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AGREEMENT AND PLAN OF MERGER
AMONG
U.S. TECHNOLOGIES INC.,
U.S. TECHNOLOGIES ACQUISITION CO.
AND
XXXXX.XXX INC.
Dated as of February 28, 2001
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS................................................................................ 1
ARTICLE II. THE MERGER................................................................................. 5
2.1 The Merger................................................................................. 5
2.2 Certificate of Incorporation............................................................... 5
2.3 By-Laws.................................................................................... 6
2.4 Directors and Officers..................................................................... 6
2.5 Shareholder's Appoval...................................................................... 6
2.6 Effective Time............................................................................. 6
ARTICLE III. CONVERSION OF SHARES....................................................................... 6
3.1 Yazam Stock................................................................................ 6
3.2 Yazam Closing Cash Balance Adjustment...................................................... 8
3.3 Dissenting Shares.......................................................................... 8
3.4 Acquisition Co. Common Stock............................................................... 8
3.5 Payment for, and Distribution of, the Merger Consideration................................. 8
3.7 Adjustment to Prevent Dilution............................................................. 9
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF yazam................................................... 10
4.1 Organization, etc......................................................................... 10
4.2 Authorization and Binding Obligation...................................................... 10
4.3 Capitalization............................................................................ 11
4.4 Consents and Approvals; No Conflicts...................................................... 12
4.5 Financial Statements...................................................................... 12
4.6 Compliance with Laws...................................................................... 12
4.7 Real Property............................................................................. 12
4.8 Property.................................................................................. 13
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4.9 Intellectual Property..................................................................... 13
4.10 Contracts................................................................................. 13
4.11 Employee Benefit Plans.................................................................... 14
4.12 Actions Pending........................................................................... 15
4.13 Affiliate Transactions.................................................................... 15
4.14 Taxes..................................................................................... 15
4.15 Brokers, Finders, etc..................................................................... 17
4.16 Labor..................................................................................... 17
4.17 Yazam Accredited Investors................................................................ 17
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND ACQUISITION CO........................... 17
5.1 Organization and Standing................................................................. 17
5.2 Authorization and Binding Obligation...................................................... 17
5.3 Consents and Approvals; No Conflicts...................................................... 18
5.4 Litigation................................................................................ 18
5.5 Finders and Investment Bankers............................................................ 18
5.6 Capitalization of Parent.................................................................. 18
5.7 Parent SEC Reports........................................................................ 19
5.8 Financing................................................................................. 20
ARTICLE VI. COVENANTS................................................................................. 20
6.1 Conduct of Business....................................................................... 20
6.2 Third-Party Consents...................................................................... 21
6.3 Compliance with DGCL; Filings; Consent Solicitation Statement............................. 21
6.4 Additional Agreements..................................................................... 22
6.5 Acquisition Proposals..................................................................... 23
6.6 Public Announcements...................................................................... 23
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6.7 Consent of the Parent..................................................................... 23
6.8 Transfer Taxes............................................................................ 24
6.9 Access.................................................................................... 24
6.10 Advice Regarding Changes.................................................................. 24
6.11 Notice of Prospective Breach.............................................................. 24
6.12 Shareholder Letter of Transmittal......................................................... 24
6.12 Indemnification of Directors and Officers................................................. 24
ARTICLE VII. RESTRICTIONS ON TRANSFER.................................................................. 25
7.1 Restricted Shares......................................................................... 25
7.2 Legends................................................................................... 25
ARTICLE VII. CLOSING CONDITIONS........................................................................ 26
8.1 Conditions to the Obligation of Yazam..................................................... 26
8.2 Conditions Precedent to Obligations of the Parent and Acquisition Co...................... 27
ARTICLE VIII. CLOSING................................................................................... 28
8.1 Time and Place............................................................................ 28
8.2 Filings at the Closing; Other Actions..................................................... 29
ARTICLE X. SURVIVAL OF COVENANTS..................................................................... 29
ARTICLE XI. TERMINATION RIGHTS........................................................................ 29
11.1 Termination............................................................................... 29
11.2 Procedure and Effect of Termination....................................................... 29
ARTICLE XII. OTHER PROVISIONS.......................................................................... 30
12.1 Amendment and Modification................................................................ 30
12.2 Benefit and Assignment.................................................................... 30
12.3 No Third-Party Beneficiaries.............................................................. 30
12.4 Entire Agreement.......................................................................... 30
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12.5 Expenses.................................................................................. 30
12.6 Headings.................................................................................. 30
12.7 Choice of Law............................................................................. 30
12.8 Notices................................................................................... 31
12.9 Counterparts.............................................................................. 32
12.10 Confidentiality........................................................................... 32
Exhibits
Exhibit A - Certificate of Designation
Exhibit B - Warrant Certificate
Exhibit C - Certificate of Merger
Exhibit D - Letter of Transmittal
Exhibit E - Opinion of Xxxx Xxxxxxx
Exhibit F - Registration Rights Agreement
Exhibit G - Opinion of Xxxxxx Xxxx & Xxxxxxxx
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 28, 2001 (the
"Agreement"), among U.S. TECHNOLOGIES INC., a Delaware corporation (the
"Parent"), U.S. TECHNOLOGIES ACQUISITION CO., a Delaware corporation and a
wholly-owned subsidiary of the Parent ("Acquisition Co."), and XXXXX.XXX INC., a
Delaware corporation ("Yazam").
ARTICLE I
DEFINITIONS
Unless otherwise stated, the following terms when used herein have the
meanings assigned to them below.
1.01 "Acquisition Co." has the meaning set forth in the preamble to
this Agreement.
1.02 "Acquisition Co. Common Stock" has the meaning set forth in
Section 3.04 hereof.
1.03 "Affiliate" means a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Person specified.
1.04 "Agreement" has the meaning set forth in the preamble to this
Agreement.
1.05 "Applicable Law" means all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including, but not limited to, the
common law), rules, regulations, ordinances, codes or orders of any Governmental
Authority and (ii) orders, decisions, rulings, injunctions, judgments, awards
and decrees, executive orders or consents of or agreements with any Governmental
Authority.
1.06 "Benefit Plan" means any plan, program, agreement, policy or
arrangement, whether covering a single individual or group of individuals, and
whether or not reduced to writing, that is: (a) an employee welfare benefit plan
within the meaning of Section 3(1) of ERISA; (b) an employee pension benefit
plan within the meaning of Section 3(2) of ERISA; (c) a stock bonus, stock
purchase, stock option, restricted stock, stock appreciation right or similar
equity-based plan; or (d) any other deferred-compensation, retirement,
welfare-benefit , bonus, incentive or fringe benefit plan or arrangement,
vacation, sick, holiday or other paid leave plan, life insurance or other death
benefit plan, severance or other similar benefit plan.
1.07 "Business Combination" means (x) any merger, consolidation,
acquisition, partnership or combination to which Yazam or any of the Yazam
Subsidiaries is or would be a party, (y) any sale, dividend, split or other
disposition of capital stock or other equity interest of Yazam, any of the Yazam
Subsidiaries or any of Yazam's portfolio companies, or (z) any sale, dividend or
other disposition of all or substantially all of the assets and properties of
Yazam, any of the Yazam Subsidiaries or any of Yazam's portfolio companies.
1.08 "Business Day," whether or not initially capitalized, means
every day of the week excluding Saturdays, Sundays and federal holidays.
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1.09 "Certificates" has the meaning set forth in Section 3.05(a)
hereof.
1.10 "Closing" means the closing of the Merger.
1.11 "Closing Date" means the date on which the Closing occurs.
1.12 "Code" means the Internal Revenue Code of 1986, as amended,
together with all regulations and rulings issued thereunder by any Governmental
Authority.
1.13 "Common Stock Consideration" has the meaning set forth in
Section 3.01 hereof.
1.14 "Consent Solicitation Statement" has the meaning set forth in
Section 6.03(b) hereof.
1.15 "Contracts" has the meaning set forth in Section 4.10 hereof.
1.16 "DGCL" means the Delaware General Corporation Law.
1.17 "Dissenting Shares" has the meaning set forth in Section 3.03
hereof.
1.18 "Effective Time" has the meaning set forth in Section 2.06
hereof.
1.19 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, together with the regulations and rulings issued thereunder by
any Governmental Authority.
1.20 "Filings" has the meaning set forth in Section 6.03(c) hereof.
1.21 "Financial Statements" has the meaning set forth in Section
4.05 hereof.
1.22 "GAAP" means United States generally accepted accounting
principles.
1.23 "Governmental Authority" means any nation or government, any
state or other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, in each case to the extent the same has jurisdiction over the
Person or property in question.
1.24 "IRS" means the Internal Revenue Service of the United States.
1.25 "Knowledge" means, with respect to Yazam or any Yazam
Subsidiary, the actual knowledge of any of the individuals set forth on Schedule
1.25 hereto.
1.26 "Leased Property" has the meaning set forth in Section 4.07
hereof.
1.27 "Liens" means all debts, liens, security interests, mortgages,
pledges, judgments, trusts, adverse claims, liabilities, encumbrances, material
rights of way, charges which are liens and other impairments of title of any
kind other than Permitted Liens.
1.28 "Letter of Transmittal" has the meaning set forth in Section
3.05(a) hereof.
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1.29 "Material Adverse Effect" means a material adverse effect on
the business, assets, properties, liabilities or financial condition of Yazam
and the Yazam Subsidiaries, taken as a whole, or on the ability of Yazam to
timely consummate the transactions contemplated hereby.
1.30 "Merger" has the meaning set forth in Section 2.01 hereof.
1.31 "Merger Consideration" has the meaning set forth in Section
2.01 hereof.
1.32 "Merger Filings" has the meaning set forth in Section 2.06
hereof.
1.33 "Notice" has the meaning set forth in Section 6.03(b) hereof.
1.34 "Parent" has the meaning set forth in the preamble to this
Agreement.
1.35 "Parent Common Stock" means the common stock, par value $0.02
per share, issued by Parent.
1.36 "Parent Preferred Stock" means the Series F Convertible
Preferred Stock, par value $0.02 per share, issued by Parent, which shall have
the rights, privileges and preferences provided in the Certificate of
Designation, attached hereto substantially in the form of Exhibit A.
1.37 "Parent Warrants" means the warrants to be issued by the
Parent in connection with the Merger, attached hereto substantially in the form
of Exhibit B, granting the right to receive Parent Common Stock.
1.38 "Permitted Liens" has the meaning set forth in Section 4.07
hereof.
1.39 "Person" means an individual, corporation, partnership,
limited liability company, association, trust or other entity or organization,
including any Governmental Authority or any other government or political
subdivision or an agency or instrumentality thereof.
1.40 "Plans" has the meaning set forth in Section 4.11 hereof.
1.41 "Preferred Stock Consideration" has the meaning set forth in
Section 3.01(d) hereof.
1.42 "Real Estate Laws" means any applicable building, zoning,
subdivision and other land use and similar laws, codes, ordinances, rules,
regulations and orders of Governmental Authorities.
