Exhibit 2.1
AGREEMENT AND PLAN OF MERGER (this "Agreement"), made and entered into
as of November 10, 2003, by and among ConnectivCorp, a Delaware corporation
("Parent"), CTTV Merger Corp., a Delaware corporation and wholly owned
subsidiary of Parent ("Merger Sub") and Majesco Sales Inc., a New Jersey
corporation (the "Company"). Parent, Merger Sub and the Company are sometimes
referred to herein each, individually, as a "Party" and collectively, as the
"Parties."
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have each declared it to be advisable and in the best interests of each
corporation and their respective stockholders that Parent and the Company
combine in order to advance their long-term business interests;
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have each approved this Agreement and the merger of Merger Sub with and into the
Company (the "Merger"), in accordance with the General Corporation Law of the
State of Delaware (the "DGCL"), the New Jersey Business Corporation Act
("NJBCA") and the terms and conditions set forth herein, which Merger will
result in, among other things, the Company becoming a wholly owned subsidiary of
Parent and the stockholders of the Company becoming stockholders of Parent; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger qualify as a tax-free reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.3), in
accordance with the DGCL, the NJBCA and the terms and conditions of this
Agreement, the Merger Sub shall be merged with and into the Company. From and
after the Effective Time, the separate corporate existence of Merger Sub shall
cease and the Company, as the surviving corporation in the Merger, shall
continue its existence under the laws of the State of Delaware as a wholly owned
subsidiary of Parent. The Company, as the surviving corporation after the
Merger, is hereinafter sometimes referred to as the "Surviving Corporation."
1.2 Closing. Unless this Agreement shall have been terminated and the
transactions contemplated by this Agreement abandoned pursuant to the provisions
of Article VII, and subject to the satisfaction or waiver, as the case may be,
of the conditions set forth in Article VI, the closing of the Merger and other
transactions contemplated by this Agreement (the "Closing") shall take place at
10:00 a.m. (eastern standard time) on a date to be mutually agreed upon by the
Parties (the "Closing Date"), which date shall be no later than the second
Business Day (as defined below) after all the conditions set forth in Article VI
(excluding conditions that, by their nature, cannot be satisfied until the
Closing) shall have been satisfied or waived in accordance with Section 7.5,
unless another time and/or date is agreed to in writing by the Parties. The
Closing shall take place at the offices of Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C., 666 Third Avenue, New York, New York 10017, or at such other
location as is agreed to in writing by the Parties. For purposes of this
Agreement, "Business Day" shall mean any day on which banks are permitted to be
open in New York, New York.
1.3 Effective Time. Subject to the provisions of this Agreement, on the
Closing Date or as soon thereafter as is practicable the Parties shall cause the
Merger to become effective by executing and filing in accordance with the DGCL
and NJBCA, a certificate of merger with the Secretaries of State of the States
of Delaware and New Jersey (the "Certificates of Merger"), the date and time of
such filing, or such later date and time as may be agreed upon by the Parties
and specified therein, being hereinafter referred to as the "Effective Time."
1.4 Effect of the Merger. At the Effective Time, the Merger shall have
the effects set forth in this Agreement and in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all the assets, properties, rights, privileges, immunities,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.5 Certificate of Incorporation and Bylaws of the Surviving
Corporation. From and after the Effective Time and without further action on the
part of the Parties, the Certificate of Incorporation and Bylaws of the
Surviving Corporation immediately prior to the Effective Time shall be the
Certificate of Incorporation and Bylaws of the Surviving Corporation until
amended in accordance with the respective terms thereof.
1.6 Directors and Officers. The directors and officers of the Surviving
Corporation immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation as of the Effective Time, each to hold
office in accordance with the Certificate of Incorporation and the Bylaws of the
Surviving Corporation, in each case, until their respective successors are duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws.
1.7 Conversion of Company Common Stock, Etc. At the Effective Time, by
virtue of the Merger and without any action on the part of the Parties or the
holders of the following securities:
(a) All shares of the Company's common stock, no par value per
share ("Company Common Stock") issued and outstanding immediately prior to the
Effective Time (other than Dissenting Shares (as defined in Section 1.12) and
any shares of Company Common Stock to be canceled and retired pursuant to
Section 1.8) shall be converted, on a pro rata basis, automatically into the
right to receive 10,000,000 fully paid and non-assessable shares of common stock
of Parent, par value $0.001 per share ("Parent Common Stock") and 1,000,000
shares of the Parent's Series A Preferred Stock, par value $0.001 per share,
having the rights, preferences, designations and privileges as set forth in
Certificate of Designations attached hereto as Exhibit C ("Parent Preferred
Stock"), which such shares of Parent Preferred Stock initially shall be
convertible into 71,000,000 shares of Parent Common Stock.
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(b) From and after the Effective Time, all shares of Company
Common Stock shall automatically be redeemed and canceled and shall cease to
exist, and each holder of a certificate that previously represented any such
share of Company Common Stock (each, a "Company Certificate" and, collectively,
the "Company Certificates") shall cease to have any rights with respect thereto
other than the right to receive a certificate representing the shares of Parent
Common Stock that such holder is entitled to receive pursuant to this Section
1.7, in each case, without interest (such shares of Parent Common Stock together
with any cash in lieu of fractional shares being referred to herein as the
"Merger Consideration").
1.8 Cancellation of Shares. At the Effective Time, each share of
Company Common Stock either held in the Company's treasury or owned by the
Company immediately prior to the Effective Time, shall be canceled and
extinguished without any conversion thereof or payment therefor.
1.9 Capital Stock of Merger Sub. Each share of common stock of Merger
Sub, no par value per share ("Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall be converted automatically into
one fully paid and non-assessable share of common stock of the Surviving
Corporation, no par value per share. From and after the Effective Time, each
stock certificate of Merger Sub that previously represented shares of Merger Sub
Common Stock shall evidence ownership of an equal number of shares of common
stock of the Surviving Corporation.
1.10 Adjustments to Merger Consideration. Without limiting any other
provision of this Agreement, the Merger Consideration shall be adjusted, at any
time and from time to time, to fully reflect the effect of any stock split,
reverse split, stock dividend (including, without limitation, any dividend or
distribution of securities convertible into Parent Common Stock, Parent
Preferred Stock or Company Common Stock, as the case may be), reorganization,
recapitalization or other like change with respect to Parent Common Stock,
Parent Preferred Stock or, if permitted by the terms of Section 4.1, Company
Common Stock, as the case may be, occurring during the Interim Period (as
defined in Section 4.1).
1.11 No Fractional Shares. No certificate or scrip representing
fractional shares of Parent Common Stock or Parent Preferred Stock shall be
issued upon the surrender of Company Certificates for exchange, and such
fractional share interests will not entitle the owner thereof to vote or to any
other rights of a stockholder of Parent. Notwithstanding any other provision of
this Agreement, each holder of shares of Company Common Stock or Parent
Preferred Stock exchanged pursuant to the Merger who would otherwise be entitled
to receive a fraction of a share of Parent Common Stock or Parent Preferred
Stock (after taking into account all Company Certificates delivered by such
holder) shall receive from Parent, in lieu thereof, the next highest number of
whole shares of Parent Common Stock.
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1.12 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Company Common Stock held by a holder, who has demanded
and perfected his right to have the court fix the fair value of such shares of
Company Common Stock in accordance with the NJBCA and who, as of the Effective
Time, has not effectively withdrawn or lost such right to appraisal ("Dissenting
Shares"), shall not be converted into or represent a right to receive shares of
Parent Common Stock pursuant to Section 1.7(a), but the holder thereof shall
only be entitled to such rights as are granted by the NJBCA. The Company shall
give Parent prompt notice of any withdrawals of any Dissenting Shares (and shall
also give Parent prompt notice of any withdrawals of such demands for appraisal
rights), and Parent shall have the right to direct all negotiations and
proceedings with respect to such demands. Neither the Company nor the Surviving
Corporation shall, except with the prior written consent of Parent (such consent
not to be unreasonably withheld, delayed or conditioned), voluntarily make any
payments with respect to, or settle or offer to settle, any such demand for
appraisal rights.
(b) Notwithstanding the provisions of Section 1.12(a), if any
holder of shares of Company Common Stock who demands appraisal of such shares
under the NJBCA shall effectively withdraw or lose (through failure to perfect
or otherwise) his right to appraisal, then, as of the later of the Effective
Time or the occurrence of such event, such holder's shares of Company Common
Stock shall automatically be converted into and represent only the right to
receive shares of Parent Common Stock or Parent Preferred Stock, upon surrender
of the certificate or certificates representing such shares of Company Common
Stock.
1.13 Exchange of Certificates. The procedures for exchanging
outstanding shares of Company Common Stock for Merger Consideration pursuant to
the Merger are set forth in Exhibit A attached hereto, which is incorporated by
reference herein as if set forth in full.
1.14 No Liability. Notwithstanding any other provision of this
Agreement, neither Parent, Merger Sub or the Surviving Corporation shall be
liable to a holder of shares of Company Common Stock for any Merger
Consideration properly paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
1.15 Taking of Necessary Action; Further Action. If, at any time and
from time to time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest in the
Surviving Corporation full right, title and possession of all properties,
assets, rights, privileges, powers and franchises of the Company and Merger Sub,
the officers and directors of the Company and Merger Sub shall be and are fully
authorized and directed, in the name of and on behalf of their respective
corporations, to take, or cause to be taken, all such lawful and necessary
action as is not inconsistent with this Agreement. Parent shall cause Merger Sub
to perform all of its obligations relating to this Agreement and the
transactions contemplated hereby.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule provided by the Company
to Parent on the date hereof and accepted in writing by Parent (the "Company
Disclosure Schedule"), the Company represents and warrants to Parent that the
statements contained in this Article II are true, complete and correct in all
material respects. The Company Disclosure Schedule shall be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this Article II, and the disclosure in any paragraph shall be deemed to qualify
only the corresponding paragraph of this Article II, unless a reasonable person
would determine that the disclosure contained in such paragraph contains enough
information to qualify or otherwise apply to other paragraphs of this Article
II. As used in this Agreement, a "Company Material Adverse Effect" means any
change, event or effect that is materially adverse to the business, assets
(including, without limitation, intangible assets), financial condition, results
of operations or reasonably foreseeable prospects of the Company and its
Subsidiaries, taken as a whole, excluding any changes, events or effects that
are attributable to: (i) general economic conditions worldwide; (ii) conditions
affecting the software industry in which the Company and its Subsidiaries
compete; or (iii) conditions resulting from the announcement of this Agreement
and the pendency of the Merger and other transactions contemplated hereby. In
the event of any litigation regarding clause (iii) of the foregoing provision,
the Company shall be required to sustain the burden of demonstrating that any
such change, event or effect is directly attributable to the Merger and other
transactions contemplated by this Agreement.
2.1 Organization and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of New Jersey. The Company is duly qualified or licensed as a foreign
corporation to conduct business, and is in corporate and tax good standing,
under the laws of each jurisdiction where the character of the properties owned,
leased or operated by it, or the nature of its activities, makes such
qualification or licensing necessary, except where the failure to be so
qualified, licensed or in good standing, individually or in the aggregate, has
not had and would not be expected to have a Company Material Adverse Effect. The
Company has made available to Parent true, complete and correct copies of its
Certificate of Incorporation and Bylaws, each as amended to date. The Company is
not in default under or in violation of any provision of its Certificate of
Incorporation or Bylaws.
2.2 Subsidiaries. The Company Disclosure Schedule sets forth a true,
complete and correct list of each Subsidiary of the Company.
(a) Each Subsidiary of the Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and is duly qualified or licensed as a
foreign corporation to conduct business, and is in corporate and tax good
standing, under the laws of each jurisdiction where the character of the
properties and other assets owned, leased or operated by it, or the nature of
its activities, makes such qualification or licensing necessary, except where
the failure to be so qualified, licensed or in good standing, individually or in
the aggregate, has not had and would not reasonably be expected to have a
Company Material Adverse Effect.
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(b) all of the issued and outstanding shares of capital stock of,
or other equity interests in, each Subsidiary of the Company are: (i) duly
authorized, validly issued, fully paid, non-assessable; (ii) owned, directly or
indirectly, by the Company (other than director's qualifying shares in the case
of foreign Subsidiaries) free and clear of all liens, claims, security
interests, pledges and encumbrances of any kind or nature whatsoever
(collectively, "Liens"); and (iii) free of any restriction, including, without
limitation, any restriction which prevents the payment of dividends to the
Company or any other Subsidiary of the Company, or which otherwise restricts the
right to vote, sell or otherwise dispose of such capital stock or other
ownership interest, other than restrictions under the Securities Act of 1933, as
amended (the "Securities Act") and state securities laws.
(c) For purposes of this Agreement, the term "Subsidiary" means,
with respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (i) such party (or any other Subsidiary
of such party) is a general partner (excluding partnerships, the general
partnerships of which held by such party or Subsidiary of such party do not have
a majority of the voting interest of such partnership) or (ii) at least a
majority of the securities or other equity interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization, is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
2.3 Capital Structure.
(a) The authorized capital stock of the Company consists of 1,000
shares of Company Common Stock.
(b) As of the date hereof: (i) 1,000 shares of Company Common
Stock were issued and outstanding; and (ii) no shares of Company Common Stock
are held in the treasury of the Company. Except as described above, there are no
shares of voting or non-voting capital stock, equity interests or other
securities of the Company authorized, issued, reserved for issuance or otherwise
outstanding.
(c) All outstanding shares of Company Common Stock are duly
authorized, validly issued, fully paid and non-assessable, and not subject to,
or issued in violation of, any kind of preemptive, subscription or any kind of
similar rights.
(d) There are no bonds, debentures, notes or other indebtedness of
the Company having the right to vote (or convertible into securities having the
right to vote) on any matters on which stockholders of the Company may vote.
Except as described in subsection (b) above, there are no outstanding
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind (contingent or otherwise) to which the
Company is a party or bound obligating the Company to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or obligating the Company to issue,
grant, extend or enter into any agreement to issue, grant or extend any
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. Neither the Company nor any Subsidiary of the Company is subject to
any obligation or requirement to provide funds for or to make any investment (in
the form of a loan or capital contribution) to or in any Person (as defined in
Section 13(a)(9) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")).
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(e) All of the issued and outstanding shares of Company Common
Stock were issued in compliance in all material respects with all applicable
federal and state securities laws.
