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AGREEMENT AND PLAN OF MERGER
among
NIXXO TECHNOLOGIES, INC.
a California corporation,
HARMONY TRADING CORP.
a New York corporation,
and
NIXXO ACQUISITION CORPORATION
a California corporation
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NOVEMBER 17, 2000
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TABLE OF CONTENTS
SECTION PAGE
ARTICLE I DEFINITIONS....................................................1
ARTICLE II PLAN OF MERGER.................................................9
2.1. The Merger .....................................................9
2.2. Effective Time..................................................9
2.3. Articles of Incorporation and Bylaws............................9
2.4. Directors and Officers.........................................10
2.5. Conversion or Cancellation of Nixxo Shares.....................10
2.6. Exchange of Merged Company Shares..............................10
2.7. Options and Warrants...........................................11
2.8. Adjustments....................................................12
2.9. Merger Subsidiary Capital Stock................................12
2.10. No Further Transfer of Shares.................................13
2.11. Dissenting Shares ............................................13
ARTICLE III [RESERVED] ..................................................13
ARTICLE IV THE CLOSING ...................................................13
4.1. Location, Date.................................................13
4.2. Deliveries.....................................................13
ARTICLE V REPRESENTATIONS AND WARRANTIES OF HARMONY.....................14
5.1. Corporate......................................................14
5.2. Authorization..................................................14
5.3. Validity of Contemplated Transactions..........................14
5.4. Capitalization and Stock Ownership.............................15
5.5. Harmony SEC Reports; Financial Statements......................15
5.6. No Violations..................................................15
5.7. Ownership of Merger Subsidiary; No Prior Activities............16
5.8. Taxes..........................................................16
5.9. Title to Assets and Related Matters............................17
5.10. Real Property.................................................17
5.11. Contracts and Commitments.....................................17
5.12. Legal Proceedings; Compliance with Law; Governmental Permits..17
5.13. Employee Relations............................................18
5.14. ERISA.........................................................18
5.15. Patents, Trademarks, Etc......................................19
5.16. Absence of Certain Changes....................................20
5.17. Corporate Records.............................................21
5.18. Finder's Fees.................................................21
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5.19. No Material Misstatements.....................................21
5.20. Listing.......................................................21
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF NIXXO.......................21
6.1. Corporate......................................................21
6.2. Authorization..................................................21
6.3. Validity of Contemplated Transactions..........................22
6.4. Capitalization and Stock Ownership.............................22
6.5. [Reserved].....................................................22
6.6. No Violations..................................................22
6.7. Nixxo Financial Statements.....................................23
6.8. Taxes..........................................................23
6.9. Title to Assets and Related Matters............................24
6.10. Real Property.................................................24
6.11. Contracts and Commitments.....................................24
6.12. Legal Proceedings; Compliance with Law; Governmental Permits..24
6.13. Employee Relations............................................25
6.14. ERISA.........................................................25
6.15. Patents, Trademarks, etc......................................26
6.17. Absence of Certain Changes....................................27
6.18. Corporate Records.............................................28
6.19. Finder's Fees.................................................28
6.20. No Material Misstatements.....................................28
ARTICLE VII INVESTMENT INTENT.............................................28
7.1. Investment Intent..............................................28
ARTICLE VIII COVENANTS OF THE PARTIES....................................28
8.1. [Reserved].....................................................28
8.2. No Solicitation................................................28
8.3. Notification of Certain Matters................................31
8.4. Access to Information..........................................31
8.5. Public Announcements...........................................31
8.6. Cooperation....................................................31
8.7. Reorganization.................................................32
ARTICLE IX COVENANTS OF HARMONY...........................................32
9.1. Operation of the Business......................................32
9.2. Maintenance of the Assets......................................33
9.3. Certain Tax Matters............................................33
9.4. State Anti-Takeover Law........................................34
9.5. Expenses.......................................................34
9.6. Harmony Stockholder Meeting....................................34
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ARTICLE X COVENANTS OF NIXXO..............................................34
10.1. Operation of the Business.....................................34
10.2. Nixxo Shareholder Meeting.....................................35
10.3. Maintenance of the Assets.....................................36
10.4. Employees and Business Relations..............................36
10.5. Expenses......................................................36
10.6. Certain Tax Matters...........................................36
10.7. State Anti-Takeover Law.......................................36
ARTICLE XI POST CLOSING COVENANTS.........................................36
11.1. Appointment to the Board of Directors of the Merged Company...36
11.2. [Reserved]....................................................37
11.3. Indemnification, Directors' and Officers' Insurance...........37
ARTICLE XII CONDITIONS PRECEDENT TO OBLIGATIONS OF ALL PARTIES............37
12.1. Legality......................................................37
12.2. Fairness Opinion..............................................37
12.3. Approval by Nixxo Shareholders................................37
ARTICLE XIII [RESERVED]...................................................37
ARTICLE XIV CONDITIONS PRECEDENT TO OBLIGATIONS OF NIXXO..................37
14.1. Representations and Warranties................................37
14.2. Agreements, Conditions and Covenants..........................38
14.3. Certificates..................................................38
14.4. Required Consents.............................................38
14.5. Material Adverse Effect.......................................38
14.6. Ancillary Documents...........................................38
14.7. Board Recommendation..........................................38
14.8. Releases from Harmony Board...................................38
14.9. Financing.....................................................38
ARTICLE XV CONDITIONS PRECEDENT TO OBLIGATIONS OF THE HARMONY
PARTIES.............................................................38
15.1. Representations and Warranties................................39
15.2. Agreements, Conditions and Covenants..........................39
15.3. Certificates..................................................39
15.4. Required Consents.............................................39
15.5. Material Adverse Effect.......................................39
15.6. Ancillary Documents...........................................39
15.7. Board Recommendation..........................................39
ARTICLE XVI INDEMNIFICATION...............................................39
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16.1. Survival of Representations and Warranties....................39
16.2. Indemnification of Nixxo Indemnified Parties..................40
16.3. Indemnification of Harmony Indemnified Parties................40
16.4. Conditions of Indemnification.................................40
16.5. Remedies Not Exclusive........................................43
ARTICLE XVII TERMINATION.................................................43
17.1. Grounds for Termination.......................................43
17.2. Effect of Termination.........................................45
ARTICLE XVII GENERAL MATTERS.............................................45
18.1. [Reserved]....................................................45
18.2. Contents of Agreement.........................................45
18.3. Amendment, Parties in Interest, Assignment, Etc...............45
18.4. Interpretation................................................46
18.5. Notices.......................................................46
18.6. Governing Law and Venue.......................................46
18.7. Counterparts..................................................47
18.8. Waivers.......................................................47
18.9. Modification..................................................47
18.10. Enforcement of Agreement.....................................47
18.11. Waiver of Jury Trial.........................................47
18.12. Severability.................................................47
SIGNATURE PAGE............................................................48
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of November 17, 2000 by and
among Harmony Trading Corp. ("Harmony"), a New York corporation, Nixxo
Acquisition Corporation, a California corporation, (the "Merger Subsidiary" and
together with Harmony, the "Harmony Parties") and Nixxo Technologies, Inc., a
California corporation ("Nixxo"). Harmony, the Merger Subsidiary and Nixxo are
individually referred to as a "Party" and collectively referred to herein as the
"Parties". Certain other terms are used herein as defined below in Article I or
elsewhere in this Agreement.
BACKGROUND
WHEREAS, this Agreement sets forth the terms and conditions under which
the Merger Subsidiary, which is a Wholly-Owned Subsidiary of Harmony, will merge
with and into Nixxo (the "Merger"). The Parties intend that upon completion of
the Merger, Nixxo will be a Wholly-Owned Subsidiary of Harmony. Immediately at
the Effective Time and thereafter, Harmony shall be referred to herein as the
"Merged Company".
WHEREAS, the Parties intend the Merger to be a tax-free reorganization
under Section 368 of the Code (as defined) and intend this Agreement to be a
"plan of reorganization" within the meaning of the regulations promulgated under
such section of the Code.
NOW, THEREFORE, in consideration of the respective covenants contained
herein and intending to be legally bound hereby, the Parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
For convenience, certain terms used in more than one part of this
Agreement are listed in alphabetical order and defined or referred to below
(such terms as well as any other terms defined elsewhere in this Agreement shall
be equally applicable to both the singular and plural forms of the terms
defined). Unless otherwise stated herein, all share information gives effect to
a three-for-one forward common stock split by Harmony to be effected on or about
November 20, 2000.
"Acquisition Proposal" is defined in Section 8.2(a).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
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"Agreement" means this Agreement and Plan of Merger and the Exhibits and
Disclosure Schedules hereto.
"Articles of Merger" is defined in Section 2.2.
"Assets" means, with respect to Harmony, the Merger Subsidiary or Nixxo,
as shown by the context in which used, all of the assets, properties, goodwill
and rights of every kind and description, real and personal, tangible and
intangible, wherever situated and whether or not reflected in such Party's most
recent financial statements, that are owned or possessed by such Party and its
Subsidiaries, taken as a whole.
"Assumed Nixxo Option" is defined in Section 2.7(a).
"Benefit Plan" means all employee benefit, health, welfare, supplemental
unemployment benefit, bonus, pension, profit sharing, deferred compensation,
severance, incentive, stock compensation, stock purchase, retirement,
hospitalization insurance, medical, dental, legal, disability, fringe benefit
and similar plans, programs, arrangements or practices, including, without
limitation, each "employee benefit plan" as defined in Section 3(3) of ERISA.
"Business" means with respect to any party the entire business and
operations of such party taken as a whole.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the state of
New York generally are authorized or required by law or other government actions
to close.
"CGCL" means the California General Corporation Law, as amended.
"Certificate" is defined in Section 2.6(a).
"Charter Documents" means an entity's certificate or articles of
incorporation, certificate defining the rights and preferences of securities,
articles of organization, general or limited partnership agreement, certificate
of limited partnership, joint venture agreement or similar document governing
the entity.
"Claim Notice" is defined in Section 16.4(b).
"Closing" is defined in Section 4.1.
"Closing Date" is defined in Section 4.1.
"Code" means the Internal Revenue Code of 1986, as amended. All citations
to provisions of the Code, or to the Treasury Regulations promulgated
thereunder, shall include any amendments thereto and any substitute or successor
provisions thereto.
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"Confidentiality Agreement" is defined in Section 8.4(b).
"Contract" means any written or oral contract, agreement, letter of
intent, agreement in principle, lease, instrument or other commitment that is
binding on any Person or its property under applicable Law.
"Conversion Number" is defined in Section 2.5(a).
"Copyrights" means registered copyrights, copyright applications and
unregistered copyrights.
"Court Order" means any judgment, decree, injunction, order or ruling of
any federal, state, local or foreign court or governmental or regulatory body or
authority, or any arbitrator that is binding on any Person or its property under
applicable Law.
"Default" means (i) a breach, default or violation, (ii) the occurrence of
an event that with or without the passage of time or the giving of notice, or
both, would constitute a breach, default or violation or (iii) with respect to
any Contract, the occurrence of an event that with or without the passage of
time or the giving of notice, or both, would give rise to a right of
termination, renegotiation or acceleration or a right to receive damages or a
payment of penalties.
"Dissenting Shares" of Nixxo are defined in Sections 2.11.
"$" means United States dollars.
"Effective Time" shall mean the time that the Articles of Merger are filed
with the California Secretary of State.
"Election Period" is defined in Section 16.4(b).
"Encumbrances" means any lien, mortgage, security interest, pledge,
restriction on transferability, defect of title or other claim, charge or
encumbrance of any nature whatsoever on any property or property interest.
"Environmental Condition" means any condition or circumstance, including
the presence of Hazardous Substances which does or would (i) require assessment,
investigation, abatement, correction, removal or remediation under any
Environmental Law, (ii) give rise to any civil or criminal Liability under any
Environmental Law, (iii) create or constitute a public or private nuisance or
(iv) constitute a violation of or non-compliance with any Environmental Law.
"Environmental Law" means all Laws, Court Orders, principles of common
law, and permits, licenses, registrations, approvals or other authorizations of
any Governmental Authority relating to Hazardous Substances, pollution,
protection of the environment or human health.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" is defined in Section 2.6(a).
"Existing Nixxo Option" is defined in Section 2.7(a).
"GAAP" means United States generally accepted accounting principles
including those set forth: (a) in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants, (b) in the statements and pronouncements of the Financial
Accounting Standards Board, (c) in such other statements by such other entity as
approved by a significant segment of the accounting profession, and (d) the
rules and regulations of the SEC governing the inclusion of financial statements
(including pro forma financial statements) in periodic reports required to be
filed pursuant to Section 13 of the Exchange Act, including opinions and
pronouncements in staff accounting bulletins and similar written statements from
the accounting staff of the SEC.
"Governmental Authority" means any federal, state, local, municipal or
foreign or other government or governmental agency or body.
"Governmental Permit" is defined in Section 5.12.
"Harmony" is defined above in the Preamble.
"Harmony Balance Sheet" is defined in Section 5.5.
"Harmony Balance Sheet Date" is defined in Section 5.5.
"Harmony Benefit Plans" is defined in Section 5.14(a).
"Harmony Common Stock" means the common stock, par value $0.000333 per
share, of Harmony.
"Harmony Companies" means Harmony and any Harmony Subsidiaries.
"Harmony Disclosure Schedule" means the Disclosure Schedule containing
information relating to Harmony pursuant to Article V and other provisions
hereof that has been provided to the other Parties on the date hereof.
"Harmony Indemnified Party" means Harmony and its Affiliates and each of
their respective officers, directors, employees, agents, counsel, each holder of
Harmony Common Stock immediately prior to the Effective Time.
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"Harmony Indemnified Loss" is defined in Section 16.3.
"Harmony's knowledge" or "knowledge of Harmony" with reference to any item
means that which an executive officer of Harmony actually knows.
"Harmony Parties" is defined in the Preamble.
"Harmony Required Consents" is defined in Section 14.4.
"Harmony SEC Reports" is defined in Section 5.5.
"Harmony Stockholder" means a recordholder or an outstanding certificate
or certificates of Harmony Common Stock as of the applicable date referenced
therein.
"Harmony Stockholder Meeting" is defined in Section 9.6.
"Harmony Subsidiary" means any Subsidiary of Harmony.
"Harmony 10-KSB" is defined in Section 5.9.
"Harmony Welfare Plan" is defined in Section 5.14(f).
"Hazardous Substances" means any material, waste or substance (including,
without limitation, any product) that may or could pose a hazard to the
environment or human health or safety including, without limitation, (i) any
"hazardous substances" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss.9601 et seq. and its implementing
regulations, (ii) any "extremely hazardous substance," "hazardous chemical" or
"toxic chemical" as those terms are defined by the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. ss.11001 et seq. and its implementing
regulations, (iii) any "hazardous waste," as defined under the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act, 42
U.S.C. ss.6901 et seq. and its implementing regulations (iv) any "pollutant," as
defined under the Water Pollution Control Act, 33 U.S.C. ss.1251 et seq. and its
implementing regulations as any of such Laws in clauses (i) through (iv) may be
amended from time to time, and (v) any material, substance or waste regulated
under any Laws or Court Orders that currently exist or that may be enacted,
promulgated or issued in the future by any Governmental Authority concerning
protection of the environment, pollution, health or safety or the public
welfare.
