AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
SEPTEMBER 2005, is made and entered into by and among Turbodyne Technologies,
Inc. a Nevada corporation ("Parent"), Turbodyne Acquisition Corp. a Nevada
corporation and wholly owned subsidiary of Parent ("Merger Subsidiary") and
Aspatuck Holdings Nevada Inc., a Nevada corporation (the "Company"). Merger
Subsidiary and the Company are hereinafter sometimes collectively referred to as
the "Constituent Corporations" and the Constituent Corporations and the Parent
are collectively referred to as the "Parties."
WHEREAS, the respective Boards of Directors of Parent, Merger
Subsidiary and the Company have determined that it is advisable and in the best
interests of the respective corporations and their shareholders that Merger
Subsidiary be merged with and into the Company in accordance with Title 7 of the
Nevada Revised Statutes (the "NRS") and the terms of this Agreement pursuant to
which the Merger Subsidiary will be the surviving corporation and will be a
wholly owned subsidiary of Parent (the "Merger"); and
WHEREAS, Parent, Merger Subsidiary, and the Company desire to make
certain representations, warranties, covenants, and agreements in connection
with, and establish various conditions precedent to, the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth in this Agreement and in the Plan of Merger,
the parties hereto hereby agree as follows:
ARTICLE I. THE MERGER
1.01. THE MERGER
At the Effective Time (as defined in Section 1.03 hereof) subject to the terms
and conditions of this Agreement and the Articles of Merger (as defined in
Section 1.03 hereof), Company shall be merged with and into the Merger
Subsidiary, the separate existence of Company shall cease, and the Merger
Subsidiary shall continue as the surviving corporation under the corporate name
it possesses immediately prior to the Effective Time. The Merger Subsidiary, in
its capacity as the corporation surviving the Merger, is hereinafter sometimes
referred to as the "Surviving Corporation."
1.02. EFFECT OF MERGER
The effect of the Merger shall be as set forth in NRS and the Surviving
Corporation shall succeed to and possess all the properties, rights, privileges,
immunities, powers, franchises and purposes, and be subject to all the duties,
liabilities, debts, obligations, restrictions and disabilities, of the
Constituent Corporations, all without further act or deed.
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1.03. EFFECTIVE TIME
The consummation of the Merger shall be effected as promptly as practicable, but
in no event more than three business days, after the satisfaction or waiver of
the conditions set forth in Article VI of this Agreement, and the parties hereto
will cause a copy of the Articles of Merger in the form required by NRS properly
completed consistent with the terms hereof (the "Articles of Merger") to be
executed, delivered and filed with the Secretary of State of the State of Nevada
in accordance with the NRS. The Merger shall become effective immediately upon
the filing of such Articles with the Secretary of State of the State of Nevada.
The date and time on which the Merger shall become effective is referred to
herein as the "Effective Time."
1.04. DIRECTORS AND OFFICERS
From and after the Effective Time, the directors of the Surviving Corporation
shall be the persons who were the directors of Company immediately prior to the
Effective Time and the officers of the Surviving Corporation shall be the
persons who were the officers of Company immediately prior to the Effective
Time. Said directors and officers of the Surviving Corporation shall hold office
for the term specified in, and subject to the provisions contained in, the
Articles of Incorporation and Bylaws of the Surviving Corporation and applicable
law. If, at or after the Effective Time, a vacancy shall exist on the Board of
Directors or in any of the offices of the Surviving Corporation, such vacancy
shall be filed in the manner provided in the Articles of Incorporation and
Bylaws of the Surviving Corporation.
1.05. ARTICLES OF INCORPORATION; BYLAWS
From and after the Effective Time and until further amended in accordance with
applicable law, the Articles of Incorporation of Merger Subsidiary as in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of the Surviving Corporation. From and after the Effective Time and until
further amended in accordance with law, the Bylaws of Merger Subsidiary as in
effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation.
1.06. TAKING OF NECESSARY ACTION; FURTHER ACTION
Parent, Merger Subsidiary and the Company, respectively, shall each use its best
efforts to take all such action as may be necessary or appropriate to effectuate
the Merger under the NRS at the time specified in Section 1.03. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all properties, rights, privileges,
immunities, powers and franchises of either of the Constituent Corporations, the
officers of the Surviving Corporation are fully authorized in the name of each
Constituent Corporation or otherwise to take, and shall take, all such lawful
and necessary action.
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1.07. THE CLOSING.
(a) The closing of the transactions contemplated by this Agreement (the
"Closing") will take place at the offices o f counsel to Parent and will be
effective as of the Effective Time.
(b) The parties shall deliver to each other the documents required to
be delivered pursuant to Article VII hereof at the Closing.
