EXHIBIT 2.1
EXECUTION COPY
INTERLAND, INC.,
BOBCATCUB ACQUISITION CORPORATION,
HOSTCENTRIC, INC.
AND
XXXXXXX X. XXXXXXX,
XXXXX XXXXXX AND
XXXXXXXXX XXXXXXXXX, AS
STOCKHOLDERS' REPRESENTATIVES
AGREEMENT AND PLAN OF MERGER
Dated as of December 19, 2002
TABLE OF CONTENTS
ARTICLE I. THE MERGER......................................................................................1
1.1 The Merger......................................................................................1
1.2 Effects of the Merger...........................................................................1
1.3 Closing.........................................................................................2
ARTICLE II CONVERSION AND EXCHANGE OF SHARES...............................................................2
2.1 Conversion of Shares of Hostcentric Stock; Cash Consideration...................................2
2.2 Escrow Fund.....................................................................................3
2.3 Payment of Merger Construction..................................................................3
2.4 Closing Adjustments.............................................................................4
2.5 Changes in Capitalization.......................................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF HOSTCENTRIC...................................................5
3.1 Organization, Standing and Power................................................................5
3.2 Capital Structure...............................................................................6
3.3 Authority.......................................................................................7
3.4 Compliance with Laws and Other Instruments; Non-Contravention...................................7
3.5 Technology and Intellectual Property Rights.....................................................8
3.6 Financial Statements...........................................................................11
3.7 No Undisclosed Liabilities.....................................................................11
3.8 Taxes..........................................................................................12
3.9 Absence of Certain Changes and Events..........................................................13
3.10 Real Property; Leases in Effect................................................................15
3.11 Personal Property..............................................................................15
3.12 Litigation and Other Proceedings...............................................................16
3.13 No Defaults....................................................................................16
3.14 Major Contracts................................................................................16
3.15 Material Reductions............................................................................17
3.16 Employees......................................................................................18
3.17 Employee Benefit Plans; ERISA; and Labor Relations.............................................18
3.18 Certain Agreements.............................................................................21
3.19 Environmental Matters..........................................................................21
3.20 Brokers........................................................................................22
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3.21 Supplier and Customer Relationships............................................................22
3.22 Product and Service Quality....................................................................22
3.23 Disruptions....................................................................................23
3.24 Insurance......................................................................................23
3.25 Immigration Matters............................................................................23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF INTERLAND AND MERGER SUB.....................................24
4.1 Organization Standing and Power................................................................24
4.2 Authority......................................................................................24
4.3 General........................................................................................24
4.4 Financial Statements...........................................................................25
4.5 Absence of Certain Changes.....................................................................25
4.6 Interland Shares...............................................................................25
4.7 SEC Filings; S-4 Eligibility...................................................................25
4.8 Brokers' and Finders' Fees.....................................................................26
4.9 Capital Structure..............................................................................26
4.10 Consents and Approvals; No Violations..........................................................26
4.11 No Undisclosed Liabilities.....................................................................27
4.12 Litigation and Other Proceedings...............................................................27
ARTICLE V COVENANTS......................................................................................28
5.1 Regular Course of Business.....................................................................28
5.2 Amendments.....................................................................................28
5.3 Capital Changes................................................................................28
5.4 Dividends......................................................................................28
5.5 Capital and Other Expenditures.................................................................28
5.6 Borrowing......................................................................................28
5.7 Full Access and Disclosure.....................................................................29
5.8 Confidentiality................................................................................29
5.9 Fulfillment of Conditions Precedent............................................................29
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5.10 Public Announcement............................................................................29
5.11 Full Access and Disclosure.....................................................................29
5.12 Confidentiality................................................................................30
5.13 Fulfillment of Conditions Precedent............................................................30
5.14 Public Announcement............................................................................30
ARTICLE VI ADDITIONAL AGREEMENTS..........................................................................30
6.1 Officers and Directors.........................................................................31
6.2 Employee Benefits..............................................................................31
6.3 Additional Agreements..........................................................................31
6.4 Reserved.......................................................................................31
6.5 No Solicitation................................................................................31
6.6 Registration...................................................................................34
6.7 Restrictions on Transferability of Interland Stock.............................................35
ARTICLE VII CONDITIONS PRECEDENT...........................................................................36
7.1 Conditions to Each Party's Obligation to Effect the Merger.....................................36
7.2 Conditions of Obligations of Interland and Merger Sub..........................................36
7.3 Conditions of Obligation of Hostcentric........................................................38
ARTICLE VIII SURVIVAL; INDEMNIFICATION......................................................................39
8.1 Survival Periods...............................................................................39
8.2 Indemnification of Interland...................................................................39
8.3 Indemnification of Hostcentric Stockholders....................................................41
ARTICLE IX TERMINATION....................................................................................43
9.1 Termination....................................................................................43
9.2 Effect of Termination..........................................................................44
ARTICLE X STOCKHOLDERS' REPRESENTATIVES..................................................................44
10.1 Appointment and Acceptance.....................................................................44
10.2 Authority......................................................................................44
10.3 Actions........................................................................................45
10.4 Effectiveness..................................................................................45
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10.5 Compensation and Reimbursement of Expenses of Stockholders' Representatives....................45
10.6 Indemnification of Stockholders' Representative................................................46
10.7 Status of the Stockholders' Representatives....................................................46
ARTICLE XI MISCELLANEOUS..................................................................................46
11.1 Entire Agreement; Binding Effect...............................................................46
11.2 Governing Law..................................................................................46
11.3 Notices........................................................................................46
11.4 Severability...................................................................................48
11.5 Assignment.....................................................................................48
11.6 Counterparts...................................................................................48
11.7 Amendment......................................................................................48
11.8 Extension; Waiver..............................................................................48
11.9 Interpretation.................................................................................49
11.10 Knowledge......................................................................................49
11.11 Transfer, Sales, Documentary, Stamp and Other Similar Taxes....................................49
11.12 Costs..........................................................................................49
11.13 Construction...................................................................................49
11.14 No Third Party Beneficiaries...................................................................49
EXHIBITS
SCHEDULES
Interland Disclosure Schedule
Hostcentric Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER, dated as of December 19, 2002 (this
"Agreement"), by and among INTERLAND, INC., a Minnesota corporation
("Interland"); BOBCATCUB ACQUISITION CORPORATION, a Delaware corporation and
wholly-owned subsidiary of Interland ("Merger Sub"); HOSTCENTRIC, INC., a
Delaware corporation ("Hostcentric"), and XXXXXXX X. XXXXXXX, XXXXX XXXXXX and
XXXXXXXXX XXXXXXXXX, as the Stockholders' Representatives (the "Stockholders'
Representatives").
WHEREAS, the respective Boards of Directors of Interland and Merger Sub
deem it to be advisable and in the best interests of their respective
stockholders, and the Board of Directors of Hostcentric deems it to be advisable
and in the best interests of its stockholders, to effect the merger of
Hostcentric with Merger Sub (the "Merger") upon the terms and conditions
provided for in this Agreement; and
WHEREAS, the Board of Directors of Hostcentric (i) has unanimously approved
the Merger (ii) has or will have at the time of Closing obtained the requisite
approval of the stockholders of Hostcentric ("Hostcentric Stockholders") to
approve the Merger; and (iii) has, and does hereby, approve and adopt this
Agreement and the Merger all in accordance with the Delaware Code (as
hereinafter defined); and
NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants and promises contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
all parties, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions hereof, and in
accordance with the Delaware General Corporation Law (the "Delaware Code"),
Merger Sub will be merged with and into Hostcentric. The Certificate of Merger
and any other required documents (collectively, the "Merger Documents"),
substantially in the form attached as Exhibit 1.1, will be duly prepared,
executed and acknowledged by Hostcentric and Merger Sub and thereafter delivered
to the Secretary of State of Delaware for filing in accordance with the Delaware
Code contemporaneously with the Closing (as defined in Section 1.3). The Merger
will become effective at such time as the Merger Documents have been filed with
the Secretary of State of Delaware (the "Effective Time"). Following the Merger,
Hostcentric will continue as the surviving corporation of the Merger (the
"Surviving Corporation") under the laws of the State of Delaware and as a
wholly-owned subsidiary of Interland, and the separate corporate existence of
Merger Sub will cease.
1.2 Effects of the Merger. At and after the Effective Time, (a) the Merger
will have all of the effects provided by the Merger Documents and applicable
law, including, without limiting the generality of the foregoing and subject
thereto, at the Effective Time, except as otherwise provided herein, all the
property, rights, privileges, powers and franchises of Hostcentric and Merger
Sub will vest in Hostcentric as the Surviving Corporation, and all debts,
liabilities and duties of Hostcentric and Merger Sub shall become the debts,
liabilities and duties of Hostcentric as the Surviving Corporation, (b) the
Certificate of Incorporation of Merger Sub will be the Certificate of
Incorporation of the Surviving Corporation until duly amended, (c) the Bylaws of
Merger Sub will be the Bylaws of the Surviving Corporation until duly amended,
(d) the directors of Merger Sub immediately prior to the Effective Time will be
the directors of the Surviving Corporation from and after the Effective Time, to
hold office until their successors are elected or appointed and qualified or
until their resignation or removal, and (e) the officers of Merger Sub
immediately prior to the Effective Time will be the officers of the Surviving
Corporation, to hold office until their successors are elected or appointed and
qualified or until their resignation or removal.
1.3 Closing. The closing of the transactions contemplated by this Agreement
("Closing") will take place on a date as soon as practicable after all of the
conditions set forth in Article VII are determined to be satisfied (or duly
waived) (the "Closing Date") at the offices of Xxxxxxxxx & Xxxxxxxxx, L.L.P.,
unless another date or place is agreed to in writing by Hostcentric and
Interland. If all of the conditions set forth in Article VII hereof are
determined to be satisfied (or duly waived) at the Closing, concurrently with
the Closing (or on the next succeeding Business Day, if not a Business Day) the
parties hereto will cause the Merger to be consummated by the filing of the
Merger Documents with the Secretary of State of Delaware. The Closing will be
deemed to have concluded at the Effective Time. For purposes of this Agreement,
"Business Day" shall mean any day other than a Saturday, Sunday or day on which
banks in Atlanta, Georgia are required or authorized to close.
ARTICLE II
CONVERSION AND EXCHANGE OF SHARES
2.1 Conversion of Shares of Hostcentric Stock; Cash Consideration. At the
Effective Time, each share of Hostcentric Stock (as defined in Section 3.2
hereof) issued and outstanding immediately prior to the Effective Time will
automatically, by virtue of the Merger and without any action on the part of
Interland, Merger Sub or Hostcentric, be converted into the right to receive,
and become exchangeable for a portion of the Merger Consideration (as
hereinafter defined) as provided in this Agreement. The Merger Consideration
consists of two components: (A) 13,563,335 shares of common stock, par value
$.01 per share of Interland ("Interland Common Stock"), which have been
registered with the Securities and Exchange Commission ("SEC") on a registration
statement on Form S-4 which has been declared effective and which shares have
been approved for listing on NASDAQ (the "Merger Shares"); and (B) three million
dollars ($3,000,000) in cash (the "Cash Consideration"). From and after the
Effective Time, each Hostcentric Stockholder shall cease to have any rights as a
stockholder of Hostcentric and such Hostcentric Stockholder's sole right shall
be to receive its applicable share of the Merger Consideration, and all shares
of outstanding Hostcentric Stock shall be cancelled and retired and cease to
exist. No fractional shares of Interland Common Stock shall be issued and
instead any Hostcentric Stockholder otherwise entitled to receive a fractional
share shall receive an amount in cash equal to the value of such fractional
share (computed using a valuation of $1.681 per share). Merger Shares will be
subject to restrictions on transferability as provided in Section 6.7 hereof.
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2.2 Escrow Fund. As security for the indemnification obligations described
in Section 8.1, stock representing seventy percent (70%) of the Merger Shares
and cash representing seventy percent (70%) of the Cash Consideration
(collectively, the "Escrow Fund"), will be deposited and held in escrow on the
Closing Date in accordance with the Escrow Agreement in form reasonably
satisfactory to the parties hereto (the "Escrow Agreement"). The delivery of the
Escrow Fund will be made by Interland on behalf of the Hostcentric Stockholders
in accordance with the provisions hereof, with the same force and effect as if
such consideration had been delivered by Interland directly to such holders and
subsequently delivered by such holders to the escrow agent under the Escrow
Agreement (the "Escrow Agent"). The cash portion of the Escrow Fund shall be
paid by Interland on the Closing Date by wire transfer of immediately available
Funds to the Escrow Agent pursuant to wiring instructions as provided in the
Escrow Agreement. The portion of the Escrow Fund consisting of Interland Common
Stock shall be paid by delivery to the Escrow Agent of confirmation by the
Paying Agent (as defined in Section 2.3) that such shares have been issued, as
more fully described in the Escrow Agreement. Payments of the Escrow Fund to the
Hostcentric Stockholders shall be governed by the terms of the Escrow Agreement.
2.3 Payment of Merger Consideration.
(a) On or before the Closing Date, Interland shall cause to be
deposited in a separate bank account (the "Exchange Account"), cash in an
aggregate amount equal to thirty percent (30%) of the Cash Consideration and
shall cause to be issued and set aside for the benefit of the Hostcentric
Stockholders thirty percent (30%) of the Merger Shares (collectively, the
"Exchange Fund"). On the Closing Date, the Exchange Fund shall be paid by
Interland to the Hostcentric Stockholders entitled to receive Merger
Consideration in accordance with written instructions provided by or on behalf
of each Hostcentric Stockholder.
(b) Unclaimed Consideration. Any portion of the Exchange Fund that
remains unclaimed by the persons otherwise entitled thereto after six (6) months
following the Effective Time shall be returned to Interland upon demand, and
thereafter any such person shall look solely to Interland for payment of the
applicable Merger Consideration. Neither Interland nor the Surviving Corporation
shall be liable to any holder of Hostcentric's capital stock for any cash
representing any portion of the Merger Consideration otherwise due to such
holder that may be delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(c) Investment of Exchange Fund. Interland may invest the Cash
Consideration held in the Exchange Account in its discretion. Any interest and
other income resulting from such investments shall be added to the Exchange
Fund. The Hostcentric Stockholders receiving cash shall be entitled to any
interest earned on the Exchange Fund pro rata in accordance with their interests
in such cash.
(d) Dissenting Shares. Shares of Hostcentric's capital stock that have
not been voted for approval of this Agreement and the Merger and with respect to
which appraisal rights shall have been properly perfected in accordance with
Section 262 of the Delaware Code ("Dissenting Shares") shall not be converted
into the right to receive the applicable Merger Consideration provided in
Sections 2.1, 2.2 and 2.3(a) at or after the Effective Time, unless and until
the holder of such Dissenting Shares withdraws such holder's demand for such
appraisal in accordance with Section 262(k) of the Delaware Code or becomes
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ineligible for such appraisal. If a holder of Dissenting Shares shall withdraw
in accordance with Section 262(k) of the Delaware Code or such holder's demand
for such appraisal shall become ineligible for such appraisal, then, as of the
later of the Effective Time or the occurrence of such event, such holder's
Dissenting Shares shall cease to be Dissenting Shares and shall be converted
into the right to receive the applicable Merger Consideration provided in
Sections 2.1, 2.2 and 2.3(a). Any amounts to be paid to holders of Dissenting
Shares with respect to such Dissenting Shares shall be paid by the Surviving
Corporation, subject to the right of Interland and Merger Sub to seek
indemnification with respect thereto as set forth in Article VIII.
