AGREEMENT AND PLAN OF MERGER BY AND AMONG RHAPSODY ACQUISITION CORP., PRIMORIS CORPORATION and CERTAIN OF THE SHAREHOLDERS OF PRIMORIS CORPORATION DATED AS OF FEBRUARY 19, 2008
Exhibit
10.1
CONFORMED
COPY
BY
AND AMONG
PRIMORIS
CORPORATION
and
CERTAIN
OF THE SHAREHOLDERS OF
PRIMORIS
CORPORATION
DATED
AS OF FEBRUARY 19, 2008
THIS
AGREEMENT AND PLAN OF MERGER is made and entered into as of February 19, 2008,
by and among Rhapsody Acquisition Corp., a Delaware corporation (“Delcorp”),
Primoris Corporation, a Nevada corporation (“Company”),
and
each of the persons listed under the caption “Signing Shareholders” on the
signature page hereof, such persons being certain of the shareholders of the
Company (each a “Signing
Shareholder”
and,
collectively, the “Signing
Shareholders.”)
RECITALS
A. Upon
the terms and subject to the conditions of this Agreement (as defined in
Section 1.2)
and in
accordance with the General Corporation Law of the State of Delaware (the
“DGCL”)
and
the Nevada General Corporation Law (the “NGCL”)
and
other applicable law, Delcorp and Company intend to enter into a business
combination transaction by means of a merger in which the Company will merge
with Delcorp and Delcorp will be the surviving entity, through an exchange
of
all the issued and outstanding shares of capital stock of the Company for shares
of common stock of Delcorp.
B. The
Boards of Directors of each of the Company and Delcorp have determined that
the
Merger (as defined in Section 1.1)
is fair
to, and in the best interests of, their respective companies and their
respective stockholders.
C. The
parties intend, by executing this Agreement, to adopt a plan of reorganization
within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of
1986, as amended (the “Code”).
NOW,
THEREFORE, in consideration of the covenants, promises and representations
set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows
(defined terms used in this Agreement are listed alphabetically in Article IX,
together with the Section and, if applicable, paragraph number in which the
definition of each such term is located):
ARTICLE
I
THE
MERGER
1.1 The
Merger.
At the
Effective Time (as defined in Section 1.2)
and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the NGCL, the Company shall be merged with and into
Delcorp (the “Merger”),
the
separate corporate existence of the Company shall cease and Delcorp shall
continue as the surviving corporation. Delcorp as the surviving corporation
after the Merger is hereinafter sometimes referred to as the “Surviving
Corporation.”
1.2 Effective
Time; Closing.
Subject
to the conditions of this Agreement, the parties hereto shall cause the Merger
to be consummated by (a) filing Articles of Merger (the “Articles
of Merger”)
with
the Secretary of State of the State of Nevada in accordance with the applicable
provisions of Nevada law and (b) filing with the Secretary of State of the
State
of Delaware in accordance with applicable provisions of the DGCL a Certificate
of Merger (the “Certificate of Merger”) (the time of such filing with the
Secretary of State of the State of Delaware, or such later time as may be agreed
in writing by Company and Delcorp and specified in the Certificate of Merger,
being the “Effective
Time”)
as
soon as practicable on or after the Closing Date (as herein defined). The term
“Agreement”
as
used
herein refers to this Agreement and Plan of Merger, as the same may be amended
from time to time, and all schedules hereto (including the Company Schedule
and
the Delcorp Schedule, as defined in the preambles to Articles
II and III
hereof,
respectively). Unless this Agreement shall have been terminated pursuant to
Section 8.1,
the
closing of the Merger (the “Closing”)
shall
take place at the offices of Xxxxxxxx Xxxxxx, counsel to Delcorp, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 or at such other place as the parties
mutually agree in writing at a time and date to be specified by the parties,
which shall be no later than the second business day after the satisfaction
or
waiver of the conditions set forth in Article VI,
or at
such other time, date and location as the parties hereto agree in writing (the
“Closing
Date”).
Closing signatures may be transmitted by facsimile.
1.3 Effect
of the Merger.
At the
Effective Time, the effect of the Merger shall be as provided in this Agreement
and the applicable provisions of the DGCL and NGCL and other applicable
provisions of Nevada law (together, with the NGCL, “Applicable
Nevada Law”).
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises
of
the Company shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company shall become the debts, liabilities and duties of
the
Surviving Corporation.
1.4 Certificate
of Incorporation; Bylaws.
(a) At
the Effective Time, the Certificate of Incorporation of Delcorp shall be amended
and restated in the form of Exhibit A,
and
which shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by law.
(b) Also,
at the Effective Time, the Bylaws of Delcorp shall be amended and restated
in
the form of Exhibit B
and
which shall be the Bylaws of the Surviving Corporation.
1.5 Effect
on Capital Stock.
Subject
to the terms and conditions of this Agreement, at the Effective Time, by virtue
of the Merger and this Agreement and without any action on the part of the
Company or the holders of any of the securities of the Company, the following
shall occur:
-
2 -
(a) Conversion
of Company Common Stock.
Other
than any shares to be canceled pursuant to Section 1.5(c),
each
share of common stock, par value $.001, of the Company (“Company
Common Stock”)
issued
and outstanding immediately prior to the Effective Time will be automatically
converted (subject to Section 1.5(e))
into
(i) the number of shares of common stock, par value $0.0001, of Delcorp
(“Delcorp
Common Stock”)
equal
to (A) 24,094,800 divided by (B) the Outstanding Common Stock Number plus (ii)
the right to receive that number of EBITDA Shares (as defined in Section 1.18(c))
for
each year with respect to which EBITDA Shares are issuable equal to (C) the
number of EBITDA Shares issuable with respect to such year divided by (D) the
Outstanding Common Stock Number as set forth in the attached Exhibit C.
As used
herein, “Outstanding
Common Stock Number”
means
the number of shares of Company Common Stock outstanding immediately prior
to
the Effective Time plus additional shares in the amount of eighty-one (81)
shares for Xxxxx Xxxxxxx (“Born”) and thirteen (13) shares for Xxxxxx Morteboy
(“Morteboy”) to treat them, for purposes of calculating the Outstanding Common
Stock Number, as if they had been shareholders prior to the Closing. Born and
Morteboy are hereinafter collectively referred to as the “Foreign Managers”. The
numbers of shares of Delcorp Common Stock that would otherwise be issuable
pursuant to this Section 1.5(a)
(including EBITDA Shares) to Persons who hold Dissenting Shares (as defined
in
Section 1.17(b))
and
exercise their dissenters’ rights pursuant to Applicable Nevada Law shall not be
issued to such Persons and shall be canceled.
(b) Certificates
for Shares.
Certificates representing the shares of Delcorp Common Stock issuable pursuant
to clause (i) of Section 1.5(a)
(“Base
Shares”)
shall
be issued to the holders of certificates representing the shares of Company
Common Stock (“Company
Certificates”)
upon
surrender of the Company Certificates in the manner provided in Section 1.6
(or in
the case of a lost, stolen or destroyed certificate, upon delivery of an
affidavit (and indemnity, if required) in the manner provided in Section 1.8).
Each
holder shall be issued separate certificates for such holder’s Escrow Shares (as
defined in Section 1.11)
and for
the remaining number of shares of Delcorp Common Stock to which such holder
is
entitled. Certificates for shares of Delcorp Common Stock representing EBITDA
Shares shall be issued to the Persons who have surrendered Company Certificates
within five business days following the release of the audited financial
statements of Delcorp for the year with respect to which such EBITDA Shares
are
issuable.
(c) Cancellation
of Treasury and Delcorp-Owned Stock.
Each
share of Company Common Stock held by the Company or owned by Delcorp or any
direct or indirect wholly-owned subsidiary of the Company or of Delcorp
immediately prior to the Effective Time shall be canceled and extinguished
without any conversion or payment in respect thereof.
(d) Adjustments
to Exchange Ratios.
The
numbers of shares of Delcorp Common Stock that the holders of the Company Common
Stock are entitled to receive as a result of the Merger (including but not
limited to the Base Shares and EBITDA Shares) shall be equitably adjusted to
reflect appropriately the effect of any stock split, reverse stock split, stock
dividend (including any dividend or distribution of securities convertible
into
Delcorp Common Stock or Company Common Stock), extraordinary cash dividends
(other than the distributions referred to in Section 5.24
hereof),
reorganization, recapitalization, reclassification, combination, exchange of
shares or other like change with respect to Delcorp Common Stock or Company
Common Stock occurring on or after the date hereof and prior to the Effective
Time.
-
3 -
(e) Fractional
Shares.
No
fraction of a share of Delcorp Common Stock will be issued by virtue of the
Merger, and each holder of shares of Company Common Stock who would otherwise
be
entitled to a fraction of a share of Delcorp Common Stock (after aggregating
all
fractional shares of Delcorp Common Stock that otherwise would be received
by
such holder) shall, upon compliance with Section 1.6,
receive
from Delcorp, in lieu of such fractional share, one (1) share of Delcorp Common
Stock.
1.6 Surrender
of Certificates.
(a) Exchange
Procedures.
Upon
surrender of Company Certificates at the Closing, the holders of such Company
Certificates shall receive in exchange therefor certificates representing the
Base Shares into which their shares of Company Common Stock shall be converted
at the Effective Time, less the Escrow Shares, and the Company Certificates
so
surrendered shall forthwith be canceled. Until so surrendered, outstanding
Company Certificates will be deemed, from and after the Effective Time, to
evidence only the right to receive the applicable number of shares of Delcorp
Common Stock issuable pursuant to Section 1.5(a).
(b) Distributions
With Respect to Unexchanged Shares.
No
dividends or other distributions declared or made after the date of this
Agreement with respect to Delcorp Common Stock with a record date after the
Effective Time will be paid to the holders of any unsurrendered Company
Certificates with respect to the shares of Delcorp Common Stock to be issued
upon surrender thereof until the holders of record of such Company Certificates
shall surrender such Company Certificates. Subject to applicable law, following
surrender of any such Company Certificates with a properly completed letter
of
transmittal, Delcorp shall promptly deliver to the record holders thereof,
without interest, the certificates representing shares of Delcorp Common Stock
issued in exchange therefor and the amount of any such dividends or other
distributions with a record date after the Effective Time theretofore paid
with
respect to such shares of Delcorp Common Stock.
(c) Transfers
of Ownership.
If
certificates representing shares of Delcorp Common Stock are to be issued in
a
name other than that in which the Company Certificates surrendered in exchange
therefor are registered, it will be a condition of the issuance thereof that
the
Company Certificates so surrendered will be properly endorsed and otherwise
in
proper form for transfer and that the persons requesting such exchange will
have
paid to Delcorp or any agent designated by it any transfer or other taxes
required by reason of the issuance of certificates representing shares of
Delcorp Common Stock in any name other than that of the registered holder of
the
Company Certificates surrendered, or established to the satisfaction of Delcorp
or any agent designated by it that such tax has been paid or is not
payable.
(d) Required
Withholding.
Delcorp
and the Surviving Corporation shall each be entitled to deduct and withhold
from
any consideration payable or otherwise deliverable pursuant to this Agreement
to
any holder or former holder of Company Common Stock such amounts as are required
to be deducted or withheld therefrom under the Code or under any provision
of
state, local or foreign tax law or under any other applicable legal requirement.
To the extent such amounts are so deducted or withheld, such amounts shall
be
treated for all purposes under this Agreement as having been paid to the person
to whom such amounts would otherwise have been paid.
-
4 -
(e) No
Liability.
Notwithstanding anything to the contrary in this Section 1.6,
neither
Delcorp, the Company, the Surviving Corporation nor any other party hereto
shall
be liable to a holder of shares of Delcorp Common Stock or Company Common Stock
for any amount properly paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
1.7 No
Further Ownership Rights in Company Stock.
All
shares of Delcorp Common Stock issued in accordance with the terms hereof shall
be deemed to have been issued in full satisfaction of all rights pertaining
to
shares of Company Common Stock and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Company
Common Stock that were outstanding immediately prior to the Effective Time.
If,
after the Effective Time, Company Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided
in
this Article I.
1.8 Lost,
Stolen or Destroyed Certificates.
In the
event that any Company Certificates shall have been lost, stolen or destroyed,
Delcorp shall issue in exchange for such lost, stolen or destroyed Company
Certificates, upon the making of an affidavit of that fact by the holder
thereof, the certificates representing the shares of Delcorp Common Stock that
the shares of Company Common Stock formerly represented by such Company
Certificates were converted into and any dividends or distributions payable
pursuant to Section 1.6(b);
provided, however, that, as a condition precedent to the issuance of such
certificates representing shares of Delcorp Common Stock and other
distributions, the owner of such lost, stolen or destroyed Company Certificates
shall indemnify Delcorp against any claim that may be made against Delcorp
or
the Surviving Corporation with respect to the Company Certificates alleged
to
have been lost, stolen or destroyed.
1.9 Tax
Consequences.
It is
intended by the parties hereto that the Merger shall constitute a reorganization
within the meaning of Section 368(a)(1)(A) of the Code and the regulations
thereunder. The parties hereto adopt this Agreement as a “plan of
reorganization” within the meaning of the United States Income Tax Regulations
issued with respect to Section 368.
1.10 Taking
of Necessary Action; Further Action.
If, at
any time after the Effective Time, any further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of the Company, the officers and
directors of the Company will take all such lawful and necessary
action.
-
5 -
1.11 Escrow.
As the
sole remedy for the indemnity obligations set forth in Article VII,
at the
Closing, the Persons receiving shares of Delcorp Common Stock to be issued
as a
result of the Merger shall deposit in escrow an aggregate of
1,807,110 of
the
Base Shares received by such Persons as a result of the Merger (the
“Escrow
Shares”),
which
shares shall be allocated among the Persons entitled to receive them in the
same
proportions as the shares of Delcorp Common Stock are allocated among them,
all
in accordance with the terms and conditions of the Escrow Agreement to be
entered into at the Closing between Delcorp, the Company, the Representative
appointed pursuant to Section 1.14(b)
and
Continental Stock Transfer & Trust Company (“Continental”),
as
Escrow Agent, in the form annexed hereto as Exhibit D
(the
“Escrow
Agreement”).
On
the date (the “Basic
Escrow Termination Date”)
that
is the later of (i) thirty (30) days after the date on which Delcorp has filed
its Report on Form 10-K pursuant to the Securities Exchange Act of 1934, as
amended (“Exchange
Act”),
for
its 2008 fiscal year or (ii) one year after the Closing Date, the Escrow Agent
shall release 1,445,688 of the original number of Escrow Shares, less that
number of Escrow Shares applied in satisfaction of or reserved with respect
to
indemnification claims made prior to such date, to the shareholders of the
Company in the same proportions as originally deposited into escrow. The
remaining Escrow Shares (the “T/E
Indemnity Shares”)
shall
be available for indemnification only with respect to Tax Indemnification Claims
and Environmental Indemnification Claims (each as hereinafter defined). On
the
date (the “T/E
Escrow Termination Date”)
that
is the first business day following the date that is the third anniversary
of
the Closing Date, the Escrow Agent shall deliver the T/E Indemnity Shares,
less
any of such shares applied in satisfaction of a Tax Indemnification Claim or
an
Environmental Indemnification Claim and any of such shares related to a Tax
Indemnification Claim or an Environmental Indemnification Claim that is then
unresolved, to each shareholder of the Company in the same proportions as
initially deposited in escrow. Any Escrow Shares held with respect to any
unresolved claim for indemnification and not applied as indemnification with
respect to such claim upon its resolution shall be delivered to such Persons
promptly upon such resolution. “Tax
Indemnification Claim”
means
a
claim for indemnification pursuant to Article VII
with
respect to (x) a breach of the representations and warranties set forth in
Section 2.15
and (y)
the matters referred to in Schedule 2.15. “Environmental
Indemnification Claim”
means
a
claim for indemnification pursuant to Article VII
with
respect to a breach of the representations and warranties set forth in
Section 2.16.
1.12 Rule
145.
All
shares of Delcorp Common Stock issued pursuant to this Agreement to “affiliates”
of the Company listed in Schedule 1.12 will be subject to certain resale
restrictions under Rule 145 promulgated under the Securities Act and all
certificates representing such shares shall bear an appropriate restrictive
legend.
1.13 Signing
Shareholder Matters.
(a) By
his, her or its execution of this Agreement, each Signing Shareholder, in his,
her or its capacity as a shareholder of the Company, hereby agrees to vote
in
favor of the approval and adoption of this Agreement and to authorize the
Company, its directors and officers to take all actions necessary for the
consummation of the Merger and the other transactions contemplated by the
provisions of this Agreement and its Exhibits at a meeting of the shareholders
of the Company to be held promptly after distribution of the Proxy
Statement/Prospectus (as defined in Section 5.1(a)) to the shareholders of
the
Company and the stockholders of Delcorp.
-
6 -
(b) Each
Signing Shareholder, for himself, herself or itself only, represents and
warrants as follows: (i) all Delcorp Common Stock to be acquired by such Signing
Shareholder pursuant to this Agreement will be acquired for his, her or its
account and not with a view towards distribution thereof other than, with
respect to Signing Shareholders that are entities, transfers to its
stockholders, partners or members; (ii) he, she or it understands that he,
she
or it must bear the economic risk of the investment in the Delcorp Common Stock,
which cannot be sold by he, she or it unless it is registered under the
Securities Act, or an exemption therefrom is available thereunder; (iii) he,
she
or it has had both the opportunity to ask questions and receive answers from
the
officers and directors of Delcorp and all persons acting on Delcorp’s behalf
concerning the business and operations of Delcorp and to obtain any additional
information to the extent Delcorp possesses or may possess such information
or
can acquire it without unreasonable effort or expense necessary to verify the
accuracy of such information; and (iv) he, she or it has had access to the
Delcorp SEC Reports filed prior to the date of this Agreement. Each Signing
Shareholder acknowledges, as to himself, herself or itself only, that (v) he,
she or it is either (A) an “accredited investor” as such term is defined in Rule
501(a) promulgated under the Securities Act or (B) a person possessing
sufficient knowledge and experience in financial and business matters to enable
it to evaluate the merits and risks of an investment in Delcorp; and (vi) he,
she or it understands that the certificates representing the Delcorp Common
Stock to be received by he, she or it may bear legends to the effect that the
Delcorp Common Stock may not be transferred except upon compliance with (C)
the
registration requirements of the Securities Act of 1933, as amended (the
“Securities
Act”),
or an
exemption therefrom, and (D) the provisions of this Agreement. Each Signing
Shareholder that is an entity, for itself, represents, warrants and
acknowledges, with respect to each holder of its equity interests, to the same
effect as the foregoing provisions of this Section 1.13(b).
(c) Each
Signing Shareholder, for himself, herself or itself, represents and warrants
that the execution and delivery of this Agreement by such Signing Shareholder
does not, and the performance of his, her or its obligations hereunder will
not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any court, administrative agency, commission, governmental
or
regulatory authority, domestic or foreign (a “Governmental
Entity”),
except (i) for applicable requirements, if any, of the Securities Act, the
Exchange Act, state securities laws (“Blue
Sky Laws”),
and
the rules and regulations thereunder, and (ii) where the failure to obtain
such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect (as defined in Section 10.2(a))
on such
Signing Shareholder or the Company or, after the Closing, the Delcorp, or
prevent consummation of the Merger or otherwise prevent the parties hereto
from
performing their obligations under this Agreement.
(d) Each
Signing Shareholder, for himself, herself or itself, represents and warrants
that he, she or it owns the shares of Company Common Stock listed on Exhibit
C
as being owned by him, her or it free and clear of all Liens.
-
7 -
1.14 Committee
and Representative for Purposes of Escrow Agreement.
(a) Delcorp
Committee.
Prior
to the Closing, the Board of Directors of Delcorp shall appoint a committee
consisting of one or more of its then members to act on behalf of Delcorp to
take all necessary actions and make all decisions pursuant to the Escrow
Agreement regarding Delcorp’s right to indemnification pursuant to Article VII
hereof.
In the event of a vacancy in such committee, the Board of Directors of Delcorp
shall appoint as a successor a Person who was a director of Delcorp prior to
the
Closing Date or some other Person who would qualify as an “independent” director
of Delcorp and who has not had any relationship with the Company prior to the
Closing. Such committee is intended to be the “Committee”
referred to in Article VII
hereof
and the Escrow Agreement.
(b) Representative.
The
Signing Shareholders hereby designate Xxxxx Xxxxx to represent the interests
of
the Persons entitled to receive Delcorp Common Stock as a result of the Merger
for purposes of the Escrow Agreement (such designee and any successor, the
“Representative”).
If
such Person ceases to serve in such capacity, for any reason, the Signing
Shareholders shall designate his or her successor. Failing such designation
within 10 business days after the Representative has ceased to serve, those
members of the Board of Directors of Delcorp who were directors of the Company
prior to the Closing shall appoint as successor a Person who was a former
shareholder of the Company or such other Person as such members shall designate.
Such Person or successor is intended to be the “Representative” referred to in
Section 1.11
and
Article VII
hereof
and the Escrow Agreement.
1.15 Outstanding
Company Derivative Securities.
The
Company shall arrange that the holders of all outstanding options, warrants
and
other derivative securities of the Company exercise such securities after the
Special Meeting but prior to the Effective Time without the payment of any
consideration therefor by the Company other than the issuance of shares of
Company Common Stock and cash that is owed to any of the Foreign Managers
pursuant to the Termination Agreements each of the Foreign Managers has entered
into with Delcorp, the Company and certain other Persons. Such exercise may
be
made contingent upon the occurrence of the Closing.
1.16 Intentionally
Omitted.
1.17 Shares
Subject to Dissenters’ Rights.
(a) Notwithstanding
Section 1.5
hereof,
Dissenting Shares shall not be converted into a right to receive Delcorp Common
Stock and the holders thereof shall be entitled only to such rights as are
granted by Applicable Nevada Law. Each holder of Dissenting Shares who becomes
entitled to payment for such shares pursuant to Applicable Nevada Law shall
receive payment therefor from the Surviving Corporation in accordance with
Applicable Nevada Law, provided, however, that (i) if any shareholder of the
Company who asserts dissenters’ rights in connection with the Merger (a
“Dissenter”)
shall
have failed to establish his entitlement to such rights as provided in
Applicable Nevada Law, or (ii) if any such Dissenter shall have effectively
withdrawn his demand for payment for such shares or waived or lost his right
to
payment for his shares under the appraisal rights process under Applicable
Nevada Law, the shares of Company Common Stock held by such Dissenter shall
be
treated as if they had been converted, as of the Effective Time, into a right
to
receive Delcorp Common Stock and as provided in Section 1.5.
The
Company shall give Delcorp prompt notice of any demands for payment received
by
the Company from a person asserting appraisal rights, and Delcorp shall have
the
right to participate in all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of
Delcorp, make any payment with respect to, or settle or offer to settle, any
such demands.
-
8 -
(b) As
used herein, “Dissenting
Shares”
means
any shares of Company Common Stock held by shareholders of the Company who
are
entitled to rights to receive payment for their shares under Chapter 92A of
the
Nevada Revised Statutes and who have properly exercised, perfected and not
subsequently withdrawn or lost or waived their rights to demand payment with
respect to their shares in accordance therewith.
1.18 EBITDA
Shares.
(a) If,
for the fiscal year of Delcorp ending December 31, 2008, Delcorp has EBITDA
equal to or greater than $39,300,000, Delcorp shall issue to the holders of
Company Certificates, in the aggregate, pursuant to Section 1.5(b),
2,500,000 shares of Delcorp Common Stock.
(b) Regardless
of whether Delcorp has EBITDA equal to or greater than $39,300,000 for its
fiscal year ending December 31, 2008, if for the fiscal year of Delcorp ending
December 31, 2009, Delcorp has EBITDA equal to or greater than $46,000,000,
Delcorp shall issue to the holders of Company Certificates, in the aggregate,
pursuant to Section 1.5(b),
2,500,000 shares of Delcorp Common Stock.
(c) As
used herein,
(i) “EBITDA”
means
for the applicable fiscal year, using results taken from the audited financial
statements of the Company, subject to certain adjustments, the following
calculation: income before provision for income taxes, plus interest expense,
less interest income, plus depreciation and amortization, plus amortization
of
intangible assets, plus any expenses arising solely from the Merger charged
to
income in such fiscal year, plus expense relating to the Termination Agreements
with Born and Morteboy of $1,277,340 in 2008 only, plus any GAAP expense
relating to the issuance of Rhapsody common stock to Born and Morteboy as part
of the Termination Agreements in 2008 only, plus any expense (non-cash only)
relating to the Delcorp Plan (as defined in Section
5.1(a)).
