Exhibit 2.1
BRAVANTA, INC.
- and -
WORKSTREAM INC.
-and-
WORKSTREAM ACQUISITION IV, INC.
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AGREEMENT AND PLAN OF MERGER
June 29, 2004
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Strategic Law Partners, LLP, counsel for the Corporation
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, solicitors for the Purchaser
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of June 29, 2004
BETWEEN:
BRAVANTA, INC., a corporation incorporated pursuant to the laws of
the State of Delaware ("Bravanta" or "the Corporation")
- and -
WORKSTREAM INC., a corporation incorporated pursuant to the laws of
Canada (the "Purchaser")
-and-
WORKSTREAM ACQUISITION IV, INC., a corporation incorporated pursuant
to the laws of the State of Delaware ("Merger Sub")
RECITALS:
A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law ("Delaware Law"),
Purchaser, Merger Sub and the Corporation intend to enter into a business
combination transaction pursuant to which Merger Sub will be merged into the
Corporation in a reverse triangular merger, with the Corporation continuing as
the Surviving Corporation of the merger (the "Merger").
B. The Board of Directors of the Corporation has approved this Agreement,
the Merger and the other transactions contemplated by this Agreement and has
determined to recommend that the shareholders of the Corporation adopt and
approve this Agreement and approve the Merger.
C. The Board of Directors of Purchaser (i) has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of
Purchaser and advisable and fair to, and in the best interests of, Purchaser and
its shareholders and (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement.
D. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Internal
Revenue Code of 1986, as amended.
E. It is also intended by the parties hereto that the Merger shall be
accounted for as a "purchase."
F. The Corporation and each of the Corporation Stockholders will enter
into a letter of transmittal in a form to be mutually agreed among the
Corporation, such stockholders and the Purchaser prior to the Corporation
Stockholders receiving Exchange Shares as contemplated hereunder (the
"Transmittal Letter"), which sets forth certain representations, warranties and
covenants of such Corporation Stockholders.
THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
Definitions
Whenever used in this Agreement, the following words and terms shall have the
meanings set out below:
"1933 Act" means the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder by the SEC;
"1934 Act" means the U.S. Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder by the SEC;
"Affiliate" shall mean, as to any Person, any Person controlling,
controlled by, or under common control with, such Person;
"Agreement" means this Agreement, including all schedules, and all
instruments supplementing or amending or confirming this Agreement, and
references to "Article" or "Section" mean and refer to the specified
Article or Section of this Agreement;
"Balance Sheet Date" means May 31, 2004;
"Benefit Plans" means all plans, arrangements, agreements, programs,
policies, practices or undertakings, whether oral or written, formal or
informal, funded or unfunded, registered or unregistered to which the
Corporation is or has been a party or by which it is or has been bound or
under which the Corporation has, or will have, any liability or contingent
liability, relating to:
(a) Pension Plans;
(b) Insurance Plans; or
(c) Compensation Plans,
with respect to any of the Employees or former employees (or any
dependants or beneficiaries of any such Employees or former employees),
directors or shareholders of the Corporation, individuals working on
contract with the Corporation or other individuals providing services to
any of them of a kind normally provided by employees or eligible
dependants of such person;
"Books and Records" means all books and records of the Corporation,
including financial, corporate, operations, sales and purchase books and
records, lists of suppliers and customers, business reports and all other
documents, surveys, plans, files, records,
correspondence, and other data and information, financial or otherwise,
including all data and information stored on computer-related or other
electronic media;
"Business" means the business carried on by the Corporation, and the term
"Business" shall include any part of the businesses held or carried on by
the Corporation;
"Business Day" means a day, other than a Saturday or Sunday, on which the
principal commercial banks located in Ottawa, Ontario are open for
business during normal banking hours;
"California Law" means the California General Corporation Law;
"Claims" means any claim, demand, action, assessment or reassessment,
suit, cause of action, damage, loss, charge, judgment, debt, costs,
liability or expense, including reasonable professional fees and all costs
incurred in investigating or pursuing any of the foregoing or any
proceeding relating to any of the foregoing;
"Closing" means the closing of the Merger contemplated under this
Agreement by consummation of the Merger;
"Closing Date" means, subject to prior termination of this Agreement as
provided in Article 11, the later of (i) June 30th, 2004, or (ii) the
second business day after all closing conditions set forth in Articles 7
and 8 hereof have been satisfied or duly waived, or such other date as the
Parties may agree in writing as the date upon which the Closing shall take
place;
"Closing Time" means 2 o'clock p.m. Ottawa time on the Closing Date, or
such other time on the Closing Date as the Parties may agree in writing as
the time at which the Closing shall take place;
"Code" means the United States Internal Revenue Code of 1986, as amended;
"Compensation Plans" means all employment benefits relating to bonus,
incentive pay or compensation, performance compensation, deferred
compensation, profit sharing or deferred profit sharing, share purchase,
share option, stock appreciation, phantom stock, vacation or vacation pay,
sick pay, severance or termination pay, employee loans or separation from
service benefits, or any other type of arrangement providing for
compensation or benefits additional to base pay or salary;
"Contracts" means all contracts, licences, leases, agreements, commitments
and engagements to which the Corporation is a party or by which it is
bound and includes all quotations, orders or tenders for contracts which
remain open for acceptance and any warranties, guarantees or commitments
(express or implied);
"Corporation Preferred Shares" means shares of the Corporations' Series C
Preferred Stock;
"Corporation Shares" means all of the issued and outstanding shares of
capital stock of the Corporation;
"Corporation Stockholders" means those persons holding Corporation Series
C Preferred Shares on the Closing Date;
"Effective Time" means the date and time on which the Merger first becomes
legally effective under Delaware Law as a result of the filing with the
Delaware Secretary of State of the Agreement of Merger pursuant to, and in
conformity with, Delaware Law;
"Employees" means all persons employed by the Corporation, including for
greater certainty, those employees on disability leave, parental leave or
other absence;
"Encumbrances" means any pledge, lien, charge, security interest, title
retention agreement, mortgage, restriction, easement, right-of-way, title
defect, option, adverse claim or encumbrance of any kind or character
whatsoever;
"Environment" means the environment or natural environment as defined in
any Environmental Laws and includes air, surface, water, ground water,
land surface, soil, subsurface strata, any sewer system and the
environment in the workplace;
"Environmental Approvals" means all approvals, permits, certificates,
licences, authorizations, consents, agreements, instructions or directions
having the force of law, and registrations or approvals issued or required
by any Governmental Authority pursuant to Environmental Laws with respect
to the operations, business or assets of the Corporation;
"Environmental Laws" means all Laws relating in full or in part to the
Environment or employee or public health or safety, and includes those
Environmental Laws relating to the storage, generation, use, handling,
manufacture, processing, labelling, advertising, sale, display,
transportation, treatment, Release and disposal of Hazardous Substances;
"Equipment Contracts" means all motor vehicle leases, equipment leases,
conditional sales contracts, title retention agreements and other similar
agreements relating to equipment used by the Corporation;
"Governmental Authority" means any government, regulatory authority,
governmental department, agency, commission, board, tribunal or court or
other law, rule or regulation-making entity having or purporting to have
jurisdiction on behalf of any nation, or any province, state or other
geographic or political subdivision of any nation;
"Governmental Authorizations" means all authorizations, approvals,
including Environmental Approvals, orders, consents, directions, notices,
licences, permits, variances, registration or similar rights issued to or
by or required by any Governmental Authority;
"Hazardous Substance" means any pollutant, contaminant, waste of any
nature, hazardous substance, hazardous material, toxic substance,
prohibited substance,
dangerous substance or dangerous good as defined or judicially interpreted
under in any Environmental Laws, including any asbestos or
asbestos-containing materials;
"Insurance Plans" means all employment benefits relating to disability or
wage continuation during period of absence from work (including short term
disability, long term disability and workers compensation),
hospitalization, health, medical or dental treatments or expenses, life
insurance, death or survivor's benefits and supplementary employment
insurance, in each case regardless of whether or not such benefits are
insured or self-insured;
"Intellectual Property" means registered and unregistered trade-marks
(including the Trade-marks), copyright, and other intellectual property
rights and all rights (proprietary, contractual or otherwise) in or
relating to all trade secrets, confidential and proprietary information,
methods, procedures, know-how and information;
"Laws" means all applicable laws, statutes, by-laws, rules, regulations,
orders, ordinances, codes, judgments and directions having the force of
law of any Governmental Authority;
"Leased Real Property" means all premises which are leased, subleased,
licensed or otherwise occupied by the Corporation, and the interest of the
Corporation in all plants, buildings, structures, fixtures, erections,
improvements, easements, rights-of-way and other appurtenances situate on
or forming part of such premises, all of which is listed in Schedule 4.24
of the Disclosure Schedules;
"Material Adverse Effect" when used with reference to any entity or group
of related entities, means any event, change, circumstance or effect that
is, individually or in the aggregate, materially adverse to the condition
(financial or otherwise), properties, assets (including intangible
assets), business, operations or results of operations of such entity and
its subsidiaries, taken as a whole with its subsidiaries; provided,
however, that in no event shall any event, change, circumstance or effect
related to (A) the economy of the United States or Canada, (B) the
industry in which such entity or group of related entities operates,
constitute, in and of itself, a Material Adverse Effect.
"Material Contract" means any currently effective Contract: (i) involving
aggregate payments following the date hereof to or by the Corporation in
excess of $100,000; (ii) involving rights or obligations of the
Corporation that may reasonably extend beyond one year (except for
standard non-exclusive licenses granted to end-user customers in the
ordinary course of business); (iii) which is outside the ordinary course
of business; (iv) which does not or cannot be terminated without penalty
on less than six months notice (except for standard non-exclusive licenses
granted to end-user customers in the ordinary course of business); or (iv)
which restricts in whole or in part in any material way the scope of the
business or activities of the Corporation;
"Merger Price Per Share" means the average last sale price of Purchaser
Common Stock quoted by the NASD on its automated quotation system for the
last five (5) trading days immediately preceding the Closing Date.
"Merger Sub" means Workstream Acquisition IV, Inc., a Delaware corporation
and a wholly-owned subsidiary of the Purchaser;
"NASD" means the National Association of Securities Dealers, Inc. or one
or more of its subsidiaries, as the context may require, and any successor
to any of them;
"Notice" shall have the meaning given in Section 12.3;
"Owned Real Property" means all freehold lands which are owned or
purported to be owned, in fee simple, by the Corporation including all
plants, buildings, structures, fixtures, erections, improvements,
easements, rights-of-way and other appurtenances situate on or forming
part of such lands;
"Parties" means all of the parties to this Agreement;
"Pension Plans" means all benefits relating to retirement or retirement
savings including pension plans, pensions or supplemental pensions,
registered retirement savings plans, registered pension plans and
retirement compensation arrangements;
"Permitted Encumbrances" means (i) the Encumbrances listed in Schedule
1.1(c) of the Disclosure Schedules, (ii) statutory liens for the payment
of Taxes that are not yet due or delinquent, and (iii) liens, encumbrances
and security interests which arise in the ordinary course of business and
which do not materially affect the assets of the relevant Party;
"Person" means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, corporation, limited liability company, unlimited
liability company, Governmental Authority, and a natural person in such
person's capacity as trustee, executor, administrator or other legal
representative;
"Purchaser Common Stock" means the common stock, no par value, of the
Purchaser.
"Real Property" means the Owned Real Property and the Leased Real
Property;
"Real Property Leases" means those agreements to lease, leases, subleases
or licences or other occupancy rights pursuant to which the Corporation
uses or occupies the Leased Real Property;
"Release" has the meaning prescribed in any Environmental Laws and
includes any release, spill, leak, pumping, pouring, addition, emission,
emptying, discharge, injection, escape, leaching, disposal, dumping,
deposit, spraying, burial, abandonment, incineration, seepage, or
placement;
"Remedial Order" means any administrative complaint, direction, order or
sanction issued, filed, imposed or threatened by any Governmental
Authority pursuant to any Environmental Laws and includes any order
requiring any remediation or clean-up of any Hazardous Substance, or
requiring that any Release or any other activity be reduced,
modified or eliminated or requiring a payment to be made to any
Governmental Authority;
"Required Approvals" means Governmental Authorizations and third Person
approvals, consents and notices, required in connection with the
consummation of the transactions contemplated by this Agreement, including
any consents required by any outstanding contract or commitment of the
Corporation that requires the prior approval of third parties prior to any
change of control of the Corporation;
"SEC" means the Securities and Exchange Commission;
"Securities Laws" means the 1933 Act, the 1934 Act, the securities or
"blue sky" laws of any state or territory of the United States and the
rules and regulations of the NASD and the comparable laws, rules and
regulations in effect in any relevant other country;
"Tax Returns" includes all returns, reports, declarations, elections,
notices, filings, information returns and statements filed or required to
be filed in respect of Taxes;
"Taxes" includes all taxes, duties, fees, premiums, assessments, imposts,
levies and other charges of any kind whatsoever imposed by any
Governmental Authority, together with all interest, penalties, fines,
additions to tax or other additional amounts imposed by any Governmental
Authority in respect thereof, including those levied on, or measured by,
or in respect of income, gross receipts, profits, capital, gains, capital
gains, transfer, land transfer, sales, goods and services, harmonized
sales, use, value-added, excise, stamp, withholding, business,
franchising, property, employer health, payroll, employment, health,
social services, education and social security taxes, all surtaxes, all
customs duties and import and export taxes, all license, franchise and
registration fees and all employment insurance, health insurance and other
government pension plan premiums or contributions;
"Trade-marks" means all trade-marks, trade names, brands, trade dress,
business names, Uniform Resource Locators ("URL"), domain names, tag
lines, designs, graphics, logos and other commercial symbols and indicia
of origin, whether registered or not, owned or used by the Corporation and
any goodwill associated with any of them.
Certain Rules of Interpretation
In this Agreement and the schedules:
(a) Time - time is of the essence in the performance of the Parties'
respective obligations;
(b) Currency - unless otherwise specified, all references to money
amounts are to the lawful currency of the United States of America;
(c) Headings - descriptive headings of Articles and Sections are
inserted solely for convenience of reference and are not intended as
complete or accurate descriptions of the content of such Articles or
Sections;
(d) Singular, etc. - use of words in the singular or plural, or with a
particular gender, shall not limit the scope or exclude the
application of any provision of this Agreement to such person or
persons or circumstances as the context otherwise permits;
(e) Consent - whenever a provision of this Agreement requires an
approval or consent by a Party to this Agreement and notification of
such approval or consent is not delivered within the applicable time
limited, then, unless otherwise specified, the Party whose consent
or approval is required shall be conclusively deemed to have
withheld its approval or consent;
(f) Calculation of Time - unless otherwise specified, time periods
within or following which any payment is to be made or act is to be
done shall be calculated by excluding the day on which the period
commences and including the day on which the period ends and by
extending the period to the next Business Day following if the last
day of the period is not a Business Day;
(g) Business Day - whenever any payment is to be made or action to be
taken under this Agreement is required to be made or taken on a day
other than a Business Day, such payment shall be made or action
taken on the next Business Day following such day; and
(h) Inclusion - where the words "including" or "includes" appear in this
Agreement, they mean "including (or includes) without limitation".