"Indemnified Party" shall have the meaning set forth in Section 16.4(b).
"Indemnifying Party" shall have the meaning set forth in Section 16.4(b).
"Indemnity Notice" is defined in Section 16.4(e).
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"Intellectual Property" means any Copyrights, Patents, Trademarks,
technology, licenses, trade secrets, computer software and other intellectual
property.
"knowledge" of any Person with reference to any item means that which such
Person actually knows.
"Law" means any statute, law, ordinance, regulation, order, rule, common
law principles or consent agreements of any Governmental Authority, including,
without limitation, those covering environmental, energy, safety, health,
transportation, bribery, record keeping, zoning, antidiscrimination, antitrust,
wage and hour, and price and wage control matters.
"Liability" means any direct or indirect liability, indebtedness,
obligation, expense, claim, loss, damage, deficiency, guaranty or endorsement of
or by any Person.
"Litigation" means any lawsuit, action, arbitration, administrative or
other proceeding, criminal prosecution or governmental investigation or inquiry.
"Material Adverse Effect", as to the Harmony Parties, means a fact or
event which has had or is reasonably likely to have a material adverse effect on
the Assets, Business, financial condition or results of operations of Harmony,
either as a corporate entity or with its Subsidiaries taken as a whole, as
indicated by the context in which used, and when used with respect to
representations, warranties, conditions, covenants or other provisions hereof
means the individual effect of the situation to which it relates and also the
aggregate effect of all similar situations unless the context indicates
otherwise. "Material Adverse Effect", as to Nixxo, means a fact or event which
has had or is reasonably likely to have a material adverse effect on the Assets,
Business, financial condition or results of operations of Nixxo, and when used
with respect to representations, warranties, conditions, covenants or other
provisions hereof means the individual effect of the situation to which it
relates and also the aggregate effect of all similar situations unless the
context indicates otherwise.
"Merged Company" is defined in the Preamble hereto.
"Merged Company Common Stock" is defined in Section 2.5(a).
"Merged Company Shares" is defined in Section 2.5(a).
"Merged Company Warrant" is defined in Section 2.7(b).
"Merger" is defined in Section 2.1.
"Merger Consideration" is defined in Section 2.5(c).
"Merger Subsidiary" is defined above in the Preamble.
"NASD" means the national Association of Securities Dealers, Inc.
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"NBCL" means the New York Business Corporation Law, as amended.
"Nixxo" is defined in the Preamble.
"Nixxo Assets" means the Assets of Nixxo.
"Nixxo Balance Sheet" is defined in Section 6.7.
"Nixxo Balance Sheet Date" is defined in Section 6.7.
"Nixxo Benefit Plan" is defined in Section 6.14(a).
"Nixxo Business" means the Business of Nixxo.
"Nixxo Common Stock" means the common stock of Nixxo.
"Nixxo Disclosure Schedule" means the Disclosure Schedule containing
information relating to Nixxo pursuant to Article VI and other provisions hereof
that has been provided to the other Parties on the date hereof.
"Nixxo Financial Statements" is defined in Section 6.7.
"Nixxo Indemnified Loss" is defined in Section 16.2.
"Nixxo Indemnified Party" means Nixxo and its Affiliates and each of their
respective officers, directors, employees, agents, counsel, each holder of Nixxo
Common Stock immediately prior to the Effective Time.
"Nixxo's knowledge" or "knowledge of Nixxo" with reference to any item
means that which an executive officer of Nixxo actually knows.
"Nixxo Required Consents" is defined in Section 15.4.
"Nixxo Shareholder" means a recordholder, as of the Effective Time, of an
outstanding certificate or certificates that immediately prior to the Effective
Time represented Nixxo Shares.
"Nixxo Shares" is defined in Section 2.5(a).
"Nixxo Shareholder Meeting" is defined in Section 10.2.
"Nixxo Subsidiary" means any Subsidiary of Nixxo.
"Nixxo Warrant" is defined in Section 2.7(b).
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"Nixxo Welfare Plan" is defined in Section 6.14(f).
"Parties" is defined above in the Preamble.
"Party Representatives" is defined in Section 8.4(b).
"Patents" means patents, patent applications, reissue patents, patents of
addition, divisions, renewals, continuations, continuations-in-part,
substitutions, additions and extensions of any of the foregoing.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Post-Signing Returns" is defined in Section 9.3.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Regulation" means any federal, state, local or foreign rule or
regulation.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means any corporation or other legal entity of which Harmony
or Nixxo, as the case may be (either above or through or together with any other
Subsidiary) owns, directly or indirectly, more than 50% of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of directors or other governing body of such corporation or other
entity.
"Surviving Corporation" is defined in Section 2.1.
"Taxes" means any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions, levies and
liabilities, including, without limitation, taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, gains, franchise, withholding, payroll, recapture,
employment, excise, unemployment, insurance, social security, business license,
occupation, business organization, stamp, environmental and property taxes,
together with all interest, penalties and additions imposed with respect to such
amounts. For purposes of this Agreement, "Taxes" also includes any obligations
under any agreements or arrangements with any Person with respect to the
liability for, or sharing
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of, Taxes (including pursuant to Treas. Reg. Section 1.1502-6 or comparable
provisions of state, local or foreign Tax Law) and including any liability for
Taxes as a transferee or successor, by Contract or otherwise.
"Tax Return" means any report, return, election, notice, estimate,
declaration, information statement and other forms and documents (including all
schedules, exhibits and other attachments thereto) relating to and filed or
required to be filed with a taxing authority in connection with any Taxes
(including, without limitation, estimated Taxes).
"Termination Date" means January 31, 2001.
"Third Party Claim" is defined in Section 16.4(b).
"Trademarks" means registered trademarks, registered service marks,
trademark and service mark applications and unregistered trademarks and service
marks.
"Transaction Documents" means this Agreement and the other agreements and
documents to be executed in connection with the Transactions.
"Transactions" means the Merger and the exchange of the Nixxo Shares for
the Merged Company Shares and the other transactions contemplated by this Merger
Agreement.
"Wholly-Owned Subsidiary" of any Person means any Subsidiary in which all
of the stock or other equity interests is owned, directly or indirectly, by such
Person.
ARTICLE II
PLAN OF MERGER
2.1. THE MERGER. Upon the terms and subject to the conditions hereof, and
in accordance with the relevant provisions of the NBCL and the CGCL, the Merger
Subsidiary shall be merged with and into Nixxo (the "Merger"). Following the
Merger, Nixxo shall continue as the surviving corporation (the "Surviving
Corporation") and shall continue its existence under the Laws of the State of
California, and the separate corporate existence of the Merger Subsidiary shall
cease.
2.2. EFFECTIVE TIME. As soon as practicable, but in any event within one
Business Day after the satisfaction or waiver of all conditions to the Merger,
the Parties shall file with the Secretary of State of the State of California
the agreement of merger and officers' certificates pursuant to CGCL Section 1103
(the "Articles of Merger") in such form as is required by the CGCL. The Merger
shall become effective at the Effective Time.
2.3. ARTICLES OF INCORPORATION AND BYLAWS. The Articles of Incorporation
of Nixxo as in effect immediately prior to the Effective Time shall be the
initial Articles of Incorporation of the Surviving Corporation. The bylaws of
Nixxo as in effect immediately prior to the Effective Time shall be the initial
bylaws of the Surviving Corporation.
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2.4. DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation and the Merged Company and the initial chief executive officer of
the Surviving Corporation and the Merged Company shall be as the Parties
determine prior to the Closing. Such persons shall hold such positions as
directors and executive officers until their successors are elected or appointed
in accordance with the Articles of Incorporation and the bylaws of the Surviving
Corporation and the Certificate of Incorporation and bylaws of the Merged
Company.
2.5. CONVERSION OR CANCELLATION OF NIXXO SHARES.
(a) Each share of Nixxo Common Stock (a "Nixxo Share") outstanding
immediately prior to the Effective Time shall by virtue of the Merger and
without any action on the part of the Nixxo Shareholder thereof, be converted
into the right to receive Seventy-Three and 9645/10000 (73.9645) (the
"Conversion Number") shares (the "Merged Company Shares") of the Merged Company
common stock, $0.001 par value per share (the "Merged Company Common Stock").
Each Nixxo Share that, immediately prior to the Effective Time, is held by Nixxo
as treasury stock shall be canceled, and no consideration shall be delivered
with respect thereto.
(b) No fractional Merged Company Shares shall be issued in the
Merger. Each Nixxo Shareholder who would otherwise be entitled to receive a
fractional share of 0.5 or greater shall receive a whole Merged Company Share
and each Nixxo Shareholder who would otherwise be entitled to receive a
fractional share of less than 0.5 shall not receive an additional whole Merged
Company Share.
(c) The consideration to be received by the Nixxo Shareholders in
respect of each Nixxo Share pursuant to this Section 2.5 is hereinafter referred
to as the "Merger Consideration."
2.6. EXCHANGE OF MERGED COMPANY SHARES.
(a) Prior to the Effective Time, Nixxo shall appoint an agent (the
"Exchange Agent") for the purpose of exchanging certificates that immediately
prior to the Effective Time represented Nixxo Shares (the "Certificates") for
the Merger Consideration. Promptly after the Effective Time, the Merged Company
will send, or will cause the Exchange Agent to send, to each Nixxo Shareholder
(other than Nixxo and any Subsidiary of Nixxo) a letter of transmittal for use
in such exchange. The Merged Company will deposit with the Exchange Agent in
trust for the Nixxo Shareholder the aggregate Merger Consideration to be paid in
respect of the Nixxo Shares.
(b) Each Nixxo Shareholder, upon surrender to the Exchange Agent of
a Certificate or Certificates together with a properly completed letter of
transmittal covering such Certificates, will be entitled to receive the Merger
Consideration payable in respect of the Nixxo Shares formerly represented
thereby, after giving effect to any required withholding Tax. Until so
surrendered, each Certificate shall, after the Effective Time, represent for all
purposes, only the right to receive such Merger Consideration. In no event will
a Nixxo Shareholder be entitled to interest on the Merger Consideration.
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(c) If any portion of the Merger Consideration is to be paid to a
Person other than the registered holder of the Nixxo Shares formerly represented
by the Certificate or Certificates surrendered in exchange for the Merger
Consideration, it shall be a condition to such payment that the Certificate or
Certificates so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the Person requesting such payment shall pay to the
Exchange Agent any transfer or other Taxes required as a result of such payment
to a Person other than the registered holder of such Nixxo Shares or establish
to the satisfaction of the Exchange Agent that such Tax has been paid or is not
payable.
(d) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to this Section 2.6 that remains unclaimed by the Nixxo
Shareholders thirty (30) days after the Effective Time shall be returned to the
Merged Company, upon demand, and any such Person who has not exchanged his
Certificate or Certificates for the Merger Consideration in accordance with this
Article II prior to that time shall thereafter look only to the Merged Company
for payment of the Merger Consideration. Notwithstanding the foregoing, the
Merged Company shall not be liable to any Person for any amount paid to a public
official pursuant to applicable abandoned property Laws. Any amounts remaining
unclaimed under this Article II two years after the Effective Time (or such
earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any governmental entity) shall, to the extent
permitted by applicable Law, become the property of the Merged Company free and
clear of any claims or interest of any Person previously entitled thereto.
(e) No dividends or other distributions with respect to securities
of the Merged Company constituting part of the Merger Consideration shall be
paid to the Nixxo Shareholder of any unsurrendered Certificates until such
Certificates are surrendered as provided in this Article II. Upon such
surrender, there shall be paid, without interest, to the Person in whose name
the Certificates representing the securities of the Merged Company into which
such Nixxo Shares were converted are registered, all dividends and other
distributions payable in respect of such securities on a date subsequent to, and
in respect of a record date after, the Effective Time, less the amount of
withholding Taxes which may be required thereon.
(f) If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by the Merged
Company, the posting by such person of a bond in such reasonable amount as the
Merged Company may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificate the consideration
provided for, and in accordance with the procedures set forth, in this Article
II and, if applicable, any unpaid dividends and distributions with respect to
securities of the Merged Company constituting part of the Merger Consideration
deliverable with respect thereof pursuant to this Agreement.
2.7. OPTIONS AND WARRANTS.
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(a) At the Effective Time, the Merged Company shall assume Nixxo's
rights and obligations under each of the outstanding stock options previously
granted by Nixxo to certain of its employees, directors and consultants that are
outstanding immediately prior to the Effective Time (each such stock option
existing immediately prior to the Effective Time is referred to herein as an
"Existing Nixxo Option" and each such assumed stock option existing immediately
after the Effective Time is referred to herein as an "Assumed Nixxo Option").
Under each Assumed Nixxo Option, the optionee shall have the right to receive
from the Merged Company, in accordance with the terms and subject to the
conditions of the Existing Nixxo Option, the Merger Consideration that such
optionee would have been entitled to receive had the optionee exercised his or
her Existing Nixxo Option immediately prior to the Effective Time, but only in
accordance with the terms and conditions of the Existing Nixxo Option (including
payment of the aggregate exercise price thereof). Except as provided in this
Section 2.7(a), the Assumed Nixxo Option shall not give the optionee any
additional benefits that the holder thereof did not have under the Existing
Nixxo Option; provided, however, that the terms of such Existing Nixxo Options
shall govern the vesting thereof, including, if applicable, any vesting of
Existing Nixxo Options as a result of the Merger. Each Assumed Nixxo Option
shall constitute a continuation of the Existing Nixxo Option, substituting the
Merged Company for Nixxo.
(b) Each of the outstanding common stock purchase warrants
previously granted by Nixxo that are outstanding immediately prior to the
Effective Time and that does not expire at the Effective Time by the terms
thereof (each such warrant existing immediately prior to the Effective Time is
referred to herein as a "Nixxo Warrant") shall, by virtue of the Merger and
pursuant to the terms of the Nixxo Warrant or with the consent of the majority
of the holders thereof, be converted into and exchanged for a common stock
purchase warrant of the Merged Company ("Merged Company Warrant") exercisable
for the Conversion Number of Merged Company Shares for each share of Merged
Company Common Stock for which the Nixxo Warrant is exercisable immediately
prior to the Effective Time, at an exercise price per Merged Company Share that
has been adjusted in accordance with the terms of the Nixxo Warrant converted
hereunder as a result of the Merger. The Merged Company Warrants shall have the
terms and conditions of the Nixxo Warrants converted hereunder. At the Effective
Time, the Merged Company shall make available to any holders of Nixxo Warrants
converted hereunder a new warrant evidencing the Merged Company Warrant.
