Exhibit 2.3
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AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF JUNE 30, 1999
BY AND AMONG
OMNILYNX COMMUNICATIONS CORPORATION,
INFO ACQUISITION, INC.,
INFO-HIGHWAY INTERNATIONAL, INC.
AND ITS
STOCKHOLDERS NAMED THEREIN
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.02. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01. Certificate of Merger. . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.02. The Effective Time . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.03. Certain Effects of the Merger. . . . . . . . . . . . . . . . . . . 17
Section 2.04. Effect of the Merger on Capital Stock. . . . . . . . . . . . . . . 18
Section 2.05. Delivery, Exchange and Payment . . . . . . . . . . . . . . . . . . 18
Section 2.06. Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.07. Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Section 3.01. By each Stockholder. . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.02. Ownership and Status of Company Capital Stock. . . . . . . . . . . 21
Section 3.03. Power of the Stockholder; Approval of the Merger . . . . . . . . . 21
Section 3.04. No Conflicts or Litigation . . . . . . . . . . . . . . . . . . . . 22
Section 3.05. No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.06. Preemptive and Other Rights; Waiver. . . . . . . . . . . . . . . . 22
Section 3.07. Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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TABLE OF CONTENTS
(Continued)
PAGE
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SIGNIFICANT STOCKHOLDERS
Section 4.01. By the Company and Each Significant Stockholder. . . . . . . . . . 23
Section 4.02. Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.03. Authorization; Enforceability; Absence of Conflicts; Required
Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.04. Charter Documents and Records; No Violation. . . . . . . . . . . . 24
Section 4.05. No Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.06. Company Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.07. Capital Stock of the Company . . . . . . . . . . . . . . . . . . . 25
Section 4.08. Transactions in Capital Stock. . . . . . . . . . . . . . . . . . . 25
Section 4.09. No Bonus Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.10. Predecessor Status; etc. . . . . . . . . . . . . . . . . . . . . . 26
Section 4.11. Related Party Agreements; Related Business . . . . . . . . . . . . 26
Section 4.12. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.13. Financial Statements; Disclosure . . . . . . . . . . . . . . . . . 26
Section 4.14. Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.15. Certain Environmental Matters. . . . . . . . . . . . . . . . . . . 28
Section 4.16. Liabilities and Obligations. . . . . . . . . . . . . . . . . . . . 28
Section 4.17. Receivables; Customer Retention. . . . . . . . . . . . . . . . . . 29
Section 4.18. Owned and Leased Real Properties . . . . . . . . . . . . . . . . . 29
Section 4.19. Owned and Leased Personal Property . . . . . . . . . . . . . . . . 30
Section 4.20. Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.21. Title to Other Properties. . . . . . . . . . . . . . . . . . . . . 33
Section 4.22. Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.23. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.24. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.25. Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.26. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.27. Government Contracts . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.28. Absence of Change. . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.29. Bank Relations; Powers of Attorney . . . . . . . . . . . . . . . . 40
Section 4.30. No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.31. Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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TABLE OF CONTENTS
(Continued)
PAGE
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND NEWCO
Section 5.01. By Purchaser and Newco . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.02. Organization; Power. . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.03. Authorization; Enforceability; Absence of Conflicts; Required
Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.04. Charter Documents. . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.05. Capital Stock of Purchaser and Newco . . . . . . . . . . . . . . . 42
Section 5.06. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.07. Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.08. Compliance With Laws; No Litigation. . . . . . . . . . . . . . . . 43
Section 5.09. No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.10. Private Placement Memorandum . . . . . . . . . . . . . . . . . . . 44
Section 5.11. Registration and Other Rights. . . . . . . . . . . . . . . . . . . 44
Section 5.12. Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI
COVENANTS EXTENDING TO THE EFFECTIVE TIME
Section 6.01. Access and Cooperation; Due Diligence. . . . . . . . . . . . . . . 44
Section 6.02. Conduct of Business Pending Closing. . . . . . . . . . . . . . . . 45
Section 6.03. Prohibited Activities. . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.04. No Shop: Release of Directors. . . . . . . . . . . . . . . . . . . 47
Section 6.05. Notification of Certain Matters. . . . . . . . . . . . . . . . . . 48
Section 6.06. Supplemental Information . . . . . . . . . . . . . . . . . . . . . 48
Section 6.07. Cooperation in Connection With the IPO . . . . . . . . . . . . . . 49
Section 6.08. HSR Act Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 49
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TABLE OF CONTENTS
(Continued)
PAGE
ARTICLE VII
THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION
Section 7.01. The Closing and Certain Conditions . . . . . . . . . . . . . . . . 50
Section 7.02. Conditions to the Obligations of Each Party. . . . . . . . . . . . 50
Section 7.03. Conditions to the Obligations of the Company and the
Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.04. Conditions to the Obligations of Purchaser and Newco . . . . . . . 53
ARTICLE VIII
COVENANTS FOLLOWING THE EFFECTIVE TIME
Section 8.01. Of Each Party Other Than the Company . . . . . . . . . . . . . . . 54
Section 8.02. Repayment of Company Indebtedness. . . . . . . . . . . . . . . . . 54
ARTICLE IX
INDEMNIFICATION
Section 9.01. Survival of Representations and Warranties . . . . . . . . . . . . 55
Section 9.02. Indemnification of Purchaser Indemnified Parties . . . . . . . . . 55
Section 9.03. Indemnification of Stockholder Indemnified Parties . . . . . . . . 56
Section 9.04. Conditions of Indemnification. . . . . . . . . . . . . . . . . . . 56
Section 9.05. Remedies Exclusive . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 9.06. Limitations on Indemnification . . . . . . . . . . . . . . . . . . 59
ARTICLE X
LIMITATIONS ON COMPETITION
Section 10.01. Prohibited Activities. . . . . . . . . . . . . . . . . . . . . . . 60
Section 10.02. Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.03. Reasonable Restraint . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.04. Severability; Reformation. . . . . . . . . . . . . . . . . . . . . 61
Section 10.05. Independent Covenant . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.06. Materiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
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TABLE OF CONTENTS
(Continued)
PAGE
ARTICLE XI
TERMINATION
Section 11.01. Termination of This Agreement. . . . . . . . . . . . . . . . . . . 62
Section 11.02. Liabilities in Event of Termination. . . . . . . . . . . . . . . . 63
ARTICLE XII
GENERAL PROVISIONS
Section 12.01. Treatment of Confidential Information. . . . . . . . . . . . . . . 63
Section 12.02. Restrictions on Transfers of Purchaser Common Stock. . . . . . . . 64
Section 12.03. Brokers and Agents . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 12.04. Assignment; No Third Party Beneficiaries . . . . . . . . . . . . . 66
Section 12.05. Entire Agreement; Amendment; Waivers . . . . . . . . . . . . . . . 66
Section 12.06. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 12.07. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 12.08. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 12.09. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 12.10. Exercise of Rights and Remedies. . . . . . . . . . . . . . . . . . 68
Section 12.11. Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 12.12. Reformation and Severability . . . . . . . . . . . . . . . . . . . 68
Section 12.13. Respecting the IPO . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 12.14. Termination of the InfoHighway International, Inc. 1998
Incentive Stock Option Plan . . . . . . . . . . . . . . . . . . . 69
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT") is made as
of June ___, 1999, among OmniLynx Communications Corporation, a Delaware
corporation ("PURCHASER"), INFO Acquisition, Inc., a Texas corporation and a
wholly owned subsidiary of Purchaser ("NEWCO"), Info-Highway International,
Inc., a Texas corporation (the "COMPANY"), and the persons listed on the
signature pages of this Agreement under the caption "STOCKHOLDERS"
(collectively, the "STOCKHOLDERS," and each of them, individually, a
"STOCKHOLDER").
PRELIMINARY STATEMENTS
The parties to this Agreement wish to effect a business combination
pursuant to which:
(i) Newco will merge into the Company (the
"MERGER") on the terms and subject to the conditions of this
Agreement;
(ii) Purchaser has acquired the stock of the entities
other than the Company identified in the accompanying Addendum I
(each an "OTHER FOUNDING COMPANY" and, collectively with the
Company, the "FOUNDING COMPANIES") under agreements entered into
among the Other Founding Companies, their stockholders,
Purchaser and other subsidiaries of Purchaser (collectively, the
"OTHER AGREEMENTS"); and
(iii) Purchaser proposes to effect a public offering
of shares of its common stock.
The respective boards of directors of Purchaser, Newco and the Company
have approved and adopted this Agreement to effect a transaction involving a
reorganization described in Section 368 of the Code.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and undertakings contained in this Agreement, the
parties to this Agreement agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms have the meanings assigned to them below in this Section 1.01:
1
"ACQUISITION PROPOSAL" has the meaning specified in
Section 6.04.
"AFFILIATE" means, as to any specified Person, any other Person
who, directly or indirectly through one or more intermediaries or
otherwise, controls, is controlled by or is under common control with
the specified Person. As used in this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person (whether through
ownership of Capital Stock of the Person, by contract, or otherwise).
"AGREEMENT" means this Agreement, including the Disclosure
Statement relating to this Agreement and all attached Schedules,
Addendum, Annexes and Exhibits, as each of them may be amended, modified
or supplemented from time to time under their provisions or the
provisions of this Agreement.
"BUSINESS CORPORATION ACT" means the Texas Business Corporation
Act.
"BUSINESS DAY" means a day other than Saturday, Sunday or any
day on which banks located in New York, New York or Houston, Texas are
authorized or obligated to close.
"CAPITAL LEASE" means a lease of (or other agreement conveying
the right to use) real or personal property that is required to be
classified and accounted for as a capital lease under GAAP as in effect
on the date of this Agreement.
"CAPITAL STOCK" means, with respect to: (a) any corporation, any
share, or any depositary receipt or other certificate representing any
share, of an equity ownership interest in the corporation; and (b) any
other Entity, any share, membership or other percentage interest, unit
of participation or other equivalent (however designated) of an equity
interest in the Entity.
"CASH COMPENSATION" means, as applied to any employee,
nonemployee director or officer of, or any natural person who performs
consulting or other independent contractor services for, the Company or
any Company Subsidiary, the wages, salaries, bonuses (discretionary and
formula), fees and other cash compensation paid or payable by the
Company and each Company Subsidiary to that employee or other natural
person.
"CEILING AMOUNT" means $9,045,790.
"CERCLA" means the Comprehensive Environmental Response,
Conservation, and Liability Act of 1980.
"CERTIFICATE OF MERGER" means the articles or certificate of
merger respecting the Merger which contains the information required by
the laws of the Company's Organization State to effect the Merger.
2
"CHARTER DOCUMENTS" means, with respect to any Entity at any
time, in each case as amended, modified and supplemented at that time,
the articles or certificate of formation, incorporation or organization
(or the equivalent organizational documents) of the Entity, (b) the
bylaws or limited liability company agreement or regulations (or the
equivalent governing documents) of the Entity, and (c) each document
setting forth the designation, amount and relative rights, limitations
and preferences of any class or series of the Entity's Capital Stock or
of any rights in respect of the Entity's Capital Stock.
"CLAIM NOTICE" has the meaning specified in Section 9.04.
"CLOSING" has the meaning specified in Section 7.01(a).
"CLOSING MEMORANDUM" means the form of closing memorandum to be
prepared by Purchaser for the Closing, in which there shall be included
the forms of certificates of officers, the opinions of counsel and
certain other documents to be delivered at the Closing as provided in
Article VII.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY COMMITMENT" has the meaning specified in Section 4.22.
"COMPANY COMMON STOCK" means the common stock, no par value per
share, of the Company.
"COMPANY ERISA GROUP" means any "group of organizations" within
the meaning of Section 414(b), (c), (m) or (o) of the Code, or any
"controlled group" as defined in Section 4001 (a)(14) of ERISA, of which
the Company is a member.
"COMPANY SUBSIDIARY" means at any time any Entity that is a
Subsidiary of the Company at that time.
"CONFIDENTIAL INFORMATION" means, with respect to any Person,
all trade secrets and other confidential, nonpublic and/or proprietary
information of that Person, including information derived from designs,
reports, investigations, research, testing, development,
work-in-progress, codes, marketing and sales programs, capital
expenditure projects, cost summaries, pricing formulae, contract
analyses, financial information, projections, confidential filings with
any Governmental Authority and any other confidential, nonpublic
concepts, methods of doing business, ideas, materials or information
prepared or performed for, by or on behalf of that Person.
"CONTINGENT STOCK ISSUE RIGHTS" means the rights to acquire
shares of Purchaser Common Stock as part of the Merger Consideration,
which rights have the terms and
3
conditions as set forth in the form of Certificate of Contingent Stock
Issue Rights attached as Exhibit 1.02-A hereto.
"COUNSEL FOR PURCHASER AND NEWCO" means Xxxxxx & Xxxxxx, L.L.P.
"COUNSEL FOR THE COMPANY AND THE STOCKHOLDERS" means Mayor, Day,
Xxxxxxxx and Xxxxxx, LLP.
"CURRENT BALANCE SHEET" means the unaudited balance sheet of the
Company at March 31, 1999, which is included in the Initial Financial
Statements.
"CURRENT BALANCE SHEET DATE" means March 31, 1999.
"CURRENT DATE" means any day during the 20-day period ending on
the date of the Closing.
"DAMAGE" to any specified Person means any cost, damage
(including any consequential, exemplary, punitive or treble damage) or
expense (including reasonable and necessary or appropriate fees and
actual expenses of and disbursements by attorneys, consultants, experts
or other Representatives and Litigation costs) to, any fine of or
penalty on, or any liability (including loss of earnings or profits) of,
any other nature of that Person.
"DAMAGE CLAIM" means, as asserted (a) against any specified
Person, any claim, demand or Litigation made or pending against that
Person for Damages to any other Person, or (b) by the specified Person,
any claim or demand of the specified Person against any other Person for
Damages to the specified Person.
"DERIVATIVE SECURITIES" of a specified Entity means any Capital
Stock or debt security or other Indebtedness of the specified Entity or
any other Person which is convertible into or exchangeable for, or any
option, warrant or other right to acquire, (a) any unissued Capital
Stock of the specified Entity or (b) any Capital Stock of the specified
Entity which has been issued and is being held by the Entity directly or
indirectly as treasury Capital Stock.
"DGCL" means the General Corporation Law of the State of
Delaware.
"DISCLOSURE STATEMENT" means the written statement executed by
the Company and each of the Stockholders and delivered to Purchaser
prior to the execution and delivery of this Agreement, in which either
(a) exceptions are taken to each of certain of the representations and
warranties made by the Company and the Stockholders in this Agreement or
(b) it is confirmed that no exception is taken to that representation
and warranty.
"EFFECTIVE TIME" has the meaning specified in Section 2.02.
4
"ELECTION PERIOD" has the meaning specified in Section 9.04(b).
"EMPLOYEE POLICIES AND PROCEDURES" means at any time all
employee manuals and all material policies, procedures and work-related
rules that apply at that time to any employee, nonemployee director or
officer of, or any other natural person performing consulting or other
independent contractor services for, the Company or any Company
Subsidiary.
"EMPLOYMENT AGREEMENT" means at any time any agreement to which
the Company is a party which then relates to the direct or indirect
employment or engagement, or arises from the past employment or
engagement, of any natural person by the Company, whether as an
employee, a nonemployee officer or director, a consultant or other
independent contractor, a sales representative or a distributor of any
kind, including any employee leasing or service agreement and any
noncompetition agreement.
"ENTITY" means any sole proprietorship, corporation, partnership
of any kind having a separate legal status, limited liability company,
business trust, unincorporated organization or association, mutual
company, joint stock company or joint venture.
"ENVIRONMENTAL LAWS" means any and all Governmental Requirements
relating to the environment or worker health, including ambient air,
surface water, land surface or subsurface strata, or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes
(including Solid Wastes, Hazardous Wastes or Hazardous Substances) or
noxious noise or odor into the environment or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, recycling, removal, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
wastes (including petroleum, petroleum distillates, asbestos or
asbestos-containing material, polychlorinated biphenyls,
chlorofluorocarbons or hydrochlorofluorocarbons).
"ERISA" means the Employee Retirement Income Security Act
of 1974.
"ERISA AFFILIATE" means, with respect to any specified Person at
any time, any other Person, including an Affiliate of the specified
Person, that is, or at any time within six years of that time was, a
member of any ERISA Group of which the specified Person is or was a
member at the same time.
"ERISA AFFILIATE PENSION PLAN" means any ERISA Employee Benefit
Plan respecting which an ERISA Affiliate is or was a contributing
sponsor or employer.
"ERISA EMPLOYEE BENEFIT PLAN" means any "employee benefit plan"
as defined in Section 3(3) of ERISA and includes any ERISA Pension
Benefit Plan.
5
"ERISA PENSION BENEFIT PLAN" means any "employee pension benefit
plan," as defined in Section 3(2) of ERISA, including any plan that is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code (excluding any Multiemployer Plan).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FINAL PROSPECTUS" means the prospectus included in the
Registration Statement at the time it becomes effective, except that if
the prospectus first furnished to the Underwriter after the Registration
Statement becomes effective for use in connection with the IPO differs
from the prospectus included in the Registration Statement at the time
it becomes effective (whether or not the prospectus so furnished to the
Underwriter is required to be filed with the SEC pursuant to Securities
Act Rule 424(b)), the prospectus so furnished will be the "FINAL
PROSPECTUS."
"FINANCIAL STATEMENTS" means the Initial Financial Statements
and the other financial statements of the Company delivered to Purchaser
prior to the Effective Time pursuant to Section 6.06.
"GAAP" means generally accepted accounting principles and
practices in the United States as in effect from time to time which have
been or are applied on a basis consistent with the most recent audited
Financial Statements delivered to Purchaser prior to the Effective Time.
"GENERAL RELEASE" means the general release of the Company and
the Company Subsidiaries to be executed at or before, and delivered to
Purchaser and the Company at, the Closing, effective as of the Effective
Time, by each Significant Stockholder, which general release shall be in
the form of the attached Exhibit 1.02-B, with its blanks appropriately
completed.
"GOVERNMENTAL APPROVAL" means at any time any authorization,
consent, approval, permit, franchise, certificate, license, implementing
order or exemption of, or registration or filing with, any Governmental
Authority.
"GOVERNMENTAL AUTHORITY" means any national, state, county,
municipal or other government, domestic or foreign, or any agency,
board, bureau, commission, court, department or other instrumentality of
any such government.
"GOVERNMENTAL REQUIREMENT" means at any time (a) any law,
statute, code, ordinance, order, rule, regulation, judgment, decree,
injunction, order, writ, edict, award, authorization or other
requirement of any Governmental Authority in effect at that time or
(b) any obligation included in any certificate, certification,
franchise, permit or license issued by any
6
Governmental Authority or resulting from binding arbitration, including
any requirement under common law, at that time.
"GUARANTY" means, for any specified Person, without duplication,
any liability, contingent or otherwise, of that Person guaranteeing or
otherwise representing liability for any obligation of any other Person
(the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
and including any liability of the specified Person, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or
payment of) the other Person's obligation or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of
that obligation, (b) to purchase property, securities or services for
the purpose of assuring the owner of that obligation of its payment, or
(c) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to enable
the primary obligor to pay that obligation; PROVIDED, HOWEVER, that the
term "GUARANTY" excludes endorsements for collection or deposit in the
ordinary course of the endorser's business.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976.
"IMMEDIATE FAMILY MEMBER" of a Stockholder means at any time:
(a) if the Stockholder is a natural person, any child or grandchild (by
blood or legal adoption) or spouse of the Stockholder at that time, or
any child of the Stockholder's spouse; and (b) if the Stockholder is an
Entity which has as an ultimate beneficial owner one or more natural
persons, or a natural person and his spouse, any child or grandchild (by
blood or legal adoption) or spouse at that time (if not then an ultimate
beneficial owner of the Entity), or any child of the spouse, of the
ultimate beneficial owner or owners of the Entity.
"INDEBTEDNESS" of any Person means, without duplication, (a) any
liability of that Person (i) for borrowed money or arising out of any
extension of credit to or for the account of that Person (including
reimbursement or payment obligations with respect to surety bonds,
letters of credit, banker's acceptances and similar instruments), for
the deferred purchase price of property or services or arising under
conditional sale or other title retention agreements, other than trade
payables arising in the ordinary course of business, (ii) evidenced by
notes, bonds, debentures or similar instruments, (iii) in respect of
Capital Leases, or (iv) in respect of Interest Rate Protection
Agreements, (b) any liability secured by any Lien upon any property or
assets of that Person (or upon any revenues, income or profits of that
Person therefrom), whether or not that Person has assumed the liability
or otherwise become liable for its payment, or (c) any liability of
others of the type described in the preceding clause (a) or (b) in
respect of which that Person has incurred, assumed or acquired a
liability by means of a Guaranty.
"INDEMNITY NOTICE" has the meaning specified in Section 9.04(e).
"INDEMNIFIED PARTY" has the meaning specified in
Section 9.04(b).
7
"INDEMNIFYING PARTY" has the meaning specified in
Section 9.04(b).
"INFORMATION" means written information, including (a) data,
certificates, reports and statements (excluding Financial
Statements) and (b) summaries of unwritten agreements, arrangements,
contracts, plans, policies, programs or practices or of unwritten
amendments or modifications of, supplements to or waivers under any of
the foregoing documents.
"INITIAL FINANCIAL STATEMENTS" means (a) the audited balance
sheets of the Company at December 31, 1998, 1997 and 1996 and the
related audited statements of operations, stockholders' equity and cash
flows for each of the Company's three fiscal years in the three-year
period ended December 31, 1998, together with the related audit report
of KPMG Peat Marwick, and (b) the Current Balance Sheet and the related
unaudited statements of operations, stockholders' equity and cash flows
for the three month period ended on the Current Balance Sheet.
"INTEREST RATE PROTECTION AGREEMENT" means, for any Person, an
interest rate swap, cap or collar agreement or similar arrangement
providing for the transfer or mitigation of interest rate risks of that
Person, either generally or under specific contingencies, between that
Person and any other Person.
