AGREEMENT AND PLAN OF
MERGER
RED DOG ACQUISITION CORP.
DATED AS OF NOVEMBER 29,
2005
AGREEMENT AND PLAN
OF MERGER, dated as of November 29, 2005 (this
“Agreement”), by and among PFSweb, Inc., a Delaware
corporation (“Parent”), Red Dog Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of Parent
(“Merger Sub”), and eCost.com, Inc., a Delaware
corporation (the “Company”).
WHEREAS, the
respective Boards of Directors of Parent, Merger Sub and the
Company have approved and declared advisable the merger of Merger
Sub with and into the Company (the “Merger”) upon the
terms and subject to the conditions of this Agreement and in
accordance with the General Corporation Law of the State of
Delaware (the “DGCL”);
WHEREAS, the
respective Boards of Directors of Parent and the Company have
determined that the Merger is in furtherance of and consistent with
their respective business strategies and is in the best interest of
their respective stockholders, and Parent has approved this
Agreement and the Merger as the sole stockholder of Merger
Sub;
WHEREAS, for
federal income Tax purposes, Parent, Merger Sub and the Company
intend that the Merger qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the “Code”); and
WHEREAS, a
stockholder of the Company has executed and delivered to Parent a
voting agreement (the “Company Voting Agreement”) as an
inducement to Parent to enter into this Agreement;
NOW, THEREFORE, in
consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth in this Agreement
and intending to be legally bound hereby, the parties hereto agree
as follows:
Section 1.1 The Merger . Upon the terms and subject to
satisfaction or waiver of the conditions set forth in this
Agreement, and in accordance with the DGCL, Merger Sub, at the
Effective Time, shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the surviving
corporation of the Merger (the “Surviving Corporation”)
and shall be a wholly owned subsidiary of Parent.
Section 1.2 Closing . The closing of the Merger (the
“Closing”) shall take place as promptly as practicable,
but in no event later than the first business day after the
satisfaction or waiver of the conditions (excluding conditions
that, by their nature, cannot be satisfied until the Closing Date)
set forth in Article VI, unless this Agreement has been
theretofore terminated pursuant to its terms or unless another time
or date is agreed to in writing by the parties hereto (the actual
date of the Closing being referred to herein as the “Closing
Date”). The Closing shall be held at the offices of Parent,
500 North Central Expressway, Plano, Texas 75074, unless another
place is agreed to in writing by the parties hereto. As soon as
practicable on or after the
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Closing Date,
the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger relating to the Merger (the
“Certificate of Merger”) with the Secretary of State of
the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL (the date and
time of such filing, or if another date and time is agreed to in
writing by the parties hereto and is specified in such filing, such
specified date and time, being the “Effective
Time”).
Section 1.3 Effect of the Merger . At the Effective
Time, the effect of the Merger shall be as provided in the
applicable provisions of the DGCL. Without limiting the generality
of the foregoing, at the Effective Time, except as otherwise
provided herein, all the property, rights, privileges, powers and
franchises of Merger Sub and the Company shall vest in the
Surviving Corporation, and all debts, liabilities and duties of
Merger Sub and the Company shall become the debts, liabilities and
duties of the Surviving Corporation.
Section 1.4 Certificate of Incorporation; Bylaws . At
the Effective Time, (a) the Certificate of Incorporation of
the Surviving Corporation shall be amended in its entirety to
contain the provisions set forth in the Certificate of
Incorporation of Merger Sub and (b) the Bylaws of the
Surviving Corporation shall be amended in their entirety to contain
the provisions set forth in the Bylaws of Merger Sub, each as in
effect immediately prior to the Effective Time, and in each case
until thereafter changed or amended as provided therein or pursuant
to applicable Law.
Section 1.5 Directors and Officers of Surviving
Corporation . At the Effective Time, the initial directors of
the Surviving Corporation shall be the directors of Merger Sub,
each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation. The initial
officers of the Surviving Corporation shall be the officers of
Merger Sub, each to hold office in accordance with the Certificate
of Incorporation and Bylaws of the Surviving
Corporation.
Conversion of Securities;
Exchange of Certificates
Section 2.1 Conversion of Securities . At the Effective
Time, by virtue of the Merger and without any action on the part of
Parent, Merger Sub, the Company or the holders of any of the
following securities:
(a)
Conversion Generally . Each share of common stock, par value
$.001 per share, of the Company (“Company Common
Stock”) issued and outstanding immediately prior to the
Effective Time (other than any shares of Company Common Stock to be
canceled pursuant to Section 2.1(b)), shall be converted,
subject to Section 2.2(e), into the right to receive one
(1) share (the “Exchange Ratio”) of common stock,
par value $.001 per share, of Parent (“Parent Common
Stock”), together with the associated Parent Rights (unless
the context otherwise requires, all references to Parent Common
Stock shall include the associated Parent Rights). All such shares
of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and
each certificate previously representing any
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such shares
shall thereafter represent the right to receive a certificate
representing the shares of Parent Common Stock into which such
Company Common Stock was converted in the Merger. Certificates
previously representing shares of Company Common Stock shall be
exchanged for certificates representing whole shares of Parent
Common Stock issued in consideration therefor upon the surrender of
such certificates in accordance with the provisions of
Section 2.2, without interest. No fractional share of Parent
Common Stock shall be issued, and in lieu thereof, a cash payment
shall be made pursuant to Section 2.2(e) hereof.
(b)
Cancellation of Certain Shares . Each share of Company
Common Stock held by Parent, Merger Sub, any wholly-owned
subsidiary of Parent or Merger Sub, in the treasury of the Company
or by any wholly-owned subsidiary of the Company immediately prior
to the Effective Time shall be canceled and extinguished without
any conversion thereof and no payment shall be made with respect
thereto.
(c)
Merger Sub . Each share of common stock, par value $.001 per
share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into and be exchanged for one
newly and validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.
(d)
Change in Shares . If between the date of this Agreement and
the Effective Time, the outstanding shares of Company Common Stock
or Parent Common Stock shall have been changed into a different
number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split,
combination, exchange of shares or other similar event or
transaction, the Exchange Ratio shall be equitably adjusted to
reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange of shares or other
similar event or transaction.
Section 2.2 Exchange of Certificates .
(a)
Exchange Agent . As of the Effective Time, Parent shall
irrevocably deposit, or shall cause to be deposited, with Mellon
Investor Services, LLC or another bank or trust company mutually
agreeable to Parent and the Company (the “Exchange
Agent”), for the benefit of the holders of shares of Company
Common Stock, for exchange in accordance with this Article II
through the Exchange Agent, certificates representing the shares of
Parent Common Stock issuable pursuant to Section 2.1 and cash
in an amount sufficient to permit payment of cash in lieu of
fractional shares pursuant to Section 2.2(e) (such
certificates for shares of Parent Common Stock, together with cash
in lieu of fractional shares and any dividends or distributions
with respect thereto, being hereinafter referred to as the
“Exchange Fund”) in exchange for outstanding shares of
Company Common Stock. The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the Parent Common Stock
contemplated to be issued pursuant to Section 2.1 and the cash
contemplated to be issued pursuant to Section 2.2(e) out of
the Exchange Fund. The Exchange Fund shall not be used for any
other purpose.
(b)
Exchange Procedures . Promptly after the Effective Time,
Parent shall instruct the Exchange Agent to mail to each holder of
record of a certificate or certificates which immediately prior to
the Effective Time represented outstanding shares of Company
Common
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Stock (the
“Certificates”) (i) a letter of transmittal
reasonably acceptable to the Company (which shall specify that
delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall be in reasonable and
customary form) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, properly completed and duly executed,
and such other documents as may be reasonably required pursuant to
such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that
number of whole shares of Parent Common Stock which such holder has
the right to receive in respect of the shares of Company Common
Stock formerly represented by such Certificate, cash in lieu of
fractional shares of Parent Common Stock to which such holder is
entitled pursuant to Section 2.2(e) and any dividends or other
distributions to which such holder is entitled pursuant to
Section 2.2(c), and the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on any
cash in lieu of fractional shares or on any unpaid dividends and
distributions payable to holders of Certificates. In the event of a
transfer of ownership of shares of Company Common Stock which is
not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent
Common Stock may be issued to a transferee if the Certificate
representing such shares of Company Common Stock is presented to
the Exchange Agent, accompanied by all documents reasonably
required to evidence and effect such transfer and by evidence
reasonably satisfactory that any applicable stock transfer Taxes,
if any, have been paid. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive
upon such surrender the certificate representing shares of Parent
Common Stock, cash in lieu of any fractional shares of Parent
Common Stock to which such holder is entitled pursuant to
Section 2.2(e) and any dividends or other distributions to
which such holder is entitled pursuant to
Section 2.2(c).
