SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 14, 2000
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INTERNET COMMERCE CORPORATION
(Exact name of registrant as specified in its charter)
Commission file number 024996
Delaware 133645702
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
805 Third Avenue, New York, New York 10022
(Address of principal executive offices)
(Zip Code)
(212) 271-7640
(Registrant's telephone number, including area code)
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INTERNET COMMERCE CORPORATION
FORM 8-K
CURRENT REPORT
TABLE OF CONTENTS
Page
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Item 5. Other Event..........................................................3
Item 7. Exhibit..............................................................3
Signature.....................................................................4
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Item 5 Other Event
On June 14, 2000, Internet Commerce Corporation ("ICC") entered into an
Agreement and Plan of Merger, among ICC, ICC Acquisition Corporation, Inc., a
wholly-owned subsidiary of ICC, Research Triangle Commerce, Inc. ("RTCI"),
Jeffrey LeRose and Blue Water Venture Fund II, L.L.C. (the "Selling
Shareholders") (such Agreement, the "Merger Agreement") and, in connection with
the Merger Agreement, loaned $5,000,000 to RTCI against receipt of a Promissory
Note from RTCI. The merger contemplated by the Merger Agreement and the
Promissory Note are described below.
The Merger
ICC's newly formed wholly-owned subsidiary will merge with and into
Research Triangle Commerce, Inc. (the "Merger") with RTCI surviving the Merger
as a wholly-owned subsidiary of ICC. ICC shall pay aggregate consideration of
$42,000,000 to the RTCI shareholders and option and warrant holders, consisting
of (i) RTCI's cash on hand at the effective time of the Merger, up to a maximum
of $4,000,000 (the "Cash at Closing") and (ii) shares of ICC Class A Common
Stock (the "ICC Shares") equal to the number of shares obtained by dividing (x)
$42,000,000 minus the Cash at Closing by (y) the average closing price of ICC's
Class A Common Stock for the ten days ending three days prior to the effective
time of the Merger (the "Market Price"). The Market Price is subject to a
maximum of $21.111111 and a minimum of $12.666667, so that a maximum of
3,315,790 ICC Shares and a minimum of 1,800,000 ICC Shares are issuable in
connection with the Merger. Options and warrants to purchase RTCI stock shall be
converted into the right to receive upon exercise of such options and warrants
the amount of cash and shares of ICC common stock which the holders of such
options and warrants would have received if such options and warrants had been
exercised immediately prior to the effective time of the Merger.
In connection with the Merger, the Selling Stockholders shall have the
right to appoint two members to the ICC Board of Directors, one of whom shall be
Jeffrey LeRose and the other of whom shall be an independent individual with
recognized experience and reputation in the industry, which individual shall be
reasonable acceptable to ICC. If such second individual is not identified at the
effective time of the Merger, the Selling Stockholders shall nominate a current
member of RTCI's Board of Directors to be a director of the ICC Board of
Directors, which member shall be reasonably acceptable to the ICC Board of
Directors.
The Merger Agreement and the Merger are subject to shareholder approval of
RTCI and other customary closing conditions. The Selling Stockholders have
agreed to vote all of their shares for such approval. The issuance of the ICC
Shares is subject to ICC stockholder approval, which will be solicited at a
special meeting of the ICC stockholders for which a proxy statement will be
prepared.
Promissory Note
ICC loaned $5,000,000 to RTCI on June 14, 2000. If the Merger is not
consummated by August 15, 2000, the principal of and all accrued and unpaid
interest on the loan will automatically convert into shares of RTCI common stock
at a pre-money valuation for RTCI of $42,000,000.
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If the Merger is not effective by November 30, 2000, RTCI shall cause one person
nominated by ICC to be elected to RTCI's Board of Directors for so long as ICC
holds any shares of RTCI common stock.
Item 7. Exhibit
c) Exhibit
Agreement and Plan of Merger dated as of June 14, 2000, among the Company, ICC
Acquisition Corporation, Inc., a wholly-owned subsidiary of the Company,
Research Triangle Commerce, Inc., Jeffrey LeRose and Blue Water Venture Fund II,
L.L.C.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 14, 2000
INTERNET COMMERCE CORPORATION
/s/ Dr. Geoffrey S. Carroll
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Dr. Geoffrey S. Carroll
President and Chief Executive Officer
(Principal Executive Officer)
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Exhibit
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June
14, 2000, among Internet Commerce Corporation, a Delaware corporation ("ICC"), a
party to this Agreement but not a constituent corporation in the Merger (as
hereinafter defined), ICC Acquisition Corporation, Inc., a North Carolina
corporation ("Buyer"), all of whose capital stock is owned directly by ICC,
Research Triangle Commerce, Inc., a North Carolina corporation (the "Company"),
and the individuals listed on the signature pages hereto (such persons being
herein referred to individually as a "Seller" and collectively as "Sellers").
WHEREAS, the Boards of Directors of ICC, Buyer and the Company,
deeming it advisable and for the respective benefit of Buyer and the Company,
and their respective shareholders, have approved the merger of Buyer with and
into the Company on the terms and conditions hereinafter set forth, and have
approved this Agreement and authorized the transactions contemplated hereby; and
WHEREAS, the Board of Directors of the Company has determined to
recommend to all of the Company's shareholders, including Sellers, that the
Merger and this Agreement be approved; and
WHEREAS, ICC, Buyer, the Company and Sellers desire to make certain
representations, warranties and agreements in connection with, and establish
various conditions precedent to, the Merger.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Articles of Merger"--as defined in Section 2.2.
"Balance Sheet Date"--April 30, 2000.
"Blue Water"-- Blue Water Venture Fund II, L.L.C.
"Blue Water Convertible Note"--the Company's Convertible Subordinated 8%
Debenture dated December 7, 1999 in the principal amount of $2 million payable
to the order of Blue Water.
"Blue Water Waiver Letter"--the side letter dated June 14, 2000 from Blue
Water to ICC pursuant to which Blue Water agrees to waive Blue Water's rights
under the Company's certificate of incorporation and under the Investor Rights
Agreement dated as of January 22,
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1999 by and among the Company, Blue Water and certain holders of the Company
Capital Stock as set forth therein.
"Buyer"--as defined in the first paragraph of this Agreement.
"Cash at Closing"--the cash on hand of the Company at the Effective Time
in excess of the sum of (x) the amount of the Company's borrowings under its
existing bank line of credit and (y) accrued and unpaid interest on the
Promissory Note, up to a maximum of $4,000,000.
"Closing"--as defined in Section 2.1(b).
"Closing Date"--the date and time as of which the Closing actually takes
place.
"Code"--as defined in Section 2.4.
"Commission"--the United States Securities and Exchange Commission.
"Company"--as defined in the first paragraph of this Agreement.
"Company Capital Stock"--the Company Common Stock (including Company
Restricted Stock) and the Series A Preferred Stock.
"Company Common Stock"--the Common Stock, no par value per share, of the
Company.
"Company Restricted Stock"-- as defined in Section 2.12(b).
"Company Series A Preferred Stock"--the Series A Preferred Stock, no par
value per share, of the Company.
"Company Shareholders"-- the holders of the Company Capital Stock.
"Company Shareholders Meeting"--as defined in Section 4.28.
"Contract"--any agreement, contract, obligation, promise or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"Conversion Number"-- the number obtained by dividing (a) $42,000,000 less
the Cash at Closing by (b) the Market Price of ICC Common Stock.
"Damages"--as defined in Section 11.2(a).
"Disclosure Schedule"--the disclosure schedule delivered by Sellers and
the Company to ICC and Buyer concurrently with the execution and delivery of
this Agreement.
"Effective Time"--as defined in Section 2.2.
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"Effective Day for the Registration Statement"--the day on which the
Commission declares a Registration Statement on Form S-3 relating to the resale
of the ICC Shares pursuant to Sections 2.7(a), (b) and/or (c) effective.
"Encumbrance"--any mortgage, charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income or exercise of any other attribute of
ownership.
"Environment"--soil, land surface or subsurface strata, surface waters,
groundwaters, drinking water supply, stream sediments, ambient air, plant and
animal life and any other environmental medium or natural resource.
"Environmental, Health and Safety Liabilities"--any cost, damages,
expense, liability, obligation or other responsibility arising from or under any
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to: (a) any environmental, health or safety matter or condition
(including on-site or off-site contamination, generation, handling and disposal
of hazardous substances, occupational safety and health and regulation of
chemical and hazardous substances or products); (b) fines, penalties, judgments,
awards, settlements, legal or administrative proceedings, damages, losses,
litigation, including civil and criminal claims, demands and response,
investigative, remedial, response or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law; (c) financial
responsibility under Environmental Law or Occupational Safety and Health Law for
cleanup costs or corrective action, including any investigation, cleanup,
removal, containment or other remediation or response actions required by
applicable Environmental Law or Occupational Safety and Health Law and for any
natural resource damages; or (d) any other compliance, corrective, investigative
or remedial measures required under Environmental Law or Occupational Safety and
Health Law. The terms "removal," "remedial" and "response action" include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as
amended ("CERCLA").
"Environmental Law"--any and all federal, state, local, provincial and
foreign, civil and criminal laws, statutes, ordinances, orders, codes, rules,
regulations, permits, policies, guidance documents, judgments, decrees and
agreements with any Governmental Authority of or relating to the protection of
health and the Environment, worker health and safety, and/or governing the
handling, use, generation, treatment, storage, transportation, disposal,
manufacture, distribution, packaging, labeling or release of Hazardous
Materials, including CERCLA; the Resource Conservation and Recovery Act, 42
U.S.C ss. 6901 et seq.; the Clean Air Act, 42 U.S.C ss. 7401 et seq.; and the
Occupational Safety and Health Act, 29 U.S.C ss. 651 et seq.; and the state
analogues thereto and any common law doctrine, including negligence, nuisance,
trespass, personal injury or property damage related or arising out of the
presence, release or exposure to Hazardous Materials.
"ERISA"--the Employee Retirement Income Security Act of 1974, as amended,
or any successor law.
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"Exchange Act"--the Securities Exchange Act of 1934, as amended, or any
successor law.
"Facilities"--any real property, leaseholds or other interests currently
or formerly owned or operated by the Company and any buildings, plants,
structures or equipment (including motor vehicles) currently or formerly owned
or operated by the Company.
"Financial Statements"--as defined in Section 4.5(a).
"Fully Diluted Number of Shares"--the sum of (i) the total number of
shares of Company Common Stock (including Company Restricted Stock) outstanding
immediately prior to the Effective Time and (ii) the total number of shares of
Company Common Stock issuable upon the exercise or conversion of all Company
Series A Preferred Stock, options, warrants and other exercisable or convertible
securities, including the Blue Water Convertible Note but excluding the
Promissory Note, outstanding immediately prior to the Effective Time.
"GAAP"--generally accepted United States accounting principles applied on
a basis consistent with the basis on which the financial statements of the
Company referred to in Section 4.5 were prepared.
"Governmental Authority" --any court, tribunal, authority, agency,
commission, bureau, department, official or other instrumentality of the United
States, any foreign country or any domestic, foreign, state, local, county, city
or other political subdivision.
"Governmental Permit" --any license, franchise, permit or other
authorization of any Governmental Authority.
"Hazardous Activity"--the distribution, generation, handling,
manufacturing, processing, production, release, storage, transportation,
treatment, disposal or use of Hazardous Materials in, on, under, about or from
the Facilities or any part thereof into the Environment, and any other act,
business or operation that increases the danger or poses an unreasonable risk of
harm to persons or property on or off the Facilities or that may affect the
value of the Facilities or the Company.
"Hazardous Materials"--any waste or other substance that is listed,
defined, designated or classified as, or otherwise determined to be, hazardous,
radioactive or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law.
"ICC"--as defined in the first paragraph of this Agreement.
"ICC Common Stock"--the Class A Common Stock, $.01 par value per share, of
ICC.
"ICC Common Stock Issuance"--as defined in Section 7.6.
"ICC SEC Reports"--as defined in Section 5.4(a).
"ICC Shares"--the shares of ICC Common Stock to be issued to the Company
Shareholders in connection with the Merger.
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"ICC Stockholders Meeting"--as defined in Section 4.28.
"Indemnified Persons"-- as defined in Section 11.2(a).
"Intellectual Property Assets" --as defined in Section 4.21(a).
"IRS"--the United States Internal Revenue Service or any successor agency
and, to the extent relevant, the United States Department of the Treasury.
"Joint Proxy Statement"--as defined in Section 4.28.
"Letter of Intent"--the Letter of Intent dated May 15, 2000 by and between
ICC and the Company.
"Liabilities"--any liability or other obligation of any kind or nature
whatsoever, and whether absolute, accrued, contingent or otherwise, and whether
known or unknown.
"Market Price of ICC Common Stock"--the average of the closing prices per
share of the ICC Common Stock for the ten trading days ending three trading days
prior to the Effective Time; provided, however, that if the Market Price of ICC
Common Stock is greater than $21.111111 or less than $12.666667, then the Market
Price of ICC Common Stock shall be deemed to be $21.111111 or $12.666667,
respectively.
"Material Adverse Effect"--as defined in Section 4.7.
"Merger"--as defined in Section 2.1(a).
"New Certificates"--as defined in Section 2.9(a).
"Occupational Safety and Health Law"--any legal or governmental
requirement or obligation relating to safe and healthful working conditions and
to reduce occupational safety and health hazards, and any program, whether
governmental or private (including those promulgated or sponsored by industry
associations and insurance companies), designed to provide safe and healthful
working conditions.
"Old Certificates"--as defined in Section 2.9(a).
"Options"--as defined in Section 2.12(a).
"Option Plan"--as defined in Section 2.12(a).
"Organizational Documents"--(a) the articles or certificate of
incorporation and the bylaws or code of regulations of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) the certificate of formation and operating
agreement of a limited liability company; (e) any charter or similar document
adopted or filed in connection with the creation, formation or organization of a
Person; and (e) any amendment to any of the foregoing.
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"Partially Diluted Number of Shares"--the sum of (i) the total number of
shares of Company Common Stock (excluding Company Restricted Stock) outstanding
immediately prior to the Effective Time and (ii) the total number of shares of
Company Common Stock issuable upon the exercise or conversion of all Company
Series A Preferred Stock, options, warrants and other exercisable or convertible
securities, including the Blue Water Convertible Note but excluding the
Promissory Note, outstanding immediately prior to the Effective Time.
"Person"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or Governmental Authority.
"Proceeding"--as defined in Section 4.13.
"Promissory Note"--the Company's Convertible Promissory Note, dated June
14, 2000, in the principal amount of $5,000,000 payable to the order of ICC.
"Registration Rights Agreement"--as defined in Section 8.10.
"Resale Registration Statement"--as defined in the Registration Rights
Agreement.
"Securities Act"--the Securities Act of 1933, as amended, or any successor
law.
"Seller"--as defined in the first paragraph of this Agreement.
"Sellers"--Jeffrey LeRose and Blue Water.
"Seller Parties"--as defined in Section 11.3(a).
"Shares"--the Company Capital Stock owned by the Sellers.
"Stockholders Meetings"--as defined in Section 4.28.
"Subsidiary"--of any person is any corporation, joint venture, limited
liability company, partnership, association or other business entity of which
more than 20% of the total voting power of stock or other equity entitled to
vote generally in the election of directors or managers thereof is owned or
controlled, directly or indirectly, by such Person.
"Surviving Corporation"--as defined in Section 2.1(a).
2. THE MERGER; CLOSING
2.1 THE MERGER
(a) Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the North Carolina Business Corporation Act
(the "NCBCA"), Buyer shall be merged with and into the Company at the Effective
Time (the "Merger"). Following the Merger, the separate corporate existence of
Buyer shall cease and the Company shall
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continue as the surviving corporation (the "Surviving Corporation") under the
name "Research Triangle Commerce, Inc.".