"IPO" means the first time after May 1, 1999 a registration
statement filed under the Securities Act and respecting an underwritten
primary offering by Purchaser of shares of Purchaser Common Stock is
declared effective under the Securities Act and all the shares
registered by that registration statement are issued and sold by
Purchaser.
"IPO CLOSING DATE" means the date on which Purchaser first
receives payment for the shares of Purchaser Common Stock it sells to
the Underwriter in the IPO.
"IPO PRICE" means the price per share of Purchaser Common Stock
which is set forth as the "price to public" on the cover page of the
Final Prospectus.
"IPO PRICING DATE" means the date, if any, on which Purchaser
and the Underwriter agree in the Underwriting Agreement to the price per
share of Common Stock at which the Underwriter, subject to the terms and
conditions of the Underwriting Agreement, will purchase newly issued
shares of Purchaser Common Stock from Purchaser on the IPO Closing Date.
"IRS" means the Internal Revenue Service.
"LIEN" means, with respect to any property or asset of any
Person (or any revenues, income or profits of that Person therefrom), in
each case whether the same is consensual or nonconsensual or arises by
contract, operation of law, legal process or otherwise, (a) any
mortgage, lien, security interest, pledge, attachment, levy or other
charge or encumbrance
8
of any kind thereupon or in respect thereof or (b) any other arrangement
under which the same is transferred, sequestered or otherwise identified
with the intention of subjecting the same to, or making the same
available for, the payment or performance of any liability in priority
to the payment of the ordinary, unsecured creditors of that Person,
including any "ADVERSE CLAIM" (as defined in Section 8-302(b) of each
applicable Uniform Commercial Code) in the case of any Capital Stock.
For purposes of this Agreement, a Person shall be deemed to own subject
to a Lien any asset that Person has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement,
Capital Lease or other title retention agreement relating to that asset.
"LITIGATION" means any action, case, proceeding, claim,
grievance, suit or investigation or other proceeding conducted by or
pending before any Governmental Authority or any arbitration proceeding.
"MAJORITY STOCKHOLDERS" means any Stockholder or combination of
Stockholders who at the date of this Agreement own shares of Company
Common Stock representing more than two-thirds of the total number of
shares of Company Common Stock outstanding at the date of this
Agreement.
"MATERIAL" means, as applied to any specified Entity, material
to the business, operations, property or assets, liabilities, financial
condition or results of operations of the specified Entity and its
Subsidiaries considered as a whole.
"MATERIAL ADVERSE EFFECT" means, with respect to the
consequences of any fact or circumstance (including the occurrence or
non-occurrence of any event) to the Company (or after the Effective Time
the Surviving Corporation), that such fact or circumstance has caused,
is causing or can reasonably be expected to cause, directly or
indirectly, singly or in the aggregate with other facts and
circumstances, any Damages in excess of the Threshold Amount.
"MATERIAL AGREEMENT" of an Entity means any contract or
agreement (a) to which the Entity or any of its Subsidiaries is a party,
or by which the Entity or any of its Subsidiaries is bound or to which
any property or assets of the Entity or any of its Subsidiaries is
subject and (b) which is Material to the Entity.
"MERGER CONSIDERATION" has the meaning specified in
Section 2.04.
"MOODY'S" means Xxxxx'x Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, Section 414 of the Code or Section 3(37) of
ERISA.
"NEWCO" means INFO Acquisition, Inc., a Texas corporation.
0
"XXXXX XXXXXX XXXXX" means the common stock, par value $1 per
share, of Newco.
"NEW EMPLOYMENT AGREEMENTS" means the Employment Agreements
entered into as of June ___, 1999, between the Purchaser and Xxxx
Xxxxxxx and Xxxxx Xxxxxx.
"ORGANIZATION STATE" means, as applied to (a) any corporation,
its state or other jurisdiction of incorporation, (b) any limited
liability company or limited partnership, the state or other
jurisdiction under whose laws it is organized and existing in that legal
form, and (c) any other Entity, the state or other jurisdiction whose
laws govern that Entity's internal affairs.
"OTHER AGREEMENTS" has the meaning specified in the Preliminary
Statements in this Agreement.
"OTHER COMPENSATION PLAN" means any compensation arrangement,
plan, policy, practice or program established, maintained or sponsored
by the Company or any Company Subsidiary, or to which the Company or any
Company Subsidiary contributes, on behalf of any of its employees,
nonemployee directors or officers or other natural persons performing
consulting or other independent contractor services for the Company or
any Company Subsidiary, including all such arrangements, plans,
policies, practices or programs providing for severance pay, deferred
compensation, incentive, bonus or performance awards or the actual or
phantom ownership of any Capital Stock or Derivative Securities of the
Company or any Company Subsidiary, but excluding all Company ERISA
Pension Plans and Employment Agreements.
"OTHER TRANSACTION DOCUMENTS" means the Other Agreements and the
other written agreements, documents, instruments and certificates at any
time executed pursuant to or in connection with the Other Agreements
(other than the Transaction Documents and the Underwriting Agreement),
all as amended, modified or supplemented from time to time.
"PARTIES" means the parties to this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITTED INVESTMENTS" means at the time of their purchase or
other acquisition by the Company or any Company Subsidiary
(a) obligations issued or guaranteed by the United States of America
with a remaining maturity not exceeding one year, (b) commercial paper
with maturities of not more than 270 days and a published rating of not
less than A-1 by S&P or P-1 by Moody's, and (c) certificates of deposit
and bankers' acceptances having maturities of not more than one year of
any commercial bank or trust company if (A) the issuing bank or trust
company has a combined capital and surplus of at least $5 million and
(B) its unsecured long-term debt obligations, or those of a holding
company of which it is a Subsidiary, are rated not less than A- by S&P
or A3 by Moody's.
10
"PERMITTED LIENS" means, as applied to the property or assets of
any Person (or any revenues, income or profits of that Person
therefrom): (a) Liens for Taxes if the same are not at the time due and
delinquent; (b) Liens of carriers, warehousemen, mechanics, laborers and
materialmen for sums not yet due; (c) Liens incurred in the ordinary
course of that Person's business in connection with worker's
compensation, unemployment insurance and other social security
legislation (other than pursuant to ERISA or Section 412(n) of the
Code); (d) Liens incurred in the ordinary course of that Person's
business in connection with deposit accounts or to secure the
performance of bids, tenders, Services Contracts, trade contracts,
statutory obligations, surety and appeal bonds, performance and
return-of-money bonds and other obligations of like nature; (e)
easements, rights-of-way, reservations, restrictions and other similar
encumbrances incurred in the ordinary course of that Person's business
or existing on property and not materially interfering with the ordinary
conduct of that Person's business or the use of that property; (f)
defects or irregularities in that Person's title to its real properties
which do not materially diminish the value of the surface estate or
interfere with the ordinary conduct of that Person's business or the use
of any of such properties; (g) any interest or title of a lessor of
assets being leased by any Person pursuant to any Capital Lease
disclosed in Section 4.19 of the Disclosure Statement or any lease that,
under GAAP, would be accounted for as an operating lease; and (h) Liens
securing purchase money Indebtedness disclosed in Section 4.18 or 4.19
of the Disclosure Statement so long as the Liens do not attach to any
property or assets other than the properties or assets purchased with
the proceeds of such Indebtedness.
"PERSON" means any natural person, Entity, estate, trust, union
or employee organization or Governmental Authority or, for the purpose
of the definition of "ERISA Affiliate," any trade or business.
"PLAN" has the meaning specified in Section 4.26(a).
"PRIVATE PLACEMENT MEMORANDUM" means the Purchaser Private
Placement Memorandum dated as of June 22, 1999, relating to the offer of
Purchaser Common Stock and Contingent Stock Issue Rights in connection
with the Merger.
"PROPERTY, PLANT AND EQUIPMENT" means at any time any property
that then would be included and classified as property, plant and
equipment on a consolidated balance sheet, prepared in accordance with
GAAP, of the Company and the Company Subsidiaries.
"PROPRIETARY RIGHTS" means any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United
States and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable
or not), invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer lists,
and all documentation relating to any of the foregoing; (iii) all
copyrights, copyrights registrations and applications therefor and all
other rights
11
corresponding thereto throughout the world; (iv) all mask works, mask
work registrations and applications therefor; (v) all industrial designs
and any registrations and applications therefor throughout the world;
(vi) all trade names, logos, common law trademarks and service marks;
trademark and service xxxx registrations and applications therefor and
all goodwill associated therewith throughout the world; (vii) all
databases and data collections and all rights therein throughout the
world; (viii) all computer software including all source code, object
code, firmware, development tools, files, records and data, all media
on which any of the foregoing is recorded, all Uniform Resource
Locators, Web addresses, sites and domain names, (ix) any similar,
corresponding or equivalent rights to any of the foregoing, and (x) all
documentation related to any of the foregoing, that are used in and/or
necessary to the conduct of the Company's business as it currently is
conducted or is currently contemplated by the Company or any Company
Subsidiary to be conducted, including, without limitation, the design,
development, manufacture, use, import and sale of the products,
technology and services of the Company or any Company Subsidiary
(including products, technology or services currently under
development).
"PURCHASER" means OmniLynx Communications Corporation, a
Delaware corporation.
"PURCHASER ACQUISITION CANDIDATE" means any Entity which shall
have been called on by any of the Company, Purchaser or a Subsidiary of
the Company or Purchaser in connection with the possible acquisition by
any of them of that Entity or with respect to which any of them has made
an acquisition analysis.
"PURCHASER COMMON STOCK" means the common stock, par value
$.0001 per share, of Purchaser.
"PURCHASER INDEMNIFIED LOSS" has the meaning specified in
Section 9.02(a).
"PURCHASER INDEMNIFIED PARTY" means Purchaser and its Affiliates
and each of their respective officers, directors, employees, agents and
counsel; PROVIDED, HOWEVER, that no Person who indemnifies any Purchaser
Indemnified Parties under this Agreement in his capacity as a
Stockholder will be an Purchaser Indemnified Party for purposes of this
Agreement, notwithstanding that the Person is an Purchaser Indemnified
Party for purposes of one or more of the Other Agreements.
"PURCHASER MERGER SECURITIES" means the Purchaser Common Stock
and Contingent Stock Issue Rights issued as part of the Merger
Consideration, and the Purchaser Common Stock issued, if any, pursuant
to the Contingent Stock Issue Rights.
"QUALIFIED PLANS" has the meaning specified in Section 4.26(b).
12
"REGISTERED PROPRIETARY RIGHTS" means all United States,
international and foreign: (i) patents, patent applications (including
provisional applications); (ii) registered trademarks, applications to
register trademarks, intent-to-use applications, or other registrations
or applications related to trademarks; (iii) registered copyrights and
applications for copyright registration; (iv) any mask work
registrations and applications to register mask works; and (v) any other
Company Proprietary Rights that is the subject of an application,
certificate, filing, registration or other document issued by, filed
with, or recorded by, any state, government or other public legal
authority, that are used in and/or necessary to the conduct of the
Company's business as it currently is conducted or is currently
contemplated by the Company or any Company Subsidiary to be conducted,
including, without limitation, the design, development, manufacture,
use, import and sale of the products, technology and services of the
Company or any Company Subsidiary (including products, technology or
services currently under development).
"REGISTRATION STATEMENT" means the registration statement
(including (a) each preliminary prospectus included therein prior to the
date on which that registration statement is declared effective under
the Securities Act (including any prospectus filed with the SEC pursuant
to Securities Act Rule 424(b)), (b) the Final Prospectus and (c) any
amendments thereof and all supplements and exhibits thereto) filed by
Purchaser with the SEC to register shares of Purchaser Common Stock
under the Securities Act for public offering and sale in the IPO.
"RETURNS" means the returns, reports or statements (including
any information returns) any Governmental Requirement requires to be
filed for purposes of any Tax.
"RELATED PARTY AGREEMENT" means any contract or other agreement,
written or oral, other than the New Employment Agreements, to which the
Company is a party or is bound or by which any property of the Company
is bound or may be subject and (a) to which any Stockholder or any of
that Stockholder's Related Persons or Affiliates also is a party, (b) of
which any Stockholder or any Stockholder's Related Persons or Affiliates
is a beneficiary, or (c) as to which any transaction contemplated
thereby properly would be characterized (without regard to the amount
involved) as a related party transaction for purposes of applying the
disclosure requirements of GAAP or the SEC applicable to the
Registration Statement.
"RELATED PERSON" of a Stockholder means: (a) if the Stockholder
is a natural person, (i) any Immediate Family Member of the Stockholder,
(ii) any Estate of the Stockholder or any Immediate Family Member of the
Stockholder, (iii) the trustee of any inter vivos or testamentary trust
of which all the beneficiaries are Immediate Family Members of the
Stockholder, and (iv) any Entity the entire equity interest in which is
owned by any one or more of the Stockholder and Immediate Family Members
of the Stockholder; and (b) if the Stockholder is an Entity, Estate or
trust, (i) any Person who owns an equity interest in the Stockholder on
the date hereof, (ii) any Person who would be a Related Person under
clause
13
(a) of this definition of a natural person who is an ultimate beneficial
owner of the Stockholder, or (iii) any other Entity the entire equity
interest in which is owned by any one or more of the Stockholder and
Immediate Family Members of the Stockholder. As used in this
definition, "Estate" means, as to any natural person who has died or
been adjudicated mentally incompetent by a court of competent
jurisdiction, (i) that person's estate or (ii) the administrator,
conservator, executor, guardian or representative of that person's
estate.
"REPRESENTATIVES" means, with respect to any Person, the
directors, officers, employees, Affiliates, accountants (including
independent certified public accountants), advisors, attorneys,
consultants or other agents of that Person, or any other representatives
of that Person or of any of that Person's directors, officers,
employees, Affiliates, accountants (including independent certified
public accountants), advisors, attorneys, consultants or other agents.
"REPORTABLE EVENT" means, with respect to any Company ERISA
Pension Plan, (a) the occurrence of any of the events set forth in
Section 4043(b) or 4043(c) (other than a Reportable Event as to which
the provision of 30 days' notice to the PBGC is waived under applicable
regulations), 4062(e) or 4063(a) of ERISA with respect to that plan,
(b) any event requiring the Company or any ERISA Affiliate to provide
security to that plan under Section 401 (a)(29) of the Code, or (c) any
failure to make a payment required by Section 412(m) of the Code with
respect to that plan.
"RCRA" means the Resource Conservation and Recovery Act of 1976.
"RESPONSIBLE OFFICER" means any of Xxxx Xxxxxxx, Xxxxx Xxxxxx or
Xxx Xxxxx.
"RESTRICTED PAYMENT" means, with respect to any Entity at any
time, any of the following effected by the Entity: (a) any declaration
or payment of any dividend or other distribution, direct or indirect, on
account of any Capital Stock of that Entity or any Affiliate of the
Entity or (b) any direct or indirect redemption, retirement, purchase or
other acquisition for value of, or any direct or indirect purchase,
payment or sinking fund or similar deposit for the redemption,
retirement, purchase or other acquisition for value of, or to obtain the
surrender of, any then outstanding Capital Stock of the Entity or any
Affiliate of the Entity or any then outstanding warrants, options or
other rights to acquire or subscribe for or purchase unissued or
treasury Capital Stock of the Entity or any of its Affiliates.
"RESTRICTED STOCKHOLDER" has the meaning specified in
Section 10.1.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
14
"SERVICES CONTRACT" means any written or oral contract,
subcontract or other agreement under which the Company is or may become
obligated to provide to or for any Person.
"SHAREHOLDERS AGREEMENTS" means (i) the Shareholders' Agreement
effective as of November 24, 1994 among Xxxx Xxxxxxx, Xxxxx X. Magnum
and Xxxx Xxxxx; (ii) the Shareholders' Agreement effective as of
December 7, 1994 between Xxx Xxxxxxxx and Xxxxx XxXxxxx; and (iii) the
Shareholders' Agreement effective as of December 14, 1994 for Xxx Xxxx.
"SIGNIFICANT STOCKHOLDER CEILING AMOUNT" means $6,433,840.
"SIGNIFICANT STOCKHOLDER PRO RATA SHARE" means for each
Significant Stockholder, the fraction expressed as a percentage, (a) the
numerator of which is the number of shares of outstanding Company Common
Stock owned by that Significant Stockholder, as set forth in Schedule
2.04, and (b) the denominator of which is the total number of shares of
outstanding Company Common Stock owned by all Significant Stockholders,
as set forth in Schedule 2.04.
"SIGNIFICANT STOCKHOLDERS" means Xxxx Xxxxxxx, AMICI Online
Investments, L.L.C., Xxxxxx Family Limited Partnership, Xxxxxxx
Investment Company, Xxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxx Xxxxxxxxxx, Xxxxx
Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxxx and Xxxx Xxxxxxx.
"SOLID WASTES, HAZARDOUS WASTES OR HAZARDOUS SUBSTANCES" have
the meanings ascribed to those terms in CERCLA, RCRA or any other
Environmental Law applicable to the business or operations of the
Company or any Company Subsidiary which imparts a broader meaning to any
of those terms than does CERCLA or RCRA.
"S&P" means Standard and Poor's Rating Group.
"STOCKHOLDER INDEMNIFIED PARTY" means (a) each Stockholder and
each of that Stockholder's Affiliates (other than the Company or,
following the Effective Time, the Surviving Corporation or Purchaser or
any of its Subsidiaries, if the Stockholder is an Affiliate of
Purchaser), agents and counsel and (b) prior to the Effective Time, the
Company and each of its officers, directors, employees, agents and
counsel who are not Stockholder Indemnified Parties within the meaning
of clause (a) of this definition.
"STOCKHOLDER INDEMNIFIED LOSS" has the meaning specified in
Section 9.03.
"STOCKHOLDER PRO RATA SHARE" means for each Stockholder, the
fraction expressed as a percentage, (a) the numerator of which is the
number of shares of outstanding Company Common Stock owned by that
Stockholder, as set forth on Schedule 2.04, and (b) the
15
denominator of which is the total number of shares of outstanding
Company Common Stock owned by all Stockholders, as set forth on
Schedule 2.04.
"SUBSIDIARY" of any specified Person means at any time, any
Entity a majority of the Capital Stock of which is at that time owned or
controlled, directly or indirectly, by the specified Person.
"SUPPLEMENTAL INFORMATION" has the meaning specified in
Section 6.06.
"SURVIVING CORPORATION" means the Company, which is to be
designated in the Certificate of Merger as the surviving corporation of
the Merger.
"TAX" or "TAXES" means all net or gross income, gross receipts,
net proceeds, sales, use, ad valorem, value added, franchise,
withholding, payroll, employment, excise, property, deed, stamp,
alternative or add-on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges or
assessments of any nature imposed by any Governmental Requirement,
whether disputed or not, together with any interest, penalties,
additions to tax or additional amounts with respect thereto.
"TAXING AUTHORITY" means any Governmental Authority having or
exercising jurisdiction with respect to any Tax.
"TERMINATION EVENT" means, with respect to any Company ERISA
Pension Plan, (a) any Reportable Event with respect to that plan which
is likely to result in the termination of that plan, (b) the termination
of, or the filing of a notice of intent to terminate, that plan or the
treatment of any amendment to that plan as a termination under Section
4041(c) of ERISA, or (c) the institution of proceedings to terminate, or
the appointment of a trustee to administer, that plan under Section 4042
of ERISA.
"TERRITORY" has the meaning specified in Section 10.01(a).
"THIRD PARTY CLAIM" has the meaning specified in
Section 9.04(b).
"THRESHOLD AMOUNT" means 1% of the Ceiling Amount.
"TRANSACTION DOCUMENT" means this Agreement, the Certificates of
Merger, the General Release and the other written agreements, documents,
instruments and certificates executed pursuant to or in connection with
this Agreement (other than the Other Transaction Documents and the
Underwriting Agreement), including those specified in Article VII to be
delivered at or before the Closing, all as amended, modified or
supplemented from time to time.
"TRANSFER TAXES" has the meaning specified in Section 12.07.
16
"UNDERWRITER" means, collectively, (a) the investment banking
firms that prospectively may enter into the Underwriting Agreement and
(b) from and after the IPO Pricing Date, the investment banking firms
parties to the Underwriting Agreement.
"UNDERWRITING AGREEMENT" has the meaning specified in
Section 7.02(a)(iii).
"WELFARE PLAN" means an "employee welfare benefit plan" as
defined in Section 3(1) of ERISA.
"WHOLLY OWNED SUBSIDIARY" means any corporation or other Entity
all of the outstanding Capital Stock of which, on a fully diluted basis,
is owned and controlled, directly or indirectly through another Wholly
Owned Subsidiary, by the Company.
Section 1.02. DEFINITIONS. Capitalized terms used in this Agreement
but not defined in this Section 1.01 have the meanings assigned to them in the
Preliminary Statements or elsewhere in this Agreement, as the case may be.
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01. CERTIFICATE OF MERGER. On the terms and subject to the
conditions of this Agreement, the Company will cause a Certificate of Merger to
be duly executed and delivered on or promptly after the date of the Closing to
the Secretary of State of the State of Texas.
Section 2.02. THE EFFECTIVE TIME. The effective time of the Merger
(the "EFFECTIVE TIME") will be the time on the IPO Closing Date which the
Certificate of Merger specifies or, if the Certificate of Merger does not
specify another time, 8:00 a.m., eastern time, on the IPO Closing Date.
Section 2.03. CERTAIN EFFECTS OF THE MERGER. At and as of the
Effective Time, (a) Newco will be merged with and into the Company in accordance
with the provisions of the Business Corporation Act, (b) Newco will cease to
exist as a separate legal entity, (c) the articles of incorporation of the
Company will be amended to change its authorized capital stock to 1,000 shares,
par value $1.00 per share, of Common Stock, (d) the Company will be the
Surviving Corporation and, as such, will, all with the effect provided by the
Business Corporation Act, (i) possess all the properties and rights, and be
subject to all the restrictions and duties, of the Company and Newco and (ii) be
governed by the laws of the State of Texas, (e) the Charter Documents of Newco
then in effect (after giving effect to the amendment of the Company's articles
of incorporation specified in clause (c) of this sentence) will become and
thereafter remain (until changed in accordance with (i) applicable law, in the
case of the articles of incorporation or (ii) their terms, in the case of the
bylaws) the Charter Documents of the Surviving Corporation, (f) the initial
board of directors of the
17
Surviving Corporation will be the Persons named in Schedule 2.03, who will
hold the office of director of the Surviving Corporation subject to the
provisions of the applicable laws of the State of Texas and the Charter
Documents of the Surviving Corporation, and (g) the officers of the Surviving
Corporation immediately following the Merger will be as set forth in Schedule
2.03, and each of the Persons so designated in Schedule 2.03 will serve in
each office specified for that Person in Schedule 2.03, subject to the
provisions of the Charter Documents of the Surviving Corporation, until his
or her successor is duly elected to, and, if necessary, qualified for, that
office.