(f) There are no outstanding contractual obligations of the
Company to repurchase, redeem or otherwise acquire any shares of capital stock
(or options to acquire any such shares) or other security or equity interest of
the Company. Except as described in this Section 2.3, there are no
stock-appreciation rights, security-based performance units, phantom stock or
other security rights or other agreements, arrangements or commitments of any
character (contingent or otherwise) pursuant to which any Person is or may be
entitled to receive any payment or other value based on the revenues, earnings
or financial performance or other attribute of the Company or any of its
Subsidiaries or assets or calculated in accordance therewith (other than
ordinary course payments, including but not limited to royalty payments to be
made pursuant to any license or other agreement made by the Company in the
ordinary course of business) or commissions to sales representatives of the
Company or any of its Subsidiaries based upon revenues generated by them without
augmentation as a result of the Merger or other transactions contemplated
hereby) or to cause the Company or any of its Subsidiaries to file a
registration statement under the Securities Act, or which otherwise relate to
the registration of any securities of the Company or any of its Subsidiaries.
(g) There are no voting trusts, proxies or other agreements,
commitments or understandings of any character to which the Company or any of
its Subsidiaries or, to the knowledge of the Company, any of the stockholders of
the Company, is a party or by which any of them is bound with respect to the
issuance, holding, acquisition, voting or disposition of any shares of capital
stock or other security or equity interest of the Company or any of its
Subsidiaries.
2.4 Authority; No Conflict; Required Filings.
(a) The Company has all requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the Merger and other transactions contemplated hereby. The execution
and delivery of this Agreement, the performance of its obligations hereunder and
the consummation of the Merger and other transactions contemplated hereby, have
been duly authorized by all corporate action on the part of the Company and no
other corporate proceedings on behalf of the Company are necessary other than,
with respect to the Merger, the approval and adoption of this Agreement by the
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock in accordance with the NJBCA and the Company's Certificate
of Incorporation (the "Requisite Stockholder Approval").
(b) This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against it in accordance with its terms, subject to: (i) the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting the enforcement of creditors' rights
generally; (ii) general equitable principles (whether considered in a proceeding
in equity or at law); and (iii) an implied covenant of good faith and fair
dealing (collectively, the "Equitable Exceptions").
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(c) The execution and delivery of this Agreement do not, and the
performance by the Company of its obligations hereunder and the consummation of
the Merger and other transactions contemplated hereby will not, conflict with or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to a loss of a material benefit, or result in
the creation of any Liens in or upon any of the properties or other assets of
the Company or any of its Subsidiaries under any provision of: (i) the
Certificate of Incorporation, Bylaws of the Company or other equivalent
organizational documents of any of its Subsidiaries; (ii) subject to the
governmental filings and other matters referred to in paragraph (d) below, any
(A) permit, license, franchise, statute, law, ordinance or regulation or (B)
judgment, decree or order, in each case applicable to the Company or any of its
Subsidiaries, or by which any of their respective properties or assets may be
bound or affected; or (iii) any loan or credit agreement, note, bond, mortgage,
indenture, contract, agreement, lease or other instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which any of their
respective properties may be bound or affected, except, in the case of clauses
(ii) or (iii) above, for any such conflicts, violations, defaults or other
occurrences, if any, that could not, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect or impair
in any material respect the ability of the Parties to consummate the Merger and
the other transactions contemplated hereby on a timely basis.
(d) No consent, approval, order or authorization of, or
registration, declaration or filing with, any government, governmental,
statutory, regulatory or administrative authority, agency, body or commission or
any court, tribunal or judicial body, whether federal, state, local or foreign
(each, a "Governmental Authority") is required by or with respect to the Company
or any of its Subsidiaries in connection with the execution and delivery of this
Agreement or the consummation of the Merger and other transactions contemplated
hereby except for: (i) the filing of a Certificate of Merger with the Secretary
of State of the State of Delaware in accordance with the DGCL; (ii) the filing
of a Certificate of Merger and such other documents as may be required to be
filed with the Secretary of State of the State of New Jersey; (iii) compliance
with any applicable requirements under the Securities Act; (iv) compliance with
any applicable requirements under the Exchange Act; (v) compliance with any
applicable state securities, takeover or so-called "Blue Sky" Laws; and (vi)
such consents, approvals, orders or authorizations, or registrations,
declarations or filings which, if not obtained or made, could not reasonably be
expected to result in a Company Material Adverse Effect.
2.5 Board Approval; Required Vote.
(a) The Board of Directors of the Company has, at a meeting duly
called and held at which all members were present or by a unanimous written
consent: (i) approved and declared advisable this Agreement; (ii) determined
that the Merger and other transactions contemplated by this Agreement are
advisable, fair to and in the best interest of the Company and its stockholders;
(iii) resolved to recommend to the stockholders of the Company (A) the approval
of the Merger and the other transactions contemplated hereby and (B) the
approval and adoption of this Agreement; and (iv) directed that this Agreement
be submitted to the stockholders of the Company for their approval and adoption.
None of the aforesaid actions by the Board of Directors of the Company has been
amended, rescinded or modified.
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(b) The affirmative vote of a majority of the outstanding shares
of Company Common Stock is the only vote of the holders of any class or series
of capital stock of the Company necessary to approve and adopt this Agreement,
the Merger or the other transactions contemplated hereby.
2.6 Financial Statements. True and complete copies of (i) the audited
balance sheets of the Company for each of the three fiscal years ended as of
October 31, 2002, October 31, 2001 and October 31, 2000, and the related audited
statements of income, retained earnings, stockholders' equity and changes in
financial position of the Company, together with all related notes and schedules
thereto, accompanied by the reports thereon of the Company's accountants
(collectively referred to herein as the "Company Financial Statements") and (ii)
the consolidated unaudited balance sheet of the Company as of July 31, 2003, and
the related statements of income, retained earnings, stockholders' equity and
changes in financial position of the Company, together with all related notes
and schedules thereto (collectively referred to herein as the "Company's Interim
Financial Statements") have been delivered by the Company to the Parent. The
Company Financial Statements and the Company's Interim Financial Statements (i)
were prepared in accordance with the books of account and other financial
records of the Company and its Subsidiaries, (ii) present fairly the financial
condition and results of operations of the Company and its Subsidiaries as of
the dates thereof or for the periods covered thereby, (iii) have been prepared
in accordance with U.S. generally accepted accounting principles ("GAAP")
applied on a basis consistent with the past practices of the Company and its
Subsidiaries and (iv) will include all adjustments (consisting only of normal
recurring accruals) that are necessary for a fair presentation of the financial
condition of the Company and its Subsidiaries and the results of the operations
of the Company and its Subsidiaries as of the dates thereof for the periods
covered thereby.
2.7 Absence of Undisclosed Liabilities. The Company and its
Subsidiaries do not have any material liabilities or obligations, whether fixed,
contingent, accrued or otherwise, liquidated or unliquidated and whether due or
to become due, other than: (i) liabilities reflected or reserved against on the
balance sheet contained in the Company's Interim Financial Statements as of July
31, 2003 (the "Company's Most Recent Balance Sheet Date"); (ii) obligations
under any Company Material Contract (as defined in Section 2.9); and (iii)
liabilities or obligations incurred since the Company's Most Recent Balance
Sheet Date in the ordinary course of business, consistent with past practice.
2.8 Absence of Certain Changes or Events. Since the Company's Most
Recent Balance Sheet Date, the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary course of business consistent with
past practice, and there has not been any action, event or occurrence which has
had, or could reasonably be expected to result in, a Company Material Adverse
Effect.
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2.9 Agreements, Contracts and Commitments.
(a) The Company Disclosure Schedule lists each of the following
contracts and agreements (including, without limitation, oral and informal
arrangements) of the Company (such contracts and agreements, together with all
contracts, agreements, leases and subleases concerning the management or
operation of any real property (including, without limitation, brokerage
contracts) listed or otherwise disclosed in the Company Disclosure Schedule to
which the Company is a party and all agreements relating to Intellectual
Property set forth in the Company Disclosure Schedule, being "Company Material
Contracts"):
(i) each contract, agreement, invoice, purchase order and
other arrangement, for the purchase of inventory, spare parts, other
materials or personal property with any supplier or for the furnishing
of services to the Company or otherwise related to the business under
the terms of which the Company: (A) is likely to pay or otherwise give
consideration of more than $1,000,000 in the aggregate during the
calendar year ended December 31, 2003 or (B) is likely to pay or
otherwise give consideration of more than $1,000,000 in the aggregate
over the remaining term of such contract;
(ii) each contract, agreement, invoice, sales order and other
arrangement, for the sale of inventory or other personal property or
for the furnishing of services by the Company which: (A) is likely to
involve consideration of more than $1,000,000 in the aggregate during
the calendar year ended December 31, 2003 or (B) is likely to involve
consideration of more than $1,000,000 in the aggregate over the
remaining term of the contract;
(iii) all material broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market research,
marketing consulting and advertising contracts and agreements to which
the Company is a party;
(iv) all material management contracts and contracts with
independent contractors or consultants (or similar arrangements) to
which the Company is a party;
(v) all contracts and agreements relating to material
indebtedness of the Company;
(vi) all contracts and agreements with any Governmental
Authority to which the Company is a party;
(vii) all contracts and agreements that materially limit the
ability of the Company to compete in any line of business or with any
Person or in any geographic area or during any period of time;
(viii) all contracts and agreements between or among the
Company or any affiliate of the Company;
(ix) all contracts and agreements for providing benefits under
any Company Employee Plan;
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(x) all contracts and agreements representing a material
relationship with a joint venturer, distributor, OEM, licensor or
licensee or relating to a material license, transfer or encumbrance of
any Intellectual Property (as defined in Section 2.19) or providing for
the development of any material software, content (including textual
content and visual, photographic or graphics content), technology or
intellectual property for (or for the benefit or use of) it, or
providing for the purchase or license of any material software, content
(including textual content and visual, photographic or graphics
content), technology or intellectual property to (or for the benefit or
use of) it, which material software, content, technology or
intellectual property is in any manner used or incorporated (or is
presently contemplated by it to be used or incorporated) in connection
with any material aspect or element of any material product, service or
technology of it which relates to the business of the Company or its
Subsidiaries (other than software generally available to the public at
a per copy license fee of less than $500 per copy); and
(xi) all other contracts and agreements, whether or not made
in the ordinary course of the business, which are material to the
Company or the conduct of the Company's business, or the absence of
which would have a Company Material Adverse Effect.
For purposes of this Agreement, the term "lease" shall include any and all
leases, subleases, sale/leaseback agreements or similar arrangements.
(b) Except as disclosed in the Company Disclosure Schedule, each
Company Material Contract: (i) is valid and binding on the Company, and to the
best knowledge of the Company, the respective parties thereto and is in full
force and effect and (ii) upon consummation of the transactions contemplated by
this Agreement, except to the extent that any required consents set forth in the
Company Disclosure Schedule are not obtained, shall continue in full force and
effect without penalty or other adverse consequence. The Company is not in
material breach of, or material default under, any Company Material Contract.
(c) Except as disclosed in the Company Disclosure Schedule, to the
Company's knowledge no other party to any Company Material Contract is in breach
thereof or default thereunder.
(d) Except as disclosed in the Company Disclosure Schedule, there is no
contract, agreement or other arrangement granting any Person any preferential
right to purchase, other than in the ordinary course of the business consistent
with past practice, any of the properties or assets of the Company.
11
2.10 Compliance with Laws. Each of the Company and its Subsidiaries has
at all times complied with all federal, state, local and foreign statutes, laws
and regulations, and is not in violation of, and has not received any written
claim or notice of violation of, any such statutes, laws and regulations with
respect to the conduct of its business or the ownership and operation of its
properties and other assets, except for such instances of non-compliance or
violation, if any, which could not reasonably be expected to result in a Company
Material Adverse Effect. No investigation or review by any Governmental
Authority is pending or, to the Company's knowledge, has been threatened,
against the Company, nor, to the Company's knowledge, has any Governmental
Authority indicated an intention to conduct an investigation of the Company. To
the knowledge of the Company, there is no agreement, judgment, injunction, order
or decree binding upon the Company which has or could reasonably be expected to
have (after giving effect to the Merger) the effect of prohibiting or impairing
any current or currently anticipated future business practice of the Company,
the Merger or any of the transactions in connection therewith and herewith or
the conduct of business by the Company as currently conducted or as currently
proposed to be conducted, to the extent any such restriction or prohibition
could not reasonably be expected to have a Company Material Adverse Effect.
2.11 Material Permits.
(a) Each of the Company and its Subsidiaries holds all federal,
state, local and foreign governmental licenses, permits, franchises and
authorizations necessary for conduct of its business as presently conducted and
the ownership and operation of its properties and other assets, including,
without limitation those that are required under all Environmental Laws (as
defined in Section 2.18), except for such instances, if any, where the failure
to hold such licenses, permits, franchises or authorizations, individually or in
the aggregate, could not reasonably be expected to result in a Company Material
Adverse Effect (collectively, the "Material Permits").
(b) Each of the Company and its Subsidiaries is in compliance in
all material respects with the terms and conditions of the Material Permits.
(c) Each Material Permit is in full force and effect and no
action, proceeding, revocation proceeding, amendment procedure, writ, injunction
or claim is pending or, to the knowledge of the Company, threatened, which seeks
to revoke or limit any Material Permit.
2.12 Litigation. There is no suit, action, arbitration, claim,
governmental or other proceeding before any Governmental Authority pending or,
to the knowledge of the Company, threatened, against the Company or any of its
Subsidiaries which, if decided adversely could (a) be considered reasonably
likely to result in (i) a Company Material Adverse Effect or (ii) damages
payable by the Company or any of its Subsidiaries in excess of $500,000 in the
aggregate, or (b) otherwise impair in any material respect the ability of the
Parties to consummate the Merger and other transactions contemplated by this
Agreement on a timely basis.
2.13 Restrictions on Business Activities. There is no agreement,
judgment, injunction, order or decree binding upon or otherwise applicable to
the Company or any of its Subsidiaries which has the effect of prohibiting or
materially impairing (a) any current or future business practice of the Company
or any of its Subsidiaries or (b) any acquisition of any Person or property by
the Company or any of its Subsidiaries.