ARTICLE II. CONVERSION OF SECURITIES
2.01. CONVERSION OF SECURITIES
At the Effective Time, by virtue of the Merger and without any action on the
part of Parent, Merger Subsidiary, the Company, the Surviving Corporation or the
holder of any of the following securities:
(a) each share of common stock, $ .01par value, of the Company
("Company Common Stock") issued and outstanding immediately prior to the
Effective Time (other than shares of Company Common Stock owned by Parent,
Merger Subsidiary or the Company or any direct or indirect subsidiary of Parent,
Merger Subsidiary or the Company) shall be converted into fully paid and
nonassessable shares of common stock, $01 par value of the Parent (such shares
being issued, the "Merger Consideration" and the shares of the Parent's common
stock, the "Parent Common Stock") determined as follows:
There shall first be determined the number of shares of Parent Common Stock
outstanding plus the number of shares of Parent Common Stock issuable on the
exercise, conversion or exchange of securities, options, rights or other
agreements providing for the issuance of Parent Common Stock. Such number of
shares is referred to as the "Fully Diluted Shares Outstanding." All of the
issued and outstanding shares of Target Common Stock shall be converted into
that number of shares of Parent Common Stock as is equal to 40% of the sum of
(i) the Fully Diluted Shares Outstanding plus (ii) the number of shares of
Parent Common Stock being issued as the Merger Consideration ("Merger
Consideration Shares"). Each share of Target Common Stock shall be converted
into that number of shares of Parent Common Stock determined by dividing the
Merger Consideration Shares by the number of shares of Target Common Stock
outstanding immediately before the Effective Time. If subsequent to the
Effective Time, the Parent issues Parent Common Stock in settlement of the
litigation between Parent and Pacific Baja Liquidating Trust ("Pacific Baja
Litigation") the number of shares of Parent Common Stock comprising the Merger
Consideration Shares shall be recalculated as if the shares issued in the
settlement of the Pacific Baja Litigation were issued and outstanding prior to
the Effective Time and additional Merger Consideration Shares shall be issued to
the shareholders of Target promptly following the issuance of the shares of
Parent Common Stock in settlement of the Pacific Baja Litigation It is the
intent of the parties that the Merger Consideration Shares shall constitute 40 %
of the post merger Fully Diluted Shares Outstanding taking into account the
issuance of the shares of Parent Common Stock in settlement of the Pacific Baja
Litigation and other shares relating in any manner to events or transactions
prior to the Effective Date.
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(b) each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time and owned by Parent, Merger Subsidiary
or the Company or any direct or indirect subsidiary of Parent, Merger Subsidiary
or the Company shall be canceled and extinguished and no payment shall be made
with respect thereto; and
(c) each share of common stock, $.01 par value, of Merger Subsidiary
("Merger Subsidiary Common Stock") issued and outstanding immediately prior to
the Effective Time shall be unaffected by the Merger and shall remain issued and
outstanding.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger
Subsidiary that, except as set forth in the Disclosure Schedule delivered by the
Company to Parent and Merger Subsidiary on the date hereof (the "Disclosure
Schedule",) which Disclosure Schedule sets forth the exceptions to the
representations and warranties contained in this Article III under captions
referencing the Sections to which such exceptions apply:
3.01. INCORPORATION AND CORPORATE POWER
The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Nevada and, subject to approval of this
Agreement by the Company's shareholders, has the requisite corporate power and
authority to execute and deliver this Agreement and the Articles of Merger and
to perform its obligations hereunder and thereunder. The Company has the
corporate power and authority and all authorizations, licenses, permits and
certifications necessary to own and operate its properties and to carry on its
business as now conducted and presently proposed to be conducted. The copies of
the Company's Articles of Incorporation and Bylaws which have been furnished by
the Company to Parent prior to the date hereof reflect all amendments made
thereto and are correct and complete as of the date hereof. The Company is
qualified to do business as a foreign corporation in every jurisdiction in which
the nature of its business or its ownership of property requires it to be so
qualified, except for those jurisdictions in which the failure to be so
qualified would not, individually or in the aggregate, have a material adverse
effect on the Company's business or results of operations.
3.02. EXECUTION, DELIVERY; VALID AND BINDING AGREEMENT
The execution, delivery and performance of this Agreement and the Articles of
Merger by the Company and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all requisite
corporate action, and no other corporate proceedings on its part are necessary
to authorize the execution, delivery and performance of this Agreement and the
Articles of Merger, other than the approval of this Agreement by the
shareholders of the Company. This Agreement has been duly executed and delivered
by the Company and constitutes the valid and binding obligation of the Company,
enforceable in accordance with its terms, and the Articles of Merger, when
executed and delivered by the Company, will constitute the valid and binding
obligation of the Company, enforceable in accordance with its terms.
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3.03. APPROVAL OF THE PLAN OF MERGER; MEETING OF SHAREHOLDERS
The Company's Board of Directors has, by resolutions duly adopted by unanimous
written consent approved this Agreement and the Articles of Merger and the
transactions contemplated hereby and thereby, including the Merger, and resolved
to recommend approval of this Agreement by the Company's shareholders. None of
the resolutions described in this Section 3.03 has been amended or otherwise
modified in any respect since the date of adoption thereof and all such
resolutions remain in full force and effect.
3.04. NO BREACH
The execution, delivery and performance of this Agreement and the Articles of
Merger by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby do not conflict with or result in any breach of
any of the provisions of, constitute a default under, result in a violation of,
result in the creation of a right of termination or acceleration or any lien,
security interest, charge or encumbrance upon any assets of the Company, or
require any authorization, consent, approval, exemption or other action by or
notice to any court or other governmental body, under the provisions of the
Articles of Incorporation or Bylaws of the Company or any indenture, mortgage,
lease, loan agreement or other agreement or instrument by which the Company is
bound or affected, or any law, statute, rule or regulation or order, judgment or
decree to which the Company is subject.
3.05. GOVERNMENTAL AUTHORITIES; CONSENTS
Except for the filing of the Articles of Merger with the Secretary of State of
the State of Nevada, the Company is not required to submit any notice, report or
other filing with any governmental authority in connection with the execution or
delivery by it of this Agreement or the Articles of Merger or the consummation
of the transactions contemplated hereby or thereby. Except as set forth in the
Disclosure Schedule, no consent, approval or authorization of any governmental
or regulatory authority or any other party or person (except the approval of
this Agreement by the shareholders of the Company) is required to be obtained by
the Company in connection with its execution, delivery and performance of this
Agreement or the Articles of Merger or the transactions contemplated hereby or
thereby.