In
addition, any Rhapsody expenses prior to the Closing that are included in the
Surviving Corporation’s 2008 income statement will be excluded for purposes of
EBITDA calculation. Attached as Exhibit E
is a
sample calculation.
-
9 -
(ii) “EBITDA
Shares”
means
shares of Delcorp Common Stock issuable pursuant to either Section 1.18(a)
or
Section 1.18(b).
1.19 Registration
of Shares.
Delcorp
shall file as soon as possible after the Closing, and use its best efforts
to
cause to become effective, within 12 months after the Closing Date, a
registration statement under the Securities Act with respect to the shares
of
Delcorp Common Stock issued pursuant to this Agreement prior to the expiration
of such 12-month period, including EBITDA shares issued pursuant to Section
1.18(a),
to
those shareholders of the Company who are listed on Schedule
1.12.
1.20 Sale
Restriction.
No
public market sales of shares of Delcorp Common Stock whether or not issued
as a
result of the Merger, including EBITDA Shares, shall be made for a period of
twelve months following the Closing Date. No private sales of shares of Delcorp
Common Stock issued as a result of the Merger shall be made unless the purchaser
acknowledges and agrees to the restriction stated in the preceding sentence
by
delivery to Delcorp of a written document to such effect. Certificates
representing shares of Delcorp Common Stock issued as a result of the Merger
shall bear a prominent legend to such effect.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES REGARDING THE COMPANY
Subject
to the exceptions set forth in Schedule 2 attached hereto (the
“Company
Schedule”),
the
Company and the Signing Shareholders hereby represent and warrant to, and
covenant with, Delcorp as follows (as used in this Article II,
and
elsewhere in this Agreement, the term “Company”
includes the Subsidiaries, as hereinafter defined, unless the context clearly
otherwise indicates):
2.1
Organization
and Qualification.
(a) The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Nevada and has the requisite corporate
power and authority to own, lease and operate its assets and properties and
to
carry on its business as it is now being or currently planned by the Company
to
be conducted. The Company is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
and orders (“Approvals”)
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being or currently planned
by
the Company to be conducted, except where the failure to have such Approvals
could not, individually or in the aggregate, reasonably be expected to have
a
Material Adverse Effect on the Company. Complete and correct copies of the
certificate of incorporation and by-laws (or other comparable governing
instruments with different names) (collectively referred to herein as
“Charter
Documents”)
of the
Company, as amended and currently in effect, have been heretofore made available
to Delcorp or Delcorp’s counsel. The Company is not in violation of any of the
provisions of the Company’s Charter Documents.
-
10 -
(b) The
Company is duly qualified or licensed to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its activities
makes
such qualification or licensing necessary, except for such failures to be so
duly qualified or licensed and in good standing that could not, individually
or
in the aggregate, reasonably be expected to have a Material Adverse Effect
on
the Company. Each jurisdiction in which the Company is so qualified or licensed
is listed in Schedule 2.1.
(c) The
minute books of the Company contain true, complete and accurate records of
all
written minutes for meetings and written consents in lieu of meetings of its
Board of Directors (and any committees thereof), similar governing bodies and
stockholders (“Corporate
Records”)
since
the time of the Company’s organization. Copies of such Corporate Records of the
Company have been made available to Delcorp or Delcorp’s counsel.
(d) The
stock transfer, warrant and option transfer and ownership records of the Company
contain true, complete and accurate records of the securities ownership as
of
the date of such records and the transfers involving the capital stock and
other
securities of the Company since the time of the Company’s incorporation. Copies
of such records of the Company have been made available to Delcorp or Delcorp’s
counsel.
2.2 Subsidiaries.
(a) The
Company has no direct or indirect subsidiaries or participations in joint
ventures or other entities other than those listed in Schedule 2.2 (the
“Subsidiaries”).
Except as set forth in Schedule 2.2, the Company owns all of the
outstanding equity securities of the Subsidiaries, free and clear of all Liens
(as defined in Section 10.2(e)).
Except
for the Subsidiaries, the Company does not own, directly or indirectly, any
ownership, equity, profits or voting interest in any Person or has any agreement
or commitment to purchase any such interest, and has not agreed and is not
obligated to make nor is bound by any written, oral or other agreement,
contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan,
commitment or undertaking of any nature, as of the date hereof or as may
hereafter be in effect under which it may become obligated to make, any future
investment in or capital contribution to any other entity.
(b) Each
Subsidiary that is a corporation is duly incorporated, validly existing and
in
good standing under the laws of its state of incorporation (as listed in
Schedule 2.2) and has the requisite corporate power and authority to own,
lease and operate its assets and properties and to carry on its business as
it
is now being or currently planned by the Company to be conducted. Each
Subsidiary that is a limited liability company is duly organized or formed,
validly existing and in good standing under the laws of its state of
organization or formation (as listed in Schedule 2.2) and has the requisite
power and authority to own, lease and operate its assets and properties and
to
carry on its business as it is now being or currently planned by the Company
to
be conducted. Each Subsidiary is in possession of all Approvals necessary to
own, lease and operate the properties it purports to own, operate or lease
and
to carry on its business as it is now being or currently planned by the Company
to be conducted, except where the failure to have such Approvals could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company or such Subsidiary. Complete and correct copies
of
the Charter Documents of each Subsidiary, as amended and currently in effect,
have been heretofore delivered to Delcorp or Delcorp’s counsel. No Subsidiary is
in violation of any of the provisions of its Charter Documents.
-
11 -
(c) Each
Subsidiary is duly qualified or licensed to do business as a foreign corporation
or foreign limited liability company and is in good standing in each
jurisdiction where the character of the properties owned, leased or operated
by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and
in
good standing that could not, individually or in the aggregate, reasonably
be
expected to have a Material Adverse Effect on the Company or such Subsidiary.
Each jurisdiction in which each Subsidiary is so qualified or licensed is listed
in Schedule 2.2.
(d) The
minute books of each Subsidiary contain true, complete and accurate records
of
all written minutes for meetings and written consents in lieu of meetings of
its
Board of Directors (and any committees thereof), similar governing bodies and
stockholders. Copies of the Corporate Records of each Subsidiary have been
heretofore made available to Delcorp or Delcorp’s counsel.
2.3 Capitalization.
(a) The
authorized capital stock of the Company consists of 250,000 shares of Company
Common Stock, of which 4,368 shares are issued and outstanding as of the date
of
this Agreement, all of which shares of Company Common Stock are validly issued,
fully paid and nonassessable. Through Termination Agreements with the Foreign
Managers, at the time of the Closing of the Merger, Rhapsody will issue common
stock which would have represented an equivalent of an additional 94 shares
in
the aggregate to the Foreign Managers which would have resulted in 4,462 shares
of Company Common Stock outstanding as of the date of the Closing. Other than
Company Common Stock, the Company has no class or series of securities
authorized by its Charter Documents. Schedule 2.3(a) hereto contains a list
of all of the shareholders of the Company and the Foreign Managers, the number
of shares of Company Common Stock owned, or to be owned at the time of the
Closing, by each shareholder and Foreign Manager and each shareholder’s state of
residence. Except as set forth in Schedule 2.3(a) hereto, as of the date of
this Agreement, no shares of Company Common Stock are reserved for issuance
upon
the exercise of outstanding options to purchase Company Common Stock granted
to
employees of Company or other parties (“Company
Stock Options”)
other
than those issued by Rhapsody to the Foreign Managers. No shares of Company
Common Stock are reserved for issuance upon the exercise of outstanding warrants
or other rights (other than Company Stock Options) to purchase Company Common
Stock other than to the Foreign Managers. All shares of Company Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instrument pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. There are no
commitments or agreements of any character to which Company is bound obligating
Company to accelerate the vesting of any Company Stock Option as a result of
the
Merger. All outstanding shares of Company Common Stock and all outstanding
Company Stock Options have been issued and granted in compliance with (x) all
applicable securities laws and (in all material respects) other applicable
laws
and regulations, and (y) all requirements set forth in any applicable Company
Contracts (as defined in Section 2.19).
The
Company has heretofore delivered to Delcorp or Delcorp’s counsel true and
accurate copies of the forms of documents used for the issuance of Company
Stock
Options and shares to the Foreign Managers and a true and complete list of
the
holders thereof, including their names and the numbers of shares of Company
Common Stock underlying such holders’ Company Stock Options or in the
alternative the names of the Foreign Managers.
-
12 -
(b) Except
as set forth in Schedule 2.3(b) hereto or as set forth in Section 2.3(a)
hereof,
there are no subscriptions, options, warrants, equity securities, partnership
interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which the Company is
a
party or by which it is bound obligating the Company to issue, deliver or sell,
or cause to be issued, delivered or sold, or repurchase, redeem or otherwise
acquire, or cause the repurchase, redemption or acquisition of, any shares
of
capital stock, partnership interests or similar ownership interests of the
Company or obligating the Company to grant, extend, accelerate the vesting
of or
enter into any such subscription, option, warrant, equity security, call, right,
commitment or agreement.
(c) Except
as contemplated by this Agreement and except as set forth in
Schedule 2.3(c) hereto, there are no registration rights, and there is no
voting trust, proxy, rights plan, antitakeover plan or other agreement or
understanding to which the Company is a party or by which the Company is bound
with respect to any equity security of any class of the Company.
(d) Except
as set forth in Schedule 2.3(d), no outstanding shares of Company Common Stock
are unvested or subjected to a repurchase option, risk of forfeiture or other
condition under any applicable agreement with the Company.
(e) The
authorized and outstanding capital stock or membership interests of each
Subsidiary are set forth in Schedule 2.3(e) hereto. Except as set forth in
Schedule 2.3(e), the Company owns all of the outstanding equity securities
of each Subsidiary, free and clear of all Liens, either directly or indirectly
through one or more other Subsidiaries. There are no outstanding options,
warrants or other rights to purchase securities of any Subsidiary.
-
13 -
2.4 Authority
Relative to this Agreement.
The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and, to consummate
the
transactions contemplated hereby (including the Merger). The execution and
delivery of this Agreement and the consummation by the Company of the
transactions contemplated hereby (including the Merger) have been duly and
validly authorized by all necessary corporate action on the part of the Company
(including the approval by its Board of Directors and shareholders, subject
in
all cases to the satisfaction of the terms and conditions of this Agreement,
including the conditions set forth in Article VI),
and no
other corporate proceedings on the part of the Company or its shareholders
are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby pursuant to Applicable Nevada Law and the terms and
conditions of this Agreement. This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution
and
delivery thereof by the other parties hereto, constitutes the legal and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as may be limited by bankruptcy, insolvency, reorganization
or
other similar laws affecting the enforcement of creditors’ rights generally and
by general principles of equity.
2.5 No
Conflict; Required Filings and Consents.
Except
as set forth in Schedule 2.5 hereto:
(a) The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company shall not, (i) conflict with or
violate the Company’s Charter Documents, (ii) subject to obtaining the adoption
of this Agreement and the Merger by the stockholders of the Company, conflict
with or violate any Legal Requirements (as defined in Section 10.2(b)),
(iii)
result in any breach of or constitute a default (or an event that with notice
or
lapse of time or both would become a default) under, or materially impair the
Company’s rights or alter the rights or obligations of any third party under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any
of
the properties or assets of the Company pursuant to, any Company Contracts
or
(iv) result in the triggering, acceleration or increase of any payment to any
Person pursuant to any Company Contract, including any “change in control” or
similar provision of any Company Contract, except, with respect to clauses
(ii),
(iii) or (iv), for any such conflicts, violations, breaches, defaults,
triggerings, accelerations, increases or other occurrences that would not,
individually and in the aggregate, have a Material Adverse Effect on the
Company.
(b) The
execution and delivery of this Agreement by the Company does not, and the
performance of its obligations hereunder will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity or other third party (including, without limitation, lenders
and lessors), except (i) for applicable requirements, if any, of the Securities
Act, the Exchange Act or Blue Sky Laws, and the rules and regulations
thereunder, and appropriate documents received from or filed with the relevant
authorities of other jurisdictions in which the Company is licensed or qualified
to do business, (ii) for the filing of any notifications required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
“HSR
Act”),
if
required upon advice of counsel, and the expiration of the required waiting
period thereunder, (iii) the consents, approvals, authorizations and permits
described in Schedule 2.5, and (iv) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company or, after the Closing,
the Delcorp or the Surviving Corporation, or prevent consummation of the Merger
or otherwise prevent the parties hereto from performing their obligations under
this Agreement.
-
14 -
2.6 Compliance.
Except
as disclosed in Schedule 2.6, during the ten year period prior to the date
of
the Closing the Company has complied with and is not in violation of any Legal
Requirements with respect to the conduct of its business, or the ownership
or
operation of its business, except for failures to comply or violations which,
individually or in the aggregate, have not had and are not reasonably likely
to
have a Material Adverse Effect on the Company. The businesses and activities
of
the Company have not been and are not being conducted in violation of any Legal
Requirements. The Company is not in default or violation of any term, condition
or provision of any applicable Charter Documents. Except as set forth in
Schedule 2.6, during the ten year period prior to the date of the Closing
no written notice of non-compliance with any Legal Requirements has been
received by the Company (and the Company has no knowledge of any such notice
delivered to any other Person). The Company is not in violation of any term
of
any Company Contract, except for failures to comply or violations which,
individually or in the aggregate, have not had and are not reasonably likely
to
have a Material Adverse Effect on the Company.
2.7 Financial
Statements.
(a) The
Company has provided to Delcorp a correct and complete copy of the audited
consolidated financial statements (including any related notes thereto) of
the
Company for the fiscal years ended December 31, 2006, December 31, 2005 and
December 31, 2004 (the “Audited
Financial Statements”).
The
Audited Financial Statements were prepared in accordance with generally accepted
accounting principles of the United States (“U.S.
GAAP”)
applied on a consistent basis throughout the periods involved (except as may
be
indicated in the notes thereto), and each fairly presents in all material
respects the financial position of the Company at the respective dates thereof
and the results of its operations and cash flows for the periods
indicated.
(b) The
Company has provided to Delcorp a correct and complete copy of the unaudited
consolidated financial statements of the Company for the nine month period
ended
September 30, 2007 (including any notes related thereto) (the “Unaudited
Financial Statements”).
The
Unaudited Financial Statements comply as to form in all material respects,
and
were prepared in accordance with U.S. GAAP applied on a consistent basis
throughout the periods involved and in a manner consistent with the preparation
of the Audited Financial Statements, and fairly present in all material respects
the financial position of the Company at the date thereof and the results of
its
operations and cash flows for the period indicated, except that such statements
are subject to normal audit adjustments that are not expected to have a Material
Adverse Effect on the Company.
-
15 -
(c) The
books of account, minute books, stock certificate books and stock transfer
ledgers and other similar books and records of the Company have been maintained
in accordance with good business practice, are complete and correct in all
material respects and there have been no material transactions that are required
to be set forth therein and which have not been so set forth.
(d) Except
as otherwise noted in the Audited Financial Statements or the Unaudited
Financial Statements, the accounts and notes receivable of the Company reflected
on the balance sheets included in the Audited Financial Statements and the
Unaudited Financial Statements: (i) arose from bona fide sales transactions
in
the ordinary course of business and are payable on ordinary trade terms, (ii)
are legal, valid and binding obligations of the respective debtors enforceable
in accordance with their terms, except as such may be limited by bankruptcy,
insolvency, reorganization, or other similar laws affecting creditors’ rights
generally, and by general equitable principles, (iii) are not subject to any
valid set-off or counterclaim except to the extent set forth in such balance
sheet contained therein other than possible back charges which to the Company’s
knowledge do not exist at this time, which back charges, to the Company’s
knowledge, either individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect upon the Company and its Subsidiaries
taken as a whole, (iv) are collectible in the ordinary course of business
consistent with past practice in the aggregate recorded amounts thereof, net
of
any applicable reserve reflected in such balance sheet referenced above, and
(v)
are not the subject of any actions or proceedings brought by or on behalf of
the
Company. The parties to this Agreement agree that the representations contained
in this Section
2.7(d)
are not
intended to imply or represent that any job or project of the Company or its
Subsidiaries under contract as of the Closing Date will have any level of
profitability or may not result in a loss.
2.8 No
Undisclosed Liabilities.
Except
as set forth in Schedule 2.8 hereto, the Company and its Subsidiaries have
no liabilities (absolute, accrued, contingent or otherwise) of a nature required
to be disclosed on a balance sheet or in the related notes to financial
statements that are, individually or in the aggregate, material to the business,
results of operations or financial condition of the Company and its
Subsidiaries, except: (i) liabilities provided for in or otherwise disclosed
in
the interim balance sheet included in the Unaudited Financial Statements or
in
the notes to the Audited Financial Statements, and (ii) such liabilities arising
in the ordinary course of the Company’s business since December 31, 2006, none
of which, individually or in the aggregate, would have a Material Adverse Effect
on the Company.
-
16 -
2.9 Absence
of Certain Changes or Events.
Except
as set forth in Schedule 2.9 hereto or in the Unaudited Financial
Statements, since December 31, 2006, there has not been: (i) any Material
Adverse Effect on the Company and its Subsidiaries, (ii) any declaration,
setting aside or payment of any dividend on, or other distribution (whether
in
cash, stock or property) in respect of, any of the Company’s stock, or any
purchase, redemption or other acquisition by the Company of any of the Company’s
capital stock or any other securities of the Company or any options, warrants,
calls or rights to acquire any such shares or other securities, (iii) any split,
combination or reclassification of any of the Company’s capital stock, (iv) any
granting by the Company or its Subsidiaries of any increase in compensation
or
fringe benefits, except for normal increases of cash compensation in the
ordinary course of business consistent with past practice, or any payment by
the
Company or any of its Subsidiaries of any bonus, except for bonuses made in
the
ordinary course of business consistent with past practice, or any granting
by
the Company or any of its Subsidiaries of any increase in severance or
termination pay or any entry by the Company or any of its Subsidiaries into
any
currently effective employment, severance, termination or indemnification
agreement or any agreement the benefits of which are contingent or the terms
of
which are materially altered upon the occurrence of a transaction involving
the
Company of the nature contemplated hereby, (v) entry by the Company or any
of
its Subsidiaries into any licensing or other agreement with regard to the
acquisition or disposition of any Intellectual Property (as defined in
Section 2.18
hereof)
other than licenses in the ordinary course of business consistent with past
practice or any amendment or consent with respect to any licensing agreement
filed or required to be filed by the Company or any of its Subsidiaries with
respect to any Governmental Entity, (vi) any material change by the Company
or
any of its Subsidiaries in its accounting methods, principles or practices,
(vii) any change in the auditors of the Company, (viii) any issuance of capital
stock of the Company, (ix) any revaluation by the Company of any of its assets,
including, without limitation, writing down the value of capitalized inventory
or writing off notes or accounts receivable or any sale of assets of the Company
other than in the ordinary course of business, or (x) any agreement, whether
written or oral, to do any of the foregoing.
2.10 Litigation.
Except
as disclosed in Schedule 2.10 hereto, there are no claims, suits, actions
or proceedings pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
that involve (a) a worker compensation claim in excess of $100,000 or (a) any
other claim in excess of $250,000.
2.11 Employee
Benefit Plans.
(a) Schedule 2.11(a)
lists all employee compensation, incentive, fringe or benefit plans, programs,
policies, commitments or other arrangements (whether or not set forth in a
written document) covering any active or former employee, director or consultant
of the Company or any of its Subsidiaries, or any trade or business (whether
or
not incorporated) which is under common control with the Company or any of
its
Subsidiaries, with respect to which the Company has liability (individually,
a
“Plan,”
and,
collectively, the “Plans”).
All
Plans have been maintained and administered in all material respects in
compliance with their respective terms and with the requirements prescribed
by
any and all statutes, orders, rules and regulations which are applicable to
such
Plans, and all liabilities with respect to the Plans have been properly
reflected in the financial statements and records of the Company or any of
its
Subsidiaries. No suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of Plan activities) has been brought, or, to
the
knowledge of the Company, is threatened, against or with respect to any Plan.
There are no audits, inquiries or proceedings pending or, to the knowledge
of
the Company, threatened by any governmental agency with respect to any Plan.
All
contributions, reserves or premium payments required to be made or accrued
as of
the date hereof to the Plans have been timely made or accrued. The Company
or
any of its Subsidiaries do not have any plan or commitment to establish any
new
Plan, to modify any Plan (except to the extent required by law or to conform
any
such Plan to the requirements of any applicable law, in each case as previously
disclosed to Delcorp in writing, or as required by this Agreement), or to enter
into any new Plan. Except as disclosed in Schedule 2.11(a), each Plan can
be amended, terminated or otherwise discontinued after the Closing in accordance
with its terms, without liability to Delcorp, the Company or any of its
Subsidiaries (other than ordinary administration expenses and expenses for
benefits accrued but not yet paid).
-
17 -
(b) Except
as disclosed in Schedule 2.11(b) hereto, neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will (i) result in any payment (including severance, unemployment compensation,
golden parachute, bonus or otherwise) becoming due to any stockholder, director
or employee of the Company and its Subsidiaries under any Plan or otherwise,
(ii) materially increase any benefits otherwise payable under any Plan, or
(iii)
result in the acceleration of the time of payment or vesting of any such
benefits.
2.12 Labor
Matters.
(a) Except
as set forth on Schedule 2.12, the Company and its Subsidiaries are not a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company and its Subsidiaries nor, to
the
Company’s knowledge, are there any activities or proceedings of any labor union
to organize any such employees. There are no pending grievance or similar
proceedings involving the Company and its Subsidiaries and any of its employees
subject to a collective bargaining agreement or other labor union contract
and
there are no continuing obligations of the Company and its Subsidiaries pursuant
to the resolution of any such proceeding that is no longer pending.
(b) Except
as provided for in the collective bargaining agreements and labor union
contracts set forth on Schedule 2.12, each employee and consultant of the
Company and its Subsidiaries is terminable “at will” subject to applicable
notice periods as set forth by law or in the employment agreement, but in any
event not more than ninety (90) days, and there are no agreements or
understandings between the Company and its Subsidiaries and any of their
employees or consultants that their employment or services will be for any
particular period. The Company has no knowledge that any of its officers or
key
employees intends to terminate his or her employment with the Company or any
of
its Subsidiaries. The Company and any of it Subsidiaries are in compliance
in
all material respects and, to the Company’s knowledge, each of the Company’s and
its Subsidiaries’ employees and consultants is in compliance in all material
respects, with the terms of the respective employment and consulting agreements
between the Company or its Subsidiaries and such individuals. Except as
otherwise disclosed in Schedule 2.12, there are not, and there have not
been, any oral or informal arrangements, commitments or promises between the
Company or its Subsidiaries and any employees or consultants of the Company
or
its Subsidiaries that have not been documented as part of the formal written
agreements between any such individuals and the Company or its Subsidiaries
that
have been made available to Delcorp.
-
18 -
(c) The
Company and its Subsidiaries are in compliance in all material respects with
all
Legal Requirements applicable to its employees, respecting employment,
employment practices, terms and conditions of employment and wages and hours
and
is not liable for any arrears of wages or penalties with respect thereto. The
Company’s and its Subsidiaries’ obligations to provide statutory severance pay
to their employees are fully funded or accrued on the Unaudited Financial
Statements and the Company has no knowledge of any circumstance that could
give
rise to any valid claim by a current or former employee for compensation on
termination of employment (beyond the statutory severance pay to which employees
are entitled). All amounts that the Company is legally or contractually required
either (x) to deduct from its employees’ salaries or to transfer to such
employees’ pension or provident, life insurance, incapacity insurance,
continuing education fund or other similar funds or (y) to withhold from its
employees’ salaries and benefits and to pay to any Governmental Entity as
required by applicable Legal Requirements have, in each case, been duly
deducted, transferred, withheld and paid, and the Company and its Subsidiaries
do not have any outstanding obligation to make any such deduction, transfer,
withholding or payment. There are no pending, or to the Company’s knowledge,
threatened or reasonably anticipated claims or actions against the Company
and
its Subsidiaries by any employee in connection with such employee’s employment
or termination of employment by the Company or any of its
Subsidiaries.
