AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER is made as of June 29, 2006, among
Thinkpath Inc., an Ontario corporation ("PURCHASER"), Thinkpath, Inc., an Ohio
corporation and wholly-owned subsidiary of Purchaser ("MERGER SUB" or the
"SURVIVING CORPORATION"), The Multitech Group, Inc., a New Jersey corporation
(the "COMPANY"), and each of the Persons identified on Schedule A attached
hereto as shareholders of the Company (each, a "Shareholder" and collectively,
the "SHAREHOLDERS"), including Xx. Xxxxxxx and Xx. Xxxxxxx, in their separate
capacity as the principal shareholders of the Company (the "PRINCIPAL
SHAREHOLDERS"). The parties hereto are sometimes hereinafter collectively
referred to as the "PARTIES."
RECITALS
WHEREAS, Purchaser desires to acquire the Company through the merger of
the Company with and into Merger Sub (the "MERGER"), with Merger Sub being the
surviving corporation of the Merger, pursuant to which all Company Shares (as
defined below) of the Company issued and outstanding at the Effective Time (as
defined below), will be converted into the right to receive the Merger
Consideration (as defined below), each as more fully provided herein.
WHEREAS, the Shareholders own all of the currently issued and
outstanding Company Shares.
WHEREAS, the Company desires to be merged with and into Merger Sub and
that the Shareholders shall be entitled to receive the Merger Consideration in
exchange for their Company Shares.
WHEREAS, the respective boards of directors of Purchaser, Merger Sub
and the Company, and the Shareholders of Company, have determined that the
Merger is desirable and in the best interests of their respective shareholders
and, by resolutions duly adopted, have approved and adopted this Agreement.
WHEREAS, the Parties intend that the Merger qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the parties intend this Agreement to
qualify as a "plan of reorganization" within the meaning of Treasury Regulation
Sections 1.368-2(g) and 1.368-3(a).
WHEREAS, Purchaser, Merger Sub and the Company are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by the provisions of Section 4(2) of the Securities Act of
1933, as amended (the "SECURITIES ACT").
WHEREAS, the Parties have agreed that Purchaser shall be entitled to
consolidate the results of operations and balance sheet of the Company from
April 1, 2006 going forward until closing.
NOW, THEREFORE, in consideration of the premises and the mutual and
dependent promises hereinafter set forth, the Parties hereby agree as follows:
AGREEMENT
The Parties, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article I:
"2005 BALANCE SHEET" - the Company's audited balance sheet as of
December 31, 2005.
"AFFILIATE" - an "AFFILIATE" of any Person means any family member of
an individual, and any other Person directly or indirectly controlling,
controlled by or under common control with, the referenced Person or (if
applicable) a family member of the referenced Person, and also means any
director, officer, partner, manager, executor, trustee or similar individual of
such other Person.
"AGREEMENT" - this Agreement and Plan of Merger, including the exhibits
and schedules thereto, and the Disclosure Schedule.
"AUDIT EXPENSE" shall mean the cost incurred by the Company in
connection with the audit of the Audited Financial Statements to be performed by
Xxxxxxxx Xxxxxxxx Xxxxxxx LLP.
"AUDITED FINANCIAL STATEMENTS" - (i) the audited balance sheets of the
Company as of December 31, 2004 and December 31, 2005, and the related audited
statements of income, cash flow and equity and notes thereto for the twelve (12)
month periods then ended.
"BREACH" - a "BREACH" of a representation, warranty, covenant,
obligation or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been any inaccuracy in or breach of, or any failure to perform or comply with
such representation, warranty, covenant, obligation or other provision.
"COMPANY INDEBTEDNESS" - all of the Company's (a) indebtedness for
borrowed money (including, without limitation, all principal, accrued interest,
applicable prepayment charges or premiums with respect to notes payable,
mortgages, term loans, revolver borrowings or other similar obligations and any
charges or premiums payable in respect of the cancellation or termination of any
outstanding interest rate swap agreements or similar arrangements), (b)
capitalized lease obligations and equipment loans; (c) guarantees and letters of
credit and (d) installment or deferred payment contracts.
"COMPANY SHARE" - each share of common stock, without par value, of the
Company, which is issued and outstanding immediately prior to the Effective
Time.
"CONTEMPLATED TRANSACTIONS" - all of the transactions contemplated by,
or to be delivered in accordance with the terms of this Agreement, including,
without limitation: (a) the Merger and (b) the performance by the Parties of
their respective covenants and obligations under this Agreement.
"COPYRIGHTS" - any original work of authorship, published or
unpublished, and any United States or foreign copyright, and any registration
thereof and applications therefore, including any renewal or extension thereof
and any right corresponding thereto in both published and unpublished works
throughout the world, that is owned by, used by or licensed to the Company in
connection with the conduct of its respective business of any nature whatsoever.
"EMPLOYEE BENEFIT PLAN" - any employee benefit plan (as defined in
Section 3.3 of ERISA), or any employment contract, employee loan, incentive
compensation, profit sharing, retirement, pension, deferred compensation,
severance, change of control, termination, pay, stock option or purchase plan,
guaranteed annual income plan, fund or arrangement, payroll incentive, policy,
fund, agreement or arrangement, consulting agreement, hospitalization,
disability, life or other insurance plan, or other employee fringe benefit
program or plan, or any other plan, payroll practice, policy, fund, agreement of
arrangement similar to or in the nature of the foregoing, oral or written.
"ENCUMBRANCE" - any charge, claim, condition, equitable interest, lien,
option, pledge, security interest, right of first refusal, or restriction of any
kind, including any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.
"ENVIRONMENT" - soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwater, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL LIABILITIES" - any cost, damage, expense, Liability,
obligation or other responsibility arising from or under any Environmental Law
and consisting of or relating to:
(a) any environmental matters or conditions (including on-site or
off-site contamination, and regulation of chemical substances or products or
Hazardous Materials);
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(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial or inspection costs and expenses arising under any
Environmental Law;
(c) financial responsibility under any Environmental Law for cleanup
costs or corrective action, including any investigation, cleanup, removal,
containment, or other remediation or response actions ("CLEANUP") required by
applicable Environmental Laws (whether or not required or requested by any
Governmental Body); or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law.
The terms "REMOVAL," "REMEDIAL," and "RESPONSE ACTION," mean the types
of activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended
("CERCLA").
"ENVIRONMENTAL LAW" - any Legal Requirement that requires or relates
to:
(a) advising appropriate authorities, employees or the public of
intended or actual Releases of Hazardous Materials, violations of discharge
limits, or other prohibitions and of the commencement of activities, such as
resource extraction or construction, that could have significant impact on the
Environment;
(b) preventing or reducing to acceptable levels the release of
Hazardous Materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing
the hazardous characteristics of wastes that are generated;
(d) protecting resources, species or ecological amenities;
(e) reducing to acceptable levels the risks inherent in the
transportation of Hazardous Materials or other potentially harmful substances;
(f) cleaning up Hazardous Materials that have been released,
preventing the threat of release, or paying the costs of such Cleanup or
prevention; or
(g) making responsible parties pay private parties, or groups of
them, for damage done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"ERISA" - the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"FACILITIES" - any real property, leaseholds or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures or equipment (including motor vehicles and rolling stock)
currently or formerly owned or operated by the Company.
"GAAP" - generally accepted United States accounting principles,
consistently applied.
"GOVERNMENTAL AUTHORIZATION" - any approval, consent, license, permit,
waiver or other authorization issued, granted, given or otherwise made available
by or under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"GOVERNMENTAL BODY" - any: (a) nation, state, county, city, town,
village, district or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal); (d)
multi-national organization or body; or (e) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature.
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"HARDWARE" - any mainframe, midrange computer, personal computer,
notebook or laptop computer, server, storage, switch, printer, modem, driver,
peripheral, point of sale terminals, kiosks and handheld scanners or any
component of any of the foregoing, that is used, developed, sold, distributed or
marketed by the Company in the conduct of its business of any nature whatsoever.
"HAZARDOUS ACTIVITY" - the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation or thing that creates an endangerment to public
health or the environment, or poses an unreasonable risk of harm to persons or
property on or off the Facilities, or that may affect the value of the
Facilities or the Company.
"HAZARDOUS MATERIALS" - any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"INTELLECTUAL PROPERTY RIGHTS" - all (i) Patents, (ii) Inventions,
(iii) Copyrights, (iv) Trademarks, (v) Trade Secrets, (vi) income, royalties,
damages and payments now or hereafter due or payable with respect to any of the
foregoing, (vii) right to xxx for past, present or future infringement,
misappropriation, or improper, unlawful or unfair use of any of the foregoing,
and (viii) rights of the Company under all contracts related to any of the
foregoing.
"INVENTIONS" - any idea, design, concept, technique, methodology,
process, invention, discovery, or improvement, whether or not patentable, any
invention disclosure or similar disclosure of any of the foregoing, and any shop
rights in any of the foregoing, that are owned by, used by or licensed to the
Company in connection with the conduct of its respective business of any nature
whatsoever.
"IRC" - the Internal Revenue Code of 1986, as amended, or any successor
law, and regulations issued by the United States Internal Revenue Service
pursuant to the Internal Revenue Code or any successor law.
"KNOWLEDGE" - the actual knowledge of any officer or director of the
Company or its affiliates, and any matter that reasonably would be expected to
be known by any such person had he or she performed the customary duties of a
person holding his or her title with the Company or its affiliates.
"LEGAL REQUIREMENT" - any federal, state, local, municipal, foreign,
international, multinational or other administrative order, constitution, law,
statute, ordinance, principle of common law, regulation, statute or treaty.
"LIABILITIES" - responsibilities, obligations, duties, commitments,
claims and liabilities of any and every kind, whether known or unknown, accrued,
absolute, contingent or otherwise.
"MARKET PRICE" shall mean the average VWAP per share of the Common
Stock of the Purchaser, as traded on the NASD OTC Bulletin Board or any other
National Securities Exchange, for the five (5) trading days immediately
preceding the Closing Date.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" - when used in
connection with a Party means any change, event, violation, inaccuracy or
circumstance the effect of which, individually or in the aggregate, is both
material and adverse to (A) the property, business, operations, customer
relationships, assets (tangible and intangible) or financial condition of such
Party and its parent or subsidiaries, or (B) the ability of such Party to
perform any of its material obligations under this Agreement or any other
documents contemplated by the Agreement to which it is a party; provided,
however, that terms "Material Adverse Effect" and "Material Adverse Change"
shall not be deemed to include (a) a change or effect with respect to a Party
that results from economic or political conditions or events affecting the
United States economy or world economy; (b) with respect to the Company, any
change or effect resulting from any termination of a current or prospective
customer, supplier or vendor relationship that is attributable to the
announcement of this Agreement or the Merger or the transactions contemplated
hereby or thereby; (c) with respect to any Party, any change or effect resulting
from any breach of any representation, warranty, covenant or agreement contained
in this Agreement of another Party; or (d) the performance of the Party's
obligations hereunder.
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"NATIONAL SECURITIES EXCHANGE" shall mean the individual and collective
reference to the New York Stock Exchange, the AMEX, the Nasdaq Stock Market, and
the NASD OTC-Bulletin Board.
"ORDER" - any award, decision, injunction, judgment, order, ruling,
subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other Governmental Body or by any arbitrator.
"ORGANIZATIONAL DOCUMENTS" - the articles or certificate of
incorporation and the bylaws or code of regulations of a corporation and any
amendments thereto.
"PARTIES" - Purchaser, Merger Sub, the Company, the Shareholders and,
for purposes of Sections 4 and 5, Principal Shareholders, collectively.