1.43 "Registration Rights Agreement" has the meaning set forth in
Section 8.01(g) hereof.
1.44 "Representatives" has the meaning set forth in Section 6.05
hereof.
1.45 "Series B Stock Cash Consideration" has the meaning set forth
in Section 3.01(c) hereof.
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1.46 "Series B Stock Consideration" has the meaning set forth in
Section 3.01(c) hereof.
1.47 "Series C Stock Cash Consideration" has the meaning set forth
in Section 3.01(b) hereof.
1.48 "Series C Stock Consideration" has the meaning set forth in
Section 3.01(b) hereof.
1.49 "Surviving Corporation" has the meaning set forth in Section
2.01 hereof.
1.50 "Surviving Corporation Common Stock" has the meaning set forth
in Section 3.04 hereof.
1.51 "Tax" means any net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, withholding on amounts paid to or by Yazam or any
Yazam Subsidiary, payroll, employment, excise, severance, stamp, occupation,
premium, property, environmental or windfall profits tax, custom duty or other
tax, governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, in addition to any tax or additional
amount imposed by any Governmental Authority (domestic or foreign) ( a "Taxing
Authority").
1.52 "Taxing Authority" has the meaning set forth in the definition
of Tax.
1.53 "Tax Returns" shall mean any report, return, declaration,
claim for refund, information statement or return relating to Taxes or other
documents filed or maintained or required to be filed or maintained, in
connection with any Tax.
1.54 "Transactions" has the meaning set forth in Section 2.05
hereof.
1.55 "Yazam Closing Cash Balance" shall mean the cash balance in
the primary bank account of Yazam as of the Closing Date, as calculated in the
ordinary course of business, consistent with past practice.
1.56 "Yazam Common Stock" means the common stock, par value $0.0001
per share, issued by Yazam.
1.57 "Yazam Options" means the outstanding options to purchase
Yazam Common Stock issued prior to the Closing Date pursuant to the option plans
listed on Schedule 1.57 hereto.
1.58 "Yazam Preferred Stock" means, collectively, the Yazam Series
A Stock, the Yazam Series B Stock, and the Yazam Series C Stock.
1.59 "Yazam Rights" has the meaning set forth in Section 4.03(b).
1.60 "Yazam Series A Stock" means the Series A Preferred Stock, par
value $0.0001 per share, issued by Yazam.
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1.61 "Yazam Series B Stock" means the Series B Preferred Stock, par
value $0.0001 per share, issued by Yazam.
1.62 "Yazam Series C Stock" means the Series C Preferred Stock, par
value $0.0001 per share, issued by Yazam.
1.63 "Yazam Subsidiary" means any corporation, partnership, limited
liability company, joint venture or other entity of which Yazam owns, directly
or indirectly, at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power or otherwise has the
right or power to elect a majority of the board of directors or other Persons
performing similar functions of such corporation, partnership, limited liability
company, joint venture or other entity.
1.64 "Yazam Warrant" means the outstanding warrant to purchase
Yazam Common Stock issued prior to the Closing Date hereof as set forth on
Schedule 1.64 hereto.
1.65 "1933 Act" means the Securities Act of 1933, as amended or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
1.66 "1934 Act" means the Securities Exchange Act of 1934, as
amended or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
ARTICLE II
THE MERGER
2.01 The Merger. The aggregate consideration to be paid in
connection with the Merger, as more particularly described in Article III
hereof, shall be the following: (i) $22,000,000 in cash (as may be adjusted
pursuant to Section 3.02 hereof), (ii) 27,374 shares of Parent Preferred Stock,
and (iii) Parent Warrants to purchase 8,000,000 shares of Parent Common Stock
(collectively, the "Merger Consideration"). In accordance with the provisions of
this Agreement and the DGCL, at the Effective Time: (i) Acquisition Co. shall be
merged with and into Yazam (the "Merger"), and Yazam shall be the surviving
corporation of the Merger (hereinafter sometimes called the "Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of Delaware; (ii) the name, identity, existence, rights, privileges,
powers, franchises, properties and assets of Yazam shall continue immediately
following consummation of the Merger unaffected and unimpaired; and (iii) the
separate existence of Acquisition Co. shall cease, and all of the rights,
privileges, powers, franchises, properties and assets of Acquisition Co. shall
be vested in Yazam. The name of the surviving corporation shall be "Xxxxx.xxx
Inc."
2.02 Certificate of Incorporation. The Certificate of Incorporation
of Yazam in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided therein or by Applicable Law.
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2.03 By-Laws. The By-Laws of Yazam in effect immediately prior to
the Effective Time shall be the By-Laws of the Surviving Corporation immediately
following the Effective Time until thereafter amended, altered or repealed as
provided therein.
2.04 Directors and Officers. The directors of Acquisition Co.
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation immediately following the Effective Time, each to hold office in
accordance with the Certificate of Incorporation and By-Laws of the Surviving
Corporation until his or her successor is appointed and qualified or until his
or her earlier death, resignation or removal.
2.05 Shareholders' Approval. Yazam shall, as soon as practicable
following the date of this Agreement, use its best efforts to take all actions
necessary, in accordance with the DGCL and the Certificate of Incorporation and
Bylaws of Yazam, to obtain the requisite approval by all of the shareholders of
Yazam entitled to vote thereon by written consent, in form satisfactory to the
Parent, for the purpose of obtaining the approval and adoption of this
Agreement, the Merger and the other transactions contemplated hereby
(collectively, the "Transactions"). The vote required for the adoption and
approval of the Transactions by the holders of Yazam Common Stock and Yazam
Preferred Stock shall be at least the minimum vote required by the DGCL or
Yazam's Certificate of Incorporation and Bylaws.
2.06 Effective Time. The Merger shall become effective upon the
filing with the Secretary of State of the State of Delaware of a certificate of
merger, in the form attached hereto as Exhibit C, in accordance with Sections
252 and 103 of the DGCL (the "Merger Filings"), or on such other time as is duly
set forth in the Merger Filings. The Merger Filings shall be filed
simultaneously with or before the Closing. The date and time when the Merger
shall become effective is hereinafter referred to as the "Effective Time."
ARTICLE III
CONVERSION OF SHARES
3.01 Yazam Stock. (a) At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof, each share of
Yazam Common Stock (except for (i) shares of Yazam Common Stock then held in the
treasury of Yazam or by any Yazam Subsidiary, and (ii) Dissenting Shares) issued
and outstanding immediately prior to the Effective Time shall be converted into
the right to receive Parent Warrants, to purchase the number of shares of Parent
Common Stock equal to 3,000,000 divided by the number of shares of Yazam Common
Stock issued and outstanding immediately prior to the Effective Time (the
"Common Stock Consideration").
(b) At the Effective Time, by virtue of the Merger and without
any action on the part of the holder thereof, each share of Yazam Series C Stock
(except for (i) shares of Yazam Series C Stock then held in the treasury of
Yazam or any Yazam Subsidiary, and (ii) Dissenting Shares) issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive the following: (i) cash in the amount of $19,288,971.11 (as may
be adjusted pursuant to Section 3.02 hereof) divided by the number of shares of
Yazam Series C Stock issued and outstanding immediately prior to the Effective
Time (the "Series C Stock Cash Consideration"), (ii) the number of fully paid
and non-assessable shares of Parent Preferred
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Stock equal to 24,000.74 divided by the number of shares of Yazam Series C Stock
issued and outstanding immediately prior to the Effective Time, and (iii) Parent
Warrants to purchase the number of shares of Parent Common Stock equal to
2,630,314 divided by the number of shares of Yazam Series C Stock issued and
outstanding immediately prior to the Effective Time (collectively, the "Series C
Stock Consideration").
(c) At the Effective Time, by virtue of the Merger and without
any action on the part of the holder thereof, each share of Yazam Series B Stock
(except for (i) shares of Yazam Series B Stock then held in the treasury of
Yazam or any Yazam Subsidiary, and (ii) Dissenting Shares) issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive the following: (i) cash in the amount of $2,711,028.89 (as may
be adjusted pursuant to Section 3.02 hereof) divided by the number of shares of
Yazam Series B Stock issued and outstanding immediately prior to the Effective
Time (the "Series B Stock Cash Consideration"), (ii) the number of fully paid
and non-assessable shares of Parent Preferred Stock equal to 3,373.26 divided by
the number of shares of Yazam Series B Stock issued and outstanding immediately
prior to the Effective Time, and (iii) Parent Warrants to purchase the number of
shares of Parent Common Stock equal to 369,686 divided by the number of shares
of Yazam Series B Stock issued and outstanding immediately prior to the
Effective Time (collectively, the "Series B Stock Consideration").
(d) At the Effective Time, by virtue of the Merger and without
any action on the part of the holder thereof, each share of Yazam Series A Stock
(except for (i) shares of Yazam Series A Stock then held in the treasury of
Yazam or by any Yazam Subsidiary, and (ii) Dissenting Shares) issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive Parent Warrants to purchase the number of shares of Parent
Common Stock equal to 2,000,000 divided by the number of shares of Yazam Series
A Stock issued and outstanding immediately prior to the Effective Time
(collectively, the "Series A Stock Consideration"; together with the Series B
Stock Consideration and the Series C Stock Consideration, the "Preferred Stock
Consideration").
(e) At the Effective Time, by virtue of the Merger and without
any action on the part of the holder thereof, the Yazam Warrant shall be
converted into a warrant (the "Converted Warrant") to purchase Parent Warrants
to purchase 153,221 shares of Parent Common Stock. The Converted Warrant shall
have an exercise price equal to the$2.74 per share.
(f) Each share of Yazam Common Stock or Yazam Preferred Stock
held in the treasury of Yazam or by any Yazam Subsidiary immediately prior to
the Effective Time shall, by virtue of the Merger, be canceled and retired and
cease to exist, without any conversion thereof.
(g) The holders of certificates representing shares of Yazam
Common Stock, Yazam Preferred Stock, Yazam Warrant or Yazam Options shall, as of
the Effective Time, cease to have any rights as shareholders, warrant holders or
option holders of Yazam, except such rights, if any, as they may have pursuant
to the DGCL, and, except as aforesaid, their sole right shall be the right to
receive their pro rata share of the Merger Consideration as determined and paid
in the manner set forth in this Agreement.
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3.02 Yazam Closing Cash Balance Adjustment. In the event that on
the Closing Date, the Yazam Closing Cash Balance is less than $25,000,000, then
(i) the Series C Cash Consideration shall be adjusted downward by $0.877 for
each dollar that the Yazam Closing Cash Balance is below $25,000,000, and (ii)
the Series B Cash Consideration shall be adjusted downward by $0.123 for each
dollar that the Yazam Closing Cash Balance is below $25,000,000.