(d) No
employee or former employee of the Company and its Subsidiaries is owed any
wages, benefits or other compensation for past services (other than wages,
benefits and compensation accrued in the ordinary course of business during
the
current pay period and any accrued benefits for services, which by their terms
or under applicable law, are payable in the future, such as accrued vacation,
recreation leave and severance pay).
2.13 Restrictions
on Business Activities.
Except
as disclosed in Schedule 2.13 hereto, there is no agreement, commitment,
judgment, injunction, order or decree binding upon the Company or its
Subsidiaries or their assets or to which the Company or its Subsidiaries is
a
party which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of the Company or
its
Subsidiaries, any acquisition of property by the Company or its Subsidiaries
or
the conduct of business by the Company or its Subsidiaries as currently
conducted other than such effects, individually or in the aggregate, which
have
not had and could not reasonably be expected to have a Material Adverse Effect
on the Company or its Subsidiaries.
-
19 -
2.14 Title
to Property.
(a) All
real property owned by the Company and its Subsidiaries (including improvements
and fixtures thereon, easements and rights of way) is shown or reflected on
the
balance sheet of the Company included in the Unaudited Financial Statements
and
is listed on Schedule 2.14(a) hereto. The Company and its Subsidiaries have
good, valid and marketable fee simple title to the real property respectively
owned by each such entity, and except as set forth in the Audited Financial
Statements or on Schedule 2.14(a) hereto, all of such real property is held
free and clear of (i) all leases, licenses and other rights to occupy or use
such real property and (ii) all Liens, rights of way, easements, restrictions,
exceptions, variances, reservations, covenants or other title defects or
limitations of any kind, other than liens for taxes not yet due and payable
and
such liens or other imperfections of title, if any, as do not materially detract
from the value of or materially interfere with the present use of the property
affected thereby. Schedule 2.14(a) hereto also contains a list of all
options or other contracts under which the Company and its Subsidiaries have
a
right to acquire or the obligation to sell any interest in real
property.
(b) Except
as otherwise disclosed on Schedule 2.14(b), all leases of real property
held by the Company and its Subsidiaries, and all personal property and other
property and assets of the Company and its Subsidiaries owned, used or held
for
use in connection with the business of the Company and its Subsidiaries (the
“Personal
Property”)
are
shown or reflected on the balance sheet included in the Audited Financial
Statements or the Unaudited Financial Statements, to the extent required by
U.S.
GAAP, as of the dates of such Audited Financial Statements and Unaudited
Financial Statements, other than those entered into or acquired on or after
the
date of the Unaudited Financial Statements in the ordinary course of business.
Schedule 2.14(b) hereto contains a list of all leases of real property and
Personal Property held by the Company and its Subsidiaries where the annual
lease payments are greater than $100,000 (other than leases of vehicles, office
equipment, or operating equipment made in the ordinary course of business).
The
Company and its Subsidiaries have good and marketable title to the Personal
Property owned respectively by each such entity, and all such Personal Property
is in each case held free and clear of all Liens, except for Liens disclosed
in
the Audited Financial Statements or in Schedule 2.14(b) hereto, none of
which Liens is reasonably expected to have, individually or in the aggregate,
a
Material Adverse Effect on such property or on the present or contemplated
use
of such property in the businesses of the Company or any of its
Subsidiaries.
(c) All
leases pursuant to which the Company an/or its Subsidiaries lease from others
material real property or Personal Property are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing material default or event of default of the Company or
its
Subsidiaries or, to the Company’s knowledge, any other party (or any event which
with notice or lapse of time, or both, would constitute a material default),
except where the lack of such validity and effectiveness or the existence of
such default or event of default could not reasonably be expected to have a
Material Adverse Effect on the Company or its Subsidiaries.
-
20 -
(d) The
Company and its Subsidiaries are in possession of, or has valid and effective
rights to, all properties, assets and rights (including Intellectual Property)
required, in all material respects for the effective conduct of its business,
as
it is currently operated and expected to be operated in the future, in the
ordinary course.
2.15 Taxes.
(a) Definition
of Taxes.
For the
purposes of this Agreement, “Tax”
or
“Taxes”
refers
to any and all federal, state, local and foreign taxes, including, without
limitation, gross receipts, income, profits, sales, use, occupation, value
added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, assessments, governmental charges and
duties together with all interest, penalties and additions imposed with respect
to any such amounts and any obligations under any agreements or arrangements
with any other Person with respect to any such amounts and including any
liability of a predecessor entity for any such amounts.
(b) Tax
Returns and Audits.
Except
as set forth in Schedule 2.15 hereto:
(i) The
Company and its Subsidiaries have timely filed all federal, state, local and
foreign returns, estimates, information statements and reports relating to
Taxes
(“Returns”)
required to be filed by the Company or its Subsidiaries with any Tax authority
prior to the date hereof, except such Returns that are not material to the
Company or its Subsidiaries. All such Returns are true, correct and complete
in
all material respects. The Company and its Subsidiaries have paid all Taxes
shown to be due and payable on such Returns.
(ii) All
Taxes that the Company and its Subsidiaries are required by law to withhold
or
collect have been duly withheld or collected, and have been timely paid over
to
the proper governmental authorities to the extent due and payable.
(iii) The
Company and its Subsidiaries have not been delinquent in the payment of any
material Tax nor is there any material Tax deficiency outstanding, proposed
or
assessed against the Company or its Subsidiaries, nor have the Company or its
Subsidiaries executed any unexpired waiver of any statute of limitations on
or
extending the period for the assessment or collection of any Tax. The Company
and its Subsidiaries have complied with all Legal Requirements with respect
to
payments made to third parties and the withholding of any payment of withheld
Taxes and has timely withheld from employee wages and other payments and timely
paid over in full to the proper taxing authorities all amounts required to
be so
withheld and paid over for all periods.
-
21 -
(iv) To
the knowledge of the Company, no audit or other examination of any Return of
the
Company and its Subsidiaries by any Tax authority is presently in progress,
nor
has the Company or any Subsidiary been notified of any request for such an
audit
or other examination.
(v) No
adjustment relating to any Returns filed by the Company or any Subsidiary has
been proposed in writing, formally or informally, by any Tax authority to the
Company or any Subsidiary or any representative thereof.
(vi) The
Company and its Subsidiaries have no liability for any unpaid Taxes which have
not been accrued for or reserved on the Company’s balance sheets included in the
Audited Financial Statements or the Unaudited Financial Statements, whether
asserted or unasserted, contingent or otherwise, other than any liability for
unpaid Taxes that may have accrued since the end of the most recent fiscal
year
in connection with the operation of the business of the Company in the ordinary
course of business.
(vii) The
Company has not taken any action and does not know of any fact, agreement,
plan
or other circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
(viii) No
current shareholder of the Company is a foreign person subject to withholding
under Section 1445 of the Code and the regulations promulgated thereunder
and the Company will provide certification to that effect from each shareholder
to Delcorp at the Closing.
2.16 Environmental
Matters.
(a) Except
as disclosed in Schedule 2.16 hereto and except for such matters that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect: (i) the Company and/or its Subsidiaries have complied with
all
applicable Environmental Laws (as defined below); (ii) the properties currently
operated or being constructed by the Company or its Subsidiaries (including
soils, groundwater, surface water, air, buildings or other structures) are
not
contaminated with any Hazardous Substances (as defined below) as a result of
the
actions or omissions of the Company and its Subsidiaries ; (iii) the properties
formerly owned, operated or constructed by the Company and/or its Subsidiaries
were not contaminated with Hazardous Substances by the Company and/or its
Subsidiaries during the period of ownership, operation or construction by the
Company or its Subsidiaries or, to the Company’s knowledge, during any prior
period; (iv) the Company and/or its Subsidiaries are not subject to liability
for any Hazardous Substance disposal or contamination on any third party or
public property (whether above, on or below ground or in the atmosphere or
water); (vi) neither the Company nor its Subsidiaries have received any notice,
demand, letter, claim or request for information alleging that the Company
and/or its Subsidiaries may be in violation of or liable under any Environmental
Law; and (vii) the Company and/or its Subsidiaries are not subject to any
orders, decrees, injunctions or other arrangements with any Governmental Entity
or subject to any indemnity or other agreement with any third party relating
to
liability under any Environmental Law or relating to Hazardous
Substances.
-
22 -
(b) As
used in this Agreement, the term “Environmental
Law”
means
any federal, state, local or foreign law, regulation, order, decree, permit,
authorization, opinion, common law or agency requirement relating to: (A) the
protection, investigation or restoration of the environment, health and safety,
or natural resources; (B) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property.
(c) As
used in this Agreement, the term “Hazardous
Substance”
means
any substance that is: (i) listed, classified or regulated pursuant to any
Environmental Law; (ii) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (iii) any other substance which is the
subject of regulatory action by any Governmental Entity pursuant to any
Environmental Law.
(d) Schedule 2.16(d)
sets forth all environmental studies and investigations completed within the
last five (5) years or in process with respect to the Company and/or its
subsidiaries or their respective properties, assets or operations, including
to
the knowledge of the Company all phase reports. All such written reports and
material documentation relating to any such study or investigation have been
provided by the Company to Delcorp.
2.17 Brokers;
Third Party Expenses.
Except
as set forth in Schedule 2.17 hereto, the Company has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage, finders’
fees, agent’s commissions or any similar charges in connection with this
Agreement or any transactions contemplated hereby. Except pursuant to
Section 1.5,
and as
disclosed in Schedule 2.17 hereto, no shares of common stock, options,
warrants or other securities of either Company or Delcorp are payable to any
third party by Company as a result of this Merger.
2.18 Intellectual
Property.
(a) Schedule 2.18
hereto contains a description of all material Intellectual Property of the
Company and its Subsidiaries. For the purposes of this Agreement, the following
terms have the following definitions:
(i) “Intellectual
Property”
shall
mean any or all of the following and all worldwide common law and statutory
rights in, arising out of, or associated therewith: (i) patents and applications
therefor and all reissues, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part thereof (“Patents”);
(ii)
inventions (whether patentable or not), invention disclosures, improvements,
trade secrets, proprietary information, know how, technology, technical data
and
customer lists, and all documentation relating to any of the foregoing; (iii)
copyrights, copyrights registrations and applications therefor, and all other
rights corresponding thereto throughout the world (“Copyrights”);
(iv)
software and software programs; (v) domain names, uniform resource locators
and
other names and locators associated with the Internet (vi) industrial designs
and any registrations and applications therefor; (vii) trade names, logos,
common law trademarks and service marks, trademark and service xxxx
registrations and applications therefor (collectively, “Trademarks”);
(viii) all databases and data collections and all rights therein; (ix) all
moral
and economic rights of authors and inventors, however denominated, and (x)
any
similar or equivalent rights to any of the foregoing (as
applicable).
-
23 -
(ii) “Company
Intellectual Property”
shall
mean any Intellectual Property that is owned by, or exclusively licensed to,
the
Company or any of its Subsidiaries, including software and software programs
developed by or exclusively licensed to the Company or any of its Subsidiaries
(specifically excluding any off the shelf or shrink-wrap software).
(iii) “Registered
Intellectual Property”
means
all Intellectual Property that is the subject of an application, certificate,
filing, registration or other document issued, filed with, or recorded by any
government or other legal authority.
(iv) “Company
Registered Intellectual Property”
means
all of the Registered Intellectual Property owned by, or filed in the name
of,
the Company or any of its Subsidiaries
(v) “Company
Products”
means
all current versions of products or service offerings of the Company or any
of
its Subsidiaries.
(b) The
Company and its Subsidiaries own or have enforceable rights to use all
Intellectual Property required for the conduct of their respective business
as
presently conducted or as presently contemplated to be conducted. Except as
disclosed in Schedule 2.18 hereto, no Company Intellectual Property or
Company Product is subject to any material proceeding or outstanding decree,
order, judgment, contract, license, agreement or stipulation restricting in
any
manner the use, transfer or licensing thereof by the Company or any of its
Subsidiaries, or which may affect the validity, use or enforceability of such
Company Intellectual Property or Company Product, which in any such case could
reasonably be expected to have a Material Adverse Effect on the Company or
any
of its Subsidiaries.
(c) Except
as disclosed in Schedule 2.18 hereto, the Company and its Subsidiaries owns
and has good and exclusive title to each material item of Company Intellectual
Property owned by it free and clear of any Liens (excluding non-exclusive
licenses and related restrictions granted by it in the ordinary course of
business); and the Company and its Subsidiaries are the exclusive owner of
all
material registered Trademarks and Copyrights used in connection with the
operation or conduct of the business of the Company and its Subsidiaries
including the sale of any products or the provision of any services by the
Company and its Subsidiaries.
-
24 -
(d) The
operation of the business of the Company and its Subsidiaries as such business
currently is conducted, including the Company’s and its Subsidiaries’ use of any
product, device or process, has not and does not infringe or misappropriate
the
Intellectual Property of any third party or constitute unfair competition or
trade practices under the laws of any jurisdiction and the Company and its
Subsidiaries have not received any claims or threats from third parties alleging
any such infringement, misappropriation or unfair competition or trade
practices.
2.19 Agreements,
Contracts and Commitments.
(a) Schedule 2.19
hereto sets forth a complete and accurate list of all Material Company Contracts
(as hereinafter defined), specifying the parties thereto. For purposes of this
Agreement, (i) the term “Company
Contracts”
shall
mean all contracts, agreements, leases, mortgages, indentures, notes, bonds,
licenses, permits, franchises, purchase orders, sales orders, and other
understandings, commitments and obligations (including, without limitation,
outstanding offers and proposals) of any kind, whether written or oral, to
which
the Company or any of its Subsidiaries is a party or by or to which any of
the
properties or assets of the Company or any of its Subsidiaries may be bound,
subject or affected (including without limitation notes or other instruments
payable to the Company or any of its Subsidiaries) and (ii) the term
“Material
Company Contracts”
shall
mean (x) each Company Contract (A) providing for payments (present or future)
to
the Company or any of its Subsidiaries in excess of $5,000,000 in the aggregate
or (B) under or in respect of which the Company or any of its Subsidiaries
presently have any liability or obligation of any nature whatsoever (absolute,
contingent or otherwise) in excess of $5,000,000, (y) each Company Contract
that
otherwise is or may be material to the businesses, operations, assets, condition
(financial or otherwise) or prospects of the Company or any of its Subsidiaries,
and (z) the limitations of subclause (x) and subclause (y) notwithstanding,
each
of the following Company Contracts:
(i) any
mortgage, indenture, note, installment obligation or other instrument, agreement
or arrangement for or relating to any borrowing of money by or from the Company
or any of its Subsidiaries and by or to any officer, director, stockholder
or
holder of derivative securities of the Company or any of its Subsidiaries
(“Insider”);
(ii) any
mortgage, indenture, note, installment obligation or other instrument, agreement
or arrangement for or relating to any borrowing of money from an Insider by
the
Company;
(iii) any
guaranty, direct or indirect, by the Company, a Subsidiary or any Insider of
the
Company of any obligation for borrowings, or otherwise, excluding endorsements
made for collection in the ordinary course of business;
-
25 -
(iv) any
Company Contract of employment or management;
(v) any
Company Contract made other than in the ordinary course of business or (x)
providing for the grant of any preferential rights to purchase or lease any
asset of the Company or any of its Subsidiaries or (y) providing for any right
(exclusive or non-exclusive) to sell or distribute, or otherwise relating to
the
sale or distribution of, any product or service of the Company or any of its
Subsidiaries;
(vi) any
obligation to register any shares of the capital stock or other securities
of
the Company or any of its Subsidiaries with any Governmental
Entity;
(vii) any
obligation to make payments, contingent or otherwise, arising out of the prior
acquisition of the business, assets or stock of other Persons;
(viii) any
collective bargaining agreement with any labor union;
(ix) any
lease or similar arrangement for the use by the Company or any of its
Subsidiaries of real property or Personal Property where the annual lease
payments are greater than $100,000 (other than any lease of vehicles, office
equipment or operating equipment made in the ordinary course of
business);
(x) any
Company Contract granting or purporting to grant, or otherwise in any way
relating to, any mineral rights or any other interest (including, without
limitation, a leasehold interest) in real property;
(xi) any
Company Contract to which any Insider of the Company or any of its Subsidiaries,
or any entity owned or controlled by an Insider, is a party; and
(xii) any
offer or proposal which, if accepted, would constitute any of the
foregoing.
(b) Each
Material Company Contract was entered into at arms’ length and in the ordinary
course, is in full force and effect and, to the Company’s knowledge, is valid
and binding upon and enforceable against each of the parties thereto, except
insofar as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
or by principles governing the availability of equitable remedies. To the
Company’s knowledge, no other party to a Material Company Contract is the
subject of a bankruptcy or insolvency proceeding. True, correct and complete
copies of all Material Company Contracts and all offers and proposals that,
if
accepted, would constitute Material Company Contracts (or written summaries
in
the case of oral Material Company Contracts or offers or proposals) have been
made available to Delcorp or Delcorp’s counsel.
-
26 -
(c) Except
as set forth in Schedule 2.19, neither the Company nor, to the best of the
Company’s knowledge, any other party thereto is in breach of or in default
under, and no event has occurred which with notice or lapse of time or both
would become a breach of or default under, any Company Contract, and no party
to
any Company Contract has given any written notice of any claim of any such
breach, default or event, which, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect on the Company and its
Subsidiaries. Each Material Company Contract that has not expired by its terms
is in full force and effect.
2.20 Insurance.
Schedule 2.20 sets forth the Company’s and its Subsidiaries insurance
policies and fidelity and surety bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors (collectively, the
“Insurance
Policies”).
The
insurances provided by such Insurance Policies are adequate in amount and scope
for the Company’s and its Subsidiaries’ business and operations, including any
insurance required to be maintained by Company Contracts.
2.21 Governmental
Actions/Filings.
(a) The
Company and its Subsidiaries have been granted and hold, and have made, all
Governmental Actions/Filings (as defined below) (including, without limitation,
Governmental Actions/Filings required for emission or discharge of effluents
and
pollutants into the air and the water) necessary to the conduct by the Company
and its Subsidiaries of their business (as presently conducted and as presently
proposed to be conducted) or used or held for use by the Company and its
Subsidiaries except for any thereof that if not granted, held or made, would
not
have, individually or in the aggregate, a Material Adverse Effect upon the
Company and its Subsidiaries taken as a whole. Each such Governmental
Action/Filing is in full force and effect and will be renewed in the ordinary
course of the Company’s business and the Company and its Subsidiaries are in
substantial compliance with all of their obligations with respect thereto.
No
event has occurred and is continuing which requires or permits, or after notice
or lapse of time or both would require or permit, and consummation of the
transactions contemplated by this Agreement or any ancillary documents will
not
require or permit (with or without notice or lapse of time, or both), any
modification or termination of any such Governmental Actions/Filings except
such
events which, either individually or in the aggregate, would not have a Material
Adverse Effect upon the Company or any of its Subsidiaries taken as a whole.
No
Governmental Action/Filing is necessary to be obtained, secured or made by
the
Company or any of its Subsidiaries to enable any of them to continue to conduct
its business and operations and use its properties after the Closing in a manner
that is consistent with current practice except for any of such that, if not
obtained, secured or made, would not, either individually or in the aggregate,
have a Material Adverse Effect upon the Company or any of its Subsidiaries
taken
as a whole.
-
27 -
(b) Except
as set forth in Schedule 2.21(b), no contractors’ licenses are necessary to
be obtained, secured or made by the Company or any of its Subsidiaries to enable
any of them to continue to conduct its businesses and operations and use its
properties after the Closing in a manner which is consistent with current
practice. All of the contractors’ licenses listed on Schedule 2.21(b) have been
obtained, secured or made and are in full force and effect.
(c) For
purposes of this Agreement, the term “Governmental
Action/Filing”
shall
mean any franchise, license, certificate of compliance, authorization, consent,
order, permit, approval, consent or other action of, or any filing, registration
or qualification with, any federal, state, municipal, foreign or other
governmental, administrative or judicial body, agency or authority.
2.22 Interested
Party Transactions.
Except
as set forth in the Schedule 2.22 hereto, no employee, officer, director or
stockholder of the Company or any of its Subsidiaries or a member of his or
her
immediate family is indebted to the Company or any of its Subsidiaries, nor
is
the Company or any of its Subsidiaries indebted (or committed to make loans
or
extend or guarantee credit) to any of such Persons, other than (i) for payment
of salary for services rendered, (ii) reimbursement for reasonable expenses
incurred on behalf of the Company or any of its Subsidiaries, and (iii) for
other employee benefits made generally available to all employees. Other than
those Company shareholders who are also shareholders in Xxxxxxxxx Investment
Group, Inc., and except as set forth in Schedule 2.22, to the Company’s
knowledge, none of such individuals has any direct or indirect ownership
interest in any Person with whom the Company or any of its Subsidiaries is
affiliated or with whom the Company or any of its Subsidiaries has a contractual
relationship, or in any Person that competes with the Company or any of its
Subsidiaries, except that each employee, stockholder, officer or director of
the
Company or any of its Subsidiaries and members of their respective immediate
families may own less than 5% of the outstanding stock in publicly traded
companies that may compete with the Company or any of its Subsidiaries. Except
as set forth in Schedule 2.22, to the knowledge of the Company, no officer,
director or Signing Shareholder or any member of their immediate families is,
directly or indirectly, interested in any Material Company Contract with the
Company or any of its Subsidiaries (other than such contracts as relate to
any
such Person’s ownership of capital stock or other securities of the Company or
such Person’s employment with the Company or any of its
Subsidiaries).
2.23 Board
Approval.
The
board of directors of the Company (including any required committee or subgroup
thereof) has, as of the date of this Agreement, duly approved, subject to the
approval of the Company’s shareholders, this Agreement and the transactions
contemplated hereby.
2.24 Signing
Shareholder Approval.
The
shares of Company Common Stock owned by the Signing Shareholders and to which
they have been granted the right to vote with respect to the Merger by other
shareholders of the Company constitute, in the aggregate, the requisite amount
of shares necessary for the adoption of this Agreement and the approval of
the
Merger by the shareholders of the Company in accordance with Applicable Nevada
Law.
-
28 -
2.25 No
Illegal or Improper Transactions.
Since
January 1, 2002, neither the Company nor any of its Subsidiaries nor any
Signing Shareholder or any officer, director, employee, agent or Affiliate
of
the Company or its Subsidiaries on its behalf has offered, paid or agreed to
pay
to any person or entity (including any governmental official) or solicited,
received or agreed to receive from any such person or entity, directly or
indirectly, any money or anything of value for the purpose or with the intent
of
(a) obtaining or maintaining business for the Company or any of its
Subsidiaries, (b) facilitating the purchase or sale of any product or service,
or (c) avoiding the imposition of any fine or penalty, in any manner which
is in
violation of any applicable ordinance, regulation or law, the effect of which,
individually or in the aggregate, would reasonably be expected to be materially
adverse to the business, assets, prospects or financial condition of the Company
or any of its Subsidiaries, taken as a whole. To the Company’s knowledge, no
employee of the Company or any of its Subsidiaries has provided or is providing
information to any law enforcement agency regarding the commission or possible
commission of any crime or the violation or possible violation of any applicable
law. Neither the Company nor any of its Subsidiaries nor any officer, employee,
contractor, subcontractor or agent of the Company or any of its Subsidiaries
has
discharged, demoted, suspended, threatened, harassed or in any other manner
discriminated against an employee of the Company or any of its Subsidiaries
in
the terms and conditions of employment because of any act of such employee
described in 18 U.S.C. Sec. 1514A(a).
2.26 Representations
and Warranties Complete.
The
representations and warranties of the Company and the Signing Shareholders
included in this Agreement and any list, statement, document or information
set
forth in, or attached to, any Schedule provided pursuant to this Agreement
or delivered hereunder, are true and complete in all material respects and
do
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 contained
therein not misleading, under the circumstance under which they were
made.
2.27 Survival
of Representations and Warranties.
The
representations and warranties of the Company and the Signing Shareholders
set
forth in this Agreement shall survive the Closing as set forth in Section 7.3(a).
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF DELCORP
Subject
to the exceptions set forth in Schedule 3 attached hereto (the
“Delcorp
Schedule”),
Delcorp represents and warrants to, and covenants with, the Company and the
Signing Shareholders, as follows:
3.1 Organization
and Qualification.