2.8. ADJUSTMENTS. If at any time during the period between the date of
this Agreement and the Effective Time, any change in the outstanding shares of
capital stock of Harmony or Nixxo shall occur by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, or any stock dividend thereon with a record date during such period or
any similar event, this Article II shall be appropriately adjusted.
2.9. MERGER SUBSIDIARY CAPITAL STOCK. Each share of capital stock of the
Merger Subsidiary issued and outstanding immediately prior to the Effective Time
shall be converted, by virtue of the Merger, into one share of common stock of
the Surviving Corporation.
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2.10. NO FURTHER TRANSFER OF SHARES. After the Effective Time, there shall
be no transfers of Nixxo Shares that were outstanding immediately prior to the
Effective Time on the stock transfer books of the Surviving Corporation. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for transfer, they shall be canceled and exchanged for the Merger
Consideration as provided in this Article II.
2.11. DISSENTING SHARES. Notwithstanding Section 2.5, the shares of Nixxo
Common Stock that are issued and outstanding immediately prior to the Effective
Time and that are held by Nixxo Shareholders who did not vote in favor of the
Merger and who comply with all of the relevant provisions of Chapter 13 of the
CGCL (the "Dissenting Shares") shall not be converted into the right to receive
the Merger Consideration, unless and until such Nixxo Shareholders shall have
waived in writing or failed to perfect or shall have effectively withdrawn or
lost their rights to appraisal under the CGCL; and any such Nixxo Shareholder
shall have only such rights in respect of the Dissenting Shares owned by them as
are provided by Chapter 13 of the CGCL. If any such Nixxo Shareholder shall have
waived in writing or failed to perfect or shall have effectively withdrawn or
lost such right, such Nixxo Shareholder's Dissenting Shares shall thereupon be
deemed to have been converted into and to have become exchangeable, as of the
Effective Time, for the right to receive the Merger Consideration without any
interest thereon, pursuant to the terms of Section 2.5. Prior to the Effective
Time, Nixxo will not, except with the prior written consent of Harmony,
voluntarily make any payment with respect to, or settle or offer to settle, any
claim made by the stockholders owning the Dissenting Shares.
ARTICLE III
[RESERVED]
ARTICLE IV
THE CLOSING
4.1. LOCATION, DATE. The closing for the Transactions (the "Closing")
shall be held at the offices of Kaplan Gottbetter & Levenson, LLP in New York,
New York at 10:00 a.m. (local time) as promptly as practicable (and in any event
within one Business Day) after satisfaction or waiver of the conditions to the
consummation of the Transactions set forth in Articles XII, XIV and XV. The date
on which the Closing occurs is referred to herein as the "Closing Date."
4.2. DELIVERIES. At the Closing,
(a) the Merger Subsidiary and Nixxo shall deliver or cause to be
delivered to the Secretary of State of the State of California a duly executed
Articles of Merger as required under the CGCL and the Parties shall take all
such other and further actions as may be required by the CGCL and NBCL and any
other applicable Law to make the Merger effective upon the terms and subject to
the conditions hereof; and
(b) the Parties shall also deliver to each other the respective
agreements and other documents and instruments specified with respect to them in
Articles XII, XIV and XV.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HARMONY
The Harmony Parties, jointly and severally, hereby represent and warrant
to Nixxo as follows, except as otherwise set forth in the Harmony Disclosure
Schedule (items disclosed in one Section of such Schedule shall apply to all
other Sections unless specified otherwise):
5.1. CORPORATE. Each Harmony Company is a corporation duly organized,
validly existing and in good standing under the Laws under which it was
incorporated. Each Harmony Company is qualified to do business as a foreign
corporation in any jurisdiction where it is required to be so qualified, except
where the failure to so qualify would not have a Material Adverse Effect. The
Charter Documents and bylaws of each Harmony Company (all of which have been
delivered or made available to Nixxo) have been duly adopted and are current,
correct and complete. Each Harmony Company has all necessary corporate power and
authority to own, lease and operate its part of the Harmony Assets and to carry
on its part of the Harmony Business as it is now being conducted.
5.2. AUTHORIZATION. Each Harmony Company has the requisite corporate power
and authority to execute and deliver this Merger Agreement and to perform the
Transactions to be performed by it. Such execution, delivery and performance by
each Harmony Company has been duly authorized by all necessary corporate action.
Each Transaction Document executed and delivered by each Harmony Company as of
the date hereof has been duly executed and delivered by such Harmony Company and
constitutes a valid and binding obligation of such Harmony Company enforceable
against such Harmony Company in accordance with its terms, and any Transaction
Document executed and delivered by each Harmony Company after the date hereof
will be duly executed and delivered by such Harmony Company and will constitute
a valid and binding obligation of such Harmony Company, enforceable against such
Harmony Company in accordance with its terms, except as otherwise limited by
bankruptcy, insolvency, reorganization and other laws affecting creditors rights
generally, and except that the remedy of specific performance or other equitable
relief is available only at the discretion of the court before which enforcement
is sought.
5.3. VALIDITY OF CONTEMPLATED TRANSACTIONS. Except for compliance with (i)
the Securities Act and the Exchange Act and (ii) the filing of the Articles of
Merger with the Secretary of State of the State of California, neither the
execution and delivery by each Harmony Company of the respective Transaction
Documents to which it is or will be a party, nor the performance of the
Transactions to be performed by it, will require any filing, consent or approval
under or constitute a Default, or result in a loss of material benefit under,
(a) to Harmony's knowledge, any Law or Court Order to which any Harmony Company
is subject, (b) the Charter Documents or bylaws of any Harmony Company, or (c)
any Contracts to which any Harmony Company is a party or by which any of the
Harmony Assets may be subject, except for Defaults which would not have a
Material Adverse Effect.
5.4. CAPITALIZATION AND STOCK OWNERSHIP. The total authorized capital
stock of Harmony consists of (a) 200,000,000 shares of Harmony Common Stock, and
(b) 5,000,000
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shares of preferred stock. Of such authorized capital stock, the only issued and
outstanding shares on the date hereof are 10,230,000 shares of Harmony Common
Stock before giving effect to the private placement contemplated in Section
14.9. There are no existing options, warrants, calls, commitments or other
rights of any character (including conversion or preemptive rights) relating to
the acquisition of any issued or unissued capital stock or other securities of
Harmony. All of the issued and outstanding shares of Harmony Common Stock are
validly issued fully paid and non-assessable. No options, warrants, calls,
commitments or other rights of any character (including conversion or preemptive
rights) will entitle any Person to acquire any securities of the Merger
Subsidiary or any subsidiary thereof.
5.5. HARMONY SEC REPORTS; FINANCIAL STATEMENTS. Harmony has filed all
required forms, reports, statements, schedules and other documents with the SEC
since January 1, 1999, including (a) its Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1999, (b) all proxy and information statements
relating to Harmony's meetings of stockholders (whether annual or special) held
since January 1, 1999, (c) its Quarterly Reports on Form 10-QSB for the quarters
ended March 31, 2000 and June 30, 2000, and (d) all other reports or
registration statements filed by Harmony with the SEC since January 1, 1999
(collectively, the "Harmony SEC Reports"). Each of such Harmony SEC Reports, at
the time it was filed, complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, and with the forms and
Regulations of the SEC promulgated thereunder, and did not contain at the time
filed any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The financial statements, including all related notes and schedules,
contained in the Harmony SEC Reports (or incorporated by reference therein)
fairly present the consolidated financial position of Harmony as at the
respective dates thereof and the consolidated results of operations and cash
flows of Harmony for the periods indicated in accordance with GAAP applied on a
consistent basis throughout the periods involved (except for changes in
accounting principles disclosed in the notes thereto) and subject in the case of
interim financial statements to normal year-end adjustments and the absence of
notes. For purposes of this Agreement, the balance sheet of Harmony as of June
30, 2000 is referred to as the "Harmony Balance Sheet" and the date thereof is
referred to as the "Harmony Balance Sheet Date."
5.6 NO VIOLATIONS
(a) Neither the execution and delivery of this Agreement by the
Harmony Parties nor the consummation of the transactions contemplated hereby,
nor compliance by the Harmony Parties with any of the provisions hereof will:
(1) violate, conflict with, or result in breach of any provision of, require any
consent, approval or notice under, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) or result in a
right of termination or acceleration under any of the terms, conditions or
provisions of (x) their respective charters or by-laws or (y) any material note,
bond, mortgage, indenture, deed of trust, agreement, lien, contract or other
instrument or obligation to which the Harmony Parties or any of its subsidiaries
or any of its shareholders is a party or to which any of them, or any of their
respective properties or assets, may be subject or by which the Harmony Parties
are bound; or (2) subject to the
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statutes and regulations referred to in Section 5.6(b), violate any judgment,
ruling, order, writ, injunction, determination, award, decree, statute,
ordinance, rule or regulation applicable to the Harmony Parties or any of its
shareholders or any of their respective properties or assets .
(b) There is (1) no legal impediment to the Harmony Parties'
consummation of the transactions contemplated by this Agreement, and (2) no
filing or registration with, or authorization, consent or approval of, any
domestic or foreign public body or authority is necessary for the consummation
by the Harmony Parties of the transactions contemplated by this Agreement.
5.7. OWNERSHIP OF MERGER SUBSIDIARY; NO PRIOR ACTIVITIES. The Merger
Subsidiary is a Wholly-Owned Subsidiary of Harmony created solely for the
purpose of effecting the Merger. As of the date hereof and the Effective Time,
except for Liabilities incurred in connection with its incorporation or
organization and the Transactions and except for this Agreement and the other
Transaction Documents, the Merger Subsidiary has not, nor will not, through the
Effective Time, directly or indirectly, through any Subsidiary or Affiliate of
Harmony, have any material Liabilities, engage in any material business
activities of any type or kind whatsoever or enter into any agreements or
arrangements with any Person.
5.8. TAXES.
(a) Harmony (i) has filed (or, in the case of Tax Returns not yet
due, will file) with the appropriate governmental agencies all material Tax
Returns required to be filed on or before the Effective Time and all such Tax
Returns filed were true, correct and complete in all material respects, and (ii)
has paid (or, in the case of Taxes not yet due, will pay), all Taxes shown on
such Tax Returns.
(b) Harmony has duly paid or caused to be paid all material Taxes
and all Taxes shown on Tax Returns that are or were due.
(c) No deficiency in respect of any Taxes which has been assessed
against Harmony remains unpaid, except for Taxes being contested in good faith,
and Harmony has no knowledge of any unassessed Tax deficiencies or of any audits
or investigations pending or threatened against Harmony with respect to any
Taxes.
(d) Harmony has not extended or waived the application of any
applicable statute of limitations of any jurisdiction regarding the assessment
or collection of any Tax or any Tax Return.
(e) There are no liens for Taxes upon any assets of Harmony except
for liens for current Taxes not yet due.
(f) Harmony has to its knowledge (i) complied with all material
provisions of the Code relating to the withholding and payment of Taxes and (ii)
has made all deposits required by applicable Law to be made with respect to
employees' withholding and other payroll, employment
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or other withholding or related Taxes.
(g) Harmony is not a party to any contract, agreement, plan or
arrangement that, individually or in the aggregate, or when taken together with
any payment that may be made under this Agreement or any agreements contemplated
hereby, could give rise to the payment of any "excess parachute payment" within
the meaning of Section 280G of the Code.
(h) Harmony is not a party to any agreement relating to the
allocating or sharing of the payment of, or Liability for, Taxes for any period
(or portion thereof).
(i) To Harmony's knowledge, Harmony has never been a member of an
affiliated group of corporations (within the meaning of Section 1504 of the
Code).
5.9. TITLE TO ASSETS AND RELATED MATTERS. Each Harmony Company has good
and marketable title to its part of the Harmony Assets, free from any
Encumbrances except (a) items described in any notes to the consolidated
financial statements of Harmony contained in Harmony's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1999 (the "Harmony 10-KSB")
included in the Harmony SEC Reports, (b) minor matters that would not have a
Material Adverse Effect, and (c) constitutional and statutory liens arising from
the obligation to pay for the provision of materials or services not yet in
Default and Taxes not yet due.
5.10. REAL PROPERTY. All material real estate leased by any Harmony
Company as of the date hereof and used in the operation of the Harmony Business
are disclosed in the Harmony SEC Reports. As of the date hereof, none of the
Harmony Companies owns any real property.
5.11. CONTRACTS AND COMMITMENTS. Each Contract providing for payments in
excess of $60,000 to which Harmony is a party (i) is legal, valid, binding and
enforceable against Harmony except as otherwise limited by bankruptcy,
insolvency, reorganization and other laws affecting creditors' rights generally,
and except that the remedy of specific performance or other equitable relief is
available only at the discretion of the court before which enforcement is
sought, and (ii) Harmony, and to Harmony's knowledge, any other party, is not in
Default under any such Contract, other than in the case of (i) and (ii) above
where the failure to be so would not have a Material Adverse Effect.
5.12. LEGAL PROCEEDINGS; COMPLIANCE WITH LAW; GOVERNMENTAL PERMITS. There
is no Litigation that is pending or, to Harmony's knowledge, threatened against
any Harmony Company that would have a Material Adverse Effect. To Harmony's
knowledge, Harmony is and has been in compliance with all applicable Laws,
including Environmental Law and applicable securities laws, except where the
failure to be in compliance would not have a Material Adverse Effect. There has
been no Default under any Laws applicable to any Harmony Company, including
Environmental Laws, except for any Defaults that would not have a Material
Adverse Effect. There has been no Default with respect to any Court Order
applicable to any Harmony Company. No Harmony Company has received any written
notice and, to the knowledge of any Harmony Company, no other communication has
been received to the effect that it is not in
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compliance with any applicable Laws, and Harmony has no reason to believe that
any presently existing circumstances are likely to result in violations of any
applicable Laws, except to the extent that such failures to comply or violations
would not have a Material Adverse Effect. To Harmony's knowledge, there is no
Environmental Condition at any property presently or formerly owned or leased by
an Harmony Company which is reasonably likely to have a Material Adverse Effect.
The Harmony Companies have all material consents, permits, franchises, licenses,
concessions, registrations, certificates of occupancy, approvals and other
authorizations of Governmental Authorities (collectively, the "Governmental
Permits") required in connection with the operation of their respective
businesses as now being conducted, all of which are in full force and effect,
except where the failure to obtain any such Governmental Permit or of any such
Governmental Permit to be in full force and effect, would not have a Material
Adverse Effect. Each Harmony Company has complied, in all material respects,
with all of its Governmental Permits, except where the failure to so comply
would not have a Material Adverse Effect.
5.13. EMPLOYEE RELATIONS. No Harmony Company is (a) a party to, involved
in or, to Harmony's knowledge, threatened by, any labor dispute or unfair labor
practice charge, or (b) currently negotiating any collective bargaining
agreement, and no Harmony Company has experienced any work stoppage during the
last three years.