(b) Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
10 and subject to the satisfaction or waiver of the conditions set forth in
Sections 8 and 9, the consummation of the Merger will take place as promptly as
practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Sections 8 and 9 at the offices of Kramer
Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, New York (the
"Closing"), unless another date, time or place is agreed to in writing by the
parties hereto.
2.2 EFFECTIVE TIME
As soon as practicable following the Closing, the parties shall (i) file
articles of merger (the "Articles of Merger") in such form as is required by and
executed in accordance with the relevant provisions of the NCBCA, and (ii) make
all other filings or recordings required under the NCBCA. The Merger shall
become effective at such time as the Articles of Merger are duly filed with the
Secretary of State of the State of North Carolina or at such subsequent time as
the Company and ICC shall agree and be specified in the Articles of Merger (the
date and time the Merger becomes effective being the "Effective Time").
2.3 EFFECTS OF THE MERGER
At and after the Effective Time, the Merger will have the effects set
forth in the NCBCA. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time the Buyer shall merge with and into the
Company and the Company shall continue as the Surviving Corporation. As a result
of the Merger, the separate existence of the Company and Buyer shall cease.
Title to all real estate and other property owned separately by the Company and
Buyer shall be vested in the Surviving Corporation without reversion or
impairment; the Surviving Corporation shall have all liabilities and obligations
of the Company and Buyer; and a proceeding pending by or against the Company or
Buyer may be continued as if the Merger did not occur or the Surviving
Corporation may be substituted in the proceeding for the Company or Buyer, as
the case may be.
2.4 ARTICLES OF INCORPORATION
At the Effective Time, the articles of incorporation of the Surviving
Corporation shall be amended in accordance with the NCBCA such that the articles
of incorporation of the Surviving Corporation shall consist of the provisions of
the articles of incorporation of Buyer, until thereafter changed or amended as
provided therein or by applicable law, except that Article I of the Articles of
Incorporation of the Surviving Corporation shall be amended to read in its
entirety as follows: "The name of this Corporation is Research Triangle
Commerce, Inc."
2.5 BY-LAWS
The by-laws of Buyer as in effect at the Effective Time shall be the
by-laws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
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2.6 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION
The officers of the Company immediately prior to the Effective Time shall
be the initial officers of the Surviving Corporation, in each case until the
earliest of their resignation or removal from office or their otherwise ceasing
to be officers or until their respective successors are duly elected and
qualified. The directors of the Buyer immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation until the earlier of
their resignation or removal or otherwise ceasing to be directors or until their
respective successors are duly elected and qualified.
2.7 CONVERSION OR CANCELLATION OF CAPITAL STOCK OF THE COMPANY
At the Effective Time of the Merger, by virtue of the Merger and without
any action on the part of any holder thereof:
(a) Subject to the provisions of Sections 2.7(e) and 2.8, the shares
held by each holder of shares of the Company Common Stock outstanding
immediately prior to the Effective Time, other than shares of Company Restricted
Stock, shall be converted into (1) the right to receive an amount of cash equal
to the Cash at Closing multiplied by a fraction, the numerator of which shall be
the number of shares of outstanding Company Common Stock held by such holder
immediately prior to the Effective Time and the denominator of which shall be
equal to the Partially Diluted Number of Shares plus (2) an aggregate number of
shares of ICC Common Stock equal to the Conversion Number multiplied by a
fraction, the numerator of which shall be the number of shares of outstanding
Company Common Stock held by such holder immediately prior to the Effective Time
and the denominator of which shall be equal to the Fully Diluted Number of
Shares; provided, however, that if the number of shares of ICC Common Stock to
which any such holder is entitled includes a fractional share, such number of
shares shall be rounded up to the next whole number of shares.
(b) Subject to the provisions of Section 2.8, the shares held by
each holder of shares of the Company Series A Preferred Stock outstanding
immediately prior to the Effective Time shall be converted into (1) the right to
receive an amount of cash equal to the Cash at Closing multiplied by a fraction,
the numerator of which shall be the number of shares of Company Common Stock
issuable upon conversion of all such shares of Company Series A Preferred Stock
immediately prior to the Effective Time and the denominator of which shall be
equal to the Partially Diluted Number of Shares plus (2) an aggregate number of
shares of ICC Common Stock equal to the Conversion Number multiplied by a
fraction, the numerator of which shall be the number of shares of Company Common
Stock issuable upon conversion of all of such shares of Company Series A
Preferred Stock immediately prior to the Effective Time and the denominator of
which shall be the Fully-Diluted Number of Shares; provided, however, that if
the number of shares of ICC Common Stock to which any such holder is entitled
includes a fractional share, such number of shares shall be rounded up to the
next whole number of shares.
(c) Each authorized but unissued share of Company Capital Stock
shall cease to exist.
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(d) Each share of Buyer's Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger shall be converted into
one share of Common Stock, par value $.01 per share, of the Surviving
Corporation.
(e) Notwithstanding any provision to the contrary, the holder of the
Promissory Note, or of the Company's Common Stock issued upon conversion of the
Promissory Note, shall not be entitled to any portion of either the Cash at
Closing or the ICC Shares distributed upon consummation of the Merger.
2.8 DISSENTERS
Shares of Company Capital Stock owned by a holder (each a "Dissenting
Shareholder" and, collectively, the "Dissenting Shareholders") who (i) shall not
have voted in favor of the Merger and (ii) shall have given to the Company, and
the Company shall have actually received, before the Company Shareholders
Meeting, written notice of such holder's intent to demand payment for such
holder's shares if the Merger is effectuated, in the manner provided in Section
55-13-21 of the NCBCA, shall not be cancelled, extinguished and converted as
provided in Section 2.7(a) or (b) of this Agreement, as the case may be, but the
holder of such shares shall be entitled to receive such consideration as shall
be provided in Section 55-13-25 of the NCBCA. To the extent the Company or any
Seller knows the identify of any Dissenting Shareholder at the Closing, the
Company shall notify ICC and Buyer in writing of the details of the Dissenting
Shareholders and the number of shares of Company Capital Stock that they own.
The Company shall not enter into any agreement or settlement with any Dissenting
Shareholder without the prior written consent of ICC.
2.9 ISSUANCE OF MERGER CONSIDERATION
(a) Subject to the provisions of Section 2.7 and 2.8, at or as soon
as practicable after the Effective Time, ICC shall issue and deliver, upon
surrender by a Company Shareholder of one or more certificates ("Old
Certificates") representing Company Capital Stock for cancellation, to a holder
that surrenders Old Certificates representing Company Capital Stock one or more
certificates ("New Certificates"), registered in the name of such holder, for a
number of shares of ICC Common Stock equal to the number of shares of ICC Common
Stock into which the number of shares of Company Capital Stock represented by
the Old Certificates has been converted pursuant to the provisions of Section
2.7. If more than one stock certificate representing Company Capital Stock shall
be surrendered for the account of the same holder, the number of whole shares of
ICC Common Stock for which such certificates shall be exchanged pursuant to this
Section 2.9 shall be computed on the basis of the aggregate number of shares of
Company Capital Stock evidenced by all of such certificates.
(b) No dividends or other distributions declared on shares of ICC
Common Stock that are to be represented by New Certificates shall be paid to any
Person otherwise entitled to receive the same until Old Certificates have been
surrendered in exchange for such New Certificates in the manner herein provided,
and upon such surrender such dividends or other distributions shall be paid to
such Persons in accordance with their terms. In no event shall the Persons
entitled to receive such dividends or other distributions be entitled to receive
interest on such dividends or other distributions.
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(c) ICC shall pay any transfer taxes in connection with the exchange
of Old Certificates for New Certificates, except that if any New Certificate is
to be issued in a name other than that in which the Old Certificate surrendered
in exchange therefor is registered, it shall be a condition of such exchange
that the Person requesting such exchange shall pay to ICC any transfer or other
taxes required by reason of the issuance of the New Certificate in a name other
than the registered holder of such Old Certificate, or shall establish to the
satisfaction of ICC that such tax has been paid or is not applicable.
2.10 STOCK TRANSFER BOOKS
At the close of business on the day prior to the Effective Time of the
Merger, the stock transfer books of the Company shall be closed and no transfer
of Company Capital Stock shall thereafter be made on such stock transfer books.
2.11 TAX-FREE REORGANIZATION
The parties intend that the Merger qualify as a tax-free reorganization
pursuant to Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code").
2.12 OPTIONS AND WARRANTS
(a) As of the Effective Time, each option, warrant or similar right
outstanding at the Effective Time to purchase shares of Company Common Stock
("Options") under the Company's Stock Option Plan dated July 1, 1998 (the
"Option Plan") or an agreement, instrument or certificate identified in Section
4.3 of the Disclosure Schedule, which Options are listed in Section 4.3 of the
Disclosure Schedule, shall constitute an option to purchase, on the same terms
and conditions set forth in the Option Plan and/or as provided in the respective
agreement, instrument or certificate governing such Option immediately prior to
the Effective Time, (1) an amount of cash equal to the Cash at Closing
multiplied by a fraction, the numerator of which shall be the number of shares
of Company Common Stock issuable upon exercise of such Option immediately prior
to the Effective Time and the denominator of which shall be equal to the
Partially Diluted Number of Shares plus (2) the number of whole shares of ICC
Common Stock equal to the Conversion Number multiplied by a fraction, the
numerator of which shall be the number of shares of Company Common Stock
underlying such Option immediately prior to the Effective Time and the
denominator of which shall be the Fully-Diluted Number of Shares of Company
Common Stock immediately prior to the Effective Time, rounded up to the nearest
whole number of shares of ICC Common Stock, at a price per share equal to the
amount determined by multiplying the exercise price per share of Company Common
Stock at which such Option was exercisable immediately prior to the Effective
Time by a fraction, the numerator of which is the number of shares of Company
Common Stock issuable upon exercise of such Option immediately prior to the
Effective Time and the denominator of which is the number of shares of ICC
Common Stock issuable upon exercise of such Option as of the Effective Time,
rounded up to the nearest whole cent. As soon as practicable following the
Effective Time, ICC will cause to be delivered to each holder of an outstanding
Option an appropriate notice setting forth such holder's rights pursuant to such
Option and that such Option shall continue in effect on the same terms and
conditions in accordance with this Section 2.12(a).
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(a) The shares held by each holder of shares of Company Common Stock
that are issued pursuant to the restricted stock plan contemplated by Section
6.2(e) ("Company Restricted Stock") shall be converted into an aggregate number
of shares of ICC Common Stock equal to the Conversion Number multiplied by a
fraction, the numerator of which shall be the number of shares of Company
Restricted Stock held by such holder immediately prior to the Effective Time and
the denominator of which shall be equal to the Fully Diluted Number of Shares;
provided, however, that if such aggregate number of shares of ICC Common Stock
includes a fractional share, such aggregate number of shares shall be rounded up
to the next whole number of shares and provided, further, that the shares of ICC
Common Stock into which the Company Restricted Stock is converted shall be
subject to the same terms, conditions and restrictions that are applicable to
the Company Restricted Stock immediately prior to the Effective Time. Any ICC
Shares that are forfeited pursuant to the terms of such restricted stock plan
shall be reissued in the name of Jeffrey LeRose without any such restrictions
thereon.
1.2 BLUE WATER CONVERTIBLE NOTE
The Blue Water Convertible Note shall be converted into (1) the right to
receive an amount of cash equal to the Cash at Closing multiplied by a fraction,
the numerator of which shall be the number of shares of Company Common Stock
issuable upon conversion of the Blue Water Convertible Note (or upon conversion
of convertible securities issuable upon conversion of the Blue Water Convertible
Note) immediately prior to the Effective Time and the denominator of which shall
be equal to the Partially Diluted Number of Shares plus (2) an aggregate number
of shares of ICC Common Stock equal to the Conversion Number multiplied by a
fraction, the numerator of which shall be the number of shares of Company Common
Stock issuable upon conversion of the Blue Water Convertible Note (or upon
conversion of convertible securities issuable upon conversion of the Blue Water
Convertible Note) immediately prior to the Effective Time and the denominator of
which shall be the Fully-Diluted Number of Shares; provided, however, that if
such number of shares of ICC Common Stock includes a fractional share, such
number of shares shall be rounded up to the next whole number of shares.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLERS
Each Seller severally and not jointly represents and warrants to ICC and
Buyer as to itself as follows:
3.1 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid and binding
obligation of such Seller, enforceable against such Seller in accordance with
its terms. Such Seller has the right, power, authority and capacity to execute
and deliver this Agreement and to perform his or her obligations under this
Agreement, and this Agreement has been duly authorized and approved, executed
and delivered by such Seller and constitutes a legal, valid and binding
obligation of such Seller, enforceable against such Seller in accordance with
its terms.
(b) Neither the execution and delivery of this Agreement by such
Seller nor the consummation or performance by such Seller of any of the
transactions contemplated hereby will, directly or indirectly (with or without
notice or lapse of time or both) contravene, conflict
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with or result in a violation or breach of or a default under any legal
requirement or any order or any Contract to which such Seller may be subject.
3.2 OWNERSHIP OF SHARES
Such Seller owns, beneficially and of record, and has good, valid and
marketable title to and the right to transfer to Buyer, that number of the
Shares set forth opposite its name on the signature page hereto executed by such
Seller, free and clear of any and all Encumbrances. Except as described on
Schedule 3.2, there are no voting trusts, shareholder agreements or any other
agreements or understandings to which such Seller is a party with respect to the
transfer, voting or registration of the capital stock of the Company.
3.3 LEGAL PROCEEDINGS
There is no pending Proceeding against such Seller that challenges, or may
have the effect of preventing, delaying or making illegal, or otherwise
interfering with, any of the transactions contemplated hereby and, to the
knowledge of such Seller, no such Proceeding has been threatened and no event or
circumstance exists that is reasonably likely to give rise to or serve as a
basis for the commencement of any such Proceeding.
3.4 INVESTMENT REPRESENTATIONS OF SELLER
(a) Such Seller is either (i) an accredited investor as that term is
defined in Rule 501 under the Securities Act, or (ii) has, either alone or with
his, her or its purchaser representative or representatives (as that term is
defined in Rule 501 under the Securities Act), such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of an investment in the ICC Common Stock.
(b) The ICC Common Stock is being acquired by such Seller for its own
account, and not for any other Person, for investment only and with no intention
of reselling, assigning, transferring or otherwise disposing of (collectively,
"Transfer") such ICC Common Stock or any part thereof or interest therein. Such
Seller will not Transfer any of such shares of ICC Common Stock, or any part
thereof or interest therein, in a transaction that would be a violation of the
securities laws of the United States of America, or any state, without
prejudice, however, to the rights of such Seller to Transfer all or any part of
such ICC Common Stock under an effective registration statement or applicable
exemption from registration under the Securities Act and any applicable state
securities law. Such Seller has no contract, undertaking, agreement or
arrangement with any Person to Transfer the ICC Common Stock, or any part
thereof or interest therein, and such Seller has no present plans to enter into
any such contract, undertaking, agreement or arrangement.
(c) Such Seller has read this Agreement and all other documents provided
by ICC in connection herewith, including the ICC SEC Reports, and fully
understands the terms and conditions under which the ICC Common Stock is being
issued to it pursuant hereto. ICC and Buyer have made available to such Seller
the opportunity to ask questions of and receive answers from ICC or Buyer
concerning ICC and the terms and conditions under which ICC Common Stock will be
issued to it and to obtain any additional information which ICC or Buyer
possesses or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy of
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information furnished in connection with this Agreement or in response to any
request for information. Such Seller is satisfied with such answers and
information.
