Exhibit 2.1
ICARIAN INC.
- and -
WORKSTREAM INC.
-and-
WORKSTREAM ACQUISITION, INC.
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AGREEMENT AND PLAN OF MERGER
MAY 23, 2002
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Fenwick & West LLP, counsel for Icarian
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, solicitors for the Purchaser
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of May 23, 2002
BETWEEN:
ICARIAN INC., a corporation incorporated pursuant to the laws of the
State of Delaware ("Icarian" or "the Corporation")
- and -
WORKSTREAM INC., a corporation incorporated pursuant to the laws of
Canada (the "Purchaser")
-and-
WORKSTREAM ACQUISITION, INC., a corporation incorporated pursuant to
the laws of the State of Delaware ("Merger Sub")
RECITALS:
A. Upon the terms and subject to the conditions of this Agreement and
in accordance with the Delaware General Corporation Law and the Delaware
Business Corporations Act ("Delaware Law"), Purchaser, Merger Sub and Icarian
intend to enter into a business combination transaction pursuant to which Merger
Sub will be merged into the Corporation in a reverse triangular merger, with the
Corporation continuing as the Surviving Corporation of the merger (the
"Merger").
B. The Board of Directors of Icarian (i) has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of
Icarian and advisable and fair to, and in the best interests of, Icarian and its
stockholders, (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement and (iii) has determined to
recommend that the stockholders of Icarian adopt and approve this Agreement and
approve the Merger.
C. The Board of Directors of Purchaser (i) has determined that the
Merger is consistent with and in furtherance of the long-term business strategy
of Purchaser and advisable and fair to, and in the best interests of, Purchaser
and its shareholders and (ii) has approved this Agreement, the Merger and the
other transactions contemplated by this Agreement.
D. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Internal
Revenue Code of 1986, as amended.
E. It is also intended by the parties hereto that the Merger shall be
accounted for as a "purchase."
F. On or prior to the Closing, the Corporation and the Icarian
Stockholders entitled to receive common stock of the Purchaser hereunder will
enter into a letter of transmittal in a form to be mutually agreed among the
Corporation, such stockholders and the Purchaser prior to the closing of the
transactions contemplated hereunder (the "Transmittal Letter"), which sets forth
certain representations, warranties and covenants of such Icarian Stockholders.
THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 Definitions
Whenever used in this Agreement, the following words and terms shall have the
meanings set out below:
"1933 Act" means the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder by the SEC;
"1934 Act" means the U.S. Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder by the SEC;
"Icarian Stockholders" means those persons holding shares of capital
stock of Icarian on the Closing Date.
"Accounts Receivable" means all accounts receivable, bills receivable,
trade accounts, book debts and insurance claims recorded as receivable
in the Books and Records and any other amount due to the Corporation,
including any refunds and rebates, and the benefit of all security
(including cash deposits), guarantees and other collateral held by the
Corporation;
"Affiliate" shall mean, as to any Person, any Person controlling,
controlled by, or under common control with, such Person;
"Agreement" means this Agreement, including all schedules, and all
instruments supplementing or amending or confirming this Agreement, and
references to "Article" or "Section" mean and refer to the specified
Article or Section of this Agreement;
"Balance Sheet Date" means the 30th day of April, 2002;
"Benefit Plans" means all plans, arrangements, agreements, programs,
policies, practices or undertakings, whether oral or written, formal or
informal, funded or unfunded, registered or unregistered to which the
Corporation is or has been a party or by which it is or has been bound
or under which the Corporation has, or will have, any liability or
contingent liability, relating to:
(a) Pension Plans;
(b) Insurance Plans; or
(c) Compensation Plans,
with respect to any of the Employees or former employees (or any
dependants or beneficiaries of any such Employees or former employees),
directors or shareholders of the Corporation, individuals working on
contract with the Corporation or other individuals providing services
to any of them of a kind normally provided by employees or eligible
dependants of such person;
"Books and Records" means all books and records of the Corporation,
including financial, corporate, operations, sales and purchase books
and records, lists of suppliers and customers, business reports, plans
and projections and all other documents, surveys, plans, files,
records, correspondence, and other data and information, financial or
otherwise, including all data and information stored on
computer-related or other electronic media;
"Business" means the development and sale of job applicant tracking
software solutions, and related services, carried on by the
Corporation, and the term "Business" shall include any part of the
businesses held or carried on by the Corporation;
"Business Day" means a day, other than a Saturday or Sunday, on which
the principal commercial banks located in Ottawa, Ontario are open for
business during normal banking hours;
"Claims" means any claim, demand, action, assessment or reassessment,
suit, cause of action, damage, loss, charge, judgment, debt, costs,
liability or expense, including reasonable professional fees and all
costs incurred in investigating or pursuing any of the foregoing or any
proceeding relating to any of the foregoing;
"Closing" means the closing of the Merger contemplated under this
Agreement by consummation of the Merger;
"Closing Date" means, subject to prior termination of this Agreement as
provided in Article 11, the earlier of (i) June 29, 2002, or (ii) the
second business day after all closing conditions set forth in Articles
7 and 8 hereof have been satisfied or duly waived, or such other date
as the Parties may agree in writing as the date upon which the Closing
shall take place;
"Closing Time" means 2 o'clock p.m. Ottawa time on the Closing Date, or
such other time on such date as the Parties may agree in writing as the
time at which the Closing shall take place;
"Code" means the United States Internal Revenue Code of 1986, as
amended;
"Compensation Plans" means all employment benefits relating to bonus,
incentive pay or compensation, performance compensation, deferred
compensation, profit sharing or deferred profit sharing, share
purchase, share option, stock appreciation, phantom stock, vacation or
vacation pay, sick pay, severance or termination pay, employee loans or
separation from service benefits, or any other type of arrangement
providing for compensation or benefits additional to base pay or
salary;
"Contracts" means all contracts, licences, leases, agreements,
commitments and engagements to which the Corporation is a party or by
which it is bound and includes all quotations, orders or tenders for
contracts which remain open for acceptance and any warranties,
guarantees or commitments (express or implied);
"Effective Time" means the date and time on which the Merger first
becomes legally effective under Delaware Law as a result of the filing
with the Delaware Secretary of State of the Agreement of Merger
pursuant to, and in conformity with, Delaware Law.
"Employees" means all persons employed by the Corporation, including
for greater certainty, those employees on disability leave, parental
leave or other absence;
"Encumbrances" means any pledge, lien, charge, security interest, title
retention agreement, mortgage, restriction, easement, right-of-way,
title defect, option, adverse claim or encumbrance of any kind or
character whatsoever;
"Environment" means the environment or natural environment as defined
in any Environmental Laws and includes air, surface, water, ground
water, land surface, soil, subsurface strata, any sewer system and the
environment in the workplace;
"Environmental Approvals" means all approvals, permits, certificates,
licences, authorizations, consents, agreements, instructions or
directions having the force of law, and registrations or approvals
issued or required by any Governmental Authority pursuant to
Environmental Laws with respect to the operations, business or assets
of the Corporation;
"Environmental Laws" means all Laws relating in full or in part to the
Environment or employee or public health or safety, and includes those
Environmental Laws relating to the storage, generation, use, handling,
manufacture, processing, labelling, advertising, sale, display,
transportation, treatment, Release and disposal of Hazardous
Substances;
"Equipment Contracts" means all motor vehicle leases, equipment leases,
conditional sales contracts, title retention agreements and other
similar agreements relating to equipment used by the Corporation;
"Governmental Authority" means any government, regulatory authority,
governmental department, agency, commission, board, tribunal or court
or other law, rule or regulation-making entity having or purporting to
have jurisdiction on behalf of any nation, or any province, state or
other geographic or political subdivision of any nation;
"Governmental Authorizations" means all authorizations, approvals,
including Environmental Approvals, orders, consents, directions,
notices, licences, permits, variances, registration or similar rights
issued to or by or required by any Governmental Authority;
"Hazardous Substance" means any pollutant, contaminant, waste of any
nature, hazardous substance, hazardous material, toxic substance,
prohibited substance, dangerous substance or dangerous good as defined
or judicially interpreted under in any Environmental Laws, including
any asbestos or asbestos-containing materials;
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder;
"Icarian Shares" means all of the issued and outstanding shares of
capital stock of the Corporation;
"Insurance Plans" means all employment benefits relating to disability
or wage continuation during period of absence from work (including
short term disability, long term disability and workers compensation),
hospitalization, health, medical or dental treatments or expenses, life
insurance, death or survivor's benefits and supplementary employment
insurance, in each case regardless of whether or not such benefits are
insured or self-insured;
"Intellectual Property" means registered and unregistered trade-marks
(including the Trade-marks), copyright, and other intellectual property
rights and all rights (proprietary, contractual or otherwise) in or
relating to all trade secrets, confidential and proprietary
information, methods, procedures, know-how and information;
"Laws" means all applicable laws, statutes, by-laws, rules,
regulations, orders, ordinances, codes, judgments and directions having
the force of law of any Governmental Authority;
"Leased Real Property" means all premises which are leased, subleased,
licensed or otherwise occupied by the Corporation, and the interest of
the Corporation in all plants, buildings, structures, fixtures,
erections, improvements, easements, rights-of-way and other
appurtenances situate on or forming part of such premises, all of which
is listed in Schedule 1.1(a) of the Disclosure Schedules;
"Material Adverse Effect" when used with reference to any entity or
group of related entities, means any event, change, circumstance or
effect that is, individually or in the aggregate, materially adverse to
the condition (financial or otherwise), properties, assets (including
intangible assets), business, operations or results of operations of
such entity and its subsidiaries, taken as a whole with its
subsidiaries; provided, however, that in no event shall any event,
change, circumstance or effect related to (A) the economy of the United
States, (B) the industry in which such entity or group of related
entities operates, constitute, in and of itself, a Material Adverse
Effect.
"Material Contract" means any currently effective Contract: (i)
involving aggregate payments following the date hereof to or by the
Corporation in excess of $100,000; (ii) involving rights or obligations
of the Corporation that may reasonably extend beyond one year (except
for standard non-exclusive licenses granted to end-user customers in
the ordinary course of business); (iii) which is outside the ordinary
course of business; (iv) which does not or cannot be terminated without
penalty on less than six months notice (except for standard
non-exclusive licenses granted to end-user customers in the ordinary
course of business); or (iv) which restricts in whole or in part in any
material way the scope of the business or activities of the
Corporation;
"Merger Price Per Share" means the average last sale price of Purchaser
Common Stock quoted by the NASD on its automated quotation system for
the last five (5) trading days immediately preceding the Closing Date.
"Merger Sub" means Workstream Acquisition, Inc., a Delaware corporation
and a wholly-owned subsidiary of the Purchaser;
"NASD" means the National Association of Securities Dealers, Inc. or
one or more of its subsidiaries, as the context may require, and any
successor to any of them;
"Notice" shall have the meaning given in Section 12.3;
"Owned Real Property" means all freehold lands which are owned or
purported to be owned, in fee simple, by the Corporation including all
plants, buildings, structures, fixtures, erections, improvements,
easements, rights-of-way and other appurtenances situate on or forming
part of such lands;
"Parties" means all of the parties to this Agreement;
"Pension Plans" means all benefits relating to retirement or retirement
savings including pension plans, pensions or supplemental pensions,
registered retirement savings plans, registered pension plans and
retirement compensation arrangements;
"Permitted Encumbrances" means (i) the Encumbrances listed in Schedule
1.1(c) of the Disclosure Schedules, (ii) statutory liens for the
payment of taxes that are not yet due or delinquent, and (iii) liens,
encumbrances and security interests which arise in the ordinary course
of business and which do not materially affect the assets of the
relevant Party;
"Person" means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, corporation, limited liability company, unlimited
liability company, Governmental Authority, and a natural person in such
person's capacity as trustee, executor, administrator or other legal
representative;
"Purchaser Common Stock" means the common stock, no par value, of the
Purchaser.
"Real Property" means the Owned Real Property and the Leased Real
Property;
"Real Property Leases" means those agreements to lease, leases,
subleases or licences or other occupancy rights pursuant to which the
Corporation uses or occupies the Leased Real Property;
"Release" has the meaning prescribed in any Environmental Laws and
includes any release, spill, leak, pumping, pouring, addition,
emission, emptying, discharge, injection, escape, leaching, disposal,
dumping, deposit, spraying, burial, abandonment, incineration, seepage,
or placement;
"Remedial Order" means any administrative complaint, direction, order
or sanction issued, filed, imposed or threatened by any Governmental
Authority pursuant to any Environmental Laws and includes any order
requiring any remediation or clean-up of any Hazardous Substance, or
requiring that any Release or any other activity be reduced, modified
or eliminated or requiring a payment to be made to any Governmental
Authority;
"Required Approvals" means those Governmental Authorizations,
shareholder approval and third Person approvals, consents and notices
referred to in Schedule 1.2(e), including any consents required by any
outstanding contract or commitment of the Corporation that requires the
prior approval of third parties prior to any change of control of the
Corporation resulting from the consummation of the transactions
contemplated by this Agreement;
"SEC" means the Securities and Exchange Commission;
"Securities Laws" means the 1933 Act, the 1934 Act, the securities or
"blue sky" laws of any state or territory of the United States and the
rules and regulations of the NASD and the comparable laws, rules and
regulations in effect in any relevant other country;
"Subsidiary" of any Person shall mean a corporation, company or other
entity (i) more than 50% of whose outstanding shares or securities
(representing the right to vote for the election of directors or other
managing authority) are, or (ii) which does not have outstanding shares
or securities (as may be the case in a partnership, limited liability
company, joint venture, or unincorporated association), but more than
50% of whose ownership interest representing the right to make
decisions for such other entity is, now or hereafter owned or
controlled, directly or indirectly, by such Person.