3.06. SUBSIDIARIES
Except as otherwise set forth in the Disclosure Schedule, the Company does not
own any stock, partnership interest, joint venture interest or any other
security or ownership interest issued by any other corporation, organization or
entity. All issued and outstanding shares of capital stock of any of the
subsidiaries set forth in such Disclosure Schedule are owned by the Company,
either directly or through one or more other subsidiaries, free and clear of all
liens, charges, encumbrances, claims and options of any nature. All of the
outstanding shares of capital stock of such subsidiaries have been duly and
validly authorized and issued, and are fully paid and nonassessable.
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3.07. CAPITAL STOCK
The authorized capital stock of the Company consists of 1000 shares of Common
Stock, par value $_01per share, of which, as of the date hereof, 100 shares are
issued and outstanding. All of such outstanding shares of Company Common Stock
have been duly authorized and are validly issued, fully paid and nonassessable.
As of the date hereof, there are no Outstanding Stock Options to purchase shares
of Company Common Stock. The Company has no other equity securities or
securities containing any equity features authorized, issued or outstanding.
There are no agreements or other rights or arrangements existing which provide
for the sale or issuance of capital stock by the Company and there are no
rights, subscriptions, warrants, options, conversion rights or agreements of any
kind outstanding to purchase or otherwise acquire from the Company any shares of
capital stock or other securities of the Company of any kind. There are no
agreements or other obligations (contingent or otherwise) which may require the
Company to repurchase or otherwise acquire any shares of its capital stock.
3.08. FINANCIAL INFORMATION.
The Company was recently formed, has not engaged in any active business
operations and has not prepared any financial statements to date. Except for
liabilities incurred in connection with its organization and in connection with
the transactions contemplated hereby, the Company has no liabilities. The assets
of the Company are set forth on Schedule 3.08 hereof.
3.09. ABSENCE OF UNDISCLOSED LIABILITIES
Except as set forth in Section 3.08, the Company has no liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise, whether due or to
become due, whether known or unknown, and regardless of when asserted) arising
out of transactions or events heretofore entered into, or any action or
inaction, or any state of facts existing, with respect to or based upon
transactions or events heretofore occurring.
3.10 TITLE TO PROPERTIES.
The Company has good and marketable title to all of the assets owned by it and
referred to in Section 3.08.
3.11 CONTRACTS AND COMMITMENTS.
The Company is not a party to any contract or commitment except as set forth in
Section 3.09.
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3.12 LITIGATION
There are no actions, suits, proceedings, orders or investigations pending or,
to the best knowledge of the Company, threatened against the Company, at law or
in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign.
3.13 BROKERAGE
No third party shall be entitled to receive any brokerage commissions, finder's
fees, fees for financial advisory services or similar compensation in connection
with the transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of the Company.
3.14 ACCREDITED INVESTOR REPRESENTATION
Company is an "accredited investor" as defined in the Securities Act of 1933, as
amended by reason of the fact that each of the owners of its equity securities
is an accredited investor. Company acknowledges it is aware that the Merger
Consideration consists of restricted securities which may not be sold,
transferred, hypothecated or otherwise disposed of except pursuant to a
registration statement under the Securities Act of 1933, as amended or pursuant
to an exemption from such registration.
3.15 DISCLOSURE
Neither this Agreement nor any of the Exhibits hereto nor any of the documents
delivered by or on behalf of the Company pursuant to Article VI hereof nor the
Disclosure Schedule, taken as a whole, contains any untrue statement of a
material fact regarding the Company or its business or any of the other matters
dealt with in this Article III relating to the Company or the transactions
contemplated by this Agreement. This Agreement, the Exhibits hereto, the
documents delivered to Parent and Merger Subsidiary by or on behalf of the
Company pursuant to Article VII hereof, the Disclosure Schedule, taken as a
whole, do not omit any material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they were made, not
misleading.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
Parent and Merger Subsidiary, jointly and severally, hereby represent
and warrant to the Company that except as set forth in the Disclosure Schedule
delivered by Parent to Company on the date hereof ("Parent Disclosure Schedule")
which Parent Disclosure Schedule sets for the exceptions to the representations
and warranties contained in this Article IV under the captions referencing the
Sections to which such exception applies:
4.01 INCORPORATION AND CORPORATE POWER
Each of Parent and Merger Subsidiary is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Nevada, with the
requisite corporate power and authority to enter into this Agreement and the
Articles of Merger and perform its obligations hereunder and thereunder.
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4.02 EXECUTION, DELIVERY; VALID AND BINDING AGREEMENT
The execution, delivery and performance of this Agreement, by Parent and Merger
Subsidiary, and the Articles of Merger, by Merger Subsidiary, and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all requisite corporate action, and no other corporate
proceedings on its part are necessary to authorize the execution, delivery or
performance of this Agreement or the Articles of Merger. This Agreement has been
duly executed and delivered by Parent and Merger Subsidiary and constitutes the
valid and binding obligation of Parent and Merger Subsidiary, enforceable in
accordance with its terms, and the Articles of Merger, when executed and
delivered by Merger Subsidiary, will constitute the valid and binding obligation
of Merger Subsidiary, enforceable in accordance with its terms.