1.3 Knowledge
Except as specified otherwise in this Agreement, any reference to the knowledge
of any Person who is an individual shall mean to the best of the knowledge,
information and belief of such Person after reasonable diligence and, with
respect to an entity, means the actual knowledge of all directors and officers
of such Person.
1.4 Entire Agreement
This Agreement, together with the agreements and other documents to be delivered
pursuant to this Agreement, constitute the entire agreement between the Parties
pertaining to the subject matter of this Agreement and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties pertaining to that subject matter, including the Letter
of Intent dated June 23, 2004 and the Non-Disclosure Agreement dated June 8,
2004, and there are no warranties, representations or other agreements between
the Parties in connection with the subject matter of this Agreement except as
specifically set forth in this Agreement and any document delivered pursuant to
this Agreement. No supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the Party to be bound thereby.
1.5 Applicable Law
This Agreement shall be governed and construed in accordance with the laws of
the State of Delaware and the federal laws of the United States of America
applicable in the State of Delaware, and without regard to the conflict of laws
principles applicable in such jurisdiction.
1.6 Accounting Principles
All references to generally accepted accounting principles mean generally
accepted accounting principles in the United States as at the Closing Date,
applied on a consistent basis.
1.7 Schedules and Exhibits
The schedules and exhibits to this Agreement, are an integral part of this
Agreement. The Schedules shall modify all representations and warranties
contained in this Agreement. Each party has used its best efforts to reference
the correct Schedule, however the failure to properly reference such schedule
shall not be a breach of a representation or warranty if the party to whom the
disclosure is being made could reasonably ascertain the effect of a disclosure
in a Schedule on other applicable representations and warranties.
ARTICLE 2
THE MERGER
2.1 The Merger. At the Effective Time and subject to and upon the terms and
conditions of this Agreement, the Agreement of Merger and the applicable
provisions of Delaware Law, Merger Sub shall be merged with and into the
Corporation, the separate corporate existence of Merger Sub shall cease and the
Corporation shall continue as the surviving corporation. The Corporation as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
2.2 Closing. Subject to the provisions of this Agreement, the parties hereto
shall cause the Merger to be consummated by filing an Agreement of Merger, in
such appropriate form as mutually determined by the parties (which agreed form
shall be attached as Exhibit A hereto prior to Closing), with the Secretary of
State of the State of Delaware in accordance with the relevant provisions of
Delaware Law (the "Agreement of Merger").
2.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall
be as provided in this Agreement, the Agreement of Merger and the applicable
provisions of Delaware Law. Without limiting the generality of the foregoing, at
the Effective Time, all the property, rights, privileges, powers and franchises
of the Corporation and Merger Sub shall vest in the Surviving Corporation, and
all debts, liabilities and duties of the Corporation and Merger Sub shall become
the debts, liabilities and duties of the Surviving Corporation.
2.4 Certificate of Incorporation; Bylaws; Directors and Officers
(a) At the Effective Time, the Certificate of Incorporation of Merger
Sub, as in effect immediately prior to the Effective Time, shall be
the Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Certificate of
Incorporation of the Surviving Corporation; provided however, that
at the Effective Time Article I of the Certificate of Incorporation
of the Surviving Corporation shall be amended to read: "The name of
the corporation is Bravanta Inc."
(b) At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended.
(c) The initial directors of the Surviving Corporation shall be the
directors of Merger Sub immediately prior to the Effective Time,
until their respective successors are duly elected or appointed and
qualified. The initial corporate officers of the Surviving
Corporation shall be the corporate officers of Merger Sub
immediately prior to the Effective Time, until their respective
successors are duly appointed.
2.5 Purchase Price.
In connection with the Merger and pursuant to the provisions of this Agreement,
subject to adjustment pursuant to Section 2.6(f) hereof, the Purchaser shall
issue to the Corporation
Stockholders in exchange for all Corporation Preferred Shares outstanding
immediately prior to the Effective Time a number of fully paid and nonassessable
shares of Purchaser Common Stock (the "Exchange Shares") equal to (A) $6,600,000
divided by the Merger Price Per Share minus (B) the total number of Management
Shares and CIBC Shares (as those terms are defined in Sections 9.12(e) and
9.12(f) below and which otherwise would be deliverable as Exchange Shares to the
Corporation Stockholders). The Exchange Shares, the Management Shares and the
CIBC Shares are sometimes collectively referred to herein as the "Shares."
2.6 Effect on Capital Stock. At the Effective Time, by virtue of the Merger and
without any action on the part of Merger Sub, the Corporation or the Corporation
Stockholders:
(a) Each of the Corporation Preferred Shares that is issued and
outstanding immediately prior to the Effective Time will, by virtue
of the Merger, be cancelled and extinguished and automatically
converted into the right to receive a number of Exchange Shares
determined by dividing the total number of Exchange Shares by the
total number of Corporation Preferred Shares issued and outstanding
immediately prior to the Effective Time, upon surrender of the
certificate representing such Corporation Preferred Share in the
manner provided herein. The preceding provisions of this Section
2.6(a) are subject to the provisions of Section 2.6(e) (regarding
the elimination of fractional shares), Section 2.6(f) (regarding
Capital Changes), Section 2.6(g) (regarding Dissenting Shares (as
defined below)) and Section 2.7 (regarding the withholding of Escrow
Shares).
(b) Subject to the provisions of Section 2.6(g) (regarding Dissenting
Shares) below, each of the Corporation Shares issued and outstanding
immediately prior to the Effective Time other than the Corporation
Preferred Shares shall be cancelled and extinguished without any
conversion thereof, and without further consideration.
(c) Each share of the Corporation's capital stock held by the
Corporation immediately prior to the Effective Time shall be
cancelled and extinguished without any conversion thereof.
(d) Each share of common stock, $0.00l par value per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time
shall be converted into one validly issued, fully paid and
nonassessable share of common stock, $0.001 par value per share, of
the Surviving Corporation. Each certificate evidencing ownership of
shares of the common stock of Merger Sub shall evidence ownership of
such shares of capital stock of the Surviving Corporation.
(e) No fractional shares of Purchaser Common Stock will be issued in
connection with the Merger. In lieu of such issuance, each
Corporation Stockholder who would otherwise be entitled to receive a
fraction of a share of Purchaser Common Stock, computing after
aggregating all shares of Purchaser Common Stock to be received by
such holder pursuant to Section 2.6(a), will instead receive from
the Purchaser, upon surrender of such holder's share certificates as
provided herein, an amount of cash (rounded to the nearest whole
cent) equal to the product
obtained by multiplying (a) the Merger Price Per Share, by (b) the
fraction of a share of Purchaser Common Stock that such holder would
otherwise have been entitled to receive.
(f) Notwithstanding anything to the contrary herein, if the Purchaser
recapitalizes, either through a subdivision (or stock split) of any
of its outstanding shares of Purchaser Common Stock into a greater
number of such shares, or a combination (or reverse stock split) of
any of its outstanding shares of Purchaser Common Stock into a
lesser number of such shares, or reorganizes, reclassifies or
otherwise changes its outstanding shares of Purchaser Common Stock
into the same or a different number of shares of other classes or
series of stock of the Purchaser (other than through a subdivision
or combination of shares provided for in the preceding clause), or
declares a dividend or other distribution on its outstanding shares
payable in shares of Purchaser Common Stock, in shares or securities
convertible into shares of Purchaser Common Stock and/or other
equity securities of the Purchaser (each, a "Capital Change"), at
any time after the date of this Agreement and prior to the Effective
Time, then the Merger Price Per Share and the number of Exchange
Shares, Management Shares and CIBC Shares will be appropriately
adjusted.
(g) Holders of shares of capital stock of the Corporation who have
complied with all requirements for perfecting shareholders'
dissenting rights (or similar rights), under Chapter 13 of the
California Law or Section 262 of the Delaware Law shall be entitled
only to their rights under such laws with respect to such shares
("Dissenting Shares") and such Dissenting Shares shall not be
converted into Exchange Shares.
(h) On the Closing Date, Purchaser and the Corporation will calculate
and set forth in Schedule 2.6(h) (to be attached hereto at the
Closing) the number of Exchange Shares issuable to each Corporation
Stockholder in accordance with this Section 2.6, together with such
holder's Escrow Shares.
(i) Notwithstanding anything contained herein to the contrary, the
aggregate number of Shares issued pursuant to the terms hereof shall
not equal or exceed 20% of the number of Purchaser Common Stock
outstanding immediately before the issuance of the Shares, unless
the Purchaser has obtained prior approval from the holders of its
common shares for such issuance. In the event the aggregate number
of Shares that would be issued pursuant to the terms hereof equals
or exceeds 20% of the number of Purchaser Common Stock then
outstanding, and the Purchaser has failed to obtain prior
shareholder approval for such issuance, then the number of Shares
that the Corporation Stockholders would be entitled acquire as part
of the Purchase Price shall be reduced so that the aggregate number
of Shares issuable pursuant to the terms hereof does not equal or
exceed 20% of the number of Purchaser Common Stock outstanding
immediately before the issuance of the Shares pursuant to the terms
hereof.
2.7 Escrow.
(a) At the Closing, the Purchaser will withhold 400,000 of the Exchange
Shares in accordance with Section 2.6(a) (rounded down to the
nearest whole number of shares to be issued to such Corporation
Stockholder) and deliver such shares (the "Escrow Shares") to ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP (the "Escrow Agent"), as escrow agent, to be held
by Escrow Agent as collateral for the Corporation's indemnification
obligations under Article 10 and pursuant to the provisions of an
escrow agreement (the "Escrow Agreement") in a form to be mutually
agreed by the parties hereto prior to Closing and, upon such
agreement, to be attached hereto as Exhibit 2.7.
(b) Subject to the terms of the Escrow Agreement, the Escrow Shares will
be held by the Escrow Agent from the Closing until the dates set
forth in the Escrow Agreement (the "Escrow Period"). Any shares of
Purchaser Common Stock or other equity securities issued or
distributed by the Purchaser (including securities issued upon a
Capital Change) with respect to the Escrow Shares in the Escrow
Period shall be added to and considered part of the Escrow Shares.
Cash dividends on the Escrow Shares shall be deposited with the
Escrow Agent until release thereof pursuant to the Escrow Agreement.
The Escrow Shares withheld from each Corporation Stockholder will be
represented by a certificate or certificates issued in the name of
the Escrow Agent. Each Corporation Stockholder shall be shown as the
record owner on the Purchaser's books and records of such number of
Escrow Shares.
2.8 Corporation Options. At the Effective Time, the Purchaser shall not assume
any outstanding options to purchase shares of capital stock of Corporation (the
"Corporation Options") and shall not substitute any equivalent option or right
for any such Corporation Option. All outstanding Corporation Options shall
remain exercisable for the period determined by the Corporation Board of
Directors (or the Compensation Committee of the Board of Directors) and any
Corporation Option that has not been exercised by the holder thereof prior to
expiration of such period (which shall in any event expire prior to the
Effective Time) shall then terminate at the Effective Time.
2.9 Corporation Warrants. Corporation agrees to obtain prior to the Effective
Time (i) a binding written agreement, acceptable to Purchaser, from each holder
of warrants to acquire capital stock of Corporation (not including warrants
which expire or terminate by their terms effective as of the Effective Time)
whereby such holder agrees that if the warrants held by such holder have not
been exercised prior to the Effective Time, then such warrants shall terminate
upon and may not be exercised on or after the Effective Time, or (ii) to
otherwise address any outstanding warrants in a matter reasonably satisfactory
to the Purchaser.
2.10 Securities Law Compliance. The Purchaser shall issue the Shares pursuant to
an exemption or exemptions from registration under Section 4(2) of the 1933 Act
and/or Regulation D promulgated under the 1933 Act and the exemption from
qualification under the laws of the
State of California and other applicable Securities Laws. The Purchaser and the
Corporation shall comply with all applicable provisions of, and rules under, the
1933 Act in connection with offering and issuance of Shares as contemplated
hereby.
2.11 Certificate Legends. The Shares to be issued pursuant to the terms hereof
shall not have been registered and shall be characterized as "restricted
securities" under the federal securities laws, and under such laws such shares
may be resold without registration under the Securities Laws, only in certain
limited circumstances. Each certificate evidencing Shares shall bear the
following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, HAVE BEEN TAKEN FOR INVESTMENT AND
MAY NOT BE SOLD OR OFFERED FOR SALE UNLESS A REGISTRATION STATEMENT UNDER THE
FEDERAL SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY
APPLICABLE STATE WITH RESPECT TO THESE SHARES, IS THEN IN EFFECT OR AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE ACT OR THE APPLICABLE STATE SECURITIES
LAWS ARE THEN IN FACT APPLICABLE TO THE OFFER OR SALE."
2.12 Place of Closing. The Closing shall take place at the Closing Time at the
offices of ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, Hill & ▇▇▇▇▇▇▇▇▇ LLP located at ▇▇▇▇▇ ▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, or at such other place as may be agreed
upon in writing by the Parties.
2.13 Tender. Any tender of documents or money under this Agreement may be made
upon the Parties or their respective counsel and money shall be tendered in U.S.
dollars by official bank certified cheque, bank draft or by such other method as
the Parties agree in writing.
2.14 Tax and Accounting Consequences
(a) It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368 of the
Code. The parties hereto adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the United States Department of the Treasury Income
Tax Regulations ("Treasury Regulations").
(b) It is intended by the parties hereto that the Merger shall be
treated as a "purchase" for accounting purposes.
ARTICLE 3
EXCHANGE OF CERTIFICATES
3.1 Surrender Procedures.
(a) Purchaser shall act as its own exchange agent in the Merger (except
for the Escrow Shares). Prior to the Closing Time, the Corporation
shall deliver to each
Corporation Stockholder a Transmittal Letter containing instructions
for the surrender and exchange of Certificates (as defined below).
(b) At the Closing Time, each Corporation Stockholder shall surrender to
the Purchaser for cancellation the share certificates representing
the Corporation Preferred Shares that are not Dissenting Shares (the
"Certificates"), in each case duly endorsed in blank for transfer,
or accompanied by irrevocable security transfer powers of attorney
duly executed in blank, in either case by the holders of record (to
the extent that such Corporation Stockholder has not surrendered its
Certificates and/or such executed irrevocable security transfer
powers of attorney to the Purchaser). Each Corporation Stockholder
who is entitled to receive Exchange Shares pursuant to Section 2.6
above shall deliver a duly executed Transmittal Letter together with
such holder's Certificate(s) (or an affidavit of lost certificate as
described in Section 3.1(c) below) to the Purchaser at the Closing
Time. Upon receipt of such duly executed Transmittal Letter and
Certificates (or affidavits of lost certificate), the Purchaser will
issue to each tendering Corporation Stockholder a certificate for
the number of Exchange Shares to which such Corporation Stockholder
is entitled pursuant to Section 2.6(a) hereof, less the Exchange
Shares deposited into escrow pursuant to Section 2.7 hereof, and pay
such Corporation Stockholder any cash payable in lieu of a
fractional share to which such Corporation Stockholder may be
entitled pursuant to Section 2.6(e) hereof.