(d) Subject to Section 5.8(a), such Seller agrees that, so long as
required by law, certificates evidencing the ICC Shares and any securities
issued in exchange for or in respect thereof shall bear a legend to the
following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS."
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
The Company and the Sellers hereby each individually represents and
warrants to ICC and Buyer as follows: 4.1 ORGANIZATION AND GOOD STANDING
(a) Section 4.1 of the Disclosure Schedule contains a complete and
accurate list for the Company of its name, its jurisdiction of incorporation,
other jurisdictions in which it is authorized to do business and its
capitalization (including the identity of each shareholder and the number of
shares held by each). The Company is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as conducted and to own or use the properties and assets that it purports to own
or use. The Company is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification, except
where the failure to be so qualified could not reasonably be expected to have a
Material Adverse Effect on the Company.
(b) The Company has delivered to ICC correct and complete copies of
the Organizational Documents of the Company.
4.2 AUTHORITY; NO CONFLICT
(a) The Company has the right, power, authority and capacity to
execute and deliver this Agreement, to consummate the Merger and to perform its
obligations under this Agreement. This Agreement has been duly authorized and
approved, executed and delivered by
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the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to approval of the Merger by the Company Shareholders.
(b) Except as set forth in Section 4.2(b) of the Disclosure
Schedule, neither the execution and delivery of this Agreement by the Company
nor the consummation or performance by the Company of the Merger or any of the
other transactions contemplated hereby will, directly or indirectly (with or
without notice or lapse of time or both):
(i) contravene, conflict with or result in a violation or
breach of (A) any provision of the Organizational Documents of the Company, (B)
any resolution adopted by the board of directors (or any Committee thereof) or
the shareholders of the Company, (C) any legal requirement or any order of any
Governmental Authority to which the Company or any of the properties or assets
owned or used by the Company may be subject, or (D) any Governmental Permit,
which is held by the Company;
(ii) result in a breach of or constitute a default, give rise
to a right of termination, cancellation or acceleration, create any entitlement
to any payment or benefit, or require the consent or approval of or any notice
to or filing with any third party, under any Contract to which the Company is a
party or by which its properties or assets are bound, or require the consent or
approval of or any notice to or filing with any Governmental Authority to which
the Company or any of its properties or assets is subject; or
(iii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the properties or assets owned or used by the
Company; except, with respect to clauses (ii) or (iii) of this Section 4.2,
where any such breach, default, termination right, cancellation or acceleration
right or Encumbrance could not reasonably be expected to have a Material Adverse
Effect on the Company or would not adversely affect the ability of the Company
to consummate the Merger or the other transactions contemplated hereby.
(c) The only votes required by the Company Shareholders to approve
the Merger are the affirmative vote of (i) a majority of the outstanding shares
of Company Common Stock and Company Series A Preferred Stock voting on an
as-converted basis, voting together as a single class, and (ii) a majority of
the Company Series A Preferred Stock voting as a separate class.
4.3 CAPITALIZATION
The authorized equity securities of the Company consist only of 20,000,000
shares of Company Common Stock, of which 9,300,000 shares are issued and
outstanding, and 2,870,000 shares of preferred stock, no par value per share, of
which 2,789,650 shares are issued and outstanding. All of such shares of
preferred stock are designated as Series A Preferred Stock. All of the
outstanding equity securities of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. Except as listed and
described in Section 4.3 of the Disclosure Schedule, there are no outstanding or
unexercised warrants, options, agreements or understandings, convertible
securities (other than the Series A Preferred Stock) or other commitments
(contingent or otherwise) pursuant to which the Company is or may become
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obligated to issue any shares of its capital stock or other securities of the
Company or any securities with profit participation features or any stock
appreciation rights or phantom stock plans. Except as listed and described in
Section 4.3 of the Disclosure Schedule, there are no voting trusts or other
agreements or understandings to which the Company is a party with respect to the
transfer, voting or registration of the capital stock of the Company, nor are
there any Contracts relating to the issuance, sale or transfer of any equity
securities or other securities of the Company. None of the outstanding equity
securities or other securities of the Company were issued in violation of the
Securities Act or any other legal requirement. The Company does not have any
Subsidiaries or own or have any Contract to acquire, any equity securities or
other securities of any Person or any, direct or indirect, equity or ownership
interest in any other business. No Person has any preemptive rights with respect
to any security of the Company.
4.4 BOOKS AND RECORDS
The books of account and other records of the Company, all of which have
been made available to ICC, are, in all material respects, correct and complete.
Except as disclosed in Section 4.4 of the Disclosure Schedule, the minute books
of the Company contain correct and complete records of all meetings held of, and
corporate action taken by, the shareholders, the Board of Directors and
committees of the Board of Directors of the Company. The stock book of the
Company is correct and complete. At the Closing, all of such books and records
will be in the possession of the Company.
4.5 FINANCIAL STATEMENTS
(a) For purposes of this Agreement, "Financial Statements" shall
mean the audited consolidated balance sheets of the Company as of December 31,
1998 and December 31, 1999, and the related consolidated income statements for
the two years then ended, and the unaudited consolidated balance sheets of the
Company as of April 30, 1999 and April 30, 2000 and the related consolidated
income statements for the four months ended on such dates (the "Interim
Financial Statements"). The Company has delivered to ICC correct and complete
copies of the Financial Statements.
(b) The Financial Statements (i) have been prepared from the books
and records of the Company in accordance with GAAP, (ii) reflect all Liabilities
of the Company required to be reflected therein on such basis as at the date
thereof and (iii) fairly present in all material respects the financial position
of the Company as of the respective dates of the balance sheets included in the
Financial Statements and the consolidated results of its operations for each of
the periods then ended.
There has been no material adverse change since the Balance Sheet Date in the
amount or delinquency of accounts payable of the Company (either individually
or in the aggregate).
Section 4.5(d) of the Disclosure Schedule sets forth as of June 9, 2000 (a) the
amount of all indebtedness of the Company then outstanding and the interest
rate applicable thereto, (b) any Encumbrances which relate to such
indebtedness and (c) the name of the lender or the other payee of each such
indebtedness.
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4.6 NO UNDISCLOSED LIABILITIES
The Company has no Liabilities except for Liabilities reflected or
reserved against in the Financial Statements and current Liabilities incurred in
the ordinary course of business consistent with past practice since the Balance
Sheet Date, which current Liabilities are consistent with the representations
and warranties contained in this Agreement and will not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
4.7 NO MATERIAL ADVERSE CHANGE
Since December 31, 1999, there has not been any material adverse change in
the business, operations, properties, assets, prospects, liabilities, results of
operations or condition (financial or otherwise) (a "Material Adverse Effect")
of the Company and no event has occurred or circumstance exists that would
reasonably be expected to result in a Material Adverse Effect on the Company.
4.8 TAXES
The Company has (a) properly and timely filed all federal, state, local
and foreign tax returns, declarations of estimated tax, tax reports, information
returns, amended returns and statements (collectively, the "Returns") required
to be filed by the Company relating to any Taxes (as defined below) with respect
to any income, properties or operations of the Company; (b) as of the time of
filing, the Returns were complete and correct in all material respects and the
Company has timely paid, collected or withheld, or caused to be paid, collected
or withheld, all material amounts of Taxes required to be paid, collected or
withheld, other than such Taxes for which adequate reserves in the Financial
Statements have been established; (c) the Company has not been delinquent in the
payment of any Taxes, nor has the Company requested any extension of time within
which to file any Return, which Return has not since been filed; (d) there are
no pending tax audits of any Returns of the Company; (e) no Tax liens have been
filed and no deficiency or addition to Taxes, interest or penalties for any
Taxes with respect to any income, properties or operations of the Company have
been proposed, asserted or assessed in writing against the Company; (f) the
Company has not been granted any extension of the statute of limitations
applicable to any Return or other Tax claim with respect to any income,
properties or operations of the Company; (g) the Company has not, during the
five-year period preceding the date hereof, been a personal holding company
within the meaning of Section 542 of the Code (or any corresponding provision of
state, local or foreign law); (h) the Company has not made any election under
Section 341(f) of the Code (or any corresponding provisions of state, local or
foreign law); (i) the Company is not liable for the Taxes of any other Person,
nor is the Company currently under any contractual obligation to indemnify any
Person with respect to Taxes (except for customary agreements to indemnify
lenders or security holders in respect of taxes other than income taxes), nor is
the Company party to any tax sharing agreement or any other agreement providing
for payments by the Company with respect to Taxes of any other Person; (j) the
Company has not agreed, nor is the Company required, as a result of a change in
method of accounting or otherwise, to include any adjustment under Section 481
of the Code (or any corresponding provision of state, local or foreign law) in
taxable income; and (k) the Company has not elected S Corporation status within
the meaning of Section 1361(a)(1) of the Code (or any corresponding provision of
state, local or foreign law). As used in this Agreement, the term
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"Tax" shall mean any of the Taxes and the term "Taxes" shall mean, with respect
to any Person, (i) all income taxes (including any tax on or based upon net
income, or gross income, or income as specially defined, or earnings, or
profits, or selected items of income, earnings or profits) and all gross
receipts, sales, use, ad valorem, transfer, franchise, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property or
windfall profits taxes, alternative or add-on minimum taxes, customs duties or
other taxes, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts imposed
by any taxing authority (domestic or foreign) on such Person and (ii) any
liability for the payment of any amount of the type described in the immediately
preceding clause (i) as a result of being a "transferee" (within the meaning of
Section 6901 of the Code or any other applicable law) of another Person or a
member of an affiliated or combined group.
4.9 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are reflected on the Financial
Statements, and all receivables arising after the date of the Interim Financial
Statements and prior to the Closing Date (collectively, the "Accounts
Receivable"), represent or will represent valid obligations arising from sales
actually made or services actually performed in the ordinary course of business.
To the knowledge of the Company or any of the Sellers, all of the Accounts
Receivable are or will be collectible at the full recorded amount thereof, less
any applicable reserves established in accordance with GAAP, in the ordinary
course of business without resort to litigation.
4.10 TITLE TO PROPERTIES; ENCUMBRANCES
Section 4.10 of the Disclosure Schedule contains a correct and complete
list of all real property, leaseholds or other interests therein owned or held
by the Company. The Company has delivered or made available to Buyer correct and
complete copies of the real property leases to which the Company is party or
pursuant to which it uses or occupies any real property. The Company has good
title to all of the properties and assets, real and personal, tangible and
intangible, it owns, purports to own or uses in its business, including those
reflected on its books and records and in the Financial Statements (except for
accounts receivable collected and materials and supplies disposed of in the
ordinary course of business consistent with past practice after the date of the
most recent Financial Statements). The Company has a valid leasehold, license or
other interest in all of the other assets, real or personal, tangible or
intangible, which are used in the operation of its business. All material
properties and assets owned, leased or used by the Company are free and clear of
all Encumbrances, except for (a) liens for current taxes not yet due, (b)
workman's, common carrier and other similar liens arising in the ordinary course
of business, none of which materially detracts from the value or impairs the use
of the property or asset subject thereto, or impairs the operations of the
Company, (c) Encumbrances disclosed in the Financial Statements and (d) with
respect to real property, (i) minor imperfections of title, if any, none of
which is substantial in amount, materially detracts from the value or impairs
the use of the property subject thereto, or impairs the operations of the
Company and (ii) zoning laws and other land use restrictions that do not impair
the present use of the property subject thereto.
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4.11 CONDITION AND SUFFICIENCY OF ASSETS
The Facilities and other property and assets owned or used by the Company
are structurally sound, are in good operating condition and repair, and are
adequate for the uses to which they are being put, and none of such Facilities
or other property or assets owned or used by the Company is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in nature or cost. The Facilities and other property and assets
owned or used by the Company are sufficient for the continued conduct of its
business after the Effective Time in substantially the same manner as conducted
prior to the Effective Time.
4.12 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Section 4.12 of the Disclosure Schedule,
the Company is in compliance in all material respects with all federal, state
and local laws, regulations, licenses, orders, ordinances, judgments and decrees
affecting the properties and assets owned or used by the Company and the
business or operations of the Company. The Company has not been charged with
violating, nor, to the knowledge of the Company or any of the Sellers,
threatened with a charge of violating, nor, to the knowledge of the Company or
any of the Sellers, is the Company under investigation with respect to a
possible violation of, any provision of any federal, state or local law,
regulation, license, order, ordinance, judgment or decree relating to any of its
properties or assets or any aspect of its business or operations.
(b) Section 4.12 of the Disclosure Schedule contains a complete and
accurate list of each material Governmental Permit that is held by the Company
or that otherwise relates to the business or operations of, or to any of the
properties or assets owned or used by, the Company. Each Governmental Permit
listed or required to be listed in Section 4.12 of the Disclosure Schedule is
valid and in full force and effect.
4.13 LEGAL PROCEEDINGS
Except as set forth in Section 4.13 of the Disclosure Schedule, there is
no pending claim, action, investigation, arbitration, litigation or other
proceeding ("Proceeding"):
(i) that has been commenced by or against the Company or that
otherwise relates to or may affect the business of, or any of the properties or
assets owned or used by, the Company; or
(ii) that challenges, or that is reasonably likely to have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
any of the transactions contemplated hereby.
To the knowledge of the Company or any of the Sellers, no such Proceeding
has been threatened. The Company has made available to Buyer true, correct and
complete copies of all pleadings, correspondence and other documents relating to
each Proceeding listed in Section 4.13 of the Disclosure Schedule. The
Proceedings listed in Section 4.13 of the Disclosure Schedule could not
reasonably be expected to have a Material Adverse Effect on the Company.
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4.14 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Section 4.14 of the Disclosure Schedule, since the
Balance Sheet Date, the Company has conducted its business only in the ordinary
course, consistent with past practice, and the Company has not:
(a) declared or paid any dividend or other distribution in respect
of shares, or redeemed or otherwise repurchased, any shares of the capital stock
of the Company;
(b) issued or sold or authorized for issuance or sale, or granted
any Options with respect to, any shares of its capital stock or any other type
of its securities, or made any change in its outstanding shares of capital stock
or other ownership interests or its capitalization, whether by way of a
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, stock dividend or otherwise;
(c) paid or increased any bonuses, salaries or other compensation to
any stockholder, director, officer, consultant or (except in the ordinary course
of business consistent with past practice) employee or entered into any
employment, severance or similar Contract with any director, officer or
employee;
(d) adopted or increased the payments to or benefits under any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement or other employee benefit plan for or with any employees;
(e) suffered any damage to or destruction or loss of any property or
asset, whether or not covered by insurance, which could reasonably be expected
to have a Material Adverse Effect on the Company;
(f) entered into, terminated or received notice of termination of
any Contract or transaction involving a total remaining commitment by or to the
Company of at least $25,000, or any other Contract, the entering into or
termination of which could reasonably be expected to have a Material Adverse
Effect on the Company, including the entry into (i) any document evidencing any
indebtedness, (ii) any capital or other lease or (iii) any guaranty;
(g) sold, leased, or otherwise disposed of (other than in the
ordinary course of business consistent with past practice) any property or asset
or mortgaged, pledged or imposed any Encumbrance on any material property or
asset;
(h) cancelled, compromised or waived any claim or right with a value
to the Company in excess of $25,000 or instituted or settled any Proceeding;
(i) changed the method of accounting or the accounting principles or
practices used by the Company in the preparation of the Financial Statements; or
(j) agreed, whether orally or in writing, to do any of the
foregoing.