4.03 NO BREACH
The execution, delivery and performance of this Agreement and the Articles of
Merger by Parent and Merger Subsidiary and the consummation by Parent and Merger
Subsidiary of the transactions contemplated hereby and thereby do not conflict
with or result in any breach of any of the provisions of, constitute a default
under, result in a violation of, result in the creation of a right of
termination or acceleration or any lien, security interest, charge or
encumbrance upon any assets of Parent or Merger Subsidiary, or require any
authorization, consent, approval, exemption or other action by or notice to any
court or other governmental body, under the provisions of the Articles of
Incorporation or Bylaws of either Parent or Merger Subsidiary or any indenture,
mortgage, lease, loan agreement or other agreement or instrument by which either
Parent or Merger Subsidiary is bound or affected, or any law, statute, rule or
regulation or order, judgment or decree to which either Parent or Merger
Subsidiary is subject.
4.04 MERGER SUBSIDIARY
All of the outstanding capital stock of Merger Subsidiary is owned by Parent
free and clear of any lien, claim or encumbrance or any agreement with respect
thereto. Since the date of its incorporation, Merger Subsidiary has not engaged
in any activity of any nature except in connection with or as contemplated by
this Agreement and the Articles of Merger.
4.05. APPROVAL OF THE PLAN OF MERGER; MEETING OF SHAREHOLDERS
The Board of Directors of Parent and of Merger Subsidiary has, by resolutions
duly adopted by unanimous written consent, approved this Agreement and the
Articles of Merger and the transactions contemplated hereby and thereby,
including the Merger. No approval of the shareholders of Parent or Merger
Subsidiary is required under the NRS or the constituent documents of Parent or
Merger Subsidiary. None of the resolutions described in this Section has been
amended or otherwise modified in any respect since the date of adoption thereof
and all such resolutions remain in full force and effect.
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4.06 DISCLOSURE AND FILINGS.
Parent is required to make periodic filings under the Securities and Exchange
Commission pursuant to the Securities and Exchange Act of 1934 ("'34 Act"). All
of the filings made by Parent under the '34 Act (collectively, the '34 Act
Filings"), when made, were true and correct and contained all information
required to be included therein under the '34 Act. When made, the '34 Act
Filings did not contain any untrue statement of material fact or omit any
material fact necessary to make the statements contained therein, in light of
the circumstances in which they were made, not misleading. To the extent any
statement in a '34 Act Filing became untrue, an amendment, or subsequent filing
under the '34 Act was made. Parent has made all filings required to be made
under the '34 Act through the date hereof.
4.07 CAPITALIZATION.
The authorized and outstanding capital stock of Parent, including all options,
warrants and other securities convertible into, exercisable for, or exchangeable
for, Parent Common Stock is as is set forth in the latest '34 Act Filing made by
Parent ("Latest '34 Act Filing").
4.08. ABSENCE OF UNDISCLOSED LIABILITIES
Except as set forth in the Latest '34 Act Filing or in the financial statements,
if any attached hereto as part of the Parent Disclosure Schedule, neither the
Parent nor the Merger Subsidiary has any liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due, whether
known or unknown, and regardless of when asserted) arising out of transactions
or events heretofore entered into, or any action or inaction, or any state of
facts existing, with respect to or based upon transactions or events heretofore
occurring.
4.09 GOVERNMENTAL AUTHORITIES; CONSENTS
Except for the filing of the Articles of Merger with the Secretary of State of
the State of Nevada, neither Parent or Merger Subsidiary is required to submit
any notice, report or other filing with any governmental authority in connection
with the execution or delivery by it of this Agreement or the Articles of Merger
or the consummation of the transactions contemplated hereby or thereby. No
consent, approval or authorization of any governmental or regulatory authority
or any other party or person is required to be obtained by either Parent or
Merger Subsidiary in connection with its execution, delivery and performance of
this Agreement or the Articles of Merger or the transactions contemplated hereby
or thereby.
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4.10 BROKERAGE
No third party shall be entitled to receive any brokerage commissions, finder's
fees, fees for financial advisory services or similar compensation in connection
with the transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of Parent or Merger Subsidiary.
4.11 DISCLOSURE
Neither this Agreement nor any of the Exhibits hereto nor any of the documents
delivered by or on behalf of the Company pursuant to Article VII hereof nor the
Disclosure Schedule, taken as a whole, contains any untrue statement of a
material fact regarding the Company or its business or any of the other matters
dealt with in this Article III relating to the Company or the transactions
contemplated by this Agreement. This Agreement, the Exhibits hereto, the
documents delivered to Parent and Merger Subsidiary by or on behalf of the
Company pursuant to Article VII hereof, the Disclosure Schedule, taken as a
whole, do not omit any material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they were made, not
misleading.