2.4 Closing Adjustments.
(a) The parties hereto acknowledge that Hostcentric has abandoned its
leased space in Farmingdale, New York, and Hostcentric covenants that it shall
use commercially reasonable best efforts to terminate the lease agreement with
respect to such space (the "Long Island Lease") prior to Closing. If Hostcentric
terminates the Long Island Lease prior to Closing for a cash payment of less
than $180,000, the difference between such amount and $180,000 shall be paid at
Closing to the Stockholders' Representatives to be distributed pro rata among
the Hostcentric Stockholders until any amounts deducted from the Escrow Fund
have been reimbursed and thereafter to be paid in full to the former preferred
stockholders of Hostcentric in accordance with their prior ownership percentages
of Hostcentric preferred stock. If Hostcentric terminates the Long Island Lease
prior to or subsequent to Closing for a cash payment of more than $180,000, the
difference between such amount and $180,000 shall be paid by the Surviving
Corporation and shall constitute a claim against the Escrow Fund, subject to the
right of Interland and Merger Sub to seek indemnification with respect thereto
as set forth in Article VIII.
(b) The parties hereto further acknowledge that Hostcentric has
estimated unpaid closing costs (consisting of legal, accounting, financial
advisory and printing costs) in excess of such costs already paid or accrued by
Hostcentric of $300,000 for the transactions contemplated by this Agreement. The
total amount of Hostcentric's unpaid closing costs shall be determined on the
Closing Date. If such closing costs exceed $300,000, the difference between the
amount of the closing costs and $300,000 shall be paid by the Surviving
Corporation and shall constitute a claim against the Escrow Fund, subject to the
right of Interland and Merger Sub to seek indemnification with respect thereto
as set forth in Article VIII. If such closing costs are less than $300,000, the
difference between $300,000 and the amount of the closing costs shall be paid at
Closing to the Stockholders' Representatives to be distributed pro rata among
the Hostcentric Stockholders until any amounts deducted from the Escrow Fund
have been reimbursed and thereafter to be paid in full to the former preferred
stockholders of Hostcentric in accordance with their prior ownership of
Hostcentric preferred stock.
2.5 Changes in Capitalization. In the event Interland changes (or
establishes a record date for changing) the number of shares of Interland Common
Stock issued and outstanding prior to the Effective Time as a result of a stock
split, stock dividend, recapitalization, subdivision, reclassification,
combination, exchange of shares or similar transaction with respect to the
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outstanding shares of Interland Common Stock or in the event that shares of
Interland Common Stock are converted or exchanged as a result of any
consolidation or merger to which Interland is a party, and the record date or
the Closing Date, as the case may be, therefor shall be prior to the Effective
Time, the number of Merger Shares to be issued in connection with the Merger
shall be adjusted to reflect such stock split, stock dividend, recapitalization,
subdivision, reclassification, combination, exchange of shares or similar
transaction or converted to reflect such consolidation or merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOSTCENTRIC
Except as set forth in the disclosure schedule of Hostcentric (the
"Hostcentric Disclosure Schedule") heretofore delivered by Hostcentric to and
acknowledged as received by Interland and Merger Sub, Hostcentric represents and
warrants to Interland and Merger Sub as follows, each of which is material to
and relied upon by Interland:
3.1 Organization, Standing and Power.
(a) Hostcentric is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and is duly qualified
and in good standing in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business make such
qualification necessary, except for such failures to be so qualified and in good
standing that would not reasonably be expected to have a Material Adverse Effect
(defined below) on Hostcentric.
As used in this Agreement, "Material Adverse Effect" when used
in connection with an entity means (i) a material adverse effect on the
entity taken as a whole, or the operations or financial condition of
the entity or its business as currently conducted taken as a whole,
including without limitation the initiation or continuation of a
bankruptcy proceeding or other insolvency action involving the entity,
as debtor; excluding, however, any change, circumstance, event or
condition to the extent resulting from (a) the economy or securities
markets in general, or any outbreak of hostility, terrorist activities
or war, or (b) any changes in general economic or regulatory conditions
in the hosting industry generally; (ii) any adverse effect, whether or
not material, on the binding nature, validity or enforceability of this
Agreement or the Escrow Agreement as an obligation of the subject
party, as a party thereto; or (iii) the prevention, prohibition or
material impairment of the consummation of the transactions
contemplated by any Transaction Document or any successful challenge to
the validity, legality or enforceability of this Agreement. In this
Agreement, a "Subsidiary" of any Person means a corporation,
partnership, limited liability company, joint venture or other entity
of which such Person directly or indirectly owns or controls a majority
of the equity interests or voting securities or other interests that
are sufficient to elect a majority of the Board of Directors or other
managers of such corporation, partnership, limited liability company,
joint venture or other entity. In this Agreement, "Person" means any
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natural person, corporation, partnership, limited liability company,
joint venture or other entity. In this Agreement, "Transaction
Documents" means this Agreement, the Escrow Agreement, the
Noncompetition Agreement, and all other agreements, certificates and
documents required to be executed and/or delivered by any of the
parties hereto pursuant to the terms and provisions of this Agreement.
Hostcentric has delivered, or will deliver, to Interland
complete and correct copies of the Certificate of Incorporation and
bylaws ("Charter Documents") of Hostcentric, in each case, as amended
to the date hereof. The minute books and stock records of Hostcentric,
complete and correct copies of which have been, or will be, delivered
to Interland, contain correct and complete records of all material
proceedings and actions taken at all meetings of, or effected by
written consent of, the Hostcentric Stockholders and its Board of
Directors, and all original issuances and subsequent transfers,
repurchases and cancellations of Hostcentric's capital stock. Section
3.1 of the Hostcentric Disclosure Schedule contains a complete and
correct list of the officers and directors of Hostcentric.
(b) Section 3.1(b) of the Hostcentric Disclosure Schedule attached
hereto lists the name of each of the Subsidiaries and sets forth the number and
class of the authorized capital stock of each of the Subsidiaries and the number
of shares of each of the Subsidiaries which are issued and outstanding, all of
which shares (except as set forth in Section 3.1(b) of the Hostcentric
Disclosure Schedule) are owned by Hostcentric free and clear of all Liens.
Except as set forth in Section 3.1(b) of the Hostcentric Disclosure Schedule,
Hostcentric has no Subsidiaries, and does not own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
business entity, and is not, directly or indirectly, a participant in any joint
venture, partnership or other non-corporate entity.
3.2 Capital Structure. The authorized capital stock of Hostcentric consists
of (i) 6,500,000 shares of Series A Preferred Stock, par value $.01 per share,
of which 6,166,936 shares are issued and outstanding, and 12,000,000 shares of
Series B Preferred Stock, par value $.01 per share, of which 7,173,162 shares
are issued and outstanding (collectively, the "Preferred Stock") and (ii)
100,000,000 shares of Common Stock, par value $.01 per share, of which
11,114,070 shares are issued and outstanding, and 7,000,000 shares of restricted
voting common stock, $.01 par value, of which 5,052,757 shares are issued and
outstanding (collectively, the "Common Stock"). The Preferred Stock and Common
Stock are referred to herein, collectively, as the "Hostcentric Stock." The
outstanding shares of Hostcentric Stock have been duly authorized, are validly
issued, fully paid and nonassessable and are transferable or assignable in
accordance with this Agreement, free and clear of any preemptive rights and
other stockholder rights. The Hostcentric Stock is held of record by the
Hostcentric Stockholders, as set forth on Exhibit A. The Hostcentric Stock was
issued and has been transferred in material compliance with all applicable laws,
including without limitation federal and state securities laws. Except as set
forth in Section 3.2 of the Disclosure Schedule, there are no outstanding or
authorized options, warrants, subscriptions, commitments, agreements or other
rights that relate to the issuance or acquisition of, or would require
Hostcentric to issue or sell, any capital stock, equity interests or other
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securities of Hostcentric, or any security convertible into or exchangeable for
any capital stock, equity interests or other securities of Hostcentric. There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to Hostcentric. Except as set forth
in Section 3.2 of the Disclosure Schedule, there are no agreements,
understandings, trusts, or other collaborative arrangements or understandings
concerning the voting, ownership or transfer of the capital stock of
Hostcentric.
3.3 Authority. Hostcentric has all necessary corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted, to execute and deliver this Agreement and all other agreements
contemplated hereby, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and all the Transaction Documents by
Hostcentric have been duly authorized by all necessary corporate action and no
other corporate proceedings on the part of Hostcentric are necessary to
authorize this Agreement or the Transaction Documents or to consummate the
transactions contemplated hereby or thereby (other than the filing and
recordation of the Merger Documents as required by the Delaware Code).
Hostcentric has duly and validly executed and delivered this Agreement and prior
to the Closing will have duly and validly executed and delivered all other
agreements contemplated hereby to be executed and delivered by Hostcentric, and
assuming due authorization, execution and delivery by Interland and Merger Sub,
each of this Agreement and the Transaction Documents executed by Hostcentric
constitutes a valid, binding and enforceable obligation of Hostcentric in
accordance with its terms.
3.4 Compliance with Laws and Other Instruments; Non-Contravention. Except
as set forth in Section 3.4 of the Hostcentric Disclosure Schedule, Hostcentric
holds, and at all times has held, all material licenses, permits and
authorizations from all Governmental Entities (as defined below) necessary for
the lawful conduct of its business in all material respects pursuant to all
applicable statutes, laws, ordinances, rules and regulations of all such
Governmental Entities having jurisdiction over it or any part of its operations.
There are no violations or claimed violations known by Hostcentric of any such
license, permit or authorization or any such statute, law, ordinance, rule or
regulation. Assuming the receipt of all Consents (as defined below), neither the
execution, delivery or performance of this Agreement and the Transaction
Documents by Hostcentric, nor the consummation of the Merger or any other
transaction described herein, does or will, after the giving of notice, or the
lapse of time, or both, (i) conflict with, result in a breach of, or constitute
a default under the Charter Documents of Hostcentric or any federal, state or
local court or administrative order or process, statute, law, ordinance, rule or
regulation, or any material contract, agreement or commitment to which
Hostcentric is a party, or under which Hostcentric is obligated, or by which
Hostcentric or any of the rights, properties or assets of Hostcentric are
subject or bound; (ii) result in the creation of any Lien (as defined below)
upon, or otherwise affect, any of the rights, properties or assets of
Hostcentric; (iii) terminate, amend or modify, or give any party the right to
terminate, amend, modify, abandon or refuse to perform or comply with, any
material contract, agreement or commitment to which Hostcentric is a party, or
under which Hostcentric is obligated, or by which Hostcentric or any of the
rights, properties or assets of Hostcentric are subject or bound; or (iv)
accelerate, postpone or modify, or give any party the right to accelerate,
postpone or modify, the time within which, or the terms and conditions under
which, any liabilities, duties or obligations are to be satisfied or performed,
or any rights or benefits are to be received, under any material contract,
agreement or commitment to which Hostcentric is a party, or under which
Hostcentric may be obligated, or by which Hostcentric or any of the rights,
properties or assets of Hostcentric are subject or bound. Section 3.4 of the
Hostcentric Disclosure Schedule sets forth a copy or description of each
material agreement, contract, commitment or other instrument binding upon
Hostcentric requiring a notice or consent (by its terms or as a result of any
conflict or other contravention required to be disclosed in the Hostcentric
Disclosure Schedule pursuant to the preceding provisions of this Section 3.4) as
a result of the execution, delivery or performance of this Agreement and all
other agreements contemplated hereby by Hostcentric or the consummation of the
Merger or any other transaction described herein (each such notice or consent, a
"Consent"). No consent, approval, order, or authorization of or registration,
7
declaration, or filing with or exemption (also a "Consent") by, any court,
administrative agency or commission or other governmental authority or
instrumentality, whether domestic or foreign (each a "Governmental Entity") or
arbitrator is required by Hostcentric in connection with the execution, delivery
or performance of this Agreement and all other agreements contemplated hereby by
Hostcentric or the consummation of the Merger or any other transaction described
herein, except approval of this Agreement by the Hostcentric Stockholders and
for the filing by Hostcentric and Merger Sub of the appropriate Merger Documents
with the Secretary of State of Delaware. The term "Lien" as used in this
Agreement means any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, any conditional sale or
other title retention agreement, financing lease having substantially the same
economic effect as any of the foregoing, the filing of any financing statement,
notice or other instrument and mechanic's, materialmen's and other similar liens
and encumbrances.
3.5 Technology and Intellectual Property Rights.
(a) For the purposes of this Agreement, "Hostcentric Intellectual
Property" consists of the following intellectual property:
(i) all United States and foreign patents, trademarks, trade
names, URLs, domain names, service marks, trade dress, moral and economic
rights, copyrights, whether registered or unregistered, and any renewal rights
therefor, mask works, inventions, schematics, databases, technical data,
software, firmware, technology, manufacturing processes, supplier lists,
customer lists, trade secrets, know-how and applications and registrations for
any of the foregoing;
(ii) all documents, records and files relating to design,
development, license, end user and other documentation, manufacturing, quality
control, sales, marketing or customer support for all intellectual property
described herein;
(iii) all other tangible or intangible proprietary information
and materials; and
(iv) all license and other rights in any third party product or
any third party intellectual property described in (i) through (iii) above;
8
that are owned by or on behalf of Hostcentric or the Subsidiaries or that are
being used, or are currently under development for use, in the business of
Hostcentric or the Subsidiaries as it is currently or is currently planned to be
conducted; provided, however, that Hostcentric Intellectual Property will not
include any commercially available non-customized third party software, hardware
or related intellectual property (the "Standard Software").
(b) Section 3.5 of the Hostcentric Disclosure Schedule lists or
otherwise describes: (i) all patents, copyright registrations, mask works,
trademarks, service marks, domain names, trade dress, any renewal rights for any
of the foregoing, and any applications and registrations for any of the
foregoing, that are included in Hostcentric Intellectual Property and owned by
or on behalf of Hostcentric or any Subsidiary; (ii) all hardware products and
tools, software products and tools and services that are currently published,
offered, or under development by Hostcentric or any Subsidiary and as to which
Hostcentric claims exclusivity or a proprietary interest; and (iii) all
licenses, sublicenses and other agreements to which Hostcentric is a party,
except for licenses contained in customer hosting agreements and pursuant to
which Hostcentric or any Subsidiary or any other person is authorized to use any
Hostcentric Intellectual Property or exercise any other right with regard
thereto. The disclosures described in (iii) hereof include the identities of the
parties to the relevant agreements, a description of the nature and subject
matter thereof, the term thereof and the applicable royalty or summary of any
formula or procedure for determining such royalty.
(c) Hostcentric Intellectual Property and Standard Software consists
solely of items and rights that are either: (i) owned solely by Hostcentric or
any Subsidiary; (ii) in the public domain; or (iii) rightfully used and
authorized for use by Hostcentric or any Subsidiary pursuant to a valid license
or other contractual right. All material agreements relating to Hostcentric
Intellectual Property that consist of a material license or other material
rights to third party property are listed in Section 3.5 of the Hostcentric
Disclosure Schedule. Hostcentric and the Subsidiaries have all rights in
Hostcentric Intellectual Property and Standard Software necessary to carry out
Hostcentric's and the Subsidiaries' current activities, including without
limitation rights to make, use, exclude others from using, reproduce, modify,
adapt, create derivative works based on, translate, distribute (directly and
indirectly), transmit, display and perform publicly, license, rent, lease,
assign and sell Hostcentric Intellectual Property in all geographic locations
and fields of use, and to sublicense any or all such rights to third parties,
including the right to grant further sublicenses.