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4.15 CONTRACTS; NO DEFAULTS
(a) Section 4.15(a) of the Disclosure Schedule contains a correct
and complete list, and the Company has delivered to ICC correct and complete
copies, of:
(i) each Contract that involves performance of services or
delivery of goods or materials by the Company of an amount or value in excess of
$50,000;
(ii) each Contract that involves performance of services or
delivery of goods or materials to the Company of an amount or value in excess of
$50,000;
(iii) each lease, license and other Contract affecting any
leasehold or other interest in any real or personal property;
(iv) each collective bargaining agreement and other Contract
to or with any labor union or other employee representative of a group of
employees;
(v) each joint venture, partnership and other Contract
involving a sharing of profits, losses, costs or liabilities by the Company with
any other Person or requiring the Company to make any capital contribution;
(vi) each Contract containing covenants that in any way
purport to restrict the business activity of the Company or limit the freedom of
the Company to engage in any line of business or to compete with any Person or
hire any Person;
(vii) each agreement between the Company and an officer or
director of the Company or any Seller or any affiliate of any of the foregoing;
(viii) each power of attorney that is currently effective and
outstanding;
(ix) each Contract for capital expenditures in excess of
$50,000;
(x) each agreement under which any money has been or may be
borrowed or loaned or any note, bond, factoring agreement, indenture or other
evidence of indebtedness has been issued or assumed (other than those under
which there remain no ongoing obligations of the Company), each guaranty
(including "take-or-pay" and "keepwell" agreements) of any evidence of
indebtedness or other obligation, or of the net worth, of any Person (other than
endorsements for the purpose of collection in the ordinary course of business)
and each pledge, security or other agreement pursuant to which any Encumbrance
is created in any material asset or property of the Company;
(xi) each agreement containing restrictions with respect to
the payment of dividends or other distributions in respect of the Company's
capital stock;
(xii) each stock purchase, merger or other agreement pursuant
to which the Company acquired any material amount of assets, and all relevant
documents and agreements delivered in connection therewith;
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(xiii) each agreement containing a change of control
provision;
(xiv) each other agreement having an indefinite term or a
fixed term of more than one (1) year (other than those that are terminable at
will or upon not more than sixty (60) days' notice by the Company without
penalty) or requiring payments by the Company of more than $50,000 per year; and
(xv) each standard form of agreement pursuant to which the
Company provides services to customers.
(b) Each Contract identified or required to be identified in Section
4.15(a) of the Disclosure Schedule is in full force and effect and is valid and
enforceable against the Company and, to the knowledge of Company or any of the
Sellers, against the other parties thereto in accordance with its terms.
(c) Except as set forth in Section 4.15(c) of the Disclosure
Schedule:
(i) the Company is in compliance in all material respects with
all applicable terms and requirements of each Contract under which the Company
has any obligation or liability or by which the Company or any of the assets
owned or used by the Company is or was bound, except for such noncompliance that
could not reasonably be expected to have a Material Adverse Effect on the
Company;
(ii) to the knowledge of the Company or any of the Sellers,
each other person that has or had any obligation or liability under any Contract
under which the Company has any rights is in compliance in all material respects
with all applicable terms and requirements of such Contract; and
(iii) no event has occurred or, to the knowledge of the
Company or any of the Sellers, circumstance exists that (with or without notice
or lapse of time or both) is reasonably likely to result in a violation or
breach of any Contract, which violation or breach could reasonably be expected
to have a Material Adverse Effect on the Company.
4.16 INSURANCE
Section 4.16 of the Disclosure Schedule sets forth the premium payments
and describes all the insurance policies of the Company, which policies are in
full force and effect in accordance with their terms and expire on the dates
shown on Section 4.16 of the Disclosure Schedule. There has been no material
default in the payment of premiums on any of such policies, and, to the
knowledge of the Company or any of the Sellers, there is no ground for
cancellation or avoidance of any such policies, or any increase in the premiums
thereof, or for reduction of the coverage provided thereby. Such policies insure
the Company in amounts and against losses and risks customary and sufficient for
businesses similar to that of the Company, and, to the knowledge of the Company
or any of the Sellers, such policies shall continue in full force and effect up
to the expiration dates shown in Section 4.16 of the Disclosure Schedule.
Correct and complete copies of all insurance policies listed in Section 4.16
have been previously furnished to ICC.
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4.17 ENVIRONMENTAL MATTERS
(a) The Company is, and at all times has been, in compliance in all
material respects with, and has not been and is not in violation of or liable
under, any Environmental Law. The Company has obtained and is in compliance with
all permits required under Environmental Laws. Neither the Sellers or the
Company has received any actual or threatened order, notice or other
communication from (i) any Governmental Authority or third party, or (ii) the
current or prior owner or operator of any Facilities, of any actual or potential
violation or failure to comply with any Environmental Law, or of any actual or
threatened Environmental, Health, and Safety Liabilities with respect to any of
the Facilities or any other properties or assets in which the Company has had an
interest or the operation of its business, or with respect to any property or
Facility at or to which Hazardous Materials were generated, manufactured,
transported, used or processed by the Company.
(b) There are no pending or, to the knowledge of the Company or any
of the Sellers, threatened claims, Encumbrances, or other restrictions of any
nature, resulting from any Environmental, Health, and Safety Liabilities or
arising under or pursuant to any Environmental Law, with respect to or affecting
any of the Facilities or any other properties or assets in which the Company has
or had an interest.
(c) None of the Sellers or the Company has knowledge of any basis to
expect, nor has any of them received, any inquiry, notice, order or other
communication that relates to Hazardous Activity, Hazardous Materials or any
violation or failure to comply with any Environmental Law, or of any obligation
to undertake or bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities or any other properties or
assets in which the Company had an interest, or with respect to any property or
facility to which Hazardous Materials generated, manufactured, transported, used
or processed by the Company have been transported, treated, stored, handled or
disposed.
(d) None of the Sellers or the Company has any Environmental,
Health, or Safety Liabilities with respect to the Facilities or with respect to
any other properties and assets in which the Company (or any predecessor) has or
had an interest that could reasonably be expected to have a Material Adverse
Effect on the Company.
(e) There are no Hazardous Materials present on, in, under or
migrating to or from the Environment at the Facilities, to the knowledge of the
Company or any of the Sellers. Neither the Sellers nor the Company has permitted
or conducted, or is aware of, any Hazardous Activity conducted with respect to
the Facilities or any other properties or assets of the Company except in
compliance in all material respects with all applicable Environmental Laws.
(f) There has been no release or, to the knowledge of the Company or
any of the Sellers, threat of release, of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, transported, produced, used, disposed or processed from
or by the Facilities, or from or by any other properties and assets in which the
Company has or had an interest.
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(g) The Company has delivered to ICC correct and complete copies and
results of any and all reports, studies, analyses, tests or monitoring possessed
or initiated by any of the Sellers or the Company pertaining to Hazardous
Materials or Hazardous Activities in, on or under the Facilities, or concerning
compliance by the Company with Environmental Laws.
4.18 EMPLOYEES
(a) Section 4.18 of the Disclosure Schedule contains a complete and
accurate list of the following information for each employee of the Company:
name, job title, current compensation, vacation accrued and service credited for
purposes of vesting and eligibility to participate under any employee benefit
plan of any nature.
(b) No Seller and no officer of the Company is a party to, or is
otherwise bound by, any agreement or arrangement, including any confidentiality,
noncompetition or proprietary rights agreement, between such Person and any
other Person that materially and adversely affects (i) the performance of his
duties as an officer or employee of the Company or (ii) the ability of the
Company to conduct its business. Neither the Company nor any Seller is aware of
any officer or other key employee of the Company who intends to terminate his or
her employment with the Company.
4.19 EMPLOYEE BENEFITS
(a) Except as listed on Section 4.19 of the Disclosure Schedule,
neither the Company nor any ERISA Affiliate maintains any Employee Benefit
Plans. "Employee Benefit Plan" means any "employee benefit plan" as defined in
Section 3(3) of ERISA and any other plan, policy, program, practice, agreement,
understanding or arrangement (whether written or oral) providing compensation or
other benefits to any current or former director, officer, employee or
consultant (or to any dependent or beneficiary thereof) of the Company or any
ERISA Affiliate, which are now, or were within the past six years, maintained by
the Company or any ERISA Affiliate, or under which the Company or any ERISA
Affiliate has any obligation or liability, whether actual or contingent,
including all incentive, bonus, deferred compensation, vacation, holiday,
cafeteria, medical, disability, stock purchase, stock option, stock
appreciation, phantom stock, restricted stock or other stock-based compensation
plans, policies, programs, practices or arrangements. "ERISA Affiliate" means
any entity (whether or not incorporated) other than the Company that, together
with the Company, is or was a member of (i) a controlled group of corporations
within the meaning of Section 414(b) of the Code, (ii) a group of trades or
businesses under common control within the meaning of Section 414(c) of the Code
or (iii) an affiliated service group within the meaning of Section 414(m) of the
Code.
The Company has delivered to ICC or its counsel prior to the date of
this Agreement correct and complete copies of (i) any employment agreements and
any procedures and policies relating to the employment of employees of the
Company and the use of temporary employees and independent contractors by the
Company (including summaries of any procedures and policies that are unwritten),
(ii) plan instruments and amendments thereto for all Employee Benefit Plans and
related trust agreements, insurance and other contracts, summary plan
descriptions, summaries of material modifications and material communications
distributed to the participants of each Plan, (iii) to the extent annual reports
on Form 5500 are required with
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respect to any Employee Benefit Plan, the three most recent annual reports and
attached schedules for each Employee Benefit Plan as to which such report is
required to be filed and (iv) where applicable, the most recent (A) opinion,
notification and determination letters, (B) audited financial statements, (C)
actuarial valuation reports and (D) nondiscrimination tests performed under the
Code (including 401(k) and 401(m) tests) for each Employee Benefit Plan.
(b) Neither the Company nor any ERISA Affiliate maintains or has
ever maintained an Employee Benefit Plan subject to Title IV of ERISA.
(c) To the knowledge of the Company or any of the Sellers, with
respect to each Employee Benefit Plan, (i) no party in interest or disqualified
person (as defined in Section 3(14) of ERISA and Section 4975 of the Code,
respectively) has at any time engaged in a transaction which could subject ICC,
Buyer or the Company, directly or indirectly, to a tax, penalty or liability for
prohibited transactions imposed by ERISA or the Code and (ii) no fiduciary (as
defined in Section 3(21) of ERISA) with respect to any Employee Benefit Plan, or
for whose conduct the Company could have any liability (by reason of indemnities
or otherwise), has breached any of the responsibilities or obligations imposed
upon the fiduciary under Title I of ERISA.
(d) Each Employee Benefit Plan which is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA (a "Pension Plan") and which
is subject to Sections 201, 301 or 401 of ERISA is covered by a favorable
opinion letter from the Internal Revenue Service covering all amendments
required by the Tax Reform Act of 1986 and prior legislation and, to the
knowledge of the Company or any of the Sellers, there are no circumstances that
are reasonably likely to result in revocation of any such favorable
determination letter. To the knowledge of the Company or any of the Sellers,
each Employee Benefit Plan is and has been operated in all material respects in
compliance with its terms and all applicable laws, and by its terms can be
amended and/or terminated at any time. As of and including the Closing Date, the
Company shall have made all contributions required to be made by them up to and
including the Closing Date with respect to each Employee Benefit Plan, or
adequate accruals therefor will have been provided for and will be reflected on
the Financial Statements provided to ICC by the Company. All notices, filings
and disclosures required by ERISA or the Code (including notices under Section
4980B of the Code) have been timely made.
(e) Neither the Company nor any of the Sellers has received or is
aware of any actions, claims (other than routine claims for benefits), lawsuits
or arbitrations pending or, to the knowledge of the Company or any of the
Sellers, threatened with respect to any Employee Benefit Plan or against any
fiduciary of any Employee Benefit Plan, and neither the Company nor any of the
Sellers has knowledge of any facts that could give rise to any such actions,
claims, lawsuits or arbitrations. To the knowledge of the Company or any of the
Sellers, there has not occurred any circumstances by reason of which the Company
may be liable for an act, or a failure to act, by a fiduciary with respect to
any Employee Benefit Plan.
(f) No Employee Benefit Plan provides for medical or health benefits
(through insurance or otherwise) or provides for the continuation of such
benefits or coverage for any participant or any dependent or beneficiary of any
participant after such participant's
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retirement or other termination of employment except as may be required by Part
6 of Subtitle B of Title I of ERISA and Section 4980B of the Code ("COBRA").
(g) Neither the Company or any ERISA Affiliate has ever contributed
to, or withdrawn in a partial or complete withdrawal from, any "multiemployer
plan" (as defined in Section 3(37) of ERISA) or has any fixed or contingent
liability under Section 4204 of ERISA.
(h) No Employee Benefit Plan is a "multiple employer plan" as
described in Section 3(40) of ERISA or Section 413(c) of the Code.
(i) No Employee Benefit Plan, other than a "pension plan" within the
meaning of Section 3(2) of ERISA ("Pension Plan"), is funded through a trust
intended to be exempt from tax pursuant to Section 501 of the Code.
(j) Except as provided in Section 4.19 of the Disclosure Schedule,
no person or entity has an employment, severance, consulting or independent
contractor agreement with the Company. No "leased employee" (within the meaning
of Section 414(n) or (o) of the Code) performs any material services for the
Company.
Except as set forth in Section 4.19 of the Disclosure Schedule, the
consummation of the transactions contemplated by this Agreement will not result
in (i) any payment (including severance, unemployment compensation, golden
parachute or bonus payments or otherwise) becoming due to any director, officer,
employee or consultant of the Company, (ii) any increase in the amount of
compensation or benefits payable in respect of any director, officer, employee
or consultant of the Company or (iii) accelerate the vesting or timing of
payment of any benefits or compensation payable in respect of any director,
officer, employee or consultant of the Company. No Employee Benefit Plan
provides benefits or payments contingent upon, triggered by or increased as a
result of a change in the ownership or effective control of the Company.
4.20 LABOR RELATIONS
Except as set forth in Section 4.20 of the Disclosure Schedule:
(a) The Company has satisfactory relationships with its employees.
(b) No condition or state of facts or circumstances exists which is
reasonably likely to materially adversely affect the Company's relations with
its employees, including the consummation of the transactions contemplated by
this Agreement.
(c) The Company is in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours and is not engaged in any unfair
labor practice.
(d) No collective bargaining agreement with respect to the business
of the Company is currently in effect or being negotiated. The Company has not
encountered any labor union or collective bargaining organizing activity with
respect to its employees. The Company has no obligation to negotiate any such
collective bargaining agreement and, to the knowledge
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of the Company or any of the Sellers, there is no indication that the employees
of the Company desire to be covered by a collective bargaining agreement.
(e) There are no strikes, slowdowns, work stoppages or other labor
trouble pending or, to the knowledge of the Company or any of the Sellers,
threatened with respect to the employees of the Company, nor has any of the
above occurred or, to the knowledge of the Company or any of the Sellers, been
threatened.
(f) There is no representation claim or petition pending before the
National Labor Relations Board or any state or local labor agency and, to the
knowledge of the Company or any of the Sellers, no question concerning
representation has been raised or threatened respecting the employees of the
Company.
(g) There are no complaints or charges against the Company pending
before the National Labor Relations Board or any state or local labor agency
and, to the knowledge of the Company or any of the Sellers, no complaints or
charges have been filed or threatened to be filed against the Company with any
such board or agency.
(h) To the knowledge of the Company or any of the Sellers, no
charges with respect to or relating to the business of the Company are pending
before the Equal Employment Opportunity Commission or any state or local agency
responsible for the prevention of unlawful employment practices.
(i) Section 4.20 of the Disclosure Schedule accurately sets forth
all unpaid severance which, as of the date hereof, is due or claimed, in
writing, to be due from the Company to any Person whose employment with the
Company was terminated.
(j) None of the Sellers or the Company has received notice of the
intent of any government body responsible for the enforcement of labor or
employment laws to conduct an investigation of the Company and, to the knowledge
of the Company or any of the Sellers, no such investigation is in progress.