12
2.14 Employee Benefit Plans. The Company has made available to Parent
true, complete and correct copies of all employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar employee
benefit plans, and all unexpired severance agreements (pursuant to which any
payments are still due and payable by the Company), written or otherwise
(together, the "Company Employee Plans"), for the benefit of, or relating to,
any current or former employee of the Company or any of its Subsidiaries or any
trade or business (whether or not incorporated) which is a member or which is
under common control with the Company within the meaning of Section 414 of the
Code (an "ERISA Affiliate").
(a) With respect to each Company Employee Plan, the Company has
made available to Parent a true, complete and correct copy of: (i) the annual
report (Form 5500) filed with the Internal Revenue Service ("IRS") for the last
three years with respect to any Company Employee Plan subject to such filing
requirement; (ii) each trust agreement and group annuity contract, if any,
relating to such Company Employee Plan; and (iii) the most recent actuarial
report or valuation relating to a Company Employee Plan subject to Title IV of
ERISA.
(b) With respect to the Company Employee Plans, individually and
in the aggregate, no event has occurred and, to the knowledge of the Company,
there exists no condition or set of circumstances in connection with which the
Company could be subject to any material liability under ERISA, the Code or any
other applicable law.
(c) With respect to the Company Employee Plans, individually and
in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no unfunded
benefit obligations which have not been properly accounted for by reserves or
otherwise footnoted in accordance with GAAP on the Company's Most Recent Balance
Sheet.
(d) Neither the Company nor any of its Subsidiaries is a party to
any written or oral: (i) union or collective bargaining agreement; (ii)
agreement with any current or former employee the benefits of which are
contingent upon, or the terms of which will be materially altered by, the
consummation of the Merger or other transactions contemplated by this Agreement;
(iii) agreement with any current or former employee of the Company or any of its
Subsidiaries providing any term of employment or compensation guarantee
extending for a period longer than one year from the date hereof or for the
payment of compensation in excess of $200,000 per annum; or (iv) agreement or
plan the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, upon the consummation of the Merger.
2.15 Properties and Assets.
(a) The Company and its Subsidiaries have good and valid title to
all of their respective properties, interests in properties and assets, real and
personal, reflected on the Company's Most Recent Balance Sheet or acquired since
the Company's Most Recent Balance Sheet Date, or, in the case of leased
properties and assets, valid leasehold interests in such properties and assets,
in each case free and clear of all Liens, except to the extent any failure would
not be reasonably expected to have a Company Material Adverse Effect.
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(b) The Company Disclosure Schedule sets forth a true, complete
and correct list of each parcel of real property owned or leased by the Company
or any of its Subsidiaries. All leases for leased real property of the Company
are in full force and effect, are valid and effective in accordance with their
respective terms except where any such failure would not reasonably be expected
to have a Company Material Adverse Effect, and there is not, under any of such
leases, any existing default or event of default (or event which with notice or
the lapse of time, or both, would constitute a default) that would give rise to
a material claim.
(c) The facilities, property and equipment owned, leased or
otherwise used by the Company or any of its Subsidiaries are in an acceptable
state of maintenance and repair, free from material defects and in operating
condition (subject to normal wear and tear), and suitable for the purposes for
which they are presently used.
(d) All tangible assets which are leased by the Company or any of
its Subsidiaries have been maintained such that at each such termination of the
lease such assets can be returned to their owner without any further material
obligation on the part of the Company or any of its Subsidiaries with respect
thereto.
(e) From and after the Effective Time, the tangible assets owned
or leased by the Surviving Corporation, together with its intangible assets are,
when utilized by a labor force substantially similar to that employed by the
Company and its Subsidiaries substantially on the date hereof, adequate to
conduct the business and operations of the Company and its Subsidiaries as
currently conducted.
2.16 Insurance.
(a) The Company and its Subsidiaries maintain policies of
insurance and bonds with reputable companies against loss relating to their
business, operations and properties and such other risks as companies engaged in
similar business would, in accordance with good business practice, customarily
insure (the "Insurance Policies"). All premiums due and payable under the
Insurance Policies have been paid on a timely basis and the Company and its
Subsidiaries are in compliance in all material respects with all other terms
thereof. True, complete and correct copies of the Insurance Policies have been
made available to Parent.
(b) The Insurance Policies are in full force and effect and there
are no material claims pending as to which coverage has been questioned, denied
or disputed. All material claims thereunder have been filed in a due and timely
fashion and since December 31, 2002, neither the Company nor any of its
Subsidiaries has been refused insurance for which it has applied or had any
policy of insurance terminated (other than at its request), nor has the Company
or any of its Subsidiaries received notice from any insurance carrier that such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated.
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2.17 Taxes.
For purposes of this Agreement, a "Tax" means any and all federal, state, local
and foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including, without limitation, taxes based upon or
measured by gross receipts, income, profits, sales, use and occupation, value
added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts and any obligations under any
agreements or arrangements with any other Person with respect to such amounts
and including any liability for Taxes of a predecessor entity.
(a) To the knowledge of the Company, each of the Company and its
Subsidiaries has accurately prepared and timely filed all federal, state, local
and foreign returns, estimates, information statements and reports required to
be filed by it (collectively, "Returns") relating to any and all Taxes
concerning or attributable to the Company or any of its Subsidiaries or to their
operations, the failure of which could not reasonably be expected to have a
Company Material Adverse Effect, and all such Returns are true, complete and
correct in all material respects.
(b) Each of the Company and its Subsidiaries: (i) has paid, or is
in good faith contesting the payment of, all Taxes it is obligated to pay as
reflected on the Returns or otherwise; and (ii) has withheld all federal, state,
local and foreign Taxes required to be withheld with respect to its employees or
otherwise.
(c) There is no Tax deficiency outstanding, proposed or assessed
against the Company or any of its Subsidiaries that is not accurately reflected
as a liability on the Company Most Recent Balance Sheet, nor has the Company or
any of its Subsidiaries executed any waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax.
(d) Neither the Company nor any of its Subsidiaries has any
material liability for unpaid Taxes that has not been properly accrued for under
GAAP and reserved for on the Company's Most Recent Balance Sheet, whether
asserted or unasserted, contingent or otherwise.
2.18 Environmental Matters.
(a) The Company is in compliance in all material respects with all
Environmental Laws (as defined below), which compliance includes, without
limitation, the possession by the Company and its Subsidiaries of all Material
Permits required under all applicable Environmental Laws, and compliance in all
material respects with the terms and conditions thereof.
(b) The Company has not received any written communication,
whether from a Governmental Authority or other Person, that alleges that either
the Company or any of its Subsidiaries is not in compliance with any
Environmental Laws or any Material Permit required under any applicable
Environmental Law, or that it is responsible (or potentially responsible) for
the cleanup of any Materials of Environmental Concern (as defined below) at, on
or beneath its facilities or at, on or beneath any land adjacent thereto, and,
to Company's knowledge, there are no conditions existing at such facilities that
could reasonably be expected to prevent or interfere with such full compliance
in the future.
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(c) There are no past or present facts, circumstances or
conditions, including, without limitation, the release of any Materials of
Environmental Concern, that could reasonably be attributed to acts or omissions
of the Company.
(d) The Company has made available to Parent true, complete and
correct copies of all of the Company's environmental audits, assessments and
documentation regarding environmental matters pertaining to, or the
environmental condition of, its facilities or the compliance (or non-compliance)
by the Company and its Subsidiaries with any Environmental Laws.
(e) To the Company's knowledge, none of the facilities ever used
by the Company or any of its Subsidiaries has ever been a site for the use,
generation, manufacture, discharge, assembly, processing, storage, release,
disposal or transportation to or from of any Materials of Environmental Concern,
except for chemicals used in the ordinary course of business of the Company and
its Subsidiaries, all of which chemicals have been stored and used in strict
compliance with all applicable Material Permits and Environmental Laws.
(f) Neither the Company nor any of its Subsidiaries is the subject
of any federal, state, local or private litigation or proceedings involving a
demand for damages or other potential liability with respect to any alleged
violations of Environmental Laws.
(g) For purposes of this Agreement, the terms "release" and
"environment" shall have the meaning set forth in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended.
"Environmental Law" shall mean any federal, state, local or foreign law or
statute, or any rule or regulation implementing such law or statute and any
applicable case law or administrative decision, in each case existing and in
effect on the date hereof relating to pollution or protection of the
environment, including, without limitation, any statute or regulation pertaining
to: (i) treatment, storage, disposal, generation or transportation of Materials
of Environmental Concern; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of hazardous substances, or solid or hazardous waste, including,
without limitation, emissions, discharges, injections, spills, escapes or
dumping of Materials of Environmental Concern; (v) the protection of wildlife,
marine sanctuaries and wetlands, including, without limitation, all endangered
and threatened species; (vi) aboveground or underground storage tanks, vessels
and containers; (vii) abandoned, disposed or discarded barrels, tanks, vessels,
containers and other closed receptacles; and (viii) the manufacture, processing,
use, distribution, treatment, storage, disposal, transportation or handling of
Materials of Environmental Concern. "Materials of Environmental Concern" shall
mean all substances defined as Hazardous Substances, Oils, Pollutants or
Contaminants in the National Oil and Hazardous Substances Pollution Contingency
Plan, as defined under 40 C.F.R. ss. 300.5, or defined as such by, or regulated
as such under, any Environmental Law.
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2.19 Intellectual Property.
For the purposes of this Agreement, the following terms have the
following definitions:
"Intellectual Property" shall mean any or all of the following
and all rights in, arising out of, or associated therewith: (i) all United
States, international and foreign patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know-how, technology, technical data and customer lists, and all documentation
relating to any of the foregoing; (iii) all copyrights, copyright registrations
and applications therefor, and all other rights corresponding thereto throughout
the world; (iv) all industrial designs and any registrations and applications
therefor throughout the world; (v) all trade names, logos, URLs, common law
trademarks and service marks, trademark and service mark registrations and
applications therefor throughout the world (collectively, the "Trademarks");
(vi) all databases and data collections and all rights therein throughout the
world; (vii) all moral and economic rights of authors and inventors, however
denominated, throughout the world; and (viii) any similar or equivalent rights
to any of the foregoing anywhere in the world.
"Company Intellectual Property" shall mean any Intellectual
Property, including, without limitation, all Registered Intellectual Property,
as defined below, that is owned by, or exclusively licensed to, the Company that
is material to the conduct of the business of the Company and its Subsidiaries.
"Registered Intellectual Property" means all United States,
international and foreign: (i) patents and patent applications (including
provisional applications); (ii) registered Trademarks, applications to register
Trademarks, intent-to-use applications, or other registrations or applications
related to Trademarks; (iii) registered copyrights and applications for
copyright registration; and (iv) any other Intellectual Property that is the
subject of an application, certificate, filing, registration or other document
issued, filed with, or recorded by any state, government or other public legal
authority.
"Company Registered Intellectual Property" means all of the
Registered Intellectual Property owned by, or filed in the name of, the Company
or its Subsidiaries.
(a) The Company Disclosure Schedule sets forth a list and brief
description of the Company Registered Intellectual Property.
(b) All Company Registered Intellectual Property is currently in
compliance with all material legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications with respect to Trademarks, and the payment of filing, examination
and maintenance fees and proof of working or use with respect to patents), are
valid and enforceable. No Trademark is currently involved in any opposition or
cancellation proceeding and no such action has been threatened with respect to
any of the Trademarks or trademark registration applications. No patent or
patent application is currently involved in any interference, reissue,
re-examination or opposition proceeding and no such action has been threatened
with respect to any patent or patent application. To the knowledge of the
Company, there are no potentially conflicting Trademarks or potentially
interfering patents or patent applications of any third party.
17
(c) The Company Disclosure Schedule sets forth a complete and
accurate list of all license agreements granting any right to use or practice
any rights under any Intellectual Property, whether either of the Company or any
of its Subsidiaries is the licensee or licensor thereunder, and any assignments,
consents, term, forbearances to sue, judgments, orders, settlements or similar
obligations relating to any Intellectual Property to which either of the Company
or any of its Subsidiaries is a party or otherwise bound (collectively, the
"License Agreements"), indicating for each the title, the parties, date
executed, whether or not it is exclusive and the Intellectual Property covered
thereby. The License Agreements, to the Company's knowledge, are valid and
binding obligations of each of the Company or its Subsidiaries, as applicable,
enforceable in accordance with their terms, and there exists no event or
condition which will result in a material violation or breach of, or constitutes
(with or without due notice or lapse of time or both) a material default by
either of the Company or any of its Subsidiaries under any such License
Agreement.
(d) The Intellectual Property owned by or licensed to the Company
and its Subsidiaries constitutes all of the Intellectual Property used in or
necessary for the conduct of each of the Company's and its Subsidiaries'
business as currently conducted.
(e) No royalties, honoraria or other fees are payable to any third
parties for the use of or right to use any Company Intellectual Property except
pursuant to the License Agreements.
(f) Each of the Company and each of its Subsidiaries exclusively
owns, free and clear of all liens, claims, charges, security interests or other
encumbrances of any nature whatsoever and obligations to license, all
Intellectual Property (including trade secrets) which it purports to own, and,
to the Company's knowledge, has a valid and enforceable right to use all of the
licensed Intellectual Property which it purports to license.
(g) Each of the Company and each of its Subsidiaries has taken all
reasonable steps to protect the Intellectual Property which it owns to the
extent necessary to the Company's and the Subsidiaries' business as currently
conducted. To the knowledge of the Company, all of such Intellectual Property is
valid and enforceable and no third party has challenged the ownership, use,
validity or enforceability of any material item of such Intellectual Property.
(h) To the knowledge of the Company , the conduct of each of the
Company's and its Subsidiaries' businesses do not infringe upon any Intellectual
Property rights of any third party.
(i) Except as set forth in the Company Disclosure Schedule, there
is no litigation pending, threatened or, to the knowledge of the Company, may be
threatened alleging that the activities of the Company or its Subsidiaries
infringes upon, violates, or constitutes the unauthorized use of the
Intellectual Property rights of any third party nor has any third party brought
or threatened any action, suit or proceeding challenging the ownership, use,
validity or enforceability of any Intellectual Property of either of the Company
or any of its Subsidiaries that could reasonably be expected to have a Company
Material Adverse Effect.
18
(j) To the knowledge of the Company , no third party is
misappropriating, infringing, diluting, or violating any Company Intellectual
Property and, except as set forth in the Company Disclosure Schedule, no such
claims have been brought against any third party by either of the Company or any
of its Subsidiaries.
