EXECUTION COPY
AGREEMENT AND PLAN OF REORGANIZATION
by and among
Webcast Solutions, Inc.,
StarMedia Network, Inc., and
S Media Acquisition Corp.,
dated as of
September 14, 1999
TABLE OF CONTENTS
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ARTICLE I Generally........................................................................... 2
Section 1.1. Certain Definitions............................................................ 2
Section 1.2. Terms Generally................................................................ 2
ARTICLE II Merger of Newco into the Company.................................................... 2
Section 2.1. The Merger..................................................................... 2
Section 2.2. Effective Time of Merger....................................................... 2
Section 2.3. Articles of Incorporation; By-Laws............................................. 2
Section 2.4. Directors and Officers......................................................... 3
Section 2.5. Taking of Necessary Action; Further Action..................................... 3
Section 2.6. Time and Place of Closing...................................................... 3
Section 2.7. Tax Consequences............................................................... 4
ARTICLE III Conversion and Exchange of Shares................................................... 4
Section 3.1. Conversion of Shares........................................................... 4
Section 3.2. Exchange of Certificates....................................................... 5
Section 3.3. Lost, Stolen or Destroyed Certificates......................................... 6
Section 3.4. Dissenting Shares.............................................................. 6
Section 3.5. Stock Legend................................................................... 7
ARTICLE IV Representations and Warranties of the Company....................................... 7
Section 4.1. Incorporation; Authorization; Capitalization................................... 7
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TABLE OF CONTENTS
(Continued)
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Section 4.2. Financial Statements........................................................... 9
Section 4.3. Undisclosed Liabilities........................................................ 9
Section 4.4. Properties..................................................................... 9
Section 4.5. Absence of Certain Changes..................................................... 10
Section 4.6. Taxes.......................................................................... 11
Section 4.7. Litigation; Orders............................................................. 11
Section 4.8. Intellectual Property.......................................................... 12
Section 4.9. Licenses, Approvals, Other Authorizations,
Consents, Reports, etc......................................................... 13
Section 4.10. Labor Matters.................................................................. 14
Section 4.11. Compliance with Laws........................................................... 14
Section 4.12. Insurance...................................................................... 14
Section 4.13. Contracts...................................................................... 14
Section 4.14. Transactions with Affiliates................................................... 15
Section 4.15. OSHA Matters................................................................... 15
Section 4.16. Totality of Assets............................................................. 15
Section 4.17. Environmental Matters.......................................................... 15
Section 4.18. Employee Benefits.............................................................. 17
Section 4.19. Year 2000...................................................................... 19
Section 4.20. Pooling........................................................................ 19
Section 4.21. Vote Required.................................................................. 20
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TABLE OF CONTENTS
(Continued)
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Section 4.23. Brokers, Finders, etc.......................................................... 20
Section 4.24. Minute Books................................................................... 20
Section 4.25. Disclosure..................................................................... 20
ARTICLE V Representations and Warranties of Parent and Newco.................................. 20
Section 5.1. Incorporation; Authorization; Capitalization................................... 20
Section 5.2. Consents, etc.................................................................. 22
Section 5.3. SEC Documents.................................................................. 22
Section 5.4. No Material Adverse Change..................................................... 23
Section 5.5. Brokers, Finders, etc.......................................................... 23
Section 5.6. Pooling........................................................................ 23
Section 5.7. Litigation, etc................................................................ 23
ARTICLE VI Covenants........................................................................... 24
Section 6.1. Covenants of the Company....................................................... 24
Section 6.2. Additional Agreements.......................................................... 27
Section 6.3. Employee Matters............................................................... 28
Section 6.4. Exclusivity.................................................................... 28
Section 6.7. Nasdaq Listing................................................................. 28
Section 6.8. Company's Auditors............................................................. 28
Section 6.10. Form S-8....................................................................... 28
Section 6.11. Indemnity Agreement............................................................ 28
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TABLE OF CONTENTS
(Continued)
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ARTICLE VII Conditions to Parent's and Newco's Obligations to Close............................. 29
Section 7.1. Representations, Warranties and Covenants of the
Company........................................................................ 29
Section 7.2. Shareholders................................................................... 30
Section 7.3. Representations, Warranties and Covenants of the
Shareholders................................................................... 30
Section 7.4. Filings; Consents.............................................................. 30
Section 7.5. No Injunction.................................................................. 30
Section 7.6. Documents...................................................................... 31
Section 7.7. Convertible Securities......................................................... 31
Section 7.8. Rule 145 Letters............................................................... 31
Section 7.9. Appraisal Rights............................................................... 31
ARTICLE VIII Conditions to the Company's Obligation to Close..................................... 31
Section 8.1. Representations, Warranties and Covenants of Parent............................ 31
Section 8.2. Shareholder Approvals.......................................................... 32
Section 8.3. No Injunction.................................................................. 32
Section 8.4. Nasdaq Listing................................................................. 32
ARTICLE IX Survival............................................................................ 32
Section 9.1. Survival....................................................................... 32
ARTICLE X Termination......................................................................... 33
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TABLE OF CONTENTS
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Section 10.1. Termination.................................................................... 33
Section 10.2. Procedure and Effect of Termination............................................ 33
ARTICLE XI Miscellaneous....................................................................... 33
Section 11.1. Entire Agreement............................................................... 33
Section 11.2. Benefit; Assignment............................................................ 33
Section 11.3. No Presumption................................................................. 34
Section 11.4. Notices........................................................................ 34
Section 11.5. Counterparts; Headings......................................................... 35
Section 11.6. Severability................................................................... 35
Section 11.7. No Reliance.................................................................... 35
Section 11.8. Governing Law.................................................................. 35
Section 11.9. Submission to Jurisdiction; Waivers............................................ 35
Section 11.10. Waiver......................................................................... 36
Section 11.11. Amendment...................................................................... 36
Section 11.12. Specific Performance........................................................... 36
Section 11.13. Expenses....................................................................... 36
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of September
14, 1999 (together with the Schedules and Exhibits hereto, the "PLAN OF
MERGER"), among Webcast Solutions, Inc., a California corporation (the
"COMPANY"), StarMedia Network, Inc., a Delaware corporation ("PARENT"), and S
Media Acquisition Corp., a California corporation and a wholly-owned subsidiary
of Parent ("NEWCO").
A. The respective Board of Directors of Parent and the Company
have determined that it is in the best interests of each such corporation that
Parent, through a wholly-owned subsidiary, acquire all outstanding shares of
common stock, no par value per share, of the Company (the "WEBCAST COMMON
STOCK") for the Aggregate Share Merger Consideration (as hereinafter defined),
pursuant to the terms and conditions of this Plan of Merger which provides,
among other things, for the merger of Newco into the Company (the "MERGER"), and
the respective Board of Directors of the Company and Newco have directed that
this Plan of Merger and the Agreement of Merger annexed hereto as Exhibit A (the
"MERGER AGREEMENT") be submitted to the Company's and Newco's shareholders for
their adoption.
B. Pursuant to the Merger, among other things, all of the issued
and outstanding capital stock of the Company shall be converted into the right
to receive StarMedia Common Stock (as defined herein), as set forth herein, and
all outstanding options to purchase Webcast Common Stock shall be converted into
options to purchase StarMedia Common Stock, as set forth herein.
C. The Company, on the one hand, and Parent and Newco, on the
other hand, desire to make certain representations, warranties, covenants and
other agreements in connection with the Merger.
D. The parties intend, by executing this Plan of Merger, to adopt
a plan of reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended, and any successor thereto (the "Code").
E. Concurrent with the execution of this Plan of Merger, as a
material inducement to Parent and Newco, certain shareholders of the Company
will enter into an agreement to indemnify and not to compete with Parent (the
"INDEMNITY AND NON-COMPETE AGREEMENT") in the form of Exhibit B hereto.
F. Concurrent with the execution of the Merger Agreement, as a
material inducement to Parent and Newco, the directors and certain shareholders
of the Company will enter a general release of the Company (the "GENERAL
RELEASE") in the form of Exhibit C hereto.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
GENERALLY
Section 1.1. CERTAIN DEFINITIONS. Certain capitalized
terms used in this Plan of Merger have the meanings specified in Exhibit D
hereof.
Section 1.2. TERMS GENERALLY. (a) Words in the singular shall
be held to include the plural and vice versa and words of one gender shall be
held to include the other genders as the context requires, (b) the terms
"hereof," "herein," "hereto" and "herewith" and words of similar import shall,
unless otherwise stated, be construed to refer to this Plan of Merger as a whole
(including all of the Schedules and Exhibits hereto) and not to any particular
provision of this Plan of Merger, and Article, Section, paragraph, Exhibit and
Schedule references are to the Articles, Sections, paragraphs, Exhibits and
Schedules to this Plan of Merger unless otherwise specified, (c) the word
"including" and words of similar import when used in this Plan of Merger shall
mean "including, without limitation," unless otherwise specified, (d) the word
"or" shall not be exclusive, (e) provisions shall apply, when appropriate, to
successive events and transactions and (f) terms not found in Exhibit D are
defined elsewhere in this Plan of Merger.
ARTICLE II
MERGER OF NEWCO INTO THE COMPANY
Section 2.1. THE MERGER. At the Effective Time, subject to the
terms and conditions of this Plan of Merger and in accordance with the
Corporations Code, (i) Newco shall be merged with and into the Company, (ii) the
separate existence of Newco shall cease, (iii) the Company shall continue as the
surviving corporation (the "SURVIVING CORPORATION") as a wholly-owned subsidiary
of Parent and under its present corporate name, and (iv) the Merger shall have
the effects set forth herein and in the Corporations Code.
Section 2.2. EFFECTIVE TIME OF MERGER. The Merger shall become
effective at the time a copy of the Merger Agreement, together with the
certificates required by Section 1103 of the Corporations Code (collectively,
the "CERTIFICATE OF MERGER") is accepted for filing by the Secretary of State of
California in accordance with the Corporations Code. Such time is referred to
herein as the "EFFECTIVE TIME." This Plan of Merger can be terminated by the
applicable party prior to the filing of the Certificate of Merger in accordance
with Article X hereof.
Section 2.3. ARTICLES OF INCORPORATION; BY-LAWS. (a) At the
Effective Time, the Articles of Incorporation of the Surviving Corporation
shall, pursuant to the Merger, be amended and restated in its entirety to be in
the form of the Articles of Incorporation of Newco, except Article One of such
amended and restated Articles of Incorporation shall be amended to read in its
entirety as follows:
"The name of the corporation is Webcast Solutions, Inc."
(b) At the Effective Time, the By-Laws of Newco in effect
immediately prior to the Effective Time shall become the By-Laws of the
Surviving Corporation, except that the name "S Media Acquisition Corp." shall be
changed to "Webcast Solutions, Inc."
Section 2.4. DIRECTORS AND OFFICERS. The Board of Directors
and principal officers of the Surviving Corporation shall be those persons who
constitute the Board of Directors and principal officers of Newco at the
Effective Time. Each such director or officer shall hold office until such
person's respective successor has been duly elected or appointed or qualified
pursuant to the By-Laws of the Surviving Corporation or as otherwise provided
under applicable law.
Section 2.5. TAKING OF NECESSARY ACTION; FURTHER ACTION.
Parent, Newco and the Company, respectively, shall take all such lawful action
as may be necessary or appropriate in order to effectuate the transactions
contemplated by this Plan of Merger. If, at any time after the Effective Time,
any further action is necessary or desirable to carry out the purposes of this
Plan of Merger and to vest the Surviving Corporation with full right, title and
possession to all assets, properties, rights, privileges, powers and franchises
of Newco or the Company, the officers and directors of the Surviving Corporation
are fully authorized in the name and on behalf of Newco and the Company or
otherwise to take, and shall take, all such lawful and necessary action.
Section 2.6. TIME AND PLACE OF CLOSING. (a) The Closing shall
take place on (i) September 14, 1999, or (ii) such later date no later than
October 31, 1999 mutually satisfactory to the Company and Parent which is no
later than the fifth business day after satisfaction (or waiver) of the
conditions to the Closing set forth in Articles VII and VIII hereof (other than
those conditions which require the delivery of any documents or the taking of
other action at the Closing) at 10:00 a.m., New York time, at the offices of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. In
the event that at the Closing no party exercises any right it may have to
terminate this Plan of Merger and no condition to the obligations of the parties
exists that has not been satisfied or waived, the parties shall (i) deliver to
each other at the Closing the certificates and other documents required to be
delivered under this Section 2.6 and Articles VII and VIII hereof and (ii) at
the Closing, or as soon thereafter as practicable, cause the Merger to be
consummated by filing the Certificate of Merger with the Secretary of State of
California.