(c) In the event any Certificates shall have been lost, stolen or
destroyed, the Purchaser shall issue in exchange for such lost,
stolen or destroyed Certificates, upon the making of an affidavit of
that fact by the holder thereof and such holder's agreement to
indemnify Purchaser or the Surviving Corporation for any claim that
may be made against Purchaser or the Surviving Corporation with
respect to such Certificate, such number of Exchange Shares and cash
for fractional shares, if any, as may be required pursuant to
Section 2.6 and any dividends or distributions payable pursuant to
Section 3.1(d).
(d) No dividends or distributions payable to holders of record of
Purchaser Common Stock after the Effective Time, or cash payable in
lieu of fractional shares, will be paid to the holder of any
unsurrendered Certificate(s) until the holder of the Certificate(s)
surrenders such Certificate(s). Subject to the effect, if any, of
applicable escheat and other laws, following surrender of any
Certificate, there will be delivered to the person entitled thereto,
without interest, the amount of any dividends and distributions
therefor paid with respect to Purchaser Common Stock so withheld as
of any date subsequent to the Effective Time and prior to such date
of delivery.
(e) Each of the Corporation Stockholders and the Purchaser shall deliver
such other documents as may be reasonably necessary to complete the
transactions contemplated by this Agreement.
(f) Until Certificates outstanding prior to the Merger are surrendered
pursuant to Section 3.1(a) above, such Certificates will be deemed,
for all purposes, to evidence the right to the Merger consideration
payable with respect to such Corporation Preferred Shares as
provided in Section 2.6 above.
3.2 No Further Ownership Rights. All Exchange Shares issued in accordance with
the terms hereof (including any cash paid in respect thereof) shall be deemed to
have been issued in full satisfaction of all rights pertaining to the
Corporation Preferred Shares and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of capital stock
of the Corporation, which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented for any reason,
they will be cancelled and exchanged as provided in this Article 3.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
Except as otherwise provided in the Disclosure Schedules to be delivered to the
Purchaser by the Corporation prior to the Closing (the "Disclosure Schedules"),
the Corporation hereby represents and warrants to the Purchaser the matters set
out below.
4.1 Incorporation and Registration
The Corporation is a corporation duly incorporated and validly existing under
the laws of its jurisdiction of incorporation and has all necessary corporate
power, authority and capacity to enter into this Agreement and to carry out its
obligations under this Agreement, to own its property and assets and to carry on
its business as presently conducted. Neither the nature of its business nor the
location or character of the property owned or leased by the Corporation
requires it to be registered, licensed or otherwise qualified as an out-of-state
or foreign corporation in any other jurisdiction other than those listed
opposite its name in Schedule 4.1 of the Disclosure Schedules, where it is duly
registered, licensed or otherwise qualified for such purpose.
4.2 Right to Sell
To the Corporation's knowledge, the Corporation Preferred Shares are not subject
to any rights of first refusal or other rights to purchase such stock in favor
of the Corporation, or restrictions on transfer pursuant to any agreement, which
would prevent the exchange of such Corporation Preferred Shares for Exchange
Shares as contemplated hereby.
4.3 Capitalization
The authorized and issued share capital of the Corporation is as set
forth in Schedule 4.3(a) of the Disclosure Schedules. All of the
shares in the capital of the Corporation have been duly and validly
issued and are outstanding as fully paid and non-assessable shares
of the Corporation. Other than as set forth in Schedule 4.3(a), (a)
no options, warrants (not including warrants to acquire common
shares of the Corporation) or other rights to purchase shares or
other securities of the Corporation, and no securities or
obligations convertible into or
exchangeable for shares or other securities of the Corporation, have
been authorized or agreed to be issued or are outstanding; and (b)
all such securities referenced in subsection (a) shall have been
exercised in full or terminated at or prior to the Effective Time.
Set forth in Schedule 4.3(b) of the Disclosure Schedules is a complete
list of all stockholders of the Corporation and the number of shares
of capital stock of the Corporation owned by each such stockholder.
4.4 Title to Assets
The Corporation has good and valid title to all of its assets and interests in
assets, real and personal, including all of the assets used in the Business,
free and clear of all Encumbrances, other than Permitted Encumbrances. In
particular, without limiting the generality of the foregoing, there has been no
assignment, subletting or granting of any licence (of occupation or otherwise)
of or in respect of any of the Leased Real Property assets of the Corporation or
any granting of any agreement or right capable of becoming an agreement or
option for the purchase of any of such assets. Except for co-located assets set
forth in Schedule 4.4 of the Disclosure Schedules, all of the assets of the
Corporation are located on the Leased Real Property.
4.5 Due Authorization and Enforceability
The execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been, or will prior to the
Closing Date be, duly authorized by all necessary corporate action on the part
of the Corporation and the Corporation's stockholders. This Agreement
constitutes a valid and binding obligation of the Corporation enforceable
against it in accordance with its terms, except as may be limited by (i)
applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally, and (ii) the effect of rules of law governing the availability of
equitable remedies.
4.6 Absence of Conflicting Agreements
The Corporation is not a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law
provision, or, to its knowledge, any Law or Governmental Authorization which
would be violated, contravened, breached by, or under which default would occur
or an Encumbrance would be created as a result of the execution and delivery of
this Agreement or any other documents or agreements to be delivered or entered
into under the terms of this Agreement, or the performance by the Corporation of
its obligations provided for under this Agreement or any other documents or
agreements to be delivered or entered into under this Agreement, except for any
such violation, contravention, breach, default or Encumbrance as would not
individually or in the aggregate have a Material Adverse Effect on the
Corporation.
4.7 Approvals
Except as disclosed in Schedule 4.7 of the Disclosure Schedules, no approval,
order or consent of or notice to or filing with any Governmental Authority or
other Person is required on the part of
the Corporation in connection with the execution, delivery and performance of
this Agreement or any other documents or agreements to be delivered under this
Agreement or the performance of the obligations of the Corporation under this
Agreement or any other documents or agreements to be delivered or entered into
under this Agreement, except for the filing of the Agreement of Merger and such
qualifications, registrations or filings under applicable securities laws as may
be required in connection with the Merger and the transactions contemplated by
this Agreement.
4.8 Financial Statements
The Corporation has delivered to the Purchaser reviewed financial statements as
of December 31, 2002, an unaudited balance sheet of the Corporation as of the
31st day of December, 2003 and an unaudited balance sheet of the Corporation as
of the Balance Sheet Date, and the related statements of income and retained
earnings for the periods ending on that date (the "Company Financial
Statements"). The Company Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently followed by the
Corporation throughout the period indicated (except for the absence of notes
thereto and normal year-end adjustments and normal quarter-end adjustments), and
fairly present in all material respects the financial position of the
Corporation as of the date of the balance sheet included in the Company
Financial Statements, and the results of its operations for the period
indicated. Except as set forth on Schedule 4.8 of the Disclosure Schedules, as
of the date of this Agreement, the Corporation, to its knowledge, does not have
any material liability or obligation of any nature, except for liabilities or
obligations that are reflected on Company Financial Statements, or in this
Agreement and the Disclosure Schedules and except for liabilities that may have
been incurred after the date of the Company Financial Statements in the ordinary
course of business.
4.9 Absence of Undisclosed Liabilities
Since the Balance Sheet Date, the Corporation has not incurred any material
liabilities or obligations (whether accrued, absolute, contingent or otherwise)
which continue to be outstanding, except those incurred in the ordinary and
usual course of business. The reserves and accrued liabilities disclosed on or
reflected in the Company Financial Statements and the Books and Records have
been calculated in accordance with generally accepted accounting principles.
4.10 Absence of Changes and Unusual Transactions
Except as consented to in advance in writing by the Purchaser or as expressly
contemplated by this Agreement, since the Balance Sheet Date:
(i) there has not been any damage, destruction, loss or labour
dispute (whether or not covered by insurance) which has had or
is reasonably likely to have a Material Adverse Effect with
respect to the Corporation;
(ii) the Corporation has not transferred, assigned, sold or
otherwise disposed of any of the assets shown or reflected in
the Company Financial Statements or cancelled any debts or
entitlements except, in each case, except in the ordinary and
usual course of business;
(iii) the Corporation has not incurred or assumed any obligation or
liability (fixed or contingent) except unsecured current
obligations and liabilities incurred in the ordinary and usual
course of business;
(iv) the Corporation has not discharged or satisfied any
Encumbrance, or paid any obligation or liability (fixed or
contingent) other than liabilities included in the Company
Financial Statements and liabilities incurred since the date
of the Balance Sheet Date in the ordinary and usual course of
business;
(v) the Corporation has not suffered any extraordinary loss,
waived or omitted to take any action in respect of any rights
of substantial value, or entered into any commitment or
transaction not in the ordinary and usual course of business
where such loss, rights, commitment or transaction is or would
be material in relation to the Corporation, as the case may
be;
(vi) the Corporation has not granted any bonuses, whether monetary
or otherwise, or made any general wage, salary or Benefit Plan
increases in respect of its Employees or changed the terms of
employment for any Employee except in the ordinary and usual
course of business and consistent with past practice;
(vii) the Corporation has not hired or dismissed any senior
Employees or hired or dismissed any other Employees other than
in the ordinary and usual course of business;
(viii) the Corporation has not mortgaged, pledged, subjected to
lien, granted a security interest in or otherwise encumbered
any of its assets or property, whether tangible or intangible;
(ix) the Corporation has not declared or paid any dividends or
declared or made any other payments or distributions on or in
respect of any of its shares or purchased or otherwise
acquired any of its shares;
(x) the Corporation has not paid any management fees or other
amounts (other than salaries and benefits of Employees, the
terms of which are disclosed in the Employee Schedule (as
defined below)) to any of the Corporation Stockholders; and
(xi) the Corporation has not authorized, agreed or otherwise become
committed to do any of the foregoing.
4.11 Non-Arm's Length Transactions
Except as disclosed in Schedule 4.11 of the Disclosure Schedules, no director or
officer, former director or officer, shareholder or Employee of the Corporation,
or any other person not dealing at arm's length (within the meaning of the Code)
with the Corporation, or any of the Corporation Stockholders, has any
indebtedness, liability or obligation to the Corporation, and the
Corporation is not indebted or otherwise obligated to or a party to any Contract
with any such person, except for employment arrangements with Employees, the
terms of which are disclosed in the Employee Schedule (as defined below).
4.12 Absence of Guarantees
The Corporation has not given or agreed to give, or is a party to or bound by,
any guarantee, surety or indemnity in respect of any indebtedness or other
obligation of any Person, or any other commitment by which the Corporation is,
or is contingently, responsible for any such indebtedness or other obligation.
4.13 Operating Businesses
All assets used in or necessary to carry on the Business are owned by the
Corporation, or leased or licensed by the Corporation from Persons acting at
arm's length from the Corporation Stockholders and the Corporation.
4.14 Major Suppliers
(a) Set forth on Schedule 4.14 of the Disclosure Schedules is a
comprehensive listing of all suppliers of goods and services to the
Corporation (including suppliers of goods and services to the
Corporation's customers, which are arranged for by the Corporation),
where the value of the goods or services supplied by such supplier
exceeded $25,000, in each case individually or in the aggregate,
during the 12 month period ending on the Balance Sheet Date.
(b) True and complete copies of all Contracts with those suppliers of
goods and services for the Business (or for customers of the
Business) referred to in subsection 4.14(a) have been made available
to the Purchaser. The Corporation has not received any written
communication that any of such Contracts will not be honoured in the
ordinary and usual course of business consistent with the past
experience of the Business.
(c) The Corporation is not subject to any Contract under which the
Corporation has made any commitment or is subject to any obligation
or would suffer any penalty (financial or otherwise) as a result of
a failure to acquire, or arrange for the acquisition of, a specified
minimum volume of products or services.
(d) The Corporation is not subject to any Contract involving a
commitment of exclusivity whereby its ability, or the ability of its
Affiliates, to acquire goods or services from any Person would be
restricted in any manner.
(e) To the knowledge of the Corporation, none of the suppliers included
in the list referred to in subsection 4.14(a) has any intention to
change its relationship or the terms upon which it conducts business
with the Corporation, including as a result of the transactions
contemplated by this Agreement.
4.15 Condition of Assets
The fixed assets, machinery, equipment, fixtures, furniture, furnishings and
vehicles owned or leased by the Corporation, including any of the foregoing
which are in storage or in transit, and other tangible property and facilities
used by the Corporation, whether located in or on the premises of the
Corporation or elsewhere, are in satisfactory condition in all material
respects, repair and (where applicable) proper working order, having regard to
their use and age, and such assets have been reasonably maintained.
4.16 Accounts Receivable
All of the corporation's accounts receivable (a) represent bona fide sales
actually made or services actually performed in the ordinary course of business,
(b) are reflected on the books and records of the Corporation in accordance with
generally accepted accounting principles, and (c) to the knowledge of the
Corporation, are not subject to any defence, counterclaim or set off, except to
the extent reflected by the reserve for bad debts or as set forth in Schedule
4.16 of the Disclosure Schedules.
4.17 Business in Compliance with Law
In all material respects, the business and operations of the Corporation have
been and are now conducted in compliance with all Laws of each jurisdiction in
which the Corporation carries on or has carried on business, and the Corporation
has not received any written notice of any alleged violation of any such Laws.
4.18 Governmental Authorizations
Schedule 4.18 of Disclosure Schedules sets forth a complete list of the material
Governmental Authorizations issued to or required by the Corporation to enable
it to carry on business in compliance, in all material respects, with all Laws.
The Governmental Authorizations listed in Schedule 4.18 are, in all material
respects, in full force and effect in accordance with their terms, and there
have been no material violations of such Governmental Authorizations and no
proceedings are pending or, to the knowledge of the Corporation, threatened,
which could result in the revocation or limitation of such Governmental
Authorizations.
4.19 Governmental Assistance
The Corporation has not received any grants or other forms of assistance,
including loans with interest below market rates or guarantees of any loans,
from any Governmental Authority that have not been fully repaid or reimbursed
and satisfied, and the Corporation is not a party to any Contract or
understanding with respect to any such grant or form of assistance.
4.20 Restrictive Covenants
The Corporation is not party to or bound or affected by any Contract limiting
the freedom of the Corporation to compete in any line of business, acquire goods
and services from any supplier, sell goods and services to any customer, or
transfer or move any of its assets or operations.
4.21 Intellectual Property
(a) Schedule 4.21 of the Disclosure Schedules sets forth a complete list
and brief description of all Intellectual Property owned by the
Corporation (including Trade-marks) that have been registered or for
which applications for registration have been filed by or on behalf
of the Corporation (collectively, the "Owned Intellectual Property")
and all Intellectual Property licensed to the Corporation (the
"Licensed Intellectual Property") except for commercially available
software licensed by the Corporation, for which the usage rights are
licensed subject to the terms of the applicable, standard form
license agreements.
(b) Except as disclosed in Schedule 4.21 of the Disclosure Schedule, the
Corporation has the right to use and is the exclusive owner of all
right, title and interest in and to all Owned Intellectual Property
(except for Permitted Encumbrances). The Owned Intellectual Property
and the Licensed Intellectual Property are all the Intellectual
Property used in or necessary to carry on the Business as currently
conducted. All Licensed Intellectual Property is being used by the
Corporation in accordance with a licence from or the express consent
of the rightful owner of such Licensed Intellectual Property, and
all such licences and consents are in full force and effect.