(c)
Distributions with Respect to Unexchanged Shares of Parent
Common Stock . No dividends or other distributions declared or
made after the Effective Time with respect to Parent Common Stock
with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the shares
of Parent Common Stock represented thereby, and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant
to Section 2.2(e), unless and until the holder of such
Certificate shall surrender such Certificate. Subject to the effect
of escheat, Tax or other applicable Laws, following surrender of
any such Certificate, there shall be paid to the holder of the
certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) promptly,
the amount of any cash payable with respect to a fractional share
of Parent Common Stock to which such holder is entitled pursuant to
Section 2.2(e) and the amount of dividends or other
distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common
Stock and (ii) at the appropriate payment date, the amount of
dividends or other distributions, with a record date after the
Effective Time but prior to surrender and a payment date occurring
after surrender, payable with respect to such whole shares of
Parent Common Stock.
(d)
Further Rights in Company Common Stock . All shares of
Parent Common Stock issued upon conversion of the shares of Company
Common Stock in accordance with the terms
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hereof
(including any cash paid pursuant to Section 2.2(c) or
Section 2.2(e)) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company
Common Stock.
(e)
Fractional Shares . No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution
with respect to Parent Common Stock shall be payable on or with
respect to any fractional share and such fractional share interests
will not entitle the owner thereof to any rights of a stockholder
of Parent. In lieu of any fractional shares of Parent Common Stock
that would otherwise be issued, each stockholder that would have
been entitled to receive a fractional share of Parent Common Stock
shall, upon proper surrender of the Certificates, receive a cash
payment equal to such fraction multiplied by the average closing
price of one share of Parent Common Stock as reported on the
Exchange for the five (5) trading days ending on and including
the second trading day preceding the Effective Time.
(f)
Termination of Exchange Fund . Any portion of the Exchange
Fund which remains undistributed to the holders of Company Common
Stock for nine (9) months after the Effective Time shall be
delivered to Parent upon demand, and any holders of Company Common
Stock who have not theretofore complied with this Article II
shall thereafter look only to Parent for the shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent
Common Stock to which they are entitled pursuant to
Section 2.2(e) and any dividends or other distributions with
respect to Parent Common Stock to which they are entitled pursuant
to Section 2.2(c), in each case, without any interest
thereon.
(g) No
Liability . None of Parent, the Surviving Corporation or the
Company shall be liable to any holder of shares of Company Common
Stock for any such shares of Parent Common Stock (or dividends or
distributions with respect thereto) or cash from the Exchange Fund
delivered to a public official pursuant to any abandoned property,
escheat or similar Law.
(h) Lost
Certificates . If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed
and, if reasonably required by Parent, the posting by such person
of a bond, in such reasonable amount as Parent may direct, as
indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the shares
of Parent Common Stock, any cash in lieu of fractional shares of
Parent Common Stock to which the holders thereof are entitled
pursuant to Section 2.2(e) and any dividends or other
distributions to which the holders thereof are entitled pursuant to
Section 2.2(c), in each case, without any interest
thereon.
(i)
Withholding . Parent or the Exchange Agent shall be entitled
to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Company Common Stock
such amounts as Parent or the Exchange Agent is required to deduct
and withhold under applicable Law with respect to the making of
such payment. To the extent that amounts are so withheld by Parent
or the Exchange Agent, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of
Company Common Stock in respect of whom such deduction and
withholding was made by Parent or the
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(j) Stock
Transfer Books. At the Effective Time, the stock transfer books
of the Company shall be closed and thereafter there shall be no
further registration of transfers of shares of Company Common Stock
theretofore outstanding on the records of the Company.
Section 2.3 Appraisal Rights . Pursuant to Section
262(b) of the DGCL, the holders of shares of Company Common Stock
shall not be entitled to appraisal rights as a result of the
Merger.
Section 2.4 Stock Options . Prior to the Effective
Time, the Board of Directors of the Company (the “Company
Board”) (or, if appropriate, any committee thereof) shall
take all actions necessary and appropriate to provide that, at the
Effective Time, all unexercised and unexpired options to purchase
Company Common Stock (“Company Options”) then
outstanding, under the Company 2004 Stock Incentive Plan or the
Company 1999 Stock Incentive Plan (the “Company Stock Option
Plans”), whether or not then exercisable, shall be cancelled
and terminated without consideration therefore. No Company Options
shall be assumed by Parent.
Representations and Warranties of
the Company
Except as set
forth in a disclosure memorandum delivered by the Company to Parent
prior to the execution of this Agreement (the “Company
Disclosure Memorandum”), which identifies exceptions by
specific Section references (provided, that any matter disclosed in
any section of the Company Disclosure Memorandum shall be
considered disclosed for other sections of the Company Disclosure
Memorandum, but only to the extent such matter on its face would be
reasonably expected to be pertinent to a particular section of the
Company Disclosure Memorandum in light of the disclosure made in
such section), the Company hereby represents and warrants to Parent
as follows:
Section 3.1 Organization and Qualification;
Subsidiaries . The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware. Each Subsidiary of the Company has been duly
organized, and is validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, as
the case may be. The Company and each of its Subsidiaries has the
requisite power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except for such powers,
authorities and approvals that would not, individually or in the
aggregate, have a Material Adverse Effect. The Company and each of
its Subsidiaries is duly qualified or licensed to do business, and
is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its
business makes such qualification, licensing or good standing
necessary, except for such failures to be so qualified, licensed or
in good standing that would not, individually or in the aggregate,
have a Material Adverse Effect. Section 3.1 of the Company
Disclosure Memorandum sets forth a true and complete list of all of
the Subsidiaries of the Company and their respective jurisdiction
of organization or incorporation. Except as set forth in
Section 3.1 of
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the Company
Disclosure Memorandum, none of the Company or any of its
Subsidiaries holds an Equity Interest in any other
person.
Section 3.2 Certificate of Incorporation and Bylaws;
Corporate Books and Records . The copies of the Company’s
Amended and Restated Certificate of Incorporation, as amended (the
“Company Certificate”), and Amended and Restated
Bylaws, as amended (the “Company Bylaws”), that are
listed as exhibits to the Company’s Form 10-K filed with the
SEC for the fiscal year ended December 31, 2004 are complete
and correct copies thereof as in effect on the date hereof. The
Company is not in violation of any of the provisions of the Company
Certificate or the Company Bylaws. True and complete copies of all
minute books of the Company have been made available by the Company
to Parent. The Company has made available to Parent true, correct
and complete copies of the certificate of incorporation, bylaws,
other organizational or charter documents and by laws of each
Subsidiary of the Company.
Section 3.3 Capitalization .
(a) The
authorized capital stock of the Company consists of 100,000,000
shares of Company Common Stock and 10,000,000 shares of preferred
stock, par value $.001 per share, of the Company (“Company
Preferred Stock”). As of November 21, 2005,
(i) 17,755,202 shares of Company Common Stock (other than
treasury shares) were issued and outstanding, all of which were
validly issued and fully paid, nonassessable and free of preemptive
rights, (ii) no shares of Company Common Stock were held in
the treasury of the Company, and (iii) 4,354,000 shares of
Company Common Stock were issuable (and such number was reserved
for issuance) upon exercise of Company Options outstanding as of
such date. As of such date, no shares of Company Preferred Stock
were issued or outstanding. All capital stock or other equity
securities of the Company have been issued in compliance with
applicable federal and state securities laws.
(b) Except
for Company Options to purchase not more than 4,354,000 shares of
Company Common Stock, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to
which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries is bound relating to the
issued or unissued capital stock or other Equity Interests of the
Company or any of its Subsidiaries, or securities convertible into
or exchangeable for such capital stock or other Equity Interests,
or obligating the Company or any of its Subsidiaries to issue or
sell any shares of its capital stock or other Equity Interests, or
securities convertible into or exchangeable for such capital stock
of, or other Equity Interests in, the Company or any of its
Subsidiaries. All issued and outstanding Company Options were
issued under, and pursuant to the terms of, the Company Stock
Option Plans. Since November 21, 2005, neither the Company nor
any of its Subsidiaries has issued any shares of its capital stock,
or securities convertible into or exchangeable for such capital
stock or other Equity Interests, other than those shares of capital
stock reserved for issuance as set forth in this Section 3.3
or Section 3.3 of the Company Disclosure Memorandum. The
Company has provided Parent with a true and complete list, as of
the date hereof, of the prices at which outstanding Company Options
may be exercised under the Company Stock Option Plans, the number
of Company Options outstanding at each such price and the vesting
schedule of the Company Options. All shares of Company Common Stock
subject to issuance under the Company Options, upon issuance on the
terms and conditions specified in the instruments
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pursuant to
which they are issuable, will be duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights.