"PATENTS" - any United States or foreign utility or design patent,
together with any extension, reexamination and reissue of such patents, patent
of addition, patent application, division, continuation, continuation-in-part,
and any subsequent filing in any country or jurisdiction claiming priority
therefrom, owned by, used by or licensed to the Company in connection with the
conduct of its respective business of any nature whatsoever.
The "PAYOUT RATIO" for any Shareholder shall be equal to the quotient
of (x) the number of Company Shares held by such Shareholder, divided by (y) the
total number of Company Shares held by all Shareholders outstanding immediately
prior to the Effective Time.
"PERMITTED ENCUMBRANCES" - (a) liens for taxes, assessments and other
governmental charges not yet due and payable or being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and for
which reasonable reserves have been established, (b) statutory, mechanics',
laborers' and materialmen's liens arising in the ordinary course of business for
sums not yet due, (c) statutory and contractual landlord's liens under leases
pursuant to which the Company is a lessee and not in default, and (d) liens
arising out of the SBA loan.
"PERSON" - any individual, corporation (including any non-profit
corporation), general or limited partnership, Limited Liability Company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PLAN" - any Employee Benefit Plan with respect to which the Company
currently is, or during the six-year period preceding the date hereof has been,
the sponsor, a party or obligated to make contributions.
"PROCEEDING" - any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, investigative or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PURCHASER SHARE CONSIDERATION AMOUNT" for any Shareholder shall be
equal to: (1) the Merger Consideration, multiplied by (2) the Payout Ratio; less
(3) such Shareholder's portion of the Cash Consideration, as calculated pursuant
to Section 2.7(a)(i) and(ii) below; less (4) the amount of such Shareholder's
Employee Tax Withholding, if any. In the event that any Employee Tax Withholding
amount is deducted, Purchaser shall cause the Surviving Corporation to promptly
and timely remit such Employee Tax Withholding amount to the applicable Tax
authority and to indemnify the respective Shareholder with respect to same.
"RELEASE" - any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping or other releasing into the Environment, whether
intentional or unintentional.
"REPAID INDEBTEDNESS" - certain Company Indebtedness included on the
2005 Balance Sheet as set forth on SCHEDULE B attached hereto.
"REPRESENTATIVE" - with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor or other representative of such
Person, including legal counsel, accountants and financial advisors.
"THREAT OF RELEASE" - a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
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"TRADEMARKS" - any unregistered trademark or service xxxx in the United
States or any foreign jurisdiction; any trademark or service xxxx registered in
the United States or any foreign jurisdiction or under any multinational
trademark authority and any applications therefor; any trade name, brand name,
product identifier, certification xxxx, logo, trade dress, and Internet domain
name, and any registration thereof or application therefor in the United States
or any foreign jurisdiction, including any extension, modification or renewal of
any such registration or application, and all goodwill associated with all of
the foregoing throughout the world, owned by, used by or licensed to the Company
in connection with the conduct of its respective business of any nature
whatsoever.
"TRADE SECRETS" - any trade secret, know-how, formula, specification,
technical information, data, process, technology, plans, drawing (including
engineering and CAD drawings), research and development, proprietary
information, blueprint, and all documentation related to any of the foregoing,
except for any such item that is generally available to the public as of the
Effective Date, owned, used or licensed by the Company in connection with the
conduct of its respective business of any nature whatsoever.
"TRANSACTION EXPENSES" - all out of pocket, third-party costs and
expenses incurred by the Company in connection with this Agreement and the
Contemplated Transactions that have not yet been paid by the Company as of the
Closing and which will be paid by the Surviving Corporation after the Closing,
as set forth on SCHEDULE B attached hereto.
"VWAP" shall mean the daily volume weighted average price of the
Purchaser's common stock on the National Securities Exchange, as reported by
Bloomberg Financial L.P (based on a trading day from 9:30 a.m. Eastern Time to
4:00 p.m. Eastern Time) using the VWAP function on the date in question.
ARTICLE II
THE MERGER
SECTION 2.1 TERMS OF MERGER.
Subject to the terms and conditions of this Agreement and in accordance with the
Ohio General Corporation Law (the "OGCL") and the New Jersey Business
Corporation Act (the "NJBCA") at the Effective Time, the Company will be merged
with and into Merger Sub, the separate existence of the Company will cease, and
Merger Sub will continue as the surviving corporation under the same name
"Thinkpath, Inc."
SECTION 2.2 EFFECT OF MERGER.
The Merger will have the effects set forth in Section 1701.82 of the OGCL.
SECTION 2.3 ARTICLES OF INCORPORATION; CODE OF REGULATIONS.
At the Effective Time, the Articles of Incorporation and the Code of Regulations
of Merger Sub, including all amendments thereto made prior to or as of the
Effective Time, will remain the Articles of Incorporation and the Code of
Regulations of the Surviving Corporation.
SECTION 2.4 DIRECTORS.
Each person serving as a director of the Company immediately prior to the
Effective Time shall cease to be a director of the Company at and as of the
Effective Time. Each person serving as a director of Merger Sub immediately
prior to the Effective Time shall remain a director of the Surviving Corporation
at and as of the Effective Time, to hold office in accordance with the Articles
of Incorporation and the Code of Regulations of the Surviving Corporation until
his successor is duly elected or appointed and qualified or until his earlier
death, resignation or removal.
SECTION 2.5 OFFICERS.
Each person serving as an officer of the Company immediately prior to the
Effective Time shall cease to be an officer of the Company at and as of the
Effective Time. Each person serving as an officer of Merger Sub immediately
prior to the Effective Time shall remain an officer of the Surviving Corporation
at and as of the Effective Time, holding the same office or offices of the
Surviving Corporation as the office or offices of Merger Sub which such person
held immediately before the Effective Time, to serve in such office or offices
at the pleasure of the Board of Directors of the Surviving Corporation.
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SECTION 2.6 EFFECT OF MERGER ON CAPITALIZATION OF THE COMPANY AND MERGER SUB.
At the Effective Time, by virtue of the Merger and without any action on the
part of any of the Parties or any other Person:
(a) Each Company Share shall be canceled and extinguished and
automatically converted at the Effective Time into the right of the record
holder thereof to receive from the Purchaser, in accordance with the terms and
conditions of this Agreement, the share, form and amount of the Merger
Consideration set forth for each Shareholder on the Payout Spreadsheet, and as
calculated and determined pursuant to Section 2.7 below, upon surrender to the
Surviving Corporation at the Closing of the certificate representing such
Company Share endorsed and otherwise in proper form for transfer to the
Surviving Corporation free of any Encumbrances and together with such other
documents, endorsements and assurances as may be required by Purchaser. All
Company Shares shall cease to be outstanding and shall automatically be canceled
and retired and cease to exist at the Effective Time, and each holder of a
certificate representing one or more Company Shares shall cease to have any
rights with respect thereto, except the right to receive such Shareholder's
portion of the Merger Consideration with respect to such Company Shares upon the
surrender of the certificate representing such Company Shares as provided
herein.
(b) Any Company Shares that are owned by the Company shall at the
Effective Time be canceled and retired and shall cease to exist and no cash or
otherconsideration shall be delivered or deliverable in exchange therefor.
(c) Each common share, without par value, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall remain a validly
issued, fully paid and nonassessable common share, no par value, of the
Surviving Corporation and shall not be affected by the Merger.
(d) If certificates representing outstanding Company Shares shall be
lost, stolen or destroyed, Purchaser shall determine the the type of additional
documents, information and assurances that may be requested in order to protect
the Surviving Corporation and Purchaser from other possible claimants with
respect to such Company Shares. No bond shall be required in connection lost
certificates. If any Merger Consideration is to be issued in a name other than
that in which the certificate surrendered in exchange therefore is registered,
it shall be a condition of the issuance thereof that the certificate so
surrendered is properly endorsed and otherwise in proper form for transfer and
that the person requesting such exchange will have paid to Purchaser any
transfer or other Taxes required by reason of the issuance of a certificate for
shares of Purchaser's common stock in any name other than that of the registered
holder of the certificate surrendered, or established to the satisfaction of
Purchaser that such Tax has been paid or is not payable.
SECTION 2.7 PAYMENT OF THE MERGER CONSIDERATION.
The aggregate consideration payable to all Shareholders with respect to their
Company Shares shall be calculated at five (5) times audited 2005 EBIT of the
Company, plus certain agreed-upon adjustments identified in Schedule C attached
hereto, less the Transaction Expenses (the "MERGER CONSIDERATION").
(a) The Merger Consideration shall be payable to each Shareholder as
follows:
(i) Thirty (30%) percent of the Merger Consideration in
cash (the "CASH CONSIDERATION") multipled by such
Shareholder's Payout Ratio, with an additional
adjustment reducing the cash payable to Xxxxxxx X.
Xxxxxxx by $100,000 and increasing the cash payble to
Xxxxx X. XxXxxxxxxx and Xxxxx X. Xxxxxxx by $50,000
each;
(ii) a non-negotiable two (2) year subordinated note
issued by Merger Sub bearing annual interest at US
prime, payable quarterly, and guaranteed by the
Purchaser after the Effective Time, each in
substantially in the form attached hereto as EXHIBIT
A (each a "NOTE," and, collectively, the "NOTES"),
the principal amount of which Note shall be equal to
20% of the Merger Consideration multiplied by such
Shareholder's Payout Ratio;
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(iii) a number of Purchaser's common shares (each a
"PURCHASER COMMON SHARE," and collectively, the
"PURCHASER COMMON SHARES") equal to such
Shareholder's Purchaser Share Consideration Amount;
(1) multiplied by 50%, divided by (2) the Market
Price. A portion of the Purchaser Common Shares shall
be made part of the Escrow Shares as defined in
Section 3.3 below.
(iv) 700 shares of Series C Preferred Stock (each a
"PURCHASER PREFERRED SHARE," and collectively, the
"PURCHASER PREFERRED SHARES" and with the Purchaser
Common Shares, the "PURCHASER SHARES") each Purchaser
Preferred Share having a liquidation value equal to
$1,000 convertible into Common Shares as set forth in
the Certificate of Designation. A portion of the
Purchaser Preferred Shares shall be made part of the
Escrow Shares as defined in Section 3.3 below. Such
Preferred Purchaser Shares shall have the rights,
privileges and designations more fully set forth in
that Certificate of Designation attached hereto as
EXHIBIT B, but such Preferred Shares shall entitle
the holder at his/her option to convert the Preferred
Shares into Common Stock after one year based on the
Market Price at the time of conversion .
(b) Prior to Closing, the Company shall provide to Purchaser a
schedule containing the calculation of the payments by type and amount to the
Shareholders, which schedule shall be subject to the review and approval of the
Purchaser. Following agreement of the Parties on such schedule, it shall be
attached hereto as an addendum to Schedule 2.7(b) (the "PAYOUT SPREADSHEET"),
and the parties shall be entitled to rely on the Payout Spreadsheet. In the
event of any conflict between Section 2.7(a) and the Payout Spreadsheet, the
Payout Spreadsheet shall control.
ARTICLE III
CLOSING AND CLOSING DELIVERIES
SECTION 3.1 CLOSING.
The Contemplated Transactions shall be consummated at the closing (the
"CLOSING") simultaneously with the execution hereof, at the offices of Xxxxxxx
Savage LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000 at 11:00 a.m.
Eastern Standard Time on June 29, 2006 or at such other time, date or place as
may be mutually agreed in writing by the Parties (the "CLOSING DATE").
