EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
U.S. TECHNOLOGIES INC.,
USXX ACQUISITION CORPORATION
AND
ON-SITE SOURCING, INC.
DATED AS OF SEPTEMBER 27, 2000
TABLE OF CONTENTS
Page
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.1 Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . .1
Section 1.2 Other Defined Terms. . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE II THE MERGER; OTHER TRANSACTIONS . . . . . . . . . . . . . . . . . . . . .8
Section 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 2.2 Effective Time of the Merger . . . . . . . . . . . . . . . . . . .8
Section 2.3 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 2.4 Certificate of Incorporation; Bylaws . . . . . . . . . . . . . . .9
Section 2.5 Directors and Officers . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE III CONVERSION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 3.1 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . .9
Section 3.2 Exchange of ONSS Common Stock Certificates . . . . . . . . . . . 12
Section 3.3 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.4 ONSS Options and the Xxxxxxxx Warrant. . . . . . . . . . . . . . 14
Section 3.5 ONSS Publicly Traded Warrants. . . . . . . . . . . . . . . . . . 14
Section 3.6 Conversion of ONSS Options, ONSS Public Warrants and
the Xxxxxxxx Warrant . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF USXX . . . . . . . . . . . . . . . . 16
Section 4.1 Organization, Existence and Qualification. . . . . . . . . . . . 16
Section 4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.3 Subsidiaries; Investments. . . . . . . . . . . . . . . . . . . . 17
Section 4.4 Authority Relative to this Agreement and Binding Effect. . . . . 17
Section 4.5 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . 17
Section 4.6 Compliance with Legal Requirements; Governmental
Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.7 Legal Proceedings; Orders. . . . . . . . . . . . . . . . . . . . 18
Section 4.8 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.10 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . 19
Section 4.11 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.12 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.13 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . 20
Section 4.14 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 23
Section 4.15 No Material Adverse Change. . . . . . . . . . . . . . . . . . . 23
Section 4.16 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.17 Proxy Statement; Registration Statement . . . . . . . . . . . . 23
Section 4.18 Votes Required. . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.19 Disclaimer of Representations and Warranties. . . . . . . . . . 24
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF ONSS. . . . . . . . . . . . . . . . . 25
Section 5.1 Organization, Existence and Qualification . . . . . . . . . . . 25
Section 5.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.3 Subsidiaries; Investments . . . . . . . . . . . . . . . . . . . 25
Section 5.4 Authority Relative to this Agreement and Binding Effect . . . . 26
Section 5.5 Governmental Approvals. . . . . . . . . . . . . . . . . . . . . 26
Section 5.6 Compliance with Legal Requirements; Governmental
Authorizations. . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.7 Legal Proceedings; Orders . . . . . . . . . . . . . . . . . . . 27
Section 5.8 SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.10 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 28
Section 5.11 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.12 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.13 Machinery and Equipment . . . . . . . . . . . . . . . . . . . . 28
Section 5.14 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.16 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.17 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . 29
Section 5.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 32
Section 5.19 No Material Adverse Change. . . . . . . . . . . . . . . . . . . 33
Section 5.20 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.21 Proxy Statement; Registration Statement . . . . . . . . . . . . 33
Section 5.22 Votes Required. . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.23 Disclaimer of Representations and Warranties. . . . . . . . . . 34
ARTICLE VI COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.1 Covenants of ONSS. . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.2 Covenants of USXX. . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.3 Additional Agreements. . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 7.1 Conditions to USXX's and Newco's Obligation to Effect the
Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 7.2 Conditions to ONSS' Obligations to Effect the Merger. . . . . . 48
ARTICLE VIII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.1 Termination Rights . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . 51
Section 8.3 Termination Fee; Expenses. . . . . . . . . . . . . . . . . . . . 51
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ARTICLE IX INDEMNIFICATION; REMEDIES. . . . . . . . . . . . . . . . . . . . . . . 52
Section 9.1 Directors' and Officers' Indemnification . . . . . . . . . . . . 52
Section 9.2 Representations and Warranties . . . . . . . . . . . . . . . . . 53
ARTICLE X GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.3 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.4 Successor Bound. . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.5 Governing Law; Forum; Consent to Jurisdiction. . . . . . . . . 54
Section 10.6 WAIVER OF TRIAL BY JURY. . . . . . . . . . . . . . . . . . . . 54
Section 10.7 Cooperation; Further Documents . . . . . . . . . . . . . . . . 55
Section 10.8 Construction of Agreement. . . . . . . . . . . . . . . . . . . 55
Section 10.9 Publicity; Organizational and Operational Announcements. . . . 55
Section 10.10 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.11 Parties in Interest. . . . . . . . . . . . . . . . . . . . . . 56
Section 10.12 Specific Performance . . . . . . . . . . . . . . . . . . . . . 56
Section 10.13 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.14 Section and Paragraph Headings . . . . . . . . . . . . . . . . 57
Section 10.15 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.16 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.17 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 57
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A Employment Agreement Terms
Section 3.4 ONSS Options and the Xxxxxxxx Warrant
Section 4.2 USXX Capitalization
Section 4.3 USXX Subsidiaries; Investments
Section 4.5 USXX Governmental Approvals
Section 4.6 USXX Compliance with Legal Requirements;
Governmental Authorizations
Section 4.7 USXX Legal Proceedings; Orders
Section 4.8 USXX SEC Documents
Section 4.9 USXX Taxes
Section 4.11 USXX Contracts
Section 4.12 USXX Indebtedness
Section 4.13 USXX Employee Benefit Plans
Section 4.14 USXX Environmental Matters
Section 4.16 USXX Brokers
Section 4.18 Votes Required
Section 5.2 ONSS Capitalization
Section 5.5 ONSS Governmental Approvals
Section 5.6 ONSS Compliance with Legal Requirements;
Governmental Authorizations
Section 5.7 ONSS Legal Proceedings; Orders
Section 5.9 ONSS Taxes
Section 5.11 ONSS Title to Assets
Section 5.12 ONSS Indebtedness
Section 5.14 ONSS Material Contracts
Section 5.15 ONSS Insurance
Section 5.16 ONSS Employees
Section 5.17 ONSS Employee Benefit Plans
Section 5.18 ONSS Environmental Matters
Section 5.19 ONSS Material Adverse Change
Section 6.1 Covenants of ONSS
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of the 27th
day of September, 2000, by and among U.S. TECHNOLOGIES INC., a Delaware
corporation ("USXX"), USXX ACQUISITION CORPORATION, a Delaware corporation and a
wholly owned subsidiary of USXX ("Newco"), and ON-SITE SOURCING, INC., a
Delaware corporation ("ONSS").
RECITALS
WHEREAS, the Board of Directors of each of USXX, Newco and ONSS has
approved and deems it advisable and in the best interests of its stockholders to
consummate the merger of ONSS with and into Newco upon the terms and subject to
the conditions set forth herein; and
WHEREAS, in furtherance thereof, the Board of Directors of each of USXX,
Newco and ONSS has approved this Agreement and the merger (the "Merger") of ONSS
with and into Newco, with Newco being the surviving corporation;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, USXX,
Newco and ONSS hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. For purposes of this Agreement, the
following terms have the meanings specified or referred to in this Article I
(such definitions to be equally applicable to both the singular and plural forms
of the terms defined):
"AFFILIATE"-- with respect to any Person, any other Person that directly,
or through one or more intermediaries, controls or is controlled by or is under
common control with such first Person. As used in this definition, "control"
(including with correlative meanings, "controlled by" and "under common control
with") shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
"APPLICABLE CONTRACT"-- any Contract (a) under which ONSS has any rights,
(b) under which ONSS has any obligation or liability, or (c) by which ONSS or
any of the assets owned or used by it is bound.
"AVERAGE TRADING PRICE"--of USXX Common Stock, as of any date, will equal
the average of the reported closing market prices of such stock for the twenty
consecutive trading days ending on the third trading day prior to such date
(counting from and including the trading day immediately preceding such date).
The closing market price for each day in question will be the last sale price,
regular way or, if no such sale takes place on such day, the average of the
closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system of the NASDAQ (OTC) or the principal national
securities exchange on which USXX Common Stock is listed or admitted to trading.
"CERCLA"-- the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CLOSING DATE"-- the date on which the Closing actually takes place.
"CONTRACT"-- any agreement, contract, document, instrument, obligation,
promise or undertaking (whether written or oral) that is legally binding.
"DGCL"-- the Delaware General Corporation Law.
"ENCUMBRANCE"-- any charge, adverse claim, lien, mortgage, pledge, security
interest or other encumbrance.
"ENVIRONMENT"-- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL LAW"-- any applicable Legal Requirement that requires or
relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and
of the commencements of activities, such as resource extraction or
construction, that could have significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of pollutants
or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) reducing to acceptable levels the risks inherent in the transportation
of hazardous substances, pollutants, oil, or other potentially harmful
substances; or
(e) making responsible parties pay private parties, or groups of them, for
damages done to their health by reason of Releases of Hazardous
Materials or to the Environment, or permitting self-appointed
representatives of the public interest to recover for injuries done to
public assets or for damages to natural resources.
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"ERISA"-- the Employee Retirement Income Security Act of 1974, as amended,
or any successor law, and regulations and rules issued pursuant to that act or
any successor law.
"EXCHANGE ACT"-- the Securities Exchange Act of 1934, as amended, or any
successor law, and regulations and rules issued by the SEC pursuant to that act
or any successor law.
"FACILITIES"-- any real property, leaseholds, or other interests currently
or formerly owned or operated by ONSS and any buildings, plants, structures, or
equipment (including motor vehicles, tank cars, and rolling stock) currently or
formerly owned or operated by ONSS.
"FINAL ORDER"-- an action by a Governmental Body as to which: (a) no
request for stay of the action is pending, no such stay is in effect and if any
time period is permitted by statute or regulation for filing any request for
such stay, such time period has passed; (b) no petition for rehearing,
reconsideration or application for review of the action is pending and the time
for filing any such petition or application has passed; (c) such Governmental
Body does not have the action under reconsideration on its own motion and the
time in which such reconsideration is permitted has passed; and (d) no appeal to
a court, or a request for stay by a court of the Governmental Body's action is
pending or in effect and the deadline for filing any such appeal or request has
passed.
"GAAP"-- generally accepted United States accounting principles, applied on
a consistent basis.
"GOVERNMENTAL AUTHORIZATION"-- any approval, consent, license, franchise,
certificate of public convenience and necessity, permit, waiver or other
authorization issued, granted, given, or otherwise made available by or under
the authority of any Governmental Body or pursuant to any Legal Requirement.
"GOVERNMENTAL BODY"-- any:
(a) nation, state, county, city, town, village, district or other
jurisdiction of any nature;
(b) federal, state, county, local, municipal or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official or entity and
any court or other tribunal); or
(d) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.
"HAZARDOUS ACTIVITY"-- the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment, any other act,
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business, operation, or thing that increases the danger, or risk of danger, or
poses an unreasonable risk of harm to persons or property on or off the
Facilities, or that may affect the value of the Facilities or ONSS.
"HAZARDOUS MATERIALS"-- any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"IRC"-- the Internal Revenue Code of 1986, as amended.
"IRS"-- the Internal Revenue Service or any successor agency.
"KNOWLEDGE"-- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter. A Person (other than an individual) will be deemed to
have "Knowledge" of a particular fact or other matter if any individual who is
serving as a director or officer of such Person or any material Subsidiary of it
has actual knowledge of such fact or other matter.
"LEGAL REQUIREMENT"-- any federal, state, county, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, rule, tariff,
franchise agreement, statute or treaty.
"MATERIAL CONTRACT"-- a Contract involving a total commitment by or to any
party thereto of at least $50,000 on an annual basis or at least $100,000 on its
remaining term which cannot be terminated on no more than sixty (60) days'
notice without penalty or additional cost to ONSS as the terminating party.
"XXXXXXXX WARRANT" -- redeemable ONSS Common Stock Purchase Warrant
granted by ONSS to X.X. Xxxxxxxx & Co., pursuant to the Underwriting Agreement
among ONSS, certain selling security holders named therein and X.X. Xxxxxxxx &
Co., Inc., dated as of July 9, 1996, and amended by a letter agreement dated
March 4, 1999, which letter agreement became effective February 19, 1999.
"ONSS BALANCE SHEET"-- the audited balance sheet of ONSS at December 31,
1999 (including the notes thereto), provided by ONSS to USXX as part of the ONSS
Financial Statements.
"ONSS COMMON STOCK"-- the common stock, par value $0.01 per share, of ONSS.
"ONSS DISCLOSURE SCHEDULE"-- the disclosure schedule delivered by ONSS to
USXX concurrently with the execution and delivery of this Agreement.
4
"ONSS MATERIAL ADVERSE EFFECT"-- a material adverse effect (i) on the
assets, business, operations, financial condition or results of operations of
ONSS, or (ii) on the ability of ONSS to consummate the Merger in accordance with
this Agreement.
"ONSS PERMITTED LIENS"-- Encumbrances securing Taxes, assessments,
governmental charges or levies, or the claims of materialmen, mechanics,
carriers and like persons, all of which are not yet due and payable or which are
being contested in good faith; Encumbrances (other than any Encumbrance imposed
by ERISA) incurred on deposits made in the Ordinary Course of Business in
connection with worker's compensation, unemployment insurance or other types of
social security; in the case of leased real property, Encumbrances (not
attributable to ONSS as lessee) affecting the landlord's (and any underlying
landlord's) interest in any leased real property; and such other Encumbrances
which are not, individually or in the aggregate, reasonably likely to have an
ONSS Material Adverse Effect.
"ONSS UNITS"-- the units comprised of two shares of ONSS Common Stock and
one warrant to purchase one share of ONSS Common Stock.
"ORDER"-- any award, decision, decree, injunction, judgment, order, writ,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS"-- an action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if such action and
authorization therefor is consistent with the past practices of such Person and
with such Person's policies in effect as of the date of this Agreement and is
taken in the ordinary course of the normal day-to-day operations of such Person.
"ORGANIZATIONAL DOCUMENTS"-- (a) the articles or certificate of
incorporation or organization and the bylaws of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) the certificate of formation and the members,
operating or similar agreement of a limited liability company; (e) any charter
or similar document adopted or filed in connection with the creation, formation
or organization of a Person; and (f) any amendment to any of the foregoing.
"PERSON"-- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, organized group
of persons, entity of any other type, or Governmental Body.
"PROCEEDING"-- any action, arbitration, hearing, litigation or suit
(whether civil, criminal, administrative, investigative, or informal) commenced,
brought, conducted, or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
5
"RELATED DOCUMENTS"-- any Contract provided for in this Agreement to be
entered into by one or more of the parties hereto or their respective
Subsidiaries in connection with the Merger.
"RELEASE"-- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE"-- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SEC"-- the United States Securities and Exchange Commission or any
successor agency.
"SECURITIES ACT"-- the Securities Act of 1933, as amended, or any successor
law, and regulations and rules issued by the SEC pursuant to that act or any
successor law.
"SUBSIDIARY"-- with respect to any Person (the "Owner"), any Person of
which securities or other interests having the power to elect a majority of that
other Person's board of directors or similar governing body, or otherwise having
the power to direct the business and policies of that corporation or other
Person (other than securities or other interests having such power only upon the
happening of a contingency that has not occurred) are held by the Owner or one
or more of its Subsidiaries; when used without reference to a particular Person,
"Subsidiary" means a Subsidiary of ONSS.
"TAX"-- any tax (including any income tax, capital gains tax, value-added
tax, sales and use tax, transfer tax, franchise tax, payroll tax, withholding
tax or property tax), levy, assessment, tariff, duty (including any customs
duty), deficiency, franchise fee or payment, payroll tax, utility tax, gross
receipts tax or other fee or payment, and any related charge or amount
(including any fine, penalty, interest or addition to tax), imposed, assessed or
collected by or under the authority of any Governmental Body or payable pursuant
to any tax-sharing agreement or any other Contract relating to the sharing or
payment of any such tax, levy, assessment, tariff, duty, deficiency or fee.
"TAX RETURN"-- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment
of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any Tax,
including any amendment thereto.
"THREATENED"-- a claim, Proceeding, dispute, action, or other matter will
be deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing) that
would lead a director or officer of a comparable company to conclude that such a
claim, Proceeding, dispute, action, or other matter is likely to be asserted,
commenced, taken or otherwise pursued in the future.
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"USXX BALANCE SHEET"-- the audited consolidated balance sheet of USXX at
December 31, 1999 (including the notes thereto), provided by USXX to ONSS as
part of the USXX Financial Statements.
"USXX COMMON STOCK"-- the common stock, par value $0.02 per share, of USXX.
"USXX DISCLOSURE SCHEDULE"-- the disclosure schedule delivered by USXX to
ONSS concurrently with the execution and delivery of this Agreement.
"USXX MATERIAL ADVERSE EFFECT"-- a material adverse effect (i) on the
assets, business, operations, financial condition or results of operations of
USXX and its Subsidiaries, taken as a whole, or (ii) on the ability of USXX to
consummate the Merger in accordance with this Agreement.
SECTION 1.2 OTHER DEFINED TERMS. In addition to the terms defined in
Section 1.1, certain other terms are defined elsewhere in this Agreement as
indicated below and, whenever such terms are used in this Agreement, they shall
have their respective defined meanings.