(c) All rights to Owned Intellectual Property are in full force and
effect and have not been used, enforced or licensed or failed to be
used, enforced or licensed in a manner that would result in the
abandonment, cancellation or unenforceability of or any loss of
rights in any of such Intellectual Property.
(d) The Corporation has no knowledge of any claim of adverse ownership,
invalidity or other opposition to or conflict with any Owned or
Licensed Intellectual Property nor of any pending or threatened
action, litigation, investigation, claim, opposition, complaint,
grievance or proceeding of any nature or kind against any of them
relating to such Intellectual Property.
(e) To the knowledge of the Corporation:
(i) the use of any of the Intellectual Property owned or licensed
by the Corporation;
(ii) any product or service which the Corporation sells, provides,
produces or uses, or has sold, provided, produced or used; and
(iii) any process, method, advertising, or material that the
Corporation employs or has employed in the marketing or sale
of any such product or service,
does not breach, violate, infringe or interfere with any
proprietary, contractual or other rights of any Person relating to
Intellectual Property.
(f) The Corporation has no knowledge of any breach, violation,
infringement of, or interference with, the Intellectual Property
owned or licensed by the Corporation.
4.22 Equipment Contracts
Schedule 4.22 of the Disclosure Schedules sets forth a complete list of all
Equipment Contracts involving aggregate payments in excess of $25,000 per annum,
together with a description of the assets to which the Equipment Contracts
relate. All of the Equipment Contracts are in full force and effect and no
material default exists on the part of the Corporation, or, to the knowledge of
the Corporation, on the part of any of the other parties thereto. The entire
interest of the Corporation under each of the Equipment Contracts is held by the
Corporation free and clear of any Encumbrances, other than Permitted
Encumbrances, and all payments due under the Equipment Contracts have been duly
and punctually paid.
4.23 Owned Real Property. The Corporation does not have now, and has never had,
any Owned Real Property.
4.24 Leased Real Property
(a) Schedule 4.24 of the Disclosure Schedules sets forth a complete list
of the Leased Real Property (by reference to municipal address) and
Real Property Leases (by reference to all relevant documents
including details of parties to the Real Property Leases and dates
of documents). True copies of all the Real Property Leases have been
provided or made available to the Purchaser. The Real Property
Leases have not been materially altered or amended and are in full
force and effect.
(b) There are no agreements or understandings between the landlord and
tenant, or sublandlord and subtenant, in respect of any Leased Real
Property other than as contained in the Real Property Leases,
pertaining to the rights and obligations of the parties to the Real
Property Leases relating to the use and occupation of the Leased
Real Property.
(c) Except for the Real Property Leases listed in Schedule 4.24, the
Corporation is not a party to or bound by any other leases,
subleases, agreements to lease, licenses or occupancy agreements
pertaining to real property.
(d) All interests held by the Corporation as lessee or occupant under
the Real Property Leases are free and clear of all Encumbrances
other than Permitted Encumbrances.
(e) All payments required to be made by the Corporation pursuant to the
Real Property Leases have been duly paid and the Corporation is not
otherwise in material default in meeting any of its obligations
under any of the Real Property Leases.
(f) To the knowledge of the Corporation, none of the other parties under
any of the Real Property Leases is in default in meeting any of its
obligations under such Real Property Leases.
(g) The Corporation does not have any option, right of first refusal or
other contractual right relating to the Leased Real Property which
is not provided under the Real Property Leases.
(h) To the knowledge of the Corporation, no event exists which, but for
the passing of time or the giving of notice, or both, would
constitute a default by any other party to any of the Real Property
Leases and no party to any Real Property Lease is claiming any such
default or taking any action purportedly based upon any such
default.
4.25 Environmental Matters
To the Corporation's knowledge:
(a) There are no Environmental Approvals.
(b) All operations of the Corporation have been, and are now, conducted
in material compliance with all Environmental Laws. There has been
no Release by the Corporation of any Hazardous Substance into the
Environment.
(c) Neither the Corporation nor any of its operations has been or is now
the subject of any Remedial Order, nor does the Corporation have any
knowledge of any investigation or evaluation commenced as to whether
any such Remedial Order is necessary nor, to the knowledge of the
Corporation, has any threat of any such Remedial Order been made
nor, to the knowledge of the Corporation, are there any
circumstances which could reasonably result in the issuance of any
such Remedial Order.
(d) The Corporation has never been prosecuted for or convicted of any
offence under Environmental Laws, nor has the Corporation been found
liable in any proceeding to pay any fine, penalty, damages, amount
or judgment to any person as a result of any Release or threatened
Release of any Hazardous Substance into the Environment or as the
result of the breach of any Environmental Law and to the knowledge
of the Corporation, there is no basis for any such proceeding or
action.
(e) The Corporation does not have any knowledge of any Hazardous
Substance in, on or under the Leased Real Property, or in any other
assets of the Corporation.
4.26 Employment Matters
(a) The Corporation has provided Purchaser with a complete list (the
"Employee Schedule") of all Employees, whose current wages, salaries
or hourly rates of pay, and bonus (whether monetary or otherwise)
exceed $40,000 U.S. (on an annualized basis), together with their
titles, service dates and material terms of employment including
current wages, salaries or hourly rates of pay, and bonus (whether
monetary or otherwise) paid since the beginning of the most recently
completed fiscal year (including the date of payment if paid since
January 1, 2004) or payable to each such Employee, and the date upon
which each
such Employee was first hired by the Corporation. Except as
disclosed in the Employee Schedule, no Employee is on disability
leave, pregnancy or parental leave, extended leave of absence or
receiving benefits pursuant to the Laws.
(b) Except for those written employment contracts with salaried
Employees identified in the Employee Schedule, there are no written
contracts of employment entered into with any Employees or any oral
contracts of employment which are not terminable on the giving of
reasonable notice in accordance with applicable law.
(c) Except as set forth in Schedule 4.26 of the Disclosure Schedules
there are no written or oral change of control provisions or
Contracts with any of the Employees which provide for any rights of
Employees contingent upon or affected by a change of control of the
Corporation or the sale of any or all of their assets.
(d) Schedule 4.26 of the Disclosure Schedules sets out a complete list
of all independent contractors currently under contract with the
Corporation, together with a list of all Contracts with them.
(e) Except for the Benefit Plans, there are no employment policies or
plans which are binding upon the Corporation.
(f) The Corporation has been and is being operated in compliance in all
material respects with all Laws relating to employees, including
employment standards, occupational health and safety, human rights,
labour relations and pay equity.
(g) There are no Claims or complaints nor, to the knowledge of the
Corporation, are there any threatened Claims or complaints, against
the Corporation pursuant to any Laws relating to employees,
including employment standards, human rights, labour relations,
occupational health and safety, worker's compensation or pay equity.
To the knowledge of the Corporation, nothing has occurred which
might lead to a Claim or complaint against the Corporation under any
such Laws. There are no outstanding decisions or settlements or
pending settlements which place any obligation upon the Corporation
to do or refrain from doing any act.
(h) All current assessments under workers' compensation legislation in
relation to the Corporation have been paid or accrued and the
Corporation has not been subject to any special or penalty
assessment under such legislation which has not been paid.
4.27 Collective Agreements
(a) The Corporation is not a party, either directly or by operation of
law, to any collective agreement, letters of understanding, letters
of intent or other written communication with any trade union or
association which may qualify as a trade union, which would cover
any of the Employees of the Corporation.
(b) There are no outstanding or, to the knowledge of the Corporation,
threatened labour tribunal proceedings of any kind, including any
proceedings which could result in certification of a trade union as
bargaining agent for Employees of the Corporation, and there have
not been any such proceedings within the last two years.
(c) To the knowledge of the Corporation, there are no threatened or
apparent union organizing activities involving any Employees of the
Corporation.
(d) The Corporation does not have any labour union problems that might
materially affect the value of the Corporation or lead to an
interruption of its operations at any location where the Corporation
carries on its business.
4.28 Benefit Plans
(a) Schedule 4.28 of the Disclosure Schedules sets forth a complete list
of the Benefit Plans.
(b) Current and complete copies of all written Benefit Plans or, where
oral, written summaries of the material terms of them, have been
provided or made available to the Purchaser together with current
and complete copies of all documents relating to the Benefit Plans,
including: all documents establishing, creating or amending any of
the Benefit Plans; all trust agreements, funding agreements;
insurance contracts, and the most recent financial statements and
accounting statements and reports; all booklets, summaries, manuals
and written communications of a general nature distributed or made
available to any Employees or former employees concerning any
Benefit Plans.
(c) Each Pension Plan has been qualified and administered in compliance
with (i) the terms thereof, and (ii) the Code and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"); and
the Corporation has not received, in the last six years, any notice
from any Person questioning or challenging such compliance (other
than in respect of any claim related solely to that Person).
(d) All obligations to or under the Pension Plans (whether pursuant to
their terms or the Code or ERISA) have been satisfied, and there are
no outstanding defaults or violations under the Pension Plans by the
Corporation nor do the Corporation Stockholders or the Corporation
have any actual knowledge, without further enquiry or investigation,
of any default or violation by any other party to any Pension Plan.
(e) Other than those required by the Code or ERISA, there have been no
improvements, increases or changes to, or promised improvements,
increases or changes to, the benefits provided under any Pension
Plan. None of the Pension Plans provides for benefit increases or
the acceleration of or an increase in funding obligations that are
contingent upon or will be triggered by the entering into of this
Agreement or the completion of the transactions contemplated by this
Agreement, other than the full vested of accrued benefits required
by the Code upon the termination of a Pension Plan qualified under
Section 401(a) of the Code.
(f) All employer or employee payments, contributions or premiums
required to be remitted, paid to or in respect of each Pension Plan
have been paid or remitted in a timely fashion in accordance with
the terms of that Pension Plan and the Code and ERISA, and no Taxes,
penalties or fees are owing or exigible under any Pension Plan, and
to the knowledge of the Corporation there are no liabilities or
contingent liabilities in respect of any Pension Plans that have
been discontinued.
(g) There is no proceeding, action, investigation, suit or claim (other
than routine claims for payment of benefits) pending or, to the
knowledge of the Corporation, threatened involving any Pension Plan
or its assets, and to the knowledge of the Corporation no facts
exist which could reasonably be expected to give rise to any such
proceeding, action, suit or Claim (other than routine claims for
benefits).
(h) No event has occurred respecting any Pension Plan which could
otherwise reasonably be expected to adversely affect the tax
qualified status of any such plan.
(i) The Corporation has not received, or applied for, any payment of
surplus or any payments as a result of the demutualization of the
insurer of any Benefit Plan out of or in respect of any Benefit
Plan.
(j) The Corporation has not taken any contribution or premium holidays
under any Benefit Plan and there have been no withdrawals or
transfers of assets from any Benefit Plan.
(k) All employee data necessary to administer each Benefit Plan is in
the possession of the Corporation and is substantially complete,
correct and in a form which is sufficient for the proper
administration of the Benefit Plan in accordance with its terms and
all Laws.
(l) None of the Benefit Plans provide benefits beyond retirement or
other termination of service to Employees or former employees, or to
the beneficiaries of such employees, except as required by Laws,
including but not limited to the Consolidated Omnibus Reconciliation
Act of 1985.
(m) None of the Benefit Plans require or permit a retroactive increase
in premiums or payments, or require additional payments or premiums
on the termination of any Benefit Plan or insurance contract in
respect thereof other than the normal and reasonable administrative
fees associated with the termination of benefit plans, and the level
of insurance reserves, if any, under any insured Benefit Plan, to
the best of the Corporation's knowledge, is reasonable and
sufficient to provide for all incurred but unreported claims.
4.29 Insurance
The Corporation maintains the policies of insurance set forth in Schedule 4.29
of the Disclosure Schedules, copies of which have been made available to the
Purchaser. All such policies of insurance are in full force and effect and the
Corporation is not in default, as to the payment of premium or otherwise, under
the terms of any such policy.
4.30 Material Contracts
Schedule 4.30 of the Disclosure Schedules sets forth a complete list of the
Material Contracts. The Material Contracts are all in full force and effect and
no material default exists under any of the Material Contracts on the part of
the Corporation or, to the knowledge of the Corporation, on the part of any
other party to such Material Contracts. Current and complete copies of the
Material Contracts have been delivered or made available to the Purchaser and
there are no current or pending negotiations with respect to the renewal,
repudiation or amendment of any such Contract.
4.31 Litigation
Except as disclosed in Schedule 4.31 of the Disclosure Schedules, there is no
action, suit, litigation, investigation, claim, complaint, grievance or
proceeding, including appeals and applications for review, pending or, to the
knowledge of the Corporation, threatened in writing against the Corporation
before any court, Governmental Authority, commission, board, bureau, agency or
arbitration panel which, if determined adversely to the Corporation, would,
(a) have a Material Adverse Effect on the Corporation;
(b) enjoin, restrict or prohibit the consummation of the Merger or any
of the other transactions contemplated by this Agreement; or
(c) to the knowledge of the Corporation, prevent the Corporation
Stockholders from fulfilling all of their obligations set out in
this Agreement or arising from this Agreement;
and the Corporation has no knowledge of any existing ground on which any such
action, suit, litigation or proceeding might be commenced with any reasonable
likelihood of success. Except as disclosed in such Schedule 4.31, there is not
presently outstanding against the Corporation any judgment, decree, injunction,
rule or order of any court, Governmental Authority, commission, board, bureau,
agency or arbitrator.