Immediately following the Closing, the Parties will cause the Merger to be
consummated by filing (i) a Certificate of Merger consistent with the terms of
this Agreement with the Secretary of State of Ohio, in such form as is required
by, and executed by the required Parties in accordance with, the OGCL (the
"CERTIFICATE OF MERGER"), and (ii) Articles of Merger consistent with the terms
of this Agreement with the Secretary of State of New Jersey in such form as is
required by, and executed by the required Parties in accordance with, the NJBCA
(the "ARTICLES OF MERGER"), in the forms attached hereto as EXHIBIT C-1 and
EXHIBIT C-2. The date and time of the filing and acceptance of such Certificate
of Merger and Articles of Merger, whichever is later, or such other time
subsequent thereto as may be mutually agreed by the Company and Purchaser and
specified in the Certificate of Merger and Articles of Merger, shall be the
effective time of the Merger (the "EFFECTIVE TIME").
SECTION 3.2 CLOSING DELIVERIES.
The transfers and deliveries described in this Section 3.2 shall be mutually
interdependent and shall be regarded as occurring simultaneously, and, any other
provision of this Agreement notwithstanding, no such transfer or delivery shall
become effective or shall be deemed to have occurred until all of the other
transfers and deliveries provided for in this Section 3.2 shall also have
occurred or been waived by the Party or Parties entitled to waive the same. At
or prior to the Closing:
(a) The Company will deliver, or will cause to be delivered, to Purchaser the
following:
(i) the Certificate of Merger and Articles of Merger,
each duly executed by the Company;
(ii) the certificates representing all of the outstanding
Company Shares, with such accompanying documents,
endorsements and assurances as may be reasonably
required by Purchaser;
(iii) resignations of each of the directors and officers of
the Company;
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(iv) a certificate of the Secretary of the Company as to
the incumbency and authority of any Person executing
and delivering on behalf of the Company this
Agreement or any other document or instrument
required to be delivered by the Company hereunder,
and setting forth copies of the resolutions approving
this Agreement and the Contemplated Transactions
which were duly adopted by the Board of Directors and
the Shareholders of the Company and a statement of
the date and manner of such adoption by the Board of
Directors and the Shareholders of the Company;
(v) a certificate of the Secretary of the Company setting
forth the number of Company Shares outstanding and
entitled to vote upon the approval of this Agreement
and the Contemplated Transactions and the results of
the vote;
(vi) certificates of good standing, dated not more than
five (5) days prior to the Closing Date, as to the
corporate existence and good standing of the Company
in New Jersey and each state or other jurisdiction in
which it is qualified to do business;
(vii) all consents and approvals of all Persons and
Governmental Authorities listed on Schedule
3.2(a)(vii) attached hereto that are necessary for
the Surviving Corporation to operate the business of
Sellers as heretofore conducted and as may be
necessary for the assumption by the Surviving
Corporation of the Contracts;
(viii) a legal opinion of X'Xxxxxxx-Xxxxxxxxxx as counsel to
the Company, reasonably satisfactory to Purchaser and
its counsel;
(ix) the Escrow Shares; and
(x) any and all other documents required by the terms of
this Agreement to be delivered at the Closing by any
Shareholder or the Company.
Any agreement or document to be delivered to Purchaser pursuant to this Section
3.2(a), the form of which is not attached to this Agreement as an exhibit, shall
be in form and substance reasonably satisfactory to Purchaser.
(b) Purchaser will deliver the following:
(i) the Certificate of Merger and Articles of Merger,
each duly executed by Purchaser and Merger Sub;
(ii) the Cash Consideration;
(iii) the Notes, duly executed by Purchaser;
(iv) certificates representing the Purchaser Shares
recorded in the name of the Shareholders as set forth
on SCHEDULE A; and
(v) the Employment Agreements duly executed by Purchaser;
Any agreement or document to be delivered to the Shareholders pursuant to this
Section 3.2(b), the form of which is not attached to this Agreement as an
exhibit, shall be in form and substance reasonably satisfactory to the Company.
SECTION 3.3 ESCROW. As soon as practicable after the Effective Time, and subject
to and in accordance with the provisions of Article VIII, Purchaser will cause
to be deposited with the escrow agent (the "ESCROW AGENT") a certificate or
certificates evidencing twelve and one-half percent (12.5%) of the number of
shares of Purchaser Shares to be issued under Section 2.7(a)(iii) and (iv) (the
"ESCROW SHARES"). All such certificates deposited with Escrow Agent will be
registered in the name of Escrow Agent as nominee for the holders of
certificates canceled under this Section 3.3, which holders will beneficially
own such Escrow Shares and be entitled to vote such Escrow Shares. The Escrow
Shares will be held in escrow and will be available to compensate Purchaser for
certain of the damages as provided in Article VIII. To the extent that they are
not used for such purpose, such Escrow Shares will be released on the date that
is one (1) year after the Effective Time.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Except as set forth in the schedules to this Agreement, disclosure in any one of
which shall apply to any and all representations and warranties made in this
Agreement, and except as otherwise disclosed in writing to Purchaser, the
Shareholders hereby jointly and severally represent and warrant to Purchaser and
Merger Sub, as of the date of this Agreement and as of the Effective Time, as
follows:
SECTION 4.1 AUTHORITY AND CAPACITY.
Such Shareholder possesses all requisite power, authority and legal capacity to
execute, deliver and perform this Agreement and each other agreement, instrument
and document to be executed and delivered by or on behalf of such Shareholder in
connection with any Contemplated Transaction.
SECTION 4.2 OWNERSHIP OF SHARES.
Such Shareholder owns all of such Shareholder's Company Shares free and clear of
all Encumbrances.
SECTION 4.3 EXECUTION AND DELIVERY; ENFORCEABILITY.
This Agreement has been, and each other document, instrument or agreement to be
executed and delivered by such Shareholder in connection herewith will upon such
delivery be, duly executed and delivered by such Principal Shareholder and
constitutes, or will upon such delivery constitute, the legal, valid and binding
obligation of such Shareholder, enforceable in accordance with its terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights or by principles of equity, provided, however,
that the Certificate of Merger will not be effective until filed with the Ohio
Secretary of State and the Ohio Secretary of State has issued a receipt
acknowledging acceptance and approval of the certificate of merger in response
thereto and the Articles of Merger will not be effective until the Articles of
Merger have been filed with the New Jersey Secretary of State and the New Jersey
Secretary of State has issued a certificate of merger in response thereto.
SECTION 4.4 NONCONTRAVENTION.
Such Shareholder is not required to submit any notice, report or other filing
with any Governmental Authority in connection with such Shareholder's execution,
delivery or performance of this Agreement or any other document, instrument or
agreement to be executed and delivered by such Shareholder in connection
herewith. Such Shareholder's execution, delivery and performance of this
Agreement will not violate, breach or conflict with any Legal Requirement by
which such Shareholder is bound or any agreement to which such Shareholder is a
party, and, to the knowledge of such Shareholder, no consent, approval or
authorization of any Governmental Authority or any other Person is required to
be obtained by such Shareholder in connection with such Shareholder's execution,
delivery and performance of this Agreement or any other document, instrument or
agreement to be executed and delivered by such Shareholder in connection with
any Contemplated Transaction.
SECTION 4.5 BROKERAGE.
No Person is or will become entitled, by reason of any agreement or arrangement
entered into or made by or on behalf of such Shareholder, to receive any
commission, brokerage, finder's fee or other similar compensation with respect
to such Shareholder's Company Shares in connection with the consummation of the
Contemplated Transactions.
SECTION 4.6 EXCULPATION AMONG SHAREHOLDERS.
Each Shareholder acknowledges that it is not relying upon any other Shareholder
in making its decision to enter into this Agreement or any of the Contemplated
Transactions. Each Shareholder agrees that no other Shareholder shall be liable
for any action heretofore or hereafter taken or omitted to be taken by any of
them in their capacity as a Shareholder relating to or in connection with this
Agreement or the Contemplated Transactions except in the case of fraud.
SECTION 4.7 RELIANCE BY THE PURCHASER.
Such Shareholder understands and acknowledges that neither the Purchaser Shares
nor the Notes to be issued to such Shareholder will be registered under the
Securities Act in reliance upon the exemption from registration provided by
Section 4(2) of the Securities Act. Such Shareholder further acknowledges and
agrees that the representations and warranties contained in this Article IV, as
well as the information previously provided to Purchaser in such Shareholder's
investor suitability questionnaire, are being relied upon by the Purchaser in
connection with such determination.
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SECTION 4.8 DISCLOSURE INFORMATION.
Prior to the date hereof, such Shareholder was provided with a copy of the
Agreement, as well as the Company's Form 10-K for the year ended December 31,
2005 and the Company's Form 10-Q for the quarter ended March 31, 2006
(collectively, the "DISCLOSURE INFORMATION"). Such Shareholder has read the
Disclosure Information and such Shareholder, to the extent that such Shareholder
concluded necessary, consulted with counsel or advisers regarding the contents
of the Disclosure Information. Such Shareholder acknowledges that he or she has
had an opportunity to ask questions and receive answers to such questions
regarding the terms and conditions of this Agreement and the Contemplated
Transactions, including, without limitation, the terms and conditions of the
Cash Consideration, the Purchaser Shares and Notes that will be issued to such
Shareholder pursuant to this Agreement, as well as information regarding the
business, properties, prospects and financial condition of Purchaser and Merger
Sub and the terms of the Contemplated Transactions.
SECTION 4.9 ACCREDITED INVESTOR REPRESENTATION.
Such Shareholder understands and accepts that he or she may be required to hold
his or her Purchaser Shares and Note indefinitely, to the extent required by the
Securities Act. Such Shareholder further represents and warrants that he or she
has such knowledge and experience in financial and business matters so as to
enable him or her to understand the merits and risks involved in acquiring the
Purchaser Shares and Notes (and the other terms of the Contemplated
Transactions, including such person's indemnification obligations) and is able
to bear the economic risk of an investment in the Purchaser Shares and Notes for
an indefinite period of time and can afford the complete loss of his or her
proposed investment in the Purchaser Shares and Notes.
SECTION 4.10 RESTRICTIONS ON PURCHASER SHARES AND NOTES.
Such Shareholder will acquire the Purchaser Shares and Note to be received by
such Shareholder under this Agreement for such Shareholder's own account and not
with a view to, or for resale in connection with, the distribution thereof and
such Shareholder has no present intention of selling, granting any participation
in, or otherwise distributing the Purchaser Shares or Note except in conformity
with the Securities Act and other applicable federal and state securities laws
and in respect with (collectively, the "SECURITIES LAWS").
Such Shareholder understands and agrees that all the Purchaser Shares and Notes
will constitute "restricted securities" under the Securities Laws inasmuch as
they are being delivered by Purchaser in a transaction not involving a public
offering and that, consequently, the Purchaser Shares and Notes may not be
resold without first being registered under the Securities Laws or only in
certain limited circumstances. Specifically, such Shareholder is familiar with
Securities and Exchange Commission (the "SEC") Rule 144 and understands, and
agrees to comply with, the resale limitations imposed thereby and by the
Securities Laws generally; provided, however, that if a different resale
exemption is available to such Shareholder at the federal level, such
Shareholder need not comply with or rely upon SEC Rule 144.
Each Shareholder understands and agrees that the certificates issued to such
Shareholder representing the Purchaser Shares and the Notes all will bear any
legend required by the Securities Laws, as well as the following legend:
"These securities have not been registered under the Securities Act of
1933, as amended (the "Act") or under any state securities laws and
have been issued and sold in reliance upon an exemption from
registration under the Act. These securities may not be sold, offered
for sale, pledged, hypothecated or otherwise transferred in the
absence of an effective registration statement under the Act or an
opinion of counsel, reasonably satisfactory to the issuer of these
securities, to the effect that such a registration statement is
unnecessary in respect of a particular sale, offer, pledge,
hypothecation or other transfer."