TERM SECTION
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Agreement Introductory Paragraph
Business Combination 6.1(h)(5)
Cash Consideration 3.1(a)
Cash Election 3.1(b)
Cash Election Number 3.1(b)
Cash Election Shares 3.1(c)
Cash Fraction 3.1(c)
Charter Amendment 7.1(m)
Certificates 3.2(b)
Closing 2.3
Confidentiality Agreement 6.1(c)(1)
Dissenting Shares 3.3
Effective Time 2.2
Election Deadline 3.2(b)
Exchange Ratio 3.1(a)
Form of Election 3.2(b)
Indemnified Parties 9.1(a)
Initial Termination Date 8.1(i)
Merger Recitals
Merger Consideration 3.1(a)
ONSS Introductory Paragraph
ONSS Benefit Plans 5.17(a)
ONSS Commonly Controlled Entity 5.17(e)
ONSS Convertible Securities 3.6(a)
ONSS Diluted Shares 3.1(a)
ONSS Financial Statements 5.8
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ONSS Meeting 6.1(j)(1)
ONSS Options 3.4
ONSS Public Warrants 3.5
ONSS Proxy Statement 4.17
ONSS SEC Documents 5.8
ONSS Stockholders' Approval 5.22
Paying Agent 3.2(a)
PBGC 4.13(b)
Registration Statement 4.17
Rule 145 Affiliates 6.1(k)
Rule 145 Letters 6.1(k)
Stock Consideration 3.1(a)
Superior Proposal 6.1(h)(5)
Surviving Corporation 2.1
Third Party Beneficiary 10.11
USXX Introductory Paragraph
USXX Benefit Plans 4.13(a)
USXX Commonly Controlled Entity 4.13(e)
USXX Financial Statements 4.8
USXX Meeting 6.2(k)
USXX Proxy Statement 4.17
USXX SEC Documents 4.8
USXX Stockholders' Approval 4.18
ARTICLE II
THE MERGER; OTHER TRANSACTIONS
SECTION 2.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time, ONSS will be merged with and into Newco
in accordance with the laws of the State of Delaware. As a result of the
Merger, the separate existence of ONSS shall cease and Newco will be the
surviving corporation in the Merger (the "Surviving Corporation"). In
connection with the Merger, Newco will amend its certificate of incorporation to
change its name to "On-Site Sourcing, Inc." and will continue its corporate
existence under the laws of the State of Delaware. The Merger will have the
effect as provided in the applicable provisions of the DGCL. Without limiting
the generality of the foregoing, upon the Merger, all the property, rights,
privileges, immunities, powers and franchises of Newco and ONSS will vest in the
Surviving Corporation and all obligations, duties, debts and liabilities of ONSS
and Newco will be the obligations, duties, debts and liabilities of the
Surviving Corporation.
SECTION 2.2 EFFECTIVE TIME OF THE MERGER. On the Closing Date, with
respect to the Merger, a duly executed certificate of merger complying with the
requirements of the DGCL will be filed
8
with the Secretary of State of the State of Delaware. The Merger will become
effective upon filing the certificate of merger with the Secretary of State of
the State of Delaware (the "Effective Time").
SECTION 2.3 CLOSING. Unless this Agreement has been terminated and the
transactions contemplated herein have been abandoned pursuant to Article VIII
hereof, the closing of the transactions contemplated by this Agreement (the
"Closing") will take place at 10:00 a.m., Eastern Time, on the Closing Date to
be specified by the parties, which shall be no later than the tenth business day
after satisfaction or, if permissible, waiver of all of the conditions set forth
in Article VII hereof (other than conditions that by their nature are required
to be performed on the Closing Date, but subject to satisfaction of such
conditions), at the offices of Xxxxxxxxxx and Xxxxx, L.L.P., Washington , D.C.,
counsel to USXX, unless another date or place is agreed to in writing by the
parties hereto.
SECTION 2.4 CERTIFICATE OF INCORPORATION; BYLAWS. Pursuant to the Merger,
the certificate of incorporation of Newco, as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided by law and (ii) the bylaws of
Newco as in effect immediately prior to the Effective Time, shall be the bylaws
of the Surviving Corporation until thereafter amended as provided by law.
SECTION 2.5 DIRECTORS AND OFFICERS. The directors of Newco immediately
prior to the Effective Time will be the directors of the Surviving Corporation,
each to hold office in accordance with the certificate of incorporation and
bylaws of the Surviving Corporation. The officers of ONSS immediately prior to
the Effective Time will be the officers of the Surviving Corporation, each to
hold office in accordance with the certificate of incorporation and bylaws of
the Surviving Corporation. Immediately after the consummation of the Merger,
Xxxxxxxxxxx X. Xxxxxx and Xxxxx Xxxxxx will be elected or appointed as members
of the Board of Directors of USXX.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 EFFECT OF THE MERGER. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holders of any shares of
ONSS Common Stock:
(a) Each issued and outstanding share of ONSS Common Stock (either
separately or as part of the ONSS Units) (other than Dissenting
Shares) will be converted into the right of each holder thereof to
receive either (i) that number of fully paid and nonassessable shares
of USXX Common Stock (the "Stock Consideration") equal to (A) (x)
35,000,000 divided by (y) the sum of the number of shares of ONSS
Common Stock outstanding immediately prior to the Effective Time
(either separately or as part of the ONSS Units), the number of shares
of ONSS Common Stock subject to issuance pursuant to the Xxxxxxxx
Warrant to the extent not exercised prior to the Effective Time (but
not including shares of ONSS Common Stock subject to issuance pursuant
to the underlying warrants included in such
9
Xxxxxxxx Warrant units) and the number of shares of ONSS Common Stock
subject to issuance pursuant to ONSS employee stock options
outstanding immediately prior to the Effective Time (collectively, the
"ONSS Diluted Shares") divided by (B) the Stock Conversion Reference
(the "Exchange Ratio"), or (ii) upon a valid Cash Election as provided
in Section 3.1(b), cash, without interest, equal to (x) $35,000,000
divided by (y) the number of ONSS Diluted Shares (the "Cash
Consideration"), subject to the limitations set forth in Section
3.1(b), 3.1(c) and 3.1(e). In the case of the consideration to be
received by the holders of ONSS Common Stock in the aggregate, "Merger
Consideration" shall mean the Cash Consideration together with the
Stock Consideration. In the case of the consideration to be received
by an individual holder of ONSS Common Stock, "Merger Consideration"
shall mean the Cash Consideration and/or the Stock Consideration to be
received by such holder, as the case may be.
"Stock Conversion Reference" shall be equal to: (i) 1, if the Average Trading
Price of USXX Common Stock as of the Closing Date is greater than or equal to
$0.90 but less than $1.15; (ii) the number equal to the Average Trading Price of
USXX Common Stock as of the Closing Date, if such Average Trading Price of USXX
Common Stock as of the Closing Date is greater than or equal to $0.75 but less
than $0.90; (iii) 0.75, if the Average Trading Price of USXX Common Stock as of
the Closing Date is less than $0.75; or (iv) 1.15, if the Average Trading Price
of USXX Common Stock as of the Closing Date is greater than or equal to $1.15.
(b) Subject to the immediately following sentence and to Section 3.1(c)
and 3.1(e), each record holder of shares of ONSS Common Stock
immediately prior to the Effective Time shall be entitled to elect to
receive cash, in lieu of Stock Consideration, for all or any part of
such shares of ONSS Common Stock (a "Cash Election"). Notwithstanding
the foregoing, the aggregate number of shares of ONSS Common Stock
that may be converted into the right to receive cash consideration
shall not exceed the Cash Election Number. All shares of ONSS Common
Stock not covered by a properly given Cash Election shall, except as
provided in Section 3.1(g), be converted solely into shares of USXX
Common Stock.
"Cash Election Number" shall equal the lesser of:
(i) the number obtained by subtracting (A) the sum of (a) the number
of shares of ONSS Common Stock to be exchanged for cash in lieu of
fractional shares pursuant to Section 3.1(f) and (b) the number of
Dissenting Shares, from (B) 50% of the number of shares of ONSS Common
Stock outstanding immediately prior to the Effective Time; and
(ii) the number obtained by subtracting (A) the sum of (a) the number
of shares of ONSS Common Stock to be exchanged for cash in lieu of
fractional shares pursuant to Section 3.1(f), and (b) the number of
Dissenting Shares, from (B) 12,000,000 divided by the Cash
Consideration.
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(c) If the aggregate number of shares of ONSS Common Stock covered by Cash
Elections (the "Cash Election Shares") exceeds the Cash Election
Number, each Cash Election Share shall be converted into (i) the right
to receive an amount in cash, without interest, equal to the product
of (a) the Cash Consideration and (b) a fraction (the "Cash
Fraction"), the numerator of which shall be the Cash Election Number
and the denominator of which shall be the total number of Cash
Election Shares, and (ii) a number of shares of USXX Common Stock
equal to the product of (a) the Exchange Ratio and (b) a fraction
equal to one minus the Cash Fraction.
(d) USXX will make all computations to give effect to this Section 3.1
promptly in accordance with the provisions of Section 3.2.
(e) Each holder of ONSS Common Stock shall surrender all such holder's
certificates formerly representing ownership of shares of ONSS Common
Stock in the manner provided in Section 3.2. At the Effective Time,
all such shares of ONSS Common Stock, shall no longer be outstanding
and shall be canceled and automatically converted into the right to
receive the Merger Consideration (and cash in lieu of fractional
shares) therefor upon the surrender of such certificate in accordance
with Section 3.2. Any payment made pursuant to this Section 3.1 shall
be made net of applicable withholding taxes to the extent such
withholding is required by law.
(f) No fractional share of USXX Common Stock shall be issued in connection
with the Merger. Each holder of shares of ONSS Common Stock shall be
entitled to receive in lieu of any fractional share of USXX Common
Stock to which such holder otherwise would have been entitled pursuant
to this Section 3.1 (after taking into account all shares of ONSS
Common Stock then held of record by such holder) a cash payment in an
amount equal to the product of (i) the fractional interest of a share
of USXX Common Stock to which such holder otherwise would have been
entitled and (ii) the Cash Consideration. Payment of such amounts
shall be made by USXX.
(g) Pursuant to a Stock Election Agreement of even date herewith, among
Xxxxxxxxxxx X. Xxxxxx, Xxxxx Xxxxxx and USXX, such individuals have
irrevocably agreed to elect to receive all Stock Consideration and no
Cash Consideration (other than cash in lieu of fractional shares) in
exchange for all of the shares of ONSS Common Stock held by them at
the Effective Time. Such individuals hold an aggregate of 567,000
shares of ONSS Common Stock as of the date hereof.
(h) Notwithstanding any provision of this Agreement to the contrary, each
share of ONSS Common Stock held in the treasury of ONSS immediately
prior to the Effective Time shall be canceled and extinguished without
conversion thereof.
(i) Each share of common stock, par value $0.01 per share, of Newco issued
and outstanding immediately prior to the Effective Time shall be
converted into and
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become one share of common stock, par value $0.01 per share, of the
Surviving Corporation.
SECTION 3.2 EXCHANGE OF ONSS COMMON STOCK CERTIFICATES.
(a) USXX's registrar and transfer agent, or such other bank or trust
company as may be selected by USXX that is reasonably acceptable to
ONSS, will act as paying agent ("Paying Agent") for the holders of
ONSS Common Stock in connection with the Merger, pursuant to an
agreement providing for the matters set forth in this Section 3.2 and
such other matters as may be appropriate and the terms of which shall
be reasonably satisfactory to USXX and ONSS.
(b) At the Effective Time of the Merger, USXX will instruct the Paying
Agent to promptly, and in any event not later than five (5) business
days following the Effective Time, mail (and to make available for
collection by hand) to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time
represented outstanding shares of ONSS Common Stock (the
"Certificates"), whose shares of ONSS Common Stock were converted
pursuant to Section 3.1(a) into the right to receive the Merger
Consideration (and cash in lieu of fractional shares) (i) a letter of
transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions consistent with this Agreement as
USXX may reasonably specify), (ii) instructions (which shall provide
that at the election of the surrendering holder Certificates may be
surrendered, and payment therefor collected, by hand delivery) for use
in effecting the surrender of the Certificates in exchange for payment
of the Merger Consideration (and cash in lieu of fractional shares)
and (iii) a form of election (the "Form of Election") to holders of
record of shares of ONSS Common Stock as of the Closing Date to allow
holders to elect either Cash Consideration, Stock Consideration or a
combination thereof. Any election to receive Cash Consideration
contemplated by Section 3.1(c) will have been properly made only if
the Paying Agent shall have received at its designated office or
offices, by 4:00 p.m., Eastern Time, on the twentieth business day
after the Closing Date (the "Election Deadline"), a Form of Election
properly completed, as set forth in such Form of Election. An
election may be revoked only by written notice received by the Paying
Agent prior to the Election Deadline. USXX shall have the discretion,
which it may delegate in whole or in part to the Paying Agent, to
determine whether Forms of Election have been properly completed,
signed and submitted or revoked pursuant to this Section 3.2(b), and
to disregard immaterial defects in Forms of Election, provided such
discretion shall be exercised reasonably. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by USXX, together with such letter
of transmittal, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration for
each share of ONSS Common Stock formerly represented
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by such Certificate (and cash in lieu of fractional shares). Holders
of Certificates electing to receive solely Stock Consideration, or
whose Cash Election is received after the Election Deadline, shall be
mailed (or made available for collection by hand if so elected by the
surrendering holder) their Merger Consideration within five (5)
business days of receipt of their letter of transmittal. Holders of
Certificates electing to receive any portion or all of their Merger
Consideration as Cash Consideration prior to the Election Deadline
shall be mailed (or made available for collection by hand if so
elected by the surrendering holder) their Merger Consideration within
ten business days after the Election Deadline. All Certificates
surrendered shall be forthwith canceled. If payment of the Merger
Consideration (and cash in lieu of fractional shares) is to be made to
a Person other than the Person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the Person requesting
such payment shall have paid any transfer and other Taxes required by
reason of the payment of the Merger Consideration (and cash in lieu of
fractional shares) to a Person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction
of the Surviving Corporation that such Tax either has been paid or is
not applicable. Until surrendered as contemplated by this Section
3.2, each Certificate (other than Certificates representing ONSS
Common Stock held by USXX or Dissenting Shares) shall be deemed at any
time after the Effective Time to represent only the right to receive
the Merger Consideration (and cash in lieu of fractional shares) as
contemplated by this Section 3.2.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed, the Paying
Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration (and cash in lieu of fractional
shares) deliverable in respect thereof as determined in accordance
with this Article III, PROVIDED THAT the Person to whom the Merger
Consideration (and cash in lieu of fractional shares) is paid shall,
as a condition precedent to the payment thereof, give the Paying Agent
a bond in such sum as it may ordinarily require and indemnify the
Surviving Corporation in a manner satisfactory to it against any claim
that may be made against the Surviving Corporation with respect to the
Certificate claimed to have been lost, stolen or destroyed.
(d) After the Effective Time, the stock transfer books of ONSS shall be
closed and there shall be no transfers on the stock transfer books of
the Surviving Corporation of shares of ONSS Common Stock that were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for the Merger
Consideration (and cash in lieu of fractional shares) as provided in
this Article III.
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(e) Neither USXX nor the Surviving Corporation shall be liable to any
holder of ONSS Common Stock for Merger Consideration (and cash in lieu
of fractional shares) properly delivered to a public official pursuant
to any applicable abandonment, escheat or similar law. Any amounts
remaining unclaimed by holders of any such shares of ONSS Common Stock
seven years after the Effective Time (or such earlier or later date
immediately prior to the time at which such amounts would otherwise
escheat to or become property of any Governmental Body) shall, to the
extent permitted by applicable law, become the property of USXX, free
and clear of any claims or interest of any such holders or their
successors, assigns or personal representatives previously entitled
thereto.
SECTION 3.3 DISSENTING SHARES. Notwithstanding any provision of this
Agreement to the contrary, the shares of any holder of ONSS Common Stock who has
demanded and perfected appraisal rights for such shares in accordance with the
DGCL and who, as of the Effective Time, has not effectively withdrawn or lost
such appraisal rights ("Dissenting Shares"), shall not be converted into or
represent a right to receive the Merger Consideration (and cash in lieu of
fractional shares) pursuant to Section 3.1, but the holder thereof shall only be
entitled to such rights as are granted by the DGCL. Notwithstanding the
foregoing, if any holder of shares of ONSS Common Stock who demands appraisal of
such shares under the DGCL shall effectively withdraw the request for appraisal
or lose the right to appraisal, then, as of the later of the Effective Time and
the occurrence of such event, such holder's shares shall automatically be
converted into and represent only the right to receive the Merger Consideration
and cash in lieu of fractional shares, without interest thereon, upon surrender
of the certificate representing such shares. ONSS shall give USXX prompt notice
of any demands received by ONSS for appraisal of ONSS Common Stock, and, prior
to the Effective Time, USXX shall have the right to participate in all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, ONSS shall not, except with the prior written consent of USXX,
make any payment with respect to or offer to settle, any such demands.
SECTION 3.4 ONSS OPTIONS AND THE XXXXXXXX WARRANT. Each outstanding
option to purchase shares of ONSS Common Stock or other similar interest
(collectively, the "ONSS Options") granted under any stock option plans or under
any other plan or arrangement of ONSS, and the Xxxxxxxx Warrant, together with
the applicable exercise prices, are disclosed in Section 5.2 of the ONSS
Disclosure Schedule. ONSS Options, to the extent not exercised prior to the
Effective Time, shall be converted into such number of options to purchase
shares of USXX Common Stock as set forth in Section 3.6(a). Each outstanding
Xxxxxxxx Warrant, to the extent not exercised prior to the Effective Time, shall
be converted into such number of options as set forth in Section 3.6(b).