"Tax Returns" includes all returns, reports, declarations, elections,
notices, filings, information returns and statements filed or required
to be filed in respect of Taxes;
"Taxes" includes all taxes, duties, fees, premiums, assessments,
imposts, levies and other charges of any kind whatsoever imposed by any
Governmental Authority, together with all interest, penalties, fines,
additions to tax or other additional amounts imposed by any
Governmental Authority in respect thereof, including those levied on,
or measured by, or in respect of income, gross receipts, profits,
capital, gains, capital gains, transfer, land transfer, sales, goods
and services, harmonized sales, use, value-added, excise, stamp,
withholding, business, franchising, property, employer health, payroll,
employment, health, social services, education and social security
taxes, all surtaxes, all customs duties and import and export taxes,
all license, franchise and registration fees and all employment
insurance, health insurance and other government pension plan premiums
or contributions;
"Trade-marks" means all trade-marks, trade names, brands, trade dress,
business names, Uniform Resource Locators ("URL"), domain names, tag
lines, designs, graphics, logos and other commercial symbols and
indicia of origin, whether registered or not, owned by, licensed to or
used by the Corporation and any goodwill associated with any of them,
including trade-marks, trade names, brands, trade dress, business
names, URL, domain names, tag lines, designs, graphics, logos and other
commercial symbols and indicia of origin owned by, licensed to or used
by the Corporation listed and described in Schedule 4.21 of the
Disclosure Schedules.
1.2 Certain Rules of Interpretation
In this Agreement and the schedules:
(a) Time - time is of the essence in the performance of the Parties'
respective obligations;
(b) Currency - unless otherwise specified, all references to money
amounts are to the lawful currency of the United States of
America;
(c) Headings - descriptive headings of Articles and Sections are
inserted solely for convenience of reference and are not intended
as complete or accurate descriptions of the content of such
Articles or Sections;
(d) Singular, etc. - use of words in the singular or plural, or with
a particular gender, shall not limit the scope or exclude the
application of any provision of this Agreement to such person or
persons or circumstances as the context otherwise permits;
(e) Consent - whenever a provision of this Agreement requires an
approval or consent by a Party to this Agreement and notification
of such approval or consent is not delivered within the
applicable time limited, then, unless otherwise specified, the
Party whose consent or approval is required shall be conclusively
deemed to have withheld its approval or consent;
(f) Calculation of Time - unless otherwise specified, time periods
within or following which any payment is to be made or act is to
be done shall be calculated by excluding the day on which the
period commences and including the day on which the period ends
and by extending the period to the next Business Day following if
the last day of the period is not a Business Day;
(g) Business Day - whenever any payment is to be made or action to be
taken under this Agreement is required to be made or taken on a
day other than a Business Day, such payment shall be made or
action taken on the next Business Day following such day; and
(h) Inclusion - where the words "including" or "includes" appear in
this Agreement, they mean "including (or includes) without
limitation".
1.3 Knowledge
Except as specified otherwise in this Agreement, any reference to the knowledge
of any Person shall mean to the best of the knowledge, information and belief of
such Person after reasonable diligence and, with respect to an entity, means the
actual knowledge of all directors and officers of such Person.
1.4 Entire Agreement
This Agreement, together with the agreements and other documents to be delivered
pursuant to this Agreement, constitute the entire agreement between the Parties
pertaining to the subject matter of this Agreement and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties pertaining to that subject matter, and there are no
warranties, representations or other agreements between the Parties in
connection with the subject matter of this Agreement except as specifically set
forth in this Agreement and any document delivered pursuant to this Agreement.
No supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the Party to be bound thereby.
1.5 Applicable Law
This Agreement shall be governed and construed in accordance with the laws of
the State of Delaware and the federal laws of the United States of America
applicable in the State of Delaware, and without regard to the conflict of laws
principles applicable in such jurisdiction.
1.6 Accounting Principles
All references to generally accepted accounting principles mean generally
accepted accounting principles in the United States as at the Closing Date,
applied on a consistent basis.
1.7 Schedules and Exhibits
The schedules and exhibits to this Agreement, are an integral part of this
Agreement. The Schedules shall modify all representations and warranties
contained in this Agreement. Each party has used its best efforts to reference
the correct Schedule, however the failure to properly reference such schedule
shall not be a breach of a representation or warranty if the party to whom the
disclosure is being made could reasonably ascertain the effect of a disclosure
in a Schedule on other applicable representations and warranties.
ARTICLE 2
THE MERGER
2.1 The Merger. At the Effective Time and subject to and upon the terms and
conditions of this Agreement, the Agreement of Merger and the applicable
provisions of Delaware Law, Merger Sub shall be merged with and into Icarian,
the separate corporate existence of Merger Sub shall cease and Icarian shall
continue as the surviving corporation. Icarian as the surviving corporation
after the Merger is hereinafter sometimes referred to as the "Surviving
Corporation."
2.2 Closing. Subject to the provisions of this Agreement, the parties hereto
shall cause the Merger to be consummated by filing an Agreement of Merger, in
such appropriate form as mutually determined by the parties (which agreed form
shall be attached as Exhibit A hereto prior to Closing), with the Secretary of
State of the State of Delaware in accordance with the relevant provisions of
Delaware Law (the "Agreement of Merger").
2.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement, the Agreement of Merger and the
applicable provisions of Delaware Law. Without limiting the generality of the
foregoing, at the Effective Time, all the property, rights, privileges, powers
and franchises of Icarian and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Icarian and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
2.4 Certificate of Incorporation; Bylaws; Directors and Officers
(a) At the Effective Time, the Certificate of Incorporation of Merger
Sub, as in effect immediately prior to the Effective Time, shall
be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by law and such Certificate
of Incorporation of the Surviving Corporation; provided however,
that at the Effective Time Article I of the Certificate of
Incorporation of the Surviving Corporation shall be amended to
read: "The name of the corporation is Icarian, Inc."
(b) At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of
the Surviving Corporation until thereafter amended.
(c) The initial directors of the Surviving Corporation shall be the
directors of Merger Sub immediately prior to the Effective Time,
until their respective successors are duly elected or appointed
and qualified. The initial corporate officers of the Surviving
Corporation shall be the corporate officers of Merger Sub
immediately prior to the Effective Time, until their respective
successors are duly appointed.
2.5 Purchase Price. In connection with the Merger and pursuant to the
provisions of this Agreement and the Agreement of Merger, subject to adjustment
pursuant to Section 2.6(f) hereof, the Purchaser shall issue an aggregate of
3,300,000 fully paid and nonassessable shares of Purchaser Common Stock (each
share, an "Exchange Share") in exchange for all Icarian Shares outstanding
immediately prior to the Effective Time (the "Purchase Price").
2.6 Effect on Capital Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of Merger Sub, Icarian or the Icarian
Stockholders:
(a) Each share of Preferred Stock and Common Stock of the Corporation
held by an Icarian Stockholder that is issued and outstanding
immediately prior to the Effective Time will, by virtue of the
Merger, be cancelled and extinguished and automatically converted
into the right to receive that number of Exchange Shares
determined in accordance with Article IV, Section 3 of the
Corporation's currently effective Amended and Restated
Certificate of Incorporation which is attached hereto as Exhibit
B (the "Distribution Mechanism"), with the value of an Exchange
Share for this determination being equal to the Merger Price Per
Share, upon surrender of the certificate representing such
Icarian Share in the manner provided herein. The preceding
provisions of this Section 2.6(a) are subject to the provisions
of Section 2.6(e) (regarding the elimination of fractional
shares), Section 2.6(f) (regarding Capital Changes), Section
2.6(g) (regarding Dissenting Shares (as defined below)) and
Section 2.7 (regarding the withholding of Escrow Shares).
(b) Each share of Icarian capital stock held by Icarian immediately
prior to the Effective Time shall be cancelled and extinguished
without any conversion thereof.
(c) Each share of common stock, $0.00l par value per share, of Merger
Sub issued and outstanding immediately prior to the Effective
Time shall be converted into one validly issued, fully paid and
nonassessable share of common stock, $0.001 par value per share,
of the Surviving Corporation. Each certificate evidencing
ownership of shares of the common stock of Merger Sub shall
evidence ownership of such shares of capital stock of the
Surviving Corporation.
(d) No fractional shares of Purchaser Common Stock will be issued in
connection with the Merger. In lieu of such issuance, each
Icarian Stockholder who would otherwise be entitled to receive a
fraction of a share of Purchaser Common Stock, computing after
aggregating all shares of Purchaser Common Stock to be received
by such holder pursuant to Section 2.6(a), will instead receive
from the Purchaser, upon surrender of such holder's share
certificates as provided herein, an amount of cash (rounded to
the nearest whole cent) equal to the product obtained by
multiplying (a) the Merger Price Per Share, by (b) the fraction
of a share of Purchaser Common Stock that such holder would
otherwise have been entitled to receive.
(e) Notwithstanding anything to the contrary herein, if the Purchaser
recapitalizes, either through a subdivision (or stock split) of
any of its outstanding shares of Purchaser Common Stock into a
greater number of such shares, or a combination (or reverse stock
split) of any of its outstanding shares of Purchaser Common Stock
into a lesser number of such shares, or reorganizes, reclassifies
or otherwise changes its outstanding shares of Purchaser Common
Stock into the same or a different number of shares of other
classes or series of stock of the Purchaser (other than through a
subdivision or combination of shares provided for in the
preceding clause), or declares a dividend or other distribution
on its outstanding shares payable in shares of Purchaser Common
Stock, in shares or securities convertible into shares of
Purchaser Common Stock and/or other equity securities of the
Purchaser (each, a "Capital Change"), at any time after the date
of this Agreement and prior to the Effective Time, then the
Merger Price Per Share and the Purchase Price will be
appropriately adjusted.
(f) Holders of shares of capital stock of the Corporation who have
complied with all requirements for perfecting (i) stockholders'
rights of appraisal, as set forth in Section 262 of the Delaware
Law, shall be entitled to their rights under the Delaware Law, or
(ii) shareholders' dissenting rights, as set forth in Section
1300 et. seq. under the California General Corporation Law
("California Law"), shall be entitled to their rights under the
California Law, with respect to such shares ("Dissenting
Shares").
(g) Prior to the Closing Date, Purchaser and the Corporation will
calculate and set forth in Schedule 2.6(h) (to be attached hereto
at the Closing) the number of Exchange Shares issuable to each
Icarian Stockholder at the Effective Time in accordance with this
Section 2.6, together with such holder's Escrow Shares.
2.7 Escrow.
(a) At the Closing, the Purchaser will withhold 10% of the Exchange
Shares to be issued to each Icarian Stockholder in accordance
with Section 2.6(a) (rounded down to the nearest whole number of
shares to be issued to such Icarian Stockholder) and deliver such
shares (the "Escrow Shares") to ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ LLP (the "Escrow Agent"), as escrow agent, to be held
by Escrow Agent as collateral for the Corporation's
indemnification obligations under Article 10 and pursuant to the
provisions of an escrow agreement (the "Escrow Agreement") in a
form to be mutually agreed by the parties hereto prior to Closing
and, upon such agreement, to be attached hereto as Exhibit 2.7.
(b) The Escrow Shares will be held by the Escrow Agent from the
Closing until the date that is twelve (12) months after the
Closing Date (the "Escrow Period"). Any shares of Purchaser
Common Stock or other equity securities issued or distributed by
the Purchaser (including securities issued upon a Capital Change)
with respect to the Escrow Shares in the Escrow Period shall be
added to and considered part of the Escrow Shares. Cash dividends
on the Escrow Shares shall be deposited with the Escrow Agent
until release thereof pursuant to the Escrow Agreement. The
Escrow Shares withheld from each Icarian Stockholder will be
represented by a certificate or certificates issued in the name
of such Icarian Stockholder. Each Icarian Stockholder shall be
shown as the record owner on the Purchaser's books and records of
such number of Escrow Shares but, in accordance with the terms of
the Escrow Agreement, such Icarian Stockholder shall not have
voting rights with respect to the Escrow Shares until such Escrow
Shares, if any, are released to such Icarian Stockholder pursuant
to the terms of the Escrow Agreement.
(c) In the event that the Merger is approved by the Icarian
Stockholders as provided herein, the Icarian Stockholders shall,
without any further act of any Icarian Stockholder, be deemed to
have consented to and approved (i) the use of the Escrow Shares
as collateral for the Corporation's indemnification obligations
under Article 10 in the manner set forth in Article 10 and the
Escrow Agreement, (ii) the appointment of Apax Partners as the
representative of the Icarian Stockholders (the "Stockholder
Representative") with respect to the matters set forth in Article
10 and under the Escrow Agreement and as the attorney-in-fact and
agent for and on behalf of each Icarian Stockholder (other than
holders of Dissenting Shares), and the taking by the Stockholder
Representative of any and all actions and the making of any
decisions required or permitted to be taken by him under the
Escrow Agreement (including, without limitation, the exercise of
the power to: authorize delivery to the Purchaser of Escrow
Shares in satisfaction of claims by the Purchaser; agree to,
negotiate, enter into settlements and compromises of and demand
arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims; resolve any claim made
pursuant to Article 10; and take all actions necessary in the
judgment of the Stockholder Representative for the accomplishment
of the foregoing) and (iii) to all of the other terms, conditions
and limitations in the Escrow Agreement.
2.8 Icarian Options. At the Effective Time, the Purchaser shall not assume any
outstanding options to purchase shares of capital stock of Icarian (the "Icarian
Options") and shall not substitute any equivalent option or right for any such
Icarian Option. All outstanding Icarian Options shall become fully vested and
remain exercisable for the period determined by the Icarian Board of Directors
(or the Compensation Committee of the Board of Directors) and any Icarian Option
that has not been exercised by the holder thereof prior to expiration of such
period (which shall in any event expire prior to the Effective Time) shall then
terminate at the Effective Time.