(k) To the knowledge of the Company or any of the Sellers, neither
the Company nor any employee of the Company is in violation in any material
respect of any employment agreement, non-disclosure agreement, non-competition
agreement or any other agreement regarding an employee's employment with the
Company.
(l) The Company has paid all wages which are due and payable to each
employee and each independent contractor.
4.21 INTELLECTUAL PROPERTY RIGHTS
(a) As used herein, the term "Intellectual Property Assets" shall
mean all worldwide industrial and intellectual property rights, including,
without limitation, patents, patent applications, patent rights, trademarks,
trademark applications, trademark rights, service marks, service mark
applications, service mark rights, copyrights, copyright applications, trade
names, unfair competition rights, franchises, licenses, inventories, know-how,
trade secrets, moral rights, rights of publicity, customer lists, proprietary
information, technologies, processes
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and formulae, all source and object code, algorithm, architecture, structure,
display screens, layouts, inventions, development tools, and all documentation
and media constituting, describing or relating to the above, including, without
limitation, manuals, memoranda and records in any format, whether hard copy or
machine-readable only.
(b) The Company is the sole legal and beneficial owner, free and
clear of any Encumbrance, of the entire right, title and interest in and to the
Intellectual Property Assets used in the conduct of the Company's business as
presently conducted and as proposed to be conducted and such rights to use, sell
or license are sufficient for such conduct of its business. The execution,
delivery and performance of this Agreement and the consummation of the
transaction contemplated hereby will not constitute a breach of any Contract
involving any of the Company's Intellectual Property Assets, will not cause the
forfeiture or termination or give rise to a right of forfeiture or termination
of any Intellectual Property Asset or impair the rights of the Company to use,
sell or license its Intellectual Property Assets or any portion thereof.
(c) Set forth in Section 4.21(c) of the Disclosure Schedule is a
complete and correct list of (i) all patents and patent applications, if any,
owned by the Company worldwide, (ii) all trademarks and service marks, all
trademark and service mark applications and registrations and all trade names
owned by the Company worldwide, (iii) all copyrights and registrations and
applications owned by the Company worldwide and (iv) all licenses owned by the
Company in which the Company is (A) a licensor with respect to any of the
patents, trademarks, service marks, trade names or copyrights listed in Section
4.21(c) of the Disclosure Schedule or (B) a licensee of any other person's
patents, trade names, trademarks, service marks or copyrights. The Company has
made all necessary filings and recordations to protect and maintain its
interests in the patents, patent applications, trademark and service mark
registrations, trademark and service mark applications, trade names, copyright
registrations and copyright applications and licenses set forth in Section
4.21(c) of the Disclosure Schedule, except for such filings and recordations the
failure of which to make would not have a Material Adverse Effect on the
Company.
(d) Except as set forth in Section 4.21(d) of the Disclosure
Schedule, and except as would not reasonably be expected to result in a Material
Adverse Effect on the Company, each patent, patent application, trademark or
service mark registration, trademark or service mark application and copyright
registration or copyright application of the Company set forth in Section
4.21(c) of the Disclosure Schedule, is valid and subsisting and has not been
judged invalid, unregistrable or unenforceable, in whole or in part, and is
valid, registrable and enforceable. Each license of the Company identified in
Section 4.21(c) of the Disclosure Schedule is valid, subsisting and enforceable
and has not been adjudged invalid or unenforceable, in whole or in part. The
Company has notified ICC of all uses of any item of its Intellectual Property
Assets becoming invalid or unenforceable, including uses which were not
supported by the good will of the business connected with such Intellectual
Property Assets. The Company has not made a previous assignment, transfer or
Contract constituting a present or future assignment, transfer or Encumbrance of
any Intellectual Property Asset. Except as listed in Section 4.21(d) of the
Disclosure Schedule, the Company has not granted any license, release, covenant
not to sue, or non-assertion assurance to any person with respect to any part of
the Intellectual Property Assets.
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(e) Except as set forth in Section 4.21(e) of the Disclosure
Schedule, and except as would not reasonably be expected to result in a Material
Adverse Effect on the Company, no use of the Intellectual Property Assets, nor
the manufacture, marketing, license, sale or use of any product or service
currently licensed or sold by the Company or currently under development by the
Company violates any license agreement between the Company and any third party
or infringes any proprietary rights of any third party and there is no pending
or threatened claim or litigation contesting the validity, ownership or right to
use, sell, license or dispose of any Intellectual Property Asset or product nor
is there any basis for any such claim. Further, the Company has not received any
notice asserting that any of the Company's Intellectual Property Assets or
products, or the proposed use, sale, license or disposition thereof, conflicts
or will conflict with the rights of any other party, nor is there any basis for
any such assertion.
(f) Except as set forth in Section 4.21(f) of the Disclosure
Schedule, there is no unauthorized use, infringement or misappropriation of any
of the Company's Intellectual Property Assets by any third party, including any
employee or former employee of the Company.
(g) Except as set forth in Section 4.21(g) of the Disclosure
Schedule, there are no royalties, honoraria, fees or other fixed or contingent
amounts or payments payable by Company to any person with respect to any
Intellectual Property Assets.
(h) The Company has taken reasonable and practicable steps designed
to safeguard and maintain the secrecy and confidentiality of, and the Company's
proprietary rights in, the Intellectual Property Assets. Except as set forth in
Section 4.21(h) of the Disclosure Schedule, all officers, employees and
consultants of or to the Company having access to or developing any Intellectual
Property Assets of the Company have executed and delivered an agreement
regarding the protection of proprietary information and the license or
assignment to the Company of all proprietary rights arising from the services
performed by such persons, such proprietary rights are licensed or assigned to
the Company or are works made-for-hire and the Company is the author and owner
of all such rights under the Copyright Act of 1976, as amended. To the knowledge
of the Company or any Seller, no current or prior officers, employees or
consultants of or to the Company (i) claims or have a right to claim an
ownership interest in any Intellectual Property Assets as a result of having
been involved in the development or licensing of any such property while
employed by or consulting to the Company, or otherwise, or (ii) owns any
Intellectual Property Assets directly or indirectly competitive with those of
the Company.
(i) Section 4.21(i) of the Disclosure Schedule contains a complete
list of all material development tools used or currently intended to be used by
the Company in the development of any product of the Company or used in the
conduct of the Company's business as presently conducted and as proposed to be
conducted, except for any such tools that are generally available and are used
in their generally available form (the "Company Development Tools"). Section
4.21(i) of the Disclosure Schedule also sets forth, for each Company Development
Tool: (i) for any Company Development Tool not entirely developed internally by
Company employees, the identity of the independent contractors and consultants
involved in such development and a list of the agreements with such independent
contractors and consultants, (ii) a list of any third parties with any rights to
receive royalties or other payments
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with respect to such Company Development Tools and a schedule of all such
royalties payable, (iii) a list of agreements containing any restrictions on the
Company's unrestricted right to use and distribute such Company Development
Tools and (iv) a list of all agreements with third parties for the use by such
third party of such Company Development Tools. The Company has sufficient right,
title and interest in and to the Company Development Tools necessary for the
conduct of its business as currently conducted and as to any products currently
in development or proposed to be developed and, except as set forth on Section
4.21(i) of the Disclosure Schedule, all Company Development Tools are works
made-for-hire and the Company is the author and owner of all such Company
Development Tools under the Copyright Act of 1976, as amended.
(j) Section 4.21(j) of the Disclosure Schedule lists all products
and services of the Company sold or proposed to be sold by the Company. Section
4.21(j) of the Disclosure Schedule sets forth, for each product and service, the
following information: (i) a list of all Contracts (including all development
agreements, trademark or service mark licenses, technology licenses,
manufacturer's representative agreements, distribution or other agreements)
relating to the product or service, (ii) as to any Contract under which
compliance or performance continues to be required, the advances paid or
payable, and the royalties or other sums payable, to any third parties with
respect to such product or service and (iii) a list of third parties with
distribution rights to such product or service together with a description of:
(a) the territory in which the third party has distribution rights and (b)
whether such distribution rights are exclusive or nonexclusive.
(k) Any software products or services owned, provided or otherwise
developed by the Company, or used in the conduct of the Company's business as
presently conducted, whether in whole or in part, by or for the Company, which
incorporate any date-related information or otherwise process any date-related
information, provide, among other things, the following functionality: (i)
accurate processing of date-related information before, during and after January
1, 2000, including accepting the date input, providing the date output and
performing calculations on dates or portions of dates, (ii) accurate functioning
without interruption before, during and after January 1, 2000 without any change
in operation associated with the advent of the new century, (iii) ability to
respond to two-digit date input in a way that resolves any ambiguity as to
century in a disclosed, defined and predetermined manner and (iv) the ability to
store and provide output date information in ways that are unambiguous as to
century.
(l) Except as set forth in Section 4.21(l) of the Disclosure
Schedule, each employee of or consultant to the Company who has or is proposed
to have access to the Company's source code or any material confidential and
proprietary information of the Company, each of whom is listed on Section
4.21(l) of the Disclosure Schedule, has executed and delivered an agreement with
the Company relating to non-competition, non-disclosure, proprietary information
and invention assignment, a correct and complete copy of which has been
delivered to ICC.
4.22 CERTAIN PAYMENTS
Neither the Company nor any director, officer, agent or employee of the
Company or, to the knowledge of the Company or any of the Sellers, any other
Person associated with or acting
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for or on behalf of the Company has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback or other
payment to any Person, private or public, regardless of form, whether in money,
property or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions, or for special concessions already obtained, for or in
respect of the Company or any affiliate of the Company or (iv) in violation of
any legal requirement or (b) established or maintained any fund or asset that
has not been recorded in the books and records of the Company.
4.23 RELATIONSHIPS WITH RELATED PERSONS; USE OF NAME
(a) Except as set forth in Section 4.23 of the Disclosure Schedule, none
of the Sellers, or any officer, director or employee of the Company, or any
spouse or child of any of them or any Person associated with any of them (a
"Related Person") has any interest in any property or asset used in or
pertaining to the business of the Company. None of the Sellers or any Related
Person has owned an equity interest or any other financial or profit interest in
a Person that has (i) had business dealings with the Company or (ii) engaged in
competition with the Company. None of the Sellers or any Related Person is a
party to any Contract with, or has any claim or right against, the Company,
except employment or consulting agreements listed in Section 4.19(j) of the
Disclosure Schedule.
(b) The business carried on by the Company has been conducted by the
Company directly and not through any Related Person or through any other Person.
The Company owns and has the exclusive right, title and interest in and to the
name "Research Triangle Commerce" and no other Person has the right to use the
same, or any confusing derivative thereof, as its corporate name or otherwise in
connection with the operation of any business similar or related to the business
conducted by the Company.
4.24 BROKERS OR FINDERS
Except as listed and described in Section 4.3 of the Disclosure Schedule,
neither the Company nor any of the Sellers nor their respective agents has
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or financial advisory services or other
similar payment in connection with this Agreement.
4.25 DEPOSIT ACCOUNTS
Section 4.25 of the Disclosure Schedule contains a true, correct and
complete list of (a) the name of each financial institution in which the Company
has an account or safe deposit box, (b) the names in which each account or box
is held, (c) the type of account and (d) the name of each person authorized to
draw on or have access to each account or box.
4.26 CLIENT RELATIONSHIPS
To the knowledge of the Company or any of the Sellers, there are no facts
or circumstances, including the consummation of the transactions contemplated by
this Agreement, that are reasonably likely to result in the loss of any material
client of the Company or a material change in the relationship of the Company
with such a client.
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4.27 DISCLOSURE
No representation or warranty of the Company or any of the Sellers
contained in this Agreement and no statement in the Disclosure Schedule is
inaccurate in any material respect or omits to state a material fact necessary
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading.
4.28 RESALE REGISTRATION STATEMENT; JOINT PROXY STATEMENT
The information supplied by the Sellers and the Company with respect to
the Sellers and the Company and their respective officers, directors,
stockholders and other affiliates (collectively, the "Company Information") for
inclusion in the Resale Registration Statement shall not at the time the Resale
Registration Statement is declared effective by the Commission contain 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 were made, not misleading. The
Company Information supplied by the Sellers and the Company for inclusion in the
joint proxy statement (such joint proxy statement as amended or supplemented is
referred to herein as the "Joint Proxy Statement") to be sent to (a) the
stockholders of the Company in connection with the meeting of the stockholders
of the Company to consider the Merger (the "Company Shareholders Meeting") and
(b) the stockholders of ICC in connection with the meeting of the stockholders
of ICC (the "ICC Stockholders Meeting" and, together with the Company
Shareholders Meeting, the "Stockholders Meetings") to consider the ICC Common
Stock Issuance will not, on the date the Joint Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to stockholders or at the time of
the Stockholders Meetings, contain any statement which, at such time and in
light of the circumstances under which it shall be made, is false or misleading
with respect to any material fact, or shall omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Stockholders
Meetings which has become false or misleading. If at any time prior to the
Effective Time any event relating to the Sellers or the Company or any of their
respective officers, directors, stockholders or other affiliates should be
discovered by the Sellers or the Company which should be set forth in an
amendment or a supplement to the Joint Proxy Statement, the Sellers or the
Company, as the case may be, shall promptly inform ICC. The Joint Proxy
Statement shall comply as to form in all material respects with the requirements
of the Exchange Act. Notwithstanding the foregoing, the Sellers and the Company
make no representation or warranty with respect to any information supplied by
ICC or Buyer which is contained or incorporated by reference in, or furnished in
connection with the preparation of, the Resale Registration Statement or the
Joint Proxy Statement.
5. REPRESENTATIONS AND WARRANTIES OF ICC AND BUYER
ICC and Buyer jointly and severally represent and warrant to the Company
and the Sellers as follows:
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5.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina. ICC is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Each of ICC and Buyer has full corporate power and authority
to conduct its business as it is now being conducted and to own or use the
properties and assets that it purports to own or use. Each of ICC and Buyer is
duly qualified to do business as a foreign corporation and is in good standing
under the laws of each state or other jurisdiction in which either the ownership
or use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except where the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect on
ICC and Buyer, taken as a whole.
5.2 AUTHORITY; NO CONFLICT
(a) ICC and Buyer each has the right, power, authority and capacity
to execute and deliver this Agreement, to consummate the Merger and to perform
its respective obligations under this Agreement. This Agreement has been duly
authorized and approved, executed and delivered by ICC and Buyer and constitutes
the legal, valid and binding obligation of ICC and Buyer, enforceable against
each in accordance with its terms, subject to approval of the ICC Common Stock
Issuance by the stockholders of ICC.
(b) Neither the execution and delivery of this Agreement by ICC or
Buyer nor the consummation or performance by ICC or Buyer of the Merger or any
of the other transactions contemplated hereby will, directly or indirectly (with
or without notice or lapse of time or both):
(i) contravene, conflict with, or result in a violation or
breach of (A) any provision of the Organizational Documents of ICC or Buyer, (B)
any resolution adopted by the board of directors (or any committee thereof) or
the stockholders of ICC or Buyer, (C) any legal requirement or any order to
which ICC or Buyer or any of the properties or assets owned or used by them may
be subject or (D) any Governmental Permit held by ICC or Buyer;
(ii) result in a breach of or constitute a default, give rise
to a right of termination, cancellation or acceleration, create any entitlement
to any payment or benefit, or require the consent or approval of or any notice
to or filing with any third party, under any Contract to which ICC or Buyer is a
party or by which their respective properties or assets are bound, or require
the consent or approval of or any notice to or filing with any Governmental
Authority to which either ICC, Buyer or their respective assets are subject; or
(iii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the properties or assets owned or used by ICC or
Buyer, except, with respect to clause (i) (C) or (D), (ii) or (iii) of this
Section 5.2, where any such contravention, conflict, violation, breach, default,
termination right, cancellation or acceleration right or Encumbrance could not
reasonably be expected to have a Material Adverse Effect on ICC or could not
reasonably be expected to adversely affect the ability of ICC or Buyer to
consummate the Merger or the other transactions contemplated by this Agreement.