(k) The consummation of the transactions contemplated hereby will
not result in the loss or impairment of either of the Company's or any of its
Subsidiaries' right to own or use any of the Company Intellectual Property, in
any material respect, nor will they require the consent of any Governmental
Entity or third party in respect of any such Intellectual Property.
(l) Neither of the Company nor any of its Subsidiaries nor any
other party acting on their behalf has disclosed or delivered to any party, or
permitted the disclosure or delivery to any escrow agent or other party of, any
Company Source Code (as defined below). No event has occurred, and no
circumstance or condition exists, that (with or without due notice or lapse of
time, or both) shall, or would reasonably be expected to, nor shall the
consummation of the transactions contemplated hereby, result in the disclosure
or delivery by the Company or any of its Subsidiaries or any other party acting
on their behalf to any party of any Company. The Company Disclosure Schedule
identifies each agreement (whether written or oral) pursuant to which either of
the Company or any of its Subsidiaries has deposited, or is or may be required
to deposit, with an escrow holder or any other party, any Company Source Code
and further describes whether the execution and delivery of this Agreement or
the consummation of the Merger, in and of themselves, would reasonably be
expected to result in the release from escrow of any Company Source Code.
"Company Source Code" means, collectively, any software source code, or any
material portion or aspect of such source code, or any material proprietary
information or algorithm contained in or relating to any such source code, of
either of the Company Intellectual Property or any other product or service
marketed by either of the Company or any of its Subsidiaries.
(m) The Company Disclosure Schedule lists all Software (as defined
below) (other than off-the-shelf software applications programs) which is owned,
licensed to or by either of the Company or any of its Subsidiaries, leased to or
by either of the Company or any of its Subsidiaries, or otherwise used by either
of the Company or any of its Subsidiaries, and identifies which Software is
owned, licensed, leased or otherwise used, as the case may be. The Company
Disclosure Schedule lists all Software sold, licensed, leased or otherwise
distributed by either of the Company or any of its Subsidiaries to any third
party, and identifies which Software is sold, licensed, leased or otherwise
distributed, as the case may be. The Software set forth in the Company
Disclosure Schedule which either of the Company or any of its Subsidiaries
purports to own was either developed (i) by employees of either of the Company
or any of its Subsidiaries within the scope of their employment; or (ii) by
independent contractors who have assigned their rights to the Company or any of
its Subsidiaries pursuant to enforceable written agreements. None of the
Subsidiaries has a right or license to use the Software other than as listed in
the Company Disclosure Schedule. For purposes of this Section 2.19(m),
"Software" means any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) descriptions, flow-charts and other work
19
product used to design, plan, organize and develop any of the foregoing, (iii)
the technology supporting any Internet site(s) operated by or on behalf of
either of the Company or any of its Subsidiaries and (iv) all documentation,
including user manuals and training materials, relating to any of the foregoing.
No Public Software (as defined below) forms part of the Company Intellectual
Property or was or is used in connection with the development of any Company
Intellectual Property, incorporated in whole or in part, or has been
distributed, in whole or in part, in conjunction with any Company Intellectual
Property. "Public Software" means any Software that contains, or is derived in
any manner (in whole or in part) from, any software that is distributed as free
software, open source software (e.g., Linux) or similar licensing or
distribution models, including software licensed or distributed under any of the
following: (i) GNU's General Public License (GPL) or Lesser/Library GPL (LGPL);
(ii) the Artistic License (e.g., PERL); (iii) the Mozilla Public License; (iv)
the Netscape Public License; (v) the Sun Community Source License (SCSL); (vi)
the Sun Industry Standards License (SISL); (vii) the BSD License; and (viii) the
Apache License.
(n) To the knowledge of the Company, there has been no prior
use of Trademarks by any third party which would confer upon said third party
superior rights in such Trademarks; the Company and its Subsidiaries have taken
all reasonable steps to protect the Trademarks against third party infringement;
and the registered Trademarks have been continuously used in the form appearing
in, and in connection with the goods and services listed in, their respective
registration certificates or identified in their respective pending
applications.
(o) The Company and its Subsidiaries have taken all reasonable
steps in accordance with normal industry practice to protect the Company's and
its Subsidiaries' rights in the confidential information and trade secrets of
the Company and its Subsidiaries. Without limiting the foregoing, the Company
and its Subsidiaries have and enforce a policy of requiring each employee,
consultant, contractor and potential business partner or investor to execute
proprietary information, confidentiality and assignment agreements substantially
consistent with the Company's standard forms thereof (complete and current
copies of which have been delivered to Parent). Except under confidentiality
obligations, to the Company's knowledge, there has been no material disclosure
of any of the Company's or its Subsidiaries' confidential information or trade
secrets.
(p) All Software owned by either of the Company or any of its
Subsidiaries, and, to the knowledge of the Company, all Software licensed from
third parties by either of the Company or any of its Subsidiaries, to the extent
currently in use, operates and runs in a reasonable and efficient business
manner, conforms to the specifications thereof, if applicable, and, with respect
to the Software owned by either of the Company or any of its Subsidiaries, the
applications can be compiled from their associated source code without undue
burden if the failure to be able to do any one of which could reasonably be
expected to have a Company Material Adverse Effect. The Company has made
available to Parent all required documentation relating to use, maintenance and
operation of the Software. All Software developed by either of the Company or
any of its Subsidiaries and licensed by either of the Company or any of its
Subsidiaries to customers and all services provided by or through either of the
Company or any of its Subsidiaries to customers on or before the Closing
conforms in all material respects (to the extent required in contracts with such
customers) to applicable contractual commitments, express and implied
warranties, product specifications and product documentation and to any
20
representations provided to customers, and neither of the Company, nor any of
its Subsidiaries has any material liability (and, to the knowledge of the
Company, there is no legitimate basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against
either of the Company or any of its Subsidiaries giving rise to any material
liability relating to the foregoing contracts) for refund, replacement or repair
thereof or other damages in connection therewith in excess of any reserves
therefor reflected on the Company Financial Statements.
(q) The Company or its Subsidiaries have valid registrations for
each of the URLs set forth in the Company Disclosure Schedule, to the extent the
Company utilizes such URL ("Company URL's"). The registrations of such Company
URLs are free and clear of any liens, claims or encumbrances and is in full
force and effect. The Company or its Subsidiaries have paid all fees required to
maintain all such registrations. None of the registrations and uses of such
Company URLs have been disturbed or placed "on hold" and, to the Company's
knowledge, no claim (oral or written) has been asserted against either of the
Company or any of its Subsidiaries adverse to its rights to such Company URLs.
2.20 Additional Tax Matters.
(a) Neither the Company nor, to the knowledge of the Company, any
of its affiliates, knows of any fact or has taken or agreed to take any action,
failed to take any action or is aware of any fact or circumstance, that could
reasonably be expected to prevent the Merger from constituting a reorganization
within the meaning of Section 368(a) of the Code.
(b) The Company Disclosure Schedule contains a true, complete and
correct list of all Persons who, to the knowledge of the Company, may be deemed
to be affiliates of the Company, excluding its Subsidiaries but including all
directors and executive officers of the Company as of the date hereof.
2.21 Brokers. Except for the obligation to Sloan Securities Corp.
("SSC"), no broker, financial advisor, investment banker or other Person is
entitled to any fee, commission or expense reimbursement in connection with the
Merger or other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
2.22 Certain Business Practices. Neither the Company, its Subsidiaries
or, to the knowledge of the Company, any director, officer, employee or agent of
the Company has: (a) used any funds for unlawful contributions, gifts,
entertainment or other unlawful payments relating to political activity; (b)
made any unlawful payment to any foreign or domestic government official or
employee or to any foreign or domestic political party or campaign or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (c)
made any other unlawful payment.
2.23 Interested Party Transactions. Except as set forth in the Company
Disclosure Schedule, the Company and its officers and agents have not made any
illegal or improper payments to, or provided any illegal or improper benefit or
inducement for, any governmental official, supplier, customer or other person in
an attempt to influence any such person to take or to refrain from taking any
action relating to the Company. Except as set forth in the Company Disclosure
Schedule, to the Company's knowledge, no director, officer or employee of each
of the Company or any of the Subsidiaries, or member of the family of any such
person, or any corporation, partnership, trust or other entity in which any such
person, or any member of the family of any such person, has a substantial
interest or is an officer, director, trustee, partner or holder of any equity
interest, is a party to any transaction with each of the Company or any of the
Subsidiaries, including any contract, agreement or other arrangement providing
for the employment of, furnishing of services by, rental of real or personal
property from or otherwise requiring payments or involving other obligations to
any such person or firm.
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2.24 Customers. Listed in the Company Disclosure Schedule are the names
and addresses of the ten most significant customers (by revenue) of the Company
for the twelve-month period ended October 31, 2003 and the amount for which each
such customer was invoiced during such period. Except as disclosed in the
Company Disclosure Schedule, the Company has not received any notice and has no
reason to believe that any significant customer of the Company has ceased, or
will cease, to use the products, equipment, goods or services of the Company or
has substantially reduced, or will substantially reduce, the use of such
products, equipment, goods or services at any time.
2.25 Suppliers. Listed in the Company Disclosure Schedule are the names
and addresses of each of the ten most significant suppliers of raw materials,
supplies, merchandise and other goods for the twelve-month period ended
September 30, 2003 and the amount for which each such supplier invoiced the
Company during such period. Except as disclosed in the Company Disclosure
Schedule, the Company has not received any notice and has no reason to believe
that any such supplier will not sell raw materials, supplies, merchandise and
other goods to the Company at any time after the Closing Date on terms and
conditions similar to those imposed on current sales of the Company, subject to
general and customary price increases.
2.26 Key Employees. (a) The Company Disclosure Schedule lists the name,
place of employment, the current annual salary rates, bonuses, deferred or
contingent compensation, pension, accrued vacation, "golden parachute" and other
like benefits paid or payable (in cash or otherwise) in 2000, 2001 and 2002, the
date of employment and a description of position and job function of each
current salaried employee, officer, director, consultant or agent of the Company
whose annual compensation exceeded (or, in 2003, is expected to exceed)
$150,000.
(b) All directors, senior officers and management employees of the
Company are under written obligation to the Company to maintain in confidence
all confidential or proprietary information acquired by them in the course of
their employment and to assign to the Company all inventions made by them within
the scope of their employment during such employment and for a reasonable period
thereafter. The Company has used its best efforts to obtain from all technical
and professional employees written obligations to the Company to maintain in
confidence all confidential or proprietary information acquired by them in the
course of their employment and to assign to the Company all inventions made by
them within the scope of their employment during such employment and for a
reasonable period thereafter.
2.27 Investment Representations and Warranties. At Closing, each of
Jesse Sutton, Joseph Sutton, Adam Sutton, Sarah Sutton and the Jesse M. Sutton
Foundation (collectively, the "Majesco Stockholders"), shall deliver a
certificate to Parent acknowledging that the Parent Common Stock and Parent
Preferred Stock to be sold, transferred and assigned to them hereunder
(collectively, the "Parent Acquisition Stock") has not been and will not be
registered under the Securities Act and is being issued and delivered hereunder
pursuant to an exemption from the registration requirements of Section 5 of the
Securities Act inasmuch as the issuance of such shares involves a transaction by
an issuer not involving a public offering, and that reliance upon such exemption
is predicated in part upon the following representations and warranties of the
Majesco Stockholders:
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(a) Each of the Majesco Stockholders is acquiring the Parent
Acquisition Stock for investment purposes only, for its own account, and not for
the benefit of others, nor with any view to, or in connection with any
distribution or public offering thereof within the meaning of the Securities
Act.
(b) Each of the Majesco Stockholders understands that the
Parent Acquisition Stock has not been registered under the Securities Act or any
state securities law by reason of its issuance in a transaction which is exempt
from the registration requirements of the Securities Act and such laws and the
Parent Acquisition Stock must be held indefinitely unless it is subsequently
registered under the Securities Act and such laws or a subsequent disposition
thereof is exempt from registration under the applicable provisions of the
Securities Act and such laws. The Majesco Stockholders acknowledge that the
certificates evidencing the Parent Acquisition Stock will contain a legend to
the foregoing effect.
(c) Each of the Majesco Stockholders has sufficient knowledge
and expertise in business and financial matters so as to enable it to analyze
and evaluate the merits and risks of acquiring the Parent Acquisition Stock
pursuant to the terms of this Agreement and is able to bear the economic risk of
such acquisition, including a complete loss of its investment in the Parent
Acquisition Stock.
(d) The transactions provided for in this Agreement with
respect to the Parent Acquisition Stock are not part of any pre-existing plan or
arrangement for, and there is no agreement or other understanding with respect
to, the distribution by the Majesco Stockholders of any of the Parent
Acquisition Stock.
2.28 Officer and Director Information. During the past ten year period
neither the Company or any of its Subsidiaries, on the one hand, nor, to the
Company's knowledge, any of their respective officers, directors or affiliates,
on the other hand, has been the subject of:
(a) a petition under the Federal bankruptcy laws or any other
insolvency or moratorium law or has a receiver, fiscal agent or similar officer
been appointed by a court for the business or property of Company, any of its
Subsidiaries or such person, or any corporation or business association of which
Company, any of its Subsidiaries or any such person was an executive officer at
or within two years before the time of such filing;
(b) a conviction in a criminal proceeding or a named subject
of a pending criminal proceeding (excluding traffic violations which do not
relate to driving while intoxicated or driving under the influence);
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(c) any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining Company, any of its Subsidiaries or any such person from, or otherwise
limiting, the following activities:
(i) Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the United States Commodity
Futures Trading Commission or an associated person of any of the foregoing, or
as an investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or continuing any
conduct or practice in connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or
sale of any security or commodity or in connection with any violation of
Federal, state or other securities laws or commodities laws;
(d) any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any Federal, state or local authority barring, suspending or
otherwise limiting for more than 60 days the right of Company, any of its
Subsidiaries or any such person to engage in any activity described in the
preceding sub-paragraph, or to be associated with persons engaged in any such
activity;
(e) a finding by a court of competent jurisdiction in a civil action or
by the Securities and Exchange Commission (the "Commission") to have violated
any securities law, regulation or decree and the judgment in such civil action
or finding by the Commission has not been subsequently reversed, suspended or
vacated; or
(f) a finding by a court of competent jurisdiction in a civil action or
by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding has not been
subsequently reversed, suspended or vacated.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the disclosure schedule provided by Parent to
the Company on the date hereof and accepted in writing by the Company (the
"Parent Disclosure Schedule"), Parent represents and warrants to the Company
that the statements contained in this Article III are true, complete and correct
in all material respects. The Parent Disclosure Schedule shall be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this Article III, and the disclosure in any paragraph shall be deemed to qualify
only the corresponding paragraph of this Article III, unless a reasonable person
would determine that the disclosure contained in such paragraph contains enough
information to qualify or otherwise apply to other paragraphs of this Article
III. As used in this Agreement, a "Parent Material Adverse Effect" means any
change, event or effect that is materially adverse to the business, assets
(including, without limitation, intangible assets), financial condition, results
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of operations or reasonably foreseeable prospects of Parent or any of its
Subsidiaries, taken as a whole, excluding any changes, events or effects that
are attributable to general economic conditions worldwide.
