EXHIBIT 2.4
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PENGE CORP.,
PENGE ACQUISITION CORP.
AND
PROFILE DIAGNOSTIC SCIENCES, INC.
JUNE 30, 2005
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT is dated as of June 30, 2005, by and among Profile
Diagnostic Sciences, Inc. a Delaware corporation ("Parent"), Penge Acquisition
Corp., a Nevada corporation and wholly-owned subsidiary of Parent ("MERGER
SUBSIDIARY"), and Penge Corp., a Nevada corporation (the "COMPANY").
WHEREAS, the Company is in the business of owning and operating tree
and shrub nurseries (the "BUSINESS"); and
WHEREAS, the Boards of Directors of Parent, the Company and Merger
Subsidiary, and the shareholders of the Merger Subsidiary, have approved the
merger of the Merger Subsidiary with and into the Company (the "MERGER") upon
the terms and subject to the conditions set forth herein and are seeking
approval from the shareholders of the Company for the same; and
WHEREAS, Parent recently effected a 25 for one reverse split of its
outstanding voting securities, and all computations herein take into account the
effects of that reverse split on the outstanding securities of Parent; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger will qualify as a reorganization within the meaning of Section
368(a)(1)(A) and (a)(2)(E) of the Internal Revenue Code of 1986, as amended (the
"CODE"); and
WHEREAS, the parties hereto desire to make certain representations,
warranties, and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants, and agreements contained herein,
the parties hereto agree as follows:
ARTICLE 1
THE MERGER; CONVERSION OF SHARES
1.1 THE MERGER. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.2 hereof), the Merger Subsidiary
will be merged with and into the Company in accordance with the provisions of
Chapter 92A of the Nevada Revised Statutes (the "NEVADA ACT"), whereupon the
separate corporate existence of the Merger Subsidiary will cease, and the
Company will continue as the surviving corporation (THE "SURVIVING
CORPORATION"). From and after the Effective Time, the Surviving Corporation will
possess all the rights, privileges, powers, and franchises and be subject to all
the restrictions, disabilities, and duties of the Company and Merger Subsidiary,
all as more fully described in Chapter 92A of the Nevada Act.
1.2 EFFECTIVE TIME. As soon as practicable after each of the conditions
set forth in Article 5 and Article 6 has been satisfied or waived, the Company
and Merger Subsidiary will file, or cause to be filed, with the Secretary of
State of the State of Nevada, Articles of Merger for the Merger, which Articles
will be in substantially the form attached hereto as EXHIBIT 1.2 (the "ARTICLES
OF MERGER"). The Merger will become effective at the time such filing is made
or, if agreed to by Parent and the Company, such later time or date set forth in
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1.3 CLOSING.
(a) CLOSING. Unless this Agreement has been terminated and the
transactions contemplated herein have been abandoned pursuant to
Article 7 hereof, the closing of the Merger (the "CLOSING") will take
place at a time and on a date (the "CLOSING DATE") to be specified by
the parties, which will be no later than July 31, 2005 (the
"TERMINATION DATE"); provided, however, that all of the conditions
provided for in Articles 5 and 6 hereof shall have been SATISFIED or
waived by such date. The Closing shall take place by the exchange of
facsimile counterpart signature pages to the Closing, at which time the
documents and instruments necessary or appropriate to effect the
transactions contemplated herein will be exchanged by the parties. With
one business day of such closing by facsimile, the parties shall
deliver originals of all closing deliveries to the offices of Xxxx
Xxxxxxxx Xxxxx Xxx & Xxxxxxxx, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxx
Xxxx Xxxx, Xxxx 00000, or such other place as the parties may agree.
Except as otherwise provided herein, all actions taken at the Closing
will be deemed to be taken simultaneously.