SECTION 3.5 ONSS PUBLICLY TRADED WARRANTS. Each outstanding publicly
traded warrant (separately or as part of the Units that include shares of ONSS
Common Stock) to purchase shares of ONSS Common Stock for $6.00 per share
(collectively, the "ONSS Public Warrants") which are not exercised prior to the
date on which the Effective Time occurs shall be converted into such number of
warrants to purchase shares of USXX Common Stock as set forth in Section 3.6(a).
14
SECTION 3.6 CONVERSION OF ONSS OPTIONS, ONSS PUBLIC WARRANTS AND
THE XXXXXXXX WARRANT.
(a) At the Effective Time, each ONSS Option and ONSS Public Warrant (each
individually, an "ONSS Convertible Securities") then outstanding shall
be automatically converted, without any further action on the part of
any holder, into an option or warrant, as applicable, to purchase
shares of USXX Common Stock. The expiration date of the warrants into
which the ONSS Public Warrants are converted at the Effective Time
shall be extended one year from the current expiration date of the
ONSS Public Warrants. The number of shares of ONSS Common Stock that
such holder shall be entitled to purchase upon exercise of such ONSS
Convertible Security shall be equal to the number of shares of USXX
Common Stock, rounded down to the nearest whole number, which is equal
to the number of shares of ONSS Common Stock that were subject to such
ONSS Convertible Security immediately prior to the Effective Time
multiplied by the Exchange Ratio, at an exercise price equal to the
per share exercise price of each such ONSS Convertible Security
immediately prior to the Effective Time divided by the Exchange Ratio.
Upon such exercise, a cash payment shall be made in lieu of any
fractional share to which any holder otherwise would have been
entitled to receive pursuant to this subsection (a).
(b) At the Effective Time, each Xxxxxxxx Warrant then outstanding shall be
automatically converted, without any further action on the part of any
holder, into an option, with an exercise price equal to the exercise
price per unit immediately prior to the Effective Time for such
Xxxxxxxx Warrant, to purchase a new USXX unit consisting of (i) the
number of shares of USXX Common Stock equal to two times the Exchange
Ratio, rounded down to the nearest whole number, and (ii) a warrant to
purchase the number of shares of USXX Common Stock equal to the
Exchange Ratio, rounded down to the nearest whole number, at an
exercise price in the case of such warrant equal to the per share
exercise price of the warrant included in the Xxxxxxxx Warrant
immediately prior to the Effective Time divided by the Exchange Ratio.
The expiration date of the options into which the Xxxxxxxx Warrants
are converted at the Effective Time (and the expiration date of the
underlying warrants to be included in such options) shall be extended
one year from the current expiration date of the Xxxxxxxx Warrants
(and the current expiration date of the underlying warrants included
in the Xxxxxxxx Warrants). Upon any such exercise, a cash payment
shall be made in lieu of any fractional share to which any holder
otherwise would have been entitled to receive pursuant to this
subsection (b).
(c) Promptly after the Effective Time, USXX will file with the SEC (i) a
registration statement on Form S-8, registering the shares of USXX
Common Stock issuable upon exercise of options into which the ONSS
Options are converted pursuant to Section 3.6(a) and (ii) to the
extent not included in the Registration Statement, an additional
registration statement to register the shares of USXX Common Stock
15
issuable upon the exercise of warrants into which the ONSS Public
Warrants are converted pursuant to Section 3.6(a) and the new USXX
units referenced in Section 3.6(b) and will use commercially
reasonably efforts to cause such registration statements to remain
effective for so long as such units, options and warrants remain
outstanding.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF USXX
USXX, as to USXX and its Subsidiaries, represents and warrants to ONSS
that:
SECTION 4.1 ORGANIZATION, EXISTENCE AND QUALIFICATION. Each of USXX and
Newco is a corporation duly incorporated, validly existing, and in good standing
under the laws of the State of Delaware, with full corporate power and authority
to conduct its business as it is now being conducted, to own or use the
properties and assets that it purports to own or use, to perform its obligations
under all Contracts to which it is a party, and to execute and deliver this
Agreement. Each of USXX and Newco is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the business conducted by it, requires such
qualification as a foreign corporation, except for such failures to be so
qualified or in good standing as are not, individually or in the aggregate,
reasonably likely to have a USXX Material Adverse Effect.
SECTION 4.2 CAPITALIZATION. As of the date of this Agreement, the
authorized capital stock of USXX consists of (i) 40,000,000 shares of USXX
Common Stock, of which 29,059,286 shares were outstanding as of the close of
business on September 26, 2000, and (ii) 10,000,000 shares of Preferred Stock,
par value $0.02 per share, 1,000,000 shares of which are authorized as Series A
Convertible Preferred Stock (the "Series A Stock"), 112,000 shares of which are
authorized as Series B Mandatorily Convertible Preferred Stock (the "Series B
Stock") and 8,750 shares of which are authorized as Series C Mandatorily
Convertible Preferred Stock (the "Series C Stock," and, together with the Series
A Stock and the Series B Stock, the "PREFERRED STOCK"). There are 625,000
shares of Series A Stock issued and outstanding, 112,000 shares of Series B
Stock issued and outstanding and 5,184 shares of Series C Stock issued and
outstanding. The issued and outstanding shares of USXX Common Stock and
Preferred Stock have been validly issued and are fully paid and nonassessable.
The shares of USXX Common Stock to be issued as the Merger Consideration,
subject to the approval by the stockholders of USXX, and the effectiveness, of
the Charter Amendment (as defined herein), have been duly authorized and
reserved for issuance pursuant to this Agreement, and when issued and delivered
in accordance with the terms of this Agreement, will have been validly issued
and will be fully paid and nonassessable and the issuance thereof is not subject
to any preemptive or other similar right. Except as set forth in Section 4.2 of
the USXX Disclosure Schedule, as of the date of this Agreement, no shares of
USXX Common Stock are held, in treasury or otherwise, by USXX or any of its
Subsidiaries, and there are no outstanding (i) securities convertible into USXX
Common Stock or other capital stock of USXX or any of its
16
material Subsidiaries, (ii) warrants or options to purchase USXX Common Stock
or other securities of USXX or any of its material Subsidiaries or (iii)
commitments to issue shares of USXX Common Stock (other than pursuant to the
Merger) or other securities of USXX or any of its material Subsidiaries.
SECTION 4.3 SUBSIDIARIES; INVESTMENTS. Except as set forth in Section 4.3
of the USXX Disclosure Schedule, as of the date of this Agreement, USXX has no
Subsidiaries or investments in any Person except for marketable securities
reflected in the USXX SEC Documents delivered to ONSS prior to the date of this
Agreement, and USXX, either directly or through E2Enet, Inc., is the registered
owner and holder of all of the issued and outstanding shares of capital stock of
its Subsidiaries and has good title to such shares. The outstanding capital
stock of each material Subsidiary of USXX has been validly issued and is fully
paid and nonassessable.
SECTION 4.4 AUTHORITY RELATIVE TO THIS AGREEMENT AND BINDING EFFECT. The
execution, delivery and performance of this Agreement and the Related Documents
by USXX and Newco have been duly authorized by all requisite corporate action,
except as of the date of this Agreement, for the USXX Stockholders' Approval and
except as set forth in Section 4.18 of the USXX Disclosure Schedule. Subject to
receipt of the USXX Stockholders' Approval and except as set forth in Section
4.18 of the USXX Disclosure Schedule, the execution, delivery and performance of
this Agreement and the Related Documents by USXX and Newco will not result in a
violation or breach of any term or provision of, constitute a default, or
require a consent, approval or notification, or accelerate the performance
required under, the Organizational Documents of USXX or Newco, any indenture,
mortgage, deed of trust, security agreement, loan agreement, or other Contract
to which USXX or Newco is a party or by which its assets are bound, or violate
any Order, with such exceptions as are not, individually or in the aggregate,
reasonably likely to have a USXX Material Adverse Effect. This Agreement
constitutes, and the Related Documents to be executed by USXX when executed and
delivered will constitute, valid and binding obligations of USXX and Newco,
enforceable against USXX and Newco in accordance with their terms, except as
enforceability may be limited by (i) bankruptcy, insolvency, reorganization or
moratorium or other similar laws from time to time in effect affecting the
enforcement of creditors' rights generally, including the effect of statutory
and other laws regarding fraudulent conveyance and preferential transfers and
(ii) general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
SECTION 4.5 GOVERNMENTAL APPROVALS. Except as set forth herein or in
Section 4.5 of the USXX Disclosure Schedule, no approval or authorization of any
Governmental Body with respect to performance under this Agreement or the
Related Documents by USXX and Newco is required to be obtained by USXX in
connection with the execution and delivery by USXX and Newco of this Agreement
or the Related Documents or the consummation by USXX and Newco of the
transactions contemplated hereby or thereby, the failure to obtain which are,
individually or in the aggregate, reasonably likely to have a USXX Material
Adverse Effect.
17
SECTION 4.6 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS.
(a) Except as set forth in Section 4.6 of the USXX Disclosure Schedule or
specifically described in the USXX SEC Documents delivered to ONSS
prior to the date of this Agreement, to the Knowledge of USXX, USXX is
not in violation of any Legal Requirement that is applicable to it, to
the conduct or operation of its business, or to the ownership or use
of any of its assets, other than such violations, if any, which are
not, individually or in the aggregate, reasonably likely to have a
USXX Material Adverse Effect.
(b) Except as set forth in Section 4.6 of the USXX Disclosure Schedule,
and except for violations that could not reasonably be expected to
have individually or in the aggregate, a Material Adverse Effect, USXX
has, and is in compliance with, all Governmental Authorizations
necessary to conduct its business and to own, operate and use all of
its assets as currently conducted.
SECTION 4.7 LEGAL PROCEEDINGS; ORDERS. Except as set forth in Section 4.7
of the USXX Disclosure Schedule or as specifically described in the USXX SEC
Documents delivered to ONSS prior to the date of this Agreement, there is no
pending Proceeding:
(a) that has been commenced by or against, or that otherwise relates to,
USXX that is reasonably likely to have a USXX Material Adverse Effect;
or
(b) as of the date of this Agreement, to the Knowledge of USXX, that
challenges, or that may have the effect of preventing, delaying,
making illegal, or otherwise interfering in any material respect with,
the Merger or any of the transactions contemplated hereby.
To the Knowledge of USXX, no such Proceedings, audits or investigations
have been Threatened that are, individually or in the aggregate, reasonably
likely to have a USXX Material Adverse Effect. As of the date of this
Agreement, USXX is not subject to any Orders that are, individually or in the
aggregate, reasonably likely to have a USXX Material Adverse Effect.
SECTION 4.8 SEC DOCUMENTS. USXX has made (and, with respect to such
documents filed after the date hereof through the Closing Date, will make)
available to ONSS a true and complete copy of each report, schedule,
registration statement (other than on Form S-8), and definitive proxy statement
filed by USXX with the SEC since December 31, 1999 and through the Closing Date
in substantially the form filed with the SEC (the "USXX SEC Documents"). Except
as set forth in Section 4.8 of the USXX Disclosure Schedule, as of their
respective dates, the USXX SEC Documents, including without limitation any
financial statements or schedules included therein, complied (or will comply
when filed), in all material respects with the requirements of the Securities
Act or the Exchange Act, as the case may be, and the rules and regulations of
the SEC thereunder applicable to such USXX SEC Documents, and did not (or will
not when filed) contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary
18
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements and
unaudited interim financial statements of USXX included in the USXX SEC
Documents (collectively, the "USXX Financial Statements") were (or will be when
filed) prepared in accordance with GAAP applied on a consistent basis (except as
may be indicated therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q) and fairly present (or will
fairly present when filed) in all material respects the financial position of
USXX as of the respective dates thereof or the results of operations and cash
flows for the respective periods then ended, as the case may be, subject, in the
case of unaudited interim financial statements, to normal, recurring adjustments
which are not material in the aggregate.
SECTION 4.9 TAXES. Except as set forth in Section 4.9 of the USXX
Disclosure Schedule:
(a) USXX and its Subsidiaries have timely filed all United States federal,
state and local income Tax Returns required to be filed by or with
respect to them or requests for extensions to file such Tax Returns
have been timely filed, granted and have not expired, and USXX and its
Subsidiaries have timely paid and discharged all Taxes due in
connection with or with respect to the periods or transactions covered
by such Tax Returns and have paid all other Taxes as are due or made
adequate provision therefor in accordance with GAAP except where the
failures to so file, pay or discharge are not, individually or in the
aggregate, reasonably likely to have a USXX Material Adverse Effect.
As of the date of this Agreement, there are no pending audits or other
examinations relating to any Tax matters. There are no Tax liens on
any assets of USXX or its Subsidiaries. As of the date of this
Agreement, USXX and its Subsidiaries have not granted any waiver of
any statute of limitations with respect to, or any extension of a
period for the assessment of, any Tax. The accruals and reserves
(including deferred taxes) reflected in the USXX Balance Sheet are in
all material respects adequate to cover all material Taxes accruable
through the date thereof (including interest and penalties, if any,
thereon and Taxes being contested) in accordance with GAAP.
(b) Except for the proposed sale of its Prison Industry Enhancement
business, USXX has no present plan or intention after the Merger to
(i) sell or otherwise dispose of any of the assets of the Surviving
Corporation, including the assets of ONSS acquired pursuant to the
Merger, except for dispositions made in the ordinary course of
business or to a corporation controlled by the Surviving Corporation
within the meaning of Section 368(a)(2)(C) of the IRC, or
(ii) reacquire any of the USXX Common Stock included in the Merger
Consideration, other than repurchases in the open market pursuant to
stock repurchase plans undertaken for reasons unrelated to the
transactions contemplated by this Agreement.
SECTION 4.10 INTELLECTUAL PROPERTY. USXX has no Knowledge of (i) any
infringement or claimed infringement by it of any patent rights or copyrights of
others or (ii) any infringement of the patent or patent license rights,
trademarks or copyrights owned by or under license to it, except for
19
any such infringements of the type described in clause (i) or (ii) that are not,
individually or in the aggregate, reasonably likely to have a USXX Material
Adverse Effect.
SECTION 4.11 CONTRACTS. Except as described in Section 4.11 of the USXX
Disclosure Schedule or as specifically described in the USXX SEC Documents
delivered to ONSS prior to the date of this Agreement, and with such exceptions
as are not, individually or in the aggregate, reasonably likely to have a USXX
Material Adverse Effect, all of USXX's Contracts are in full force and effect
and neither USXX nor, to the Knowledge of USXX, any other party thereto is in
default thereunder nor has any event occurred or is any event occurring that,
with notice or the passage of time or otherwise, is reasonably likely to give
rise to an event of default thereunder by any party thereto.
SECTION 4.12 INDEBTEDNESS. All outstanding principal amounts of
indebtedness for borrowed money of USXX as of the date of this Agreement are set
forth in Section 4.12 of the USXX Disclosure Schedule.
SECTION 4.13 EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in Section 4.13 of the USXX Disclosure Schedule,
each of the USXX Benefit Plans has been operated and administered in
all material respects in accordance with its governing documents and
applicable federal and state laws (including, but not limited to,
ERISA and the IRC). For purposes of this Agreement, "USXX Benefit
Plans" shall mean all employee retirement, welfare, stock option,
stock ownership, deferred compensation, bonus or other benefit plans,
agreements, practices, policies, programs, or arrangements that are
applicable to any employee, director or consultant of USXX or its
Subsidiaries or maintained by or contributed to by USXX or its
Subsidiaries.
(b) Except as set forth in Section 4.13 of the USXX Disclosure Schedule,
as to any USXX Benefit Plan subject to Title IV of ERISA, there is no
event or condition which presents the material risk of plan
termination, no accumulated funding deficiency, whether or not waived,
within the meaning of Section 302 of ERISA or Section 412 of the IRC
has been incurred for which any liability is outstanding, no
reportable event within the meaning of Section 4043 of ERISA (for
which the notice requirements of Regulation Section 4043 promulgated
by the Pension Benefit Guaranty Corporation ("PBGC") have not been
waived) has occurred within the last six years, no notice of intent to
terminate the USXX Benefit Plan has been given under Section 4041 of
ERISA, no proceeding has been instituted under Section 4042 of ERISA
to terminate the USXX Benefit Plan, there has been no termination or
partial termination of the USXX Benefit Plan within the meaning of
Section 411(d)(3) of the IRC within the last six years, no event
described in Sections 4062 or 4063 of ERISA has occurred, all PBGC
premiums have been timely paid and no liability to the PBGC has been
incurred, except for PBGC premiums not yet due.
20
(c) There is no matter pending (other than qualification determination
applications and filings and other required periodic filings) with
respect to any of the USXX Benefit Plans before the IRS, the
Department of Labor, the PBGC or before any other Governmental Body.
(d) Except as set forth in Section 4.13 of the USXX Disclosure Schedule,
each trust funding a USXX Benefit Plan, which trust is intended to be
exempt from federal income taxation pursuant to Section 501(c)(9) of
the IRC, has, whenever required by law, received a favorable
determination letter from the IRS regarding such exempt status, and to
the Knowledge of USXX has not, since receipt of the most recent
favorable determination letter, been amended or operated in any way
which would adversely affect such exempt status.