5.14. ERISA.
(a) Harmony has delivered to Nixxo (i) accurate and complete copies
of all Benefit Plans sponsored or maintained by any Harmony Company or under
which any Harmony Company may be obligated for its employees, directors or
independent contractors ("Harmony Benefit Plans") and of any summary plan
descriptions, summary annual reports and insurance contracts relating thereto,
(ii) accurate and complete detailed summaries of all unwritten Harmony Benefit
Plans, (iii) accurate and complete copies of the most recent financial
statements and actuarial reports with respect to all Harmony Benefit Plans for
which financial statements or actuarial reports are required or have been
prepared and (iv) accurate and complete copies of all annual reports for all
Harmony Benefit Plans (for which annual reports are required) prepared within
the last two years.
(b) All Harmony Benefit Plans conform in all material respects to,
and are being administered and operated in material compliance with, the
requirements of ERISA, the Code and all other applicable Laws, including
applicable Laws of foreign jurisdictions. There have not been any "prohibited
transactions," as such term is defined in Section 4975 of the Code or Section
406 of ERISA involving any of the Harmony Benefit Plans, that could subject any
Harmony Company to any material penalty or tax imposed under the Code or ERISA.
(c) Any Harmony Benefit Plan that is intended to be qualified under
Section 401(a) of the Code and exempt from tax under Section 501(a) of the Code
has been determined by the Internal Revenue Service to be so qualified, and such
determination remains in effect and has not been revoked. Nothing has occurred
since the date of any such determination that is reasonably likely to affect
adversely such qualification or exemption, or result in the imposition of excise
taxes
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or income taxes on unrelated business income under the Code or ERISA with
respect to any Harmony Benefit Plan.
(d) No Harmony Company has a current or contingent obligation to
contribute to any multiemployer plan (as defined in Section 3(37) of ERISA) and
(ii) no Harmony Company, nor any entity that has been treated as a single
employer with any Harmony Company under Sections 414(b), (c), (m) or (o) of the
Code, has any liability, contingent or otherwise, under Title IV of ERISA or
Section 412 of the Code.
(e) There are no pending or, to the knowledge of Harmony, threatened
claims by or on behalf of any Harmony Benefit Plans, or by or on behalf of any
individual participants or beneficiaries of any Harmony Benefit Plans, alleging
any breach of fiduciary duty on the part of any Harmony Company or any of the
officers, directors or employees of any Harmony Company under ERISA or any other
applicable Regulations, or claiming benefit payments other than those made in
the ordinary operation of such plans, or alleging any violation of any other
applicable Laws. To Harmony's knowledge, the Harmony Benefit Plans are not the
subject of any investigation, audit or action by the Internal Revenue Service,
the Department of Labor or the PBGC. Each Harmony Company has made all required
contributions under the Harmony Benefit Plans including the payment of any
premiums payable to the PBGC and other insurance premiums.
(f) With respect to any Harmony Benefit Plan that is an employee
welfare benefit plan (within the meaning of Section 3(1) of ERISA) (an "Harmony
Welfare Plan"), (i) each Harmony Welfare Plan for which contributions are
claimed as deductions under any provision of the Code is in material compliance
with all applicable requirements pertaining to such deduction, (ii) with respect
to any welfare benefit fund (within the meaning of Section 419 of the Code)
related to an Harmony Welfare Plan, there is no disqualified benefit (within the
meaning of Section 4976(b) of the Code) that would result in the imposition of a
tax under Section 4976(a) of the Code, and (iii) any Harmony Benefit Plan that
is a group health plan (within the meaning of Section 4980B(g)(2) of the Code)
complies, and in each and every case has complied, with all of the material
requirements of Section 4980B of the Code, ERISA, Title XXII of the Public
Health Service Act and the applicable provisions of the Social Security Act.
(g) The execution of this Agreement and the performance of the
Transactions will not (either alone or in combination with the occurrence of any
additional or subsequent events) constitute an event under any Harmony Benefit
Plan that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any current
or former employee, director or consultant of any Harmony Company.
5.15. PATENTS, TRADEMARKS, ETC. To Harmony's knowledge, no Harmony Company
infringes upon or unlawfully or wrongfully uses any Intellectual Property owned
or claimed by another Person and no Person infringes on or wrongfully uses any
Intellectual Property owned or claimed by Harmony, except for those situations
that would not have a Material Adverse Effect. To Harmony's knowledge, the
Harmony Companies own or have valid rights to use all
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Intellectual Property used in the conduct of their business except where the
failure to have valid rights to use such Intellectual Property will not have a
Material Adverse Effect, free and clear of all Encumbrances, other than
Encumbrances which would not have a Material Adverse Effect.
5.16. ABSENCE OF CERTAIN CHANGES. Since the Harmony Balance Sheet Date,
the Harmony Companies have conducted the Harmony Business in the ordinary course
and, as of the date hereof, there has not been:
(a) any Material Adverse Effect on the Harmony Business;
(b) any distribution or payment declared or made in respect of
Harmony's capital stock by way of dividends, purchase or redemption of shares or
otherwise;
(c) any increase in the compensation payable or to become payable to
any current director or officer of any Harmony Company, except for merit and
seniority increases for employees made in the ordinary course of business, nor
any material change in any existing employment, severance, consulting
arrangements or any Harmony Benefit Plan;
(d) any sale, assignment or transfer of any Harmony Assets, or any
additions to or transactions involving any Harmony Assets, other than those made
in the ordinary course of business or those solely involving the Harmony
Companies;
(e) other than in the ordinary course of business, any waiver or
release of any material claim or right or cancellation of any material debt held
by any Harmony Company;
(f) any change in practice with respect to Taxes, or any election,
change of any election, or revocation of any election with respect to Taxes, or
any settlement or compromise of any dispute involving a Tax liability;
(g) (i) any creation, or assumption of, any long-term debt or any
short-term debt for borrowed money other than under existing notes payable,
lines of credit or other credit facility or in the ordinary course of business
or with respect to its Wholly-Owned Subsidiaries; (ii) any assumption, granting
of guarantees, endorsements or otherwise becoming liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person
except its Wholly-Owned Subsidiaries; or (iii) any loans, advances or capital
contributions to, or investments in, any other Person except its Wholly-Owned
Subsidiaries;
(h) any material agreement, commitment or contract, except
agreements, commitments or contracts for the purchase, sale or lease of goods or
services in the ordinary course of business;
(i) other than in the ordinary course of business, any
authorization, recommendation, proposal or announcement of an intention to
authorize, recommend or propose, or enter into any Contract with respect to, any
(i) plan of liquidation or dissolution, (ii) acquisition
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of a material amount of assets or securities, (iii) disposition or Encumbrance
of a material amount of assets or securities, (iv) merger or consolidation or
(v) material change in its capitalization; or
(j) any change in accounting procedure or practice.
5.17. CORPORATE RECORDS. The minute books of each Harmony Company contain
accurate, complete and current copies of all Charter Documents and of all
minutes of meetings, resolutions and other proceedings of its Board of Directors
and stockholders.
5.18. FINDER'S FEES. No Person is or will be entitled to any commission,
finder's fee or other payment in connection with the Transactions based on
arrangements made by or on behalf of Harmony.
5.19 NO MATERIAL MISSTATEMENTS. No statement by the Harmony Parties
contained in this Agreement contains any untrue statement of a material fact, or
omits to state any material fact which is necessary to make the statements
contained herein, in light of the circumstances under which they were made, not
misleading.
5.20. LISTING. The Harmony Common Stock is listed for quotation on the
NASD Over-the-Counter Bulletin Board under the symbol "HRMY". Harmony is in full
compliance with the NASD Over-the-Counter Bulletin Board listing maintenance
requirements. Since listing the Harmony Common Stock on the NASD
Over-the-Counter Bulletin Board, Harmony has not received any notice from the
NASD that (i) Harmony is not in full compliance with the NASD Over-the- Counter
Bulletin Board listing maintenance requirements or (ii) that Harmony Common
Stock may be delisted from the NASD Over-the-Counter Bulletin Board.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NIXXO
Nixxo hereby represents and warrants to Harmony as follows, except as
otherwise set forth in the Nixxo Disclosure Schedule (items disclosed in one
Section of such Schedule shall apply to all other Sections unless specified
otherwise):
6.1. CORPORATE. Nixxo is a corporation duly organized, validly existing
and in good standing under the Laws under which it was incorporated. Nixxo is
qualified to do business as a foreign corporation in any jurisdiction where it
is required to be so qualified, except where the failure to so qualify would not
have a Material Adverse Effect. The Charter Documents and bylaws of Nixxo (all
of which have been delivered or made available to Harmony) have been duly
adopted and are current, correct and complete. Nixxo has all necessary corporate
power and authority to own, lease and operate the Nixxo Assets and to carry on
the Nixxo Business as it is now being conducted. Nixxo has no Subsidiaries.
6.2. AUTHORIZATION. Nixxo has the requisite corporate power and authority
to execute and deliver the documents to which it is a party and to perform the
Transactions to be
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performed by it. Such execution, delivery and performance by Nixxo have been
duly authorized by all necessary corporate action, other than the approval of
this Agreement and consummation of the Merger is subject to the approval of the
holders of a majority of the outstanding shares of Nixxo Common Stock, which are
the only consents or approvals of holders of Nixxo capital stock required for
the consummation of the Transactions. Each Transaction Document executed and
delivered by Nixxo as of the date hereof has been duly executed and delivered by
Nixxo and constitutes a valid and binding obligation of Nixxo, enforceable
against Nixxo in accordance with its terms, and any document executed and
delivered by Nixxo after the date hereof will be duly executed and delivered by
Nixxo and will constitute a valid and binding obligation of Nixxo, enforceable
against Nixxo in accordance with its terms, except as otherwise limited by
bankruptcy, insolvency reorganization and other laws affecting creditors rights
generally, and except that the remedy of specified performance or other
equitable relief is available only at the discretion of the court before which
enforcement is sought.
6.3. VALIDITY OF CONTEMPLATED TRANSACTIONS. Except for compliance with (i)
the Securities Act and the Exchange Act and (ii) the filing of the Articles of
Merger with the Secretary of State of the State of California, neither the
execution and delivery by Nixxo of the respective Transaction Documents to which
it is or will be a party, nor the performance of the Transactions to be
performed by it, will require any filing, consent or approval under or
constitute a Default, or result in a loss of material benefit under, (a) to
Nixxo's knowledge, any Law or Court Order to which Nixxo is subject, (b) the
Charter Documents or bylaws of Nixxo, (c) any other Contracts to which Nixxo is
a party or by which any of the Nixxo Assets may be subject, except for Defaults
which would not have a Material Adverse Effect.
6.4. CAPITALIZATION AND STOCK OWNERSHIP. Of the authorized capital stock
of Nixxo, the only issued and outstanding shares on the date hereof are 676,000
shares of Nixxo Common Stock. There are no existing options, warrants, calls,
commitments or other rights of any character (including conversion or preemptive
rights) relating to the acquisition of any issued or unissued capital stock or
other securities of Nixxo. All of the issued and outstanding shares of Nixxo
Common Stock are validly issued, fully paid and non-assessable. No options,
warrants, calls, commitments or other rights of any character (including
conversion or preemptive rights) will entitle any Person to acquire any
securities of the Merger Subsidiary or any subsidiary thereof.
6.5. [Reserved]
6.6. NO VIOLATIONS.
(a) Neither the execution and delivery of this Agreement by Nixxo
nor the consummation of the transactions contemplated hereby, nor compliance by
Nixxo with any of the provisions hereof will: (1) violate, conflict with, or
result in breach of any provision of, require any consent, approval or notice
under, or constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) or result in a right of termination or
acceleration under any of the terms, conditions or provisions of (x) its
charters or by-laws or (y) any material note, bond, mortgage, indenture, deed of
trust, agreement, lien, contract or other instrument or obligation to
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which Nixxo or any of its subsidiaries or any of its shareholders is a party or
to which any of them, or any of their respective properties or assets, may be
subject or by which Nixxo is bound; or (2) subject to compliance with the
statutes and regulations referred to in Section 6.6(b), violate any judgment,
ruling, order, writ, injunction, determination, award, decree, statute,
ordinance, rule or regulation applicable to Nixxo or any of its shareholders or
any of their respective properties or assets.
(b) There is (1) no legal impediment to Nixxo's consummation of the
transactions contemplated by this Agreement, and (2) no filing or registration
with, or authorization, consent or approval of, any domestic or foreign public
body or authority is necessary for the consummation by Nixxo of the transactions
contemplated by this Agreement.
6.7. NIXXO FINANCIAL STATEMENTS. The balance sheet as of June 30, 2000 and
related statement of income for the period ending June 30, 2000, including all
related notes and schedules (the "Nixxo Financial Statements") delivered to
Harmony fairly present the financial position of Nixxo as at the respective
dates thereof and the results of operations of Nixxo for the periods indicated
in accordance with GAAP applied on a consistent basis throughout the periods
involved (except for changes in accounting principles disclosed in the notes
thereto) and subject in the case of interim financial statements to normal
year-end adjustments and the absence of notes. For purposes of this Agreement,
the balance sheet of Nixxo as of June 30, 2000 is referred to as the "Nixxo
Balance Sheet" and the date thereof is referred to as the "Nixxo Balance Sheet
Date."
6.8. TAXES.
(a) Nixxo (i) has filed (or, in the case of Tax Returns not yet due,
will file) with the appropriate governmental agencies all material Tax Returns
required to be filed on or before the Effective Time and all such Tax Returns
filed were true, correct and complete in all material respects, and (ii) has
paid (or, in the case of Taxes not yet due, will pay), all Taxes shown on such
Tax Returns.
(b) Nixxo has (i) duly paid or caused to be paid all material Taxes
and all Taxes shown on Tax Returns that are or were due, except to the extent
that a sufficient reserve for Taxes has been reflected on the Nixxo Balance
Sheet and (ii) provided a sufficient reserve on the Nixxo Balance Sheet for the
payment of all Taxes not yet due and payable.
(c) No deficiency in respect of any Taxes which has been assessed
against Nixxo remains unpaid, except for Taxes being contested in good faith,
and Nixxo has no knowledge of any unassessed Tax deficiencies or of any audits
or investigations pending or threatened against Nixxo with respect to any Taxes.
(d) Nixxo has not extended or waived the application of any
applicable statute of limitations of any jurisdiction regarding the assessment
or collection of any Tax or any Tax Return.
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(e) There are no liens for Taxes upon any assets of Nixxo except for
liens for current Taxes not yet due.
(f) Nixxo has to its knowledge (i) complied with all material
provisions of the Code relating to the withholding and payment of Taxes and (ii)
has made all deposits required by applicable Law to be made with respect to
employees' withholding and other payroll, employment or other withholding or
related Taxes.