(b) In addition to the other things required to be done
hereby, at the Closing, the Company shall deliver or cause to be delivered to
Parent the following: (i) a copy of the resolutions of (A) the board of
directors of the Company authorizing the execution, delivery and performance of
this Plan of Merger, the Merger Agreement and the consummation of the
transactions contemplated hereby and thereby and (B) the shareholders of the
Company approving and adopting this Plan of Merger and the Merger Agreement as
required by Section 8.2, and a certificate of the Company's secretary dated as
of the Closing Date, that the resolutions referred to in the foregoing clauses
(A) and (B) were duly adopted and are in full force and effect; (ii) the
corporate seal and all of the minute books and stock transfer books of the
Company; (iii) the written resignations of all of the officers of the Company
and all of the members of the board of directors of the Company; (iv) good
standing certificates requested by Parent; (v) a duly executed officer's
certificate as required by Section 1103 of the Corporations Code; and (vi) if
not previously delivered to Parent, all other certificates and such other
instruments, releases and documents required pursuant hereto to be delivered by
or on behalf of the Company at or prior to the Closing pursuant to Article VII
or otherwise required, or reasonably requested by Parent, in connection
herewith.
(c) In addition to the other things required to be done
hereby, at the Closing, Parent and Newco shall deliver to the Company the
following: (i) a copy of the resolutions of (A) the board of directors of Newco
authorizing the execution, delivery and performance of this Plan of Merger, the
Merger Agreement and the consummation of the transactions contemplated hereby
and thereby and (B) the sole shareholder of Newco approving and adopting this
Plan of Merger and the Merger Agreement, and a certificate of Newco's secretary,
dated as of the Closing Date, that the resolutions referred to in the foregoing
clauses (A) and (B) were duly adopted and are in full force and effect; and (ii)
if not previously delivered to the Company, all other certificates and such
other instruments and documents required pursuant hereto to be delivered by or
on behalf of Parent or Newco at or prior to the Closing pursuant to Article VIII
or otherwise required, or reasonably requested by the Company, in connection
herewith.
Section 2.7. TAX CONSEQUENCES. It is intended that the Merger
shall constitute a reorganization within the meaning of Section 368(a)(1)(A) and
(a)(2)(E) of the Code. Notwithstanding the foregoing, no representation or
warranty is made by any party hereto regarding the treatment or consequences of
the Merger for purposes of U.S. federal income tax, or foreign, state or local
tax law.
ARTICLE III
CONVERSION AND EXCHANGE OF SHARES
Section 3.1. CONVERSION OF SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Newco, the
Company or the holders of any of the following securities:
(a) Each share of common stock, par value $.01 per share, of
Newco issued and outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock, no par value per share, of
the Surviving Corporation.
(b) Any shares of Webcast Common Stock which are held in the
Company's treasury immediately prior to the Effective Time shall be canceled,
and no securities of Parent or cash shall be issuable or exchangeable with
respect thereto.
(c) Each share of Webcast Common Stock which is issued and
outstanding immediately prior to the Effective Time shall be converted into and
become the right to receive the Per Share Merger Consideration (as defined
herein). Each holder of Webcast Common Stock
shall surrender all such holder's certificates formerly representing ownership
of Webcast Common Stock in the manner provided in Section 3.2. All such shares
of Webcast Common Stock, when so converted, shall no longer be outstanding and
shall be canceled and automatically converted into the right to receive the Per
Share Merger Consideration (and cash in lieu of fractional shares) therefor upon
the surrender of such certificate in accordance with Section 3.2. Any payment
made pursuant to this Section 3.1(c) shall be made net of applicable withholding
taxes to the extent such withholding is required by law.
(d) No fractional share of StarMedia Common Stock shall be
issued in connection with the Merger. Each holder of shares of Webcast Common
Stock shall be entitled to receive in lieu of any fractional share of StarMedia
Common Stock to which such holder otherwise would have been entitled pursuant to
this Section 3.1 (after taking into account all shares of Webcast Common Stock
then held of record by such holder) a cash payment in an amount equal to the
product of (i) the fractional interest of a share of StarMedia Common Stock to
which such holder otherwise would have been entitled and (ii) the Conversion
Price. Payment of such amounts shall be made by Parent.
Section 3.2. EXCHANGE OF CERTIFICATES. (a) The Surviving
Corporation shall act as Exchange Agent in the Merger. After the Effective Time,
each holder of a certificate or certificates theretofore evidencing outstanding
shares of Webcast Common Stock, upon surrender of the same, together with a
fully completed and executed Letter of Transmittal (as hereinafter defined), to
the Surviving Corporation or such other agent or agents as shall be appointed by
the Surviving Corporation, shall be entitled to receive in exchange therefor the
Per Share Merger Consideration multiplied by the number of shares of Webcast
Common Stock represented thereby, rounded to the nearest ten-thousandth of a
share. Each holder shall provide the Surviving Corporation with the
certification described in Section 4.6(c) and a properly completed IRS Form W-9,
if required. No interest will be paid or accrue on the Per Share Merger
Consideration payable upon surrender of such certificate. As soon as practicable
after the Effective Time, but in any event, within 20 days, the Surviving
Corporation will send a notice and transmittal form (the "LETTER OF
TRANSMITTAL") to each holder of an outstanding certificate or certificates which
immediately prior to the Effective Time evidenced shares of Webcast Common Stock
advising such shareholder of the terms of the exchange effected by the Merger
and the procedure for surrendering to the Exchange Agent such certificate or
certificates for exchange into the shares of StarMedia Common Stock and cash in
lieu of fractional shares, constituting the Per Share Merger Consideration.
Until so surrendered, each outstanding certificate which, prior to the Effective
Time, represented shares of Webcast Common Stock will be deemed for all
corporate purposes of Parent to evidence ownership of a right to receive without
interest thereon, the number of full shares of StarMedia Common Stock rounded to
the lowest whole share multiplied by the number of shares of Webcast Common
Stock represented thereby, plus the applicable cash amount, if any, in lieu of
fractional shares, constituting the Per Share Merger Consideration. After the
Effective Time there shall be no further registration of transfers on the
records of the Company of shares of Webcast Common Stock and, if a certificate
representing any such shares is presented to the Surviving Corporation, it shall
be canceled and exchanged for the Per Share Merger Consideration as herein
provided.
(b) If payment of the Per Share Merger Consideration is to be
made to a person other than the registered holder of the certificate or
certificates surrendered in exchange therefor, it shall be a condition of such
payment that the certificate or certificates so surrendered shall be properly
endorsed and otherwise in proper form for transfer and that the Person
requesting such exchange pay to the Surviving Corporation any transfer or other
taxes required by reason of the payment to a Person other than the registered
holder of the certificate or certificates surrendered or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
payable.
(c) Notwithstanding anything to the contrary in this Section
3.2, none of the Exchange Agent, the Surviving Corporation or any party hereto
shall be liable to a holder of shares of Webcast Common Stock for any amount
properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
Section 3.3. LOST, STOLEN OR DESTROYED CERTIFICATES. In the
event any certificates evidencing shares of Webcast Common Stock shall have been
lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed certificates, upon the making of an affidavit of that
fact by the holder thereof, such shares of StarMedia Common Stock and other
amounts, if any, as may be required pursuant to this Article 3; PROVIDED,
HOWEVER, that Parent may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificates to deliver a bond in such sum as it may reasonably direct against
any claim that may be made against Parent or the Exchange Agent with respect to
the certificates alleged to have been lost, stolen or destroyed.
Section 3.4. DISSENTING SHARES.
(a) Notwithstanding any provision of this Plan of Merger to
the contrary, any shares of Webcast Common Stock held by a holder who has
exercised and perfected appraisal rights for such shares in accordance with the
Corporations Code and who, as of the Effective Time, has not effectively
withdrawn or lost such appraisal rights ("DISSENTING SHARES"), shall not be
converted into or represent a right to receive the Per Share Merger
Consideration pursuant to Section 3.1, but the holder thereof shall only be
entitled to such rights as are granted by the Corporations Code.
(b) Notwithstanding the provisions of subsection (a) above, if
any holder of Dissenting Shares shall effectively withdraw or lose (through
failure to perfect or otherwise) his or her appraisal rights, then, as of the
later of the Effective Time or the occurrence of such event, such holder's
shares shall automatically be converted into and represent only the right to
receive the Per Share Merger Consideration as provided in Section 3.1, without
interest thereon, upon surrender of the certificate representing such shares.
(c) The Company shall give Parent (i) prompt notice of any
written demand for appraisal received by the Company pursuant to the applicable
provisions of the Corporations Code and (ii) the opportunity to participate in
all negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, or as
required under the Corporations Code, voluntarily make any payment with respect
to any such demands or offer to settle or settle any such demands.
Section 3.5. STOCK LEGEND. Stock certificates for StarMedia
Common Stock issued in the Merger as Per Share Merger Consideration shall
contain the legend specified on Schedule 3.5.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to and for the
benefit of Parent and Newco as follows:
Section 4.1. INCORPORATION; AUTHORIZATION; CAPITALIZATION. (a)
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of California. The Company (i) has all
requisite corporate power to own its properties and assets and to carry on its
business as it is now being conducted and (ii) is in good standing and is duly
qualified to transact business in each jurisdiction in which the nature of
property owned or leased by it or the conduct of its business requires it to be
so qualified, except where the failure to be in good standing or to be duly
qualified to transact business would not, individually or in the aggregate, have
a Material Adverse Effect on the Company. The Company has previously delivered
to Parent true and correct copies of the articles of incorporation and by-laws
of the Company. The Company has no Subsidiaries. Except as set forth on Schedule
4.1(a), the Company has no investments in, or joint venture arrangements with,
any other Person.
(b) The Company has full power and authority (corporate or
otherwise) to execute, deliver and perform this Plan of Merger, the Merger
Agreement and all other agreements and instruments to be executed in connection
herewith and therewith (collectively, the "TRANSACTION DOCUMENTS"). Subject only
to the receipt of the requisite approval of the Company's shareholders referred
to in Section 8.2 hereof, (i) the execution, delivery and performance by the
Company of this Plan of Merger has been duly authorized by all necessary action
(corporate or otherwise) on the part of the Company, and (ii) as of the Closing
Date, the Merger Agreement and the other Transaction Documents to which the
Company is a party will be duly authorized by all necessary action (corporate or
otherwise) on the part of the Company. This Plan of Merger has been duly
executed and delivered by the Company, and, as of the Closing Date, the Merger
Agreement and the other Transaction Documents to which the Company is a party
will be duly executed and delivered by the Company. Assuming due authorization,
execution and delivery by Parent and Newco of this Plan of Merger, this Plan of
Merger is a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable laws relating to bankruptcy, insolvency, fraudulent
conveyance, reorganization or affecting creditors' rights generally and except
to the extent that injunctive or other equitable relief is within the discretion
of a court. As of the Closing Date, assuming due authorization, execution and
delivery by Parent of this Plan of Merger and the receipt of the requisite
approval
of the Company's shareholders referred to in Section 8.2 hereof, the
Merger Agreement and the other Transaction Documents to which the Company is a
party will constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by applicable laws relating to bankruptcy,
insolvency, fraudulent conveyance, reorganization or affecting creditors' rights
generally and except to the extent that injunctive or other equitable relief is
within the discretion of a court.
(c) The execution, delivery, and performance by the Company of
this Plan of Merger, the Merger Agreement and the other Transaction Documents to
which it is a party does not, and the consummation by the Company of the
transactions contemplated hereby and thereby, will not, (a) upon receipt of the
requisite approval of the Company's shareholders referred to in Section 8.2,
violate, conflict with or result in the breach of any provision of the Articles
of Incorporation or by-laws of the Company or (b) violate, conflict with, result
in a breach of, or constitute a default (or an event which would, with the
passage of time or the giving of notice or both, constitute a default) under,
require any consent under, or result in or permit the termination, amendment,
modification, acceleration, suspensions, revocation or cancellation of, or
result in the creation or imposition of any Lien of any nature whatsoever upon
any of the assets of the Company or give to others any interests or rights
therein under (i) any Contract, or (ii) any judgment, injunction, writ, award,
decree, restriction, ruling, or order of any court, arbitrator or other
Governmental Entity or any applicable constitution or Law, to which the Company
is subject or which is applicable to the Company's assets.
(d) The authorized capital stock of the Company consists of
(i) 10,000,000 shares of Webcast Common Stock, of which 7,237,500 shares are
issued and outstanding, and (ii) 560,000 shares of Series A preferred stock, no
par value, of the Company (the "PREFERRED STOCK"), of which 541,650 shares are
issued and outstanding. All of the outstanding shares of capital stock of the
Company have been duly authorized, validly issued, are fully paid and
non-assessable, and have not been issued in violation of any preemptive rights
created by statute, regulation, the articles of incorporation or bylaws of the
Company or any agreement to which the Company is a party or by which it is
bound, or in violation of any federal or state securities laws. The Company has
reserved 541,650 shares of Webcast Common Stock for issuance upon conversion of
the Preferred Stock and 1,100,000 shares of Webcast Common Stock under the
Company's 1999 Stock Option Plan (the "OPTION PLAN") for employees, officers,
directors and consultants of the Company as may be determined and approved by
the Company's Board of Directors from time to time. Except as disclosed in this
Section 4.1(d) and in Schedule 4.1(d) and for the transactions contemplated by
this Plan of Merger, there is no security, option, warrant, right (including
preemptive rights), put, call, subscription, agreement, commitment,
understanding or claim of any nature whatsoever, fixed or contingent, to which
the Company is a party or by which it is bound that directly or indirectly (i)
calls for the issuance, sale, pledge, delivery or other disposition of any
securities of the Company or any securities convertible into, or other rights to
acquire, any securities of the Company, (ii) relates to the voting or control of
any securities of the Company or (iii) obligates the Company or any of its
Affiliates to grant, offer or enter into any of the foregoing.