2.9 Icarian Warrants. At the Effective Time, the Purchaser shall assume any
outstanding warrants to purchase shares of capital stock of Icarian (the
"Icarian Warrants"), other than any Icarian Warrant which by its terms expires
or terminates upon the Effective Time unless exercised prior to the Effective
Time and other than any outstanding warrants to purchase shares of Series F
Preferred Stock of Icarian (collectively, the "Expiring Warrants"). Icarian
agrees that any and all outstanding warrants to purchase shares of Series F
Preferred Stock of Icarian shall have been either exercised, terminated or
expired prior to the Effective Time. Each such assumed Icarian Warrant shall by
its terms be converted into a warrant (an "Exchange Warrant") to purchase that
number of Exchange Shares which would be issuable pursuant to Section 2.6(a) to
the holder thereof if such Icarian Warrant had been fully exercised (by payment
in cash) for shares of Icarian Preferred or Common Stock immediately before the
Effective Time, if any, rounded down to the nearest whole share. The per share
exercise price for each Exchange Warrant will equal the per share exercise price
of the corresponding Icarian Warrant immediately before the Effective Time
multiplied by the number of Icarian Shares issuable upon exercise of all Icarian
Warrants outstanding immediately prior to the Effective Time (excluding any
Expiring Warrants), divided by the aggregate number of Exchange Shares subject
to all Exchange Warrants issued in the Merger, if any (calculated on the
assumptions set forth above in the first sentence of this Section 2.9), rounded
up to the nearest whole cent. No cash will be paid in lieu of fractional shares
that are rounded down pursuant to this Section 2.9. The term, exercisability and
all other terms of each Exchange Warrant will be the same in all material
respects as the corresponding Icarian Warrant.
2.10 Securities Law Compliance. The Purchaser shall issue the Exchange Shares
to be issued to the Icarian Stockholders in the Merger as provided in Section
2.6(a) pursuant to an exemption or exemptions from registration under Section
4(2) of the 1933 Act and/or Regulation D promulgated under the 1933 Act and the
exemption from qualification under the laws of the State of California and other
applicable Securities Laws. The Purchaser and the Corporation shall comply with
all applicable provisions of, and rules under, the 1933 Act in connection with
offering and issuance of Exchange Shares in the Merger.
2.11 Place of Closing. The Closing shall take place at the Closing Time at the
offices of ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP located at ▇▇▇▇▇ ▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, or at such other place as may be agreed
upon in writing by the Parties.
2.12 Tender. Any tender of documents or money under this Agreement may be made
upon the Parties or their respective counsel and money shall be tendered in U.S.
dollars by official bank certified cheque, bank draft or by such other method as
the Parties agree in writing.
2.13 Tax and Accounting Consequences
(a) It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368 of
the Code. The parties hereto adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the United States Department of the Treasury Income
Tax Regulations ("Treasury Regulations").
(b) It is intended by the parties hereto that the Merger shall be
treated as a "purchase" for accounting purposes.
ARTICLE 3
EXCHANGE OF CERTIFICATES
3.1 Surrender Procedures.
(a) Purchaser shall act as its own exchange agent in the Merger
(except for the Escrow Shares).
(b) At or as soon as practicable after the Effective Time, each
Icarian Stockholder shall surrender to the Purchaser for
cancellation the share certificates representing the Icarian
Shares that are not Dissenting Shares (the "Certificates"), in
each case duly endorsed in blank for transfer, or accompanied by
irrevocable security transfer powers of attorney duly executed in
blank, in either case by the holders of record (to the extent
that such Icarian Stockholder has not surrendered its
Certificates and/or such executed irrevocable security transfer
powers of attorney to the Purchaser at or prior to the Effective
Time). On or prior to Closing, each Icarian Stockholder who is
entitled to receive Exchange Shares pursuant to the Distribution
Mechanism shall deliver a duly executed Transmittal Letter
together with such holder's Certificate(s) (or an affidavit of
lost certificate as described in Section 3.1(c) below) to the
Purchaser. At the Closing, subject to receipt of such Transmittal
Letter and Certificates (or affidavits of lost certificate), the
Purchaser will issue to each tendering Icarian Stockholder a
certificate for the number of Exchange Shares to which such
Icarian Stockholder is entitled pursuant to Section 2.6(a)
hereof, less the Exchange Shares deposited into escrow pursuant
to Section 2.7 hereof, and pay such Icarian Stockholder any cash
payable in lieu of a fractional share to which such Icarian
Stockholder may be entitled pursuant to Section 2.6(e) hereof.
(c) In the event any Certificates shall have been lost, stolen or
destroyed, the Purchaser shall issue in exchange for such lost,
stolen or destroyed Certificates, upon the making of an affidavit
of that fact by the holder thereof and the posting of reasonable
bond therefore, such number of Exchange Shares and cash for
fractional shares, if any, as may be required pursuant to Section
2.6 and any dividends or distributions payable pursuant to
Section 3.1(d).
(d) No dividends or distributions payable to holders of record of
Purchaser Common Stock after the Effective Time, or cash payable
in lieu of fractional shares, will be paid to the holder of any
unsurrendered Certificate(s) until the holder of the
Certificate(s) surrenders such Certificate(s). Subject to the
effect, if any, of applicable escheat and other laws, following
surrender of any Certificate, there will be delivered to the
person entitled thereto, without interest, the amount of any
dividends and distributions therefor paid with respect to
Purchaser Common Stock so withheld as of any date subsequent to
the Effective Time and prior to such date of delivery.
(e) Each of the Icarian Stockholders and the Purchaser shall deliver
such other documents as may be reasonably necessary to complete
the transactions contemplated by this Agreement.
(f) Until certificates representing the Icarian Shares outstanding
prior to the Merger are surrendered pursuant to Section 3.1(a)
above, such certificates will be deemed, for all purposes, to
evidence the right to the Merger consideration payable with
respect to such Icarian Shares as provided in Section 2.6 above.
3.2 No Further Ownership Rights. All Exchange Shares issued in accordance with
the terms hereof (including any cash paid in respect thereof) shall be deemed to
have been issued in full satisfaction of all rights pertaining to the Icarian
Shares and there shall be no further registration of transfers on the records of
the Surviving Corporation of shares of capital stock of the Corporation, which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented for any reason, they will be canceled
and exchanged as provided in this Article 3.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE corporation
Except as otherwise provided in the Disclosure Schedules to be delivered to the
Purchaser by the Corporation prior to the Closing (the "Disclosure Schedules"),
the Corporation hereby represents and warrants to the Purchaser the matters set
out below.
4.1 Incorporation and Registration
The Corporation is a corporation duly incorporated and validly existing under
the laws of its jurisdiction of incorporation and has all necessary corporate
power, authority and capacity to enter into this Agreement and to carry out its
obligations under this Agreement, to own its property and assets and to carry on
its business as presently conducted. Neither the nature of its business nor the
location or character of the property owned or leased by the Corporation
requires it to be registered, licensed or otherwise qualified as an
out-of-province or foreign corporation in any other jurisdiction other than
those listed opposite its name in Schedule 4.1 of the Disclosure Schedules,
where it is duly registered, licensed or otherwise qualified for such purpose.
4.2 Right to Sell
To the Corporation's knowledge, the Icarian Shares are not subject to any rights
of first refusal or other rights to purchase such stock in favor of the
Corporation or restrictions on transfer pursuant to any agreement.
4.3 Capitalization
(a) The authorized and issued share capital of the Corporation is as
set forth in Schedule 4.3(a) of the Disclosure Schedules. All of
the shares in the capital of the Corporation have been duly and
validly issued and are outstanding as fully paid and
non-assessable shares of the Corporation. Other than as set forth
in Schedule 4.3(a), (a) no options, warrants or other rights to
purchase shares or other securities of the Corporation, and no
securities or obligations convertible into or exchangeable for
shares or other securities of the Corporation, have been
authorized or agreed to be issued or are outstanding; and (b) all
such securities referenced in subsection (a) shall have been
exercised in full or terminated at or prior to the Effective
Time.
(b) Set forth in Schedule 4.3(b) of the Disclosure Schedules is a
complete list of all stockholders of the Corporation and the
number of shares of capital stock of the Corporation owned by
each such stockholder.
4.4 Title to Assets
The Corporation has good and valid title to all of its assets and interests in
assets, real and personal, including all of the assets used in the Business,
free and clear of all Encumbrances, other than Permitted Encumbrances. In
particular, without limiting the generality of the foregoing, there has been no
assignment, subletting or granting of any licence (of occupation or otherwise)
of or in respect of any of the Leased Real Property assets of the Corporation or
any granting of any agreement or right capable of becoming an agreement or
option for the purchase of any of such assets. Except for co-located assets set
forth in Schedule 4.4 of the Disclosure Schedules, all of the assets of the
Corporation are located on the Leased Real Property.
4.5 Due Authorization and Enforceability
The execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been, or will prior to the
Closing Date be, duly authorized by all necessary corporate action on the part
of the Corporation and the Icarian Stockholders. This Agreement constitutes a
valid and binding obligation of the Corporation enforceable against it in
accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors' rights generally, and
(ii) the effect of rules of law governing the availability of equitable
remedies.
4.6 Absence of Conflicting Agreements
The Corporation is not a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law
provision, or, to its knowledge, any Law or Governmental Authorization which
would be violated, contravened, breached by, or under which default would occur
or an Encumbrance would be created as a result of the execution and delivery of
this Agreement or any other documents or agreements to be delivered or entered
into under the terms of this Agreement, or the performance by the Corporation of
its obligations provided for under this Agreement or any other documents or
agreements to be delivered or entered into under this Agreement, except for any
such violation, contravention, breach, default or Encumbrance as would not
individually or in the aggregate have a Material Adverse Effect on the
Corporation.
4.7 Approvals
Except as disclosed in Schedule 4.7 of the Disclosure Schedules, no approval,
order or consent of or notice to or filing with any Governmental Authority or
other Person is required on the part of the Corporation in connection with the
execution, delivery and performance of this Agreement or any other documents or
agreements to be delivered under this Agreement or the performance of the
obligations of the Corporation under this Agreement or any other documents or
agreements to be delivered or entered into under this Agreement, except for the
filing of the Agreement of Merger and such qualifications, registrations or
filings under applicable securities laws as may be required in connection with
the Merger and the transactions contemplated by this Agreement.
4.8 Financial Statements
The Corporation has delivered to the Purchaser unaudited balance sheet of the
Corporation as of April 30, 2002, and the related statements of income and
retained earnings for the periods ending on that date (the "Company Financial
Statements"). The Company Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently followed by the
Corporation throughout the period indicated (except for the absence of notes
thereto and normal year-end adjustments), and fairly present in all material
respects the financial position of the Corporation as of the date of the balance
sheet included in the Company Financial Statements, and the results of its
operations for the period indicated. Except as set forth on Schedule 4.8 of the
Disclosure Schedules, as of the date of this Agreement, the Corporation, to its
knowledge, does not have any material liability or obligation of any nature,
except for liabilities or obligations that are reflected on Company Financial
Statements, or in this Agreement and the Disclosure Schedules and except for
liabilities that may have been incurred after the date of the Company Financial
Statements in the ordinary course of business.
4.9 Absence of Undisclosed Liabilities
Since the Balance Sheet Date, the Corporation has not incurred any material
liabilities or obligations (whether accrued, absolute, contingent or
otherwise)which continue to be outstanding, except those incurred in the
ordinary and usual course of business. The reserves and accrued liabilities
disclosed on or reflected in the Company Financial Statements and the Books and
Records have been calculated in accordance with generally accepted accounting
principles.
4.10 Absence of Changes and Unusual Transactions
Except as described in Schedule 4.10 of the Disclosure Schedules, or except as
consented to in advance in writing by the Purchaser, since the date of the most
recent Balance Sheet Date:
(i) there has not been any damage, destruction, loss or labour
dispute (whether or not covered by insurance) which has had or
is reasonably likely to have a Material Adverse Effect with
respect to the Corporation;
(ii) the Corporation has not transferred, assigned, sold or otherwise
disposed of any of the assets shown or reflected in the Company
Financial Statements or cancelled any debts or entitlements
except, in each case, in the ordinary and usual course of
business;
(iii) the Corporation has not incurred or assumed any obligation or
liability (fixed or contingent) except unsecured current
obligations and liabilities incurred in the ordinary and usual
course of business;
(iv) the Corporation has not discharged or satisfied any Encumbrance,
or paid any obligation or liability (fixed or contingent) other
than liabilities included in the Company Financial Statements
and liabilities incurred since the date of the Company Financial
Statements in the ordinary and usual course of business;
(v) the Corporation has not suffered any cumulative operating or
extraordinary loss, waived or omitted to take any action in
respect of any rights of substantial value, or entered into any
commitment or transaction not in the ordinary and usual course
of business where such loss, rights, commitment or transaction
is or would be material in relation to the Corporation, as the
case may be;
(vi) the Corporation has not granted any bonuses, whether monetary or
otherwise, or made any general wage, salary or Benefit Plan
increases in respect of its Employees or changed the terms of
employment for any Employee except in the ordinary and usual
course of business and consistent with past practice;
(vii) the Corporation has not hired or dismissed any senior Employees
or hired or dismissed any other Employees other than in the
ordinary and usual course of business;
(viii) the Corporation has not mortgaged, pledged, subjected to lien,
granted a security interest in or otherwise encumbered any of
its assets or property, whether tangible or intangible;
(ix) the Corporation has not declared or paid any dividends or
declared or made any other payments or distributions on or in
respect of any of its shares or purchased or otherwise acquired
any of its shares;
(x) the Corporation has not paid any management fees or other
amounts (other than salaries and benefits of employees, the
terms of which are disclosed in Schedule 4.26 of the Disclosure
Schedules) to any of the Icarian Stockholders; and
(xi) the Corporation has not authorized, agreed or otherwise become
committed to do any of the foregoing.