4.32 Tax Matters.
Except as disclosed in Schedule 4.32 of the Disclosure Schedules:
(a) The Corporation is not, and has never been, a member of an
affiliated group, within the meaning of Section 1504(a) of the Code,
and neither the Corporation nor any entity whose liabilities the
Corporation has succeeded has ever filed a
consolidated United States federal income tax return with (or been
included in a consolidated return or) an affiliated group;
(b) The Corporation has filed or caused to be filed all Tax Returns and
reports required to have been filed by or for them on or before the
Closing Date, and all information set forth in such returns or
reports is accurate and complete in all material respects;
(c) No tax return or report of the Corporation contains any position
which is subject to penalties under the Code Section 6662 or
corresponding provision of state, local or foreign tax law;
(d) The Corporation has paid all Taxes due and payable by them;
(e) The Corporation is in material compliance with, and their records
contain all information and documents (including, without
limitation, properly completed United States Internal Revenue
Service Forms W-9) necessary to comply with, all applicable
information tax reporting and tax withholding requirements;
(f) There are no material unpaid Taxes, additions to tax, penalties, or
interest payable by the Corporation or any other person that are or
could become a lien on any assets, or otherwise have a Material
Adverse Effect on the Corporation;
(g) The Corporation has collected or withheld all amounts required to be
collected or withheld by them for any Taxes, and all such amounts
have been paid to the appropriate governmental agencies or set aside
in appropriate accounts for future payment when due;
(h) The balance sheet of the Corporation as of the Balance Sheet Date
fully and properly reflects, as of the Balance Sheet, the
liabilities of the Corporation for all accrued Taxes for all periods
ending on or before the Balance Sheet Date;
(i) The Corporation has not granted (nor is subject to) any waiver
currently in effect of the period of limitations for the assessment
or collection of tax, no unpaid tax deficiency has been asserted
against or with respect to the Corporation by any taxing authority,
and there is no pending examination, administrative or judicial
proceeding, or deficiency or refund litigation with respect to any
Taxes or Tax Returns of the Corporation;
(j) The Corporation has not made or entered into, nor holds any assets
subject to, a consent filed pursuant to Section 341(f) of the Code
and the regulations there under or a "safe harbour lease" subject to
former Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended before the Tax Reform Act of 1984, and the Treasury
Regulations thereunder;
(k) The Corporation is not required to include in income any amount from
an adjustment pursuant to Section 481 of the Code or the Treasury
Regulations thereunder or any similar provision of state law;
(l) The Corporation is not a party to, nor obligated under, any
agreement or other arrangement providing for the payment of any
amount that is or would be non-deductible under Section 280G of the
Code;
(m) The Corporation has not distributed to their stockholders or
security holders stock or securities of a controlled corporation in
a transaction to which Section 355(a) of the Code applies;
(n) There are no outstanding rulings or requests for rulings from any
taxing authority that are, or if issued would be, binding on the
Corporation;
(o) The Corporation is not, nor have they been at any time within the
last five years, a "United States real property holding corporation"
for the purposes of Section 897 of the Code;
(p) The Corporation does not have and has not had any permanent
establishment, nor are otherwise subject to taxation, in any country
other than the United States; and
(q) Schedule 4.32 describes all material tax elections, consents, and
agreements made by or affecting the Corporation that would be
effective after the Closing, lists all material types of taxes paid
and tax returns filed by or on behalf of the Corporation, expressly
indicates each tax with respect to which the Corporation is or has
been included in a consolidated, unitary, or combined return and
describes the status of all examinations, administrative or judicial
proceedings, and litigation with respect to taxes of the
Corporation.
4.33 Books and Records
All Books and Records have been made available to the Purchaser. Such Books and
Records, together with the Company Financial Statements, fairly and correctly
set out and disclose in all material respects the financial position of the
Corporation and all material financial transactions to which the Corporation is
or was a party have been accurately recorded in all material respects in such
Books and Records.
4.34 Corporate Records
(a) The articles of incorporation and by-laws for the Corporation,
including any and all amendments, have been made available to the
Purchaser and such articles of incorporation and by-laws as so
amended are in full force and effect unamended.
(b) The corporate records and minute books for the Corporation have been
made available to the Purchaser. The minute books include minutes
prepared of all meetings of the directors and stockholders of the
Corporation held to date and resolutions passed by the directors or
shareholders on consent. The stock ledger and journal, reflecting
all stock issuances and stock transfers, of the Corporation is
complete and accurate in all material respects.
4.35 Management Recommendation Letters
Copies of all management recommendation letters received by the Corporation or
their boards of directors from any auditor of the Corporation during the last
three years have been made available to the Corporation.
4.36 Trade Allowances
The Material Contracts contain all provisions concerning customer and supplier
discounts, allowances, volume rebates, preferential terms, customer credits or
similar reductions in price or other trade terms that have a material effect on
the Corporation.
4.37 Bank Accounts, etc.
Schedule 4.37 of the Disclosure Schedules sets forth a complete list of every
financial institution in which the Corporation maintain any depository account,
trust account or safe deposit box, details of all such accounts and safe deposit
boxes and the names of all persons authorized to draw on or who have access to
such accounts or safe deposit boxes.
4.38 No Broker
Except as disclosed on Schedule 4.38, neither the Corporation nor, to the
knowledge of the Corporation, any Corporation Stockholder is obligated for the
payment of any fees or expenses of any broker or finder in connection with the
origin, negotiation or execution of this Agreement or in connection with the
transactions contemplated hereby.
4.39 Disclosure
This Agreement (including all exhibits and schedules hereto) does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements herein not misleading in light of the
circumstances under which they were made. Except as set forth in this Agreement
(including all exhibits and schedules thereto), there is no fact that the
Corporation has not disclosed to the Purchaser and of which its officers and
directors are aware, that has had or would reasonably be expected to have a
Material Adverse Effect on the Corporation.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND
MERGER SUB
The Purchaser and/or Merger Sub hereby represents and warrants to the
Corporation Stockholders the matters set out below.
5.1 Incorporation
The Purchaser is a corporation duly incorporated and validly existing under the
laws of Canada and has all necessary corporate power to own its property and
assets and to carry on its business as presently conducted. Merger Sub is a
corporation duly incorporated and validly existing under the laws of Delaware
and has all necessary corporate power to own its property and assets and to
carry on its business as presently conducted.
5.2 Due Authorization
The Purchaser has all necessary corporate power, authority and capacity to enter
into this Agreement and to carry out its obligations under this Agreement. The
execution and delivery of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement have been duly authorized
by all necessary corporate action on the part of the Purchaser, including all
necessary approvals by the Purchaser's shareholders. Merger Sub has all
necessary corporate power, authority and capacity to enter into this Agreement
and to carry out its obligations under this Agreement. The execution and
delivery of this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Merger Sub.
5.3 Enforceability of Obligations
This Agreement, and the other agreements and documents to be entered into by
Purchaser and Merger Sub pursuant to this Agreement (the "Purchaser Ancillary
Documents"), constitutes valid and binding obligations of each of the Purchaser
and Merger Sub enforceable against each of them in accordance with their
respective terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors' rights generally, and (ii) the effect of
rules of law governing the availability of equitable remedies.
5.4 SEC Documents; Purchaser Financial Statements
Purchaser has furnished the Corporation with its most recent true and complete
copy of each statement, quarterly and other report pursuant to Section 13 or
15(d) of the 1934 Act filed by Purchaser with the SEC since June 1, 2003 ( (the
"Purchaser SEC Documents"), which are all the documents (other than preliminary
material) that Purchaser was required to file with the SEC under the 1934 Act
since such date. As of their respective filing dates, the Purchaser SEC
Documents complied in all materials respects with the requirements of the 1934
Act. The Purchaser SEC Documents and this Agreement (including the exhibits and
schedules hereto), when taken together, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading, except to the extent corrected by a
subsequently filed Purchaser SEC Document provided to the Corporation prior to
the Effective Time. The financial statements of Purchaser included in the
Purchaser SEC Documents (the "Purchaser Financial Statements") comply as to form
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting
principles consistently applied (except as may be indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC)
and fairly present the consolidated financial position of Purchaser and its
consolidated subsidiaries at the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal, recurring audit adjustments). There has been
no change in Purchaser's accounting policies, methods or practices (including
any change in depreciation or amortization policies or rates) or any material
revaluation by the Purchaser of any of its material assets, except as described
in the notes to the Purchaser Financial Statements. Except as disclosed in the
Purchaser Financial Statements, neither the Purchaser nor any of its
subsidiaries has any liabilities required under generally accepted accounting
principles to be set forth on a balance sheet (absolute, accrued, contingent or
otherwise) which are, individually or in the aggregate, material to the
business, results of operations or financial condition of the Purchaser and its
subsidiaries taken as a whole, except for liabilities incurred since the date of
the most recent balance sheet forming part of such Purchaser Financial
Statements in the ordinary course of business consistent with past practices.
5.5 Absence of Conflicting Agreements
Neither the Purchaser nor Merger Sub is a party to, bound or affected by or
subject to any indenture, mortgage, lease, agreement, Contract, obligation,
instrument, charter or by-law provision, Law or Governmental Authorization which
would be violated, contravened, breached by, or under which any default would
occur or an Encumbrance would be created as a result of the execution and
delivery by it of this Agreement or the performance by it of any of its
obligations provided for under this Agreement. Neither the Purchaser nor Merger
Sub's entering into this Agreement nor the consummation of the Merger or any
other transaction contemplated by this Agreement or any Parent Ancillary
Document will give rise to, or trigger the application of, any rights of any
third party that would come into effect upon the consummation of the Merger.
5.6 Approvals; Restrictions
Except for the filings and/or notices required (a) the Securities Laws, (b)
under a foreign anti-trust or trade regulation law, (c) to be made with: (i) the
NASD and/or its Nasdaq SmallCap Market, (ii) the Boston Stock Exchange, and
(iii) each state securities or "blue sky" authority which may have jurisdiction,
or (d) to be filed by the Purchaser pursuant to the Investment Canada Act, and
except for the filing of the Agreement of Merger with the Secretary of State of
the State of Delaware, no approval, order or consent of or filing with any
Governmental Authority is required on the part of the Purchaser or Merger Sub in
connection with the execution, delivery and performance of this Agreement or any
Purchaser Ancillary Documents or the performance of the Purchasers' obligations
under this Agreement and the Purchaser Ancillary Documents. Such filings shall
be accomplished in a timely manner, except where failure to accomplish such
filing would not reasonably be expected to have a Material Adverse Effect on the
Purchaser or on the Corporation. The Purchaser Common Stock will be of the same
class as is currently registered under the 1934 Act and the Purchaser will use
commercially reasonable best efforts to ensure that the Purchaser Common Stock
is listed for trading on the Nasdaq SmallCap Market. The Shares to be issued
hereunder will constitute "restricted securities" within the meaning of the
federal securities laws of the United States and may not be
offered, sold, transferred or otherwise disposed of by any other person except
in strict compliance with all applicable provisions of such laws, the rules and
regulations thereunder and all state and Canadian securities laws, rules and
regulations. There are no other restrictions on the securities being issued
except as provided in the Escrow Agreement.
5.7 Capitalization.
The authorized capital stock of the Purchaser consists of an unlimited number of
shares of Common Stock, no par value per share, of which 35, 079, 014 shares are
issued and outstanding. All issued and outstanding shares of Purchaser Common
Stock have been duly authorized and validly issued, and are fully paid and
nonassessable. Other than as listed on Schedule 5.7, there are no stock
appreciation rights, options, warrants, calls, rights, commitments, conversion
privileges or preemptive or other rights or agreements outstanding to purchase
or otherwise acquire any of the Purchaser's authorized but unissued capital
stock or any securities or debt convertible into or exchangeable for shares of
the Purchaser's capital stock or obligating the Purchaser to grant, extend or
enter into such option, warrant, call, commitment, conversion privileges or
preemptive or other right or agreement.
5.8 Litigation
There is no action, suit, litigation, investigation, claim, complaint, grievance
or proceeding, including appeals and applications for review, in progress or, to
the knowledge of the Purchaser pending or threatened against or relating to the
Purchaser or Merger Sub before any court, Governmental Authority, commission,
board, bureau, agency or arbitration panel, which, if determined adversely to
the Purchaser or Merger Sub would:
(a) prevent the Purchaser from issuing the Purchaser Common Stock to the
Corporation Stockholders in the Merger;
(b) enjoin, restrict or prohibit the Merger or the other transactions
contemplated by this Agreement; or
(c) prevent the Purchaser or Merger Sub from fulfilling all of its
obligations set out in this Agreement or arising from this
Agreement, or
(d) that would have or would be reasonably likely to have a Material
Adverse Effect on the Purchaser;
and the Purchaser has no knowledge of any existing ground on which any such
action, suit, litigation or proceeding might be commenced with any reasonable
likelihood of success. There is not presently outstanding against the Purchaser
or Merger Sub any judgment, decree, injunction, rule or order of any court,
Governmental Authority, commission, board, bureau, agency or arbitrator.
5.9 Absence of Certain Changes.
Since the date of the most recent balance sheet of the Purchaser included in the
Purchaser Financial Statements, Purchaser has operated its business in the
ordinary course consistent with
past practice and there has not been (a) any change in the financial condition,
properties, assets, liabilities, business or operations of the Purchaser which
change by itself or in conjunction with all other such changes, whether or not
arising in the ordinary course of business, has had or will have a Material
Adverse Effect thereon, (b) any amendment or change in the Purchaser's charter
documents; or (c) any declaration, setting aside or payment of a dividend on, or
the making of any other distribution in respect of, the capital stock of the
Purchaser, or any split, combination or recapitalization of the capital stock of
the Purchaser or any direct or indirect redemption, purchase or other
acquisition of any capital stock of the Purchaser or any change in any rights,
preferences, privileges or restrictions of any outstanding security of the
Purchaser.
5.10 No Broker
Except as disclosed on Schedule 5.10, the Purchaser has carried on all
negotiations relating to this Agreement and the transactions contemplated by
this Agreement directly and without the intervention on their behalf of any
other party in such manner as to give rise to any valid claim for a brokerage
commission, finder's fee or other like payment against any of the Corporation
Stockholders and the Purchaser shall be responsible for the Broker fees
disclosed in Schedule 5.10.
5.11 Shares.
All of the Shares when issued as contemplated hereby will be duly authorized,
validly issued, fully-paid and non-assessable shares of Common Stock of the
Purchaser and will be issued in compliance with all applicable Securities Laws.
5.12 Experience.
The Purchaser has carefully reviewed the representations concerning the
Corporation contained in this Agreement and has made detailed inquiry concerning
the Corporation, its business and its personnel; the officers of the Corporation
have made available to the Purchaser any and all written information which it
has requested and have answered to the Purchaser's satisfaction all inquiries
made by the Purchaser as of the date of this Agreement. The Purchaser has
sufficient knowledge and experience in finance and business that it is capable
of evaluating the risks and merits of this transaction, and the Purchaser is
able financially to bear the risks thereof.
5.12 Merger Sub.
Merger Sub is a wholly-owned subsidiary of Purchaser and Purchaser shall cause
Merger Sub to perform as provided in this Agreement. Merger Sub was formed
solely for the purpose of consummating the Merger, has not conducted any
operations and has no material assets or liabilities.
ARTICLE 6
NON-WAIVER; SURVIVAL
6.1 Non-Waiver
No investigations made by or on behalf of the Purchaser at any time shall have
the effect of waiving, diminishing the scope of or otherwise affecting any
representation or warranty made by the Corporation. No investigations made by or
on behalf of the Corporation at any time shall have the effect of waiving,
diminishing the scope of or otherwise affecting any representation or warranty
made by the Corporation. No waiver of any condition or other provision, in whole
or in part, shall constitute a waiver of any other condition or provision
(whether or not similar) nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
6.2 Nature and Survival
All representations and warranties contained in this Agreement on the part of
each of the Parties shall survive the Closing, until December 31, 2004, unless a
bona fide notice of a Claim shall have been given in writing before the expiry
of such period, in which case the representation and warranty to which such
notice relates shall survive in respect of that Claim until final determination
or settlement of such Claim. All covenants of the each of the Parties shall
survive in accordance with their terms.
ARTICLE 7
PURCHASER'S CONDITIONS PRECEDENT
The obligation of the Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction of, or compliance with, at
or before the Closing, each of the following conditions precedent (each of which
is acknowledged to be inserted for the exclusive benefit of the Purchaser and
may be waived by it in whole or in part).