(d) To the knowledge of Hostcentric, neither Hostcentric nor any
Subsidiary is, nor as a result of the execution or delivery of this Agreement
and the Transaction Documents, or performance of Hostcentric's obligations
hereunder or the consummation of the Merger, will Hostcentric or any Subsidiary
be, in violation of any license, sublicense or other agreement relating to any
Hostcentric Intellectual Property or Standard Software to which Hostcentric or
any Subsidiary is a party or otherwise bound. Hostcentric is not obligated to
provide any material consideration (whether financial or otherwise) to any third
party, nor is any third party otherwise entitled to any consideration, with
respect to any exercise of rights by Hostcentric or Interland, as successor to
Hostcentric, in Hostcentric Intellectual Property or Standard Software.
9
(e) To the knowledge of Hostcentric, the use, reproduction,
modification, distribution, licensing, sublicensing, sale, or any other exercise
of rights in any product, work, technology, service or process as used,
provided, or offered at any time, or as proposed for use, reproduction,
modification, distribution, licensing, sublicensing, sale, or any other exercise
of rights, by Hostcentric or any Subsidiary does not infringe any copyright,
patent, trade secret, trademark, service xxxx, trade name, domain name, firm
name, logo, trade dress, mask work, moral right, other intellectual property
right, right of privacy, or right in personal data of any Person. To the
knowledge of Hostcentric, no claims (i) challenging the validity, effectiveness,
or ownership by Hostcentric or any Subsidiary of any Hostcentric Intellectual
Property or Standard Software, or (ii) to the effect that the use, reproduction,
modification, manufacturing, distribution, licensing, sublicensing, sale, or any
other exercise of rights in any product, work, technology, service, or process
as used, provided or offered at any time, or as proposed for use, reproduction,
modification, distribution, licensing, sublicensing, sale, or any other exercise
of rights, by Hostcentric or any Subsidiary infringes on any intellectual
property or other proprietary or personal right of any Person have been asserted
to Hostcentric or, to the knowledge of Hostcentric, are threatened by any Person
nor is there any basis therefor. To the knowledge of Hostcentric, there are no
legal or governmental proceedings, including interference, re-examination,
reissue, opposition, nullity, or cancellation proceedings pending that relate to
any Hostcentric Intellectual Property or Standard Software, other than review of
pending applications for patent, and there is not any information indicating
that such proceedings are threatened by any Governmental Entity or any other
Person nor is there any basis therefor. To the knowledge of Hostcentric, all
granted or issued patents and mask works and all registered trademarks, service
marks and copyright registrations owned by Hostcentric are valid, enforceable
and subsisting. To the knowledge of Hostcentric, there is no unauthorized use,
infringement, or misappropriation of any Hostcentric Intellectual Property by
any third party, employee or former employee.
(f) Section 3.5 of the Hostcentric Disclosure Schedule separately
lists all parties (other than employees) who have created any portion of, or
otherwise have any rights in or to, Hostcentric Intellectual Property.
Hostcentric has secured from all parties who have created any portion of, or
otherwise have any rights in or to, Hostcentric Intellectual Property valid and
enforceable written assignments of any such work or other rights to Hostcentric
except where the failure to have secured such assignments could not reasonably
be expected to result in a Material Adverse Effect on Hostcentric.
(g) Hostcentric has obtained written agreements from all employees and
from third parties with whom Hostcentric has shared confidential proprietary
information (i) of Hostcentric or (ii) received from others that Hostcentric is
obligated to treat as confidential and to obtain the written agreement of
employees and others to keep confidential, which agreements require such
employees and third parties to keep such information confidential in accordance
with the terms thereof.
10
3.6 Financial Statements.
(a) Section 3.6 of the Hostcentric Disclosure Schedule includes copies
of the following consolidated financial statements of Hostcentric and its
Subsidiaries ("Hostcentric's Financial Statements"): (i) Hostcentric's audited
consolidated balance sheet and the consolidated statements of income, changes in
stockholders' equity and cash flow of Hostcentric for the twelve (12) months as
of and ending on December 31, 2001 and (ii) the unaudited consolidated balance
sheet and statements of income of Hostcentric for the eleven (11) months ended
November 30, 2002 ("Hostcentric's Most Recent Balance Sheet").
(b) Each of Hostcentric's Financial Statements (including the notes
thereto) are true, complete and correct in all material respects, present fairly
the financial condition and results of operations of Hostcentric as of the dates
of such statements and for the periods covered, and have been prepared on an
accrual basis in accordance with GAAP (except, with respect to any unaudited
interim financial statements, the absence of notes and normal year-end
adjustments). Hostcentric's Financial Statements (including the notes thereto)
are consistent with the books of account and records of Hostcentric and such
books and records are correct and complete, in all material respects, and have
been maintained in accordance with prudent and customary business practices.
3.7 No Undisclosed Liabilities. Except for Liabilities (as defined below)
of the type set forth in Section 3.7 of the Disclosure Schedule, neither
Hostcentric nor any Subsidiary has any debt, liability or obligation of any kind
(and to the knowledge of Hostcentric there is no basis for any present or future
proceeding that could reasonably be expected to give rise to any debt, liability
or obligation), whether accrued, absolute, direct, indirect, contingent or
otherwise, including any liability or obligation on account of Taxes (as defined
below) or any penalty, interest or fine (collectively, the "Liabilities"),
except for (a) liabilities incurred in the ordinary course of business after
November 30, 2002, and that, individually or in the aggregate, could not have a
Material Adverse Effect on Hostcentric; (b) liabilities that are accrued or
reserved against in Hostcentric's Most Recent Balance Sheet in accordance with
GAAP; (c) obligations under this Agreement or the other Transaction Documents;
(d) obligations to perform or pay the executory portion of any contracts
incurred in the ordinary course of business and not required under GAAP to be
reflected in Hostcentric's Financial Statements; and (e) liabilities or
obligations for Taxes incurred in the ordinary course of business.
3.8 Taxes.
(a) Except as set forth in Section 3.8(a) of the Hostcentric
Disclosure Schedule, (i) Hostcentric has duly and timely paid all income,
franchise, excise, sales, use, withholding, employment related, real and
personal property and other taxes, customs, duties, fees, assessments and
charges of any federal, state and local taxing authority of a Governmental
Entity (each, a "Tax" and collectively, "Taxes") (whether or not shown on any
Tax return), and all interest and penalties with respect thereto, required to be
paid by Hostcentric (whether by way of withholding or otherwise) to any taxing
authority, (ii) Hostcentric has withheld and paid all Taxes required to have
been withheld and paid by Hostcentric in connection with amounts paid or owing
to any employee, independent contractor, creditor or stockholder of Hostcentric,
or any other Person transacting business with Hostcentric, (iii) Hostcentric has
duly and timely filed all Tax returns, reports, declarations, claims for
refunds, informational returns and statements and other statements, including
any extensions (collectively, the "Tax Returns"), required to have been filed by
11
Hostcentric and all such Tax Returns were correct and complete in all material
respects, (iv) all deficiencies proposed as a result of any audit have been paid
or settled or are in the process of being settled, (v) to Hostcentric's
knowledge, no claim has ever been made by an authority in a jurisdiction where
Hostcentric does not file a Tax Return that it is or may be subject to taxation
by that jurisdiction and (vi) there are no Liens on any of the assets of
Hostcentric that arose in connection with any failure (or alleged failure) to
pay any Tax when due.
(b) Hostcentric is not a party to, or bound by, or otherwise in any
way obligated under, any Tax sharing or similar agreement. Hostcentric (A) has
not been a member of an affiliated group filing a consolidated federal income
Tax Return (other than a group the common parent of which was Hostcentric) or
(B) does not have any Liability for the Taxes of any Person (other than
Hostcentric and its affiliates) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract or otherwise.
(c) Hostcentric has not consented to have the provisions of Section
341(f)(2) of the Internal Revenue Code of 1986, as amended (the "Code") (or
comparable state law) apply to it, and Hostcentric has not agreed or been
requested to make any adjustment under Section 481(c) of the Code by reason of a
change in accounting method or otherwise.
(d) Hostcentric knows of no reason to expect any Governmental Entity
to assess any additional Taxes for any period for which Tax Returns have been
filed. To Hostcentric's knowledge, there is no dispute or proceeding concerning
any Liability for Taxes of Hostcentric claimed or raised by any Governmental
Entity in writing.
(e) Hostcentric has not made or become obligated to make, nor, as a
result of the transactions contemplated herein or in the other Transaction
Documents, will it make or become obligated to make, any "excess parachute
payment" as defined in Section 280G of the Code.
(f) Hostcentric has never filed a consent pursuant to Section 341(f)
of the Code, relating to collapsible corporations.
3.9 Absence of Certain Changes and Events. Except as set forth on Schedule
3.9, and except as contemplated hereby, since November 30, 2002 Hostcentric has
conducted its business only in the ordinary course, consistent with past
practice and, since such date, there has not been:
(a) Any transaction involving more than $25,000 per year entered into
by Hostcentric outside of the ordinary course of business;
12
(b) Any Material Adverse Effect on Hostcentric and there have not been
any events that, either individually or in the aggregate, could reasonably be
expected to result in any Material Adverse Effect on Hostcentric;
(c) Any loss of or damage to any of the properties of Hostcentric due
to fire or other casualty or other loss, whether or not insured, amounting to
more than $25,000 in the aggregate;
(d) Any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Hostcentric or any
Subsidiary, or any repurchase, redemption, retirement or other acquisition by
Hostcentric or any Subsidiary of any outstanding shares of its capital stock, or
other securities of, or other equity or ownership interests in, Hostcentric or
any Subsidiary;
(e) Any discharge or satisfaction of any Lien or payment or
satisfaction of any obligation or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due) other than current
liabilities shown on the Hostcentric Most Recent Balance Sheet and current
liabilities incurred since November 30, 2002 in the ordinary course of business;
(f) Any amendment to the Charter Documents of Hostcentric or any
amendment of any term of any outstanding security of Hostcentric;
(g) Any incurrence, assumption or guarantee by Hostcentric or any
Subsidiary of any indebtedness for borrowed money outside of the ordinary course
of business;
(h) Any creation or assumption by Hostcentric or any Subsidiary of any
Lien on any asset other than in the ordinary course of business;
(i) Any making of any loan, advance or capital contributions to, or
investment in, any Person outside of the ordinary course of business;
(j) Any sale, lease, pledge, transfer or other disposition of any
capital assets (1) to any Hostcentric Stockholders irrespective of the value or
(2) to any other Person, except for fair value received having an aggregate
value exceeding $25,000;
(k) Any material transaction or commitment made, or any material
contract or agreement entered into, by Hostcentric relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by Hostcentric or any Subsidiary of any contract or other right
other than in the ordinary course of business, or any change in accounting
practices;
(l) Other than in the ordinary course of business or as evidenced by
the Hostcentric employment manual which has been delivered to Interland and
which reflects the current policies of Hostcentric except where otherwise
indicated in Section 3.17 of the Hostcentric Disclosure Schedule, any (i) grant
of any severance or termination pay to any director, officer or employee of
Hostcentric or any Subsidiary, (ii) entering into of any employment, severance,
management, consulting, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or employee
13
of Hostcentric or any Subsidiary, (iii) change in benefits payable under
existing severance or termination pay policies or employment, severance,
management, consulting or other similar agreements, (iv) change in compensation,
bonus or other benefits payable to directors, officers or employees of
Hostcentric or any Subsidiary, (v) establishment of or amendment to any Employee
Plan (as defined in Section 3.17), or (vi) change in the payment or accrual
policy with respect to any of the foregoing (it being understood that all
transactions identified in subparts (i) to (v) involving any Hostcentric
Stockholder after November 30, 2002 are disclosed in the Disclosure Schedule),
and the consummation of the transactions contemplated herein will not result in
any of the changes specified in (i) to (vi);
(m) Any labor dispute or any activity or proceeding by a labor union
or representative thereof to organize any employees of Hostcentric, or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to any employees of Hostcentric;
(n) Any notes or accounts receivable or portions thereof written off
by Hostcentric or any Subsidiary as uncollectible (1) with any Hostcentric
Stockholder irrespective of amount or (2) with any other Person in an aggregate
amount exceeding $25,000;
(o) Any issuance or sale of any stock, bonds, phantom stock interest
or other securities of which Hostcentric is the issuer, or the grant, issuance
or change of any stock options, warrants, or other rights to purchase securities
of Hostcentric or phantom stock interest in Hostcentric;
(p) Any cancellation of any debts or claims to the knowledge of
Hostcentric or waiver of any rights (1) with any Hostcentric Stockholder
irrespective of amount or (2) with any other Person having an aggregate value
exceeding $25,000;
(q) Any sale, assignment or transfer of any Hostcentric Intellectual
Property or other similar assets, including licenses therefor, (1) with any
Hostcentric Stockholder irrespective of amount or (2) with any other Person
having an aggregate value exceeding $25,000;
(r) Any capital expenditures, or commitment to make any capital
expenditures, for additions to property, plant or equipment outside of the
ordinary course of business in an aggregate amount exceeding $25,000;
(s) Payment of any amounts to, or liability incurred to or in respect
of, or sale of any properties or assets (real, personal or mixed, tangible or
intangible) to, or any transaction or any agreement or arrangement with, any
corporation or business in which Hostcentric or any of its corporate officers or
directors, or any "affiliate" or "associate" (as such terms are defined in the
rules and regulations promulgated under the Securities Act of 1933, as amended
(the "Securities Act")) of any such Person; or
(t) Any agreement, undertaking or commitment to do any of the
foregoing.
14
3.10 Real Property; Leases in Effect. Neither Hostcentric nor any
Subsidiary owns any real property. All real property and personal property
leases and subleases to which Hostcentric or any Subsidiary is a party
(excluding contracts and arrangements for co-location facilities) and any
amendments or modifications thereof are listed in Schedule 3.10 of the
Hostcentric Disclosure Schedule (each a "Lease" and collectively, the "Leases")
and are valid and in full force and effect, and there are no existing material
defaults on the part of Hostcentric or any Subsidiary, and neither Hostcentric
nor any Subsidiary has received or given notice of default or claimed default
with respect to any Lease, nor is there any event that with notice or lapse of
time, or both, would constitute a default on the part of Hostcentric or any
Subsidiary thereunder. True and complete copies of each Lease have been provided
to Interland, and such Leases constitute the entire understanding relating to
Hostcentric's use and occupancy of the leased premises. To the knowledge of
Hostcentric, the improvements located on the real property described in the
Leases are not the subject of any official complaint or notice of violation of
any applicable zoning ordinance or building code and there is no use or
occupancy restriction or condemnation proceeding pending or threatened against
Hostcentric or any Subsidiary.
3.11 Personal Property. Except as set forth on Section 3.11 of the
Hostcentric Disclosure Schedule, Hostcentric has good and indefeasible title,
free and clear of all title defects and Liens (excepting, however, where such
title defects or Liens do not involve an amount exceeding $25,000 in the
aggregate) to all inventory, receivables, furniture, machinery, equipment and
other personal property, tangible or otherwise, reflected on the Hostcentric
Most Recent Balance Sheet, except for acquisitions and dispositions since
November 30, 2002. The Hostcentric Disclosure Schedule lists (a) all material
computer equipment and (b) all other personal property, in each case having a
depreciated book value of $25,000 or more, which are used by Hostcentric in the
conduct of its business, and all such equipment and property, in the aggregate,
is in good operating condition and repair, reasonable wear and tear excepted.
There is no asset used or required by Hostcentric in the conduct of its business
as presently operated which is not either owned by it or licensed or leased to
it.
3.12 Litigation and Other Proceedings.
(a) Except as set forth on Section 3.12 of the Hostcentric Disclosure
Schedule, there is no action, suit, claim, investigation or proceeding pending
against or, to the knowledge of Hostcentric, threatened against Hostcentric, any
Subsidiary, or any of their respective properties and assets before any court or
arbitrator or any Governmental Entity in which the amount involved exceeds
$25,000. Hostcentric is not subject to any order, writ, judgment, decree, or
injunction in which the amount involved exceeds $25,000.