(b) PAYMENT TO TRYANT. At Closing, the Company shall pay
Tryant LLC, a Delaware limited liability company ("Tryant"), the sum of
$150,000 by wire transfer to an account designated by Tryant, $50,000
of which has already been deposited into the Trust Account of Xxxxxxx
X. Xxxxxxxxxx, Esq., counsel for Parent.
(c) CONVERSION OF INTERESTS. Subject to the terms and
conditions of this Agreement, at the Effective Time, by virtue of the
Merger and without any action on the part of the Parent, the Company
and/or the Merger Subsidiary:
(i) Except as set forth in Section 1.3(c)(ii) below
and except with respect to Dissenting Shares (as defined in
Section 1.8), all of the shares of common stock of the Company
("COMPANY COMMON STOCK") issued and outstanding immediately
prior to the Effective Time will collectively be converted
into the right to receive an aggregate number of shares of
common stock of the Parent, $0.001 par value per share
("PARENT COMMON STOCK") equal to the number of shares of
Company Common Stock outstanding (and not held of record by
Parent, Merger Subsidiary or the Company or any direct or
indirect subsidiary of Parent, Merger Subsidiary or the
Company) as of the Effective Time (with each individual share
of Company Common Stock converting into the right to receive a
pro rata portion thereof). The amount of Parent Common Stock
into which shares of Company Common Stock is converted is
referred to herein as the "MERGER CONSIDERATION."
(ii) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time that is
then owned beneficially or of record by Parent, Merger
Subsidiary or the Company, or any direct or indirect
subsidiary of Parent, Merger Subsidiary or the Company will be
canceled without payment of any consideration therefor and
without any conversion thereof. All Dissenting Shares will be
treated as set forth in Section 1.8
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(iii) All of the shares of common stock of Merger
Subsidiary, par value $1.00 per share ("MERGER SUBSIDIARY
COMMON STOCK"), issued and outstanding immediately prior to
the Effective Time will collectively be converted into a
number of shares of common stock of the Surviving Corporation
equal to the number of shares of Company Common Stock that
were issued and outstanding immediately prior to the Effective
Time.
(d) OPTIONS. Effective as of the Closing Time, the Company
hereby assigns to Parent, and Parent hereby assumes, all rights and
obligations of the Company arising under Company's 2002 Stock Incentive
Plan (the "OPTION PLAN"). As permitted by the Option Plan, each
outstanding option to purchase Company Common Stock shall automatically
be converted into an option (a "REPLACEMENT OPTION") to purchase the
number of shares of Parent Common Stock into which the number of shares
of Company Common Stock with respect to which such options was
execisable immediately prior to the Effective Time converts to in the
Merger (with the same aggregate exercise price and a proportionate
adjustment in the per share exercise price). Each Replacement Option
shall have the same vesting terms and expiration date as the options
that it is replacement and shall otherwise be subject to all terms and
conditions of the Option Plan. Following the Effective Time, Parent
shall promptly take such steps as are necessary in order to issue
agreements reflecting this Section 1.3(d).
1.4 POST-CLOSING EXCHANGES.
(a) As soon as reasonably practicable after the Effective
Time, Parent will mail to each person that held Company Common Stock
immediately prior to the Effective Time ("SHAREHOLDER") (i) a notice
advising the Shareholders that the Merger has become effective and a
letter of transmittal in customary and appropriate form (which will
specify that delivery will be effected, and risk of loss and title of a
certificate or certificates that immediately before the Effective Time
represented shares of Company Common Stock (a "Certificate") will pass,
only upon proper delivery of the Certificates to Parent) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for the number of shares of Parent Common Stock such
Shareholder is entitled to receive pursuant to Section 1.3(c). Upon
surrender of a Certificate for cancellation to Parent or to such agent
or agents as may be appointed by Parent, together with such letter of
transmittal, properly completed and duly executed, and such other
customary documents as may reasonably be required by Parent, the holder
of such Certificate will be entitled to receive in exchange therefor a
number of shares of Parent Common Stock equal to the number of shares
of Parent Common Stock into which the Company Shares theretofore
represented by such Certificate have been converted pursuant to Section
1.3(c), and the Certificate so surrendered will be canceled. In the
event of a transfer of ownership of Company shares that is not
registered in the transfer records of Company, delivery of the number
of Shares of Parent Common Stock to which such transferred Company
Shares are entitled may be made to a person other than the person in
whose name the Certificate so surrendered is registered, if such
Certificate is properly endorsed or otherwise is in proper form for
transfer, if the transfer is in compliance with applicable state and
federal securities laws and the person requesting such delivery pays
any transfer or other taxes required by reason of the delivery to a
person other than the registered holder of such Certificate or
establishes to the satisfaction of Parent that such tax has been paid
or is not applicable. Until surrendered as contemplated by this Section
1.4(a), each Certificate will be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender a
number of shares of Parent Common Stock into which the share of Company
Common Stock theretofore represented by such Certificate will have been
converted pursuant to Section 1.3(c). No interest will be paid or will
accrue on shares of Parent Common Stock deliverable upon the surrender
of any Certificate.