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5.3 CAPITALIZATION; ICC SHARES
(a) The authorized capital stock of ICC consists of 40,000,000
shares of Class A Common Stock, par value $.01 per share, of which as of June 9,
2000 6,287,301 shares were issued and outstanding; 2,000,000 shares of Class B
Common Stock, par value $.01 per share, of which as of June 9, 2000 3,218 shares
were issued and outstanding; 2,000,000 shares of Class E-1 Common Stock, par
value $.01 per share, of which as of June 9, 2000 no shares were issued and
outstanding; 2,000,000 shares of Class E-2 Common Stock, par value $.01 per
share, of which as of June 9, 2000 no shares were issued and outstanding; and
5,000,000 shares of preferred stock, $.01 par value per share, of which as of
June 9, 2000 (i) 10,000 shares, designated Series A Convertible Redeemable
Preferred Stock, were authorized and 868 shares were outstanding, (ii) 10,000
shares, designated Series C Convertible Redeemable Preferred Stock, were
authorized and outstanding and (iii) 175 shares, designated Series S Preferred
Stock, were authorized and none was outstanding. All of the issued and
outstanding capital stock of Buyer is owned of record and beneficially by ICC.
(a) The ICC Shares issuable as a result of the Merger have been duly
authorized and upon the Effective Time, will be validly issued, fully paid and
nonassessable and designated for quotation on The NASDAQ SmallCap Market.
5.4 FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION
(a) ICC has delivered to each Seller correct and complete copies of
its Prospectus dated March 28, 2000 as filed with the Commission pursuant to
Rule 424(b) under the Securities Act (the "Prospectus"), its Annual Report on
Form 10-KSB for the year ended July 31, 1999 (the "Form 10-KSB") and its
Quarterly Reports on Form 10-QSB for the quarters ended October 31, 1999,
January 31, 2000 and April 30, 2000 (the "Forms 10-QSB") The Prospectus, the
Form 10-KSB and the Forms 10-QSB (the "ICC SEC Reports") have been timely filed
pursuant to the Securities Act or the Exchange Act, as applicable.
(b) The Prospectus, the Form 10-KSB and the Forms 10-QSB complied as
to form in all material respects with the requirements of the Securities Act and
the Exchange Act, as applicable, in effect on the respective dates thereof. None
of the Prospectus, the Form 10-KSB or the Forms 10-QSB, when filed pursuant to
the Securities Act or the Exchange Act, as applicable, contained any untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(c) Each of the financial statements (including the related notes)
included in the Form 10-KSB and the Forms 10-QSB presents fairly, in all
material respects, the consolidated financial position and consolidated results
of operations and cash flows of ICC as of the respective dates or for the
respective periods set forth therein, all in conformity with GAAP consistently
applied during the periods involved, except as otherwise noted therein, and
subject, in the case of any unaudited interim financial statements included
therein, to normal year-end adjustments and to the absence of complete
footnotes.
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5.5 NO MATERIAL ADVERSE CHANGE
Since July 31, 1999, there has not been any material adverse change in the
business, operations, properties, prospects, liabilities, results of operations,
assets or condition (financial or otherwise) of ICC taken as a whole. Certain
recent developments involving ICC are described in Section 5.5 of the Disclosure
Schedule.
5.6 LEGAL PROCEEDINGS
Except as set forth in Section 5.6 of the Disclosure Schedule, there is no
pending Proceeding against ICC or Buyer that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering with,
any of the transactions contemplated by this Agreement. To the knowledge of ICC,
no such Proceeding has been threatened in writing.
5.7 BROKERS OR FINDERS
Neither ICC nor Buyer nor any of its officers and agents has incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or financial advisory services or other similar payment
in connection with this Agreement, except for fees that will be paid by ICC.
5.8 RESALE REGISTRATION STATEMENT; JOINT PROXY STATEMENT
Subject to the accuracy of the representations of the Company in Section
4.28, the Resale Registration Statement pursuant to which the ICC Shares will be
registered with the Commission shall not at the time the Resale Registration
Statement is declared effective by the Commission contain 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 the light of
the circumstances under which they were made, not misleading. The information
with respect to ICC and its officers, directors, stockholders and other
affiliates included in the Joint Proxy Statement will not, on the date the Joint
Proxy Statement (or any amendment thereof or supplement thereto) is first mailed
to stockholders, or at the time of the Stockholders Meetings, contain any
statement which, at such time and in light of the circumstances under which it
shall be made, is false or misleading with respect to any material fact, or
shall omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they are made, not false
or misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Stockholders Meetings which has become false or misleading. If
at any time prior to the Effective Time any event relating to ICC or Buyer or
any of their respective officers, directors, stockholders or affiliates should
be discovered by ICC which should be set forth in an amendment or a supplement
to the Joint Proxy Statement, ICC shall promptly inform the Sellers and the
Company. The Joint Proxy Statement shall comply as to form in all material
respects with the requirements of the Exchange Act. Notwithstanding the
foregoing, ICC and Buyer make no representation or warranty with respect to any
Company Information which is contained or incorporated by reference in, or
furnished in connection with the preparation of, the Resale Registration
Statement or the Joint Proxy Statement.
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5.9 EMPLOYEES
ICC is not aware of any officer or other key employee of ICC who intends
to terminate his or her employment with ICC.
5.10 CONTINUATION OF BUSINESS
After the Effective Time ICC intends to operate the Company as a going
concern substantially in accordance with the Company's present plan of operation
(without regard to acquisitions) and at the Effective Time ICC will offer
employment to all the present employees of the Company on terms substantially
comparable to the terms of employment of comparable ICC employees, subject to
reasonable adjustments related to location, cost of living and other relevant
factors and subject in all cases to the discretion of the Board of Directors of
ICC.
6. COVENANTS OF THE COMPANY AND THE SELLERS
The Company and the Sellers hereby each individually covenants and agrees
with ICC and Buyer as follows:
6.1 NORMAL COURSE
From the date of this Agreement until the Closing, the Company will and
the Sellers will cause the Company to: (a) maintain its corporate existence in
good standing, (b) maintain the general character of its business, (c) use all
reasonable commercial efforts to maintain in effect all of its presently
existing insurance coverage (or substantially equivalent insurance coverage),
preserve its business organization substantially intact, keep the services of
its present principal employees and preserve its present business relationships
with its material suppliers and customers, (d) permit ICC, Buyer, their
accountants, their legal counsel and their other representatives full access to
its management, minute books and stock transfer records, other books and
records, Contracts, properties and operations at all reasonable times and upon
reasonable notice and (e) in all respects conduct its business in the usual and
ordinary manner consistent with past practice, including without limitation with
respect to any cash provided to the Company by ICC in connection with the
transactions contemplated by this Agreement and the Letter of Intent, and
perform in all material respects all agreements or other obligations with banks,
customers, suppliers, employees and others.
6.2 CONDUCT OF BUSINESS
Without limiting the provisions of Section 6.1 and except as otherwise
expressly permitted by this Agreement, from the date of this Agreement until the
Closing, the Company will not, and the Sellers will cause the Company not to,
without the prior written consent of ICC, enter into any Contract or take or
fail to take any action that, if it had occurred after the Balance Sheet Date
and prior to the date of this Agreement would be required to be disclosed in
Section 4.14 of the Disclosure Schedule:
(a) amend or otherwise modify its Organizational Documents;
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(b) pay any material Liability, except for any current Liabilities
and the current portion of any long term Liabilities shown on the Financial
Statements (or not required as of the date thereof to be shown thereon in
accordance with GAAP) or incurred since the Balance Sheet Date in the ordinary
course of business consistent with past practice;
(c) make any loan or advance in excess of $10,000 to any Person
other than travel and other similar routine advances in the ordinary course of
business consistent with past practice, or acquire any capital stock or other
securities of or any ownership interest in any other business enterprise;
(d) make any capital expenditure or capital addition or betterment
in amounts which exceed $100,000 in the aggregate, except as contemplated in
capital budgets in effect on the date of this Agreement; or
(e) enter into any commitment to do any of the foregoing; provided,
however, that prior to the Closing the Company may adopt a restricted stock plan
reasonably satisfactory to ICC and award shares of Company Restricted Stock
subject to forfeiture by the recipients of such shares on the terms and
conditions set forth in such plan. The total number of shares of Company
Restricted Stock awarded under such plan may not exceed the lesser of (x)
825,000 shares of Company Restricted Stock and (y) the number of shares
contributed by Jeffrey LeRose to the capital of the Company prior to the
Closing.
6.3 CERTAIN FILINGS
The Company and the Sellers agree to cooperate with ICC with respect
to all filings with regulatory authorities that are required to be made,
respectively, by any of the Sellers or by the Company to carry out the
transactions contemplated by this Agreement, including providing information and
cooperating in the preparation and filing of the Resale Registration Statement
(or such other form as may be appropriate) and the Joint Proxy Statement. The
Sellers shall assist and shall cause the Company to assist ICC and Buyer in
making all such filings, applications and notices as may be necessary or
desirable in order to obtain the authorization, approval or consent of any
governmental entity which may be reasonably required or which ICC and Buyer may
reasonably request in connection with the consummation of the transactions
contemplated by this Agreement. The Joint Proxy Statement shall include the
unanimous recommendation of the Board of Directors of the Company in favor of
the Merger and this Agreement and such recommendation shall not be withdrawn
modified or changed in a manner adverse to ICC or the Company, respectively.
6.4 CONSENTS AND APPROVALS
The Company and the Sellers shall use their respective reasonable
commercial efforts to obtain as promptly as practicable all consents,
authorizations, approvals and waivers required in connection with the
consummation of the transactions contemplated by this Agreement.
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6.5 COMMERCIALLY REASONABLE BEST EFFORTS TO SATISFY CONDITIONS
(b) The Company and the Sellers shall use their commercially
reasonable best efforts to cooperate with ICC for purposes of satisfying the
conditions set forth in Sections 8 and 9 that are within their control.
(c) The Company and the Sellers shall use their commercially
reasonable best efforts to cause the Persons listed in Section 4.21(h) and
Section 4.21(l) of the Disclosure Schedule to sign the Company's standard form
of non-compete, non-disclosure, proprietary information and invention assignment
agreement.
6.6 INTERCOMPANY PAYMENTS
All loans, payables and other amounts due between, to or from the Company
and its affiliates as listed in Section 6.6 of the Disclosure Schedule, if any,
shall be paid in full, written off or adjusted to zero balances at or prior to
the Closing. Such amounts due may be paid from cash on hand or as may otherwise
be available to the Company from existing lines of credit with third party
lenders.
6.7 NOTIFICATION OF CERTAIN MATTERS
The Company and each Seller shall promptly notify ICC of (i) the
occurrence or non-occurrence of any fact or event of which such Seller or the
Company has knowledge which would be reasonably likely (A) to cause any
representation or warranty of such Seller or the Company contained in this
Agreement or the Disclosure Schedule to be untrue or inaccurate in any material
respect at any time from the date of this Agreement to the Closing Date or (B)
to cause any covenant, condition or agreement of such Seller or the Company in
this Agreement not to be complied with or satisfied in any material respect and
(ii) any failure of such Seller or the Company to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder in any material respect; provided, however, that no such notification
shall affect the representations or warranties of the Sellers or the Company or
the right of ICC or Buyer to rely thereon, or the conditions to the obligations
of ICC or Buyer. The Company shall give prompt notice to ICC of any notice or
other communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement.
6.8 TAX TREATMENT
The Company and each Seller agrees not to take any action that would
jeopardize treatment of the Merger as a tax-free reorganization as described in
Section 2.11.
6.9 RESTRICTIVE COVENANTS
(a) Scope and Reasonableness. Mr. LeRose acknowledges that ICC would
not consummate the transactions contemplated by this Agreement without the
assurance that he will not engage in the activities prohibited by this Section
6.9 as and for the period set forth below. In order to induce ICC to consummate
the transactions contemplated by this Agreement,
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Mr. LeRose agrees to restrict his actions and activities throughout the United
States (the "Territory") as provided in this Section 6.9. Mr. LeRose
acknowledges and agrees that the restrictions in this Section 6.9 are reasonable
in light of the benefits of the transactions contemplated by this Agreement to
him.
(b) Non-competition. Mr. LeRose hereby covenants and agrees that
from the Closing Date until the second (2nd) anniversary of the Closing Date, it
will not in the Territory, directly or indirectly, (a) engage on its own behalf
in the RTCI Business (as hereinafter defined) or (b) own any interest in or
engage in or perform any service for any Person, either as a partner, owner,
employee, consultant, agent, officer, director or shareholder, that (A) derives
a meaningful portion of its revenues from the RTCI Business or (B) is a
meaningful competitor in the RTCI Business. Notwithstanding any provision of
this Section 6.9(b), it shall not be a violation of this Section 6.9(b) for Mr.
LeRose to own two percent (2%) or less of a public company, provided that he
does not exert or have the power to exert any management or other control over
such public company. The RTCI Business means Data Transformation and Mapping (as
hereinafter defined) for business-to-business electronic commerce over the
Internet. "Data Transformation and Mapping" means using commercially available
translation software to communicate between systems.
(c) Non-Solicitation. Mr. LeRose hereby covenants and agrees that
from the Closing Date through the first (1st) anniversary of the Closing Date,
he will not induce or attempt to induce, in any manner, directly or indirectly,
any employee, agent, representative, customer or any other person or concern
dealing with or in any way associated with the Company to terminate or to
modify, in any fashion to the material detriment of the Company, such
association with the Company. Mr. LeRose acknowledges that the provisions of
Sections 6.9(b) and 6.9(c) are his separate agreement.
(d) Remedies. Mr. LeRose's agreements contained in this Section 6.9
relate to matters of unique character and peculiar value impossible of
replacement, that breach of such agreements by Mr. LeRose will cause the Company
great and irreparable injury, that the remedy at law for any breach of the
agreements contained in this Section 6.9 will be inadequate and that ICC, in
addition to any other remedy available to it, shall be entitled to temporary
restraining orders and temporary and permanent injunctive relief or other
equitable relief without the necessity of proving actual damage or of providing
a bond so as to prevent a breach or threatened breach of any of the agreements
contained in this Section 6.9 and to secure the enforcement thereof.
6.10 COMPANY SHAREHOLDERS MEETING
The Company shall call the Company Shareholders Meeting as promptly as
practicable for the purpose of voting upon the approval of the Merger. The
Company shall take all reasonable action necessary or advisable to secure the
vote or consent of stockholders of the Company in favor of approval of the
Merger and this Agreement and shall not take any action that could reasonably be
expected to prevent the vote or consent of stockholders in favor of such
approval.
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6.11 AGREEMENT TO VOTE COMPANY CAPITAL STOCK
Each of the Sellers shall, at any meeting of the stockholders of the
Company prior to the Effective Time, however called, vote, or shall execute a
written consent with respect to all of, its shares of Company Capital Stock (a)
in favor of the Merger and this Agreement, (b) against any action or agreement
that would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of the Company or the Sellers under this Agreement
and (c) against any action or agreement (other than this Agreement) that would
impede, interfere with, delay, postpone or attempt to discourage the Merger,
including, but not limited to: (i) any extraordinary corporate transaction, such
as a merger, consolidation or other business combination involving the Company,
(ii) a sale or transfer of a material amount of assets of the Company or a
reorganization, recapitalization or liquidation of the Company, except as
provided in this Agreement, (iii) any change in the management or board of
directors of the Company, except as otherwise agreed to in writing by ICC, (iv)
any material change in the present capitalization or dividend policy of the
Company, except as provided in this Agreement or (v) any other material change
in the Company's corporate structure or business, except as provided in this
Agreement.