(b) Except as set forth on Section 3.12 of the Hostcentric Disclosure
Schedule, there is no action, suit, claim, investigation or proceeding pending
against or, to the knowledge of Hostcentric, threatened against any present or
former officer or director of Hostcentric with respect to actions taken in their
capacities as directors or officers of Hostcentric, and to Hostcentric's
knowledge there is no reasonable basis for asserting any such action, suit,
claim, investigation or proceeding.
15
3.13 No Defaults.
(a) Hostcentric is not, nor to its knowledge would it be, with the
passage of time, giving of notice or both, in default or violation of any term,
condition, or provision of (a) the Charter Documents; (b) any judgment, decree,
or order applicable to Hostcentric; or (c) any loan or credit agreement, note,
bond, mortgage or lease to which Hostcentric is now a party or by which it or
any of its properties or assets may be bound.
(b) Hostcentric is not, nor to its knowledge would it be, with the
passage of time, giving of notice or both, in default under any term, condition
or provision of any indenture, contract, agreement, license or other instrument
to which Hostcentric is now a party or by which it or any of its properties or
assets may be bound in which the amount involved exceeds $25,000 annually.
3.14 Major Contracts. Except as set forth on Section 3.14 of Hostcentric
Disclosure Schedule, neither Hostcentric nor any Subsidiary is a party to or
subject to any of the following:
(a) Any union contract, or any employment contract or arrangement
(other than "at-will" employment arrangements) providing for future
compensation, written or oral, with any officer, consultant, director, or
employee;
(b) Any plan or contract providing for bonuses, pensions, deferred
compensation, retirement payments, profit-sharing or the like;
(c) Any joint venture contract or arrangement or any other agreement
which has involved or is expected to involve a sharing of profits;
(d) Any OEM agreement, reseller or distribution agreement, volume
purchase agreement, corporate end user sales or service agreement, reproduction
or replication agreement or manufacturing agreement in which the amount involved
exceeds $25,000 annually or pursuant to which Hostcentric has granted or
received manufacturing rights, most favored nation pricing provisions, or
exclusive marketing, production, publishing or distribution rights related to
any product, group of products or territory;
(e) Any agreement, license, franchise, permit, indenture, or
authorization in which the amount involved exceeds $25,000 annually which may be
terminated as a result of the execution of this Agreement or any other
agreements contemplated hereby, or the consummation of the Merger;
(f) Except for trade indebtedness in which the amount involved does
not exceed $25,000, any instrument evidencing or related in any way to
indebtedness incurred in the acquisition of companies or other entities or
indebtedness for borrowed money by way of direct loan, sale of debt securities,
purchase money obligation, conditional sale, guarantee, or otherwise;
16
(g) Any license agreement, either as licensor or licensee (excluding
nonexclusive hardware and software licenses granted to distributors or end-users
and commercially available in licensed software applications);
(h) Any customer contract or agreement (including month-to-month
agreements) containing covenants purporting to limit Hostcentric's freedom to
compete in any line of business in any geographic area; or
(i) Any contract or agreement, not elsewhere specifically disclosed
pursuant to this Agreement, involving the payment or receipt by Hostcentric or
any Subsidiary of more than $25,000 in the aggregate annually.
All contracts, arrangements, plans, agreements, leases, licenses,
franchises, permits, indentures, authorizations, instruments and other
commitments which are listed in the Hostcentric Disclosure Schedule pursuant to
this Section 3.14 are valid and in full force and effect and neither Hostcentric
nor any Subsidiary has, nor, to the knowledge of Hostcentric, has any other
party thereto, breached any provisions of, or defaulted in any respect under the
terms thereof, which would have a Material Adverse Effect on Hostcentric. Since
November 30, 2002, neither Hostcentric nor any Subsidiary has amended, modified
or terminated the terms of the contracts or agreements referred to in this
Section 3.14 unless such amendment, modification or termination was in the
ordinary course of business and Hostcentric has provided Interland with a copy
of such amendment, modification or termination.
In this Agreement, a "material contract," a "material agreement" or a
"material commitment" of Hostcentric requiring disclosure herein is any
agreement, contract or commitment that obligates or entitles Hostcentric to
incur expenses or creates a financial obligation or benefit in the aggregate
amount of $25,000 or more annually, and which is not terminable without
liability on thirty (30) days' notice or less.
3.15 Material Reductions. To the knowledge of Hostcentric, none of the
parties to any of the contracts identified in the Hostcentric Disclosure
Schedule pursuant to Section 3.14 have terminated, or, to the knowledge of
Hostcentric, expressed to Hostcentric an intent to materially reduce or
terminate the amount of its business with Hostcentric in the future.
3.16 Employees. Except as disclosed on Section 3.16 of the Hostcentric
Disclosure Schedule:
(a) Hostcentric is not and never has been engaged in any dispute or
litigation with an employee or former employee regarding matters pertaining to
intellectual property or assignment of inventions.
(b) Hostcentric has never been and, to the knowledge of Hostcentric,
is not now subject to a union organizing effort.
(c) Hostcentric does not have any written contract of employment or
other employment, severance or similar agreement with any of its employees or
any established policy or practice relating thereto.
17
(d) Hostcentric is not a party to any pending, or to Hostcentric's
knowledge, threatened, labor dispute.
(e) To Hostcentric's knowledge, Hostcentric is in material compliance
with all applicable federal, state and local laws, ordinances, rules and
regulations and requirements relating to the employment of labor, including but
not limited to the provisions thereof relating to wages, hours, collective
bargaining and ensuring equality of opportunity for employment and advancement
of minorities and women.
(f) There are no claims pending, or, to the knowledge of Hostcentric,
threatened to be brought, in any court or administrative agency by any former or
current Hostcentric employees for compensation, pending severance benefits,
vacation time, vacation pay or pension benefits, or any other claim pending or,
to the knowledge of Hostcentric, threatened in any court or administrative
agency from any current or former employee or any other Person arising out of
Hostcentric's status as employer, whether in the form of claims for employment
discrimination, harassment, unfair labor practices, grievances, wrongful
discharge, or otherwise.
(g) Any persons engaged by Hostcentric as independent contractors,
rather than employees, have been properly classified as such and have been so
engaged in compliance with all applicable federal, state or local laws.
3.17 Employee Benefit Plans; ERISA; and Labor Relations. Except as set
forth on Section 3.17 of the Hostcentric Disclosure Schedule:
(a) With respect to Hostcentric and any entity which is considered one
employer with Hostcentric under Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or Section 414 of the Code (an "ERISA
Affiliate"), Section 3.17 of the Hostcentric Disclosure Schedule includes a list
of the employee benefit plans, programs, policies or contracts providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits, change in control, deferred compensation
or other employee benefits (including, without limitation, each "employee
benefit plan," within the meaning of Section 3(3) of ERISA and each
"multiemployer plan" within the meaning of Sections 3(37) or 4001(a)(3) of
ERISA), for which Hostcentric or any ERISA Affiliate contributes, maintains or
is liable (whether contingent or otherwise) for, on behalf of, or for the
benefit of, any current employee of Hostcentric (an "Employee") or former
employee, consultant, service provider or director of Hostcentric or any ERISA
Affiliate (any such plan or other arrangement, an "Employee Plan"). There is no
pending or, to Hostcentric's knowledge, threatened proceeding, other than
routine claims for benefits, relating to the Employee Plans. Hostcentric has not
engaged in a transaction with respect to any Employee Plan that, assuming the
taxable period of such transaction expired as of the date hereof, could subject
Hostcentric to a material tax or penalty imposed by either Section 4975 of the
Code or Section 502(i) of ERISA.
(b) Hostcentric has delivered to Merger Sub, with respect to each
Employee Plan, true and complete copies, as applicable, of:
18
(i) the documents embodying and relating to such Employee Plan,
including, without limitation, the current plan documents and documents creating
any trust maintained pursuant thereto, all amendments, investment management
agreements, administrative service contracts, group annuity contracts, insurance
contracts, collective bargaining agreements, the most recent summary plan
description with each summary of material modifications thereto, if any, and
employee handbooks;
(ii) annual reports, including, but not limited to, Forms 5500,
990 and 1041, for the last three (3) years for the Employee Plan and any related
trust;
(iii) actuarial valuation reports and financial statements for
the last three (3) years for the Employee Plan; and
(iv) each communication involving the Employee Plan or any
related trust to or from the Internal Revenue Service ("IRS"), Department of
Labor ("DOL"), or any other governmental authority.
(c) Neither Hostcentric nor any ERISA Affiliate has ever maintained,
contributed to, or been liable for an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA.
(d) All contributions required to be made under the terms of any
Employee Plan with respect to all periods through the date hereof have been
timely made or have been reflected on the face of Hostcentric's Most Recent
Balance Sheet (rather than in any notes thereto).
(e) Hostcentric has no obligation to contribute to or provide benefits
pursuant to, and has no other liability of any kind with respect to, (i) a
"multiple employer welfare arrangement" ("MEWA") (within the meaning of Section
3(40) of ERISA), or (ii) a "plan maintained by more than one employer" (within
the meaning of Section 413(c) of the Code).
(f) Hostcentric is not liable for, and neither the Hostcentric nor
Merger Sub will be liable for, any contribution, tax, lien, penalty, cost,
interest, claim, loss, action, suit, damage, cost assessment or other similar
type of liability or expense of any ERISA Affiliate (including predecessors
thereof) with regard to any Employee Plan maintained, sponsored or contributed
to by an ERISA Affiliate (if a like definition of Employee Plan were applicable
to the ERISA Affiliate in the same manner as it applies to Hostcentric).
(g) Hostcentric, each ERISA Affiliate, each Employee Plan and each
Employee Plan "sponsor" or "administrator" (within the meaning of Section 3(16)
of ERISA) has complied in all respects with the applicable requirements of
Section 4980B of the Code and Section 601 et seq. of ERISA (such statutory
provisions and predecessors thereof are referred to herein collectively as
"COBRA"). Section 3.17 of the Hostcentric Disclosure Schedule lists the name of
each Employee who is on a leave of absence (whether or not pursuant to the
Family and Medical Leave Act of 1993, as amended ("FMLA")) and is receiving or
entitled to receive health coverage under an Employee Plan, whether pursuant to
FMLA, COBRA or otherwise.
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(h) With respect to each Employee Plan:
(i) the Employee Plan complies in all material respects with, and
has been maintained and operated in accordance with, its respective terms and
the terms and the provisions of applicable law, including, without limitation,
ERISA and the Code (including rules and regulations thereunder);
(ii) the Employee Plan is not under audit or investigation by the
IRS or the DOL or any other governmental authority, and no such completed audit,
if any, has resulted in the imposition of any tax, interest or penalty;
(iii) if the Employee Plan purports to provide benefits that
qualify for tax-favored treatment under Sections 79, 105, 106, 117, 120, 125,
127, 129 or 132 of the Code, the Employee Plan satisfies the requirements of
said Section(s); and
(iv) if the Employee Plan purports to be a voluntary employee
beneficiary association ("VEBA"), a request for a determination letter for the
VEBA has been submitted to and approved by the IRS that the VEBA is exempt from
federal income tax under Section 501(c)(9) of the Code, and nothing has occurred
or is expected to occur that caused or could cause the loss of such
qualification or exemption or the imposition of any tax, interest or penalty
with respect thereto.
(i) Hostcentric is not subject to any liens or excise or other taxes
under ERISA, the Code, or other applicable law relating to any Employee Plan.
(j) The consummation of the transactions contemplated by this
Agreement will not give rise to any liability for any employee benefits,
including, without limitation, liability for severance pay, unemployment
compensation, or termination pay, or accelerate the time of payment or vesting
or increase the amount of compensation or benefits due any Employee.
(k) No amounts payable under any Employee Plan in connection with the
transactions contemplated by this Agreement will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the Code.
(l) No Employee Plan in any way provides for any health or welfare
benefits (other than under COBRA or the Federal Social Security Act) to any
Employee who, at the time the benefit is to be provided, is a former director or
employee of, or other provider of services to, Hostcentric or an ERISA Affiliate
(or a beneficiary of any such person), nor have any representations, agreements,
covenants or commitments been made to provide such benefits.
(m) All employees involved in the conduct or operation of the Business
are employees of Hostcentric.
(n) (i) there is no unfair labor practice, charge, grievance, stoppage
or complaint or other proceeding pending or, to the knowledge of Hostcentric,
threatened against Hostcentric before the National Labor Relations Board or any
other Governmental Entity,
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(ii) there is no labor strike, slowdown or stoppage pending or
threatened, against Hostcentric, and
(iii) there has not been any, and there are no, pending
collective bargaining negotiations relating to the employees of Hostcentric.
There are no agreements with, or pending petitions for recognition of, a labor
union or association as the exclusive bargaining agent for any or all of the
employees of Hostcentric, no such petitions have been pending within the past
two (2) years, and there has not been any general solicitation of representation
cards by any union seeking to represent the employees of Hostcentric as their
exclusive bargaining agent at any time within the past two (2) years.
3.18 Certain Agreements. Except as contemplated by this Agreement, neither
the execution and delivery of this Agreement and the Transaction Documents, nor
the consummation of the transactions contemplated hereby will: (a) result in any
payment by Hostcentric (including, without limitation, severance, unemployment
compensation, parachute payment, bonus or otherwise) becoming due to any
director, employee, or independent contractor of Hostcentric under any Employee
Plan, agreement, or otherwise, (b) increase any benefits otherwise payable under
any Employee Plan or agreement or (c) result in the acceleration of the time of
payment or vesting of any such benefits.
3.19 Environmental Matters.
(a) Hostcentric has complied, in all material respects, with all
federal, state and local laws (including, without limitation, case law, rules,
regulations, orders, judgments, decrees, permits, licenses and governmental
approvals) which are intended to protect the environment and/or human health or
safety (collectively, "Environmental Laws");
(b) Hostcentric has not handled, generated, used, stored, transported
or disposed of any material, substance or waste which is regulated by
Environmental Laws ("Hazardous Materials"), except for reasonable amounts of
ordinary office and/or office-cleaning supplies which have been used in
compliance with Environmental Laws;
(c) to the knowledge of Hostcentric, there is not now any underground
storage tank or asbestos on any real property operated or leased by Hostcentric;
(d) Hostcentric has not conducted, nor is it aware of, any
environmental investigations, studies, audits, tests, reviews or analyses, the
purpose of which was to discover, identify, or otherwise characterize the
condition of the soil, groundwater, air or the presence of Hazardous Materials
at any real property operated or leased by Hostcentric; and
(e) to the knowledge of Hostcentric, there are no "Environmental
Liabilities." For purposes of this Agreement, "Environmental Liabilities" are
any claims, demands, or liabilities under Environmental Laws which (i) arise out
of or in any way relate to Hostcentric's operations or activities, or any real
property at any time operated or leased by Hostcentric, or any Hostcentric
Stockholder's use or ownership thereof, whether vested or unvested, contingent
or fixed, actual or potential, and (ii) arise from or relate to actions
occurring (including any failure to act) or conditions existing on or before the
Closing Date.
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3.20 Brokers. Except as described in Section 3.20 of the Hostcentric
Disclosure Schedule, no broker, finder or investment bankers is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger
based upon arrangements made by or on behalf of Hostcentric.
3.21 Supplier and Customer Relationships. To the knowledge of Hostcentric,
it has good commercial working relationships with its material customers and
suppliers. No customer accounting for more than five percent (5%) of
Hostcentric's revenues in any month during the last seven calendar months ending
November 30, 2002 has canceled or otherwise terminated its relationship with
Hostcentric, decreased or limited materially the amount of product or services
ordered from Hostcentric or threatened in writing (or to Hostcentric's knowledge
orally) to take any such action.