(e) Schedule 4.1(e) contains a complete and correct list of
the record and
beneficial ownership of Webcast Common Stock and Preferred Stock by each
shareholder of the Company designating each officer and director of the Company
and the current mailing address of each such shareholder.
Section 4.2. FINANCIAL STATEMENTS. (a) Attached hereto as
Schedule 4.2(a) are true, correct and complete copies of the (i) unaudited
balance sheet of the Company as of June 30, 1999 and the related unaudited
income and cash flow statements for the Company for the six-month period then
ended, and (ii) unaudited balance sheet of the Company as of December 31, 1998
and the related unaudited income and cash flow statements for the Company for
the twelve [sic]-month period then ended. The foregoing financial statements are
collectively referred to as the "FINANCIAL STATEMENTS."
(b) The Financial Statements were prepared in accordance with
the books and records of the Company and fairly present the financial condition,
results of operations and cash flows of the Company, as of the dates and for the
periods indicated, in each case in conformity with GAAP throughout the periods
specified.
Section 4.3. UNDISCLOSED LIABILITIES. The Company does not
have any liabilities or obligations of any nature (whether known or unknown, due
or to become due, absolute, accrued, contingent or otherwise), and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability or obligation, including any liabilities
or obligations under Environmental Laws or any unfunded obligation under any
Benefit Plan, except as (i) set forth in Schedule 4.3, (ii) disclosed in the
Financial Statements, or (iii) incurred in the ordinary course of business since
June 30, 1999 which do not individually or in the aggregate have a Material
Adverse Effect.
Section 4.4. PROPERTIES. (a) The Company does not own, and has
never owned, any interest in real property.
(b) Schedule 4.4(b) hereto contains descriptions of all items
of tangible personal property of every kind or description owned by the Company
having a current net book value in excess of $2,500. The Company has good and
marketable title to, or holds by valid and existing lease or license, all assets
and properties (including without limitation all assets reflected on the
Financial Statements (other than Intellectual Property, which is the subject of
the corresponding representation set forth in Section 4.8 below)), free and
clear of all Liens, except (1) as set forth on Schedule 4.4(b)(i) and (2) for
liens for taxes not yet due and payable and such imperfections of title and
encumbrances, if any, which are not material in character, amount or extent, and
which do not detract from the value or interfere with the present use, of the
property subject thereto or affected thereby.
(c) All material tangible assets of every kind or description
owned or leased by the Company are in good operating condition and repair,
ordinary wear and tear excepted.
Section 4.5. ABSENCE OF CERTAIN CHANGES. Except as disclosed
in Schedule 4.5, since December 31, 1998, there has been no:
(a) event that, individually or together with any other events
has, or is reasonably likely to have, a Material Adverse Effect on the Company;
(b) physical damage, destruction or loss of any assets of the
Company in an amount exceeding $10,000 in the aggregate affecting the Company
not remedied within 30 days;
(c) increase in compensation payable or to become payable to
any of the employees, consultants or directors of the Company, or any bonus
payment made or promised to any employee, consultant or director of the Company,
or any material change in personnel policies, insurance benefits, Benefit Plans
or other compensation arrangements affecting the employees, consultants or
directors of the Company (other than increases in wages and salaries or bonus
payments or other compensation made in the ordinary course of business and
consistent with past practice or except as otherwise contemplated by this Plan
of Merger or the Transaction Documents, but in no event increases greater than
3% per annum);
(d) waiver of any rights by the Company under any Contract
which waivers, individually or in the aggregate, could have a Material Adverse
Effect on the Company;
(e) mortgage, pledge or subjection to any Lien of any of the
properties or assets of the Company;
(f) sale or transfer of the properties or assets of the
Company including Intellectual Property, other than insignificant transfers in
the ordinary course of business which individually or in the aggregate are not
material;
(g) change in any method of accounting or accounting practice
except as required by GAAP as in effect from time to time;
(h) dividend or other distribution paid or declared by the
Company in respect of any of its capital stock and the Company has not, directly
or indirectly, purchased, acquired or redeemed or split, combined or
reclassified any shares of the capital stock of the Company;
(i) entrance into any material transaction or Contract
involving a total commitment by or to any party thereto of more than $20,000 on
an annual basis or more than $100,000 on its remaining term which cannot be
terminated on no more than 60 days' notice without penalty or additional cost to
the Company as the terminating party (except as otherwise contemplated by this
Plan of Merger, the Merger Agreement or the Transaction Documents); or
(j) material tax election or change in tax accounting by the
Company.
Section 4.6. TAXES. (a) The Company (which, for purposes of
this Section 4.6, shall include any predecessor of the Company) has timely filed
all Returns which are required to be filed (giving effect to any timely
extensions), and all Taxes shown to be due on such Returns have been timely
paid. All such Returns are true, accurate and complete. The Company has provided
Parent with complete and accurate copies of all Returns filed by the Company for
periods for which the statute of limitations is still open. The Company has paid
all Taxes required to be paid. The Company has not been included in any
consolidated, combined or unitary Returns. Except as disclosed in Schedule
4.6(a), the Company does not have in effect, nor has been requested to make, any
waiver or extension of any statute of limitations with respect to Taxes.
(b) No property of the Company is subject to a tax benefit
transfer lease subject to the provisions of former Section 168(f)(8) of the
Internal Revenue Code of 1954.
(c) None of the shareholders of the Company is a foreign
person subject to withholding under Section 1445 of the Code and the regulations
promulgated thereunder, and certification to that effect will be delivered to
Parent.
(d) The Company has complied with all applicable laws, rules
and regulations relating to information reporting with respect to payments made
to third parties and the withholding of and payment of withheld Taxes and has
timely withheld from employee wages and other payments and paid over to the
proper taxing authorities all amounts required to be so withheld and paid over
for all periods under all applicable laws.
(e) There are no pending, proposed, or, to the knowledge of
the Company, threatened, audits, Actions, assessments or deficiencies, asserted
with respect to Taxes of the Company. There is no pending, proposed, or, to the
knowledge of the Company, threatened, claim by any Taxing Authority in any
jurisdiction in which the Company does not pay Taxes or file Returns that the
Company is required to pay Taxes or file Returns.
(f) The Company has not made an election under Section 341(f)
of the Code.
(g) The Company has not agreed nor is required to make any
adjustment under Section 481(a) of the Code.
(h) The Company will not have any liability under any tax
sharing agreement or tax indemnity agreement on or after the Closing Date.
(i) All deficiencies asserted or assessments made as a result
of any examination of Returns referred to in Section 4.6(a) have been paid in
full.
Section 4.7. LITIGATION; ORDERS. There is no Action pending,
or to the knowledge of the Company, threatened, against the Company by or before
any court, arbitrator, panel or other Government Entity that would prevent the
consummation of any of the transactions contemplated hereby. Except as disclosed
in Schedule 4.7, there is no Action pending, or to the knowledge of the Company,
threatened, against the Company or any of its business, properties or rights by
or before any court, arbitrator, panel or other Government Entity. There are no
judgments, orders, injunctions, decrees, stipulations or awards rendered by any
Government Entity or arbitrator against the Company or any of its properties
that would individually or in the aggregate have Material Adverse Effect on the
Company.
Section 4.8. INTELLECTUAL PROPERTY. (a) Schedule 4.8(a)
contains a true, accurate and complete list as of the date hereof of all
patents, patent applications, trademark and service marks and corresponding
registrations and applications for registration thereof, and copyrights and
corresponding registrations and applications for registration thereof,
worldwide, as are now owned, used or held for use by the Company. Schedule
4.8(a) further sets forth a true, accurate and complete list as of the date
hereof of all Outstanding IP Licenses (other than non-negotiated IP Licenses to
the Company for off-the-shelf Software having a license fee, in the aggregate
for all copies licensed, of less than $5,000), identifying the other parties
thereto and the subject matter and date thereof, any royalty or other payment
obligations, the term thereof, and any exclusivity obligations. Except as set
forth in Schedule 4.8(a)(i), the Company owns, or is licensed or otherwise
possesses legally enforceable rights to use all subject matter set forth in
Schedule 4.8(a), free and clear of Liens (including any rights or claims of
present or former employees, consultants, officers and directors of the Company
or any other Persons) and of any obligations to pay royalties or other
remuneration to any Person. There are no Outstanding IP Licenses other than as
identified in Schedule 4.8(a), oral or written, and except as may be
specifically stated in Schedule 4.8(a), no Outstanding IP License requires any
payment of any nature, cash or noncash, or approval from, any past or present
officer, director, shareholder or Affiliate of the Company.
(b) The Company has sufficient title, ownership or IP Licenses
of Intellectual Property Rights (whether or not listed in Schedule 4.8(a))
necessary for its business as now conducted and as proposed to be conducted
without any conflict with or infringement of the rights of others and such
Intellectual Property Rights will not be materially adversely affected by the
execution and delivery of this Plan of Merger or the consummation of the
transactions contemplated hereby.
(c) The Company has not been and is not now interfering with,
infringing upon, misappropriating, or otherwise in conflict with or violating
any Intellectual Property Rights of other Persons, nor has the Company received
any communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the Intellectual Property Rights of
any other Person, nor to the Company's knowledge, is there any basis for the
making of any such allegation.
(d) Schedule 4.8(d) sets forth a list of all patents relating
to any field of business or proposed business of the Company as to which the
Company has either sought an opinion of counsel or been advised that it should
seek an opinion of counsel.
(e) There is not pending, nor to the Company's knowledge, has
there been threatened, any action or proceeding to contest, oppose, cancel or
otherwise challenge the validity, ownership or enforceability of any of the
Company's Intellectual Property.
(f) The Company has no knowledge that any Person is infringing
any of its Intellectual Property.
(g) The Company is not aware after due inquiry of its
employees that any of
its employees are obligated under any contract (including IP Licenses, covenants
or commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any Governmental Entity, that would interfere with the use of
the best efforts of such employee to promote the interests of the Company or
that would conflict with the Company's business as currently proposed to be
conducted. The Company is not aware after due inquiry of its consultants that
any of its consultants is obligated under any contract (including IP Licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any Governmental Entity, that would interfere with
such consultant's performance of its contractual obligations or other currently
contemplated duties to the Company. Neither the execution nor delivery of this
Plan of Merger or the consummation of the transactions contemplated hereby, nor
the carrying on of the Company's business by the employees of and the
consultants to the Company, nor the conduct of the Company's business as
proposed, will, to the Company's knowledge, conflict with or result in a breach
of the terms, conditions or provisions of, or constitute a default under, any
law, contract, covenant or instrument to or under which any of such employees or
consultants is now subject to or obligated. The Company does not believe it is
or will be necessary to utilize any inventions of any of its employees or
consultants (or Persons it currently intends to hire or retain as consultants)
made prior to their employment or engagement by the Company.
(h) Schedule 4.8(h) sets forth a complete list of all Internet
domain names now used or contemplated to be used by the Company. All such domain
names are currently registered and in good standing, and the Company is shown on
the records of the registrar thereof as the sole owner thereof. The Company has
received no notice or communication stating that any Person is challenging the
right of the Company to use any such domain name.
(i) All Software which has been used and which is now being
used by the Company has and is being used in compliance with all applicable
License requirements.
Section 4.9. LICENSES, APPROVALS, OTHER AUTHORIZATIONS,
CONSENTS, REPORTS, ETC. (a) The Company has all licenses, permits, franchises,
registrations, certificates, consents, and other authorizations of any
Government Entity necessary to the conduct of the business of the Company (the
"LICENSES"). All Licenses are in full force and effect. No Action is pending or,
to the knowledge of the Company, threatened, by or before any court, arbitrator,
panel or other Government Entity seeking the revocation, modification or
limitation of any License.
(b) No filing, consent, waiver, approval or authorization of
any Government Entity or of any third party on the part of the Company is
required in connection with the execution, delivery and performance by the
Company of this Plan of Merger, the Merger Agreement, or the other Transaction
Documents to which it is a party or the consummation of any of the transactions
contemplated hereby or thereby, except in connection with or in compliance with
the provisions of the Corporations Code.
Section 4.10. LABOR MATTERS.
(a) Schedule 4.10(a) sets forth a complete and correct list of
all employees of the Company, including for each such employee his or her (i)
name; (ii) job title; (iii) status as a
full-time or part-time employee; (iv) base salary or wage rate; and (v) 1998
bonus. Schedule 4.10(a) also lists each employee of the Company who is not
actively at work for any reason other than vacation, and the reason for such
absence.
(b) Schedule 4.10(b) sets forth a complete and correct list of
all individuals who perform services for the Company as an independent
contractor or a leased employee, the services they perform, and their rate of
compensation.