(c) Except
for the Company Voting Agreement and as set forth in
Section 3.3 of the Company Disclosure Memorandum, there are no
outstanding contractual obligations of the Company or any of its
Subsidiaries (i) restricting the transfer of,
(ii) affecting the voting rights of, (iii) requiring the
repurchase, redemption or disposition of, or containing any right
of first refusal with respect to, (iv) requiring the
registration for sale of, or (v) granting any preemptive or
antidilutive right with respect to, any shares of Company Common
Stock or any capital stock of, or other Equity Interests in, the
Company or any of its Subsidiaries. Except as set forth in Section
3.3 of the Company Disclosure Memorandum, each outstanding share of
capital stock of each Subsidiary of the Company is duly authorized,
validly issued, fully paid, nonassessable and free of preemptive
rights and is owned, beneficially and of record, by the Company or
another of its Subsidiaries, free and clear of all security
interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on the Company’s or such
other of its Subsidiary’s voting rights, charges and other
encumbrances of any nature whatsoever. There are no outstanding
contractual obligations of the Company or any of its Subsidiaries
to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in any of its Subsidiaries any
other person, other than guarantees by the Company or any of its
Subsidiaries of any indebtedness or other obligations of the
Company or other Subsidiary.
(d) The
Company does not have outstanding any bonds, debentures, notes or
other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to
vote) with the stockholders of the Company on any matter. The
Company has not adopted a stockholder rights plan.
(e) Except as
set forth in Section 3.3 of the Company Disclosure Memorandum,
none of the Merger or other transactions contemplated hereby will
result in an acceleration of vesting, or modification of vesting
terms, with respect to any Company Options.
(a) The
Company has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of the
Company and no stockholder votes are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby
other than as provided in Section 3.20. This Agreement
has been duly authorized and validly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and
to general equity principles.
(b) The
Company Board, by resolutions duly adopted by unanimous vote of the
directors
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present at a
meeting duly called and held and not subsequently rescinded or
modified in any way (the “Company Board Approval”), has
duly (i) declared that this Agreement and the transactions
contemplated hereby (including the Merger) are advisable,
(ii) approved and adopted this Agreement and
(iii) resolved to recommend (subject to Section 5.3(a))
that the stockholders of the Company approve and adopt this
Agreement and the transactions contemplated by this Agreement,
including the Merger, and directed that this Agreement be submitted
for consideration by the Company’s stockholders in accordance
with this Agreement. The Company Board Approval constitutes
approval of this Agreement as required under any applicable state
takeover Law and no such state takeover Law is applicable to the
Merger or the other transactions contemplated hereby, including,
without limitation, the restrictions on business combinations
contained in Section 203 of the DGCL.
Section 3.5 No Conflict; Required Filings and Consents
.
(a) The
execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, (i)
(assuming the Company Stockholder Approval is obtained) conflict
with or violate any provision of the Company Certificate or Company
Bylaws or any equivalent organizational documents of any of its
Subsidiaries, (ii) (assuming that all consents, approvals,
authorizations and permits described in Section 3.5(b) have
been obtained and all filings and notifications described in
Section 3.5(b) have been made and any waiting periods
thereunder have terminated or expired) conflict with or violate any
Law applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its
Subsidiaries is bound or affected or (iii) require any consent
or approval under, result in any breach of or any loss of any
benefit under, constitute a change of control or default (or an
event which with notice or lapse of time or both would become a
default) under or give to others any right of termination, vesting,
amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of
the Company or any of its Subsidiaries pursuant to, any Contract,
Company Permit or other instrument or obligation, except, with
respect to clauses (ii) and (iii), for any such conflicts,
violations, consents, approvals, breaches, losses, defaults or
other occurrences which would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) The
execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity or any
other person, except (i) under the Exchange Act, the Securities
Act, applicable Blue Sky Law, and the filing and recordation of the
Certificate of Merger as required by the DGCL, (ii) for such
consents, approvals, authorizations, permits and filings and
notifications set forth in Section 3.5(b) of the Company Disclosure
Memorandum and (iii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not, individually or in the aggregate, have a
Material Adverse Effect.
Section 3.6 Permits; Compliance With Law . The Company
and each of its Subsidiaries is in possession of all
authorizations, licenses, permits, certificates, approvals and
clearances of any Governmental Entity necessary for the Company and
its Subsidiaries to own, lease and operate its properties or to
carry on its respective businesses substantially in the manner
described in the
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Company SEC
Filings filed prior to the date hereof and substantially as it is
being conducted as of the date hereof (the “Company
Permits”), and all such Company Permits are valid, and in
full force and effect, except where the failure to have, or the
suspension or cancellation of, or failure to be valid or in full
force and effect of, any of the Company Permits would not,
individually or in the aggregate, have a Material Adverse Effect.
None of the Company nor any of its Subsidiaries is in conflict
with, or in default or violation of, (a) any Law applicable to
the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or
affected or (b) any Company Permits, except in each case for
any such conflicts, defaults or violations that would not,
individually or in the aggregate, have a Material Adverse
Effect.
Section 3.7 SEC Filings; Financial Statements
.
(a) The
Company has timely filed all registration statements, prospectuses,
forms, reports, definitive proxy statements, schedules and
documents required to be filed by it under the Securities Act or
the Exchange Act, as the case may be (collectively, the
“Company SEC Filings”). Each Company SEC Filing
(i) as of the time it was filed, complied or, if filed
subsequent to the date hereof, will comply, in all material
respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not, at the
time it was filed, or, if filed subsequent to the date hereof, will
not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the
circumstances under which they were or will be made, not
misleading.
(b) Each of
the consolidated financial statements (including, in each case, any
notes thereto) contained in the Company SEC Filings was, or will
be, prepared in accordance with GAAP applied (except as may be
indicated in the notes thereto and, in the case of unaudited
quarterly financial statements, as permitted by Form 10-Q under the
Exchange Act) on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto), and
each presented, or will present, fairly the consolidated financial
position, results of operations and cash flows of the Company and
its consolidated Subsidiaries as of the respective dates thereof
and for the respective periods indicated therein (subject, in the
case of unaudited statements, to normal year-end adjustments which
did not and would not, individually or in the aggregate, have a
Material Adverse Effect).
(c) The
books, records and accounts of the Company (i) are in all
material respects true and correct, (ii) have been and are
being maintained in accordance with reasonable business practices
and customary internal controls procedures on a basis consistent
with prior years, and (iii) accurately and fairly reflect the
transactions and dispositions of the assets of the Company and its
Subsidiaries. The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with
management’s general or specific authorization;
(ii) transactions are recorded as necessary (1) to permit
preparation of financial statements in conformity with generally
accepted accounting principles or any other criteria applicable to
such statements, and (2) to maintain accountability for
assets; and (iii) the amount recorded for assets on the books
and records of the Company is compared with the existing assets at
reasonable intervals and appropriate action is taken
with
11
respect to any
differences.
(d) Except as
and to the extent set forth on the consolidated balance sheet of
the Company and its consolidated Subsidiaries as of
September 30, 2005 included in the Company’s Form 10-Q
for the period ended September 30, 2005 or the notes thereto
(the “Company Balance Sheet”), none of the Company nor
any of its consolidated Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) that would be required to be reflected on a balance
sheet or in notes thereto prepared in accordance with GAAP, except
for liabilities or obligations incurred in the ordinary course of
business since September 30, 2005 that would not, individually
or in the aggregate, have a Material Adverse Effect.
(e) Each
required form, report and document containing financial statements
that the Company has filed with or furnished to the SEC was
accompanied by the certifications then required to be filed or
furnished by the Company’s Chief Executive Officer and Chief
Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 and
the rules and regulations promulgated under such Act or the
Exchange Act (collectively, the “Sarbanes-Oxley Act”),
and at the time of filing or submission of each such certification,
such certification (i) was true and accurate and complied with
the Sarbanes-Oxley Act, (ii) did not contain any
qualifications or exceptions to the matters certified therein,
except as otherwise permitted under the Sarbanes-Oxley Act, and
(iii) has not been modified or withdrawn. As of the date of
this Agreement, neither the Company nor any of its officers has
received notice from any Governmental Entity questioning or
challenging the accuracy, completeness, content, form or manner of
filing or furnishing of such certifications. The Company’s
disclosure controls and procedures (as defined in
Sections 13a-14(c) and 15d-14(c) of the Exchange Act)
effectively enable the Company to comply with, and the appropriate
officers of the Company to make all certifications required under,
the Sarbanes-Oxley Act. Neither the Company nor, to the
Company’s knowledge, any director, officer, employee,
auditor, accountant or representative of the Company has received
any written complaint, assertion or claim alleging that the Company
has engaged in improper or illegal accounting or auditing practices
or maintains improper or inadequate internal controls over
financial reporting (as defined in Exchange Act Rule 13a-15(f)
and Rule 15a-15(f)).