(e) Except as set forth in Section 4.13 of the USXX Disclosure Schedule,
with respect to any USXX Benefit Plan or any other "employee benefit
plan" as defined in Section 3(3) of ERISA under which USXX has any
current liabilities or, to the Knowledge of USXX, with respect to any
such plan which within six years prior to the Closing Date, USXX or
its Subsidiaries or any corporation, trade, business or entity under
common control or being a part of an affiliated service group with
USXX, within the meaning of Section 414(b), (c) or (m) of the IRC or
Section 4001 of ERISA ("USXX Commonly Controlled Entity"), have had
any liabilities, (i) no withdrawal liability, within the meaning of
Section 4201 of ERISA, has been incurred, which withdrawal liability
has not been satisfied and no such withdrawal liability is reasonably
expected to be incurred, (ii) no liability under Title IV of ERISA
(including, but not limited to, liability to the PBGC) has been
incurred by USXX or any USXX Commonly Controlled Entity, which
liability has not been satisfied (other than for PBGC premiums not yet
due), (iii) no accumulated funding deficiency, whether or not waived,
within the meaning of Section 302 of ERISA or Section 412 of the IRC
has been incurred for which any liability is outstanding, (iv) there
has been no failure to make any contribution (including installments)
to such plan required by Section 302 of ERISA and Section 412 of the
IRC which has resulted in a lien under Section 302 of ERISA or Section
412 of the IRC and for which any liability is currently outstanding,
(v) to the Knowledge of USXX, no action, omission or transaction has
occurred with respect to any such plan or any other USXX Benefit Plan
which could subject USXX or the plan or trust forming a part thereof
to a material civil liability or penalty under ERISA or other
applicable laws, or a material Tax under the IRC, (vi) any such plan
which is a Group Health Plan has complied in all material respects
with the provisions of Part 6 of ERISA and Section 4980B of the IRC,
(vii) there are no pending or, to the Knowledge of USXX, Threatened
claims by or on behalf of any such plan or any other USXX Benefit
Plan, by any employees, former employees or plan beneficiaries covered
by such plan or otherwise by or on behalf of any person involving any
such plan (other than routine claims for benefits) which could result
in a material liability to USXX and its Subsidiaries, taken as a
whole, and (viii) neither USXX nor any USXX Commonly Controlled Entity
has engaged in, or is a
21
successor or parent corporation to any entity or person that has
engaged in, a transaction described in Section 4069 of ERISA.
(f) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not (i) increase the amount
of benefits otherwise payable under any USXX Benefit Plan, (ii) result
in the acceleration of the time of eligibility to participate in any
USXX Benefit Plan, or of any payment, exercisability, funding or
vesting of any benefit under any USXX Benefit Plan, (iii) result in
payment becoming due or with respect to any current or former
employee, director or consultant, or (iv) result in any payment
becoming due in the event of a termination of employment or service of
any employee, director or consultant.
(g) USXX is not a party to any Contract nor has it established any policy
or practice, which would require USXX to make a payment or provide any
other form of compensation or benefit to any Person performing (or who
within the past twelve months performed) services for USXX during or
upon termination of such services which would not be payable or
provided in the absence of the consummation of the transactions
contemplated by this Agreement.
(h) Except as otherwise set forth in Section 4.13 of the USXX Disclosure
Schedule, each USXX Benefit Plan which is an "employee welfare benefit
plan," as such term is defined in Section 3(1) of ERISA, may by its
terms be unilaterally amended or terminated in its entirety without
any liability being incurred by USXX or any Affiliate of USXX, except
as to benefits accrued thereunder prior to such amendment or
termination.
(i) As of the date of this Agreement, USXX has not contributed nor been
obligated to contribute to any "multi-employer plan" within the
meaning of Section 3(37) of ERISA within the last six years and has no
outstanding liability with respect to any such plan.
(j) Section 4.13 of the USXX Disclosure Schedule contains a true and
complete list of each USXX Benefit Plan, and any management,
employment, deferred compensation, severance (including any payment,
right or benefit resulting from a change in control), bonus, or other
contract for personal services with respect to which USXX has any
liabilities with any current or former officer, director or employee,
any consulting contract with any person who prior to entering this
such contract was a director or officer or owner of 5% or more of the
stock of USXX or family member of any such director, officer or
stockholder, or any plan, agreement, arrangement or understanding
similar to any of the foregoing. Except as set forth in Section 4.2 of
the USXX Disclosure Schedule, there are no outstanding options to
purchase USXX capital stock or other securities. USXX has made
available to ONSS a complete and correct copy of each USXX Benefit
Plan (or written summary of any unwritten USXX Benefit Plan), and with
respect to each USXX Benefit Plan,
22
the current summary plan description, related trust agreements,
related insurance contracts, the latest IRS determination letter, the
last three annual reports on Form 5500 series (including all required
schedules), and the most recent actuarial report and annual financial
statements.
SECTION 4.14 ENVIRONMENTAL MATTERS. Except as set forth in Section 4.14
of the USXX Disclosure Schedule or as specifically described in the USXX SEC
Documents delivered to ONSS prior to the date of this Agreement, and with such
other exceptions as are not, individually or in the aggregate, reasonably likely
to have a USXX Material Adverse Effect:
(a) To the Knowledge of USXX, USXX and any Person for whose conduct USXX
is reasonably likely to be held responsible, is currently and at all
times has been, in material compliance with any Environmental Law.
USXX has not received any Order, notice, or other communication from
(i) any Governmental Body or private citizen acting in the public
interest, or (ii) the current or prior owner or operator of any
Facilities, of any violation or failure to comply with any
Environmental Law by USXX, or of any obligation to undertake or bear
the cost of any environmental cleanup, or with respect to any property
or Facility at which Hazardous Materials generated by USXX or any
other Person for whose conduct USXX may be held responsible were
transported for disposal; and
(b) There are no pending, or to the Knowledge of USXX Threatened, claims
against USXX arising under or pursuant to any Environmental Law with
respect to or affecting any of the Facilities or any other properties
and assets (whether real, personal, or mixed) in which USXX has or had
a direct or indirect interest (including by ownership or use).
SECTION 4.15 NO MATERIAL ADVERSE CHANGE. Except as described in the USXX
SEC Documents that have been provided to ONSS prior to the date of this
Agreement, since the date of the USXX Balance Sheet, there has not been any USXX
Material Adverse Effect, except that any USXX Material Adverse Effect that
results from or relates to (a) general business or economic conditions, (b)
conditions generally affecting the industries in which USXX operates or (c) the
announcement of the transactions contemplated by this Agreement shall be
disregarded.
SECTION 4.16 BROKERS. Except as set forth in Section 4.16 of the USXX
Disclosure Schedule, USXX is not a party to, or in any way obligated under any
Contract, and there are no outstanding claims against USXX, for the payment of
any broker's or finder's fees in connection with the origin, negotiation,
execution or performance of this Agreement.
SECTION 4.17 PROXY STATEMENT; REGISTRATION STATEMENT. None of the
information supplied or to be supplied to ONSS by or on behalf of USXX for
inclusion in the proxy statement, in definitive form, relating to the ONSS
Meeting to be held in connection with the Merger (the "ONSS Proxy Statement"),
supplied or to be supplied by or on behalf of USXX in the proxy statement(s), in
definitive form, relating to the USXX Meeting(s) (as defined in Section
6.2(k)(1)) to be held in
23
connection with the Charter Amendment and, if USXX in its sole discretion
determines it is advisable, the Merger (individually or collectively, the "USXX
Proxy Statement"), or supplied by or on behalf of USXX in the Registration
Statement on Form S-4 (and any amendments thereto) to be filed by USXX with the
SEC pursuant to the Securities Act to register the shares of USXX Common Stock
constituting the Stock Consideration (the "Registration Statement") will, in the
case of the Registration Statement, at the effective time of the Registration
Statement, at any time the Registration Statement is amended or supplemented, at
the date the ONSS Proxy Statement is first mailed to ONSS' stockholders, at any
time the ONSS Proxy Statement is amended or supplemented, at the time of the
ONSS Meeting and at the Effective Time, and in the case of the ONSS Proxy
Statement, at the date the ONSS Proxy Statement is first mailed to ONSS'
stockholders, at any time the ONSS Proxy Statement is amended or supplemented
and at the time of the ONSS Meeting, and in the case of the USXX Proxy
Statement, at the date the USXX Proxy Statement is first mailed to USXX's
shareholders, at any time the USXX Proxy Statement is amended or supplemented
and at the time of the USXX Meeting (giving effect to any documents incorporated
by reference therein), contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. The Registration Statement will comply as to form and
in substance in all material respects with the applicable provisions of the
Securities Act and the rules and regulations thereunder. The USXX Proxy
Statement will comply as to form and in substance in all material respects with
the applicable provisions of the Exchange Act and the rules and regulations
thereunder.
SECTION 4.18 VOTES REQUIRED. The Board of Directors of USXX has adopted
resolutions approving the Charter Amendment and recommending the approval of
such amendment to the USXX stockholders. Holders representing a majority of the
Series A Stock have adopted resolutions approving the Charter Amendment, this
Agreement and the transactions contemplated hereby. At the USXX Meeting(s),
USXX will seek the approval by the holders of a majority of the outstanding
shares of USXX Common Stock of the Charter Amendment and, if USXX in its sole
discretion determines it is advisable, the Merger (collectively, the "USXX
Stockholders' Approval") and, except as set forth in Section 4.18 of the USXX
Disclosure Schedule, no other vote of the holders of any class or series of the
capital stock of USXX is required to approve the Charter Amendment, this
Agreement and the Merger.
SECTION 4.19 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE IV, USXX MAKES NO OTHER
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AND USXX HEREBY DISCLAIMS ANY
SUCH OTHER REPRESENTATIONS OR WARRANTIES, WHETHER BY USXX, ANY SUBSIDIARY OF
USXX, OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES, OR ANY OTHER PERSON, WITH RESPECT TO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO
ONSS OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES, OR
ANY OTHER PERSON, OF ANY DOCUMENTATION OR OTHER INFORMATION BY USXX, ANY
SUBSIDIARY OF USXX, OR ANY OF THEIR RESPECTIVE
24
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES, OR ANY OTHER PERSON,
WITH RESPECT TO ANY OF THE FOREGOING.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ONSS.
ONSS represents and warrants to USXX as follows:
SECTION 5.1 ORGANIZATION, EXISTENCE AND QUALIFICATION. ONSS is a
corporation duly incorporated, validly existing, and in good standing under the
laws of the State of Delaware, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under all Applicable Contracts. ONSS is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the business conducted by it, requires such
qualification as a foreign corporation, except for such failures to be so
qualified or in good standing as are not, individually or in the aggregate,
reasonably likely to have an ONSS Material Adverse Effect.
SECTION 5.2 CAPITALIZATION. The capital stock of ONSS consists of
20,000,000 shares of ONSS Common Stock, of which as of the close of business on
September __, 2000, 4,841,125 shares are issued and outstanding, and 1,000,000
shares of Preferred Stock, $0.01 par value per share, none of which are issued
or outstanding. The issued and outstanding shares of ONSS Common Stock have
been validly issued and are fully paid and nonassessable. Except as set forth
in Section 5.2 of the ONSS Disclosure Schedule, no shares of ONSS Common Stock
are held, in treasury or otherwise, by ONSS and there are no outstanding (i)
securities convertible into ONSS Common Stock or other capital stock of ONSS,
(ii) warrants or options to purchase ONSS Common Stock or other securities of
ONSS or (iii) other commitments to issue shares of ONSS Common Stock or other
securities of ONSS or any of its Subsidiaries.
SECTION 5.3 SUBSIDIARIES; INVESTMENTS. ONSS has no Subsidiaries or
investments in any Person (except for marketable securities disclosed to USXX
prior to the date of this Agreement). All such capital stock owned by ONSS is
free and clear of any Encumbrance (except for any Encumbrance disclosed in the
ONSS SEC Documents delivered to USXX prior to the date of this Agreement, or
created or incurred by this Agreement in favor of USXX, or imposed by federal or
state securities laws).
SECTION 5.4 AUTHORITY RELATIVE TO THIS AGREEMENT AND BINDING EFFECT. The
execution, delivery and performance of this Agreement and the Related Documents
by ONSS have been duly authorized by all requisite corporate action, except, as
of the date of this Agreement, for the ONSS Stockholders' Approval. Subject to
receipt of the ONSS Stockholders' Approval and except as set forth in Section
5.4 of the ONSS Disclosure Schedule, the execution, delivery and performance of
this Agreement and the Related Documents by ONSS will not result in a violation
or breach of any
25
term or provision of, or constitute a default, require a consent, approval or
notification, or accelerate the performance required under, the Organizational
Documents of ONSS, any indenture, mortgage, deed of trust, security agreement,
loan agreement, or other Applicable Contract to which ONSS is a party or by
which its assets are bound, or violate any Order, with such exceptions as are
not, individually or in the aggregate, reasonably likely to have a ONSS Material
Adverse Effect. This Agreement constitutes and the Related Documents to be
executed by ONSS, when executed and delivered, will constitute valid and binding
obligations of ONSS, enforceable against it in accordance with their terms,
except as enforceability may be limited by (i) bankruptcy, insolvency,
reorganization or moratorium or other similar laws from time to time in effect
affecting the enforcement of creditors' rights generally, including the effect
of statutory and other laws regarding fraudulent conveyance and preferential
transfers and (ii) general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
SECTION 5.5 GOVERNMENTAL APPROVALS. Except as set forth in Section 5.5 of
the ONSS Disclosure Schedule, no approval or authorization of any Governmental
Body with respect to performance under this Agreement or the Related Documents
by ONSS is required to be obtained by ONSS in connection with the execution and
delivery by ONSS of this Agreement or the Related Documents, the failure to
obtain which are, individually or in the aggregate, reasonably likely to have a
ONSS Material Adverse Effect.
SECTION 5.6 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS.
(a) Except as set forth in Section 5.6 of the ONSS Disclosure Schedule or
as specifically described in the ONSS SEC Documents delivered to USXX
prior to the date of this Agreement, to the Knowledge of ONSS, ONSS is
not in violation of any Legal Requirement that is applicable to it, to
the conduct or operation of its business, or to the ownership or use
of any of its assets, other than such violations, if any, which are
not, individually or in the aggregate, reasonably likely to have a
ONSS Material Adverse Effect.
(b) Except as set forth in Section 5.6 of the ONSS Disclosure Schedule,
and except for violations that could not reasonably be expected to
have, individually or in the aggregate, an ONSS Material Adverse
Effect, ONSS has, and is in compliance with, all Governmental
Authorizations necessary to conduct its business and to own, operate
and use all of its assets as currently conducted.
SECTION 5.7 LEGAL PROCEEDINGS; ORDERS. Except as set forth in Section 5.7
of the ONSS Disclosure Schedule or as specifically described in the ONSS SEC
Documents delivered to USXX prior to the date of this Agreement, there is no
pending Proceeding:
(a) that has been commenced by or against, or that otherwise relates to,
ONSS that is reasonably likely to have a ONSS Material Adverse Effect;
or
26
(b) as of the date of this Agreement, to the Knowledge of ONSS, that
challenges, or that may have the effect of preventing, delaying,
making illegal, or otherwise interfering in any material respect with
the Merger or any of the transactions contemplated hereby.
To the Knowledge of ONSS, except as set forth in Section 5.7 of the ONSS
Disclosure Schedule, as of the date of this Agreement, no such Proceedings,
audits or investigations have been Threatened that are, individually or in the
aggregate, reasonably likely to have a ONSS Material Adverse Effect. As of the
date of this Agreement, ONSS is not subject to any Orders that are, individually
or in the aggregate, reasonably likely to have a ONSS Material Adverse Effect.
SECTION 5.8 SEC DOCUMENTS. ONSS has made (and, with respect to such
documents filed after the date hereof through the Closing Date, will make)
available to USXX a true and complete copy of each report, schedule,
registration statement (other than on Form S-8), and definitive proxy statement
filed by ONSS with the SEC since June 30, 2000 through the Closing Date in
substantially the form filed with the SEC (the "ONSS SEC Documents"). As of
their respective dates, the ONSS SEC Documents, including without limitation any
financial statements or schedules included therein, complied (or will comply
when filed), in all material respects with the requirements of the Securities
Act or the Exchange Act, as the case may be, and the rules and regulations of
the SEC thereunder applicable to such ONSS SEC Documents, and did not (or will
not when filed) contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited financial statements and unaudited interim financial
statements of ONSS included in the ONSS SEC Documents (collectively, the "ONSS
Financial Statements") were (or will be when filed) prepared in accordance with
GAAP (except as may be indicated therein or in the notes thereto and except with
respect to unaudited statements as permitted by Form 10-Q) and fairly present
(or will fairly present when filed) in all material respects the financial
position of ONSS, as of the respective dates thereof or the results of
operations and cash flows for the respective periods then ended, as the case may
be, subject, in the case of unaudited interim financial statements, to normal,
recurring adjustments which are not material in the aggregate.
SECTION 5.9 TAXES. Except as set forth in Section 5.9 of the ONSS
Disclosure Schedule, ONSS has timely filed all United States federal, state and
local income Tax Returns required to be filed by or with respect to it or
requests for extensions to file such Tax Returns have been timely filed, granted
and have not expired, and ONSS has timely paid and discharged all Taxes due in
connection with or with respect to the periods or transactions covered by such
Tax Returns and has paid all other Taxes as are due or made adequate provision
therefor in accordance with GAAP except where failures to so file, pay or
discharge are not, individually or in the aggregate, reasonably likely to have a
ONSS Material Adverse Effect. There are no pending audits or other examinations
relating to any Tax matters. There are no Tax liens on any assets of ONSS. As
of the date of this Agreement, ONSS has not granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax. The accruals and reserves (including deferred taxes) reflected in the
ONSS Balance Sheet are in all material respects adequate to cover all material
27
Taxes accruable through the date thereof (including interest and penalties, if
any, thereon and Taxes being contested) in accordance with GAAP.