4.11 Non-Arm's Length Transactions
Except as disclosed in Schedule 4.11 of the Disclosure Schedules, no director or
officer, former director or officer, shareholder or Employee of the Corporation,
or any other person not dealing at arm's length (within the meaning of the Code)
with the Corporation, or any of the Icarian Stockholders, has any indebtedness,
liability or obligation to the Corporation, and the Corporation is not indebted
or otherwise obligated to or a party to any Contract with any such person,
except for employment arrangements with Employees, the terms of which are
disclosed in Schedule 4.26 of the Disclosure Schedules.
4.12 Absence of Guarantees
Except as described in Schedule 4.12 of the Disclosure Schedules, the
Corporation has not given or agreed to give, or is a party to or bound by, any
guarantee, surety or indemnity in respect of any indebtedness or other
obligation of any Person, or any other commitment by which the Corporation is,
or is contingently, responsible for any such indebtedness or other obligation.
4.13 Operating Businesses
The Business is carried on exclusively by the Corporation. All assets used in or
necessary to carry on the Business are owned by the Corporation, or leased or
licensed by the Corporation from Persons acting at arm's length from the Icarian
Stockholders and the Corporation.
4.14 Major Suppliers
(a) A comprehensive listing of all suppliers of goods and services
to the Corporation (including suppliers of goods and services to
the Corporation's customers, which are arranged for by the
Corporation), where the value of the goods or services supplied
by such supplier exceeded $25,000, in each case individually or
in the aggregate, during the 12 month period ending on the
Balance Sheet Date.
(b) True and complete copies of all Contracts with those suppliers
of goods and services for the Business (or for customers of the
Business) referred to in subsection 4.14(a) have been made
available to the Purchaser. The Corporation has not received any
written communication that any of such Contracts will not be
honoured in the ordinary and usual course of business consistent
with the past experience of the Business.
(c) Except as disclosed in Schedule 4.14 of the Disclosure
Schedules, the Corporation is not subject to any Contract under
which the Corporation has made any commitment or is subject to
any obligation or would suffer any penalty (financial or
otherwise) as a result of a failure to acquire, or arrange for
the acquisition of, a specified minimum volume of products or
services.
(d) Except as disclosed in Schedule 4.14, the Corporation is not
subject to any Contract involving a commitment of exclusivity
whereby its ability, or the ability of its Affiliates, to
acquire goods or services from any Person would be restricted in
any manner.
(e) To the knowledge of the Corporation, none of the suppliers
included in the list referred to in subsection 4.14(a) has any
intention to change its relationship or the terms upon which it
conducts business with the Corporation, including as a result of
the transactions contemplated by this Agreement.
4.15 Condition of Assets
The fixed assets, machinery, equipment, fixtures, furniture, furnishings and
vehicles owned or leased by the Corporation, including any of the foregoing
which are in storage or in transit, and other tangible property and facilities
used by the Corporation, whether located in or on the premises of the
Corporation or elsewhere, are in good condition in all material respects, repair
and (where applicable) proper working order, having regard to their use and age
and such assets have been reasonably maintained.
4.16 Accounts Receivable
The Accounts Receivable (a) represent bona fide sales actually made or services
actually performed in the ordinary course of business, (b) are reflected on the
books and records of the Corporation in accordance with generally accepted
accounting principles, and (c) to the knowledge of the Corporation, are not
subject to any defence, counterclaim or set off.
4.17 Business in Compliance with Law
In all material respects, the business and operations of the Corporation have
been and are now conducted in compliance with all Laws of each jurisdiction in
which the Corporation carries on or has carried on business, and the Corporation
has not received any written notice of any alleged violation of any such Laws.
4.18 Governmental Authorizations
Schedule 4.18 of Disclosure Schedules sets forth a complete list of the material
Governmental Authorizations issued to or required by the Corporation to enable
it to carry on business in compliance, in all material respects, with all Laws.
The Governmental Authorizations listed in Schedule 4.18 are, in all material
respects, in full force and effect in accordance with their terms, and there
have been no material violations of such Governmental Authorizations and no
proceedings are pending or, to the knowledge of the Corporation, threatened,
which could result in the revocation or limitation of such Governmental
Authorizations.
4.19 Governmental Assistance
Except as disclosed in Schedule 4.19 of the Disclosure Schedules, the
Corporation has not received any grants or other forms of assistance, including
loans with interest below market rates or guarantees of any loans, from any
Governmental Authority that have not been fully repaid or reimbursed and
satisfied, and the Corporation is not a party to any Contract or understanding
with respect to any such grant or form of assistance.
4.20 Restrictive Covenants
Except as disclosed in Schedule 4.20 of the Disclosure Schedules, and as set
forth in license agreements made available to the Purchaser in due diligence,
the Corporation is not party to or bound or affected by any Contract limiting
the freedom of the Corporation to compete in any line of business, acquire goods
and services from any supplier, sell goods and services to any customer, or
transfer or move any of its assets or operations.
4.21 Intellectual Property
(a) Schedule 4.21 of the Disclosure Schedules sets forth a complete
list and brief description of all Intellectual Property owned by
the Corporation (including Trade-marks) that have been
registered or for which applications for registration have been
filed by or on behalf of the Corporation (collectively, the
"Owned Intellectual Property") and all Intellectual Property
licensed to the Corporation (the "Licensed Intellectual
Property") except for commercially available software licensed
by the Corporation, for which the usage rights are licensed
subject to the terms of the applicable, standard form license
agreements.
(b) Except as disclosed in Schedule 4.21, the Corporation has the
right to use and is the exclusive owner of all right, title and
interest in and to all Owned Intellectual Property. The Owned
Intellectual Property and the Licensed Intellectual Property are
all the Intellectual Property used in or necessary to carry on
the Business as currently conducted. All Licensed Intellectual
Property is being used by the Corporation in accordance with a
licence from or the express consent of the rightful owner of
such Licensed Intellectual Property, and all such licences and
consents are in full force and effect.
(c) All rights to Owned or Licensed Intellectual Property are in
full force and effect and have not been used, enforced or
licensed or failed to be used, enforced or licensed in a manner
that would result in the abandonment, cancellation or
unenforceability of or any loss of rights in any of such
Intellectual Property.
(d) Except as disclosed in Schedule 4.21, the Corporation has no
knowledge of any claim of adverse ownership, invalidity or other
opposition to or conflict with any Owned or Licensed
Intellectual Property nor of any pending or threatened action,
litigation, investigation, claim, opposition, complaint,
grievance or proceeding of any nature or kind against any of
them relating to such Intellectual Property.
(e) Except as disclosed in Schedule 4.21, to the knowledge of the
Corporation:
(i) the use of any of the Intellectual Property owned or
licensed by the Corporation;
(ii) any product or service which the Corporation sells,
provides, produces or uses, or has sold, provided,
produced or used; and
(iii) any process, method, advertising, or material that the
Corporation employs or has employed in the marketing or
sale of any such product or service,
does not breach, violate, infringe or interfere with any
proprietary, contractual or other rights of any Person
relating to Intellectual Property.
(f) Except as disclosed in Schedule 4.21, the Corporation has no
knowledge of any breach, violation, infringement of, or
interference with, the Intellectual Property owned or licensed
by the Corporation.
4.22 Equipment Contracts
Schedule 4.22 of the Disclosure Schedules sets forth a complete list of all
Equipment Contracts involving aggregate payments in excess of $25,000 per annum,
together with a description of the assets to which the Equipment Contracts
relate. All of the Equipment Contracts are in full force and effect and no
material default exists on the part of the Corporation, or, to the knowledge of
the Corporation, on the part of any of the other parties thereto. The entire
interest of the Corporation under each of the Equipment Contracts is held by the
Corporation free and clear of any Encumbrances, other than Permitted
Encumbrances, and all payments due under the Equipment Contracts have been duly
and punctually paid.
4.23 Owned Real Property. The Corporation does not have now, and has never
had, any Owned Real Property.
4.24 Leased Real Property
(a) Schedule 4.24 of the Disclosure Schedules sets forth a complete
list of the Leased Real Property (by reference to municipal
address) and Real Property Leases (by reference to all relevant
documents including details of parties to the Real Property
Leases and dates of documents). True copies of all the Real
Property Leases have been provided or made available to the
Purchaser. The Real Property Leases have not been materially
altered or amended and are in full force and effect.
(b) There are no agreements or understandings between the landlord
and tenant, or sublandlord and subtenant, in respect of any
Leased Real Property other than as contained in the Real
Property Leases, pertaining to the rights and obligations of the
parties to the Real Property Leases relating to the use and
occupation of the Leased Real Property.
(c) Except for the Real Property Leases listed in Schedule 4.24, the
Corporation is not a party to or bound by any other leases,
subleases, agreements to lease, licenses or occupancy agreements
pertaining to real property.
(d) All interests held by the Corporation as lessee or occupant
under the Real Property Leases are free and clear of all
Encumbrances other than Permitted Encumbrances.
(e) All payments required to be made by the Corporation pursuant to
the Real Property Leases have been duly paid and the Corporation
is not otherwise in material default in meeting any of its
obligations under any of the Real Property Leases.
(f) To the knowledge of the Corporation, none of the other parties
under any of the Real Property Leases is in default in meeting
any of its obligations under such Real Property Leases.
(g) The Corporation does not have any option, right of first refusal
or other contractual right relating to the Leased Real Property
which is not provided under the Real Property Leases.
(h) To the knowledge of the Corporation, no event exists which, but
for the passing of time or the giving of notice, or both, would
constitute a default by any other party to any of the Real
Property Leases and no party to any Real Property Lease is
claiming any such default or taking any action purportedly based
upon any such default.
4.25 Environmental Matters
To the Corporation's knowledge:
(a) There are no Environmental Approvals.
(b) All operations of the Corporation have been, and are now,
conducted in material compliance with all Environmental Laws.
There has been no Release by the Corporation of any Hazardous
Substance into the Environment.
(c) Neither the Corporation nor any of its operations has been or is
now the subject of any Remedial Order, nor does the Corporation
have any knowledge of any investigation or evaluation commenced
as to whether any such Remedial Order is necessary nor, to the
knowledge of the Corporation, has any threat of any such
Remedial Order been made nor, to the knowledge of the
Corporation, are there any circumstances which could reasonably
result in the issuance of any such Remedial Order.
(d) The Corporation has never been prosecuted for or convicted of
any offence under Environmental Laws, nor has the Corporation
been found liable in any proceeding to pay any fine, penalty,
damages, amount or judgment to any person as a result of any
Release or threatened Release of any Hazardous Substance into
the Environment or as the result of the breach of any
Environmental Law and to the knowledge of the Corporation, there
is no basis for any such proceeding or action.
(e) The Corporation does not have any knowledge of any Hazardous
Substance in, on or under the Leased Real Property, or in any
other assets of the Corporation.
4.26 Employment Matters
(a) Schedule 4.26 (Part A) of the Disclosure Schedules sets forth a
complete list of all Employees, whose current wages, salaries or
hourly rates of pay, and bonus (whether monetary or otherwise)
exceed $40,000 U.S., together with their titles, service dates
and material terms of employment including current wages,
salaries or hourly rates of pay, and bonus (whether monetary or
otherwise) paid since the beginning of the most recently
completed fiscal year (including the date of payment if paid
since May 31, 2001) or payable to each such Employee, and the
date upon which each such Employee was first hired by the
Corporation. Except as disclosed in Schedule 4.26, no Employee
is on disability leave, pregnancy or parental leave, extended
leave of absence or receiving benefits pursuant to the Laws.
(b) Except for those written employment contracts with salaried
Employees identified in Schedule 4.26 (Part B) of the Disclosure
Schedules, there are no written contracts of employment entered
into with any Employees or any oral contracts of employment
which are not terminable on the giving of reasonable notice in
accordance with applicable law.
(c) There are no written or oral change of control provisions or
Contracts with any of the Employees which provide for any rights
of Employees contingent upon or affected by a change of control
of the Corporation or the sale of any or all of their assets.
(d) Schedule 4.26 (Part C) of the Disclosure Schedules sets out a
complete list of all independent contractors with whom the
Corporation has entered into any Contract, together with a list
of all Contracts with them.
(e) Except for the Benefit Plans, there are no employment policies
or plans which are binding upon the Corporation.
(f) The Corporation has been and is being operated in compliance in
all material respects with all Laws relating to employees,
including employment standards, occupational health and safety,
human rights, labour relations and pay equity.
(g) There are no Claims or complaints nor, to the knowledge of the
Corporation, are there any threatened Claims or complaints,
against the Corporation pursuant to any Laws relating to
employees, including employment standards, human rights, labour
relations, occupational health and safety, worker's compensation
or pay equity. To the knowledge of the Corporation, nothing has
occurred which might lead to a Claim or complaint against the
Corporation under any such Laws. There are no outstanding
decisions or settlements or pending settlements which place any
obligation upon the Corporation to do or refrain from doing any
act.
(h) All current assessments under workers' compensation legislation
in relation to the Corporation have been paid or accrued and the
Corporation has not been subject to any special or penalty
assessment under such legislation which has not been paid.
4.27 Collective Agreements
(a) The Corporation is not a party, either directly or by operation
of law, to any collective agreement, letters of understanding,
letters of intent or other written communication with any trade
union or association which may qualify as a trade union, which
would cover any of the Employees of the Corporation.
(b) There are no outstanding or, to the knowledge of the
Corporation, threatened labour tribunal proceedings of any kind,
including any proceedings which could result in certification of
a trade union as bargaining agent for Employees of the
Corporation, and there have not been any such proceedings within
the last two years.
(c) To the knowledge of the Corporation, there are no threatened or
apparent union organizing activities involving any Employees of
the Corporation.
(d) The Corporation does not have any labour union problems that
might materially affect the value of the Corporation or lead to
an interruption of its operations at any location where the
Corporation carries on its business.
4.28 Benefit Plans
(a) Schedule 4.28 of the Disclosure Schedules sets forth a complete
list of the Benefit Plans.