(f) The
Company is in compliance in all material respects with the
applicable listing and corporate governance rules and regulations
of The Nasdaq Stock Market.
Section 3.8 Brokers . No broker, finder or investment
banker (other than the Company Financial Advisor) is entitled to
any brokerage, finder’s or other fee or commission in
connection with the Merger based upon arrangements made by or on
behalf of the Company or any of its Subsidiaries. The Company has
heretofore made available to Parent a true and complete copy of all
agreements between the Company and the Company Financial Advisor
pursuant to which such firm would be entitled to any payment
relating to the Merger or any other transaction contemplated by
this Agreement.
Section 3.9 Absence of Certain Changes or Events .
Since September 30, 2005, except as specifically contemplated
by, or as disclosed in, this Agreement or Section 3.9 of the
Company Disclosure Memorandum, the Company and each of its
Subsidiaries has conducted its businesses
12
in the ordinary
course consistent with past practice and, since such date there has
not been any :
(a) Material
Adverse Effect or an event or development that would, individually
or in the aggregate, have a Material Adverse Effect;
(b) amendment
to, or change in, the Company Certificate or Company
Bylaws;
(c) incurrence,
creation or assumption by the Company or any of its Subsidiaries of
(i) any mortgage, deed of trust, security interest, pledge,
title retention device or collateral assignment, (ii) any
claim, lien, charge, restriction or other encumbrance of any kind
on any of the assets or properties of the Company or any of its
Subsidiaries other than obligations or liabilities incurred in the
ordinary course of their respective business, including those
related to letters of credit or (iii) any indebtedness for
borrowed money to purchase inventory or other indebtedness for
borrowed money in excess of $50,000;
(d) offer,
issuance or sale of any debt or equity securities of the Company,
or any options, warrants or other rights to acquire from the
Company, directly or indirectly, any debt or equity securities of
the Company (other than pursuant to the exercise of outstanding
Company Options in accordance with the terms thereof);
(e) payment
or discharge by the Company or any of its Subsidiaries of any
security interest, lien, or encumbrance of any kind on any asset or
property of the Company or any of its Subsidiaries, or the payment
or discharge of any liability other than in the ordinary course of
its business;
(f) purchase,
license, sale, assignment or other disposition or transfer (or any
agreement or other arrangement for the purchase, license, sale,
assignment or other disposition or transfer) of any of the assets,
properties or goodwill of the Company or any of its Subsidiaries
other than in the ordinary course of its business;
(g) damage,
destruction or loss of any property or asset, whether or not
covered by insurance, having (or likely with the passage of time to
have) a Material Adverse Effect;
(h) declaration,
setting aside or payment of any dividend on, or the making of any
other distribution in respect of, the capital stock of the Company,
any split, combination or recapitalization of the capital stock of
the Company or any direct or indirect redemption, purchase or other
acquisition of any capital stock of the Company or any change in
any rights, preferences, privileges or restrictions of any
outstanding security of the Company;
(i) material
increase in the compensation payable or to become payable to any
(i) of the officers or directors of the Company or
(ii) employees of the Company, except in connection with
normal employee salary or performance reviews and in the ordinary
course of the Company’s business or as required under the
plans of any Company Benefit Plan or applicable Law;
(j) making by
the Company of any loan, advance or capital contribution to, or
any
13
investment in,
any officer, director or shareholder of the Company or any firm or
business enterprise in which any such person had a direct or
indirect material interest at the time of such loan, advance,
capital contribution or investment;
(k) entering
into, material amendment of, relinquishment, termination or
non-renewal by the Company of any material Contract, other than in
the ordinary course of its business;
(l) assertion
by any customer(s) of the Company of any complaint regarding the
Company’s services or products which has a reasonable factual
basis and, if substantiated, is reasonably likely to have a
Material Adverse Effect;
(m) material
change in the policies under which the Company extends discounts,
credits or warranties to customers or otherwise deals with its
customers;
(n) entering
into by the Company of any transaction, Contract or agreement that
by its terms requires or contemplates a current and/or future
financial commitment, expense or obligation on the part of the
Company involving in excess of $100,000, other than in the ordinary
course of the Company’s business;
(o) any
license, transfer or grant of a right under any Company Material
Intellectual Property, other than in the ordinary course of the
Company’s business;
(p) any
agreement made by the Company to provide exclusive services to any
person or not to engage in any business activity.
Section 3.10 Employee Benefit Plans .
(a) Section 3.10(a)
of the Company Disclosure Memorandum sets forth a true and complete
list of each material “employee benefit plan” as
defined in Section 3(3) of ERISA and any other plan, policy,
program, practice, agreement, understanding or arrangement (whether
written or oral) providing material compensation or other material
benefits to any current or former director, officer, employee or
consultant (or to any dependent or beneficiary thereof of the
Company, which are maintained, sponsored or contributed to by the
Company or any of its Subsidiaries, or under which the Company or
any of its Subsidiaries has any material obligation or liability,
whether actual or contingent, including, without limitation, all
incentive, bonus, deferred compensation, profit-sharing, severance,
termination, retention, change in control, vacation, holiday,
cafeteria, medical, disability, stock purchase, stock option, stock
appreciation, phantom stock, restricted stock or other stock-based
compensation plans, policies, programs, practices or arrangements
(each a “Company Benefit Plan”). Neither the Company,
nor to the knowledge of the Company, any other person or entity,
has made any commitment to establish, modify, change or terminate
any Company Benefit Plan, other than with respect to a
modification, change or termination required by ERISA, the Code or
other applicable Law. With respect to each Company Benefit Plan,
except as set forth in Section 3.10 of the Company Disclosure
Memorandum, the Company has delivered or made available to Parent
true, correct and complete copies, if applicable, of (i) each
Company Benefit Plan (or, if not written, a written summary of its
material terms), including without limitation all plan documents,
adoption
14
agreements,
trust agreements, insurance contracts or other funding vehicles and
all amendments thereto, (ii) all current summary plan
descriptions and amendments thereto, including any current summary
of material modifications, (iii) the annual reports
(Form 5500 series) for the two most recent year filed or
required to be filed with the IRS with respect to such Company
Benefit Plan, (iv) the two most recent actuarial reports or
other financial statements relating to such Company Benefit Plan,
(v) the most recent determination or opinion letter, if any,
issued by the IRS with respect to any Company Benefit Plan and any
pending request for such a determination letter, (vi) the most
recent nondiscrimination tests performed under the Code (including
401(k) and 401(m) tests) for each Company Benefit Plan, and
(vii) all filings made with any Governmental Entity, including
but not limited to any filings under the Voluntary Compliance
Resolution or Closing Agreement Program or the Department of Labor
Delinquent Filer Program, within the current or prior two calendar
years.
(b) Each
Company Benefit Plan has been administered in all material respects
in accordance with its terms and all applicable Laws, including
ERISA and the Code, and contributions required to be made under the
terms of any of the Company Benefit Plans as of the date of this
Agreement have been timely made or, if not yet due, have been
properly reflected on the most recent balance sheet filed or
incorporated by reference in the Company SEC Filings prior to the
date of this Agreement. With respect to the Company Benefit Plans,
no event has occurred and, to the knowledge of the Company, there
exists no condition or set of circumstances in connection with
which the Company could be subject to any material liability (other
than for routine benefit liabilities) under the terms of, or with
respect to, such Company Benefit Plans, ERISA, the Code or any
other applicable Law.