ARTICLE V. COVENANTS OF THE COMPANY, PARENT AND MERGER SUBSIDIARY
5.01 CONDUCT OF THE BUSINESS
Each of the Parties shall, and Parent shall cause Merger Subsidiary to, comply
each term set forth in this Section 5.01 and agrees that, from the date hereof
until the Effective Time, unless otherwise consented to by Parent or Merger
Subsidiary in writing as to Company and by Company in writing as to Parent or
Merger Subsidiary:
(a) The business of the Party shall be conducted only in, and
the Party shall not take any action except in, the ordinary course of
the Party's business, on an arm's-length basis and in accordance in all
material respects with all applicable laws, rules and regulations and
the Party's past custom and practice;
(b) The Party shall not, directly or indirectly, do or permit
to occur any of the following: (i) issue or sell any additional shares
of, or any options, warrants, conversion privileges or rights of any
kind to acquire any shares of, any of its capital stock, (ii) sell,
pledge, dispose of or encumber any of its assets, except in the
ordinary course of business; (iii) amend or propose to amend its
Articles of Incorporation or Bylaws; (iv) split, combine or reclassify
any outstanding shares of Common Stock, or declare, set aside or pay
any dividend or other distribution payable in cash, stock, property or
otherwise with respect to shares of Common Stock; (v) redeem, purchase
or acquire or offer to acquire any shares of Common Stock or other
securities of the Company; (vi) acquire (by merger, exchange,
consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership, joint venture or other business organization
or division or material assets thereof; (vii) incur any indebtedness
for borrowed money or issue any debt securities except the borrowing of
working capital in the ordinary course of business and consistent with
past practice; (viii) permit any accounts payable owed to trade
creditors to remain outstanding more than 60 days; (ix) accelerate,
beyond the normal collection cycle, collection of accounts receivable;
or (x) enter into or propose to enter into, or modify or propose to
modify, any agreement, arrangement or understanding with respect to any
of the matters set forth in this Section 5.01(b);
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(c) The Party shall not, directly or indirectly, (i) enter
into or modify any employment, severance or similar agreements or
arrangements with, or grant any bonuses, salary increases, severance or
termination pay to, any officers or directors or consultants; or (ii)
in the case of employees, officers or consultants who earn in excess of
$50,000 per year, take any action with respect to the grant of any
bonuses, salary increases, severance or termination pay or with respect
to any increase of benefits payable in effect on the date hereof;
(d) The Party shall not adopt or amend any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, trust, fund or
group arrangement for the benefit or welfare of any employees or any
bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan,
agreement, trust, fund or arrangements for the benefit or welfare of
any director;
(e) The Party shall not cancel or terminate its current
insurance policies or cause any of the coverage thereunder to lapse,
unless simultaneously with such termination, cancellation or lapse,
replacement policies providing coverage equal to or greater than the
coverage under the canceled, terminated or lapsed policies for
substantially similar premiums are in full force and effect; and
(f) The Party shall (i) use its best efforts to preserve
intact the its business organization and goodwill, keep available the
services of the Company's officers and employees as a group and
maintain satisfactory relationships with suppliers, distributors,
customers and others having business relationships with it; (ii) confer
on a regular and frequent basis with representatives of the other
Parties to report operational matters and the general status of ongoing
operations; (iii) not intentionally take any action which would render,
or which reasonably may be expected to render, any representation or
warranty made by it in this Agreement untrue at the Closing; and (iv)
promptly notify the other Party in writing if the Party shall discover
that any representation or warranty made by it in this Agreement was
when made, or has subsequently become, untrue in any respect.
5.02 ACCESS TO BOOKS AND RECORDS
Between the date hereof and the Closing Date, each Party shall afford to the
other Party and its authorized representatives (the "Representatives") full
access at all reasonable times and upon reasonable notice to the offices,
properties, books, records, officers, employees and other items of the Company,
and otherwise provide such assistance as is reasonably requested.
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5.05 CONDITIONS
Each Party shall take all commercially reasonable actions necessary or desirable
to cause the conditions set forth in Article VI to be satisfied and to
consummate the transactions contemplated herein as soon as reasonably possible
after the satisfaction thereof (but in any event within three business days of
such date).
ARTICLE VI. CONDITIONS TO CLOSING
6.01 CONDITIONS TO PARENT'S AND MERGER SUBSIDIARY'S OBLIGATIONS
The obligation of Parent and Merger Subsidiary to consummate the transactions
contemplated by this Agreement is subject to the satisfaction of the following
conditions at or before the Effective Time:
(a) The representations and warranties set forth in Article
III hereof shall be true and correct in all material respects at and as
of the Effective Time as though then made and as though the Effective
Time had been substituted for the date of this Agreement throughout
such representations and warranties (without taking into account any
disclosures by the Company of discoveries, events or occurrences
arising on or after the date hereof), except that any such
representation or warranty made as of a specified date (other than the
date hereof) shall only need to have been true on and as of such date;
(b) The Company shall have performed in all material respects
all of the covenants and agreements required to be performed and
complied with by it under this Agreement prior to the Effective Time;
(c) The Company shall have obtained, or caused to be obtained,
each consent and approval necessary in order that the transactions
contemplated herein not constitute a breach or violation of, or result
in a right of termination or acceleration of, or creation of any
encumbrance on any of the Company's assets pursuant to the provisions
of, any agreement, arrangement or undertaking of or affecting the
Company or any license, franchise or permit of or affecting the
Company;
(d) This Agreement, the Articles of Merger and the Merger
shall have been duly and validly authorized by the Board of Directors
and the Plan of Merger shall have been duly and validly approved by the
shareholders of the Company, and the Company shall have delivered to
Parent evidence, in form satisfactory to Parent's counsel, of such
authorization and approval, and the Articles of Merger shall have been
duly executed by the Company;
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(e) There shall not be threatened, instituted or pending any
action or proceeding, before any court or governmental authority or
agency, domestic or foreign, (i) challenging or seeking to make
illegal, or to delay or otherwise directly or indirectly restrain or
prohibit, the consummation of the transactions contemplated hereby or
seeking to obtain material damages in connection with such
transactions, (ii) seeking to prohibit direct or indirect ownership or
operation by Parent or Merger Subsidiary of all or a material portion
of the business or assets of the Company and its subsidiaries, or to
Parent or Merger Subsidiary or any of their subsidiaries or the Company
to dispose of or to hold separately all or a material portion of the
business or assets of Parent or Merger Subsidiary and their
subsidiaries or of the Company, as a result of the transactions
contemplated hereby, (iii) seeking to require direct or indirect
transfer or sale by Parent or Merger Subsidiary of any of the shares of
Company Common Stock, (iv) seeking to invalidate or render
unenforceable any material provision of this Agreement or the Articles
of Merger or (v) otherwise relating to and materially adversely
affecting the transactions contemplated hereby;
(f) There shall not be any action taken, or any statute, rule,
regulation, judgment, order or injunction enacted, entered, enforced,
promulgated, issued or deemed applicable to the transactions
contemplated hereby by any federal, state or foreign court, government
or governmental authority or agency, which would reasonably be expected
to result, directly or indirectly, in any of the consequences referred
to in Section 7.01(f) hereof.