3.03 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, shares of Yazam Common Stock and Yazam Preferred Stock which
are held by shareholders who shall have effectively dissented from the Merger
and perfected their appraisal rights, if permitted by, and in accordance with,
the provisions of Section 262 of the DGCL (the "Dissenting Shares"), shall not
be converted into or be exchangeable for the right to receive any Merger
Consideration, but the holders thereof shall be entitled to payment from the
Surviving Corporation of the fair value of such shares in accordance with the
provisions of Section 262 of the DGCL; provided, however, that if any such
holder shall have failed to perfect such appraisal rights or shall have
effectively withdrawn or lost such rights, pursuant to Section 262 of the DGCL
or otherwise, his or her shares of Yazam Common Stock or Yazam Preferred Stock,
as the case may be, shall thereupon be converted into and exchangeable for, at
the Effective Time, their pro rata share of the aggregate Merger Consideration,
without interest as applicable, as determined and paid in the manner set forth
in this Agreement.
3.04 Acquisition Co. Common Stock. At the Effective Time, each
share of common stock, par value $.01 per share, of Acquisition Co. (the
"Acquisition Co. Common Stock"), issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and exchangeable for one fully paid and
non-assessable share of common stock, par value $0.0001 per share, of the
Surviving Corporation ("Surviving Corporation Common Stock"). From and after the
Effective Time, each outstanding certificate theretofore representing shares of
Acquisition Co. Common Stock shall be deemed for all purposes to evidence
ownership of and to represent the number of shares of Surviving Corporation
Common Stock into which such shares of Acquisition Co. Common Stock shall have
been converted. Promptly after the Effective Time, the Surviving Corporation
shall issue to the Parent a stock certificate or certificates representing 1,00
shares of Surviving Corporation Common Stock in exchange for the certificate or
certificates which formerly represented shares of Acquisition Co. Common Stock,
which former shares of Acquisition Co. Common Stock shall automatically be
deemed to be canceled.
3.05 Payment for, and Distribution of, the Merger Consideration.
Each record holder of Yazam Common Stock or Yazam Preferred Stock, as the case
may be, immediately prior to the Effective Time shall be entitled to receive,
upon surrender to the Parent of the certificates representing such shares of
Yazam Common Stock or Yazam Preferred Stock, as the case may be (collectively,
the "Certificates") for cancellation, their share of the Merger Consideration,
subject to any required withholding of taxes, as set forth in Sections 3.01,
(b), (c), and (d) hereof. At or prior to the Effective Time, the Parent shall
make available sufficient funds to make all payments as determined by Sections
3.01, (b), (c), and (d). No interest shall accrue or be paid on the cash and
securities payable upon the surrender of the Certificates. Notwithstanding
anything contained herein to the contrary, neither the Parent, the Surviving
Corporation nor any party hereto shall be liable to a holder of shares of Yazam
Common Stock
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or Yazam Preferred Stock for any cash or interest delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws. As soon as
practicable after the date hereof, Yazam shall mail to each record holder of
shares of Yazam Common Stock and Yazam Preferred Stock (i) a form of letter of
transmittal (which shall specify that delivery will be effected, and risk of
loss and title to the Certificates will pass, only upon proper delivery of the
Certificates to the Parent), substantially in the form of Exhibit D hereto (the
"Letter of Transmittal"), and (ii) instructions for use in effecting the
surrender of the Certificates for payment.
(b) With respect to any Certificate alleged to have been lost,
stolen or destroyed, the owner or owners of such Certificate shall be entitled
to the consideration set forth above upon delivery to the Parent of an affidavit
of such owner or owners setting forth such allegation and an indemnity agreement
to indemnify the Parent and the Surviving Corporation, on terms reasonably
satisfactory to the Parent, against any claim that may be made against any of
them on account of the alleged loss, theft or destruction of any such
Certificate or the delivery of the payment set forth above.
(c) If consideration is to be delivered to a Person other than
the Person in whose name the Certificate surrendered in exchange therefor is
registered, it shall be a condition to delivery of the consideration that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the Person requesting such consideration shall pay
any transfer or other Taxes required by reason of the payment to a Person other
than the registered holder of the Certificate surrendered or establish to the
satisfaction of the Parent that such Tax has been paid or is not applicable.
(d) Until surrendered in accordance with the provisions of
this Section 3.05, from and after the Effective Time, each Certificate (other
than (i) Certificates representing shares of Yazam Common Stock or Yazam
Preferred Stock held in the treasury by Yazam or by any Yazam Subsidiary and
(ii) Dissenting Shares in respect of which appraisal rights are perfected) shall
represent, for all purposes, only the right to receive the cash, Parent Warrants
and/or Parent Preferred Stock pursuant to Sections 3.013.01, (b), (c), and (d)
as applicable, as determined and paid in the manner set forth in this Agreement.
(e) After the Effective Time there shall be no transfers on
the stock transfer books of the Surviving Corporation of the shares of Yazam
Common Stock, shares of Yazam Preferred Stock, Yazam Options or Yazam Warrant
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Parent or the Surviving
Corporation, they shall be canceled and exchanged for the applicable
consideration referred to in this Section 3.05.
3.06 Adjustment to Prevent Dilution. In the event that Yazam
changes the number of shares of Yazam Common Stock or Yazam Preferred Stock or
securities convertible or exchangeable into or exercisable for shares of Yazam
Common Stock or Yazam Preferred Stock issued and outstanding prior to the
Effective Time, or the Parent changes the number of shares of Parent Common
Stock outstanding, in either case, solely as a result of a reclassification,
stock split (including a reverse split), stock dividend or distribution,
recapitalization, merger,
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subdivision, issuer tender or exchange offer, or other similar transaction, the
Merger Consideration shall be equitably adjusted.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF YAZAM
Yazam hereby represents and warrants to the Parent and Acquisition Co.
as follows:
4.01 Organization, etc. Yazam is a corporation duly organized and
validly existing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Yazam is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary, except where the failure to be so
qualified or licensed would not individually or in the aggregate have a Material
Adverse Effect or materially restrict the ability of Yazam to conduct business
as presently conducted by it in such jurisdiction. Each jurisdiction where Yazam
is so qualified is listed on Schedule 4.01(a) hereto. Except as set forth on
Schedule 4.01(b) hereto, there are no Yazam Subsidiaries and, except as set
forth on Schedule 4.01(b) hereto, Yazam does not own, directly or indirectly,
any capital stock of or equity interests in any Person. Yazam has heretofore
delivered or made available to the Parent accurate and complete copies of the
Certificate of Incorporation and By-Laws of Yazam, as amended and in effect on
the date hereof. The stock certificate books and ledgers of Yazam, which have
been made available to the Parent, accurately reflect, at the date hereof, the
ownership of the issued and outstanding capital stock of Yazam.
(b) Each Yazam Subsidiary is listed on Schedule 4.01(b)
hereto, is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry out its business as now being conducted. Each Yazam Subsidiary is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified or licensed would not individually or in the
aggregate have a Material Adverse Effect or materially restrict the ability of
such Yazam Subsidiary to conduct business as presently conducted by it in such
jurisdiction. Each jurisdiction where each Yazam Subsidiary is so qualified is
listed on Schedule 4.01(b) hereto. Yazam has heretofore delivered to the Parent
accurate and complete copies of the Certificate of Incorporation and By-Laws or
other organizational documents of each Yazam Subsidiary, as amended and in
effect on the date hereof.
(c) Except as set forth on Schedule 4.01(c) hereto, Yazam owns
of record and beneficially 100% of the issued and outstanding capital stock and
all other equity interests in each Yazam Subsidiary, free and clear of any
Liens.
4.02 Authorization and Binding Obligation. (a) Yazam has all
necessary corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. Subject to the approvals
referred to in Section 2.05, Yazam's execution, delivery and performance of this
Agreement has been duly and validly authorized by all
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necessary corporate action on the part of Yazam and this Agreement has been duly
executed and delivered by Yazam. Except for the actions referred to in Sections
2.05 hereof, which actions are, or as of the Effective Time will be, in full
force and effect, and the giving of notice in accordance with the provisions of
Section 251 and 262 of the DGCL, no other corporate action or proceedings on the
part of Yazam are necessary to authorize this Agreement or the consummation of
the transactions contemplated hereby. Subject to the approvals referred to in
Section 2.05, this Agreement constitutes the valid and binding obligation of
Yazam, enforceable against Yazam in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar rights of creditors generally and by general principles of equity.
(b) The Board has authorized the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby and
has not withdrawn such authorization. A true and complete copy of such approvals
by the Board has been delivered to the Parent.
(c) There are no "fair price," "moratorium," "control share
acquisition" or any other applicable provision of the DGCL similar thereto that
is applicable to the Merger or other similar anti-takeover statute or regulation
or any applicable anti-takeover provision in the Certificate of Incorporation
and By-laws of Yazam.
4.03 Capitalization. (a) The authorized Yazam Common Stock, Yazam
Preferred Stock and other authorized capital stock of Yazam and each of the
Yazam Subsidiaries is as set forth on Schedule 4.03 hereto. All issued and
outstanding shares of Yazam Common Stock, Yazam Preferred Stock and other equity
interests of Yazam and each of the Yazam Subsidiaries (other than the Yazam
Options and the Yazam Warrant) are duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights. Schedule 4.03 hereto sets forth
the name of each Person who owns beneficially or of record any shares of capital
stock and other equity interests of any Yazam Subsidiary and, in the case of
each Yazam Subsidiary, the number of shares owned by each such Person.
(b) Except as set forth on Schedule 4.03 hereto, there are not
now, and at the Effective Time there will not be, any options, warrants, calls,
subscriptions or other rights or other agreements or commitments of any nature
whatsoever obligating Yazam or any of the Yazam Subsidiaries to issue, transfer,
deliver or sell, or cause to be issued, transferred, delivered or sold, any
additional shares of Yazam Common Stock or other equity interest of Yazam or any
of the Yazam Subsidiaries, or any securities or obligations convertible into or
exchangeable for any such Yazam Common Stock or other equity interests, or
obligating Yazam or any of the Yazam Subsidiaries to grant, extend or enter into
any such agreement or commitment and no authorization therefor has been given or
made by Yazam or any Yazam Subsidiary (collectively, any such instrument
described in this Section, "Yazam Rights"). Except for the arrangements
described in Schedule 4.03 hereto, there are no contractual arrangements that
obligate Yazam or any Yazam Subsidiary to (i) repurchase, redeem or otherwise
acquire any of its capital stock or its other equity interests or (ii) pay any
Person any consideration that is calculated with reference to the consideration
to be paid to the Yazam shareholders under this Agreement. Prior to the
Effective Time, all Yazam Rights set forth on Schedule 4.03 shall have been
exercised or shall have otherwise been terminated or canceled.