7.1 Truth and Accuracy of Representations of Corporation at the Closing Time
All of the representations and warranties of the Corporation made in or pursuant
to this Agreement shall be true and correct in all material respects as at the
Closing Time (except to the extent that such representations or warranties
address matters as of a particular date or period, in which case such
representations and warranties shall be true and correct in all material
respects as of such date or period) and with the same effect as if made at and
as of the Closing Time and the Purchaser shall have received a certificate of
the Corporation to such effect signed by the Chief Executive Officer of the
Corporation.
7.2 Performance of Obligations
The Corporation shall have performed or complied with, in all material respects,
all its obligations and covenants under this Agreement.
7.3 Receipt of Closing Documentation
All documentation relating to the due authorization and completion of the Merger
shall be satisfactory to the Purchaser, acting reasonably, and the Purchaser
shall have received copies of all such documentation or other evidence as it may
reasonably request in order to establish the consummation of the transactions
contemplated by this Agreement and the taking of all corporate proceedings in
connection with such transactions in compliance with these conditions, in form
(as to certification and otherwise) and substance reasonably satisfactory to the
Purchaser.
7.4 Consents, Authorizations and Registrations
The Required Approvals listed in Schedule 7.4 hereto shall have been obtained at
or before the Closing Time on terms acceptable to the Purchaser, acting
reasonably.
7.5 Substantial Damage
No substantial damage by fire or other hazard to the assets or Business of the
Corporation shall have occurred prior to the Closing Time.
7.6 No Proceedings
There shall be no injunction or restraining order issued preventing, and no
claim, action, suit, litigation or proceeding, judicial or administrative, or
investigation against any Party pending by any Person, or pending or threatened
by any Governmental Authority, for the purpose of enjoining or preventing the
consummation of the transactions contemplated by this Agreement or otherwise
claiming that this Agreement or the consummation of those transactions is
improper or would give rise to proceedings under any Laws.
7.7 Directors and Officers of the Corporations
There shall have been delivered to the Purchaser on or before the Closing Time,
the resignations of all individuals who are currently directors or officers of
the Corporation (except to the extent that the Corporation has been notified to
the contrary by the Purchaser).
7.8 Transfer and Delivery of the Purchased Shares
The Purchaser shall have received Transmittal Letters from each Corporation
Stockholder receiving Exchange Shares in the Merger pursuant to Section 2.6
hereof and accredited investor questionnaires, in a form acceptable to counsel
for the Purchaser, from each entity receiving the Management Shares and the CIBC
Shares.
7.9 Securities Laws
Purchaser shall have reasonably satisfied itself that all applicable
requirements of any and all applicable Securities Laws relating to the sale and
issuance of the Shares hereunder pursuant to the Merger have been met.
7.10 Corporation Stockholder Approval
The Corporation's stockholders shall have approved this Agreement in accordance
with the Articles of Incorporation of Corporation and as provided by Delaware
Law and California Law.
7.11 Opinion of Counsel for Corporation.
The Purchaser shall have received an opinion dated as of the Closing Date from
counsel for the corporation in form and substance acceptable to the Purchaser
and its counsel, acting reasonably.
7.12 Disclosure Schedules
Corporation shall have delivered to the Purchaser Disclosure Schedules that
qualify and set forth matters required by the representations and warranties
contained in Article 4 of this Agreement.
7.13 Escrow Agreement
Purchaser shall have been provided with an executed Escrow Agreement.
7.14 Corporation Liabilities
(a) The Corporation shall have paid in full its term loan from Agility
Capital in the current principal amount of $150,000 (including any
interest accrued thereon).
(b) The liabilities of the Corporation as of the Closing Date, not
including any brokers' or similar fees payable by the Corporation to
CIBC World Markets Corp. but specifically including any legal or
accounting fees to be paid pursuant to Section 9.12(c) below, shall
not exceed $3,600,000.
7.15 No Material Adverse Effect
There shall not have occurred a Closing Material Adverse Effect. As used herein,
a "Closing Material Adverse Effect" means a Material Adverse Effect with respect
to the Corporation other than a Material Adverse Effect arising due to the
Corporation's lack of liquidity or insolvency (but not including the Corporation
being petitioned into voluntary or involuntary bankruptcy or any creditors of
the Corporation having provided, after the date of this Agreement, notice to the
Corporation of the exercise of their rights to foreclose upon, seize or sell any
of the assets of the Corporation), unless such Material Adverse Effect arising
due to the Corporation's lack of liquidity or insolvency occurs as a direct
result of a wilful misrepresentation by one of the Corporation's officers,
directors, or agents with respect to the Corporation's financial or business
agreements, financial statements, customer revenue or adverse change to the
Business which directly relates to the Corporation's liquidity and/or solvency.
7.16 Releases
The Purchaser shall have been provided with releases from CIBC (as hereinafter
defined in Section 9.12(d)) and all employee of the Corporation entitled to
receive the Management Shares
(as hereinafter defined in Section 9.12(e)), in form and substance satisfactory
to the Purchaser acting reasonably.
7.17 Waiver of Conditions
The Purchaser may waive compliance with any condition in whole or in part if it
sees fit to do so, without prejudice to its rights of termination pursuant to
Article 11 in the event of non-fulfilment of any other condition, in whole or in
part, or to its rights to recover damages for the breach of any representation,
warranty, covenant or condition contained in this Agreement.
ARTICLE 8
CORPORATION'S CONDITIONS PRECEDENT
The obligations of the Corporation to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction of or compliance with, at
or before the Closing, each of the following conditions precedent (each of which
is acknowledged to be inserted for the exclusive benefit of the Corporation and
may be waived by the Corporation, in whole or in part).
8.1 Truth and Accuracy of Representations of the Purchaser at the Closing Time
All of the representations and warranties of the Purchaser made in or pursuant
to this Agreement shall be true and correct in all material respects as at the
Closing Time and with the same effect as if made at and as of the Closing Time
(except to the extent that such representations or warranties address matters as
of a particular date or period, in which case such representations and
warranties shall be true and correct in all material respects as of such date or
period) and the Corporation shall have received a certificate of the Purchaser
to such effect signed by the Chief Executive Officer of the Purchaser.
8.2 Performance of Obligations
The Purchaser shall have performed or complied with, in all respects, all its
obligations and covenants under this Agreement.
8.3 Receipt of Closing Documentation
All documentation relating to the due authorization and completion of the Merger
under this Agreement shall be satisfactory to the Corporation, acting
reasonably, and the Corporation shall have received copies of all extra
documentation or other evidence as it may reasonably request in order to
establish the consummation of the transactions contemplated by this Agreement
and the taking of all corporate proceedings in connection with such transactions
in compliance with these conditions in form (as to certification and otherwise)
and substance reasonably satisfactory to the Corporation.
8.4 Consents and Authorizations
The Required Approvals listed in Schedule 7.4 hereto shall have been obtained at
or before the Closing Time on terms acceptable to the Corporation, acting
reasonably.
8.5 No Proceedings
There shall be no injunction or restraining order issued preventing, and no
pending or threatened claim, action, suit, litigation or proceeding, judicial or
administrative, or investigation against any Party by any Person, for the
purpose of enjoining or preventing the consummation of the transactions
contemplated by this Agreement or otherwise claiming that this Agreement or the
consummation of those transactions is improper or would give rise to proceedings
under any Laws.
8.6 Corporation Stockholder Approval
The Corporation's stockholders shall have approved this Agreement in accordance
with the Articles of Incorporation of Corporation and as provided by Delaware
Law and California Law.
8.7 Registration Rights
The Purchaser shall have executed and delivered a Registration Rights Agreement
in a form attached hereto as Exhibit 8.7 with respect to the Shares.
8.8 Disclosure Schedules
The Purchaser shall have accepted the Disclosure Schedules prepared by the
Corporation to qualify and set forth the matters required by the representations
and warranties contained in Article 4 of this Agreement, in form and substance
reasonably satisfactory to the Corporation.
8.9 Escrow Agreement
The Purchaser and the Escrow Agent shall have executed and delivered the Escrow
Agreement to the Stockholder Representative.
8.10 Nasdaq Listing
The Shares shall have been listed with The Nasdaq Stock Market, Inc.
8.11 Waiver of Conditions.
The Corporation may waive compliance with any condition in whole or in part if
it sees fit to do so, without prejudice to its rights of termination pursuant to
Article 11 in the event of non-fulfilment of any other condition, in whole or in
part, or to its rights to recover damages for the breach of any representation,
warranty, covenant or condition contained in this Agreement.
ARTICLE 9
OTHER COVENANTS AND REPRESENTATIONS OF THE PARTIES
9.1 Conduct of Business Prior to Closing
During the period from the date of this Agreement to the Effective Time or the
earlier termination of this Agreement in accordance with Article 11 hereof, the
Corporation will do the following:
(a) Conduct Business in the Ordinary Course - Except as otherwise
expressly contemplated under this Agreement or as otherwise approved
by the Purchaser, conduct its business in the ordinary and usual
course, consistent with past practice and regular customer service
and business policies and not, without the prior written consent of
the Purchaser, enter into any transaction or Contract which, if
effected before the date of this Agreement, would constitute a
breach of the representations, warranties or covenants of the
Corporation contained in this Agreement.
(b) Maintain Good Relations - Use all reasonable efforts to maintain
good relations with the Employees, its customers and suppliers.
(c) Continue Insurance - Continue in force all policies of insurance
maintained by or for the benefit of the Corporation and give all
notices and present claims under all insurance policies in a timely
fashion.
(d) Compliance with Law - Comply in all material respects with all Laws
affecting the operation of the Corporation.
(e) Prevent Certain Changes - Not, without the prior written consent of
the Purchaser or as contemplated by this Agreement, take any of the
following actions:
(i) transfer, assign, sell or otherwise dispose of any of any
material assets or the corporation, or cancel any debts or
entitlements, in each case except in the ordinary and usual
course of business;
(ii) incur or assume any material obligation or liability (fixed or
contingent) except liabilities incurred in the ordinary and
usual course of business;
(iii) discharge or satisfy any material Encumbrance or pay any
material obligation or liability (fixed or contingent) other
than liabilities included in the Company Financial Statements
and liabilities incurred since the Balance Sheet Date in the
ordinary and usual course of business;
(iv) enter into any commitment or transaction not in the ordinary
and usual course of business where such transaction is or
would be material in relation to the Corporation;
(v) grant any bonuses, whether monetary or otherwise, or make any
general wage, salary or Benefit Plan increases in respect of
its Employees or change the terms of employment for any
Employee except in the ordinary and usual course of business
and consistent with past practice;
(vi) hire or dismiss any senior Employees or hired or dismissed any
other Employees except in the ordinary and usual course of
business;
(vii) mortgage, pledge, or otherwise subject to any Encumbrance any
of its assets or property, whether tangible or intangible;
(viii) declare or pay any dividends or declare or make any other
distributions on or in respect of any of its shares or
purchase or otherwise acquire any of its shares;
(ix) pay any management fees or other amounts (other than salaries
an benefits of Employees, the terms of which are disclosed in
Schedule 4.25 of the Disclosure Schedules) to any of the
Corporation Stockholders; and
(x) authorize, agree or otherwise become committed to do any of
the foregoing.
(f) Approvals - Co-operate with the Purchaser and use all commercially
reasonable efforts and diligently pursue obtaining the Required
Approvals set forth in Schedule 7.4.
9.2 Access for Investigation
(a) The Corporation shall permit the Purchaser and its representatives,
on reasonable notice to the Corporation, between the date of this
Agreement and the Closing Time, without interference with the
ordinary conduct of the Business, to have reasonable access during
normal business hours to (i) the Real Property; (ii) all other
locations where Books and Records or other material relevant to the
Business are stored; (iii) all the Books and Records; and (iv) the
properties and assets used in the Business. The Corporation shall
furnish to the Purchaser copies of Books and Records (subject to any
confidentiality agreements or covenants relating to any Books and
Records) as the Purchaser shall from time to time request to enable
confirmation of the matters warranted in Article 4. Without limiting
the generality of the foregoing, it is agreed that the accounting
representatives of the Purchaser shall be afforded a reasonable
opportunity to review all aspects of the financial affairs of the
Corporation.
(b) The Purchaser shall permit the Corporation and its representatives,
on reasonable notice to the Purchasers, between the date of this
Agreement and the Closing Date, without interference with the
ordinary conduct of Purchasers' business, to have reasonable access
during normal business hours to Purchaser's facilities, books and
records. The Purchaser shall furnish to the Corporation copies of
such of Purchaser's books and records (subject to any
confidentiality agreements or
covenants relating to such books and records) as the Corporation
shall from time to time reasonably request. Without limiting the
generality of the foregoing, it is agreed that the accounting
representatives of the Corporation shall be afforded a reasonable
opportunity to review material aspects of the financial affairs of
the Corporation.
(c) Notwithstanding subsections (a) and (b), neither party shall be
required to disclose any information, records, files or other data
to the other where prohibited by Laws or confidentiality
obligations, or where the information, records, files or other data
would be subject to attorney-client privilege.
9.3 Confidentiality
Prior to the Closing and following any termination of this Agreement, the
Purchaser shall keep confidential and not divulge, furnish or make accessible
all information disclosed to it by the Corporation or their agents relating to
the Corporation, except information which:
(a) is or becomes generally available to the public;
(b) the Purchaser received from an independent third Person, who had
obtained the information lawfully and was under no obligation of
secrecy, or
(c) the Purchaser can show was in its possession before receipt of such
information from the Corporation or their agents.
If this Agreement is terminated without completion of the transactions
contemplated by this Agreement, the Purchaser shall (A) promptly return all
documents, work papers and other written material (including all copies)
obtained from the Corporation or their agents in connection with this Agreement
and not previously made public, and shall continue to maintain the confidence of
all such information, and (B) not solicit, offer or otherwise attempt to entice
any Employee to leave the employ of Corporation to work for the Purchaser for a
period of one (1) year from the date of termination of this Agreement. The
provisions of this Section 9.3 are in addition to, and not in substitution for,
the provisions of any separate nondisclosure agreement that may be executed by
the Parties with respect to the transactions contemplated by this Agreement.
9.4 Actions to Satisfy Closing Conditions
Each of the Parties shall use commercially reasonable efforts to satisfy or
cause to be satisfied all the conditions precedent to the Merger and the
consummation of the transactions contemplated by this Agreement which are set
forth in Articles 7 and 8 and to ensure compliance with each of the covenants
set forth in this Article 9.
9.5 U.S. Securities Filings
The Purchaser shall timely complete all filings required under Securities Laws
with respect to the transactions contemplated hereunder.
9.6 Nasdaq Listing
The Purchaser agrees to authorize for listing, prior to the Closing Time, on the
Nasdaq Small Cap Market and the Boston Stock Exchange the shares of Purchaser
Common Stock issuable to the Corporation Stockholders in connection with the
Merger upon official notice of issuance.
9.7 Stub Period Returns
The Purchaser shall cause to be prepared and filed on a timely basis all Tax
Returns for the Corporation for any period which ends on or before the Closing
Date and for which Tax Returns have not been filed as of such date. The
Purchaser shall also cause to be prepared and filed on a timely basis all Tax
Returns of the Corporation for periods beginning before and ending after the
Closing Date.