(a) Delcorp
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry
on
its business as it is now being or currently planned by Delcorp to be conducted.
Delcorp is in possession of all Approvals necessary to own, lease and operate
the properties it purports to own, operate or lease and to carry on its business
as it is now being or currently planned by Delcorp to be conducted, except
where
the failure to have such Approvals could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Delcorp. Complete
and correct copies of the Charter Documents of Delcorp, as amended and currently
in effect, have been heretofore delivered to the Company. Delcorp is not in
violation of any of the provisions of Delcorp’s Charter Documents.
-
29 -
(b) Delcorp
is duly qualified or licensed to do business as a foreign corporation and is
in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that could not, individually or
in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Delcorp.
3.2 Subsidiaries
and Other Interests.
(a) Delcorp
has no Subsidiaries and does not own, directly or indirectly, any ownership,
equity, profits or voting interest in any Person or have any agreement or
commitment to purchase any such interest, and Delcorp has not agreed and is
not
obligated to make nor is bound by any written, oral or other agreement,
contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan,
commitment or undertaking of any nature, as of the date hereof or as may
hereafter be in effect under which it may become obligated to make, any future
investment in or capital contribution to any other entity.
(b) Delcorp
does not own directly or indirectly any interest or investment (whether equity
or debt) in any corporation, partnership, joint venture, business, trust or
other entity (other than investments in short term investment
securities).
3.3 Capitalization.
(a) As
of the date of this Agreement, the authorized capital stock of Delcorp consists
of 15,000,000 shares of common stock, par value $0.0001 per share (“Delcorp
Common Stock”)
and
1,000,000 shares of preferred stock, par value $0.0001 per share (“Delcorp
Preferred Stock”),
of
which 6,300,000 shares of Delcorp Common Stock and no shares of Delcorp
Preferred Stock are issued and outstanding, all of which are validly issued,
fully paid and nonassessable and
free of preemptive rights or rights of first refusal created by statute, the
Certificate of Incorporation or Bylaws of Delcorp or any agreement to which
Delcorp is a party or by which it is bound, and free of any liens or
encumbrances other than any liens or encumbrances created by or imposed upon
the
holders thereof or under applicable federal or state securities or “blue sky”
laws. Delcorp has no outstanding bonds, debentures, notes or other obligations
the holders of which have or upon the happening of certain events would have
the
right to vote (or which are convertible into or exercisable or exchangeable
for
securities having the right to vote) with the stockholders of Delcorp on any
matter.
-
30 -
(b) Except
as set forth in Schedule 3.3(b), there
are no existing options, warrants, calls, subscriptions, convertible securities,
or other rights, agreements, stock appreciation rights or similar derivative
securities or instruments or commitments which obligate Delcorp to issue,
transfer or sell any Delcorp Capital Stock or make any payments in lieu thereof.
Other than the Voting Agreement and Lock-Up Agreement and as set forth in
Schedule 3.3(b), there are no agreements or understandings to which Delcorp
is a
party with respect to the voting of any Delcorp Capital Stock or which restrict
the transfer of any such shares, nor does Delcorp have knowledge of any such
agreements or understandings with respect to the voting of any such shares
or
which restrict the transfer of any such shares. Other than the Voting Agreement
and Lock-Up Agreement and as set forth in Schedule 3.3(b), there are no
outstanding contractual obligations of Delcorp to repurchase, redeem or
otherwise acquire any Delcorp Capital Stock or any other securities of Delcorp;
and (i)
no
shares of Delcorp Common Stock or Delcorp Preferred Stock are reserved for
issuance upon the exercise of outstanding options to purchase Delcorp Common
Stock or Delcorp Preferred Stock granted to employees of Delcorp or other
parties (“Delcorp
Stock Options”)
and
there are no outstanding Delcorp Stock Options; (ii) no shares of Delcorp Common
Stock or Delcorp Preferred Stock are reserved for issuance upon the exercise
of
outstanding warrants to purchase Delcorp Common Stock or Delcorp Preferred
Stock
(“Delcorp
Warrants”)
and
there are no outstanding Delcorp Warrants; and (iii) no shares of Delcorp Common
Stock or Delcorp Preferred Stock are reserved for issuance upon the conversion
of the Delcorp Preferred Stock or any outstanding convertible notes, debentures
or securities (“Delcorp
Convertible Securities”).
All
shares of Delcorp Common Stock and Delcorp Preferred Stock subject to issuance
as aforesaid, upon issuance on the terms and conditions specified in the
instrument pursuant to which they are issuable, will be duly authorized, validly
issued, fully paid and nonassessable. All outstanding shares of Delcorp Common
Stock and all outstanding Delcorp Warrants have been issued and granted in
compliance with (x) all applicable securities laws and (in all material
respects) other applicable laws and regulations, and (y) all requirements set
forth in any applicable Delcorp Contracts (as defined in Section 3.19).
Delcorp has heretofore delivered to the Company true, complete and accurate
copies of the Delcorp Warrants, including any and all documents and agreements
relating thereto.
(c) The
shares of Delcorp Common Stock to be issued by Delcorp in connection with the
Merger, upon issuance in accordance with the terms of this Agreement, will
be
duly authorized and validly issued and such shares of Delcorp Common Stock
will
be fully paid and nonassessable.
(d) Except
as set forth in Schedule 3.3(d) or as referenced in Section 1.19
of this
Agreement, there are no registrations rights, and there is no voting trust,
proxy, rights plan, antitakeover plan or other agreements or understandings
to
which the Delcorp is a party or by which the Delcorp is bound with respect
to
any security of any class of the Delcorp.
(e) Except
as provided for in this Agreement or as set forth in Schedule 3.3(e), as a
result of the consummation of the transactions contemplated hereby, no shares
of
capital stock, warrants, options or other securities of the Delcorp are issuable
and no rights in connection with any shares, warrants, options or other
securities of the Delcorp accelerate or otherwise become triggered (whether
as
to vesting, exercisability, convertibility or otherwise).
-
31 -
3.4 Authority
Relative to this Agreement.
Delcorp
has full corporate power and authority to: (i) execute, deliver and perform
this
Agreement, and each ancillary document that Delcorp has executed or delivered
or
is to execute or deliver pursuant to this Agreement, and (ii) carry out
Delcorp’s obligations hereunder and thereunder and, to consummate the
transactions contemplated hereby (including the Merger). The execution and
delivery of this Agreement by Delcorp and the consummation by Delcorp of the
transactions contemplated hereby (including the Merger) have been duly and
validly authorized by all necessary corporate action on the part of Delcorp
(including the approval by its Board of Directors), and no other corporate
proceedings on the part of Delcorp are necessary to authorize this Agreement
or
to consummate the transactions contemplated hereby, other than the Delcorp
Stockholder Approval (as defined in Section 5.1(a)).
This
Agreement has been duly and validly executed and delivered by Delcorp and,
assuming the due authorization, execution and delivery thereof by the other
parties hereto, constitutes the legal and binding obligation of Delcorp,
enforceable against Delcorp in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors’ rights generally and by general
principles of equity.
3.5 No
Conflict; Required Filings and Consents.
(a) The
execution and delivery of this Agreement by Delcorp does not, and the
performance of this Agreement by Delcorp shall not: (i) conflict with or violate
Delcorp’s Charter Documents, (ii) conflict with or violate any Legal
Requirements, or (iii) result in any breach of or constitute a default (or
an
event that with notice or lapse of time or both would become a default) under,
or materially impair Delcorp’s rights or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any
of
the properties or assets of Delcorp pursuant to, any Delcorp Contracts, except,
with respect to clauses (ii) or (iii), for any such conflicts, violations,
breaches, defaults or other occurrences that would not, individually and in
the
aggregate, have a Material Adverse Effect on Delcorp.
(b) The
execution and delivery of this Agreement by Delcorp does not, and the
performance of it hereunder will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity, except (i) for applicable requirements, if any, of the Securities Act,
the Exchange Act, Blue Sky Laws, and the rules and regulations thereunder,
and
appropriate documents with the relevant authorities of other jurisdictions
in
which Delcorp is qualified to do business, (ii) for the filing of any
notifications required under the HSR Act, if required upon advice of counsel,
and the expiration of the required waiting period thereunder, (iii) the
qualification of Delcorp as a foreign corporation in those jurisdictions in
which the business of the Company makes such qualification necessary, and (iv)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Delcorp,
or prevent consummation of the Merger or otherwise prevent the parties hereto
from performing their obligations under this Agreement.
-
32 -
3.6 Compliance.
Delcorp
has complied with, and is not in violation of, any Legal Requirements with
respect to the conduct of its business, or the ownership or operation of its
business, except for failures to comply or violations which, individually or
in
the aggregate, have not had and are not reasonably likely to have a Material
Adverse Effect on Delcorp. The business and activities of Delcorp have not
been
and are not being conducted in violation of any Legal Requirements. Neither
Delcorp is not in default or violation of any term, condition or provision
of
its Charter Documents. No written notice of non-compliance with any Legal
Requirements has been received by Delcorp.
3.7 SEC
Filings; Financial Statements.
(a) Delcorp
has made available to the Company and the Signing Shareholders a correct and
complete copy of each report, registration statement and definitive proxy
statement filed by Delcorp with the SEC (the “Delcorp
SEC Reports”),
which
are all the forms, reports and documents required to be filed by Delcorp with
the SEC prior to the date of this Agreement. All Delcorp SEC Reports required
to
be filed by Delcorp in the twelve (12) month period prior to the date of this
Agreement were filed in a timely manner. As of their respective dates the
Delcorp SEC Reports: (i) were prepared in accordance and complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Delcorp SEC Reports, and (ii) did not at the time they were
filed (and if amended or superseded by a filing prior to the date of this
Agreement then on the date of such filing and as so amended or superseded)
contain any untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent set forth in the preceding sentence, Delcorp
makes no representation or warranty whatsoever concerning any Delcorp SEC Report
as of any time other than the date or period with respect to which it was filed.
The
certifications and statements required by (A) Rule 13a-14 under the Exchange
Act
and (B) 18 U.S.C. Sec.1350 (Section 906 of the Xxxxxxxx-Xxxxx Act) relating
to
the NGRU SEC Documents are accurate and complete and comply as to form and
content with all applicable laws or rules of applicable governmental and
regulatory authorities in all material respects.
(b) Except
as set forth in Schedule 3.7(b), each set of financial statements
(including, in each case, any related notes thereto) contained in Delcorp SEC
Reports, including each Delcorp SEC Report filed after the date hereof until
the
Closing, complied or will comply as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, was or will
be
prepared in accordance with U.S. GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto or, in
the
case of unaudited statements, do not contain footnotes as permitted by Form
10-QSB of the Exchange Act) and each fairly presents or will fairly present
in
all material respects the financial position of Delcorp at the respective dates
thereof and the results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were, are
or
will be subject to normal adjustments which were not or are not expected to
have
a Material Adverse Effect on Delcorp taken as a whole.
-
33 -
(c) Delcorp
maintains disclosure
controls and procedures that satisfy the requirements of Rule 13a-15 under
the
Exchange Act, and such disclosure controls and procedures are designed to ensure
that all material information concerning Delcorp is made known on a timely
basis
to the individuals responsible for the preparation of Delcorp’s filings with the
SEC and other public disclosure documents.
(d) To
the knowledge of Delcorp, Delcorp’s auditor has at all required times since the
date of enactment of the Xxxxxxxx-Xxxxx Act been: (i) a registered public
accounting firm (as defined in Section 2(a)(12) of the Xxxxxxxx-Xxxxx Act);
(ii)
“independent” with respect to Delcorp within the meaning of Regulation S-X under
the Exchange Act; and (iii) in compliance with subsections (g) through (l)
of
Section 10A of the Exchange Act and the rules and regulations promulgated by
the
SEC and the Public Company Accounting Oversight Board thereunder. Schedule
3.7(d) contains an accurate and complete description of all non-audit services
performed by Delcorp’s auditors for Delcorp and the fees paid for such services.
All such non-audit services were approved as required by Section 202 of the
Xxxxxxxx-Xxxxx Act.
3.8 No
Undisclosed Liabilities.
Delcorp
has no liabilities (absolute, accrued, contingent or otherwise) of a nature
required to be disclosed on a balance sheet or in the related notes to the
financial statements included in Delcorp SEC Reports that are, individually
or
in the aggregate, material to the business, results of operations or financial
condition of Delcorp, except (i) liabilities provided for in or otherwise
disclosed in Delcorp SEC Reports filed prior to the date hereof, and (ii)
liabilities incurred since September 30, 2007 in the ordinary course of
business, none of which would have a Material Adverse Effect on Delcorp. Delcorp
is not and has not been a party to any securitization
transactions or “off-balance sheet arrangements” (as defined in Item 303(c) of
Regulation S-K under the Exchange Act).
3.9 Absence
of Certain Changes or Events.
Except
as set forth in Delcorp SEC Reports filed prior to the date of this Agreement,
and except as contemplated by this Agreement, since September 30, 2007,
there has not been: (i) any Material Adverse Effect on Delcorp, (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of Delcorp’s capital
stock, or any purchase, redemption or other acquisition by Delcorp of any of
Delcorp’s capital stock or any other securities of Delcorp or any options,
warrants, calls or rights to acquire any such shares or other securities, (iii)
any split, combination or reclassification of any of Delcorp’s capital stock,
(iv) any granting by Delcorp of any increase in compensation or fringe benefits,
except for normal increases of cash compensation in the ordinary course of
business consistent with past practice, or any payment by Delcorp of any bonus,
except for bonuses made in the ordinary course of business consistent with
past
practice, or any granting by Delcorp of any increase in severance or termination
pay or any entry by Delcorp into any currently effective employment, severance,
termination or indemnification agreement or any agreement the benefits of which
are contingent or the terms of which are materially altered upon the occurrence
of a transaction involving Delcorp of the nature contemplated hereby, (v) entry
by Delcorp into any licensing or other agreement with regard to the acquisition
or disposition of any Intellectual Property other than licenses in the ordinary
course of business consistent with past practice or any amendment or consent
with respect to any licensing agreement filed or required to be filed by Delcorp
with respect to any Governmental Entity, (vi) any material change by Delcorp
in
its accounting methods, principles or practices, except as required by
concurrent changes in U.S. GAAP, (vii) any change in the auditors of Delcorp,
(vii) any issuance of capital stock of Delcorp, or (viii) any revaluation by
Delcorp of any of its assets, including, without limitation, writing down the
value of capitalized inventory or writing off notes or accounts receivable
or
any sale of assets of Delcorp other than in the ordinary course of
business.
-
34 -
3.10 Litigation.
There
are no claims, suits, actions or proceedings pending or to Delcorp’s knowledge,
threatened against Delcorp, before any court, governmental department,
commission, agency, instrumentality or authority, or any
arbitrator.
3.11 Employee
Benefit Plans.
Except
as may be contemplated by the Delcorp Plan (as defined in Section 5.1(a)),
Delcorp does not maintain, and has no liability under, any Plan, and neither
the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any stockholder, director or employee of Delcorp, or (ii) result
in the acceleration of the time of payment or vesting of any such
benefits.
3.12 Labor
Matters.
Delcorp
is not a party to any collective bargaining agreement or other labor union
contract applicable to persons employed by Delcorp and Delcorp does not know
of
any activities or proceedings of any labor union to organize any such
employees.
3.13 Business
Activities.
Since
its organization, Delcorp has not conducted any business activities other than
activities directed toward the accomplishment of a business combination. Except
as set forth in the Delcorp Charter Documents, there is no agreement,
commitment, judgment, injunction, order or decree binding upon Delcorp or to
which Delcorp is a party which has or could reasonably be expected to have
the
effect of prohibiting or materially impairing any business practice of Delcorp,
any acquisition of property by Delcorp or the conduct of business by Delcorp
as
currently conducted other than such effects, individually or in the aggregate,
which have not had and could not reasonably be expected to have, a Material
Adverse Effect on Delcorp.
3.14 Title
to Property.
Delcorp
does not own or lease any real property or personal property. Except as set
forth in Schedule 3.14, there are no options or other contracts under which
Delcorp has a right or obligation to acquire or lease any interest in real
property or personal property.
3.15 Taxes.
Except
as set forth in Schedule 3.15 hereto:
-
35 -
(a) Delcorp
has timely filed all Returns required to be filed by Delcorp with any Tax
authority prior to the date hereof, except such Returns which are not material
to Delcorp. All such Returns are true, correct and complete in all material
respects. Delcorp has paid all Taxes shown to be due on such
Returns.
(b) All
Taxes that Delcorp is required by law to withhold or collect have been duly
withheld or collected, and have been timely paid over to the proper governmental
authorities to the extent due and payable.
(c) Delcorp
has not been delinquent in the payment of any material Tax that has not been
accrued for in Delcorp’s books and records of account for the period for which
such Tax relates nor is there any material Tax deficiency outstanding, proposed
or assessed against Delcorp, nor has Delcorp executed any unexpired waiver
of
any statute of limitations on or extending the period for the assessment or
collection of any Tax.
(d) No
audit or other examination of any Return of Delcorp by any Tax authority is
presently in progress, nor has Delcorp been notified of any request for such
an
audit or other examination.
(e) No
adjustment relating to any Returns filed by Delcorp has been proposed in
writing, formally or informally, by any Tax authority to Delcorp or any
representative thereof.
(f) Delcorp
has no liability for any material unpaid Taxes which have not been accrued
for
or reserved on Delcorp’s balance sheets included in the audited financial
statements for the most recent fiscal year ended, whether asserted or
unasserted, contingent or otherwise, which is material to Delcorp, other than
any liability for unpaid Taxes that may have accrued since the end of the most
recent fiscal year in connection with the operation of the business of Delcorp
in the ordinary course of business, none of which is material to the business,
results of operations or financial condition of Delcorp.
(g) Delcorp
has not taken any action and does not know of any fact, agreement, plan or
other
circumstance that is reasonably likely to prevent the Merger from qualifying
as
a reorganization within the meaning of Section 368(a) of the
Code.
3.16 Environmental
Matters.
Except
for such matters that, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect: (i) Delcorp has complied with all
applicable Environmental Laws; (ii) Delcorp is not subject to liability for
any
Hazardous Substance disposal or contamination on any third party property;
(iii)
Delcorp has not been associated with any release or threat of release of any
Hazardous Substance; (iv) Delcorp has not received any notice, demand, letter,
claim or request for information alleging that Delcorp may be in violation
of or
liable under any Environmental Law; and (v) Delcorp is not subject to any
orders, decrees, injunctions or other arrangements with any Governmental Entity
or subject to any indemnity or other agreement with any third party relating
to
liability under any Environmental Law or relating to Hazardous
Substances.
-
36 -
3.17 Brokers.
Except
as set forth in Schedule 3.17, Delcorp has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders’ fees or agent’s
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
3.18 Intellectual
Property.
Delcorp
does not own, license or otherwise have any right, title or interest in any
material Intellectual Property or Registered Intellectual Property except
non-exclusive rights to the name “Rhapsody.”
3.19 Agreements,
Contracts and Commitments.
(a) Except
as set forth in the Delcorp SEC Reports filed prior to the date of this
Agreement, other than confidentiality and non-disclosure agreements, there
are
no contracts, agreements, leases, mortgages, indentures, notes, bonds, liens,
license, permit, franchise, purchase orders, sales orders or other
understandings, commitments or obligations (including without limitation
outstanding offers or proposals) of any kind, whether written or oral, to which
Delcorp is a party or by or to which any of the properties or assets of Delcorp
may be bound, subject or affected, which either (a) creates or imposes a
liability greater than $25,000, or (b) may not be cancelled by Delcorp on less
than 30 days’ or less prior notice (“Delcorp
Contracts”).
All
Delcorp Contracts are listed in Schedule 3.19 other than those that are
exhibits to the Delcorp SEC Reports.
(b) Except
as set forth in the Delcorp SEC Reports filed prior to the date of this
Agreement, each Delcorp Contract was entered into at arms’ length and in the
ordinary course, is in full force and effect and is valid and binding upon
and
enforceable against each of the parties thereto. True, correct and complete
copies of all Delcorp Contracts (or written summaries in the case of oral
Delcorp Contracts) and of all outstanding offers or proposals of Delcorp have
been heretofore made available to the Company.
(c) Neither
Delcorp nor, to the knowledge of Delcorp, any other party thereto is in breach
of or in default under, and no event has occurred which with notice or lapse
of
time or both would become a breach of or default under, any Delcorp Contract,
and no party to any Delcorp Contract has given any written notice of any claim
of any such breach, default or event, which, individually or in the aggregate,
are reasonably likely to have a Material Adverse Effect on Delcorp. Each
agreement, contract or commitment to which Delcorp is a party or by which it
is
bound that has not expired by its terms is in full force and effect, except
where such failure to be in full force and effect is not reasonably likely
to
have a Material Adverse Effect on Delcorp.
3.20 Insurance.
Except
for directors’ and officers’ liability insurance, Delcorp does not maintain any
Insurance Policies.
-
37 -
3.21 Interested
Party Transactions.
Except
as set forth in the Delcorp SEC Reports filed prior to the date of this
Agreement: (a) no employee, officer, director or stockholder of Delcorp or
a
member of his or her immediate family is indebted to Delcorp nor is Delcorp
indebted (or committed to make loans or extend or guarantee credit) to any
of
them, other than reimbursement for reasonable expenses incurred on behalf of
Delcorp; (b) to Delcorp’s knowledge, none of such individuals has any direct or
indirect ownership interest in any Person with whom Delcorp is affiliated or
with whom Delcorp has a material contractual relationship, or any Person that
competes with Delcorp, except that each employee, stockholder, officer or
director of Delcorp and members of their respective immediate families may
own
less than 5% of the outstanding stock in publicly traded companies that may
compete with Delcorp; and (c) to Delcorp’s knowledge, no officer, director or
stockholder or any member of their immediate families is, directly or
indirectly, interested in any material contract with Delcorp (other than such
contracts as relate to any such individual ownership of capital stock or other
securities of Delcorp).
3.22 Indebtedness.
Delcorp
has no indebtedness for borrowed money.
3.23 Over-the-Counter
Bulletin Board Quotation.
Delcorp
Common Stock is quoted on the Over-the-Counter Bulletin Board (“OTC
BB”).
There
is no action or proceeding pending or, to Delcorp’s knowledge, threatened
against Delcorp by NASDAQ or the Financial Industry Regulatory Authority
(“FINRA”)
with
respect to any intention by such entities to prohibit or terminate the quotation
of Delcorp Common Stock on the OTC BB.
3.24 Board
Approval.
The
Board of Directors of Delcorp (including any required committee or subgroup
of
the Board of Directors of Delcorp) has, as of the date of this Agreement,
unanimously (i) declared the advisability of the Merger and approved this
Agreement and the transactions contemplated hereby, (ii) determined that the
Merger is in the best interests of the stockholders of Delcorp, and (iii)
determined that the fair market value of the Company is equal to at least 80%
of
Delcorp’s net assets.
3.25 Trust
Fund.
As of
the date hereof and at the Closing Date, Delcorp has and will have no less
than
$40,000,000 invested in United States Government securities in a trust account
administered by Continental (the “Trust
Fund”),
less
such amounts, if any, as Delcorp is required to pay to (i) stockholders who
elect to have their shares converted to cash in accordance with the provisions
of Delcorp’s Charter Documents, (ii) deferred underwriters’ compensation in
connection with Delcorp’s initial public offering, and (iii) third parties
(e.g., professionals, printers, etc.) who have rendered services to Delcorp
in
connection with its efforts to effect a business combination, including the
Merger.
3.26 Governmental
Filings.
Except
as set forth in Schedule 3.26, Delcorp has been granted and holds, and has
made, all Governmental Actions/Filings necessary to the conduct by Delcorp
of
its business (as presently conducted) or used or held for use by Delcorp, and
true, complete and correct copies of which have heretofore been delivered to
the
Company. Each such Governmental Action/Filing is in full force and effect and,
except as disclosed in Schedule 3.26, will not expire prior to
December 31, 2008, and Delcorp is in compliance with all of its obligations
with respect thereto. No event has occurred and is continuing which requires
or
permits, or after notice or lapse of time or both would require or permit,
and
consummation of the transactions contemplated by this Agreement or any ancillary
documents will not require or permit (with or without notice or lapse of time,
or both), any modification or termination of any such Governmental
Actions/Filings except such events which, either individually or in the
aggregate, would not have a Material Adverse Effect upon Delcorp.
