-------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXXXXX.XXX, INC.
CCS MERGER CORP.
AND
CCS INTERNATIONAL, LTD.
DATED AS OF FEBRUARY 28, 2002
-------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER..............................................................................................4
SECTION 1.1. The Merger.........................................................................................4
SECTION 1.2. Closing............................................................................................4
SECTION 1.3. Effective Time.....................................................................................5
SECTION 1.4. Effects of the Merger..............................................................................5
SECTION 1.5. Certificate of Incorporation and By-laws of the Surviving Corporation..............................5
SECTION 1.6. Boards, Committees and Officers....................................................................5
SECTION 1.7. Name of the Surviving Corporation..................................................................5
SECTION 1.8. Reservation of Right to Revise Transaction.........................................................5
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK..............................................................6
SECTION 2.1. Effect on Capital Stock...........................................................................6
(a) Cancellation of Stock....................................................................................6
(b) Conversion of CCS Capital Stock..........................................................................6
(c) CCS Options; Warrants and Convertible Securities......................................................6
SECTION 2.2. HipStyle to Deliver Certificates...................................................................6
SECTION 2.3. No Fractional Securities...........................................................................7
SECTION 2.4. Closing of CCS Transfer Books......................................................................7
SECTION 2.5. Tax Treatment......................................................................................7
SECTION 2.6. Restricted Securities.............................................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES........................................................................7
SECTION 3.1. Representations and Warranties of CCS.............................................................7
(a) Organization, Standing and Corporate Power...............................................................7
(b) Subsidiaries.............................................................................................8
(c) Capital Structure.........................................................................................8
(d) Authority; Noncontravention..............................................................................8
i
(e) Undisclosed Liabilities..................................................................................10
(f) Information Supplied.....................................................................................10
(g) Taxes.....................................................................................................10
(j) Financial Statements.....................................................................................10
(g) Absence of Certain Changes or Events......................................................................10
(n) Intellectual Property.....................................................................................11
SECTION 3.2. Representations and Warranties of HipStyle.........................................................11
(a) Organization, Standing and Corporate Power................................................................11
(b) Subsidiaries..............................................................................................11
(c) Capital Structure.........................................................................................11
(d) Authority; Noncontravention...............................................................................12
(e) SEC Documents; Undisclosed Liabilities; Financial Statements..............................................13
(f) Information Supplied......................................................................................14
(g) Absence of Certain Changes or Events......................................................................14
(h) Compliance with Applicable Laws; Litigation...............................................................15
(i) Absence of Changes in Benefit Plans.......................................................................15
(j) ERISA Compliance..........................................................................................15
(k) Taxes.....................................................................................................15
(l) Voting Requirements.......................................................................................16
(m) State Takeover Statutes; Certificate of Incorporation.....................................................16
(n) Intellectual Property.....................................................................................16
(p) Certain Contracts.........................................................................................16
SECTION 3.3. Representations and Warranties of MergerSub.......................................................17
(a) Organization, Standing and Corporate Power...............................................................17
(b) Subsidiaries.............................................................................................17
(c) Capital Structure.........................................................................................17
(d) Authority; Noncontravention..............................................................................17
(e) Undisclosed Liabilities..................................................................................18
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS...............................................................18
SECTION 4.1. Conduct of Business................................................................................18
(a) Conduct of Business by CCS................................................................................18
(b) Conduct of Business by HipStyle and Subsidiaries..........................................................19
(c) Other Actions.............................................................................................20
(d) Advice of Changes.........................................................................................20
SECTION 4.2. No Solicitation by HipStyle........................................................................20
ARTICLE V ADDITIONAL AGREEMENTS...................................................................................22
SECTION 5.1. Certificate of Designation for Preferred Stock........................................................22
SECTION 5.2. Access to Information; Confidentiality.............................................................22
SECTION 5.3. Best Efforts.......................................................................................23
SECTION 5.4. Schedule 14f-1 Information Statement...............................................................23
SECTION 5.5. Fees and Expenses..................................................................................23
SECTION 5.6. Public Announcements...............................................................................23
SECTION 5.8. Bulletin Board Listing.............................................................................24
SECTION 5.8 HipStyle Liabilities................................................................................24
SECTION 5.9. Tax Treatment......................................................................................24
SECTION 5.10. Company Officers; Employment Contracts; Equity Awards.............................................24
SECTION 5.11. Post-Merger Operations............................................................................24
SECTION 5.12. Conveyance Taxes..................................................................................24
ARTICLE VI CONDITIONS PRECEDENT...................................................................................25
SECTION 6.1. Conditions to Each Party's Obligation to Effect the Merger.........................................25
(a) Stockholder Approvals.....................................................................................25
ii
(b) Governmental and Regulatory Approvals.....................................................................25
(c) No Injunctions or Restraints..............................................................................25
SECTION 6.2. Conditions to Obligations of HipStyle..............................................................25
(a) Representations and Warranties............................................................................25
(b) Performance of Obligations of CCS.........................................................................25
(c) No Material Adverse Change................................................................................25
(d) Legal Opinion.........................................................................................26
(e) Financial Statements..................................................................................26
SECTION 6.3. Conditions to Obligations of CCS...................................................................26
(a) Representations and Warranties............................................................................26
(b) Performance of Obligations of HipStyle....................................................................26
(c) No Material Adverse Change................................................................................26
(d) Quotation on Bulletin Board...............................................................................26
(e) HipStyle Liabilities......................................................................................26
(f) Amendment of HipStyle Articles of Incorporation Stock Option Plan.........................................26
SECTION 6.4. Frustration of Closing Conditions..................................................................27
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.....................................................................27
SECTION 7.1. Termination........................................................................................28
SECTION 7.2. Effect of Termination..............................................................................28
SECTION 7.3. Amendment..........................................................................................29
SECTION 7.4. Extension; Waiver..................................................................................29
SECTION 7.5. Procedure for Termination, Amendment, Extension or Waiver..........................................29
ARTICLE VIII Indemnification......................................................................................29
SECTION 8.1. Survival of Representations and Warranties.........................................................29
SECTION 8.2. Indemnification....................................................................................29
SECTION 8.3. Method of Asserting Claims.........................................................................30
ARTICLE IX GENERAL PROVISIONS.....................................................................................31
SECTION 9.1. Survival of Representations and Warranties.........................................................31
SECTION 9.2. Notices............................................................................................31
SECTION 9.3. Definitions........................................................................................32
SECTION 9.4. Interpretation.....................................................................................33
SECTION 9.5. Counterparts.......................................................................................33
SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries.....................................................33
SECTION 9.7. Governing Law......................................................................................33
SECTION 9.8. Assignment.........................................................................................33
SECTION 9.9. Headings...........................................................................................34
SECTION 9.10. Severability......................................................................................34
SECTION 9.11. Brokers and Finders...............................................................................34
iii
AGREEMENT AND PLAN OF MERGER dated as of February 28, 2002, among
XXXXXXXX.XXX, INC., a Florida corporation ("HipStyle"), CCS INTERNATIONAL, LTD.,
a Delaware corporation ("CCS"), and CCS MERGER CORP., a Delaware corporation
("MergerSub").
WHEREAS, the respective Boards of Directors of HipStyle, MergerSub and CCS
have each approved the merger of MergerSub with and into CCS (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement,
whereby each issued and outstanding share of common stock, par value $.0001 per
share, of CCS ("CCS Common Stock"), will be converted into the right to receive
shares of HipStyle common stock, par value $.0001 per share ("HipStyle Common
Stock"), and each issued and outstanding share of preferred stock, par value
$.0001 per share, of CCS ("CSS Preferred Stock"), will be converted into the
right to receive shares of HipStyle preferred stock, par value $.0001 per share
("HipStyle Preferred Stock").
WHEREAS, the respective Boards of Directors of HipStyle, MergerSub and CCS
have each determined that the Merger and the other transactions contemplated
hereby are consistent with, and in furtherance of, their respective business
strategies and goals and are in the best interests of their respective
stockholders;
WHEREAS, HipStyle, MergerSub and CCS intend that the merger of MergerSub
with and into CCS will quality as a tax-free reorganization pursuant to Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, HipStyle, MergerSub and CCS desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Delaware General Corporation Law
(the "DGCL"), MergerSub shall be merged with and into CCS at the Effective Time
(as defined in Section 1.3). Following the Effective Time, CCS shall be the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of MergerSub in accordance with the DGCL.
SECTION 1.2. Closing. The closing of the Merger (the "Closing") will take place
at 10:00 a.m. on a date to be specified by the parties (the "Closing Date"),
which shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Article VI, unless
another time or date is agreed to by the parties hereto. The Closing will be
held at such location as is agreed to by the parties hereto.
SECTION 1.3. Effective Time. Subject to the provisions of this Agreement, as
soon as practicable on the Closing Date, the parties shall cause the Merger to
be consummated by filing a certificate of merger or other appropriate documents
(in any such case, the "Certificate of Merger") executed in accordance with the
relevant provisions of the DGCL and shall make all other filings or recordings
required under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of Delaware, or
at such subsequent date or time as HipStyle and CCS shall agree and specify in
the Certificate of Merger (the time the Merger becomes effective being
hereinafter referred to as the "Effective Time").
SECTION 1.4. Effects of the Merger. The Merger shall have the effects set forth
in Section 259 of the DGCL.
SECTION 1.5. Certificate of Incorporation and By-laws of the Surviving
Corporation. The Certificate of Incorporation of CCS, as amended and in effect
prior to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation (the "Surviving Certificate of Incorporation"). The
By-laws of CCS, in effect prior to the Effective Time, shall be the By-laws of
the Surviving Corporation (the "Surviving By-laws").