3.22 Product and Service Quality. To the knowledge of Hostcentric, all
services provided by Hostcentric or any Subsidiary to customers on or prior to
the date hereof conform to applicable contractual commitments, implied
warranties not disclaimed, express warranties, product specifications and
quality standards published by Hostcentric in all material respects. Hostcentric
has no material liability (and Hostcentric has no knowledge of any basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against Hostcentric giving rise to any liability) for
replacement or repair thereof, or for the taking of any remedial action with
respect thereto or other damages in connection therewith. Hostcentric has not
received any written complaint from a customer that alleges that Hostcentric is
in material breach of the customer contract or the agreed upon service level
commitments, except for those that Hostcentric reasonably believes can be
addressed without resulting in a material liability. Hostcentric's data privacy
policy is as set forth on its web site and in Section 3.22 of the Hostcentric
Disclosure Schedule.
3.23 Disruptions. Since November 30, 2002 there has not occurred any
material disruption to network operations, or any material delays in planned
facility or network build out or construction activities, or any material
performance failures by Hostcentric, or other material service disruptions, that
have resulted in material customer complaints or material breaches of customer
installation commitments, in each case with respect to Hostcentric, which
individually or in the aggregate, have a Material Adverse Effect.
3.24 Insurance. Section 3.24 of the Hostcentric Disclosure Schedule
contains a true, correct and complete list of all of the insurance policies
maintained by Hostcentric, which schedule includes the name of the insurance
company, the policy number, a description of the type of insurance covered by
such policy, the dollar limit of the policy, and the annual premiums for such
policy, and the name and phone number of the insurance agent in respect thereto.
Such policies are paid up to date, and no notice of cancellation has been
received.
3.25 Immigration Matters.
(a) With respect to all employees (as defined in Section 274a.1(g) of
Title 8, Code of Federal Regulations) of Hostcentric, Hostcentric has complied
in all material respects with the Immigration Reform and Control Act of 1986, as
amended, and all regulations promulgated thereunder ("IRCA") with respect to the
completion, maintenance and other documentary requirements of Forms I-9
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(Employment Eligibility Verification Forms) for all current and former employees
and the reverification of the employment status for any and all employees whose
employment authorization documents indicated a limited period of employment
authorization.
(b) Section 3.25 of the Hostcentric Disclosure Schedule contains a
true and complete list of all employees of each Hostcentric, if any, who to
Hostcentric's knowledge are not citizens of the United States of America and who
are not permanent residents of the United States of America, together with a
true and complete list of the visa status and visa expiration dates of each such
employee.
(c) Hostcentric has only employed individuals authorized to work in
the United States. Hostcentric has not received any written notice of any
inspection or investigation relating to its alleged noncompliance with or
violation of IRCA, nor has it been warned, fined or otherwise penalized by
reason of any failure to comply with IRCA.
(d) The consummation of the transactions contemplated by this
Agreement will not, (i) give rise to any liability for the failure to properly
complete and update Forms I-9, (ii) give rise to any liability for the
employment of individuals not authorized to work in the United States, or (iii)
cause any current employee to become unauthorized to work in the United States.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INTERLAND AND MERGER SUB
Except as set forth in the disclosure schedule attached to this Agreement
(the "Interland Disclosure Schedule") each of Merger Sub and Interland jointly
and severally represents and warrants to Hostcentric and the Hostcentric
Stockholders as follows, each of which is material to and relied upon by
Hostcentric and the Hostcentric Stockholders:
4.1 Organization Standing and Power. The Merger Sub is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and is duly qualified and in good standing in each jurisdiction where
the character of the properties owned, based or operated by it or the nature of
its business make such qualifications necessary, except for such failures to be
so qualified and in good standing that would not be expected to have a Material
Adverse Effect on Merger Sub. Interland is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Minnesota, and is
duly qualified and in good standing in each jurisdiction where the character of
the properties owned, based or operated by it or the nature of its business make
such qualifications necessary, except for such failures to be so qualified and
in good standing that would not be expected to have a Material Adverse Effect on
Interland.
4.2 Authority. Each of Interland and Merger Sub has all necessary corporate
power to own, lease and operate its properties and to carry on its business as
now being conducted, to execute and deliver this Agreement and all other
documents contemplated hereby, to perform its obligations hereunder and
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thereunder and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance by each of Merger Sub and Interland of
this Agreement and all the Transaction Documents to which it is a party has been
duly authorized by all necessary corporate action on the part of Merger Sub and
Interland, respectively, and no other corporate proceedings on the part of
Merger Sub or Interland are necessary to authorize this Agreement or the
Transaction Documents or to consummate the transactions contemplated hereby or
thereby. Each of Interland and Merger Sub has duly and validly executed and
delivered this Agreement, and prior to the Closing Date will have duly and
validly executed and delivered all other agreements contemplated hereby to be
executed and delivered by Interland and Merger Sub, and assuming due
authorization, execution and delivery by Hostcentric, each of this Agreement and
the Transaction Documents constitutes a valid, binding and enforceable
obligation of Merger Sub and Interland in accordance with its terms.
4.3 General. There is no fact within the knowledge of Merger Sub or
Interland that (a) is likely to have a Material Adverse Effect on the ability of
Merger Sub or Interland to comply with or perform any covenant or obligation
under this Agreement or (b) is likely to have the effect of preventing,
delaying, making illegal or otherwise interfering with any of the transactions
contemplated hereby.
4.4 Financial Statements.
(a) Section 4.4(a) of the Interland Disclosure Schedule includes
copies of the following financial statements of Interland ("Interland's
Financial Statements"): the audited balance sheet and statements of income,
changes in stockholders' equity and cash flow of Interland for the twelve (12)
months as of and ending on August 31, 2002.
(b) Each of Interland's Financial Statements (including the notes
thereto) are true, complete and correct in all material respects, present fairly
the financial condition and results of operations of Interland as of the dates
of such statements, and have been prepared on an accrual basis in accordance
with GAAP (except, with respect to any unaudited interim financial statements,
the absence of notes and normal year-end adjustments).
4.5 Absence of Certain Changes. Except as provided in Section 4.5 of the
Interland Disclosure Schedule and except as contemplated hereby, since August
31, 2002 Interland has conducted its business only in the ordinary course
consistent with past practice, and since such date there has not been:
(a) any Material Adverse Effect on Interland and there have not been
any events that, individually or in the aggregate, could reasonably be expected
to result in any Material Adverse Effect on Interland;
(b) any material change in Interland's accounting methods or
practices;
(c) any material liabilities incurred by Interland, whether due or to
become due, except in the ordinary course of business consistent with past
practices, or a failure to satisfy, or a delay or postponement of payment of,
any of its Liabilities as the same becomes due and owing.
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4.6 Interland Shares. The issuance and delivery by Interland of Interland
Common Stock in accordance with this Agreement have been duly and validly
authorized by all necessary corporate action by Interland and, when issued in
accordance with the terms and provisions of this Agreement, such Interland
Common Stock will be duly authorized, fully paid and non-assessable, will not be
subject to any preemptive or other statutory or contractual rights of
stockholders, will be issued in compliance with all United States federal and
state securities laws, will be approved for listing on NASDAQ at the time of
issuance and will be registered pursuant to the Registration Statement (as
defined in Section 6.6(a) hereof).
4.7 SEC Filings; S-4 Eligibility. Except as provided in Section 4.7 of the
Interland Disclosure Schedule, Interland has filed all reports and filings with
the SEC required pursuant to the Securities Act or the Securities Exchange Act
of 1934 ("Exchange Act") on a timely basis. Except as provided in Section 4.7 of
the Interland Disclosure Schedule, each such report or filing is true, correct
and complete in all material respects and does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading. Interland is eligible to file the Registration Statement (as defined
in Section 6.6(a) hereof).
4.8 Brokers' and Finders' Fees. Neither the Merger Sub nor Interland has
incurred, or will incur, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or any similar charges in connection with
the Transaction Documents or any transaction contemplated thereby which would
result in any Person having a claim against Hostcentric or the Hostcentric
Stockholders arising from the non-payment of any such fees, commissions or
similar charges.
4.9 Capital Structure. The authorized capital stock of Interland consists
of 210,000,000 shares of par value $.01 stock which is divisible into classes
and series by the Board of Directors, of which 141,381,601 shares of common
stock are issued and outstanding as of November 15, 2002. All outstanding shares
of Interland common stock have been duly authorized, are validly issued, fully
paid and nonassessable, and were issued free and clear of any preemptive rights
or other stockholder rights. The outstanding shares of Interland common stock
were issued in material compliance with all applicable laws, including without
limitation federal and state securities laws.
4.10 Consents and Approvals; No Violations. Interland holds and at all
times has held, all material licenses, permits and authorizations from all
Governmental Entities necessary for the lawful conduct of its business in all
material respects pursuant to all applicable statutes, laws, ordinances, rules
and regulations of all such Governmental Entities having jurisdiction of them or
any part of their operations. The consummation of the transactions contemplated
by the Transaction Documents:
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(a) will not conflict with or violate any provision of the articles or
certificate of incorporation or by-laws of either the Merger Sub or Interland,
or any federal, state or local court or administrative order or process,
statute, law, ordinance, rule or regulation;
(b) will not require any consent, approval or waiver of, any filing by
the Merger Sub or Interland with, or any notice by the Merger Sub or Interland
to, any Person (other than as set forth in Section 4.10 of the Interland
Disclosure Schedule),
(c) will not result in a violation or breach of, will not constitute
(with or without due notice or lapse of time or both) a default under, or will
not require any notice under, any of the terms, conditions or provisions of any
contract, loan or credit agreement, note, bond, mortgage or lease to which
either the Merger Sub or Interland is a party or by which either the Merger Sub
or Interland or any of their respective assets may be bound, and
(d) will not terminate, amend or modify, or give any party the right
to terminate, amend, modify, abandon or refuse to perform or comply with, any
material contract, agreement or commitment to which Interland or Merger Sub is a
party, or under which Interland or Merger Sub is obligated, or by which
Interland or Merger Sub or any of the rights, properties or assets of Interland
or Merger Sub are subject to or bound;
(e) will not accelerate, postpone or modify, or give any party the
right to accelerate, postpone or modify, the time within which, or the terms and
conditions under which, any liabilities, duties or obligations are to be
satisfied or performed, or any rights or benefits are to be received, under any
contract, agreement or commitment to which Interland or Merger Sub is a party,
or under which Interland or Merger Sub is obligated, or by which Interland or
Merger Sub or any of the rights, properties or assets of Interland or Merger Sub
are subject to or bound. Section 4.10 of the Interland Disclosure Schedule sets
forth a copy or description of each material agreement, contract or other
instrument binding upon Interland or Merger Sub requiring a notice or consent
(by its terms or as a result of any conflict or other contravention required to
be disclosed in the Interland Disclosure Schedule pursuant to the preceding
provisions of this Section 4.10) as a result of the execution, delivery or
performance of this Agreement and all other agreements contemplated hereby by
Interland and Merger Sub or the consummation of the merger or any other
transaction described herein; and
(f) will not violate or breach any law or order applicable to the
Merger Sub or Interland.
4.11 No Undisclosed Liabilities. Except for Liabilities of the type set
forth in Section 4.11 of the Interland Disclosure Schedule, neither Interland
nor Merger Sub has any debt, liability or obligation of any kind (and to the
knowledge of Interland and Merger Sub there is no basis for any present or
future proceeding that could reasonably be expected to give rise to any debt,
liability or obligation), whether accrued, absolute, direct, indirect,
contingent or otherwise including any liability or obligation on account of
Taxes or any penalty, interest or fine, except for
26
(a) liabilities incurred in the ordinary course of business after
August 31, 2002, and that individually or in the aggregate, could not have a
Material Adverse Effect on Interland or Merger Sub;
(b) liabilities that are accrued or reserved against in Interland's
August 31, 2002 audited balance sheet in accordance with GAAP;
(c) obligations under this Agreement or other Transaction Documents;
and
(d) obligation to perform or pay the executory portion of any
contracts incurred in the ordinary course of business and not required under
GAAP to be reflected in Interland's Financial Statements.
4.12 Litigation and Other Proceedings. There is no action, suit, claim,
investigation or proceeding pending against or, to the knowledge of Interland or
Merger Sub, threatened against Interland, Merger Sub any Subsidiary, or any of
their respective properties and assets before any court or arbitrator or any
Governmental Entity which is not fully disclosed in the Interland Annual Report
on Form 10-K filed with the Securities and Exchange Commission for the year
ended August 31, 2002, or in which the amount involved exceeds $850,000.
Interland is not subject to any order, writ, judgment, decree or injunction in
which the amount involved exceeds $850,000.
ARTICLE V
COVENANTS
Hostcentric hereby covenants and agrees with Interland and Merger Sub that
from the date hereof until the Closing Date:
5.1 Regular Course of Business. Hostcentric shall operate its business
diligently and consistent with past management practices; shall maintain all of
its properties in customary repair, order and condition, reasonable wear and
tear excepted; shall maintain (except for expiration due to lapse of time) all
leases and contracts in effect without change except as expressly provided
herein; shall comply in all material respects with the provisions of all
regulations and orders applicable to Hostcentric and the conduct of its
business; shall not cancel, release, waive or compromise any debt, claim or
right in its favor having a value in excess of $25,000 other than in connection
with returns for credit or replacement in the ordinary course of business; and
shall not alter the rate or basis of compensation of any of its officers,
directors or employees other than in the ordinary course of business.
5.2 Amendments. Except as required for the transactions contemplated in
this Agreement, no change or amendment shall be made in the Certificate of
Incorporation or bylaws of Hostcentric.
5.3 Capital Changes. Hostcentric shall not issue or sell any shares of
Hostcentric Stock or issue or sell other equity interests in Hostcentric except
upon the exercise of currently outstanding options and warrants.
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5.4 Dividends. Neither Hostcentric nor any Subsidiary shall declare, pay or
set aside for payment any dividend or other distribution in respect of its
capital stock, nor shall Hostcentric or any Subsidiary, directly or indirectly,
redeem, purchase or otherwise acquire any shares of its capital stock.
5.5 Capital and Other Expenditures. Neither Hostcentric nor any Subsidiary
shall make any capital expenditures, or commitments with respect thereto,
outside of the ordinary course of business in excess of $25,000.
5.6 Borrowing. Neither Hostcentric nor any Subsidiary shall incur, assume
or guarantee any indebtedness not reflected on the Hostcentric Financial
Statements except in the ordinary course of business under existing credit
facilities or for purposes of consummation of the transactions contemplated by
this Agreement and in any case only after consultation with Interland.
5.7 Full Access and Disclosure.
(a) Hostcentric shall afford to Xxxxxxx Xxxxx, the designated
representative of Interland (the "Interland Representative"), reasonable access
during business hours to Hostcentric's properties, books and records in order
that Interland may have full opportunity to make such reasonable investigations
as it shall desire to make of the affairs of Hostcentric; and Hostcentric shall
cause its officers, employees and auditors to furnish such additional financial
and operating data and other information as the Interland Representative shall
from time to time reasonably request.
(b) From time to time prior to the Closing Date, Hostcentric shall
promptly supplement or amend information previously delivered to Interland with
respect to any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or disclosed;
provided, however, that such supplemental information shall not be deemed to be
an amendment to any schedule or exhibit hereto.
5.8 Confidentiality. Hostcentric agrees that unless and until the
transactions contemplated hereby have been consummated, Hostcentric and its
representatives and its affiliates and their representatives and advisors will
hold in strict confidence all data and information obtained from Interland or
any of its affiliates in connection with the transactions contemplated hereby.