(c) The Company is not presently, nor has in the past been a
party to, or bound by any collective bargaining agreement with respect to its
employees. No employees of the Company are, or within the last three years have
been, represented by a union or other bargaining agent with respect to their
employment with the Company, and, to the knowledge of the Company, no employee
organizing efforts are pending with respect to employees of the Company. Within
the last three years, there has been no strike, work slowdown or other material
labor dispute with respect to employees of the Company, nor to the knowledge of
the Company, is any strike, work slowdown or other material labor dispute
pending. The Company is not involved in nor, to the knowledge of the Company,
threatened with any arbitration, lawsuit or administrative proceeding relating
to labor matters involving the employees of the Company (excluding any routine
workers' or unemployment compensation claims).
(d) Each individual who performs, or has performed, services
for the Company and has been classified by the Company as an independent
contractor (rather than as an employee) for purposes of income tax withholding
and employment taxes is and has been properly classified as an independent
contractor for such purposes.
Section 4.11. COMPLIANCE WITH LAWS. The conduct of the
business of the Company has complied with, and the Company and its properties
are in compliance with all Laws applicable thereto other than Laws, the
violations of which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
Section 4.12. INSURANCE. Schedule 4.12 lists all insurance
policies owned or held by the Company. The Company's insurance policies afford
coverage to the Company and its assets or business in amounts and against all
risks normally insured against by Persons possessing similar assets or operating
similar businesses in similar locations. All such policies are in full force and
effect, all premiums with respect thereto have been paid to the extent due, and
no notice of cancellation or termination has been received with respect to any
such policy.
Section 4.13. CONTRACTS. Schedule 4.13 sets forth a list of
all written, and a description of all oral, employment Contracts, regardless of
amount, and all other Contracts, except for individual unrelated Contracts which
could not involve the payment or receipt by the Company of more than $10,000 per
calendar year; PROVIDED, HOWEVER, that such schedule also sets forth those
Contracts which do not satisfy the $10,000 threshold but are otherwise material
to the Company. Except for all failures to be valid, binding and enforceable and
breaches, defaults, events, waivers and disputes which would not, individually
or in the aggregate, have a Material Adverse Effect on the Company, (a) all of
the Contracts are valid and binding on and enforceable against the Company, in
accordance with their terms and, to the knowledge of the
Company, on and against the other parties thereto, (b) neither the Company nor,
to the knowledge of the Company, any other party to any Contract, is in breach
or default under any Contract, (c) the Company has not waived any material right
under any Contract, (d) no event has occurred that, with the giving of notice or
the lapse of time or both, would constitute a breach or default under any
Contract, and (e) there are no unresolved disputes under any of the Contracts.
True and complete copies of all written, and accurate summaries of all oral,
Contracts set forth on Schedule 4.13 have been provided to Parent.
Section 4.14. TRANSACTIONS WITH AFFILIATES. Schedule 4.14 sets
forth a complete and accurate (a) list of all Contracts to which any
shareholder, director or officer of the Company, or any of its Affiliates,
Associates or Relatives (the "INSIDERS"), on the one hand, and the Company, on
the other hand, is a party and (b) description of all material transactions
which are not the subject of the agreements described in clause (a) above (the
"INSIDER TRANSACTIONS") between the Company, on one hand, and any Insider, on
the other hand, that have occurred since July 1, 1998.
Section 4.15. OSHA MATTERS. The Company is in compliance with
the requirements of the Occupational Safety and Health Act and the regulations
promulgated thereunder and any similar laws or regulations of any state or local
jurisdiction ("OSHA") other than violations of OSHA which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
The Company has not received any citation from the Occupational Safety and
Health Administration or any comparable administration of any state or local
jurisdiction (an "ADMINISTRATION") or any Administration inspector setting forth
any respect in which the facilities or operations of the Company are not in
compliance with OSHA, or the regulations thereunder, which non-compliance has
not been corrected or remedied to the satisfaction of such Administration or
inspector. The Company has heretofore furnished to Parent copies of any
citations heretofore issued to the Company under OSHA during the three years
prior to the date of this Plan of Merger and copies of all correspondence from
and to such Administration and any Administration inspectors during the past
three years.
Section 4.16. TOTALITY OF ASSETS. The assets of the Company
which Parent, through the Surviving Corporation, will acquire at the Closing by
virtue of the Merger include all of the assets or rights necessary for the
continued operation of the business of the Company substantially in the same
manner as currently operated.
Section 4.17. ENVIRONMENTAL MATTERS. (a) The Company has made
available to Parent all material information which it possesses or controls
pertaining to the use, generation, storage, handling, treatment or disposal of
Hazardous Materials on any real property, used or leased by the Company and any
sampling and test results obtained, samples, tests and monitoring programs taken
or conducted by the Company (or otherwise in its possession or control) at and
around any real property used or leased by the Company with respect to Hazardous
Materials.
(b) The Company has complied with, and the Company and any
real property used or leased by the Company, is in compliance in all material
respects with, the provisions of all applicable Environmental Laws.
(c) The Company has not received any written notice or is
otherwise aware of any existing claim or the basis for any claim by any
Government Entity or any third party that the Company or the condition of any
real properties used or leased by the Company has violated or is subject to
liability pursuant to any Environmental Law.
(d) There are no facts, events or conditions with respect to
the past or present operation of business of the Company or any environmental
conditions at any of the real properties used or leased by the Company which
could reasonably be expected to interfere with or prevent continued compliance
with, or could reasonably be expected to give rise to any action, suit, claim or
proceeding under, Environmental Laws.
(e) The Company is not subject to any liability, past or
present, fixed or contingent under any Environmental Law.
(f) To the knowledge of the Company, there are no underground
storage tanks on or under the real property used or leased by the Company.
(g) To the knowledge of the Company, no underground storage
tanks were located on or under the real property used or leased by the Company
which were removed or filled.
(h) The Company has not caused Hazardous Materials to be
discharged, disbursed, released, stored, treated, generated, disposed of, or
allowed to escape on, in, over or under the real property used or leased by the
Company, and, to the knowledge of the Company, no other Person has caused
Hazardous Materials to be discharged, disbursed, stored, treated, generated or
allowed to escape on, in, over or under the real property used or leased by the
Company.
(i) No asbestos or asbestos containing materials have been
installed, used, incorporated into, or disposed of on the real property used or
leased by the Company, by the Company or, to the knowledge of the Company, by
any other Person.
(j) To the knowledge of the Company, no PCBs have been located
on or in the real property used or leased by the Company, whether in electrical
transformers, fluorescent light fixtures with ballasts, cooling oils, or
otherwise.
Section 4.18. EMPLOYEE BENEFITS.
(a) Schedule 4.18(a) sets forth a complete and correct list of
(i) any "employee benefit plan" within the meaning of Section 3(3) of ERISA,
(ii) any other employee benefit plan, arrangement or policy, including without
limitation, any stock option, stock purchase, stock award, stock appreciation,
phantom stock, deferred compensation, pension, retirement, savings, profit
sharing, incentive, bonus, health, life insurance, cafeteria, flexible spending,
dependent care, fringe benefit, vacation pay, holiday pay, disability, sick pay,
workers compensation, unemployment, severance, employee loan or educational
assistance plan,
arrangement or policy, and (iii) any employment, indemnification, consulting,
severance or change-in-control agreement, in each case, which is sponsored or
maintained by the Company or any of its Affiliates, or to which the Company or
any of its Affiliates contributes or is required to contribute, on behalf of
current or former employees, consultants or directors of the Company or their
beneficiaries or dependents, whether or not written ("BENEFIT PLANS"). Neither
the Company nor any of its Affiliates has communicated to present or former
employees of the Company or formally adopted or authorized any additional
Benefit Plan or any change in or termination of any existing Benefit Plan. No
Benefit Plan covers employees other than employees of the Company.
(b) The Company has delivered to Parent complete and correct
copies of each Benefit Plan, or written summaries of any unwritten Benefit Plan,
any employee handbook applicable to employees of the Company, and, with respect
to each Benefit Plan, the current summary plan description, related trust
agreements or insurance contracts, the latest IRS determination letter, the last
three annual financial statements, and the last three annual reports on IRS Form
5500 (including all required schedules and accountant's opinions).
(c) Each Benefit Plan is and has been operated and
administered in accordance with its terms and all applicable laws. Each Benefit
Plan intended to be tax-qualified under Section 401(a) of the Code has received
a favorable determination letter from the IRS as to its tax-qualified status
under the Code and nothing has occurred since the date of such favorable
determination letter which would adversely affect the qualified status of such
plan.
(d) All contributions and premium payments required to have
been paid under or with respect to any Benefit Plan have been timely paid.
(e) No Benefit Plan provides health, life insurance or other
welfare benefits to retirees or other terminated employees of the Company, other
than continuation coverage required by Section 4980B of the Code or Sections
601-608 of ERISA ("COBRA"), and the Company does not have any current or
projected liability for any such benefits.
(f) The Company has never maintained or contributed to a trust
which is or was intended to be a voluntary employees' beneficiary association
under Section 501(c)(9) of the Code.
(g) Except as set forth in Schedule 4.18(g) hereto, no Benefit
Plan is funded with, or provides for benefits in the form of, stock or other
securities of the Company.
(h) Except as set forth in Schedule 4.18(h), there has been no
change, since January 1, 1999, in any Benefit Plan, or its related funding
vehicle, which would significantly increase the Company's cost, or the benefits
payable, with respect to such plan.
(i) Schedule 4.18(i) hereto lists each individual who is
receiving, or who is entitled to elect, COBRA continuation coverage under any
Benefit Plan which is a group health plan.
(j) The Company has never maintained or contributed to, or had
an obligation to contribute to, (i) a "single-employer plan" within the meaning
of Section 4001(a)(15) of ERISA, (ii) a plan subject to Section 412 of the Code,
(iii) a plan subject to Section 4063 or 4064 of ERISA, or (iv) a multiemployer
plan within the meaning of Section 3(37) or 4001(a)(3) of ERISA.
(k) No event has occurred and no condition exists with respect
to any Benefit Plan which could subject any Benefit Plan, the Company, Parent or
any of their employees, agents, directors or Affiliates, directly or indirectly
(through an indemnification agreement or otherwise), to liability for a breach
of fiduciary duty, a "prohibited transaction," within the meaning of Section 406
of ERISA or Section 4975 of the Code, or a tax, penalty or fine under Section
502 or 4071 of ERISA or Subtitle D, Chapter 43 of the Code.
(l) There are no actions, suits, or claims (other than routine
claims for benefits in the ordinary course) with respect to any Benefit Plan
pending which could give rise to a material liability, or to the knowledge of
the Company, threatened, and the Company has no knowledge of any facts which
could give rise to any such actions, suits or claims (other than routine claims
for benefits in the ordinary course). No Benefit Plan is currently under
governmental investigation or audit and, to the best knowledge of the Company,
no such investigation or audit is contemplated or under consideration.
(m) No event has occurred and no condition exists with respect
to (i) any terminated employee benefit plan or arrangement previously maintained
or contributed to by the Company, or (ii) any employee benefit plan or
arrangement currently or previously maintained or contributed to by any
Affiliate of the Company which, in either case, could subject the Company,
Parent or any of their employees, agents, directors or Affiliates, directly or
indirectly (through an indemnification agreement or otherwise), to any
liability, including, without limitation, liability under Section 412, 4971 or
4980B of the Code or Title IV of ERISA.
(n) Except as set forth on Schedule 4.18(n) hereto and as
otherwise contemplated by this Plan of Merger, the Transaction Documents or the
transactions contemplated hereby and thereby, neither the execution of this Plan
of Merger nor the consummation of the transactions contemplated by this Plan of
Merger, will (i) increase the amount of benefits otherwise payable under any
Benefit Plan, (ii) result in the acceleration of the time of payment,
exercisability, funding or vesting of any such benefits, or (iii) result in any
payment (whether severance pay or otherwise) becoming due to, or with respect
to, any current or former employee, consultant, or director of the Company. No
payment or series of payments that would constitute a "parachute payment"
(within the meaning of Section 280G of the Code) has been made or will be made
by the Company, directly or indirectly, to any employee, consultant or director
in connection with the execution of this Plan of Merger or as a result of the
consummation of the transactions contemplated hereby.
(o) Substantially adequate and complete records have been and
are maintained with respect to each Benefit Plan and are in the custody of the
Company or a third party service provider retained by the Company.