(c) Except as
set forth in Section 3.10(c) of the Company Disclosure
Memorandum: (i) each Company Benefit Plan which is intended to
qualify under Section 401(a), Section 401(k), Section
401(m) or Section 4975(e)(6) of the Code has either received a
favorable determination letter from the IRS as to its qualified
status or the remedial amendment period for such Company Benefit
Plan has not yet expired, and each trust established in connection
with any Company Benefit Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code is so
exempt, and, to the Company’s knowledge, no fact or event has
occurred that has adversely affected or could adversely affect the
qualified status of any such Company Benefit Plan or the exempt
status of any such trust, (ii) to the Company’s
knowledge there has been no prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the
Code and other than a transaction that is exempt under a statutory
or administrative exemption) with respect to any Company Benefit
Plan that could result in liability to the Company or any of its
Subsidiaries , (iii) no suit, administrative proceeding,
action or other litigation has been brought, or to the knowledge of
the Company is threatened, against or with respect to any such
Company Benefit Plan or an administrator or fiduciary thereof,
including any audit or inquiry by the IRS, United States Department
of Labor, the Pension Benefit Guaranty Corporation, or any other
federal or state governmental agency (other than routine benefits
claims), (iv) no Company Benefit Plan is a multiple employer
pension plan (within the meaning of Section 413(c) of the Code
(“Multiple Employer Plan”), a multiemployer pension
plan (as defined in Section 3(37) of ERISA)
(“Multiemployer Plan”) or other pension plan subject to
Title IV of ERISA and none of the Company or any ERISA Affiliate
has sponsored or contributed to or been required to contribute to a
Multiple Employer Plan, a Multiemployer Plan
15
or other
pension plan subject to Title IV of ERISA, (v) no material
liability under Title IV of ERISA has been incurred by the Company
or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring or being subject (whether
primarily, jointly or secondarily) to a material liability
thereunder, (vi) none of the assets of the Company or any
ERISA Affiliate is, or may reasonably be expected to become, the
subject of any lien arising under ERISA or Section 412(n) of the
Code, (vii) neither the Company nor any ERISA Affiliate has
any liability under ERISA Section 502, (viii) all Tax, annual
reporting and other governmental filings required by ERISA and the
Code have been timely filed with the appropriate Governmental
Entity and all required notices and disclosures have been timely
provided to Company Benefit Plan participants, and (ix) all
contributions and payments to each Company Benefit Plan are
deductible under Code sections 162 or 404.
(d) Neither
the execution and delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, either alone or in
combination with another event (whether contingent or otherwise)
will (i) entitle any current or former employee, consultant or
director of the Company or any of its Subsidiaries or any group of
such employees, consultants or directors to any payment;
(ii) increase the amount of compensation or benefits due to
any such employee, consultant or director; (iii) accelerate
the vesting, funding or time of payment of any compensation, equity
award or other benefit, other than the Company Options;
(iv) result in any “parachute payment” under
Section 280G of the Code (whether or not such payment is
considered to be reasonable compensation for services rendered); or
(v) cause any compensation to fail to be deductible under
Section 162(m) of the Code, or any other provision of the Code or
any similar foreign law or regulation.
(e) Except as
required by Law, no Company Benefit Plan provides any of the
following retiree or post-employment benefits to any person and
there has been no communication to any current or former employee,
consultant or director of the Company or any subsidiary of the
Company that would reasonably be expected to promise or guarantee
any such benefits on any ongoing basis: medical, disability or life
insurance benefits. No Company Benefit Plan is a voluntary employee
benefit association under Section 501(a)(9) of the Code. The
Company and each ERISA Affiliate are in material compliance with
(i) the requirements of the applicable health care
continuation and notice provisions of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and the regulations
(including proposed regulations) thereunder and any similar state
law and (ii) the applicable requirements of the Health
Insurance Portability and Accountability Act of 1996, as amended,
and the regulations (including the proposed regulations)
thereunder.
(f) The
Company does not maintain, sponsor, contribute or have any
liability with respect to any employee benefit plan, program or
arrangement that provides benefits to non-resident aliens with no
U.S. source income outside of the United States.
(g) Section 3.10(g)
of the Company Disclosure Memorandum sets forth any and all
indebtedness in excess of twenty-five thousand U.S. dollars
(US$25,000) owed by any current or former employee, consultant or
director of the Company or any Subsidiary of the Company to any
such entity, other than travel advances and similar amounts arising
in the ordinary course of
16
business and
consistent with past practice and the Company policies and
procedures.
Section 3.11 Labor and Other Employment Matters
.
(a) The
Company and each of its Subsidiaries is in compliance with all
applicable Laws respecting labor, employment, fair employment
practices, terms and conditions of employment, workers’
compensation, occupational safety, plant closings, and wages and
hours, except where the failure to so comply would not,
individually or in the aggregate, have a Material Adverse Effect.
None of the Company or any of its Subsidiaries is a party to any
collective-bargaining agreement or other labor union contract
applicable to persons employed by the Company. No labor unions or
other organizations are representing, purporting to represent or
attempting to represent any employees of the Company or any of its
Subsidiaries and no collective-bargaining agreement or other labor
union contract is being negotiated by the Company or any of its
Subsidiaries. There is no labor dispute, strike, slowdown or work
stoppage against the Company or any of its Subsidiaries pending or,
to the knowledge of the Company, threatened, nor has there been any
such incident during the past three years. To the Company’s
knowledge, the Company has not engaged in any unfair labor
practices within the meaning of the National Labor Relations Act.
To the Company’s knowledge, no employee of the Company or any
of its Subsidiaries is in any material respect in violation of any
term of any employment contract, non-disclosure agreement,
non-competition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed
by the Company or such Subsidiary because of the nature of the
business conducted or presently proposed to be conducted by it or
to the use of trade secrets or proprietary information of
others.
(b) The
Company has identified in Section 3.11(b) of the Company
Disclosure Memorandum and, if written, has made available to Parent
true and complete copies of all plans, programs, agreements and
other arrangements of the Company with or relating to its
directors, officers, employees or consultants that contain
change-in-control provisions. As of the date of this Agreement, no
individual who is a party to an employment agreement listed in
Section 3.10(a) of the Company Disclosure Memorandum or any
agreement containing change-in-control provisions has terminated
employment or been terminated, nor has any event occurred that
could give rise to a termination event, in either case under
circumstances that has given, or could reasonably be expected to
give, rise to a severance obligation on the part of the Company
under such agreement.
(c) Neither
the Company nor any of its Subsidiaries has violated any Law
regarding the terms and conditions of employment of employees,
former employees or prospective employees or other labor related
matters, including Laws relating to discrimination, fair labor
standards and occupational health and safety, wrongful discharge or
violation of the personal rights of employees, former employees or
prospective employees, except for any violations which do not have,
and would not have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(d) There are
no material liabilities, whether contingent or absolute, of the
Company or any of its Subsidiaries relating to workers’
compensation benefits that are not fully insured against by a bona
fide third-party insurance carrier and all premiums required to be
paid to date
17
under such
insurance policy or fund have been paid.
Section 3.12 Tax Treatment . None of the Company, any
of its Subsidiaries or any of its affiliates has taken or agreed to
take any action that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
The Company is not aware of any agreement, plan or other
circumstance that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the
Code.
Section 3.13 Contracts . Except for those Contracts
already disclosed on Schedule 3.10(a), which shall be incorporated
by reference into Schedule 3.13, Schedule 3.13 to the
Company Disclosure Memorandum sets forth a list of each of the
following Contracts to which the Company or any of its Subsidiaries
is a party or to which any of their respective assets or properties
is bound (the “Company Material Contracts”). The
Company has delivered or made available to Parent a true, complete
and correct copy of each Company Material Contract:
(a) any
website hosting, website linking, content or data sharing, data
feed, information exchange, advertising, distribution, fee sharing,
lead or customer referral, commerce, co-branding, framing, service,
order or transaction processing or similar agreement relating to
any aspect or element of the Company Website;
(b) any
distributor, OEM (Original Equipment Manufacturer), VAR (Value
Added Reseller), sales representative or similar agreement under
which any third party is authorized to sell, sublicense, lease,
distribute, market or take orders for, any product, services or
technology of the Company or any of its Subsidiaries;
(c) any
continuing Contract for the future purchase, sale, license,
provision or manufacture of products, material, supplies, equipment
or services requiring payment to or from the Company or any of its
Subsidiaries in an amount in excess of $250,000 per
annum;
(d) any
Contract or commitment in which the Company or any of its
Subsidiaries has granted or received most favored customer pricing
provisions or exclusive marketing or on-line distribution rights
relating to any product or service, group of products or services,
market or geographic territory;
(e) any
Contract providing for the development of software, website content
or other technology or intellectual property for the Company or any
of its Subsidiaries, or the license of any software, website
content or other technology or intellectual property to the Company
or any of its Subsidiaries, which software, website content or
other technology or intellectual property is material to the
Company and used or incorporated (or is contemplated by the Company
to be used or incorporated) (i) in connection with any aspect
or element of the Company Website; (ii) in any product
currently sold, licensed, leased, distributed or marketed by the
Company or any of its Subsidiaries or (iii) to provide any
service currently provided or marketed by the Company or any of its
Subsidiaries (other than off-the-shelf software generally available
to the public at retail);
(f) any joint
venture or partnership contract or agreement or other agreement
which has
18
involved or is
reasonably expected to involve a sharing of profits, expenses or
losses with any other party;
(g) any
Contract or commitment for or relating to the employment of any
officer, employee or consultant of the Company or any other type of
contract or understanding with any officer, employee or consultant
of the Company that is not immediately terminable by the Company
without cost or other liability;
(h) any
indenture, mortgage, trust deed, promissory note, loan agreement,
security agreement, guarantee or other agreement or commitment for
the borrowing of money, for a line of credit or for a leasing
transaction of a type required to be capitalized in accordance with
Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board;
(i) any lease
or other agreement under which the Company is lessee of or holds or
operates any items of tangible personal property or real property
owned by any third party and under which payments to such third
party exceed $50,000 per annum;
(j) any
agreement or arrangement for the sale, licensing or leasing of any
assets, properties, products, services or rights having a value in
excess of $50,000 other than sale of inventory in the ordinary
course of the Company’s business;
(k) any
agreement that restricts the Company from engaging in any aspect of
its business, from participating or competing in any line of
business or market or that restricts the Company from engaging in
any business in any market or geographic area;
(l) any
instrument, Contract, license or other agreement governing any the
Company Material Intellectual Property;
(m) any
agreement relating to the sale, issuance, grant, exercise, award,
purchase, repurchase or redemption of any shares of capital stock
or other securities of the Company or any options, warrants or
other rights to purchase or otherwise acquire any such shares of
stock, other securities or options, warrants or other rights
therefor;
(n) consulting
or similar agreement under which the Company provides any advice or
services to a third party for an annual compensation to the Company
of $100,000 per year or more, other than in the ordinary course of
the Company’s business;
(o) any
Contract with or commitment to any labor union;
(p) any
Contract or arrangement under which the Company has made any
commitment to develop any website content, software or new
technology, to deliver any software currently under development or
to enhance or customize any software;
(q) any
consulting, development or similar agreement under which the
Company currently provides or will provide any custom software
development, training, documentation,
19
personnel
placements, advice, consulting service or other products or
services to a customer of the Company;
(r) any
“material contract” (as such term is defined in
Item 601(b)(10) of Regulation S-K of the SEC);
(s) any
agreement, Contract, commitment or instrument (the “PC Mall
Contracts”) between the Company and PC Mall, Inc. or any
Subsidiary or affiliate thereof (“PC Mall”);
and
(t) any
Contract which would prohibit or materially delay the consummation
of the Merger or any of the transactions contemplated by this
Agreement.