The foregoing legend will be removed from a certificate at the request of such
Shareholder (or the request of any person to whom any such Shareholder has
transferred shares in conformity with this Agreement) in connection with the
proposed transfer of Purchaser Shares or Notes only upon either the
effectiveness of such a registration statement or receipt by Purchaser of an
opinion of counsel, reasonably satisfactory to Purchaser, to the effect that
registration under the Securities Act is unnecessary in respect of the proposed
transfer and that such legend is not required by law to appear on the
certificate.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE PRINCIPAL SHAREHOLDERS
Except as set forth in the schedules to this Agreement, disclosure in any one of
which shall apply to any and all representations and warranties made in this
Agreement, and except as otherwise disclosed in writing to Purchaser, the
Company and the Principal Shareholders hereby jointly and severally represent
and warrant to Purchaser and Merger Sub, as of the date of this Agreement and as
of the Effective Time, as follows:
SECTION 5.1 ORGANIZATION AND GOOD STANDING.
(a) The Company is a corporation duly organized, validly existing, and in good
standing under the laws of New Jersey, with requisite corporate power and
authority to conduct its business as it is now being conducted and to own or use
the properties and assets that it purports to own or use. The Company is duly
qualified to do business and is in good standing under the laws of each
jurisdiction where such qualification is required, each of which is listed in
Section 5.1(a) of the Disclosure Schedule, except where lack of such
qualification would not have a Material Adverse Effect on the Company. The
Company has no direct or indirect subsidiaries, does not own any equity
ownership interest in any other corporation, partnership, limited liability
company, trust or other business entity, and is not a member of any other joint
venture.
(b) The Company has delivered to Purchaser copies of the Organizational
Documents of the Company and its subsidiaries, if any, as in effect on the date
of this Agreement.
SECTION 5.2 AUTHORITY; NO CONFLICT.
(a) This Agreement has been, and each other document, instrument or agreement to
be executed and delivered by the Company in connection herewith will upon such
delivery be, duly executed and delivered by the Company and constitutes, or will
upon such delivery constitute, the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting enforcement of creditors' rights
or by principles of equity, provided, however, that the Certificate of Merger
will not be effective until filed with the Ohio Secretary of State and the Ohio
Secretary of State has issued a receipt acknowledging acceptance and approval of
the Certificate of Merger in response thereto and the Articles of Merger will
not be effective until the Articles of Merger have been filed with the New
Jersey Secretary of State and the New Jersey Secretary of State has issued a
certificate of merger in response thereto. The Company and the Principal
Shareholders have all necessary right, power, authority, and capacity to execute
and deliver this Agreement and to perform its obligations hereunder.
(b) This Agreement and the Contemplated Transactions have been duly authorized
and approved by the Company's Board of Directors and shall have been duly
authorized and approved prior to the Closing by the Shareholders in accordance
with all Legal Requirements, including the New Jersey Business Corporation Act
and the Company's Organizational Documents.
(c) Neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of any
provision of the Company's Organizational Documents;
(ii) conflict with any material Legal Requirements, or give any
Governmental Body or other Person the right to exercise any remedy or obtain any
relief under any Legal Requirement or any Order to which the Company or any of
its assets may be subject;
(iii) violate or conflict with any of the terms or requirements of,
any material Governmental Authorization that is held by the Company or that
otherwise relates to the business of, or any of the assets owned or used by, the
Company;
(iv) conflict with any provision of, or give any Person the right to
declare a default or to exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate or modify, any Contract; or
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(v) result in the imposition or creation of any Encumbrance, other
than Permitted Encumbrances, upon or with respect to any of the assets necessary
to the operation of the Company's business.
SECTION 5.3 CAPITALIZATION.
There are 1,000 Company Shares authorized, consisting of 1,000 shares of common
stock, without par value, 300 of which are issued and outstanding as of the date
hereof.
At the Closing, there will exist no contract (including any stock option,
warrant, convertible debt instrument, subscription agreement, shareholder
agreement, buy-sell agreement or other similar right, instrument or agreement)
relating to the prospective issuance, sale or transfer or prohibition on the
sale or transfer (including any right of first refusal) of the Company Shares,
and the Company does not have and will not have any Liability, whether fixed,
accrued or contingent, under any such contract or on account of the performance,
discharge, cancellation or termination thereof other than the payment of
applicable withholding Taxes upon the exercise of Company Options immediately
prior to the Closing. None of the Company Shares was issued or, since issuance,
to the Company's Knowledge, has been transferred, in violation of any securities
law or other material Legal Requirement, including any pre-emptive right, right
of first refusal or other similar right of any Person. The Company does not own,
or have any contract to acquire, any equity securities or other securities of
any Person or any direct or indirect equity interest or other ownership interest
in any other Person.
SECTION 5.4 FINANCIAL STATEMENTS AND FINANCIAL CONDITION.
The Company has delivered to Purchaser the Audited Financial Statements. All
such Audited Financial Statements were prepared from the Company's books and
records in all material respects in accordance with GAAP, consistently applied,
and present fairly the financial position, results of operations and cash flows
of the Company at the dates and for the periods indicated and comply in all
material respects with Regulation S-X. The books of account of the Company
accurately reflect in all material respects all items of income and expense
(including, but not limited to, accruals) and all assets and liabilities of the
Company in accordance with normal accrual accounting practices, subject to
customary year-end adjustments of a normal, recurring type which would not be
material in the aggregate. There exist no Liabilities of the Company, whether
the same are direct or indirect, whether arising under an agreement or contract
or otherwise, except (i) to the extent provided for or reserved against on the
2005 Balance Sheet, (ii) current Liabilities which have arisen in the ordinary
course of business consistent with past practice since the 2005 Balance Sheet,
or (iii) Liabilities occurring in the ordinary course of business not required
to be reflected on the 2005 Balance Sheet under GAAP.
SECTION 5.5 BOOKS AND RECORDS.
The Company has permitted Purchaser to examine the Company's books of account,
minute books, stock record books and other records and such documents contain
the Company's Organizational Documents as in effect on the date hereof and are
in all material respects a true and complete record of all material actions by
and meetings of the directors (and committees thereof) and shareholders of the
Company and accurately reflect all transactions referred to therein.
SECTION 5.6 TITLE TO PROPERTY; ENCUMBRANCES.
(a) Title. The Company does not own any real property. The Company owns all the
properties and assets (whether real, personal, or mixed and whether tangible or
intangible) that it purports to own, including all of the properties and assets
reflected on the 2005 Balance Sheet (except for personal property sold since the
date of the 2005 Balance Sheet in the ordinary course of business) free and
clear of all Encumbrances other than Permitted Encumbrances.
(b) Assets.
(i) The Company owns all of the assets (the "ASSETS") that it purports
to own free and clear of all Encumbrances other than Permitted Encumbrances.
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(ii) The Company has not granted any other Person any license, option
or other right in or to any of the Assets.
(iii) The Company is not subject to any legal or contractual
restriction that would prevent it from making available to any customer any of
its products (the "PRODUCTs").
(iv) None of the Assets owned by the Company is jointly owned between
the Company and any other Person.
(v) To the Knowledge of the Company, none of its employees has entered
into any contract that restricts or limits in any way the scope or type of work
in which the employee may be engaged or requires the employee to transfer,
assign or disclose information concerning his or her work to anyone other than
the Company.
(vi) To the Knowledge of the Company, none of its employees or
consultants: (A) has infringed the intellectual property, proprietary, or
contractual rights of any Person in the course of his or her work for the
Company or (B) is, or is currently expected to be, in default under any term of
any contract relating to any Intellectual Property Rights, or any
confidentiality agreement or any other contract or restrictive covenant relating
to the Intellectual Property Rights or any Asset.
(vii) No material Asset contains any third party source code governed
by an "open source" license (or similar license agreement) use of which
restricts free and unencumbered use of the Asset by the Company or would oblige
the Company to distribute source code for any Asset in the conduct of the
Company's business as it is currently conducted.
(viii) To the Knowledge of the Company, all works creations,
inventions, designs, developments, contributions or improvements made by any
employee or consultant of the Company, either alone or with third parties
(including but not limited to all works of authorship, inventions, materials,
documents, research, reports, software, databases, systems, applications,
presentations, textual works, technology, content, or audiovisual materials),
related to the business of the Company, and all Intellectual Property Rights
therein, are owned by the Company.
SECTION 5.7 ACCOUNTS RECEIVABLE.
The accounts receivable reflected on the 2005 Balance Sheet, and accounts
receivable arising after the date of the 2005 Balance Sheet (both subject to any
reserve set forth therein), are reflected on the books and records of the
Company and represent bona fide claims against debtors for sale and other
charges. The accounts receivable reflected on the 2005 Balance Sheet are stated
thereon in accordance with GAAP in all material respects. The Company has not
received written notice of any contest, claim or right of setoff with respect to
its accounts receivable, other than returns and discounts in the ordinary course
of business.
SECTION 5.8 CONDITION AND SUFFICIENCY OF ASSETS.
The equipment and other material assets owned or used by the Company are in good
operating condition, normal wear and tear excepted, to the Company's Knowledge,
do not require any special or extraordinary expenditures to remain in such
condition beyond maintenance and repairs in the ordinary course of business,
consistent with past practice, constitute all of the assets, of any nature
whatsoever other than real estate, sufficient to operate the Company's business
in the manner operated by the Company in accordance with past practices, and
include all of the operating assets of the Company other than real estate.
SECTION 5.9 TAXES.
(a) The Company has filed or caused to be filed, on a timely basis, all material
Tax Returns that are or were required to be filed by or with respect to it,
pursuant to applicable Legal Requirements relating to its assets, businesses,
operations or otherwise. All Tax Returns filed by the Company are true, correct
and complete in all material respects. The Company has paid, or made provision
for the payment of, all Taxes that have become due pursuant to those Tax Returns
or otherwise, or pursuant to any assessment received by the Company, except such
Taxes, if any, as are listed in Section 5.9 of the Disclosure Schedule and are
being contested in good faith and as to which adequate reserves (determined in
accordance with GAAP applied in a manner consistent with the Company's past
practices) have been provided on the 2005 Balance Sheet.
-14-
(b) The charges, accruals and reserves with respect to Taxes on the books of the
Company are adequate (determined in accordance with GAAP applied in a manner
consistent with the Company's past practices), are at least equal to the
Company's known liability for Taxes and do not include any accrued Tax refunds
or deferred tax assets. There exists no proposed Tax assessment against the
Company. All Taxes that the Company is or was required by Legal Requirements to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Body or other Person.
(c) The Company has satisfied the requirements of Section 280G(b)(5) of the IRC
with respect to all payments (including, without limitation, any bonus payments
or success fees) that the Company has made or is or may be obligated to make
that would, when taken together or singly, otherwise constitute an excess
parachute payment within the meaning of Section 280G of the IRC, and the Company
has taken all other action, and the employees of the Company have taken all
other action, necessary to avoid the loss of any Tax deduction with respect to
any such payment.
SECTION 5.10 OPERATIONS SINCE FINANCIAL STATEMENTS DATE
Since December 31, 2005 (the "BALANCE SHEET DATE"), except as contemplated by
this Agreement, the Company:
(i) has operated its businesses substantially as it was operated prior
to that date and only in the ordinary course;
(ii) has not declared or otherwise become liable with respect to any
dividend or distribution of cash, assets or capital stock;
(iii) has maintained or kept current its books, accounts, records,
payroll, and filings in the usual and ordinary course of business, consistent in
all material respects with past practice; and
(iv) has not made any capital expenditure, commitment or investment
other than in the ordinary course of business.