Section 4.19. YEAR 2000. The "YEAR 2000" problem, consisting
of the inability of certain computer applications to recognize and properly
perform date-sensitive functions involving dates on or about or subsequent to
December 31, 1999, will not have a Material Adverse Effect on the Company. The
Company reasonably anticipates that all computer applications which are material
to its business will, in a timely basis, be able to properly perform
date-sensitive functions for all dates on and after January 1, 2000. The
Software and related services used by the Company (except for off-the-shelf,
shrink-wrap Software that is commercially available for retail purchase) and/or
sold or licensed by the Company will not require any additional expenditures in
order to be "YEAR 2000 COMPLIANT," which term shall include the following
capabilities: (a) accurately processing date information before, during and
after January 1, 2000, including, but not limited to, accepting date input,
providing date output and performing calculations on dates or portions of dates;
(b) functioning accurately and without interruption before, during and after
January 1, 2000, without any change in operations associated with the advent of
the new century; (c) responding to two-digit year date input in a way that
resolves the ambiguity as to century in a disclosed, defined and predetermined
manner; and (d) storing and providing output of date information in ways that
are unambiguous as to century. The Company has contacted its principal vendors
of hardware, Software and services, and other Persons with whom the Company has
material business relationships, and all such vendors and other Persons have
notified the Company that their hardware, Software and services are Year 2000
Compliant to the extent affecting the Company. Upon Parent's request from time
to time, the Company shall provide to Parent assurance that the Company's
systems and Software are or will be in all material respects Year 2000 Compliant
on a timely basis, all in form and substance reasonably satisfactory to Parent.
Section 4.20. POOLING. The Company was incorporated in 1998
and has never been a subsidiary or division of another corporation. At the date
of this Plan of Merger, the Company had no investment in Parent and has not
acquired any investment in Parent to date. The Company has not had any
transactions changing the total equity interest of its common stock in
contemplation of the Merger from the date of its incorporation to the date of
this Plan of Merger, nor are there any equity transactions of this type planned
prior to the Closing. The Company has purchased no treasury shares since the
date of its incorporation nor are any purchases planned prior to the Closing. To
the knowledge of the Company, Parent does not intend and has not agreed to
effect any of the following transactions: (a) retire or reacquire, directly or
indirectly, all or part of the Webcast Common Stock issued to effect the Merger,
(b) enter into financial arrangements for the benefit of the former shareholders
of the Company (except as previously disclosed to Parent), or (c) dispose of a
significant part of the assets of the Company within two years after the
Effective Time, other than disposals in the ordinary course of business and to
eliminate duplicate facilities or excess capacity or to comply with an order of
a Governmental Entity. The Company has not disposed of any significant assets in
the two years prior to the date of this Plan of Merger and between the date of
this Plan of Merger and the Closing, except for disposals in the ordinary course
of business. Notwithstanding the foregoing, no representation or warranty is
made by the Company regarding the treatment or consequences of the Merger being
accounted for as a pooling or a purchase transaction.
Section 4.21. VOTE REQUIRED. Other than the approval of the
Merger by the affirmative vote of a majority of the holders of the outstanding
shares of Webcast Common Stock and the Preferred Stock entitled to vote on the
question, no vote of the holders of any class or series of the capital stock of
the Company is required to approve this Plan of Merger, the Merger Agreement and
the Merger.
Section 4.22. INTENTIONALLY OMITTED.
Section 4.23. BROKERS, FINDERS, ETC. No broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with this Plan of Merger or the transactions
contemplated hereby based upon any agreements, written or oral, made by or on
behalf of the Company or by or on behalf of any director, officer, employee,
agent or Affiliate of the Company.
Section 4.24. MINUTE BOOKS. The minute books of the Company
contain an accurate summary of all meetings of directors and shareholders of the
Company since the time of the Company's incorporation. True and complete copies
of the minute books of the Company have been made available to Parent.
Section 4.25. DISCLOSURE. No representation, warranty or
statement made by the Company in this Plan of Merger, the Merger Agreement or
the other Transaction Documents contains (or will contain) any untrue statement
of a material fact or omits (or will omit) to state a material fact necessary in
order to make the statements contained herein or therein not misleading in light
of the circumstances under which they were made.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
Parent and Newco hereby jointly and severally represent and
warrant to the Company as follows:
Section 5.1. INCORPORATION; AUTHORIZATION; CAPITALIZATION. (a)
Each of Parent and Newco is a corporation duly incorporated, validly existing
and in good standing under the laws of its state of incorporation. Each of
Parent and Newco has all requisite corporate power to own its respective
properties and assets and to carry on its respective business as it is now being
conducted.
(b) Each of Parent and Newco have full power and authority
(corporate or otherwise) to execute, deliver and perform this Plan of Merger,
the Merger Agreement and the other Transaction Documents to which Parent or
Newco is a party. The execution, delivery and performance by Parent and Newco of
this Plan of Merger, the Merger Agreement and the other Transaction Documents to
which Parent or Newco is a party have been duly authorized by all necessary
action (corporate or otherwise) on the part of each of Parent and Newco. This
Plan of
Merger has been duly executed and delivered by each of Parent and Newco,
and, as of the Closing Date, the Merger Agreement and the other Transaction
Documents to which Parent or Newco is a party will be duly executed and
delivered by Parent or Newco, as the case may be. This Plan of Merger is a
legal, valid and binding obligation of each of Parent and Newco, enforceable
against each of them in accordance with its terms, except as such enforceability
may be limited by applicable laws relating to bankruptcy, insolvency, fraudulent
conveyance, reorganization or affecting creditors' rights generally and except
to the extent that injunctive or other equitable relief is within the discretion
of a court. As of the Closing Date, the Merger Agreement and the other
Transaction Documents to which Parent or Newco is a party will constitute legal,
valid and binding obligations of Parent or Newco, as the case may be,
enforceable against Parent or Newco in accordance with their terms, except as
such enforceability may be limited by applicable laws relating to bankruptcy,
insolvency, fraudulent conveyance, reorganization or affecting creditors' rights
generally and except to the extent that injunctive or other equitable relief is
within the discretion of a court.
(c) The execution, delivery, and performance by each of Parent
and Newco of this Plan of Merger, the Merger Agreement, and the other
Transaction Documents to which Parent or Newco is a party and the consummation
by Parent and Newco of the transactions contemplated hereby and thereby, do not,
(a) violate, conflict with or result in the breach of any provision of the
Articles of Incorporation or by-laws (or similar organizational documents) of
Parent or Newco or (b) violate, conflict with, result in a breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, require any consent
under, or result in or permit the termination, amendment, modification,
acceleration, suspensions, revocation or cancellation of, or give to others any
interests or rights therein under (i) any indenture, mortgage, loan or credit
agreement, license, instrument, lease, contract, plan, permit or other agreement
or commitment, oral or written, to which Parent or Newco is a party, or (ii) any
judgment, injunction, writ, award, decree, restriction, ruling, or order of any
court, arbitrator or other Governmental Entity or any applicable constitution or
Law, to which Parent or Newco is subject, except for such violations, conflicts,
breaches, defaults, failures to obtain consents, terminations, modifications,
accelerations, revocations and cancellations as would not individually or in the
aggregate have a Material Adverse Effect on Parent's or Newco's ability to
perform their obligations hereunder.
(d) The authorized stock of Parent consists of 200,000,000
shares of Common Stock, $.001 par value, of which 57,222,000 shares were issued
and outstanding as of the quarter ended June 30, 1999, and 10,000,000 shares of
undesignated preferred stock, $.001 par value. No shares of Parent's preferred
stock were issued or outstanding as of the quarter ended June 30, 1999. The
authorized capital stock of Newco consists of 1,000 shares of Common Stock, $.01
par value, 1,000 shares of which, as of the date hereof, are issued and
outstanding and are held by Parent. All such shares of Parent and Newco have
been duly authorized, and all such issued and outstanding shares have been
validly issued, are fully paid and nonassessable. As of the date hereof, Parent
has also reserved 18,500,000 shares of its Common Stock for issuance pursuant to
its employee and director stock and option plans, 9,374,776 shares of which were
subject to outstanding options at July 31, 1999.
(e) The shares of StarMedia Common Stock to be issued as the
Per Share Merger Consideration in accordance with this Plan of Merger and the
Merger Agreement when issued and delivered in accordance with the terms of this
Plan of Merger and the Merger Agreement, will have been duly authorized, validly
issued, fully paid and non-assessable, and will not be issued in violation of
any preemptive rights or any U.S. federal or state securities laws.
Section 5.2. CONSENTS, ETC. No filing, consent, approval or
authorization of any Government Entity or of any third party on the part of the
Parent or Newco is required in connection with the execution, delivery and
performance of this Plan of Merger, the Merger Agreement and the other
Transaction Documents to which Parent or Newco is a party by Parent or Newco or
the consummation by Parent or Newco of any of the transactions contemplated
hereby or thereby, except in connection with or in compliance with the
provisions of the Corporations Code, the laws of certain foreign jurisdictions
under which a filing may be required in connection with the Merger, and
compliance with applicable state blue sky laws.
Section 5.3. SEC DOCUMENTS. Parent has made available to the
Company a true and complete copy of Amendment No. 7 to Parent's S-1 Registration
Statement (including all exhibits thereto) relating to Parent's initial public
offering, Form 10-Q for the quarter ended June 30, 1999 filed by Parent with the
Securities and Exchange Commission (the "SEC"), and the Form 8-K's filed on June
10, 1999, June 25, 1999 and August 10, 1999 by Parent with the SEC
(collectively, the "PARENT SEC DOCUMENTS"). As of their respective dates, the
Parent SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Parent SEC Documents, and
as of their respective filing dates, none of the Parent SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim financial
statements of Parent included in the Parent SEC Documents (collectively, the
"PARENT FINANCIAL STATEMENTS") were prepared in accordance with GAAP (except as
may be indicated therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q) and fairly present in all
material respects the financial position of Parent as of the respective dates
thereof or the results of operations and cash flows for the respective periods
then ended, as the case may be, subject, in the case of unaudited interim
financial statements, to normal, recurring adjustments which are not material in
the aggregate. Since June 30, 1999 and until the date of this Plan of Merger,
there has been no material change in Parent's accounting policies which would
require disclosure in the Parent's Financial Statements under GAAP.
Section 5.4. NO MATERIAL ADVERSE CHANGE. Since the date of the
balance sheet included in the Parent's report on Form 10-Q for the quarter ended
June 30, 1999 and until the date of this Plan of Merger, there has not occurred
any material adverse change in the business, assets, liabilities, operations,
results of operation, prospects or financial condition of Parent and its
subsidiaries, taken as a whole.
Section 5.5. BROKERS, FINDERS, ETC. No broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with this Plan of Merger, the Merger Agreement or the
transactions contemplated hereby and thereby based upon any agreements, written
or oral, made by or on behalf of Parent or Newco or by or on behalf of any
director, officer, employee, agent or Affiliate of Parent or Newco.
Section 5.6. POOLING. To Parent's knowledge, Parent does not
intend and has not agreed to effect any of the following transactions: (a)
retire or reacquire, directly or indirectly, all or part of the Webcast Common
Stock issued to effect the Merger, (b) enter into financial arrangements for the
benefit of the former shareholders of the Company (except as previously
disclosed to the Company), or (c) dispose of a significant part of the assets of
the Company within two years after the Effective Time, other than disposals in
the ordinary course of business and to eliminate duplicate facilities or excess
capacity or to comply with an order of a Governmental Entity. Notwithstanding
the foregoing, no representation or warranty is made by Parent regarding the
treatment or consequences of the Merger being accounted for as a pooling or a
purchase transaction.
Section 5.7. LITIGATION, ETC. As of the date of this Plan of
Merger, to Parent's knowledge, there is no action, suit, proceeding, claim,
arbitration or investigation pending or as to which Parent has received any
notice of assertion against Parent, which in any manner challenges or seeks to
prevent, enjoin, alter or materially delay any of the transactions contemplated
by this Plan of Merger.
Section 5.8. TAXES. Parent has no present plan or intention
after the Merger to (i) reacquire any of its stock issued in the Merger, (ii)
liquidate the Surviving Corporation; (iii) merge the Surviving Corporation with
or into another corporation; (iv) sell or otherwise dispose of the stock of
Surviving Corporation, except for transfers of stock to corporations controlled
by Parent; or, (v) cause the Surviving Corporation to sell or otherwise dispose
of any of its assets or of any of the assets acquired from Newco, except for
dispositions made in the ordinary course of business or transfers of assets to a
corporation controlled by the Surviving Corporation.