3.1 Organization and Qualification. Each of Parent and Merger Sub is a
corporation duly incorporated, validly existing and in good standing under the
laws of its respective state of incorporation. Each of Parent and Merger Sub is
duly qualified or licensed as a foreign corporation to conduct business, and is
in good standing, under the laws of each jurisdiction where the character of the
properties owned, leased or operated by it, or the nature of its activities,
makes such qualification or licensing necessary, except where the failure to be
so qualified, licensed or in good standing, individually or in the aggregate,
has not had and would not be expected to have a Parent Material Adverse Effect.
Each of Parent and Merger Sub has made available to the Company true, complete
and correct copies of its Certificate of Incorporation and Bylaws, each as
amended to date. Neither Parent nor Merger Sub is in default under or in
violation of any provision of its Certificate of Incorporation or Bylaws.
3.2 Parent Subsidiaries. The Parent Disclosure Schedule sets forth a
true, complete and correct list of each Subsidiary of the Parent. Since June 30,
2003, no Subsidiary of Parent has conducted active business operations. all of
the issued and outstanding shares of capital stock of, or other equity interests
in, each Subsidiary of the Parent are: (i) duly authorized, validly issued,
fully paid, non-assessable; (ii) owned directly by the Parent free and clear of
all Liens; and (iii) free of any restriction, including, without limitation, any
restriction which prevents the payment of dividends to the Parent or any other
Subsidiary of the Parent, or which otherwise restricts the right to vote, sell
or otherwise dispose of such capital stock or other ownership interest, other
than restrictions under the Securities Act and state securities laws.
3.3 Capital Structure.
(a) The authorized capital stock of Parent consists of (i)
40,000,000 shares of Parent Common Stock and (ii) 10,000,000 shares of preferred
stock, par value $0.001 per share.
(b) Immediately prior to the Closing, (i) 21,000,000 shares of
Parent Common Stock (on a fully diluted basis) shall be issued and outstanding,
(ii) no shares of Parent Preferred Stock are to be issued or outstanding; and
(iii) no shares of Parent Common Stock are to be held in the treasury of Parent.
Except as described above, there shall be no shares of voting or non-voting
capital stock, equity interests or other securities of Parent authorized,
issued, reserved for issuance or otherwise outstanding.
(c) All outstanding shares of Parent Common Stock are, and all
shares of Parent Common Stock to be issued in connection with the Merger will
be, when issued in accordance with the terms hereof, duly authorized, validly
issued, fully paid and non-assessable, and not subject to, or issued in
violation of, any kind of preemptive, subscription or any kind of similar
rights.
(d) There are no bonds, debentures, notes or other indebtedness of
Parent having the right to vote (or convertible into securities having the right
to vote) on any matters on which stockholders of Parent may vote. Except as
described in subsection (b) above or as otherwise set forth on the Parent
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Disclosure Schedule, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
(contingent or otherwise) to which Parent is a party or bound obligating Parent
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of Parent or obligating
Parent to issue, grant, extend or enter into any agreement to issue, grant or
extend any security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. Neither Parent nor any Subsidiary of Parent is
subject to any obligation or requirement to provide funds for or to make any
investment (in the form of a loan or capital contribution) to or in any Person.
(e) All of the issued and outstanding shares of Parent Common
Stock and all equity of its Subsidiaries were issued in compliance in all
material respects with all applicable federal and state securities laws.
(f) The authorized capital stock of Merger Sub consists of 1,000
shares of common stock, no par value per share, all of which are duly
authorized, validly issued and fully paid and non-assessable, and all of which
are, and at the Effective Time will be, owned by Parent free and clear of any
Liens. All issued and outstanding capital stock of the Parent's Subsidiaries
were duly authorized, validly issued and fully paid and non-assessable, and all
of which are, and at the Effective Time will be and have been, owned by Parent
free and clear of any Liens. There are no outstanding contractual obligations of
the Parent to repurchase, redeem or otherwise acquire any shares of capital
stock (or options to acquire any such shares) or other security or equity
interest of the Parent. Except as described in this Section 3.3, there are no
stock-appreciation rights, security-based performance units, phantom stock or
other security rights or other agreements, arrangements or commitments of any
character (contingent or otherwise) pursuant to which any Person is or may be
entitled to receive any payment or other value based on the revenues, earnings
or financial performance or other attribute of the Parent or any of its
Subsidiaries or assets or calculated in accordance therewith (other than
ordinary course payments, including but not limited to royalty payments to be
made pursuant to any license or other agreement made by the Parent in the
ordinary course of business) or commissions to sales representatives of the
Parent or any of its Subsidiaries based upon revenues generated by them without
augmentation as a result of the Merger or other transactions contemplated
hereby) or to cause the Parent or any of its Subsidiaries to file a registration
statement under the Securities Act, or which otherwise relate to the
registration of any securities of the Parent or any of its Subsidiaries.
(g) There are no voting trusts, registration rights, proxies or
other agreements, commitments or understandings of any character to which the
Parent or any of its Subsidiaries or, to the knowledge of the Parent, any of the
stockholders of the Parent, is a party or by which any of them is bound with
respect to the issuance, holding, acquisition, voting or disposition of any
shares of capital stock or other security or equity interest of the Parent or
any of its Subsidiaries.
3.4 Authority; No Conflict; Required Filings.
(a) Each of Parent and Merger Sub has all requisite corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the Merger and other transactions
contemplated hereby. The execution and delivery of this Agreement, the
performance of its obligations hereunder and the consummation of the Merger and
26
other transactions contemplated hereby, have been duly authorized by all
corporate action on the part of Parent and Merger Sub and no other corporate
proceedings on the part of Parent and Merger Sub are necessary.
(b) This Agreement has been duly executed and delivered by Parent
and the Merger Sub and constitutes a valid and binding obligation of Parent and
Merger Sub, enforceable against each of them in accordance with its terms,
subject only to the Equitable Exceptions.
(c) The execution and delivery of this Agreement do not, the
performance by either Parent or Merger Sub of its obligations hereunder and the
consummation of the Merger and other transactions contemplated hereby will not,
conflict with or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit, or result in the creation of any Liens in or upon any of the properties
or other assets of Parent under any provision of: (i) their respective
Certificates of Incorporation, Bylaws or other equivalent organizational
documents of Parent or any of its Subsidiaries; (ii) subject to the governmental
filings and other matters referred to in paragraph (d) below, any (A) permit,
license, franchise, statute, law, ordinance or regulation or (B) judgment,
decree or order, in each case applicable to Parent or any of its Subsidiaries,
or by which any of its properties or assets may be bound or affected; or (iii)
any loan or credit agreement, note, bond, mortgage, indenture, contract,
agreement, lease or other instrument or obligation to which Parent or Merger Sub
is a party or by which any of their respective properties may be bound or
affected, except, in the case of clauses (ii) or (iii) above, for any such
conflicts, violations, defaults or other occurrences, if any, that could not,
individually or in the aggregate, reasonably be expected to result in a Parent
Material Adverse Effect or impair in any material respect the ability of the
Parties to consummate the Merger and the other transactions contemplated hereby
on a timely basis.
(d) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority is required
by or with respect to Parent in connection with the execution and delivery of
this Agreement or the consummation of the Merger or other transactions
contemplated hereby except for: (i) the filing of a Certificate of Merger with
the Secretary of State of the State of Delaware in accordance with the DGCL;
(ii) the filing of a Certificate of Merger and such other documents as may be
required to be filed with the Secretary of State of the State of New Jersey;
(iii) compliance with any applicable requirements under the Securities Act; (iv)
compliance with any applicable requirements under the Exchange Act; (v)
compliance with any applicable state securities, takeover or so-called "Blue
Sky" Laws; and (vi) such consents, approvals, orders or authorizations, or
registrations, declarations or filings which, if not obtained or made, could not
reasonably be expected to result in a Parent Material Adverse Effect.
(e) The Board of Directors of the Parent has, at a meeting duly
called and held at which all members were present or by a unanimous written
consent: (i) approved and declared advisable this Agreement; (ii) determined
that the Merger and other transactions contemplated by this Agreement are
advisable, fair to and in the best interest of the Parent and its stockholders.
None of the aforesaid actions by the Board of Directors of the Parent has been
amended, rescinded or modified.
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3.5 SEC Filings. Since December 31, 2000 and until Closing, Parent has
or will have filed all forms, reports and documents required to be filed with
the SEC by such time (collectively, the "Parent SEC Reports") pursuant to the
federal securities laws and regulations of the SEC promulgated thereunder, and
all Parent SEC Reports have been filed in all material respects on a timely
basis. The Parent SEC Reports were prepared in accordance, and complied as of
their respective filing dates in all material respects, with the requirements of
the Exchange Act and the regulations promulgated thereunder and did not at the
time they were filed (or if amended or superseded by a filing prior to the date
hereof, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial
statements contained in the Form 10-KSB for the years ended December 31, 2000,
2001 and 2002 and the Forms 10-QSB for the periods ended March 31, 2001, 2002
and 2003, June 30, 2001, 2002 and 2003 and September 30, 2001, 2002 and 2003
were prepared in accordance with GAAP and the books and records of Parent,
fairly present the financial condition and results of operations of Parent as of
the date thereof and for the period covered thereby, were prepared in accordance
with the books of account and other financial records of the Parent and its
Subsidiaries and include all adjustments (consisting only of normal recurring
accruals) that are necessary for a fair presentation of the financial condition
of the Parent and its Subsidiaries and the results of the operations of the
Parent and its Subsidiaries as of the dates thereof for the periods covered
thereby in all material respects.
3.6 Absence of Undisclosed Liabilities. Parent does not have any
material liabilities or obligations, whether fixed, contingent, accrued or
otherwise, liquidated or unliquidated and whether due or to become due, other
than liabilities reflected or reserved against on the balance sheets contained
in the Parent SEC Reports. There are no agreements of the Parent or any of its
Subsidiaries which are required to be filed under the Exchange Act that have not
been filed as an exhibit to the Parent SEC Reports or that have not been
provided to the Company.
3.7 Compliance with Laws. Each of Parent and its Subsidiaries has at
all times complied with all federal, state, local and foreign statutes, laws and
regulations, and is not in violation of, and has not received any written claim
or notice of violation of, any such statutes, laws and regulations with respect
to the conduct of its business or the ownership and operation of its properties
and other assets, except for such instances of non-compliance or violation, if
any, which could not reasonably be expected to result in a Parent Material
Adverse Effect. No investigation or review by any Governmental Authority is
pending or, to the Parent's knowledge, has been threatened, against the Parent,
nor, to the Parent's knowledge, has any Governmental Authority indicated an
intention to conduct an investigation of the Parent. To the knowledge of Parent,
there is no agreement, judgment, injunction, order or decree binding upon the
Parent which has or could reasonably be expected to have (after giving effect to
the Merger) the effect of prohibiting or impairing any current or currently
anticipated future business practice of the Parent, the Merger or any of the
transactions in connection therewith and herewith or the conduct of business by
the Parent as currently conducted or as currently proposed to be conducted.
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3.8 Litigation. There is no suit, action, arbitration, claim,
governmental or other proceeding before any Governmental Authority or otherwise
pending or, to the knowledge of the Parent, threatened, against the Parent or
any of its Subsidiaries.
3.9 Restrictions on Business Activities. There is no agreement,
judgment, injunction, order or decree binding upon or otherwise applicable to
the Parent which has the effect of prohibiting or materially impairing (a) any
current or future business practice of the Parent or (b) any acquisition of any
Person or property by the Parent.
3.10 Taxes.
(a) Each of Parent and its Subsidiaries has accurately prepared
and timely filed all Returns relating to any and all Taxes concerning or
attributable to each of the Parent or such Subsidiary or its operations, and all
such Returns are true, complete and correct in all material respects.
(b) Parent and each of its Subsidiaries: (i) has paid all Taxes it
is obligated to pay as reflected on the Returns or otherwise; and (ii) has
withheld all federal, state, local and foreign Taxes required to be withheld
with respect to its employees or otherwise.
(c) There is no Tax deficiency outstanding, proposed or assessed
against the Parent or any of its Subsidiaries that is not accurately reflected
as a liability on the balance sheets contained in the Parent SEC Reports, nor
has the Parent or any of its Subsidiaries executed any waiver of any statute of
limitations on or extending the period for the assessment or collection of any
Tax, nor are any of same expected to be contained in the Form 10-QSB to be filed
by Parent for the fiscal quarter ended September 30, 2003.
(d) Neither Parent nor any of its Subsidiaries has any liability
for unpaid Taxes that has not been properly accrued for under GAAP and reserved
for on the balance sheets contained in the Parent SEC Reports, whether asserted
or unasserted, contingent or otherwise.
(e) As of December 31, 2002, Parent has approximately $11,328,000
of net operating loss.
3.11 Certain Business Practices. Neither the Parent or, to the
knowledge of the Parent, any director, officer, employee or agent of the Parent
has: (a) used any funds for unlawful contributions, gifts, entertainment or
other unlawful payments relating to political activity; (b) made any unlawful
payment to any foreign or domestic government official or employee or to any
foreign or domestic political party or campaign or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended; or (c) made any other
unlawful payment.