SECTION 1.6. Boards, Committees and Officers. Prior to the Effective Time,
HipStyle shall adopt resolutions in form and substance reasonably acceptable to
CCS, establishing, among other things that, the Board of Directors and Officers
of HipStyle and CCS from and after the Effective Time shall be comprised solely
of the nominees of CCS.
SECTION 1.7. Name of the Surviving Corporation. The name of the Surviving
Corporation shall be "CCS International, Ltd."
SECTION 1.8. Reservation of Right to Revise Transaction. If each of CCS,
MergerSub and HipStyle agree, the parties hereto may change the method of
effecting the business combination between MergerSub and CCS, and each party
shall cooperate in such efforts, including to provide for (a) a merger of CCS
with and into MergerSub, or (b) a merger of CCS with and into HipStyle;
provided, however, that no such change shall alter or change the amount or kind
of consideration to be issued to holders of CCS Capital Stock as provided for in
this Agreement (the "Merger Consideration") and no such change shall alter or
change the tax free nature of the Merger.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
SECTION 2.1. Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of CCS
Common Stock:
(a) Cancellation of Stock. Each share of capital stock of
HipStyle that is owned by CCS, and each share of capital stock of CCS owned by
HipStyle, shall automatically be cancelled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(b) Conversion of CCS Capital Stock. Each issued and
outstanding share of (i) CCS Common Stock shall be converted into the right to
receive one (1) validly issued, fully paid and nonassessable shares of HipStyle
Common Stock, (ii) Series A Convertible Preferred Stock of CCS, par value $.0001
per share, shall be entitled to receive one (1) share of Series A Convertible
Preferred Stock of HipStyle, par value $.0001 per share (the "HipStyle Series A
Preferred Stock"), and (iii) each issued and outstanding share of Series B
Convertible Preferred Stock of CCS, par value $.0001 per share, shall be
entitled to receive one (1) share of Series B Convertible Preferred Stock of
HipStyle, par value $.0001 per share (the "HipStyle Series B Preferred Stock).
As of the Effective Time, (i) all shares of MergerSub common stock outstanding
shall no longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and (ii) each holder of a certificate representing any
shares of CCS Common Stock, CCS Series A Preferred Stock or CCS Series B
Preferred Stock (collectively, the "CCS Capital Stock") shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration and shall be surrendered at the Closing.
(c) CCS Options, Warrants and Convertible Securities. At the
Effective Time, by virtue of the Merger and without any action on the part of
the holder thereof, each outstanding option and warrant to purchase shares of
CCS Common Stock and each outstanding security convertible into the capital
stock of CCS (the "Derivative Securities"), shall remain outstanding, unchanged
by reason of the Merger, except that, in accordance with the adjustment
provisions thereof, each Derivative Security shall no longer be exercisable for
CCS Capital Stock, but shall thereafter be exercisable for that whole number of
shares of HipStyle capital stock as the holder thereof would have been entitled
to receive pursuant to the Merger had such holder exercised such Derivative
Security in full immediately prior to the Effective Time, at the same exercise
price per share. HipStyle shall comply with the terms and provisions of all such
Derivative Securities.
SECTION 2.2. HipStyle to Deliver Certificates. At the Closing, HipStyle shall
deliver to the CCS Stockholders, stock certificates representing the Merger
Consideration. HipStyle Capital Stock into which CCS Capital Stock shall be
converted in the Merger shall be deemed to have been
issued at the Effective Time. In the event that any CCS Stockholder's
certificates have been lost, stolen or destroyed, such CCS Stockholder will be
entitled to receive the Merger Consideration only after providing an affidavit
of loss and indemnity bond, in form reasonably satisfactory to HipStyle.
SECTION 2.3. No Fractional Securities. Notwithstanding any other provision of
this Agreement, no certificates or scrip for shares of capital stock
representing less than one share of HipStyle Common Stock shall be issued upon
the surrender for exchange of CCS certificates.
SECTION 2.4. Closing of CCS Transfer Books. Immediately prior to the Effective
Time, CCS transfer books shall be closed and no transfer of CCS Capital Stock
shall thereafter be made.
SECTION 2.5. Tax Treatment. The Merger is intended to constitute a
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code, and
HipStyle and the CCS shall not report the transaction on any tax return in a
manner or take any action inconsistent therewith.
SECTION 2.6. Restricted Securities. The shares of the HipStyle Common Stock,
HipStyle Series A Preferred Stock and HipStyle Series B Preferred Stock to be
issued in connection with the Merger shall be deemed "restricted securities" as
defined by Rule 144(a)(3) under the Securities Act of 1933, as amended (the
"Securities Act"). The certificates evidencing such shares shall bear the
following restrictive legend:
The shares evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"),
and may not be sold or otherwise transferred unless registered under
the Securities Act or there is an opinion from counsel to the Company
that such sale or other transfer may be made pursuant to an exemption
from the registration requirement of the Securities Act.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of CCS. Except as set forth on the
Disclosure Schedule delivered by CCS to HipStyle prior to the execution of this
Agreement (the "CCS Disclosure Schedule") and making reference to the particular
subsection of this Agreement to which exception is being taken, CCS represents
and warrants to HipStyle and MergerSub as follows:
(a) Organization, Standing and Corporate Power. (i) CCS is a corporation
duly organized, validly existing and in good standing (with respect to
jurisdictions which recognize such concept) under the laws of the jurisdiction
in which it is organized and has the requisite corporate or other power and
authority to carry on its business as now being conducted, except, for those
jurisdictions where the failure to be so organized, existing or in good standing
individually or in the aggregate would not have a material adverse effect (as
defined in Section 9.3) on CCS. CCS is duly qualified or licensed to do business
and is in good standing (with
respect to jurisdictions which recognize such concept) in each jurisdiction in
which the nature of its business or the ownership, leasing or operation of its
properties makes such qualification or licensing necessary, except for those
jurisdictions where the failure to be so qualified or licensed or to be in good
standing would not have a material adverse effect on CCS.
(ii) ....CCS has delivered to HipStyle prior to the execution of this
Agreement complete and correct copies of its Certificate of Incorporation and
By-Laws, as amended to date.
(b) Subsidiaries. Except as set forth in Section 3.1(b) of the CCS
Disclosure Schedule, CCS does not beneficially own any subsidiaries nor
does it own any capital stock or other proprietary interest, directly,
indirectly in any corporation, trust, partnership, joint venture or other
entity.
(c) Capital Structure. The authorized capital stock of CCS consists of
50,000,000 shares of CCS Common Stock and 10,000,000 shares of preferred
stock, par value $.0001 per share ("CCS Preferred Stock"). At the close of
business on the date hereof: (i) 11,900,000 shares of CCS Common Stock were
issued and outstanding; (ii) no shares of CCS Common Stock were held by CCS
in its treasury; (iii) 3,500,000 shares of CCS Series A Preferred Stock
were issued and outstanding, (iv) 1,500,000 shares of CCS Series B
Preferred Stock were issued and outstanding; (v) 2,000,000 shares of CCS
Common Stock were reserved for issuance upon exercise of stock options
issuable under the 2002 Stock Option Plan; and (vi) 400,000 shares of
Common Stock were reserved for issuance upon the exercise of a Common Stock
Purchase Warrant. All outstanding shares of capital stock of CCS are, and
all shares which may be issued will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. Except as set forth in this Section 3.1(c) or Section 3.1(c) of the
CCS Disclosure Schedule, (x) there are not issued, reserved for issuance or
outstanding (A) any shares of capital stock or other voting securities of
CCS, (B) any securities of CCS or any CCS subsidiary convertible into or
exchangeable or exercisable for shares of capital stock or voting
securities of CCS, (C) any warrants, calls, options or other rights to
acquire from CCS or any CCS subsidiary, and any obligation of CCS or any
CCS subsidiary to issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or voting
securities of CCS, and (y) there are no outstanding obligations of CCS or
any CCS subsidiary to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued, delivered
or sold, any such securities. There are no outstanding (A) securities of
CCS or any CCS subsidiary convertible into or exchangeable or exercisable
for shares of capital stock or other voting securities or ownership
interests in any CCS subsidiary, (B) warrants, calls, options or other
rights to acquire from CCS or any CCS subsidiary, and any obligation of CCS
or any CCS subsidiary to issue, any capital stock, voting securities or
other ownership interests in, or any securities convertible into or
exchangeable or exercisable for any capital stock, voting securities or
ownership interests in, any CCS subsidiary or (C) obligations of CCS or any
CCS subsidiary to repurchase, redeem or otherwise acquire any such
outstanding securities of CCS subsidiaries or to issue, deliver or sell, or
cause to be issued, delivered or sold, any such securities.
(d) Authority; Noncontravention. CCS has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by CCS and the consummation by CCS of the transactions
contemplated by this
Agreement have been duly authorized by all necessary
corporate action on the part of CCS, subject, in the case of the Merger, to
the CCS Stockholder Approval. This Agreement has been duly executed and
delivered by CCS and, assuming the due authorization, execution and
delivery by HipStyle and MergerSub constitutes the legal, valid and binding
obligation of CCS, enforceable against CCS in accordance with its terms.