ARTICLE VI
COVENANTS
Section 6.1. COVENANTS OF THE COMPANY. The Company agrees to
observe and perform the following covenants and agreements:
(a) CONDUCT OF THE BUSINESS PRIOR TO THE CLOSING DATE. Except
as contemplated in this Plan of Merger, prior to the Closing, the Company will:
(1) not make or permit any material change in the
general nature of its business;
(2) maintain its business in accordance with prudent
business judgment and consistent with past practice and
policy, and maintain its assets in good repair, order and
condition, reasonable wear and tear excepted;
(3) preserve the Company as an ongoing business and
use reasonable efforts to maintain the goodwill associated
with the Company;
(4) preserve all of the Company's Licenses;
(5) not enter into any material transaction or
Contract involving a total commitment by or to any party
thereto of more than $10,000 on an annual basis or more than
$30,000 on its remaining term which cannot be terminated on no
more than 60 days' notice without penalty or additional cost
to the Company as the terminating party, except in the
ordinary course of business and consistent with past practice;
(6) not purchase, sell, lease, dispose of or
otherwise transfer or make any contract for the purchase,
sale, lease, disposition or transfer of, or subject to Lien,
any of the assets of the Company;
(7) not hire any new employee unless such new
employee is hired at-will and such new employee's total
compensation is the same or less than present employees of the
Company as of the date hereof;
(8) not voluntarily change in any material respect or
terminate any insurance policies disclosed on Schedule 4.12
that presently are in effect unless equivalent coverage is
obtained;
(9) not make any changes in financial policies or
practices, or strategic or operating policies or practices;
(10) comply in all material respects with all
applicable Laws and permits, including without limitation
those relating to the filing of reports and the payment of
Taxes due to be paid prior to the Closing, other than those
contested in good faith;
(11) not adopt, amend (other than amendments that
reduce the amounts payable by Parent or any of its
subsidiaries or amendments required by law) or assume an
obligation to contribute to any Benefit Plan or collective
bargaining agreement or enter into any employment, consulting,
severance or similar Contract with any Person (including
without limitation, contracts with management of the Company
or any of its Affiliates that might require payments be made
upon consummation of the transactions contemplated hereby) or
amend any such existing contracts to increase any amounts
payable thereunder or benefits provided thereunder;
(12) except in the ordinary course of business or as
required by the terms of any existing Contract or Benefit
Plan, not grant any increase or change in total compensation,
benefits or pay any bonus to any employee, director or
consultant;
(13) not grant or enter into or extend the term of
any Contract with respect to continued employment or service
for any employee, officer, director or consultant;
(14) not make any loan or advance to any Person other
than to any officer, director, shareholder or employee in the
ordinary course of business and consistent with past practice;
(15) not amend any of its organizational
documents; and
(16) not incur any indebtedness.
(b) ACCESS TO THE COMPANY'S OFFICES, PROPERTIES AND RECORDS;
UPDATING INFORMATION.
(1) From and after the date hereof and until the
Closing Date, the Company shall permit Parent and its
representatives to have, on reasonable notice and at
reasonable times, reasonable access to such of the offices,
properties and employees of the Company, and shall disclose,
and make available to Parent and its representatives all
books, papers and records to the extent that they relate to
the ownership, operation, obligations and liabilities of or
pertaining to the Company, its business, assets and
liabilities. Without limiting the application of the
Confidentiality Agreement dated August 1999 between the
Company and Parent (the "CONFIDENTIALITY AGREEMENT"), all
documents or information furnished by the Company hereunder
shall be subject to the Confidentiality Agreement.
(2) The Company will notify Parent as promptly as
practicable of any significant change in the operation of the
Company and of any material complaints, investigations or
hearings (or communications indicating that the same may be
contemplated) by any Governmental Entity, or the institution
or overt threat or settlement of any material Action involving
or affecting the Company or the transactions contemplated by
this Plan of Merger, and shall use reasonable efforts to keep
Parent fully informed of such events and permit Parent's
representatives access to all materials prepared in connection
therewith.
(3) As promptly as practicable after Parent's
request, the Company will furnish such financial and operating
data and other information pertaining to the Company and its
business and assets as Parent may reasonably request.
(c) GOVERNMENTAL APPROVALS; THIRD PARTY CONSENTS. The Company
will use
its reasonable best efforts to obtain all necessary consents, approvals
and waivers from any Person required in connection with the transactions
contemplated hereby.
(d) DIVIDENDS. The Company shall not: (i) declare or pay any
dividends on or make other distributions in respect of any of its capital stock;
or (ii) redeem, repurchase or otherwise acquire any shares of its capital stock.
(e) ISSUANCE OF SECURITIES. Except for Webcast Common Stock
(i) issued pursuant to the exercise of options to purchase Webcast Common Stock
outstanding on the date hereof; (ii) issued upon the conversion of the Preferred
Stock; or (iii) released from the Company's repurchase option pursuant to
restricted stock purchase agreements between the Company and the Shareholders,
the Company shall not issue, agree to issue, deliver, sell, award, pledge,
dispose of or otherwise encumber or authorize or propose the issuance, delivery,
sale, award, pledge, disposal or other encumbrance of, any shares of its capital
stock of any class or any securities convertible into or exchangeable for, or
any rights, warrants or options to acquire, any such shares or convertible or
exchangeable securities.
(f) ACCOUNTING. The Company shall not make any changes in its
accounting methods, principles or practices except as required by law, rule,
regulation or GAAP.
(g) CONVERSION OF STOCK. Prior to the Closing, the Company
shall cause the holders of all of the issued and outstanding shares of Preferred
Stock to convert such shares of Preferred Stock to Webcast Common Stock in
accordance with the terms of such Preferred Stock, effective immediately prior
to the Effective Time and conditioned upon the effectiveness of the Merger.
(h) WEBCAST SHAREHOLDERS' APPROVAL. The Company shall, as soon
as reasonably practicable after the date hereof, but in no event later than
seven days after the date hereof, (i) take all steps necessary to duly call,
give notice of, convene and hold a meeting of its shareholders (including all
adjournments thereof, the "COMPANY MEETING," which term shall also include any
action by written consent of shareholders) for the purpose of securing the
affirmative vote of 98% of the outstanding shares of Webcast Common Stock and
Preferred Stock, and (ii) subject to the fiduciary duties of its Board of
Directors, recommend to its shareholders the approval and adoption of this Plan
of Merger and the Merger Agreement and the transactions contemplated hereby and
thereby. The Company will (i) promptly prepare and, after consultation with and
approval by Parent as to the form and substance thereof, promptly mail to each
holder of shares of Webcast Common Stock and of Preferred Stock, a proxy
statement describing the Merger, soliciting the approval and adoption of this
Plan of Merger by such holders and containing such other information as the
Company shall determine or as Parent may reasonably request and (ii) use its
best efforts to obtain the necessary approvals by its shareholders of this Plan
of Merger.
(i) RULE 145 LETTERS. The Company shall promptly identify to
Parent all officers and directors of the Company and any other persons who are
"affiliates" within the meaning of such term as used in Rule 145 under the
Securities Act ("RULE 145 AFFILIATES"), and the Company shall use its reasonable
efforts to provide to Parent undertakings from such persons
("RULE 145 LETTERS") to the effect that no disposition of shares of StarMedia
Common Stock received in the Merger will be made by such persons except within
the limits and in accordance with the applicable provisions of said Rule 145, as
amended from time to time, or except in a transaction which, in the opinion of
legal counsel satisfactory to Parent, is exempt from registration under the
Securities Act.
(j) CONVERTIBLE SECURITIES. As of the Closing, there shall be
no security, option, warrant, right (including preemptive rights), put, call,
subscription, agreement, commitment, understanding or claim of any nature
whatsoever, fixed or contingent, to which the Company is a party or to which it
is bound, that directly or indirectly (a) calls for the issuance, sale, pledge,
delivery or other disposition of any securities of the Company or any securities
convertible into, or other rights to acquire, any securities of any of the
Company, (b) relates to the voting or control of any securities of the Company
or (c) obligates the Company or any of its Affiliates to grant, offer or enter
into any of the foregoing.
Section 6.2. ADDITIONAL AGREEMENTS.
(a) FURTHER ASSURANCES. Each of Parent and the Company agrees
to take all such reasonable and lawful action as may be necessary or appropriate
in order to effectuate the Merger in accordance with this Plan of Merger as
promptly as possible. If, at any time after the Effective Time, any such further
action is necessary or desirable to carry out the purpose of this Plan of Merger
and to vest the Surviving Corporation with full right, title and possession to
all assets, property, rights, privileges, powers and franchises of the Company,
the Company's shareholders and the officers and directors of the Company
immediately prior to the Effective Time are fully authorized in the name of the
Company or otherwise to take, and will take, all such lawful and necessary
action.
(b) PUBLIC ANNOUNCEMENTS. From the date of this Plan of Merger
until the earlier of the date of termination of this Plan of Merger or the
Effective Time, neither the Company, Newco nor Parent will disclose or permit
their respective agents or Affiliates to disclose to any third parties (other
than the Company's shareholders) the fact of the proposed Merger, issue, or
permit any of their respective agents or Affiliates to issue, any press releases
or otherwise make, or permit any of their respective agents or Affiliates to
make, any public or other statements, or to release any information intended for
or reasonably likely to result in public or other dissemination thereof, with
respect to this Plan of Merger, the Merger Agreement and the transactions
contemplated hereby and thereby without the prior written consent of all the
other parties hereto, except in the case of Parent, as may be required, in the
opinion of Parent's counsel, by law or by the rules of the Nasdaq Stock Market.
Section 6.3. EMPLOYEE MATTERS. Nothing in this Plan of Merger
shall be construed to require the Surviving Corporation, any of its Affiliates
or Parent to continue the employment of any employee of the Company or any of
its Affiliates or, to continue in effect any employee benefit plan or
arrangement; PROVIDED, HOWEVER, that each employee of the Company who becomes an
employee of Parent after the Effective Time shall be eligible to receive salary
and benefits (such as health insurance, bonuses, stock options) consistent with
Parent's standard
human resource policies.
Section 6.4. EXCLUSIVITY. Neither the Company nor its
officers, directors or Affiliates will take any action, directly or indirectly,
to encourage, solicit, initiate, engage in, or continue discussions or
negotiations with, or provide any information to, any Person, group or other
entity, other than Parent, concerning any purchase of any capital stock or
assets of the Company or any merger or similar transaction involving the
Company.
Section 6.5. INTENTIONALLY OMITTED.
Section 6.6. NASDAQ LISTING. Parent agrees to use reasonable
efforts to cause the listing on the Nasdaq National Market the shares of
StarMedia Common Stock issuable in the Merger, upon official notice of issuance.
Section 6.7. COMPANY'S AUDITORS. The Company will use its
commercially reasonable efforts to cause its management and its independent
auditors to facilitate on a timely basis (i) the preparation of financial
statements (including pro forma financial statements if required) as required by
Parent to comply with applicable SEC regulations, and (ii) the review of any
Company audit or review work papers since inception, including the examination
of selected interim financial statements and data.
Section 6.8. INTENTIONALLY OMITTED.
Section 6.9. FORM S-8. As of the date of this Plan of Merger,
Parent represents and warrants that it is eligible to register shares on Form
S-8. The Assumed Options will be covered under a registration statement on Form
S-8 and Parent shall use its reasonable efforts to maintain the effectiveness of
such registration statement consistent with Parent's practice with similar
registration statements related to employee stock plans.
Section 6.10. INDEMNITY AGREEMENT. Parent agrees that it will
cause the Surviving Corporation to honor that certain indemnity agreement
between the Company and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated as of July 1, 1999.
Section 6.11. WEBCAST STOCK OPTIONS. (a) At the Effective
Time, each option to purchase shares of Webcast Common Stock issued under the
Company's Option Plan which is outstanding and unexercised immediately prior to
the Effective Time (a "WEBCAST OPTION") shall cease to represent a right to
acquire shares of Webcast Common Stock and shall be converted automatically into
an option to purchase shares of StarMedia Common Stock (an "ASSUMED OPTION") in
an amount and at an exercise price determined as follows:
(i) the number of shares of StarMedia Common Stock
subject to an Assumed Option shall be equal to the product of
(A) the number of shares of Webcast Common Stock subject to
the original Webcast Option, and (B) an amount equal to the
Per Share Merger Consideration, provided that any fractional
shares of StarMedia Common Stock resulting from such
multiplication shall be rounded down to the nearest number of
whole shares; and
(ii) the exercise price per share of StarMedia Common
Stock under an Assumed Option shall be equal to (A) the
exercise price per share of Webcast Common Stock under the
original Webcast Option, divided by (B) an amount equal to the
Per Share Merger Consideration, provided that the resulting
exercise price shall be rounded up to the nearest cent.
(b) Except as provided in subsection (a) above, each Assumed
Option shall continue to be subject to the same terms and conditions as applied
immediately prior to the Effective Time (except that all references to the
Company shall be deemed to be references to Parent).
ARTICLE VII
CONDITIONS TO PARENT'S AND NEWCO'S OBLIGATIONS TO CLOSE
Parent's and Newco's obligations to consummate the Closing and
effect the Merger shall be subject to the satisfaction at or prior to the
Closing, or waiver by Parent and Newco, of each of the following conditions (any
of which may be waived by Parent and Newco in their sole discretion):
Section 7.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COMPANY. Each of the representations and warranties of the Company contained in
this Plan of Merger or in any Schedule, certificate, document or instrument
delivered in connection herewith shall be true and correct in all material
respects on and as of the date of this Plan of Merger and on and as of the
Effective Time, except for representations and warranties that speak as of a
specific date or time other than the Effective Time (which need only be true and
correct in all material respects as of such date or time); PROVIDED, HOWEVER,
that if any portion of any such representation or warranty is already qualified
by materiality, for purposes of determining whether this condition has been
satisfied with respect to such portion of such representation or warranty, such
portion of such representation or warranty as so qualified shall be true and
correct in all respects. The Company shall have performed and complied in all
material respects with all covenants and agreements required by this Plan of
Merger to be performed or complied with by the Company at or prior to the
Effective Time. The Company shall deliver to Parent and Newco a certificate,
dated the Closing Date and signed by a senior executive officer of the Company,
to the effect that the conditions set forth in this Section 7.1 have been
satisfied.