Section 2.04. EFFECT OF THE MERGER ON CAPITAL STOCK. As of the
Effective Time, as a result of the Merger and without any action on the part of
any holder thereof:
(a) the shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares
referred to in Section 2.04(b) below and Dissenting Shares (as defined
in Section 2.08 below) will (i) be converted into the right to receive,
without interest, on surrender of the certificate evidencing those
shares, the number of whole and fractional shares of Purchaser Common
Stock and Contingent Stock Issue Rights set forth or determined as
provided in Schedule 2.04 (the "MERGER CONSIDERATION"), (ii) cease to be
outstanding and to exist, and (iii) be canceled and retired;
(b) each share of Company Common Stock held in the treasury
of the Company or by any Company Subsidiary will (i) cease to be
outstanding and to exist and (ii) be canceled and retired; and
(c) each share of Newco Common Stock issued and outstanding
immediately prior to the Effective Time will be converted into one share
of Common Stock, par value $1.00 per share, of the Surviving
Corporation, and the shares of Common Stock of the Surviving Corporation
issued on such conversion will constitute all the issued and outstanding
shares of Capital Stock of the Surviving Corporation.
Each holder of a certificate representing shares of Company Common Stock
immediately prior to the Effective Time (other than the shares referred to in
Section 2.04(b) below and Dissenting Shares) will, as of the Effective Time and
thereafter, cease to have any rights respecting those shares other than the
right to receive, without interest, the Merger Consideration owing with respect
to those shares as provided in Section 2.06.
Section 2.05. DELIVERY, EXCHANGE AND PAYMENT.
(a) At or after the Effective Time: (i) each Stockholder,
as the holder of certificates representing shares of Company Common
Stock, will, on surrender of his certificates to Purchaser (or any agent
which may be appointed by Purchaser for purposes of this Section 2.05),
receive, and Purchaser will pay and issue to each Stockholder, in each
case subject to the provisions of Section 2.06, the Merger
Consideration; and (ii) until any certificate representing Company
Common Stock has been surrendered and replaced
18
pursuant to this Section 2.05, that certificate will, for all purposes,
be deemed to evidence ownership of the number of whole shares of
Purchaser Common Stock and Contingent Stock Issue Rights included in the
Merger Consideration payable in respect of that certificate pursuant to
Section 2.04. All shares of Purchaser Common Stock and Contingent Stock
Issue Rights issuable in the Merger will be deemed for all purposes to
have been issued by Purchaser at the Effective Time.
(b) Each Stockholder will deliver to Purchaser (or any agent
that may be appointed by Purchaser for purposes of this Section 2.05),
on or before the IPO Closing Date, the certificates representing Company
Common Stock owned by the Stockholder, duly endorsed in blank by him, or
accompanied by stock powers duly executed by him in blank, and with all
necessary transfer tax and other revenue stamps, acquired at his
expense, affixed and canceled. Each Stockholder shall cure any
deficiencies in the endorsement of the certificates or other documents
of conveyance respecting, or in the stock powers accompanying, the
certificates representing Company Common Stock delivered by him.
(c) No dividends (or interest) or other distributions
declared or earned after the Effective Time with respect to Purchaser
Common Stock and payable to the holders of record thereof after the
Effective Time will be paid to the holder of any unsurrendered
certificates representing shares of Company Common Stock for which
shares of Purchaser Common Stock have been issued in the Merger until
the unsurrendered certificates are surrendered as provided herein, but
(i) on such surrender, Purchaser will cause to be paid, to the Person in
whose name the certificates representing such shares of Purchaser Common
Stock shall then be issued, the amount of dividends or other
distributions previously paid with respect to such whole shares of
Purchaser Common Stock with a record date, or which have accrued,
subsequent to the Effective Time, but prior to surrender, and the amount
of any cash payable to such Person for and in lieu of fractional shares
pursuant to Section 2.06 and (ii) at the appropriate payment date or as
soon as practicable thereafter, Purchaser will cause to be paid to that
Person the amount of dividends or other distributions with a record
date, or which have been accrued, subsequent to the Effective Time, but
which are not payable until a date subsequent to surrender, which are
payable with respect to such number of whole shares of Purchaser Common
Stock, subject in all cases to any applicable escheat laws. No interest
will be payable with respect to the payment of such dividends or other
distributions (or cash for and in lieu of fractional shares) on
surrender of outstanding certificates.
Section 2.06. FRACTIONAL SHARES. Notwithstanding any other provision
of this Article II, no fractional shares of Purchaser Common Stock and
Contingent Stock Issue Rights will be issued, and any Stockholder otherwise
entitled to receive a fractional share of Purchaser Common Stock and Contingent
Stock Issue Rights but for this Section 2.06 will instead be entitled to receive
a cash payment for and in lieu thereof in the amount (rounded to the nearest
whole cent) equal to that Person's fractional interest in a share of Purchaser
Common Stock and Contingent Stock Issue Rights multiplied by $10.
19
Section 2.07. DISSENTING SHARES.
(a) Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock that are held by any record
holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal rights in accordance Sections
5.11 and 5.12 of the Business Corporation Act (the "Dissenting Shares")
shall not be converted into the right to receive the Merger
Consideration but shall become the right to receive such consideration
as may be determined to be due in respect of such Dissenting Shares
pursuant to the Business Corporation Act; provided, however, that any
holder of Dissenting Shares who shall have failed to perfect or shall
have withdrawn or lost his rights to appraisal of such Dissenting
Shares, in each case under the Business Corporation Act, shall forfeit
the right to appraisal of such Dissenting Shares, and such Dissenting
Shares shall be deemed to have been converted into the right to receive,
as of the Effective Time, the Merger Consideration without interest.
Parent and the Surviving Corporation shall comply with all of their
obligations under the Business Corporation Act with respect to holders
of Dissenting Shares.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal, and any withdrawals of such demands, received by
the Company and any other related instruments served pursuant to
Delaware Law and received by the Company and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for
appraisal under the Business Corporation Act. The Company shall not,
except with the prior written consent of Parent, make any payment with
respect to any demands for appraisal or offer to settle or settle any
such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Section 3.01. BY EACH STOCKHOLDER. Each Stockholder, severally as to
himself or herself only, represents and warrants to Purchaser that all the
following representations and warranties in this Article III are true and
correct: (i) the Stockholder will be acquiring the shares of Purchaser Merger
Securities to be issued to him pursuant to Section 2.04 solely for the
Stockholder's account, for investment purposes only and with no current
intention or plan to distribute, sell or otherwise dispose of any of those
Purchaser Merger Securities in connection with any distribution; (ii) the
Stockholder is not a party to any agreement or other arrangement for the
disposition of any shares of Purchaser Merger Securities other than this
Agreement; (iii) unless otherwise specified on Schedule 2.04, the Stockholder is
an "accredited investor" as defined in Securities Act Rule 501 (a); (iv) the
Stockholder (A) is able to bear the economic risk of an investment in the
Purchaser Merger Securities to be acquired by him pursuant to this Agreement,
(B) can afford to sustain a total loss of that investment, (C) has such
knowledge and experience in financial and business matters that he is capable of
evaluating the merits and risks of the proposed investment in the Purchaser
Merger
20
Securities, (D) has had an adequate opportunity to ask questions and receive
answers from the officers of Purchaser concerning any and all matters
relating to the transactions contemplated by this Agreement, including the
background and experience of the current and proposed officers and directors
of Purchaser, and the plans for the operations of the business of Purchaser,
and (E) has asked all questions of the nature described in preceding clause
(D), and all those questions have been answered to his satisfaction.
Section 3.02. OWNERSHIP AND STATUS OF COMPANY CAPITAL STOCK. The
Stockholder is the record and beneficial owner (or, if the Stockholder is a
trust or the estate of a deceased natural person, the legal owner) of the number
of shares of Company Capital Stock set forth, by class, and by each series in
each class, opposite the Stockholder's name in Schedule 2.04, free and clear of
all Liens, except for the Liens accurately set forth in Schedule 2.04, all of
which will be released at or before the Effective Time.
Section 3.03. POWER OF THE STOCKHOLDER; APPROVAL OF THE MERGER.
(a) The Stockholder has the full power, legal capacity and
authority to execute and deliver this Agreement and each other
Transaction Document to which the Stockholder is a party and to perform
the Stockholder's obligations in this Agreement and in all other
Transaction Documents to which the Stockholder is a party. This
Agreement constitutes, and each such other Transaction Document, when
executed in the Stockholder's individual capacity and delivered by the
Stockholder, will constitute, the legal, valid and binding obligation of
the Stockholder, enforceable against the Stockholder in accordance with
its terms, except as their enforceability may be (i) limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and
(ii) subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law). If
the Stockholder is an Entity, the Stockholder has, in accordance with
all applicable Governmental Requirements and its Charter Documents,
obtained all approvals and taken all actions necessary for the
authorization, execution, delivery and performance by the Stockholder of
this Agreement and the other Transaction Documents to which the
Stockholder is a party. If the Stockholder is acting otherwise than in
his individual capacity (whether as an executor or a guardian or in any
other fiduciary or representative capacity), all actions on the part of
the Stockholder and all other Persons (including any court) necessary
for the authorization, execution, delivery and performance by the
Stockholder of this Agreement and the other Transaction Documents to
which the Stockholder is a party have been duly taken.
(b) The Stockholder, acting in each capacity in which he is
entitled, by reason of the Company's Charter Documents or the
Governmental Requirements of the Company's Organization State or for any
other reason, to vote to approve or disapprove the consummation of the
Merger, has voted all the shares of Company Capital Stock owned by him
and entitled to a vote or votes on that matter, in any one or more of
the manners prescribed or permitted by the Company's Charter Documents
or the Governmental
21
Requirements of the Company's Organization State, whichever are
controlling, to approve this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement.
Section 3.04. NO CONFLICTS OR LITIGATION. The execution, delivery and
performance in accordance with their respective terms by the Stockholder of this
Agreement and the other Transaction Documents to which the Stockholder is or
will be a party do not and will not (a) violate any Governmental Requirement,
(b) breach or constitute a default under any agreement or instrument to which
the Stockholder is a party or by which the Stockholder or any of the shares of
Company Capital Stock owned by the Stockholder is bound, (c) result in the
creation or imposition of, or afford any Person the right to obtain, any Lien
upon any of the shares of Company Capital Stock owned by the Stockholder (or
upon any revenues, income or profits of the Stockholder therefrom) or (d) if the
Stockholder is an Entity, violate the Stockholder's Charter Documents. No
Litigation is pending or, to the knowledge of the Stockholder, threatened to
which the Stockholder is or may become a party which (a) questions or involves
the validity or enforceability of any of the Stockholder's obligations under any
Transaction Document or (b) seeks (or reasonably may be expected to seek) (i) to
prevent or delay the consummation by the Stockholder of the transactions
contemplated by this Agreement to be consummated by the Stockholder or
(ii) Damages in connection with any consummation by the Stockholder of the
transactions contemplated by this Agreement.
Section 3.05. NO BROKERS. The Stockholder has not, directly or
indirectly, in connection with this Agreement or the transactions contemplated
hereby (a) employed any broker, finder or agent or (b) agreed to pay or incurred
any obligation to pay any broker's or finder's fee, any sales commission or any
similar form of compensation.
Section 3.06. PREEMPTIVE AND OTHER RIGHTS; WAIVER. Except for the
right of the Stockholder to receive shares of Purchaser Common Stock and
Contingent Stock Issue Rights as a result of the Merger or to acquire Purchaser
Common Stock pursuant to any written option or warrant granted by Purchaser to
the Stockholder, the Stockholder either (a) does not have any statutory or
contractual preemptive or other right of any kind (including any right of first
offer or refusal) to acquire any shares of Company Capital Stock or Purchaser
Common Stock or (b) hereby irrevocably waives each such right of that type the
Stockholder has or may have. Further, by execution of this Agreement, the
Stockholder irrevocably waives any statutory or contractual preemptive or other
right of any kind to acquire any shares of Company Capital Stock with respect to
any prior issuances of Company Capital Stock.
Section 3.07. COUNSEL. The Stockholder has been given the opportunity
to obtain the advice of attorneys, accountants and other counsel of their own
choosing, and have not relied in any way on any statements, advice or opinion,
whether written or oral, of the Counsel for Purchaser and Newco or the counsel
for the Company with respect to this Agreement, the transactions contemplated
hereby and any actual or potential consequences, including any actual or
potential Tax
22
consequences, hereof and thereof on the Purchaser, Newco, the Company, the
Stockholder or the Significant Stockholders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SIGNIFICANT STOCKHOLDERS
Section 4.01. BY THE COMPANY AND EACH SIGNIFICANT STOCKHOLDER. The
Company and each Significant Stockholder severally represent and warrant to, and
agree with, Purchaser that all the following representations and warranties in
this Article IV are true and correct:
(a) the Organization State of the Company is the State of
Texas, and the Company (i) is a corporation duly organized, validly
existing and in good standing under the laws of that State and (ii) has
the corporate power and authority under those laws and its Charter
Documents to own or lease and to operate its properties and to carry on
its business as now conducted; and
(b) the authorized Capital Stock of the Company is comprised
of 20,000,000 shares of Company Common Stock, of which 10,807,756 shares
have been issued and are now outstanding and no shares are held by the
Company as treasury shares, and no outstanding Derivative Securities of
the Company exist.
Section 4.02. QUALIFICATION. Section 4.02 of the Disclosure Statement
accurately lists all the jurisdictions in which the Company are authorized or
qualified to own or lease and to operate their properties or to carry on their
business as now conducted. The Company does not own, lease or operate
properties or carry on its business in any jurisdiction not listed in Section
4.02 of the Disclosure Statement.
Section 4.03. AUTHORIZATION; ENFORCEABILITY; ABSENCE OF CONFLICTS;
REQUIRED CONSENTS.
(a) The execution, delivery and performance by the Company
of this Agreement and each other Transaction Document to which it is or
will be a party, and the effectuation of the Merger and the other
transactions contemplated hereby and thereby, are within its corporate
or other power under its Charter Documents and all applicable
Governmental Requirements of its Organization State and have been duly
authorized by all proceedings, including actions permitted to be taken
in lieu of proceedings, required under its Charter Documents and all
applicable Governmental Requirements Organization State.
(b) This Agreement has been, and each of the other
Transaction Documents to which the Company is or will be a party, when
executed and delivered to Purchaser (or, in the case of the Certificate
of Merger, the applicable Governmental Authorities) will have
23
been, duly executed and delivered by the Company and is, or when so
executed and delivered will be, the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms, except as enforceability may be (i) limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and
(ii) subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(c) The execution, delivery and performance in accordance
with their respective terms by the Company of the Transaction Documents
to which it is a party do not and will not (i) violate, breach or
constitute a default under (A) the Charter Documents of the Company,
(B) any Governmental Requirement applicable to the Company or (C) except
as set forth in Section 4.03 of the Disclosure Statement, any Material
Agreement of the Company, (ii) except as set forth in Section 4.03 of
the Disclosure Statement, result in the acceleration or mandatory
prepayment of any Indebtedness, or any Guaranty not constituting
Indebtedness, of the Company or afford any holder of any of that
Indebtedness, or any beneficiary of any of those Guaranties, the right
to require the Company to redeem, purchase or otherwise acquire,
reacquire or repay any of that Indebtedness, or to perform any of those
Guaranties, (iii) cause or result in the imposition of, or afford any
Person the right to obtain, any Lien upon any property or assets of the
Company (or upon revenues, income or profits of the Company therefrom),
(iv) except as set forth in Section 4.03 of the Disclosure Statement,
result in the revocation, cancellation, suspension or material
modification, in any single case or in the aggregate, of any
Governmental Approval possessed by the Company at the date hereof and
necessary for the ownership or lease or the operation of its properties
or the carrying on of its business as now conducted, including any
necessary Governmental Approval under each applicable Environmental Law,
or (v) except as set forth in Section 4.03 of the Disclosure Statement,
entitle any Person other than the Company to revoke, cancel, suspend or
materially modify any Company Commitment.
(d) Except for (i) the filing of the Certificates of Merger
with the applicable Governmental Authorities, (ii) filings of the
Registration Statement under the Securities Act and the SEC order
declaring the Registration Statement effective under the Securities Act,
and (iii) as may be required by the HSR Act or the applicable state
securities or blue sky laws, no Governmental Approvals are required to
be obtained, and no reports or notices to or filings with any
Governmental Authority are required to be made, by the Company for the
execution, delivery or performance by the Company of the Transaction
Documents to which it is a party, the enforcement against the Company of
its obligations thereunder or the effectuation of the Merger and the
other transactions contemplated thereby.
(e) The Company has terminated the Shareholders Agreements
and the Shareholders Agreements have no further force and effect.
Section 4.04. CHARTER DOCUMENTS AND RECORDS; NO VIOLATION. The
Company has caused true, complete and correct copies of the Charter Documents,
each as in effect on the date hereof, and
24
the minute books and similar corporate or other Entity records of the Company
to be delivered or otherwise made available to Purchaser. No breach or
violation of any Charter Document of the Company has occurred and is
continuing.
Section 4.05. NO DEFAULTS. No act or omission by the Company has
occurred, and to the knowledge of the Company (which for purposes of this
Article IV means the actual knowledge of any Responsible Officer and any
information which any Responsible Officer should have known in the reasonable
performance of their duties), no other condition or state of facts exists, or,
with the giving of notice or the lapse of time or both, would exist, which
(a) entitles any holder of any outstanding Indebtedness, or any Guaranty not
constituting Indebtedness, of the Company, or a representative of the holder, to
accelerate the maturity, or require a mandatory prepayment of that Indebtedness
or Guaranty, or affords the holder or its representative, or any beneficiary of
that Guaranty, the right to require the Company to redeem, purchase or otherwise
acquire, reacquire or repay any of that Indebtedness, or to perform that
Guaranty in whole or in part, (b) entitles any Person to obtain any Lien (other
than a Permitted Lien) upon any properties or assets of the Company (or upon
revenues, income or profits of the Company therefrom), or (c) constitutes a
violation or breach of, or a default under, any Material Agreement of the
Company by the Company.
Section 4.06. COMPANY SUBSIDIARIES. The Company does not have, and
has never had, any Company Subsidiaries. Except as accurately set forth in
Section 4.06 of the Disclosure Statement, the Company does not own, of record or
beneficially, directly or indirectly through any Person, and does not control,
directly or indirectly through any Person or otherwise, any Capital Stock or
Derivative Securities of any Entity.
Section 4.07. CAPITAL STOCK OF THE COMPANY. All the issued and
outstanding shares of Capital Stock of the Company have been duly authorized and
validly issued in accordance with the applicable Governmental Requirements of
its Organization State and Charter Documents and are fully paid and
nonassessable. The Company has not issued or sold any shares of its outstanding
Capital Stock in breach or violation of (a) any applicable federal or state
securities laws, any statutory or contractual preemptive rights, or any other
rights of any kind (including any rights of first offer or refusal), of any
Person or (b) the terms of any of its Derivative Securities which then were
outstanding. No Person has, otherwise than solely by reason of that Person's
right, if any, to vote shares of the Capital Stock of the Company it holds (to
the extent those shares afford their holder any voting rights) any right to vote
on any matter with the holders of Capital Stock of the Company.
Section 4.08. TRANSACTIONS IN CAPITAL STOCK. Except as accurately set
forth in Section 4.08 of the Disclosure Statement: (a) the Company has no fixed
or contingent obligation to purchase, redeem or otherwise acquire or reacquire
any of its equity securities or any interests therein or to pay any dividend or
make any distribution in respect thereof, and (b) no transaction has been
effected, and no action has been taken, respecting the equity ownership of the
Company, in either case in contemplation of the transactions described in this
Agreement.
25
Section 4.09. NO BONUS SHARES. Except as accurately set forth in
Section 4.09 of the Disclosure Statement, no outstanding share of Capital Stock
of the Company was issued for less than its fair market value at the time of its
issuance or was issued in exchange for any consideration other than cash.
Section 4.10. PREDECESSOR STATUS; ETC. Section 4.10 of the Disclosure
Statement accurately lists all the legal and assumed names of all predecessor
companies for the past five years of the Company, including the names of any
Entities from which the Company previously acquired material assets. Except as
accurately disclosed in Section 4.10 of the Disclosure Statement, the Company
has not been a Subsidiary or division of another corporation or a part of an
acquisition that was later rescinded.
Section 4.11. RELATED PARTY AGREEMENTS; RELATED BUSINESS. Except as
set forth in Schedule 4.11, each Related Party Agreement in effect on the date
of this Agreement will have been terminated as of the IPO Closing Date, and no
Related Party Agreement will exist then or thereafter. Except as set forth in
Schedule 4.11, each Stockholder is not, alone or with one or more other Persons,
the controlling Affiliate of any Entity, business or trade (other than the
Company, if a Stockholder is an Affiliate of the Company) that (a) is engaged in
any line of business which is the same as or similar to any line of business in
which the Company is engaged or (b) is, or has within the three-year period
ending on the date of this Agreement, engaged in any transaction or been a party
to any agreement with the Company.
Section 4.12. LITIGATION. Except as accurately disclosed in Section
4.12 of the Disclosure Statement, no Litigation is pending or, to the knowledge
of the Company threatened to which the Company is or may become a party.
Section 4.13. FINANCIAL STATEMENTS; DISCLOSURE.