The execution and delivery of this Agreement do not, and the consummation
of the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation or loss of a benefit under, or result in the creation of
any Lien upon any of the properties or assets of CCS or any of its
subsidiaries under, (i) the certificate of incorporation or By-Laws of CCS
or the comparable organizational documents of any of its subsidiaries, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, license or similar
authorization applicable to CCS or any of its subsidiaries or their
respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to CCS or any of its subsidiaries or their respective properties
or assets, other than, in the case of clauses (ii) and (iii), any such
conflicts, violations, defaults, rights, losses or Liens that individually
or in the aggregate would not (x) have a material adverse effect on CCS or
(y) reasonably be expected to impair the ability of CCS to perform its
obligations under this Agreement. No consent, approval, order or
authorization of, action by or in respect of, or registration, declaration
or filing with, any federal, state, local or foreign government, any court,
administrative, regulatory or other governmental agency, commission or
authority or any nongovernmental self-regulatory agency, commission or
authority (a "Governmental Entity") is required by or with respect to CCS
or any of its subsidiaries in connection with the execution and delivery of
this Agreement by CCS or the consummation by CCS of the transactions
contemplated by this Agreement, except for (1) the filing of the
Certificate of Merger with the Secretary of State of Delaware and
appropriate documents with the relevant authorities of other states in
which CCS is qualified to do business and such filings with Governmental
Entities to satisfy the applicable requirements of state securities or
"blue sky" laws; and (2) such consents, approvals, orders or authorizations
the failure of which to be made or obtained individually or in the
aggregate would not (x) have a material adverse effect on CCS or (y)
reasonably be expected to impair the ability of CCS to perform its
obligations under this Agreement.
Except as set forth in Section 3.1(d) of the CCS Disclosure Schedule,
to the knowledge of CCS neither CCS, nor any of its Subsidiaries, are in
material violation of, or in material default under, (i) any term or provision
of its Certificate of Incorporation or By-Laws; or (ii) any existing applicable
law, rule, regulation, judgment, order or decree of any governmental agency or
court, domestic or foreign, having jurisdiction over it or any of its properties
or business. CCS owns, possesses or has obtained all material governmental and
other licenses, permits, certifications, registration, approvals or consents and
other authorizations necessary to own or lease, as the case may be, and to
operate its properties and to conduct its business or operations as presently
conducted and all such governmental and other licenses, permits, certifications,
registrations, approvals, consents and other authorizations are outstanding and
in good standing
and there are no existing actions, seeking to cancel, terminate or limit such
licenses, permits, certifications, registrations, approvals or consents or
authorizations.
(e) Undisclosed Liabilities. To CCS' knowledge, except (i) as
reflected in the CCS Financial Statements (as defined in Section 3.1(h)) or
in the notes thereto, (ii) for liabilities incurred in connection with this
Agreement or the transactions contemplated hereby, or (iii) liabilities
incurred in the ordinary cause of CCS's business since June 30, 2001,
neither CCS nor any of its subsidiaries has any liabilities or obligations
of any nature which, individually or in the aggregate, would have a
material adverse effect on CCS.
(f) Information Supplied. None of the information supplied or to be
supplied by CCS specifically for inclusion or incorporation by reference
any reports, notices, schedules or filings to be filed with the SEC by
HipStyle in connection with the transactions contemplated hereby will to
CCS' knowledge contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading.
(g) Taxes. (i) To CCS' knowledge, each of CCS and its subsidiaries has
filed all material tax returns and reports required to be filed by it and
all such returns and reports are complete and correct in all material
respects, or requests for extensions to file such returns or reports have
been timely filed, granted and have not expired, except to the extent that
such failures to file, to be complete or correct or to have extensions
granted that remain in effect individually or in the aggregate would not
have a material adverse effect on CCS. CCS and each of its subsidiaries has
paid (or CCS has paid on its behalf) all taxes (as defined herein) shown as
due on such returns.
(ii) As used in this Agreement, "taxes" shall include all (x) federal,
state, local or foreign income, property, sales, excise and other taxes or
similar governmental charges, including any interest, penalties or additions
with respect thereto, (y) liability for the payment of any amounts of the type
described in (x) as a result of being a member of an affiliated, consolidated,
combined or unitary group, and (z) liability for the payment of any amounts as a
result of being party to any tax sharing agreement or as a result of any express
or implied obligation to indemnify any other person with respect to the payment
of any amounts of the type described in clause (x) or (y).
(h) Financial Statements. CCS has heretofore delivered to HipStyle
financial statements, which are accountants compilations, relating to the
period ending June 30, 2001 (the "Financial Statements"). To CCS'
knowledge, the Financial Statements fairly present the financial position
and results of operations of the CCS for the periods presented.
(i) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, and except as set forth on Schedule 3.1, since June 30, 2001, CCS
and its subsidiaries have conducted their business only in the ordinary
course and there to CCS' knowledge has not been any material adverse change
in CCS.
(j) Intellectual Property. To the knowledge of CCS, CCS and its
subsidiaries own or have a valid license to use all trademarks, service
marks, trade names, patents and copyrights (including any registrations or
applications for registration of any of the foregoing) (collectively, the
"CCS Intellectual Property") necessary to carry on its business
substantially as currently conducted, except for such CCS Intellectual
Property the failure of which to own or validly license individually or in
the aggregate would not have a material adverse effect on CCS. Neither CCS
nor any such subsidiary has received any notice of infringement of or
conflict with, and, to CCS's knowledge, there are no infringements of or
conflicts (i) with the rights of others with respect to the use of, or (ii)
by others with respect to, any CCS Intellectual Property that individually
or in the aggregate, in either such case, would have a material adverse
effect on CCS.
SECTION 3.2. Representations and Warranties of HipStyle. Except as set forth on
the Disclosure Schedule delivered by HipStyle to CCS prior to the execution of
this Agreement (the "HipStyle Disclosure Schedule") and making reference to the
particular subsection of this Agreement to which exception is being taken,
HipStyle represents and warrants to CCS as follows:
(a) Organization, Standing and Corporate Power. (i) HipStyle is a
corporation or other legal entity duly organized, validly existing and in
good standing (with respect to jurisdictions which recognize such concept)
under the laws of the jurisdiction in which it is organized and has the
requisite corporate or other power, as the case may be, and authority to
carry on its business as now being conducted, except, as to subsidiaries,
for those jurisdictions where the failure to be so organized, existing or
in good standing individually or in the aggregate would not have a material
adverse effect on HipStyle. Each of HipStyle and its subsidiaries is duly
qualified or licensed to do business and is in good standing (with respect
to jurisdictions which recognize such concept) in each jurisdiction in
which the nature of its business or the ownership, leasing or operation of
its properties makes such qualification or licensing necessary, except for
those jurisdictions where the failure to be so qualified or licensed or to
be in good standing individually or in the aggregate would not have a
material adverse effect on HipStyle.
(ii) HipStyle has delivered to CCS prior to the execution of this Agreement
complete and correct copies of its Certificate of Incorporation and By-Laws, as
amended to date.
(b) Subsidiaries. MergerSub is the only subsidiary of HipStyle. All
the outstanding shares of capital stock of MergerSub have been validly
issued and are fully paid and nonassessable and are owned directly or
indirectly by HipStyle, free and clear of all Liens and free of any other
restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests).
(c) Capital Structure. The authorized capital stock of HipStyle
consists of 100,000,000 shares of HipStyle Common Stock, $.0001 par value
per share, and 10,000,000 shares of HipStyle Preferred Stock, par value
$.0001 per share. At the close of business on the date hereof (i) 4,600,000
shares of HipStyle Common Stock were issued and outstanding (including
shares of restricted HipStyle Common Stock); (ii) no shares of HipStyle
Common Stock were held by HipStyle in its treasury; and (iii) no shares of
preferred stock (of any Class)
were issued and outstanding. All outstanding shares of capital stock of
HipStyle are, and all shares which may be issued pursuant to this Agreement
or otherwise will be, when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights. Except as set
forth in this Section 3.2(c), Section 3.2 (c) of the HipStyle Disclosure
Schedule there are not issued, reserved for issuance or outstanding (A) any
shares of capital stock or other voting securities of HipStyle, (B) any
securities of HipStyle or any HipStyle subsidiary convertible into or
exchangeable or exercisable for shares of capital stock or voting
securities of HipStyle, (C) any warrants, calls, options or other rights to
acquire from HipStyle or any HipStyle subsidiary, and any obligation of
HipStyle or any HipStyle subsidiary to issue, any capital stock, voting
securities or securities convertible into or exchangeable or exercisable
for capital stock or voting securities of HipStyle, and (D) there are no
outstanding obligations of HipStyle or any HipStyle subsidiary to
repurchase, redeem or otherwise acquire any such securities or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such
securities. There are no outstanding (X) securities of HipStyle or any
HipStyle subsidiary convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities or ownership interests
in any HipStyle subsidiary, (Y) warrants, calls, options or other rights to
acquire from HipStyle or any HipStyle subsidiary, and any obligation of
HipStyle or any HipStyle subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible
into or exchangeable or exercisable for any capital stock, voting
securities or ownership interests in, any HipStyle subsidiary or (Z)
obligations of HipStyle or any HipStyle subsidiary to repurchase, redeem or
otherwise acquire any such outstanding securities of HipStyle subsidiaries
or to issue, deliver or sell, or cause to be issued, delivered or sold, any
such securities. Neither HipStyle nor any HipStyle subsidiary is a party to
any agreement restricting the transfer of, relating to the voting of,
requiring registration of, or granting any preemptive or, antidilutive
rights with respect to, any securities of the type referred to in the two
preceding sentences. Other than the HipStyle subsidiaries, HipStyle does
not directly or indirectly beneficially own any securities or other
beneficial ownership interests in any other entity except for
non-controlling investments made in the ordinary course of business in
entities which are not individually or in the aggregate material to
HipStyle and its subsidiaries as a whole.