(b) Current and complete copies of all written Benefit Plans or,
where oral, written summaries of the material terms of them,
have been provided or made available to the Purchaser together
with current and complete copies of all documents relating to
the Benefit Plans, including: all documents establishing,
creating or amending any of the Benefit Plans; all trust
agreements, funding agreements; insurance contracts, and the
most recent financial statements and accounting statements and
reports; all booklets, summaries, manuals and written
communications of a general nature distributed or made available
to any Employees or former employees concerning any Benefit
Plans.
(c) Each Pension Plan has been qualified and administered in
compliance with (i) the terms thereof, and (ii) the Internal
Revenue Code of 1986, as amended (the "Code") and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA");
and the Corporation has not received, in the last six years, any
notice from any Person questioning or challenging such
compliance (other than in respect of any claim related solely to
that Person).
(d) All obligations to or under the Pension Plans (whether pursuant
to their terms or the Code or ERISA) have been satisfied, and
there are no outstanding defaults or violations under the
Pension Plans by the Corporation nor do the Icarian Stockholders
or the Corporation have any actual knowledge, without further
enquiry or investigation, of any default or violation by any
other party to any Pension Plan.
(e) Other than those required by the Code of ERISA, there have been
no improvements, increases or changes to, or promised
improvements, increases or changes to, the benefits provided
under any Pension Plan. None of the Pension Plans provides for
benefit increases or the acceleration of or an increase in
funding obligations that are contingent upon or will be
triggered by the entering into of this Agreement or the
completion of the transactions contemplated by this Agreement,
other than the full vested of accrued benefits required by the
Code upon the termination of a Pension Plan qualified under
Section 401(a) of the Code.
(f) All employer or employee payments, contributions or premiums
required to be remitted, paid to or in respect of each Pension
Plan have been paid or remitted in a timely fashion in
accordance with the terms of that Pension Plan and the Code and
ERISA, and no Taxes, penalties or fees are owing or exigible
under any Pension Plan, and to the knowledge of the Corporation
there are no liabilities or contingent liabilities in respect of
any Pension Plans that have been discontinued.
(g) There is no proceeding, action, investigation, suit or claim
(other than routine claims for payment of benefits) pending or,
to the knowledge of the Corporation, threatened involving any
Pension Plan or its assets, and to the knowledge of the
Corporation no facts exist which could reasonably be expected to
give rise to any such proceeding, action, suit or Claim (other
than routine claims for benefits).
(h) No event has occurred respecting any Pension Plan which could
otherwise reasonably be expected to adversely affect the tax
qualified status of any such plan.
(i) The Corporation has not received, or applied for, any payment of
surplus or any payments as a result of the demutualization of
the insurer of any Benefit Plan out of or in respect of any
Benefit Plan.
(j) The Corporation has not taken any contribution or premium
holidays under any Benefit Plan and there have been no
withdrawals or transfers of assets from any Benefit Plan.
(k) All employee data necessary to administer each Benefit Plan is
in the possession of the Corporation and is substantially
complete, correct and in a form which is sufficient for the
proper administration of the Benefit Plan in accordance with its
terms and all Laws.
(l) None of the Benefit Plans provide benefits beyond retirement or
other termination of service to Employees or former employees,
or to the beneficiaries of such employees, except as required by
applicable laws, including but not limited to the Consolidated
Omnibus Reconciliation Act of 1985.
(m) None of the Benefit Plans require or permit a retroactive
increase in premiums or payments, or require additional payments
or premiums on the termination of any Benefit Plan or insurance
contract in respect thereof other than the normal and reasonable
administrative fees associated with the termination of benefit
plans, and the level of insurance reserves, if any, under any
insured Benefit Plan, to the best of the Corporation's
knowledge, is reasonable and sufficient to provide for all
incurred but unreported claims.
4.29 Insurance
The Corporation maintains the policies of insurance set forth in Schedule 4.29
of the Disclosure Schedules, copies of which have been made available to the
Purchaser. All such policies of insurance are in full force and effect and the
Corporation is not in default, as to the payment of premium or otherwise, under
the terms of any such policy.
4.30 Material Contracts
Schedule 4.30 of the Disclosure Schedules sets forth a complete list of the
Material Contracts. The Material Contracts are all in full force and effect and
no material default exists under any of the Material Contracts on the part of
the Corporation or, to the knowledge of the Corporation, on the part of any
other party to such Material Contracts. Current and complete copies of the
Material Contracts have been delivered or made available to the Purchaser and
there are no current or pending negotiations with respect to the renewal,
repudiation or amendment of any such Contract.
4.31 Litigation
Except as disclosed in Schedule 4.31 of the Disclosure Schedules, there is no
action, suit, litigation, investigation, claim, complaint, grievance or
proceeding, including appeals and applications for review, pending or, to the
knowledge of the Corporation, threatened against the Corporation before any
court, Governmental Authority, commission, board, bureau, agency or arbitration
panel which, if determined adversely to the Corporation, would,
(a) have a Material Adverse Effect on the Corporation;
(b) enjoin, restrict or prohibit the consummation of the Merger or
any of the other transactions contemplated by this Agreement; or
(c) to the knowledge of the Corporation, prevent the Icarian
Stockholders from fulfilling all of their obligations set out in
this Agreement or arising from this Agreement.
and the Corporation has no knowledge of any existing ground on which any such
action, suit, litigation or proceeding might be commenced with any reasonable
likelihood of success. Except as disclosed in such Schedule 4.31, there is not
presently outstanding against the Corporation any judgment, decree, injunction,
rule or order of any court, Governmental Authority, commission, board, bureau,
agency or arbitrator.
4.32 Tax Matters
Except as disclosed in Schedule 4.32 of the Disclosure Schedules:
(a) The Corporation is not, and has never been, a member of an
affiliated group, within the meaning of Section 1504(a) of the
Code, and neither the Corporation nor any entity whose
liabilities the Corporation has succeeded has ever filed a
consolidated United States federal income tax return with (or
been included in a consolidated return or) an affiliated group;
(b) The Corporation has filed or caused to be filed all tax returns
and reports required to have been filed by or for them on or
before the Closing Date, and all information set forth in such
returns or reports is accurate and complete in all material
respects;
(c) No tax return or report of the Corporation contains any position
which is subject to penalties under the Code Section 6662 or
corresponding provision of state, local or foreign tax law;
(d) The Corporation has paid all taxes due and payable by them;
(e) The Corporation is in material compliance with, and their
records contain all information and documents (including,
without limitation, properly completed United States Internal
Revenue Service Forms W-9) necessary to comply with, all
applicable information tax reporting and tax withholding
requirements;
(f) There are no material unpaid taxes, additions to tax, penalties,
or interest payable by the Corporation or any other person that
are or could become a lien on any assets, or otherwise have a
Material Adverse Effect on the Corporation;
(g) The Corporation has collected or withheld all amounts required
to be collected or withheld by them for any taxes, and all such
amounts have been paid to the appropriate governmental agencies
or set aside in appropriate accounts for future payment when
due;
(h) The balance sheet of the Corporation fully and properly
reflects, as of the Closing Date, the liabilities of the
Corporation for all accrued taxes for all periods ending on or
before the Closing Date;
(i) The Corporation has not granted (nor is subject to) any waiver
currently in effect of the period of limitations for the
assessment or collection of tax, no unpaid tax deficiency has
been asserted against or with respect to the Corporation by any
taxing authority, and there is no pending examination,
administrative or judicial proceeding, or deficiency or refund
litigation with respect to any taxes or tax returns of the
Corporation;
(j) The Corporation has not made or entered into, nor holds any
assets subject to, a consent filed pursuant to Section 341(f) of
the Code and the regulations there under or a "safe harbour
lease" subject to former Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended before the Tax Reform Act of
1984, and the Treasury Regulations thereunder;
(k) The Corporation is not required to include in income any amount
from an adjustment pursuant to Section 481 of the Code or the
Treasury Regulations thereunder or any similar provision of
state law;
(l) The Corporation is not a party to, nor obligated under, any
agreement or other arrangement providing for the payment of any
amount that is or would be non-deductible under Section 280G of
the Code;
(m) The Corporation has not distributed to their stockholders or
security holders stock or securities of a controlled corporation
in a transaction to which Section 355(a) of the Code applies;
(n) There are no outstanding rulings or requests for rulings from
any taxing authority that are, or if issued would be, binding on
the Corporation;
(o) The Corporation is not, nor have they been at any time within
the last five years, a "United States real property holding
corporation" for the purposes of Section 897 of the Code;
(p) The Corporation does not have and has not had any permanent
establishment, nor are otherwise subject to taxation, in any
country other than the United States;
(q) Schedule 4.32 describes all material tax elections, consents,
and agreements made by or affecting the Corporation that would
be effective after the Closing, lists all material types of
taxes paid and tax returns filed by or on behalf of the
Corporation, expressly indicates each tax with respect to which
the Corporation is or has been included in a consolidated,
unitary, or combined return and describes the status of all
examinations, administrative or judicial proceedings, and
litigation with respect to taxes of the Corporation.
4.33 Books and Records
All Books and Records have been made available to the Purchaser. Such Books and
Records, together with the Company Financial Statements, fairly and correctly
set out and disclose in all material respects the financial position of the
Corporation and all financial transactions to which the Corporation is or was a
party have been accurately recorded in all material respects in such Books and
Records.
4.34 Corporate Records
(a) The certificate of incorporation and by-laws for the
Corporation, including any and all amendments, have been made
available to the Purchaser and such certificate of incorporation
and by-laws as so amended are in full force and effect
unamended.
(b) The corporate records and minute books for the Corporation have
been made available to the Purchaser. The minute books include
minutes prepared of all meetings of the directors and
stockholders of the Corporation held to date and resolutions
passed by the directors or shareholders on consent. The stock
ledger and journal, reflecting all stock issuances and stock
transfers, of the Corporation is complete and accurate in all
material respects.
4.35 Management Recommendation Letters
Copies of all management recommendation letters received by the Corporation or
their boards of directors from any auditor of the Corporation during the last
three years have been made available to the Corporation.
4.36 Trade Allowances
The Material Contracts contain all provisions concerning customer and supplier
discounts, allowances, volume rebates, preferential terms, customer credits or
similar reductions in price or other trade terms that have a material effect on
the Corporation.
4.37 Bank Accounts, etc.
Schedule 4.37 of the Disclosure Schedules sets forth a complete list of every
financial institution in which the Corporation maintain any depository account,
trust account or safe deposit box, details of all such accounts and safe deposit
boxes and the names of all persons authorized to draw on or who have access to
such accounts or safe deposit boxes.
4.38 No Broker
Neither the Corporation nor, to the knowledge of the Corporation, any Icarian
Stockholder is obligated for the payment of any fees or expenses of any broker
or finder in connection with the origin, negotiation or execution of this
Agreement or in connection with the transactions contemplated hereby.
4.39 Disclosure
This Agreement (including all exhibits and schedules hereto) does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements herein not misleading in light of the
circumstances under which they were made. Except as set forth in this Agreement
(including all exhibits and schedules thereto), there is no fact that the
Corporation has not disclosed to the Purchaser and of which its officers and
directors are aware, that has had or would reasonably be expected to have a
Material Adverse Effect on the Corporation.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND MERGER SUB
The Purchaser hereby represents and warrants to the Icarian Stockholders the
matters set out below.
5.1 Incorporation
The Purchaser is a corporation duly incorporated and validly existing under the
laws of Canada and has all necessary corporate power to own its property and
assets and to carry on its business as presently conducted. Merger Sub is a
corporation duly incorporated and validly existing under the laws of Delaware
and has all necessary corporate power to own its property and assets and to
carry on its business as presently conducted.
5.2 Due Authorization
The Purchaser has all necessary corporate power, authority and capacity to enter
into this Agreement and to carry out its obligations under this Agreement. The
execution and delivery of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement have been duly authorized
by all necessary corporate action on the part of the Purchaser, including all
necessary approvals by the Purchaser's shareholders. Merger Sub has all
necessary corporate power, authority and capacity to enter into this Agreement
and to carry out its obligations under this Agreement. The execution and
delivery of this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Merger Sub.
5.3 Enforceability of Obligations
This Agreement, and the other agreements and documents to be entered into by
Purchaser and Merger Sub pursuant to this Agreement (the "Purchaser Ancillary
Documents"), constitutes valid and binding obligations of each of the Purchaser
and Merger Sub enforceable against each of them in accordance with their
respective terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors' rights generally, and (ii) the effect of
rules of law governing the availability of equitable remedies.
5.4 SEC Documents; Purchaser Financial Statements
Purchaser has furnished the Corporation with a true and complete copy of each
statement, quarterly and other report pursuant to Section 13 or 15(d) of the
1934 Act filed by Purchaser with the SEC since December 1999 (the "Purchaser SEC
Documents"), which are all the documents (other than preliminary material) that
Purchaser was required to file with the SEC under the 1934 Act since such date.
As of their respective filing dates, the Purchaser SEC Documents complied in all
materials respects with the requirements of the 1934 Act. The Purchaser SEC
Documents and this Agreement (including the exhibits and schedules hereto), when
taken together, do not 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 made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a subsequently filed Purchaser
SEC Document provided to the Corporation prior to the Effective Time. The
financial statements of Purchaser included in the Purchaser SEC Documents (the
"Purchaser Financial Statements") comply as to form in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles consistently applied (except as
may be indicated in the notes thereto or, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC) and fairly present the consolidated
financial position of Purchaser and its consolidated subsidiaries at the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal,
recurring audit adjustments). There has been no change in Purchaser's accounting
policies, methods or practices (including any change in depreciation or
amortization policies or rates) or any material revaluation by the Purchaser of
any of its material assets, except as described in the notes to the Purchaser
Financial Statements. Except as disclosed in the Purchaser Financial Statements,
neither the Purchaser nor any of its subsidiaries has any liabilities required
under generally accepted accounting principles to be set forth on a balance
sheet (absolute, accrued, contingent or otherwise) which are, individually or in
the aggregate, material to the business, results of operations or financial
condition of the Purchaser and its subsidiaries taken as a whole, except for
liabilities incurred since the date of the most recent balance sheet forming
part of such Purchaser Financial Statements in the ordinary course of business
consistent with past practices.