SECTION 5.10 INTELLECTUAL PROPERTY. ONSS owns or possesses the rights to
use the trademarks, trade names, patents, licenses and proprietary or other
confidential information currently used by it in connection with its business,
except where the failure to so own or possess could not reasonably be expected
to have, individually or in the aggregate, an ONSS Material Adverse Effect.
ONSS has no Knowledge of (i) any infringement or claimed infringement by it of
any patent rights or copyrights of others or (ii) any infringement of, or
conflict with, the patent or patent license rights, trade names, licenses,
trademarks or copyrights owned by or under license to it, except for any such
infringements of the type described in clause (i) or (ii) that are not,
individually or in the aggregate, reasonably likely to have an ONSS Material
Adverse Effect.
SECTION 5.11 TITLE TO ASSETS. Except (i) as set forth in Section 5.11 of
the ONSS Disclosure Schedule, (ii) as specifically described in the ONSS SEC
Documents delivered to USXX prior to the date of this Agreement, (iii) as set
forth in Section 5.19 of this Agreement or (iv) as set forth in Section 5.19 of
the ONSS Disclosure Schedule, none of ONSS' assets are subject to any
Encumbrance other than ONSS Permitted Liens.
SECTION 5.12 INDEBTEDNESS. All outstanding principal amounts of
indebtedness for borrowed money of ONSS as of the date of this Agreement are set
forth in Section 5.12 of the ONSS Disclosure Schedule.
SECTION 5.13 MACHINERY AND EQUIPMENT. Except for normal wear and tear,
and with such exceptions as are not, individually or in the aggregate,
reasonably likely to have a ONSS Material Adverse Effect, the machinery and
equipment of ONSS necessary for the conduct by it of its businesses as presently
conducted are in good operating condition and in a state of reasonable
maintenance and repair.
SECTION 5.14 MATERIAL CONTRACTS. Set forth in Section 5.14 of the ONSS
Disclosure Schedule is a list as of the date hereof of all Material Contracts to
which ONSS is a party involving a total commitment by or to any party thereto of
more than $50,000 on an annual basis or more than $100,000 on its remaining term
which cannot be terminated on no more than sixty (60) days' notice without
penalty or additional cost to ONSS as the terminating party. Except as
specifically described in the ONSS SEC Documents delivered to USXX prior to the
date of this Agreement, and with such exceptions as are not, individually or in
the aggregate, reasonably likely to have an ONSS Material Adverse Effect, all
Material Contracts of ONSS set forth in Section 5.14 of the ONSS Disclosure
Schedule are in full force and effect and neither ONSS nor, to the Knowledge of
ONSS, any other party thereto is in default thereunder nor has any event
occurred or is any event occurring that with notice or the passage of time or
otherwise, is reasonably likely to give rise to an event of default thereunder
by any party thereto.
SECTION 5.15 INSURANCE . Section 5.15(a) of the ONSS Disclosure Schedule
sets forth a list of all policies of insurance held by ONSS as of the date of
this Agreement. Since June 30, 1995, the
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assets and the business of ONSS have been continuously insured with what ONSS
believes are reputable insurers against all risks and in such amounts normally
insured against by companies of the same type and in the same line of business
as ONSS. As of the date of this Agreement, no notice of cancellation,
non-renewal or material increase in premiums has been received by ONSS with
respect to such policies, and ONSS has no Knowledge of any fact or circumstance
that could reasonably be expected to form the basis for any cancellation,
non-renewal or material increase in premiums, except for such cancellations,
non-renewals and increases which are not, individually or in the aggregate,
reasonably likely to have a ONSS Material Adverse Effect. ONSS is not in
default with respect to any provision contained in any such policy or binder nor
has there been any failure to give notice or to present any claim relating to
the business or the assets of ONSS under any such policy or binder in a timely
fashion or in the manner or detail required by the policy or binder, except for
such defaults or failures which are not, individually or in the aggregate,
reasonably likely to have a ONSS Material Adverse Effect. As of the date of
this Agreement, there are no outstanding unpaid premiums (except premiums not
yet due and payable), and no notice of cancellation or renewal with respect to,
or disallowance of any claim under, any such policy or binder has been received
by ONSS as of the date hereof, except for such non-payments of premiums,
cancellations, renewals or disallowances which are not, individually or in the
aggregate, reasonably likely to have a ONSS Material Adverse Effect.
SECTION 5.16 EMPLOYEES. Section 5.16 of the ONSS Disclosure Schedule sets
forth a list as of the date of this Agreement of all the present officers and
employees of ONSS, indicating each employee's position and identifying those who
are part-time employees. Except as set forth in Section 5.16 of the ONSS
Disclosure Schedule, as of the date of this Agreement, no labor union or other
collective bargaining unit has been certified or recognized by ONSS, and, to the
Knowledge of ONSS, as of the date of this Agreement, there are no elections,
organizing drives or material controversies pending or Threatened between ONSS
and any labor union or other collective bargaining unit representing any of the
ONSS employees. There is no pending or, to the Knowledge of ONSS, Threatened
labor practice complaint, arbitration, labor strike or other material labor
dispute (excluding grievances) involving ONSS which are, individually or in the
aggregate, reasonably likely to have a ONSS Material Adverse Effect. Except as
set forth in Section 5.16 of the ONSS Disclosure Schedule, ONSS is not a party
to any written employment agreement with any employee of ONSS.
SECTION 5.17 EMPLOYEE BENEFIT PLANS. Except as set forth in Section 5.17
of the ONSS Disclosure Schedule:
(a) Each of the ONSS Benefit Plans has been operated and administered in
all material respects in accordance with its governing documents and
applicable federal and state laws (including, but not limited to,
ERISA and the IRC). For purposes of this Agreement, "ONSS Benefit
Plans" shall mean all employee retirement, welfare, stock option,
stock ownership, deferred compensation, bonus or other benefit plans,
agreements, practices, policies, programs, or arrangements, that are
applicable to any employee, director or consultant of ONSS or
maintained by or contributed to by ONSS.
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(b) As to any ONSS Benefit Plan subject to Title IV of ERISA, there is no
event or condition which presents the material risk of plan
termination, no accumulated funding deficiency, whether or not waived,
within the meaning of Section 302 of ERISA or Section 412 of the IRC
has been incurred for which any liability is outstanding, no
reportable event within the meaning of Section 4043 of ERISA (for
which the notice requirements of Regulation Section 4043 promulgated
by the PBGC have not been waived) has occurred within the last six
years, no notice of intent to terminate the ONSS Benefit Plan has been
given under Section 4041 of ERISA, no proceeding has been instituted
under Section 4042 of ERISA to terminate the ONSS Benefit Plan, there
has been no termination or partial termination of the ONSS Benefit
Plan within the meaning of Section 411(d)(3) of the IRC within the
last six years, no event described in Sections 4062 or 4063 of ERISA
has occurred, all PBGC premiums have been timely paid and no liability
to the PBGC has been incurred, except for PBGC premiums not yet due.
(c) There is no matter pending (other than qualification determination
applications and filings and other required periodic filings) with
respect to any of the ONSS Benefit Plans before the IRS, the
Department of Labor, the PBGC or before any other Governmental Body.
(d) Each trust funding a ONSS Benefit Plan, which trust is intended to be
exempt from federal income taxation pursuant to Section 501(c)(9) of
the IRC has received a favorable determination letter from the IRS
regarding such exempt status and to the Knowledge of ONSS has not,
since receipt of the most recent favorable determination letter, been
amended or operated in any way which would adversely affect such
exempt status.
(e) With respect to any ONSS Benefit Plan or any other "employee benefit
plan" as defined in Section 3(3) of ERISA under which ONSS has any
current liabilities, or to the Knowledge of ONSS, with respect to any
such plan which within six years prior to the Closing Date, ONSS or
any corporation, trade, business or entity under common control or
being a part of an affiliated service group with ONSS, within the
meaning of Section 414(b), (c) or (m) of the IRC or Section 4001 of
ERISA ("ONSS Commonly Controlled Entity") has had any liabilities, (i)
no withdrawal liability, within the meaning of Section 4201 of ERISA,
has been incurred, which withdrawal liability has not been satisfied
and no such withdrawal liability is reasonably expected to be
incurred, (ii) no liability under Title IV of ERISA (including, but
not limited to, liability to the PBGC) has been incurred by ONSS or
any ONSS Commonly Controlled Entity, which liability has not been
satisfied (other than for PBGC premiums not yet due), (iii) no
accumulated funding deficiency, whether or not waived, within the
meaning of Section 302 of ERISA or Section 412 of the IRC has been
incurred for which any liability is outstanding, (iv) there has been
no failure to make any contribution (including installments) to such
plan required by Section 302 of ERISA and Section 412 of the IRC which
has resulted in a lien under Section
30
302 of ERISA or Section 412 of the IRC and for which any liability is
currently outstanding, (v) to the Knowledge of ONSS, no action,
omission or transaction has occurred with respect to any such plan or
any other ONSS Benefit Plan which could subject ONSS, the plan or
trust forming a part thereof, or USXX to a material civil liability or
penalty under ERISA or other applicable laws, or a material Tax under
the IRC, (vi) any such plan which is a Group Health Plan has complied
in all material respects with the provisions of Part 6 of ERISA and
Section 4980B of the IRC, (vii) there are no pending or, to the
Knowledge of ONSS, Threatened claims by or on behalf of any such plan
or any other ONSS Benefit Plan, by any employees, former employees or
plan beneficiaries covered by such plan or otherwise by or on behalf
of any person involving any such plan (other than routine claims for
benefits) which could result in a material liability to ONSS, and
(viii) neither ONSS nor any ONSS Commonly Controlled Entity has
engaged in, or is a successor or parent corporation to any entity or
person that has engaged in, a transaction described in Section 4069 of
ERISA.
(f) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not (i) increase the amount
of benefits otherwise payable under any ONSS Benefit Plan, (ii) result
in the acceleration of the time of eligibility to participate in any
ONSS Benefit Plan, or any payment, exercisability, funding or vesting
of any benefit under any ONSS Benefit Plan, (iii) result in any
payment becoming due to or with respect to any current or former
employee, director or consultant, or (iv) result in any payment
becoming due in the event of a termination of employment or service of
any employee, director or consultant.
(g) ONSS is not a party to any Applicable Contract nor has it established
any policy or practice, which would require it or USXX to make a
payment or provide any other form of compensation or benefit to any
Person performing (or who within the past twelve months performed)
services for ONSS during or upon termination of such services which
would not be payable or provided in the absence of the consummation of
the transactions contemplated by this Agreement.
(h) Each ONSS Benefit Plan which is an "employee welfare benefit plan," as
such term is defined in Section 3(1) of ERISA, may by its terms be
unilaterally amended or terminated in its entirety without any
liability being incurred by ONSS, USXX or any Affiliate of USXX,
except as to benefits accrued thereunder prior to such amendment or
termination.
(i) ONSS has not contributed nor been obligated to contribute to any
"multi-employer plan" within the meaning of Section 3(37) of ERISA
within the last six years, and ONSS does not have any outstanding
liability with respect to any such plan.
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(j) Section 5.17(j) of the ONSS Disclosure Schedule contains a true and
complete list of each ONSS Benefit Plan, and any management,
employment, deferred compensation, severance (including any payment,
right or benefit resulting from a change in control), bonus, or other
contract for personal services with respect to which ONSS has any
liabilities with any current or former officer, director or employee,
any consulting contract with any person who prior to entering this
such contract was a director or officer or owner of 5% or more of the
stock of ONSS or family member of any such director, officer or
stockholder, or any plan, agreement, arrangement or understanding
similar to any of the foregoing. Except as set forth in Section 5.2
of the ONSS Disclosure Schedule, there are no outstanding options to
purchase ONSS capital stock or other securities. ONSS has provided to
USXX a complete and correct copy of each ONSS Benefit Plan (or written
summary of any unwritten ONSS Benefit Plan), and with respect to each
ONSS Benefit Plan, the current summary plan description, related trust
agreements, related insurance contracts, the latest IRS determination
letter, the last three annual reports on Form 5500 series (including
all required schedules), and the most recent actuarial report and
annual financial statements.
SECTION 5.18 ENVIRONMENTAL MATTERS. Except as set forth in Section 5.18
of the ONSS Disclosure Schedule, and with such other exceptions as are not,
individually or in the aggregate, reasonably likely to have a ONSS Material
Adverse Effect:
(a) To the Knowledge of ONSS, no Facility owned or operated by ONSS is
currently, or was at any time, listed on the National Priorities List
promulgated under CERCLA, or on any comparable state list, and ONSS
has not received any written notification of potential or actual
liability or a written request for information from any Person under
or relating to a Release regulated under CERCLA or any comparable
Legal Requirement with respect to it or the Facilities;
(b) To the Knowledge of ONSS, ONSS and any Person for whose conduct it is
reasonably likely to be held responsible, is currently and at all
times has been, in material compliance with any Environmental Law.
ONSS has not received any Order, notice, or other communication from
(i) any Governmental Body or private citizen acting in the public
interest, or (ii) the current or prior owner or operator of any
Facilities, of any violation or failure to comply with any
Environmental Law by ONSS, or of any obligation to undertake or bear
the cost of any environmental cleanup, or with respect to any property
or Facility at which Hazardous Materials generated by ONSS were
transported for disposal;
(c) There are no pending or, to the Knowledge of ONSS, Threatened claims
against ONSS arising under or pursuant to any Environmental Law with
respect to or affecting any of the Facilities or any other properties
and assets (whether real, personal, or mixed) in which ONSS has or had
a direct or indirect interest (including by ownership or use); and
32
(d) ONSS has delivered or made available to USXX true and complete copies
and results of any environmental site assessments, studies, analyses,
tests or monitoring possessed by ONSS of which it has Knowledge
pertaining to Hazardous Materials or Hazardous Activities in, on or
under the Facilities, or concerning compliance by ONSS or any other
Person for whose conduct ONSS is reasonably likely to be held
responsible, with Environmental Laws.
SECTION 5.19 NO MATERIAL ADVERSE CHANGE. Since the date of the ONSS
Balance Sheet, except as described in Section 5.19 of the ONSS Disclosure
Schedule, there has not been any ONSS Material Adverse Effect, except that any
ONSS Material Adverse Effect that results from or relates to (a) general
business or economic conditions, (b) conditions generally affecting the
industries in which ONSS competes or (c) the announcement of the transactions
contemplated by this Agreement shall be disregarded.
SECTION 5.20 BROKERS. ONSS is not a party to, or in any way obligated
under any Applicable Contract, and there are no outstanding claims against it,
for the payment of any broker's or finder's fees in connection with the origin,
negotiation, execution or performance of this Agreement, except for a Contract
with Xxxxxx, Xxxxx Xxxxx, Incorporated, pursuant to which Xxxxxx, Xxxxx Xxxxx,
Incorporated is being paid a fee for the delivery of an opinion that the Merger
Consideration to be paid to ONSS is fair from a financial point of view.
SECTION 5.21 PROXY STATEMENT; REGISTRATION STATEMENT. None of the
information supplied or to be supplied by or on behalf of ONSS in either the
ONSS Proxy Statement or supplied or to be supplied by ONSS to USXX for inclusion
in either the USXX Proxy Statement or the Registration Statement, will, in the
case of the Registration Statement, at the effective time of the Registration
Statement, at any time the Registration Statement is amended or supplemented, at
the date the ONSS Proxy Statement is first mailed to ONSS' stockholders, at any
time the ONSS Proxy Statement is amended or supplemented, at the time of the
ONSS Meeting and at the Effective Time, in the case of the ONSS Proxy Statement,
at the date the ONSS Proxy Statement is first mailed to ONSS' stockholders, at
any time the ONSS Proxy Statement is amended or supplemented and at the time of
the ONSS Meeting and in the case of the USXX Proxy Statement, at the date the
USXX Proxy Statement is first mailed to USXX's shareholders, at any time the
USXX Proxy Statement is amended or supplemented and at the time of the USXX
Meeting (giving effect to any documents incorporated by reference therein),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The ONSS Proxy Statement will comply as to form and in substance in
all material respects with the applicable provisions of the Exchange Act and the
rules and regulations thereunder.
SECTION 5.22 VOTES REQUIRED. Other than the approval of the Merger by the
holders of a majority of the outstanding shares of ONSS Common Stock entitled to
vote on the question (the "ONSS Stockholders' Approval"), no vote of the holders
of any class or series of the capital stock of ONSS is required to approve this
Agreement and the Merger.
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SECTION 5.23 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE V, ONSS MAKES NO OTHER
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AND ONSS HEREBY DISCLAIMS ANY
SUCH OTHER REPRESENTATIONS OR WARRANTIES, WHETHER BY ONSS, OR ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES, OR ANY OTHER PERSON,
WITH RESPECT TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY,
NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO USXX OR ANY OF ITS DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES, OR ANY OTHER PERSON, OF ANY
DOCUMENTATION OR OTHER INFORMATION BY ONSS, OR ANY OF ITS DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR REPRESENTATIVES, OR ANY OTHER PERSON, WITH RESPECT TO ANY
OF THE FOREGOING.