-
38 -
3.27 Representations
and Warranties Complete.
The
representations and warranties of Delcorp included in this Agreement and any
list, statement, document or information set forth in, or attached to, any
Schedule provided pursuant to this Agreement or delivered hereunder, are
true and complete in all material respects and do 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 contained therein not
misleading, under the circumstance under which they were made.
3.28 Survival
of Representations and Warranties.
The
representations and warranties of Delcorp set forth in this Agreement shall
survive until the Closing.
ARTICLE
IV
CONDUCT
PRIOR TO THE EFFECTIVE TIME
4.1 Conduct
of Business by the Company, its Shareholders and
Delcorp.
During
the period from the date of this Agreement and continuing until the earlier
of
the termination of this Agreement pursuant to its terms or the Closing, each
of
the Company, its Subsidiaries, and Delcorp shall, except to the extent that
the
other party shall otherwise consent in writing, carry on its business in the
usual, regular and ordinary course consistent with past practices, in
substantially the same manner as heretofore conducted and in compliance with
all
applicable laws and regulations (except where noncompliance would not have
a
Material Adverse Effect), pay its debts and taxes when due subject to good
faith
disputes over such debts or taxes, pay or perform other material obligations
when due, and use its commercially reasonable efforts consistent with past
practices and policies to (i) preserve substantially intact its present business
organization, (ii) keep available the services of its present officers and
employees and (iii) preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has significant
business dealings. In addition, except as required or permitted by the terms
of
this Agreement or set forth in Schedule 4.1 hereto, without the prior
written consent of the other party, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Closing, each of the Company, its Subsidiaries
and
Delcorp and Merger Sub shall not do any of the following:
(a) Waive
any stock repurchase rights, accelerate, amend or (except as specifically
provided for herein) change the period of exercisability of options or
restricted stock, or reprice options granted under any employee, consultant,
director or other stock plans or authorize cash payments in exchange for any
options granted under any of such plans;
(b) Grant
any severance or termination pay to any officer or employee outside the ordinary
course of business except pursuant to applicable law, written agreements
outstanding, or policies existing on the date hereof and as previously or
concurrently disclosed in writing or made available to the other party, or
adopt
any new severance plan, or amend or modify or alter in any manner any severance
plan, agreement or arrangement existing on the date hereof;
-
39 -
(c) Transfer
or license to any person or otherwise extend, amend or modify any material
rights to any Intellectual Property of the Company, its Subsidiaries or Delcorp,
as applicable, or enter into grants to transfer or license to any person future
patent rights, other than in the ordinary course of business consistent with
past practices provided that in no event shall the Company, its Subsidiaries
or
Delcorp license on an exclusive basis or sell any Intellectual Property of
the
Company, its Subsidiaries or Delcorp as applicable;
(d) Except
as provided in Section 5.24
or as it
relates to the Foreign Managers, declare, set aside or pay any dividends on
or
make any other distributions (whether in cash, stock, equity securities or
property) in respect of any capital stock or split, combine or reclassify any
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for any capital stock;
(e) Purchase,
redeem or otherwise acquire, directly or indirectly, any shares of capital
stock
of the Company, its Subsidiaries and Delcorp, as applicable, including
repurchases of unvested shares at cost in connection with the termination of
the
relationship with any employee or consultant pursuant to agreements in effect
on
the date hereof and in connection with the issuance of shares of Company Common
Stock to the Foreign Managers;
(f) Issue,
deliver, sell, authorize, pledge or otherwise encumber, or agree to any of
the
foregoing with respect to, any shares of capital stock or any securities
convertible into or exchangeable for shares of capital stock, or subscriptions,
rights, warrants or options to acquire any shares of capital stock or any
securities convertible into or exchangeable for shares of capital stock, or
enter into other agreements or commitments of any character obligating it to
issue any such shares or convertible or exchangeable securities;
(g) Amend
its Charter Documents;
(h) Acquire
or agree to acquire by merging or consolidating with, or by purchasing any
equity interest in or a portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire
any
assets which are material, individually or in the aggregate, to the business
of
Delcorp, the Company or its Subsidiaries as applicable, or enter into any joint
ventures, strategic partnerships or alliances or other arrangements that provide
for exclusivity of territory or otherwise restrict such party’s ability to
compete or to offer or sell any products or services. For purposes of this
paragraph, “material” includes the requirement that, as a result of such
transaction, financial statements of the acquired, merged or consolidated entity
be included in the Proxy Statement (as defined in Section 5.1);
-
40 -
(i) Sell,
lease, license, encumber or otherwise dispose of any properties or assets,
except (A) sales of inventory and property, plant and equipment in the ordinary
course of business consistent with past practice, and (B) the sale, lease or
disposition (other than through licensing) of property or assets that are not
material, individually or in the aggregate, to the business of such
party;
(j) Except,
(i) with respect to Delcorp, as permitted pursuant to Section 5.22,
and
(ii) with respect to the Company, or one of its Subsidiaries securing
financing in the approximate amount of $5,000,000 for the acquisition of
equipment, incur any indebtedness for borrowed money in excess of $3,000,000
in
the aggregate, other than normal usage under the existing line of credit
facilities including the issuance of letters of credit in the ordinary course,
or guarantee any such indebtedness of another Person or Persons in excess of
$1,000,000 in the aggregate, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Delcorp,
the
Company or any of its Subsidiaries, as applicable, enter into any “keep well” or
other agreement to maintain any financial statement condition or enter into
any
arrangement having the economic effect of any of the foregoing;
(k) Other
than the new employment agreements to be executed prior to or concurrently
with
the execution of this Agreement between the Company and/or its Subsidiaries
and
those individuals listed in Section
6.3(h)
of this
Agreement, adopt or amend any employee benefit plan, policy or arrangement,
any
employee stock purchase or employee stock option plan, or enter into any
employment contract or collective bargaining agreement (other than offer letters
and letter agreements entered into in the ordinary course of business consistent
with past practice with employees who are terminable “at will”), pay any special
bonus or special remuneration to any director or employee, or increase the
salaries or wage rates or fringe benefits (including rights to severance or
indemnification) of its directors, officers, employees or consultants, except
in
the ordinary course of business consistent with past practices and except as
to;
(l) Pay,
discharge, settle or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), or litigation
(whether or not commenced prior to the date of this Agreement) other than the
payment, discharge, settlement or satisfaction, in the ordinary course of
business consistent with past practices or in accordance with their terms,
or
liabilities recognized or disclosed in the Unaudited Financial Statements or
in
the most recent financial statements included in the Delcorp SEC Reports filed
prior to the date of this Agreement, as applicable, or incurred since the date
of such financial statements, or waive the benefits of, agree to modify in
any
manner, terminate, release any person from or knowingly fail to enforce any
confidentiality or similar agreement to which the Company is a party or of
which
the Company is a beneficiary or to which Delcorp is a party or of which Delcorp
is a beneficiary, as applicable;
-
41 -
(m) Except
in the ordinary course of business consistent with past practices, modify,
amend
or terminate any Material Company Contract or Delcorp Contract, as applicable,
or waive, delay the exercise of, release or assign any material rights or claims
thereunder;
(n) Except
as required by U.S. GAAP or as set forth in Schedule 4.1(n), revalue any of
its assets or make any change in accounting methods, principles or
practices;
(o) Except
in the ordinary course of business consistent with past practices, incur or
enter into any agreement, contract or commitment requiring such party to pay
in
excess of $2,500,000 in any 12 month period;
(p) Engage
in any action that could reasonably be expected to cause the Merger to fail
to
qualify as a “reorganization” under Section 368(a)(1)(A) of the
Code;
(q) Settle
any litigation where the consideration given is other than monetary or to which
an Insider is a party;
(r) Make
or rescind any Tax elections that, individually or in the aggregate, could
be
reasonably likely to adversely affect in any material respect the Tax liability
or Tax attributes of such party, settle or compromise any material income tax
liability or, except as required by applicable law, materially change any method
of accounting for Tax purposes or prepare or file any Return in a manner
inconsistent with past practice, other than Company converting from an
S Corp to a C Corp through this proposed Merger;
(s) Form,
establish or acquire any subsidiary except as contemplated by this
Agreement;
(t) Permit
any Person to exercise any of its discretionary rights under any Plan to provide
for the automatic acceleration of any outstanding options, the termination
of
any outstanding repurchase rights or the termination of any cancellation rights
issued pursuant to such plans;
(u) Make
capital expenditures except in accordance with prudent business and operational
practices consistent with prior practice;
(v) Make
or omit to take any action which would be reasonably anticipated to have a
Material Adverse Effect;
(w) Enter
into any transaction with or distribute or advance any assets or property to
any
of its officers, directors, partners, stockholders or other affiliates other
than the payment of salary and benefits in the ordinary course of business
consistent with prior practice; or
-
42 -
(x) Agree
in writing or otherwise agree, commit or resolve to take any of the actions
described in Section 4.1(a)
through (w)
above.
ARTICLE
V
ADDITIONAL
AGREEMENTS
5.1 Proxy
Statement; Special Meeting.
(a) As
soon as is reasonably practicable after receipt by Delcorp from the Company
of
all financial and other information relating to the Company as Delcorp may
reasonably request for its preparation, Delcorp shall prepare with the
assistance of the Company, and after the Company has given its consent to the
form of the prospectus/proxy statement to be included therein, which such
consent shall not be unreasonably withheld, file with the SEC under the
Securities Act and the Exchange Act, and with all other applicable regulatory
bodies, a registration statement on Form S-4 with respect to the shares of
Delcorp Common Stock to the issued in the Merger (the “Registration
Statement”),
which
shall include proxy materials for the purpose of soliciting proxies from holders
of Delcorp Common Stock to vote, at a meeting of holders of Delcorp Common
Stock
to be called and held for such purpose (the “Special
Meeting”),
in
favor of (i) the adoption of this Agreement and the approval of the Merger
(“Delcorp
Stockholder Approval”),
(ii)
amending and restating Delcorp’s certificate of incorporation, effective upon
the Closing, to be substantially in the form of Exhibit B hereto, providing
for,
among other things, (A) the change of the name of Delcorp to “Primoris
Corporation;” (B) an increase in the number of authorized shares of Delcorp
Common Stock to 60,000,000; (C) the existence of Delcorp to be perpetual; (D)
and the removal of the preamble and sections A through D, inclusive, thereof
and
the redesignation of section E of Article Seventh as Article Seventh
(the “Charter
Amendment”);
(iii)
the adoption of an Incentive Compensation Plan (the “Delcorp
Plan”);
and
(iv) an adjournment proposal, if necessary, to adjourn the Special Meeting
if,
based on the tabulated vote count, Delcorp is not authorized to proceed with
the
Merger. The Delcorp Plan shall provide that an aggregate of no less than
1,520,000 shares of Delcorp Common Stock shall be reserved for issuance pursuant
to the Delcorp Plan. Such proxy materials shall be in the form of a
prospectus/proxy statement to be used for the purpose of soliciting proxies
from
holders of Delcorp Common Stock for the matters to be acted upon at the Special
Meeting and also for the purpose of issuing Delcorp Common Stock to holders
of
Company Common Stock in connection with the Merger (the “Proxy
Statement/Prospectus”).
The
Company shall furnish to Delcorp all information concerning the Company as
Delcorp may reasonably request in connection with the preparation of the
Registration Statement. The Company and its counsel shall be given an
opportunity to review and comment on the preliminary Registration Statement
prior to its filing with the SEC. Delcorp, with the assistance of the Company,
shall promptly respond to any SEC comments on the Registration Statement and
shall otherwise use reasonable best efforts to cause the Registration Statement
to be declared effective by the SEC as promptly as practicable. Delcorp shall
also take any and all actions required to satisfy the requirements of the
Securities Act and the Exchange Act. Prior to the Closing Date, Delcorp shall
use its reasonable best efforts to cause the shares of Delcorp Common Stock
to
be issued pursuant to the Merger to be registered or qualified under all
applicable Blue Sky Laws of each of the states and territories of the United
States in which it is believed, based on information furnished by the Company,
holders of the Company Common Stock reside and in which such registration or
qualification is required and to take any other such actions that may be
necessary to enable the Delcorp Common Stock to be issued pursuant to the Merger
in each such jurisdiction.
-
43 -
(b) As
soon as practicable following the declaration of effectiveness of the
Registration Statement by the SEC, Delcorp shall distribute the Proxy
Statement/Prospectus to the holders of Delcorp Common Stock and, pursuant
thereto, shall call the Special Meeting for a date no later than thirty (30)
days following the approval of the Proxy Statement by the SEC in accordance
with
the DGCL and, subject to the other provisions of this Agreement, solicit proxies
from such holders to vote in favor of the adoption of this Agreement and the
approval of the Merger and the other matters presented to the stockholders
of
Delcorp for approval or adoption at the Special Meeting, including, without
limitation, the matters described in Section 5.1(a).
Delcorp
shall also distribute the Proxy Statement/Prospectus to the holders of Company
Common Stock and shall include therewith a notice, prepared by the Company,
advising such holders of their appraisal rights pursuant to Applicable Nevada
Law.
(c) Delcorp
shall comply with all applicable provisions of and rules under the Exchange
Act
and all applicable provisions of the DGCL in the preparation, filing and
distribution of the Registration Statement and the Proxy Statement/Prospectus,
the solicitation of proxies thereunder, and the calling and holding of the
Special Meeting. Without limiting the foregoing, Delcorp shall ensure that
the
Proxy Statement/Prospectus does not, as of the date on which the Registration
Statement is declared effective, and as of the date of the Special Meeting,
contain any untrue statement of a material fact or omit to state a material
fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading (provided that Delcorp shall not
be
responsible for the accuracy or completeness of any information relating to
the
Company or any other information furnished by the Company for inclusion in
the
Proxy Statement/Prospectus). The Company represents and warrants that the
information relating to the Company supplied by the Company for inclusion in
the
Proxy Statement/Prospectus will not as of the date on which the Registration
Statement (or any amendment or supplement thereto) is declared effective or
at
the time of the Special Meeting contain any statement which, at such time and
in
light of the circumstances under which it is made, is false or misleading with
respect to any material fact, or omits to state any material fact required
to be
stated therein or necessary in order to make the statement therein not false
or
misleading. The Company shall not be responsible for the accuracy or
completeness of any information relating to Delcorp or any other information
furnished by Delcorp for inclusion in the Proxy
Statement/Prospectus.
-
44 -
(d) Delcorp,
acting through its board of directors, shall include in the Proxy
Statement/Prospectus the recommendation of its board of directors that the
holders of Delcorp Common Stock vote in favor of the adoption of this Agreement
and the approval of the Merger, and shall otherwise use reasonable best efforts
to obtain the Delcorp Stockholder Approval.
5.2 Directors
and Officers of Delcorp After Merger; Voting Agreement.
The
Parties shall take all necessary action so that the persons listed in
Schedule 5.2 are elected for a period of three years from the date of
Closing to the positions of officers and directors of Delcorp, as set forth
therein, to serve in such positions effective immediately after the Closing.
In
addition, the person listed in Schedule 5.2 as “Observer”
shall
be entitled to attend all meetings of the board of directors as an observer
and
receive all information distributed to the directors until the shorter of (i)
such time as such person shall be elected to the board of directors and
(ii) three years from the date of the Closing. During the aforesaid three
year period, at any annual meeting, Delcorp may designate a person acting as
an
Observer for election to the board of directors in place of its then designee
and such designee shall be entitled to be the Observer. If any Person listed
in
Schedule 5.2 is unable to serve, the Party appointing such Person shall
designate a successor; provided that, if such designation is to be made after
the Closing, any successor to a Person designated by Delcorp shall be made
by
the Person serving in the capacity of Chairman of Delcorp immediately prior
to
the Closing. Those Signing Shareholders and those stockholders of Delcorp stated
to be parties thereto shall enter into a Voting Agreement in the form of
Exhibit F
on or
before the Closing Date.
5.3 HSR
Act.
If
required pursuant to the HSR Act, as promptly as practicable after the date
of
this Agreement, Delcorp and the Company shall each prepare and file the
notification required of it thereunder in connection with the transactions
contemplated by this Agreement and shall promptly and in good faith respond
to
all information requested of it by the Federal Trade Commission and Department
of Justice in connection with such notification and otherwise cooperate in
good
faith with each other and such Governmental Entities. Delcorp and the Company
shall (a) promptly inform the other of any communication to or from the Federal
Trade Commission, the Department of Justice or any other Governmental Entity
regarding the transactions contemplated by this Agreement, (b) give the other
prompt notice of the commencement of any action, suit, litigation, arbitration,
proceeding or investigation by or before any Governmental Entity with respect
to
such transactions and (c) keep the other reasonably informed as to the status
of
any such action, suit, litigation, arbitration, proceeding or investigation.
Filing fees with respect to the notifications required under the HSR Act shall
be paid by the Company.
5.4 Other
Actions.
(a) As
promptly as practicable after execution of this Agreement, Delcorp will prepare
and file a Current Report on Form 8-K pursuant to the Exchange Act to report
the
execution of this Agreement (“Signing
Form 8-K”),
which
the Company may review and comment upon prior to filing. Any language included
in the Signing Form 8-K that reflects the Company’s comments, as well as any
text as to which the Company has not commented upon after being given a
reasonable opportunity to comment, shall, notwithstanding the provisions of
Section 5.1(a),
be
deemed to have been approved by the Company and may henceforth be used by
Delcorp in other filings made by it with the SEC and in other documents
distributed by Delcorp in connection with the transactions contemplated by
this
Agreement without further review or consent of the Signing Shareholders or
the
Company. Promptly after the execution of this Agreement, Delcorp and the Company
shall also issue a mutually agreeable press release announcing the execution
of
this Agreement (the “Signing
Press Release”).
-
45 -
(b) At
least five (5) days prior to Closing, Delcorp shall prepare together with
Company a draft Form 8-K announcing the Closing, together with, or incorporating
by reference, the financial statements prepared by the Company and its
accountant, and such other information that may be required to be disclosed
with
respect to the Merger in any report or form to be filed with the SEC
(“Closing
Form 8-K”),
which
shall be in a form reasonably acceptable to the Company. Prior to Closing,
Delcorp and the Company shall prepare a mutually agreeable press release
announcing the consummation of the Merger hereunder (“Closing
Press Release”).
Concurrently with the Closing, Delcorp shall distribute the Closing Press
Release. Concurrently with the Closing, or as soon as practicable thereafter,
Delcorp shall file the Closing Form 8-K with the Commission.
(c) The
Company and Delcorp shall further cooperate with each other and use their
respective reasonable best efforts to take or cause to be taken all actions,
and
do or cause to be done all things, necessary, proper or advisable on its part
under this Agreement and applicable laws to consummate the Merger and the other
transactions contemplated hereby as soon as practicable, including preparing
and
filing as soon as practicable all documentation to effect all necessary notices,
reports and other filings and to obtain as soon as practicable all consents,
registrations, approvals, permits and authorizations necessary or advisable
to
be obtained from any third party (including the respective independent
accountants of the Company and Delcorp) and/or any Governmental Entity in order
to consummate the Merger or any of the other transactions contemplated hereby.
This obligation shall include, on the part of Delcorp, sending a termination
letter to Continental in substantially the form of Exhibit A
attached
to the Investment Management Trust Agreement by and between Delcorp and
Continental dated as of October 3, 2006. Subject to applicable laws relating
to
the exchange of information and the preservation of any applicable
attorney-client privilege, work-product doctrine, self-audit privilege or other
similar privilege, each of the Company and Delcorp shall have the right to
review and comment on in advance, and to the extent practicable each will
consult the other on, all the information relating to such party, that appear
in
any filing made with, or written materials submitted to, any third party and/or
any Governmental Entity in connection with the Merger and the other transactions
contemplated hereby. In exercising the foregoing right, each of the Company
and
Delcorp shall act reasonably and as promptly as practicable.
-
46 -
5.5 Required
Information.
In
connection with the preparation of the Signing Form 8-K, the Signing Press
Release, the Registration Statement, the Proxy Statement/Prospectus, the Closing
Form 8-K and the Closing Press Release, or any other statement, filing notice
or
application made by or on behalf of Delcorp and/or the Company to any Government
Entity or other third party in connection with Merger and the other transactions
contemplated hereby, and for such other reasonable purposes, the Company and
Delcorp each shall, upon request by the other, furnish the other with all
information concerning themselves, their respective directors, officers and
stockholders (including the directors of Delcorp and the Company to be elected
effective as of the Closing pursuant to Section 5.2
hereof)
and such other matters as may be reasonably necessary or advisable in connection
with the Merger. Each party warrants and represents to the other party that
all
such information shall be true and correct in all material respects and will
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 contained
therein, in light of the circumstances under which they were made, not
misleading.
5.6 Confidentiality;
Access to Information.
(a) Confidentiality.
Any
confidentiality agreement previously executed by the parties shall be superseded
in its entirety by the provisions of this Agreement. Each party agrees to
maintain in confidence any non-public information received from the other party,
and to use such non-public information only for purposes of consummating the
transactions contemplated by this Agreement. Such confidentiality obligations
will not apply to (i) information which was known to the one party or their
respective agents prior to receipt from the other party; (ii) information which
is or becomes generally known; (iii) information acquired by a party or their
respective agents from a third party who was not bound to an obligation of
confidentiality; and (iv) disclosure required by law. In the event this
Agreement is terminated as provided in Article VIII
hereof,
each party (i) will destroy or return or cause to be destroyed or returned
to
the other all documents and other material obtained from the other in connection
with the Merger contemplated hereby, and (ii) will use its reasonable best
efforts to delete from its computer systems all documents and other material
obtained from the other in connection with the Merger contemplated
hereby.
(b) Access
to Information.
(i) The
Company will afford Delcorp and its financial advisors, accountants, counsel
and
other representatives reasonable access during normal business hours, upon
reasonable notice, to the properties, books, records and personnel of the
Company during the period prior to the Closing to obtain all information
concerning the business, including the status of business development efforts,
properties, results of operations and personnel of the Company, as Delcorp
may
reasonably request. No information or knowledge obtained by Delcorp in any
investigation pursuant to this Section 5.6
will
affect or be deemed to modify any representation or warranty contained herein
or
the conditions to the obligations of the parties to consummate the
Merger.
-
47 -
(ii) Delcorp
will afford the Company and its financial advisors, underwriters, accountants,
counsel and other representatives reasonable access during normal business
hours, upon reasonable notice, to the properties, books, records and personnel
of Delcorp during the period prior to the Closing to obtain all information
concerning the business, including properties, results of operations and
personnel of Delcorp, as the Company may reasonably request. No information
or
knowledge obtained by the Company in any investigation pursuant to this
Section 5.6
will
affect or be deemed to modify any representation or warranty contained herein
or
the conditions to the obligations of the parties to consummate the
Merger.
(iii) Notwithstanding
anything to the contrary contained herein, each party hereby agrees that, by
proceeding with the Closing, he or it shall be conclusively deemed to have
waived for all purposes hereunder any inaccuracy of representation or breach
of
warranty by another party that is actually known by him or it prior to the
Closing, including knowledge obtained as a result of a supplement or amendment
to a Disclosure Schedule (as hereinafter defined) pursuant to Section 5.14;
provided that no such supplement or amendment shall preclude the Company or
Parent from terminating this Agreement if the Disclosure Schedule, as so
supplemented or amended, does not satisfy the provisions of Section 6.2(a)
or
Section 6.3(a),
as the
case may be.
5.7 Public
Disclosure.
From
the date of this Agreement until Closing or termination, the parties shall
cooperate in good faith to jointly prepare all press releases and public
announcements pertaining to this Agreement and the transactions governed by
it,
and no party shall issue or otherwise make any public announcement or
communication pertaining to this Agreement or the transaction without the prior
consent of Delcorp (in the case of the Company and the Signing Shareholders)
or
the Company (in the case of Delcorp), except as required by any legal
requirement or by the rules and regulations of, or pursuant to any agreement
of
a stock exchange or trading system. Each party will not unreasonably withhold
approval from the others with respect to any press release or public
announcement. If any party determines with the advice of counsel that it is
required to make this Agreement and the terms of the transaction public or
otherwise issue a press release or make public disclosure with respect thereto,
it shall, at a reasonable time before making any public disclosure, consult
with
the other party regarding such disclosure, seek such confidential treatment
for
such terms or portions of this Agreement or the transaction as may be reasonably
requested by the other party and disclose only such information as is legally
compelled to be disclosed. This provision will not apply to communications
by
any party to its counsel, accountants and other professional
advisors.