(a) FINANCIAL STATEMENTS. The Financial Statements
(including in each case the related schedules and notes) delivered to
Purchaser by the Company present fairly, in all material respects, the
financial position of the Company at the respective dates of the balance
sheets included therein and the results of their operations and their
cash flows for the respective periods set forth therein and have been
prepared in accordance with GAAP (except in the case of unaudited
statements for the omission of footnotes and normal year end audit
adjustments). As of the date of each balance sheet included in all
previously delivered Financial Statements, the Company did not have any
outstanding Indebtedness to any Person or any liabilities of any kind
(including contingent obligations, Tax assessments or forward or
long-term commitments), or any unrealized or anticipated loss, which in
the aggregate then were Material to the Company and required to be
reflected in those Financial Statements or in the notes related thereto
in accordance with GAAP which were not so reflected.
(b) DISCLOSURE. To the knowledge of the Company:
26
(i) all Information (other than financial budgets
and projections) concerning the Company that (A) is set forth in
the Disclosure Statement, (B) has been delivered to Purchaser by
or on behalf of the Company pursuant to an express requirement
of this Agreement, or (C) has been furnished to Purchaser by or
on behalf of the Company for inclusion in the Registration
Statement under the captions "THE COMPANY," "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS," "BUSINESS," "MANAGEMENT," and "CERTAIN
TRANSACTIONS" in any prospectus forming a part of the
Registration Statement is, taken together, true and correct in
all material respects and does not contain any untrue statement
of a material fact or omit to state a material fact necessary in
order to make the statements contained therein not materially
misleading in light of the circumstances under which the
statements were made; and
(ii) except as set forth in Section 4.13 of the
Disclosure Schedule, all financial budgets and projections that
have been or are hereafter from time to time prepared by the
Company or any of its Representatives and made available prior
to the Effective Time to Purchaser pursuant to or in connection
with this Agreement, any other Transaction Document or the
transactions contemplated hereby or thereby have been and will
be prepared and furnished to Purchaser in good faith and were
and will be based on facts and assumptions that are believed by
the management of the Company to be reasonable in light of the
then current and reasonably foreseeable business conditions of
the Company and represented and will represent management's good
faith estimate of the projected financial performance of the
Company based on the information available to the Responsible
Officer at the time so furnished (it being acknowledged by
Purchaser that the budgets and projections referred to in this
clause (ii) are derived from judgments made by the Company's
management and are only estimates of future results based on
assumptions made at the time of their preparation, and that
there can be no assurance that the budgets or projections will
be obtained or maintained or that actual results will not be
different from those budgeted or projected).
Section 4.14. COMPLIANCE WITH LAWS.
(a) Except as accurately disclosed in Section 4.14 of the
Disclosure Statement, (i) the Company possesses all necessary licenses,
registrations and qualifications required for the conduct of its
business, and (ii) to the knowledge of the Company, the Company is in
compliance in all material respects with the terms and conditions of all
Governmental Approvals necessary for the ownership or lease and the
operation of its properties (including all the facilities and sites it
owns or holds under any lease) and the carrying on of its business as
now conducted. The Company has identified in Section 4.14 of the
Disclosure Statement all the Governmental Approvals it possesses. To
the knowledge of the Company, all the Governmental Approvals identified
in Section 4.14 of the Disclosure Statement, are valid. Except as
accurately disclosed in Section 4.14 of the Disclosure Statement, the
Company has
27
not received any notice from any Governmental Authority of its intention
to cancel, terminate or not renew any of those Governmental Approvals.
(b) Except as accurately disclosed in Section 4.14 of the
Disclosure Statement, the Company: (i) has been and continues to be in
compliance in all material respects with all Governmental Requirements
applicable to it or any of its presently or previously owned or operated
properties (including all the facilities and sites now or previously
owned or held by it under any lease), businesses or operations, and
(ii)(A) the Company has not received any notice from any Governmental
Authority which asserts, or raises the possibility of assertion of, any
noncompliance by the Company with any Governmental Requirements and
(B) to the knowledge of the Company and the Significant Stockholders, no
condition or state of facts exists which would provide a valid basis for
any such assertion.
Section 4.15. CERTAIN ENVIRONMENTAL MATTERS. Except as accurately
disclosed in Section 4.15 of the Disclosure Statement: (a) to the knowledge of
the Company, the Company has complied, and remains in compliance, with the
provisions of all Environmental Laws applicable to it or any of it presently
owned or operated facilities, sites or other properties, businesses and
operations and which relate to the reporting by the Company of all sites
presently owned or operated by any of it where Solid Wastes, Hazardous Wastes or
Hazardous Substances have been treated, stored, disposed of or otherwise
handled; (b) no release (as defined in the applicable Environmental Laws) at,
from, in or on any site owned or operated by the Company has occurred which, if
all relevant facts were known to the relevant Governmental Authorities,
reasonably could be expected to require remediation to avoid deed record
notices, restrictions, liabilities or other consequences that would not be
applicable if the release had not occurred; (c) the Company has not transported
or arranged for the transportation of any Solid Wastes, Hazardous Wastes or
Hazardous Substances to, or disposed or arranged for the disposition of any
Solid Wastes, Hazardous Wastes or Hazardous Substances at, any off-site location
that could lead to any valid claim against the Company, Purchaser or Newco, as a
potentially responsible party or otherwise, for any clean-up costs, remedial
work, damage to natural resources, personal injury or property damage, including
any claim under CERCLA; and (d) no storage tanks exist, or, to the knowledge of
the Company, has existed, on or under any of the properties owned or operated by
the Company from which any Solid Wastes, Hazardous Wastes or Hazardous
Substances have been released into the surrounding environment. The Company has
provided Purchaser with copies (or if not available, accurate written summaries)
of all environmental investigations, studies, audits, reviews and other analyses
conducted by or on behalf, or which otherwise are in the possession, of the
Company respecting any facility, site or other property now or previously owned
or operated by the Company.
Section 4.16. LIABILITIES AND OBLIGATIONS. Section 4.16 of the
Disclosure Statement accurately lists all present liabilities, of every kind,
character and description and whether accrued, absolute, fixed, contingent or
otherwise, of each of the Company which exceed or reasonably could be expected
to exceed $10,000 and which (a) had been incurred prior to the Current Balance
Sheet Date, but are not reflected on the Current Balance Sheet, or (b) were
incurred after the Current Balance Sheet otherwise than in the ordinary course
of business, and consistent with the past
28
practice, of the Company, in each case other than (i) obligations and
liabilities of the Company in respect of the Company Commitments, (ii)
obligations and liabilities of the Company in respect of each Company ERISA
Benefit Plan, and (iii) obligations and liabilities of the Company set forth
in the Disclosure Statement. Section 4.16 of the Disclosure Statement also
accurately lists and describes, for the Company: (a) each of its outstanding
secured and unsecured Guaranties not constituting its Indebtedness and, for
each of those Guaranties, whether any Stockholder or Related Person or
Affiliate of any Stockholder is a Person whose obligation is covered by that
Guaranty, and (b) for each of the items listed under clause (a) of this
sentence, (i) if that item is secured by any property or asset of the
Company, the nature of the security, and (ii) if that item is covered in
whole or in part by a Guaranty of any Stockholder or any Related Person or
Affiliate of any Stockholder, the name of the guarantor.
Section 4.17. RECEIVABLES; CUSTOMER RETENTION. Except as accurately
set forth in Section 4.17 of the Disclosure Statement, all the accounts and
notes or other advances receivable of the Company reflected on the Current
Balance Sheet were collected, or are, in the good faith belief of the Company's
management, collectible, in the respective amounts so reflected, net of the
reserves, if any, reflected in the Current Balance Sheet. The Company has not
lost any customers or customer accounts in excess of the number of customers
lost by the Company during the twelve month period ended on the Current Balance
Sheet Date, and the Company has no reason to believe that its customers will
terminate their accounts with the Company in excess of the number of customers
lost by the Company during such twelve month period, whether as a result of the
consummation of the transaction contemplated by this Agreement or otherwise.
Section 4.18. OWNED AND LEASED REAL PROPERTIES.
(a) Section 4.18 of the Disclosure Statement accurately
lists and correctly describes in all material respects: (i) all real
properties owned by the Company and, for each of those properties, its
address, the type and square footage of each structure located thereon
and the nature of its use in the business of the Company; (ii) all real
properties of which the Company is the lessee and, for each of those
properties, its address, the type and square footage of each structure
located thereon which the Company is leasing, the annual rental rate,
the expiration date of its lease and the use made of the leased property
in the business of the Company; and (iii) in the case of each real
property listed as being owned, whether it was previously owned, and in
the case of each real property listed as being leased, whether it is
presently owned, by any Stockholder or any of his Related Persons or
Affiliates (other than the Company, if the Stockholder is an Affiliate
of the Company).
(b) The Company has provided Purchaser with true, complete
and correct copies of all title reports and title insurance policies
owned or in the possession of the Company and relating to any of the
real properties identified in Section 4.18 of the Disclosure Statement
as being owned. Except as accurately set forth in that Section or those
reports and policies, and except for Permitted Liens, the Company owns
in fee, and has good, valid and
29
indefeasible title to, free and clear of all Liens, each property listed
in that Section as being owned.
(c) The Company has provided Purchaser with true, correct
and complete copies of all leases under which the Company is leasing
each of the real properties listed in Section 4.18 of the Disclosure
Statement as being leased, and, except as accurately set forth in
Section 4.18 of the Disclosure Statement, (i) each of the listed leases
is, to the knowledge of the Company, valid and binding on the lessor
party thereto, and (ii) the lessee party thereto has not sublet any of
the leased space to any Person other than the Company.
(d) The fixed assets of each of the Company are affixed only
to one or more of the real properties listed in Section 4.18 of the
Disclosure Statement and, except as accurately set forth in that
Section, are well-maintained and adequate for the purposes for which
they presently are being used or held for use, ordinary wear and tear
excepted.
(e) The Company has accurately described, in all material
respects, in Section 4.18 of the Disclosure Statement all plans or
projects involving the opening of new operations, the expansion of any
existing operations or the acquisition of any real property or existing
business, with respect to which management of the Company has made any
expenditure in the two-year period prior to the date of the Agreement in
excess of $25,000, or which if pursued by the Company would require
additional capital expenditures in excess of $25,000.
Section 4.19. OWNED AND LEASED PERSONAL PROPERTY.
(a) Section 4.19 of the Disclosure Statement accurately
lists, in all material respects, of all machinery, equipment and other
personal property with a current net book value of $2,500 or more
included in the Property, Plant and Equipment owned and leased by the
Company, which list states, in the case of each of those properties
listed as being owned, whether it was previously owned, and in the case
of each of those properties listed as being leased, whether it is
presently owned, by any Stockholder or any of his Related Persons or
Affiliates (other than the Company, if the Stockholder is an Affiliate
of the Company).
(b) Except as accurately set forth in Section 4.19 of the
Disclosure Statement and except for Permitted Liens, the Company has
good, valid and indefeasible title to, free and clear of all Liens, each
asset listed in that Section as being owned, free and clear of all
Liens.
(c) The Company has provided Purchaser with true, correct
and complete copies of all leases under which the Company is leasing
each of the properties listed in Section 4.19 of the Disclosure
Statement as being leased and all leases referred to in Section 4.21
and, except as accurately set forth in Section 4.19 of the Disclosure
Statement, (i) each of those leases is, to the knowledge of the Company,
valid and binding on the lessor party thereto,
30
and (ii) the lessee party thereto has not sublet any of the leased
property to any Person other than the Company.
(d) Except as accurately set forth in Section 4.19 of the
Disclosure Statement, all items of machinery, equipment and other
personal property listed therein are in good working order and
condition, ordinary wear and tear excepted, and adequate for the
purposes for which they presently are being used or held for use.
Section 4.20. PROPRIETARY RIGHTS.
(a) Section 4.20(a) of the Disclosure Schedule lists all
Proprietary Rights which are Material to the Company and lists any
proceedings or actions before any court, tribunal (including the United
States Patent and Trademark Office (the "PTO") or equivalent authority
anywhere in the world) related to any of the Proprietary Rights.
(b) Except as set forth in Section 4.20(b) of the Disclosure
Schedule, the Company (i) owns or has the legal right to use all
Proprietary Rights, including all Proprietary Rights licensed to the
Company, that are necessary to the conduct of its business as now
conducted, in each case free of any claims or infringements known to the
Company, (ii) to the knowledge of the Company, is the exclusive owner of
all trademarks and trade names used in connection with the operation or
conduct of the business of the Company, including the sale of any
products or technology or the provision of any services by the Company,
and (iii) to the knowledge of the Company, owns exclusively, and has
good title to, all copyrighted works that are Company products or other
works of authorship that the Company otherwise purports to own.
(c) To the extent that any Proprietary Rights have been
developed or created by any person other than the Company for which the
Company has, directly or indirectly, paid, the Company has a written
agreement with such person with respect thereto and the Company thereby
has obtained ownership of, and is the exclusive owner of, all such
Proprietary Rights by operation of law or by valid assignment.
(d) Except as set forth in Section 4.20(d) of the Disclosure
Schedule, the Company has not transferred ownership of or granted any
license of or right to use or authorized the retention of any rights to
use any of the Proprietary Rights to any other person.
(e) Other than "shrink-wrap" and similar widely available
commercial end-user licenses, the contracts, licenses and agreements
listed in Section 4.20(e) of the Disclosure Schedule include all
contracts, licenses and agreements to which the Company or any Company
Subsidiary is a party with respect to any Proprietary Rights. No person
who has licensed Proprietary Rights to the Company has ownership rights
or license rights to
31
improvements made by the Company in such Proprietary Rights which have
been licensed to the Company.
(f) Section 4.20(f) of the Disclosure Schedule lists all
contracts, licenses and agreements between the Company and any other
person wherein or whereby the Company has agreed to, or assumed, any
obligation or duty to warrant, indemnify, reimburse, hold harmless,
guaranty or otherwise assume or incur any obligation or liability or
provide a right of rescission with respect to the infringement or
misappropriation by the Company or such other person of the Proprietary
Rights of any person other than the Company.
(g) The operation of the business of the Company as it
currently is conducted or is currently contemplated by the Company to be
conducted, including but not limited to the Company's design,
development, use, import, manufacture and sale of the products,
technology or services (including products, technology or services
currently under development) of the Company does not infringe or
misappropriate the Proprietary Rights of any person, violate the rights
of any person (including rights to privacy or publicity), or constitute
unfair competition or trade practices under the laws of any
jurisdiction, and the Company has not received notice from any person
claiming that such operation or any act, product, technology or service
(including products, technology or services currently under development)
of the Company infringes or misappropriates the Proprietary Rights of
any person or constitutes unfair competition or trade practices under
the laws of any jurisdiction (nor is the Company aware of any basis
therefor).
(h) Each item of Registered Proprietary Rights is valid and
subsisting, all necessary registration, maintenance and renewal fees in
connection with such Registered Proprietary Rights have been paid and
all necessary documents and certificates in connection with such
Registered Proprietary Rights have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of
maintaining such Registered Intellectual Property.
(i) There are no contracts, licenses or agreements between
the Company and any other person with respect to Proprietary Rights
under which there is any dispute known to the Company regarding the
scope of such agreement, or performance under such agreement including
with respect to any payments to be made or received by the Company
thereunder.
(j) To the knowledge of the Company, no person is infringing
or misappropriating any of the Proprietary Rights.
(k) The Company has taken commercially reasonable steps to
protect the Company's rights in confidential information and trade
secrets of the Company or provided by any other person to the Company.
32
(l) No Proprietary Rights or product, technology or service
of the Company are subject to any proceeding or outstanding decree,
order, judgment, agreement or stipulation that restricts in any manner
the use, transfer or licensing thereof by the Company or any Company
Subsidiary or may affect the validity, use or enforceability of such
Proprietary Rights.
(m) To the Company's knowledge, no (i) product, technology,
service or publication of the Company, (ii) material published or
distributed by the Company, or (iii) conduct or statement of Company
constitutes obscene material, a defamatory statement or material, false
advertising or otherwise violates any law or regulation.
(n) All of the Company's products will record, store,
process, calculate and present calendar dates falling on and after (and
if applicable, spans of time including) September 9, 1999 and January 1,
2000, and will calculate any information dependent on or relating to
such dates in the same manner, and with the same functionality, data
integrity and performance, as the products record, store, process,
calculate and present calendar dates on or before September 8, 1999 and
December 31, 1999, or calculate any information dependent on or relating
to such dates (collectively, "Year 2000 Compliant"). The Company's
internal computer and technology products and systems are Year 2000
Compliant.
Section 4.21. TITLE TO OTHER PROPERTIES. The Company has good and
valid title to, or holds under a lease valid and binding on the lessor party
thereto, all its tangible personal properties and assets (other than Property,
Plant and Equipment) that individually is or in the aggregate are Material to
the Company in each case, free and clear of all Liens except for Permitted Liens
and as set forth in Section 4.21 of the Disclosure Statement.
Section 4.22. COMMITMENTS.
(a) In Section 4.22(a) of the Disclosure Statement, the
Company has completely and accurately listed each of the following (each
a "COMPANY COMMITMENT") to which the Company is a party or by which any
of its properties is bound and which presently remains executory in
whole or in any part:
(i) each partnership, joint venture or cost-sharing
agreement;
(ii) each guaranty or suretyship, indemnification or
contribution agreement or performance bond;
(iii) each instrument, agreement or other obligation
evidencing or relating to Indebtedness of the Company or to
money lent or to be lent to another Person;
(iv) each contract to purchase or sell real property;
33
(v) each Services Contract for which either the
contract price or the cost of performance will or could
reasonably be expected to exceed $25,000 (each a "MATERIAL
SERVICES CONTRACT");
(vi) each Related Party Agreement involving total
payments within any 12-month period in excess of $10,000 and
which is not terminable without penalty on no more than 30 days'
prior notice;
(vii) each agreement (other than Services Contracts
and routine purchase orders or purchase order acknowledgments
issued or received in the ordinary course of business) for the
acquisition or provision of services, supplies, equipment,
inventory, fixtures or other property involving more than
$25,000 in the aggregate;
(viii) each contract containing any noncompetition
agreement, covenant or undertaking; or
(ix) each other agreement or commitment not made in
the ordinary course of business that is Material to the Company.
True, correct and complete copies of all written Company Commitments,
and true, correct and complete written descriptions of all oral Company
Commitments, have been delivered or made available to Purchaser. Except
as accurately set forth in Section 4.22(a) of the Disclosure Statement:
(i) there are no existing or asserted defaults, events of default or
events, occurrences, acts or omissions that, with the giving of notice
or lapse of time or both, would constitute defaults or events of default
under any Company Commitment which is Material to the Company or, to the
knowledge of the Company, any other party thereto; and (ii) no penalties
have been incurred, nor are amendments pending, with respect to any
Company Commitment which is Material to the Company. The Company
Commitments are in full force and effect and are valid and enforceable
obligations of the Company and, to the knowledge of the Company, the
other parties thereto, in accordance with their respective terms, and no
defenses, off-sets or counterclaims have been asserted or, to the
knowledge of the Company, may be made by any party thereto (other than
by the Company), nor has the Company, as the case may be, waived any
rights thereunder, except as accurately described in Section 4.22 of the
Disclosure Statement.
(b) Except as accurately disclosed in Section 4.22(b) of the
Disclosure Statement or contemplated hereby or by any other Transaction
Document to which the Company or Stockholder is a party: (i) neither the
Company nor any Significant Stockholder has received notice of any plan
or intention of any other party to any Company Commitment to exercise
any right to cancel or terminate any Company Commitment, and neither the
Company nor any Significant Stockholder knows of any condition or state
of facts, including the consummation of the Merger, which would justify
the exercise of such a right; and (ii) neither the Company nor any
Significant Stockholder currently contemplates, or has
34
reason to believe any other Person currently contemplates, any amendment
or change to any Company Commitment.
Section 4.23. CAPITAL EXPENDITURES. Section 4.23 of the Disclosure
Statement accurately sets forth the total amount of capital expenditures
currently budgeted to be incurred by the Company during the balance of the
Company's current and next ensuing fiscal years. Except as accurately set forth
in Section 4.23 of the Disclosure Statement, to the knowledge of the Company and
the Significant Stockholders, no condition or state of facts exists which will
cause the total capital expenditures of the Company which will be required to
replace worn-out or obsolete Property, Plant and Equipment in the Company's
current and next ensuing fiscal years to exceed the amount budgeted for capital
expenditures by the Company for the current and next ensuing fiscal years in
order to maintain the types and levels of sales and services the Company
presently make or provide.
Section 4.24. INSURANCE. Except as accurately set forth in Section
4.24 of the Disclosure Statement: (a) the Company has provided Purchaser with:
(i) a list of all insurance policies carried by each of the Company; (ii) an
accurate list of all insurance loss runs and worker's compensation claims
received for the most recently ended three policy years; and (iii) true,
complete and correct copies of all insurance policies carried by each of the
Company which are in effect, all of which have been issued by insurers of
recognized responsibility and currently are, and will remain without
interruption through the IPO Closing Date, in full force and effect; (b) no
insurance carried by the Company has been canceled by the insurer during the
past five years, and the Company has never been denied coverage; and (c) neither
the Company nor any Significant Stockholder has received any notice or other
communication from any issuer of any listed insurance policy of any material
increase in any deductibles, retained amounts or the premiums payable
thereunder, and, to the knowledge of the Company and the Significant
Stockholders, no such increase in deductibles, retainages or premiums is
threatened.
Section 4.25. EMPLOYEE MATTERS.
(a) CASH COMPENSATION. Section 4.25 of the Disclosure
Statement accurately lists the names, titles and rates of annual Cash
Compensation, at the Current Balance Sheet Date and at the date hereof
(and the portions thereof attributable to salary or the equivalent,
fixed bonuses, discretionary bonuses and other Cash Compensation,
respectively) of all employees who are officers or directors or who have
an annual salary of at least $70,000, nonemployee officers, nonemployee
directors and key consultants and independent contractors of the
Company.