ARTICLE VI
COVENANTS
SECTION 6.1 COVENANTS OF ONSS. ONSS agrees to observe and perform the
following covenants and agreements:
(a) CONDUCT OF THE BUSINESS PRIOR TO THE CLOSING DATE. Except (i) as
contemplated in this Agreement, (ii) as required by law or regulation,
(iii) as set forth in Section 6.1 of the ONSS Disclosure Schedule, or
(iv) as otherwise expressly consented to in writing by USXX, which
consent shall not be unreasonably withheld or delayed, prior to the
Closing, ONSS will:
(1) Not make or permit any material change in the general nature of
its business as described in the ONSS Annual Report on Form 10-K
for the fiscal year ending December 31, 1999;
(2) Maintain its Ordinary Course of Business in accordance with
prudent business judgment and maintain its assets in good
operating repair, order and condition, reasonable wear and tear
excepted, subject to retirements in the Ordinary Course of
Business;
(3) Preserve ONSS as an ongoing business and use reasonable efforts
to maintain the goodwill associated with it;
(4) Preserve all of its licenses, authorizations and other
governmental rights and permits necessary for the operation of
ONSS;
(5) Not enter into any Material Contract;
34
(6) Not purchase, sell, lease, dispose of or otherwise transfer or
make any contract for the purchase, sale, lease, disposition or
transfer of, or subject to lien, any of the assets of ONSS other
than in the Ordinary Course of Business;
(7) Not voluntarily change in any material respect or terminate any
insurance policies disclosed on Section 5.15(a) of the ONSS
Disclosure Schedule that presently are in effect unless
substantially equivalent coverage is obtained;
(8) Except as disclosed or specifically contemplated in this
Agreement or in Section 6.1 of the ONSS Disclosure Schedule, and
with respect to budgeted expenditures known and specifically
disclosed in writing to USXX before the date of this Agreement,
subject to adjustments in the Ordinary Course of Business and
other deviations (which in the aggregate shall not exceed 5% on
an annualized basis during the period from the date of this
Agreement until the Closing Date), not make any material capital
expenditure or capital expenditure commitment;
(9) Not make any changes in financial policies or practices, or
strategic or operating policies or practices, except in the
Ordinary Course of Business;
(10) Comply in all material respects with all applicable material
Legal Requirements and permits, including without limitation
those relating to the filing of reports and the payment of Taxes
due to be paid prior to the Closing, other than those contested
in good faith;
(11) Not adopt, amend (other than amendments that reduce the amounts
payable by USXX or any of its Subsidiaries or amendments required
by law) or assume an obligation to contribute to any ONSS Benefit
Plan or collective bargaining agreement or enter into any written
employment, consulting, severance or similar Contract with any
Person (including without limitation, contracts with management
of ONSS or any of its Affiliates that might require payments be
made upon consummation of the transactions contemplated hereby)
or amend any such existing contracts;
(12) Except in the Ordinary Course of Business or as required by the
terms of any Contract in effect, or ONSS Benefit Plan in
existence, as of the date of this Agreement, not grant any
increase or change in total compensation, benefits or pay any
bonus to any employee, director or consultant;
(13) Not grant or enter into or extend the term of any Contract with
respect to continued employment or service for any employee,
officer, director or consultant, except in the Ordinary Course of
Business;
35
(14) Not make any loan or advance to any Person other than to any
officer, director, stockholder or employee in the Ordinary
Course of Business;
(15) Not amend any of its Organizational Documents and;
(16) Not issue or assume any note, debenture or other evidence of
indebtedness which by its terms does not mature within one year
from the date of execution or issuance thereof, unless otherwise
redeemable or subject to prepayment at any time at the option of
ONSS on not more than thirty (30) days notice without penalty for
such redemption or prepayment.
(b) CASH RECEIVED UPON EXERCISE OF OPTIONS AND WARRANTS. All cash
received by ONSS in connection with any exercise between the date
hereof and the Closing Date of options or warrants to purchase shares
of ONSS Common Stock or ONSS Units shall be placed in a designated
account until the Closing. On the Closing Date, USXX shall be
entitled to use the cash in such designated account toward the
satisfaction of its obligations hereunder, including, without
limitation, its obligation under Section 7.2(k)(i) hereunder,
provided, however, that USXX shall not be entitled to receive the cash
in such designated account if this Agreement is terminated.
(c) ACCESS TO ONSS' OFFICES, PROPERTIES AND RECORDS; UPDATING INFORMATION.
(1) Except as may be necessary to comply with any applicable law and
subject to any applicable privilege (including, without
limitation, the attorney-client privilege), from and after the
date hereof and until the Closing Date, ONSS shall permit USXX
and its Representatives to have, on reasonable notice and
request, and at reasonable times, reasonable access to such of
the offices, properties and employees of ONSS, and shall
disclose, and make available to USXX and its Representatives all
books, papers and records to the extent that they relate to the
ownership, operation, obligations and liabilities of or
pertaining to ONSS, its businesses, assets and liabilities.
Without limiting the application of the Confidentiality and
Non-Disclosure Agreement dated July 18, 2000 between ONSS and
USXX (the "Confidentiality Agreement"), all documents or
information furnished by ONSS hereunder shall be subject to the
Confidentiality Agreement and Section 10.13 hereof.
(2) ONSS will notify USXX as promptly as practicable of any
significant change in the Ordinary Course of Business or
operation of ONSS and of any material complaints, investigations
or hearings (or communications indicating that the same may be
contemplated) by any Governmental Body, or the institution or
overt threat or settlement of any material Proceeding involving
or affecting ONSS or the transactions contemplated by this
Agreement, and subject to any applicable privilege (including,
without limitation, the attorney-client privilege), shall use
reasonable efforts to keep USXX fully informed of such
36
events and permit USXX's Representatives access to all materials
prepared in connection therewith, consistent with any applicable
Legal Requirement or Contract.
(3) As promptly as practicable after USXX's request, subject to any
applicable privilege (including, without limitation, the
attorney-client privilege), ONSS will furnish such financial and
operating data and other information pertaining to ONSS and its
businesses and assets as USXX may reasonably request; PROVIDED,
HOWEVER, that nothing herein will obligate ONSS to take actions
that would unreasonably disrupt its Ordinary Course of Business
or violate the terms of any Legal Requirement or Contract to
which it is a party or to which any of its assets is subject in
providing such information, or to incur any costs with respect to
USXX's external auditors (or ONSS' external auditors in the event
a report by such auditors is requested by USXX) providing
accounting services with respect to issuing an auditor's report
required by or for USXX.
(d) GOVERNMENTAL APPROVALS; THIRD PARTY CONSENTS. ONSS will use its
commercially reasonable best efforts to obtain all necessary consents,
approvals and waivers from any Person required in connection with the
transactions contemplated hereby under any license, lease, permit or
Contract applicable to ONSS, including, without limitation, the
approvals of those Governmental Bodies and the consents of those third
parties listed in Section 5.5 and Section 5.6 of the ONSS Disclosure
Schedule; PROVIDED, HOWEVER that ONSS shall not be required to make
any payments (other than de minimus transfer fees) with respect to
obtaining the approvals and consents contemplated in this Section
6.1(d), except for payments for which ONSS is obligated under
agreements with third parties existing as of the date of this
Agreement with respect to such approvals and consents.
(e) DIVIDENDS. Except as expressly consented to in writing by USXX, ONSS
shall not: (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock; (ii) split,
combine or reclassify any of its capital stock or the capital stock of
any Subsidiary or issue or authorize or propose the issuance of any
other securities in respect of, or in substitution for, shares of its
capital stock; or (iii) redeem, repurchase or otherwise acquire any
shares of its capital stock other than redemptions, repurchases and
other acquisitions of shares of capital stock in connection with the
administration of employee benefit plans as in effect on the date
hereof in the ordinary course of the operation of such plans
consistent with past practice.
(f) ISSUANCE OF SECURITIES. Except as expressly consented to in writing
by USXX or as contemplated by Section 6.1 of the ONSS Disclosure
Schedule and except for issuances of shares of ONSS Common Stock
pursuant to the exercise of ONSS Public Warrants, Xxxxxxxx Warrants
and employee stock options, ONSS shall not issue, agree to issue,
deliver, sell, award, pledge, dispose of or otherwise encumber
37
or authorize or propose the issuance, delivery, sale, award, pledge,
disposal or other encumbrance of, any shares of its capital stock of
any class or any securities convertible into or exchangeable for, or
any rights, warrants or options to acquire, any such shares or
convertible or exchangeable securities.
(g) ACCOUNTING. Except as expressly consented to in writing by USXX, ONSS
shall not make any changes in its accounting methods, principles or
practices except as required by law, rule, regulation or GAAP.
(h) NO SHOPPING.
(1) Subject to the qualification and provisions of Section 6.1(h)(2)
below, ONSS will immediately cease and cause to be terminated any
existing solicitation, initiation, encouragement, activity,
discussion or negotiations with any parties conducted heretofore
by ONSS or any of its representatives with respect to any
Business Combination.
(2) ONSS shall not, and shall not authorize or permit any of its (or
any of its Subsidiaries') officers, directors, agents, financial advisors,
attorneys, accountants or other Representatives to, directly or indirectly,
solicit, initiate or encourage submission of proposals or offers from any Person
relating to, or that could reasonably be expected to lead to, a Business
Combination or participate in any negotiations or discussions regarding, or
furnish to any other Person any information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person to do or seek a Business Combination;
PROVIDED, HOWEVER, that until the later of the ONSS Stockholders' Approval, the
USXX Stockholders' Approval, the date upon which USXX satisfies the condition to
ONSS' obligation to close that is set forth in Section 7.2(l) hereof, and such
other date upon which USXX (which shall have no obligation but may do so in its
sole discretion) waives in writing its condition of Closing set forth in Section
7.1(n), ONSS may, in response to an unsolicited written proposal from a third
party with respect to a Business Combination, (i) furnish information to, and
negotiate, explore or otherwise engage in substantive discussions with such
third party if ONSS' Board of Directors determines, in its good faith judgment,
after consultation with and the receipt of the advice of its financial advisor
and its outside counsel, in each case with customary qualifications, that the
failure to take any of such actions could result in a breach of fiduciary duty
by ONSS' Board of Directors under applicable law, (ii) in connection with any
Business Combination proposal, take and disclose to ONSS' stockholders a
position in favor of such proposal or not in favor of the transactions
contemplated hereby in connection therewith, if ONSS' Board of Directors
determines, in its good faith judgment, after consultation with and the receipt
of the advice of its financial advisor and its outside
38
counsel, in each case with customary qualifications, that such
Business Combination is a Superior Proposal and that the failure
to do any of the foregoing actions could result in a breach of
the fiduciary duties of ONSS' Board of Directors under applicable
law and (iii) make such disclosure to ONSS' stockholders which in
the good faith judgment of ONSS' Board of Directors is required
by applicable law, based on the advice of its outside counsel.
Prior to furnishing any non-public information to, entering into
negotiations with or accepting a Superior Proposal from such
third party, ONSS will (i) provide written notice to USXX to the
effect that it is furnishing information to or entering into
discussions or negotiations with such third party and
(ii) receive from such third party an executed confidentiality
agreement containing customary terms and conditions for
transactions of such nature.
(3) Except as expressly permitted by this Section 6.1(h), neither the
ONSS Board of Directors nor any committee thereof may, (i)
withdraw or modify, or propose publicly to withdraw or modify, in
a manner adverse to USXX, the approval or recommendation by such
Board of Directors or such committee of the Merger or this
Agreement, (ii) approve or recommend, or propose publicly to
approve or recommend, a Business Combination or (iii) cause ONSS
to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any
Business Combination. Notwithstanding the foregoing, until the
later of the ONSS Stockholders' Approval, the USXX Stockholders'
Approval, the date upon which USXX satisfies the condition to
ONSS' obligation to close that is set forth in Section 7.2(l)
hereof, and such other date upon which USXX (which shall have no
obligation but may do so in its sole discretion) waives in
writing its condition of Closing set forth in Section 7.1(n), in
response to an unsolicited Business Combination proposal from a
third party, if ONSS' Board of Directors determines, in its good
faith judgment, after consultation with and the receipt of the
advice of its financial advisor and outside counsel with
customary qualifications, that such proposal is a Superior
Proposal and that failure to do any of the actions set forth in
clauses (i), (ii) or (iii) above could result in a breach of the
fiduciary duties of ONSS' Board of Directors under applicable
law, ONSS' Board of Directors may (i) withdraw or modify its
approval or recommendation of the Merger or this Agreement,
approve or recommend a Business Combination or cause ONSS to
enter into a Business Combination and (ii) subject to ONSS having
paid to USXX the fees described in Section 8.3(a) hereof and
having entered into a definitive agreement with respect to such
Business Combination proposal, terminate this Agreement;
PROVIDED, HOWEVER, that prior to entering into a definitive
agreement with respect to a Business Combination proposal, ONSS
shall give USXX at least five (5) day's notice thereof (which
notice shall include a copy of the proposed definitive
agreement), and shall cause its Representatives to, negotiate
with
39
USXX to make such adjustments in the terms and conditions of
this Agreement as would enable ONSS to proceed with the
transactions contemplated herein on such adjusted terms;
PROVIDED, FURTHER, that if ONSS and USXX are unable to reach an
agreement on such adjustments within five (5) days after such
notice from ONSS, ONSS may enter into such definitive agreement,
subject to the provisions of Article VIII.
(4) ONSS shall notify USXX orally and in writing of any such offers
or proposals (including, without limitation, the material terms
and conditions of any such offer or proposal and the identity of
the Person making it) within one (1) business day of the receipt
thereof, and, subject to the terms and conditions of any
confidentiality agreement entered into by ONSS in accordance with
Section 6.1(h)(2), shall use commercially reasonable efforts to
keep USXX informed of the status and details of any such offer or
proposal and shall give USXX one (1) business day advance notice
of the first delivery of non-public information to such Person.
(5) For purposes of this Agreement, (i) "Business Combination" means
(other than the transactions contemplated or permitted by this
Agreement) (A) a merger, consolidation or other business
combination, share exchange, issuance of shares of capital stock,
tender offer or exchange offer, or similar transaction involving
ONSS, (B) acquisition in any manner, directly or indirectly, of a
majority interest in the capital stock of, or an equity interest
in a material portion of the assets of, ONSS, including any
single or multi-step transaction or series of related
transactions that is structured to permit a third party to
acquire beneficial ownership of a majority or greater equity
interest in ONSS, or (C) the acquisition in any manner, directly
or indirectly, of any material portion of the business or assets
(other than immaterial or insubstantial assets or inventory in
the Ordinary Course of Business) of ONSS and (ii) "Superior
Proposal" means a proposed Business Combination that ONSS' Board
of Directors determines, after consulting with ONSS' financial
advisors and outside counsel, is superior (taking into account
the financial terms of the proposed Business Combination and all
other factors that the ONSS Board of Directors determines in good
faith to be relevant) to the transactions contemplated hereby and
it appears that the party making the proposal is reasonably
likely to be able to consummate the Business Combination,
including funding therefor.
(i) SOLICITATION OF PROXIES; ONSS PROXY STATEMENT. Subject to Section
6.1(h), ONSS shall use its commercially reasonable efforts to solicit
from its stockholders proxies in favor of the Merger and shall take
all other action necessary or advisable to secure the ONSS
Stockholders' Approval. By the Voting Agreement and Proxy of even date
herewith, the ONSS shareholders thereto who collectively hold
approximately 23% of the voting shares of ONSS Common Stock have
agreed to vote, or cause to be
40
voted, all of the shares of ONSS Common Stock owned by such
shareholders in favor of this Agreement, the Merger and the other
transactions contemplated by this Agreement.
(j) ONSS STOCKHOLDERS' APPROVAL.
(1) Subject to the provisions of Section 6.1(h) and Section
6.1(j)(2), ONSS shall, as soon as reasonably practicable after
the date hereof (i) take all steps necessary to duly call, give
notice of, convene and hold a meeting of its stockholders
(including all adjournments thereof, the "ONSS Meeting") for the
purpose of securing the ONSS Stockholders' Approval, (ii)
distribute to its stockholders the ONSS Proxy Statement in
accordance with applicable federal and state law and with its
Organizational Documents, (iii) subject to the fiduciary duties
of its Board of Directors, recommend to its stockholders the
approval and adoption of this Agreement and the transactions
contemplated hereby and (iv) cooperate and consult with USXX with
respect to each of the foregoing matters.
(2) The ONSS Meeting for the purpose of securing the ONSS
Stockholders' Approval, including any adjournments thereof, will
be held on such date or dates as ONSS and USXX mutually
determine.
(k) RULE 145 LETTERS. ONSS shall promptly identify to USXX all officers
and directors of ONSS and any other persons who are "affiliates"
within the meaning of such term as used in Rule 145 under the
Securities Act ("Rule 145 Affiliates"), and ONSS shall use its
reasonable efforts to provide to USXX undertakings from such persons
("Rule 145 Letters") to the effect that no disposition of shares of
USXX Common Stock received in the Merger will be made by such persons
except within the limits and in accordance with the applicable
provisions of said Rule 145, as amended from time to time, or except
in a transaction which, in the opinion of legal counsel satisfactory
to USXX, is exempt from registration under the Securities Act.
(l) FINANCING ACTIVITIES. ONSS shall cooperate, to the fullest extent
commercially reasonable and practicable, with USXX's requests with
respect to refinancing by ONSS of the current maturities of any of its
indebtedness, and any repurchase, redemption or prepayment by ONSS of
any of its indebtedness that may be required prior to or because of
the Merger or that USXX may request that ONSS effect prior to the
Merger, so as to permit USXX to have the maximum opportunity to
refinance, on or promptly after the Closing Date without any penalty
except as may be due pursuant to the terms of ONSS' indebtedness as in
effect on the date of this Agreement, any of ONSS' indebtedness
outstanding on the Closing Date; PROVIDED, HOWEVER, that ONSS shall
not be required to consummate prior to the Effective Time any such
refinancing, repurchase, redemption or repayment requested by USXX.