6.02 CONDITIONS TO THE COMPANY'S OBLIGATIONS
The obligations of the Company to consummate the transactions contemplated by
this Agreement are subject to the satisfaction of the following conditions at or
before the Effective Time:
(a) The representations and warranties set forth in Article IV
hereof will be true and correct in all material respects at and as of
the Effective Time as though then made and as though the Effective Time
had been substituted for the date of this Agreement throughout such
representations and warranties;
(b) Parent and Merger Subsidiary shall have performed in all
material respects all the covenants and agreements required to be
performed by them under this Agreement and the Articles of Merger prior
to the Effective Time, and Merger Subsidiary shall have executed the
Articles of Merger;
(c) There shall not be threatened, instituted or pending any
action or proceeding, before any court or governmental authority or
agency, domestic or foreign, (i) challenging or seeking to make
illegal, or to delay or otherwise directly or indirectly restrain or
prohibit, the consummation of the transactions contemplated by this
Agreement or the Articles of Merger or seeking to obtain material
damages in connection with such transactions, (ii) seeking to
invalidate or render unenforceable any material provision of this
Agreement, the Articles of Merger or any of the Related Agreements, or
(iii) otherwise relating to and materially adversely affecting the
transactions contemplated hereby or thereby;
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(d) There shall not be any action taken, or any statute, rule,
regulation, judgment, order or injunction, enacted, entered, enforced,
promulgated, issued or deemed applicable to the transactions
contemplated by this Agreement or the Articles of Merger by any
federal, state or foreign court, government or governmental authority
or agency, which would reasonably be expected to result, directly or
indirectly, in any of the consequences referred to in Section 7.02(d)
hereof.
(e) One half of the board of directors of the Parent shall
have resigned and the vacancies created by such resignation shall have
been filled by the election of designee of the Company, such
resignation and election to be effective upon the effectiveness of the
Merger.
ARTICLE VII. TERMINATION
7.01 TERMINATION
This Agreement may be terminated at any time prior to the Effective Time:
(a) by the mutual consent of Parent, Merger Subsidiary, and
the Company;
(b) by either Parent or Merger Subsidiary, on the one hand, or
the Company, on the other, if there has been a material
misrepresentation, breach of warranty or breach of covenant on the part
of the other in the representations, warranties and covenants set forth
in this Agreement;
(c) by either Parent or Merger Subsidiary, on the one hand, or
the Company, on the other, if the transactions contemplated by this
Agreement or the Articles of Merger have not been consummated by August
31, 2005; provided that, neither will be entitled to terminate this
Agreement pursuant to this Section 7.01(c) if such party's willful
breach of this Agreement has prevented the consummation of the
transactions contemplated by this Agreement or the Articles of Merger;
or
(d) by Parent or Merger Subsidiary if, after the date hereof,
there shall have been a material adverse change in the financial
condition or business of the Company or if an event shall have occurred
which, so far as reasonably can be foreseen, would result in any such
change, except to the extent such change is directly caused by Parent
or Merger Subsidiary;
(e) by the Company if, after the date hereof, there shall have
been a material adverse change in the financial condition of business
of Parent or Merger Subsidiary or an event shall have occurred which,
so far as reasonably can be foreseen, would result in any such change.
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7.02 EFFECT OF TERMINATION
In the event of termination of this Agreement by either Parent or Merger
Subsidiary, on the one hand, or the Company, on the other, as provided in
Section 7.01, all provisions of this Agreement shall terminate and there shall
be no liability on the part of any of Parent, Merger Subsidiary, or the Company
or their respective shareholders, officers, or directors, except that the
provisions of Article VIII hereof shall survive indefinitely, except that
parties shall remain liable for willful breaches of this Agreement prior to the
time of such termination.
ARTICLE VIII. SURVIVAL; INDEMNIFICATION
8.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Notwithstanding any investigation made by or on behalf of any of the parties
hereto or the results of any such investigation and notwithstanding the
participation of such party in the Closing, the representations and warranties
contained in Article III and Article IV hereof shall survive the Effective Time
for a period of one year following the Effective Time.