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(b) All shares of Parent Common Stock issued upon the
surrender for exchange of shares of Company Common Stock in accordance
with the terms hereof will be deemed to have been issued in full
satisfaction of all rights pertaining to such Company Common Stock.
(c) As of the Effective Time, the holders of Certificates
representing shares of Company Common Stock will cease to have any
rights as shareholders of the Company (except such rights, if any, as
the holders of Dissenting Shares may have pursuant to the Nevada Act).
(d) No fractional shares of Parent Common Stock will be issued
upon the surrender for exchange of Company Certificates; no dividend or
other distribution of Parent will relate to any fractional share; and
such fractional share interests will not entitle the owner thereof to
vote or to any rights of a shareholder of Parent. All fractional shares
of Parent Common Stock to which a holder of Company Common Stock
immediately prior to the Effective Time would otherwise be entitled, at
the Effective Time, will be aggregated if and to the extent multiple
Certificates of such holder are submitted together to Parent. If a
fractional share results from such aggregation, then such fractional
share will be rounded up to the nearest whole share and each holder of
shares of Company Common Stock Interests who otherwise would be
entitled to receive such fractional share of Parent Common Stock will
receive one whole share in lieu of such fractional share.
(e) To the extent that any outstanding rights exercisable for,
or convertible into, Company Common Stock do not include provisions
into which such rights automatically convert at the Effective Time into
rights exercisable for, or convertible into, Parent Common Stock, on
terms reflecting the exchange rate implicit in the Merger, Parent shall
promptly use commercially reasonable efforts to obtain from the holders
of such rights amendments to governing instruments causing such rights
to become exercisable for, or convertible into, Parent Common Stock, on
terms reflecting the exchange rate implicit in the Merger.
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1.5 ARTICLES OF INCORPORATION OF THE SURVIVING CORPORATION. The
Articles of Incorporation of the Company as in effect immediately prior to the
Effective Time will be the Articles of Incorporation of the Surviving
Corporation.
1.6 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of the Company, as
in effect immediately prior to the Effective Time, will be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with applicable
law.
1.7 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors
and officers of the Company, as of the Effective Time, shall continue as the
directors of the Surviving Corporation.
1.8 DISSENTING SHARES. Notwithstanding any provision of this Agreement
to the contrary, each outstanding share of Company Common Stock, the holder of
which has demanded and perfected such holder's right to dissent from the Merger
and to be paid the fair value of such shares in accordance with Sections 92A.300
to 92A.500 of the Nevada Act and, as of the Effective Time, has not effectively
withdrawn or lost such dissenters' rights ("DISSENTING SHARES"), will not be
converted into or represent a right to receive Parent Common Stock into which
Company Common Stock are converted pursuant to Section 1.3(c) hereof, but the
holder thereof will be entitled only to such rights as are granted by Section
92A.300 to 92A.500 of the Nevada Act. Prior to the Effective Time, the Company
will give Parent prompt written notice of any notice of intent to demand fair
value for any Company Common Stock, withdrawals of such notices, and any other
instruments served pursuant to the Nevada Act and received by the Company.