9.8 Tax Matters.
The Purchaser recognizes that in order for the Corporation Stockholders to
receive tax-free treatment in the Merger, the Purchaser must satisfy a number of
requirements under Sections 367 and 368 of the Code and the regulations
promulgated thereunder. Accordingly, the Purchaser covenants and represents as
follows:
(a) the Purchaser has not taken and will not take any actions, or fail to
take any actions, that would prevent the Merger from qualifying as a
reorganization under Section 368(a) or that would trigger gain under Section
367(a);
(b) the Purchaser does not have any knowledge of any fact or circumstance
that is reasonably likely to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) or that would trigger gain
under Section 367(a);
(c) the Purchaser shall cooperate reasonably with the Corporation and the
Corporation Stockholders in their reasonable efforts to satisfy all requirements
under Sections 367 and 368 of the Code;
(d) the Purchaser shall cooperate, as reasonably required, with the
Corporation's efforts to satisfy the reporting requirements set forth in
Treasury Regulations Section 1.367(a)-3(c)(6), including reporting of
information reasonably required thereby;
(e) the Purchaser shall cooperate, as reasonably required, with the
obligations of the Corporation Stockholders that hold five percent (5%) or more
of the outstanding voting capital stock of the Purchaser immediately after the
Merger (the "Five Percent Stockholders") to enter into gain recognition
agreements with the Internal Revenue Service pursuant to Treasury Regulations
Sections 1.367(a)-3(c)(1)(IV)(B) and 1.367(a)-8 and satisfy their continuing
obligations pursuant to such gain recognition agreements, including the
provision of information to the Five Percent Stockholders if the Purchaser makes
a disposition that causes the Five Percent Stockholders to recognize gain
pursuant to such gain recognition agreements; and
(f) the Purchaser shall not dispose of the Corporation's assets, either
through an asset or stock sale, in a transaction that causes the Five Percent
Stockholders to recognize gain pursuant to Treasury Regulations Sections
1.367(a)-3(c)(IV)(B) and 1.367(a)-8.
9.9 No Shop.
(a) The Corporation agrees, from the date of execution of this Agreement
until the earlier of the Closing Date or termination of this Agreement in
accordance with its terms, not to solicit, negotiate, participate in discussions
or consider offers relating to any other proposal contemplating (i) a merger or
consolidation involving the Corporation pursuant to which the stockholders of
the Corporation immediately preceding such transaction hold less than 50% of the
equity interest in the surviving or resulting entity of such transaction, (ii)
the acquisition by any person or group (including by way of a tender offer or an
exchange offer), directly or indirectly, of ownership of more than 50% of the
then outstanding shares of capital stock of the Corporation, (iii) a sale of a
majority of the Corporation's outstanding shares or (iv) a sale of all or
substantially all of the assets of the Corporation (each, an "Acquisition
Proposal") nor will the Corporation encourage any third party to make an
unsolicited Acquisition Proposal; provided however that this Section 9.9 shall
not prohibit the Corporation from entering into discussions or negotiations
with, furnishing information regarding the Corporation to, and considering an
offer from, any person or group who has submitted to the Corporation an
unsolicited, written, bona fide Acquisition Proposal that the Board of Directors
of the Corporation in good faith concludes (1) may constitute a Superior Offer
(as defined below) (2) that such action is consistent with the Corporation's
Board of Directors' compliance with its fiduciary obligations to the
Corporation's stockholders under applicable law. A "Superior Offer" means any
Acquisition Proposal of at least $10,000,000.00 that the Board of Directors of
the Corporation determines, in its reasonable judgment, to be more favorable to
the Corporation's stockholders than the terms of the Merger.
(b) Nothing in this Agreement shall prevent the Board of Directors of the
Corporation from withholding, withdrawing, amending or modifying any
recommendation of the Board of Directors in favor of the Merger if (i) a
Superior Offer (as defined above) is made to the Corporation and is not
withdrawn, and (ii) the Corporation shall have provided written notice to the
Purchaser advising the Purchaser that the Corporation has received a Superior
Offer, within one business day of receiving such Superior Offer, specifying all
of the material terms and conditions of such Superior Offer and identifying the
person or entity making such Superior Offer.
9.10 Corporation Insurance and Indemnification
(a) From and after the Effective Time, Purchaser and the Surviving
Corporation, jointly and severally, shall indemnify, defend and hold harmless
any person who is now, or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time, an officer or director of the Corporation
(an "Indemnified Director or Officer") against all Claims based on, or arising
out of the fact that such person is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a director
or officer of another corporation, partnership, joint venture, trust or other
enterprise, in each case to the extent that any such Claim pertains to any
matter or fact arising, existing, or occurring prior to or at the Effective
Time, regardless of whether such Claim is asserted or claimed prior to, at or
after the
Effective Time, and, in each case, to the full extent permitted under Delaware
law or the Corporation's Certificate of Incorporation, Bylaws or indemnification
agreements, if any, in effect at the date hereof.
(b) All rights to indemnification and all limitations of liability
existing in favor of an Indemnified Director or Officer as provided under
Delaware law or the Company's Certificate of Incorporation, Bylaws or
indemnification agreements, if any, in effect at the date hereof shall survive
the Merger and shall continue in full force and effect.
(c) In the event the Surviving Corporation or any of its successors
or assigns (x) consolidates with or merges into any other Person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger, or (y) transfers or conveys all or substantially all of its properties
and/or assets to any Person, then, and in each such case, to the extent
necessary to effectuate the purposes of this Section 9.10, proper provision
shall be made so that the successors and assigns of the Surviving Corporation
assume the obligations set forth in this Section 9.10 and none of the actions
described in clauses (x) or (y) immediately above shall be taken until such
provision is made.
(d) The Corporation shall maintain and not terminate any Directors
and Officers insurance policy in effect as of the Effective Time, covering acts
occurring prior to the Effective Time for a period of two years following
expiration of the current policy.
9.11 Loan to the Corporation
Upon execution of this Agreement, Purchaser shall loan to the Corporation
$400,000, by wire transfer of immediately available funds pursuant to a secured
promissory note reasonably satisfactory in form and substance to Purchaser and
the Corporation. $150,000 of the proceeds of such loan will be used to pay the
Corporation's term loan from Agility Capital, which loan is due on June 30,
2004, and $250,000 of the proceeds of such loan will be used to pay the cash
payment due from the Corporation to 818 Partners, LLC ("818 Partners") on July
1, 2004.
9.12 Payment of Certain Obligations
(a) At the Closing, Purchaser will pay to 818 Partners, on behalf of
the Corporation, $600,000, provided that such payment obligation shall be
conditioned upon 818 Partners' providing Purchaser and the Corporation with a
full release of all further obligations in connection the Settlement Agreement
between 818 Partners and the Corporation.
(b) At the Closing, Purchasers will pay such amounts as are required
to fully satisfy and terminate the Corporation's factored receivable line of
credit from Alliance Financial Capital, Inc., including the $200,000 exit fee
related thereto, and the parties shall take all necessary steps to terminate
such line of credit and any related Encumbrances effective as of the Closing or
as soon thereafter as is reasonably practicable.
(c) At the Closing, or as soon thereafter as Purchaser or the
Surviving Corporation is presented with an invoice therefor, Purchaser or the
Surviving Corporation shall pay the legal and accounting fees and expenses
incurred by the Corporation in connection with the transactions contemplated by
this Agreement, provided, however, that such fees and
expenses shall not exceed $75,000 in the aggregate and shall be counted as
liabilities for purposes of calculating the aggregate liability amount set forth
in Section 7.10(b).
(d) At the Closing, Purchaser shall issue to CIBC World Markets
("CIBC") a number of Shares equal to $550,000 divided by the Merger Price Per
Share (the "CIBC Shares") on behalf of the Corporation Stockholders in
satisfaction of fees payable by the Corporation to CIBC.
(e) Immediately prior to the filing of a registration statement
pursuant to the terms of the Registration Rights Agreement described in section
8.7 herein, the Purchaser shall issue to certain of the Corporation's employees
a number of Shares equal to approximately 10% of (A) the total number of Shares
minus (B) the CIBC Shares (the "Management Shares"), on behalf of the
Corporation Stockholders in satisfaction of amounts payable by the Corporation
to certain of the Corporation's employees. Exhibit 9.12(e), which the
Corporation shall deliver to Purchaser prior to the Closing, will set forth the
total number of Management Shares, the employees who shall receive Management
Shares and the allocation thereof.
(f) Within 30 days following the Closing, Purchaser or the Surviving
Corporation shall pay in full those certain Convertible Promissory Notes issued
by the Corporation to certain of its investors on or about April 1, 2004 in the
aggregate principal amount of $325,000 (plus accrued interest thereon).
(g) Without limiting the foregoing subsections (a)-(f), Purchaser
further agrees to pay in full when due each of the liabilities set forth on
Exhibit 9.12(g) which is not specifically addressed in the foregoing
subsections.
ARTICLE 10
INDEMNIFICATION
10.1 Mutual Indemnification for Breaches of Covenants and Warranty, etc.
The Corporation and the Corporation Stockholders covenants and agrees with the
Purchaser, and the Purchaser covenants and agrees with the Corporation
Stockholders and the Corporation (the Party or Parties so covenanting and
agreeing to indemnify another Party being referred to as the "Indemnifying
Party" and the Party so to be indemnified being referred to as the "Indemnified
Party") to indemnify and save harmless the Indemnified Party effective as and
from the Closing Time, from and against all Claims that may be made or brought
against the Indemnified Party, or that it may suffer or incur, directly or
indirectly as a result of or in connection with any non-fulfilment of any
covenant or agreement on the part of the Indemnifying Party under this Agreement
or any incorrectness in or breach of any representation or warranty of the
Indemnifying Party contained in this Agreement (including any exhibits and
schedules thereto):
(a) Promptly after becoming aware of any matter that may give rise to a
Claim, the Indemnified Party will provide to the Indemnifying Party
written notice of the Claim specifying (to the extent that
information is available) the factual basis for the Claim and the
amount of the Claim or, if an amount is not then determinable,
an estimate of the amount of the Claim, if an estimate is feasible
in the circumstances.
(b) In case an Indemnifying Party shall object in writing to any claim
or claims for indemnification, the Indemnified Party and the
Indemnifying Party shall attempt in good faith for fifteen (15) days
to agree upon the rights of the respective parties with respect to
each of such claims.
(c) If no agreement can be reached after good faith negotiation during
such fifteen (15) day period, either the Indemnified Party or the
Indemnifying Party may, by written notice to the other party, demand
submission of the matter to arbitration or to some other
mutually-agreeable form of alternative dispute resolution (together
or in the alternative, "ADR") to take place in Chicago, Illinois,
United States. Unless the parties mutually agree in writing to some
alternative form of ADR, arbitration of the matter shall be
conducted in accordance with the commercial rules then in effect of
the American Arbitration Association using an arbitrator who is an
experienced commercial litigator and admitted before the bar of
California, Illinois or New York. The dispute shall be determined by
one (1) arbitrator acceptable to both parties, which arbitrator
shall be selected within twenty (20) days of filing by a party of
notice of intention to arbitrate. If, by the end of said twenty (20)
day period, the parties have not agreed on one (1) arbitrator to be
acceptable, then either party may request the American Arbitration
Association to appoint the arbitrator pursuant to this Section 10.1
and the commercial rules then in effect of the American Arbitration
Association. Arbitrators shall be compensated for their services at
the standard hourly rate charged in their private professional
activities. The parties acknowledge that the federal and state
courts situated in Illinois shall have jurisdiction and venue over
the parties for the purpose of enforcing this Section 10.1. The
United States Federal Rules of Civil Procedure shall apply with
respect to any arbitration hereunder, and to the extent practicable
any hearing with respect to a single matter shall be held on
consecutive hearing days. The arbitrator(s) shall follow substantive
rules of law and shall make its award in strict conformity with this
Agreement. All parties agree to be bound by the results of this
arbitration; judgement upon the award so rendered may be entered and
enforced in any court of competent jurisdiction.
(d) The foregoing indemnity shall be subject to the requirement that the
Indemnifying Party shall, in respect of any Claim made by any third
person, be afforded an opportunity at its sole expense to resist,
defend and compromise such Claim.
(e) The foregoing indemnity shall be subject to the limitation that, for
any Claims made hereunder, the Indemnifying Party shall not be
required to pay any such amount until the aggregate amount of such
Claims exceeds $125,000 and then the Indemnifying Party shall be
required to pay all amounts in excess thereof.
(f) Notwithstanding anything to the contrary set forth herein, the
Escrow Shares shall be the sole source of payment for any indemnity
Claims brought hereunder
against the Corporation or the Corporation Stockholders, and neither
Corporation nor any Corporation Stockholder shall be required to pay
any amounts in excess of, or other than, the Escrow Shares.
(g) Notwithstanding anything to the contrary set forth herein the
Purchaser shall not be obligated to pay any amount in excess of the
value of the Escrow Shares, valued at the Merger Price Per Share,
with respect to any claim for indemnification hereunder.
(h) The indemnification rights set forth in this Article 10 shall be the
sole and exclusive remedy of the Indemnified Party, and are in lieu
of any other claim or right that the Indemnified Party may otherwise
have under applicable law or otherwise and the liability of any
Corporation Stockholder for indemnification claims hereunder shall
be several and not joint (but in any event limited to the Escrow
Shares as set forth herein).
(i) In no event shall any holder of the Corporation's stock other than a
Corporation Stockholder be liable for any indemnification claims
hereunder.
(j) For all purposes of this Article 10, the Stockholder Representative
shall act on behalf of the Corporation Stockholders in administering
Claims by the Purchaser, including, without limitation, for purposes
of determining whether to dispute that the Corporation Stockholders
are in fact liable under this Article 10 for a Claim asserted by the
Purchaser, determining whether to assume the defense of third party
claims, and administering the Escrow Agreement for the benefit of
the Corporation Stockholders.
10.2 Indemnification Procedures for Third Person Claims
(a) In the case of Claims made by a third Person with respect to which
indemnification is sought, the Party seeking indemnification shall
give Notice promptly, and in any event within 20 days, to the other
Party of any such Claims made upon it. In the event of a failure to
give such notice, such failure shall not preclude the Party seeking
indemnification from obtaining such indemnification but its right to
indemnification may be reduced to the extent that such delay
prejudiced the defence of the Claim or increased the amount of
liability or cost of defence and provided that, notwithstanding
anything else contained in this Agreement, no Claim for indemnity in
respect of the breach of any representation or warranty contained in
this Agreement may be made unless Notice of such Claim has been
given prior to the expiry of the survival period applicable to such
representation and warranty pursuant to Section 6.2. The provisions
of Sections 10.1(a) and 10.1(b) shall also apply to any third person
Claims such that the Indemnifying Party shall have an opportunity to
object to the defense of any third person Claim in accordance with
such provisions.
(b) The Indemnifying Party shall have the right, by Notice to the
Indemnified Party given not later than 30 days after receipt of the
Notice described in subsection (a),
to assume the control of the defence, compromise or settlement of
the Claim, provided that such assumption shall, by its terms, be
without cost to the Indemnified Party.