41
(m) ONSS DISCLOSURE SCHEDULE . On the date hereof, ONSS has delivered to
USXX the ONSS Disclosure Schedule, accompanied by a certificate signed
by an executive officer of ONSS stating the ONSS Disclosure Schedule
is being delivered pursuant to this Section 6.1(m). The ONSS
Disclosure Schedule constitutes an integral part of this Agreement and
modifies the representations, warranties, covenants or agreements of
ONSS contained herein to the extent that such representations,
warranties, covenants or agreements expressly refer to the ONSS
Disclosure Schedule.
SECTION 6.2 COVENANTS OF USXX. USXX agrees to observe and perform the
following covenants and agreements:
(a) GOVERNMENTAL APPROVALS; THIRD PARTY CONSENTS. USXX will use its
commercially reasonable best efforts at USXX's sole expense to obtain
all necessary consents, approvals and waivers from any Person required
in connection with the transactions contemplated hereby under any
license, lease, permit, Contract or agreement applicable to USXX,
including, without limitation, the approvals of those Governmental
Bodies and the consents of those third parties listed in Section 4.5
of the USXX Disclosure Schedule.
(b) EMPLOYEE BENEFITS. With respect to the employees of the Surviving
Corporation, except as otherwise specified herein, USXX agrees to make
up to 3,600,000 options to purchase shares of USXX Common Stock
available at Closing for grant to employees of the Surviving
Corporation (which includes 1,000,000 for Xxxxxxxxxxx Xxxxxx as
contemplated by Exhibit A hereof and 600,000 for Xxxxx Xxxxxx). The
exercise price for such options shall be $1.00 per share and such
options shall vest pro rata over four years. These grants will be
made by the Compensation Committee of the Board of Directors of USXX
after taking into consideration Xx. Xxxxxx'x recommendation.
(c) BLUE SKY PERMITS. USXX shall use its commercially reasonable best
efforts to obtain, prior to the effective date of the Registration
Statement, all necessary state securities laws or "blue sky" permits
and approvals required to carry out the transactions contemplated by
the Agreement, and will pay all expenses incident thereto.
(d) ONSS INDEBTEDNESS. On the Closing Date, USXX shall either pay or
refinance any indebtedness of ONSS that will become due as a result of
the transactions contemplated hereby.
(e) OFFICER OF SURVIVING CORPORATION. From the Effective Time until the
earlier of his resignation or removal, Xxxxxxxxxxx X. Xxxxxx shall
serve as President and Chief Executive Officer of the Surviving
Corporation. On the Closing Date, USXX shall cause the Surviving
Corporation to assume Xx. Xxxxxx'x existing employment agreement, as
amended to reflect the terms set forth on EXHIBIT A.
42
(f) USXX DISCLOSURE SCHEDULE. On the date hereof, USXX has delivered to
ONSS the USXX Disclosure Schedule, accompanied by a certificate signed
by an executive officer of USXX stating that the USXX Disclosure
Schedule is being delivered pursuant to this Section 6.2(f). The USXX
Disclosure Schedule constitutes an integral part of this Agreement and
modifies the representations, warranties, covenants or agreements of
USXX contained herein to the extent that such representations,
warranties, covenants or agreements expressly refer to the USXX
Disclosure Schedule.
(g) CONDUCT OF THE BUSINESS PRIOR TO THE CLOSING DATE. Except (i) as
contemplated in this Agreement, (ii) in connection with the proposed
sale of its Prison Industry Enhancement business, (iii) as required by
law or regulation or (iv) as otherwise expressly consented to in
writing by ONSS, which consent will not be unreasonably withheld or
delayed, prior to the Closing, USXX will:
(1) Not make or permit any material change in the general nature of
its business;
(2) Maintain its present operations in the Ordinary Course of
Business in accordance with prudent business judgment and
consistent with past practice and policy, and maintain its assets
in good repair, order and condition, reasonable wear and tear
excepted, subject to retirements in the Ordinary Course of
Business;
(3) Preserve USXX as an ongoing business and use reasonable efforts
to maintain the goodwill associated with USXX; and
(4) Preserve all of USXX' licenses, authorizations and other
governmental rights and permits necessary for the operation of
USXX.
(h) ACCESS TO USXX'S OFFICES, PROPERTIES AND RECORDS; UPDATING
INFORMATION.
(1) Except as may be necessary to comply with any applicable law and
subject to any applicable privilege (including, without
limitation, the attorney-client privilege), from and after the
date hereof and until the Closing Date, USXX and its Subsidiaries
shall permit ONSS and its Representatives to have, on reasonable
notice and request, and at reasonable times, reasonable access to
such of the offices, properties and employees of USXX and its
Subsidiaries, and shall disclose, and make available to ONSS and
its Representatives all books, papers and records to the extent
that they relate to the ownership, operation, obligations and
liabilities of or pertaining to USXX, its Subsidiaries and their
respective businesses and assets. Without limiting the
application of the Confidentiality Agreement, all documents or
information furnished by USXX and its Subsidiaries hereunder
shall be subject to the Confidentiality Agreement and Section
10.13 herein.
43
(2) USXX will notify ONSS as promptly as practicable of any
significant change in the Ordinary Course of Business or
operation of USXX or any of its Subsidiaries and of any material
complaints, investigations or hearings (or communications
indicating that the same may be contemplated) by any Governmental
Body, or the institution or overt threat or settlement of any
material Proceeding involving or affecting USXX or any of its
Subsidiaries or the transactions contemplated by this Agreement,
and subject to any applicable privilege (including, without
limitation, the attorney-client privilege), shall use reasonable
efforts to keep ONSS fully informed of such events and permit
ONSS' Representatives access to all materials prepared in
connection therewith consistent with any applicable Legal
Requirement or Contract.
(i) FINANCING. Prior to the Closing Date, USXX shall use commercially
reasonable efforts to obtain financing on commercially reasonable
terms necessary for payment of (i) the Cash Consideration at Closing
and (ii) any indebtedness of ONSS that will become due as a result of
the transactions contemplated hereby. From the Closing Date until the
date twelve months thereafter, USXX shall use its reasonable efforts
to make available to the Surviving Corporation at least Five Million
Dollars ($5,000,000). The use of such funds would be based on
requests by the Surviving Corporation's Chief Executive Officer,
subject to the approval of the Board of Directors of USXX as to the
application of such funds in light of the anticipated returns on
investment.
(j) SOLICITATION OF PROXIES; USXX PROXY STATEMENT. USXX shall use its
reasonable best efforts to solicit from USXX's shareholders proxies in
favor of the Charter Amendment and, if USXX in its sole discretion
determines it is advisable, the Merger, and shall take all other
action necessary or advisable to secure the USXX Stockholders'
Approval. By the Voting Agreement and Proxy of even date herewith,
certain stockholders of USXX who collectively hold approximately 75%
of the voting shares of USXX Common Stock (including shares of Series
A Stock and Series C Stock, which vote together with USXX Common
Stock) have agreed to vote, or cause to be voted, all of the shares of
USXX Common Stock and capital stock of USXX owned by such stockholders
in favor of this Agreement, the Merger and the other transactions
contemplated by this Agreement (including, without limitation, the
Charter Amendment).
(k) USXX STOCKHOLDER APPROVAL.
(1) Subject to the provisions of Section 6.2(k)(2), USXX shall,
as soon as reasonably practicable after the date hereof (i) take all
steps necessary to duly call, give notice of, convene and hold a
meeting (or meetings, if USXX in its sole discretion determines that a
separate meeting with respect to the Merger is advisable) of its
shareholders (individually or collectively, including all adjournments
thereof,
44
the "USXX Meeting") for the purpose of securing the USXX Stockholders'
Approval, (ii) distribute to its shareholders the USXX Proxy Statement
in accordance with applicable federal and state law and with its
Organizational Documents, (iii) recommend to its shareholders the
approval of the Charter Amendment and, if applicable, this Agreement
and the transactions contemplated hereby, and (iv) cooperate and
consult with ONSS with respect to each of the foregoing matters.
(2) If necessary, any USXX Meeting for the purpose of securing
the USXX Stockholders' Approval of this Agreement and the transactions
contemplated hereby, including any adjournments thereof, will be held
on such date or dates as ONSS and USXX mutually determine.
SECTION 6.3 ADDITIONAL AGREEMENTS.
(a) THE REGISTRATION STATEMENT, THE ONSS PROXY STATEMENT AND THE USXX
PROXY STATEMENT. As soon as practicable after the date hereof, ONSS
and USXX shall take such reasonable steps as are necessary for the
prompt preparation and filing with the SEC of (i) the ONSS Proxy
Statement by ONSS, (ii) the USXX Proxy Statement by USXX and (iii) the
Registration Statement, which will include information contained in
the ONSS Proxy Statement, by USXX. The foregoing shall include
without limitation: (i) obtaining and furnishing the information
required to be included therein, (ii) after consultation between ONSS
and USXX, responding promptly to any comments made by the SEC with
respect to the ONSS Proxy Statement, the USXX Proxy Statement and the
Registration Statement and any amendments and preliminary versions
thereof and (iii) causing the Registration Statement to become
effective, the ONSS Proxy Statement to be mailed to ONSS' shareholders
at the earliest practicable date and the USXX Proxy Statement to be
mailed to USXX' shareholders at the earliest practicable date. ONSS
agrees, as to information with respect to ONSS, its officers,
directors, shareholders and Subsidiaries contained in the Registration
Statement, the ONSS Proxy Statement and the USXX Proxy Statement, and
USXX agrees, as to information with respect to USXX, its officers,
directors, shareholders and Subsidiaries contained in the Registration
Statement, the ONSS Proxy Statement and the USXX Proxy Statement, that
such information, in the case of the ONSS Proxy Statement at the time
of the mailing of the ONSS Proxy Statement and (as then amended or
supplemented) at the time of the ONSS Meeting, in the case of the USXX
Proxy Statement, at the time of the mailing of the USXX Proxy
Statement and (as then amended or supplemented) at the time of the
USXX Meeting or in the case of the Registration Statement at the time
of the mailing of the ONSS Proxy Statement (as then amended or
supplemented), at the time of the ONSS Meeting and at the effective
time of the Registration Statement, will not contain any untrue
statement of 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. No representation,
warranty, covenant or agreement is made by or on behalf of ONSS with
respect to information supplied in writing by USXX for inclusion in
the ONSS
45
Proxy Statement, the USXX Proxy Statement or the Registration
Statement. No representation, warranty, covenant or agreement is made
by or on behalf of USXX with respect to information supplied in
writing by ONSS for inclusion in the ONSS Proxy Statement, the USXX
Proxy Statement or the Registration Statement. No filing of, or
amendment or supplement to, the ONSS Proxy Statement, the USXX Proxy
Statement or the Registration Statement shall be made by any party
hereto without providing the other party with the opportunity to
review and comment thereon (except for any ongoing SEC reporting
required of USXX or ONSS that will be incorporated by reference and
except with respect to any USXX Proxy Statement that does not contain
a vote on the Merger). If at any time prior to the Effective Time any
information relating to any party hereto or any of their respective
officers, directors, shareholders or Subsidiaries, should be
discovered by any party hereto which should be set forth in an
amendment or supplement to the ONSS Proxy Statement, the USXX Proxy
Statement or the Registration Statement so that the ONSS Proxy
Statement, the USXX Proxy Statement or the Registration Statement
would not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading,
the party which discovers such information shall promptly notify the
other party hereto and an appropriate amendment or supplement
describing such information shall be promptly prepared, filed with the
SEC and, to the extent required by law, disseminated to the
shareholders of ONSS and/or the shareholders of USXX, as may be
necessary.
(b) FURTHER ASSURANCES. Each of ONSS and USXX agrees, and USXX agrees to
cause its Subsidiaries, to take all such reasonable and lawful action
as may be necessary or appropriate in order to effectuate the Merger
in accordance with this Agreement as promptly as possible. If, at any
time after the Effective Time, any such further action is necessary or
desirable to carry out the purpose of this Agreement and to vest the
Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of ONSS,
the officers and directors of the Surviving Corporation will be fully
authorized to take, and will take, all such lawful and necessary
action.
ARTICLE VII
CONDITIONS
SECTION 7.1 CONDITIONS TO USXX'S AND NEWCO'S OBLIGATION TO EFFECT THE
MERGER. The obligation of USXX and Newco to effect the transactions
contemplated by this Agreement shall be subject to fulfillment at or prior to
the Closing of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE AS OF THE CLOSING DATE. ONSS'
representations and warranties in this Agreement shall have been
accurate in all material respects as of the date of this Agreement and
shall be accurate in all material respects as of the
46
Closing Date as if made on the Closing Date (except to the extent that
such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties shall be
accurate in all material respects as of such earlier date); provided,
however, that any such representation or warranty that is qualified by
any standard of materiality (including, but not limited to, ONSS
Material Adverse Effect) shall have then been, and shall then be,
accurate in all respects.
(b) COMPLIANCE WITH AGREEMENTS. The covenants, agreements and conditions
required by this Agreement to be performed and complied with by ONSS
shall have been performed and complied with in all material respects
prior to or at the Closing Date.
(c) CERTIFICATE. ONSS shall execute and deliver to USXX a certificate of
an authorized officer of ONSS, dated the Closing Date, stating that
the conditions specified in Sections 7.1(a) and 7.1(b) of this
Agreement applicable to ONSS have been satisfied.
(d) GOVERNMENTAL APPROVALS. All approvals, consents, opinions or rulings
of all Governmental Bodies required in order to consummate the
transactions contemplated hereby shall have been obtained by Final
Order in such form as is, and with no conditions that are,
individually or in the aggregate, reasonably likely to have a ONSS
Material Adverse Effect or a material adverse effect on the business,
operations, properties, financial condition or results of operations
of USXX.
(e) THIRD PARTY CONSENTS. Each of the consents required under Section 5.4
of this Agreement shall have been obtained to the reasonable
satisfaction of USXX, other than any such consents which, if not
obtained, are not, individually or in the aggregate, reasonably likely
to result in a ONSS Material Adverse Effect after the Closing.
(f) INJUNCTIONS. On the Closing Date, there shall be no Orders which
operate to restrain, enjoin or otherwise prevent the consummation of
this Agreement or the Merger.
(g) OPINION OF TAX COUNSEL. On the Closing Date, USXX shall have received
from King & Spalding, special tax counsel to ONSS, a reliance letter
authorizing USXX to rely on the opinion contemplated in Section 7.2
(f) of this Agreement.
(h) STOCKHOLDER APPROVALS. The USXX Stockholders' Approval and the ONSS
Stockholders' Approval shall have been obtained.
(j) APPRAISAL RIGHTS. Demand for payment for shares and appraisal thereof
by stockholders of ONSS in accordance with the DGCL with respect to
the Merger shall not equal or exceed 5 percent of the shares of ONSS
Common Stock entitled to vote on the Merger.
47
(k) RULE 145 LETTERS. Each Rule 145 Affiliate shall have executed and
delivered to USXX a Rule 145 Letter, in form and substance reasonably
satisfactory to USXX and its counsel, which letters also shall include
a 90-day restriction on any sale or transfer of any of their shares of
USXX Common Stock received in the Merger.
(l) REGISTRATION STATEMENT. The Registration Statement shall have become
effective, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been initiated or threatened by the SEC.
(m) USXX CHARTER AMENDMENT. USXX's Restated Certificate of Incorporation
shall have been amended to increase to at least 500,000,000 the
number of shares of USXX Common Stock authorized (the "Charter
Amendment").
(n) USXX FINANCING. USXX shall have obtained sufficient financing for the
payment of the Cash Consideration and any indebtedness of ONSS that
will become due as a result of the transactions contemplated by this
Agreement.
SECTION 7.2 CONDITIONS TO ONSS' OBLIGATIONS TO EFFECT THE MERGER. The
obligation of ONSS to effect the transactions contemplated by this Agreement
shall be subject to fulfillment at or prior to the Closing of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE AS OF THE CLOSING DATE. USXX's
representations and warranties in this Agreement shall have been
accurate in all material respects as of the date of this Agreement and
shall be accurate in all material respects as of the Closing Date as
if made on the Closing Date (except to the extent such representations
and warranties specifically relate to an earlier date, in which case
such representations and warranties shall be accurate in all material
respects as of such earlier date); PROVIDED, HOWEVER, that any such
representation or warranty that is qualified by any standard of
materiality (including, but not limited to, USXX Material Adverse
Effect) shall have then been , and shall then be, accurate in all
respects.
(b) COMPLIANCE WITH AGREEMENTS. The covenants, agreements and conditions
required by this Agreement to be performed and complied with by USXX
shall have been performed and complied with in all material respects
prior to or at the Closing Date.
(c) CERTIFICATE. USXX shall execute and deliver to ONSS a certificate of
an authorized officer of USXX, dated the Closing Date, stating that
the conditions specified in Sections 7.2(a) and 7.2(b) of this
Agreement applicable to USXX have been satisfied
(d) GOVERNMENTAL APPROVALS. All approvals, consents, opinions or rulings
of all Governmental Bodies required in order to consummate the
transactions contemplated hereby shall have been obtained by Final
Order in such form as is, and with no conditions that are,
individually or in the aggregate, reasonably likely to have a
48
material adverse effect on the business, operations, properties,
financial condition or results of operations of the Surviving
Corporation.
(e) INJUNCTIONS. On the Closing Date, there shall be no Orders which
operate to restrain, enjoin or otherwise prevent the consummation of
this Agreement or the Merger.