SECTION 5.11 EMPLOYEE BENEFITS.
A complete list of all Plans is set forth in Section 5.11 of the Disclosure
Schedule, and complete and correct copies of all written Plans, and amendments
thereto, accurate and complete written descriptions of each material unwritten
Plan, and summary plan descriptions have been made available to Purchaser.
SECTION 5.12 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
(a) The Company is in compliance with each Legal Requirement that is applicable
to it or to the conduct or operation of its business or the ownership or use of
any of its assets, except where the failure to do so would not, singly or in the
aggregate, have a Material Adverse Effect on the Company; and
(b) The Company has not received any written notice from any Governmental Body
regarding any actual, alleged, possible, or potential violation of, or failure
to comply with, any Legal Requirement.
(c) Section 5.12(c) of the Disclosure Schedule contains a complete and accurate
list of each material Governmental Authorization held by the Company that
relates to the operation of the business of, or to the ownership or use of any
of the assets owned or used by, the Company. Each Governmental Authorization
listed or required to be listed in Section 5.12(c) of the Disclosure Schedule is
valid and in full force and effect in all material respects. The Governmental
Authorizations listed in Section 5.12(c) of the Disclosure Schedule constitute
all of the Governmental Authorizations necessary to permit the Company to
conduct and operate its business in accordance with past practices and to permit
the Company to own and use its assets in the manner in which it currently owns
and uses such assets.
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SECTION 5.13 LITIGATION.
Except as set forth in Section 5.13 of the Disclosure Schedule, to the Knowledge
of the Company there are no actions, suits, arbitrations, proceedings,
investigations or claims of any kind whatsoever, at law or in equity, pending or
threatened, by or against the Company. To the Knowledge of the Company the
Company has not been named in any judgment, order or decree of any court or
other Governmental Body.
SECTION 5.14 ABSENCE OF CERTAIN CHANGES AND EVENTS.
Since the Balance Sheet Date, the Company has conducted its business only in the
ordinary course of business and there has not been any:
(a) change in the Company's authorized or issued capital stock; split,
combination or reclassification of the Company's capital stock; grant,
termination or cancellation of any stock option, stock appreciation right or
similar right or right to purchase shares of capital stock of the Company;
issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition by
the Company of any shares of any such capital stock; or declaration or payment
of any dividend or other distribution or payment in respect of shares of capital
stock;
(b) amendment to the Company's Organizational Documents;
(c) payment or increase by the Company of any bonuses, salaries, or other
compensation to any shareholder, director, officer, or employee, except in the
ordinary course of business, or, except as entered into pursuant to this
Agreement, entry into any employment, severance, or similar contract with any
director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits under, any profit
sharing, bonus, deferred compensation, savings, insurance, pension, retirement,
or other employee benefit plan for or with any employees of the Company;
(e) damage to or destruction or loss of any material asset or property of the
Company, whether or not covered by insurance;
(f) sale (other than sales of inventory in the ordinary course of business),
lease, or other disposition of any material asset or property of the Company or
mortgage, pledge, or imposition of any Encumbrance on any material asset or
property of the Company;
(g) acquisition (or agreement to acquire) by the Company of any other Person or
the assets or business operations of any Person by merger, consolidation,
purchase of stock or assets, or in any other manner;
(h) incurrence of any indebtedness for borrowed money by the Company, except for
lease obligations and trade payables incurred in the ordinary course of
business, the Audit Expense (which are to be assumed and paid by Purchaser to
the extent provided under Section 7.2), and expenses incurred in connection with
the Contemplated Transactions;
(i) payment, discharge or satisfaction of any material Liability by the Company,
except for (i) the payment, discharge or satisfaction of Liabilities in the
ordinary course of business, or (ii) the payment of the Repaid Indebtedness or
the Transaction Expenses;
(j) making of any loans, advances or capital contributions to, or investments
in, any other Person;
(k) other than this Agreement, entry into any agreement or arrangement
prohibiting or restricting the Company from freely engaging in any business;
(l) waiver, release, grant or transfer by the Company of any rights of material
value, or modification or change in any material respect of any existing
Contract, Governmental Authorization or other document affecting the Company,
other than in the ordinary course of business;
-16-
(m) entry into any new Contract except in the ordinary course of business or
material modification or termination of any existing Contract by the Company
except in the ordinary course of business;
(n) settlement or compromise by the Company of any Proceeding (whether or not
commenced prior to the date of this Agreement);
(o) change in the accounting methods used by the Company from those established
in connection with the Company's 2005 audit; or
(p) agreement, whether oral or written, by the Company to do any of the
foregoing.
SECTION 5.15 CONTRACTS.
Section 5.15 of the Disclosure Schedule (i) lists all of the currently effective
written agreements or binding oral agreements (ii) providing for annual payments
in excess of Five Thousand Dollars ($5,000) or (iii) which are necessary to the
operation of the business as currently conducted, to which the Company is a
party or by which any material assets of the Company are bound or subject,
including all amendments thereto (collectively, the "Contracts"), and (iv)
indicates what consents, approvals and notices are required for the Company to
transfer or assign, by operation of law or otherwise, the Contracts to the
Surviving Corporation. Correct and complete copies of each contract required to
be identified on Section 5.15 of the Disclosure Schedule, have been made
available to Purchaser. To the Company's Knowledge, all of the Contracts are in
full force and effect and are enforceable in accordance with their respective
terms. The Company has performed in all material respects all obligations
required to be performed by it pursuant to such Contracts, and there is no
existing or, to the Company's Knowledge, threatened default under, breach or
violation of any of such Contracts by any other party thereto.
SECTION 5.16 INSURANCE.
(a) Section 5.16(a) of the Disclosure Schedule contains an accurate and complete
list of all insurance policies currently owned, held by or applicable to the
Company (or its assets or business) since January 1, 2004. All such policies
required to be disclosed in Section 5.16(a) of the Disclosure Schedule are in
full force and effect, all premiums that are due and payable with respect
thereto have been paid, and no notice of cancellation or termination has been
received with respect to such policies. Such policies are valid, outstanding and
enforceable policies and will remain in effect after the Closing and the
applicable limits under such policies have not been exhausted.
(b) All policies to which the Company is a party or that provide coverage to the
Company, or any director or officer of the Company:
(i) are valid, outstanding, and enforceable;
(ii) are issued by an insurer that, to the Company's Knowledge, is
financially sound and reputable;
(iii) are in the amounts and of the types customarily carried by
Persons conducting business or owning assets similar to those of the Company;
(iv) will continue in full force and effect following the consummation
of the Contemplated Transactions, subject to renewal requirements and premium
payments in the ordinary course of business; and
(v) do not provide for retrospective premium adjustments or other
experience-based Liability on the part of the Company.
SECTION 5.17 ENVIRONMENTAL MATTERS.
(a) The Company is, and at all times has been, in material compliance with, and
has not been and is not in violation of or liable under, any Environmental Law.
The Company has not received any actual or threatened order, notice, or other
communication from any Governmental Body or other Person of any actual or
potential violation or failure to comply with any Environmental Law, or of any
actual or threatened obligation to undertake or bear the cost of any
Environmental Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which the Company has
or had an interest, or with respect to any property or Facility at or to which
Hazardous Materials were generated, manufactured, refined, transferred,
imported, used, or processed by the Company, or from which Hazardous Materials
have been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
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(b) There are no pending or, to the Knowledge of the Company, threatened claims,
Encumbrances (other than Permitted Encumbrances) or other restrictions of any
nature resulting from any Environmental Liabilities with respect to or affecting
any of the Facilities or any other properties or assets (whether real, personal,
or mixed) in which the Company has or had an interest.
(c) The Company has no Knowledge of nor has received any citation, directive,
inquiry, notice, Order, summons, warning, or other communication from a
Governmental Body or other Person that relates to Hazardous Activity, Hazardous
Materials, or any alleged, actual, or potential violation or failure to comply
with any Environmental Law, or of any alleged, actual, or potential obligation
to undertake or bear the cost of any Environmental Liabilities with respect to
any of the Facilities or any other properties or assets (whether real, personal,
or mixed) in which the Company had or has an interest, or with respect to any
property or facility to which Hazardous Materials generated, manufactured,
refined, transferred, imported, used, or processed by the Company have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(d) There are no Hazardous Materials Released into the Environment at any
Facility or deposited or located in the land or water or any other part of the
Environment at any Facility. There has been no Release or, to the Knowledge of
the Company, Threat of Release of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used or
processed from or by any Facility, or from any other properties in which the
Company has or had an interest.
(e) The Company has delivered to Purchaser true and complete copies and results
of any reports, studies, analyses, tests, or monitoring possessed or initiated
by the Company pertaining to Hazardous Materials or Hazardous Activities in, on,
or under the Facilities, or concerning compliance by the Company with
Environmental Laws.
SECTION 5.18 LABOR RELATIONS.
The Company is not a party to any collective bargaining or other labor contract
and, to the Knowledge of the Company; there has been no effort by employees of
the Company to form a collective bargaining unit. There has not been, and there
is not presently pending or existing, and, to the Knowledge of the Company,
there is not threatened, (a) any strike, slowdown, picketing, work stoppage or
employee grievance process generally, (b) any Proceeding against or affecting
the Company relating to the alleged violation of the National Labor Relations
Act, or (c) any application for certification of a collective bargaining agent.
There is no lockout of any employees by the Company and no such action is
contemplated by the Company. The Company has complied in all material respects
with and is in material compliance with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, harassment,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar Taxes, occupational health and safety, and the
Company is not liable for any arrears of wages or any Tax related thereto
(except for currently accrued and unpaid wages and any currently accrued Taxes
related thereto, payment of which is not overdue) or penalties for failure to
comply with any of the foregoing.
SECTION 5.19 INTELLECTUAL PROPERTY.
Section 5.19 of the Disclosure Schedule contains a complete and accurate list of
all of the Intellectual Property Rights owned by, used by, or licensed to the
Company that are either material to its business or that are issued Patents,
Patent applications, registered Trademarks or service marks, Trademark or
service xxxx applications, registered Copyrights, or Copyright applications,
except for Intellectual Property Rights of third parties inherent in standard
non-customized Hardware products that are used internally by the Company or
purchased and resold by the Company.
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SECTION 5.20 RELATED PARTY TRANSACTIONS.
No Shareholder and, to the knowledge of the Company, no Affiliate of any
Shareholder or of the Company currently has, or has had, any interest in any
property (whether real, personal, or mixed and whether tangible or intangible),
used in or pertaining to the Company's business other than the License. To the
knowledge of the Company, no Shareholder and no Affiliate of any Shareholder or
of the Company owns or has owned (of record or as a beneficial owner) an equity
interest or any other financial or profit interest in, a Person (other than the
Company) that has (i) had material business dealings or a material financial
interest in any transaction with the Company, or (ii) engaged in competition
with the Company with respect to any line of the products or services of the
Company in any market presently served by the Company except for less than five
percent (5%) of the outstanding capital stock of any competing business that is
publicly traded on any recognized exchange or in the over-the-counter market. No
Shareholder has received any payments or anything else of value from the Company
other than payments of salary and bonuses, stock options and reimbursements of
travel and entertainment expenses, all in the ordinary course of business
consistent with past practice.
SECTION 5.21 BROKERS.
The Company has not incurred any obligation or Liability for brokerage or
finders' fees or agents' commissions or other similar payments in connection
with the Contemplated Transactions.
SECTION 5.22 SUPPLIERS AND CUSTOMERS.