(g) Nixxo is not a party to any contract, agreement, plan or
arrangement that, individually or in the aggregate, or when taken together with
any payment that may be made under this Agreement or any agreements contemplated
hereby, could give rise to the payment of any "excess parachute payment" within
the meaning of Section 280G of the Code.
(h) Nixxo is not a party to any agreement relating to the allocating
or sharing of the payment of, or Liability for, Taxes for any period (or portion
thereof).
(i) To Nixxo's knowledge, Nixxo has never been a member of an
affiliated group of corporations (within the meaning of Section 1504 of the
Code).
6.9. TITLE TO ASSETS AND RELATED MATTERS. Nixxo has good and marketable
title to its part of the Nixxo Assets, free from any Encumbrances except (a) any
Encumbrance in favor of Nixxo, (b) items described in any notes to the
consolidated financial statements of Nixxo contained in Nixxo's Financial
Statements, (c) minor matters that would not have a Material Adverse Effect, and
(d) constitutional and statutory liens arising from the obligation to pay for
the provision of materials or services not yet in Default and Taxes not yet due.
6.10. REAL PROPERTY. All material real estate leased by Nixxo as of the
date hereof and used in the operation of the Nixxo Business are disclosed in the
Nixxo Financial Statements. As of the date hereof, Nixxo does not own any real
property.
6.11. CONTRACTS AND COMMITMENTS. Each Contract providing for payments in
excess of $60,000 to which Nixxo is a party (i) is legal, valid, binding and
enforceable against Nixxo except as otherwise limited by bankruptcy, insolvency,
reorganization and other laws affecting creditors' rights generally, and except
that the remedy of specific performance or other equitable relief is available
only at the discretion of the court before which enforcement is sought, and (ii)
Nixxo, and to Nixxo's knowledge, any other party, is not in Default under any
such Contract, other than in the case of (i) and (ii) above where the failure to
be so would not have a Material Adverse Effect.
6.12. LEGAL PROCEEDINGS; COMPLIANCE WITH LAW; GOVERNMENTAL PERMITS. There
is no Litigation that is pending or, to Nixxo's knowledge, threatened against
Nixxo that would have a Material Adverse Effect. To Nixxo's knowledge, Nixxo is
and has been in compliance with all applicable Laws, including Environmental
Laws and applicable securities laws, except where the failure to be in
compliance would not have a Material Adverse Effect. There
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has been no Default under any Laws applicable to Nixxo, including Environmental
Laws, except for any Defaults that would not have a Material Adverse Effect.
There has been no Default with respect to any Court Order applicable to Nixxo.
Nixxo has not received any written notice and, to the knowledge of Nixxo, no
other communication has been received to the effect that it is not in compliance
with any applicable Laws, and Nixxo has no reason to believe that any presently
existing circumstances are likely to result in violations of any applicable
Laws, except to the extent that such failures to comply or violations would not
have a Material Adverse Effect. To Nixxo's knowledge, there is no Environmental
Condition at any property presently or formerly owned or leased by Nixxo which
is reasonably likely to have a Material Adverse Effect. Nixxo has all
Governmental Permits required in connection with the operation of its Business,
all of which are in full force and effect, except where the failure to obtain
any such Governmental Permit or of any such Governmental Permit to be in full
force and effect, would not have a Material Adverse Effect. Nixxo has complied,
in all material respects, with all of its Governmental Permits, except where the
failure to so comply would not have a Material Adverse Effect.
6.13. EMPLOYEE RELATIONS. Nixxo is not (a) a party to, involved in or, to
Nixxo's knowledge, threatened by, any labor dispute or unfair labor practice
charge, or (b) currently negotiating any collective bargaining agreement, and
Nixxo has not experienced any work stoppage during the last three years.
6.14. ERISA.
(a) Nixxo has delivered to Harmony (i) accurate and complete copies
of all Benefit Plans sponsored or maintained by Nixxo or under which Nixxo may
be obligated for its employees, directors or independent contractors ("Nixxo
Benefit Plans") and of any summary plan descriptions, summary annual reports and
insurance contracts relating thereto, (ii) accurate and complete detailed
summaries of all unwritten Nixxo Benefit Plans, (iii) accurate and complete
copies of the most recent financial statements and actuarial reports with
respect to all Nixxo Benefit Plans for which financial statements or actuarial
reports are required or have been prepared and (iv) accurate and complete copies
of all annual reports for all Nixxo Benefit Plans (for which annual reports are
required) prepared within the last two years.
(b) All Nixxo Benefit Plans conform in all material respects to, and
are being administered and operated in material compliance with, the
requirements of ERISA, the Code and all other applicable Laws, including
applicable Laws of foreign jurisdictions. There have not been any "prohibited
transactions," as such term is defined in Section 4975 of the Code or Section
406 of ERISA involving any of the Nixxo Benefit Plans, that could subject Nixxo
to any material penalty or tax imposed under the Code or ERISA.
(c) Any Nixxo Benefit Plan that is intended to be qualified under
Section 401(a) of the Code and exempt from tax under Section 501(a) of the Code
has been determined by the Internal Revenue Service to be so qualified, and such
determination remains in effect and has not been revoked. Nothing has occurred
since the date of any such determination that is reasonably likely to affect
adversely such qualification or exemption, or result in the imposition of excise
taxes
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or income taxes on unrelated business income under the Code or ERISA with
respect to any Nixxo Benefit Plan.
(d) To Nixxo's knowledge, (i) Nixxo has no current or contingent
obligation to contribute to any multiemployer plan (as defined in Section 3(37)
of ERISA) and (ii) neither Nixxo nor any entity that has been treated as a
single employer with Nixxo under Sections 414(b), (c), (m) or (o) of the Code,
has any liability, contingent or otherwise, under Title IV of ERISA or Section
412 of the Code.
(e) There are no pending or, to the knowledge of Nixxo, threatened
claims by or on behalf of any Nixxo Benefit Plans, or by or on behalf of any
individual participants or beneficiaries of any Nixxo Benefit Plans, alleging
any breach of fiduciary duty on the part of Nixxo or any of the officers,
directors or employees of Nixxo under ERISA or any other applicable Regulations,
or claiming benefit payments other than those made in the ordinary operation of
such plans, or alleging any violation of any other applicable Laws. To Nixxo's
knowledge, the Nixxo Benefit Plans are not the subject of any investigation,
audit or action by the Internal Revenue Service, the Department of Labor or the
PBGC. Nixxo has made all required contributions under the Nixxo Benefit Plans
including the payment of any premiums payable to the PBGC and other insurance
premiums.
(f) With respect to any Nixxo Benefit Plan that is an employee
welfare benefit plan (within the meaning of Section 3(1) of ERISA) (a "Nixxo
Welfare Plan"), (i) each Nixxo Welfare Plan for which contributions are claimed
as deductions under any provision of the Code is in material compliance with all
applicable requirements pertaining to such deduction, (ii) with respect to any
welfare benefit fund (within the meaning of Section 419 of the Code) related to
an Nixxo Welfare Plan, there is no disqualified benefit (within the meaning of
Section 4976(b) of the Code) that would result in the imposition of a tax under
Section 4976(a) of the Code, and (iii) any Nixxo Benefit Plan that is a group
health plan (within the meaning of Section 4980B(g)(2) of the Code) complies,
and in each and every case has complied, with all of the material requirements
of Section 4980B of the Code, ERISA, Title XXII of the Public Health Service Act
and the applicable provisions of the Social Security Act.
(g) The execution of this Agreement and the performance of the
Transactions will not (either alone or in combination with the occurrence of any
additional or subsequent events) constitute an event under any Nixxo Benefit
Plan that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any current
or former employee, director or consultant of Nixxo.
6.15. PATENTS, TRADEMARKS, ETC. To Nixxo's knowledge, Nixxo does not
infringe upon or unlawfully or wrongfully use any Intellectual Property owned or
claimed by another Person and no Person infringes on or wrongfully uses any
Intellectual Property owned or claimed by Nixxo, except for those situations
that would not have a Material Adverse Effect. To Nixxo's knowledge, Nixxo owns
or has valid rights to use all Intellectual Property used in the conduct of its
business, or
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proposed to be used in its business as proposed to be conducted, except where
the failure to have valid rights to use such Intellectual Property will not have
a Material Adverse Effect, free and clear of all Encumbrances, other than
Encumbrances which would not have a Material Adverse Effect.
6.16. ABSENCE OF CERTAIN CHANGES. Since the Nixxo Balance Sheet Date,
Nixxo has conducted the Nixxo Business in the ordinary course, and, as of the
date hereof, there has not been:
(a) any Material Adverse Effect on the Nixxo Business;
(b) any distribution or payment declared or made in respect of
Nixxo's capital stock by way of dividends, purchase or redemption of shares or
otherwise;
(c) any increase in the compensation payable or to become payable to
any current director or officer of Nixxo, except for merit and seniority
increases for employees made in the ordinary course of business, nor any
material change in any existing employment, severance, consulting arrangements
or any Nixxo Benefit Plan;
(d) any sale, assignment or transfer of any Nixxo Assets, or any
additions to or transactions involving any Nixxo Assets, other than those made
in the ordinary course of business or those solely involving Nixxo;
(e) other than in the ordinary course of business, any waiver or
release of any material claim or right or cancellation of any material debt held
by Nixxo;
(f) any change in practice with respect to Taxes, or any election,
change of any election, or revocation of any election with respect to Taxes, or
any settlement or compromise of any dispute involving a Tax liability;
(g) (i) any creation, or assumption of, any long-term debt or any
short-term debt for borrowed money other than under existing notes payable,
lines of credit or other credit facility or in the ordinary course of business
(ii) any assumption, granting of guarantees, endorsements or otherwise becoming
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other Person or (iii) any loans, advances or capital
contributions to, or investments in, any other Person except its Wholly-Owned
Subsidiaries;
(h) any material agreement, commitment or contract, except
agreements, commitments or contracts for the purchase, sale or lease of goods or
services in the ordinary course of business;
(i) other than in the ordinary course of business, any
authorization, recommendation, proposal or announcement of an intention to
authorize, recommend or propose, or enter into any Contract with respect to, any
(i) plan of liquidation or dissolution, (ii) acquisition
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of a material amount of assets or securities, (iii) disposition or Encumbrance
of a material amount of assets or securities, (iv) merger or consolidation or
(v) material change in its capitalization; or
(j) any change in accounting procedure or practice.
6.17. CORPORATE RECORDS. The minute books of Nixxo contain accurate,
complete and current copies of all Charter Documents and of all minutes of
meetings, resolutions and other proceedings of its Board of Directors and
stockholders.
6.18. FINDER'S FEES. No Person is or will be entitled to any commission,
finder's fee or other payment in connection with the Transactions based on
arrangements made by or on behalf of Nixxo.
6.19 NO MATERIAL MISSTATEMENTS. No statement by Nixxo contained in this
Agreement contains any untrue statement of a material fact, or omits to state
any material fact which is necessary to make the statements contained herein, in
light of the circumstances under which they were made, not misleading.
ARTICLE VII
INVESTMENT INTENT
7.1. INVESTMENT INTENT. In connection with the Closing, each Nixxo
Shareholder shall execute and deliver to the Merged Company a letter, the form
of which is reasonably acceptable to Harmony, which will state that the person
acquiring the Merged Company Shares in the Merger is acquiring the Merged
Company Shares for investment and not with a view for the distribution of the
Merged Company Shares except in compliance with Section 5 of the Securities Act,
and such other representations as is reasonably necessary for the issuance of
the Merged Company Shares to comply with Rule 506 under the Securities Act. The
Merged Company Shares will be issued in compliance with the Securities Act of
1933 and all applicable state securities Laws.
ARTICLE VIII
COVENANTS OF THE PARTIES
8.1 [Reserved]
8.2. NO SOLICITATION.
(a) From and after the date hereof until earlier of the Effective
Date or the date this Agreement is terminated under Article XVII, Harmony,
without the prior written consent of Nixxo, will not, and will not authorize or
permit any of its Subsidiaries or its Party Representatives to, directly or
indirectly, solicit, initiate or encourage (including by way of furnishing
information) or take any other action to facilitate knowingly any inquiries or
the making of any proposal which constitutes or may reasonably be expected to
lead to an Acquisition Proposal (as defined below) from any Person, or engage in
any discussion or negotiations relating thereto or accept any
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Acquisition Proposal; provided, however, that notwithstanding any other
provision hereof, Harmony may at any time prior to the time Harmony's
stockholders shall have voted to approve this Agreement, engage in discussions
or negotiations with a third party who (without any solicitation, initiation,
encouragement, discussion or negotiation, directly or indirectly, by or with any
Harmony Company or its Party Representatives after the date hereof) seeks to
initiate such discussions or negotiations and may furnish such third party
information concerning Harmony and its Business and Assets if, and only to the
extent that, (i)(x) the third party has first made an Acquisition Proposal that
is (as determined in good faith by the Harmony Board of Directors after
consultation with its legal and financial advisor) financially superior to the
Transactions and has demonstrated that the funds necessary for the Acquisition
Proposal are reasonably likely to be available and the Acquisition Proposal is
reasonably capable of consummation in accordance with its terms (as determined
in good faith in each case by Harmony's Board of Directors after consultation
with its legal and financial advisors) and (y) Harmony's Board of Directors
shall conclude in good faith, after considering applicable provisions of
applicable Law, on the basis of advice of its counsel, that such action is
necessary for the Board of Directors to act in a manner consistent with its
fiduciary duties under applicable Law and (ii) prior to furnishing such
information to or entering into discussions or negotiations with such Person,
Harmony (x) provides prompt notice to Nixxo to the effect that it is furnishing
information to or entering into discussions or negotiations with such Person and
(y) receives from such Person an executed confidentiality agreement in
reasonably customary form. Harmony shall immediately cease and terminate any
existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any Persons conducted heretofore by Harmony or its Party
Representatives with respect to the foregoing. Harmony shall not release any
third party from, or waive any provision of, any standstill agreement to which
it is a party or any confidentiality agreement between it and another Person who
has made an Acquisition Proposal, unless such Person has made an Acquisition
Proposal meeting the criteria set forth in clause (a)(i)(x) above and Harmony's
Board of Directors shall conclude in good faith, after considering applicable
provisions of applicable Law, on the basis of advice of its counsel, that such
action is necessary for the Board of Directors to act in a manner consistent
with its fiduciary duties under applicable Law. Harmony shall immediately notify
Nixxo orally (with a prompt written confirmation) of any such inquiries, offers
or proposals (including the terms and conditions of any such proposal and the
identity of the Person making it and shall provide copies of any such written
inquiries, offers or proposals), shall keep Nixxo informed of the status and
details of any such inquiry, offer or proposal (and agrees that any material
modification of the terms of an inquiry or proposal shall constitute a new
inquiry or proposal), and shall give Nixxo two (2) Business Days' advance notice
of any agreement to be entered into with, or any information to be supplied to,
any Person making such inquiry, offer or proposal (no such agreement, other than
a confidentiality agreement as set forth in this Section, to be executed or
agreed prior to the termination of this Agreement in accordance with its terms).