(b) EMPLOYMENT AGREEMENTS. Section 4.25(b) of the
Disclosure Statement accurately lists all Employment Agreements
remaining executory in whole or in part on the date hereof, complete
and correct copies of all of which have been provided to Purchaser by
the Company. The Company is not a party to any oral Employment
Agreement.
35
(c) OTHER COMPENSATION PLANS. Section 4.25(c) of the
Disclosure Statement accurately lists all Other Compensation Plans
either remaining executory at the date of this Agreement or to later
become effective. The Company has provided Purchaser with a true,
correct and complete copy of each of the listed Other Compensation Plans
that is in writing and an accurate description of each of the listed
Other Compensation Plans that is not written. Except as accurately set
forth in Section 4.26(c) of the Disclosure Statement, each of the Other
Compensation Plans, including each that is a Welfare Plan, may be
unilaterally amended or terminated by the Company or any Company
Subsidiary without liability to any of them, except as to benefits
accrued thereunder prior to amendment or termination.
(d) ERISA BENEFIT PLANS. The Company has no, and has never
had any, ERISA Employee Benefit Plan, ERISA Pension Benefit Plan and
ERISA Affiliate Pension Plan. Except as accurately set forth in Section
4.26(d) of the Disclosure Statement, (i) the Company is not and has
never been a member of any ERISA Group that currently includes, or
included when the Company was a member, among its members any Person
other than the Company, and (ii) no Person is an ERISA Affiliate of the
Company (other than the Company).
(e) EMPLOYEE POLICIES AND PROCEDURES. Section 4.25(e) of
the Disclosure Statement accurately lists all Employee Policies and
Procedures. The Company has provided Purchaser with a copy of all
Material written Employee Policies and Procedures and a written
description of all Material unwritten Employee Policies and Procedures
the continuance or discontinuance of which could reasonably be expected
to have a Material Adverse Effect.
(f) UNWRITTEN AMENDMENTS. Except as accurately described in
Section 4.25(f) of the Disclosure Statement, no material unwritten
amendments have been made, whether by oral communication, pattern of
conduct or otherwise, with respect to any of the Employment Agreements,
Other Compensation Plans or Employee Policies and Procedures.
(g) LABOR COMPLIANCE. The Company has been and is in
compliance in all material respects with all applicable Governmental
Requirements respecting employment and employment practices, terms and
conditions of employment and wages and hours, and the Company is not
liable for any arrears of wages or penalties for failure to comply with
any of the foregoing. The Company has not engaged in any unfair labor
practice or discriminated on the basis of race, color, religion, sex,
national origin, age, disability or handicap in its employment
conditions or practices. Except as accurately set forth in Section
4.25(g) of the Disclosure Statement, to the knowledge of the Company
there are no (i) unfair labor practice charges or complaints or racial,
color, religious, sex, national origin, age, disability or handicap
discrimination charges or complaints pending or, to the knowledge of the
Company, threatened against the Company before any Governmental
Authority (nor, to the knowledge of the Company, does any valid basis
therefor exist) or (ii) existing or, to the knowledge of the Company,
threatened labor strikes, disputes, grievances, controversies or
36
other labor troubles affecting the Company (nor, to the knowledge of the
Company, does any valid basis therefor exist).
(h) UNIONS. Neither the Company nor any ERISA Affiliate has
ever been a party to any agreement with any union, labor organization or
collective bargaining unit. No employees of the Company are represented
by any union, labor organization or collective bargaining unit. Except
as accurately set forth in Section 4.25(h) of the Disclosure Statement,
to the knowledge of the Company, none of the employees of the Company
has threatened to organize or join a union, labor organization or
collective bargaining unit.
(i) NO ALIENS. All employees of each of the Company are
citizens of, or are authorized in accordance with federal immigration
laws to be employed in, the United States.
(j) CHANGE OF CONTROL BENEFITS. Except as accurately set
forth in Section 4.25(j) of the Disclosure Statement, the Company is not
a party to any agreement, or has established any policy, practice or
program, requiring it to make a payment or provide any other form of
compensation or benefit or vesting rights to any person performing
services for the Company which would not be payable or provided in the
absence of this Agreement or the consummation of the transactions
contemplated by this Agreement, including any parachute payment under
Section 280G of the Code.
(k) RETIREES. The Company has no obligation or commitment
to provide medical, dental or life insurance benefits to or on behalf of
any of its employees who may retire or any of its former employees who
have retired except (i) as may be required pursuant to the continuation
of coverage provisions of Section 4980B of the Code, the applicable
parallel provisions of ERISA and any applicable state law,
(ii) continuation of benefits in the event of disability, and
(iii) conversion privileges provided under any insured Company ERISA
Employee Benefit Plans.
Section 4.26. TAXES.
(a) Each of the following representations and warranties in
this Section 4.26 is qualified to the extent set forth in Section 4.26
of the Disclosure Statement.
(b) All Returns required to be filed with respect to any Tax
for which the Company is liable have been duly and timely filed with the
appropriate Taxing Authority, each Tax shown to be payable on each such
Return has been paid, each Tax payable by the Company by assessment has
been timely paid in the amount assessed, and adequate reserves have been
established on the books of the Company for all Taxes for which the
Company is liable, but the payment of which is not yet due. The Company
is not and never has been, liable for any Tax payable by reason of the
income or property of a Person other than the Company. The Company has
timely filed true, correct and complete declarations of estimated Tax in
each jurisdiction in which any such declaration is required to be filed
by it.
37
No Liens for Taxes exist upon the assets of the Company except Liens for
Taxes which are not yet due. The Company has not, and never has been,
subject to Tax in any jurisdiction outside of the United States. No
Litigation with respect to any Tax for which the Company is asserted to
be liable is pending or, to the knowledge of the Company, threatened,
and no basis which the Company believes to be valid exists on which any
claim for any such Tax can be asserted against the Company. There are
no requests for rulings or determinations in respect of any Taxes
pending between the Company and any Taxing Authority. No extension of
any period during which any Tax may be assessed or collected and for
which the Company is or may be liable has been granted to any Taxing
Authority. The Company is not or has not been a party to any tax
allocation or sharing agreement. All amounts required to be withheld by
the Company and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes
have been collected or withheld and paid to the proper Taxing Authority.
The Company has made all deposits required by law to be made with
respect to employees' withholding and other employment Taxes.
(c) The Company has not filed a consent pursuant to Section
341(f) of the Code or any comparable provision of any other tax statute
and has not agreed to have Section 341(f)(2) of the Code or any
comparable provision of any other Tax statute apply to any disposition
of an asset. No asset of the Company is subject to any provision of
applicable law which eliminates or reduces the allowance for
depreciation or amortization in respect of that asset below the
allowance generally available to an asset of its type. No accounting
method changes of the Company exists or is proposed or threatened which
could give rise to an adjustment under Section 481 of the Code.
Section 4.27. GOVERNMENT CONTRACTS. Except as accurately set forth in
Section 4.27 of the Disclosure Statement, the Company is not a party to any
governmental contract subject to price redetermination or renegotiation.
Section 4.28. ABSENCE OF CHANGE. Since the Current Balance Sheet
Date, except as accurately set forth in Section 4.28 of the Disclosure
Statement, none of the following has occurred with respect to the Company:
(a) any circumstance, condition, event or state of facts
(either singly or in the aggregate), other than conditions affecting the
economy generally or the industry in which the Company operates, which
has caused, is causing or could reasonably be expected to cause a
Material Adverse Effect on the Company;
(b) any change in its authorized Capital Stock or in any of
its outstanding Capital Stock or Derivative Securities;
(c) any Restricted Payment, except any declaration or
payment of dividends by any Company Subsidiary solely to the Company;
38
(d) any increase in, or any commitment or promise to
increase, the rates of Cash Compensation as of the date hereof, or the
amounts or other benefits paid or payable under any ERISA Pension
Benefit Plan or Other Compensation Plan, except for ordinary and
customary bonuses and salary increases for employees (other than the
Stockholders or their Immediate Family Members) at the times and in the
amounts consistent with its past practice;
(e) any work interruptions, labor grievances or claims
filed, or any similar event or condition of any character, that will
have a Material Adverse Effect on the Surviving Corporation following
the Effective Time;
(f) any distribution, sale or transfer of, or any Company
Commitment to distribute, sell or transfer, any of its assets or
properties of any kind which singly is or in the aggregate are Material
to the Company, other than distributions, sales or transfers in the
ordinary course of its business and consistent with its past practices
to Persons other than to the Stockholders and their Immediate Family
Members and Affiliates;
(g) any cancellation, or agreement to cancel, any
Indebtedness, obligation or other liability owing to it, including any
Indebtedness, obligation or other liability of any Stockholder or any
Related Person or Affiliate thereof, provided that the Company may
negotiate and adjust bills in the course of good faith disputes with
customers in a manner consistent with past practice, if the adjustments
are (i) included in the Supplemental Information provided Purchaser
pursuant to Section 6.07 or (ii) do exceed $10,000 in the aggregate;
(h) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of its
assets, property or rights or requiring consent of any Person to the
transfer and assignment of any such assets, property or rights;
(i) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of its business or not consistent with
its past practices;
(j) any waiver of any of its rights or claims that singly is
or in the aggregate are Material to the Company;
(k) any transaction by it outside the ordinary course of its
business or not consistent with its past practices and which involves in
excess of $10,000;
(l) any incurrence by it of any Indebtedness or any Guaranty
not constituting its Indebtedness, or any Company Commitment to incur
any Indebtedness or any such Guaranty;
39
(m) any investment in the Capital Stock, Derivative
Securities or Indebtedness of any Person, other than a Permitted
Investment;
(n) except in accordance with the Company's capital
expenditure budget for the Company's current fiscal year, any capital
expenditure or series of related capital expenditures by the Company
collectively in excess of $25,000, or commitments by the Company to make
capital expenditures totaling in excess of $25,000; or
(o) any cancellation or termination of a Material Agreement
of the Company.
Section 4.29. BANK RELATIONS; POWERS OF ATTORNEY. Section 4.29 of the
Disclosure Statement accurately lists and identifies:
(a) the name of each financial institution in which the
Company has borrowing or investment arrangements, deposit or checking
accounts or safe deposit boxes;
(b) the types of those arrangements and accounts, including,
as applicable, names in which accounts or boxes are held, the account or
box numbers and the name of each Person authorized to draw thereon or
have access thereto; and
(c) the name of each Person holding a general or special
power of attorney from the Company and a description of the terms of
each such power.
Section 4.30. NO BROKERS. Except as set forth on Section 4.30 of the
Disclosure Schedule, the Company and the Significant Stockholders have not,
directly or indirectly, in connection with this Agreement or the transactions
contemplated hereby, employed any broker, finder or agent, or agreed to pay or
incurred any obligation to pay any broker's or finder's fee, any sales
commission or any similar form of compensation.
Section 4.31. COUNSEL. The Company has been represented by and the
Significant Stockholders have been given the opportunity to obtain the advice of
attorneys, accountants and other counsel of their own choosing, and have not
relied in any way on any statements, advice or opinion, whether written or oral,
of the Counsel for Purchaser and Newco with respect to this Agreement, the
transactions contemplated hereby and any actual or potential consequences,
including any actual or potential Tax consequences, hereof and thereof on the
Purchaser, Newco, the Company, the Stockholder or the Significant Stockholders.
40
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND NEWCO
Section 5.01. BY PURCHASER AND NEWCO. Purchaser and Newco jointly and
severally represent and warrant to the Company and each Stockholder that all the
following representations and warranties in this Article V are true and correct:
(a) Newco is a corporation duly organized, validly existing and in good standing
under the laws of the State of Texas, (b) no Derivative Securities of Newco are
outstanding, and (c) Newco has been organized for the sole purpose of
participating in the Merger and has not, and will not, engage in any activities
other than those necessary to effectuate the Merger.
Section 5.02. ORGANIZATION; POWER. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and each of Purchaser and Newco has all requisite corporate power and
authority under the laws of its Organization State and its Charter Documents to
own or lease and to operate its properties presently and following the Effective
Time and to carry on its business as now conducted and as proposed to be
conducted following the Effective Time. Neither Purchaser nor Newco has engaged
in any operations since its organization other than in connection with their
formation and capitalization and the transactions contemplated by this Agreement
and the Other Agreements.
Section 5.03. AUTHORIZATION; ENFORCEABILITY; ABSENCE OF CONFLICTS;
REQUIRED CONSENTS.
(a) The execution, delivery and performance by each of
Purchaser and Newco of this Agreement and each other Transaction
Document to which it is a party, and the effectuation of the Merger and
the other transactions contemplated hereby and thereby, are within its
corporate power under its Charter Documents and the applicable
Governmental Requirements of its Organization State and have been duly
authorized by all proceedings, including actions permitted to be taken
in lieu of proceedings, required under its Charter Documents and the
applicable Governmental Requirements of its Organization State.
(b) This Agreement has been, and each of the other
Transaction Documents to which either of Purchaser or Newco is a party,
when executed and delivered to the other parties thereto (or, in the
case of the Certificate of Merger, the applicable Governmental
Authorities), will have been, duly executed and delivered by it and is,
or when so executed and delivered will be, its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except
as enforceability may be (i) limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and (ii) subject to general
principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).
(c) The execution, delivery and performance in accordance
with their respective terms by each of Purchaser and Newco of the
Transaction Documents to which it is a party
41
do not and will not (i) violate, breach or constitute a default under
(A) the Charter Documents of Purchaser or Newco, (B) any Governmental
Requirement applicable to Purchaser or Newco or (C) any Material
Agreement of Purchaser or Newco, (ii) result in the acceleration or
mandatory prepayment of any Indebtedness, or any Guaranty not
constituting Indebtedness, of Purchaser or Newco or afford any holder
of any of that Indebtedness, or any beneficiary of any of those
Guaranties, the right to require Purchaser or Newco to redeem, purchase
or otherwise acquire, reacquire or repay any of that Indebtedness, or to
perform any of those Guaranties, (iii) cause or result in the imposition
of, or afford any Person the right to obtain, any Lien upon any property
or assets of Purchaser or Newco (or upon any revenues income or profits
of either Purchaser or Newco therefrom) or (iv) result in the
revocation, cancellation, suspension or material modification, in any
single case or in the aggregate, of any Governmental Approval possessed
by Purchaser or Newco at the date of this Agreement and necessary for
the ownership or lease and the operation of its properties or the
carrying on of its business as now conducted, including any necessary
Governmental Approval under each applicable Environmental Law.
(d) Except for (i) the filing of the Certificate of Merger
with the applicable Governmental Authorities, (ii) filings of the
Registration Statement under the Securities Act and a registration
statement on Form 8-A with respect to the registration of the Purchaser
Common Stock under the Exchange Act and the SEC order declaring those
registration statements effective under the Securities Act and the
Exchange Act, respectively, and (iii) as may be required by the HSR Act
or the applicable state securities or blue sky laws, no Governmental
Approvals are required to be obtained, and no reports or notices to or
filings with any Governmental Authority are required to be made, by
Purchaser or Newco for the execution, delivery or performance by
Purchaser or Newco of the Transaction Documents to which it is a party,
the enforcement against Purchaser or Newco, as the case may be, of its
obligations thereunder or the effectuation of the Merger and the other
transactions contemplated thereby.
Section 5.04. CHARTER DOCUMENTS. Purchaser has delivered to the
Company true, complete and correct copies of the Charter Documents of each of
Purchaser and Newco. No breach or violation of any Charter Document of either
Purchaser or Newco has occurred and is continuing.
Section 5.05. CAPITAL STOCK OF PURCHASER AND NEWCO.
(a) Immediately prior to the Effective Time, (i) the
authorized Capital Stock of Purchaser will be comprised of
(A) 25,000,000 shares of Purchaser Common Stock and (B) 3,000,000 shares
of preferred stock, $.0001 par value per share, (ii) before giving
effect to the Merger and the merger transactions contemplated by the
Other Agreements, (A) the number of shares of Purchaser Common Stock
then issued and outstanding, will be as set forth in the Registration
Statement when it becomes effective under the Securities Act, (B) no
shares of the Purchaser preferred stock then will be issued or
outstanding, and (C) Purchaser will have authorized and reserved for
issuance, pursuant to Other
42
Compensation Plans or the exercise of Derivative Securities the number
of shares of Purchaser Common Stock set forth in the Registration
Statement when it becomes effective under the Securities Act.
(b) The authorized Capital Stock of Newco is comprised of
1,000 shares of Newco Common Stock, all of which shares are issued,
outstanding and owned, of record and beneficially, by Purchaser.
(c) All shares of Purchaser Common Stock and Newco Common
Stock outstanding immediately prior to the Effective Time, and all
shares of Purchaser Common Stock to be issued pursuant to Section 2.04,
when issued, will have been duly authorized and validly issued in
accordance with the DGCL and their issuer's Charter Documents, and will
be fully paid and nonassessable. None of the shares of Purchaser Common
Stock to be issued pursuant to Section 2.04 will, when issued, have been
issued in breach or violation of (i) any applicable statutory or
contractual preemptive rights, or any other rights of any kind
(including any rights of first offer or refusal), of any Person or
(ii) the terms of any of its Derivative Securities then outstanding.
Section 5.06. SUBSIDIARIES. Immediately prior to the IPO Closing
Date, (a) Purchaser will have no Subsidiaries other than Newco and each Entity
defined as "Newco" in each of the Other Agreements, (b) Newco will have no
Subsidiaries, and (c) neither Purchaser nor Newco will own, of record or
beneficially, directly or indirectly through any Person or otherwise (except
pursuant hereto or to the Other Agreements), any Capital Stock or Derivative
Securities of any Entity not described in this Section 5.06 as a Subsidiary of
Purchaser (in the case of Purchaser) or any Entity (in the case of Newco).
Section 5.07. LIABILITIES. Except as disclosed in the Private
Placement Memorandum, neither Purchaser nor Newco has any material liabilities
of any kind other than those incurred in connection with this Agreement and the
Other Agreements and the transactions contemplated hereby and thereby, including
the IPO.
Section 5.08. COMPLIANCE WITH LAWS; NO LITIGATION. Each of Purchaser
and Newco is in compliance with all Governmental Requirements applicable to it,
and no Litigation is pending or, to the knowledge of Purchaser, threatened to
which Purchaser or Newco is or may become a party which questions or involves
the validity or enforceability of any obligation of Purchaser or Newco under any
Transaction Document, or which seeks (or reasonably may be expected to seek)
(a) to prevent or delay consummation by Purchaser or Newco of the transactions
contemplated by this Agreement to be consummated by Purchaser or Newco, as the
case may be, or (b) Damages from Purchaser or Newco in connection with any such
consummation.
Section 5.09. NO BROKERS. Purchaser has not, directly or indirectly,
in connection with this Agreement or the transactions contemplated hereby,
employed any broker, finder or agent, or agreed
43
to pay or incurred any obligation to pay any broker's or finder's fee, any
sales commission or any similar form of compensation.
Section 5.10. PRIVATE PLACEMENT MEMORANDUM. At the date hereof, the
Private Placement Memorandum (other than the historical financial statements,
including the notes thereto, of the Founding Companies (other than the Company)
and the historical information contained therein respecting the Company and the
Stockholders, to which this Section 5.10 does not apply) does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein not materially misleading in
the light of the circumstances under which those statements are made.
Section 5.11. REGISTRATION AND OTHER RIGHTS. Except as set forth in
the Private Placement Memorandum or the Registration Statement, at the Effective
Time Purchaser will have no (a) commitment to any Person to cause securities of
Purchaser to be registered under the Securities Act or the securities laws of
any state, (b) outstanding Derivative Securities, or (c) outstanding agreements
or commitments of any character committing Purchaser to issue or acquire shares
of its Capital Stock or Derivative Securities.
Section 5.12. COUNSEL. Purchaser and Newco have been represented by
attorneys, accountants and other counsel of their own choosing, and have not
relied in any way on any statements, advice or opinion, whether written or oral,
of Counsel for the Company and the Stockholders with respect to this Agreement,
the transactions contemplated hereby and any actual or potential consequences,
including any actual or potential Tax consequences, hereof and thereof on
Purchaser and Newco.
ARTICLE VI
COVENANTS EXTENDING TO THE EFFECTIVE TIME
Section 6.01. ACCESS AND COOPERATION; DUE DILIGENCE.
(a) From the date of this Agreement until the IPO Closing
Date, the Company, for the benefit of Purchaser and each Other Founding
Company, will (i) afford to the Representatives of Purchaser and each
Other Founding Company reasonable access to all the key employees,
sites, properties, books and records of the Company, (ii) provide
Purchaser with such additional financial and operating data and other
information relating to the business and properties of the Company as
Purchaser or any Other Founding Company may from time to time reasonably
request, and (iii) cooperate with Purchaser and each Other Founding
Company and their respective Representatives in the preparation of any
documents or other material which may be required in connection with any
Transaction Documents or any Other Transaction Documents. Each
Stockholder and the Company agree, for the benefit of Purchaser and each
Other Founding Company, that they will treat all Confidential
44
Information obtained by them in connection with the negotiation and
performance of this Agreement or the due diligence investigations
conducted with respect to each Other Founding Company as confidential in
accordance with the provisions of Section 12.01. In addition, Purchaser
will cause each Other Founding Company to enter into a provision
identical to this Section 6.01 to require each Other Founding Company to
keep confidential any Confidential Information respecting the Company
obtained by that Other Founding Company.
(b) Each of the Company and the Stockholders will use its
commercially reasonable best efforts to secure, as soon as practicable
after the execution of this Agreement, all approvals or consents of
third Persons as may be necessary to consummate the transactions
contemplated hereby.
(c) From the date hereof until the IPO Closing Date,
Purchaser and Newco will (i) afford to the Representatives of the
Company and the Stockholders access to all sites, properties, books and
records of Purchaser and Newco, (ii) provide the Company with such
additional financial and operating data and other information relating
to the business and properties of Purchaser and Newco as the Company or
any Stockholder may from time to time reasonably request, and
(iii) cooperate with the Company and the Stockholders and their
respective Representatives in the preparation of any documents or other
material which may be required in connection with any Transaction
Documents.