(d) Authority; Noncontravention. HipStyle has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by HipStyle and the consummation by HipStyle of the
transactions contemplated by this Agreement have been duly authorized by
all necessary corporate action on the part of HipStyle. This Agreement has
been duly executed and delivered by HipStyle and, assuming the due
authorization, execution and delivery by CCS, constitutes the legal, valid
and binding obligations of HipStyle, enforceable against HipStyle in
accordance with its terms. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
benefit under, or result in the creation of any Lien upon any of the
properties or assets of HipStyle or any of its subsidiaries under, (i) the
certificate of incorporation or By-Laws of HipStyle or the comparable
organizational documents of any of its subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise, license or similar
authorization applicable to HipStyle or any of its subsidiaries or their
respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to HipStyle or any
of its subsidiaries or their respective properties or assets, other than,
in the case of clauses (ii) and (iii), any such conflicts, violations,
defaults, rights, losses or Liens that individually or in the aggregate
would not (x) have a material adverse effect on HipStyle or (y) reasonably
be expected to impair the ability of HipStyle to perform its obligations
under this Agreement. No consent, approval, order or authorization of,
action by, or in respect of, or registration, declaration or filing with,
any Governmental Entity is required by or with respect to HipStyle or any
of its subsidiaries in connection with the execution and delivery of this
Agreement by HipStyle or the consummation by HipStyle of the transactions
contemplated by this Agreement, except for (1) the filing with the SEC of
such reports under Section 13(a), 13(d), 15(d) or 16(a) of the Exchange Act
as may be required in connection with this Agreement and the transactions
contemplated by this Agreement; (2) the filing of the Certificate of Merger
with the Secretary of State of Delaware and appropriate documents with the
relevant authorities of other states in which HipStyle is qualified to do
business and such filings with Governmental Entities to satisfy the
applicable requirements of state securities or "blue sky" laws; and (3)
such consents, approvals, orders or authorizations the failure of which to
be made or obtained individually or in the aggregate would not (x) have a
material adverse effect on HipStyle or (y) reasonably be expected to impair
the ability of HipStyle to perform its obligations under this Agreement.
Except as set forth in Section 3.2(d) of the HipStyle Disclosure Schedule ,
neither HipStyle, nor any of its Subsidiaries, are in material violation of, or
in default under, (i) any term or provision of its Certificate of Incorporation
or By-Laws; or (ii) any existing applicable law, rule, regulation, judgment,
order or decree of any governmental agency or court, domestic or foreign, having
jurisdiction over it or any of its properties or business. HipStyle owns,
possesses or has obtained all material governmental and other licenses, permits,
certifications, registration, approvals or consents and other authorizations
necessary to own or lease, as the case may be, and to operate its properties and
to conduct its business or operations as presently conducted and all such
governmental and other licenses, permits, certifications, registrations,
approvals, consents and other authorizations are outstanding and in good
standing and there are no existing actions, seeking to cancel, terminate or
limit such licenses, permits, certifications, registrations, approvals or
consents or authorizations.
(e) SEC Documents; Undisclosed Liabilities; Financial Statements. (i)
HipStyle has filed all required registration statements, prospectuses,
reports, schedules, forms, statements and other documents (including
exhibits and all other information incorporated therein) with the SEC since
October 17, 2000, (the "HipStyle SEC Documents"). As of their respective
dates, the HipStyle SEC Documents complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder
applicable to such HipStyle SEC Documents, and none of the HipStyle SEC
Documents when filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of
HipStyle included in the HipStyle SEC Documents comply as to form, as of
their respective dates of filing with the SEC, in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of HipStyle and its
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments.
(ii) The unaudited consolidated financial statements of HipStyle for the
six months ended December 31, 2001 (the "HipStyle Financial Statements"), which
are included in the HipStyle SEC Documents, have previously been made available
to the Company. The Parent Financial Statements comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto; and fairly present, in
all material respects, on a consolidated basis, the financial position of
HipStyle at, and the results of its operations for, each of the periods then
ended and were prepared in conformity with GAAP applied on a consistent basis,
except as otherwise disclosed therein and, subject to normal year-end
adjustments, the absence of footnote disclosures, and any other adjustments
described therein.
(iii) Except as reflected in the HipStyle Financial Statements, to the
knowledge of HipStyle, HipStyle has no Liabilities (as hereinafter defined) or
obligations of any nature.
(f) Information Supplied. None of the information supplied or to be
supplied by HipStyle specifically for inclusion or incorporation by
reference in any registration statements, prospectuses, reports, schedules
or other documents to be filed with the SEC or any other governmental
entity, shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading. All SEC Filings will comply as to form and
substance in all material respects with the requirements of the Securities
Act and the Exchange Act and the rules and regulations thereunder, except
that no representation or warranty is made by HipStyle with respect to
statements made or incorporated by reference therein based on information
supplied by CCS specifically for inclusion or incorporation by reference in
any subsequent SEC Filing.
(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby since December 31, 2001, HipStyle and its subsidiaries have
conducted their business only in the ordinary course since such date and
prior to the date hereof, and there has not been (i) any material adverse
change in HipStyle, (ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to any of HipStyle's capital stock, (iii) any split, combination or
reclassification of any of HipStyle's capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of HipStyle's capital stock, (iv)(A)
any granting by HipStyle or any of its subsidiaries to any current or
former director, executive officer or other key employee of HipStyle or its
subsidiaries of any increase in compensation, bonus or other benefit, (B)
any granting by HipStyle or any of its subsidiaries to any such current or
former director, executive officer or key employee of any increase in
severance or termination pay, or (C) any entry by
HipStyle or any of its subsidiaries into, or any amendment of, any
employment, deferred compensation consulting, severance, termination or
indemnification agreement with any such current or former director,
executive officer or key employee, (v) except insofar as may have been
disclosed in HipStyle SEC Documents filed and publicly available prior to
the date of this Agreement or required by a change in GAAP, any change in
accounting methods, principles or practices by HipStyle materially
affecting its assets, liabilities or business, (vi) except insofar as may
have been disclosed in the HipStyle SEC Documents, any tax election that
individually or in the aggregate would have a material adverse effect on
HipStyle or any of its tax attributes or any settlement or compromise of
any material income tax liability or (vii) any action taken by HipStyle or
any of the HipStyle subsidiaries during the period from June 30, 2001
through the date of this Agreement that, if taken during the period from
the date of this Agreement through the Effective Time would constitute a
breach of Section 4.1(b).
(h) Compliance with Applicable Laws; Litigation. (i) To the knowledge
of HipStyle, HipStyle, its subsidiaries and employees hold all permits,
licenses, variances, exemptions, orders, registrations and approvals of all
Governmental Entities which are required for the operation of the
businesses of HipStyle and its subsidiaries (the "HipStyle Permits") except
where the failure to have any such HipStyle Permits individually or in the
aggregate would not have a material adverse effect on HipStyle. HipStyle
and its subsidiaries are in compliance with the terms of the HipStyle
Permits and all applicable statutes, laws, ordinances, rules and
regulations, except where the failure so to comply individually or in the
aggregate would not have a material adverse effect on HipStyle. As of the
date of this Agreement, no action, demand, requirement or investigation by
any Governmental Entity and no suit, action or proceeding by any person, in
each case with respect to HipStyle or any of its subsidiaries or any of
their respective properties, is pending or, to the knowledge of HipStyle,
threatened.
(ii) Neither HipStyle nor any HipStyle subsidiary is subject to any
outstanding order, injunction or decree which has had or, insofar as can be
reasonably foreseen, individually or in the aggregate will have a material
adverse effect on HipStyle.
(i) Absence of Benefit Plans. HipStyle has no severance, or employment
agreements or policies, bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other plan, arrangement or
understanding providing benefits to any current or former employee, officer
or director of HipStyle or any of its wholly owned subsidiaries.
(j) ERISA Compliance. HipStyle and its affiliates have never had any
employee, medical or pension benefit plans.
(k) Taxes. (i) Each of HipStyle and its subsidiaries has filed all
material tax returns and reports required to be filed by it and all such
returns and reports are complete and correct in all material respects, or
requests for extensions to file such returns or reports have been timely
filed, granted and have not expired, except to the extent that such
failures to file, to be complete or correct or to have extensions granted
that remain in effect individually or in the aggregate would not have a
material adverse effect on HipStyle. HipStyle and each of its
subsidiaries has paid (or HipStyle has paid on its behalf) all taxes shown
as due on such returns, and the most recent financial statements contained
in the HipStyle SEC Documents reflect an adequate reserve in accordance
with GAAP for all taxes payable by HipStyle and its subsidiaries for all
taxable periods and portions thereof accrued through the date of such
financial statements.
(l) Voting Requirements. The affirmative vote of the holders of a
majority of all outstanding voting shares of MergerSub is the only vote of
the holders of any class or series of capital stock necessary to approve
and adopt this Agreement and the transactions contemplated hereby,
including the Merger, and the issuance of the Merger Consideration pursuant
to the Merger.
(m) State Takeover Statutes; Certificate of Incorporation. The Board
of Directors of HipStyle (including the disinterested Directors thereof)
has unanimously approved this Agreement and the transactions contemplated
hereby and such approval constitutes approval of the Merger and the other
transactions contemplated hereby by the HipStyle Board of Directors under
the applicable provisions of the Florida Business Corporation Act ("FBCA")
and constitutes approval of the Merger the issuance of HipStyle Common
Stock in connection therewith and the other transactions contemplated
hereby.