(f) OPINION OF COUNSEL. On the Closing Date, ONSS shall have received
from King & Spalding, special tax counsel to ONSS, an opinion to the
effect that the Merger will be treated for federal income tax purposes
as a "reorganization" within the meaning of IRC Section 368(a), and
that no gain or loss will be recognized for federal income tax
purposes by the stockholders of ONSS who receive USXX Common Stock in
the Merger upon their receipt of the Merger Consideration, except that
any realized gain will be recognized to the extent of the amount of
cash received (including cash in lieu of the fractional shares).
(g) STOCKHOLDER APPROVAL. The USXX Stockholders' Approval and the ONSS
Stockholders' Approval shall have been obtained.
(h) REGISTRATION STATEMENT. The Registration Statement shall have become
effective, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been initiated or threatened by the SEC.
(i) USXX CHARTER AMENDMENT. USXX's Restated Certificate of Incorporation
shall have been amended to increase to at least 500,000,000 the number
of shares of USXX Common Stock authorized.
(j) USXX FINANCING. USXX shall have obtained sufficient financing for the
payment of the Cash Consideration and any indebtedness of ONSS that
will become due as a result of the transactions contemplated by this
Agreement.
(k) ONSS INDEBTEDNESS. USXX shall have (i) paid any and all indebtedness
of ONSS that will become due as a result of the transactions
contemplated by this Agreement or (ii) made reasonably satisfactory
arrangements to pay any indebtedness of ONSS that will become due as a
result of the transactions contemplated hereby.
(l) PORTRIS, INC. USXX shall have completed a $380,000 investment
(representing at least a 30% equity interest) in Portris, Inc.
ARTICLE VIII
TERMINATION
49
SECTION 8.1 TERMINATION RIGHTS. This Agreement may be terminated in its
entirety at any time prior to the Closing:
(a) By the mutual written consent of USXX and ONSS;
(b) By ONSS, on the one hand, or USXX, on the other hand, in writing if
there shall be in effect a non-appealable order of a court of
competent jurisdiction prohibiting the consummation of the Merger in
accordance with this Agreement;
(c) By ONSS, by written notice to USXX, if there is a breach of any
representation, warranty, covenant or agreement of USXX, which breach
cannot be cured and would cause the conditions set forth in Section
7.2(a) or (b) to be incapable of being satisfied;
(d) By USXX, by written notice to ONSS, if there is a breach of any
representation, warranty, covenant or agreement of ONSS, which breach
cannot be cured and would cause the conditions set forth in Section
7.1(a) or (b) to be incapable of being satisfied;
(e) By ONSS, by written notice to USXX in accordance with Section
6.1(h)(3); PROVIDED, HOWEVER, that the termination described in this
clause (e) shall not be effective unless and until ONSS shall have
paid USXX the fee described in Section 8.3(a) and ONSS has
substantially contemporaneously entered into a definitive agreement
with respect to the proposed Business Combination;
(f) By ONSS, by written notice to USXX, if the ONSS Stockholders' Approval
is not obtained at the ONSS Meeting or the USXX Stockholders' Approval
is not obtained at the USXX Meeting, or by USXX, by written notice to
ONSS, if the ONSS Stockholders' Approval is not obtained at the ONSS
Meeting or the USXX Stockholders' Approval is not obtained at the USXX
Meeting;
(g) By USXX, by written notice to ONSS, if the Board of Directors of ONSS
or any committee thereof (i) withdraws or modifies, or proposes
publicly to withdraw or modify, in a manner adverse to USXX, the
approval or recommendation by the Board of Directors or such committee
of the Merger or this Agreement, (ii) approves or recommends, or
proposes publicly to approve or recommend, a Business Combination,
(iii) causes ONSS to enter into a definitive agreement related to any
Business Combination or (iv) resolves to take any of the actions
specified in clause (i), (ii) and (iii) above;
(h) By USXX, by written notice to ONSS, if a third party, including a
group (as defined under the Exchange Act) acquires securities
representing greater than 50% of the voting power of the outstanding
voting securities of ONSS;
50
(i) By either party in writing at any time after 5:00 p.m., Eastern Time,
on March 31, 2001 (the "Initial Termination Date"), if the Closing has
not occurred prior thereto; PROVIDED, HOWEVER, that the right to
terminate this Agreement under this Section 8.1(i) will not be
available to any party that is in material breach of its
representations, warranties, covenants or agreements contained herein;
and PROVIDED, FURTHER, that if Closing has not occurred by such date
because the conditions precedent to Closing set forth in Section
7.1(l) and Section 7.2(h) have not been fulfilled, then such date
shall be automatically extended to June 30, 2001; or
(j) By ONSS, if the Average Trading Price of USXX Common Stock as of the
date on which the Closing would have occurred is lower than $0.675.
SECTION 8.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 8.1, this Agreement shall be of no further force and effect
and there shall be no further liability hereunder on the part of any party or
its Affiliates, directors, officers, stockholders, agents or other
Representatives; PROVIDED, HOWEVER, that (i) any fee payable under Section
8.3(a) is paid to USXX and (ii) no such termination shall relieve any party of
liability for (A) any claims, damages or losses suffered by the other party as a
result of the negligent or willful failure of a party to perform any obligations
required to be performed by it hereunder on or prior to the date of termination
or (B) any willful breach of such party's representations or warranties
contained in this Agreement. Notwithstanding anything to the contrary contained
herein, the provisions of Section 8.2, Sections 10.1 through 10.6, Sections 10.8
through 10.11, and Section 10.13 of this Agreement shall survive any termination
of this Agreement.
SECTION 8.3 TERMINATION FEE; EXPENSES.
(a) TERMINATION FEE. If this Agreement is terminated pursuant to Section
8.1(e), 8.1(g) or 8.1(h), then ONSS shall pay to USXX promptly (but
not later than five business days after notice is received from USXX)
an amount equal to $1.5 million in cash and such payment shall
represent a full and complete satisfaction of all of ONSS' obligations
under this Agreement.
(b) EXPENSES. The parties agree that the agreements contained in this
Section 8.3 are an integral part of the transactions contemplated by
this Agreement and constitute liquidated damages and not a penalty.
Notwithstanding anything to the contrary contained in this Section
8.3, if ONSS fails to pay promptly to USXX the fee due under Section
8.3(a), in addition to any amounts paid or payable pursuant to Section
8.3(a), ONSS shall pay the costs and expenses (including legal fees
and expenses) in connection with any action, including the filing of
any lawsuit or other legal action, taken to collect payment, together
with interest on the amount of any unpaid fee calculated using an
annual percentage rate of interest equal to the prime rate published
in the WALL STREET JOURNAL on the date (or preceding business day if
such date is not a business day) such fee was required to be paid,
compounded on a daily basis using a 360-day year.
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ARTICLE IX
INDEMNIFICATION; REMEDIES
SECTION 9.1 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) INDEMNIFICATION AND INSURANCE. For a period of six years after the
Effective Time, the Surviving Corporation will indemnify and hold
harmless the present and former officers and directors of ONSS (the
"Indemnified Parties") in respect of acts or omissions occurring prior
to the Effective Time to the extent provided under ONSS' certificate
of incorporation and bylaws in effect on the date hereof; PROVIDED,
HOWEVER, that if any claim or claims are asserted or made within such
six-year period, all rights to indemnification in respect of such
claims shall continue until the final disposition of any and all such
claims. For six years after the Effective Time, the Surviving
Corporation will use its reasonable best efforts to provide officers'
and directors' liability insurance in respect of acts or omissions
occurring prior to the Effective Time covering each such person
currently covered by ONSS' officers' and directors' liability
insurance policy on terms with respect to coverage and amount no less
favorable than those of such policy in effect on the date hereof;
PROVIDED, HOWEVER, that in satisfying its obligation under this
Section, if the annual premiums of such insurance coverage exceed 200%
of the previous year's premiums, the Surviving Corporation will be
obligated to obtain a policy with the best coverage available, in the
reasonable judgment of the Board of Directors of the Surviving
Corporation for a cost not exceeding such amount.
(b) SUCCESSORS. In the event the Surviving Corporation or any of its
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 all or substantially
all of its properties and assets to any Person, then and in either
such case, proper provisions must be made so that the successors and
assigns of the Surviving Corporation will assume the obligations set
forth in this Section 9.1.
(c) SURVIVAL OF INDEMNIFICATION . To the fullest extent permitted by law,
from and after the Effective Time, all rights to indemnification as of
the date hereof in favor of the employees, agents, directors and
officers of ONSS with respect to their activities as such prior to the
Effective Time, as provided in its Organizational Documents in effect
on the date hereof, or otherwise in effect on the date hereof, will
survive the Merger and will continue in full force and effect except
for amendments to make changes permitted by law that would enhance the
rights of past or present officers and directors to indemnification or
advancement of expenses in respect of acts or omissions occurring
prior to the Effective Time for a period of not less than six years
from the Effective Time (or, in the case of matters occurring prior to
the Effective Time which have not been resolved prior to the sixth
anniversary of the Effective Time, until such matters are finally
resolved).
52
SECTION 9.2 REPRESENTATIONS AND WARRANTIES. Each and every representation
and warranty of either party shall expire at, and be terminated and extinguished
with, the Effective Time.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 EXPENSES. Each of the parties will pay all costs and
expenses of its performance of and compliance with this Agreement, except (i) as
provided in Section 8.3 and as expressly provided otherwise herein, (ii) ONSS
shall pay all fees and expenses of counsel for ONSS, (iii) USXX shall pay all
fees and expenses of counsel for USXX and Newco and (iv) USXX and ONSS will each
pay half of the combined costs of printing and mailing to the ONSS stockholders
the prospectus that is a part of the Registration Statement, the USXX Proxy
Statement and the ONSS Proxy Statement.
SECTION 10.2 NOTICES. All notices, requests and other communications
hereunder shall be in writing and shall be deemed to have been given upon
receipt if either (a) personally delivered, (b) sent by prepaid first class
mail, and registered or certified and a return receipt requested or (c) by
facsimile telecopier with completed transmission acknowledged:
if to ONSS, to:
On-Site Sourcing, Inc.
0000 Xxxxx 00xx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxx,
President and Chief Executive Officer
Telecopier: (000) 000-0000
with a copy to:
King & Spalding
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
53
if to USXX, to:
U.S. Technologies Inc.
0000 Xxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: C. Xxxxxxx Xxxxx
Co-Chairman and Co-Chief Executive Officer
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxxxxx and Xxxxx, L.L.P.
0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx Xxxxx
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
or at such other address or number as shall be given in writing by a party to
the other parties.
SECTION 10.3 ASSIGNMENT. This Agreement may not be assigned by any party
hereto without the prior written consent of the other parties hereto. Any
assignment in violation of the terms of this Agreement shall be null and void AB
INITIO.
SECTION 10.4 SUCCESSOR BOUND. Subject to the provisions of Section 10.3,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
SECTION 10.5 GOVERNING LAW; FORUM; CONSENT TO JURISDICTION. This
Agreement shall be construed in accordance with and governed by the laws of the
State of Delaware without regard to its rules for conflicts of law. Each party
to this Agreement hereby irrevocably and unconditionally (i) consents to submit
to the exclusive jurisdiction of the Chancery Court of the State of Delaware for
any proceeding arising in connection with this Agreement (and each such party
agrees not to commence any such proceeding, except in such court), (ii) waives
any objection to the laying of venue of any such proceeding in the Chancery
Court of the State of Delaware, and (iii) waives and agrees not to plead or to
make, any claim that any such proceeding brought in Chancery Court of the State
of Delaware has been brought in an improper or otherwise inconvenient forum.
SECTION 10.6 WAIVER OF TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH ANY SUCH PARTY MAY BE
A PARTY ARISING OUT OF OR IN ANY WAY PERTAINING TO (I) THIS AGREEMENT, (II) THE
MERGER, (III) THE CONFIDENTIALITY AGREEMENT OR (IV) ANY RELATED DOCUMENTS. IT
IS AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY
OF ALL CLAIMS AGAINST ALL PARTIES WHO ARE PARTIES TO THIS
54
AGREEMENT. THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY EACH
PARTY HERETO, AND EACH SUCH PARTY HEREBY REPRESENTS AND WARRANTS THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON TO INDUCE THIS
WAIVER OR TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. EACH
PARTY TO THIS AGREEMENT FURTHER REPRESENTS AND WARRANTS THAT EACH SUCH PARTY HAS
BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF EACH SUCH PARTY'S OWN FREE
WILL, AND THAT EACH SUCH PARTY HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER
WITH COUNSEL.
SECTION 10.7 COOPERATION; FURTHER DOCUMENTS.
(a) Each of the parties hereto agrees to use its respective commercially
reasonable efforts to take or cause to be taken all action, and to do
or cause to be done all things necessary, proper or advisable under
applicable laws, regulations or otherwise, to consummate and to make
effective the transactions contemplated by this Agreement, including,
without limitation, the timely performance of all actions and things
contemplated by this Agreement to be taken or done by each of the
parties hereto.
(b) Each party shall cooperate with the other party in such other party's
discharge of the obligations hereunder, which shall include making
reasonably available to the other party such of its personnel as have
relevant information, with respect thereto.
SECTION 10.8 CONSTRUCTION OF AGREEMENT. The terms and provisions of this
Agreement represent the results of negotiations between the parties hereto and
their Representatives, each of which has been represented by counsel of its own
choosing, and neither of which has acted under duress or compulsion, whether
legal, economic or otherwise. Accordingly, the terms and provisions of this
Agreement shall be interpreted and construed in accordance with their usual and
customary meanings, and ONSS and USXX hereby waive the application in connection
with the interpretation and construction of this Agreement of any rule of law to
the effect that ambiguous or conflicting terms or provisions contained in this
Agreement shall be interpreted or construed against the party whose attorney
prepared the executed draft or any earlier draft of this Agreement.
SECTION 10.9 PUBLICITY; ORGANIZATIONAL AND OPERATIONAL ANNOUNCEMENTS. No
party hereto shall issue, make or cause the publication of any press release or
other announcement with respect to this Agreement or the transactions
contemplated hereby, or otherwise make any disclosures relating thereto, without
the consent of the other party, such consent not to be unreasonably withheld or
delayed; PROVIDED, HOWEVER, that such consent shall not be required where such
release or announcement is required by applicable law or the rules or
regulations of a securities exchange, in which event the party so required to
issue such release or announcement shall endeavor, wherever possible, to furnish
an advance copy of the proposed release to the other party.
55
SECTION 10.10 WAIVER. Except as otherwise expressly provided in this
Agreement, neither the failure nor any delay on the part of any party to
exercise any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise or waiver of any such right,
power or privilege preclude any other or further exercise thereof, or the
exercise of any other right, power or privilege available to each party at law
or in equity.
SECTION 10.11 PARTIES IN INTEREST. This Agreement (including the
documents and instruments referred to herein) is not intended to confer upon any
Person, other than the parties hereto and their successors and permitted
assigns, any rights or remedies hereunder, except that the parties hereto agree
and acknowledge that the agreements and covenants contained in Section 9.1 are
intended for the direct and irrevocable benefit of the Indemnified Parties
described therein and their respective heirs or legal representatives (each such
director or Indemnified Party, a "Third Party Beneficiary"), and that each such
Third Party Beneficiary, although not a party to this Agreement, shall be and is
a direct and irrevocable third party beneficiary of such agreements and
covenants and shall have the right to enforce such agreements and covenants
against the Surviving Corporation in all respects fully and to the same extent
as if such Third Party Beneficiary were a party hereto.
SECTION 10.12 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur to a party in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that any
party shall be entitled to an injunction or injunctions to prevent breaches of
this agreement by any other party and to enforce specifically, to the fullest
extent available, the terms and provisions hereof, including each party's
obligation to close, in any court of the United States or any state having
jurisdiction, this being in addition to any other right or remedy to which any
party is entitled at law or in equity.
SECTION 10.13 CONFIDENTIALITY. In the event that the transactions
contemplated hereby are not consummated, each party hereto will return to the
other party all information and data relating to such other party provided by
such other party and any and all copies thereof, and in such event, each arty
agrees to take all reasonably necessary and appropriate precautions so that none
of its agents, employees, accountants, attorneys or other representatives
divulge any material information relating to the business of the other party to
a third party or use the same in any manner for the profit or to the benefit of
the party to whom the information was provided or any such employee, agent,
other representatives or a third party. The obligation of the parties hereto to
keep information confidential shall not apply to :
(a) any information which (i) was (at the time of the disclosure
thereof) generally known to the public; (ii) became known to the public through
no fault of the party or any of its agents or representatives; or (ii) was
disclosed to said party by a third party who was not bound by an obligation of
confidentiality to the other party;
(b) disclosures required to be made in accordance with any law,
regulation or order of a court or regulatory agency of competent jurisdiction or
authority or information included in filings pursuant hereto; or
56
(c) any disclosure of information in any action or proceeding brought
to enforce any provision of this Agreement.
SECTION 10.14 SECTION AND PARAGRAPH HEADINGS. The section and paragraph
headings in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 10.15 AMENDMENT. This Agreement may be amended only by an
instrument in writing executed by the parties hereto.
SECTION 10.16 ENTIRE AGREEMENT. This Agreement, the exhibits, annexes and
schedules hereto and the documents specifically referred to herein and the
Confidentiality Agreement constitute the entire agreement, understanding,
representations and warranties of the parties hereto with respect to the subject
matter hereof.
SECTION 10.17 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Remainder of this Page Intentionally Left Blank.]
57
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
U.S. TECHNOLOGIES INC.
By:
------------------------------------
Name: C. Xxxxxxx Xxxxx
Title: Co-Chairman of the Board and
Co-Chief Executive Officer
USXX ACQUISITION CORPORATION
By:
------------------------------------
Name: C. Xxxxxxx Xxxxx
Title: President
ON-SITE SOURCING, INC.
By:
------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