Except as set
forth in Section 3.13 of the Company Disclosure Memorandum and
except as would not, individually or in the aggregate, have a
Material Adverse Effect, each Company Material Contract is valid
and binding on the Company and each of its Subsidiaries party
thereto and, to the Company’s knowledge, each other party
thereto, and in full force and effect, and the Company and each of
its Subsidiaries has in all respects performed all obligations
required to be performed by it to the date hereof under each
Company Material Contract and, to the Company’s knowledge,
each other party to each Company Material Contract has in all
respects performed all obligations required to be performed by it
under such Company Material Contract. None of the Company or any of
its Subsidiaries has received any written notice of any violation
or default under (or any condition which with the passage of time
or the giving of notice would cause such a violation of or default
under) any Company Material Contract.
Except for the PC
Mall Contracts, the Company has no liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise),
including any indemnification obligation, to or for the benefit of
PC Mall.
In connection with
the execution and delivery of this Agreement by the Company and the
consummation of the Merger and other transactions contemplated
herein, PC Mall has executed a conditional waiver and consent in
the form which the Company has previously provided to the
Parent.
Section 3.14 Litigation . Except as and to the extent
disclosed in the Company SEC Filings, including the notes thereto,
filed prior to the date of this Agreement, or as set forth in
Section 3.14 of the Company Disclosure Memorandum or as would not,
individually or in the aggregate, have a Material Adverse Effect,
(a) there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries or for
which the Company or any of its Subsidiaries is obligated to
indemnify a third party and (b) neither the Company nor any of
its Subsidiaries is subject to any outstanding and unsatisfied
order, writ, injunction, decree or arbitration ruling, award or
other finding.
Section 3.15 Environmental Matters . Except as would
not, individually or in the aggregate, have a Material Adverse
Effect:
(a) The
Company and each of its Subsidiaries (i) is in compliance with
all, and is not
20
subject to any
liability with respect to any, applicable Environmental Laws,
(ii) holds or has applied for all Environmental Permits
necessary to conduct its current operations, and (iii) is in
compliance with its Environmental Permits.
(b) None of
the Company or any of its Subsidiaries has received any written
notice, demand, letter, claim or request for information alleging
that the Company or any of its Subsidiaries may be in violation of,
or liable under, any Environmental Law.
(c) None of
the Company or any of its Subsidiaries (i) has entered into or
agreed to any consent decree or order or is subject to any
judgment, decree or judicial order relating to (A) compliance with
Environmental Laws or Environmental Permits or (B) the
investigation, sampling, monitoring, treatment, remediation,
removal or cleanup of Hazardous Materials and no investigation,
litigation or other proceeding is pending or, to the knowledge of
the Company, threatened with respect thereto, or (ii) is not
an indemnitor in connection with any claim threatened or asserted
in writing by any third-party indemnitee for any liability under
any Environmental Law or relating to any Hazardous
Materials.
(d) None of
the real property owned or leased by the Company or any of its
Subsidiaries is, to the knowledge of the Company, listed or
proposed for listing on the “National Priorities List”
under CERCLA, as updated through the date hereof, or any similar
state or foreign list of sites requiring investigation or
cleanup.
(e) To the
knowledge of the Company, there are no past or present conditions,
circumstances, or facts that may (i) interfere with or prevent
continued compliance by the Company or any of its Subsidiaries with
Environmental Laws and the requirements of Environmental Permits,
(ii) give rise to any liability or other obligation under any
Environmental Laws, or (iii) form the basis of any claim,
action, suit, proceeding, or investigation against or involving the
Company or any of its Subsidiaries based on or related to any
Environmental Law.
Section 3.16 Intellectual Property . Except as would
not, individually or in the aggregate, have a Material Adverse
Effect, the Company owns or has the right to use, whether through
ownership, licensing or otherwise, all Intellectual Property
necessary for or used in the operation of the businesses of the
Company and each of its Subsidiaries as such businesses are
conducted on the date hereof, including without limitation, the
operation of the Company Website (“Company Material
Intellectual Property”). Except as set forth in
Section 3.16 of the Company Disclosure Memorandum or except as
would not, individually or in the aggregate, have a Material
Adverse Effect: (a) no written claim has been received by the
Company or any of its Subsidiaries challenging the ownership,
legality, use, validity or enforceability of any Company Material
Intellectual Property and no such Company Material Intellectual
Property is currently the subject of any pending or, to the
Company’s knowledge, threatened action, suit, claim,
investigation, arbitration or other proceeding to which the Company
or any of its Subsidiaries is a party; (b) no person has given
notice to the Company or any of its Subsidiaries that the use of
any Company Material Intellectual Property by the Company or any
licensee is infringing or has infringed any domestic or foreign
patent, trademark, service mark, trade name, or copyright or design
right, or that the Company or any licensee has misappropriated or
improperly used or disclosed any trade secret, confidential
information or know-how; (c) the execution, delivery
and
21
performance of
this Agreement by the Company and the consummation of the
transactions contemplated hereby will not breach, violate or
conflict with any instrument or agreement concerning any Company
Material Intellectual Property and will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of
any Company Material Intellectual Property; (d) the Company
has the right to require the inventor or author of any Company
Material Intellectual Property which constitutes an application for
registration, including, but not limited to, all patent
applications, trademark applications, service mark applications,
copyright applications and mask work applications, to transfer
ownership, including all right, title and interest in and to
(including any moral rights), to the Company of the application and
of the registration once it issues; (e) to the Company’s
knowledge, no third party has interfered with, infringed upon,
misappropriated, or used without authorization any Company Material
Intellectual Property, and no employee or former employee of the
Company has interfered with, infringed upon, misappropriated, used
without authorization, or otherwise come into conflict with any
Company Material Intellectual Property; (f) the Company has
taken all reasonable action to maintain and protect each item of
Company Material Intellectual Property; (g) to its knowledge,
the Company has the right to use all of the Company Material
Intellectual Property in all jurisdictions in which the Company
currently conducts business; and (h) neither the marketing,
license, sale, furnishing or intended use of any product or service
(including without limitation any service offered to users of the
Company Website) currently licensed, utilized, sold, provided or
furnished by the Company violates any license or agreement between
the Company and any third party or infringes or misappropriates any
Intellectual Property of any other person.