5.9 Fulfillment of Conditions Precedent. Hostcentric shall use its
reasonable best efforts to obtain at its expense all such waivers, permits,
consents, approvals or other authorizations from third parties and authorities,
and to do all things as may be necessary or desirable in connection with
transactions contemplated by this Agreement.
5.10 Public Announcement. Hostcentric will not disseminate any press
release or other announcement concerning this Agreement or the transactions
contemplated herein to any third party (except to the directors, officers and
employees of the parties to this Agreement whose direct involvement is necessary
for the consummation of the transactions contemplated under this Agreement, to
the attorneys, advisors and accountants of the parties hereto, or except as
Hostcentric determines in good faith to be required by applicable law) without
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the prior written agreement of Interland, which agreement shall not be
unreasonably withheld or delayed. Any press release or other announcement
disseminated by Hostcentric concerning this Agreement will not disclose the
names of any Hostcentric Stockholders without their prior written consent.
Interland hereby covenants and agrees with Hostcentric that from the date
hereof until the Closing Date:
5.11 Full Access and Disclosure.
(a) Interland shall afford to Xxxxxxx X. Xxxxx, the designated
representative of Hostcentric (the "Hostcentric Representative"), reasonable
access during business hours to Interland's properties, books and records in
order that Hostcentric may have full opportunity to make such reasonable
investigations as it shall desire to make of the affairs of Interland; and
Interland shall cause its officers, employees and auditors to furnish such
additional financial and operating data and other information as the Hostcentric
Representative shall from time to time reasonably request.
(b) From time to time prior to the Closing Date, Interland shall
promptly supplement or amend information previously delivered to Hostcentric
with respect to any matter hereafter arising which, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
disclosed; provided, however, that such supplemental information shall not be
deemed to be an amendment to any schedule or exhibit hereto.
5.12 Confidentiality. Interland agrees that unless and until the
transactions contemplated hereby have been consummated, Interland and its
representatives and its affiliates and their representatives and advisors will
hold in strict confidence all data and information obtained from Hostcentric or
any of its affiliates in connection with the transactions contemplated hereby.
5.13 Fulfillment of Conditions Precedent. Interland shall use its
reasonable best efforts to obtain at its expense all such waivers, permits,
consents, approvals or other authorizations from third parties and authorities,
and to do all things as may be necessary or desirable in connection with
transactions contemplated by this Agreement.
5.14 Public Announcement. Interland will not disseminate any press release
or other announcement concerning this Agreement or the transactions contemplated
herein to any third party (except to the directors, officers and employees of
the parties to this Agreement whose direct involvement is necessary for the
consummation of the transactions contemplated under this Agreement, to the
attorneys, advisors and accountants of the parties hereto, or except as
Interland determines in good faith to be required by applicable law) without the
prior written agreement of Hostcentric, which agreement shall not be
unreasonably withheld or delayed. Any press release or other announcement
disseminated by Interland concerning this Agreement will not disclose the names
of any Hostcentric Stockholders without their prior written consent.
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ARTICLE VI
ADDITIONAL AGREEMENTS
Interland, Merger Sub and Hostcentric each agree to take the following
actions after the execution of this Agreement.
6.1 Officers and Directors. Interland hereby unconditionally guarantees all
rights to indemnification existing on the date hereof in favor of the present or
former officers and directors of Hostcentric as well as all other parties
entitled to indemnification under Hostcentric's Certificate of Incorporation
with respect to actions taken in their authorized capacities prior to the
Effective Time and any applicable indemnification agreements (copies of which
have been provided to Interland), all of which will survive the Merger and
continue in full force and effect following the Effective Time.
6.2 Employee Benefits. Nothing contained herein will be considered as
requiring Hostcentric or Interland to continue any specific plan or benefit, or
to confer upon any employee, beneficiary, dependent, legal representative or
collective bargaining agent of such employee any right or remedy of any nature
or kind whatsoever under or by reason of this Agreement, including without
limitation any right to employment or to continued employment for any specified
period, at any specified location or under any specified job category, except as
specifically provided for in an offer letter or other agreement of employment.
It is specifically understood that continued employment with Hostcentric or
employment with Interland is not offered or implied for any other employees of
Hostcentric and any continuation of employment with Hostcentric after the
Closing will be at will except as specifically provided otherwise in an accepted
offer letter or other agreement of employment. Notwithstanding the foregoing
provisions in this Section 6.2, Interland shall be responsible for all
liabilities arising pursuant to the so-called WARN Act with respect to any
termination of employees after the Effective Time.
6.3 Additional Agreements. In case at any time after the Effective Time any
further action is reasonably necessary or desirable to carry out the purposes of
this Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of Hostcentric,
the officers and directors of each corporation which is a party to this
Agreement will take all such necessary action. Without limiting the foregoing,
on or prior to the Closing Date, Hostcentric will deliver to Interland a
properly executed statement satisfying the requirements of Treasury Regulation
Sections 1.897-2(h) and 1.1445-2(c)(3) in form and substance reasonably
acceptable to Interland.
6.4 Reserved
6.5 No Solicitation.
(a) From and after the date of this Agreement until the earlier to
occur of the Effective Time or termination of this Agreement pursuant to its
terms, Hostcentric will not, and Hostcentric will instruct its directors,
officers and anyone else acting on its behalf not to, directly or indirectly:
30
(i) solicit or encourage submission of any Acquisition Proposal
(as defined herein) by any person, entity or group (other than Interland and its
affiliates, agents and representatives) or
(ii) participate in any discussions or negotiations with, or
disclose any non-public information concerning Hostcentric to, or afford access
to the properties, books or records of Hostcentric, or otherwise assist or
facilitate, or enter into any agreement or understanding with, any person,
entity or group (other than Interland and its affiliates, agents and
representatives and except to other persons customarily provided such access and
materials) in connection with any Acquisition Proposal with respect to
Hostcentric. For purposes of this Agreement, an "Acquisition Proposal" means any
proposal or offer relating to (i) any merger, consolidation, sale or license of
substantial assets or similar transactions involving Hostcentric (other than
sales or licenses of assets or inventory in the ordinary course of business or
as permitted by this Agreement) or (ii) sales by Hostcentric of any capital
stock of Hostcentric (including, without limitation, by way of a tender offer or
an exchange offer) (except the issuance of Hostcentric Stock under any
Hostcentric options or warrants issued and outstanding as of the date of this
Agreement). Hostcentric, will immediately cease any and all existing activities,
discussion or negotiations with any parties conducted heretofore with respect to
any of the foregoing.
(b) Nothing contained in Section 6.5(a) shall prevent Hostcentric or
its Board of Directors from (A) furnishing non-public information or entering
into discussions or negotiations with, any person or entity in connection with
an unsolicited bona fide written Acquisition Proposal by such person or entity
or agreeing to or recommending an unsolicited bona fide written Acquisition
Proposal to its stockholders, if and only to the extent that (1) the Board of
Directors of Hostcentric believes in good faith (after consultation with its
advisors) that such Acquisition Proposal is reasonably capable of being
completed on the terms proposed and, after taking into account the strategic
benefits anticipated to be derived from the Acquisition Proposal, would, if
consummated, result in a transaction more favorable to such party over the long
term than the transaction contemplated by this Agreement, and such Board of
Directors determines in good faith after receipt of advice from outside legal
counsel to the effect that such action is likely necessary for such Board of
Directors to comply with its fiduciary duties to stockholders under applicable
law, and (2) prior to furnishing such non-public information to, or entering
into discussions or negotiations with, such person or entity, such Board of
Directors receives from such person or entity an executed confidentiality
agreement with terms consistent with those contained in confidentiality
agreements utilized in similar transactions.
(c) Hostcentric will promptly:
(i) notify Interland if, after the date of this Agreement, it
receives any proposal or written inquiry or written request for information in
connection with an Acquisition Proposal or potential Acquisition Proposal and
(ii) notify Interland of the significant terms and conditions of
any such Acquisition Proposal including the identity of the party making an
Acquisition Proposal. In addition, from and after the date of this Agreement,
until the earlier to occur of the Effective Time or termination of this
Agreement pursuant to its terms, Hostcentric will not, and will instruct its
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directors, officers, and anyone else acting on its behalf not to, directly or
indirectly, make or authorize any public statement, recommendation or
solicitation in support of any Acquisition Proposal made by any person, entity
or group (other than Interland).
(d) If Hostcentric enters into a definitive agreement pursuant to
an Acquisition Proposal, it shall be deemed to have terminated this Agreement
and shall pay Interland a termination fee of $774,000 within the earlier of
three business days of such termination or three business days of its entering
into such a definitive agreement. In addition, the Voting Agreement shall
terminate at the same time that this Agreement terminates. The payment of a
termination fee pursuant to this subsection, which is agreed to be a fair
estimate of the expenses and damages which would be suffered by Interland in
such event, shall be the sole and exclusive remedy of Interland against
Hostcentric and its respective directors, officers, employees, attorneys,
agents, advisors or other representatives (including its stockholders), under
this Agreement. Should any court of competent jurisdiction determine that,
consistent with applicable law, the termination fee set forth above is
unenforceable or otherwise contrary to public policy, the parties hereto agree
to any reformation of this Agreement by a court that would result in such
termination fee being upheld and given effect.
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6.6 Registration.
(a) Hostcentric shall furnish to Interland such information,
(including information about Hostcentric and its affiliates), as may be
necessary to enable Interland to prepare and file with the SEC a registration
statement on Form S-4 under the Securities Act, and the rules and regulations
promulgated thereunder, in respect of the Merger Shares to be issued by reason
of the Merger (such registration statement, including the proxy
statement/prospectus included therein being referred to in this Agreement as the
"Registration Statement"). Hostcentric covenants that the Company Information
(as defined below) included in the Registration Statement shall not, at the time
the Registration Statement is declared effective, at the time the proxy
statement/prospectus contained therein is first mailed to the Hostcentric
Stockholders, or at the time of the meeting of the Hostcentric Stockholders held
to approve the Merger, 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 not misleading. If at any time prior to the Effective Time
any event or circumstance should come to the attention of Hostcentric with
respect to the Company Information that is required to be set forth in an
amendment or supplement to the Registration Statement, Hostcentric shall
promptly notify Interland and shall assist Interland in appropriately amending
or supplementing the Registration Statement in the manner contemplated in
Section 6.6(d) below. An amendment or supplement may be accomplished, to the
extent permitted by law, rule or regulation, by including such information in a
filing under the Exchange Act that is incorporated by reference into the
Registration Statement. Hostcentric covenants that the Registration Statement
insofar as it relates to information concerning Hostcentric, or any of its
businesses, assets, directors, officers, or stockholders or any other affiliates
or other matters pertaining to Hostcentric that is supplied by Hostcentric for
inclusion in the Registration Statement, including by incorporation by reference
to SEC filings (the "Company Information") shall comply as to form and substance
in all material respects with the applicable requirements of the Securities Act
and the rules and regulations thereunder and the Exchange Act and the rules and
regulations thereunder; except that Hostcentric shall have no liability or
obligation for any information other than the Company Information.
(b) Hostcentric shall instruct its accountants to deliver and shall
use its reasonable best efforts to cause such accountants to deliver to
Interland letters dated at the time the Registration Statement becomes effective
and as of the Closing Date, addressed to Interland, each containing such matters
as are customarily contained in auditors' letters regarding information about
Hostcentric included in the Registration Statement, which auditors' letters
shall be in form and substance reasonably satisfactory to Purchaser.
(c) Interland shall use its reasonable best efforts to file the
Registration Statement and to have it declared effective by the SEC as promptly
as practicable, and shall use its reasonable best efforts to take any action
required to be taken to comply in all material respects with any applicable
federal or state securities laws in connection with the issuance of the Merger
Shares; except that such covenant of Interland is made, as to those portions of
the Registration Statement containing or required to contain Company
Information, assuming and relying solely on timely and full compliance with
Sections 6.6(a) and 6.6(b). Interland will, in a timely manner, provide
33
Hostcentric with copies of any written communications to or from the SEC and
notify Hostcentric of any material oral communications to or from the SEC with
respect to the Registration Statement or the transactions contemplated thereby.
(d) Interland covenants that the information included in the
Registration Statement shall not, at the time the Registration Statement is
declared effective, at the time the proxy statement/prospectus contained therein
is first mailed to the Hostcentric Stockholders, or at the time of the meeting
of the Hostcentric Stockholders held to approve the Merger, 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 not misleading;
except that Interland makes no covenant as to those portions of the Registration
Statement containing or required to contain Company Information. If at any time
prior to the Effective Time any event or circumstance should come to the
attention of Interland that is required to be set forth in an amendment or
supplement to the Registration Statement, Interland shall use its reasonable
efforts to amend or supplement appropriately the Registration Statement. An
amendment or supplement may be accomplished, to the extent permitted by law,
rule or regulation, by including such information in a filing under the Exchange
Act that is incorporated by reference into the Registration Statement.
(e) The Registration Statement and all other documents required to be
filed by Interland with the SEC in connection with the Merger shall comply as to
form and substance in all material respects with the applicable requirements of
the Securities Act and the rules and regulations thereunder and the Exchange Act
and the rules and regulations thereunder; except that Interland shall have no
liability or obligation for any failure to comply with such requirements arising
out of the Company Information.
(f) Each party will provide to the other parties, or their counsel,
drafts of the information related to or customarily provided by such party to be
included in the Registration Statement and will generally cooperate with each
other in the preparation thereof.
(g) Hostcentric shall use its reasonable best efforts to cause each
person that is an "Affiliate" (as defined in Rule 145 under the Securities Act)
of Hostcentric on the date immediately preceding the date of the filing of the
Registration Statement to deliver to Interland on such date a written agreement
substantially in the form attached hereto as Exhibit 6.6(g) ("Rule 145 Letter"),
and, in the event that any other person becomes an affiliate of Hostcentric
thereafter, to cause such person to provide a Rule 145 Letter to Interland at
the Closing.
(h)If Interland is unable to cause the Registration Statement to be
declared effective by April 30, 2003 due solely to Interland's failure to
resolve any SEC comments to Interland's prior SEC filings that remain
outstanding on the date hereof (a copy of which comments were delivered to
Hostcentric's counsel on December 13, 2002), Interland shall pay Hostcentric, at
Hostcentric's request, as liquidated damages for such failure a fee of $774,000
within three business days after April 30, 2003.
6.7 Restrictions on Transferability of Interland Stock. Holders of the
Merger Shares to be issued at Closing shall be permitted to sell on a cumulative
basis up to ten percent (10%) of their original holding of Merger Shares in each
calendar month following the Closing Date, with the initial ten percent (10%) of
34
such Merger Shares being freely tradeable on the Closing Date. Any short sales
of Merger Shares shall be treated as sales for purposes of this Section 6.7.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger will be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) Governmental Approvals. Other than the filing of the Merger
Documents with the Secretary of State of Delaware, all statutory requirements
and all Consents of Governmental Entities and other third parties legally
required for the consummation of the Merger and the transactions contemplated by
this Agreement will have been filed, occurred, or been obtained, other than such
Consents for which the failure to obtain would not have a material adverse
effect on the consummation of the Merger or the other transactions contemplated
hereby or a Material Adverse Effect on Interland or Hostcentric.
(b) No Restraints. No statute, rule or regulation, and no final and
nonappealable order, decree or injunction will have been enacted, entered,
promulgated or enforced by any court or Governmental Entity of competent
jurisdiction which enjoins or prohibits the consummation of the Merger.
(c) Good Standing Certificate. Interland and Merger Sub shall deliver
to Hostcentric, and Hostcentric shall deliver to Interland and Merger Sub,
certificates of good standing from the Secretary of State of Delaware.