3.12 Interested Party Transactions. Except as set forth in the Parent
Disclosure Schedule, the Parent, its Subsidiaries and their officers and agents
have not made any illegal or improper payments to, or provided any illegal or
improper benefit or inducement for, any governmental official, supplier,
customer or other person in an attempt to influence any such person to take or
29
to refrain from taking any action relating to the Parent. Except as set forth in
the Parent Disclosure Schedule, to the Parent's knowledge, no director, officer
or employee of Parent or any of its Subsidiaries, or member of the family of any
such person, or any corporation, partnership, trust or other entity in which any
such person, or any member of the family of any such person, has a substantial
interest or is an officer, director, trustee, partner or holder of any equity
interest, is a party to any transaction with Parent, including any contract,
agreement or other arrangement providing for the employment of, furnishing of
services by, rental of real or personal property from or otherwise requiring
payments or involving other obligations to any such person or firm.
3.13 Brokers. Except for the obligation to SSC, no broker, financial
advisor, investment banker or other Person is entitled to any fee, commission or
expense reimbursement in connection with the Merger or other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent.
3.14 Interim Operations of Merger Sub. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated in this Agreement.
3.15 Required Vote. This Agreement has been approved by Parent, as the
sole stockholder of Merger Sub. No other vote of holders of any class or series
of securities of Parent or Merger Sub is necessary to approve this Agreement,
the Merger and the transactions contemplated hereby.
3.16 Intellectual Property. Except as disclosed in the Parent SEC
Reports, neither Parent nor any of its Subsidiaries owns any material licenses
or otherwise has any material interest in any Intellectual Property.
3.17 Additional Tax Matters. (a) Neither the Parent nor, to the
knowledge of the Parent, any of its affiliates, knows of any fact or has taken
or agreed to take any action, failed to take any action or is aware of any fact
or circumstance, that could reasonably be expected to prevent the Merger from
constituting a reorganization within the meaning of Section 368(a) of the Code.
(b) The Parent Disclosure Schedule contains a true, complete and
correct list of all Persons who, to the knowledge of the Parent, may be deemed
to be affiliates of the Parent, excluding its Subsidiaries but including all
directors and executive officers of the Parent as of the date hereof.
3.18 Absence of Certain Changes or Events. Since March 31, 2002, the
Parent has conducted no active business operations other than the search for a
merger or acquisition candidate and the activities related thereto.
3.19 Employee Benefit Plans. Except as set forth on the Parent
Disclosure Schedule, Parent has no employee benefit plans (as defined in Section
3(3) of ERISA) or any bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar employee
benefit plans, or unexpired severance agreements (pursuant to which any payments
are still due and payable by the Parent), written or otherwise, for the benefit
of, or relating to, any current or former employee of the Parent or any of its
Subsidiaries or any trade or business (whether or not incorporated) which is a
member or which is under common control with the Parent within the meaning of
Section 414 of the Code.
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3.20 Properties and Assets.
(a) The Parent and its Subsidiaries have good and valid title
to all of their respective properties, interests in properties and assets, real
and personal, or, in the case of leased properties and assets, valid leasehold
interests in such properties and assets, in each case free and clear of all
Liens, except to the extent any failure would not be reasonably expected to have
a Parent Material Adverse Effect.
(b) The Parent Disclosure Schedule sets forth a true, complete
and correct list of each parcel of real property owned or leased by the Parent
or any of its Subsidiaries. All leases for leased real property of the Parent
are in full force and effect, are valid and effective in accordance with their
respective terms except where any such failure would not reasonably be expected
to have a Parent Material Adverse Effect, and there is not, under any of such
leases, any existing default or event of default (or event which with notice or
the lapse of time, or both, would constitute a default) that would give rise to
a material claim.
(c) The facilities, property and equipment owned, leased or
otherwise used by the Parent or any of its Subsidiaries are in an acceptable
state of maintenance and repair, free from material defects and in operating
condition (subject to normal wear and tear), and suitable for the purposes for
which they are presently used.
(d) All tangible assets which are leased by the Parent or any
of its Subsidiaries have been maintained such that at each such termination of
the lease such assets can be returned to their owner without any further
material obligation on the part of the Parent or any of its Subsidiaries with
respect thereto.
3.21 Insurance. Except as set forth on Schedule 3.19, neither the
Parent nor any of its Subsidiaries maintains any policies of insurance.
3.22 Environmental Matters.
(a) The Parent is in compliance in all material respects with
all Environmental Laws, which compliance includes, without limitation, the
possession by the Parent of all Material Permits required under all applicable
Environmental Laws, and compliance in all material respects with the terms and
conditions thereof.
(b) The Parent has not received any written communication,
whether from a Governmental Authority or other Person, that alleges that either
the Parent or any of its Subsidiaries is not in compliance with any
Environmental Laws or any Material Permit required under any applicable
Environmental Law, or that it is responsible (or potentially responsible) for
the cleanup of any Materials of Environmental Concern at, on or beneath its
facilities or at, on or beneath any land adjacent thereto, and, to Parent's
knowledge, there are no conditions existing at such facilities that could
reasonably be expected to prevent or interfere with such full compliance in the
future.
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(c) There are no past or present facts, circumstances or
conditions, including, without limitation, the release of any Materials of
Environmental Concern, that could reasonably be attributed to acts or omissions
of the Parent.
(d) The Parent has made available to Company true, complete and
correct copies of all of the Parent's environmental audits, assessments and
documentation regarding environmental matters pertaining to, or the
environmental condition of, its facilities or the compliance (or non-compliance)
by the Parent and its Subsidiaries with any Environmental Laws.
(e) To the Parent's knowledge, none of the facilities ever used by
the Parent or any of its Subsidiaries has ever been a site for the use,
generation, manufacture, discharge, assembly, processing, storage, release,
disposal or transportation to or from of any Materials of Environmental Concern,
except for chemicals used in the ordinary course of business of the Parent and
its Subsidiaries, all of which chemicals have been stored and used in strict
compliance with all applicable Material Permits and Environmental Laws. Neither
the Parent nor any of its Subsidiaries is the subject of any federal, state,
local or private litigation or proceedings involving a demand for damages or
other potential liability with respect to any alleged violations of
Environmental Laws.
3.23 Officer and Director Information. During the past ten year period
neither Parent nor any of its Subsidiaries, on the one hand, nor, to the
Parent's knowledge, any of their respective officers, directors or affiliates,
on the other hand, has been the subject of:
(a) a petition under the Federal bankruptcy laws or any other
insolvency or moratorium law or has a receiver, fiscal agent or similar officer
been appointed by a court for the business or property of Parent, any of its
Subsidiaries or such person, or any corporation or business association of which
Parent, any of its Subsidiaries or any such person was an executive officer at
or within two years before the time of such filing;
(b) a conviction in a criminal proceeding or a named subject of a
pending criminal proceeding (excluding traffic violations which do not relate to
driving while intoxicated or driving under the influence);
(c) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining Parent, any of its Subsidiaries or any such person from,
or otherwise limiting, the following activities:
(i) Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the United States Commodity
Futures Trading Commission or an associated person of any of the foregoing, or
as an investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or continuing any
conduct or practice in connection with such activity;
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(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or
sale of any security or commodity or in connection with any violation of
Federal, state or other securities laws or commodities laws;
(d) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal, state or local authority barring,
suspending or otherwise limiting for more than 60 days the right of Parent, any
of its Subsidiaries or any such person to engage in any activity described in
the preceding sub-paragraph, or to be associated with persons engaged in any
such activity;
(e) a finding by a court of competent jurisdiction in a civil
action or by the Securities and Exchange Commission (the "Commission") to have
violated any securities law, regulation or decree and the judgment in such civil
action or finding by the Commission has not been subsequently reversed,
suspended or vacated; or
(f) a finding by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or finding has
not been subsequently reversed, suspended or vacated.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 Conduct of Business of the Company Pending the Merger.
(a) The Company covenants and agrees that, between the date hereof and
the earlier to occur of the Effective Time or such earlier time as this
Agreement is terminated in accordance with Article VII (such period being
hereinafter referred to as the "Interim Period"), except as expressly required
by this Agreement or unless Parent shall otherwise consent in writing, which
consent shall not be unreasonably withheld, each of the Company and its
Subsidiaries: (i) shall conduct its business only in the ordinary course of
business, consistent with past practice; (ii) shall not take any action, or fail
to take any action, except in the ordinary course of business, consistent with
past practice; and (iii) shall use its reasonable best efforts to preserve
intact its business organization, properties and assets, keep available the
services of their officers, employees and consultants and maintain in effect all
Company Material Contracts. By way of amplification and not limitation, except
as expressly permitted by this Agreement, neither the Company nor any of its
Subsidiaries shall , during the Interim Period, directly or indirectly, do any
of the following without the prior written consent of Parent:
(i) amend its Certificate of Incorporation, Bylaws or other
equivalent organizational documents, or otherwise alter their corporate
structure through merger, liquidation, reorganization, restructuring or
otherwise;
(ii) issue, sell, transfer, pledge, dispose of or encumber any
shares of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock,
or any other ownership interest of the Company or any of its Subsidiaries;
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(iii) redeem, repurchase or otherwise acquire, directly or
indirectly, any shares of capital stock of the Company or interest in or
securities of any of its Subsidiaries;
(iv) sell, transfer, pledge, dispose of or encumber any material
properties, facilities, equipment or other assets, except in the ordinary course
of business consistent with past practice;
(v) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or other securities or property, or any combination
thereof) in respect of any of its capital stock or other equity interests
(except that a wholly owned Subsidiary of the Company may declare and pay a cash
dividend to the Company);
(vi) split, combine or reclassify any shares of its capital stock
or other securities or equity interests, or issue any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
equity interests;
(vii) sell, transfer, lease, license, sublicense, mortgage,
pledge, dispose of, encumber, grant or otherwise dispose of any Company
Intellectual Property, or amend or modify in any material respect any existing
agreements with respect to any Company Intellectual Property other than in the
ordinary course of business consistent with past practice;
(viii) acquire (by merger, consolidation, acquisition of stock or
assets or otherwise) any corporation, limited liability company, partnership,
joint venture or other business organization or division thereof;
(ix) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee (other than guarantees of bank debt of the
Company's Subsidiaries entered into in the ordinary course of business) or
endorse or otherwise as an accommodation become responsible for the obligations
of any Person, or make any loans, advances or enter into any financial
commitments, except in the ordinary course of business and as otherwise
permitted under any loan or credit agreement to which the Company or any of its
Subsidiaries is a party as of the date of this Agreement;
(x) authorize any capital expenditures in excess of $175,000 in
the aggregate;
(xi) take or permit to be taken any action to: (A) increase the
compensation payable to its officers or employees, except for increases in
salary or wages in accordance with agreements entered into prior to the date of
this Agreement or otherwise in the ordinary course of business consistent with
past practice; (B) grant any additional severance or termination pay to, or
enter into any employment or severance agreements with, its officers; (C) grant
any severance or termination pay to, or enter into any employment or severance
agreement with, any employee except in accordance with agreements entered into
before the date of this Agreement or otherwise in the ordinary course of
business consistent with past practice; (D) enter into any collective bargaining
agreement; or (E) establish, adopt, enter into or amend in any material respect
any bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, trust, fund, policy or arrangement for the benefit of any of its
directors, officers or employees;
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(xii) change any accounting policies or procedures (including,
without limitation, procedures with respect to reserves, revenue recognition,
payments of accounts payable and collection of accounts receivable), unless
required by statutory accounting principles or GAAP or in connection with the
Merger;
(xiii) make any Tax election or settle or compromise any material
federal, state, local or foreign Tax liability, or agree to an extension of a
statute of limitations with respect thereto;
(xiv) other than with respect to the Atari litigation set forth in
the Company Disclosure Schedules, pay, discharge, satisfy or settle any material
litigation or waive, assign or release any rights or claims with respect
thereto, other than settlements in the ordinary course of business that involve
only the payment of non-material amounts of cash and no admission being made
with respect to (A) any criminal wrongdoing or (B) the invalidity or
unenforceability of, or any infringement with respect to, any Company
Intellectual Property Rights;
(xv) fail to maintain in full force and effect all material
insurance policies currently in effect, or permit any of the coverage thereunder
to lapse, in each case without simultaneously securing replacement insurance
policies which will be in full force and effect and provide coverage
substantially similar to or greater than under the prior insurance policies;
(xvi) take any action that (without regard to any action taken, or
agreed to be taken, by Parent or any of its affiliates) could be considered
reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code;
(xvii) take any action or fail to take any reasonable action
permitted by this Agreement if such action or failure to take action could
reasonably be expected to result in either (A) any of the representations and
warranties of the Company set forth in Article II of this Agreement becoming
untrue in any material respect or (B) any of the conditions to the Closing set
forth in Article VI of this Agreement not being satisfied in any material
respect as of the Closing Date; or
(xviii) authorize, recommend, propose, announce or enter into any
agreement, contract, commitment or arrangement to do any of the foregoing.
Notwithstanding anything contained herein to the contrary, Parent's
consent shall not be required with respect to any currently proposed or
contemplated business transaction with Take 2.