(n) Intellectual Property. To the knowledge of HipStyle, HipStyle and
its subsidiaries own or have a valid license to use all trademarks, service
marks, trade names, patents and copyrights (including any registrations or
applications for registration of any of the foregoing) (collectively, the
"HipStyle Intellectual Property") necessary to carry on its business
substantially as currently conducted, except for such HipStyle Intellectual
Property the failure of which to own or validly license individually or in
the aggregate would not have a material adverse effect on HipStyle. Neither
HipStyle nor any such subsidiary has received any notice of infringement of
or conflict with, and, to HipStyle's knowledge, there are no infringements
of or conflicts (i) with the rights of others with respect to the use of,
or (ii) by others with respect to, any HipStyle Intellectual Property that
individually or in the aggregate, in either such case, would have a
material adverse effect on HipStyle.
(o) Certain Contracts. Except as set forth in the HipStyle SEC
Documents, neither HipStyle nor any of its subsidiaries is a party to or
bound by (i) any "material contract" (as such term is defined in item
601(b)(10) of Regulation S-K of the SEC), (ii) any non-competition
agreement or any other agreement or obligation which purports to limit in
any material respect the manner in which, or the localities in which, all
or any material portion of the business of HipStyle and its subsidiaries
(including CCS and its subsidiaries, assuming the Merger had taken place),
taken as a whole, is or would be conducted, or (iii) any contract or other
agreement which would prohibit or materially delay the consummation of the
Merger or any of the transactions contemplated by this Agreement (all
contracts of the type described in clauses (i) and (ii) being referred to
herein as "HipStyle Material Contracts"). Each HipStyle Material Contract
is valid and binding on HipStyle (or, to the extent a HipStyle subsidiary
is a party, such subsidiary) and is in full force and effect, and HipStyle
and each HipStyle subsidiary have in all material respects performed all
obligations required to be performed by them to date under each HipStyle
Material Contract, except where such noncompliance, individually or in the
aggregate, would not have a material adverse effect on HipStyle. Neither
HipStyle nor any HipStyle subsidiary knows of, or has received notice of,
any violation or default under (nor, to the knowledge of HipStyle, does
there exist any condition which with the passage of time or the giving of
notice or both would result in such a violation or default under) any
HipStyle Material Contract.
SECTION 3.3. Representations and Warranties of MergerSub. Except as set forth on
the Disclosure Schedule delivered by MergerSub to CCS prior to the execution of
this Agreement (the "MergerSub Disclosure Schedule") and making reference to the
particular subsection of this Agreement to which exception is being taken,
HipStyle and MergerSub represents and warrants to CCS as follows:
(a) Organization, Standing and Corporate Power. (i) MergerSub is a
corporation or other legal entity duly organized, validly existing and in
good standing (with respect to jurisdictions which recognize such concept)
under the laws of the jurisdiction in which it is organized and has the
requisite corporate or other power and authority to carry on its business
as now being conducted, except, for those jurisdictions where the failure
to be so organized, existing or in good standing individually or in the
aggregate would not have a material adverse effect (as defined in Section
8.3) on MergerSub.
(ii) MergerSub has delivered to HipStyle prior to the execution of this
Agreement complete and correct copies of its Certificate of Incorporation and
By-Laws, as amended to date.
(b) Subsidiaries. MergerSub does not beneficially own any shares of
capital stock.
(c) Capital Structure. The authorized capital stock of MergerSub
consists of 1,000 shares of MergerSub Common Stock and no shares of
preferred stock. At the close of business on the date hereof: (i) 1,000
shares of MergerSub Common Stock were issued and outstanding; and (ii) no
shares of MergerSub Common Stock were held by MergerSub in its treasury.
All outstanding shares of capital stock of MergerSub are, and all shares
which may be issued will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. There
are no issued, reserved for issuance or outstanding securities of MergerSub
or any MergerSub subsidiary convertible into or exchangeable or exercisable
for shares of capital stock or voting securities of MergerSub, or any
warrants, calls, options or other rights to acquire from MergerSub or any
MergerSub subsidiary.
(d) Authority; Noncontravention. MergerSub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by MergerSub and the consummation by MergerSub of the
transactions contemplated by this Agreement have been duly authorized by
all necessary corporate action on the part of MergerSub, subject, in the
case of the Merger, to the MergerSub Stockholder Approval. This Agreement
has been duly executed and delivered by MergerSub and, assuming the due
authorization, execution and delivery by HipStyle and MergerSub constitutes
the legal, valid and binding obligation of MergerSub, enforceable against
MergerSub in accordance with its terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by
this Agreement and compliance with the provisions of this Agreement will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
benefit under, or result in the creation of any Lien upon any of the
properties or assets of MergerSub or any of its subsidiaries under, (i) the
certificate of incorporation or By-Laws of MergerSub or the comparable
organizational documents of any of its subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, license or similar authorization
applicable to MergerSub or any of its subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to MergerSub or any
of its subsidiaries or their respective properties or assets, other than,
in the case of clauses (ii) and (iii), any such conflicts, violations,
defaults, rights, losses or Liens that individually or in the aggregate
would not (x) have a material adverse effect on MergerSub or (y) reasonably
be expected to impair the ability of MergerSub to perform its obligations
under this Agreement. No consent, approval, order or authorization of,
action by or in respect of, or registration, declaration or filing with,
any federal, state, local or foreign government, any court, administrative,
regulatory or other governmental agency, commission or authority or any
nongovernmental self-regulatory agency, commission or authority (a
"Governmental Entity") is required by or with respect to MergerSub or any
of its subsidiaries in connection with the execution and delivery of this
Agreement by MergerSub or the consummation by MergerSub of the transactions
contemplated by this Agreement, except for (1) the filing of the
Certificate of Merger with the Secretary of State of Delaware and
appropriate documents with the relevant authorities of other states in
which MergerSub is qualified to do business and such filings with
Governmental Entities to satisfy the applicable requirements of state
securities or "blue sky" laws; and (2) such consents, approvals, orders or
authorizations the failure of which to be made or obtained individually or
in the aggregate would not (x) have a material adverse effect on MergerSub
or (y) reasonably be expected to impair the ability of MergerSub to perform
its obligations under this Agreement.
(e) Undisclosed Liabilities. Except for liabilities incurred in
connection with this Agreement or the transactions contemplated hereby,
neither MergerSub nor any of its subsidiaries has any liabilities or
obligations of any nature which, individually or in the aggregate, would
have a material adverse effect on MergerSub.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1. Conduct of Business.
(a) Conduct of Business by CCS. Except as set forth in Section 4.1(a)
of the CCS Disclosure Schedule, and as otherwise expressly contemplated by
this Agreement or as consented to by HipStyle in writing, such consent not
to be unreasonably withheld or delayed,
2
during the period from the date of this Agreement to the Effective Time,
CCS shall carry on its business in the ordinary course consistent with past
practice and in compliance in all material respects with all applicable
laws and regulations and, to the extent consistent therewith, use all
reasonable efforts to preserve intact their current business organizations,
use reasonable efforts to keep available the services of their current
officers and other key employees and preserve their relationships with
those persons having business dealings with them to the end that their
goodwill and ongoing businesses shall be unimpaired at the Effective Time.
Without limiting the generality of the foregoing (but subject to the above
exceptions), except as otherwise contemplated by this Agreement and Merger,
during the period from the date of this Agreement to the Effective Time,
CCS shall not, and shall not permit any of its subsidiaries to: issue,
deliver, sell, pledge or otherwise encumber or subject to any Lien any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities.
(b) Conduct of Business by HipStyle and Subsidiaries. Except as set
forth in Section 4.1(b) of the HipStyle Disclosure Schedule, as otherwise
expressly contemplated by this Agreement or as consented to by CCS in
writing, such consent not to be unreasonably withheld or delayed, during
the period from the date of this Agreement to the Effective Time, HipStyle
shall, and shall cause its subsidiaries to, carry on their respective
businesses in the ordinary course consistent with past practice and in
compliance in all material respects with all applicable laws and
regulations and, to the extent consistent therewith, use all reasonable
efforts to preserve intact their current business organizations, use
reasonable efforts to keep available the services of their current officers
and other key employees and preserve their relationships with those persons
having business dealings with them to the end that their goodwill and
ongoing businesses shall be unimpaired at the Effective Time. Without
limiting the generality of the foregoing (but subject to the above
exceptions), except as otherwise contemplated by this Agreement and the
Merger, during the period from the date of this Agreement to the Effective
Time, HipStyle shall not, and shall not permit any of its subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, make any other
distributions in respect of, or enter into any agreement with respect to the
voting of, any of its capital stock, (y) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock;
(ii) issue, deliver, sell, pledge or otherwise encumber or subject to any
Lien any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities;
(iii) except as contemplated hereby, amend its certificate of
incorporation, By-Laws or other comparable organizational documents;
(iv) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner, any
business or any person;
(v) sell, lease, license, mortgage or otherwise encumber or subject to any
Lien or otherwise dispose of any of its properties or assets (including
securitization);
(vi) take any action that would cause the representations and warranties
set forth in Section 3.2(g) to no longer be true and correct;
(vii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for the obligations of any person for borrowed money; or
(viii) authorize, or commit or agree to take, any of the foregoing actions.
(c) Other Actions. Except as required by law, CCS and HipStyle shall
not, and shall not permit any of their respective subsidiaries to,
voluntarily take any action that would, or that could reasonably be
expected to, result in any of the representations and warranties of such
party set forth in this Agreement that are qualified as to materiality
becoming untrue at the Effective Time.
(d) Advice of Changes. CCS and HipStyle shall promptly advise the
other party orally and in writing to the extent it has knowledge of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or
any such representation or warranty that is not so qualified becoming
untrue or inaccurate in any material respect, (ii) the failure by it to
comply in any material respect with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it
under this Agreement and (iii) any change or event having, or which,
insofar as can reasonably be foreseen, could reasonably be expected to have
a material adverse effect on such party or on the truth of their respective
representations and warranties or the ability of the conditions set forth
in Article VI to be satisfied; provided, however, that no such notification
shall affect the representations, warranties, covenants or agreements of
the parties (or remedies with respect thereto) or the conditions to the
obligations of the parties under this Agreement.