7.2 Conditions of Obligations of Interland and Merger Sub. The obligations
of Interland and Merger Sub to effect the Merger are subject to the satisfaction
of the following conditions unless waived by Interland and Merger Sub:
(a) Representations and Warranties of Hostcentric. The representations
and warranties of Hostcentric set forth in this Agreement will be true and
correct in all material respects as of the Closing Date, except (i) as otherwise
specifically permitted by this Agreement, including changes permitted by the
conduct of Hostcentric's business in accordance with the provisions of Article V
hereof, (ii) as a result of actions taken or not taken at the direction of or
after consultation with and written concurrence of Interland and (iii) for
representations and warranties specifically limited to an earlier date(s) (which
must have been true as of such dates).
(b) Performance of Obligations of Hostcentric. Hostcentric will have
performed in all material respects all agreements required to be performed by it
under this Agreement except (i) as otherwise contemplated or permitted by this
Agreement and (ii) as a result of actions taken or not taken at the direction of
or after consultation with and written concurrence of Interland specifying an
exception to this Section.
35
(c) Legal Action. There will not be overtly threatened or pending any
action, proceeding or other application before any court or Governmental Entity
brought by any Person or Governmental Entity: (i) challenging or seeking to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement, or seeking to obtain any material damages from Interland, Merger Sub
or Hostcentric as a result of such transactions; or (ii) seeking to prohibit or
impose any limitations on Interland's ownership or operation of all or any
portion of Hostcentric's business or assets, or to compel Interland to dispose
of or hold separate all or any portion of its or Hostcentric's business or
assets as a result of the transactions contemplated by the Agreement which if
successful would have a material adverse effect on Interland's ability to
receive the anticipated benefits of the Merger.
(d) Opinion of Counsel. Interland will have received an opinion dated
as of the Closing Date of Xxxxxxxxx & Xxxxxxxxx, L.L.P., special counsel to
Hostcentric, acceptable in form and substance to Interland substantially in the
form attached as Exhibit 7.2(d).
(e) Escrow Agreement. The Stockholders' Representatives shall have
duly executed and delivered the Escrow Agreement in form reasonably acceptable
to the parties hereto.
(f) Corporate Proceedings Satisfactory. All corporate and other
proceedings to be taken by Hostcentric in connection with the transactions
contemplated hereby, including approval of such transactions by Hostcentric's
board of directors and stockholders, shall have been taken, and all documents
incident thereto will be satisfactory in form and substance to Interland and its
counsel, and Interland and its counsel will have received all such counterpart
originals or certified or other copies of such documents as they reasonably may
request.
(g) Noncompetition and Nonsolicitation Agreements. Each person listed
on Section 7.2(g) of the Hostcentric Disclosure Schedule shall have duly
executed and delivered a Noncompetition and Nonsolicitation Agreement in the
form attached hereto as Exhibit 7.2(g).
(h) Modification to Employment Agreements. Each person listed on
Section 7.2(h) of the Hostcentric Disclosure Schedule shall have duly executed
and delivered a Modification to Employment Agreement in the form of Exhibit
7.2(h).
(i) Lease Amendment. Hostcentric or Interland shall have entered into
a lease amendment with respect to its Orlando, Florida real property lease
substantially in the form of Exhibit 7.2(i) attached hereto.
(j) Amendment to Hostcentric Certificate of Incorporation. Hostcentric
shall have filed an amendment to its certificate of incorporation in the form of
Exhibit 7.2(j) attached hereto.
(k) Voting Agreement. Certain Hostcentric Stockholders shall have
executed a Voting Agreement in the form attached hereto as Exhibit 7.2(k).
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(l) Registration Statement. The Registration Statement shall have been
declared effective by the SEC, and the Interland Shares shall have been approved
for listing on NASDAQ.
(m) Payments. Hostcentric shall have paid in full or accrued on its
balance sheet all estimated professional fees and expenses, including without
limitation the full payment of Xxxxxxxxx & Xxxxxxxxx, L.L.P., Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx Inc. and Hostcentric's auditors for services previously rendered
and to be rendered in connection with this Agreement and the transactions
contemplated hereby.
7.3 Conditions of Obligation of Hostcentric. The obligation of Hostcentric
to effect the Merger is subject to the satisfaction of the following conditions
unless waived by Hostcentric:
(a) Representations and Warranties of Interland and Merger Sub. The
representations and warranties of Interland and Merger Sub set forth in this
Agreement will be true and correct in all material respects as of the Closing
Date, except as otherwise specifically permitted by this Agreement.
(b) Performance of Obligations of Interland and Merger Sub. Interland
and Merger Sub will have performed in all material respects all agreements
required to be performed by them under this Agreement.
(c) Opinion of Interland's Counsel. Hostcentric has received an
opinion dated the Closing Date of the general counsel of Interland,
substantially in the form attached as Exhibit 7.3(c).
(d) Payment of the Merger Consideration. Interland shall have paid the
Merger Consideration as contemplated by Article II hereof.
(e) Escrow Agreement. Interland shall have duly executed and delivered
the Escrow Agreement in form reasonably acceptable to the parties hereto.
(f) Legal Action. There will not be overtly threatened or pending any
action, proceeding or other application before any court or Governmental Entity
brought by any Person or Governmental Entity: (i) challenging or seeking to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement, or seeking to obtain any material damages from Hostcentric as a
result of the transactions contemplated by this Agreement or (ii) restricting in
any way the receipt, ownership, or ability to dispose of the consideration to be
received by any Hostcentric Stockholder in the transactions contemplated by this
Agreement; provided, however, that Hostcentric will automatically be deemed to
waive this condition if Interland agrees to indemnify, defend and hold any such
named party harmless against any such action.
(g) Amendment to Hostcentric Certificate of Incorporation. Hostcentric
shall have filed an amendment to its certificate of incorporation in the form of
Exhibit 7.2(j) attached hereto.
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ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.1 Survival Periods. All representations and warranties of the parties
contained in any Transaction Document, Disclosure Schedule, or any certificate
delivered in connection herewith shall survive the Closing until six (6) months
from the Closing Date; provided, however, that the representations and
warranties set forth in Section 3.8 hereof shall survive until twelve (12)
months from the Closing Date.
8.2 Indemnification of Interland.
(a) General Indemnification of Interland. Subject to this Article
VIII, the Hostcentric Stockholders, severally and not jointly, hereby agree to
defend, indemnify and hold Interland harmless from and against, and to reimburse
Interland with respect to, any and all losses, damages, liabilities, claims,
judgments, settlements, fines, out-of-pocket costs and expenses (including
reasonable attorneys' fees and expenses actually paid ("Indemnifiable Amounts")
of every nature whatsoever incurred by Interland (which will be deemed to
include any of the foregoing incurred by the Surviving Corporation) by reason of
or arising out of or in connection with the following. Any claim for
indemnification shall be made pro rata against the Hostcentric Stockholders.
(i) any breach or any claim that constitutes a breach by
Hostcentric of any representation or warranty of Hostcentric contained in this
Agreement or in the Hostcentric Disclosure Schedule or any breach or any claim
that constitutes a breach of any covenant or agreement of Hostcentric contained
in this Agreement, other than any breach or related claim resulting from action
taken or not taken at the written direction of or after consultation with and
written concurrence of Interland;
(ii) reasonable costs or expenses which may be incurred by
Interland, Merger Sub or any affiliate thereof in curing any breach of covenant,
warranty or representation by Hostcentric contained in this Agreement or made
pursuant hereto or the Transaction Documents together with all reasonable costs
and expenses incurred by Interland or Merger Sub in defending any suit or action
which may be brought against it alleging such breach, including, but not limited
to, reasonable attorneys' fees;
(iii) any obligation of Interland or the Surviving Corporation to
pay holders of Dissenting Shares amounts in excess of the amount of Merger
Consideration to which such holder would be entitled under the terms of Section
2.1 as a result of the exercise by such holder of its appraisal rights;
(iv) any obligation of Interland or the Surviving Corporation to
pay a cash payment to terminate the Long Island Lease in excess of $180,000 or
to pay closing costs for Hostcentric in excess of $300,000 pursuant to Sections
2.4(a) and (b) respectively;
(v) any claim, suit, proceeding or similar action by any holder
of the capital stock of Hostcentric, or any group of such holders, pertaining to
(A) the negotiation, execution, delivery, or consummation (I) of this Agreement
38
or the Transaction Documents, (other than claims related to a breach by
Interland or the Merger Sub of any representation, warranty, or covenant
hereunder or thereunder), (II) the certificate of incorporation, bylaws, stock
purchase agreements, registration rights agreements, right of first refusal
agreements, co-sale agreements, voting agreements, or similar agreements of
Hostcentric existing prior to the Effective Time; or (B) any claim of breach of
fiduciary duty by any officer or director of Hostcentric arising out of any act
or omission occurring prior to the Effective Time or arising in connection with
the Merger; and
(vi) any Company Information included in the Registration
Statement that contains any untrue statement of a material fact or which omits
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(b) Indemnification Procedures. With respect to any claims or demands
as to which Interland may seek indemnification hereunder, Interland will
promptly notify the Stockholders' Representatives of such claim or demand and of
the facts within Interland's knowledge that relate thereto within a reasonable
time after becoming aware of such claim or demand. The Stockholders'
Representatives will then have the right to defend, contest, negotiate or settle
any such claim or demand through counsel of its own selection, and solely for
the account of the Hostcentric Stockholders, which costs and expenses will be
payable out of the Escrow Fund. The Stockholders' Representatives will not
settle, compromise, or offer to settle or compromise any such claim or demand
without the prior written consent of Interland, which consent will not be
unreasonably withheld or delayed; provided, however, that in the event Interland
does not consent to a settlement or compromise of a claim negotiated by the
Stockholders' Representatives, then in no event shall the Hostcentric
Stockholders be liable for Indemnifiable Amounts in excess of the amount of the
proposed settlement or claim. Without limiting Interland's rights to object for
other reasons, Interland may object to a settlement or compromise which includes
any provision which in its good faith reasonable judgment may have a Material
Adverse Effect on or establish an adverse precedent for Interland or any of its
Subsidiaries. If the Stockholders' Representatives give notice to Interland
within thirty (30) calendar days after Interland has notified the Stockholders'
Representatives that any such claim or demand has been made in writing, that the
Stockholders' Representatives elect to have Interland defend, contest,
negotiate, or settle any such claim or demand, then Interland will have the
right to contest and settle any such claim or demand and seek indemnification
pursuant to this Article VIII as to any Indemnifiable Amounts; provided,
however, that Interland will not settle, compromise, or offer to settle or
compromise any such claim or demand without the prior written consent (which may
include a general or limited consent) of the Stockholders' Representatives,
which consent will not be unreasonably withheld or delayed. If the Stockholders'
Representatives fail to give written notice to Interland of their intention to
contest or settle any such claim or demand within thirty (30) calendar days
after Interland has notified the Stockholders' Representatives that any such
claim or demand has been made in writing, or if any such notice is given but any
such claim or demand is not contested by the Stockholders' Representatives
within a reasonable time thereafter, Interland will have the right to contest
and settle any such claim or demand in its sole discretion and seek
indemnification pursuant to this Article VIII as to any Indemnifiable Amounts.
39
In connection with the matters for which indemnification is sought hereunder,
the indemnified party agrees to give the indemnifying party and its
representatives access to its books, records and employees, to the extent such
reasonably relate to the matters to which the claim relates.
(c) Tax Contests. Notwithstanding any of the foregoing, Interland, at
its sole expense, will have the right to conduct any Tax audit or other Tax
contest relating to the Surviving Corporation. Interland will conduct any such
Tax audit or other Tax contest in good faith; Interland shall consult with the
Stockholders' Representatives and allow them to comment before taking any
position or making any written submission with any Governmental Entity; and
neither Interland nor the Stockholders' Representatives shall make any such
submission without the prior written consent of the other party which consent
shall not be unreasonably withheld or delayed.
(d) Limitations. Notwithstanding any other provision in this Agreement
(except for subsections (iii) and (iv) Section 8.2(a) as to which there is no
Deductible Amount), Interland will be entitled to indemnification only to the
extent that the aggregate Indemnifiable Amount is greater than $258,000 (the
"Deductible Amount") and then only to the extent such amounts exceed the
Deductible Amount. In no event shall the Hostcentric Stockholders be liable for
any amounts in excess of the Escrow Fund (the "Cap Amount"), and no Hostcentric
Stockholder shall be liable for any amount in excess of its pro rata portion of
the Escrow Fund.
(e) Indemnification is Sole Remedy. Notwithstanding any other
provision in this Agreement to the contrary, the provisions of this Article VIII
will be the sole and exclusive remedy of (and corresponding liability of the
Hostcentric Stockholders, to) Interland, Merger Sub and the Surviving
Corporation for any damage, claim, cause of action or right of any nature
arising out of or relating to this Agreement or the transactions contemplated
hereby and access to the Escrow Fund under the terms of the Escrow Agreement
shall be the sole recourse of Interland, Merger Sub and the Surviving
Corporation for such damages, claims, causes of action or rights.
8.3 Indemnification of Hostcentric Stockholders.
(a) General Indemnification of Hostcentric Stockholders. Interland
hereby agrees to defend, indemnify and hold the Hostcentric Stockholders
harmless from and against, and to reimburse them with respect to, any and all
losses, damages, liabilities, claims, judgments, settlements, fines,
out-of-pocket costs and expenses (including reasonable attorneys' fees and
expenses actually paid), of every nature whatsoever incurred by the Hostcentric
Stockholders ("Damages"), by reason of or arising out of or in connection with:
(i) any breach or any claim that constitutes a breach of any
representation or warranty of Interland or Merger Sub contained in this
Agreement or contained in the Interland Disclosure Schedules or any breach or
any claim that constitutes a breach of any covenant or agreement of Interland or
Merger Sub contained in this Agreement other than any breach or related claim
resulting from action taken or not taken at the written direction of or after
consultation with and written concurrence of the Stockholders' Representatives
on behalf of the Hostcentric Stockholders;
40
(ii) reasonable costs or expenses which may be incurred by the
Hostcentric Stockholders in curing any breach of covenant, warranty or
representation by Interland or Merger Sub contained in this Agreement or made
pursuant hereto or the Transaction Documents together with all reasonable costs
and expenses incurred by the Hostcentric Stockholders in defending any sort or
action which may be brought against it alleging such breach, including, but not
limited to, reasonable attorneys' fees;
(iii) any untrue statement of a material fact in the Registration
statement or omission to state a material fact required to be stated in the
Registration Statement or necessary to make the statements in the Registration
Statement not misleading, except for Company Information provided by
Hostcentric; and
(iv) any claim, suit, proceeding or similar action by any holder
of the capital stock of Interland, or any group of such holders, pertaining to
any claim of breach of fiduciary duty by any officer or director of Interland
arising in connection with the Merger.
(b) Indemnification Procedures. With respect to any claims or demands
as to which the Stockholders' Representative may seek indemnification hereunder,
the Stockholders' Representatives will promptly notify Interland of such claim
or demand and of the facts within its knowledge that relate thereto within a
reasonable time after becoming aware of such claim or demand. Interland will
then have the right to defend, contest, negotiate or settle any such claim or
demand through counsel of its own selection, and solely at the Interland's own
cost and expense. Interland will not settle, compromise, or offer to settle or
compromise any such claim or demand without the prior written consent of the
Stockholders' Representatives, which consent will not be unreasonably withheld
or delayed; provided, however, that in the event the Stockholders'
Representatives do not consent to a settlement or compromise of a claim
negotiated by Interland, then in no event shall Interland be liable for Damages
in excess of the proposed settlement or claim. If Interland gives notice to the
Stockholders' Representatives within thirty (30) calendar days after the
Stockholders' Representatives have notified Interland that any such claim or
demand has been made in writing, that Interland elects to have the Stockholders'
Representatives defend, contest, negotiate, or settle any such claim or demand,
then the Stockholders' Representatives will have the right to contest and settle
any such claim or demand and seek indemnification pursuant to this Article VIII
as to any Damages; provided, however, that the Stockholders' Representatives
will not settle, compromise, or offer to settle or compromise any such claim or
demand without the prior written consent (which may include a general or limited
consent) of Interland, which consent will not be unreasonably withheld. If
Interland fails to give written notice to the Stockholders' Representatives of
their intention to contest or settle any such claim or demand within thirty (30)
calendar days after the Stockholders' Representatives have notified Interland
that any such claim or demand has been made in writing, or if any such notice is
given but any such claim or demand is not contested by Interland within a
reasonable time thereafter, the Stockholders' Representatives will have the
right to contest and settle any such claim or demand in their sole discretion
and seek indemnification pursuant to this Article VIII as to any Damages. In
connection with the matters for which indemnification is sought hereunder,
Interland agrees to give the Stockholders' Representatives, and their
representatives, access to its books, records and employees, to the extent such
reasonably relate to the matters to which the claim relates.