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4.04 Consents and Approvals; No Conflicts. Except as set forth on
Schedule 4.04 hereto and the approvals referred to in Sections 2.05 and 4.02
hereof, the giving of notice in accordance with Section 251 of the DGCL and the
filing and recordation of the Merger Filings as required by the DGCL, no filing
with, and no permit, authorization, consent or approval of, any Governmental
Authority or other third party is necessary for the consummation by Yazam of the
transactions contemplated by this Agreement, except where the failure to make
such filing or obtain such authorization, consent or approval would not
individually or in the aggregate have a Material Adverse Effect. Subject to
obtaining such approvals and making such filings, neither the execution and
delivery of this Agreement by Yazam nor the consummation by Yazam of the
transactions contemplated hereby, nor compliance by Yazam with any of the
provisions hereof, will (i) result in any violation of any provision of the
Certificate of Incorporation or By-Laws or other organizational documents of
Yazam or any Yazam Subsidiary, (ii) violate any Applicable Law or (iii) except
as set forth on Schedule 4.04 hereto, result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default or
give rise to a right of any Person to terminate, cancel or accelerate the
payment or performance of any liability, obligation or commitment under, any
contract to which Yazam or any of the Yazam Subsidiaries is a party, or by which
any of their respective properties are bound, except, in the case of clause
(iii) above, where such violation, breach, default or right of termination,
cancellation or acceleration would not individually or in the aggregate have a
Material Adverse Effect.
4.05 Financial Statements. Yazam has furnished the Parent with an
unaudited consolidated balance sheet of Yazam as of December 31, 2000, an
unaudited consolidated income statement of Yazam as of December 31, 2000 and an
unaudited consolidated statement of cash flows (on a cash basis) of Yazam for
each month ended October 31, 2000, November 30, 2000 and December 31, 2000. All
such financial statements are referred to herein collectively as the "Financial
Statements." To the Knowledge of Yazam, the balance sheet included in the
Financial Statements fairly presents, in all material respects, the financial
position of Yazam and the Yazam Subsidiaries as at the date thereof, and, to the
Knowledge of Yazam, the income statement and cash flows included in the
Financial Statements fairly presents, in all material respects, the results of
the operations and cash flows, respectively, of Yazam and the Yazam Subsidiaries
for the periods indicated therein.
4.06 Compliance with Laws. Except as set forth on Schedule 4.06
hereto, neither Yazam nor any Yazam Subsidiary is in conflict with or in
violation or breach of or default under (a) any Applicable Law or (b) any
provision of its organizational documents, and neither Yazam nor any Yazam
Subsidiary has received any written notice alleging any such conflict,
violation, breach or default, except for any such violations, breaches or
defaults which would not individually or in the aggregate have a Material
Adverse Effect.
4.07 Real Property. Yazam does not own any real property. Schedule
4.07 hereto sets forth a complete list of all real property and all interests in
real property leased by Yazam or the Yazam Subsidiaries (collectively, the
"Leased Property"). Except as set forth on Schedule 4.07 hereto, Yazam and the
Yazam Subsidiaries have good and valid leasehold interests in all Leased
Property, free and clear of any Liens, except for easements, rights of way and
minor and immaterial liens, charges or encumbrances that do not interfere with
the use of the Leased Property in the normal conduct of the business of Yazam
and the Yazam Subsidiaries and that do not materially impair the value of the
Leased Property (collectively, the "Permitted Liens").
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Complete and correct copies of each lease relating to the Leased Property
described on Schedule 4.07 hereto have been furnished or made available to the
Parent. Except as disclosed on Schedule 4.07 hereto, no damage or destruction
has occurred and, to the Knowledge of Yazam, no condemnation or rezoning
proceeding has been threatened or commenced with respect to any of the Leased
Property that would individually or in the aggregate materially impair the
continued use or operation of the Leased Property. To the Knowledge of Yazam,
the Leased Property is in compliance with all Real Estate Laws, and neither
Yazam nor any Yazam Subsidiary has any Knowledge of any written notice of
violation or claimed violation of any Real Estate Law, in either case except
where such violation or lack of compliance would not individually or in the
aggregate materially restrict the ability of Yazam or any Yazam Subsidiary to
conduct its business as presently conducted by it at any location. Except as
disclosed on Schedule 4.07 hereto, neither Yazam nor any Yazam Subsidiary is
obligated under or a party to any option, right of first refusal or other
contractual right to purchase, acquire, sell or dispose of any real property or
any interests in real property. Neither Yazam nor any Yazam Subsidiary is a
lessor, sublessor or grantor under any lease, sublease or other instrument
granting to another Person any right to the possession, lease, occupancy or
enjoyment of the Leased Property, other than pursuant to any agreements listed
on Schedule 4.07 hereto.
4.08 Property. Schedule 4.08 hereto sets forth a complete list of
each item of property, plant and equipment owned or leased by Yazam or any Yazam
Subsidiary. Except as set forth on Schedule 4.08 hereto, Yazam and each of the
Yazam Subsidiaries has good and valid title to all tangible personal property
and assets which it owns, including the material tangible personal property
reflected in the balance sheet included in the Financial Statements as being
owned by Yazam or such Yazam Subsidiary, as the case may be, except for such
tangible personal property and assets disposed of in the ordinary course of
business, consistent with past practice, having a value not in excess of
$50,000.
4.09 Intellectual Property. To the Knowledge of Yazam, except as
set forth on Schedule 4.09 hereto, no registered trademarks, trade names,
copyrights or patents used by Yazam or any Yazam Subsidiary infringes on any
trademark or trade name in any state or country in which such trademark, trade
name, copyright or patent is used by Yazam or such Yazam Subsidiary. Neither
Yazam nor any Yazam Subsidiary has received written notification of infringement
of any patent, copyright, trademark or trade name, or any application therefor,
from any Person.
4.10 Contracts. Schedule 4.10 hereto lists (or describes in the
case of oral contracts) each contract, note, debt instrument, lease, sublease,
covenant not to compete, supply agreement, guarantee, licensing agreement,
partnership agreement, joint venture agreement, employment agreement, collective
bargaining agreement or other agreement or commitment of any kind, whether
written or oral, to which Yazam or any Yazam Subsidiary is a party or by which
either of them is bound (each, a "Contract"), provided that such Schedule need
not list any written or oral Contract or related written Contracts under which
the aggregate payments required to be made by or to Yazam or any Yazam
Subsidiary over the life of the Contract or Contracts are less than $25,000.
Complete copies of every written Contract listed or referred to on Schedule 4.10
hereto have been previously made available to the Parent. Each of Yazam and the
Yazam Subsidiaries has performed all material obligations required to be
performed by it to date under the Contracts, and neither Yazam nor any Yazam
Subsidiary has received written (or, to the
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Knowledge of Yazam, oral) notice that it is in material default in the
performance of any of its obligations under any Contract.
4.11 Employee Benefit Plans. (a) Schedule 4.11 hereto contains a
true and complete list of each Benefit Plan maintained, administered or
contributed to for the benefit of any of Yazam's or any Yazam Subsidiary's
current or former employees, officers, Directors or any other independent
contractors or leased employees who provide services to Yazam or any Yazam
Subsidiary (collectively, the "Plans"). Yazam has made available to the Parent
true and complete copies of (i) all Plans, other than those maintained outside
the United States and required by Applicable Law (the "U.S. Plans"), (ii) all
related trust agreements and insurance contracts forming a part of any U.S.
Plans, (iii) the most recent determination letter issued in respect of each such
U.S. Plan, (iv) the current summary plan descriptions with respect to such U.S.
Plans for which such a description has been distributed, and (v) and all
amendments to any such document.
(b) Each of the Plans has been operated and administered in
all material respects in accordance with their terms and Applicable Laws,
including but not limited to ERISA and the Code, and there are no material
unfunded liabilities with respect to any Plan which are not reflected on the
Financial Statements. There are no pending or, to the Knowledge of Yazam,
threatened material claims by or on behalf of any of the Plans or by any
participant therein (other than routine claims for benefits). All contributions
required to have been made by Yazam and the Yazam Subsidiaries to any Plan
pursuant to Applicable Law (including, without limitation, ERISA and the Code)
have been made on a timely basis.
(c) Yazam, the Yazam Subsidiaries and any corporation, trust,
partnership or other entity that would be considered as a single employer with
Yazam or the Yazam Subsidiaries under Section 4001(b)(1) of ERISA or Sections
414(b), (c), (m) or (o) of the Code (each, an "ERISA Affiliate") do not
currently, and within the preceding six years have not maintained or contributed
to an employee pension benefit plan (within the meaning of Section 3(2) of
ERISA) subject to Title IV of ERISA, Section 412 of the Code or Section 302 of
ERISA. No ERISA Affiliate has any obligation to contribute to (or any other
liability with respect to) any "multi-employer plan," as defined in the
Multi-employer Pension Plan Amendments Act of 1980, and no ERISA Affiliate has
incurred or will incur (as a result of the transaction contemplated by this
Agreement) any withdrawal liability or termination liability as a result of a
complete or partial withdrawal from any multi-employer plan. No U.S. Plan, ERISA
Affiliate or officer of any ERISA Affiliate with respect to any U.S. Plan which
is subject to ERISA, any trusts created thereunder or any trustee or
administrator thereof, has engaged in a nonexempt "prohibited transaction" (as
such term defined in Section 406 of ERISA or Section 4975 of the Code) or any
other breach of fiduciary responsibility that could subject any ERISA Affiliate
or any officer thereof to any material tax or penalty on prohibited transactions
imposed by such Section 4975 or to any material liability under Section 502(i)
or 502(1) of ERISA.
(d) With respect to any U.S. Plan that is an "employee welfare
benefit plan" within the meaning of ERISA Section 3(1), (i) all such U.S. Plans
are unfunded and no such U.S. Plan is funded through a "welfare benefits fund"
(as such term is defined in Section 419(e) of the Code), and (ii) each such U.S.
Plan may be amended or terminated in accordance with its terms without material
liability to any ERISA Affiliate on or at any time after the Effective Time,
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except with respect to contributions, premiums or benefit claims (actual or
contingent) with respect to the period from the Effective Time to such
termination.
(e) With respect to any current or former employee, officer,
Director or any other independent contractor or leased employee who provides
services to Yazam or a Yazam Subsidiary (for purposes of this Section 4.11,
collectively "Employees"), neither Yazam nor any Yazam Subsidiary has an
obligation to contribute to (or any other liability with respect to) any funded
or unfunded plan or program which provides medical, health, life insurance or
other welfare benefits for current or future retirees or current or future
former Employees (including their dependents and spouses) except for limited
continued medical benefit coverage for former Employees, their spouses and their
other dependents as required to be provided under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"). Yazam and each Yazam
Subsidiary are in material compliance in all respects with the continued medical
and other welfare benefits coverage requirements of COBRA and all other
Applicable Laws.
(f) Each person classified as an independent contractor by
Yazam and each Yazam Subsidiary has been reasonably classified as such based on
the requirements of Applicable Law to be so classified and each such entity has
fully and accurately reported the compensation of such person on IRS Forms 1099
when required to do so. All agreements to which Yazam and each Yazam Subsidiary
are parties, with respect to Employees provided by any professional employer
organization, employee leasing organization or other employee contracting
organization, are set forth on Schedule 4.11(f) and true, complete and correct
copies of all such agreements have been provided to Parent.