Schedule 3.16
of the Company Disclosure Memorandum contains a complete list of
(i) with respect to any Company Material Intellectual
Property, all Company registrations of any patents, copyrights,
mask works, trademarks, service marks, Internet domain names or
Internet or World Wide Web URLs or addresses with any governmental
or quasi-governmental authority or other body; (ii) all
applications, registrations, filings and other formal actions made
or taken pursuant to federal, state and foreign laws by the Company
to secure, perfect or protect its interest in the Company Material
Intellectual Property, including, without limitation, all patent
applications, copyright applications, and applications for
registration of trademarks and service marks, (iii) all
unregistered copyrights, trademarks and service marks included
within the Company Material Intellectual Property, (iv) all
licenses, sublicenses and other agreements as to which the Company
is a party and pursuant to which any person is authorized to use
any the Company Material Intellectual Property, and (v) all
licenses, sublicenses and other agreements as to which the Company
is a party and pursuant to which the Company is authorized to use
any Company Material Intellectual Property.
(a) The
Company and each of its Subsidiaries has duly and timely filed
(taking into account any extensions of time to file) with the
appropriate Tax authorities or other Governmental Entities all
material Tax Returns required to be filed by it. All such Tax
Returns are complete and accurate in all respects, except as would
not, individually or in the aggregate, have a Material Adverse
Effect. All Taxes shown as due on such Tax Returns have been timely
paid.
22
(b) Subject
to such exceptions as would not, individually or in the aggregate,
have a Material Adverse Effect, the unpaid Taxes of the Company and
its Subsidiaries (i) did not, as of the dates of the most
recent financial statements (in each case, determining such
liability for unpaid Taxes as of the date of such financial
statements) contained in the Company SEC Filings, exceed the
reserve for Tax liability (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax
income) set forth on the face of the balance sheets contained in
such financial statements, and (ii) will not exceed that
reserve as adjusted for operations and transactions through the
Closing Date in accordance with the past custom and practice of the
Company and its Subsidiaries in filing their Tax
Returns.
(c) Subject
to such exceptions as would not, individually or in the aggregate,
have a Material Adverse Effect or as set forth in Section 3.17
of the Company Disclosure Memorandum, (i) no deficiencies for
Taxes with respect to the Company or any of its Subsidiaries have
been claimed, proposed or assessed by a Tax authority or other
Governmental Entity in writing, (ii) no audit or other
proceeding for or relating to any liability in respect of Taxes of
the Company or any of its Subsidiaries is being conducted by any
Tax authority or Governmental Entity, and neither the Company nor
any of its Subsidiaries has received notification in writing that
any such audit or other proceeding is pending, and
(iii) neither the Company nor any of its Subsidiaries nor, to
the Company’s knowledge, any predecessor has waived any
statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or
deficiency.
(d) Subject
to such exceptions as would not, individually or in the aggregate,
have a Material Adverse Effect, there are no Tax liens upon any
property or assets of the Company or any of its Subsidiaries except
(i) liens for current Taxes not yet due and payable, and
(ii) liens for Taxes that are being contested in good faith by
appropriate proceedings and for which adequate reserves are being
maintained in accordance with GAAP.
(e) The
Company and each of its Subsidiaries has withheld and paid all
Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party, subject to such
exceptions as would not, individually or in the aggregate, have a
Material Adverse Effect.
(f) Subject
to such exceptions as would not, individually or in the aggregate,
have a Material Adverse Effect or as set forth in Section 3.17
of the Company Disclosure Memorandum, neither the Company nor any
of its Subsidiaries currently is the beneficiary of any extension
of time within which to file any Tax Return.
(g) No
written claim has been made by a Tax authority or other
Governmental Entity in a jurisdiction where the Company or any of
its Subsidiaries does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction.
(h) Except as
set forth in Section 3.17 of the Company Disclosure
Memorandum, neither the Company nor any of its Subsidiaries has any
liability for the Taxes of any person (other than members of the
consolidated group of which the Company is the common parent)
(i) under
23
Treasury
Regulation Section 1.1502-6 (or any similar provision of
state, local, or foreign Law), (ii) as a transferee or
successor, (iii) by contract, or (iv) otherwise, except
in each case where such liability for Taxes would not, individually
or in the aggregate, have a Material Adverse Effect.
(i) The
Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period described in Section
897(c)(1)(A)(ii) of the Code.
(j) Except as
set forth in Section 3.17 of the Company Disclosure
Memorandum, neither the Company nor any of its Subsidiaries has
been a party to any distribution occurring during the two
(2) years preceding the date of this Agreement in which the
parties to such distribution treated the distribution as one to
which Section 355 or 361 of the Code is applicable, in whole
or in part.
(k) Except as
set forth in Section 3.17 of the Company Disclosure
Memorandum, neither the Company nor any of its Subsidiaries is a
party to, is bound by or has any obligation under any Tax sharing
or Tax indemnity agreement or similar contract or
arrangement.
(l) Neither
the Company nor any of its Subsidiaries has participated in any
transaction identified as a “listed transaction” for
purposes of Treasury Regulations Section 1.6011-4(b)(2) or
301.6111-2(b)(2).
Section 3.18 Insurance . Section 3.18 of the
Company Disclosure Memorandum lists material policies of liability,
property, casualty and other forms of insurance, including D&O
insurance, owned or held by the Company and each of its
Subsidiaries, copies of which have previously been made available
to Parent. All such policies are in full force and effect, all
premiums due and payable have been paid, and no written notice of
cancellation or termination has been received with respect to any
such policy. No insurer has advised the Company or any of its
Subsidiaries that it intends to reduce coverage or materially
increase any premium under any such policy, or that coverage is not
available (or that it will contest coverage) for any material claim
made against the Company or any of its Subsidiaries.
Section 3.19 Opinion of Financial Advisor . Thomas
Weisel Partners LLC (the “Company Financial Advisor”)
has delivered to the Company Board its written opinion to the
effect that the Exchange Ratio is fair, from a financial point of
view, to the holders of Company Common Stock. The Company has been
authorized by the Company Financial Advisor to permit, subject to
prior review and consent by the Company Financial Advisor, the
inclusion of such opinion in its entirety, and references thereto,
in the Joint Proxy/Prospectus.
Section 3.20 Vote Required . The affirmative vote of
the holders of a majority of the outstanding shares of Company
Common Stock is the only vote of the holders of any class or series
of capital stock or other Equity Interests of the Company necessary
to approve and adopt this Agreement and the transactions
contemplated hereby, including the Merger (the “Company
Stockholder Approval”).
24
Section 3.21 Properties . The Company and its
Subsidiaries has good and valid title to or a valid leasehold
interest in all of its properties and assets reflected on the
Company Balance Sheet or acquired after the date thereof, except
for (a) properties and assets sold or otherwise disposed of in
the ordinary course of business since the date of such balance
sheet and (b) properties and assets the loss of which would not,
individually or in the aggregate, have a Material Adverse
Effect.
Section 3.22 Customers and Suppliers .
Section 3.22 of the Company Disclosure Memorandum sets forth
the name and address of (i) any customer which accounted for
more than $500,000 in revenue for the Company for the fiscal year
ended December 31, 2004 or $375,000 in revenue for the nine
months ended September 30, 2005 (collectively, the
“Company Customers”) and (ii) any vendor or
supplier from whom the Company purchased goods or services having
an aggregate cost of more than $500,000 during the fiscal year
ended December 31, 2004 or $375,000 during the nine months
ended September 30, 2005 (collectively, the “Company
Suppliers”) . To the knowledge of the Company, the
relationships of the Company with the Company Customers and Company
Suppliers are good commercial working relationships. Except as set
forth in Section 3.22 of the Company Disclosure Memorandum, to
the knowledge of the Company, as of the date of this Agreement, no
Company Customer or Company Supplier intends to terminate or
materially reduce its business relationship (or reduce any credit
line extended by any Company Supplier) with the Company for any
reason, including as a result of the consummation of the
transactions contemplated hereby.
Section 3.23 Transactions With Interested Persons .
Except as set forth in the Company SEC Filings filed prior to the
date of this Agreement, or as disclosed in Section 3.23 of the
Company Disclosure Memorandum, no officer or director of the
Company or any of its Subsidiaries nor any member of any such
officer’s or director’s immediate family (i) is
presently a party to any agreement with the Company or any of its
Subsidiaries that would be required to be disclosed in the Company
SEC Filings, (ii) owns, directly or indirectly, any interest
in (excepting not more than one percent (1%) stock holdings for
investment purposes in securities of publicly held and traded
companies), or is an officer, director, employee or consultant of,
any person which is, or is engaged in business as, a competitor,
lessor, lessee, customer or supplier of the Company, (iii) owns,
directly or indirectly, in whole or in part, any tangible or
intangible property that the Company uses or the use of which is
necessary or desirable for the conduct of business of the Company,
(iv) has any cause of action or other claim whatsoever
against, or owes any amount to, the Company, except for claims in
the ordinary course of business, such as for accrued vacation pay,
accrued benefits under employee benefit plans, normal employee
advances and employee personal travel reimbursement in the ordinary
course of business, and similar matters and agreements existing on
the date of this Agreement.