-
48 -
5.8 Reasonable
Efforts.
Upon
the terms and subject to the conditions set forth in this Agreement, each of
the
parties agrees to use its commercially reasonable efforts to take, or cause
to
be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including using commercially reasonable efforts to accomplish the
following: (i) the taking of all reasonable acts necessary to cause the
conditions precedent set forth in Article VI
to be
satisfied, (ii) the obtaining of all necessary actions, waivers, consents,
approvals, orders and authorizations from Governmental Entities and the making
of all necessary registrations, declarations and filings (including
registrations, declarations and filings with Governmental Entities, if any)
and
the taking of all reasonable steps as may be necessary to avoid any suit, claim,
action, investigation or proceeding by any Governmental Entity, (iii) the
obtaining of all consents, approvals or waivers from third parties required
as a
result of the transactions contemplated in this Agreement, including the
consents referred to in Schedule 2.5 of the Company Schedule, (iv) the
defending of any suits, claims, actions, investigations or proceedings, whether
judicial or administrative, challenging this Agreement or the consummation
of
the transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (v) the execution or delivery of any additional
instruments reasonably necessary to consummate the transactions contemplated
by,
and to fully carry out the purposes of, this Agreement. In connection with
and
without limiting the foregoing, Delcorp and its board of directors and the
Company and its board of directors shall, if any state takeover statute or
similar statute or regulation is or becomes applicable to the Merger, this
Agreement or any of the transactions contemplated by this Agreement, use its
commercially reasonable efforts to enable the Merger and the other transactions
contemplated by this Agreement to be consummated as promptly as practicable
on
the terms contemplated by this Agreement. Notwithstanding anything herein to
the
contrary, nothing in this Agreement shall be deemed to require Delcorp or the
Company to agree to any divestiture by itself or any of its affiliates of shares
of capital stock or of any business, assets or property, or the imposition
of
any material limitation on the ability of any of them to conduct their business
or to own or exercise control of such assets, properties and stock.
5.9 Treatment
as a Reorganization.
Neither
Delcorp nor the Company nor the Signing Shareholders shall take any action
prior
to or following the Merger that could reasonably be expected to cause the Merger
to fail to qualify as a “reorganization” within the meaning of
Section 368(a)(i)(A) of the Code and the regulations
thereunder.
5.10 No
Delcorp Common Stock Transactions.
Each
officer, director and Signing Shareholder of the Company shall agree that it
shall not, prior to the date that is twelve months after the Closing Date,
sell,
transfer or otherwise dispose of an interest in any of the shares of Delcorp
Common Stock it receives as a result of the Merger other than as permitted
pursuant to the Lock-Up Agreement in the form of Exhibit G
hereto
executed by such Person prior to or on the Closing Date. Each officer and
director of Delcorp as of the Closing Date including, but not limited to, Xxxx
X. Xxxxxxxxx, Xxxxx Xxxx, Xxxxxx Xxxxxx, Xxxxxxx X. Xxxxxxx, Xxx Xxxxx and
Xxxxx
X. Xxxxxx shall agree that he shall not, prior to the date that is twelve (12)
months after the Closing Date, sell, transfer, otherwise dispose of an interest
in any of the shares of Delcorp Common Stock owned as of the Closing Date other
than as permitted pursuant to the Lock-Up Agreement in the form of Exhibit G
hereto
executed by such person on or prior to the Closing Date.
5.11 Certain
Claims.
(a) As
additional consideration for the issuance of Delcorp Common Stock pursuant
to
this Agreement, each of the Signing Shareholders hereby releases and forever
discharges, effective as of the Closing Date, the Company and its directors,
officers, employees and agents, from any and all rights, claims, demands,
judgments, obligations, liabilities and damages, whether accrued or unaccrued,
asserted or unasserted, and whether known or unknown arising out of or resulting
from such Signing Shareholder’s (i) status as a holder of an equity interest in
the Company; and (ii) employment, service, consulting or other similar agreement
entered into with the Company prior to Closing to the extent that the basis
for
claims under any such agreement that survives the Closing arise prior to the
Closing, provided, however, the foregoing shall not release any obligations
of
Delcorp set forth in this Agreement or any of the other documents executed
in
connection with the transactions contemplated hereby.
-
49 -
(b) As
additional consideration for the Stockholders to enter into this Agreement,
the
Company hereby releases and forever discharges, effective as of the Closing
Date, each of the Stockholders from any and all rights, claims, demands,
judgments, obligations, liabilities and damages, whether accrued or unaccrued,
asserted or unasserted, and whether known or unknown arising out of or resulting
from such Stockholder’s employment, service, consulting or other similar
agreement entered into with the Company prior to Closing to the extent that
the
basis for claims under any such agreement that survives the Closing arise prior
to the Closing.
5.12 No
Securities Transactions.
Neither
the Company nor any Signing Shareholder or any of their affiliates, directly
or
indirectly, shall engage in any transactions involving the securities of Delcorp
prior to the time of the making of a public announcement of the transactions
contemplated by this Agreement. The Company shall use its best efforts to
require each of its officers, directors and employees, and shall use
commercially reasonable efforts to require each of its agents, advisors,
contractors, associates, clients, customers and representatives, to comply
with
the foregoing requirement.
5.13 No
Claim Against Trust Fund.
Notwithstanding anything else in this Agreement, the Company and the Signing
Shareholders acknowledge that they have read Delcorp’s final prospectus dated
October 3, 2006 and understand that Delcorp has established the Trust Fund
for the benefit of Delcorp’s public stockholders and that Delcorp may disburse
monies from the Trust Fund only (a) to Delcorp’s public stockholders in the
event they elect to convert their shares into cash in accordance with Delcorp’s
Charter Documents and/or the liquidation of Delcorp or (b) to Delcorp after
it
consummates a business combination. The Company and the Signing Shareholders
further acknowledge that, if the transactions contemplated by this Agreement,
or, upon termination of this Agreement, another business combination, are not
consummated by October 3, 2008, Delcorp will be obligated to return to its
stockholders the amounts being held in the Trust Fund. Accordingly, the Company
and the Signing Shareholders, for themselves and their subsidiaries, affiliated
entities, directors, officers, employees, stockholders, representatives,
advisors and all other associates and affiliates, hereby waive all rights,
title, interest or claim of any kind against Delcorp to collect from the Trust
Fund any monies that may be owed to them by Delcorp for any reason whatsoever,
including but not limited to a breach of this Agreement by Delcorp or any
negotiations, agreements or understandings with Delcorp (whether in the past,
present or future), and will not seek recourse against the Trust Fund at any
time for any reason whatsoever. This paragraph will survive this Agreement
and
will not expire and will not be altered in any way without the express written
consent of Delcorp, the Company and the Signing Shareholders.
-
50 -
5.14 Disclosure
of Certain Matters.
Each of
Delcorp, the Company and each of the Signing Shareholders will provide the
others with prompt written notice of any event, development or condition that
(a) would cause any of such party’s representations and warranties to become
untrue or misleading or which may affect its ability to consummate the
transactions contemplated by this Agreement, (b) had it existed or been known
on
the date hereof would have been required to be disclosed under this Agreement,
(c) gives such party any reason to believe that any of the conditions set forth
in Article VI
will not
be satisfied, (d) is of a nature that is or may be materially adverse to the
operations, prospects or condition (financial or otherwise) of the Company,
or
(e) would require any amendment or supplement to the Proxy Statement/Prospectus.
The parties shall have the obligation to supplement or amend the Company
Schedules and Delcorp Schedules (the “Disclosure
Schedules”)
being
delivered concurrently with the execution of this Agreement with respect to
any
matter hereafter arising or discovered which, if existing or known at the date
of this Agreement, would have been required to be set forth or described in
the
Disclosure Schedules. The obligations of the parties to amend or supplement
the
Disclosure Schedules being delivered herewith shall terminate on the Closing
Date. Notwithstanding any such amendment or supplementation, for purposes of
Sections
6.2(a), 6.3(a), 7.1(a)(i), 8.1(d) and 8.1(e),
the
representations and warranties of the parties shall be made with reference
to
the Disclosure Schedules as they exist at the time of execution of this
Agreement, subject to such anticipated changes as are set forth in
Schedule 4.1 or otherwise expressly contemplated by this Agreement or that
are set forth in the Disclosure Schedules as they exist on the date of this
Agreement.
5.15 Securities
Listing.
Delcorp
and the Company shall use commercially reasonable efforts to obtain the listing
for trading on either the New York Stock Exchange or on NASDAQ of the Delcorp
Common Stock and the Units issued in Delcorp’s initial public offering and the
class of warrants included in such Units. If such listing is not obtained by
the
Closing, the parties shall continue to use their best efforts after the Closing
to obtain such listing.
5.16 Further
Actions.
The
Company shall use its best efforts to take such actions as are necessary to
fulfill its obligations under this Agreement and to enable Delcorp to fulfill
its obligations hereunder.
5.17 No
Solicitation.
(a) The
Company will not, and will cause its Affiliates, employees, agents and
representatives not to, directly or indirectly, solicit or enter into
discussions or transactions with, or encourage, or provide any information
to,
any corporation, partnership or other entity or group (other than Delcorp and
its designees) concerning any merger, sale of ownership interests and/or assets
of the Company, recapitalization or similar transaction.
(b) Delcorp
will not, and will cause its employees, agents and representatives not to,
directly or indirectly, solicit or enter into discussions or transactions with,
or encourage, or provide any information to, any corporation, partnership or
other entity or group (other than the Company and its designees) concerning
any
merger, purchase of ownership interests and/or assets, recapitalization or
similar transaction.
-
51 -
5.18 Charter
Protections; Directors’ and Officers’ Liability
Insurance.
(a) All
rights to indemnification for acts or omissions occurring through the Closing
Date now existing in favor of the current directors and officers of Delcorp
as
provided in the Charter Documents of Delcorp or in any indemnification
agreements shall survive the Merger and shall continue in full force and effect
in accordance with their terms.
(b) For
a period of six (6) years after the Closing Date, each of Delcorp and the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors’ and officers’ liability insurance maintained by Delcorp
and the Company, respectively (or policies of at least the same coverage and
amounts containing terms and conditions which are no less advantageous), with
respect to claims arising from facts and events that occurred prior to the
Closing Date.
(c) If
Delcorp or any of its successors or assigns (i) consolidates with or merges
into
any other Person and shall not be the continuing or surviving entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially
all
of its properties and assets to any Person, then, in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Delcorp assume the obligations set forth in this Section 5.18.
(d) The
provisions of this Section 5.18
are
intended to be for the benefit of, and shall be enforceable by, each Person
who
will have been a director or officer of Delcorp for all periods ending on or
before the Closing Date and may not be changed without the consent of Committee
referred to in Section 1.14(a).
5.19 Insider
Loans; Equity Ownership in Subsidiaries.
Each
Signing Shareholder, at or prior to Closing, shall (i) repay to the Company
any
loan by the Company to such Signing Shareholder and any other amount owed by
the
Signing Shareholder to the Company; (ii) cause any guaranty or similar
arrangement pursuant to which the Company has guaranteed the payment or
performance of any obligations of such Signing Shareholder to a third party
to
be terminated; and (iii) cease to own any direct equity interests in any
Subsidiary of the Company or in any other Person that utilizes the name
“Primoris.” The Company shall use its best efforts to enable the Signing
Shareholders to accomplish the foregoing.
5.20 Certain
Financial Information.
Within
twenty (20) business days after the end of each month between the date hereof
and the earlier of the Closing Date and the date on which this Agreement is
terminated, the Company shall deliver to Delcorp unaudited consolidated
financial statements of the Company and its Subsidiaries for such month,
certified by the chief financial officer of the Company as being true and
correct, including a balance sheet, statement of operations, and statements
of
stockholders’ equity and cash flow, prepared in accordance with the U.S. GAAP
applied on a consistent basis to prior periods (except as may be indicated
in
the notes thereto) and that fairly present in all material respects the
financial position of the Company at the date thereof and the results of its
operations for the period indicated, except that statements of cash flow need
be
delivered only as of the end of each fiscal quarter and such statements need
not
contain notes and may be subject to normal adjustments that are not expected
to
have a Material Adverse Effect on the Company and its Subsidiaries, taken as
a
whole.
-
52 -
5.21 Access
to Financial Information.
The
Company will, and will cause its auditors to (a) continue to provide Delcorp
and
its advisors full access to all of the Company’s financial information used in
the preparation of its Audited Financial Statements and Unaudited Financial
Statements and the financial information furnished pursuant to Section 5.20
hereof
and (b) cooperate fully with any reviews performed by Delcorp or its advisors
of
any such financial statements or information.
5.22 Delcorp
Borrowings.
Through
the Closing, Delcorp shall be allowed to borrow funds from its directors,
officers and/or stockholders to meet its reasonable capital requirements, with
any such loans to be made only as reasonably required by the operation of
Delcorp in due course on a non-interest bearing basis and repayable at Closing.
The proceeds of such loans shall not be used for the payment of salaries,
bonuses or other compensation to any of Delcorp’s directors, officers or
stockholders.
5.23 Trust
Fund Disbursement.
Delcorp
shall cause the Trust Fund to be dispersed to Delcorp immediately upon the
Closing. All liabilities of Delcorp due and owing or incurred at or prior to
the
Effective Time shall be paid as and when due, including all Delcorp tax
liabilities and the payment at Closing of professional fees related to these
transactions, and adequate reserves shall be made against amounts distributed
from the Trust Fund therefor.
5.24 Distributions
by Company.
The
Company may make cash distributions as follows:
(a) From
and after the date of this Agreement, at any time prior to the Closing Date,
distributions (“Tax
Distributions”)
under
Section 1368 of the Code to its shareholders limited, in the aggregate, to
50%
of the estimated Stub Period Taxable Income (as hereinafter defined). As used
herein, “Stub
Period Taxable Income”
means
the income of the Company and its Subsidiaries that will be entered on Form
1120S, Schedule K, Line 18 of the final U.S. Income Tax Return of the Company
and its Subsidiaries for the period beginning on January 1, 2008 and ending
on
the Closing Date, which Tax Return shall be prepared and filed by the Surviving
Corporation as soon as practicable after the Closing Date. The Surviving
Corporation shall submit such final Tax Return to the Representative at least
ten days prior to the date it intends to file such final Tax Return. The
Surviving Corporation shall not file such final Tax Return without the consent
of the Representative, which consent shall not be unreasonably
withheld.
(b) From
and after the date of this Agreement, at any time prior to the Closing Date,
in
addition to the distributions provided for in Section 5.24(a), distributions
under Section 1368 of the Code in an amount not to exceed Forty-Eight Million
Nine Hundred Forty-Six Thousand Six Hundred Sixty Dollars and Sixty-Nine Cents
($48,946,660.69) (the “Base
Distribution”).
Of
the Base Distribution, the Company will distribute Forty-Four Million Fifty-One
Thousand Two Hundred Eighty Dollars ($44,051,280) to its shareholders, with
the
balance of Four Million Eight Hundred Ninety-Five Thousand Three Hundred Eighty
Dollars and Sixty-Nine Cents ($4,895,380.69) (the “Distribution
Holdback”)
to be
held by Delcorp and distributed in accordance with the provisions of Section
5.24(c).
-
53 -
(c) After
the Stub Period Taxable Income and the Tax Distribution amount to which the
shareholders of the Company are entitled have been finally determined, the
Surviving Corporation shall release as a distribution to the former shareholders
of the Company under Sections 1368 and 1371(e)(1) of the Code, no later than
a
date qualifying as within the post-termination transaction period defined by
Section 1377(b)(1)(A) of the Code, such amount from the Distribution Holdback
so
that the total distribution payments to such Persons pursuant to this Section
5.24, including amounts released to such Persons from the Distribution Holdback,
shall equal the sum of (i) 50% of the Stub Period Taxable Income, as finally
determined, plus (ii) the Base Distribution. Any amount remaining in the
Distribution Holdback shall be retained by the Surviving
Corporation.
5.25 Dividend.
Following the closing, Delcorp’s board of directors shall initially declare and
pay annual dividends on the Delcorp Common Stock at a rate of not less than
$0.10 per share; provided, however, that the board of directors shall not
declare any such dividend unless, at the time of declaration, there is adequate
surplus for such declaration under the DGCL or if the board of directors, in
the
exercise of their business judgment, believes that it would be prudent to cancel
or modify the dividend payment.
5.26 Termination
of Shareholders’ Agreement.
The
Company and the Signing Shareholders shall use their reasonable best efforts
to
cause the Primoris Shareholders’ Agreement dated December 31, 2003 shall be
terminated by all parties hereto.
ARTICLE
VI
CONDITIONS
TO THE TRANSACTION
6.1 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 prior to the Closing Date of the
following conditions:
(a) Delcorp
Stockholder Approval.
The
Delcorp Stockholder Approval and the Charter Amendment each shall have been
duly
approved and adopted by the stockholders of Delcorp by the requisite vote under
the laws of the State of Delaware and the Delcorp Charter Documents.
(b) Delcorp
Common Stock.
Holders
of twenty percent (20%) or more of the shares of Delcorp Common Stock issued
in
Delcorp’s initial public offering of securities and outstanding immediately
before the Closing shall not have exercised their rights to convert their shares
into a pro rata share of the Trust Fund in accordance with Delcorp’s Charter
Documents.
(c) HSR
Act; No Order.
All
specified waiting periods under the HSR Act shall have expired and no
Governmental Entity shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is in effect and
which
has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger, substantially on the terms contemplated by this
Agreement.
-
54 -
(d) Stock
Quotation or Listing.
The
Delcorp Common Stock at the Closing will be quoted on the OTC BB or listed
for
trading on the New York Stock Exchange or NASDAQ, if the application for any
such listing is approved, and there will be no action or proceeding pending
or
threatened against Delcorp by FINRA to prohibit or terminate the quotation
of
Delcorp Common Stock on the OTC BB or the trading thereof on the New York Stock
Exchange or NASDAQ.
6.2 Additional
Conditions to Obligations of the Company.
The
obligations of the Company to consummate and effect the Merger shall be subject
to the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by the
Company:
(a) Representations
and Warranties.
Each
representation and warranty of Delcorp contained in this Agreement that is
(i)
qualified as to materiality shall have been true and correct (A) as of the
date
of this Agreement and (B) subject to the provisions of the last sentence of
Section 5.14,
on and
as of the Closing Date with the same force and effect as if made on the Closing
Date, and (ii) not qualified as to materiality shall have been true and correct
(C) as of the date of this Agreement and (D) subject to the provisions of the
last sentence of Section 5.14,
in all
material respects on and as of the Closing Date with the same force and effect
as if made on the Closing Date. The Company shall have received a certificate
with respect to the foregoing signed on behalf of Delcorp by an authorized
officer of Delcorp (“Delcorp
Closing Certificate”).
(b) Agreements
and Covenants.
Delcorp
and Merger Sub shall have performed or complied with all agreements and
covenants required by this Agreement to be performed or complied with by them
on
or prior to the Closing Date, except to the extent that any failure to perform
or comply (other than a willful failure to perform or comply or failure to
perform or comply with an agreement or covenant reasonably within the control
of
Delcorp) does not, or will not, constitute a Material Adverse Effect with
respect to Delcorp, and the Delcorp Closing Certificate shall include a
provision to such effect.
(c) No
Litigation.
No
action, suit or proceeding shall be pending or threatened before any
Governmental Entity which is reasonably likely to (i) prevent consummation
of
any of the transactions contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (iii) affect materially and adversely or otherwise encumber
the
title of the shares of Delcorp Common Stock to be issued by Delcorp in
connection with the Merger and no order, judgment, decree, stipulation or
injunction to any such effect shall be in effect.
-
55 -
(d) Consents.
Delcorp
shall have obtained all consents, waivers and approvals required to be obtained
by Delcorp in connection with the consummation of the transactions contemplated
hereby, other than consents, waivers and approvals the absence of which, either
alone or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect on Delcorp and the Delcorp Closing Certificate shall include
a
provision to such effect.
(e) Material
Adverse Effect.
No
Material Adverse Effect with respect to Delcorp shall have occurred since the
date of this Agreement.
(f) SEC
Compliance.
Immediately prior to Closing, Delcorp shall be in compliance with the reporting
requirements under the Exchange Act.
(g) Opinion
of Counsel.
The
Company shall have received from Xxxxxxxx Xxxxxx, counsel to Delcorp, an opinion
of counsel in substantially the form of Exhibit H
annexed
hereto.
(h) Other
Deliveries.
At or
prior to Closing, Delcorp shall have delivered to the Company (i) copies of
resolutions and actions taken by Delcorp’s board of directors and stockholders
in connection with the approval of this Agreement and the transactions
contemplated hereunder, and (ii) such other documents or certificates as shall
reasonably be required by the Company and its counsel in order to consummate
the
transactions contemplated hereunder.
(i) Resignations.
The
persons listed in Schedule 6.2(i) shall have resigned from all of their
positions and offices with Delcorp.
(j) Trust
Fund.
Delcorp
shall have made appropriate arrangements to have the Trust Fund, which shall
contain no less than the amount referred to in Section 3.25,
dispersed to Delcorp immediately upon the Closing.
(k) Lock-Up
Agreement.
The
Lock-Up Agreement in the form of Exhibit G
shall be
executed by the Delcorp stockholders designated as parties thereto.
6.3 Additional
Conditions to the Obligations of Delcorp.
The
obligations of Delcorp to consummate and effect the Merger shall be subject
to
the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by
Delcorp:
(a) Representations
and Warranties.
Each
representation and warranty of the Company and the Stockholders contained in
this Agreement that is (i) qualified as to materiality shall have been true
and
correct (A) as of the date of this Agreement and (B) subject to the provisions
of the last sentence of Section 5.14,
on and
as of the Closing Date with the same force and effect as if made on the Closing
Date, and (ii) not qualified as to materiality shall have been true and correct
(C) as of the date of this Agreement and (D) subject to the provisions of the
last sentence of Section 5.14,
in all
material respects on and as of the Closing Date with the same force and effect
as if made on the Closing Date. Delcorp shall have received a certificate with
respect to the foregoing signed on behalf of the Company by an authorized
officer of the Company (“Company
Closing Certificate”).
-
56 -
(b) Agreements
and Covenants.
The
Company and the Signing Shareholders shall have performed or complied with
all
agreements and covenants required by this Agreement to be performed or complied
with by them at or prior to the Closing Date except to the extent that any
failure to perform or comply (other than a willful failure to perform or comply
or failure to perform or comply with an agreement or covenant reasonably within
the control of the Company) does not, or will not, constitute a Material Adverse
Effect on the Company, and the Company Closing Certificate shall include a
provision to such effect.
(c) Dissenters’
Rights.
Holders
of no more than five percent (5%) of the shares of any class of securities
of
the Company outstanding immediately before the Effective Time shall have taken
action to exercise their rights pursuant to Chapter 92A of the Nevada Revised
Statutes and other provisions of Applicable Nevada Law.
(d) No
Litigation.
No
action, suit or proceeding shall be pending or threatened before any
Governmental Entity which is reasonably likely to (i) prevent consummation
of
any of the transactions contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (iii) affect materially and adversely the right of Delcorp
to
own, operate or control any of the assets and operations of the Surviving
Corporation following the Merger and no order, judgment, decree, stipulation
or
injunction to any such effect shall be in effect.
(e) Consents.
The
Company shall have obtained all consents, waivers, permits and approvals
required to be obtained by the Company in connection with the consummation
of
the transactions contemplated hereby, other than consents, waivers and approvals
the absence of which, either alone or in the aggregate, could not reasonably
be
expected to have a Material Adverse Effect on the Company and the Company
Closing Certificate shall include a provision to such effect.
(f) Material
Adverse Effect.
No
Material Adverse Effect with respect to the Company shall have occurred since
the date of this Agreement.
(g) Voting
and Lock-Up Agreements.
The
Voting Agreement substantially in the form of Exhibit F
and the
Lock-Up Agreements substantially in the form of Exhibit G
shall be
in full force and effect.
(h) Employment
Agreements.
Employment Agreements between the Company and, separately, Xxxxx Xxxxx, Xxxx
Xxxxxxxxxx, Xxxx Xxxxxxxx, Xxxxxx Xxxxxxxx, Xxxxx Xxxxxxx, Xxx Xxxxx, Xxxx
Xxxxxxx, Xxxx Xxxxx and Xxxx XxXxxxxx in the forms of Exhibits I
through Q,
respectively, shall be in full force and effect.