Section 7.2. SHAREHOLDERS.
(a) This Plan of Merger and the Merger shall have been
approved and adopted by 98% of the holders of Webcast Common Stock and Preferred
Stock.
(b) The Indemnity and Non-Compete Agreement shall have been
entered into by the Shareholders and be in full force and effect.
(c) Each of the Shareholders and all of the other officers and
directors of the Company shall have executed and delivered to the Company and
Parent a General Release, in the form attached hereto as Exhibit C, providing
for, among other things, the release of the Company of all obligations owed to
the Shareholders.
Section 7.3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SHAREHOLDERS. Each of the representations and warranties of the Shareholders
contained in the Indemnity and Non-Compete Agreement shall be true and correct
in all material respects on and as of the date of this Plan of Merger and on and
as of the Effective Time; PROVIDED, HOWEVER, that if any such representation or
warranty is already qualified by materiality, for purposes of determining
whether this condition has been satisfied, such representation or warranty as so
qualified must be true and correct in all respects. The Shareholders shall have
performed or complied with all covenants and agreements required by the
Indemnity and Non-Compete Agreement to be performed or complied with by them at
or prior to the Effective Time. Each of the Shareholders shall have delivered to
Parent and Newco a certificate, dated the Closing Date and signed by each of the
Shareholders, to the effect that the conditions set forth in this Section 7.3
have been satisfied.
Section 7.4. FILINGS; CONSENTS. All registrations, filings,
applications, notices, consents, releases, approvals, orders, qualifications and
waivers required in connection with the consummation of the transactions
contemplated hereby, including the approval of the Company's shareholders
contemplated by Section 7.2, shall have been filed, made, obtained or received.
Section 7.5. NO INJUNCTION. (a) There shall be no injunction,
restraining order or decree of any nature of any court or other Government
Entity of competent jurisdiction that is in effect that restrains or prohibits
the consummation of the transactions contemplated hereby, (b) no Action shall
have been instituted by or before any court, panel, arbitrator or other
Government Entity or any other Person to restrain or prohibit, or to obtain
substantial damages in respect of, the consummation of the transactions
contemplated hereby, and (c) none of the parties hereto shall have received
notice from any Government Entity or any other Person of (i) its intention to
institute any Action to restrain or enjoin or nullify this Plan of Merger or the
consummation of the transactions contemplated hereby or to commence any
investigation into the consummation of the transactions contemplated hereby or
(ii) the actual commencement of such an investigation.
Section 7.6. DOCUMENTS. The Company shall have delivered to
Parent at the Closing such other documents and instruments as shall be
reasonably necessary to effectuate the transactions contemplated by this Plan of
Merger. The Company and the Shareholders shall have delivered all the
certificates, instruments, contracts and other documents specified to be
delivered by each such person hereunder.
Section 7.7. CONVERTIBLE SECURITIES. As of the Closing, there
shall be no security, option, warrant, right (including preemptive rights), put,
call, subscription, agreement, commitment, understanding or claim of any nature
whatsoever, fixed or contingent, to which the Company is a party or to which it
is bound that directly or indirectly (a) calls for the issuance,
sale, pledge, delivery or other disposition of any securities of the Company or
any securities convertible into, or other rights to acquire, any securities of
any of the Company, (b) relates to the voting or control of any securities of
the Company or (c) obligates the Company or any of its Affiliates to grant,
offer or enter into any of the foregoing.
Section 7.8. RULE 145 LETTERS. Each Rule 145 Affiliate shall
have executed and delivered to Parent a Rule 145 Letter, in form and substance
reasonably satisfactory to Parent and its counsel.
Section 7.9. APPRAISAL RIGHTS. There shall not be any demand
for payment for shares or any appraisal thereof by more than 2% of the
outstanding shares of Webcast Common Stock and Preferred Stock pursuant to the
Corporations Code with respect to the Merger.
ARTICLE VIII
CONDITIONS TO THE COMPANY'S OBLIGATION TO CLOSE
The Company's obligation to consummate the Closing and effect
the Merger is subject to the satisfaction at or prior to the Closing, or waiver
by the Company, of all of the following conditions (any of which may be waived
by the Company in its sole discretion):
Section 8.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
PARENT. Each of the representations and warranties of Parent and Newco contained
in this Plan of Merger or in any Schedule, certificate, document or instrument
delivered in connection herewith, shall be true and correct in all material
respects on and as of the date of this Plan of Merger and on and as of the
Effective Time, except for representations and warranties that speak as of a
specific date or time other than the Effective Time (which need only be true and
correct in all material respects as of such date or time); PROVIDED, HOWEVER,
that if any portion of any such representation or warranty is already qualified
by materiality, for purposes of determining whether this condition has been
satisfied with respect to such portion of such representation or warranty, such
portion of such representation or warranty as so qualified shall be true and
correct in all respects. Parent and Newco shall have performed and complied in
all material respects with all covenants and agreements required by this Plan of
Merger to be performed or complied with by them at or prior to the Effective
Time. Parent shall deliver to the Company a certificate, dated the Closing Date
and signed by an officer of Parent, to the effect that the conditions set forth
in this Section 8.1 have been satisfied.
Section 8.2. SHAREHOLDER APPROVALS. This Plan of Merger and
the Merger shall have been approved and adopted by the shareholders of the
Company by the requisite vote under applicable law and the Company's Articles of
Incorporation.
Section 8.3. NO INJUNCTION. There shall be no injunction,
restraining order or decree of any nature of any court or other Government
Entity of competent jurisdiction that is in effect that restrains or prohibits
the consummation of the Merger and the other transactions contemplated hereby.
Section 8.4. NASDAQ LISTING. The shares of StarMedia Common
Stock issuable to shareholders of the Company pursuant to this Plan of Merger
and such other shares required to be reserved for issuance in connection with
the Merger shall have been authorized for listing on the Nasdaq Stock Market
upon official notice of issuance.
ARTICLE IX
SURVIVAL
Section 9.1. SURVIVAL. All of the representations, warranties,
covenants and agreements of the parties contained in this Plan of Merger or in
any certificate, document or other instrument delivered in connection herewith
shall survive (and not be affected in any respect by) the Effective Time and any
investigation conducted by any party hereto and any information which any party
may receive. Notwithstanding the foregoing, the representations and warranties
contained in or made pursuant to this Plan of Merger shall terminate on, and no
claim or Action with respect thereto may be brought after, the first anniversary
of the Effective Time, PROVIDED, HOWEVER, that to the extent a breach of a
representation or warranty made by the Company is discovered during the audit by
Parent's accountants of Parent's consolidated financial statements for the year
ended December 31, 1999, such representation and warranty insofar as it relates
to such discovered matter shall terminate on the date of the issuance of such
accountants' report with respect such consolidated financial statements. The
representations and warranties which terminate on the first anniversary of the
Effective Time and the representations and warranties which terminate on the
issuance of such accountants' report, and the liability of the Shareholders with
respect thereto under the Indemnity and Non-Compete Agreement, shall not
terminate with respect to any claim, whether or not fixed as to liability or
liquidated as to amount, with respect to which the appropriate Person has been
given written notice setting forth the facts upon which the claim for
indemnification is based and, if possible, a reasonable estimate of the amount
of the claims prior to the first anniversary of the Effective Time, or the date
of the issuance of such accountants' report, as the case may be.
ARTICLE X
TERMINATION
Section 10.1. TERMINATION. This Plan of Merger may be
terminated at any time prior to the Closing by:
(a) the mutual written consent of the Company and Parent; or
(b) the Company or Parent, if the Closing has not occurred by
the close of business on October 31, 1999; PROVIDED, that neither the Company,
in the case of termination by the Company, or Parent or Newco, in the case of
termination by Parent, is in material default hereunder.
Section 10.2. PROCEDURE AND EFFECT OF TERMINATION. In the
event of termination of this Plan of Merger pursuant to Section 10.1, written
notice thereof shall forthwith be given by the terminating party to the other
party or parties hereto, and this Plan of Merger shall thereupon terminate and
become void and have no effect, and the transactions contemplated hereby shall
be abandoned without further action by the parties hereto, except that the
provisions of this Section 10.2 and of Sections 11.8, 11.9 and 11.13 shall
survive the termination of this Plan of Merger; PROVIDED, HOWEVER, that such
termination shall not relieve any party hereto of any liability for any breach
of this Plan of Merger.
ARTICLE XI
MISCELLANEOUS
Section 11.1. ENTIRE AGREEMENT. This Plan of Merger and the
documents and agreements referred to herein and to be delivered pursuant hereto
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof, and supersede all prior and contemporaneous agreements,
understandings, negotiations and discussions of the parties, whether oral or
written.
Section 11.2. BENEFIT; ASSIGNMENT. This Plan of Merger shall
be binding upon and inure to the benefit of and shall be enforceable by the
parties hereto and their respective successors and permitted assigns. This Plan
of Merger shall not be assigned by any party hereto without the prior written
consent of the other parties hereto; PROVIDED, HOWEVER, that Parent may assign
any or all of its rights hereunder to one or more Affiliates of Parent without
the consent of the Company. Any assignment of this Plan of Merger in violation
of the terms hereof shall be null and void AB INITIO.
Section 11.3. NO PRESUMPTION. Parent and the Company have
participated jointly in the negotiation and drafting of this Plan of Merger. In
the event any ambiguity or question of intent or interpretation arises, this
Plan of Merger shall be construed as if drafted jointly by Parent, Newco and the
Company and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Plan of Merger.
Section 11.4. NOTICES. All notices, requests, claims, demands
and other communications provided for herein shall be in writing and shall be
deemed given only if delivered to the party personally or sent to the party by
telecopy, by registered or certified mail (return receipt requested) with
postage and registration or certification fees thereon prepaid, or by any
nationally recognized overnight courier, addressed to the party at its address
set forth below:
If to Company: Webcast Solutions, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.:(▇▇▇) ▇▇▇-▇▇▇▇
If to Parent or Newco: StarMedia Network, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. Macedonia
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or to such other address as a party may from time to time designate in writing.
All notices, requests, claims, demands and other communications given to any
party hereto in accordance with the provisions of this Plan of Merger shall be
deemed to have been given on the date of receipt.
Section 11.5. COUNTERPARTS; HEADINGS. This Plan of Merger may
be executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed an original,
but all of which taken together shall constitute one and the same Plan of
Merger. The Article and Section headings in this Plan of Merger are inserted for
convenience of reference only and shall not constitute a part hereof or affect
in any way the meaning or interpretation of this Plan of Merger.
Section 11.6. SEVERABILITY. If any term, provision, clause or
part of this Plan of Merger or the application thereof under certain
circumstances is held invalid, illegal or incapable of being enforced by any Law
or public policy, all other terms, provisions and parts of this Plan of Merger
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term,
provision or part of this Plan of Merger is invalid, illegal or incapable of
being enforced, the parties hereto shall negotiate in
good faith to modify this Plan of Merger so as to effect the original intent of
the parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
Section 11.7. NO RELIANCE. Except for any assignees permitted
by Section 11.2 of this Plan of Merger:
(a) no third party is entitled to rely on any of the
representations, warranties or agreements of the parties hereto contained in
this Plan of Merger; and
(b) the parties hereto assume no liability to any third party
because of any reliance on the representations, warranties or agreements of such
parties contained in this Plan of Merger.
Section 11.8. GOVERNING LAW. This Plan of Merger shall be
governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflicts of laws, except to the extent that the
terms and consummation of the Merger are subject to the laws of the State of
California, in which case the applicable provisions hereof shall be governed by
the laws of the State of California.
Section 11.9. SUBMISSION TO JURISDICTION; WAIVERS. The parties
hereto hereby irrevocably and unconditionally agree that:
(a) All suits, actions and proceedings arising out of or
relating to this Agreement shall be heard and determined in any New York state
or Federal court sitting in the City of New York and any appellate court from
any thereof, and each of the parties hereto hereby irrevocably submits to the
exclusive jurisdiction of such courts in any such suit, action or proceeding and
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of any such suit, action or
proceeding and any objection to any such suit action or proceeding whether on
the grounds of venue, residence or domicile. A final judgment in any such suit,
action, or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or any other manner provided by law.
(b) Service of process in any such suit, action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such party at its
address as provided in Section 11.4.
Section 11.10. WAIVER. Any party to this Plan of Merger may
(a) extend the time for the performance of any of the obligations or other acts
of the other parties, (b) waive any inaccuracies in the representations and
warranties of the other parties contained herein or in any document delivered by
the other parties pursuant hereto or (c) waive compliance with any of the
agreements or conditions of the other parties contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party to be bound thereby. Any waiver of any term or condition
shall not be construed as a waiver of any subsequent breach or a subsequent
waiver of the same term or condition, or a waiver of any other term or
condition, of this Plan of Merger. The failure of any party to assert any of its
rights
hereunder shall not constitute a waiver of any such rights.