5.5 Absence of Conflicting Agreements
Neither the Purchaser nor Merger Sub is a party to, bound or affected by or
subject to any indenture, mortgage, lease, agreement, Contract, obligation,
instrument, charter or by-law provision, Law or Governmental Authorization which
would be violated, contravened, breached by, or under which any default would
occur or an Encumbrance would be created as a result of the execution and
delivery by it of this Agreement or the performance by it of any of its
obligations provided for under this Agreement. Neither the Purchaser nor Merger
Sub's entering into this Agreement nor the consummation of the Merger or any
other transaction contemplated by this Agreement or any Parent Ancillary
Document will give rise to, or trigger the application of, any rights of any
third party that would come into effect upon the consummation of the Merger.
5.6 Approvals; Restrictions
Except for the filings and/or notices required (a) under the HSR Act or the
Securities Laws, (b) under a foreign anti-trust or trade regulation law, (c) to
be made with: (i) the NASD and/or its Nasdaq SmallCap Market, (ii) the Boston
Stock Exchange, and (iii) each state securities or "blue sky" authority which
may have jurisdiction, or (d) to be filed by the Purchaser pursuant to the
Investment Canada Act, and except for the filing of the Agreement of Merger with
the Secretary of State of the State of Delaware, no approval, order or consent
of or filing with any Governmental Authority is required on the part of the
Purchaser or Merger Sub in connection with the execution, delivery and
performance of this Agreement or any Purchaser Ancillary Documents or the
performance of the Purchasers' obligations under this Agreement and the
Purchaser Ancillary Documents. Such filings shall be accomplished in a timely
manner, except where failure to accomplish such filing would not reasonably be
expected to have a Material Adverse Effect on the Purchaser or on the
Corporation. The Purchaser Common Stock will be of the same class as is
currently registered under the 1934 Act and the Purchaser will use commercially
reasonable best efforts to ensure that the Purchaser Common Stock is listed for
trading on the Nasdaq SmallCap Market. The Exchange Shares to be issued
hereunder will constitute "restricted securities" within the meaning of the
federal securities laws of the United States and may not be offered, sold,
transferred or otherwise disposed of by any other person except in strict
compliance with all applicable provisions of such laws, the rules and
regulations thereunder and all state and Canadian securities laws, rules and
regulations. There are no other restrictions on the securities being issued
except as provided in the Escrow Agreement.
5.7 Capitalization.
The authorized capital stock of the Purchaser consists of an unlimited number of
shares of Common Stock, no par value per share, of which 16,572,551 shares are
issued and outstanding. All issued and outstanding shares of Purchaser Common
Stock have been duly authorized and validly issued, and are fully paid and
nonassessable. An aggregate of 2,500,000 shares of Purchaser Common Stock were
reserved and authorized for issuance pursuant to the Purchaser's 2001 Amended
and Restated Stock Option Plan, of which options to purchase a total of
1,886,869 shares of Purchaser Common Stock are outstanding (the "Purchaser
Options"). Other than the Purchaser Options and as listed on Schedule 5.7, there
are no stock appreciation rights, options, warrants, calls, rights, commitments,
conversion privileges or preemptive or other rights or agreements outstanding to
purchase or otherwise acquire any of the Purchaser's authorized but unissued
capital stock or any securities or debt convertible into or exchangeable for
shares of the Purchaser's capital stock or obligating the Purchaser to grant,
extend or enter into such option, warrant, call, commitment, conversion
privileges or preemptive or other right or agreement.
5.8 Litigation
There is no action, suit, litigation, investigation, claim, complaint, grievance
or proceeding, including appeals and applications for review, in progress or, to
the knowledge of the Purchaser pending or threatened against or relating to the
Purchaser or Merger Sub before any court, Governmental Authority, commission,
board, bureau, agency or arbitration panel, which, if determined adversely to
the Purchaser or Merger Sub would:
(a) prevent the Purchaser from issuing the Purchaser Common Stock to
the Icarian Stockholders in the Merger;
(b) enjoin, restrict or prohibit the Merger or the other
transactions contemplated by this Agreement; or
(c) prevent the Purchaser or Merger Sub from fulfilling all of its
obligations set out in this Agreement or arising from this
Agreement, or
(d) that would have or would be reasonably likely to have a Material
Adverse Effect on the Purchaser;
and the Purchaser has no knowledge of any existing ground on which any such
action, suit, litigation or proceeding might be commenced with any reasonable
likelihood of success. There is not presently outstanding against the Purchaser
or Merger Sub any judgment, decree, injunction, rule or order of any court,
Governmental Authority, commission, board, bureau, agency or arbitrator.
5.9 Absence of Certain Changes.
Since the date of the most recent balance sheet of the Purchaser included in the
Purchaser Financial Statements, Purchaser has operated its business in the
ordinary course consistent with past practice and there has not been (a) any
change in the financial condition, properties, assets, liabilities, business or
operations of the Purchaser which change by itself or in conjunction with all
other such changes, whether or not arising in the ordinary course of business,
has had or will have a Material Adverse Effect thereon, (b) any amendment or
change in the Purchaser's charter documents; or (c) any declaration, setting
aside or payment of a dividend on, or the making of any other distribution in
respect of, the capital stock of the Purchaser, or any split, combination or
recapitalization of the capital stock of the Purchaser or any direct or indirect
redemption, purchase or other acquisition of any capital stock of the Purchaser
or any change in any rights, preferences, privileges or restrictions of any
outstanding security of the Purchaser.
5.10 No Broker
The Purchaser has carried on all negotiations relating to this Agreement and the
transactions contemplated by this Agreement directly and without the
intervention on their behalf of any other party in such manner as to give rise
to any valid claim for a brokerage commission, finder's fee or other like
payment against any of the Icarian Stockholders.
5.11 Shares.
All Purchaser Common Stock to be issued in the Merger will be duly authorized,
validly issued, fully-paid and non-assessable shares of Common Stock of the
Purchaser and will be issued in compliance with all applicable Securities Laws.
5.12 Tax Free Reorganization.
Neither the Purchaser, Merger Sub nor, to the Purchaser's knowledge, any
affiliate of the Purchaser or Merger Sub, has taken any action or knows of any
fact, agreement, plan or other circumstances that poses a material risk to the
status of the Merger as a reorganization under the provisions of Section 368(a)
of the Code.
5.13 Experience.
The Purchaser has carefully reviewed the representations concerning the
Corporation contained in this Agreement and has made detailed inquiry concerning
the Corporation, its business and its personnel; the officers of the Corporation
have made available to the Purchaser any and all written information which it
has requested and have answered to the Purchaser's satisfaction all inquiries
made by the Purchaser as of the date of this Agreement. The Purchaser has
sufficient knowledge and experience in finance and business that it is capable
of evaluating the risks and merits of this transaction, and the Purchaser is
able financially to bear the risks thereof.
5.12 Merger Sub.
Merger Sub is a wholly-owned subsidiary of Purchaser and Purchaser shall cause
Merger Sub to perform as provided in this Agreement. Merger Sub was formed
solely for the purpose of consummating the Merger, has not conducted any
operations and has no material assets or liabilities.
ARTICLE 6
NON-WAIVER; SURVIVAL
6.1 Non-Waiver
No investigations made by or on behalf of the Purchaser at any time shall have
the effect of waiving, diminishing the scope of or otherwise affecting any
representation or warranty made by the Corporation. No waiver of any condition
or other provision, in whole or in part, shall constitute a waiver of any other
condition or provision (whether or not similar) nor shall such waiver constitute
a continuing waiver unless otherwise expressly provided.
6.2 Nature and Survival
All representations and warranties contained in this Agreement on the part of
each of the Parties shall survive the Closing, the execution and delivery under
this Agreement of any share or security transfer instruments or other documents
of title to any of the Icarian Shares and the issuance of the Purchaser Common
Stock pursuant to the Merger, until the date that is one year from the Closing,
unless a bona fide notice of a Claim shall have been given in writing before the
expiry of such period, in which case the representation and warranty to which
such notice relates shall survive in respect of that Claim until final
determination or settlement of such Claim. All covenants of the each of the
Parties shall survive in accordance with their terms.
ARTICLE 7
PURCHASER'S CONDITIONS PRECEDENT
The obligation of the Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction of, or compliance with, at
or before the Closing, each of the following conditions precedent (each of which
is acknowledged to be inserted for the exclusive benefit of the Purchaser and
may be waived by it in whole or in part); provided however that, notwithstanding
the foregoing or any other provision to the contrary herein, all of the
following conditions precedent shall be deemed satisfied or complied with at the
Closing other than up to three of such unfulfilled conditions precedent if the
facts and circumstances underlying such unfulfilled conditions would result in
an aggregate loss or expense to the Surviving Corporation of more than $350,000
following the Closing.
7.1 Truth and Accuracy of Representations of Corporation at the Closing Time
All of the representations and warranties of the Corporation made in or pursuant
to this Agreement shall be true and correct in all material respects as at the
Closing Time and with the same effect as if made at and as of the Closing Time
and the Purchaser shall have received a certificate of the Corporation to such
effect signed by the Chief Executive Officer of the Corporation.
7.2 Performance of Obligations
The Corporation shall have performed or complied with, in all material respects,
all its obligations and covenants under this Agreement.
7.3 Receipt of Closing Documentation
All documentation relating to the due authorization and completion of the Merger
shall be satisfactory to the Purchaser, acting reasonably, and the Purchaser
shall have received copies of all such documentation or other evidence as it may
reasonably request in order to establish the consummation of the transactions
contemplated by this Agreement and the taking of all corporate proceedings in
connection with such transactions in compliance with these conditions, in form
(as to certification and otherwise) and substance reasonably satisfactory to the
Purchaser.
7.4 Consents, Authorizations and Registrations
The Required Approvals listed in Schedule 7.4 hereto shall have been obtained at
or before the Closing Time on terms acceptable to the Purchaser, acting
reasonably.
7.5 No Proceedings
There shall be no injunction or restraining order issued preventing, and no
claim, action, suit, litigation or proceeding, judicial or administrative, or
investigation against any Party pending by any Person, or pending or threatened
by any Governmental Authority, for the purpose of enjoining or preventing the
consummation of the transactions contemplated by this Agreement or otherwise
claiming that this Agreement or the consummation of those transactions is
improper or would give rise to proceedings under any Laws.
7.6 Substantial Damage
No substantial damage by fire or other hazard to the assets or Business of the
Corporation shall have occurred prior to the Closing Time.
7.7 No Laws
No Laws shall have been enacted which would directly have a material adverse
effect on the Business of the Corporation.
7.8 Directors and Officers of the Corporations
There shall have been delivered to the Purchaser on or before the Closing Time,
the resignations of all individuals who are currently directors or officers of
the Corporation (except to the extent that the Corporation has been notified to
the contrary by the Purchaser).
7.9 [Intentionally Omitted]
7.10 Transfer and Delivery of the Purchased Shares
The Purchaser shall have received Transmittal Letters from each Icarian
Stockholder receiving Exchange Shares in the Merger pursuant to Section 2.6
hereof.
7.11 The Form and Legality of Matters
The form and legality of all matters incidental to this Agreement shall be
subject to the reasonable approval of the solicitors of the Purchaser.
7.12 Material Adverse Change
There shall not have occurred a Material Adverse Change (as hereinafter defined)
with respect to the Corporation. A "Material Adverse Change" shall have occurred
if the Corporation has incurred debts or other liabilities, outside the ordinary
course of the Corporation's business, consistent with past practice, that are
not reflected in the Company Financial Statements, excluding any such debts or
liabilities that have been incurred with the Purchaser's prior consent.
7.13 Securities Laws
Purchaser shall have reasonably satisfied itself that all applicable
requirements of any and all applicable Securities Laws relating to the sale and
issuance of the Exchange Shares hereunder pursuant to the Merger have been met.
7.14 Icarian Stockholder Approval
The Icarian Stockholders shall have approved this Agreement in accordance with
the Certificate of Incorporation of Icarian and as provided by Delaware Law and
the applicable Laws of California.
7.15 Opinion of Counsel for Corporation.
The Purchaser shall have received an opinion dated as of the Closing Date from
counsel for the corporation, Fenwick & West LLP, in form and substance
acceptable to the Purchaser and its counsel, acting reasonably.
7.16 Disclosure Schedules
Icarian shall have delivered to the Purchaser Disclosure Schedules that qualify
and set forth matters required by the representations and warranties contained
in Article 4 of this Agreement.
The Purchaser may waive compliance with any condition in whole or in part if it
sees fit to do so, without prejudice to its rights of termination pursuant to
Article 11 in the event of non-fulfilment of any other condition, in whole or in
part, or to its rights to recover damages for the breach of any representation,
warranty, covenant or condition contained in this Agreement.
ARTICLE 8
CORPORATION'S CONDITIONS PRECEDENT
The obligations of the Corporation to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction of or compliance with, at
or before the Closing, each of the following conditions precedent (each of which
is acknowledged to be inserted for the exclusive benefit of the Corporation and
may be waived by the Corporation, in whole or in part).
8.1 Truth and Accuracy of Representations of the Purchaser at the Closing Time
All of the representations and warranties of the Purchaser made in or pursuant
to this Agreement shall be true and correct in all material respects as at the
Closing Time and with the same effect as if made at and as of the Closing Time
(except to the extent that such representations or warranties address matters as
of a particular date or period, in which case such representations and
warranties shall be true and correct in all material respects as of such date or
period) and the Corporation shall have received a certificate of the Purchaser
to such effect signed by the Chief Executive Officer of the Purchaser.
8.2 Performance of Obligations
The Purchaser shall have performed or complied with, in all respects, all its
obligations and covenants under this Agreement.