Except as set forth on Schedule 4.11 hereto, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any employees
of Yazam or any Yazam Subsidiary to severance pay, (ii) accelerate the time of
payments or vesting or trigger any payment of compensation or benefits under, or
increase the amount payable or trigger any other material obligation pursuant
to, any Company Plan, or (iii) result in any breach or violation of, or a
default under, any of the Company Plans.
4.12 Actions Pending. Except as set forth in Schedule 4.12 hereto,
there is no civil, criminal or administrative action, suit, hearing, claim,
litigation, proceeding or investigation pending or, to the Knowledge of Yazam,
threatened, against or affecting Yazam or any Yazam Subsidiary or the business
or any of the assets of Yazam or any Yazam Subsidiary, or which seeks to enjoin
or prohibit, or otherwise questions the validity of, any action taken or to be
taken in connection with this Agreement, and there is no order, decision,
ruling, injunction, judgment, award or decree or consent of or agreements with
any Governmental Authority affecting Yazam or any Yazam Subsidiary or the
business or assets of Yazam or any Yazam Subsidiary, or which enjoins or
prohibits any action taken or to be taken in connection with this Agreement.
4.13 Affiliate Transactions. Except as set forth on Schedule 4.13
hereto, there are no existing agreements, understandings or arrangements between
Yazam or any Yazam Subsidiary, on the one hand, and any Affiliate of Yazam or
any Yazam Subsidiary, on the other hand.
4.14 Taxes.
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(a) Except as set forth on Schedule 4.14 hereto, (i) Yazam and
the Yazam Subsidiaries have each (or by the Closing Date will have) duly and
timely filed or caused to be filed all Tax Returns that they are required to
have filed on or before the Closing Date, and all such Tax Returns are true,
correct and complete in all respects; (ii) Yazam and the Yazam Subsidiaries have
paid all Taxes shown (or required to be shown) on such Tax Returns, and have (or
by the Closing will have) withheld and paid to the appropriate Taxing Authority,
all Taxes that are required to be withheld on or before the Closing Date; (iii)
no claim in writing by the IRS or any other Taxing Authority for assessment or
collection of Taxes, that are or may become payable by Yazam or the Yazam
Subsidiaries or chargeable as a Lien upon the assets thereof, has been received
by Yazam or any Yazam Subsidiary; (iv) the taxable years of Yazam and the Yazam
Subsidiaries through the taxable year ended 1995, to the extent examined, have
been closed; (v) neither Yazam nor any Yazam Subsidiary has granted any
extension or waiver of the limitation period applicable to any Tax or Tax
Returns or agreed to any extension of time with respect to a Tax assessment or
deficiency, which has continuing effect; (vi) neither Yazam nor any Yazam
Subsidiary has received any notice in writing of any claim, audit, action, suit,
proceeding or investigation now pending against or with respect to Yazam or any
Yazam Subsidiary in respect of any Tax; (vii) there are no requests for rulings
or determinations in respect of any Tax pending between Yazam or any Yazam
Subsidiary, on the one hand, and any Taxing Authority on the other; (viii)
neither Yazam nor any Yazam Subsidiary has (A) been a member of an affiliated
group, or (B) filed or been included in a combined, consolidated or unitary Tax
Return, in each case involving group members other than Yazam and the Yazam
Subsidiaries, or (C) any liability for the Taxes of any other Person; (ix)
neither Yazam nor any Yazam Subsidiary is or has been a party to any Tax
allocation, Tax sharing or similar agreement or arrangement; and (x) no Liens
exist on any of the assets of Yazam or any Yazam Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax.
(b) Yazam and the Yazam Subsidiaries have delivered to the
Parent complete and accurate copies of all of the following materials that
relate to periods ending after January 1, 1997: (i) all federal income Tax
Returns filed by Yazam or the Yazam Subsidiaries; (ii) all examination reports
relating to Taxes of Yazam or the Yazam Subsidiaries; (iii) all statements of
Taxes assessed against or agreed to by Yazam or the Yazam Subsidiaries; (iv) all
written rulings Yazam or the Yazam Subsidiaries have received from any Taxing
Authority relating to any Tax; and (v) all written agreements Yazam or the Yazam
Subsidiaries have entered into with any Taxing Authority relating to any Tax. To
the extent requested by Parent, Yazam and the Yazam Subsidiaries have made
available to Parent: (i) complete and accurate copies of all Tax Returns Yazam
and the Yazam Subsidiaries have filed for all periods; and (ii) complete and
accurate copies of all documents described in the previous sentence without
regard to the period to which they relate. Schedule 4.14 hereto contains a list
of all Tax Returns filed by Yazam or any Yazam Subsidiary and the period covered
by each such Tax Return.
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4.15 Brokers, Finders, etc. Except as described on Schedule 4.15,
neither Yazam nor any Yazam Subsidiary has employed, or is subject to the valid
claim of, any broker, finder or other financial intermediary in connection with
the transactions contemplated by this Agreement or the transactions contemplated
hereby, who might be entitled to a fee or commission in connection herewith.
4.16 Labor. In the two year period prior to the date hereof, Yazam
has not employed more than 100 employees who are or were (i) either working at
locations in the United States, or (ii) are United States citizens working at
Yazam locations outside of the United States. Except as set forth on Schedule
4.16 hereof, in the one year period prior to the Closing Date, Yazam has paid to
each employee terminated by Yazam not for cause, severance in the amounts set
forth in each such employee's employment agreement, if any, or severance in the
amounts provided by Yazam in the ordinary course of business, consistent with
past practice.
4.17 Yazam Accredited Investors. There are no more than 30
shareholders of Yazam who are eligible to receive a portion of the Merger
Consideration hereunder that are not, in each case, an "accredited investor" as
defined in Section 501(a) of Regulation D of the 1933 Act.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE PARENT AND ACQUISITION CO.
The Parent and Acquisition Co., jointly and severally, represent and
warrant to Yazam as follows:
5.01 Organization and Standing. The Parent is a corporation duly
organized and in good standing under the laws of the State of Delaware and has
the power and authority to carry on its business as presently conducted, except
where the failure to be so qualified would not individually or in the aggregate
have a material adverse effect on its business, assets, properties, liabilities
or financial condition or its ability to timely perform its obligations
hereunder or consummate the transactions contemplated hereby. Acquisition Co. is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as presently conducted, except where the
failure to be so qualified would not individually or in the aggregate have a
material adverse effect on its ability to timely perform its obligations
hereunder or consummate the transactions contemplated hereby. Since the date of
its incorporation, Acquisition Co. has not carried on any business or conducted
any operations other than the execution of this Agreement, the performance of
its obligations hereunder and matters ancillary thereto. Acquisition Co. has no
liabilities or obligations of any nature, contingent or otherwise, other than
those related to the transactions contemplated hereby. Acquisition Co. is a
wholly owned subsidiary of the Parent.
5.02 Authorization and Binding Obligation. Each of the Parent and
Acquisition Co. has all necessary corporate or other power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Parent
and Acquisition Co. and the consummation by the Parent and
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Acquisition Co. of the transactions contemplated hereby have been duly and
validly authorized and approved by all necessary corporate (or other) action on
the part of each of the Parent and Acquisition Co. and no other corporate action
or other proceedings on the part of the Parent or Acquisition Co. is necessary
to authorize this Agreement or the consummation of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each of the
Parent and Acquisition Co. and constitutes a valid and binding obligation of the
Parent and Acquisition Co., enforceable against the Parent and Acquisition Co.
in accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar rights of creditors generally
and by general principles of equity.
5.03 Consents and Approvals; No Conflicts. Except for filing and
recordation of the Merger Filings as required by the DGCL, no filing with, and
no permit, authorization, consent or approval of, any public body or authority
is necessary for the consummation by the Parent or Acquisition Co. of the
transactions contemplated by this Agreement, except where the failure to make
such filing or obtain such permit, authorization, consent or approval, would not
individually or in the aggregate have a material adverse effect on such Person's
ability to timely perform its obligations hereunder or consummate the
transactions contemplated hereby. Except as set forth on Schedule 5.03, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby, nor compliance by the Parent or Acquisition
Co. with any of the provisions hereof will (a) result in any violation of any
provision of the organizational documents of the Parent or Acquisition Co., (b)
violate any Applicable Law, or (c) result in a material violation or breach of,
or constitute (with or without due notice or lapse of time or both) a material
default (or give rise to any right of termination, cancellation or acceleration)
under, any material contract, agreement, note, bond, mortgage, indenture,
license, lease, franchise, permit, Plan or other instrument or obligation to
which the Parent or Acquisition Co. is a party, or by which any of them or any
of their respective properties is bound, except in the case of clause (c) above,
where such violation, breach, default or right of termination would not
individually or in the aggregate have a material adverse effect on such Person's
business, assets, properties, liabilities or financial condition or its ability
to timely perform its obligations hereunder or to consummate the transactions
contemplated hereby.
5.04 Litigation. There is no claim, litigation, proceeding or
investigation pending or, to the best of the Parent's or Acquisition Co.'s
knowledge, threatened, which seeks to enjoin or prohibit, or otherwise questions
the validity of, any action taken or to be taken by the Parent or Acquisition
Co. in connection with this Agreement or which would individually or in the
aggregate have a material adverse effect on such Person's business, assets,
properties, liabilities or financial condition or its ability timely to perform
its respective obligations hereunder or to consummate the transactions
contemplated hereby.
5.05 Brokers, Finders, Etc. Neither the Parent nor Acquisition Co.
has employed, or is subject to the valid claim of, any broker, finder or other
financial intermediary in connection with the transactions contemplated by this
Agreement, who might be entitled to a fee or commission in connection therewith.
5.06 Capitalization of Parent. The Parent Preferred Stock and the
Parent Warrants to be issued in connection with the Merger will, when issued and
delivered to the respective shareholders of Yazam as a result of the Merger and
pursuant to the terms of this Agreement and
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the Merger Filings, be duly authorized, validly issued, non-assessable and, upon
receipt of consideration therefore, fully paid. The shares of Parent Common
Stock to be issued as a result of the conversion of the Parent Preferred Stock
and upon the exercise of such Parent Warrants will be, when issued and delivered
to the respective shareholders of Yazam pursuant to the terms of such preferred
stock and warrants, duly authorized, validly issued, non-assessable, and fully
paid; provided, however, as of the date hereof a sufficient number of such
shares shall not have been, and as of the Effective Time, a sufficient number of
such shares may not be, authorized and reserved for issuance. Subject to any
required approval by the Securities and Exchange Commission, the Parent shall
use its best efforts to authorize and issue, as soon as practicable after the
Closing Date but in any event prior to June 1, 2001, such additional number of
shares of Parent Common Stock as necessary for the conversion of the Parent
Preferred Stock and the exercise of the Parent Warrants issued in connection
with the Merger. In the event that the authorization of such addition shares of
the Parent Common Stock does not occur prior to June 1, 2001, the shareholders
of Yazam who receive shares of Parent Preferred Stock pursuant to the Merger may
require the Parent after such date to repurchase their shares of Parent
Preferred Stock for a price per share of the average price of Parent Common
Stock as reported on the "Over the Counter Market" ("OTC BB"), or such other
applicable nationally recognized market quotation system, for the 20 trading
days prior to the requested date of such repurchase multiplied by 1,000;
provided, however, such price shall in any event not be less than $250 per
share. As of the date hereof, Xxxxxxx Xxxxx has executed and delivered to Yazam,
a voting agreement whereby he shall have agreed to vote the shares of capital
stock of the Parent owned, held beneficially, and/or controlled by him (as of
the appropriate record date for such shareholder vote) in favor of the amendment
of the Certificate of Incorporation of the Parent to increase the authorized
number of shares of Parent Common Stock in order to authorize and reserve a
sufficient number of shares of Parent Common Stock for issuance in connection
with the conversion of the Parent Preferred Stock and the exercise of the Parent
Warrants.