4.2 Conduct of Business of Parent Pending the Merger.
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(a) The Parent covenants and agrees that, during the Interim
Period, except as expressly required by this Agreement or unless the Company
shall otherwise consent in writing, which consent shall not be unreasonably
withheld, the Parent: (i) shall conduct its business only in the ordinary course
of business, consistent with past practice; (ii) shall not take any action, or
fail to take any action, except in the ordinary course of business, consistent
with past practice; and (iii) shall use its reasonable best efforts to preserve
intact its business organization, properties and assets, and keep available the
services of their officers, employees and consultants. By way of amplification
and not limitation, except as expressly permitted by this Agreement, the Parent
shall not, during the Interim Period, directly or indirectly, do any of the
following without the prior written consent of the Company:
(i) amend its Certificate of Incorporation, Bylaws or other
equivalent organizational documents, or otherwise alter their corporate
structure through merger, liquidation, reorganization, restructuring or
otherwise;
(ii) issue, sell, transfer, pledge, dispose of or encumber any
shares of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock,
or any other ownership interest of the Parent; or any of its Subsidiaries, other
than pursuant to the transactions contemplated by this Agreement;
(iii) redeem, repurchase or otherwise acquire, directly or
indirectly, any shares of capital stock of the Parent or interest in or
securities of any Subsidiary of Parent;
(iv) sell, transfer, pledge, dispose of or encumber any
properties, facilities, equipment or other assets;
(v) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or other securities or property, or any combination
thereof) in respect of any of its capital stock or other equity interests;
(vi) split, combine or reclassify any shares of its capital stock
or other securities or equity interests, or issue any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
equity interests;
(vii) acquire (by merger, consolidation, acquisition of stock or
assets or otherwise) any corporation, limited liability company, partnership,
joint venture or other business organization or division thereof;
(viii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse or otherwise as an accommodation
become responsible for the obligations of any Person, or make any loans,
advances or enter into any financial commitments;
(ix) authorize any capital expenditures;
(x) take or permit to be taken any action to: (A) increase the
compensation payable to its officers or employees, except for increases in
salary or wages in accordance with agreements entered into prior to the date of
this Agreement; (B) grant any additional severance or termination pay to, or
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enter into any employment or severance agreements with, its officers; (C) grant
any severance or termination pay to, or enter into any employment or severance
agreement with, any employee except in accordance with agreements entered into
before the date of this Agreement; (D) enter into any collective bargaining
agreement; or (E) establish, adopt, enter into or amend in any material respect
any bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, trust, fund, policy or arrangement for the benefit of any of its
directors, officers or employees;
(xi) change any accounting policies or procedures (including,
without limitation, procedures with respect to reserves, revenue recognition,
payments of accounts payable and collection of accounts receivable), unless
required by statutory accounting principles or GAAP;
(xii) create, incur, suffer to exist or assume any Lien on any of
its properties, facilities or other assets;
(xiii) make any Tax election or settle or compromise any material
federal, state, local or foreign Tax liability, or agree to an extension of a
statute of limitations with respect thereto;
(xiv) pay, discharge, satisfy or settle any litigation or waive,
assign or release any rights or claims with respect thereto;
(xv) fail to maintain in full force and effect all insurance
policies currently in effect, or permit any of the coverage thereunder to lapse,
in each case without simultaneously securing replacement insurance policies
which will be in full force and effect and provide coverage substantially
similar to or greater than under the prior insurance policies;
(xvi) take any action that (without regard to any action taken, or
agreed to be taken, by Company or any of its affiliates) could be considered
reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code;
(xvii) take any action or fail to take any reasonable action
permitted by this Agreement if such action or failure to take action could
reasonably be expected to result in either (A) any of the representations and
warranties of the Parent or any of its Subsidiaries set forth in Article III of
this Agreement becoming untrue in any material respect or (B) any of the
conditions to the Closing set forth in Article VI of this Agreement not being
satisfied in any material respect as of the Closing Date;
(xviii) waive, release or assign any rights or claims under any
Parent Material Contract or enter into or extend any lease with respect to real
property; or
(xix) authorize, recommend, propose, announce or enter into any
agreement, contract, commitment or arrangement to do any of the foregoing.
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4.3 No Solicitation of Other Proposals. Unless this Agreement shall
have been terminated, neither the Company on the one hand, nor Parent or Merger
Sub on the other, shall, directly or indirectly, through any shareholder (or
affiliate thereof), officer, director, employee, representative or agent,
initiate, solicit, encourage, consider, entertain or otherwise consider any
other offers for or inquiries about, or hold discussions with any person
regarding, the acquisition of any assets or capital stock of the Company or
Parent, as applicable. Neither the Company on the one hand, nor Parent or Merger
Sub on the other, shall, directly or indirectly, through any shareholder (or
affiliate thereof), officer, director, employee, representative or agent, engage
in any negotiations concerning, provide any confidential information or data to,
or have any discussions with, any person relating to the acquisition of any
assets or capital stock of the Company or Parent, as applicable, whether
initiated before or after this Agreement. The Company on the one hand, and
Parent on the other, will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to the acquisition of any assets or capital stock of the
Company or Parent, as appropriate. Each Party will notify the other immediately
in writing of any such inquiries or proposals received and the name of such
person and the material terms and conditions of any proposals or offers.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Meeting of Company Stockholders.
(a) The Company shall promptly after the date hereof take all
action necessary in accordance with the NJBCA and its Certificate of
Incorporation and Bylaws to duly call, give notice of and (unless Parent
otherwise reasonably requests) (i) hold a special meeting of its stockholders as
soon as practicable following the date hereof ("Special Meeting") or, (ii)
obtain the written consent of all Majesco Stockholders in lieu of a meeting.
(b) Once the Special Meeting, if any, has been called and noticed,
the Company shall not postpone or adjourn the Special Meeting (other than for
the absence of a quorum and then only to such future date as is reasonably
acceptable to Parent) without the prior written consent of Parent.
(c) The Company's Board of Directors shall recommend that the
Merger be approved and this Agreement be approved and adopted by the Majesco
Stockholders. The Company's Board of Directors shall submit this Agreement to
the Majesco Stockholders, whether or not the Company's Board of Directors at any
time changes, withdraws or modifies its recommendation. The Company shall take
all action reasonably necessary or advisable to secure the vote or consent of
Majesco Stockholders required by the NJBCA and its Certificate of Incorporation
to authorize and approve the Merger.
5.2 Access to Information; Confidentiality.
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(a) Upon reasonable notice, Parent and the Company shall (and
shall cause each of their respective Subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of the other Party
reasonable access, during the Interim Period, to all its properties, books,
contracts, commitments and records and, during such period, furnish promptly to
the other Party all information concerning its business, properties and
personnel as the other Party may reasonably request. Parent and the Company
shall make available to the other the appropriate individuals for discussion of
its business, properties and personnel as the other may reasonably request. No
investigation pursuant to this Section 5.2(a) shall affect, modify or invalidate
any representations or warranties of Parent or the Company contained herein or
the conditions to the obligations of Parent or the Company hereto.
(b) The Parties shall keep all information obtained pursuant to
Section 5.2(a) confidential and shall return all such information to the Party
requesting such return, upon their request therefor. The foregoing shall not
apply with respect to information the Party receiving such confidential
information can establish (i) is in the public domain at the time of disclosure
or which thereafter enters the public domain, through no improper action or
inaction by the receiving Party; or (ii) was known or independently developed by
or in the possession of receiving Party prior to receipt from the disclosing
Party, as evidenced by written records; or (iii) was rightfully disclosed to the
receiving Party by a third party without restriction; or (iv) is required to be
disclosed by a government agency or court order or pursuant to applicable laws
and regulations.
5.3 Reasonable Efforts; Further Assurances.
(a) Parent and the Company shall use their reasonable best efforts
to satisfy or cause to be satisfied all of the conditions precedent that are set
forth in Article VI, as applicable to each of them. Each Party, at the
reasonable request of the other, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of the Merger and other
transactions contemplated by this Agreement.
(b) Subject to the terms and conditions hereof, the Company and
Parent agree to use their respective reasonable best efforts to take, or cause
to be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and other transactions contemplated by this
Agreement including, without limitation, using their respective reasonable
commercially practicable efforts: (i) to obtain prior to the Closing Date all
licenses, certificates, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Authorities and parties to contracts
as are necessary for the consummation of the transactions contemplated hereby;
(ii) to effect all necessary registrations and filings required by any
Governmental Authority (in connection with which Parent and the Company shall
cooperate with each other in connection with the making of all such
registrations and filings, including, without limitation, providing copies of
all such documents to the non-filing party and its advisors prior to the time of
such filing and, if requested, will accept all reasonable additions, deletions
or changes suggested in connection therewith); (iii) to furnish to each other
such information and assistance as reasonably may be requested in connection
with the foregoing; and (iv) to lift, rescind or mitigate the effects of any
injunction, restraining order or other ruling by a Governmental Authority
adversely affecting the ability of any Party to consummate the Merger or other
transactions contemplated hereby and to prevent, with respect to any threatened
or such injunction, restraining order or other such ruling, the issuance or
entry thereof.
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5.4 Employee Benefits.
Parent agrees that individuals who are employed by the Company or any Subsidiary
of the Company immediately prior to the Effective Time shall remain employees of
the Surviving Corporation or one of its Subsidiaries upon the Effective Time
(each such employee, a "Company Employee"); provided, however, that this Section
5.4(a) shall not be construed to limit the ability of the Surviving Corporation,
or the Parent or any of its Subsidiaries to terminate the employment of any
Company Employee at any time.
5.5 Notification of Certain Matters.
(a) The Company shall give prompt notice to Parent, and Parent
shall give prompt notice to the Company, of the occurrence or non-occurrence of
(i) any event, the occurrence or non-occurrence of which could reasonably be
expected to result in any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect (or, in the case of any
representation or warranty qualified by its terms by materiality, then untrue or
inaccurate in any respect) and (ii) any failure of the Company, Parent or any
Subsidiary of either Company or Parent, as the case may be, to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.6(a) shall not limit or otherwise
affect the remedies available hereunder to the Party receiving such notice.
(b) Each of the Company and Parent shall give prompt notice to the
other of (i) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the Merger or
other transactions contemplated by this Agreement; (ii) any notice or other
communication from any Governmental Authority in connection with the Merger or
other transactions contemplated by this Agreement; (iii) any litigation,
relating to or involving or otherwise affecting the Company or any of its
Subsidiaries or Parent that relates to the Merger or other transactions
contemplated by this Agreement; (iv) the occurrence of a default or event that,
with notice or lapse of time or both, will become a default under either a
Company Material Contract or a Parent Material Contract; and (v) any change that
would be considered reasonably likely to result in a Company or Parent Material
Adverse Effect, as the case may be, or is likely to impair in any material
respect the ability of either Parent or the Company to consummate the
transactions contemplated by this Agreement.
5.6 Public Announcements. Except as otherwise required by applicable
law, court process or as provided elsewhere herein, prior to the Closing or the
earlier termination of this Agreement pursuant to Article VII, neither the
Company nor Parent shall, nor shall permit any of its Subsidiaries to, issue or
cause the publication of any press release or other public announcement with
respect to the Merger or other transactions contemplated by this Agreement
without the consent of the other Party, which consent shall not be unreasonably
withheld, conditioned or delayed.
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5.7 Third Party Consents. The Surviving Corporation shall use its
reasonable best efforts to obtain the consents of those third parties listed on
Company Disclosure Schedule 2.4(c) attached hereto.
ARTICLE VI
CONDITIONS OF MERGER
6.1 Conditions to Obligation of Each Party to Effect the Merger. The
obligations of each Party to effect the Merger and consummate the other
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing of the following conditions, any of which may be waived in
writing by the Party entitled to the benefit thereof, in whole or in part, to
the extent permitted by the applicable law:
(a) Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the stockholders of the
Company and Merger Sub in accordance with the DGCL, NJBCA and the Certificate of
Incorporation and Bylaws of the Company and Merger Sub.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order (whether
temporary, preliminary or permanent) issued by any court of competent
jurisdiction, or other legal restraint or prohibition shall be in effect which
prevents the consummation of the Merger on substantially identical terms and
conferring upon Parent and the Company substantially all the rights and benefits
as contemplated herein, nor shall any proceeding brought by any Governmental
Authority, domestic or foreign, seeking any of the foregoing be pending, and
there shall not be any action taken, or any law, regulation or order enacted,
entered, enforced or deemed applicable to the Merger, which makes the
consummation of the Merger on substantially identical terms and conferring upon
Parent substantially all the rights and benefits as contemplated herein illegal.
(c) No Dissenter's Rights. As of the Effective Time no dissenter's
rights under the NJBCA shall have been asserted by any stockholder of the
Company.
(d) Acceptance of Certificates. All certificates required to be
filed with the Secretaries of State of the States of New Jersey and Delaware in
connection with the transactions contemplated hereby, including, without
limitation the Certificates of Merger and a Certificate of Designation filed
with respect to the Parent Preferred Stock (in such form acceptable to the
Company), shall have been accepted for filing.
(e) Satisfaction with Due Diligence. Each of the Company and the
Parent shall be satisfied with its "due diligence" review of the other;
provided, that (i) the Company's due diligence review shall be limited to all
matters relating to the bankruptcy of Cakewalk BRE LLC and its affiliates and
(ii) Parent's due diligence review shall be limited to (A) receipt of year 2000
financial statements and (B) reasonably satisfactory evidence that the Company
has reserved such sums as the Company deems necessary to settle the matter with
Rage or that it has resolved such matters.
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(f) Schedules. Each of the Company and the Parent shall have
delivered to the other all disclosure schedules required to be delivered
hereunder, which such schedules shall be reasonably satisfactory to the
receiving party.
(g) Tax Free Reorganization. The parties shall be satisfied with
the review of the tax implications of the transactions contemplated hereby on
each of them and their respective shareholders. The parties acknowledge it is
intended that the Merger be treated, for tax purposes, as a tax free
reorganization under the Code.
6.2 Additional Conditions to Obligations of Parent. The obligations of
Parent to effect the Merger are also subject to the following conditions, any
and all of which may be waived in writing by the Parent, in whole or in part, to
the extent permitted by the applicable law:
(a) Representations and Warranties. The representations and
warranties of the Company contained in Article II shall be true and correct in
all material respects on and as of the Effective Time, with the same force and
effect as if made on and as of the Effective Time, except for those (x)
representations and warranties that are qualified by materiality, which
representations and warranties shall be true and correct in all respects and (y)
representations and warranties which address matters only as of a particular
date, which representations and warranties shall be true and correct on and as
of such particular date, and Parent shall have received a certificate to such
effect signed by the Chief Executive Officer and Chief Financial Officer of the
Company.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time. Parent shall have received a certificate to such effect signed
by the Chief Executive Officer and Chief Financial Officer of the Company.
(c) No Material Adverse Effect. From and after the date hereof,
there shall not have occurred any event or occurrence and no circumstance shall
exist which, alone or together with any one or more other events, occurrences or
circumstances has had, is having or could reasonably be expected to result in a
Company Material Adverse Effect.
(d) Consulting Agreement. Parent shall have amended the existing
consulting agreement (the "Consulting Agreement") with Atlantis Equities, Inc.
("Atlantis") to provide that, for services rendered prior to the Closing, it
shall receive the following:
(i) if at least $10,000,000 but less than $15,000,000 in new
equity financing is raised by Parent following the Closing, Atlantis or its
designees shall receive a payment of $450,000 and a payment of $12,500 per month
for the 24 months following the consummation of such financing; or
(ii) if at least $15,000,000 in new equity financing is raised by
Parent following the Closing, Atlantis or its designees shall receive a one time
payment of $750,000.
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Notwithstanding the foregoing, the parties agree to discuss in good
faith alternative methods for achieving the transfers of funds contemplated by
this clause (d) between the date hereof and the Closing Date.