(d) If this Agreement is terminated pursuant to Section
12.01, Purchaser promptly will return all written Confidential
Information of the Company it then possesses to the Company.
Section 6.02. CONDUCT OF BUSINESS PENDING CLOSING. From the date of
this Agreement until the Effective Time, the Company will, except as and only to
the extent set forth in Schedule 6.02:
(a) carry on its businesses in substantially the same manner
as it has before, and not introduce any material new method of
management, operation or accounting;
(b) maintain its properties and facilities, including those
held under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
(c) perform all its obligations under agreements relating to
or affecting its assets, properties and other rights;
(d) keep in full force and effect, without interruption, all
its present insurance policies or other comparable insurance coverage;
45
(e) use reasonable commercial efforts to (i) maintain and
preserve its business organization intact, (ii) retain its present
employees, and (iii) maintain its relationships with suppliers,
subcontractors, customers and others having business relations with it;
(f) comply with all applicable Governmental Requirements;
and
(g) except as required or expressly permitted by this
Agreement, maintain the instruments and agreements governing its
outstanding Indebtedness and leases on their present terms and not enter
into new or amended Indebtedness or lease instruments or agreements
involving amounts over $5,000 in any case or $25,000 in the aggregate,
without the prior written consent of Purchaser (which consent will not
be unreasonably withheld).
Section 6.03. PROHIBITED ACTIVITIES. From the date of this Agreement
until the Effective Time, without the prior written consent of Purchaser (which
will not be unreasonably withheld) or unless as required or expressly permitted
by this Agreement, the Company will not (other than as provided in Schedule
6.03):
(a) make any change in its Charter Documents;
(b) issue any of its Capital Stock or issue or otherwise
create any of its Derivative Securities;
(c) make any Restricted Payment;
(d) make any investments (other than Permitted Investments)
in the Capital Stock, Derivative Securities or Indebtedness of any
Person;
(e) enter into any contract or commitment (other than an
Services Contract) or incur or agree to incur any liability or make any
capital expenditures in a single transaction or a series of related
transactions involving an aggregate amount of more than $25,000
otherwise than in the ordinary course of its business and consistent
with its past practice;
(f) increase or commit or promise to increase the Cash
Compensation payable or to become payable to any officer, director,
stockholder, employee or agent, consultant or independent contractor of
the Company or make any discretionary bonus or management fee payment to
any such Person, except bonuses or salary increases to employees (other
than the Stockholders or their Immediate Family Members) at the times
and in the amounts consistent with its past practice;
(g) create or assume any Liens (other than Permitted Liens)
upon any of its assets or properties, whether now owned or hereafter
acquired, except for purchase money Liens incurred in connection with
the acquisition of equipment with an aggregate cost not
46
in excess of $10,000 and necessary or desirable for the conduct of the
business of the Company;
(h) adopt, establish, amend or terminate any ERISA Employee
Benefit Plan, or any Other Compensation Plan or Employee Policies and
Procedures, or take any discretionary action, or omit to take any
contractually required action, if that action or omission could either
(i) deplete the assets of any ERISA Employee Benefit Plan or any Other
Compensation Plan or (ii) increase the liabilities or obligations under
any such plan;
(i) sell, assign, lease or otherwise transfer or dispose of
any of its owned or leased Property, Plant or Equipment otherwise than
in the ordinary course of its business and consistent with its past
practice;
(j) negotiate for the acquisition of any business or the
start-up of any new business;
(k) merge, consolidate or effect a share exchange with, or
agree to merge, consolidate or effect a share exchange with, any other
Entity;
(l) waive any of its material rights or claims, provided
that it may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice, but
such adjustments will not be deemed to be included in Section 4.17 of
the Disclosure Statement unless specifically listed in the Supplemental
Information;
(m) commit a material breach of or amend materially or
terminate any Material Agreement of the Company or any of its
Governmental Approvals; or
(n) enter into any other transaction (i) outside the
ordinary course of its business and consistent with its past practice or
(ii) prohibited hereby.
Section 6.04. NO SHOP: RELEASE OF DIRECTORS.
(a) Each of the Company and the Stockholders agrees that,
from the date of this Agreement until the Effective Time, neither the
Company nor any Stockholder, nor any of their respective officers and
directors shall, and the Company and each Stockholder will direct and
use their best efforts to cause each of their respective Representatives
not to, initiate, solicit or encourage, directly or indirectly, any
inquiries or the making or implementation of any proposal or offer
(including any proposal or offer to the Stockholders) with respect to a
merger, acquisition, consolidation or similar transaction involving, or
any purchase of all or any significant portion of the assets or any
equity securities of, the Company (any such proposal or offer being
herein called an "ACQUISITION PROPOSAL") or engage in any activities,
discussions or negotiations concerning, or provide any Confidential
Information respecting, the Company, any Other Founding Company or
Purchaser to, or
47
have any discussions with, any Person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal. The Company and each Stockholder
will: (i) immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons previously
conducted with respect to any of the foregoing, and each will take the
steps necessary to inform the Persons referred to in the first sentence
of this Section 6.04(a) of the obligations undertaken in this Section
6.04(a); and (ii) notify Purchaser immediately if any such inquiries
or proposals are received by, any such information is requested from or
any such discussions or negotiations are sought to be initiated or
continued with the Company or any Stockholder.
(b) Each of the Company and the Stockholders hereby
(i) waives every right, if any, the Governmental Requirements of the
Company's Organization State afford the Company or Stockholders to
require the Company's directors (or their equivalents if the Company is
not a corporation), in the exercise of their fiduciary duties in their
capacity as such, to engage in any of the activities prohibited by this
Section 6.04 and (ii) releases each such person from any and all
liability he might otherwise have to the Company or any Stockholders but
for this release.
Section 6.05. NOTIFICATION OF CERTAIN MATTERS. The Stockholders and
the Company shall give prompt notice to Purchaser of (a) the existence or
occurrence of each condition or state of facts which becomes known to them and
which will or reasonably could be expected to cause any representation or
warranty of the Company or any Stockholder contained herein to be untrue or
incorrect in any material respect at or prior to the Closing or on the IPO
Closing Date and (b) any material failure of any Stockholder or the Company to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by that Person hereunder. Purchaser shall give prompt notice to
the Company of (a) the existence or occurrence of each condition or state of
facts which will or reasonably could be expected to cause any representation or
warranty of Purchaser or Newco contained herein to be untrue or inaccurate at or
prior to the Closing or on the IPO Closing Date and (b) any material failure of
Purchaser or Newco to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder. The delivery of any
notice pursuant to this Section 6.05 shall not be deemed to (a) modify the
representations or warranties herein of the party delivering that notice, or any
other party, which modification may be made only pursuant to Section 6.06,
(b) modify the conditions set forth in Article VII or (c) limit or otherwise
affect the remedies available hereunder to the party receiving that notice.
Section 6.06. SUPPLEMENTAL INFORMATION. Each of the Company and the
Stockholders agrees that, with respect to its representations and warranties
contained in this Agreement, it will have the continuing obligation until the
Closing to provide Purchaser promptly with such additional supplemental
Information (collectively, the "SUPPLEMENTAL INFORMATION"), in the form of
(a) amendments to then existing Schedules or Sections of the Disclosure
Statement or (b) additional Schedules or Sections of the Disclosure Statement,
as would be necessary, in the light of the circumstances, conditions, events and
states of facts then known to the Company or any Stockholder, to make each of
those representations and warranties true and correct as of the Closing and on
the
48
IPO Closing Date. For purposes only of determining whether the conditions
to the obligations of Purchaser and Newco which are specified in Sections
7.04(a)(i) and 7.04(b)(ii) have been satisfied, and not for any purpose under
Article IX, the Schedules and the Disclosure Statement as of the Closing and on
the IPO Closing Date shall be deemed to be the Schedules and the Disclosure
Statement as of the date hereof as amended or supplemented by the Supplemental
Information provided to Purchaser prior to the Closing pursuant to this
Section 6.06; PROVIDED, HOWEVER, that if the Supplemental Information so
provided discloses the existence of circumstances, conditions, events or states
of facts which, in any combination thereof, (a) have had a Material Adverse
Effect on the Company which was not reflected in the determination of the Merger
Consideration or, in the judgment of Purchaser (which shall be conclusive for
purposes of this Section 6.06 and Article XII, but not for any purpose of
Article IX), (b) are having or will have a Material Adverse Effect on the
Company or the Surviving Corporation, as the case may be, Purchaser will be
entitled to terminate this Agreement pursuant to Section 11.01(a)(iv) and to
treat as Purchaser Indemnified Losses for all purposes of Article IX (which
treatment will not prejudice the right of any Stockholder under Article IX to
contest Damage Claims made by Purchaser in respect of those Purchaser
Indemnified Losses) all Damages to the Company or the Surviving Corporation
which are attributable to the circumstances, conditions, events and states of
facts first disclosed herein after the date hereof in the Supplemental
Information; and PROVIDED FURTHER, HOWEVER, that if the circumstances,
conditions, events or states of facts disclosed in the Supplemental Information
and having or judged to have in the future such a Material Adverse Effect
(A) have not resulted from a breach by the Company or the Stockholders of any of
their covenants set forth in Article VI or elsewhere in this Agreement and
(B) do not indicate that any representation or warranty of the Stockholders and
the Company made in Articles III and IV shall have been untrue or inaccurate at
the date of this Agreement, then Purchaser shall only be entitled to terminate
this Agreement pursuant to Section 11.01(a)(iv), and shall not be entitled to
treat as Purchaser Indemnified Losses any such Damages to the Company or the
Surviving Corporation. Purchaser will provide the Company with copies of the
Registration Statement, including all pre-effective amendments thereto, promptly
after the filing thereof with the SEC under the Securities Act.
Section 6.07. COOPERATION IN CONNECTION WITH THE IPO. The Company and
the Stockholders will (a) provide Purchaser and the Underwriter with all the
Information concerning the Company or any of the Stockholders which is
reasonably requested by Purchaser and the Underwriter from time to time in
connection with effecting the IPO and (b) cooperate with Purchaser and the
Underwriter and their respective Representatives in the preparation and
amendment of the Registration Statement (including the Financial Statements) and
in responding to the comments of the SEC staff, if any, with respect thereto.
The Company and each Stockholder agree promptly to (a) advise Purchaser if, at
any time during the period in which a prospectus relating to the IPO is required
to be delivered under the Securities Act, any information contained in the then
current Registration Statement prospectus concerning the Company, any Company
Subsidiary or the Stockholders becomes incorrect or incomplete in any material
respect and (b) provide Purchaser with the information needed to correct or
complete that information.
49
Section 6.08. HSR ACT MATTERS. If Purchaser shall determine that
filings under the HSR Act are necessary or appropriate in connection with the
effectuation of the Merger or the consummation of the acquisitions contemplated
by the Other Agreements, and advises the Company in writing of that
determination, the Company promptly will compile and file under the HSR Act such
information respecting it as the HSR Act requires of an Entity to be acquired,
and the expiration or termination of the applicable waiting period and any
extension thereof under the HSR Act shall be deemed a condition precedent set
forth in Section 7.02(b).
ARTICLE VII
THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION
Section 7.01. THE CLOSING AND CERTAIN CONDITIONS. On or before the
IPO Pricing Date, the Parties will take all actions necessary to (i) effect the
Merger on the IPO Closing Date (including, as permitted by the Business
Corporation Act, (A) the execution of a Certificate of Merger meeting the
requirements of the Business Corporation Act and providing that the Merger will
become effective on the IPO Closing Date and (B) the filing of the Certificate
of Merger with the Secretary of State of the State of Texas), (ii) verify the
existence and ownership of the certificates evidencing the Company Common Stock
to be exchanged for the Merger Consideration pursuant to Section 2.05, and
(iii) satisfy the document delivery requirements to which the obligations of the
Parties to effect the Merger and the other transactions contemplated hereby are
conditioned by the provisions of this Article VII (all those actions
collectively being the "CLOSING"). The Closing will take place at the offices
of Xxxxxx & Xxxxxx, L.L.P., 000 Xxxxxxxxx, Xxxxxxx, Xxxxx at 10:00 a.m., Houston
time, or at such later time on the IPO Pricing Date as Purchaser shall specify
by written notice to the Company. The actions taken at the Closing will not
include the completion of either the Merger or the delivery of the Company
Common Stock or the Merger Consideration pursuant to Section 2.05. Instead, on
the IPO Closing Date, the Certificate of Merger will become effective pursuant
to Section 2.02, and all transactions contemplated by this Agreement to be
closed or completed on or before the IPO Closing Date, including the surrender
of the Company Common Stock in exchange for the Merger Consideration will be
closed or completed, as the case may be. During the period from the Closing to
the IPO Closing Date, this Agreement may be terminated by the parties only
pursuant to Section 11.01 (b)(i).
Section 7.02. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY.
(a) The obligation of each Party to take the actions
contemplated to be taken by that Party at the Closing is subject to the
satisfaction or waiver of each of the following conditions on or before
the date of the Closing:
(i) NO LITIGATION. No Litigation shall be pending
on the date of the Closing to restrain, prohibit or otherwise
interfere with, or to obtain material
50
damages or other relief from Purchaser or the Surviving
Corporation in connection with, the consummation of the Merger
or the IPO;
(ii) GOVERNMENTAL APPROVALS. All Governmental
Approvals (other than the acceptance for filing of the
Certificate of Merger) required to be obtained by any of the
Company, Purchaser and Newco in connection with the consummation
of the Merger and the IPO shall have been obtained; and
(iii) THE REGISTRATION STATEMENT. (A) The
Registration Statement shall have been declared effective under
the Securities Act by the SEC; (B) no stop order suspending the
effectiveness of the Registration Statement shall have been
issued by the SEC, and the SEC shall not have initiated or
threatened to initiate Litigation for that purpose; (C) the
Underwriter shall have agreed in writing (the "UNDERWRITING
AGREEMENT," which term includes the related pricing agreement,
if any) to purchase from Purchaser on a firm commitment basis
for resale to the public initially at the IPO Price, subject to
the conditions set forth in the Underwriting Agreement, such
number of shares of Purchaser Common Stock covered by the
Registration Statement; and (D) neither the Registration
Statement nor the Final Prospectus shall contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements contained therein not
materially misleading in the light of the circumstances under
which those statements are made.
(b) The obligation of each Party hereto with respect to the
actions to be taken on the IPO Closing Date is subject to the
satisfaction on that date of each of the following conditions:
(i) NO LITIGATION. No Litigation shall be pending
on the IPO Closing Date to restrain, prohibit or otherwise
interfere with, or to obtain material damages or other relief
from Purchaser or the Surviving Corporation in connection with,
the consummation of the Merger or the IPO;
(ii) GOVERNMENTAL APPROVALS. All Governmental
Approvals required to be obtained by the Company, Purchaser and
Newco in connection with the consummation of the Merger and the
IPO shall have been obtained;
(iii) REGISTRATION STATEMENT AND FINAL PROSPECTUS.
Neither the Registration Statement, in its form at the Effective
Time, nor the Final Prospectus shall contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements contained therein not
materially misleading in the light of the circumstances under
which those statements are made; and
51
(iv) REGISTRATION RIGHTS AGREEMENT. Each of the
Stockholders and the Purchaser shall have entered into the
Registration Rights Agreement in the form of Exhibit 7.02
hereto.
Section 7.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE
STOCKHOLDERS. The obligations of the Company and each Stockholder with respect
to actions to be taken by them at or before the Closing and the actions to be
taken on the IPO Closing Date are subject to the satisfaction, or the written
waiver by the Company on behalf of itself and each Stockholder pursuant to
Section 12.05 on or before the date of the Closing of, in addition to the
conditions specified in Section 7.02 (a) or 7.02 (b), as applicable, all the
following conditions:
(i) REPRESENTATIONS AND WARRANTIES. All the
representations and warranties of Purchaser and Newco in Article
V shall be true and correct in all material respects as of the
Closing as though made at that time;
(ii) DELIVERY OF DOCUMENTS. Purchaser shall have
delivered to the Company, with copies for each Stockholder:
(A) a Purchaser officer's certificate
respecting the representations and warranties of
Purchaser and Newco in Article V and compliance with the
covenants of Purchaser and Newco in Article VI and in
the form thereof attached as an exhibit to the Closing
Memorandum;
(B) opinions dated the IPO Closing Date and
addressed to the Company and the Stockholders from
Counsel for Purchaser and Newco substantially in the
forms thereof attached as exhibits to the Closing
Memorandum;
(C) a certificate of the secretary or any
assistant secretary of Purchaser in the form thereof
(without attachments thereto) attached as an exhibit to
the Closing Memorandum and respecting, and to which
there shall be attached, (a) the Charter Documents of
Purchaser and Newco (certified by the Secretary of State
of the State of Delaware in the case of the certificates
of incorporation of Purchaser included therein); (b) the
resolutions of the boards of directors of Purchaser and
Newco respecting the Transaction Documents and the
transactions contemplated thereby; (c) a certificate
respecting the incumbency and true signatures of the
Purchaser and Newco officers who execute the Transaction
Documents on behalf of Purchaser and Newco,
respectively; (d) a specimen certificate evidencing
shares of Purchaser Common Stock; (e) the prospectus
included in the Registration Statement when it became
effective; and (f) a facsimile copy of the Underwriting
Agreement as executed and delivered by Purchaser and the
Underwriter;
52
(D) a certificate, dated as of a Current
Date, duly issued by the Secretary of State of the State
of Delaware, showing Purchaser to be in good standing
and authorized to do business in that State.
Section 7.04. CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND NEWCO.
(a) The obligations of Purchaser and Newco with respect to
actions to be taken by them at or before the Closing are subject to the
satisfaction on or before the date of the Closing of, in addition to the
conditions specified in Section 7.02 (a) and Section 7.02(b), all the
following conditions:
(i) REPRESENTATIONS AND WARRANTIES. All the
representations and warranties of the Stockholders and the
Company in Articles III and IV shall be true and correct in all
material respects as of the Closing as though made at that time;
(ii) DELIVERY OF DOCUMENTS. The Stockholders and the
Company shall have delivered to Purchaser:
(A) a Company officer's certificate, signed
by a Responsible Officer, respecting the representations
and warranties of the Stockholders and the Company in
Articles III and IV and compliance with the covenants of
the Stockholders and the Company in Article VI and in
the form thereof attached as an exhibit to the Closing
Memorandum;
(B) opinions dated the IPO Closing Date and
addressed to Purchaser from Counsel for the Company and
the Stockholders substantially in the form thereof
attached as exhibits to the Closing Memorandum;
(C) a certificate of the secretary or any
assistant secretary of the Company in the form thereof
(without attachments thereto) attached as an exhibit to
the Closing Memorandum and respecting, and to which is
attached, (a) the Charter Documents of the Company;
(b) the resolutions of the board of directors of the
Company respecting the Transaction Documents and the
transactions contemplated thereby; and (c) a certificate
respecting the incumbency and true signatures of the
Responsible Officers who execute the Transaction
Documents on behalf of the Company;
(D) from each Significant Stockholder, a
General Release duly executed and delivered by that
Significant Stockholder; and
(E) for the Company, a certificate, dated as
of a Current Date, duly issued by the appropriate
Governmental Authorities in its Organization State and,
unless waived by Purchaser, in each other jurisdiction
listed for
53
it in Section 4.02 of the Disclosure Statement, showing
it to be in good standing and authorized to do business
in its Organization State and those other jurisdictions
and that all state franchise and/or income tax returns
and taxes due by it in its Organization State and those
other jurisdictions for all periods prior to the Closing
have been filed and paid.
(iii) CLOSING OF STOCK PURCHASE. Xxxxxx Xxxxxxxxx
shall have acquired approximately 535,453 shares of Company
Common Stock pursuant to the terms of that Agreement between
Xxxxxx Xxxxxxxxx and the shareholder of the Info-Highway
International, Inc. dated as of June __, 1999.
(iv) TERMINATION OF PLAN. The Company shall have
amended and terminated the InfoHighway International, Inc. 1998
Incentive Stock Option Plan pursuant to Section 12.14 of this
Agreement.
(b) The obligations of Purchaser and Newco with respect to
the actions to be taken on the IPO Closing Date are subject to the
satisfaction on that date of (i) all the conditions set forth in Section
7.02(b), if any, and (ii) the condition that all the representations and
warranties of the Stockholders and the Company in Articles III and IV
shall be true and correct in all material respects as of the IPO Closing
Date as though made on that date.
ARTICLE VIII
COVENANTS FOLLOWING THE EFFECTIVE TIME
Section 8.01. OF EACH PARTY OTHER THAN THE COMPANY. From and after
the Effective Time, subject to the waiver provisions of Section 11.05, each
Party(other than the Company) will comply with the following covenants. If,
subsequent to the IPO Pricing Date and prior to the 25th day after the date of
the Final Prospectus, any Stockholder becomes aware of any material fact or
circumstance which would change (or, if after the Effective Time, would have
changed) a representation or warranty of the Company or any Stockholder in this
Agreement or would affect any material document delivered pursuant hereto in any
material respect, that Stockholder will promptly give notice of that fact or
circumstance to Purchaser.
Section 8.02. REPAYMENT OF COMPANY INDEBTEDNESS. Within 30 days
following the Effective Time, the Purchaser will repay the Company Indebtedness
listed in Schedule 8.02. The provisions of this Section 8.02 shall survive the
Closing.
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ARTICLE IX
INDEMNIFICATION
Section 9.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All the
provisions of this Agreement will survive the Closing and the Effective Time
notwithstanding any investigation at any time made by or on behalf of any party
hereto or the provision of any Supplemental Information pursuant to
Section 6.06, provided that the representations and warranties set forth in
Articles IV, V and VI and in any certificate delivered in connection herewith
with respect to any of those representations and warranties will terminate and
expire two years after the IPO Closing Date, except the representations and
warranties of Purchaser and the Company will terminate and expire at the
Effective Time. After a representation and warranty has terminated and expired,
no indemnification will or may be sought on the basis of that representation and
warranty by any Person who would have been entitled pursuant to this Article IX
to indemnification on the basis of that representation and warranty prior to its
termination and expiration, provided that, in the case of each representation
and warranty that will terminate and expire as provided in this Section 9.01, no
claim presented in writing for indemnification pursuant to this Article IX on
the basis of that representation and warranty prior to its termination and
expiration will be affected in any way by the termination and expiration.