5.07 Parent SEC Reports. Except for the financial statements
required to be filed in connection with the Form 8K filed with the Securities
Exchange Commission by USXX on April 12, 2000, April 27, 2000 and July 20, 2000,
since June 1, 1999, the Parent has timely filed all registration statements,
prospectuses, forms, reports and documents required to be filed by it with the
Securities Exchange Commission under the 1933 Act or the 1934 Act (collectively,
the "Parent SEC Reports"). The Parent SEC Reports (i) as of their respective
dates, were prepared in accordance with, and complied as to form in all material
respects with, the requirements of the 1933 Act or the 1934 Act, as the case may
be, and the applicable rules and regulations thereunder, and (ii) did not, at
the time they were filed, contain any untrue statement of material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No subsidiary of Parent is subject to the periodic reporting
requirements of the 1934 Act. Each of the consolidated balance sheets (including
the related notes) included in the Parent SEC Reports presents fairly, in all
material respects, the consolidated financial position of Parent and its
subsidiaries as of its date, and each of the other related statements (including
the related notes) included in the Parent SEC Reports presents fairly, in all
material respects, the results of operations, cash flows and changes in
shareholders' equity of Parent and its subsidiaries as of its date and for the
respective periods set forth therein, all in conformity with GAAP consistently
applied during the periods involved, except as otherwise noted therein and
subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments. To the extent any
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such Parent SEC Reports were not timely filed, such failure is not reasonably
likely to individually or in the aggregate have a material adverse effect on
such the Parent's business, assets, properties, liabilities or financial
condition or its ability timely to perform its respective obligations hereunder
or to consummate the transactions contemplated hereby.
5.08 Financing. As of the Closing Date, the Parent shall have funds
sufficient to pay the cash portion of the Merger Consideration pursuant to the
terms and conditions of this Agreement.
ARTICLE VI
COVENANTS
6.01 Conduct of Business. During the period from the date hereof to
the Effective Time, Yazam covenants and agrees that it shall, and shall cause
the Yazam Subsidiaries to, carry on their businesses in the ordinary course of
business, in substantially the same manner as heretofore conducted, and shall
use its reasonable commercial efforts to preserve intact its and the Yazam
Subsidiaries' present business organization, keep available the services of
their respective officers and employees and preserve their relationships with
customers and suppliers and others having business dealings with them, to the
end that their goodwill and going business shall be maintained following the
Closing. Without limiting the generality of the foregoing, except as expressly
permitted by this Agreement or with the prior written consent of the Parent in
its sole discretion, or as set forth on Schedule 6.01 hereto, Yazam covenants
and agrees that it shall not, and it shall not permit any Yazam Subsidiary to
do, or agree to do, on or after the date hereof, any of the following, at or
before the Effective Time:
(a) amend their respective certificates of incorporation or
by-laws or other organizational documents;
(b) rescind, modify, amend or otherwise change or affect any
of the resolutions of the Board recommending adoption of this Agreement and
authorization of the Merger;
(c) issue, sell, transfer, assign, pledge, convey or dispose
of any security or equity interest or any security convertible into or
exchangeable or exercisable for any security or equity interest, including,
without limitation, any subscriptions, options, warrants, calls, conversions or
other rights, agreements, commitments, arrangements or understandings of any
kind obligating Yazam or any Yazam Subsidiary, contingently or otherwise, to
issue or sell, or cause to be issued or sold, any security or equity interest of
Yazam, any Yazam Subsidiary, or any of Yazam's investment portfolio companies or
any security convertible into or exchangeable or exercisable for any security or
equity interest; provided, however, that Yazam may sell substantially all of the
assets of, or all of the securities of, the Yazam Subsidiary named First
Tuesday, Inc. (as well as any subsidiary of First Tuesday, Inc.) with the
Parent's written consent, which consent shall not be unreasonably withheld or
delayed;
(d) split, combine or reclassify any shares of any class of
its capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any class of its capital stock, or redeem or otherwise acquire
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any shares of such capital stock, except as required under the agreements listed
on Schedule 6.01(d) hereto;
(e) write off any receivables in excess of $5,000
individually, or $20,000 in the aggregate;
(f) sell, assign, lease or otherwise transfer or dispose of
any assets in excess of $15,000 individually, or $50,000 in the aggregate;
(g) create, incur or assume any liability, including
obligations in respect of capital leases, or make or commit to make capital
expenditures in excess of $25,000 each or $50,000 in the aggregate, or create,
incur, assume, maintain or permit to exist any indebtedness in an aggregate
amount greater than $50,000 for Yazam and the Yazam Subsidiaries combined, or
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person,
except for assumptions, guarantees or endorsements by Yazam of the obligations
of any Yazam Subsidiary in the ordinary course of business consistent with past
practice; (iii) make any loans, advances or capital contributions to, or
investments in, any other Person; or (iv) create, assume or permit to exist any
Lien upon their assets, except for those in existence on the date of this
Agreement;
(h) increase or modify or agree to increase or modify the
compensation, bonuses or other benefits or perquisites of any employee of Yazam
or any Yazam Subsidiary, or pay or commit to pay any compensation, bonus,
pension or other retirement benefit or allowance, fringe benefit or other
benefit not required by the terms of an existing Plan as in effect on the date
hereof or suspend or terminate any employee of Yazam or any Yazam Subsidiary;
(i) make any new elections, or make any changes to current
elections, with respect to Taxes;
(j) change its auditors or materially change its auditing or
bookkeeping practices;
(k) take or fail to take any action that would cause any of
its representations and warranties not to be true and correct on the Closing
Date in the manner required by Section 8.02(c) hereof;
(l) cancel, terminate or materially amend or modify any real
or material personal property leases;
(m) cancel or materially amend or modify any agreement with
any customer; or
(n) enter into any new agreement with any customer.
6.02 Third-Party Consents. Yazam covenants and agrees that it shall
and shall cause each Yazam Subsidiary to use reasonable commercial efforts to
obtain, prior to the Closing, the consents of third parties and Governmental
Authorities set forth on Schedule 4.04 hereto.
6.03 Compliance with DGCL; Filings; Consent Solicitation Statement.
Yazam shall cooperate with, and deliver to, the Parent, such information as
reasonably requested by the
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Parent from time to time prior to the Closing regarding each of the shareholders
of Yazam who are to receive a portion of the Merger Consideration hereunder to
assist the Parent in determining whether each such shareholder is an "accredited
investor" as defined in Section 501(a) of Regulation D of the 1933 Act (such
information to be true and correct to the Knowledge of Yazam).
(b) As soon as practicable after the date of this Agreement,
the Parent shall prepare and deliver to Yazam certain information regarding the
Parent, the Parent Preferred Stock, the Parent Warrants and the Parent Common
Stock, as required by applicable federal and state securities laws, to be
included in a consent solicitation statement, prepared in accordance with
Section 3.05 hereof, to be delivered to the shareholders of Yazam (the "Consent
Solicitation Statement").. As soon as practicable after receipt thereof, Yazam
shall prepare and deliver to each shareholder of Yazam the Consent Solicitation
Statement, which shall include a notice (the "Notice"), in accordance with
Section 251 of the DGCL, regarding (i) the execution of this Agreement, (ii) the
Board's authorization of the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby; and (iii) the availability
of appraisal rights under Section 262 of the DGCL. As promptly as practicable
thereafter, Yazam will deliver to each holder of Yazam Common Stock, Yazam
Preferred Stock and Yazam Rights, a copy of the Consent Solicitation Statement,
provided that Yazam shall not circulate the Consent Solicitation Statement
without the Parent's prior written consent. Yazam agrees that none of the
information included or incorporated by reference in the Consent Solicitation
Statement will be false or misleading with respect to any material fact or will
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; provided, that the foregoing shall not apply to
information supplied by or on behalf of the Parent or Acquisition Co.
specifically for inclusion or incorporation by reference in the Consent
Solicitation Statement. The Parent agrees that none of the information supplied
by or on behalf of the Parent or Acquisition Co. specifically for inclusion or
incorporation by reference in the Consent Solicitation Statement will be false
or misleading with respect to any material fact or will omit to state any
material fact required to be stated therein or necessary in order to make the
statements in such Consent Solicitation Statement, in light of the circumstances
under which they are made, not misleading.
(c) As promptly as practicable, each of Yazam, the Parent and
Acquisition Co. shall properly prepare and file any filings required under any
Applicable Law relating to the Merger and the transactions contemplated herein
(collectively, the "Filings"). The Parent and Acquisition Co., on the one hand,
and Yazam, on the other, shall promptly notify the other of the receipt of any
comments on, or any request for amendments or supplements to, the Filings by any
governmental official, and each of Yazam, the Parent and Acquisition Co. shall
supply the other with copies of all correspondence between it and each of its
subsidiaries and representatives, on the one hand, and any appropriate
governmental official, on the other hand, with respect to the Filings.
6.04 Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use (and Yazam shall cause
the Yazam Subsidiaries to use) their commercially reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement and to cooperate
with
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one another in connection with the foregoing, including using its commercially
reasonable efforts to obtain all necessary consents, approvals and
authorizations as are required to be obtained under Applicable Law, to defend
all lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby, to cause to be lifted or
rescinded any injunction or restraining order or other order adversely affecting
the ability of the parties to consummate the transactions contemplated hereby,
and to effect all necessary registrations and Filings.
6.05 Acquisition Proposals. (a) Yazam hereby covenants and agrees
that for the period from the date hereof until the Effective Time, subject to
the duties imposed by applicable law, neither Yazam nor any of the Yazam
Subsidiaries shall take, directly or indirectly, any action to initiate, assist,
solicit, receive, negotiate, encourage or accept any offer or inquiry from any
Person (or authorize or permit any of their respective officers, directors,
employees, agents, counsel, accountants, financial advisors, consultants and
other representatives (together "Representatives")) (1) to engage in any
Business Combination, (2) to reach any agreement or understanding (whether or
not such agreement or understanding is absolute, revocable, contingent or
conditional) for, or otherwise attempt to consummate, any Business Combination,
(3) to furnish or cause to be furnished any information with respect to Yazam or
any of the Yazam Subsidiaries to any Person (other than as contemplated by this
Agreement) who Yazam or any such Yazam Subsidiary or Representative knows or has
reason to believe is in the process of considering any Business Combination, or
(4) to (i) purchase, acquire, sell or otherwise transfer any capital stock or
other equity interest of such other Person, (ii) purchase or acquire all or
substantially all of the assets and properties of such other Person, or (iii)
invest in or enter into a joint venture, strategic partnership or other similar
arrangement with such other Person. If Yazam or any such Yazam Subsidiary or
Representative receives from any Person any offer, inquiry or informational
request referred to above, Yazam shall promptly advise such Person, by written
notice, of the terms of this section and shall promptly, orally and in writing,
advise the Parent of such offer, inquiry or request and deliver a copy of the
foregoing notice to the Parent.