6.12 GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY
(a) Effective upon the mailing of the Joint Proxy Statement, each Seller
hereby irrevocably appoints and grants to Dr. Geoffrey S. Carroll and Walter M.
Psztur or either of them, in their respective capacities as officers or
directors of ICC, and any individual who shall hereafter succeed to any such
office or directorship of ICC, and each of them individually, as such Seller's
proxy and attorney-in-fact (with full power of substitution and resubstitution),
for and in the name, place and stead of such Seller, to vote, or execute a
written consent with respect to all of, the shares of Company Capital Stock held
by such Seller in favor of the Merger and against each matter contemplated by
(b) and (c) in Section 6.11.
(b) Each Seller represents and warrants that any proxies heretofore given
in respect of the shares of Company Capital Stock held by such Seller are
revocable, and that any such proxies are hereby revoked. Each Seller hereby
affirms that the irrevocable proxy set forth in this Section is given to secure
the performance of the duties of such Seller under this Agreement. Each Seller
hereby further affirms that the irrevocable proxy is coupled with an interest
and may under no circumstances be revoked. Each Seller hereby ratifies and
confirms all that such irrevocable proxy may lawfully do or cause to be done by
virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable
in accordance with the applicable provisions of the NCBCA.
6.13 AGREEMENT TO COOPERATE
The Company and each Seller shall provide to ICC such financial (including
financial statements) and other information concerning the Company, and shall
otherwise fully cooperate with ICC, in connection with the preparation and
filing with the Commission of any registration statement, report or other
document required to be filed by ICC. ICC shall pay all reasonable out-of-pocket
costs incurred by the Company in preparing such financial and other information
if and to the extent the Company would not otherwise have incurred such costs.
All such
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information shall be true and correct and none shall contain 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 were made, not misleading.
6.14 BOARD MEMBERSHIP
In the event the Merger is either (i) not consummated or (ii) not
effective by November 30, 2000 (unless extended by mutual agreement of the
parties), then the Company and each Seller shall cause one person nominated by
ICC to be elected to the Company's board of directors for so long as ICC owns
any shares of the Company's capital stock acquired upon the conversion of the
Promissory Note. This covenant shall survive the termination of this Agreement
for any reason and by any of the parties to this Agreement.
6.15 EXERCISE OF WARRANTS
Immediately prior to the Effective Time, Blue Water shall exercise all
warrants to purchase Company Capital Stock held by it.
7. COVENANTS OF ICC AND BUYER
ICC and Buyer each covenants and agrees with the Company as follows:
7.1 NORMAL COURSE
From the date of this Agreement until the Closing, each of ICC and Buyer
will: (a) maintain its corporate existence in good standing, (b) maintain the
general character of its business, (c) use all reasonable commercial efforts to
maintain in effect all of its presently existing insurance coverage (or
substantially equivalent insurance coverage), preserve its business organization
substantially intact, keep the services of its present principal employees and
preserve its present business relationships with its material suppliers and
customers, (d) permit the Company, the Sellers, their accountants, their legal
counsel and their other representatives full access to its management, minute
books and stock transfer records, other books and records, Contracts, properties
and operations at all reasonable times and upon reasonable notice and (e) in all
respects conduct its business in the usual and ordinary manner consistent with
past practice and perform in all material respects all agreements or other
obligations with banks, customers, suppliers, employees and others.
7.2 CERTAIN FILINGS
ICC and Buyer agree to make or cause to be made all filings with
regulatory authorities that are required to be made by ICC or Buyer or their
respective affiliates to carry out the transactions contemplated by this
Agreement. ICC shall use its best efforts to file a Registration Statement on
Form S-8 as soon reasonably practicable after the Effective Time to register the
Options to be granted pursuant to Section 2.12(a) and, to the extent
permissible, the ICC Shares issued pursuant to Section 2.12(b).
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7.3 COMMERCIALLY REASONABLE BEST EFFORTS TO SATISFY CONDITIONS
Each of ICC and Buyer agrees to use its commercially reasonable best
efforts to satisfy the conditions set forth in Sections 8 and 9 that are within
its control.
7.4 NOTIFICATION OF CERTAIN MATTERS
ICC and Buyer shall promptly notify the Company and the Sellers of (i) the
occurrence or non-occurrence of any fact or event of which ICC or Buyer has
knowledge which would be reasonably likely (A) to cause any representation or
warranty of ICC or Buyer contained in this Agreement to be untrue or inaccurate
in any material respect at any time from the date hereof to the Closing Date or
(B) to cause any covenant, condition or agreement of ICC or Buyer in this
Agreement not to be complied with or satisfied in any material respect and (ii)
any failure of ICC or Buyer to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder in any material
respect; provided, however, that no such notification shall affect the
representations or warranties of ICC and Buyer, or the Company's or the Sellers'
right to rely thereon, or the conditions to the obligations of the Company and
the Sellers. ICC and Buyer shall give prompt notice to the Company of any notice
or other communication from any third party alleging that the consent of such
third party is or may be required in connection with the transactions
contemplated by this Agreement.
7.5 TAX TREATMENT
ICC agrees not to take any action that would jeopardize treatment of the
Merger as a tax-free reorganization as described in Section 2.11.
7.6 ICC STOCKHOLDERS MEETING
ICC shall call the ICC Stockholders Meeting as promptly as practicable for
the purpose of authorizing and approving the issuance by ICC of the ICC Shares
in the Merger, as contemplated by this Agreement (the "ICC Common Stock
Issuance"), as required by the National Association of Securities Dealers, Inc.
(the "NASD"). ICC shall solicit from its stockholders proxies in favor of
approval of the ICC Common Stock Issuance, shall take all other reasonable
action necessary or advisable to secure the vote or consent of stockholders in
favor of such approval and shall not take any action that could reasonably be
expected to prevent such vote or consent of stockholders in favor of such
approval. The Joint Proxy Statement for the ICC Stockholders Meeting shall
include the unanimous recommendation of the Board of Directors of the Company in
favor of the ICC Common Stock Issuance, and such recommendations shall not be
withdrawn modified or changed in a manner adverse to the Company.
1.3 DELIVERY OF ICC SHARES
At the Effective Time or as soon thereafter as reasonably practicable, ICC
shall deliver, or caused to be delivered, the ICC Shares.
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8. CONDITIONS TO OBLIGATIONS OF ICC AND BUYER
The obligations of ICC and Buyer under this Agreement to consummate the
Merger shall be subject to the satisfaction, on or before the Closing Date, of
each of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company and the Sellers
contained in this Agreement or in the Disclosure Schedule or in any certificate
delivered pursuant to this Agreement shall be complete and correct as of the
date when made, shall be deemed repeated at and as of the Closing Date as if
made on the Closing Date and, without giving effect to any qualification as to
materiality (or any variation of such term) contained in any representation or
warranty, shall then be complete and correct in all material respects.
8.2 PERFORMANCE OF COVENANTS
The Company and the Sellers shall have performed and complied in all
material respects with each covenant, agreement and condition required by this
Agreement to be performed or complied with by them prior to or on the Closing
Date.
8.3 LACK OF ADVERSE CHANGE
Since the date of this Agreement, there shall not have occurred any
incident or event which, individually or in the aggregate, has had or is
reasonably likely to result in a Material Adverse Effect on the Company,
including the loss of any significant customer of the Company.
8.4 UPDATE CERTIFICATE
ICC and Buyer shall have received favorable certificates, dated the
Closing Date, signed by the Company and each of the Sellers as to the matters
set forth in Sections 8.1, 8.2 and 8.3.
8.5 NO GOVERNMENTAL OR OTHER PROCEEDING OR LITIGATION
No order of any Governmental Authority shall be in effect that restrains
or prohibits any transaction contemplated by this Agreement or that would limit
or affect ICC's or Buyer's ownership or operation of the business of the
Company; no suit, action, investigation, inquiry or proceeding by any
Governmental Authority shall be pending or threatened against ICC, Buyer, the
Company or any Seller that challenges the validity or legality, or that seeks to
restrain the consummation, of the transactions contemplated by this Agreement or
that seeks to limit or otherwise affect ICC's right to own or operate the
business of the Company and no written advice shall have been received by ICC,
Buyer, the Company or any Seller or by any of their respective counsel from any
Governmental Authority, and remain in effect, stating that a Proceeding will, if
the Merger is consummated or sought to be consummated, be filed seeking to
invalidate or restrain the Merger or limit or otherwise affect ICC's or Buyer's
ownership or operation of the business of the Company.
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8.6 APPROVALS AND CONSENTS
All consents, waivers, approvals, authorizations or orders required to be
obtained, and all filings required to be made, by the Company for the
authorization, execution and delivery of this Agreement, the consummation by it
of the transactions contemplated by this Agreement and the continuation in full
force and effect of any and all material rights, documents, agreements or
instruments of the Company shall have been obtained and made by the Company,
except where the failure to receive such consents, waivers, approvals,
authorizations or orders could not reasonably be expected to have a Material
Adverse Effect on the Company.
8.7 OPINION OF COUNSEL
The Sellers and the Company shall have delivered to ICC and Buyer an
opinion of Kilpatrick Stockton LLP, dated the Closing Date and addressed to ICC
and Buyer, as to such matters as are customarily covered by opinions in
connection with transactions similar to the Merger, in form and substance
reasonably satisfactory to ICC.
8.8 SHAREHOLDER APPROVAL
This Agreement shall have been duly approved at or prior to the Effective
Time of the Merger by the requisite vote of the Company Shareholders in
accordance with the NCBCA. The ICC Stock Issuance shall have been duly approved
at or prior to the Effective Time by the requisite vote of ICC's stockholders in
accordance with the Delaware General Corporation Law.
8.9 REGISTRATION RIGHTS AGREEMENT
The Sellers shall have delivered an executed Registration Rights Agreement
(the "Registration Rights Agreement"), in the form attached to this Agreement as
Exhibit 8.9, with respect to the ICC Shares.
8.10 TERMINATION OF AGREEMENTS
The Registration Rights Agreement dated as of April 9, 1999 by and between
the Company and Marion Bass Securities Corporation and the Voting Trust
Agreement dated as of March 9, 2000 by and among the Company, the Trustee (as
defined therein) and the Shareholders (as defined therein) shall both be
terminated and shall have no further force and effect as of the Closing.
8.11 BLUE WATER WAIVER LETTER
The Blue Water Waiver Letter shall remain in full force and effect.
9. CONDITIONS TO OBLIGATION OF THE COMPANY AND THE SELLERS
The obligations of the Company and the Sellers under this Agreement to
consummate the Merger shall be subject to the satisfaction, on or before the
Closing Date, of each of the following conditions:
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9.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties of ICC and Buyer contained in this
Agreement or in any certificate delivered pursuant to this Agreement shall be
complete and correct as of the date when made, shall be deemed repeated at and
as of the Closing Date as if made on the Closing Date and, without giving effect
to any qualification as to materiality (or any variation of such term) contained
in any representation or warranty, shall then be complete and correct in all
material respects.
9.2 LACK OF ADVERSE CHANGE
Since the date of this Agreement, there shall not have occurred any
incident or event which, individually or in the aggregate, has had or is
reasonably likely to result in a Material Adverse Effect on ICC, including the
loss of any significant customer of ICC.
9.3 PERFORMANCE OF COVENANTS
ICC and Buyer shall have performed and complied in all material respects
with each covenant, agreement and condition required by this Agreement to be
performed or complied with by them prior to or on the Closing Date.
9.4 UPDATE CERTIFICATE
The Company and the Sellers shall have received favorable certificates,
dated the Closing Date, signed by ICC and Buyer as to the matters set forth in
Sections 9.1, 9.2 and 9.3.
9.5 NO GOVERNMENTAL OR OTHER PROCEEDING OR LITIGATION
No order of any Governmental Authority shall be in effect that restrains
or prohibits the Merger, and no written advice shall have been received by ICC,
Buyer, the Company or any Seller or by any of their respective counsel from any
Governmental Authority, and remain in effect, stating that a Proceeding will, if
the Merger is consummated or sought to be consummated, be filed seeking to
invalidate or restrain the Merger.
9.6 OPINION OF COUNSEL
ICC shall have delivered to Sellers an opinion of Kramer Levin Naftalis &
Frankel LLP, dated the Closing Date and addressed to Sellers, as to such matters
as are customarily covered by opinions in connection with transactions similar
to the Merger, in form and substance reasonably satisfactory to Sellers.
9.7 BOARD MEMBERS
Two directors nominated by the Sellers shall have been elected to ICC's
Board of Directors, one of whom shall be Jeffrey LeRose and the other of whom
shall be an independent individual with recognized experience and reputation in
the industry, which individual shall be reasonable acceptable to ICC in
consultation with its investment bankers; provided, however, that in the event
that such second individual is not identified at the Effective Time, the Sellers
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shall nominate a current member of the Company's Board of Directors to be a
director of the ICC Board of Directors, which member shall be reasonably
acceptable to the ICC Board of Directors.
9.8 REGISTRATION RIGHTS AGREEMENT
ICC shall have delivered an executed Registration Rights Agreement with
respect to the ICC Shares.
10. TERMINATION OF AGREEMENT
This Agreement may be terminated upon the occurrence of any of the
following events:
10.1 MUTUAL CONSENT
At any time prior to the Effective Time, by mutual consent of ICC, Buyer
and the Company.
10.2 TRANSACTION DATE
By ICC, Buyer or the Company if the Effective Time shall not have occurred
by November 30, 2000, unless such failure shall be due to a material breach of
any representation or warranty, or the nonfulfillment in any material respect,
and failure to cure such nonfulfillment, of any covenant or agreement contained
in this Agreement on the part of the party or parties seeking to terminate.
10.3 BREACH
By ICC or Buyer if there has been a material misrepresentation by the
Company or the Sellers, or a material breach on the part of the Company or the
Sellers of any of their warranties or covenants set forth in this Agreement, or
a material failure on the part of the Company or the Sellers to comply with any
of their other obligations under this Agreement, or by the Company if there has
been a material misrepresentation by ICC or Buyer, or a material breach on the
part of ICC or Buyer of any of their warranties or covenants set forth in this
Agreement, or a material failure on the part of ICC or Buyer to comply with any
of their other obligations under this Agreement. No such termination shall
relieve any party of the consequences of any such misrepresentation, breach or
failure.
11. INDEMNIFICATION; REMEDIES
11.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Schedule and any other certificate or document
delivered pursuant to this Agreement shall survive the Closing until ICC files
with the Commission its Annual Report on Form 10-K
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(or 10-KSB) for the year ending July 31, 2001, except as to Sections 4.8, 4.17
and 4.19, which shall survive for the applicable statute of limitations, and
Sections 3.2, 3.4, 4.3, 4.23 and 4.24, which shall survive indefinitely;
provided, however, that a claim asserted within such time may continue beyond
any such time limit. The right to indemnification, payment of Damages (as
defined below) or other remedy based on such representations, warranties,
covenants and obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement or
the Closing Date, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant or obligation.
11.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
(a) Each Seller hereby agrees to indemnify and hold harmless ICC,
Buyer, the Company and their respective representatives (including all officers
and directors), stockholders, controlling persons and affiliates (collectively,
the "Indemnified Persons") from and against, and will pay to the Indemnified
Persons the amount of any loss, liability, claim, damage, cost or expense
(including reasonable costs of investigation and defense and reasonable
attorneys' and experts' fees and expenses) or diminution of value, whether or
not involving a third-party claim (collectively, "Damages"), arising, directly
or indirectly, from or in connection with or incurred as a result of:
(i) any breach of any representation or warranty made by such
Seller or the Company in this Agreement, the Disclosure Schedule or in any
certificate delivered by such Seller or the Company pursuant to this Agreement;
and
(ii) any breach by such Seller or Company of any covenant or
obligation of such Seller or Company in this Agreement.