As used herein, "Acquisition Proposal" shall mean a bona fide proposal or offer
(other than by Nixxo) for a tender or exchange offer, merger, consolidation or
other business combination involving Harmony or any Subsidiary thereof, of any
proposal to acquire in any manner a substantial equity interest in, or a
substantial amount of the assets of, Harmony or any such Subsidiary.
(b) From and after the date hereof until earlier of the Effective
Date or the date this Agreement is terminated under Article XVII, Nixxo, without
the prior written consent of
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Harmony, will not, and will not authorize or permit any of its Subsidiaries or
its Party Representatives to, directly or indirectly, solicit, initiate or
encourage (including by way of furnishing information) or take any other action
to facilitate knowingly any inquiries or the making of any proposal which
constitutes or may reasonably be expected to lead to an Acquisition Proposal (as
defined above) from any Person, or engage in any discussion or negotiations
relating thereto or accept any Acquisition Proposal; provided, however, that
notwithstanding any other provision hereof, Nixxo may at any time prior to the
time the Shareholders shall have voted to approve this Agreement, engage in
discussions or negotiations with a third party who (without any solicitation,
initiation, encouragement, discussion or negotiation, directly or indirectly, by
or with Nixxo or its Party Representatives after the date hereof) seeks to
initiate such discussions or negotiations and may furnish such third party
information concerning Nixxo and its Business and Assets if, and only to the
extent that, (i)(x) the third party has first made an Acquisition Proposal that
is (as determined in good faith by the Nixxo Board of Directors after
consultation with its legal and financial advisor) financially superior to the
Transactions and has demonstrated that the funds necessary for the Acquisition
Proposal are reasonably likely to be available and the Acquisition Proposal is
reasonably capable of consummation in accordance with its terms (as determined
in good faith in each case by Nixxo's Board of Directors after consultation with
its legal and financial advisors) and (y) Nixxo's Board of Directors shall
conclude in good faith, after considering applicable provisions of applicable
Law, on the basis of advice of its counsel, that such action is necessary for
the Board of Directors to act in a manner consistent with its fiduciary duties
under applicable Law and (ii) prior to furnishing such information to or
entering into discussions or negotiations with such Person, Nixxo (x) provides
prompt notice to Harmony to the effect that it is furnishing information to or
entering into discussions or negotiations with such Person and (y) receives from
such Person an executed confidentiality agreement in reasonably customary form.
Nixxo shall immediately cease and terminate any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any Persons
conducted heretofore by Nixxo or its Party Representatives with respect to the
foregoing. Nixxo shall not release any third party from, or waive any provision
of, any standstill agreement to which it is a party or any confidentiality
agreement between it and another Person who has made an Acquisition Proposal,
unless such Person has made an Acquisition Proposal meeting the criteria set
forth in clause (a)(i)(x) above and Nixxo's Board of Directors shall conclude in
good faith, after considering applicable provisions of applicable Law, on the
basis of advice of its counsel, that such action is necessary for the Board of
Directors to act in a manner consistent with its fiduciary duties under
applicable Law. Nixxo shall immediately notify Harmony orally (with a prompt
written confirmation) of any such inquiries, offers or proposals (including the
terms and conditions of any such proposal and the identity of the Person making
it and shall provide copies of any such written inquiries, offers or proposals),
shall keep Harmony informed of the status and details of any such inquiry, offer
or proposal (and agrees that any material modification of the terms of an
inquiry or proposal shall constitute a new inquiry or proposal) , and shall give
Harmony two (2) Business Days' advance notice of any agreement to be entered
into with, or any information to be supplied to, any Person making such inquiry,
offer or proposal (no such agreement, other than a confidentiality agreement as
set forth in this Section, to be executed or agreed prior to the termination of
this Agreement in accordance with its terms).
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8.3. NOTIFICATION OF CERTAIN MATTERS. Each of the Harmony Parties and
Nixxo shall give prompt notice to each other of the following:
(a) the occurrence or nonoccurrence of any event whose occurrence or
nonoccurrence would be likely to cause either (i) any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the Effective Time, or (ii) directly or
indirectly, any Material Adverse Effect;
(b) any material failure of such Party, or any officer, director,
employee or agent of any thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder; and
8.4. ACCESS TO INFORMATION.
(a) From the date hereof to the Effective Time, the Harmony Parties
and Nixxo shall, and shall cause its respective Subsidiaries, and its officers,
directors, employees, auditors, counsel and agents to afford the officers,
employees, auditors, counsel, financial advisors and agents of the other Party
complete access at all reasonable times to such Party's and its Subsidiaries'
officers, employees, auditors, counsel, agents, properties, offices and other
facilities and to all of their respective books and records, and shall furnish
the other with all financial, operating and other data and information as such
other Party may reasonably request.
(b) All information so received from the other Party shall be deemed
received pursuant to the confidentiality agreement provisions in the Letter of
Intent dated August 31, 2000 heretofore executed and delivered by Nixxo and
Harmony (the "Confidentiality Agreement"), and each such Party shall, and shall
cause its Subsidiaries and each of its and their respective officers, directors,
employees, auditors, counsel, financial advisors and agents ("Party
Representatives"), to comply with the provisions of the Confidentiality
Agreement with respect to such information. The provisions of the
Confidentiality Agreement are hereby incorporated herein by reference with the
same effect as if fully set forth herein.
8.5. PUBLIC ANNOUNCEMENTS. Harmony and Nixxo (a) shall use all reasonable
efforts to develop a joint communications plan and each Party shall use all
reasonable efforts to ensure that all press releases and other public statements
with respect to the Transactions shall be consistent with such joint
communications plan or, to the extent inconsistent therewith, shall have
received the prior written approval of the other and (b) before issuing any
press release or otherwise making any public statements with respect to the
Transactions, will consult with each other as to its form and substance and
shall not issue any such press release or make any such public statement prior
to such consultation, except for each of (a) and (b) above as may be required by
Law.
8.6. COOPERATION. Upon the terms and subject to the conditions hereof,
each of the Parties shall use its commercially reasonable efforts to take or
cause to be taken all actions and to do or cause to be done all things
necessary, proper or advisable to consummate as promptly as practicable the
Transactions and shall use its commercially reasonable efforts to obtain all
Harmony
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Required Consents and Nixxo Required Consents, and to effect all necessary
filings under the Securities Act and the Exchange Act. Without limiting the
generality of the foregoing, each Party shall use all commercially reasonable
efforts to take, or cause to be taken, all other actions and to do, or cause to
be done, all other things necessary, proper or advisable to fulfill the
conditions herein to the extent that the fulfillment thereof is within a Party's
control.
8.7. REORGANIZATION. From and after the date hereof and until the
Effective Time, neither Harmony or Nixxo, nor any of their respective
Subsidiaries shall knowingly take any action, or knowingly fail to take any
action, that would jeopardize qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code. Notwithstanding that there is
no guaranty of qualification, the Parties agree that the Merger is intended to
be a tax-free reorganization under Section 368 of the Code, and this Agreement
is intended to be a "plan of reorganization" within the meaning of the
regulations promulgated under such section of the Code.
ARTICLE IX
COVENANTS OF HARMONY
9.1. OPERATION OF THE BUSINESS. Except as contemplated by this Agreement
or as expressly agreed to in writing by Nixxo, during the period from the date
of this Agreement to the Effective Time, Harmony and its Subsidiaries will
conduct their operations only in the ordinary course of business consistent with
sound financial, operational and regulatory practice, and will take no action
which would materially adversely affect their ability to consummate the
Transactions. Without limiting the generality of the foregoing, except as
otherwise expressly provided in this Agreement or except as disclosed in the
Harmony Disclosure Schedule, prior to the Effective Time, neither Harmony nor
any of its Subsidiaries will, without the prior written consent of Nixxo:
(a) amend its Charter Documents or bylaws (or similar organizational
documents);
(b) authorize for issuance, issue, sell, deliver, grant any options
for, or otherwise agree or commit to issue, sell or deliver any shares of its
capital stock or any other securities, other than as set forth in this
Agreement;
(c) recapitalize, split, combine or reclassify any shares of its
capital stock; declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock; or purchase, redeem or otherwise acquire any of its or its
Subsidiaries' securities or modify any of the terms of any such securities;
(d) (i) create, incur, assume or permit to exist any long-term debt
or any short-term debt for borrowed money other than under existing notes
payable, lines of credit or other credit facilities or in the ordinary course of
business; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person except in the ordinary course of business or as otherwise may
be contractually required
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and disclosed in the Harmony Disclosure Schedule; or (iii) make any loans,
advances or capital contributions to, or investments in, any other Person;
(e) enter into any material agreement, commitment or contract,
except agreements, commitments or contracts for the purchase, sale or lease of
goods or services in the ordinary course of business;
(f) other than in the ordinary course of business, authorize,
recommend, propose or announce an intention to authorize, recommend or propose,
or enter into any Contract with respect to, any (i) plan of liquidation or
dissolution, (ii) acquisition of a material amount of assets or securities,
(iii) disposition or Encumbrance of a material amount of assets or securities,
(iv) merger or consolidation or (v) material change in its capitalization;
(g) change any material accounting or Tax procedure or practice;
(h) take any action the taking of which, or knowingly omit to take
any action the omission of which, would cause any of the representations and
warranties herein to fail to be true and correct in all material respects as of
the date of such action or omission as though made at and as of the date of such
action or omission;
(i) compromise, settle or otherwise modify any material claim or
litigation not identified in the Harmony Disclosure Schedule; or
(j) commit or agree to do any of the foregoing.
9.2. MAINTENANCE OF THE ASSETS. Harmony shall, and shall cause each other
Harmony Company to, use its reasonable best efforts to continue to maintain and
service the Harmony Assets consistent with past practice. Harmony shall not, and
shall cause each other Harmony Company not to, directly or indirectly, sell or
encumber all or any part of the Harmony Assets, other than sales in the ordinary
course of business or sales to or Encumbrances in favor of any other Harmony
Company, or initiate or participate in any discussions or negotiations or enter
into any agreement to do any of the foregoing.
9.3. CERTAIN TAX MATTERS. From the date hereof until the Effective Time,
(a) Harmony and each of its Subsidiaries will prepare and file, in the manner
required by applicable Law, all Tax Returns (the "Post-Signing Returns")
required to be filed under applicable Law; (b) Harmony and each of its
Subsidiaries will timely pay all Taxes shown as due and payable on such
Post-Signing Returns that are so filed; (c) Harmony and each of its Subsidiaries
will make provision for all Taxes payable by Harmony and/or any such Subsidiary
under applicable Law for which no Post-Signing Return is due prior to the
Effective Time; and (d) Harmony will promptly notify Nixxo in writing of any
action, suit, proceeding, claim or audit pending against or with respect to
Harmony or any of its Subsidiaries in respect of any Tax that is not disclosed
on the Harmony Disclosure Schedule.
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9.4. STATE ANTI-TAKEOVER LAW. If any "business combination," "moratorium,"
"control share," "fair price," "interested shareholder," "affiliated
transaction" or other anti-takeover statute or regulation under the NBCL (i)
prohibits or restricts Harmony's ability to perform its obligations under this
Agreement or any party's ability to consummate the Merger or the other
transactions contemplated hereby or thereby, or (ii) would have the effect of
invalidating or voiding this Agreement or any provision hereof, then Harmony
shall use its best efforts to obtain any necessary consents or approvals so that
the foregoing shall not apply.
9.5. EXPENSES. Harmony shall pay all of the legal, accounting and other
expenses incurred by Harmony in connection with the Transactions.
9.6. HARMONY STOCKHOLDER MEETING. Harmony shall cause a meeting of its
stockholders or action by written consent (the "Harmony Stockholder Meeting") to
be duly called and held as soon as reasonably practicable for the purpose of
voting on the amendment to Harmony's Charter Documents to effectuate the change
of Harmony's name to such name as designated by Nixxo effective at the Effective
Time as required by the NBCL. Subject to their fiduciary duties, the directors
of Harmony shall recommend such adoption by Harmony's stockholders of the other
matters to be voted upon.
ARTICLE X
COVENANTS OF NIXXO
10.1. OPERATION OF THE BUSINESS. Except as contemplated by this Agreement
or as expressly agreed to in writing by Harmony, during the period from the date
of this Agreement to the Effective Time, Nixxo will conduct its operations only
in the ordinary course of business consistent with sound financial, operational
and regulatory practice, and will take no action which would materially
adversely affect its ability to consummate the Transactions. Without limiting
the generality of the foregoing, except as otherwise expressly provided in this
Agreement or except as disclosed in the Nixxo Disclosure Schedule, prior to the
Effective Time, Nixxo will not, without the prior written consent of Harmony:
(a) amend its Charter Documents or bylaws (or similar organizational
documents);
(b) authorize for issuance, issue, sell, deliver, grant any options
for, or otherwise agree or commit to issue, sell or deliver any shares of its
capital stock or any other securities, other than as described in this
Agreement;
(c) recapitalize, split, combine or reclassify any shares of its
capital stock; declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock; or purchase, redeem or otherwise acquire any of its
securities or modify any of the terms of any such securities;
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(d) (i) create, incur, assume or permit to exist any long-term debt
or any short-term debt for borrowed money other than under existing notes
payable, lines of credit or other credit facilities or in the ordinary course of
business; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person or as otherwise may be contractually required and disclosed in
the Nixxo Disclosure Schedule; or (iii) make any loans, advances or capital
contributions to, or investments in, any other Person;
(e) (i) amend any Nixxo Benefit Plan or (ii) except in the ordinary
course of business consistent with usual practice or established policy (a)
increase in any manner the rate of compensation of any of its directors,
officers or other employees everywhere, except for increases in the ordinary
course of business; (b) pay or agree to pay any bonus, pension, retirement
allowance, severance or other employee benefit except as required under
currently existing Nixxo Benefit Plans disclosed in the Nixxo Disclosure
Schedule or in the ordinary course of business; or (c) amend, terminate or enter
into any employment, consulting, severance, change in control or similar
agreements or arrangements with any of its directors, officers or other
employees;
(f) enter into any material agreement, commitment or contract,
except agreements, commitments or contracts for the purchase, sale or lease of
goods or services in the ordinary course of business;
(g) other than in the ordinary course of business, authorize,
recommend, propose or announce an intention to authorize, recommend or propose,
or enter into any Contract with respect to, any (i) plan of liquidation or
dissolution, (ii) acquisition of a material amount of assets or securities,
(iii) disposition or Encumbrance of a material amount of assets or securities,
(iv) merger or consolidation or (v) material change in its capitalization;
(h) change any material accounting or Tax procedure or practice;
(i) take any action the taking of which, or knowingly omit to take
any action the omission of which, would cause any of the representations and
warranties herein to fail to be true and correct in all material respects as of
the date of such action or omission as though made at and as of the date of such
action or omission;
(j) compromise, settle or otherwise modify any material claim or
litigation not identified in the Nixxo Disclosure Schedule; or
(k) commit or agree to do any of the foregoing.