SECTION 4.2. No Solicitation by HipStyle. (a) HipStyle shall not, nor shall it
permit any of its subsidiaries to, nor shall it authorize or permit any of its
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), or take any
other action designed to facilitate, any inquiries or the making of any proposal
which constitutes any HipStyle Takeover Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding any HipStyle Takeover
Proposal; provided, however, that if the Board of Directors of HipStyle
determines in good faith, based on the advice of outside counsel, that it is
necessary to do so in order to act in a manner consistent with its fiduciary
duties to HipStyle's stockholders under applicable law, HipStyle may, in
response to a HipStyle Superior Proposal (as defined in Section 4.2(b)) which
was not solicited by it, which did not otherwise result from a breach of this
Section 4.2(a) and subject to providing prior written notice of its decision to
take such action to CCS and compliance with Section 4.2(c) (x) furnish
information with respect to HipStyle and its subsidiaries to any person making a
HipStyle Superior Proposal pursuant to a customary confidentiality agreement (as
determined by HipStyle based on the advice of its outside counsel, the terms of
which are no more favorable to such person than the Confidentiality Agreement)
and (y) participate in discussions or negotiations regarding such HipStyle
Superior Proposal. For purposes of this Agreement, "HipStyle Takeover Proposal"
means any inquiry, proposal or offer from any person relating to any direct or
indirect acquisition or purchase of a business that constitutes 50% or more of
the net revenues, net income or the assets of HipStyle and its subsidiaries,
taken as a whole, or 10% or more of any class of equity securities of HipStyle,
any tender offer, exchange offer or other transactions that if consummated would
result in any person beneficially owning 10% or more of any class of equity
securities of HipStyle, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
HipStyle or the HipStyle Capital Stock (or any HipStyle subsidiary whose
business constitutes 50% or more of the net revenues, net income or the assets
of HipStyle and its subsidiaries, taken as a whole), other than the transactions
contemplated by this Agreement.
(b) Except as expressly permitted by this Section 4.2, neither the
Board of Directors of HipStyle nor any committee thereof shall (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse
to CCS, the approval or recommendation by such Board of Directors or such
committee of the Merger, this Agreement or the issuance of HipStyle Capital
Stock in connection with the Merger, (ii) approve or recommend, or propose
publicly to approve or recommend, any HipStyle Takeover Proposal, or (iii)
cause HipStyle to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, a "HipStyle
Acquisition Agreement") related to any HipStyle Takeover Proposal.
Notwithstanding the foregoing, at any time prior to the obtaining of the
HipStyle Stockholder Approval, the Board of Directors of HipStyle, to the
extent that it determines in good faith, based upon the advice of outside
counsel, that it is necessary to do so in order to act in a manner
consistent with its fiduciary duties to HipStyle's stockholders under
applicable law, may (subject to this and the following sentences) terminate
this Agreement solely in order to concurrently enter into any HipStyle
Acquisition Agreement with respect to any HipStyle Superior Proposal, but
only at a time that is after the fifth business day following HipStyle's
receipt of written notice advising CCS that the Board of Directors of
HipStyle is prepared to accept a HipStyle Superior Proposal, specifying the
material terms and conditions of such HipStyle Superior Proposal and
identifying the person making such HipStyle Superior Proposal. For purposes
of this Agreement, a "HipStyle Superior Proposal" means any proposal made
by a third party to acquire, directly or indirectly, including pursuant to
a tender offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities, more
than 50% of the combined voting power of the shares of HipStyle Common
Stock then outstanding or all or substantially all the assets of HipStyle
and otherwise on terms which the Board of Directors of HipStyle determines
in its good faith judgment (based on the advice of a financial advisor of
nationally recognized reputation) to be more favorable to HipStyle's
stockholders than the Merger and for which financing, to the extent
required, is then committed or which, in the good faith judgment of the
Board of Directors of HipStyle based on the advice of its financial
advisor, is reasonably capable of being obtained by such third party.
(c) In addition to the obligations of HipStyle set forth in paragraphs
(a) and (b) of this Section 4.2, HipStyle shall immediately advise CCS
orally and in writing of any request for information or of any HipStyle
Takeover Proposal, the material terms and conditions of such request or
HipStyle Takeover Proposal and the identity of the person making such
request or HipStyle Takeover Proposal. HipStyle will keep CCS reasonably
informed of the status and details (including amendments or proposed
amendments) of any such request or HipStyle Takeover Proposal. CCS shall
treat any information it receives from HipStyle pursuant to this section as
confidential information.
(d) Nothing contained in this Section 4.2 shall prohibit HipStyle from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure
to HipStyle's stockholders if, in the good faith judgment of the Board of
Directors of HipStyle, after consultation with outside counsel, failure so
to disclose would be inconsistent with its obligations under applicable
law; provided, however, that neither HipStyle nor its Board of Directors
nor any committee thereof shall withdraw or modify, or propose publicly to
withdraw or modify, its position with respect to this Agreement, the
Merger, the issuance of HipStyle Common Stock in connection with the
Merger, or approve or recommend, or propose publicly to approve or
recommend, a HipStyle Takeover Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Certificate of Designation for Preferred Stock. HipStyle represents
and warrants to CCS that on February 22, 2002, the stockholders of HipStyle
lawfully approved (i) an amendment and restatement of the HipStyle Articles of
Incorporation (the "Amended Articles") and (ii) the adoption of the HipStyle
2002 Stock Option (the "2002 Stock Option Plan"), each of which of have
previously been provided to CCS. HipStyle agrees to prepare and file a
Certificate of Designation with respect to the rights, limitations and
preferences for the HipStyle Preferred Stock, in form and substance reasonably
acceptable to CCS, with the Secretary of State of the State of Florida in
accordance with all applicable rules and regulations of the FBCA.
SECTION 5.2. Access to Information; Confidentiality. Each of CCS and HipStyle
shall, and shall cause each of its respective subsidiaries to, afford to the
other party and to the officers, employees, accountants, counsel, financial
advisors and other representatives of such other party, reasonable access during
normal business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, each of CCS and HipStyle shall, and shall cause each of its
respective subsidiaries to, furnish promptly to the other party (a) a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of federal or state securities
laws and (b) all other information concerning its business, properties and
personnel as such other party may reasonably request. No review pursuant to this
Section 5.2 shall affect any representation or warranty given by the other party
hereto. Each of CCS and HipStyle will hold, and will cause its respective
officers, employees, accountants, counsel, financial advisors and other
representatives and affiliates to hold, any nonpublic information in accordance
with the terms of the Confidentiality Agreement.
SECTION 5.3. Best Efforts. (a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including (i) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making of all
necessary registrations and filings and the taking of all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
by this Agreement, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed, and
(iv) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the purposes
of, this Agreement. Nothing set forth in this Section 5.3(a) will limit or
affect actions permitted to be taken pursuant to Sections 4.1 and 4.2.
(b) In connection with and without limiting the foregoing, CCS and
HipStyle shall (i) take all action necessary to ensure that no state
takeover statute or similar statute or regulation is or becomes applicable
to the Merger, this Agreement, or any of the other transactions
contemplated by this Agreement and (ii) if any state takeover statute or
similar statute or regulation becomes applicable to the Merger, this
Agreement, or any other transaction contemplated by this Agreement, take
all action necessary to ensure that the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and the
other transactions contemplated by this Agreement.
SECTION 5.4. Schedule 14f-1 Information Statement. Promptly following the
execution and delivery of this Agreement, HipStyle shall prepare and file with
the Commission an Information Statement on Schedule 14f-1 with respect to the
transactions contemplated by this Agreement in accordance with all applicable
rules and regulations of the Securities Exchange Act of 1934, as amended (the
"1934 Act"). Not less than five (5) days prior to the filing with the Securities
and Exchange Commission ("Commission"), HipStyle shall permit CCS and its legal
counsel to review the filing and make suggested revisions thereto. HipStyle
shall mail the Information Statement on Schedule 14f-1 to each HipStyle
shareholder in accordance with all applicable rules and regulations of the 1934
Act and the FBCA.
SECTION 5.5. Fees and Expenses. All fees and expenses incurred in connection
with the Merger, this Agreement, and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses, whether or
not the Merger is consummated.
SECTION 5.6. Public Announcements. HipStyle and CCS will consult with each other
before issuing, and provide each other the opportunity to review, comment upon
and concur with and use reasonable efforts to agree on, any press release or
other public statements with respect to the
transactions contemplated by this Agreement, including the Merger, and shall not
issue any such press release or make any such public statement prior to such
consultation, except as either party may determine is required by applicable
law, court process or by obligations pursuant to any listing agreement with any
national securities exchange. The parties agree that the initial press release
to be issued with respect to the transactions contemplated by this Agreement
shall be in the form heretofore agreed to by the parties.
SECTION 5.7. Bulletin Board Listing. HipStyle shall use its best efforts to
maintain the listing of its shares of Common Stock on the NASD OTC Bulletin
Board.
SECTION 5.8 HipStyle Liabilities. HipStyle shall terminate and extinguish all
direct, indirect, short term, long term, xxxxxx, unchoate, contingent,
unmatured, matured, known and unknown liabilities (collectively, "Liabilities")
and all other obligations of HipStyle in form and substance satisfactory to CCS.