Section 11.11. AMENDMENT. This Plan of Merger may not be
amended, modified or supplemented except by an instrument in writing signed by,
or on behalf of, each of the parties hereto.
Section 11.12. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event any provision of this Plan of
Merger was not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
Section 11.13. EXPENSES. Whether or not the Merger is
consummated, all legal expenses and all other costs and expenses incurred in
connection with this Plan of Merger, the Merger Agreement and the transactions
contemplated hereby and thereby shall be paid by the party incurring such costs
and expenses.
IN WITNESS WHEREOF, this Plan of Merger has been signed by or
on behalf of each of the parties as of the day first above written.
WEBCAST SOLUTIONS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer
STARMEDIA NETWORK, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇
Title: President
S MEDIA ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇
Title: President
EXHIBIT D
1. For purposes of this Plan of Merger, the following terms
shall have the following meanings:
"ACTION" shall mean any actual or threatened action (at law or
in equity), suit, arbitration, review, inquiry, proceeding or investigation.
"AFFILIATE" (and, with a correlative meaning, "AFFILIATED")
shall mean, with respect to any Person, any other Person that directly, or
through one or more intermediaries, controls or is controlled by or is under
common control with such first Person. As used in this definition, "control"
(including, with correlative meanings, "controlled by" and "under common control
with") shall mean possession, directly or indirectly, of the power to direct or
cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
"AGGREGATE SHARE MERGER CONSIDERATION" shall mean:
(1) that number of shares of StarMedia Common Stock determined
as follows: (x) if the Conversion Price is less than or equal to $41.50 and
greater than or equal to $31.50, 1,000,000, (y) if the Conversion Price is less
than $31.50, then an amount equal to (i) 1,000,000 multiplied by (ii) $31.50,
divided by (iii) the Conversion Price, provided, however, that if the amount
determined pursuant to this clause (y) without giving effect to this proviso is
more than 1,500,000, then such amount shall be deemed to equal 1,500,000, or (z)
if the Conversion Price is greater than $41.50, then an amount equal to (i)
1,000,000 multiplied by (ii) $41.50, divided by (iii) the Conversion Price,
provided, however, that if the amount determined pursuant to this clause (z)
without giving effect to this proviso is less than 500,000, then such amount
shall be deemed to equal 500,000,
minus (2) 10,278.
"AGGREGATE WEBCAST OPTION NUMBER" shall mean the product of:
(a) the Aggregate Share Merger Consideration, times (b) a fraction, the
numerator of which is the number of shares of Webcast Common Stock subject to
options to purchase under the Company's Option Plan which options are
outstanding and unexercised immediately prior to the Effective Time
("Outstanding Option Shares"), and the denominator of which is the sum of the
Effective Time Shares and the Outstanding Option Shares.
"ASSOCIATE" of a specified Person shall mean (a) a corporation
or other organization of which such Person is a director, officer or partner or
is, directly or indirectly, the beneficial owner of 5% or more of any class of
equity securities, (b) any trust or other estate in which such Person has such a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar capacity and (c) any Relative of such Person who has the same home
as such Person.
"CLOSING" shall mean the consummation of the Merger and the
other transactions contemplated hereby as described in Article II.
"CLOSING DATE" shall mean the date on which the Closing
occurs.
"CONTRACTS" shall mean all contracts, agreements, leases,
arrangements, commitments or understandings, whether oral or written, whether
existing as of the date hereof or arising prior to the Effective Time, to which
the Company is a party or is otherwise bound.
"CONVERSION PRICE" shall mean the average of the closing price
of shares of StarMedia Common Stock on the Nasdaq Stock Market for the five
trading day period ending on the day before the Effective Time.
"CORPORATIONS CODE" shall mean the California Corporations
Code as in effect from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor thereto.
"EFFECTIVE TIME SHARES" shall mean the number of shares of
Webcast Common Stock outstanding immediately prior to the Effective Time after
giving effect to the conversion of all outstanding shares of Preferred Stock.
"ENVIRONMENTAL LAWS" shall mean all federal, state, local and
foreign statutes and codes or regulations, rules or ordinances issued,
promulgated, or approved thereunder (including those with respect to asbestos or
asbestos-containing material or exposure to asbestos or asbestos-containing
material) relating to (a) emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals or industrial toxic or hazardous
constituents, substances or wastes, including any Hazardous Material, petroleum,
including crude oil or any fraction thereof, any petroleum product or other
waste, chemicals or substances regulated by any Environmental Law into the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata), (b) the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport or handling of any Hazardous
Material, petroleum, including crude oil or any fraction thereof, any petroleum
product or other waste, chemicals or substances regulated by any Environmental
Law, and (c) underground storage tanks and related piping, and emissions,
discharges and releases or threatened releases therefrom.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, or any successor law, and regulations and rules issued by the SEC
pursuant to that act or any successor law.
"GAAP" shall mean generally accepted accounting principles in
the United States as in effect from time to time consistently applied.
"GOVERNMENTAL ENTITY" OR "GOVERNMENT ENTITY" means (i) any
multinational,
federal, provincial, state, municipal, local or other governmental or public
department, court, commission, board, bureau, agency or instrumentality,
domestic or foreign; (ii) any subdivision, agent, commission, board, or
Governmental Entity of any of the foregoing; or (iii) any quasi-governmental or
private body exercising any regulatory, expropriation or taxing Governmental
Entity under or for the account of any of the foregoing.
"HAZARDOUS MATERIALS" shall mean substances defined as
"hazardous substances," "hazardous materials," "hazardous wastes," or "toxic
substances," or otherwise regulated under Environmental Laws, including
petroleum, its derivatives and petroleum products.
"IP LICENSE" means any option, license, or agreement of any
kind relating to the exercise, use, non-use, registration, enforcement,
non-enforcement of or remuneration for any Intellectual Property Right.
"IRS" shall mean the Internal Revenue Service.
"INDEMNITY AND NON-COMPETE AGREEMENT" shall mean the agreement
in the form of Exhibit B hereto executed as of the date of this Plan of Merger
by the Shareholders and Parent.
"INTELLECTUAL PROPERTY" means the Intellectual Property Rights
identified in Schedules 4.8(a), 4.8(d) and 4.8(h), together with all other
Intellectual Property Rights owned, used or held for use in connection with the
business of the Company as currently conducted.
"INTELLECTUAL PROPERTY RIGHTS" means all (i) patents,
copyrights, trademarks, service marks, trade identification, trade dress, trade
names, copyrights, trade secrets, know-how, proprietary information (including
without limitation proprietary software algorithms and designs), mask work
rights, database rights, publicity rights, privacy rights and other rights of a
similar nature for which legal protection may be obtained, in the United States
and/or any other country or jurisdiction; (ii) pending applications to register
or otherwise obtain legal protection for any of the foregoing; (iii) rights to
make application in the future to register or otherwise obtain legal protection
for any of the foregoing; (iv) rights of priority under national laws and
international conventions with respect to any of the foregoing; (v)
continuations, continuations-in-part, divisions, renewals, extensions, patents
of addition, reexaminations, or reissues of any of the foregoing and all related
applications therefor; (vi) goodwill associated with any of said trademarks,
service marks, trade identification, trade dress and trade names; and (vii)
rights to ▇▇▇ with respect to past and future infringements of any of the
foregoing.
"LAWS" means all statutes, codes, ordinances, decrees, rules,
regulations, municipal by-laws, judicial or arbitral or administrative or
ministerial or departmental or regulatory judgments, orders, decisions, rulings
or awards, policies, voluntary restraints, guidelines, or any provisions or
interpretations of the foregoing, including general principles of common and
civil law and equity, binding on or affecting the Person referred to in the
context in which such word is used.
"LIEN" means any lien, (including, without limitation,
environmental and tax
liens) charge, claim, pledge, security interest, conditional sale agreement or
other title retention agreement, lease, mortgage, security agreement, right of
first refusal, option, restriction, tenancy, license, covenant, right of way,
easement or other Lien (including the filing of, or agreement to give, any
financing statement under the Uniform Commercial Code or statute or law of any
jurisdiction) preferential arrangement or restriction of any kind (including,
without limitation, any restriction on the use, voting, transfer, receipt of
income or other exercise of any attributes).
"MATERIAL ADVERSE EFFECT" when used with reference to a Person
or Persons shall mean a material adverse effect on the business, assets,
liabilities, operations, results of operation, prospects or financial condition
of such Person or Persons.
"OUTSTANDING IP LICENSE" means any IP License by or to the
Company or to which the Company is otherwise a party, or by which the Company or
any of its Intellectual Property or other property is subject or bound.
"PER SHARE MERGER CONSIDERATION" shall mean an amount equal to
(x) the Aggregate Share Merger Consideration, (y) minus the Aggregate Webcast
Option Number, (z) divided by the Effective Time Shares rounded to the nearest
ten-thousandth of a share.
"PERSON" shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, unincorporated organization,
other form of business or legal entity or Government Entity.
"RELATIVE" of a Person shall mean such Person's spouse, such
Person's parents, sisters, brothers, children and the spouses of the foregoing
and any member of the immediate household of such Person.
"RETURNS" shall mean all returns, declarations, statements,
reports, estimates, forms or other documents or information, including any
amendments to any of the foregoing, required to be filed with or supplied to any
Taxing Authority.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any successor law, and regulations and rules issued by the SEC
pursuant to that act or any successor law.
"SHAREHOLDERS" shall mean ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇ ▇▇▇
and ▇▇▇▇ ▇▇▇▇▇▇▇▇.
"SOFTWARE" means any and all (i) computer programs, including
any and all software implementations of algorithms, models and methodologies,
whether in source code or object code; (ii) databases and compilations,
including any and all data and collections of data, whether machine readable or
otherwise, (iii) descriptions, flow-charts and other work product used to
design, plan, organize and develop any of the foregoing, and (iv) all
documentation, including user manuals and training materials, relating to any of
the foregoing.
"STARMEDIA COMMON STOCK" shall mean the common stock, par
value $0.001 per
share of StarMedia Network, Inc.
"SUBSIDIARY" means, with respect to any specified Person, any
other corporation, partnership, joint venture, association or other entity in
respect of which such specified Person directly, or indirectly through one or
more other subsidiaries, owns not less than 50% of the overall economic equity.
"TAXES" shall mean (a) all taxes (whether federal, state,
county, local or foreign), fees, levies, customs duties, assessments, or charges
of any kind whatsoever, including without limitation gross income, net income,
gross receipts, profits, windfall profits, sales, use, occupation, value-added,
AD VALOREM, transfer, license, franchise, withholding, payroll, employment,
excise, estimated, stamp, premium, capital stock, production, net worth,
alternative or add-on minimum, environmental, business and occupation,
disability, severance, or real or personal property taxes, together with any
interest, penalties, or additions to tax imposed with respect thereto and (b)
any obligations under any tax sharing, tax allocation, or tax indemnity
agreements or arrangements with respect to any Taxes described in clause (a)
above.
"TAXING AUTHORITY" shall mean any Government Entity having
jurisdiction over the assessment, determination, collection, or other imposition
of any Tax.
2. The following terms shall have the meanings ascribed to
them in the section of this Plan of Merger indicated below:
DEFINED TERM SECTION
"Administration"...................................................................... 4.15
"Benefit Plans"....................................................................... 4.18(a)
"Certificate of Merger"............................................................... 2.2
"COBRA"............................................................................... 4.18(e)
"Company"............................................................................. Preamble
"Company Meeting"..................................................................... 6.1(h)
"Confidentiality Agreement"........................................................... 6.1(b)(1)
"Effective Time"...................................................................... 2.2
"Financial Statements"................................................................ 4.2(a)
"Insider Transactions"................................................................ 4.14
"Insiders"............................................................................ 4.14
"Letter of Transmittal"............................................................... 3.2(a)
"Licenses"............................................................................ 4.9(a)
"Merger".............................................................................. Preamble
"Merger Agreement".................................................................... Preamble
"Newco"............................................................................... Preamble
"Option Plan"......................................................................... 4.1(d)
"OSHA"................................................................................ 4.15
"Parent".............................................................................. Preamble
"Parent Financial Statements"......................................................... 5.3
"Parent SEC Documents"................................................................ 5.3
"Plan of Merger"...................................................................... Preamble
"Preferred Stock"..................................................................... 4.1(d)
"Rule 145 Affiliates"................................................................. 6.1(i)
"Rule 145 Letters".................................................................... 6.1(i)
"SEC"................................................................................. 5.3
"Surviving Corporation"............................................................... 2.1
"Transaction Documents"............................................................... 4.1(b)
"Webcast Common Stock"................................................................ Preamble
"Webcast Shareholders' Approval"...................................................... 4.21
"Year 2000"........................................................................... 4.19
"Year 2000 Compliant"................................................................. 4.19
SCHEDULE 3.5
1933 Act Legend
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR ANY STATE
SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS AN OPINION
OF COUNSEL SATISFACTORY TO THE CORPORATION IS RECEIVED STATING THAT SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE SECURITIES ACT. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
SECTION 4(2) THEREUNDER.