8.02 Indemnification by the Company
(a) Subject to the limitations of Section 8.02(b), the Company, prior
to the Effective Time agrees, after the Effective Time, agrees, to indemnify in
full Parent and Merger Subsidiary and their respective officers, directors,
employees, agents and shareholders (collectively, the "Parent Indemnified
Parties") and hold them harmless against any loss, liability, deficiency,
damage, expense or cost (including reasonable legal expenses), whether or not
actually incurred or paid (collectively, "Losses"), which Parent Indemnified
Parties may suffer, sustain or become subject to, prior to the first anniversary
of the Effective Time, as a result of (i) any misrepresentation in any of the
representations and warranties of the Company contained in this Agreement or in
any exhibits, schedules, certificates or other documents delivered or to be
delivered by or on behalf of the Company pursuant to the terms of this Agreement
or otherwise referenced or incorporated in this Agreement (collectively, the
"Related Documents"), (ii) any breach of, or failure to perform, any agreement
of the Company contained in this Agreement or any of the Related Documents, or
(iii) any "Claims" (as defined in Section 9.04(a) hereof) or threatened Claims
against Parent arising out of the actions or inactions of the Company with
respect to the Company's business or the Real Property prior to the Effective
Time (collectively, "Parent Losses").
(b) The Company will be liable to the Parent Indemnified Parties for
any Parent Loss (i) only if Parent or Merger Subsidiary delivers to the Company
written notice, setting forth in reasonable detail the identity, nature and
amount of Parent Losses related to such claim or claims prior to the first
anniversary of the Effective Time and (ii) only if the aggregate amount of all
Parent Losses exceeds $25,000 ("the Basket Amount"), in which case the Company
shall be obligated to indemnify the Parent Indemnified Parties only for the
excess of the aggregate amount of all such Parent Losses over the Basket Amount.
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8.03 INDEMNIFICATION BY PARENT.
(a) Subject to the limitations of Section 8.03(b), Parent agrees to
indemnify in full the Company and the Company's officers, directors, employees,
agents and stockholders (collectively, the "Company Indemnified Parties") and
hold them harmless against any Losses which any of the Company Indemnified
Parties may suffer, sustain or become subject to, prior to the first anniversary
of the Effective Time, as a result of (i) any misrepresentation in any of the
representations and warranties of Parent and Merger Subsidiary contained in this
Agreement or in any of the Related Documents, (ii) any breach of, or failure to
perform, any agreement of Parent or Merger Subsidiary contained in this
Agreement or any of the Related Documents, or (iii) any Claims or threatened
Claims against the Company arising out of the actions or inactions of Parent or
Merger Subsidiary with respect to the Company's business after the Effective
Time (collectively, "Company Losses").
(b) Parent will be liable to the Company Indemnified Parties for any
Company Loss (i) only if the Company delivers to Parent and Merger Subsidiary
written notice, setting forth in reasonable detail the identity, nature and
amount of Company Losses related to such claim or claims prior to the
anniversary of the Effective Time and (ii) only if the aggregate amount of all
Company Losses exceeds the Basket Amount, in which case Parent shall be
obligated to indemnify the Company Indemnified Parties only for the excess of
the aggregate amount of all such Company Losses over the Basket Amount.
8.04 METHOD OF ASSERTING CLAIMS
As used herein, an "Indemnified Party" shall refer to a "Parent Indemnified
Party" or "Company Indemnified Party," as applicable, the "Notifying Party"
shall refer to the party hereto whose Indemnified Parties are entitled to
indemnification hereunder, and the "Indemnifying Party" shall refer to the party
hereto obligated to indemnify such Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or administrative,
instituted by any third party for the liability or the costs or expenses of
which are Losses (any such third party action or proceeding being referred to as
a "Claim"), the Notifying Party shall give the Indemnifying Party prompt notice
thereof. The failure to give such notice shall not affect any Indemnified
Party's ability to seek reimbursement unless such failure has materially and
adversely affected the Indemnifying Party's ability to defend successfully a
Claim. The Indemnifying Party shall be entitled to contest and defend such
Claim; PROVIDED, that the Indemnifying Party (i) has a reasonable basis for
concluding that such defense may be successful and (ii) diligently contests and
defends such Claim. Notice of the intention so to contest and defend shall be
given by the Indemnifying Party to the Notifying Party within 20 business days
after the Notifying Party's notice of such Claim (but, in all events, at least
five business days prior to the date that an answer to such Claim is due to be
filed). Such contest and defense shall be conducted by reputable attorneys
employed by the Indemnifying Party. The Notifying Party shall be entitled at any
time, at its own cost and expense (which expense shall not constitute a Loss
unless the Notifying Party reasonably determines that the Indemnifying Party is
not adequately representing or, because of a conflict of interest, may not
adequately represent, any interests of the Indemnified Parties, and only to the
extent that such expenses are reasonable), to participate in such contest and
defense and to be represented by attorneys of its or their own choosing. If the
Notifying Party elects to participate in such defense, the Notifying Party will
cooperate with the Indemnifying Party in the conduct of such defense. Neither
the Notifying Party nor the Indemnifying Party may concede, settle or compromise
any Claim without the consent of the other party, which consents will not be
unreasonably withheld. Notwithstanding the foregoing, (i) if a Claim seeks
equitable relief or (ii) if the subject matter of a Claim relates to the ongoing
business of any of the Indemnified Parties, which Claim, if decided against any
of the Indemnified Parties, would materially adversely affect the ongoing
business or reputation of any of the Indemnified Parties, then, in each such
case, the Indemnified Parties alone shall be entitled to contest, defend and
settle such Claim in the first instance and, if the Indemnified Parties do not
contest, defend or settle such Claim, the Indemnifying Party shall then have the
right to contest and defend (but not settle) such Claim.