Section 5.22 of the Disclosure Schedule sets forth a list of the top five (5)
customers of the Company by dollar volume of sales for each of the fiscal years
ended December 31, 2004, and December 31, 2005. No customer which is listed in
Section 5.22 of the Disclosure Schedule, has in the last year cancelled,
materially modified, or otherwise terminated its relationship with the Company
or materially decreased its usage or purchase of the services or products of the
Company, nor to the Knowledge of the Company, has any such customer indicated
its intention to do any of the foregoing.
SECTION 5.23 INDEBTEDNESS
Section 5.23 of the Disclosure Schedule sets forth all Company Indebtedness and
the pay-off amount of such Company Indebtedness as of the Closing Date. The
amount of the Company Indebtedness set forth in Section 5.23 of the Disclosure
Schedule is not materially and adversely different than the amount of the Repaid
Indebtedness.
SECTION 5.24 DISCLOSURE.
Neither the Company nor the Principal Shareholders have failed to disclose to
the Purchaser or Merger Sub any facts material to the business, results of
operations, assets, liabilities, financial condition or prospects of the Company
or any subsidiaries of the Company. No representation or warranty by the
Principal Shareholders contained in this Agreement and no statement contained in
any document (including financial statements and the Schedules hereto),
certificate, or other writing furnished or to be furnished by the Company to the
Purchaser or Merger Sub or any of their representatives pursuant to the
provisions hereof or in connection with the Merger, contains or will contain any
untrue statement of material fact or omits or will omit to state any material
fact necessary, in light of the circumstances under which it was made, in order
to make the statements herein or therein not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Purchaser and Merger Sub jointly and severally represent and warrant to the
Company as of the date of this Agreement and as of the Effective Time, as
follows:
SECTION 6.1 ORGANIZATION AND GOOD STANDING.
Purchaser is a corporation is duly organized, validly existing and in good
standing under the laws of the Province of Ontario and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio and each possesses the requisite corporate power and
authority to conduct its business as it is now being conducted and to own or use
the properties which it purports to own or use. Each of Purchaser and Merger Sub
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified or in good standing, individually or
in the aggregate, would not have a Material Adverse Effect.
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SECTION 6.2 AUTHORITY; NO CONFLICT.
(a) This Agreement has been, and each other document, instrument or agreement to
be executed and delivered by Purchaser or Merger Sub in connection herewith will
upon such delivery be, duly executed and delivered by Purchaser and Merger Sub
and constitutes, or will upon such delivery constitute, the legal, valid and
binding obligation of Purchaser and Merger Sub, enforceable in accordance with
its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights or by principles of equity; provided,
however, that the Certificate of Merger will not be effective until filed with
the Ohio Secretary of State and the Ohio Secretary of State has issued a receipt
acknowledging acceptance and approval of the Certificate of Merger in response
thereto and the Articles of Merger will not be effective until the Articles of
Merger have been filed with the New Jersey Secretary of State and the New Jersey
Secretary of State has issued a certificate of merger in response thereto.
Purchaser and Merger Sub have all necessary right, power, authority, and
capacity to execute and deliver this Agreement and to perform its obligations
hereunder.
(b) This Agreement and the Contemplated Transactions have been duly authorized
and approved by the Boards of Directors of Purchaser and Merger Sub and shall
have been duly authorized and approved prior to the Closing by the shareholder
of Merger Sub in accordance with all Legal Requirements.
SECTION 6.3 GOVERNMENTAL AUTHORIZATION.
The execution, delivery, and performance by Purchaser and Merger Sub of this
Agreement and the consummation by Purchaser and Merger Sub of the Contemplated
Transactions requires no action by or in respect of, or filing with, any
Governmental Body, other than (a) the filing of (i) the Articles of Merger in
accordance with the OGCL and the NJBCA, respectively, and (ii) appropriate
documents with the relevant authorities of other states or jurisdictions in
which Purchaser or Merger Sub is qualified to do business; (b) compliance with
any applicable requirements of the Act and the Exchange Act; (c) such as may be
required under any applicable state securities or blue sky laws; and (d) such
other consents, approvals, actions, orders, authorizations, registrations,
declarations, and filings which, if not obtained or made, would not,
individually or in the aggregate, (x) have a Material Adverse Effect or (y)
prevent or materially impair the ability of the Company, Purchaser or Merger Sub
to consummate the Contemplated Transactions.
SECTION 6.4 CAPITALIZATION.
(a) CAPITALIZATION OF PURCHASER. The authorized capital stock of the Purchaser
consists of (a) an unlimited number of common shares, without par value, of
which 4,738,322 shares were issued and outstanding as of January 31, 2006, and
(b) 1,000,000 Shares of Blank Check Preferred Stock, without par value, of which
no shares are currently issued or outstanding. The Company had 25,000 shares of
Series A Preferred Stock and 1,750 shares of Series B Preferred Stock issued but
none of such shares are currently outstanding. In addition, as of May 31, 2006,
warrants to purchase 3,340,024 of Purchaser's common shares and options to
purchase 1,864,572 of Purchaser's common shares were outstanding.
(b) CAPITALIZATION OF MERGER SUB. As of the date of this Agreement, the
authorized capital stock of Merger Sub consists solely of 200 shares of common
stock,$.0001 par value, of which 200 shares are outstanding and owned by
Purchaser, all of which have been duly authorized, are validly issued and are
fully paid and non-assessable, and free of any preemptive rights in respect
thereof. Purchaser is the only shareholder of Merger Sub.
(c) ISSUANCE OF PURCHASER SHARES AND NOTES. Subject to the accuracy of each of
the Shareholders representations and warranties in Section 4.2 hereof, the Notes
and the Purchaser Shares, when issued in accordance with the terms of this
Agreement constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act and from the registration or qualification
requirements of the laws of any applicable state.
SECTION 6.5 SECURITIES AND EXCHANGE COMMISSION FILINGS AND FINANCIAL
STATEMENTS.
Purchaser has filed on a timely basis (and has previously furnished or made
available to the Company) complete and accurate copies, as amended or
supplemented of all documents required to be filed by Purchaser with the SEC
under the Exchange Act of 1934, as amended (the "EXCHANGE ACT") from December
31, 2004 through the date of this Agreement (the "SEC REPORTS"). As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder when
filed. As of their respective dates, the SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited financial
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statements and unaudited interim financial statements of Purchaser included in
the SEC Reports (i) complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto when filed, (ii) were prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby (except as may be
indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act), and
(iii) fairly present the consolidated financial condition, results of operations
and cash flows of Purchaser as of the respective dates thereof and for the
periods referred to therein.
SECTION 6.6 NO MATERIAL ADVERSE CHANGE.
Since December 31, 2005, there has not been any Material Adverse Change
affecting Purchaser, nor has any event or series of related events occurred that
reasonably would be expected to result in a Material Adverse Change.
SECTION 6.7 LITIGATION.
Except as included in the SEC Reports and Schedule 6.7, there are no actions,
suits, arbitrations, proceedings, investigations or claims of any kind
whatsoever, at law or in equity, pending or, to the knowledge of Purchaser,
threatened, by or against Purchaser or Merger Sub that reasonably would be
expected to have a Material Adverse Effect on Purchaser.
SECTION 6.8 COMPLIANCE WITH LAWS.
Purchaser has conducted and is conducting its business in compliance with all
Legal Requirements, except where the failure to do so would not, singly or in
the aggregate, have a Material Adverse Effect on Purchaser.
SECTION 6.9 TAX-FREE REORGANIZATION.
None of Purchaser, Merger Sub nor any entity affiliated therewith: (i) has
undertaken the obligation to investigate whether Purchaser, Merger Sub or any
entity affiliated therewith has taken or agreed to take any action that would
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368 of the IRC; or (ii) makes any representation or warranty as to the
qualification of the Merger as a reorganization within the meaning of Section
368 of the IRC. Subject to the foregoing, to the knowledge of Purchaser, none of
Purchaser, Merger Sub nor any entity affiliated therewith has taken or agreed to
take any action or is aware of any fact or circumstance that would prevent the
Merger from qualifying as a reorganization within the meaning of Section 368 of
the IRC.
SECTION 6.10 DISCLOSURE.
No representation or warranty of Purchaser or Merger Sub in this Agreement and
no statement contained in any schedule provided by Purchaser or Merger Sub
attached hereto, contains or will contain any untrue statement of material fact
or omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
ARTICLE VII
CERTAIN COVENANTS
SECTION 7.1 PUBLICITY.
All public announcements relating to this Agreement or the Contemplated
Transactions will be made only as may be agreed upon by the Company and
Purchaser or as required by applicable law.
SECTION 7.2 EXPENSES.
Each of the Company, Purchaser and Merger Sub shall pay its costs and expenses
associated with the Contemplated Transactions, including without limitation the
fees and expenses of its legal counsel (which in the case of the Company will be
deducted from the Merger Consideration), certified public accountants, and other
financial advisors, provided, that Purchaser shall pay for all but $10,000 of
the Audit Expense, which $10,000 shall be paid by the Company.
SECTION 7.3 ASSIGNMENT, SUCCESSORS, AND NO THIRD PARTY RIGHTS.
No Party may assign any of its rights under this Agreement without the prior
consent of the other Parties, which will not be unreasonably withheld, except
that Purchaser may assign any of its rights (but not its obligations) under this
Agreement to any Affiliate of Purchaser, to any lender of Purchaser and to any
successor to substantially all of the business of Purchaser. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
Parties. Nothing expressed or referred to in this Agreement will be construed to
give any Person other than the Parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the Parties and their respective
successors and permitted assigns.
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SECTION 7.4 REPAID INDEBTEDNESS.
All Repaid Indebtedness, for which any officer of the Company has provided a
personal guarantee, shall be paid in full by Purchaser within fifteen (15) days
of Closing, and each such guarantor shall be provided with evidence of the full
and final release and discharge of any obligations with respect to any such
Repaid Indebtedness.
SECTION 7.5 TAX-FREE REORGANIZATION.
The Parties intend that the Merger qualify as a tax-free reorganization under
Section 368(a) of the IRC, as amended, and the Parties will take the position
for all purposes that the Merger shall qualify as a reorganization under such
Section. In addition, the Parties covenant and agree that they will not engage
in any action, or fail to take any action, which action or failure to take
action would reasonably be expected to cause the Merger to fail to qualify as a
tax-free "reorganization" under Section 368(a) of the IRC, whether or not
otherwise permitted by the provisions of this Agreement.
SECTION 7.6 SECURITIES COMPLIANCE BY PURCHASER.
With a view to making available the benefits of certain rules and regulations of
the SEC which may at any time permit the sale of certain Purchaser Shares
without registration, Purchaser agrees to use commercially reasonable efforts to
do the following, for so long as any Shareholder holds any Purchaser Shares:
(a) Make and keep public information available, as those terms are understood
and defined in Rule 144 under the Securities Act, at all times;
(b) If the Purchaser is or becomes S-3 eligible, take such action as is
necessary to enable the Shareholders to utilize Form S-3 for the sale of such
Purchaser Shares as are of a class of securities then registered by Purchaser
under the Exchange Act;
(c) Use commercially reasonable efforts to file with the SEC in a timely manner
all reports and other documents required of Purchaser under the Securities Act
and the Exchange Act; and
(d) Furnish to the Shareholder forthwith upon request a written statement by
Purchaser as to its compliance with the reporting requirements of Rule 144 and
of the Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of Purchaser, and such other reports and documents of Purchaser
as a Shareholder may reasonably request in availing itself of any rule or
regulation of the SEC allowing a Shareholder to sell any Purchaser Shares
without registration.