41
(c) Limitation. Notwithstanding any other provision in this Agreement,
the Stockholders' Representatives will be entitled to indemnification only to
the extent that the aggregate Damages is greater than the Deductible Amount. In
no event shall Interland be liable for any amounts in excess of the original Cap
Amount.
(d) Indemnification is Sole Remedy. Notwithstanding any other
provision in this Agreement to the contrary, the provisions of this Article VIII
will be the sole and exclusive remedy of the Stockholders' Representatives for
any damage, claim, cause of action or right of any nature arising out of or
relating to this Agreement or the transactions contemplated hereby.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date:
(a) By mutual written consent of the Merger Sub, Interland and
Hostcentric;
(b) By Hostcentric, upon a material breach hereof on the part of
either the Merger Sub or Interland which has not been cured and which would
cause any condition set forth in Section 7.3 hereof to be incapable of being
satisfied by June 30, 2003 and which Hostcentric does not elect to waive or
extend the term of performance for;
(c) By Interland or Merger Sub, upon a material breach hereof on the
part of Hostcentric which has not been cured and which would have caused any
condition set forth in Section 7.3 hereof to be incapable of being satisfied by
June 30, 2003 and which Interland does not elect to waive or extend the term of
performance for;
(d) By the Merger Sub, Interland or Hostcentric if the conditions set
forth in Section 7.1 hereof have not been satisfied or waived prior to Closing
or if any court of competent jurisdiction shall have issued, enacted, entered,
promulgated or enforced any Order which restrains, enjoins or otherwise
prohibits the Merger and such Order shall have become final and nonappealable;
(e) By Hostcentric pursuant to Section 6.5(d) hereof; or
(f) By either the Merger Sub, Interland or Hostcentric if the Merger
shall not have become effective on or before June 30, 2003 (provided the
terminating party is not otherwise in material breach of its representations,
warranties or obligations hereunder).
9.2 Effect of Termination. In the event this Agreement is terminated
pursuant to Sections 9.1(a), 9.1(d) or 9.1(f) above, no party shall have any
obligations to the others hereunder except for those obligations with respect to
confidentiality and the return of confidential information set forth below. If
this Agreement is terminated pursuant to Section 9.1(e), the remedies available
to Interland set forth in Section 6.5(d) hereof shall apply. If this Agreement
is terminated pursuant to Section 9.1(b) or 9.1(c) above, such termination shall
not operate as an election of remedies or limit in any way the right of any
party to pursue a claim for damages or such other relief to which such party may
be entitled; provided, however, that if Hostcentric fails to receive the
requisite approval of the Hostcentric Stockholders for the transactions
42
contemplated by this Agreement, Hostcentric shall be deemed to have terminated
this Agreement and shall pay Interland a termination fee within three business
days of such termination equal to Interland's out-of-pocket costs incurred in
connection with the transactions contemplated by this Agreement through the date
of termination. If this Agreement is terminated, each party shall promptly
return to the other all copies of the due diligence materials previously
provided to such party or their representatives, and the obligations in respect
of confidentiality set forth in this Agreement shall remain in effect.
ARTICLE X
STOCKHOLDERS' REPRESENTATIVES
10.1 Appointment and Acceptance. There shall be three individuals who shall
initially act as the Stockholders' Representatives under this Agreement. Each of
Xxxxxx Xxxxxx Capital Partners, L.P. ("TWP"), Notre Capital Ventures III, L.L.C.
("Notre") and BNP Europe Telecom and Media Fund II, L.P. ("BNP") shall have the
right to appoint one Stockholders' Representative (which may be an entity), and
shall be entitled, from time to time, to remove and replace its appointment. The
initial appointees as Stockholders' Representatives shall be Xxxxxxx X. Xxxxxxx
on behalf of TWP, Xxxxx Xxxxxx on behalf of Notre and Xxxxxxxxx Xxxxxxxxx on
behalf of BNP. By executing this Agreement, each of the Stockholders'
Representatives hereby (i) accepts its appointment and authorization to act as a
Stockholders' Representative and as representative of the Hostcentric
Stockholders in accordance with the terms hereof and (ii) agrees to perform its
obligations hereunder and otherwise to comply with this Article X.
10.2 Authority. The Stockholders' Representatives, acting by majority vote,
are hereby exclusively authorized after the Closing Date to take such action as
the Stockholders' Representatives, acting in their sole discretion, deem
necessary, appropriate or convenient to perform the actions contemplated by this
Agreement and any other actions reasonably related thereto. Without limiting the
generality of the foregoing, the Stockholders' Representatives are specifically
authorized:
(a) to assert claims, make demands and commence actions on behalf of
the Hostcentric Stockholders under the Transaction Documents;
(b) to act on behalf of the Hostcentric Stockholders in connection
with Article VIII hereof;
(c) to negotiate and compromise any dispute which may arise under, and
exercise or refrain from exercising remedies available to the Hostcentric
Stockholders under, the Transaction Documents, and to sign any releases or other
documents with respect to such dispute or remedy (and to bind the Hostcentric
Stockholders in so doing);
43
(d) to retain and compensate attorneys, accountants and other
professionals or consultants to assist in performing its duties hereunder;
(e) to give such instructions and do such other things and refrain
from doing such things as it shall deem appropriate to carry out the provisions
of the Transaction Documents;
(f) to give any and all consents and notices under the Transaction
Documents; and
(g) to perform all actions, exercise all powers, and fulfill all
duties otherwise assigned to it in this Agreement.
10.3 Actions. The Stockholders' Representatives are hereby granted the sole
and exclusive authority to act on behalf of the Hostcentric Stockholders in
respect of all matters arising under or in connection with the Transaction
Documents after the Closing Date, notwithstanding any dispute or disagreement
among the Hostcentric Stockholders, and no Hostcentric Stockholder shall have
any authority to act unilaterally or independently of the Stockholders'
Representatives in respect to any such matter. Merger Sub, Interland, the
Surviving Corporation and the Escrow Agent shall be entitled to rely on any and
all actions taken by the Stockholders' Representatives under the Transaction
Documents without any liability to, or obligation to inquire of, any of the
Hostcentric Stockholders. Escrow Agent and any other Person or entity are hereby
expressly authorized to rely on the genuineness of the signatures of the
Stockholders' Representatives, and upon receipt of any writing which reasonably
appears to have been signed by a majority of the Stockholders' Representatives.
The Merger Sub, Interland, the Surviving Corporation, the Escrow Agent and any
other Person may act upon the same without any further duty of inquiry as to the
genuineness of the writing.
10.4 Effectiveness. The authorization of the Stockholders' Representatives
contained herein shall be irrevocable and effective until the rights and
obligations of the Hostcentric Stockholders under the Transaction Documents
terminate.
10.5 Compensation and Reimbursement of Expenses of Stockholders'
Representatives. The Stockholders' Representatives shall be entitled to receive
out of the Escrow Fund reasonable compensation for their services hereunder and
to be reimbursed for any reasonable out-of-pocket costs and expenses they incur
in performing their services hereunder.
10.6 Indemnification of Stockholders' Representatives. The Merger Sub,
Interland and the Surviving Corporation shall jointly and severally indemnify
and save harmless the Stockholders' Representatives from and against any and all
liability, including all expenses reasonably incurred in its defense and all
costs and expenses reasonably incurred in connection with the performance of
their reasonable duties under this Agreement. This Section 10.6 shall survive
the termination of this Agreement.
10.7 Status of the Stockholders' Representatives. The Stockholders'
Representatives act solely in a representative capacity on behalf of the
Hostcentric Stockholders. The Stockholders' Representatives are not agents of
the Hostcentric Stockholders and owe no fiduciary obligation to the Hostcentric
Stockholders. The Stockholders' Representatives are not expected to devote their
44
full business time to the performance of their duties hereunder, and may engage
in activities that are competitive with the business of Interland and the
Surviving Corporation. The Stockholders' Representatives shall have no
obligation to account to any Hostcentric Stockholder for their time or actions
hereunder.
ARTICLE XI
MISCELLANEOUS
11.1 Entire Agreement; Binding Effect. This Agreement, including the
exhibits, schedules and other agreements delivered pursuant to this Agreement,
contains all of the terms and conditions agreed upon by the parties relating to
the subject matter of this Agreement and supersede all prior agreements,
negotiations, correspondence, undertakings and communications of the parties,
whether oral or written, respecting that subject matter. This Agreement shall be
binding upon the parties hereto and inure to the benefit of their respective
successors, permitted assigns, heirs and personal representatives.
11.2 Governing Law. The Merger will be governed by the internal laws of
Texas (without giving effect to its internal conflict of laws provisions),
except for matters expressly covered by the Delaware Code.
11.3 Notices. All notices, requests, demands or other communications which
are required or may be given pursuant to the terms of this Agreement will be in
writing and will be deemed to have been duly given: (a) on the date of delivery
if personally delivered by hand, (b) upon the third Business Day after such
notice is deposited in the United States mail, if mailed by registered or
certified mail, postage prepaid, return receipt requested, (c) upon the date of
delivery if such notice is sent by a nationally recognized overnight express
courier or (d) by fax upon written confirmation (including the automatic
confirmation that is received from the recipient's fax machine) of receipt by
the recipient of such notice if a Business Day, and if not, on the next
succeeding Business Day:
If to Interland or Interland, Inc.
Merger Sub: 000 Xxxxxxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
With copies to:
Interland, Inc.
General Counsel
000 Xxxxxxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
45
If to Hostcentric: Hostcentric, Inc.
Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. XxXxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
With a copy to:
Bracewell & Xxxxxxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
If to the Stockholders'
Representatives: Xxxxxxx X. Xxxxxxx
Xxx Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone No.: (000) 000-0000
Fax No.: (415) 364-284
Xxxxxxxxx Xxxxxxxxx
00, xxx Xxxxxxxx - 00000 Xxxxx
Telephone No.: 00 0 00 00 00 00
Fax No.: 00 0 00 00 00 00
Xxxxx Xxxxxx
Xxxxx Xxxxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
Such addresses may be changed, from time to time, by means of a notice given in
the manner provided in this Section 11.3.
11.4 Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it will be modified rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement will be
deemed valid and enforceable to the full extent.
11.5 Assignment. Except as contemplated by Article X, no party to this
Agreement may assign, by operation of law or otherwise, all or any portion of
its rights, obligations, or liabilities under this Agreement without the prior
written consent of the non-assigning parties, which consent may be withheld in
46
the absolute discretion of the party asked to grant such consent. Any attempted
assignment in violation of this Section 11.5 will be voidable and will entitle
the non-assigning parties, respectively, to terminate this Agreement at its
option. Election to void the assignment shall not require a termination of this
Agreement.
11.6 Counterparts. This Agreement may be executed in two or more partially
or fully executed counterparts each of which will be deemed an original and will
bind the signatory, but all of which together will constitute but one and the
same instrument. The execution and delivery of a Signature Page to Agreement and
Plan of Merger in the form annexed to this Agreement, including a facsimile copy
of the actual signature, by any party hereto who will have been furnished the
final form of this Agreement will constitute the execution and delivery of this
Agreement by such party.
11.7 Amendment. This Agreement may not be amended except by an instrument
in writing executed by Interland, Merger Sub and Hostcentric, and, in the event
the amendment affects the rights, duties or obligations of the Stockholders'
Representatives, the Stockholders' Representatives.
11.8 Extension; Waiver. At any time prior to the Effective Time, any party
hereto may in its absolute discretion, to the extent legally allowed: (a) extend
the time for the performance of any of the obligations or other acts of any
other party hereto to the party extending such time, (b) waive any inaccuracies
in the representations and warranties made to such party contained herein or in
any document delivered pursuant hereto, and (c) waive compliance with any of the
agreements, covenants or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver will be valid only if set forth in an instrument in writing signed on
behalf of such party, and no waiver or extension of any specific act or
circumstance shall be deemed to waive or extend any other action or
circumstance.
11.9 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference will be to a Section, Exhibit or
Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes," and "including" when used therein will be deemed in each case to be
followed by the words "without limitation." The table of contents, index to
defined terms, and headings contained in this Agreement are for reference
purposes only and will not affect in any way the meaning or interpretation of
this Agreement.
11.10 Knowledge. For purposes of this Agreement, the term "knowledge"
(including any derivation thereof such as "know," "known" or "knowing" and
regardless of whether such word starts with an initial capital) (i) in reference
to Hostcentric will mean the actual knowledge of Xxxxxxx X. XxXxxx, Xxxxx X.
Xxxxxx, Xxxxx Xxxxx and Xxxxxxx X. Xxxxx; and (ii) in reference to Interland or
Merger Sub will mean the actual knowledge of Xxxx X. Xxxxxx, Xxxxx X. Xxxxxxx,
Xxxxxxxxx Xxxxx and Xxxxxxx Xxxxx.
11.11 Transfer, Sales, Documentary, Stamp and Other Similar Taxes. Any and
all transfer, sales, documentary, stamp and other similar Taxes imposed in
connection with the transactions contemplated by this Agreement will be paid by
Hostcentric.
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11.12 Costs. If any legal action or other proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys' fees and all other costs incurred in that action
or proceeding, in addition to any other relief to which it may be entitled.
11.13 Construction. The parties hereto acknowledge and agree that each
party has participated in the drafting of this document has been reviewed by the
respective legal counsel for the parties hereto and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be applied to the interpretation of this Agreement. No
inference in favor of, or against, any party shall be drawn from the fact that
one party has drafted any portion hereof. The disclosure of any matter on any
section of the Disclosure Schedule shall apply to each section to which such
disclosure applies.
11.14 No Third Party Beneficiaries. This Agreement, together with the
Exhibits and Schedules referenced herein, are not intended to confer upon any
person other than the parties hereto and, on and after the Closing Date, the
Hostcentric Stockholders, any rights or remedies hereunder.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, Interland, Merger Sub, Hostcentric and the
Stockholders' Representatives have executed this Agreement as of the date first
written above.
INTERLAND, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxxxx
---------------------------------------------
Title: CFO & General Counsel
---------------------------------------------
BOBCATCUB ACQUISITION CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxxxx
---------------------------------------------
Title: CFO & General Counsel
---------------------------------------------
HOSTCENTRIC, INC.
By: /s/ Xxxxxxx X. XxXxxx
---------------------------------------------
Name: Xxxxxxx X. XxXxxx
---------------------------------------------
Title: Chief Executive Officer
---------------------------------------------
STOCKHOLDERS' REPRESENTATIVES:
/s/ Xxxxxxx X. Xxxxxxx
------------------------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxx Xxxxxx
------------------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxxxxxx Xxxxxxxxx
------------------------------------------------
Xxxxxxxxx Xxxxxxxxx
[Signature Page to Agreement and Plan of Merger]
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1511509