Section 3.24 No Other Agreements . The Company does not
have any binding commitment, absolute or contingent, to any other
person to sell, directly or indirectly, the Company or to effect
any merger, share exchange, consolidation, business combination,
recapitalization, liquidation or other reorganization of the
Company or to enter into any agreement with respect
thereto.
25
Representations and Warranties of
Parent and Merger Sub
Except as set
forth in a disclosure memorandum delivered by Parent to the Company
prior to the execution of this Agreement (the “Parent
Disclosure Memorandum”), which identifies exceptions by
specific Section references (provided, that any matter disclosed in
any section of the Parent Disclosure Memorandum shall be considered
disclosed for other sections of the Parent Disclosure Memorandum,
but only to the extent such matter on its face would be reasonably
expected to be pertinent to a particular section of the Parent
Disclosure Memorandum in light of the disclosure made in such
section), Parent and Merger Sub hereby jointly and severally
represent and warrant to the Company as follows:
Section 4.1 Organization and Qualification;
Subsidiaries . Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. Each Subsidiary of Parent has been duly organized, and is
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, as the case may
be. Parent and each of its Subsidiaries has the requisite power and
authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as it is
now being conducted, except for such powers, authorities and
approvals that would not, individually or in the aggregate, have a
Material Adverse Effect. Parent and each of its Subsidiaries is
duly qualified or licensed to do business, and is in good standing,
in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such
qualification, licensing or good standing necessary, except for
such failures to be so qualified, licensed or in good standing that
would not, individually or in the aggregate, have a Material
Adverse Effect. Section 4.1 of the Parent Disclosure
Memorandum sets forth a true and complete list of all of the
Subsidiaries of the Parent and their respective jurisdiction of
organization or incorporation. Except as set forth in
Section 4.1 of the Parent Disclosure Memorandum, none of the
Parent or any of its Subsidiaries holds an Equity Interest in any
other person.
Section 4.2 Certificate of Incorporation and Bylaws .
The copies of Parent’s Amended and Restated Certificate of
Incorporation (the “Parent Certificate”) and Amended
and Restated Bylaws (the “Parent Bylaws”) that are
listed as exhibits to Parent’s Form 10-K filed with the SEC
for the fiscal year ended December 31, 2004 are complete and
correct copies thereof as in effect on the date hereof. Parent is
not in violation of any of the provisions of the Parent Certificate
or the Parent Bylaws. True and complete copies of all minute books
of the Parent have been made available by the Parent to Company.
The Parent has made available to Company true, correct and complete
copies of the certificate of incorporation, bylaws, other
organizational or charter documents and by laws of each Subsidiary
of the Parent.
Section 4.3 Capitalization
(a) The
authorized capital stock of Parent consists of 40,000,000 shares of
Parent Common Stock and 1,000,000 shares of preferred stock, par
value $1.00 per share, of Parent (“Parent Preferred
Stock”). As of November 21, 2005, (i) 22,526,681
shares of Parent Common Stock (other than treasury shares) were
issued and outstanding, all of which were validly issued
26
and fully paid,
nonassessable and free of preemptive rights, (ii) 86,300
shares of Parent Common Stock were held in the treasury of Parent
or by its Subsidiaries, (iii) 5,449,518 shares of Parent
Common Stock were issuable (and such number was reserved for
issuance) upon exercise of options to purchase Parent Common Stock
(“Parent Options”) outstanding as of such date, and
(iv) 395,486 shares of Parent Common Stock were issuable (and
such number was reserved for issuance) upon exercise of warrants to
purchase Parent Common Stock (“Parent Warrants”)
outstanding as of such date. As of such date, no shares of Parent
Preferred Stock were issued or outstanding. All capital stock or
other equity securities of Parent have been issued in compliance
with applicable federal and state securities laws.
(b) Except
for Parent Options to purchase not more than 5,449,518 shares of
Parent Common Stock, Parent Warrants to purchase not more than
395,486 shares of Parent Common Stock and arrangements and
agreements set forth in this Section 4.3 or Section 4.3
of the Parent Disclosure Memorandum, there are no options, warrants
or other rights, agreements, arrangements or commitments of any
character to which Parent or any of its Subsidiaries is a party or
by which Parent or any of its Subsidiaries is bound relating to the
issued or unissued capital stock or other Equity Interests of
Parent or any of its Subsidiaries, or securities convertible into
or exchangeable for such capital stock or other Equity Interests,
or obligating Parent or any of its Subsidiaries to issue or sell
any shares of its capital stock or other Equity Interests, or
securities convertible into or exchangeable for such capital stock
of, or other Equity Interests in, Parent or any of its
Subsidiaries.
(c) Except as
set forth in Section 4.3 of the Parent Disclosure Memorandum,
there are no outstanding contractual obligations of Parent or any
of its Subsidiaries (i) restricting the transfer of,
(ii) affecting the voting rights of, (iii) requiring the
repurchase, redemption or disposition of, or containing any right
of first refusal with respect to, (iv) requiring the
registration for sale of, or (v) granting any preemptive or
antidilutive right with respect to, any shares of Parent Common
Stock or any capital stock of, or other Equity Interests in, Parent
or any of its Subsidiaries. Except as set forth in Section 4.3
of the Parent Disclosure Memorandum, each outstanding share of
capital stock of each Subsidiary of the Parent is duly authorized,
validly issued, fully paid, nonassessable and free of preemptive
rights and is owned, beneficially and of record, by the Parent or
another of its Subsidiaries, free and clear of all security
interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on the Parent’s or such
other of its Subsidiary’s voting rights, charges and other
encumbrances of any nature whatsoever. There are no outstanding
contractual obligations of Parent or any of its Subsidiaries to
provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any of its Subsidiaries or
any other person, other than guarantees by Parent or any Subsidiary
of any indebtedness or other obligations of Parent or other
Subsidiary.
(d) Parent
does not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to
vote) with the stockholders of Parent on any matter.
(e) None of
the Merger or other transactions contemplated hereby will result in
an acceleration of vesting, or modification of vesting terms, with
respect to any Parent Options.
27
(f) Neither
Parent nor Merger Sub beneficially owns any shares of Company
Common Stock.
(g) The
Parent Common Stock to be issued in the Merger has duly authorized
and will be validly issued, fully paid and
nonassessable.
(a) Each of
Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by Parent
and Merger Sub of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action and
no other corporate proceedings on the part of Parent or Merger Sub
and no stockholder votes are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby other than as
provided in Section 4.20. This Agreement has been duly
authorized and validly executed and delivered by each of Parent and
Merger Sub and constitutes a legal, valid and binding obligation of
each of Parent and Merger Sub, enforceable against each of Parent
and Merger Sub in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors’ rights and to general equity
principles.
(b) The Board
of Directors of Parent (the “Parent Board”), by
resolutions duly adopted by unanimous vote at a meeting duly called
and held and not subsequently rescinded or modified in any way (the
“Parent Board Approval”), has duly (i) declared
that this Agreement and the transactions contemplated hereby
(including the Merger) are advisable, (ii) approved and
adopted this Agreement and (iii) resolved to recommend
(subject to Section 5.3(b)) that the stockholders of Parent
vote for approval of the issuance of Parent Common Stock to be
issued pursuant to the Merger as required by NASD Rule 4350(i) and
the amendment to the Parent Certificate to increase the number of
authorized shares of Parent Common Stock to 75,000,000 shares. The
Parent Board Approval constitutes approval of this Agreement as
required under any applicable state takeover Law and no such state
takeover Law is applicable to the Merger or the other transactions
contemplated hereby, including, without limitation, the
restrictions on business combinations contained in Section 203
of the DGCL.
Section 4.5 No Conflict; Required Filings and Consents
.
(a) The
execution and delivery of this Agreement by each of Parent and
Merger Sub does not, and the performance of this Agreement by each
of Parent and Merger Sub will not, (i) (assuming the Parent
Stockholder Approval is obtained) conflict with or violate any
provision of the Parent Certificate or Parent Bylaws or any
equivalent organizational documents of any of its Subsidiaries
(including Merger Sub), (ii) (assuming that all consents,
approvals, authorizations and permits described in
Section 4.5(b) have been obtained and all filings and
notifications described in Section 4.5(b) have been made and
any waiting periods thereunder have terminated or expired) conflict
with or violate any Law applicable to Parent or any of its
Subsidiaries or by which any property or asset of Parent or any of
its Subsidiaries is bound or affected or (iii)
28
require any
consent or approval under, result in any breach of or any loss of
any benefit under, constitute a change of control or default (or an
event which with notice
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