SECTION 7.7 DUE DILIGENCE
Purchaser shall promptly complete its due diligence review on the Company
following execution of this Agreement and report any concerns or problems to the
Company and Principal Shareholders in a timely manner so that such matters can
be addressed prior to the Closing Date.
SECTION 7.8 REPAYMENT OF DEBT
The Purchaser acknowledges that certain of the Principal Shareholders are owed
an aggregate of $349,624. As part of the Closing, the Purchaser will settle such
outstanding liability by paying the Principal Shareholders an aggregate of
$100,000 (which is in addition to the cash portion of the Merger Consideration
as identified in Section 2.7(a)) and will issue the Principal Shareholders an
amount of shares of common stock having an aggregate value of $249,624, as
determined by dividing the $249,624 by the average closing price of the
Purchaser's common stock for the five days immediately preceding the closing.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 ESCROW FUND
As soon as practicable after the Effective Time, the Escrow Shares will be
registered in the name of, and deposited with, the Escrow Agent, such deposit to
constitute the escrow fund (the "ESCROW FUND") and to be governed by the terms
set forth in the Escrow Agreement attached as EXHIBIT D (the "ESCROW
AGREEMENT"). The Escrow Fund will be available to compensate Purchaser and
Merger Sub pursuant to the indemnification obligations of the Company and the
Shareholders.
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SECTION 8.2 INDEMNITY BY COMPANY AND SHAREHOLDERS
Each of the Shareholders severally (but not jointly) hereby agrees to indemnify
and hold Purchaser and its subsidiaries, directors, officers and agents (the
"PURCHASER INDEMNIFIED PARTIES") harmless against and in respect of any loss,
cost, expense (including reasonable attorneys' fees and costs), claim,
liability, deficiency, judgment or damage (hereinafter, individually, a "LOSS,"
and collectively, "LOSSES") incurred by the Purchaser Indemnified Parties as a
result of any material inaccuracy in or material breach of a representation or
warranty of the Company or the Shareholders contained in this Agreement, or any
instrument delivered by the Shareholders at the Closing or any material failure
by the Company to perform or comply with any covenant contained in this
Agreement. The Shareholders shall not have any right of contribution from the
Company with respect to any Loss claimed after Closing by Company.
SECTION 8.3 INDEMNITY BY COMPANY AND PRINCIPAL SHAREHOLDERS
The Company and the Principal Shareholders agree to indemnify and hold the
Purchaser Indemnified Parties harmless against and in respect of any Loss
incurred by the Purchaser Indemnified Parties as a result of any material
inaccuracy in or material breach of any of the representations or warranties of
the Company and any third party claims under Section 8.10.
SECTION 8.4 LIMITATION ON LIABILITY OF COMPANY AND SHAREHOLDERS
(a) The Purchaser Indemnified Parties shall not be entitled to indemnification
for any Losses under Section 8.2 or 8.3 until the Purchaser Indemnified Parties
have incurred aggregate Losses in excess of $30,000 (the "Threshold"). From and
after such time as the aggregate Losses incurred by the Purchaser Indemnified
Parties shall exceed the Threshold, they shall be entitled to receive the full
amount of Losses to which they are entitled under Section 8.2 or 8.3 in excess
of the Threshold.
(b) The Purchaser Indemnified Parties shall not be entitled to indemnification
for any Losses under Section 8.2 or 8.3, and the Company and the Shareholders
shall have no liability, in excess of the value of the Escrow Shares. From and
after the Closing Date through the term of the Escrow, the Escrow Shares shall
be the sole source of recovery against which the Purchaser Indemnified Parties
may make any claim for any Losses arising under, or out of a breach of, this
Agreement.
SECTION 8.5 INDEMNITY BY PURCHASER AND MERGER SUB.
The Purchaser and the Merger Sub hereby agree to jointly and severally indemnify
and hold the Principal Shareholders, the Company, and its officers, directors,
agents and attorneys harmless against and in respect of any Loss or Losses
incurred by the Shareholders, the Company, its subsidiaries, officers,
directors, agents and attorneys as a result of any material inaccuracy in or
material breach of a representation or warranty of Purchaser contained in this
Agreement or any instrument delivered by Purchaser at the Closing or any
material failure by Purchaser to perform or comply with any covenant contained
in this Agreement.
SECTION 8.6 EXPIRATION OF INDEMNIFICATION.
The indemnification obligations under this Article VIII and any liability under
this Agreement shall terminate one year from the Effective Time, but shall not
terminate as to any Loss (or a potential claim by an appropriate party) asserted
in good faith before such date in accordance with Section 8.7 below.
SECTION 8.7 PROCEDURE FOR INDEMNIFICATION.
In the event that either party shall incur or suffer any Losses in respect of
which indemnification may be sought by such party pursuant to the provisions of
this Article VIII, the indemnified party shall assert a claim for
indemnification by written notice (a "NOTICE") to Purchaser or the Company, as
the case may be, briefly stating (i) that the party delivering the Notice has
paid or accrued Losses and (ii) specifying in reasonable detail the individual
items of Losses included in the amount so stated, the date each such item was
paid or accrued, or the basis for such anticipated liability, and the nature of
the misrepresentation, breach of warranty or covenant to which such item is
related. The indemnified party shall provide the other party on request with all
information and documentation reasonably necessary to support and verify any
Losses which the indemnified party believes give rise to a claim for
indemnification hereunder and shall give reasonable access to all books, records
and personnel in the possession or under the control of that party which would
have bearing on such claim. The indemnifying party may meet its indemnification
obligations by, at their option, either making payment to the indemnified party
in cash by wire transfer of the amount owed or delivering shares of Purchaser
Shares, duly endorsed or with stock powers attached which have been endorsed in
blank.
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SECTION 8.8 CALCULATION OF PURCHASER SHARES.
For the purposes of determining the number of shares of Purchaser Shares to be
delivered in satisfaction of an indemnification obligation under this Article
VIII (to the extent payment is made in Purchaser Shares), the price per share
shall be equal to the Fair Market Value (defined below) at the time the Loss was
discovered (or reasonably should have been known) or on the Date the
indemnification Notice is given, whichever is greater. Strictly for purposes of
this Article VIII, "FAIR MARKET VALUE" of a Purchaser Share as of a particular
date means: (i) the average of the closing prices over the ten (10) day period
ending immediately before the applicable date of valuation, if the Purchaser
Shares are then traded in the over-the-counter market (including trading on the
Nasdaq OTC Bulletin Board); (ii) the average of the closing prices of the
Purchaser Shares over the five (5) business days ending immediately before the
applicable date of valuation, if the Purchaser Shares are then traded on a
securities exchange or the Nasdaq National Market or Nasdaq Small Cap Market;
and (iii) as determined in good faith by Purchaser's Board of Directors upon a
review of relevant factors, if no active public market exists for the Purchaser
Shares.
SECTION 8.9 RESOLUTION OF CONFLICTS; ARBITRATION.
(a) In the event of any dispute among the parties in connection with this
Agreement, including without limitation, disputes over a claim pursuant to this
Article VIII or any disputes under the state or federal securities laws in
connection with this Agreement, Xx. Xxxxxxx on behalf of the Shareholders and
the Purchaser shall attempt in good faith to agree upon the rights of the
respective parties with respect to each of such claims. If the Shareholders and
Purchaser should so agree, a memorandum setting forth such agreement shall be
prepared and signed by both parties.
(b) If no such agreement can be reached after good faith negotiation (or in any
event after sixty (60) days from the date of the Notice), either Purchaser or
the Shareholders may demand arbitration of the matter unless the amount of the
damage or loss is at issue in pending litigation with a third party, in which
event arbitration shall not be commenced until such amount is ascertained or
both parties agree to arbitration; and in either such event the matter shall be
settled by arbitration conducted by three arbitrators. Purchaser and the
Shareholders shall each select one (1) arbitrator, and the two (2) arbitrators
so selected shall select a third arbitrator. The arbitrators shall set a limited
time period and establish procedures designed to reduce the cost and time for
discovery while allowing the parties an opportunity, adequate in the sole
judgment of the arbitrators, to discover relevant information from the opposing
parties about the subject matter of the dispute. The arbitrators shall rule upon
motions to compel or limit discovery and shall have the authority to impose
sanctions, including attorneys' fees and costs, to the same extent as a court of
law or equity, should the arbitrators determine that discovery was sought
without substantial justification or that discovery was refused or objected to
without substantial justification. The decision of a majority of the three
arbitrators as to the validity and amount of any claim in such Notice shall be
binding and conclusive upon the parties to this Agreement. Such decision shall
be written and shall be supported by written findings of fact and conclusions
which shall set forth the award, judgment, decree or order awarded by the
arbitrators. The arbitrators shall not be empowered to award punitive damages.
(c) Judgment upon any award rendered by the arbitrators may be entered in any
court having jurisdiction. Any such arbitration shall be held in New Jersey
under the rules then in effect of the American Arbitration Association. The
arbitrators shall determine how all expenses relating to the arbitration shall
be paid, including without limitation, the respective expenses of each party,
the fees of each arbitrator and the administrative fee of the American
Arbitration Association.
SECTION 8.10 THIRD-PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party of notice of the commencement
of any action, arbitration, audit, hearing, investigation, litigation or suit
(whether civil, criminal, administrative, investigative or informal) commenced,
brought, conducted or heard before or otherwise involving any court,
governmental agency or entity or arbitrator (a "PROCEEDING") against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under this Article VIII, give notice to the indemnifying party of the
commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnified party's failure
to give such notice.
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(b) If any Proceeding referred to in Section 8.10(a) is brought against an
indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will be entitled to
participate in such Proceeding and, to the extent that it wishes (unless the
indemnifying party is also a party to such Proceeding and the indemnified party
reasonably determines that joint representation would be inappropriate), to
assume the defense of such Proceeding with counsel satisfactory to the
indemnified party (acting in good faith) and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently conducts
such defense, be liable to the indemnified party under this Article VIII for any
fees of other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the indemnified party in
connection with the defense of such Proceeding, other than reasonable costs of
investigation. If the indemnifying party assumes the defense of a Proceeding,
(i) no compromise or settlement of such claims may be effected by the
indemnifying party without the indemnified party's consent unless (A) there is
no finding or admission of any violation of any law, statute, ordinance,
regulation or ruling or any violation of the rights of any person and no effect
on any other claims that may be made against the indemnified party, and (B) the
sole relief provided is monetary damages that are paid in full by the
indemnifying party; and (ii) the indemnified party will have no liability with
respect to any compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the commencement of any
Proceeding and the indemnifying party does not, within thirty days after the
indemnified party's notice is given, give notice to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party will
be bound by any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party reasonably determines
that there is a reasonable probability that a Proceeding may adversely affect it
or its affiliates other than as a result of monetary damages for which it would
be entitled to indemnification under this Agreement, the indemnified party may,
by notice to the indemnifying party, assume the exclusive right to defend,
compromise, or settle such Proceeding, but the indemnifying party will not be
bound by any determination of a Proceeding so defended or any compromise or
settlement effected without its consent (which may not be unreasonably
withheld).
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or before the Closing of the following
conditions:
(a) BOARD APPROVAL. This Agreement and the Merger shall have been approved by
each of the boards of directors of the parties hereto by the requisite vote
under applicable law and the parties' Certificate of Incorporation or Articles
of Incorporation, as the case may be.
(b) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Merger shall be in effect.