10.2. NIXXO SHAREHOLDER MEETING. Nixxo shall cause a meeting of the Nixxo
Shareholders (the "Nixxo Shareholder Meeting") to be duly called and held as
soon as reasonably practicable for the purpose of voting on the adoption of this
Agreement and the Merger as required by the CGCL. Subject to their fiduciary
duties, the directors of Nixxo shall recommend such adoption of this Agreement
and the Merger by Nixxo's stockholders. In connection with such
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meeting, Nixxo (a) will mail to its stockholders as promptly as practicable all
required materials for such meeting, (b) will use all reasonable efforts to
obtain the necessary approvals by its stockholders of this Agreement and the
Transactions, and (c) will otherwise comply with all legal requirements
applicable to such meeting.
10.3. MAINTENANCE OF THE ASSETS. Nixxo shall use its reasonable best
efforts to continue to maintain and service the Nixxo Assets consistent with
past practice. Nixxo shall not directly or indirectly, sell or encumber all or
any part of the Nixxo Assets, other than sales in the ordinary course of
business or initiate or participate in any discussions or negotiations or enter
into any agreement to do any of the foregoing.
10.4. EMPLOYEES AND BUSINESS RELATIONS. Nixxo shall use commercially
reasonable efforts to keep available the services of its current employees and
agents and to maintain its relations and goodwill with its suppliers, customers,
distributors and any others having business relations with it.
10.5. EXPENSES. Nixxo shall pay all of the legal, accounting and other
expenses incurred by Nixxo in connection with the Transactions.
10.6. CERTAIN TAX MATTERS. From the date hereof until the Effective Time,
(a) Nixxo will prepare and file, in the manner required by applicable Law, all
Post-Signing Returns required to be filed under applicable Law; (b) Nixxo will
timely pay all Taxes shown as due and payable on such Post-Signing Returns that
are so filed; (c) Nixxo will make provision for all Taxes payable by Nixxo under
applicable Law for which no Post-Signing Return is due prior to the Effective
Time; and (d) Nixxo will promptly notify Harmony in writing of any action, suit,
proceeding, claim or audit pending against or with respect to Nixxo in respect
of any Tax that is not disclosed on the Nixxo Disclosure Schedule.
10.7. STATE ANTI-TAKEOVER LAW. If any "business combination,"
"moratorium," "control share," "fair price," "interested shareholder,"
"affiliated transaction" or other anti-takeover statute or regulation under the
CGCL (i) prohibits or restricts Nixxo's ability to perform its obligations under
this Agreement or any party's ability to consummate the Nixxo Merger or the
other transactions contemplated hereby or thereby, or (ii) would have the effect
of invalidating or voiding this Agreement or any provision hereof or thereof,
then Nixxo shall use its best efforts to obtain any necessary consents or
approvals so that the foregoing shall not apply.
ARTICLE XI
POST-CLOSING COVENANTS
11.1. APPOINTMENT TO THE BOARD OF DIRECTORS OF THE MERGED COMPANY. At the
Effective Time, the size of the Merged Company Board of Directors shall be five.
Four of the Merged Company Board of Directors shall be designated by Nixxo at or
prior to the closing and one of Merged Company Board of Directors shall be
designated by Harmony.
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11.2 [Reserved]
11.3. INDEMNIFICATION, DIRECTORS' AND OFFICERS' INSURANCE. The Merged
Company shall (a) maintain in effect the current provisions regarding
indemnification of officers and directors contained in the Charter Documents and
bylaws of Harmony, and (b) indemnify the directors and officers of Harmony to
the fullest extent to which Harmony is permitted to indemnify such officers and
directors under its Charter Documents and bylaws and applicable Law as in effect
immediately prior to the Effective Time.
ARTICLE XII
CONDITIONS PRECEDENT TO OBLIGATIONS OF ALL PARTIES
The respective obligations of each Party to consummate the Merger and the
other Transactions shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions:
12.1. LEGALITY. All required governmental approvals shall have been
obtained and any applicable waiting periods, shall have expired. No Law or Court
Order shall have been enacted, entered, promulgated or enforced by any court or
governmental entity that is in effect and that has the effect of making the
Merger illegal or otherwise prohibiting the consummation of the Merger and no
legal action shall be pending or threatened which is reasonably likely to have a
Material Adverse Effect on Party.
12.2. FAIRNESS OPINION. An investment banking firm reasonably acceptable
to Harmony will have delivered to Harmony's Board of Directors its opinion
reasonably satisfactory to Harmony's Board of Directors to the effect that on
the date of the opinion the Merger and the other Transactions contemplated
herein, as a whole, is fair from a financial point of view to the Harmony
Stockholders.
12.3. APPROVAL BY NIXXO SHAREHOLDERS. This Agreement shall have been
approved and adopted by the shareholders of Nixxo in accordance with the CGCL
and its Charter Documents.
ARTICLE XIII
[RESERVED]
ARTICLE XIV
CONDITIONS PRECEDENT TO OBLIGATIONS OF NIXXO
The obligations of Nixxo to consummate the Merger and the Transactions
shall be subject to the satisfaction or waiver, on or before the Effective Time,
of each of the following conditions:
14.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Harmony Parties contained in this Agreement shall be true and correct on
the date hereof and
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(except to the extent such representations and warranties speak as of an earlier
date) shall also be true and correct on and as of the Closing Date, except for
changes contemplated by this Agreement, with the same force and effect as if
made on and as of the Closing Date.
14.2. AGREEMENTS, CONDITIONS AND COVENANTS. The Harmony Parties shall have
performed or complied in all material respects with all agreements, conditions
and covenants required by this Agreement to be performed or complied with by
them on or before the Effective Time.
14.3. CERTIFICATES. Nixxo shall have received a certificate of an
executive officer of Harmony to the effect set forth in Sections 14.1, 14.2 and
14.5, respectively, and a certificate of an executive officer verifying the
Charter Documents and bylaws and the incumbency of the officers.
14.4. REQUIRED CONSENTS. Harmony shall have obtained all consents
("Harmony Required Consents") from third parties the absence of which would
result in a Material Adverse Effect on the Harmony Companies.
14.5. MATERIAL ADVERSE EFFECT. There shall have been no Material Adverse
Effect on Harmony or the Harmony Companies taken as a whole.
14.6. ANCILLARY DOCUMENTS. Each Harmony Party shall have tendered executed
copies of the Transaction Documents to which it is intended to be a party.
14.7. BOARD RECOMMENDATION. The Board of Directors of Harmony will have
approved and adopted this Agreement, including the Merger and the other
Transactions, and determined that the Merger is fair to the Harmony Stockholder.
14.8. RELEASES FROM HARMONY BOARD. Each of the members of the Board of
Directors of Harmony shall have delivered to Nixxo (i) such director's
resignation as a director of Harmony, (ii) such director's resignation as an
officer of Harmony, if applicable, (iii) release of Harmony from any obligation
under any employment or consulting agreement with such director, and (iv)
release of Harmony from any other obligation of Harmony to such director, except
any rights such director has under Section 11.3.
14.9 FINANCING. Harmony shall have raised in a private placement of the
sale of a maximum of 2,200,000 shares of Nixxo Common Stock at an offering price
of not less than $5.25 per share, before giving effect to Harmony's
three-for-one forward common stock split.
ARTICLE XV
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE HARMONY PARTIES
The obligations of the Harmony Parties to consummate the Merger and the
Transactions and the obligations of the Harmony Parties to consummate the Nixxo
Merger and the Transactions shall
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be subject to the satisfaction or waiver, on or before the Effective Time, of
each of the following conditions:
15.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Nixxo contained in this Agreement shall be true and correct on the date
hereof and (except to the extent such representations and warranties speak as of
an earlier date) shall also be true and correct on and as of the Closing Date,
except for changes contemplated by this Agreement, with the same force and
effect as if made on and as of the Closing Date.
15.2. AGREEMENTS, CONDITIONS AND COVENANTS. Nixxo shall have performed or
complied in all material respects with all agreements, conditions and covenants
required by this Agreement to be performed or complied with by it on or before
the Effective Time. Nixxo shall provide the written consent of Nixxo's
independent accountant's reports in the Nixxo Financial Statements, if necessary
under the Securities Act or Exchange Act.
15.3. CERTIFICATES. Harmony shall have received a certificate of an
executive officer of Nixxo to the effect set forth in Sections 15.1, 15.2 and
15.5, respectively, and a certificate of an executive officer verifying the
Charter Documents and bylaws and the incumbency of the officers.
15.4. REQUIRED CONSENTS. Nixxo shall have obtained all consents ("Nixxo
Required Consents") from third parties the absence of which would result in a
Material Adverse Effect on Nixxo.
15.5. MATERIAL ADVERSE EFFECT. There shall have been no Material Adverse
Effect on Nixxo.
15.6. ANCILLARY DOCUMENTS. Nixxo shall have tendered executed copies of
the Transaction Documents to which it is intended to be a party.
15.7. BOARD RECOMMENDATION. The Board of Directors of Nixxo will have (a)
approved and adopted this Agreement, including the Merger and the other
Transactions, and determined that the Merger is fair to the stockholders of
Nixxo, and (b) subject to fiduciary obligations of the Nixxo Board of Directors,
resolved to recommend approval and adoption of this Agreement, including the
Merger and the other Transactions, by the shareholder of Nixxo.
ARTICLE XVI
INDEMNIFICATION
16.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties set forth in Articles V and VI in this Agreement,
notwithstanding any investigation at any time made by or on behalf of any party
hereto, and in any certificate delivered in connection herewith with respect to
any of those representations and warranties, will terminate on the Effective
Date.
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16.2. INDEMNIFICATION OF NIXXO INDEMNIFIED PARTIES. Harmony covenants and
agrees that it will indemnify each Nixxo Indemnified Party against, and hold
each Nixxo Indemnified Party harmless from and in respect of, all claims that
arise from, are based on, arise out of, or are attributable to (i) any breach of
the representations and warranties of the Harmony Companies or in certificates
delivered in connection herewith; (ii) the nonfulfillment of any covenant or
agreement on the part of the Harmony Companies under this Agreement to be
performed prior to the Closing or (iii) any liability under the Securities Act,
the Exchange Act or other applicable Law which arises out of or is based on (A)
any untrue statement or alleged untrue statement of a material fact relating to
Harmony and its Subsidiaries, or any of them, which is provided to Nixxo or its
counsel in writing by the Harmony or (B) any omission or alleged omission to
state therein a material fact relating to Harmony and its Subsidiaries, or any
of them, required to be stated therein or necessary to make the statements
therein not misleading, and not provided to Nixxo or its counsel by Harmony
after a written request therefor (each damage claim described in Section 16.2
being a "Nixxo Indemnified Loss"). Once the occurrence of a breach of any
representations or warranties has been established, damages shall be calculated
without regard to whether such breach caused a Material Adverse Effect.
16.3. INDEMNIFICATION OF HARMONY INDEMNIFIED PARTIES. Nixxo covenants and
agrees that it will indemnify each Harmony Indemnified Party against, and hold
each Harmony Indemnified Party harmless from and in respect of, all claims that
arise from, are based on, arise out of, or are attributable to (i) any breach of
the representations and warranties of the Nixxo Companies or in certificates
delivered in connection herewith; (ii) the nonfulfillment of any covenant or
agreement on the part of the Nixxo Companies under this Agreement to be
performed prior to the Closing or (iii) any liability under the Securities Act,
the Exchange Act or other applicable Law which arises out of or is based on (A)
any untrue statement or alleged untrue statement of a material fact relating to
Nixxo and its Subsidiaries, or any of them, which is provided to Harmony or its
counsel in writing by the Nixxo Companies or (B) any omission or alleged
omission to state therein a material fact relating to Nixxo and its
Subsidiaries, or any of them, required to be stated therein or necessary to make
the statements therein not misleading, and not provided to Harmony or its
counsel by Nixxo after a written request therefor (each damage claim described
in Section 16.3 being a "Harmony Indemnified Loss"). Once the occurrence of a
breach of any representations or warranties has been established, damages shall
be calculated without regard to whether such breach caused a Material Adverse
Effect.
16.4. CONDITIONS OF INDEMNIFICATION.
(a) All claims for indemnification under this Agreement (except
Article VII) shall be asserted and resolved as follows in this Section 16.4. The
provisions of Article XVI shall be the sole manner by which the Indemnified
Party shall assert any claim against the Indemnifying Party that does not
involve a Third Party Claim, including without limitation any claim for breach
of this Agreement.
(b) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the party from whom
indemnification is sought (the "Indemnifying
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Party") of any third-party claim or claims asserted against the Indemnified
Party ("Third Party Claim") that could give rise to a right of indemnification
under this Agreement and (ii) transmit to the Indemnifying Party a written
notice ("Claim Notice") describing in reasonable detail the nature of the Third
Party Claim, a copy of all papers served with respect to that claim (if any), an
estimate of the amount of damages attributable to the Third Party Claim to the
extent feasible (which estimate shall not be conclusive of the final amount of
such claim) and the basis for the Indemnified Party's request for
indemnification under this Agreement. Except as set forth in Section 16.1, the
failure to promptly deliver a Claim Notice shall not relieve the Indemnifying
Party of its obligations to the Indemnified Party with respect to the related
Third Party Claim except to the extent that the resulting delay is materially
prejudicial to the defense of that claim. Within 15 days after receipt of any
Claim Notice (the "Election Period"), the Indemnifying Party shall notify the
Indemnified Party (i) whether the Indemnifying Party disputes its potential
liability to the Indemnified Party under this Article XVI with respect to that
Third Party Claim and (ii) if the Indemnifying Party does not dispute its
potential liability to the Indemnified Party with respect to that Third Party
Claim, whether the Indemnifying Party desires, at the sole cost and expense of
the Indemnifying Party, to defend the Indemnified Party against that Third Party
Claim.
(c) If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party and notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the
Third Party Claim, then the Indemnifying Party shall have the right to defend,
at its sole cost and expense, that Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 16.4(c) and the Indemnified
Party will furnish the Indemnifying Party with all information in its
possession, subject to a confidentiality agreement, with respect to that Third
Party Claim and otherwise cooperate with the Indemnifying Party in the defense
of that Third Party Claim; provided, however, that the Indemnifying Party shall
not enter into any settlement with respect to any Third Party Claim that (i)
purports to limit the activities of, or otherwise restrict in any way, any
Indemnified Party or any Affiliate of any Indemnified Party, (ii) involves a
guilty plea to any crime or (iii) involves a fine or penalty, whether or not
paid by the Indemnifying Party, without the prior consent of that Indemnified
Party (which consent may be withheld in the sole discretion of that Indemnified
Party). The Indemnified Party is hereby authorized, at the sole cost and expense
of the Indemnifying Party, to file, during the Election Period, any motion,
answer or other pleadings that the Indemnified Party shall deem necessary or
appropriate to protect its interests or those of the Indemnifying Party. The
Indemnified Party may participate in, but not control, any defense or settlement
of any Third Party Claim controlled by the Indemnifying Party pursuant to this
Section 16.4(c) and will bear its own costs and expenses with respect to that
participation; provided, however, that if the named parties to any such action
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party, and the Indemnified Party has been advised by counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the Indemnifying Party, then the Indemnified
Party may employ separate counsel at the expense of the Indemnifying Party
(provided that such expenses are reasonable), and, on its written notification
of that employment, the Indemnifying Party shall not have the right to assume or
continue the defense of such action on behalf of the Indemnified Party.