(b) If at any time between the date hereof and the Closing
Date, Yazam, any of the Yazam Subsidiaries or Yazam Representatives is
approached by any Person concerning participation by Yazam, any of the Yazam
Subsidiaries or Yazam Representatives or such other Person in a transaction or
transactions involving the assets or businesses of, or securities issued by,
Yazam or any Yazam Subsidiary, Yazam shall promptly inform the Parent of the
nature of such contact and the parties thereto.
6.06 Public Announcements. The Parent and Yazam shall consult with
one another before issuing any press release or otherwise making any public
statement with respect to this Agreement or the Merger and shall not issue any
such press release or make any such public statement prior to such consultation
without the express consent of the Parent and Yazam, except based on the advice
of counsel for Yazam or the Parent, as the case may be, as required by
Applicable Law.
6.07 Consent of the Parent. The Parent, as the sole shareholder of
Acquisition Co., by executing this Agreement hereby consents to the execution,
delivery and performance of this Agreement by Acquisition Co. and such consent
shall be treated for all purposes as a vote duly adopted at a meeting of the
shareholders of Acquisition Co. held for such purpose.
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6.08 Transfer Taxes. The Parent shall be responsible for the
payment of all Transfer Taxes arising out of or in connection with or
attributable to the transactions effected pursuant to this Agreement.
6.09 Access. Upon reasonable notice, and except as may otherwise be
required by Applicable Law, each of Yazam and Parent shall (and shall cause each
of their Affiliates to) afford the other's officers, agents and advisors
reasonable access, during normal business hours throughout the period prior to
the Effective Time, to its properties, books, contracts and records and, during
such period, such party shall (and shall cause its Affiliates to) furnish to the
other and its agents and advisors all information concerning its business,
properties and personnel as they may reasonably request. All such information
shall be considered confidential and subject to Section 12.10 hereof.
6.10 Advice Regarding Changes. Yazam shall confer on a regular
basis with the Parent, report on operational matters and promptly advise the
Parent orally and in writing of any change, event or circumstance having, or
which could reasonably be expected to be reasonably likely to have, a Material
Adverse Effect or which could materially impair (negatively or positively) Yazam
or any of the Yazam Subsidiaries' financial projections, forecasts or prospects.
The Parent and Yazam agree that all information obtained pursuant to this
Section shall be considered confidential and shall be subject to Section 12.10
hereof.
6.11 Notice of Prospective Breach. Each Party hereto shall
immediately notify the other parties in writing upon the occurrence of any act,
event, circumstance or thing that, to such party's knowledge, is reasonably
likely to cause or result in a representation or warranty hereunder to be untrue
at the Closing, the failure of a closing condition to be achieved at the
Closing, or any other breach or violation hereof or default hereunder.
6.12 Shareholder Letter of Transmittal. Yazam shall cooperate and
use its commercially reasonable efforts to cause each shareholder of Yazam who
is to receive a portion of the Merger Consideration hereunder to execute and
deliver, at or prior to the Closing, the Letter of Transmittal.
6.13 Indemnification of Directors and Officers.
(a) After the Effective Time, any repeal or modification of
Section 23 of the Bylaws of Yazam shall not adversely affect any right or
protection of an officer, director, employee or agent of Yazam existing at the
time of such repeal or modification.
(b) For the shorter of (i) three years after the Effective
Time, or (ii) for as long as the current directors' and officers' liability
insurance policies of the Parent are in effect, the Parent shall cause to be
maintained in effect policies of directors' and officers' insurance, for the
benefit of those persons who are covered by Yazam's directors' and officers'
liability insurance at the date of this Agreement, providing coverage with
respect to such claims as covered thereby as of such date, that is at least
equal to the coverage provided under Yazam's current directors' and officers'
liability insurance policies, to the extent that such liability insurance can be
purchased for a total of no more than an aggregate amount of $180,000; provided,
however, that if such
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insurance cannot be so maintained at or below such cost, Parent shall maintain
as much of such insurance as can so be maintained at a cost equal to 300 percent
of the current annual premiums of Yazam for such insurance. The forgoing
provisions shall not in any way restrict or preclude any sale, liquidation or
dissolution of any subsidiary of Parent at any time after the Effective Time.
The Parent agrees to pay all expenses (including fees and expenses of counsel)
that may be incurred by any Indemnified Party in successfully enforcing the
indemnity or other obligations under this Section 6.13. The Parent or the
Surviving Corporation shall provide a copy of such directors' and officers'
liability insurance policy, upon request, to any beneficiary of such policy and
shall notify the beneficiaries of such policy in the event of a reduction or
termination of such policy coverage in accordance with the provisions herein.
(c) In the event the Parent or the Surviving Corporation or
any of their successors or assigns (i) consolidates with or merges into any
other person and is not the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers or conveys all or substantially
all of its properties and assets to any person, then, and in each case, the
successors and assigns of the Parent or the Surviving Corporation shall be
deemed to have assumed the obligations set forth in this Section 6.13
automatically and without any further action.
(d) The provisions of this Section 6.13 are (i) intended to be
for the benefit of, and to be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives and (ii) in addition to, and not in
substitution for, any other rights to indemnification or contribution that may
such person may have by contract or otherwise.
ARTICLE VII
RESTRICTIONS ON TRANSFER
7.01 Restricted Shares. Yazam acknowledges that the Parent Common
Stock, the Parent Preferred Stock and the Parent Warrants may not be sold,
transferred or otherwise disposed of without registration under the 1933 Act and
any applicable state securities laws absent an exemption therefrom, and that in
the absence of an effective registration statement covering such securities or
an available exemption from registration under the 1933 Act and any applicable
state securities laws, the Parent Common Stock, the Parent Preferred Stock and
the Parent Warrants must be held indefinitely.
7.02 Legends. All certificates evidencing the Parent Common Stock,
the Parent Preferred Stock and the Parent Warrants shall bear a legend
substantially to the following effect until the same is no longer required under
the 1933 Act:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES OR "BLUE-SKY" LAWS.
THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED,
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ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS
NOT REQUIRED."
The certificates evidencing the Parent Common Stock, the Parent Preferred Stock
and the Parent Warrants shall also bear any legend required by any applicable
state securities laws.
ARTICLE VIII
CLOSING CONDITIONS
8.01 Conditions to the Obligation of Yazam. The obligation of Yazam
to effect the Merger is subject to the fulfillment at or prior to the Effective
Time of the following conditions:
(a) The Parent and Acquisition Co. shall each have performed
in all material respects each of its respective obligations under this Agreement
required to be performed by it on or prior to the Effective Time pursuant to the
terms hereof.
(b) The representations and warranties of Parent and
Acquisition Co. set forth in this Agreement that are qualified by reference to a
material adverse effect shall be true and correct, and all other representations
and warranties of Parent and Acquisition Co. shall be true and correct, except
for failures to be true and correct as would not, individually or in the
aggregate, have a material adverse effect on each of their respective
businesses, assets, properties, liabilities or financial conditions or each of
their respective abilities to timely perform its obligations hereunder or
consummate the transactions contemplated hereby, as of the date of this
Agreement and as of the Effective Time as though made as of the Effective Time
(except to the extent any such representation or warranty expressly speaks as of
an earlier date, in which case it shall have been true and correct in all
material respects as of such date).
(c) Yazam shall have received a certificate, dated the Closing
Date, of the President or any Vice President of Parent, to the effect that the
conditions specified in paragraphs (a) and (b) of this Section 8.01 have been
fulfilled.
(d) No preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission nor any
Applicable Law promulgated or enacted by any Governmental Authority shall be in
effect which would be reasonably likely to (i) make the consummation of the
Merger by the Parent, Acquisition Co. or Yazam illegal or (ii) otherwise prevent
the consummation of the Merger.
(e) On the Closing Date, in addition to any other documents
specifically required to be delivered pursuant to this Agreement, the Parent and
Acquisition Co. shall have executed and delivered or caused to be executed and
delivered, in form and substance reasonably acceptable to Yazam and its counsel,
such other certificates, documents, instruments and agreements as may be
reasonably necessary in connection with the consummation of the
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transactions contemplated hereby, including but not limited to consents, all in
form and substance reasonably satisfactory to Yazam and its counsel.
(f) Yazam shall have received the opinion of Xxxx Xxxxxxx,
counsel to the Parent and Acquisition Co., in form and substance reasonably
satisfactory to Yazam, as to the opinions set forth on Exhibit E hereto.
(g) The registration rights agreement setting forth the
respective registration rights of the holders of the Parent Preferred Stock and
the Parent Warrants, substantially in the form of Exhibit F hereto (the
"Registration Rights Agreement"), shall have been executed and delivered by the
Parent.
(h) The Parent shall have received written waivers from the
applicable number of shareholders in order to waive the conflicts set forth on
Schedule 5.03 hereof.
8.02 Conditions Precedent to Obligations of the Parent and
Acquisition Co. The obligations of the Parent and Acquisition Co. to effect the
Merger are subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) The Merger shall have been approved and adopted as set
forth in this Agreement by the requisite vote of the shareholders of Yazam
entitled to vote as required by the DGCL and Yazam's Certificate of
Incorporation and By-laws.
(b) Yazam shall have performed in all material respects each
of its obligations under this Agreement required to be performed by it on or
prior to the Effective Time pursuant to the terms hereof.
(c) The representations and warranties of Yazam set forth in
this Agreement that are qualified by reference to a Material Adverse Effect
shall be true and correct, and all other representations and warranties of Yazam
shall be true and correct, except for failures to be true and correct as would
not, individually or in the aggregate, have a Material Adverse Effect, as of the
date of this Agreement and as of the Effective Time as though made as of the
Effective Time (except to the extent any such representation or warranty
expressly speaks as of an earlier date, in which case it shall have been true
and correct in all material respects as of such date).
(d) The Parent and Acquisition Co. shall have received a
certificate, dated the Closing Date, of the acting Chief Executive Officer of
Yazam, to the effect that the conditions specified in paragraphs (b) and (c) of
this Section 8.02 have been fulfilled and certifying as to the amount of the
Yazam Closing Cash Balance.
(e) No preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission nor any
Applicable Law promulgated or enacted by any Governmental Authority shall be in
effect which would be reasonably likely to (i) make the consummation of the
Merger by the Parent, Acquisition Co. or Yazam illegal or (ii) otherwise prevent
the consummation of the Merger.