Section 9.02. INDEMNIFICATION OF PURCHASER INDEMNIFIED PARTIES.
(a) Subject to the applicable provisions of Sections 9.01
and 9.06, the Significant Stockholders covenant and agree that each of
them, severally will indemnify each Purchaser Indemnified Party against,
and hold each Purchaser Indemnified Party harmless from and in respect
of, all Damages that arise from, are based on or relate or otherwise are
attributable to (i) any breach of the representations and warranties of
the Significant Stockholders or the Company set forth herein (other than
in Article III) or in certificates delivered in connection herewith
(other than in respect of certificates relating only to the
representations and warranties in Article III), (ii) any nonfulfillment
of any covenant or agreement on the part of the Significant Stockholders
or the Company under this Agreement, (iii) any liability under the
Securities Act, the Exchange Act or other applicable Governmental
Requirement which arises out of or is based on (A) any untrue statement
of a material fact relating to the Company, or any of them, which is
(1) provided to Purchaser or its counsel by the Company and
(2) contained in any preliminary prospectus relating to the IPO, the
Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or (B) any omission or alleged
omission to state therein a material fact relating to the Company
required to be stated therein or necessary to make the statements
therein not misleading, and not provided to Purchaser or its counsel by
the Company or the Significant Stockholders (each such Damage Claim and
each Damage Claim described in Section 9.02(b) being an "PURCHASER
INDEMNIFIED LOSS").
55
(b) Each Stockholder, severally and not jointly with any
other Person, covenants and agrees that he will indemnify each Purchaser
Indemnified Party against, and hold each Purchaser Indemnified Party
harmless from and in respect of, all Damage Claims that arise from, are
based on or relate or otherwise are attributable to (i) any breach of
the representations and warranties of that Stockholder solely as to that
Stockholder set forth in Article III or in certificates delivered by
that Stockholder and relating to those representations and warranties,
(ii) any nonfulfillment of any agreement on the part of that Stockholder
under this Agreement or (iii) any liability under the Securities Act,
the Exchange Act or other applicable Governmental Requirement which
arises out of or is based on (A) any untrue statement or alleged untrue
statement of a material fact relating solely to that Stockholder which
is (1) provided to Purchaser or its counsel by that Stockholder and
(2) contained in any preliminary prospectus relating to the IPO, the
Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or (B) any omission or alleged
omission to state therein a material fact relating solely to that
Stockholder required to be stated therein or necessary to make the
statements therein not misleading, and not provided to Purchaser or its
counsel by that Stockholder.
Section 9.03. INDEMNIFICATION OF STOCKHOLDER INDEMNIFIED PARTIES.
Purchaser covenants and agrees that it will indemnify each Stockholder
Indemnified Party against, and hold each Stockholder Indemnified Party harmless
from and in respect of, all Damage Claims (that arise from, are based on or
relate or otherwise are attributable to (i) any breach by Purchaser or Newco of
their representations and warranties set forth herein or in their certificates
delivered to the Company or the Stockholders in connection herewith, (ii) any
nonfulfillment of any covenant or agreement on the part of Purchaser or Newco
under this Agreement (each such Damage Claim being a "STOCKHOLDER INDEMNIFIED
LOSS"); or (iii) any liability under the Securities Act, the Exchange Act or
other applicable Governmental Requirement which arises out of or is based on
(A) any untrue statement or alleged untrue statement of a material fact relating
to Purchaser, Newco or any of the Other Founding Companies contained in any
preliminary prospectus relating to the IPO, the Registration Statement or any
prospectus forming a part thereof, or any amendment thereof or supplement
thereto, or (B) any omission or alleged omission to state therein a material
fact relating to Purchaser, Newco or any of the Other Founding Companies, or any
of them, required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made.
Section 9.04. CONDITIONS OF INDEMNIFICATION.
(a) All claims for indemnification under this Agreement
shall be asserted and resolved as provided in this Section 9.04.
(b) A party claiming indemnification under this Agreement
(an "INDEMNIFIED PARTY") shall promptly (i) notify the party from whom
indemnification is sought (the "INDEMNIFYING PARTY") of any third-party
claim or claims asserted against the Indemnified Party ("THIRD PARTY
CLAIM") that could give rise to a right of indemnification under this
56
Agreement and (ii) transmit to the Indemnifying Party a written notice
("CLAIM NOTICE") describing in reasonable detail the nature of the Third
Party Claim, a copy of all papers served with respect to the claim (if
any), an estimate of the amount of damages attributable to the Third
Party Claim to the extent feasible (which estimate shall not be
conclusive of the final amount of the claim) and the basis for the
Indemnified Party's request for indemnification under this Agreement.
Except as set forth in Section 9.02, the failure to promptly deliver a
Claim Notice shall not relieve the Indemnifying Party of its obligations
to the Indemnified Party with respect to the related Third Party Claim
except to the extent that the resulting delay is materially prejudicial
to the defense of the claim. Any Third Party Claim asserted by
Purchaser against the Significant Stockholders pursuant to
Section 9.02(a) will be made against all, but not less than all, of the
Significant Stockholders. Within 15 days after receipt of any Claim
Notice (the "ELECTION PERIOD"), the Indemnifying Party shall notify the
Indemnified Party (i) whether the Indemnifying Party disputes its
potential liability to the Indemnified Party under this Article IX with
respect to the Third Party Claim and (ii) if the Indemnifying Party does
not dispute its potential liability to the Indemnified Party with
respect to the Third Party Claim, whether the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying Party, to
defend the Indemnified Party against the Third Party Claim.
(c) If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party and notifies the Indemnified Party
within the Election Period that the Indemnifying Party elects to assume
the defense of the Third Party Claim, then the Indemnifying Party shall
have the right to defend, at its sole cost and expense, the Third Party
Claim by all appropriate proceedings, which proceedings shall be
prosecuted diligently by the Indemnifying Party to a final conclusion or
settled at the discretion of the Indemnifying Party in accordance with
this Section 9.04(c) and the Indemnified Party will furnish the
Indemnifying Party with all information in its possession with respect
to the Third Party Claim and otherwise cooperate with the Indemnifying
Party in the defense of the Third Party Claim; PROVIDED, HOWEVER, that
the Indemnifying Party shall not enter into any settlement with respect
to any Third Party Claim that purports to limit the activities of, or
otherwise restrict in any way, any Indemnified Party or any Affiliate of
any Indemnified Party without the prior consent of that Indemnified
Party (which consent may be withheld in the sole discretion of that
Indemnified Party). The Indemnified Party is hereby authorized, at the
sole cost and expense of the Indemnifying Party if found liable
hereunder, to file, during the Election Period, any motion, answer or
other pleadings that the Indemnified Party shall deem necessary or
appropriate to protect its interests or those of the Indemnifying Party.
The Indemnified Party may participate in, but not control, any defense
or settlement of any Third Party Claim controlled by the Indemnifying
Party pursuant to this Section 9.04(c) and will bear its own costs and
expenses with respect to its participation; PROVIDED, HOWEVER, that if
the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party, and the
Indemnified Party has been advised in writing by counsel that there may
be one or more legal defenses available to it which are different from
or additional to those available to the Indemnifying
57
Party, then the Indemnified Party may employ separate counsel at the
expense of the Indemnifying Party, and, on its written notification of
that employment, the Indemnifying Party shall not have the right to
assume or continue the defense of the action on behalf of the
Indemnified Party.
(d) If the Indemnifying Party (i) within the Election Period
(A) disputes its potential liability to the Indemnified Party under this
Article IX, (B) elects not to defend the Indemnified Party pursuant to
Section 9.04(c) or (C) fails to notify the Indemnified Party that the
Indemnifying Party elects to defend the Indemnified Party pursuant to
Section 9.04(c) or (ii) elects to defend the Indemnified Party pursuant
to Section 9.04(c) but fails diligently and promptly to prosecute or
settle the Third Party Claim, then the Indemnified Party shall have the
right to defend, at the sole cost and expense of the Indemnifying Party
(if the Indemnified Party is entitled to indemnification hereunder), the
Third Party Claim by all appropriate proceedings, which proceedings
shall be promptly and vigorously prosecuted by the Indemnified Party to
a final conclusion or settled. The Indemnified Party shall have full
control of such defense and proceedings. Notwithstanding the foregoing,
if the Indemnifying Party has delivered a written notice to the
Indemnified Party to the effect that the Indemnifying Party disputes its
potential liability to the Indemnified Party under this Article IX and
if such dispute is resolved in favor of the Indemnifying Party, the
Indemnifying Party shall not be required to bear the costs and expenses
of the Indemnified Party's defense pursuant to this Section 9.04 or of
the Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party shall reimburse the
Indemnifying Party in full for all reasonable and appropriate costs and
expenses of such litigation. The Indemnifying Party may participate in,
but not control, any defense or settlement controlled by the Indemnified
Party pursuant to this Section 9.04(d), and the Indemnifying Party shall
bear its own costs and expenses with respect to such participation.
(e) If any Indemnified Party should have a claim against any
Indemnifying Party hereunder that does not involve a Third Party Claim,
the Indemnified Party shall transmit to the Indemnifying Party a written
notice (the "INDEMNITY NOTICE") describing in reasonable detail the
nature of the claim, an estimate of the amount of Damages attributable
to that claim to the extent feasible (which estimate shall not be
conclusive of the final amount of the claim) and the basis of the
Indemnified Party's request for indemnification under this Agreement.
Any claim that does not involve a Third Party Claim asserted by
Purchaser against the Significant Stockholders under Section 9.02(a)
will be made against all, but not less than all, of the Significant
Stockholders. If the Indemnifying Party does not notify the Indemnified
Party within 15 days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes the claim, the claim specified by the
Indemnified Party in the Indemnity Notice shall be deemed a liability of
the Indemnifying Party hereunder. If the Indemnifying Party has timely
disputed the claim, as provided above, the dispute shall be resolved by
proceedings in an appropriate court of competent jurisdiction if the
parties do not reach a settlement of such dispute within 30 days after
notice of the dispute is given.
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(f) Payments of all amounts owing by an Indemnifying Party
pursuant to this Article IX relating to a Third Party Claim shall be
made within 30 days after the latest of (i) the settlement of that Third
Party Claim, (ii) the expiration of the period for appeal of a final
adjudication of that Third Party Claim or (iii) the expiration of the
period for appeal of a final adjudication of the Indemnifying Party's
liability to the Indemnified Party under this Agreement. Payments of
all amounts owing by an Indemnifying Party pursuant to Section 9.04(e)
shall be made within 30 days after the later of (i) the expiration of
the 30-day Indemnity Notice period or (ii) the expiration of the period
for appeal of a final adjudication of the Indemnifying Party's liability
to the Indemnified Party under this Agreement. Any payments owing by a
Stockholder Indemnifying Party under this Article IX may be paid either
in cash or by surrendering a number of shares of Purchaser Common Stock,
and if all of the Stockholder Indemnifying Party's Purchaser Common
Stock has been surrendered, a number of Contingent Stock Issue Rights,
in each case equal to the amount obtained by dividing the amount of the
payment owed by the IPO Price.
Section 9.05. REMEDIES EXCLUSIVE. Except as otherwise expressly
provided in this Agreement, the remedies provided in this Article IX are the
exclusive remedies available to one party against the other, either at law or in
equity, in respect of any matter indemnified against in this Article IX.
Section 9.06. LIMITATIONS ON INDEMNIFICATION.
(a) Notwithstanding the provisions of Section 9.02(a),
neither the Company nor any of the Significant Stockholders shall be
required to indemnify or hold harmless any of the Purchaser Indemnified
Parties on account of any Purchaser Indemnified Loss under Section
9.02(a) unless the liability of the Company and the Significant
Stockholders in respect of that Purchaser Indemnified Loss, when
aggregated with the liability of the Company and the Significant
Stockholders in respect of all Purchaser Indemnified Losses under
Section 9.02 (a), exceeds, and only to the extent the aggregate amount
of all those Purchaser Indemnified Losses does exceed, the Threshold
Amount. In no event shall (i) the liability of any Significant
Stockholder under Section 9.02(a) exceed that Significant Stockholder's
Pro Rata Share of the Significant Stockholder Ceiling Amount or (ii) the
aggregate liability of each Stockholder under Section 9.02(b) exceed
that Stockholder's Stockholder Pro Rata Share of the Ceiling Amount.
(b) Notwithstanding the provisions of Section 9.03,
Purchaser shall not be required to indemnify or hold harmless any of the
Stockholder Indemnified Parties on account of any Stockholder
Indemnified Loss unless the liability of Purchaser in respect of that
Stockholder Indemnified Loss, when aggregated with the liability of
Purchaser in respect of all Stockholder Indemnified Losses, exceeds, and
only to the extent the aggregate amount of all those Stockholder
Indemnified Losses does exceed, the Threshold Amount. In no event shall
Purchaser be liable under this Agreement, including Section 9.03, for
any amount in excess of the Ceiling Amount.
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ARTICLE X
LIMITATIONS ON COMPETITION
Section 10.01. PROHIBITED ACTIVITIES. Each of Xxxx Xxxxxxx, Xxxxx
Xxxxxx and Xxx Xxxxx (each a "Restricted Stockholder") severally agrees that he
will not during the period beginning on the date hereof and ending on the second
anniversary of the date hereof, directly or indirectly, for any reason, for his
own account or on behalf of or together with any other Person:
(a) engage as an officer, director or in any other
managerial capacity or as an owner, co-owner or other investor of or in,
whether as an employee, independent contractor, consultant or advisor,
in any business in competition with the Company, any Company Subsidiary
or Purchaser or any Subsidiary of Purchaser (Purchaser and its
Subsidiaries collectively being called "Purchaser" for purposes of this
Article X) within any territory surrounding any office or facility (each
a "facility") in which the Company was engaged in business on the date
hereof or immediately prior to the Effective Time (for purposes of this
Article X, the territory surrounding a facility shall be: (i) the city,
town or village in which the facility is located, (ii) the county or
parish in which the facility is located, (iii) the counties or parishes
contiguous to the county or parish in which the facility is located, and
(iv) the area located within 100 miles of the facility, all of such
locations being herein collectively called the "TERRITORY");
(b) call on any natural Person who is at that time employed
by the Company, any Company Subsidiary or Purchaser with the purpose or
intent of attracting that person from the employ of the Company, any
Company Subsidiary or Purchaser, provided that a Stockholder may call on
and hire any of his Immediate Family Members;
(c) call on any Person that at that time is, or at any time
within one year prior to that time was, a customer of the Company, any
Company Subsidiary or Purchaser within the Territory, (i) for the
purpose of soliciting or selling any product or service in competition
with the Company, any Company Subsidiary or Purchaser within the
Territory and (ii) with the knowledge of the customer relationship; or
(d) call on any Purchaser Acquisition Candidate, with the
knowledge of that Person's status as an Purchaser Acquisition Candidate,
for the purpose of acquiring that Person or arranging the acquisition of
that Person by any Person other than Purchaser.
Notwithstanding the foregoing, any Restricted Stockholder may own and hold as a
passive investment up to 1% of a class of the outstanding Capital Stock of a
competing Entity if that class of Capital Stock is publicly traded.
60
Section 10.02. DAMAGES. Because of the difficulty of measuring
economic losses to Purchaser as a result of any breach by a Restricted
Stockholder of his covenants in Section 10.01, and because of the immediate and
irreparable damage that could be caused to Purchaser for which it would have no
other adequate remedy, each Restricted Stockholder agrees that Purchaser may
enforce the provisions of Section 10.01 by injunctions and restraining orders
against the Restricted Stockholder if he breaches any of those provisions.
Section 10.03. REASONABLE RESTRAINT. The Parties each agree that
Sections 10.01 and 10.02 impose a reasonable restraint on the Restricted
Stockholder in light of the activities and business of Purchaser on the date
hereof, the current business plans of Purchaser and the investment by each
Restricted Stockholder in Purchaser as a result of the Merger.
Section 10.04. SEVERABILITY; REFORMATION. The covenants in this
Article X are severable and separate. The unenforceability of any specific
covenant in this Article X is not intended by any Party to, and shall not,
affect the provisions of any other covenant in this Article X. If any court of
competent jurisdiction determines that the scope, time or territorial
restrictions set forth in Section 10.01 are unreasonable as applied to any
Restricted Stockholder, the Parties, including the Restricted Stockholder in
question, acknowledge their mutual intention and agreement that those
restrictions be enforced to the fullest extent the court deems reasonable, and
thereby shall be reformed to that extent as applied to that Restricted
Stockholder and any other Restricted Stockholder similarly situated.
Section 10.05. INDEPENDENT COVENANT. All the covenants in this Article
X are intended by each Party to, and shall, be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of any Restricted Stockholder against Purchaser,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Purchaser of any covenant in this Article X. It is
specifically agreed that the period specified in Section 10.01 shall be computed
in the case of each Restricted Stockholder by excluding from that computation
any time during which the Restricted Stockholder is in violation of any
provision of Section 10.01. The covenants contained in this Article X shall not
be affected by any breach of any other provision of this Agreement by any Party.
Section 10.06. MATERIALITY. The Company and each Restricted
Stockholder, severally and not jointly with any other Person, hereby agree that
this Article X is a material and substantial part of the transactions
contemplated by this Agreement.
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ARTICLE XI
TERMINATION
Section 11.01. TERMINATION OF THIS AGREEMENT.
(a) This Agreement may be terminated at any time prior to
the Closing solely:
(i) by the mutual written consent of Purchaser and
the Company;
(ii) by the Majority Stockholders or the Company, on
the one hand, or by Purchaser, on the other hand, if the
transactions contemplated by this Agreement to take place at the
Closing shall not have been consummated by October 31, 1999,
unless the failure of such transactions to be consummated
results from the willful failure of the Party (or in the case of
the Stockholders and the Company, any of them) seeking to
terminate this Agreement to perform or adhere to any agreement
required hereby to be performed or adhered to by that Party
prior to or at the Closing or thereafter on the IPO Closing
Date;
(iii) by the Majority Stockholders or the Company, on
the one hand, or by Purchaser, on the other hand, if a material
breach or default shall be made by the other Party (or in the
case of the Stockholders and the Company, any of them) in the
observance or in the due and timely performance of any of the
covenants, agreements or conditions contained herein; or
(iv) by Purchaser if it is entitled to do so as
provided in Section 6.06;
(b) This Agreement may be terminated after the Closing
solely:
(i) by Purchaser or the Company if the Underwriting
Agreement is terminated pursuant to its terms after the Closing
and prior to the consummation of the IPO; or
(ii) automatically and without action on the part of
any party hereto if the IPO is not consummated within 7 Business
Days after the date of the Closing.
(c) If this Agreement is terminated pursuant to this Section
11.01, the Merger will be deemed for all purposes to have been abandoned
and of no force or effect. If this Agreement is terminated pursuant to
this Section 11.01 after the Certificate of Merger has been filed with
the Secretary of State of the State of Texas, but before the IPO has
been consummated, Purchaser will take all actions that Counsel for the
Company and the Stockholders advises Purchaser are required by the
applicable laws of the State of Texas to rescind the Merger.
62
Section 11.02. LIABILITIES IN EVENT OF TERMINATION. If this Agreement
is terminated pursuant to Section 11.01, there shall be no liability or
obligation on the part of any Party except (a) as provided in Section 12.07, (b)
to the extent that such liability is based on the breach of that Party of any of
its or his representations, warranties or covenants set forth in of this
Agreement.
ARTICLE XII
GENERAL PROVISIONS
Section 12.01. TREATMENT OF CONFIDENTIAL INFORMATION.
(a) Each of the Company and the Stockholders, severally and
not jointly with any other Person, acknowledges that it has or may have
had in the past, currently has and in the future may have access to
Confidential Information of the Company and the Company Subsidiaries,
the Other Founding Companies and their Subsidiaries and Purchaser and
its Subsidiaries. Each of the Company and the Stockholders, severally
and not jointly with any other Person, agrees that it will keep
confidential all such Confidential Information furnished to it and,
except with the specific prior written consent of Purchaser will not
disclose such Confidential Information to any Person except
(a) Representatives of Purchaser, (b) its own Representatives, provided
that these Representatives (other than counsel) agree to the
confidentiality provisions of this Section 12.01; and provided, further,
that Confidential Information shall not include (i) such information
which becomes known to the public generally through no fault of any
Stockholder, (ii) information required to be disclosed by law or the
order of any governmental authority under color of law, provided, that
prior to disclosing any information pursuant to this clause (ii), each
Stockholder shall, if possible, give prior written notice thereof to
Purchaser and provide Purchaser with the opportunity to contest such
disclosure, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit
against the disclosing party. In the event of a breach or threatened
breach by any Stockholder of the provisions of this Section 12.01 with
respect to any Confidential Information, Purchaser shall be entitled to
an injunction restraining such Stockholder from disclosing, in whole or
in part, that Confidential Information. Nothing herein shall be
construed as prohibiting Purchaser from pursuing any other available
remedy for such breach or threatened breach, including the recovery of
damages.
(b) Because of the difficulty of measuring economic losses
as a result of the breach of the foregoing covenants in Section
12.01(a), and because of the immediate and irreparable damage that would
be caused to Purchaser for which it would have no other adequate remedy,
each of the Company and the Stockholders agrees that Purchaser may
enforce the provisions of Section 12.01(a) by injunctions and
restraining orders against each of them who breaches any of those
provisions.
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(c) The obligations of Purchaser set forth in Section
6.01(d) are incorporated in this Section 12.01 by this reference.
(d) The obligations of the parties under this Section 12.01
shall survive the termination of this Agreement for a period of three
years.
Section 12.02. RESTRICTIONS ON TRANSFERS OF PURCHASER COMMON STOCK.