-
57 -
(i) Opinion
of Counsel.
Delcorp
shall have received from Xxxxx & Xxxxxx, LLP, counsel to the Company,
an opinion of counsel in substantially the form of Exhibit R
annexed
hereto.
(j) Other
Deliveries.
At or
prior to Closing, the Company shall have delivered to Delcorp: (i) copies of
resolutions and actions taken by the Company’s board of directors and
stockholders in connection with the approval of this Agreement and the
transactions contemplated hereunder, and (ii) such other documents or
certificates as shall reasonably be required by Delcorp and its counsel in
order
to consummate the transactions contemplated hereunder.
(k) Derivative
Securities.
There
shall be outstanding no options, warrants or other derivative securities
entitling the holders thereof to acquire shares of Company Common Stock or
other
securities of the Company.
(l) Insider
Loans; Equity Ownership in Subsidiaries.
(i) All
outstanding indebtedness owed by Insiders to the Company shall have been repaid
in full, including the indebtedness and other obligations described on
Schedule 2.22; (ii) all outstanding guaranties and similar arrangements
pursuant to which the Company has guaranteed the payment or performance of
any
obligations of any Insider to a third party shall have been terminated; and
(iii) no Insider shall own any direct equity interests in any Subsidiary of
the
Company or in any other Person that utilizes in its name “Primoris.”
(m) Company
Shareholder Vote.
The
terms of this Agreement and the transactions referred to herein shall have
been
approved by the Company’s shareholders pursuant to a properly noticed meeting of
the Company’s shareholders.
(n) Termination
of Shareholders’ Agreement.
The
Primoris Shareholders’ Agreement dated December 31, 2003 shall have been
terminated.
ARTICLE
VII
INDEMNIFICATION
7.1 Indemnification
of Delcorp.
(a) Subject
to the terms and conditions of this Article VII
(including without limitation the limitations set forth in Section 7.4),
Delcorp, the Surviving Corporation and their respective representatives,
successors and permitted assigns (the “Delcorp
Indemnitees”)
shall
be indemnified, defended and held harmless by those Persons who receive shares
of Delcorp Company Stock from Delcorp upon consummation of the Merger, but
only
to the extent of the Escrow Shares, from and against all Losses asserted
against, resulting to, imposed upon, or incurred by any Delcorp Indemnitee
by
reason of, arising out of or resulting from:
-
58 -
(i) the
inaccuracy or breach of any representation or warranty of the Company contained
in or made pursuant to this Agreement, any Schedule or any certificate
delivered by the Company to Delcorp pursuant to this Agreement with respect
hereto or thereto in connection with the Closing; and
(ii) the
non-fulfillment or breach of any covenant or agreement of the Company contained
in this Agreement;
(b) As
used in this Article VII,
the
term “Losses”
shall
include on a dollar for dollar basis all losses, liabilities, damages,
judgments, awards, orders, penalties, settlements, costs and expenses
(including, without limitation, interest, penalties, court costs and reasonable
legal fees and expenses) including those arising from any demands, claims,
suits, actions, costs of investigation, notices of violation or noncompliance,
causes of action, proceedings and assessments whether or not made by third
parties or whether or not ultimately determined to be valid. Solely for the
purpose of determining the amount of any Losses (and not for determining any
breach) for which Delcorp Indemnitee may be entitled to indemnification pursuant
to Article VII,
any
representation or warranty contained in this Agreement that is qualified by
a
term or terms such as “material,” “materially,” or “Material Adverse Effect”
shall be deemed made or given without such qualification and without giving
effect to such words.
7.2 Indemnification
of Third Party Claims.
The
indemnification obligations and liabilities under this Article VII
with
respect to actions, proceedings, lawsuits, investigations, demands or other
claims brought against Delcorp by a Person other than the Company (a
“Third
Party Claim”)
shall
be subject to the following terms and conditions:
(a) Notice
of Claim.
Delcorp, acting through the Committee, will give the Representative prompt
written notice after receiving written notice of any Third Party Claim or
discovering the liability, obligation or facts giving rise to such Third Party
Claim (a “Notice
of Claim”)
which
Notice of Third Party Claim shall set forth (i) a brief description of the
nature of the Third Party Claim, (ii) the total amount of the actual
out-of-pocket Loss or the anticipated potential Loss (including any costs or
expenses which have been or may be reasonably incurred in connection therewith),
and (iii) whether such Loss may be covered (in whole or in part) under any
insurance and the estimated amount of such Loss which may be covered under
such
insurance, and the Representative shall be entitled to participate in the
defense of Third Party Claim at its expense.
(b) Defense.
The
Representative shall have the right, at its option (subject to the limitations
set forth in subsection
7.2(c)
below)
and at its own expense, by written notice to Delcorp, to assume the entire
control of, subject to the right of Delcorp to participate (at its expense
and
with counsel of its choice) in, the defense, compromise or settlement of the
Third Party Claim as to which such Notice of Claim has been given, and shall
be
entitled to appoint a recognized and reputable counsel reasonably acceptable
to
Delcorp to be the lead counsel in connection with such defense. If the
Representative is permitted and elects to assume the defense of a Third Party
Claim:
-
59 -
(i) the
Representative shall diligently and in good faith defend such Third Party Claim
and shall keep Delcorp reasonably informed of the status of such defense;
provided, however, that in the case of any settlement providing for remedies
which are not merely incidental to a primary damage claim or claims for monetary
damages, Delcorp shall have the right to approve any settlement, which approval
will not be unreasonably withheld, delayed or conditioned; and
(ii) Delcorp
shall cooperate fully in all respects with the Representative in any such
defense, compromise or settlement thereof, including, without limitation, the
selection of counsel, and Delcorp shall make available to the Representative
all
pertinent information and documents under its control.
(c) Limitations
of Right to Assume Defense.
The
Representative shall not be entitled to assume control of such defense and
shall
pay the fees and expenses of counsel retained by Delcorp if (i) the Third Party
Claim relates to or arises in connection with any criminal proceeding, action,
indictment, allegation or investigation; (ii) the Third Party Claim seeks an
injunction or equitable relief against Delcorp which is not merely incidental
to
a primary damage claim or claims for monetary damages; or (iii) there is a
reasonable probability that a Third Party Claim may materially and adversely
affect Delcorp other than as a result of money damages or other money
payments.
(d) Other
Limitations.
Failure
to give prompt Notice of Claim or to provide copies of relevant available
documents or to furnish relevant available data shall not constitute a defense
(in whole or in part) to any Third Party Claim by Delcorp against the
Representative and shall not affect the Representative’s duty or obligations
under this Article VII,
except
to the extent (and only to the extent that) such failure shall have adversely
affected the ability of the Representative to defend against or reduce its
liability or caused or increased such liability or otherwise caused the damages
for which the Representative is obligated to be greater than such damages would
have been had Delcorp given the Representative prompt notice hereunder. So
long
as the Representative is defending any such action actively and in good faith,
Delcorp shall not settle such action. Delcorp shall make available to the
Representative all relevant records and other relevant materials required by
them and in the possession or under the control of Delcorp, for the use of
the
Representative and its representatives in defending any such action, and shall
in other respects give reasonable cooperation in such defense.
(e) Failure
to Defend.
If the
Representative, promptly after receiving a Notice of Claim, fails to defend
such
Third Party Claim actively and in good faith, Delcorp, at the reasonable cost
and expense of the Representative, will (upon further written notice) have
the
right to undertake the defense, compromise or settlement of such Third Party
Claim as it may determine in its reasonable discretion, provided that the
Representative shall have the right to approve any settlement, which approval
will not be unreasonably withheld, delayed or conditioned.
-
60 -
(f) Delcorp’s
Rights.
Anything in this Section 7.2
to the
contrary notwithstanding, the Representative shall not, without the written
consent of Delcorp, settle or compromise any action or consent to the entry
of
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to Delcorp of a full and unconditional release
from all liability and obligation in respect of such action without any payment
by Delcorp.
(g) Representative
Consent.
Unless
the Representative has consented to a settlement of a Third Party Claim, the
amount of the settlement shall not be a binding determination of the amount
of
the Loss and such amount shall be determined in accordance with the provisions
of the Escrow Agreement.
7.3 Insurance
Effect.
To the
extent that any Losses that are subject to indemnification pursuant to this
Article VII
are
covered by insurance paid for by the Company prior to or after the Closing,
Delcorp shall use commercially reasonable efforts to obtain the maximum recovery
under such insurance; provided that Delcorp shall nevertheless be entitled
to
bring a claim for indemnification under this Article VII
in
respect of such Losses and the time limitations set forth in Section 7.4
hereof
for bringing a claim of indemnification under this Agreement shall be tolled
during the pendency of such insurance claim. The existence of a claim by Delcorp
for monies from an insurer or against a third party in respect of any Loss
shall
not, however, delay any payment pursuant to the indemnification provisions
contained herein and otherwise determined to be due and owing by the
Representative. If Delcorp has received the payment required by this Agreement
from the Representative in respect of any Loss and later receives proceeds
from
insurance or other amounts in respect of such Loss, then it shall hold such
proceeds or other amounts in trust for the benefit of the Representative and
shall pay to the Representative, as promptly as practicable after receipt,
a sum
equal to the amount of such proceeds or other amount received, up to the
aggregate amount of any payments received from the Representative pursuant
to
this Agreement in respect of such Loss. Notwithstanding any other provisions
of
this Agreement, it is the intention of the parties that no insurer or any other
third party shall be (i) entitled to a benefit it would not be entitled to
receive in the absence of the foregoing indemnification provisions, or (ii)
relieved of the responsibility to pay any claims for which it is
obligated.
7.4 Limitations
on Indemnification.
(a) Survival:
Time Limitation.
The
representations, warranties, covenants and agreements in this Agreement or
in
any writing delivered by the Company to Delcorp in connection with this
Agreement (including the certificate required to be delivered by the Company
pursuant to Section 6.3(a))
shall
survive the Closing for the period that ends on the Basic Escrow Termination
Date (the “Basic
Survival Period”)
except
that the right of Delcorp to bring (i) Tax Indemnification Claims and
Environmental Indemnity Claims shall survive the Closing for the period that
ends on the T/E Escrow Termination Date (the “T/E
Survival Period”)
and
(ii) Claims for the breach of the representations and warranties in Section
2.3
and 1.13(d) shall survive without limitation as to time.
-
61 -
(b) Any
indemnification claim made by Delcorp prior to the termination of the Basic
Survival Period or the T/E Survival Period (each a “Survival
Period”),
as
the case may be, shall be preserved despite the subsequent termination of such
Survival Period and any claim set forth in a Notice of Claim sent prior to
the
expiration of such Survival Period shall survive until final resolution thereof.
Except as set forth in the immediately preceding sentence, no claim for
indemnification under this Article VII
shall be
brought after the end of the Survival Period or the T/E Survival Period, as
the
case may be.
(c) Deductible.
No
amount shall be payable under Article VII
unless
and until the aggregate amount of all indemnifiable Losses otherwise payable
exceeds $1,400,000 (the “Deductible”),
in
which event the amount payable shall only be the full amount in excess of the
amount of the Deductible, and, subject to the limitations set forth in
Section 7.5(c),
all
future amounts that become payable under Section 7.1
from
time to time thereafter. Notwithstanding the foregoing, the Deductible shall
not
apply to Losses that arise out of (i) a breach of the representations and
warranties in Section
1.13(d)
or
Section
2.3,
or (ii)
an T/E Indemnification Claim all of which shall be indemnifiable as to all
Losses that so arise from the first dollar thereof. It is understood and agreed
that to the extent that there are reserves in the Audited Financial Statements
or Unaudited Financial Statements for any matter which may be a claim against
the Company, any Losses shall first apply against any such applicable reserve
and thereafter to the extent permitted herein against the
Deductible.
(d) Aggregate
Amount Limitation.
The
aggregate liability for Losses pursuant to Section 7.1
shall
not in any event exceed the Basic Escrow Shares in the case of Basic Indemnity
Claims or the T/E Indemnity Shares in the case of Tax Indemnity Claims or
Environmental Indemnity Claims and Delcorp shall have no claim against the
Company’s shareholders other than for any of such Escrow Shares (and any
proceeds of the shares or distributions with respect to the Escrow Shares).
7.5 Exclusive
Remedy.
Delcorp, on behalf of itself and the other Delcorp Indemnitees, hereby
acknowledges and agrees that, from and after the Closing, the sole remedy of
the
Delcorp Indemnitees with respect to any and all claims for money damages arising
out of or relating to this Agreement shall be pursuant and subject to the
requirements of the indemnification provisions set forth in this Article VII.
Notwithstanding any of the foregoing, nothing contained in this Article VII
shall in
any way impair, modify or otherwise limit a Delcorp Indemnitees right to bring
any claim, demand or suit against the other party based upon such other party’s
actual fraud or intentional or willful misrepresentation or omission, it being
understood that a mere breach of a representation and warranty, without
intentional or willful misrepresentation or omission, does not constitute fraud.
7.6 Adjustment
to Merger Consideration.
Amounts
paid for indemnification under Article VII
shall be
deemed to be an adjustment to the value of the shares of Delcorp Common Stock
issued by Delcorp as a result of the Merger, except as otherwise required by
Law.
-
62 -
7.7 Representative
Capacities; Application of Escrow Shares.
The
parties acknowledge that the Representative’s obligations under this
Article VII
are
solely as a representative of the Company’s stockholders in the manner set forth
in the Escrow Agreement with respect to the obligations to indemnify Delcorp
under this Article VII
and that
the Representative shall have no personal responsibility for any expenses
incurred by him in such capacity and that all payments to Delcorp as a result
of
such indemnification obligations shall be made solely from, and to the extent
of, the Escrow Shares. Out-of-pocket expenses of the Representative for
attorneys’ fees and other costs shall be borne in the first instance by Delcorp,
which may make a claim for reimbursement thereof against the Escrow Shares
upon
the claim with respect to which such expenses are incurred becoming an
Established Claim (as defined in the Escrow Agreement). The parties further
acknowledge that all actions to be taken by Delcorp pursuant to this
Article VII
shall be
taken on its behalf by the Committee in accordance with the provisions of the
Escrow Agreement. The Escrow Agent, pursuant to the Escrow Agreement after
the
Closing, may apply all or a portion of the Escrow Shares to satisfy any claim
for indemnification pursuant to this Article VII.
The
Escrow Agent will hold the remaining portion of the Escrow Shares until final
resolution of all claims for indemnification or disputes relating
thereto.
7.8 Tax
Benefits.
The
amount of any Losses for which indemnification is provided shall be reduced
by
any net Tax benefit to such indemnified party and its Affiliates, to the extent
realized by such party as a result of such Losses, including the present value
(determined by discounting at 8%) of the benefit arising from an increase in
the
Tax basis of assets, net of any Tax costs incurred by the indemnified party
as a
result of the receipt of the indemnification payments hereunder. In calculating
the amount of net Tax benefit, the indemnified party and its Affiliates shall
be
presumed to pay Taxes at a forty percent (40%) Tax rate. The indemnified party
shall provide the indemnifying party with such documentation as may be
reasonably requested in order to ascertain or confirm the amount of any net
Tax
benefit or net Tax cost referred to herein.
7.9 Mitigation.
A
Delcorp Indemnitee shall use commercially reasonably efforts to mitigate Losses
suffered, incurred or sustained by it arising out of any matter for which it
is
entitled to indemnification hereunder; provided that no Delcorp Indemnitee
shall
be required to (i) take any action or refrain from taking any action that is
contrary to any applicable Contract, order or law binding on it or any Affiliate
thereof or (ii) incur any out-of-pocket expense in connection with such
mitigation (other than de minimus incidental expenses).
7.10 No
Double Recovery.
To the
extent that any of the items or matters that would otherwise constitute a Loss
pursuant to Section 7.1(b) of this Agreement have been incurred and have already
been incorporated in the calculation of EBITDA for the purposes of Section
1.18
of this Agreement, such items or matters shall not also be a Loss for purposes
of indemnity under this Article VII and shall not apply against the Deductible.
Conversely, to the extent any Loss has been incurred that has applied against
the Deductible or has been indemnified, such Loss shall not be included in
the
calculation of EBITDA for the purposes of Section
1.18
of this
Agreement.
-
63 -
ARTICLE
VIII
TERMINATION
8.1 Termination.
This
Agreement may be terminated at any time prior to the Closing:
(a) by
mutual written agreement of Delcorp and the Company at any time;
(b) by
either Delcorp or the Company if the Merger shall not have been consummated
by
October 3, 2008 for any reason; provided, however, that the right to
terminate this Agreement under this Section 8.1(b)
shall
not be available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Merger to occur on or
before such date and such action or failure to act constitutes a breach of
this
Agreement;
(c) by
either Delcorp or the Company if a Governmental Entity shall have issued an
order, decree, judgment or ruling or taken any other action, in any case having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action is final and
nonappealable;
(d) by
the Company, upon a material breach of any representation, warranty, covenant
or
agreement on the part of Delcorp set forth in this Agreement, or if any
representation or warranty of Delcorp shall have become untrue, in either case
such that the conditions set forth in Article VI
would
not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided, that if such
breach by Delcorp is curable by Delcorp prior to the Closing Date, then the
Company may not terminate this Agreement under this Section 8.1(d)
for
thirty (30) days after delivery of written notice from the Company to Delcorp
of
such breach, provided Delcorp continues to exercise commercially reasonable
efforts to cure such breach (it being understood that the Company may not
terminate this Agreement pursuant to this Section 8.1(d)
if it
shall have materially breached this Agreement or if such breach by Delcorp
is
cured during such thirty (30)-day period);
(e) by
Delcorp, upon a material breach of any representation, warranty, covenant or
agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue, in either
case such that the conditions set forth in Article VI
would
not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided, that if such
breach is curable by the Company prior to the Closing Date, then Delcorp may
not
terminate this Agreement under this Section 8.1(e)
for
thirty (30) days after delivery of written notice from Delcorp to the Company
of
such breach, provided the Company continues to exercise commercially reasonable
efforts to cure such breach (it being understood that Delcorp may not terminate
this Agreement pursuant to this Section 8.1(e)
if it
shall have materially breached this Agreement or if such breach by the Company
is cured during such thirty (30)-day period);
-
64 -
(f) by
either Delcorp or the Company, if, at the Special Meeting (including any
adjournments thereof), this Agreement and the transactions contemplated thereby
shall fail to be approved and adopted by the affirmative vote of the holders
of
Delcorp Common Stock required under Delcorp’s certificate of incorporation, or
the holders of 20% or more of the number of shares of Delcorp Common Stock
issued in Delcorp’s initial public offering and outstanding as of the date of
the record date of the Special Meeting exercise their rights to convert the
shares of Delcorp Common Stock held by them into cash in accordance with
Delcorp’s certificate of incorporation; or
(g) by
the Company if the Special Meeting is not called to be held within thirty (30)
days after the declaration by the SEC of the effectiveness of the Registration
Statement.
8.2 Notice
of Termination; Effect of Termination.
Any
termination of this Agreement under Section 8.1
above
will be effective immediately upon (or, if the termination is pursuant to
Section 8.1(d)
or
Section 8.1(e)
and the
proviso therein is applicable, thirty (30) days after) the delivery of written
notice of the terminating party to the other parties hereto. In the event of
the
termination of this Agreement as provided in Section 8.1,
this
Agreement shall be of no further force or effect and the Merger shall be
abandoned, except for and subject to the following: (i) Sections
5.6, 5.13, 8.2 and 8.3
and
Article X
(General
Provisions) shall survive the termination of this Agreement, and (ii) nothing
herein shall relieve any party from liability for any breach of this Agreement,
including a breach by a party electing to terminate this Agreement pursuant
to
Section 8.1(b)
caused
by the action or failure to act of such party constituting a principal cause
of
or resulting in the failure of the Merger to occur on or before the date stated
therein.
8.3 Fees
and Expenses.
All
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses whether or not the Merger is consummated.
ARTICLE
IX
DEFINED
TERMS
Terms
defined in this Agreement are organized alphabetically as follows, together
with
the Section and, where applicable, paragraph, number in which definition of
each
such term is located:
|
“Affiliate”
|
Section 10.2(f)
|
|
|
“Agreement”
|
Section 1.2
|
|
|
“Applicable
Nevada Law”
|
Section 1.3
|
|
|
“Approvals”
|
Section 2.1(a)
|
|
|
“Articles
of Merger
|
Section 1.2
|
|
|
“Audited
Financial Statements”
|
Section 2.7(a)
|
-
65 -
|
“Base
Distribution”
|
Section 5.24(b)
|
|
|
“Base
Shares”
|
Section 1.5(b)
|
|
|
“Basic
Escrow Termination Date”
|
Section 1.11
|
|
|
“Basic
Survival Period”
|
Section 7.4(a)
|
|
|
“Blue
Sky Laws”
|
Section 1.13(c)
|
|
|
“Certificate
of Merger”
|
Section 1.2
|
|
|
“Charter
Amendment”
|
Section 5.1(a)
|
|
|
“Charter
Documents”
|
Section 2.1(a)
|
|
|
“Closing”
|
Section 1.2
|
|
|
“Closing
Date”
|
Section 1.2
|
|
|
“Closing
Form 8-K
|
Section 5.4
|
|
|
“Code”
|
Recital
C
|
|
|
“Company”
|
Heading
|
|
|
“Company
Certificates”
|
Section 1.5(b)
|
|
|
“Company
Closing Certificate”
|
Section 6.3(a)
|
|
|
“Company
Common Stock”
|
Section 1.5(a)
|
|
|
“Company
Contracts”
|
Section 2.19(a)
|
|
|
“Company
Intellectual Property”
|
Section 2.18
|
|
|
“Company
Products”
|
Section 2.18
|
|
|
“Company
Registered Intellectual Property”
|
Section 2.18
|
|
|
“Company
Schedule”
|
Article II
Preamble
|
|
|
“Company
Stock Options”
|
Section 2.3(a)
|
|
|
“Continental”
|
Section 1.11
|
|
|
“Copyrights”
|
Section 2.18
|
|
|
“Corporate
Records”
|
Section 2.1(c)
|
|
|
“DGCL”
|
Recital
A
|
|
|
“Deductible”
|
Section 7.4(c)
|
|
|
“Delcorp”
|
Heading
|
|
|
“Delcorp
Closing Certificate”
|
Section 6.2(a)
|
|
|
“Delcorp
Common Stock”
|
Section 1.5(a)
|
|
|
“Delcorp
Contracts”
|
Section 3.19(a)
|
|
|
“Delcorp
Convertible Securities”
|
Section 3.3(b)
|
|
|
“Delcorp
Indemnitees”
|
Section 7.1
|
|
|
“Delcorp
Plan”
|
Section 5.1(a)
|
|
|
“Delcorp
Preferred Stock”
|
Section 3.3(a)
|
|
|
“Delcorp
SEC Reports”
|
Section 3.7(a)
|
|
|
“Delcorp
Schedule”
|
Article III
Preamble
|
|
|
“Delcorp
Stock Options”
|
Section 3.3(b)
|
|
|
“Delcorp
Stockholder Approval”
|
Section 5.1(a)
|
|
|
“Delcorp
Warrants”
|
Section 3.3(b)
|
|
|
“Disclosure
Schedules”
|
Section 5.14
|
|
|
“Dissenter”
|
Section 1.17(a)
|
|
|
“Dissenting
Shares”
|
Section 1.17(b)
|
|
|
“Distribution
Holdback”
|
Section 5.24(b)
|
|
|
“EBITDA”
|
Section 1.18(c)
|
|
|
“EBITDA
Shares”
|
Section 1.18(c)
|
-
66 -
|
“Effect
of the Merger”
|
Section 1.3
|
|
|
“Effective
Time”
|
Section 1.2
|
|
|
“Environmental
Indemnification Claim”
|
Section 1.11
|
|
|
“Environmental
Law”
|
Section 2.16(b)
|
|
|
“Escrow
Agreement”
|
Section 1.11
|
|
|
“Escrow
Termination Date”
|
Section 1.11
|
|
|
“Escrow
Shares”
|
Section 1.11
|
|
|
“Exchange
Act”
|
Section 1.11
|
|
|
“FINRA”
|
Section 3.23
|
|
|
“Foreign
Managers”
|
Section 2.3(a)
|
|
|
“Governmental
Action/Filing”
|
Section 2.21
|
|
|
“Governmental
Entity”
|
Section 1.13(c)
|
|
|
“Hazardous
Substance”
|
Section 2.16(c)
|
|
|
“HSR
Act”
|
Section 2.5(b)
|
|
|
“Insider”
|
Section 2.19(a)(i)
|
|
|
“Insurance
Policies”
|
Section 2.20
|
|
|
“Intellectual
Property”
|
Section 2.18
|
|
|
“Knowledge”
|
Section 10.2(d)
|
|
|
“Legal
Requirements”
|
Section 10.2(b)
|
|
|
“Lien”
|
Section 10.2(e)
|
|
|
“Losses”
|
Section 7.1(b)
|
|
|
“Material
Adverse Effect”
|
Section 10.2(a)
|
|
|
“Material
Company Contracts”
|
Section 2.19(a)
|
|
|
“Merger”
|
Section 1.1
|
|
|
“NGCL
|
Recital
A
|
|
|
“Notice
of Claim”
|
Section 7.2(a)
|
|
|
“OTC
BB”
|
Section 3.23
|
|
|
“Outstanding
Company Stock Number”
|
Section 1.5(a)
|
|
|
“Patents”
|
Section 2.18
|
|
|
“Person”
|
Section 10.2(c)
|
|
|
“Personal
Property”
|
Section 2.14(b)
|
|
|
“Plans”
|
Section 2.11(a)
|
|
|
“Press
Release”
|
Section 5.4(a)
|
|
|
“Proxy
Statement/Prospectus”
|
Section 5.1(a)
|
|
|
“Registered
Intellectual Property”
|
Section 2.18
|
|
|
“Registration
Statement”
|
Section 5.1
|
|
|
“Representative”
|
Section 1.14(b)
|
|
|
“Returns”
|
Section 2.15(b)(i)
|
|
|
“Securities
Act”
|
Section 1.13(b)
|
|
|
“Special
Meeting”
|
Section 5.1(a)
|
|
|
“Signing
Form 8-K
|
Section 5.4
|
|
|
“Signing
Press Release”
|
Section 5.4
|
|
|
“Signing
Shareholder/Signing Shareholders”
|
Heading
|
|
|
“Stub
Period”
|
Section 5.24(a)
|
|
|
“Stub
Period Taxable Income”
|
Section 5.24(a)
|
|
|
“Subsidiary/Subsidiaries”
|
Section 2.2
|
-
67 -
|
“Survival
Period”
|
Section 7.4(b)
|
|
|
“Surviving
Corporation”
|
Section 1.1
|
|
|
“Tax/Taxes”
|
Section 2.15(a)
|
|
|
“Tax
Distributions”
|
Section 5.24(a)
|
|
|
“Tax
Indemnification Claim”
|
Section 1.11
|
|
|
“T/E
Indemnity Shares”
|
Section 1.11
|
|
|
“T/E
Survival Period”
|
Section 7.4(a)
|
|
|
“T/E
Termination Date”
|
Section 1.11
|
|
|
“Third
Party Claim”
|
Section 7.2
|
|
|
“Trademarks”
|
Section 2.18
|
|
|
“Trust
Fund”
|
Section 3.25
|
|
|
“U.S.