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(d) If the Indemnifying Party (i) within the Election Period (A)
disputes its potential liability to the Indemnified Party under this Article
XVI, (B) elects not to defend the Indemnified Party pursuant to Section 16.4(c)
or (C) fails to notify the Indemnified Party that the Indemnifying Party elects
to defend the Indemnified Party pursuant to Section 16.4(c) or (ii) elects to
defend the Indemnified Party pursuant to Section 16.4(c) but fails diligently
and promptly to prosecute or settle the Third Party Claim, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party (provided that such expenses are reasonable) (if the
Indemnified Party is entitled to indemnification hereunder), the Third Party
Claim by all appropriate proceedings, which proceedings shall be promptly and
vigorously prosecuted by the Indemnified Party to a final conclusion or settled.
The Indemnified Party shall have full control of such defense and proceedings.
Notwithstanding the foregoing, if the Indemnifying Party has delivered a written
notice to the Indemnified Party to the effect that the Indemnifying Party
disputes its potential liability to the Indemnified Party under this Article XVI
and if such dispute is resolved in favor of the Indemnifying Party, the
Indemnifying Party shall not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this Section 16.4 or of the Indemnifying
Party's participation therein at the Indemnified Party's request, and the
Indemnified Party shall reimburse the Indemnifying Party in full for all
reasonable costs and expenses of such litigation. The Indemnifying Party may
participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this Section 16.4(d), and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation.
(e) In the event any Indemnified Party should have a claim against
any Indemnifying Party hereunder that does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"Indemnity Notice") describing in reasonable detail the nature of the claim, an
estimate of the amount of damages attributable to that claim to the extent
feasible (which estimate shall not be conclusive of the final amount of such
claim) and the basis of the Indemnified Party's request for indemnification
under this Agreement. If the Indemnifying Party does not notify the Indemnified
Party within 15 days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes such claim, the claim specified by the Indemnified
Party in the Indemnity Notice shall be deemed a liability of the Indemnifying
Party hereunder. If the Indemnifying Party has timely disputed such claim, as
provided above, such dispute shall be resolved by proceedings in an appropriate
court of competent jurisdiction if the parties do not reach a settlement of such
dispute within 30 days after notice of a dispute is given.
(f) Payments of all amounts owing by an Indemnifying Party pursuant
to this Article XVI relating to a Third Party Claim shall be made within 30 days
after the latest of (i) the settlement of that Third Party Claim, (ii) the
expiration of the period for appeal of a final adjudication of that Third Party
Claim or (iii) the expiration of the period for appeal of a final adjudication
of the Indemnifying Party's liability to the Indemnified Party under this
Agreement. Payments of all amounts owing by an Indemnifying Party pursuant to
Section 16.4(e) shall be made within 30 days after the later of (i) the
expiration of the 30-day Indemnity Notice period or (ii) the expiration of the
period for appeal of a final adjudication of the Indemnifying Party's liability
to the Indemnified Party under this Agreement.
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16.5. REMEDIES NOT EXCLUSIVE. The remedies provided in this Agreement
shall not be exclusive of any other rights or remedies available to one party
against the other, either at law or in equity.
ARTICLE XVII
TERMINATION
17.1. GROUNDS FOR TERMINATION. This Agreement may be terminated at any
time before the Effective Time, in each case as authorized by the respective
Boards of Directors of the Parties:
(a) By mutual written consent of each of Harmony and Nixxo;
(b) By Harmony or Nixxo if the Merger shall not have been
consummated on or before the Termination Date; provided, however, that the right
to terminate this Agreement under this Section 17.1(b) shall not be available to
any Party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Effective Time to occur on or
before the Termination Date;
(c) By Harmony or Nixxo if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued a Court Order (which Court Order the Parties shall use commercially
reasonable efforts to lift) that permanently restrains, enjoins or otherwise
prohibits the Transactions, and such Court Order shall have become final and
nonappealable;
(d) By Nixxo if Harmony shall have breached, or failed to comply
with, in any material respect, any of its obligations under this Agreement or
any representation or warranty made by Harmony shall have been incorrect in any
material respect when made, and such breach, failure or misrepresentation is not
cured within 20 days after notice thereof, and in either case, any such
breaches, failures or misrepresentations, individually or in the aggregate,
results or would reasonably be expected to result in a failure to satisfy a
condition to Harmony's obligations to consummate the transactions contemplated
hereby;
(e) By Harmony if Nixxo shall have breached, or failed to comply
with, in any material respect, any of its obligations under this Agreement or
any representation or warranty made by it shall have been incorrect in any
material respect when made, and such breach, failure or misrepresentation is not
cured within 20 days after notice thereof, and in either case, any such
breaches, failures or misrepresentations, individually or in the aggregate,
results or would reasonably be expected to result in a failure to satisfy a
condition to Nixxo's obligations to consummate the transactions contemplated
hereby;
(f) By Harmony if at the Harmony Stockholder Meeting (including any
adjournment thereof) the matters required to be approved at the Harmony
Stockholder Meeting shall
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fail to be approved and adopted by the affirmative vote of the stockholders of
Harmony as required under the NBCL;
(g) By Nixxo if at the Nixxo Shareholder Meeting (including any
adjournment thereof) this Agreement and the Merger shall fail to be approved and
adopted by the affirmative vote of the stockholders of Nixxo as required under
the CGCL;
(h) By Harmony, prior to the approval of this Agreement by the
stockholders of Harmony, upon five days notice to Nixxo, if, as a result of an
Acquisition Proposal received by Harmony from a Person other than a Party to
this Agreement or any of its Affiliates, the Board of Directors of Harmony
determines in good faith that its fiduciary obligations under applicable Law
require that such Acquisition Proposal be accepted; provided, however, that (i)
immediately following such termination Harmony executes with such third party a
definitive agreement to implement such Acquisition Proposal, (ii) the Board of
Directors of Harmony shall have concluded in good faith, after considering
applicable provisions of applicable Law and after giving effect to all
concessions which may be offered by Nixxo pursuant to clause (iii) below, on the
basis of advice of counsel, that such action is necessary for the Board of
Directors to act in a manner consistent with its fiduciary duties under
applicable Law, and (iii) prior to any such termination, (x) Harmony shall have
provided Nixxo with five days' notice of the terms of the proposal and otherwise
complied with Section 8.2(a) hereof (including making the finding contemplated
by Section 8.2(a)(x) hereof) and (y) Harmony shall, and shall cause its
financial and legal advisors to, negotiate with Nixxo to make such adjustments
in the terms and conditions of this Agreement as would enable Harmony to proceed
with the Transactions;
(i) By Nixxo, prior to the approval of this Agreement by the
stockholders of Nixxo, upon five days notice to Harmony, if, as a result of an
Acquisition Proposal received by Nixxo from a Person other than a Party to this
Agreement or any of its Affiliates, the Board of Directors of Nixxo determines
in good faith that its fiduciary obligations under applicable Law require that
such Acquisition Proposal be accepted; provided, however, that (i) immediately
following such termination Nixxo executes with such third party a definitive
agreement to implement such Acquisition Proposal, (ii) the Board of Directors of
Nixxo shall have concluded in good faith, after considering applicable
provisions of applicable Law and after giving effect to all concessions which
may be offered by Harmony pursuant to clause (iii) below, on the basis of advice
of counsel, that such action is necessary for the Board of Directors to act in a
manner consistent with its fiduciary duties under applicable Law, and (iii)
prior to any such termination, (x) Nixxo shall have provided Harmony with five
days' notice of the terms of the proposal and otherwise complied with Section
8.2(b) hereof (including making the finding contemplated by Section 8.2(b)(i)(x)
hereof) and (y) Nixxo shall, and shall cause its financial and legal advisors
to, negotiate with Harmony to make such adjustments in the terms and conditions
of this Agreement as would enable Nixxo to proceed with the Transactions.
(j) By Harmony if the Board of Directors of Nixxo shall withdraw,
modify or change its recommendation of this Agreement or the Merger or shall
have failed to reaffirm its recommendation within five Business Days of
Harmony's request that it do so or shall have
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recommended or issued a neutral recommendation (or taken no position) with
respect to any Acquisition Proposal.
(k) By Nixxo if the Board of Directors of Harmony shall withdraw,
modify or change its recommendation of this Agreement or the Merger or shall
have failed to reaffirm its recommendation within five Business Days of Nixxo's
request that it do so or shall have recommended or issued a neutral
recommendation (or taken no position) with respect to any Acquisition Proposal.
17.2. EFFECT OF TERMINATION.
(a) If this Agreement is terminated pursuant to Section 17.1(a), (b)
or (c), this Agreement shall be terminated and there shall be no liability on
the part of any of the Parties.
(b) If this Agreement is terminated by Nixxo pursuant to Section
17.1(d) or (k) or by Harmony pursuant to Section 17.1(f) or (h), then Harmony
shall pay Nixxo liquidated damages in the amount of $100,000.
(c) If this Agreement is terminated by Harmony pursuant to Section
17.1(e) or (j) or by Nixxo pursuant to Section 17.1(g) or (i), then Nixxo shall
pay Harmony liquidated damages in the amount of $100,000.
ARTICLE XVIII
GENERAL MATTERS
18.1. [Reserved]
18.2. CONTENTS OF AGREEMENT. This Agreement, together with the other
Transaction Documents, set forth the entire understanding of the Parties hereto
with respect to the Transactions and supersede all prior agreements or
understandings among the Parties regarding those matters.
18.3. AMENDMENT, PARTIES IN INTEREST, ASSIGNMENT, ETC. This Agreement may
be amended, modified or supplemented only by a written instrument duly executed
by each of the Parties hereto. If any provision of this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, legal representatives, successors and permitted assigns of the Parties
hereto. No Party hereto shall assign this Agreement or any right, benefit or
obligation hereunder. Any term or provision of this Agreement may be waived at
any time by the Party entitled to the benefit thereof by a written instrument
duly executed by such Party. The Parties hereto shall execute and deliver any
and all documents and take any and all other actions that may be deemed
reasonably necessary by their respective counsel to complete
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the Transactions. Nothing in this Agreement is intended or will be construed to
confer on any Person other than the Parties hereto any rights or benefits
hereunder.
18.4. INTERPRETATION. Unless the context of this Agreement clearly
requires otherwise, (a) references to the plural include the singular, the
singular the plural, the part the whole, (b) references to any gender include
all genders, (c) "or" has the inclusive meaning frequently identified with the
phrase "and/or," (d) "including," "includes" or similar words has the inclusive
meaning frequently identified with the phrase "but not limited to" and (e)
references to "hereunder" or "herein" relate to this Agreement. The section and
other headings contained in this Agreement are for reference purposes only and
shall not control or affect the construction of this Agreement or the
interpretation thereof in any respect. Section, subsection, Disclosure Schedule
and Exhibit references are to this Agreement unless otherwise specified. The
Exhibits and Schedules referred to in this Agreement will be deemed to be a part
of this Agreement. Each accounting term used herein that is not specifically
defined herein shall have the meaning given to it under GAAP.
18.5. NOTICES. All notices that are required or permitted hereunder shall
be in writing and shall be sufficient if personally delivered or sent by a
nationally recognized overnight courier upon proof of delivery. Any notices
shall be deemed given upon receipt at the address set forth below, unless such
address is changed by notice to the other Party hereto:
If to Nixxo: Nixxo Technologies, Inc.
2855 Zanker Road
San Jose, California 95134
Attn: Stanley Kim
with a required copy to: Standard Telecom Co., Ltd.
926 Kwanyang 2-Dong
Dongan-Ku
Anyang City, Kyunggi-Do
KOREA 431-062
If to Harmony: Harmony Trading Corp.
275 St. Jacques Street West, Suite 36
Montreal, Quebec, Canada H2Y 1M9
Attn: Henry J. Yersh
with a required copy to: Kaplan Gottbetter & Levenson, LLP
630 Third Avenue, 5th Floor
New York, New York 10017
Attn: James G. Smith, Esq.
18.6. GOVERNING LAW AND VENUE. This Agreement shall be construed and
interpreted in accordance with the Laws of the State of New York without regard
to its provisions
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concerning conflict of laws. Any dispute or controversy concerning or relating
to this Agreement shall be exclusively resolved in the federal or state courts
located in the city, county and state of New York, USA.
18.7. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be binding as of the date first written above,
and all of which shall constitute one and the same instrument. Each such copy
shall be deemed an original, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
18.8. WAIVERS. Compliance with the provisions of this Agreement may be
waived only by a written instrument specifically referring to this Agreement and
signed by the Party waiving compliance. No course of dealing, nor any failure or
delay in exercising any right, will be construed as a waiver, and no single or
partial exercise of a right will preclude any other or further exercise of that
or any other right.
18.9. MODIFICATION. No supplement, modification or amendment of this
Agreement will be binding unless made in a written instrument that is signed by
all of the Parties hereto and that specifically refers to this Agreement.
18.10. ENFORCEMENT OF AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of competent jurisdiction, this being in addition
to any other remedy to which they are entitled at law or equity.
18.11. WAIVER OF JURY TRIAL. Each party acknowledges and agrees that any
controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each such party hereby
irrevocably and unconditionally waives any right such party may have to a trial
by jury in respect of any litigation directly or indirectly arising out of or
relating to this Agreement, or the Transactions contemplated by this Agreement.
Each party certifies and acknowledges that (i) no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver, (ii) each party understands and has considered the implications of this
waiver, (iii) each party makes this waiver voluntarily, and (iv) each party has
been induced to enter into this Agreement by, among other things, the mutual
waivers and certifications in this Section 18.11.
18.12. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable Law in an acceptable manner to the end that the
Transactions are fulfilled to the extent possible.
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IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto
as of the day and year first written above.
NIXXO TECHNOLOGIES, INC.
By: /s/ SA H. Bang
-------------------------------------
Name: SA H. BANG, Ph.D.
Title: President & CEO
HARMONY TRADING CORP.
By: /s/ Henry J. Yersa
-------------------------------------
Name: HENRY J. YERSA
Title: President
NIXXO ACQUISITION CORPORATION
By: /s/ Henry J. Yersa
-------------------------------------
Name: HENRY J. YERSA
Title:
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[Schedules Omitted]