SECTION 5.9. Tax Treatment. It is the intent of the parties that the
transactions contemplated hereby will be effected pursuant to Section 368 of the
Internal Revenue Code of 1986, as amended. No representation or warranty is
being made by any party to any other regarding the treatment of this transaction
for federal or state income taxation. Each party has relied exclusively on its
own legal, accounting and other tax adviser regarding the treatment of the
transaction for federal and state income taxes and on no representation,
warranty, or assurance from any other party or such other party's legal,
accounting, or other adviser.
SECTION 5.10. Company Officers; Employment Contracts; Equity Awards. At or prior
to the Effective Time, HipStyle agrees to enter into an employment agreement
with Xxx Xxxxx in form and substance reasonably acceptable to CCS and as
summarized in that certain letter of intent dated as of January 25, 2002 between
HipStyle and CCS.
SECTION 5.11. Post-Merger Operations. Following the Effective Time, the combined
company shall maintain its principal corporate office in New Rochelle, NY and
all bank accounts of HipStyle shall be amended so that two nominees of CCS shall
be only signatories with authority to engage in transactions for such accounts.
SECTION 5.12. Conveyance Taxes. HipStyle and CCS shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees or any similar taxes which become payable in
connection with the transactions contemplated by this Agreement that are
required or permitted to be filed on or before the Effective Time. HipStyle
shall pay, and CCS shall pay, without deduction or withholding from any amount
payable to the holders of CCS Common Stock, any such taxes or fees imposed by
any Governmental Entity (and any penalties and interest with respect to such
taxes and fees), which become payable in connection with the transactions
contemplated by this Agreement, on behalf of their respective stockholders.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approvals. Each of the CCS Stockholder Approval and
the approval of the stockholders of MergerSub shall have been obtained.
(b) Governmental and Regulatory Approvals. Other than the filing
provided for under Section 1.3, all consents, approvals and actions of,
filings with and notices to any Governmental Entity required of CCS,
HipStyle or any of their subsidiaries to consummate the Merger and the
other transactions contemplated hereby, the failure of which to be obtained
or taken (i) is reasonably expected to have a material adverse effect on
the Surviving Corporation and its prospective subsidiaries, taken as a
whole, or (ii) will result in a violation of any laws, shall have been
obtained, all in form and substance reasonably satisfactory to CCS and
HipStyle.
(c) No Injunctions or Restraints. No judgment, order, decree, statute,
law, ordinance, rule or regulation, entered, enacted, promulgated, enforced
or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect (i) preventing the consummation of the
Merger, or (ii) which otherwise is reasonably likely to have a material
adverse effect on CCS or HipStyle, as applicable; provided, however, that
each of the parties shall have used its best efforts to prevent the entry
of any such Restraints and to appeal as promptly as possible any such
Restraints that may be entered.
SECTION 6.2. Conditions to Obligations of HipStyle. The obligation of HipStyle
to effect the Merger is further subject to satisfaction or waiver of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of CCS set forth herein shall be true and correct both when made and at and
as of the Closing Date, as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such
date), except where the failure of such representations and warranties to
be so true and correct (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein) does not
have, and is not likely to have, individually or in the aggregate, a
material adverse effect on CCS.
(b) Performance of Obligations of CCS. CCS shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
(c) No Material Adverse Change. At any time after the date of this
Agreement there shall not have occurred any material adverse change
relating to CCS.
(d) Legal Opinion. HipStyle shall receive a legal opinion from CCS's
counsel in form and substance reasonably satisfactory to HipStyle.
(e) Financial Statements. CCS will deliver to HipStyle (i) audited
financial statements for the year ended June 30, 2001 (the "Audited
Financial Statements") and (ii) unaudited financial statements for the
three months ending September 30, 2001 and the six months ending December
31, 2001 (the "Unaudited Financial Statements"). The Audited Financial
Statements and the Unaudited Financial Statements will be prepared
accordance with the books and records of CCS and will present fairly in all
material respects the financial position and results of operations of CCS
as of the times and for the periods referred to therein, in each case in
accordance with generally accepted accounting principled under current
United States accounting rules and regulations, consistently applied.
(f) Segregation of Funds. At or prior to closing, CCS and HipStyle
will agree to segregate monies to fund the payment and/or defense of unpaid
taxes and pending litigation matters.
SECTION 6.3. Conditions to Obligations of CCS. The obligation of CCS to effect
the Merger is further subject to satisfaction or waiver of the following
conditions:
(a) Representations and Warranties. The representations and warranties
of HipStyle and MergerSub set forth herein shall be true and correct both
when made and at and as of the Closing Date, as if made at and as of such
time (except to the extent expressly made as of an earlier date, in which
case as of such date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any
limitation as to "materiality," or "material adverse effect" set forth
therein) does not have, and is not likely to have, individually or in the
aggregate, a material adverse effect on HipStyle.
(b) Performance of Obligations of HipStyle. HipStyle shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date.
(c) No Material Adverse Change. At any time after the date of this
Agreement there shall not have occurred any material adverse change
relating to HipStyle.
(d) Quotation on Bulletin Board. The shares of the HipStyle common
stock shall be quoted for trading on the NASD OTC Bulletin Board without
restriction or qualification.
(e) HipStyle Liabilities. All HipStyle Liabilities shall have been
terminated and extinguished in form and substance satisfactory to CCS.
(f) Amendment of HipStyle Articles of Incorporation; Stock Option
Plan. HipStyle shall have amended its Articles of Incorporation and adopted
a Stock Option Plan in form and substance reasonably satisfactory to CCS.
(g) Share Outstanding; Private Placement. HipStyle shall have no more
than 5,250,000 shares of its common stock outstanding on a fully diluted
basis. HipStyle shall have closed on the private sale of no more than
650,000 shares of its common stock raising net proceeds of not less than
$1,000,000 (the "Proceeds"). All of the Proceeds shall be in immediately
available funds held in a HipStyle account, free from all liens, claims or
encumbrances.
(h) Books and Records. HipStyle shall have delivered to CCS all
corporate books and records for CCS.
(i) Officer and Directors. HipStyle shall have (i) accepted the
resignations of all existing officers of HipStyle; (ii) expanded the
HipStyle Board of Directors to five (5) members; (iii) appointed Xxx Xxxxx
and his nominees to fill the vacancies on the Board of Directors of
HipStyle to fill the newly created Board seat, and (iv) appointed Xxx Xxxxx
as the President and Chief Executive Officer of HipStyle.
(j) Employment Agreement. HipStyle shall have entered into an
employment agreement with Xxx Xxxxx in form and substance satisfactory to
CCS and as summarized in that certain letter of intent dated as of January
25, 2002 between HipStyle and CCS.
(k) Legal Opinion. CCS shall receive a legal opinion from HipStyle's
counsel in form and substance satisfactory to CCS.
(l) SEC Reports. All SEC Filings shall have been submitted to the SEC
in accordance with the requirements of the Exchange Act (and the rules,
regulations and guidance promulgated thereunder), in form and substance
satisfactory to CCS, and all applicable waiting periods shall have been
expired or waived by CCS.
(m) Delivery of the Merger Consideration. The stockholders of CCS
shall receive the Merger Consideration of Closing.
(n) Closing Conditions. Documentation or other information shall have
been received in a form reasonably satisfactory to CCS and HipStyle which
evidences that the conditions set forth in this Section 6.3 have been
satisfied.
SECTION 6.4. Frustration of Closing Conditions. Neither HipStyle nor CCS may
rely on the failure of any condition set forth in Section 6.1, 6.2 or 6.3, as
the case may be, to be satisfied if such failure was caused by such party's
failure to use best efforts to consummate the Merger and the other transactions
contemplated by this Agreement, as required by and subject to Section 5.5.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination. This Agreement may be terminated at any time prior to
the Effective Time, and (except in the case of 7.1(d) or 7.1(f)) whether before
or after the CCS Stockholder Approval or the HipStyle Stockholder Approval:
(a) by mutual written consent of HipStyle, MergerSub and CCS;
(b) by either HipStyle or CCS:
(i) if the Merger shall not have been consummated by May 1, 2002, provided,
however, that the right to terminate this Agreement pursuant to this Section
7.1(b)(i) shall not be available to any party whose failure to perform any of
its obligations under this Agreement results in the failure of the Merger to be
consummated by such time; provided, however, that this Agreement may be extended
not more than 30 days by either party by written notice to the other party if
the Merger shall not have been consummated as a direct result of HipStyle or CCS
having failed to receive all regulatory approvals required to be obtained with
respect to the Merger.
(ii) if any restraint having any of the effects set forth in Section 6.1(c)
shall be in effect and shall have become final and nonappealable; provided, that
the party seeking to terminate this Agreement pursuant to this Section
7.1(b)(iv) shall have used best efforts to prevent the entry of and to remove
such Restraint;
(c) by HipStyle, if CCS shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to
perform (A) would give rise to the failure of a condition set forth in
Section 6.2(a) or (b), and (B) is incapable of being cured by CCS or is not
cured within 60 days of written notice thereof;
(d) by HipStyle in accordance with Section 4.2; provided that, in
order for the termination of this Agreement pursuant to this paragraph (d)
to be deemed effective, HipStyle shall have complied with all provisions
contained in Section 4.2, including the notice provisions therein, and with
applicable requirements, including the payment of the Termination Fee; or
(e) by CCS, if HipStyle shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to
perform (A) would give rise to the failure of a condition set forth in
Section 6.3(a) or (b), and (B) is incapable of being cured by HipStyle or
is not cured within 60 days of written notice thereof.