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(f) Each of the executive officers and directors of Yazam
shall have delivered a letter of resignation to the Parent, effective as of the
Effective Time.
(g) The Parent shall have received a Letter of Transmittal
from a sufficient number of shareholders of Yazam who are to receive a portion
of the Merger Consideration hereunder, for the Parent to determine that there
are less than 30 of such shareholders who are not an "accredited investor" as
defined in Section 501(a) of Regulation D of the 1933 Act.
(h) The consents (or in lieu thereof waivers) listed in
Schedule 4.04 (a) shall have been obtained, (b) shall be in form and substance
reasonably satisfactory to Parent, (c) shall not be subject to the satisfaction
of any condition that has not been satisfied or waived, and (d) shall be in full
force and effect, except where the failure to obtain any such consent (or in
lieu thereof waiver) could not reasonably be expected, individually or in the
aggregate with other such failures, to result in a Material Adverse Effect.
(i) On the Closing Date, in addition to any other documents
specifically required to be delivered pursuant to this Agreement, Yazam or the
holders of Yazam Common Stock and Yazam Preferred Stock, as the case may be,
shall have executed and delivered or caused to be executed and delivered, in
form and substance reasonably acceptable to Parent and its counsel, such other
certificates, documents, instruments and agreements as may be reasonably
necessary in connection with the consummation of the transactions contemplated
hereby, including but not limited to consents, all in form and substance
reasonably satisfactory to Parent and its counsel.
(j) The Parent and Acquisition Co. shall each have received
the opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel to Yazam, in form and
substance reasonably satisfactory to the Parent, as to the opinions set forth on
Exhibit G hereto.
(k) The Parent and Acquisition Co. shall have received from
Yazam the original stock certificates representing the number of shares held by
Yazam in certain portfolio companies as of the date hereof as set forth on
Schedule 8.02(k) hereto , and the original copies of the documentation
representing each such investment (or true and correct copies thereof in the
event such original copies are unavailable).
(l) The employment agreements between Yazam and each of Xxxx
Xxxxxxx, Xxx Xxxxxx and Xxxx Xxxxxxxxxx, each as amended as of February 12,
2001, shall be amended prior to the Effective Time to clarify that each such
employee shall be entitled to receive one severance payment in the amount set
forth in such agreement by either Yazam, the Parent or the Surviving Corporation
and under no circumstances shall such individual be entitled to more than one
severance payment as provided therein.
ARTICLE IX
CLOSING
9.01 Time and Place. Subject to the satisfaction or waiver of all
applicable conditions in Article VIII, the Closing shall take place at the
offices of Xxxxxx, Xxxx & Xxxxxxxx, LLP, 000 Xxxx Xxx., 00xx Xxxxx, Xxx Xxxx,
X.X. 00000, at 10:00 a.m., local time, on March 27, 2001, or at such other
location, on such other date as Yazam and the Parent may agree.
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9.02 Filings at the Closing; Other Actions. At the Closing, the
Parent and Yazam shall cause the Merger Filings to be filed and recorded in
accordance with the applicable provisions of the DGCL (unless filed previously
thereto), and shall take any and all other lawful actions and do any and all
other lawful things necessary to cause the Merger to become effective.
ARTICLE X
SURVIVAL OF COVENANTS
The covenants and agreements set forth herein shall survive the
Closing.
ARTICLE XI
TERMINATION RIGHTS
11.01 Termination This Agreement may be terminated at any time prior
to the Effective Time:
(a) by mutual consent of the Parent and Yazam;
(b) by the Parent and Acquisition Co., (i) if Yazam shall have
materially breached any of its covenants herein or if Yazam shall have made a
material misrepresentation and not cured the same within 15 days of notice of
such breach or misrepresentation, or (ii) if the Merger shall not have been
consummated on or before May 15, 2001; provided, however, that the right to
terminate this Agreement shall not be available to the Parent or Acquisition Co.
in the event that the failure to fulfill any obligation of this Agreement or
satisfy any closing condition contained in Section 8.01 hereof (other than
Section 8.01(d) hereof) by the Parent or Acquisition Co. has been the cause of,
or resulted in, the failure of the Merger to have occurred on or before the
aforesaid date;
(c) by Yazam, (i) if either the Parent or Acquisition Co.
shall have materially breached any of its covenants herein or if either the
Parent or Acquisition Co. shall have made a material misrepresentation herein
and not cured the same within 15 days of notice of such breach or
misrepresentation, or (ii) if the Merger shall not have been consummated on or
before April 5, 2001; provided, however, that the right to terminate this
Agreement shall not be available to Yazam in the event that the failure to
fulfill any obligation of this Agreement or satisfy any closing condition
contained in Section 8.02 hereof (other than Section 8.02(e) hereof) by Yazam
has been the cause of, or resulted in, the failure of the Merger to have
occurred on or before the aforesaid date; or
(d) by either the Parent or Yazam, if any court of competent
jurisdiction or other governmental agency of competent jurisdiction shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger, and such order, decree, ruling or
other action shall have become final and non-appealable.
11.02 Procedure and Effect of Termination. In the event of
termination and abandonment of the Merger by the Parent or Yazam pursuant to
Section 11.01 hereof, written notice thereof shall forthwith be given to Yazam
or the Parent, respectively, and this Agreement shall terminate and the Merger
shall be abandoned, without further action by any of the parties
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hereto. If this Agreement is terminated as provided herein, no party hereto
shall have any liability or further obligation to any other party to this
Agreement except that any termination shall be without prejudice to the rights
of any party hereto arising out of a breach by any other party of any covenant
or agreement contained in this Agreement, and except that (a) the provisions of
Sections 6.06, 12.10, 12.04, 12.05 and 12.07 hereof shall survive such
termination, and (b) the parties hereto shall cooperate in taking any action
necessary to cancel, rescind, modify or revoke any Filings previously made.
ARTICLE XII
OTHER PROVISIONS
12.01 Amendment and Modification. Subject to Applicable Law, this
Agreement may be amended, modified or supplemented only by mutual written
agreement of the parties hereto.
12.02 Benefit and Assignment. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective heirs,
successors and assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party to this
Agreement without the prior written consent of the other parties hereto. Any
purported assignment made in contravention of the previous sentence shall be
null and void.
12.03 No Third-Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any Person other than the parties hereto and their
respective heirs, successors and permitted assigns.
12.04 Entire Agreement. This Agreement and the exhibits and
schedules hereto embody the entire agreement and understanding of the parties
hereto, and supersede any and all prior agreements, arrangements and
understandings, relating to the matters provided for herein and therein.
Acquisition Co. hereby agrees that any consent or waiver of compliance given by
the Parent hereunder shall be conclusively binding upon Acquisition Co., whether
given expressly on its behalf or not. No party is making any representation or
warranty whatsoever, express or implied, except the representations and
warranties contained in this Agreement, and each party acknowledges and agrees
that it has not relied on or been induced to enter into this Agreement by any
representation or warranty other than those expressly set forth herein.
12.05 Expenses. Except as otherwise provided in this Agreement, each
of the Parent and Acquisition Co., on the one hand, and Yazam, on the other
hand, shall be responsible for the payment of their and their Affiliates'
respective expenses, including legal and accounting fees, in connection with the
preparation, negotiation and closing of this Agreement and the transactions
contemplated hereby.
12.06 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
12.07 Choice of Law. The construction and performance of this
Agreement shall be governed by the laws of the State of Delaware without regard
to its principles of conflict of laws, and the state and federal courts of
Delaware shall have exclusive jurisdiction over any controversy or claim arising
out of or relating to this Agreement.
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12.08 Notices. All notices, requests, demands, letters, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
sent by next-day or overnight mail or delivery or (d) sent by facsimile, as
follows:
(a) If to the Parent or Acquisition Co., to it at:
U.S. Technologies Inc.
0000 Xxxxxxxxxxx Xxx., XX
Xxxxx 000
Xxxxxxxxxx, XX 00000
Telecopy#: (000) 000-0000
Attention: Xx. Xxxxxxx Xxxxx
with a copy to:
Xxxx Xxxxxxx
0000 X Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Telecopy #: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
(b) If to Yazam, to it at:
Xxxxx.xxx Inc.
00 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy #: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
Acting Chief Executive Officer
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy #: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
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or to such other Person or address as any party shall specify by notice in
writing to the party entitled to notice. All such notices, requests, demands,
letters, waivers and other communications shall be deemed to have been received
(w) if by personal delivery on the day of such delivery, (x) if by certified or
registered mail, when received, (y) if by next-day or overnight mail or
delivery, on the day delivered, or (z) if by facsimile, on the day on which such
facsimile was sent and electronically confirmed if during business hours where
received (and if not, on the next Business Day).
12.09 Counterparts. This Agreement may be executed in one or more
counterparts and/or by facsimile, each of which will be deemed an original and
all of which together will constitute one and the same instrument.
12.10 Confidentiality. Each party hereto will hold, and will use its
best efforts to cause its Affiliates, and their respective Representatives to
hold, in strict confidence from any Person (other than any such Affiliate or
Representative), unless (i) compelled to disclose by judicial or administrative
process (including without limitation in connection with obtaining the necessary
approvals of this Agreement and the transactions contemplated hereby of
Governmental Authorities) or by other requirements of Applicable Law or (ii)
disclosed in an action or proceeding brought by any party hereto in pursuit of
its rights or in the exercise of its remedies hereunder, all documents and
information concerning any party or any of their Affiliates furnished to each of
them by any other party or such other party's Representatives in connection with
this Agreement or the transactions contemplated hereby, except to the extent
that such documents or information can be shown to have been (a) previously
known by the party receiving such documents or information, (b) in the public
domain (either prior to or after the furnishing of such documents or information
hereunder) through no fault of such receiving party, or (c) later acquired by
the receiving party from another source if the receiving party is not aware that
such source is under an obligation to another party hereto to keep such
documents and information confidential; provided that following the Closing the
foregoing restrictions will not apply to Parent's and Acquisition Co.'s use of
documents and information concerning Yazam's business furnished by Yazam
hereunder. In the event the transactions contemplated hereby are not
consummated, upon the request of the other party, each party hereto will, and
will cause its Affiliates and their respective Representatives to, promptly (and
in no event later than five Business Days after such request) redeliver or cause
to be redelivered all copies of documents and information furnished by any of
the other parties in connection with this Agreement or the transactions
contemplated hereby and destroy or cause to be destroyed all electronic copies
of the foregoing and all notes, memoranda, summaries, analyses, compilations and
other writings related thereto or based thereon prepared by the party which
furnished such documents and information or its Representatives.
[The remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
U.S. TECHNOLOGIES INC.
By: /s/ Xxxxxxx Xxxxx
----------------------------------------
Xxxxxxx Xxxxx
Chairman and Chief Executive Officer
U.S. TECHNOLOGIES ACQUISITION CO.
By: /s/ Xxxxxxx Xxxxx
----------------------------------------
Xxxxxxx Xxxxx
President
XXXXX.XXX INC.
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Acting Chief Executive Officer
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