8.3 Receipt of Closing Documentation
All documentation relating to the due authorization and completion of the Merger
under this Agreement shall be satisfactory to the Corporation, acting
reasonably, and the Corporation shall have received copies of all extra
documentation or other evidence as it may reasonably request in order to
establish the consummation of the transactions contemplated by this Agreement
and the taking of all corporate proceedings in connection with such transactions
in compliance with these conditions in form (as to certification and otherwise)
and substance reasonably satisfactory to the Corporation.
8.4 Consents, Authorizations and Registrations
The Required Approvals listed in Schedule 7.4 hereto shall have been obtained at
or before the Closing Time on terms acceptable to the Corporation, acting
reasonably.
8.5 No Proceedings
There shall be no injunction or restraining order issued preventing, and no
pending or threatened claim, action, suit, litigation or proceeding, judicial or
administrative, or investigation against any Party by any Person, for the
purpose of enjoining or preventing the consummation of the transactions
contemplated by this Agreement or otherwise claiming that this Agreement or the
consummation of those transactions is improper or would give rise to proceedings
under any Laws.
8.6 Securities Laws
The Corporation shall have reasonably satisfied itself that all applicable
requirements of any and all applicable Securities Laws relating to the
transaction have been met, including the form and substance of any information
statement or other disclosure document provided to the Icarian Stockholders in
connection with the transactions contemplated by this Agreement.
8.7 Icarian Stockholder Approval
The Icarian Stockholders shall have approved this Agreement in accordance with
the Certificate of Incorporation of Icarian and as provided by Delaware Law and
the applicable Laws of California.
8.8 Registration Rights
The Purchaser shall have executed and delivered a Registration Rights Agreement
in a form to be mutually agreed by the parties prior to Closing and, upon such
agreement, attached hereto as Exhibit 8.8 with respect to the Purchaser Common
Stock being issued in the Merger.
8.9 Disclosure Schedules
The Purchaser shall have accepted the Disclosure Schedules prepared by the
Corporation to qualify and set forth the matters required by the representations
and warranties contained in Article 4 of this Agreement, in form and substance
reasonably satisfactory to the Corporation.
8.10 Escrow Agreement
The Purchaser and the Escrow Agent shall have executed and delivered the Escrow
Agreement to the Stockholder Representative.
8.11 Nasdaq Listing
The Exchange Shares shall have been listed with The Nasdaq Stock Market, Inc.
8.12 Opinion of Counsel for Purchaser.
The Corporation shall have received an opinion dated as of the Closing Date from
counsel for the Purchaser, ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, in form and
substance acceptable to the Corporation and its counsel, acting reasonably.
The Corporation may waive compliance with any condition in whole or in part if
it sees fit to do so, without prejudice to its rights of termination pursuant to
Article 11 in the event of non-fulfilment of any other condition, in whole or in
part, or to its rights to recover damages for the breach of any representation,
warranty, covenant or condition contained in this Agreement.
ARTICLE 9
OTHER COVENANTS AND REPRESENTATIONS OF THE PARTIES
9.1 Conduct of Business Prior to Closing
During the period from the date of this Agreement to the Effective Time or the
earlier termination of this Agreement in accordance with Article 11 hereof, the
Corporation will do the following:
(a) Conduct Business in the Ordinary Course - Except as otherwise
expressly contemplated under this Agreement or as otherwise
approved by the Purchaser, conduct its business in the ordinary
and usual course, consistent with past practice and regular
customer service and business policies and not, without the
prior written consent of the Purchaser, enter into any
transaction or Contract which, if effected before the date of
this Agreement, would constitute a breach of the
representations, warranties or covenants of the Corporation
contained in this Agreement.
(b) Maintain Good Relations - Use all reasonable efforts to maintain
good relations with the Employees, its customers and suppliers.
(c) Continue Insurance - Continue in force all policies of insurance
maintained by or for the benefit of the Corporation and give all
notices and present claims under all insurance policies in a
timely fashion.
(d) Compliance with Law - Comply in all material respects with all
Laws affecting the operation of the Corporation.
(e) Prevent Certain Changes - Not, without the prior written consent
of the Purchaser, take any of the actions, do any of the things
or perform any of the acts described in Section 4.10.
(f) Approvals - Co-operate with the Purchaser and use all
commercially reasonable efforts and diligently pursue obtaining
the Required Approvals.
9.2 Access for Investigation
(a) The Corporation shall permit the Purchaser and its
representatives, on reasonable notice to the Corporation,
between the date of this Agreement and the Closing Time, without
interference with the ordinary conduct of the Business, to have
reasonable access during normal business hours to (i) the Real
Property; (ii) all other locations where Books and Records or
other material relevant to the Business are stored; (iii) all
the Books and Records; and (iv) the properties and assets used
in the Business. The Corporation shall furnish to the Purchaser
copies of Books and Records (subject to any confidentiality
agreements or covenants relating to any Books and Records) as
the Purchaser shall from time to time request to enable
confirmation of the matters warranted in Article 4. Without
limiting the generality of the foregoing, it is agreed that the
accounting representatives of the Purchaser shall be afforded a
reasonable opportunity to review all aspects of the financial
affairs of the Corporation.
(b) Notwithstanding subsection (a), the Corporation shall not be
required to disclose any information, records, files or other
data to the Purchaser where prohibited by Laws or
confidentiality obligations, or where the information, records,
files or other data would be subject to attorney-client
privilege.
9.3 Confidentiality
Prior to the Closing and following any termination of this Agreement, the
Purchaser shall keep confidential and not divulge, furnish or make accessible
all information disclosed to it by the Corporation or their agents relating to
the Corporation, except information which:
(a) is or becomes generally available to the public;
(b) the Purchaser received from an independent third Person, who had
obtained the information lawfully and was under no obligation of
secrecy, or
(c) the Purchaser can show was in its possession before receipt of
such information from the Corporation or their agents.
If this Agreement is terminated without completion of the transactions
contemplated by this Agreement, the Purchaser shall (A) promptly return all
documents, work papers and other written material (including all copies)
obtained from the Corporation or their agents in connection with this Agreement
and not previously made public, and shall continue to maintain the confidence of
all such information, and (B) not solicit, offer or otherwise attempt to entice
any Employee to leave the employ of Icarian to work for the Purchaser for a
period of one (1) year from the date of termination of this Agreement. The
provisions of this Section 9.3 are in addition to, and not in substitution for,
the provisions of any separate nondisclosure agreement that may be executed by
the Parties with respect to the transactions contemplated by this Agreement.
9.4 Actions to Satisfy Closing Conditions
Each of the Parties shall use commercially reasonable efforts to satisfy or
cause to be satisfied all the conditions precedent to the Merger and the
consummation of the transactions contemplated by this Agreement which are set
forth in Articles 7 and 8 and to ensure compliance with each of the covenants
set forth in this Article 9.
9.5 Investment Canada Notification; U.S. Securities Filings
The Purchaser shall file the notification required to be filed by the Purchaser
under the Investment Canada Act in respect of the transactions contemplated
under this Agreement within 10 days following the Closing, and shall timely
complete all filings required under Securities Laws with respect to the
transactions contemplated hereunder.
9.6 Nasdaq Listing
The Purchaser agrees to authorize for listing on the Nasdaq Small Cap Market and
the Boston Stock Exchange the shares of Purchaser Common Stock issuable to the
Icarian Stockholders in connection with the Merger upon official notice of
issuance.
9.7 Stub Period Returns
The Purchaser shall cause to be prepared and filed on a timely basis all Tax
Returns for the Corporation for any period which ends on or before the Closing
Date and for which Tax Returns have not been filed as of such date. The
Purchaser shall also cause to be prepared and filed on a timely basis all Tax
Returns of the Corporation for periods beginning before and ending after the
Closing Date.
9.8 Tax Matters
The Purchaser recognizes that in order for the Icarian Stockholders to
receive tax-free treatment in the Merger, the Purchaser must satisfy a number of
requirements under Sections 367 and 368 of the Code and the regulations
promulgated thereunder. Accordingly, the Purchaser covenants and represents as
follows:
(a) the Purchaser has not taken and will not take any actions, or fail
to take any actions, that would prevent the Merger from qualifying as a
reorganization under Section 368(a) or that would trigger gain under Section
367(a);
(b) the Purchaser does not have any knowledge of any fact or
circumstance that is reasonably likely to prevent the Merger from qualifying as
a reorganization within the meaning of Section 368(a) or that would trigger gain
under Section 367(a);
(c) the Purchaser shall cooperate reasonably with the Corporation and
the Icarian Stockholders in their reasonable efforts to satisfy all requirements
under Sections 367 and 368 of the Code;
(d) the Purchaser shall cooperate, as reasonably required, with the
Corporation's efforts to satisfy the reporting requirements set forth in
Treasury Regulations Section 1.367(a)-3(c)(6), including reporting of
information reasonably required thereby;
(e) the Purchaser shall cooperate, as reasonably required, with the
obligations of the Icarian Stockholders that hold five percent (5%) or more of
the outstanding voting capital stock of the Purchaser immediately after the
Merger (the "Five Percent Stockholders") to enter into gain recognition
agreements with the Internal Revenue Service pursuant to Treasury Regulations
Sections 1.367(a)-3(c)(1)(iii)(B) and 1.367(a)-8 and satisfy their continuing
obligations pursuant to such gain recognition agreements, including the
provision of information to the Five Percent Stockholders if the Purchaser makes
a disposition that causes the Five Percent Stockholders to recognize gain
pursuant to such gain recognition agreements; and
(f) the Purchaser shall not dispose of the Corporation's assets, either
through an asset or stock sale, in a transaction that causes the Five Percent
Stockholders to recognize gain pursuant to Treasury Regulations Sections
1.367(a)-3(c)(iii)(B) and 1.367(a)-8.
9.9 No Shop.
(a) The Corporation agrees, from the date of execution of this
Agreement until the earlier of the Closing Date or termination of this Agreement
in accordance with its terms, not to solicit, negotiate, participate in
discussions or consider offers relating to any other proposal contemplating (i)
a merger or consolidation involving the Corporation pursuant to which the
stockholders of the Corporation immediately preceding such transaction hold less
than 50% of the equity interest in the surviving or resulting entity of such
transaction, (ii) the acquisition by any person or group (including by way of a
tender offer or an exchange offer), directly or indirectly, of ownership of more
than 50% of the then outstanding shares of capital stock of the Corporation,
(iii) a sale of a majority of the Corporation's outstanding shares or (iv) a
sale of all or substantially all of the assets of the Corporation (each, an
"Acquisition Proposal") nor will the Corporation encourage any third party to
make an unsolicited Acquisition Proposal; provided however that this Section 9.9
shall not prohibit the Corporation from entering into discussions or
negotiations with, furnishing information regarding the Corporation to, and
considering an offer from, any person or group who has submitted to the
Corporation an unsolicited, written, bona fide Acquisition Proposal that the
Board of Directors of the Corporation in good faith concludes (1) may constitute
a Superior Offer (as defined below) (2) that such action is consistent with the
Corporation's Board of Directors' compliance with its fiduciary obligations to
the Corporation's stockholders under applicable law. A "Superior Offer" means
any Acquisition Proposal that the Board of Directors of the Corporation
determines, in its reasonable judgment, to be more favorable to the
Corporation's stockholders than the terms of the Merger.
(b) Nothing in this Agreement shall prevent the Board of Directors of
the Corporation from withholding, withdrawing, amending or modifying any
recommendation of the Board of Directors in favor of the Merger if (i) a
Superior Offer (as defined above) is made to the Corporation and is not
withdrawn, and (ii) the Corporation shall have provided written notice to the
Purchaser advising the Purchaser that the Corporation has received a Superior
Offer, within one business day of receiving such Superior Offer, specifying all
of the material terms and conditions of such Superior Offer and identifying the
person or entity making such Superior Offer.
9.10 Additional Indemnities
The Corporation and the Icarian Stockholders agree to indemnify the
Purchaser pursuant to Article 10 hereof, and subject to all of the limitations
of said Article 10, for the following Claims, provided such Claims arise during
the one year period following the Closing Date and the Purchaser claims
indemnification with respect thereto under Article 10 prior to the expiration of
such one year period:
(a) if any of the Icarian Warrants, except for any Icarian Warrants
for Series F Preferred Stock of the Corporation, outstanding as
of the Closing Date are exercised or threatened to be exercised,
any costs incurred by the Corporation or the Purchaser with
respect to negotiation of the cancellation of said Icarian
Warrants and avoidance of the issuance of any shares of the
Corporation pursuant to the exercise of said Icarian Warrants;
(b) any costs incurred by the Corporation and/or the Purchaser
arising from or in connection with any and all Claims made
against the Corporation by holders of Dissenting Shares pursuant
to the applicable dissenters' or appraisal rights provisions of
the Delaware Law and the California Law; and
(c) any legal costs and expenses incurred by the Corporation and/or
the Purchaser, arising from or in connection with any and all
Claims relating to any matters arising up to and including the
Closing of the transactions contemplated herein brought by or
against any Former Officers and/or Directors of the Corporation,
which are in excess of the legal costs and expenses incurred
with respect to such Claims by the Corporation and/or the
Purchaser that are covered by insurance of the Corporation
and/or the Purchaser ("Former Officers and/or Directors of the
Corporation" being any person who was an officer and/or a
director of the Corporation at any time prior to the Closing of
the transactions contemplated herein).
9.11 Covenant regarding Employment Offer Letter
Following the Closing, the Purchaser shall cause the Corporation to
comply with all of its obligations pursuant to that certain employment offer
letter agreement dated April 23, 2001 between the Corporation and ▇▇ ▇▇▇▇▇▇▇▇.