6.3 Additional Conditions to Obligations of the Company. The obligation
of the Company to effect the Merger is also subject to the following conditions,
any and all of which may be waived in writing by the Company, in whole or in
part, to the extent permitted by the applicable law:
(a) Representations and Warranties. The representations and
warranties of Parent contained Article III shall be true and correct in all
material respects as of when made and on and as of the Effective Time, except
for those (x) representations and warranties that are qualified by materiality,
which representations and warranties shall be true and correct in all respects
and (y) representations and warranties which address matters only as of a
particular date, which representations and warranties shall be true and correct
on and as of such particular date, with the same force and effect as if made on
and as of the Effective Time, and the Company shall have received a certificate
to such effect signed by the President and Chief Executive Officer of Parent.
(b) Agreements and Covenants. Parent and Subsidiaries shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Effective Time, except for any failure to perform or comply with such
agreements and covenants which would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect, and the Company
shall have received a certificate to such effect signed by the President and
Chief Executive Officer of Parent.
(c) No Material Adverse Effect. From and including the date
hereof, there shall not have occurred any event and no circumstance shall exist
which, alone or together with any one or more other events or circumstances has
had, is having or would reasonably be expected to have a Parent Material Adverse
Effect.
(d) Satisfaction of Indebtedness. Except for the continuing
obligation of the Parent pursuant to the Consulting Agreement, as amended, (and
subject to the parties' obligation to discuss the matter in good faith), as
contemplated herein, but including all fees and expenses incurred by Parent in
connection with this Agreement and the transactions contemplated hereby, the
Parent and Subsidiaries shall have no indebtedness, obligations, payables or
costs of any kind existing as of the Effective Time (collectively, the
"Liabilities") and shall deliver such documents as the Company shall reasonably
request to evidence the discharge of all such Liabilities. In addition, except
as otherwise set forth herein, all direct and indirect obligations to current
and former officers, directors, shareholders and their affiliates, including but
not limited to (i) any and all employments agreements, and (ii) that certain
lease for space on the 24th floor at 750 Lexington Avenue, New York, New York,
shall have been terminated in all respects with no obligations to survive the
Closing.
43
(e) Authorized Stock of Parent. Immediately prior to the Effective
Time, Parent shall have no more than 21,000,000 shares of Parent Common Stock
outstanding or reserved for issuance with respect to options, warrants or other
similar rights, in all respects on a fully diluted basis (not including the
obligation to issue up to 2,000,000 shares of Parent Common Stock to SSC), and
no shares of Parent Preferred Stock outstanding.
(f) Termination of Agreements. As of the Closing Date, all
agreements, contracts, notes payable, rights or other arrangements, whether
written or oral, with Entertainment Finance International, Inc., Cakewalk LLC
and Cakewalk BRE LLC shall be terminated and of no further force or effect as
against the Company. Satisfaction of this condition may be evidenced by a
certificate signed by the President of the Parent.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and the Merger and
other transactions contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval thereof by the Majesco Stockholders:
(a) by mutual written consent of the Parties duly authorized by
each of the Boards of Directors of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have
been consummated on or before January 10, 2004; and provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to a Party whose failure to fulfill any material obligation under this
Agreement has been the cause of, or resulted in, the failure of the Merger to
have been consummated on or before such date;
(c) by either Parent or the Company, if a Governmental Authority
shall have issued an order or taken any other action, in each case, which has
become final and non-appealable and which restrains, enjoins or otherwise
prohibits the Merger;
(d) by Parent, if neither Parent nor Merger Sub is in material
breach of its obligations under this Agreement, and if (i) at any time any of
the representations and warranties of the Company herein are or become untrue or
inaccurate such that Section 6.2(a) would not be satisfied (treating such time
as if it were the Effective Time for purposes of this Section 7.1(d)); (ii)
there has been a breach on the part of the Company of any of its covenants or
agreements contained in this Agreement such that Section 6.2(b) will not be
satisfied (treating such time as if it were the Effective Time for purposes of
this Section 7.1(d)), and, in both case (i) and case (ii), such breach (if
curable) has not been cured within fifteen (15) days after notice thereof to the
Company; or (iii) a condition specified in Section 6.1 or 6.2 will not be
satisfied, and no additional time will be able to cure such failure; or
(e) by the Company, if it is not in material breach of its
obligations under this Agreement, and if (i) at any time the representations and
warranties of Parent or Merger Sub herein become untrue or inaccurate such that
Section 6.3(a) would not be satisfied (treating such time as if it were the
Effective Time for purposes of this Section 7.1(e)), or (ii) there has been a
breach on the part of Parent or Merger Sub of any of their respective covenants
or agreements contained in this Agreement such that Section 6.3(b) would not be
satisfied (treating such time as if it were the Effective Time for purposes of
this Section 7.1(e)), and, in both case (i) and case (ii), such breach (if
curable) has not been cured within fifteen (15) days after notice thereof to
Parent or (iii) a condition specified in Section 6.1 or 6.3 will not be
satisfied, and no additional time will be able to cure such failure.
44
7.2 Effect of Termination. Except as provided in this Section 7.2, in
the event of the termination of this Agreement pursuant to Section 7.1, this
Agreement (other than this Section 7.2 and Sections 5.2(b), 5.7and 7.3, each of
which shall survive such termination) will forthwith become void, and there will
be no liability on the part of Parent, Merger Sub or the Company or any of their
respective officers or directors to the other and all rights and obligations of
any Party will cease, except that nothing herein will relieve any Party from
liability for any breach, prior to termination of this Agreement in accordance
with its terms, of any representation, warranty, covenant or agreement contained
in this Agreement.
7.3 Fees and Expenses. Except as set forth in this Section 7.3, all
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Party incurring such fees
and expenses, whether or not the Merger is consummated.
7.4 Amendment. This Agreement may be amended by the Parties by action
taken by or on behalf of their respective Boards of Directors at any time prior
to the Effective Time; provided, however, that, after approval of the Merger by
the Majesco Stockholders, no amendment may be made that would reduce the amount
or change the type of consideration into which each share of Company Common
Stock shall be converted upon consummation of the Merger. This Agreement may not
be amended except by an instrument in writing signed by all of the Parties.
7.5 Waiver. At any time prior to the Effective Time, any Party may
extend the time for the performance of any of the obligations or other acts
required hereunder, waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and waive
compliance with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument signed by
the Party to be bound thereby.
ARTICLE VIII
INDEMNIFICATION
8.1 Survival of Representations, Warranties and Covenants. The
warranties, representations and covenants of the Parent and the Company
contained in or made pursuant to this Agreement shall survive the Closing for
one year.
8.2 Indemnification by the Company. The Company (prior to the Closing)
shall indemnify, defend and hold harmless Parent and its affiliates (including
the Surviving Corporation), promptly upon demand at any time and from time to
time, against any and all losses, liabilities, claims, actions, damages and
45
expenses (including without limitation, reasonable attorneys' fees and
disbursements) (collectively, "Losses"), arising out of or in connection with
any of the following: (i) any misrepresentation or breach of any warranty made
by the Company in this Agreement or in any of the Company Documents; or (ii) any
breach or non-fulfillment of any covenant or agreement made by the Company in
this Agreement or in any of the documents executed by the Company in connection
herewith.
8.3 Indemnification by Parent. Parent shall indemnify, defend and hold
harmless the Company and the Majesco Stockholders, promptly upon demand at any
time and from time to time, against any and all Losses arising out of or in
connection with any of the following: (i) any misrepresentation or breach of any
warranty made by Parent in this Agreement; or (ii) any breach or nonfulfillment
of any covenant or agreement made by Parent in this Agreement or in any of the
Parent Documents.
8.4 Procedure. Notwithstanding the foregoing,
(a) An indemnified party shall promptly give written notice to the
indemnifying party after the indemnified party has knowledge that any legal
proceeding has been instituted or any claim has been asserted in respect of
which indemnification may be sought under the provisions of Sections 8.1, 8.2,
or 8.3. If the indemnifying party, within 30 days after the indemnified party
has given such notice (or within such shorter period of time as an answer or
other responsive motion may be required), shall have acknowledged in writing his
or its obligation to indemnify, then the indemnifying party shall have the right
to control the defense of such claim or proceeding, and the indemnifying party
shall not settle or compromise such claim or proceeding without the written
consent of the indemnified party. The indemnified party may in any event
participate in any such defense with his or its own counsel and at his or its
own expense; and
(b) The indemnified party shall be kept fully informed by the
indemnifying party of such action, suit or proceeding at all stages thereof,
whether or not he or it is represented by counsel. The indemnifying party shall,
at the indemnifying party's expense, make available to the indemnified party and
its attorneys and accountants all books and records of the indemnifying party
relating to such action, suit or proceeding, and the parties hereto agree to
render to each other such assistance as they may reasonably require of each
other in order to ensure the proper and adequate defense of any such action,
suit or proceeding.
ARTICLE IX
GENERAL PROVISIONS
9.1 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by nationally-recognized overnight courier or by registered or certified
mail, postage prepaid, return receipt requested, or by electronic mail, with a
copy thereof to be delivered by mail (as aforesaid) within 24 hours of such
electronic mail, or by telecopier, with confirmation as provided above addressed
as follows:
46
(a) If to Parent or Merger Sub:
CONNECTIVCORP
750 Lexington Avenue, 23rd Floor
New York, NY 10022
Telecopier: 212-750-6667
E-Mail: robcotv@aol.com
Attention: Robert S. Ellin
With copies to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
666 Third Avenue, 25th Floor
New York, NY 10017
Telecopier: 212-983-3115
E-Mail: kkoch@mintz.com
Attention: Kenneth R. Koch, Esq.
(b) If to the Company:
Majesco Sales, Inc.
160 Raritan Center Parkway
Edison, NJ 08837
Telecopier: (732) 346-7972
E-Mail: jesutton@majescosales.com
Attention: Jesse Sutton
With a copy to:
Feldman Weinstein LLP
The Graybar Building
420 Lexington Avenue
Suite 2620
New York, NY 10170
Telecopier: (212) 997-4242
E-Mail:dfeldman@feldmanweinstein.com
Attention: David N. Feldman, Esq.
(c) To each Stockholder:
c/o Majesco Sales, Inc.
160 Raritan Center Parkway
Edison, NJ 08837
Telecopier: (732) 346-7972
E-Mail: jesutton@majescosales.com
Attention: Jesse Sutton
47
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All such notices
or communications shall be deemed to be received (a) in the case of personal
delivery, on the date of such delivery, (b) in the case of nationally-recognized
overnight courier, on the next Business Day after the date when sent, (c) in the
case of facsimile transmission or telecopier or electronic mail, upon confirmed
receipt and (d) in the case of mailing, on the third Business Day following the
date on which the piece of mail containing such communication was posted.
9.2 Interpretation. When a reference, representation or warranty of the
Company is made in this Agreement "to the knowledge of the Company", such term
shall mean the actual knowledge of the officers or directors of the Company or
their Affiliates. When a reference, representation or warranty of the Parent is
made in this Agreement "to the knowledge of the Parent", such term shall mean
the actual knowledge of the officers or directors of the Parent or its
Affiliates. When a reference is made in this Agreement to Sections, subsections,
Schedules or Exhibits, such reference shall be to a Section, subsection,
Schedule or Exhibit to this Agreement unless otherwise indicated. The words
"include," "includes" and "including" when used herein shall be deemed in each
case to be followed by the words "without limitation." The word "herein" and
similar references mean, except where a specific Section or Article reference is
expressly indicated, the entire Agreement rather than any specific Section or
Article. The table of contents and the headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.3 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
9.4 Entire Agreement. This Agreement (including all exhibits and
schedules hereto and thereto), and other documents and instruments delivered in
connection herewith constitute the entire agreement and supersede all prior
agreements and undertakings, both written and oral, among the Parties with
respect to the subject matter hereof.
9.5 Assignment. This Agreement shall not be assigned by operation of
law or otherwise by any Party hereto with the prior written consent of all other
Parties hereto.
9.6 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each Party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
9.7 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of any Party in the exercise of any right hereunder will
impair such right or be construed to be a waiver of, or acquiescence in, any
48
breach of any representation, warranty or agreement herein, nor will any single
or partial exercise of any such right preclude other or further exercise thereof
or of any other right. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive to, and not exclusive of, any rights or
remedies otherwise available.
9.8 Governing Law; Enforcement. This Agreement and the rights and
duties of the Parties hereunder shall be governed by, and construed in
accordance with, the law of the State of New York. The Parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement. In addition,
each of the Parties: (a) waives any right to trial by jury with respect to any
action related to or arising out of this Agreement or any transaction
contemplated hereby and (b) consents to service of process by delivery pursuant
to Section 9.1 hereof.
9.9 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
49
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have duly
executed this Agreement as of the date first written above.
CONNECTIVCORP
By
---------------------------------
Name:
Title:
CTTV MERGER CORP.
By
---------------------------------
Name:
Title:
MAJESCO SALES, INC.
By
---------------------------------
Name:
Title:
EXHIBIT A
EXCHANGE PROCEDURES
(a) The holders of Company Common Stock shall surrender the
certificates therefor as soon as practicable after the Effective Time and Parent
shall deliver to such holders in exchange therefor the Merger Consideration in
accordance with Section 1.7. The Merger Consideration delivered upon the
surrender for exchange of the shares of Company Common Stock in accordance with
the terms hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares, and after the Effective Time, there shall be
no further registration or transfers of shares of Company Common Stock that were
outstanding prior to the Closing Date. If after the Effective Time, Company
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Section.
(b) If certificates for shares of Parent Common Stock are to be issued
in the name of a person other than the person in whose name the surrendered
Company Certificate is registered, it shall be a condition of the issuance
thereof that the Company Certificates so surrendered shall be properly endorsed
or shall be otherwise in proper form for transfer and that the person requesting
such exchange shall have paid to Parent or any agent designated by it any
transfer or other taxes required by reason of the issuance of certificates for
shares of Parent Common Stock in the name of a person other than the registered
holder of the Company Certificate surrendered or shall have established to the
satisfaction of Parent or any agent designated by it that such tax either has
been paid or is not applicable.
(c) If any Company Certificates shall have been lost, stolen or
destroyed, Parent shall issue in exchange for such lost, stolen or destroyed
Company Certificates, upon the making of an affidavit of that fact by the holder
thereof, the Merger Consideration; provided, however, that Parent may, in its
discretion and as a condition precedent to the issuance and delivery thereof,
require the owner of such lost, stolen or destroyed Company Certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Parent or the Company with respect to the
certificates alleged to have been lost, stolen or destroyed.