(c) Upon the assumption of control of any Claim by the Indemnifying
Party as set out in subsection (b), the Indemnifying Party shall
diligently proceed with the defence, compromise or settlement of the
Claim at its sole expense, including if necessary, employment of
counsel reasonably satisfactory to the Indemnified Party and, in
connection therewith, the Indemnified Party shall co-operate fully,
to make available to the Indemnifying Party all pertinent
information and witnesses under the Indemnified Party's control,
make such assignments and take such other steps as the Indemnifying
Party determines, with the advice of counsel, are reasonably
necessary to enable the Indemnifying Party to conduct such defence.
Any compromise or settlement of the Claim by the Indemnifying Party
shall be subject to the consent of the Indemnified Party, such
consent not to be unreasonably withheld. The Indemnified Party shall
also have the right to participate in the negotiation, settlement or
defence of any Claim at its own expense.
(d) The final determination of any Claim pursuant to this Section,
including all related costs and expenses, will be binding and
conclusive upon the parties as to the validity or invalidity, as the
case may be, of such Claim against the Indemnifying Party.
(e) If the Indemnifying Party does not assume control of a Claim as
permitted in subsection 10.2(b), the Indemnified Party shall be
entitled to make settlement of the Claim subject to obtaining the
prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed, and any such settlement or
any other final determination of the Claim shall be binding upon the
Indemnifying Party.
10.3 Recovery for Indemnification Claims
Notwithstanding anything to the contrary set forth herein, in the event that
Purchaser is entitled to indemnification from the Corporation Stockholders
pursuant to the terms of this Agreement for breaches of the Corporation's
representations and warranties contained in Article 4 herein, such
indemnification may be recovered only by deducting the amount of such Claims
from the Escrow Shares by instructing the Escrow Agent to return a number of
Escrow Shares to the Purchaser equal to the value of such Claim based on the
Merger Price Per Share.
10.4 Insurance Proceeds
The amount which an Indemnifying Party is or may be required to indemnify the
Indemnified Party pursuant to this Article 10 shall be reduced (including
retroactively) by (i) any amounts received by such Indemnified Party from an
insurance carrier or paid and resolved by an insurance carrier on behalf of the
insured ("Insurance Proceeds") and (ii) other amounts actually recovered by or
on behalf of such Indemnified Party in reduction of the related Claims, or (iii)
tax benefits received by the Indemnified Party in connection with such Claims.
If an Indemnified Party receives the payment required by this Agreement from the
Indemnifying Party in respect of any Claims and subsequently actually receives
Insurance Proceeds, or other amounts or benefits in respect of such Claims as
specified above, then such Indemnified Party shall pay to the Indemnifying Party
a sum equal to the amount of any such double recovery actually received. The
parties agree that any indemnification provided by this Agreement is not to be
deemed insurance (whether primary, excess, or otherwise) for purposes of seeking
reimbursement from the applicable insurance coverage.
ATICLE 11 TERMINATION
11.1 Termination
(a) This Agreement may be terminated as follows:
(i) The Parties may terminate this Agreement by their mutual
written consent at any time prior to the Closing;
(ii) The Purchaser may terminate this Agreement by giving written
notice to the Corporation at any time prior to the Closing (A)
in the event the Corporation has breached any material
representation, warranty, or covenant contained in this
Agreement in any material respect, the Purchaser has notified
the Corporation of the breach, and the breach has continued
without cure for a period of 10 days after the notice of
breach, or (B) if the Closing shall not have occurred on or
before 30 days from the date hereof, by reason of the failure
of any condition precedent of Purchaser (unless the failure
results primarily from Purchaser itself breaching any
representation, warranty, or covenant contained in this
Agreement);
(iii) The Corporation may terminate this Agreement by giving written
notice to Purchaser at any time prior to the Closing (A) in
the event Purchaser has breached any material representation,
warranty, or covenant contained in this Agreement in any
material respect, the Corporation or the Corporation
Stockholders have notified the Purchaser of the breach, and
the breach has continued without cure for a period of 10 days
after the notice of breach or (B) upon repayment of the
$400,000 loan described in section 9.11 herein to the
Purchaser if the Closing shall not have occurred on or before
30 days from the date hereof, by reason of the failure of any
condition precedent of the Corporation hereof (unless the
failure results primarily from the Corporation breaching any
representation, warranty, or covenant contained in this
Agreement);
(iv) Either Party may, by giving written notice to the other,
terminate this Agreement if a court of competent jurisdiction
or other governmental Authority shall have issued a
nonappealable final order, decree or ruling or
taken any other action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting
the Merger; and
(v) By either Party, if the approval and adoption of this
Agreement, and the approval of the Merger by the Corporation's
stockholders shall not have been obtained by reason of the
failure to obtain the vote required by Delaware and California
Law at a meeting of the Corporation's stockholders duly
convened therefore or at any adjournment thereof or pursuant
to a written consent of the Corporation's stockholders.
(b) Effect of Termination. If any Party properly terminates this
Agreement pursuant to Section 11.1(a) hereof, all rights and
obligations of the Parties hereunder shall terminate without any
liability of any Party to any other Party (except for any liability
of any Party then in wilful breach of this Agreement). The
provisions of Section 9.3, Article 11 and Article 12 shall survive
any termination of this Agreement.
(c) Termination for Superior Offer. If the Corporation properly
terminates this Agreement pursuant to Section 11.1(a)(iii)(B) or
11.1(a)(iv) hereof due to the acceptance by the Corporation of a
Superior Offer, or if the Corporation consummates a transaction
pursuant to Superior Offer (any such transaction arising from a
Superior Offer being referred to herein as a "Superior Transaction")
within six months of its terminating this Agreement pursuant to
Sections 11.1(a)(iii)(B) or 11.1(a)(iv) hereof, the Corporation
shall pay to the Purchaser ten percent (10%) of the proceeds of the
Superior Transaction to the Purchaser at the time of closing of the
Superior Transaction from the proceeds of the Superior Transaction.
ARTICLE 12
GENERAL
12.1 Public Notices
All public notices to third Persons and all other publicity concerning the
transactions contemplated by this Agreement shall be jointly planned and
co-ordinated by the Corporation, on the one hand, and the Purchaser, on the
other hand, and no Party shall act unilaterally in this regard without the prior
approval of the other Party, such approval not to be unreasonably withheld,
except where required to do so by Law or any stock exchange in circumstances
where prior consultation with the other Parties is not practicable.
12.2 Expenses
Subject to Section 9.12(c) above, each Party shall be responsible for and pay
their own respective legal, accounting, and other professional advisory fees,
costs and expenses incurred in connection with the Merger and the preparation,
execution and delivery of this Agreement and all documents and instruments
executed pursuant to this Agreement and any other costs and expenses incurred.
12.3 Notices
Any notice or other writing required or permitted to be given under this
Agreement or for the purposes of this Agreement (a "Notice") shall be in writing
and shall be sufficiently given if delivered, or if sent by prepaid registered
mail or if transmitted by facsimile or other form of recorded communication
tested prior to transmission to such Party:
in the case of a Notice to the Corporation:
Bravanta Inc.
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Attention: ▇▇▇▇ ▇▇▇
with a copy to:
Sellers attorney
Strategic Law Partners, LLP
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Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
in the case of a Notice to the Purchaser.:
Workstream Inc.
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Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇ ▇▇▇ ▇▇▇▇
with a copy to:
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇ ▇▇▇▇
in the case of a Notice to the Stockholder Representative:
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c/o Bravanta Inc.
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or at such other address as the Party to whom such Notice is to be given shall
have last notified the Party giving the Notice in the manner provided in this
Section. Any Notice delivered to the Party to whom it is addressed as provided
above shall be deemed to have been given and received on the day it is so
delivered at such address, provided that if such day is not a Business Day then
the Notice shall be deemed to have been given and received on the next Business
Day. Any Notice sent by prepaid registered mail shall be deemed to have been
given and received on the fifth Business Day following the date of its mailing.
Any Notice transmitted by facsimile or other form of recorded communication
shall be deemed to have been given and received on the first Business Day after
its transmission. Any Notice sent by commercial overnight courier shall be
deemed to have been given and received within one Business Day following the
date of deposit thereof with such courier.
12.4 Assignment
Neither party may assign this Agreement without the prior written consent of the
other party.
12.5 Further Assurances
The Parties shall, with reasonable diligence, do all such things and provide all
such reasonable assurances as may be required to consummate the Merger
contemplated by this Agreement, and each Party shall provide such further
documents or instruments required by any other Party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Closing.
12.6 Counterparts
This Agreement may be executed by the Parties in separate counterparts each of
which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
12.7 Enurement
This Agreement shall enure to the benefit of and be binding upon the Parties
hereto and their respective successors and permitted assigns.
12.8 Amendment of Agreement
This Agreement may be altered, amended or annulled at any time by the mutual
consent in writing of the parties hereto.
12.9 Waivers
No amendment, waiver or termination of this Agreement will be binding unless
executed in writing by the parties to be bound hereby. No waiver of any
provision of this Agreement will be
deemed or will constitute a waiver of any other provision, nor will any such
waiver constitute a continuing waiver unless expressly provided.
12.10 Stockholder Representative
(a) ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall serve as the Stockholder Representative. The
Stockholder Representative shall be constituted and appointed as
agent for and on behalf of the Corporation Stockholders to give and
receive notices and communications, to enter into any ancillary
documents to give effect to the transactions described herein, to
authorize delivery of the Escrow Shares or other property in
satisfaction of Claims, to object to such deliveries, to make Claims
on behalf of the Corporation Stockholders to agree to, negotiate,
enter into settlements and compromises of, and demand arbitration
and comply with orders of courts and awards of arbitrators with
respect to such claims, and to take all actions necessary or
appropriate in the judgment of the Stockholder Representative for
the accomplishment of the foregoing. Such agency may be changed by
the holders of a majority in interest of the Escrow Shares from time
to time upon not less than 10 days' prior written notice to the
Purchaser and the Escrow Agent, provided that any such replacement
Stockholder Representative shall agree to be bound by the terms
hereof and the terms of the Escrow Agreement. No bond shall be
required of the Stockholder Representative, and the Stockholder
Representative shall receive no compensation for his services.
Notices or communications to or from the Stockholder Representative
shall constitute notice to or from each of the Corporation
Stockholders.
(b) The Stockholder Representative shall not be liable for any act done
or omitted hereunder as Stockholder Representative while acting in
good faith and in the exercise of reasonable judgment and any act
done or omitted pursuant to the advice of counsel shall be
conclusive evidence of such good faith. The Corporation Stockholders
shall severally indemnify and hold the Stockholder Representative
harmless against any loss, liability or expense incurred without
gross negligence or bad faith on the part of the Stockholder
Representative and arising out of or in connection with the
acceptance or administration of his duties hereunder.
(c) To the extent that any of the Corporation Stockholders provide the
Stockholder Representative with written directions with respect to
the voting of the Escrow Shares beneficially owned by such
Corporation Stockholders, the Stockholder Representative shall
instruct the Escrow Agent to vote the Escrow Shares in accordance
with such written directions. In the absence of such directions, the
Stockholder Representative shall have no obligations with respect to
the voting of the Escrow Shares. The Stockholder Representative need
not solicit the Corporation Stockholders for such directions, nor
furnish proxy information or other documents provided to the
Stockholder Representative or Escrow Agent by the Purchaser, if any,
to Corporation Stockholders.
12.11 Actions of the Stockholder Representative.
A decision, act, consent or instruction of the Stockholder Representative shall
constitute a decision of all Corporation Stockholders for whom Escrow Shares
otherwise issuable to them are deposited into escrow and shall be final, binding
and conclusive upon each of the Corporation Stockholders, and the Escrow Agent
and Purchaser may rely upon any decision, act, consent or instruction of the
Stockholder Representative as being the decision, act, consent or instruction of
each and every one of the Corporation Stockholders. The Escrow Agent and
Purchaser are hereby relieved from any liability to any person for any acts done
by them in accordance with such decision, act, consent or instruction of the
Stockholder Representative.
13. Preparation of Solicitation Statement
As soon as practicable after the execution of this Agreement, the Corporation
shall prepare, with the cooperation of the Purchaser, a solicitation statement
for the solicitation of approval of the shareholders of the Corporation
describing this Agreement, the Agreement of Merger and the transactions
contemplated hereby and thereby. The Purchaser shall provide such information
about the Purchaser as the Corporation shall reasonably request. The information
supplied by the Corporation for inclusion in the solicitation statement to be
sent to the shareholders of the Corporation shall not, on the date the
solicitation statement is first mailed to the Corporation's shareholders or at
the Effective Time, contain any statement that, at such time, is false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication that has become false or misleading. Notwithstanding the
foregoing, the Corporation makes no representation, warranty or covenant with
respect to any information supplied by the Purchaser or Merger Sub that is
contained in any of the foregoing documents. The information supplied by the
Purchaser or Merger Sub for inclusion in the solicitation statement shall not,
on the date the solicitation statement is first mailed to the Corporation's
shareholders or at the Effective Time, contain any statement that, at such time,
is false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they are made, not false or misleading, or omit to
state any material fact necessary to correct any statement in an earlier
communication that has become false or misleading. Notwithstanding the
foregoing, the Purchaser and Merger Sub make no representation, warranty or
covenant with respect to any information supplied by the Corporation that is
contained in any of the foregoing documents.
The solicitation statement shall constitute a disclosure document for the offer
and issuance of shares of Purchaser Common Stock to be received by the
Corporation Stockholders in the Merger. The Purchaser and the Corporation shall
each use reasonable commercial efforts to cause the solicitation statement to
comply with applicable federal and state securities laws requirements. Each of
the Purchaser and the Corporation agrees to provide promptly to the other such
information concerning its business and financial statements and affairs as, in
the reasonable judgement of the providing party or its counsel, may be required
or appropriate for inclusion in the solicitation statement or in any amendments
or supplements thereto, and to cause its counsel and auditors to cooperate with
the other's counsel and auditors in the preparation of the solicitation
statement in order to make the statements contained or incorporated by reference
therein not misleading or to comply with applicable law. The solicitation
statement shall contain the recommendation of the Board of Directors of the
Corporation that the Corporation Stockholders approve the Merger and this
Agreement and the conclusion of the Board of Directors that the terms and
conditions of the Merger are fair and reasonable to the Corporation
Stockholders. Anything to the contrary contained herein notwithstanding, the
Corporation shall not include in the solicitation statement any information with
respect to the Purchaser or its affiliates or associates, the form and content
of which information shall not have been approved by the Purchaser prior to such
inclusion.
Notwithstanding the foregoing, to the extent that the Corporation obtains the
necessary approvals of its stockholders by written consent prior to distribution
of a solicitation statement, the Corporation shall, in lieu of such solicitation
statement, provide timely notice of such approval to its stockholders as
required by Delaware and California Law.
[Signature Page Follows]
IN WITNESS OF WHICH the Parties have duly executed this Agreement as of the date
first set forth above.
SIGNED & DELIVERED
BRAVANTA INC.
Per: /s/ ▇▇▇▇ ▇▇▇
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Name: ▇▇▇▇ ▇▇▇
Title: CEO
WORKSTREAM INC.
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: CEO
WORKSTREAM ACQUISITION IV, INC.
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title:
FOR PURPOSES OF SECTIONS 12.10 AND 12.11
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
as Stockholder Representative