SECTION 7.2. Effect of Termination. In the event of termination of this
Agreement by either CCS or HipStyle as provided in Section 7.1, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of HipStyle or CCS, other than the provisions of this
Section 7.2 and Article VIII, which provisions survive such termination, and
except to the extent that such termination results from the willful and material
breach by a party of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
SECTION 7.3. Amendment. This Agreement may be amended by the parties at any time
before or after the CCS Stockholder Approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
SECTION 7.4. Extension; Waiver. At any time prior to the Effective Time, a party
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties, or (b) waive any inaccuracies in the representations
and warranties of the other parties contained in this Agreement or in any
document delivered pursuant to this Agreement. Any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
SECTION 7.5. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3 or an extension or waiver pursuant to Section
7.4 shall, in order to be effective, require, in the case of HipStyle or CCS,
action by its Board of Directors or, with respect to any amendment to this
Agreement, the duly authorized committee of its Board of Directors to the extent
permitted by law.
ARTICLE VIII
Indemnification
SECTION 8.1. Survival of Representations and Warranties. The representations and
warranties of HipStyle and CCS shall survive the execution and delivery hereof
and the Closing hereunder. SECTION 8.2. Indemnification.
(a) Xxxxxxx Xxxxxx ("Xxxxxx") agrees to indemnify, defend and hold
harmless CCS and HipStyle and their respective directors, officers,
employees, shareholders and any Affiliates of the foregoing, and their
successors and assigns (collectively, the "CCS Group") from and against any
and all losses, liabilities (including punitive or exemplary damages and
fines or penalties and any interest thereon), expenses (including
reasonable fees and disbursements of counsel and expenses of investigation
and defense), claims, Liens or other obligations of any nature whatsoever
(hereinafter individually, a "Loss" and collectively, "Losses") suffered or
incurred by the CCS Group which, directly or indirectly, arise out of,
result from or relate to, (i) any inaccuracy in or any breach of any
representation or warranty of HipStyle or (ii) any breach of any covenant
or agreement of HipStyle contained in this Agreement or in any Company
Document.
(b) CCS agrees to indemnify, defend and hold harmless Xxxxxxx Xxxxxx,
Xxxxxxxx Xxxxx and Xxxxxx and their successors and assigns (the
"Stockholder Group") from and against any and all Losses suffered or
incurred by the Stockholder Group which, directly or indirectly, arise out
of, result from or relate to (i) any inaccuracy in or any breach of any
representation or warranty of CCS contained in this Agreement, or (ii) any
breach of any covenant or agreement of CCS contained in this Agreement.
SECTION 8.3. Method of Asserting Claims The party making a claim under this
Article VIII is referred to as the "Indemnified Party" and the party against
whom such claims are asserted under Section 8.2 is referred to as the
"Indemnifying Party". All claims by any Indemnified Party under Section 8.2
shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which an Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted against
or sought to be collected from such Indemnified Party by a third party,
said Indemnified Party shall within fifteen (15) days notify in writing the
Indemnifying Party of such claim or demand, specifying the nature of the
specific basis for such claim or demand, and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such claim and demand; any such notice,
being the "Claim Notice"); provided, however, that any failure to give such
Claim Notice will not be deemed a waiver of any rights of the Indemnified
Party except to the extent the rights of the Indemnifying Party are
actually prejudiced or harmed. The Indemnifying Party may elect to assume
the defense of any such claim or demand by delivering written notice to the
Indemnified Party of such election; provided that any Indemnified Party is
hereby authorized prior to the date on which it receives written notice
from the Indemnifying Party assuming such defense, to retain counsel, whose
reasonable fees and expenses shall be at the expense of the Indemnifying
Party, to file any motion, answer or other pleading and take such other
action which it reasonably shall deem necessary to protect its interests or
those of the Indemnifying Party until the date on which the Indemnified
Party receives such notice from the Indemnifying Party. After the
Indemnifying Party shall assume such defense, the Indemnified Party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless the named
parties of any such proceeding (including any impleaded parties) include
both the Indemnifying Party and the Indemnified Party and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The Indemnifying Party shall
not, in connection with any proceedings or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than
one such firm for the Indemnified Party (except to the extent the
Indemnified Party retained counsel to protect its (or the Indemnifying
Party's) rights prior to the selection of counsel by the Indemnifying
Party). The Indemnified Party agrees to cooperate reasonably with the
Indemnifying Party and its counsel in contesting any claim or demand which
the Indemnifying Party defends. No claim or demand may be settled by an
Indemnifying Party or, where permitted pursuant to this Agreement, by an
Indemnified Party without the consent of the Indemnified Party in the first
case or the consent of the Indemnifying Party in the second case, which
consent shall not be unreasonably withheld, unless such settlement shall be
accompanied by a complete release of the Indemnified Party in the first
case or the Indemnifying Party in the second case.
(b) In the event any Indemnified Party shall have a claim against any
Indemnifying Party hereunder which does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall send a Claim Notice with respect to such claim to
the Indemnifying Party. If the Indemnifying Party does not dispute such
claim within thirty (30) days of receipt of the Claim Notice the amount of
such claim shall be paid to the Indemnified Party within forty-five (45)
days of receipt of the Claim Notice.
(c) So long as any right to indemnification exists pursuant to this
Article VIII, the affected parties each agree to retain all books, records,
accounts, instruments and documents reasonably related to the Claim Notice.
In each instance, the Indemnified Party shall have the right to be kept
informed by the Indemnifying Party and its legal counsel with respect to
all significant matters relating to any legal proceedings. Any information
or documents made available to any party hereunder, which information is
designated as confidential by the party providing such information and
which is not otherwise generally available to the public, or which
information is not otherwise lawfully obtained from third parties or not
already within the knowledge of the party to whom the information is
provided (unless otherwise covered by the confidentiality provisions of any
other agreement among the parties hereto, or any of them), and except as
may be required by applicable law or requested by third party lenders to
such party, shall not be disclosed to any third Person (except for the
representatives of the party being provided with the information, in which
event the party being provided with the information shall request its
representatives not to disclose any such information which it otherwise
required hereunder to be kept confidential).
(d) To the extent a Loss occurs under Section 8.2(a), Xxxxxx may elect
to meet such obligation by delivery for cancellation of a number of shares
of HipStyle Common Stock. Any stock delivered pursuant to this Section
8.3(d) shall be valued at the lower of (i) a price equal to the fair market
value on the date of delivery and (ii) and a price equal to the fair market
value on the Closing Date (the "Fair Market Value"). To the extent a Loss
occurs under Section 8.2(b), CCS may elect to make such payment (i) in
cash, or (ii) in a number of shares of HipStyle Common Stock having a Fair
Market Value equal to such payment amount.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Survival of Representations and Warranties. The representations and
warranties in this Agreement shall survive the Effective Time.
SECTION 9.2. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
.........(a) if to HipStyle or MergerSub, to
.........XxxXxxxx.Xxx, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
.........Attention: Xxxxxxx Xxxxxx
.........with a copy to:
Xxxxxx & Xxxxxx, LLP
0000 Xxxxx 0, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
(b) if to CCS, to
CCS International, Ltd.
000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxxx, XX 00000
.........Attention: Xx. Xxx Xxxxx
with a copy to:
.........Xxxxx Xxxxxxx Berlack Israels LLP
.........120 Xxxx 00xx Xxxxxx
.........Xxx Xxxx, XX 00000
.........Attention: Xxxx X. Xxxxxx
SECTION 9.3. Definitions. For purposes of this Agreement:
(a) except for purposes of Section 5.11, an "affiliate" of any person
means another person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with, such first person, where "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of voting securities,
by contract, as trustee or executor, or otherwise;
(b) "material adverse change" or "material adverse effect" means, when
used in connection with CCS or HipStyle, any change, effect, event,
occurrence or state of facts that is, or would reasonably be expected to
be, materially adverse to the business, financial condition or results of
operations of such party and its subsidiaries taken as a whole; and the
terms "material" and "materially" have correlative meanings;
(c) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity;
(d) a "subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board
of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly
or indirectly by such first person; provided however, that with respect to
HipStyle, such term shall not include CCS; and
(e) "knowledge" of any person which is not an individual means the
knowledge of such person's executive officers or senior management of such
person's operating divisions and segments, in each case after reasonable
inquiry.
(f) "termination fee" shall mean the payment by HipStyle to CCS of an
amount equal to (i) CCS out-of-pocket expenditures plus (ii) $75,000.
SECTION 9.4. Interpretation. When a reference is made in this Agreement to an
Article, Section or Exhibit, such reference shall be to an Article or Section
of, or an Exhibit to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a person are also to its
permitted successors and assigns.
SECTION 9.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (a) constitute the
entire agreement, and supersede all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter of this
Agreement and (b) except for the provisions of Article II, Section 5.6 and
Section 5.8, are not intended to confer upon any person other than the parties
any rights or remedies.
SECTION 9.7. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflict of laws
thereof.
SECTION 9.8. Assignment. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by either of the parties hereto without the prior
written consent of the other party. Any assignment in violation of the preceding
sentence shall be void. Subject to the preceding two sentences, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
SECTION 9.9. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.10. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.11. Brokers and Finders. The parties have not employed any broker,
financial advisor or finder or incurred any liability for any broker, financial
advisory or finder's fee in connection with the Agreement and Merger.
IN WITNESS WHEREOF, HipStyle, MergerSub and CCS have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
XXXXXXXX.XXX, INC.
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
CCS MERGER CORP.
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
CCS INTERNATIONAL, LTD.
By: /s/ Xxx Xxxxx
---------------------------------
Name: Xxx Xxxxx
Title: President
With respect to the obligations
under Article VIII only:
/s/ Xxxxxxx Xxxxxx
-----------------------------------
Xxxxxxx Xxxxxx