(a) During the two year period following the IPO Closing
Date (the "RESTRICTED PERIOD"), no Stockholder voluntarily will:
(i) sell, assign, exchange, transfer, encumber, pledge, distribute,
appoint or otherwise dispose of (A) any shares of Purchaser Common Stock
and Contingent Stock Issue Rights (and shares of Purchaser Common Stock
issued thereunder, if any) received by any Stockholder in the Merger or
(B) any interest in (including any option to buy or sell) any such
shares of Purchaser Common Stock and Contingent Stock Issue Rights (and
shares of Purchaser Common Stock issued thereunder, if any), in whole or
in part, and Purchaser will have no obligation to, and shall not, treat
any such attempted transfer as effective for any purpose; or (ii) engage
in any transaction, whether or not with respect to any shares of
Purchaser Common Stock and Contingent Stock Issue Rights (and shares of
Purchaser Common Stock issued thereunder, if any) or any interest
therein, the intent or effect of which is to reduce the risk of owning
the shares of Purchaser Common Stock and Contingent Stock Issue Rights
(and shares of Purchaser Common Stock issued thereunder, if any)
acquired pursuant to Section 2.04 (including, for example engaging in
put, call, short-sale, straddle or similar market transactions);
PROVIDED, HOWEVER, that if the average closing price of the Purchaser
Common Stock (as reported by the principal exchange or market upon which
the Purchaser Common Stock is then listed) for the ten trading day
period prior to (i) the end of the twelfth month following the IPO
Closing Date, (ii) the end of the fifteenth month following the IPO
Closing Date, (iii) the end of the eighteenth month following the IPO
Closing Date, or (iv) the end of the twenty-first month following the
IPO Closing Date, each such ten trading day period a "Measurement
Period," is greater than or equal to $17 per share, then (i) ten
percent, (ii) twenty percent, (iii) thirty percent or (iv) forty
percent, respectively, of Purchaser Common Stock and shares of Purchaser
Common Stock actually issued pursuant to the Contingent Stock Issue
Rights, if any, received by each Stockholder in the Merger shall
irrevocably be released from the restrictions of this Section 12.02(a)
following the applicable Measurement Period; and, PROVIDED, FURTHER,
that this Section 12.02 shall not restrict any transfer of Purchaser
Common Stock and Contingent Stock Issue Rights acquired by a Stockholder
pursuant to Section 2.04 to any of that Stockholder's Related Persons
who agree in writing to be bound by the provisions of Section 12.01 and
this Section 12.02. The certificates evidencing the Purchaser Common
Stock and Contingent Stock Issue Rights (and shares of Purchaser Common
Stock issued thereunder, if any) delivered to each Stockholder pursuant
to Section 2.05 will bear a legend substantially in the form set forth
below and containing such other information as Purchaser may deem
necessary or appropriate:
64
EXCEPT PURSUANT TO THE TERMS OF THE AGREEMENT AND PLAN
OF REORGANIZATION AMONG THE ISSUER, THE HOLDER OF THIS
CERTIFICATE AND THE OTHER PARTIES THERETO, THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE VOLUNTARILY
SOLD, ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED,
PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED
OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT
TO ANY ATTEMPTED VOLUNTARY SALE, ASSIGNMENT, EXCHANGE,
TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION, APPOINTMENT
OR OTHER DISPOSITION OF ANY OF THOSE SHARES, DURING THE
TWO-YEAR PERIOD ENDING ON __________ (THE "RESTRICTED
PERIOD"). ON THE WRITTEN REQUEST OF THE HOLDER OF THIS
CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS
RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE
TRANSFER AGENT) AFTER THE EXPIRATION OF THE RESTRICTED
PERIOD.
(b) Each Stockholder, severally and not jointly with any
other Person, (i) acknowledges that the shares of Purchaser Common Stock
and Contingent Stock Issue Rights (and shares of Purchaser Common Stock
issued thereunder, if any) to be delivered to him pursuant to Section
2.04 (A) have not been and will not be registered under the Securities
Act and therefore may not be resold by him without compliance with the
Securities Act and (B) will, as a result of their restrictions on
transferability which are imposed by this Agreement during the
Restricted Period, have a value materially less at the Effective Time
than the value of then freely tradeable shares of Purchaser Common
Stock, and (ii) covenants that none of the shares of Purchaser Common
Stock and Contingent Stock Issue Rights (and shares of Purchaser Common
Stock issued thereunder, if any) issued to him pursuant to Section 2.04
will be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of except after full compliance with all the
applicable provisions of the Securities Act and the rules and
regulations of the SEC and applicable state securities laws and
regulations. All certificates evidencing shares of Purchaser Common
Stock and Contingent Stock Issue Rights (and shares of Purchaser Common
Stock issued thereunder, if any) issued pursuant to Section 2.04 will
bear the following legend in addition to the legend prescribed by
Section 12.02(a):
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
ONLY BE SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER
HEREOF COMPLIES WITH THAT ACT AND OTHER APPLICABLE
SECURITIES LAWS.
In addition, certificates evidencing shares of Purchaser Common Stock
and Contingent Stock Issue Rights issued to each Stockholder pursuant to
Section 2.04 will bear any legend required by (i) the securities or blue
sky laws of the state in which that Stockholder resides or (ii) the
Underwriter in connection with any agreement of that Stockholder with
the Underwriter to the effect set forth in Section 12.02(a).
65
Section 12.03. BROKERS AND AGENTS. The Stockholders jointly and
severally represent and warrant to Purchaser that the Company has not directly
or indirectly employed or become obligated to pay any broker or similar agent,
except as set forth on Section 4.30 of the Disclosure Schedule, in connection
with the transactions contemplated hereby and agree, without regard to the
Threshold Amount limitations set forth in Article IX, to indemnify Purchaser
against all Damage Claims arising out of claims for any and all fees and
commissions of brokers or similar agents employed or promised payment by the
Company.
Section 12.04. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the rights of its Parties may not be assigned (except by operation
of law) and shall be binding on and inure to the benefit of the Parties, the
successors of Purchaser, and the heirs and legal representatives of the
Stockholders (and, in the case of any trust, the successor trustees of the
trust). Neither this Agreement nor any other Transaction Document is intended,
or shall be construed, deemed or interpreted, to confer on any Person not a
party hereto or thereto any rights or remedies hereunder or thereunder, except
as provided in Section 6.04(b), in Article IX, or as otherwise provided
expressly herein or therein.
Section 12.05. ENTIRE AGREEMENT; AMENDMENT; WAIVERS. This Agreement
and the documents delivered pursuant to it constitute the entire agreement and
understanding among the Parties and supersede all prior agreements and
understandings, both written and oral, relating to the subject matter of this
Agreement. This Agreement may be amended, modified or supplemented, and any
right hereunder may be waived, if, but only if, the amendment, modification,
supplement or waiver is in writing and signed by the Majority Stockholders, the
Company and Purchaser. The waiver of any of the terms and conditions of this
Agreement shall not be construed or interpreted as, or deemed to be, a waiver of
any of its other term or conditions.
Section 12.06. COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which will be an original, but all of which
together will constitute one and the same instrument.
Section 12.07. EXPENSES. Whether or not the transactions contemplated
hereby are consummated, (a) Purchaser will pay the fees, expenses and
disbursements of Purchaser and Newco and their Representatives which are
incurred in connection with the subject matter of this Agreement and any
amendments to this Agreement including all costs and expenses incurred in the
performance of and compliance with all conditions to be performed by Purchaser
and Newco under this Agreement, including the costs of preparing the
Registration Statement, (b) the Company may pay any fees, expenses and
disbursements of Counsel for the Company and the Stockholders incurred in
connection with the subject matter of this Agreement and the Registration
Statement on or before the IPO Closing Date, up to a maximum of $75,000 in the
aggregate, and (c) the Stockholders will pay from personal funds, and not from
funds of the Company or any Company Subsidiary, (i) all sales, use, transfer and
other similar taxes and fees (collectively, "TRANSFER TAXES") incurred in
connection with the transactions contemplated hereby, and (ii) the fees,
expenses and disbursements in excess of $75,000 in the aggregate of Counsel for
the Company and the Stockholders incurred in
66
connection with the subject matter of this Agreement and the Registration
Statement on or before the IPO Closing Date. The Stockholders will file all
necessary documentation and Returns with respect to all Transfer Taxes. In
addition, each Stockholder acknowledges that he, and not the Company,
Purchaser or the Surviving Corporation, will pay all Taxes due upon receipt
of the Merger Consideration payable to the Stockholder pursuant to Article
II.
Section 12.08. NOTICES. All notices required or permitted hereunder
shall be in writing, and shall be deemed to be delivered and received (a) if
personally delivered or if delivered by telex, telegram, facsimile or courier
service, when actually received by the Party to whom notice is sent or (b) if
delivered by mail (whether actually received or not), at the close of business
on the third Business Day next following the day when placed in the mail,
postage prepaid, certified or registered, addressed to the appropriate Party or
Parties, at the address of such Party set forth below (or at such other address
as such party may designate by written notice to all other Parties in accordance
herewith):
(i) if to Purchaser or Newco, addressed to it at:
OmniLynx Communications Corporation
000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn.: Xxxxxxxxxxx X. Xxxxx, President
Telecopy No.: (000) 000-0000
and
OmniLynx Communications Corporation
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxx 00000
Attn.: Xxxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
with copies (which shall not constitute notice for purposes of
this Agreement) to:
Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
(ii) if to the Stockholders, addressed to them at
their respective addresses set forth in Schedule 2.04; and
67
(iii) if to the Company, addressed to it at:
00000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxx
Telecopy No.: (000) 000-0000
with copies (which shall not constitute notice for purposes of
this Agreement) to:
Mayor, Day, Xxxxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
Attn: Xx Xxxxxx
SECTION 12.09. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE, WITH THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO
THE CONFLICTS OF LAW PROVISIONS THEREOF.
Section 12.10. EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay or omission in the exercise of any right, power or
remedy accruing to any Party as a result of any breach or default hereunder by
any other Party shall impair any such right, power or remedy, nor shall it be
construed, deemed or interpreted as a waiver of or acquiescence in any such
breach or default, or of any similar breach or default occurring later; nor
shall any waiver of any single breach or default be construed, deemed or
interpreted as a waiver of any other breach or default hereunder occurring
before or after that waiver.
Section 12.11. TIME. Time is of the essence in the performance of this
Agreement in all respects.
Section 12.12. REFORMATION AND SEVERABILITY. If any provision of this
Agreement is invalid, illegal or unenforceable, that provision shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the Parties as
expressed herein, and if such a modification is not possible, that provision
shall be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement shall not in
any way be affected or impaired thereby.
Section 12.13. RESPECTING THE IPO. Each of the Company and the
Stockholders acknowledges and agrees that: (a) no firm commitment, binding
agreement or promise or other assurance of any kind, whether express or implied,
oral or written, exists at the date hereof that the Registration Statement will
become effective or that the IPO will occur at a particular price or within a
particular range of prices or occur at all; (b) neither Purchaser or any of its
Representatives nor any prospective underwriters in the IPO will have any
liability to the Company, the Stockholders or any
68
of their respective Affiliates or associates for any failure of (i) the
Registration Statement to become effective (provided, however, that Purchaser
will use its reasonable best efforts to cause the Registration Statement to
become effective prior to October 31, 1999) or (ii) the IPO to occur at a
particular price or within a particular range of prices or to occur at all;
and (c) the decision of Stockholders to enter into this Agreement, or to vote
in favor of or consent to the Merger, has been or will be made independent
of, and without reliance on, any statements, opinions or other communications
of, or due diligence investigations that have been or will be made or
performed by, any prospective underwriter relative to Purchaser or the IPO.
The Underwriter shall have no obligation to the Company with respect to any
disclosure contained in the Registration Statement.
Section 12.14. TERMINATION OF THE INFOHIGHWAY INTERNATIONAL, INC. 1998
INCENTIVE STOCK OPTION PLAN. The Company hereby covenants and agrees to
terminate the InfoHighway International, Inc. 1998 Incentive Stock Option Plan
(the "Designated Plan") in accordance with the terms therein prior to the date
of the Closing, and at or prior to the Closing, the Company will provide
evidence reasonably satisfactory to the Purchaser that the Designated Plan has
been terminated.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
OMNILYNX COMMUNICATIONS CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------------------
Xxxxxxxxxxx X. Xxxxx, President
INFO ACQUISITION, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------------------
Xxxxxxxxxxx X. Xxxxx, President
INFO-HIGHWAY INTERNATIONAL, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
-----------------------,
President
69
STOCKHOLDERS:
/s/ Xxxx Xxxxxxx /s/ Xxxxxx Xxxxxxxx
------------------------------------- -----------------------------------
Xxxx Xxxxxxx Xxxxxx Xxxxxxxx
/s/ AMICI Online Investments, L.L.C. /s/ X. Xxxxxxx /s/ Xxxxxxx X. Xxxxx
------------------------------------- -----------------------------------
AMICI Online Investments, L.L.C. H. Spenser and Xxxxxxx X. Xxxxx
/s/ Xxxxx Xxxxxx, G.P. /s/ Xxxxxx Xxxxx
------------------------------------- -----------------------------------
Xxxxxx Family Limited Partnership Xxxxxx Xxxxx
/s/ Xxxxx Xxxxxx /s/ Xxxx Xxxxxxxx
------------------------------------- -----------------------------------
Xxxxx Xxxxxx Xxxx Xxxxxxxx
/s/ Xxxx Xxxxx
------------------------------------- -----------------------------------
Xxxx Xxxxx Xxxxxxx Xxxx
/s/ Xxxxxxx Xxxxxxx
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxxxx Xxxxx
---------------------------------------- -----------------------------------
Xxxxxxx Investment Company Xxxxxxx Xxxxx
/s/ Xxxxxx Mokterian /s/ Xxxx Xxxxxx
------------------------------------- -----------------------------------
Xxxxxx Mokterian Xxxx Xxxxxx
/s/ Xxxxx Xxxxxx, attorney-in-fact /s/ Xxxxx Xxxxxxxxxx
------------------------------------- -----------------------------------
Xxxxx Xxxxxx Xxxxx Xxxxxxxxxx
/s/ Xxxxx Xxxxxx
------------------------------------- -----------------------------------
Xxxxx Xxxxxx Xxxx Xxxxxxx
/s/ Xxx Xxxxx /s/ Xxxxx Xxxxxxx /s/ Xxxx Xxxxxxxx
------------------------------------- -----------------------------------
Xxx Xxxxx Xxxxx Xxxxxxx and Xxxx Xxxxxxxx
/s/ Xxxx Xxxxxxx /s/ Xx Xxxxxx
------------------------------------- -----------------------------------
Xxxx Xxxxxxx Xx Xxxxxx
/s/ Xxxxxxx Xxxx /s/ Xxxxx Xxxxx
------------------------------------- -----------------------------------
Xxxxxxx Xxxx Xxxxx Xxxxx
/s/ Xxx Xxxxx /s/ Xxxx Xxxxx /s/ Xxxxxxx Xxxxxxx
------------------------------------- -----------------------------------
Xxx Xxxxx Xxxxxxx Xxxxxxx
70
/s/ X.X. Xxxxxxxxx /s/ Xxxxx Xxxxxx, V.P.
------------------------------------- -----------------------------------
X.X. Xxxxxxxxx Liberty Petroleum
/s/ Xxxx X. Xxxxxx
------------------------------------- -----------------------------------
Xxxx X. Xxxxxx Xxx Xxxx
/s/ Xxxxxx Xxxxxx, Xx.
/s/ Xxxxxxxx Xxxxxx /s/ Xxx Xxxxxx /s/ Xxxxx X. Xxxxxx
------------------------------------- -----------------------------------
Xxxxxx Xxxxxx, Xx. & Xxx Xxxxxx
Xxxxxxxx Xxxxxx
/s/ Xxxxxx Ace /s/ Xxxxxx Xxxxxx
------------------------------------- -----------------------------------
Xxxxxx Ace Xxxxxx Xxxxxx
/s/ Xxx Xxxx /s/ Xxx Xxxxxxx
------------------------------------- -----------------------------------
Xxx Xxxx Xxx Xxxxxxx
/s/ Xxxxxx Xxxxxx /s/ Xxxx Xxxxxx
------------------------------------- -----------------------------------
Xxxxxx Xxxxxx Xxxxxx and Xxxx Xxxxxx
/s/ Xxxxxx Tiberius
------------------------------------- -----------------------------------
Xxxxxx Tiberius Xxxx Xxxxx
/s/ Xxx X. Xxxx /s/ Xxxxxxx Xxxxxx
------------------------------------- -----------------------------------
Xxx X. Xxxx Xxxxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
------------------------------------- -----------------------------------
Xxxxxxx X'Xxxxxx Xxxxx Xxxxxx
/s/ Xxxx Xxxxx /s/ Xxxxxx Xxxxx
------------------------------------- -----------------------------------
Xxxx Xxxxx Xxxxxx Xxxxx
/s/ Xxxxx Xxxxxxx
------------------------------------- -----------------------------------
Xxxxx Xxxxxxx Xxxxx Xxxx
------------------------------------- -----------------------------------
Xxxxx X. and Xxxxxxx Xxxxx Xxxx Xxxxx
/s/ Xxxxxx Xxxxxxxx /s/ Xxxxxxx Xxxxxx /s/ Xxxxx Xxxxxx
------------------------------------- -----------------------------------
Xxxxxx Xxxxxxxx Xxxxxxx and Xxxxx Xxxxxx
71
/s/ Xxxxxx Xxxx /s/ Xxxxxxx Xxxxxx
------------------------------------- -----------------------------------
Xxxxxx Xxxx Xxxxxxx Xxxxxx
/s/ Xxxxx Xxxxx
------------------------------------- -----------------------------------
Xxxxx Xxxxx Xxxx Xxxx
/s/ Xxxxxxx Xxxxxxx Xxxx /s/ Xxxxxxx Xxxxxx
------------------------------------- -----------------------------------
Winston Xxxxxxx Xxxx Xxxxxxx Xxxxxx
------------------------------------- -----------------------------------
Xxxxx Xxxxxx Xxxxxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxx /s/ Xxxx Xxxxx
------------------------------------- -----------------------------------
Xxxxxxx Xxxxx Xxxx Xxxxx
/s/ Xxxxx Xxxxxx /s/ Xxxxx Xxxxxxxx /s/ Xxxxxx Xxxxxxxx
------------------------------------- --------------------------------------
ADS Financial Services Xxxxx and Xxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxx
------------------------------------- -----------------------------------
Xxxxxx and Xxxx Xxxxx Xxxxxx Xxxxxxx
/s/ Xxxxx X. Xxxxx /s/ Xxxxxxxxx Xxxx
------------------------------------- -----------------------------------
Xxxxx X. Xxxxx Xxxxxxxxx Xxxx
/s/ Xxxxx and Xxxxxx Xxxxxxx /s/ Xxxxxxx Xxxxxxx
------------------------------------- -----------------------------------
Xxxxx and Xxxxxx Xxxxxxx Xxxxxxx Xxxxxxx
/s/ Xxxx Xxxxxxx
------------------------------------- -----------------------------------
Xxxx Xxxxxxx Xxxxxx Xxxxxxx
/s/ Xxx Xxxxxx Xxxxx
------------------------------------- -----------------------------------
Xxx Xxxxxx Xxxxx Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxxx /s/ H. Xxxx Xxxxxxxxx
------------------------------------- -----------------------------------
Xxxxxx Xxxxxxx H. Xxxx Xxxxxxxxx
/s/ Xxxxxxxx Xxxxxxxxxxx /s/ Xxxx Xxxxxxx
------------------------------------- -----------------------------------
Xxxxxxxx Xxxxxxxxxxx Xxxx Xxxxxxx
72
------------------------------------- -----------------------------------
Xxxx Xxxxxx Xxxxx Xxxxxx
/s/ Xxxx Xxxxxxxxxx /s/ Xxxxxx Xxxxxx Xxxxxx
------------------------------------- -----------------------------------
Xxxx Xxxxx Xxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
/s/ Xxxxx Xxxxxxx /s/ Xxxxxx Xxxxxxxx Xxxxxx
------------------------------------- -----------------------------------
Xxxxx Xxxxxxx Xxxxxxx Xxxxxx
/s/ Xxxxxxx X'Xxxxx
------------------------------------- -----------------------------------
Xxxxxxx X'Xxxxx Xxxxx Xxxxx
/s/ Xxxxxxx Xxxxxxxxxxx /s/ Xxxxx Xxxx
------------------------------------- -----------------------------------
Xxxxxxx Xxxxxxxxxxx Xxxxx Xxxx
/s/ Xxxxxxx Xxxxxxx /s/ Xxxxx Xxxxxx
------------------------------------- -----------------------------------
Xxxxxxx Xxxxxxx Xxxxx Xxxxxx
------------------------------------- -----------------------------------
Xxx Xxxxxx Xxxxxx Xxxxxx
/s/ Xxxxx Xxxxxx /s/ Xxxxxxxx Xxxxxxx
------------------------------------- -----------------------------------
Xxxxx Xxxxxx Xxxxxxxx Xxxxxxx
/s/ Xxxx Xxxxxxx /s/ Xxxxxx Xxxxx
------------------------------------- -----------------------------------
Xxxx Xxxxxxx Xxxxxx Xxxxx
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxx Yozik
------------------------------------- -----------------------------------
Xxxxxx X. Xxxxxxx ISP Net
/s/ Xxxx Xxxxxxx /s/ Xxxxxx Xxxxxx
------------------------------------- -----------------------------------
Xxxx Xxxxxxx Xxxxxx Xxxxxx
/s/ Xx Xxxxxx /s/ Xxxx Xxxxxxxxxx
------------------------------------- -----------------------------------
Sirius Video Productions Xxxx Xxxxxxxxxx
/s/ Xx Xxxxxxxx /s/ Xxxx Xxxxxxx
------------------------------------- -----------------------------------
Xx Xxxxxxxx Xxxx Xxxxxxx
73
/s/ Xxxxx X. Xxxxxx
-------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxx Xxxxxxx
-------------------------------------
Xxxx Xxxxxxx
-------------------------------------
Xxxxx and Xxxxxxxxx Xxxxx
-------------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxx Xxxxxx, Director
-------------------------------------
Trident III, L.L.C.
74