(c) EMPLOYMENT AGREEMENTS. Xx. Xxxxxxx and Xx. Xxxxxxx shall have executed and
delivered to Purchaser an employment agreement in substantially the form of
EXHIBIT E-1 and EXHIBIT E-2 attached hereto and all such employment agreements
shall be in full force and effect. Employment Agreements also shall have been
offered to Xxxxx XxXxxxxxxx, Xxxxx Xxxxxxx, and Xxxxxx Xxxxxxxx in substantially
the form of EXHIBIT E-3, EXHIBIT E-4, and EXHIBIT E-5 attached hereto.
SECTION 9.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company to consummate the Merger and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or before
the Closing of each of the following conditions, any of which may be waived, in
writing, subject to the mutual consent of the Company and Purchaser.
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(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Purchaser and Merger Sub contained in this Agreement shall be true and correct
in all material respects on and as of the Effective Time, except for changes
contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date), with the same force and effect as if
made on and as of the Effective Time, except, in all such cases, for such
breaches, inaccuracies or omissions of such representations and warranties which
have neither had nor reasonably would be expected to have a Material Adverse
Effect on Purchaser; and the Company shall have received a certificate to such
effect signed on behalf of Purchaser by a duly authorized officer of Purchaser.
(b) FINANCING TRANSACTIONS. The Purchaser shall have engaged a financing source
for the merger under the terms and parameters set forth under Schedule 9.2 (b)
of this Agreement (the "Financing Engagement"). Notwithstanding anything
contained or implied in this Agreement to the contrary, Purchaser shall have no
obligation whatsoever with respect to the satisfaction of the terms of the
Financing Engagement, and Purchaser shall not be liable to the Company if (for
any reason whatsoever) the Financing Engagement is not adhered to. However,
Purchaser shall be obligated to close on the transaction as required by this
Agreement.
(c) AGREEMENTS AND COVENANTS. Purchaser and Merger Sub 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 before the
Effective Time, and the Company shall have received a certificate to such effect
signed by a duly authorized officer of Purchaser.
(d) GOVERNMENTAL AUTHORIZATIONS. Purchaser and Merger Sub shall have obtained
all required Governmental Authorizations.
(e) SHAREHOLDER APPROVAL. The Company shall have obtained the requisite consent
of the Shareholders.
(f) MATERIAL ADVERSE CHANGE. There shall not have occurred any material adverse
change in the business, assets (including intangible assets), condition
(financial or otherwise) or results of operations of Purchaser since the date
hereof.
SECTION 9.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND
MERGER SUB.
The obligations of Purchaser and Merger Sub to consummate the Merger and the
transactions contemplated by this Agreement shall be subject to the satisfaction
at or before the Closing of each of the following conditions, any of which may
be waived by Purchaser in writing:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of the
Company and the Shareholders contained in this Agreement shall be true and
correct in all material respects on and as of the Effective Time, except for
changes contemplated by this Agreement (including the Disclosure Schedule) and
except for those representations and warranties which address matters only as of
a particular date (which shall remain true and correct as of such date), with
the same force and effect as if made on and as of the Effective Time, except, in
all such cases, for such breaches, inaccuracies or omissions of such
representations and warranties which have neither had nor reasonably would be
expected to have a Material Adverse Effect on the Company, Merger Sub or
Purchaser; and Purchaser and Merger Sub shall have received a certificate to
such effect signed on behalf of the Company by a duly authorized officer of the
Company;
(b) AGREEMENTS AND COVENANTS. The Company and the Shareholders 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 and them on or
before the Effective Time, and Purchaser and Merger Sub shall have received a
certificate to such effect signed by a duly authorized officer of the Company.
(c) DUE DILIGENCE. The Purchaser shall have received all documents reasonably
requested in connection with its due diligence review of the Company, including
(without limitation) the financial statements of the Company that are described
elsewhere in this Agreement, together with the satisfactory opinion of Company
Independent Auditor (with respect to the 2005 financial statements referenced
elsewhere in this Agreement). Three (3) business days prior to the anticipated
closing date, the Company shall deliver to Purchaser an unaudited balance sheet
prepared in accordance with GAAP as of five (5) business days prior to such
anticipated closing date ("PRE-CLOSING BALANCE SHEET") for review by Purchaser.
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(d) THIRD PARTY CONSENTS. Purchaser shall have been furnished with evidence
satisfactory to it that the Company has obtained the consents, approvals and
waivers set forth in the Disclosure Schedule.
(e) MATERIAL ADVERSE CHANGE. There shall not have occurred any material adverse
change in the business, assets (including intangible assets) condition
(financial or otherwise) or results of operations of the Company since the date
hereof.
(f) DISSENTERS. Holders of more than five percent (5.0%) of the outstanding
shares of Company Shares shall not have exercised, nor shall they have any
continued right to exercise, appraisal, dissenters' or similar rights under
applicable law with respect to their shares by virtue of the Merger.
(g) EXEMPTION FROM REGISTRATION. The offer, sale and issuance of the shares of
Purchaser Shares and the Notes under this Agreement are exempt from registration
under the Securities Act.
(h) PROCEEDINGS AND DOCUMENTS. All corporate, company and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to Purchaser and its counsel, and Purchaser
and its counsel shall have received all such counterpart originals (or certified
or other copies) of such documents as they may reasonably request.
(i) CERTIFICATE OF GOOD STANDING. The Company shall have delivered to Purchaser
a certificate as to the good standing of the Company certified by the Secretary
of State of the State of New Jersey on or within five (5) business days prior to
the Closing Date.
ARTICLE X
TERMINATION
SECTION 10.1 TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement as provided below:
(a) Purchaser and the Company may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(b) Purchaser may terminate this Agreement by giving written notice to the
Company at any time prior to the Closing (i) in the event the Company has
breached in any material respect any representation, warranty, covenant or
agreement contained in this Agreement, Purchaser has notified the Company and
the Principal Shareholders of the breach, and the breach has continued without
cure for a period of 15 days after the notice of breach (provided, however, that
such 15-day period shall be extended for so long as a cure is being diligently
pursued, but no longer than July 31, 2006), or (ii) if the Closing shall not
have occurred on or before July 31, 2006, by reason of the failure of any
condition under Section 9.1 or 9.3 to be satisfied (unless the failure results
primarily from Purchaser breaching in any material respect any material
representation, warranty, covenant or agreement contained in this Agreement);
and
(c) Company may terminate this Agreement by giving written notice to Purchaser
at any time prior to the Closing (i) in the event Purchaser or Merger Sub has
breached in any material respect any representation, warranty, covenant or
agreement contained in this Agreement, the Company has notified Purchaser of the
breach, and the breach has continued without cure for a period of 15 days after
the notice of breach (provided, however, that such 15-day period shall be
extended for so long as a cure is being diligently pursued, but no longer than
July 31, 2006, 2006), or (ii) if the Closing shall not have occurred on or
before July 31, 2006, by reason of the failure of any condition under Section
9.1 or 9.2 to be satisfied (unless the failure results primarily from the
Company or Shareholders breaching in any material respect any material
representation, warranty, covenant or agreement contained in this Agreement).
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SECTION 10.2 EFFECT OF TERMINATION. In the event that this Agreement is
terminated pursuant to 10.1(b) or 10.1(c) as a result of an uncured breach, the
non-breaching party retains its right to pursue all legal remedies, which right
shall survive termination of this Agreement unimpaired.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except as set forth in Article VIII. All such representations and
warranties will be extinguished on consummation of the Merger and none of the
Parties nor any of their officers, directors, members, employees or shareholders
shall be under any liability whatsoever with respect to any such representation
or warranty after such time. This Section 10.01 shall not limit any covenant or
agreement of the Parties which by its terms contemplates performance after the
Effective Time.
SECTION 11.2 NOTICES.
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by certified
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a Party may designate by
notice to the other Parties). Any party may change any address to which notice
is to be given to it by giving notice as provided above of such change of
address.
If to any Shareholder, to the address set forth below such Shareholder's name on
the signature pages hereto.
If to the Company: The Multitech Group, Inc
000 Xxxx Xxxxxx
Xxxxx Xxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
(000) 000-0000 (fax)
with a copy (which shall not constitute notice) to:
Xxxxx X. Xxxxxxxxx, P.C.
c/o McManus, Schor, Asmar & Xxxxxx, LLP
0000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, XX 00000
(000) 000-0000 (fax)
If to the Shareholders: The Multitech Group, Inc
000 Xxxx Xxxxxx
Xxxxx Xxxxxxxxxx, XX 00000
Attention: The Shareholder [Name]
with a copy (which shall not constitute notice) to:
Xxxxx X. Xxxxxxxxx, P.C.
c/o McManus, Schor, Asmar & Xxxxxx, LLP
0000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, XX 00000
(000) 000-0000 (fax)
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If to Purchaser, Merger Sub
or Surviving Corporation, to: Thinkpath Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0 Xxxxxx
Attention: Declan French, CEO
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
(000) 000-0000 (fax)
SECTION 11.3 WAIVER.
The rights and remedies of the Parties are cumulative and not alternative.
Neither the failure nor any delay by any Party in exercising any right, power,
or privilege under this Agreement or the documents referred to in this Agreement
will operate as a waiver of such right, power, or privilege, and no single or
partial exercise of any such right, power, or privilege will preclude any other
or further exercise of such right, power, or privilege or the exercise of any
other right, power, or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right arising out of this Agreement or the documents
referred to in this Agreement can be discharged by one Party or the
Shareholders, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the affected Party; (b) no waiver that may be
given by a Party or the Shareholders will be applicable except in the specific
instance for which it is given; and (c) no notice to or demand on one Party or
the Shareholders will be deemed to be a waiver of any obligation of such Party
or the Shareholders or of the right of the Party or the Shareholders giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
SECTION 11.4 ENTIRE AGREEMENT AND AMENDMENT.
This Agreement supersedes all prior agreements among the Parties with respect to
its subject matter and constitutes (along with the documents referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
among the Parties with respect to its subject matter. This Agreement may not be
amended except by a written agreement executed by Purchaser, Merger Sub and the
Company and the Principal Shareholders (provided that any amendment that reduces
the amount of or modifies the type of Merger Consideration a Shareholder
receives hereunder will require that Shareholder's consent).
SECTION 11.5 SEVERABILITY.
If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
SECTION 11.6 SECTION HEADINGS; CONSTRUCTION.
The headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding Section or Sections of this Agreement.
All words used in this Agreement will be construed to be of such gender or
number, as the circumstances require. In every place where they are used in this
Agreement, the words "include" and "including" are intended and shall be
construed to mean, "include, without limitation" and "including, without
limitation," respectively. References in this document to "Sections" refer to
the correspondingly numbered Sections of this Agreement and Plan of Merger,
unless otherwise expressly specified in the context.
SECTION 11.7 TIME OF THE ESSENCE.
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
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SECTION 11.8 JURISDICTION AND VENUE.
Other than as specifically set forth herein, any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
shall be brought against any of the Parties in the federal and state courts in
New Jersey, and each of the Parties consents to the exclusive jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any Party
anywhere in the world.
SECTION 11.9 GOVERNING LAW.
This Agreement will be governed by the laws of the State of Ohio without regard
to conflicts of laws principles.
SECTION 11.10 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
SECTION 11.11 JOINT DRAFTING.
The Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent of interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties,
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement and
Plan of Merger effective as of the date first written above.
PURCHASER: COMPANY:
THINKPATH, INC. THE MULTITECH GROUP, INC.
------------------------- ---------------------------
By: Declan French, CEO By: Xxxxxxx Xxxxxxx, CEO
MERGER SUB: SHAREHOLDERS
THINKPATH, INC. (USA)
By: By:
------------------------------
SHAREHOLDERS
By: By:
------------------------------
SHAREHOLDERS
By: By:
------------------------------
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