ARTICLE 10
INDEMNIFICATION
10.1 Mutual Indemnification for Breaches of Covenants and Warranty, etc.
The Corporation covenants and agrees with the Purchaser, and the Purchaser
covenants and agrees with the Icarian Stockholders (the Party or Parties so
covenanting and agreeing to indemnify another Party being referred to as the
"Indemnifying Party" and the Party so to be indemnified being referred to as the
"Indemnified Party") to indemnify and save harmless, on an after-tax basis, the
Indemnified Party effective as and from the Closing Time, from and against all
Claims that may be made or brought against the Indemnified Party, or that it may
suffer or incur, directly or indirectly as a result of or in connection with any
non-fulfilment of any covenant or agreement on the part of the Indemnifying
Party under this Agreement or any incorrectness in or breach of any
representation or warranty of the Indemnifying Party contained in this Agreement
(including any exhibits and schedules thereto):
(a) In case an Indemnifying Party shall object in writing to any
claim or claims for indemnification, the Indemnified Party and
the Indemnifying Party shall attempt in good faith for fifteen
(15) days to agree upon the rights of the respective parties
with respect to each of such claims.
(b) If no agreement can be reached after good faith negotiation
during such fifteen (15) day period, either the Indemnified
Party or the Indemnifying Party may, by written notice to the
other party, demand submission of the matter to arbitration or
to some other mutually-agreeable form of alternative dispute
resolution (together or in the alternative, "ADR") to take place
in Chicago, Illinois, United States. Unless the parties mutually
agree in writing to some alternative form of ADR, arbitration of
the matter shall be conducted in accordance with the commercial
rules then in effect of the American Arbitration Association
using an arbitrator who is an experienced commercial litigator
and admitted before the bar of California, Illinois or New York.
The dispute shall be determined by one (1) arbitrator acceptable
to both parties, which arbitrator shall be selected within
twenty (20) days of filing by a party of notice of intention to
arbitrate. If, by the end of said twenty (20) day period, the
parties have not agreed on one (1) arbitrator to be acceptable,
then either party may request the American Arbitration
Association to appoint the arbitrator pursuant to this Section
10.1 and the commercial rules then in effect of the American
Arbitration Association. Arbitrators shall be compensated for
their services at the standard hourly rate charged in their
private professional activities. The parties acknowledge that
the federal and state courts situated in California shall have
jurisdiction and venue over the parties for the purpose of
enforcing this Section 10.1. The United States Federal Rules of
Civil Procedure shall apply with respect to any arbitration
hereunder, and to the extent practicable any hearing with
respect to a single matter shall be held on consecutive hearing
days. The arbitrator(s) shall follow substantive rules of law
and shall make its award in strict conformity with this
Agreement. All parties agree to be bound by the results of this
arbitration; judgement upon the award so rendered may be entered
and enforced in any court of competent jurisdiction.
(c) the foregoing indemnity shall be subject to the requirement that
the Indemnifying Party shall, in respect of any Claim made by
any third person, be afforded an opportunity at its sole expense
to resist, defend and compromise such Claim;
(d) the foregoing indemnity shall be subject to the limitation that,
for any Claims made hereunder, the Indemnifying Party shall not
be required to pay any such amount until the aggregate amount of
such Claims exceeds $100,000 and then the Indemnifying Party
shall be required to pay the full amount;
(e) the foregoing indemnity shall be subject to the limitation that,
for Claims made in connection with any representation or
warranty contained in Article 5, Purchaser shall not, absent
fraud, be required to pay any amount in excess of the value of
the Escrow Shares based on the Merger Price Per Share;
(f) the foregoing indemnity shall be subject to the limitation that,
for Claims made in connection with any representation or
warranty contained in Article 4, the aggregate liability of the
Corporation and the Icarian Stockholders for such Claims will
not exceed, absent fraud, the Escrow Shares;
(g) the indemnification rights set forth in this Article 10 shall be
the sole and exclusive remedy of the Indemnified Party, and are
in lieu of any other claim or right that the Indemnified Party
may otherwise have under applicable law or otherwise and the
liability of any Icarian Stockholder for indemnification claims
hereunder shall be several and not joint;
(h) in no event shall any Icarian Stockholder who has not received
any Exchange Shares pursuant to the Distribution Mechanism as
described in Section 2.6 be liable for any indemnification
claims hereunder; and
(i) for all purposes of this Article 10, the Stockholder
Representative shall act on behalf of the Icarian Stockholders
in administering Claims by the Purchaser, including, without
limitation, for purposes of determining whether to dispute that
the Icarian Stockholders are in fact liable under this Article
10 for a Claim asserted by the Purchaser, determining whether to
assume the defense of third party claims, and administering the
Escrow Agreement for the benefit of the Icarian Stockholders.
10.2 Indemnification Procedures for Third Person Claims
(a) In the case of Claims made by a third Person with respect to
which indemnification is sought, the Party seeking
indemnification shall give Notice promptly, and in any event
within 20 days, to the other Party of any such Claims made upon
it. In the event of a failure to give such notice, such failure
shall not preclude the Party seeking indemnification from
obtaining such indemnification but its right to indemnification
may be reduced to the extent that such delay prejudiced the
defence of the Claim or increased the amount of liability or
cost of defence and provided that, notwithstanding anything else
contained in this Agreement, no Claim for indemnity in respect
of the breach of any representation or warranty contained in
this Agreement may be made unless Notice of such Claim has been
given prior to the expiry of the survival period applicable to
such representation and warranty pursuant to Section 6.2. The
provisions of Sections 10.1(a) and 10.1(b) shall also apply to
any third person Claims such that the Indemnifying Party shall
have an opportunity to object to the defense of any third person
Claim in accordance with such provisions.
(b) The Indemnifying Party shall have the right, by Notice to the
Indemnified Party given not later than 30 days after receipt of
the Notice described in subsection (a), to assume the control of
the defence, compromise or settlement of the Claim, provided
that such assumption shall, by its terms, be without cost to the
Indemnified Party.
(c) Upon the assumption of control of any Claim by the Indemnifying
Party as set out in subsection (b), the Indemnifying Party shall
diligently proceed with the defence, compromise or settlement of
the Claim at its sole expense, including if necessary,
employment of counsel reasonably satisfactory to the Indemnified
Party and, in connection therewith, the Indemnified Party shall
co-operate fully, to make available to the Indemnifying Party
all pertinent information and witnesses under the Indemnified
Party's control, make such assignments and take such other steps
as the Indemnifying Party determines, with the advice of
counsel, are reasonably necessary to enable the Indemnifying
Party to conduct such defence. Any compromise or settlement of
the Claim by the Indemnifying Party shall be subject to the
consent of the Indemnified Party, such consent not to be
unreasonably withheld. The Indemnified Party shall also have the
right to participate in the negotiation, settlement or defence
of any Claim at its own expense.
(d) The final determination of any Claim pursuant to this Section,
including all related costs and expenses, will be binding and
conclusive upon the parties as to the validity or invalidity, as
the case may be, of such Claim against the Indemnifying Party.
(e) If the Indemnifying Party does not assume control of a Claim as
permitted in subsection 10.2(b), the Indemnified Party shall be
entitled to make settlement of the Claim subject to obtaining
the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed, and any
such settlement or any other final determination of the Claim
shall be binding upon the Indemnifying Party.
10.3 Recovery for Indemnification Claims
In the event that Purchaser is entitled to indemnification from the Icarian
Stockholders pursuant to the terms of this Agreement for any Claims, such
indemnification shall only be recovered by deducting the amount of such Claims
from the Escrow Shares by instructing the Escrow Agent to return a number of
Escrow Shares to the Purchaser equal to the value of such Claim based on the
Merger Price Per Share. The right to obtain indemnification from, and only from,
the Escrow Shares pursuant to the indemnification provisions of this Article 10
and the Escrow Agreement shall be the Purchaser's sole and exclusive remedy for
any breach by the Corporation of the terms of this Agreement or any Claims
described in Section 10.1.
10.4 Insurance Proceeds
The amount which an Indemnifying Party is or may be required to indemnify the
Indemnified Party pursuant to this Article 10 shall be reduced (including
retroactively) by (i) any amounts received by such Indemnified Party from an
insurance carrier or paid and resolved by an insurance carrier on behalf of the
insured ("Insurance Proceeds") and (ii) other amounts actually recovered by or
on behalf of such Indemnified Party in reduction of the related Claims. If an
Indemnified Party receives the payment required by this Agreement from the
Indemnifying Party in respect of any Claims and subsequently actually receives
Insurance Proceeds, or other amounts in respect of such Claims as specified
above, then such Indemnified Party shall pay to the Indemnifying Party a sum
equal to the amount of any such double recovery actually received. The parties
agree that any indemnification provided by this Agreement is not to be deemed
insurance (whether primary, excess, or otherwise) for purposes of seeking
reimbursement from the applicable insurance coverage.
ARTICLE 11
TERMINATION
11.1 Termination
(a) This Agreement may be terminated as follows:
(i) The Parties may terminate this Agreement by their mutual
written consent at any time prior to the Closing;
(ii) The Purchaser may terminate this Agreement by giving
written notice to the Corporation at any time prior to
the Closing (A) in the event the Corporation has breached
any material representation, warranty, or covenant
contained in this Agreement in any material respect, the
Purchaser has notified the Corporation of the breach, and
the breach has continued without cure for a period of 10
days after the notice of breach, or (B) if the Closing
shall not have occurred on or before June 29, 2002, by
reason of the failure of any condition precedent of
Purchaser (unless the failure results primarily from
Purchaser itself breaching any representation, warranty,
or covenant contained in this Agreement);
(iii) The Corporation may terminate this Agreement by giving
written notice to Purchaser at any time prior to the
Closing (A) in the event Purchaser has breached any
material representation, warranty, or covenant contained
in this Agreement in any material respect, the
Corporation or the Icarian Stockholders have notified the
Purchaser of the breach, and the breach has continued
without cure for a period of 10 days after the notice of
breach or (B) if the Closing shall not have occurred on
or before June 29, 2002, by reason of the failure of any
condition precedent of the Corporation hereof (unless the
failure results primarily from the Corporation breaching
any representation, warranty, or covenant contained in
this Agreement);
(iv) Either Party may, by giving written notice to the other,
terminate this Agreement if a court of competent
jurisdiction or other governmental Authority shall have
issued a nonappealable final order, decree or ruling or
taken any other action, in each case having the effect of
permanently restraining, enjoining or otherwise
prohibiting the Merger; and
(v) By either Party, if the approval and adoption of this
Agreement, and the approval of the Merger, by the Icarian
Stockholders shall not have been obtained by reason of
the failure to obtain the required vote at a meeting of
the Icarian Stockholders duly convened therefore or at
any adjournment thereof or pursuant to a written consent
of the Icarian Stockholders.
(b) Effect of Termination. If any Party properly terminates this
Agreement pursuant to Section 11.1(a) hereof, all rights and
obligations of the Parties hereunder shall terminate without any
liability of any Party to any other Party (except for any
liability of any Party then in wilful breach of this Agreement).
The provisions of Section 9.3, Article 11 and Article 12 shall
survive any termination of this Agreement.
ARTICLE 12
GENERAL
12.1 Public Notices
All public notices to third Persons and all other publicity concerning the
transactions contemplated by this Agreement shall be jointly planned and
co-ordinated by the Corporation, on the one hand, and the Purchaser, on the
other hand, and no Party shall act unilaterally in this regard without the prior
approval of the other Party, such approval not to be unreasonably withheld,
except where required to do so by Law or any stock exchange in circumstances
where prior consultation with the other Parties is not practicable.
12.2 Expenses
Each Party shall be responsible for and pay their own respective legal,
accounting, and other professional advisory fees, costs and expenses incurred in
connection with the Merger and the preparation, execution and delivery of this
Agreement and all documents and instruments executed pursuant to this Agreement
and any other costs and expenses incurred.
12.3 Notices
Any notice or other writing required or permitted to be given under this
Agreement or for the purposes of this Agreement (a "Notice") shall be in writing
and shall be sufficiently given if delivered, or if sent by prepaid registered
mail or if transmitted by facsimile or other form of recorded communication
tested prior to transmission to such Party:
(a) in the case of a Notice to the Corporation:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
Fenwick & West LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) in the case of a Notice to the Purchaser.:
Workstream Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇ ▇▇▇ ▇▇▇▇
with a copy to:
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇ ▇▇▇▇
(c) in the case of a Notice to the Stockholder Representative:
Apax Partners
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
or at such other address as the Party to whom such Notice is to be given shall
have last notified the Party giving the Notice in the manner provided in this
Section. Any Notice delivered to the Party to whom it is addressed as provided
above shall be deemed to have been given and received on the day it is so
delivered at such address, provided that if such day is not a Business Day then
the Notice shall be deemed to have been given and received on the next Business
Day. Any Notice sent by prepaid registered mail shall be deemed to have been
given and received on the fifth Business Day following the date of its mailing.
Any Notice transmitted by facsimile or other form of recorded communication
shall be deemed to have been given and received on the first Business Day after
its transmission. Any Notice sent by commercial overnight courier shall be
deemed to have been given and received within two Business Days following the
date of deposit thereof with such courier.
12.4 Assignment
Neither party may assign this Agreement without the prior written consent of the
other party.
12.5 Further Assurances
The Parties shall, with reasonable diligence, do all such things and provide all
such reasonable assurances as may be required to consummate the Merger
contemplated by this Agreement, and each Party shall provide such further
documents or instruments required by any other Party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Closing.
12.6 Counterparts
This Agreement may be executed by the Parties in separate counterparts each of
which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
12.7 Enurement
This Agreement shall enure to the benefit of and be binding upon the Parties
hereto and their respective successors and permitted assigns.
[Signature Page Follows]
IN WITNESS OF WHICH the Parties have duly executed this Agreement as of the date
first set forth above.
SIGNED, SEALED & DELIVERED
ICARIAN INC.
Per:
----------------------------------
Name: ▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
WORKSTREAM INC.
Per:
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: CEO
WORKSTREAM ACQUISITION, INC.
Per:
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Director