(b) Notwithstanding anything in this Section 11.2 to the contrary,
no Seller shall have any obligation to indemnify the Indemnified Persons for any
Damages resulting from the breach or breaches of any representation or warranty
of the Sellers or the Company contained in Section 4 of this Agreement or in the
Disclosure Schedule or in any certificate relating thereto and delivered by any
of the Sellers or the Company pursuant to this Agreement: (i) until the
Indemnified Persons have suffered Damages, by reason of such breach or breaches,
in excess of $500,000 in the aggregate (the "Seller Basket"); provided that once
the Indemnified Persons' aggregate Damages exceed the Seller Basket, the Sellers
shall indemnify the Indemnified Persons for all such Damages suffered, and (ii)
to the extent the aggregate Damages the Indemnified Persons have suffered by
reason of all such breaches of representations and warranties of the Sellers or
the Company exceed $21,000,000 (the "Seller Cap"), in the absence of fraud or
intentional misrepresentation, the Sellers will have no obligation to indemnify
the Indemnified Persons for further Damages in excess of the Seller Cap. Such
indemnification shall be payable by the Sellers by relinquishing that number of
ICC Shares equal to the amount of such Damages (subject to the Seller Cap)
divided by the Market Price of ICC Common Stock; provided, however, that the
Sellers shall be severally liable for such Damages in amount determined for each
Seller by multiplying the amount of such Damages by a fraction, the numerator of
which
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shall be the number of ICC Shares into which such Seller's shares of Company
Capital Stock were converted pursuant to Section 2.7 and the denominator of
which shall be the total number of ICC Shares into which both Sellers' shares of
Company Capital Stock were converted pursuant to Section 2.7. For purposes of
determining whether a breach of any representation or warranty of the Sellers or
the Company contained in Section 4 of this Agreement or in the Disclosure
Schedule or in any certificate relating thereto and delivered by the Sellers or
the Company pursuant to this Agreement has occurred and results in Damages in
excess of the Seller Basket or the Seller Cap, any requirement in any
representation or warranty that an event or fact be material, have a Material
Adverse Effect or be qualified to the Sellers' knowledge in order for such event
or fact to constitute a breach of such representation or warranty (a
"Materiality Condition") shall be ignored, and if the aggregate of all the
claims for indemnification for breaches of a representation or warranty exceeds
the Seller Basket, in each case ignoring all Materiality Conditions, the
Indemnified Persons shall be indemnified in accordance with this Section 11.
11.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY ICC AND BUYER
(a) ICC and Buyer will indemnify and hold harmless the Sellers and
their respective heirs, estates and personal representatives ("Seller Parties")
and will pay to the Seller Parties the amount of any Damages arising, directly
or indirectly, from or in connection with or incurred as a result of (a) any
breach of any representation or warranty made by ICC or Buyer in this Agreement
or in any certificate delivered by ICC or Buyer pursuant to this Agreement, (b)
any breach by ICC or Buyer of any covenant or obligation of ICC or Buyer in this
Agreement or (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with ICC or Buyer in connection with
the transactions contemplated by this Agreement.
(b) Notwithstanding anything in this Section 11.3 to the contrary,
ICC and Buyer shall not have any obligation to indemnify the Seller Parties for
any Damages resulting from the breach or breaches of any representation or
warranty of ICC or Buyer contained in Section 5 of this Agreement or in any
certificate relating thereto and delivered by either ICC or Buyer pursuant to
this Agreement: (i) until the Seller Parties have suffered Damages, by reason of
such breach or breaches, in excess of $500,000 in the aggregate (the "ICC
Basket"); provided that once the Seller Parties' aggregate Damages exceed the
ICC Basket, ICC and Buyer shall indemnify the Seller Parties for all such
Damages suffered, and (ii) to the extent the aggregate Damages the Seller
Parties have suffered by reason of all such breaches of representations and
warranties of ICC or Buyer exceed $21,000,000 (the "ICC Cap"), in the absence of
fraud or intentional misrepresentation, ICC and Buyer will have no obligation to
indemnify the Seller Parties for further Damages in excess of the ICC Cap. For
purposes of determining whether a breach of any representation or warranty of
ICC or Buyer contained in Section 5 of this Agreement or in any certificate
relating thereto and delivered by ICC or Buyer pursuant to this Agreement has
occurred and results in Damages in excess of the ICC Basket or the ICC Cap, any
requirement in any representation or warranty that an event or fact be material,
have a Material Adverse Effect or be qualified to ICC's or Buyer's knowledge in
order for such event or fact to constitute a breach of such representation or
warranty (a "Materiality Condition") shall be ignored, and if the aggregate of
all the claims for indemnification for breaches of a representation or warranty
exceeds the ICC Basket, in each case ignoring all Materiality Conditions, the
Indemnified Persons shall be indemnified in accordance with this Section 11.
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11.4 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) An indemnified party shall promptly give notice to each
indemnifying party after obtaining knowledge of any matter as to which recovery
may be sought against such indemnifying party because of the indemnity set forth
above, and, if such indemnity shall arise from the claim of a third party, shall
permit such indemnifying party to assume the defense of any such claim or any
Proceeding resulting from such claim; provided, however, that failure to
promptly give any such notice shall not affect the indemnification provided
under this Section 11 except to the extent such indemnifying party shall have
been actually and materially prejudiced as a result of such failure.
Notwithstanding the foregoing, an indemnifying party may not assume the defense
of any such third-party claim or Proceeding if it does not demonstrate to the
reasonable satisfaction of the indemnified party that it has adequate financial
resources to defend such claim or Proceeding and pay any and all Damages that
may result therefrom, or if the claim or Proceeding (i) could result in
imprisonment of the indemnified party, (ii) could result in a criminal penalty
or fine against the indemnified party the consequences of which would be
reasonably likely to have a Material Adverse Effect on the indemnified party
unrelated to the size of such penalty or fine or (iii) could result in an
equitable remedy which would materially impair the indemnified party's ability
to exercise its rights under this Agreement, or impair ICC's right or ability to
operate the Company. If an indemnifying party assumes the defense of such third
party claim or Proceeding, such indemnifying party shall agree prior thereto, in
writing, that it is liable under this Section 11 to indemnify the indemnified
party in accordance with the terms contained herein in respect of such claim or
Proceeding, shall conduct such defense diligently, shall have full and complete
control over the conduct of such claim or Proceeding on behalf of the
indemnified party and shall, in his or her or its sole discretion, have the
right to decide all matters of procedure, strategy, substance and settlement
relating to such claim or Proceeding; provided, however, that any counsel chosen
by such indemnifying party to conduct such defense shall be reasonably
satisfactory to the indemnified party. The indemnified party may participate in
such claim or Proceeding and retain separate co-counsel at its sole cost and
expense (except that the indemnifying party shall be responsible for the
reasonable fees and expenses of one separate co-counsel for the indemnified
party to the extent the indemnified party is advised by its counsel that the
counsel the indemnifying party has selected has a conflict of interest) and the
indemnifying party will not without the written consent of the indemnified party
consent to the entry of any judgment or enter into any settlement with respect
to the matter which does not include a provision whereby the plaintiff or the
claimant in the matter releases the indemnified party from all liability with
respect thereto. Failure by an indemnifying party to notify the indemnified
party of its election to defend any such claim or Proceeding by a third party
within thirty (30) days after notice thereof shall have been given to such
indemnifying party by the indemnified party shall be deemed a waiver by such
indemnifying party of its right to defend such claim or Proceeding. In the event
more than one of the Sellers is the indemnifying party, then the Sellers shall
appoint one of them to act on behalf of such Sellers in connection with the
defense of any third-party claim or Proceeding pursuant to this Section 11.4.
(b) If no indemnifying party is permitted or elects to assume the
defense of any such claim or Proceeding by a third party, the indemnified party
shall diligently defend against such claim or Proceeding in such manner as it
may deem appropriate and, in such event, the indemnifying party or parties shall
promptly reimburse the indemnified party for all reasonable out-of-pocket costs
and expenses, legal or otherwise, incurred by the indemnified party and its
affiliates in connection with the defense against such claim or Proceeding, as
such costs and expenses are incurred. Any counsel chosen by such indemnified
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party to conduct such defense must be reasonably satisfactory to the
indemnifying party or parties, and only one counsel (in addition to local
counsel, if required) shall be retained to represent all indemnified parties in
an action (except that if litigation is pending in more than one jurisdiction
with respect to an action, one such counsel may be retained in each jurisdiction
in which such litigation is pending).
(c) The indemnified party will cooperate in all reasonable respects
with any indemnifying party in the conduct of any claim or Proceeding as to
which such indemnifying party assumes the defense. For the cooperation of the
indemnified party pursuant to this Section 11.4, the indemnifying party or
parties shall promptly reimburse the indemnified party for all reasonable
out-of-pocket costs and expenses, legal or otherwise, incurred by the
indemnified party or its affiliates in connection therewith, as such costs and
expenses are incurred.
12. GENERAL PROVISIONS
12.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, delivery and performance of this Agreement, including
all fees and expenses of agents, representatives, counsel and accountants.
12.2 PUBLIC ANNOUNCEMENTS
Unless required by law or by the NASD, any public announcement or similar
publicity with respect to this Agreement, the Closing or the transactions
contemplated hereby will be issued, if at all, at such time and in such manner
as ICC determines with the concurrence of the Company, which concurrence shall
not be unreasonably withheld or delayed by the Company. Unless disclosure is
consented to by ICC in advance or required by law, the Sellers and the Company
shall keep this Agreement strictly confidential and may not make any disclosure
of this Agreement to any Person. The Sellers and ICC will consult with each
other concerning the means by which the Company's employees, customers and
suppliers and others having dealings with the Company will be informed of this
Agreement, the Closing and the transactions contemplated by this Agreement, and
representatives of ICC may at its option be present for any such communication.
12.3 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by fax (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses or fax numbers set forth below (or to
such other address,
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person's attention or fax number as a party may designate by notice to the other
parties given in accordance with this Section 12.3):
(a) If to ICC or Buyer:
Internet Commerce Corporation
805 Third Avenue
New York, NY 10022
Telecopier No.: (212) 271-8580
Telephone No.: (212) 271-7640
Attention: Dr. Geoffrey S. Carroll
With a copy to:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9288
Attention: Peter S. Kolevzon, Esq.
(b) If to the Company:
Research Triangle Commerce, Inc.
201 Shannon Oaks Circle
Cary, North Carolina 27511
Telecopier No.: (919) 657-1502
Telephone No.: (919) 657-1400
Attention: Jeffrey W. LeRose
With a copy to:
Kilpatrick Stockton LLP
3737 Glenwood Avenue, Suite 400
Raleigh, North Carolina 27612
Telecopier No.: (919) 420-1800
Telephone No.: (919) 420-1700
Attention: James F. Verdonik, Esq.
(c) If to any Seller, to the address or fax number and person's
attention set forth opposite such Sellers name on the signature pages of this
Agreement.
12.4 FURTHER ASSURANCES
The parties agree upon request to each other to (a) furnish such further
information, (b) execute and deliver to each other such other documents and
instruments, and (c) do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and to put ICC in control of the operations of the Company.
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12.5 WAIVER
Neither the failure nor any delay by any party in exercising any right,
power or privilege under this Agreement or the documents referred to in this
Agreement will operate as a waiver of such right, power or privilege.
12.6 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter (including any correspondence among ICC, Buyer,
the Company and the Sellers) and constitutes (along with the documents referred
to in this Agreement) the entire agreement among the parties with respect to its
subject matter. This Agreement may not be amended, and no provision hereof may
be waived, except by a written agreement executed by the party to be charged
with the amendment or waiver.
12.7 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
No party may assign any of its rights under this Agreement without the
prior written consent of the other parties except that ICC may assign any of its
rights, but not its obligations, under this Agreement to any direct wholly owned
Subsidiary of ICC. Subject to the preceding sentence, this Agreement will apply
to, be binding in all respects upon, and inure to the benefit of the successors
and permitted assigns of the parties and their respective heirs and personal
representatives. Nothing expressed or referred to in this Agreement will be
construed to give any Person other than the parties to this Agreement and the
Persons contemplated by Section 11 any legal or equitable right, remedy or claim
under or with respect to this Agreement or any provision of this Agreement.
12.8 SEVERABILITY
If any provision of this Agreement or the application of any such
provision to any party or circumstances shall be determined by any court of
competent jurisdiction to be invalid or unenforceable to any extent, the
remainder of this Agreement, or the application of such provision to such person
or circumstances other than those to which it is so determined to be invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall be
enforced to the fullest extent permitted by law. If the final judgment of a
court of competent jurisdiction declares that any item or provision hereof is
invalid or unenforceable, the parties hereto agree that the court making the
determination of invalidity or unenforceability shall have the power, and is
hereby directed, to reduce the scope, duration or area of the term or provision,
to delete specific words or phrases and to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified.
12.9 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. In this Agreement
(i) words denoting the singular include the plural and vice versa, (ii) "it" or
"its" or words denoting any gender include all
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genders, (iii) the word "including" shall mean "including without limitation,"
whether or not expressed, (iv) any reference to a statute shall mean the statute
and any regulations thereunder in force as of the date of this Agreement or the
Closing Date, as applicable, unless otherwise expressly provided, (v) any
reference herein to a Section, Article, Schedule or Exhibit refers to a Section
or Article of or a Schedule or Exhibit to this Agreement, unless otherwise
stated, and (vi) when calculating the period of time within or following which
any act is to be done or steps taken, the date which is the reference day in
calculating such period shall be excluded and if the last day of such period is
not a business day, then the period shall end on the next day which is a
business day. Each party acknowledges that he, she or it has been advised and
represented by counsel in the negotiation, execution and delivery of this
Agreement and accordingly agrees that if an ambiguity exists with respect to any
provision of this Agreement, such provision shall not be construed against any
party because such party or its representatives drafted such provision.
12.10 GOVERNING LAW; JURISDICTION
This Agreement will be governed by the internal laws of the State of New
York without regard to principles of conflict of laws. In the event of any
controversy or claim arising out of or relating to this Agreement or the breach
or alleged breach hereof, each of the parties irrevocably (i) submits to the
non-exclusive jurisdiction of the U.S. District Court for the Southern District
of New York (or, if such court does not have jurisdiction, the courts of the
State of New York), (ii) waives any objection which it may have at any time to
the laying of venue of any action or proceeding brought in any such court, (iii)
waives any claim that such action or proceeding has been brought in an
inconvenient forum and (iv) agrees that service of any summons and complaint or
other process in any such action or proceeding may be made by ICC upon either
Seller by registered or certified mail directed to such Seller as provided in
Section 12.3, each Seller hereby waiving personal service thereof, and that such
service shall be deemed good, proper and effective service upon such party.
12.11 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
[Remainder of the page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
INTERNET COMMERCE CORPORATION
By:
--------------------------------------
Dr. Geoffrey S. Carroll
President and Chief Executive Officer
ICC ACQUISITION CORPORATION, INC.
By:
--------------------------------------
Dr. Geoffrey S. Carroll
President
RESEARCH TRIANGLE COMMERCE, INC.
By:
--------------------------------------
Jeffrey W. LeRose
President and Chief Executive Officer
<PAGE>
SELLERS
--------------------------------------
Jeffrey W. LeRose
BLUE WATER VENTURE FUND II, L.L.C.
By:
--------------------------------------
Kim Cooke
Managing Director