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(b) In the event any Indemnified Party should have a claim against any
Indemnifying Party that does not involve a Claim, the Notifying Party shall
deliver a notice of such claim with reasonable promptness to the Indemnifying
Party. If the Indemnifying Party notifies the Notifying Party that it does not
dispute the claim described in such notice or fails to notify the Notifying
Party within 30 days after delivery of such notice by the Notifying Party
whether the Indemnifying Party disputes the claim described in such notice, the
Loss in the amount specified in the Notifying Party's notice will be
conclusively deemed a liability of the Indemnifying Party and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified Party on demand. If
the Indemnifying Party has timely disputed its Liability with respect to such
claim, the Chief Executive Officers of each of the Indemnifying Party and the
Notifying Party will proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through the negotiations of such Chief Executive
Officers within 60 days after the delivery of the Notifying Party's notice of
such claim, such dispute shall be resolved fully and finally in [Minneapolis,
Minnesota] by an arbitrator selected pursuant to, and an arbitration governed
by, the Commercial Arbitration Rules of the American Arbitration Association.
The arbitrator shall resolve the dispute within 30 days after selection and
judgment upon the award rendered by such arbitrator may be entered in any court
of competent jurisdiction.
(c) After the Closing, the rights set forth in this Article X shall be
each party's sole and exclusive remedies against the other party hereto for
misrepresentations or breaches of covenants contained in this Agreement and the
Related Documents. Notwithstanding the foregoing, nothing herein shall prevent
any of the Indemnified Parties from bringing an action based upon allegations of
fraud or other intentional breach of an obligation of or with respect to either
party in connection with this Agreement and the Related Documents. In the event
such action is brought, the prevailing party's attorneys' fees and costs shall
be paid by the nonprevailing party.
(d) Any indemnification payable under this Article VIII shall be, to
the extent permitted by law, an adjustment to purchase price.
ARTICLE IX. MISCELLANEOUS
9.01 PRESS RELEASES AND ANNOUNCEMENTS
Prior to the Effective Time, no party hereto shall issue any press release (or
make any other public announcement) related to this Agreement or the
transactions contemplated hereby or make any announcement to the employees,
customers or suppliers of the Company without prior written approval of the
other party hereto, except as may be necessary, in the opinion of counsel to the
party seeking to make disclosure, to comply with the requirements of this
Agreement, the Articles of Merger or applicable law. If any such press release
or public announcement is so required, the party making such disclosure shall
consult with the other party prior to making such disclosure, and the parties
shall use all reasonable efforts, acting in good faith, to agree upon a text for
such disclosure which is satisfactory to both parties.
9.02 EXPENSES
Except as otherwise expressly provided for herein, Parent and Merger Subsidiary
will each pay all of their own expenses (including attorneys' and accountants'
fees) in connection with the negotiation of this Agreement, the performance of
their respective obligations under this Agreement and the Articles of Merger and
the consummation of the transactions contemplated hereby and thereby (whether
consummated or not). Any such expenses which are unpaid by the Company on the
Effective Date shall become obligations of the Surviving Corporation.
9.03 AMENDMENT AND WAIVER
This Agreement may not be amended or waived except in a writing executed by the
party against which such amendment or waiver is sought to be enforced; PROVIDED,
HOWEVER, that after the approval of the Plan of Merger by the shareholders of
the Company, no amendment may be made which reduces the Merger Consideration or
which effects any changes which would materially adversely affect the
shareholders of the Company without the further approval of the shareholders of
the Company. No course of dealing between or among any persons having any
interest in this Agreement will be deemed effective to modify or amend any part
of this Agreement or any rights or obligations of any person under or by reason
of this Agreement.
9.04 NOTICES
All notices, demands and other communications to be given or delivered under or
by reason of the provisions of this Agreement will be in writing and will be
deemed to have been given when personally delivered or three days after being
mailed, if mailed by first class mail, return receipt requested, or when receipt
is acknowledged, if sent by facsimile, telecopy or other electronic transmission
device. Notices, demands and communications to Parent, Merger Subsidiary, the
Company will, unless another address is specified in writing, be sent to the
address indicated below:
Notices to Parent or Merger Subsidiary: 0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx-Xxxxx
Chief Executive Officer
with a copy to: Xxxxxxx XxXxxxxxxx, Esq.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 08
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Notices to the Company: c/o Aspatuck Holdings Ltd.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
with a copy to: Xxxxxxx X. Xxxxxx, Esq.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
9.05 ASSIGNMENT
This Agreement and all of the provisions hereof will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, except that neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by any party hereto without
the prior written consent of the other parties hereto.
9.06 SEVERABILITY
Whenever possible, each provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
9.07 COMPLETE AGREEMENT
This Agreement, the Articles of Merger and the Related Agreements and other
exhibits hereto, the Disclosure Schedule and the other documents referred to
herein contain the complete agreement between the parties and supersede any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any way.
9.08 COUNTERPARTS
This Agreement may be executed in one or more counterparts, any one of which
need not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same instrument.
9.09 GOVERNING LAW
The internal law, without regard for conflicts of laws principles, of the State
of Nevada will govern all questions concerning the construction, validity and
interpretation of this Agreement and the performance of the obligations imposed
by this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
TURBODYNE TECHNOLOGIES, INC.
By:
Name: Xxxxxx Xxxxxx-Xxxxx
Title: Chief Executive Officer
TURBODYNE ACQUISITION CORP.
By:
Name: Xxxxxx Xxxxxx-Xxxxx
Title: Chief Executive Officer
ASPATUCK HOLDINGS NEVADA INC.
By:
Name: Xxxxx X.Xxxxxx
Title: Chief Executive Officer
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