GAAP”
|
Section 2.7(a)
|
|
|
“Unaudited
Financial Statements”
|
Section 2.7(b)
|
ARTICLE
X
GENERAL
PROVISIONS
10.1
Notices.
All
notices and other communications hereunder shall be in writing and shall
be
deemed given if delivered personally or by commercial delivery service, or
sent
via telecopy (receipt confirmed) to the parties at the following addresses
or
telecopy numbers (or at such other address or telecopy numbers for a party
as
shall be specified by like notice):
|
if
to Delcorp, to:
|
||
|
000
Xxxxx Xxxxxx, 00xx Xxxxx
|
||
|
Xxx
Xxxx, Xxx Xxxx 00000
|
||
|
Attention:
Xxxx Xxxxxxxxx
|
||
|
Telephone:
000-000-0000
|
||
|
Telecopy:
000-000-0000
|
||
|
E-mail:
xxxxxxxxxx@xxxxxxxxxxxxxxxxx.xxx
|
||
|
with
a copy to:
|
Xxxxx
Xxxx Xxxxxx, Esq.
|
|
|
Xxxxxxxx
Xxxxxx
|
||
|
000
Xxxxxxxxx Xxxxxx
|
||
|
Xxx
Xxxx, Xxx Xxxx 00000-0000
|
||
|
Telephone:
000-000-0000
|
||
|
Telecopy:
000-000-0000
|
||
|
Email:
xxxxxxx@xxxxxxxx.xxx
|
||
|
if
to the Company or
|
||
|
Signing
Shareholders, to:
|
Xxxx
X. Xxxxxxxx
|
|
|
Primoris
Corporation
|
||
|
00000
Xxxxxxxxxxxxxx Xxxxx
|
||
|
Xxxx
Xxxxxx, XX 00000
|
||
|
Telephone:
000 000-0000
|
||
|
Telecopy:
949 599-5532
|
||
|
E-mail:
XXxxxxxxx@xxxxxx.xxx
|
-
68 -
|
with
a copy to:
|
Xxxxx
& Xxxxxx, LLP
|
|
|
000
Xxxxx Xxxxxxxxx, Xxxxx 0000
|
||
|
Xxxxx
Xxxx, XX 00000-0000
|
||
|
Attention:
Xxxxxx X. Xxxx, Esq.
|
||
|
Telephone:
000 000-0000
|
||
|
Telecopier
No.: 000-000-0000
|
||
|
E-mail:
xxxxx@xxxxx.xxx
|
10.2
Interpretation.
The
definitions of the terms herein shall apply equally to the singular and plural
forms of the terms defined. Whenever the context shall require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. When
a
reference is made in this Agreement to an Exhibit or Schedule, such reference
shall be to an Exhibit or Schedule to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to Sections or
subsections, such reference shall be to a Section or subsection of this
Agreement. Unless otherwise indicated the words “include,” “includes” and
“including” when used herein shall be deemed in each case to be followed by the
words “without limitation.” The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the
meaning or interpretation of this Agreement. When reference is made herein
to
“the business of” an entity, such reference shall be deemed to include the
business of all direct and indirect Subsidiaries of such entity. Reference
to
the Subsidiaries of an entity shall be deemed to include all direct and indirect
Subsidiaries of such entity. For purposes of this Agreement:
(a) the
term “Material
Adverse Effect”
when
used in connection with an entity means any change, event, violation,
inaccuracy, circumstance or effect, individually or when aggregated with
other
changes, events, violations, inaccuracies, circumstances or effects, that
is
materially adverse to the business, assets (including intangible assets),
revenues, financial condition or results of operations of such entity,
it being
understood that none of the following alone or in combination shall be
deemed,
in and of itself, to constitute a Material Adverse Effect: (i) changes
attributable to the public announcement or pendency of the transactions
contemplated hereby, (ii) changes in general national or regional economic
conditions, or (iii) any SEC rulemaking requiring enhanced disclosure of
reverse
merger transactions with a public shell;
(b) the
term “Legal
Requirements”
means
any federal, state, local, municipal, foreign or other law, statute,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, rule, regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Entity and all requirements set forth in applicable
Company
Contracts or Delcorp Contracts;
-
69 -
(c) the
term “Person”
shall
mean any individual, corporation (including any non-profit corporation),
general
partnership, limited partnership, limited liability partnership, joint
venture,
estate, trust, company (including any limited liability company or joint
stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity;
(d) the
term “knowledge”
means
actual knowledge or awareness as to a specified fact or event of Xxxxx
Xxxxx,
Xxxx Xxxxxxxxxx, Xxxx Xxxxxxxx and Xxxxxx Xxxxxxxx;
(e) the
term “Lien”
means
any mortgage, pledge, security interest, encumbrance, lien, restriction
or
charge of any kind (including, without limitation, any conditional sale
or other
title retention agreement or lease in the nature thereof, any sale with
recourse
against the seller or any Affiliate of the seller, or any agreement to
give any
security interest);
(f) the
term “Affiliate”
means,
as applied to any Person, any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with, such Person.
For
purposes of this definition, “control” (including with correlative meanings, the
terms “controlling,” “controlled by” and “under common control with”), as
applied to any Person, means the possession, directly or indirectly, of
the
power to direct or cause the direction of the management and policies of
such
Person, whether through the ownership of voting securities, by contract
or
otherwise; and
(g) all
monetary amounts set forth herein are referenced in United States dollars,
unless otherwise noted.
10.3
Counterparts;
Facsimile Signatures.
This
Agreement and each other document executed in connection with the transactions
contemplated hereby, and the consummation thereof, may be executed in one
or
more counterparts, all of which shall be considered one and the same document
and shall become effective when one or more counterparts have been signed
by
each of the parties and delivered to the other party, it being understood
that
all parties need not sign the same counterpart. Delivery by facsimile to
counsel
for the other party of a counterpart executed by a party shall be deemed
to meet
the requirements of the previous sentence.
10.4
Entire
Agreement; Third Party Beneficiaries.
This
Agreement and the documents and instruments and other agreements among the
parties hereto as contemplated by or referred to herein, including the Exhibits
and Schedules hereto (a) constitute the entire agreement among the parties
with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to
the
subject matter hereof, it being understood that the letter of intent between
Delcorp and the Company dated January 14, 2008 is hereby terminated in its
entirety and shall be of no further force and effect (except to the extent
expressly stated to survive the execution of this Agreement and the consummation
of the transactions contemplated hereby); and (b) are not intended to confer
upon any other person any rights or remedies hereunder (except as specifically
provided in this Agreement).
-
70 -
10.5
Severability.
In the
event that any provision of this Agreement, or the application thereof, becomes
or is declared by a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in full force
and
effect and the application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the parties
hereto.
The parties further agree to replace such void or unenforceable provision
of
this Agreement with a valid and enforceable provision that will achieve,
to the
extent possible, the economic, business and other purposes of such void or
unenforceable provision.
10.6
Other
Remedies; Specific Performance.
Except
as otherwise provided herein, any and all remedies herein expressly conferred
upon a party will be deemed cumulative with and not exclusive of any other
remedy conferred hereby, or by law or equity upon such party, and the exercise
by a party of any one remedy will not preclude the exercise of any other
remedy.
The parties hereto agree that irreparable damage would occur in the event
that
any of the provisions of this Agreement were not performed in accordance
with
their specific terms or were otherwise breached. It is accordingly agreed
that
the parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction,
this
being in addition to any other remedy to which they are entitled at law or
in
equity.
10.7
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the law of
the
State of Delaware regardless of the law that might otherwise govern under
applicable principles of conflicts of law thereof.
10.8
Rules
of Construction.
The
parties hereto agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against
the
party drafting such agreement or document.
10.9
Assignment.
No
party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other parties.
Subject to the first sentence of this Section 10.9,
this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
10.10 Amendment.
This
Agreement may be amended by the parties hereto at any time by execution of
an
instrument in writing signed on behalf of each of the parties.
10.11
Extension;
Waiver.
At any
time prior to the Closing, any party hereto may, to the extent legally allowed,
(i) extend the time for the performance of any of the obligations or other
acts
of the other parties hereto, (ii) waive any inaccuracies in the representations
and warranties made to such party contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement
on the
part of a party hereto to any such extension or waiver shall be valid only
if
set forth in an instrument in writing signed on behalf of such party. Delay
in
exercising any right under this Agreement shall not constitute a waiver of
such
right.
-
71 -
10.12 Arbitration.
Except
as otherwise provided in this Agreement, any controversy or claim arising
out of
or relating to this Agreement or the breach thereof shall be settled by
arbitration in Orange County, California.
(a) Judicial
Arbitration and Mediation Services.
The
arbitration shall be administered by Judicial Arbitration and Mediation Services
(“JAMS”)
in its
Orange County, California, office.
(b) Arbitrator.
The
arbitrator shall be a retired superior or appellate court judge of the State
of
California affiliated with JAMS. The award of the arbitrator shall be binding,
final, and nonappealable.
(c) Provisional
Remedies and Appeals.
Each of
the parties reserves the right to file with a court of competent jurisdiction
an
application for temporary or preliminary injunctive relief, writ of attachment,
writ of possession, temporary protective order and/or appointment of a receiver
on the grounds that the arbitration award to which the applicant may be entitled
may be rendered ineffectual in the absence of such relief.
(d) Enforcement
of Judgment.
Judgment upon the award rendered by the arbitrator may be entered in any
court
having jurisdiction thereof.
(e) Discovery.
The
parties may obtain discovery in aid of the arbitration to the fullest extent
permitted under law, including California Code of Civil Procedure Section
1283.05. All discovery disputes shall be resolved by the
arbitrator.
(f) Consolidation.
Any
arbitration hereunder may be consolidated by JAMS with the arbitration of
any
other dispute arising out of or relating to the same subject matter when
the
arbitrator determines that there is a common issue of law or fact creating
the
possibility of conflicting rulings by more than one arbitrator. Any disputes
over which arbitrator shall hear any consolidated matter shall be resolved
by
JAMS.
(g) Power
and Authority of Arbitrator.
The
arbitrator shall not have any power to alter, amend, modify or change any
of the
terms of this Agreement nor to grant any remedy which is either prohibited
by
the terms of this Agreement, or not available in a court of law.
(h) Governing
Law.
All
questions in respect of procedure to be followed in conducting the arbitration
as well as the enforceability of this Agreement to arbitrate which may be
resolved by state law shall be resolved according to the law of the state
of
California. Any action brought to enforce the provisions of this Section
shall
be brought in the Orange County Superior Court. All other questions in respect
to this Agreement, including but not limited to the interpretation, enforcement
of this Agreement (other than the right to arbitrate), and the rights, duties
and liabilities of the parties to this Agreement shall be governed by California
law.
-
72 -
(i) Costs.
The
costs of the arbitration, including any JAMS administration fee, and
arbitrator’s fee, and costs of the use of facilities during the hearings, shall
be borne equally by the parties in the first instance. Upon issuance of an
award, costs shall be awarded to the prevailing party.
(j) Attorneys’
Fees.
If a
party to this Agreement shall bring any action, suit, counterclaim, appeal,
arbitration, or mediation for any relief against the other parties, declaratory
or otherwise, to enforce the terms hereof or to declare rights hereunder
(referred to herein as an “Action”),
the
non-prevailing party in such Action shall pay to the prevailing party in
such
Action a reasonable sum for the prevailing party’s attorneys’ fees and expenses
(at the prevailing party’s attorneys’ then-current rates, as increased from time
to time by the giving of advance written notice by such counsel to such party)
incurred in prosecuting or defending such Action and/or enforcing any judgment,
order, ruling or award (referred to herein as a “Decision”),
granted therein, all of which shall be deemed to have accrued from the
commencement of such Action, and shall be paid whether or not such Action
is
prosecuted to a Decision. Any Decision entered into in such Action shall
contain
a specific provision providing for the recovery of attorneys’ fees and expenses
incurred in enforcing such Decision. The court or arbitrator may fix the
amount
of reasonable attorneys’ fees and expenses upon the request of any party. For
purposes of this Section, attorneys’ fees shall include, without limitation,
fees incurred in connection with (1) postjudgment motions and collection
actions, (2) contempt proceedings, (3) garnishment, levy and debtor
and third party examination, (4) discovery and (5) bankruptcy
litigation.
10.13 Currency.
All
references to currency amounts in this Agreement shall mean United States
dollars.
10.14 Power
of Attorney; Proxy.
Each
Signing Shareholder hereby appoints Xxxxx Xxxxx and Xxxx X. Xxxxxxxxxx, and
each
of them acting without the other, as his, her or its (a) true and lawful
attorney-in-fact to execute and deliver, in his, her or its name, place and
stead, in any and all capacities, any and all amendments to this Agreement
and
any and all other agreements, instruments and other documents deemed necessary
or desirable by such attorney-in-fact to effectuate the transactions
contemplated by this Agreement, including the agreements in the forms of
the
exhibits hereto, and (b) proxy and hereby authorizes either of them to represent
and to vote all shares of Company Common Stock owned by such Signing Shareholder
in the manner such proxy deems desirable in his sole judgment on all matters
pertaining to the transactions contemplated by this Agreement that may be
presented to the holders of Company Common Stock for their vote or consent.
The
power-of-attorney granted herein is coupled with an interest and it and the
proxy granted herein shall be irrevocable to the full extent allowed by
applicable law.
[The
Signature Page is the following page.]
-
73 -
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as
of the date first written above.
| |
|
|
| By: |
s/
Xxxx Xxxxxxxxx
|
|
|
Xxxx
Xxxxxxxxx, Chairman, CEO and
President
|
||
|
PRIMORIS
CORPORATION
|
||
| |
|
|
| By: | By: s/ Xxxxx Xxxxx | |
|
Xxxxx
Xxxxx, Chief Executive Officer
|
||
|
SIGNING
SHAREHOLDERS:
|
s/
Xxxxx Xxxxx
|
|
Xxxxx
Xxxxx
|
|
|
Xxxxx
Family Trust
|
|
|
By:
s/
Xxxxxx Xxxxx
|
|
|
Xxxxxx
Xxxxx, Trustee
|
|
|
Xxxxx
Family Bypass Trust
|
|
|
By:
s/Xxxxxx
Xxxxx
|
|
|
Xxxxxx
Xxxxx, Trustee
|
|
|
s/
Xxxx X. Xxxxxxxxxx
|
|
|
Xxxx
X. Xxxxxxxxxx
|
|
|
Xxxxxxx
Trust
|
|
|
By: s/Xxxxx
X. Xxxxxxx
|
|
|
Xxxxx
X. Xxxxxxx, Trustee
|
|
|
|
s/
Xxxxxxx X. Xxxxx
|
|
Xxxxxxx
X. Xxxxx
|
-
74 -
INDEX
OF EXHIBITS AND SCHEDULES
|
Exhibits
|
|
|
Exhibit A
|
Second
Amended and Restated Certificate of Incorporation of
Delcorp
|
|
Exhibit B
|
Bylaws
of Delcorp
|
|
Exhibit
C
|
Outstanding
Common Stock Number
|
|
Exhibit D
|
Form
of Escrow Agreement
|
|
Exhibit E
|
Sample
EBITDA Calculations
|
|
Exhibit F
|
Form
of Voting Agreement
|
|
Exhibit G
|
Form
of Lock-Up Agreement
|
|
Exhibit H
|
Form
of Opinion of Xxxxxxxx Xxxxxx
|
|
Exhibit I
|
Form
of Employment Agreement for Xxxxx Xxxxx
|
|
Exhibit J
|
Form
of Employment Agreement for Xxxx Xxxxxxxxxx
|
|
Exhibit K
|
Form
of Employment Agreement for Xxxx Xxxxxxxx
|
|
Exhibit L
|
Form
of Employment Agreement for Xxxxxx Xxxxxxxx
|
|
Exhibit M
|
Form
of Employment Agreement for Xxxxx Xxxxxxx
|
|
Exhibit N
|
Form
of Employment Agreement for Xxx Xxxxx
|
|
Exhibit O
|
Form
of Employment Agreement for Xxxx Xxxxxxx
|
|
Exhibit P
|
Form
of Employment Agreement for Xxxx Xxxxx
|
|
Exhibit Q
|
Form
of Employment Agreement for Xxxx XxXxxxxx
|
|
Exhibit R
|
Form
of Opinion of Xxxxx & Xxxxxx, LLP
|
|
Schedules
|
|
|
Schedule 1.12
|
Affiliates
of the Company
|
|
Schedule 2
|
Company
Schedule
|
|
Schedule 3
|
Delcorp
Schedule
|
|
Schedule 4.1
|
Company
and Delcorp Permitted Actions
|
|
Schedule 5.2
|
Directors
and Officers of Delcorp
|
|
Schedule 6.2(i)
|
Delcorp
Resignations
|
-
75 -
SCHEDULE
1.12
RULE
145 AFFILIATES OF THE COMPANY
Directors
Xxxxx
Xxxxx
Xxxx
Xxxxxxxxxx
Xxxxxx
Xxxxxxxx
Xxxx
Xxxxxxxx
Xxxxx
Xxxxxxx
Xxxxxxx
Xxxxx
Xxxxxx
Xxxxx
Xxxx
Xxxxxx
Xxxx
Xxxxxxx
Xxxxx
Xxxxx
Xxxx
XxXxxxx
Xxxxxx
Xxxxx
Officers
Xxxxx
Xxxxx
Xxxx
Xxxxxxxxxx
Xxxxxx
Xxxxxxxx
Xxxx
Xxxxxxxx
Xxxxx
Xxxxxxx
Xxxxxxx
Xxxxx
Xxxx
Xxxxxxx
Xxxxx
Xxxxx
Xxxx
XxXxxxxx
The
inclusion of any Officer on this list is not an admission that such Officer
is
in fact an “Affiliate”
for
the
purposes of Rule 145 promulgated under the Securities Act.
Significant
Shareholders
|
Name
|
Shares
Owned
|
|
Percent
|
||||
|
Xxxxx
Xxxxx
|
2,606
|
58.4
|
%
|
||||
|
Xxxxx
Family Trust
|
409
|
9.2
|
%
|
||||
|
Xxxxx
Family Bypass Trust
|
57
|
1.3
|
%
|
||||
-
76 -
SCHEDULE
2
COMPANY
SCHEDULE
(Information
Furnished Separately)
|
Schedule 2.1
|
-
|
Organization
and Qualification
|
|
Schedule 2.2
|
-
|
Subsidiaries
|
|
Schedule 2.3
|
-
|
Capitalization
|
|
Schedule 2.5
|
-
|
Required
Consents
|
|
Schedule 2.6
|
-
|
Compliance
|
|
Schedule 2.7
|
-
|
Financial
Statements
|
|
Schedule 2.8
|
-
|
No
Undisclosed Liabilities
|
|
Schedule 2.9
|
-
|
Absence
of Certain Changes or Events
|
|
Schedule 2.10
|
-
|
Litigation
|
|
Schedule 2.11
|
-
|
Employee
Benefit Plans
|
|
Schedule 2.13
|
-
|
Restrictions
on Business Activities
|
|
Schedule 2.14
|
-
|
Title
to Property
|
|
Schedule 2.15
|
-
|
Taxes
|
|
Schedule 2.16
|
-
|
Environmental
Matters
|
|
Schedule 2.17
|
-
|
Brokers;
Third Party Expenses
|
|
Schedule 2.18
|
-
|
Intellectual
Property
|
|
Schedule 2.19
|
-
|
Agreements,
Contracts and Commitments
|
|
Schedule 2.20
|
-
|
Insurance
|
|
Schedule 2.21
|
-
|
Governmental
Actions/Filings
|
|
Schedule 2.22
|
-
|
Interested
Party Transactions
|
-
77 -
SCHEDULE
3
DELCORP
SCHEDULE
(Information
Furnished Separately)
|
Schedule 3.3
|
-
|
Capitalization
|
|
Schedule
3.7
|
-
|
SEC
Filings; Financial Statements
|
|
Schedule 3.14
|
-
|
Title
to Property
|
|
Schedule 3.15
|
-
|
Taxes
|
|
Schedule
3.17
|
-
|
Brokers
|
|
Schedule 3.19
|
-
|
Agreements,
Contracts and Commitments
|
|
Schedule 3.26
|
-
|
Governmental
Filings
|
-
78 -
SCHEDULE
4.1
COMPANY
AND DELCORP PERMITTED ACTIONS
The
Company has reduced the value on its balance sheet of its investment in
ARB/Arendal during the 2007 fiscal year, by writing down its balance sheet
value
by $3,588,000 to a value of $0. This write down is due to the uncertainty
of
ARB/Arendal’s to collect on a claim on an existing project.
SCHEDULE
5.2
DIRECTORS
AND OFFICERS OF DELCORP
Directors
and officers of Delcorp will be determined by the parties prior to the
Closing.
Five directors shall be designated by the Company and the Signing Shareholders
and two directors shall be designated by the current directors of
Delcorp.
SCHEDULE
6.2(i)
DELCORP
RESIGNATIONS
All
officers of Delcorp in office immediately prior to the Closing shall resign
from
all of their positions as officers.
All
directors of Delcorp in office immediately prior to the Closing other than
those
designated to be directors after the Closing shall resign from their
directorships.