Notwithstanding the provisions of this Section 1.8, if any Dissenting
Shareholder shall effectively withdraw or lose (through failure to perfect or
otherwise) the right to dissent, then, as of the later of the Effective Time and
the occurrence of such event, such holder's shares shall automatically be
converted into and represent only the right to receive the applicable
consideration to which such Shareholder is then entitled under Section 1.3(c) of
this Agreement and Nevada Law, without interest thereon and upon surrender of
the certificate representing such shares (and the Merger Consideration shall be
proportionately adjusted to reflect the increase in shares of Company Common
Stock eligible for conversion in the Merger).
1.9 REVERSE SPLIT/COMBINATION OF PARENT COMMON STOCK. Parent hereby
covenants that for a two-year (2-year) period following the Effective Time, it
shall not effect any reverse stock split of Parent Common Stock without the
prior written of Tryant (other than a single 2 to 1 reverse split).
1.10 RESTRICTED SECURITIES. The parties acknowledge and agree that the
offers and issuance of shares of Parent Common Stock under this Agreement has
not been, and will not be, registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT") or any state securities laws and that such offer
and issuance are being made in reliance upon exemptions from the registration
requirements of the Securities Act and state securities laws. Accordingly, all
shares of Parent Common Stock issued in connection with the Merger will be
"restricted securities," as that term is defined in Rule 144 promulgated under
the Securities Act, and all certificates representing shares of Parent Common
Stock will bear appropriate legends evidencing the restrictions on transfer
imposed by the Securities Act and other securities laws.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent that the
statements contained in this Article 2 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Effective Time (as
though made then and as though the Effective Time were substituted for the date
of this Agreement throughout this Article 2), except as set forth in the
disclosure schedule delivered by the Company in connection with the Agreement
(the "COMPANY DISCLOSURE SCHEDULE"). The Company Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs and
subparagraphs contained in this Section 2. Any matter disclosed on the Company
Disclosure Schedule in respect of a particular representation will be deemed to
have been disclosed in respect of any other representation calling for a similar
or related type of disclosure (even if such matter is not specifically
referenced to the lettered and numbered paragraphs relating to such
representation), if and only to the extent that, it is clear from a reading of
the disclosure that it applies to such other representation. Notwithstanding the
foregoing, the Company Disclosure Schedule shall be deemed to include all
information contained in the Amendment No. 2 on Form SB-2, File No. 333-119947
filed by the Company with the Securities and Exchange Commission (the "SEC") on
January 14, 2005 (including all exhibits thereto and incorporated by reference
therein, the "FORM SB-2"), and the requirement that the Company Disclosure
Schedule be divided in Sections corresponding to the section of this Article 2
shall not apply to information included in the Company Disclosure Schedule by
means of the Form SB-2.
2.1 [intentionally omitted]
2.2 CORPORATE ORGANIZATION, ETC. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada with the requisite corporate power and authority to carry on its business
as it is now being conducted and to own, operate and lease its properties and
assets, is duly qualified or licensed to do business as a foreign corporation in
good standing in every other jurisdiction in which the character or location of
the properties and assets owned, leased or operated by it or the conduct of its
business requires such qualification or licensing, except in such jurisdictions
in which the failure to be so qualified or licensed and in good standing would
not, individually or in the aggregate, have a Material Adverse Effect (as
defined below) on the Company. The Company Disclosure Schedule contains a list
of all jurisdictions in which the Company is qualified or licensed to do
business and includes complete and correct copies of the Company's articles of
incorporation and bylaws. Other than as set forth in Section 2.2 of Company
Disclosure Schedule, the Company does not have any subsidiaries or own or
control any capital stock of any corporation or any interest in any partnership,
joint venture or other entity.
2.3 CAPITALIZATION. The authorized capital securities of the Company is
set forth in the Company Disclosure Schedule. The number of shares of Company
Common Stock outstanding, as of the date of this Agreement and as set forth in
the Company Disclosure Schedule, represent all of the issued and outstanding
capital securities of the Company. All issued and outstanding shares of Company
Common Stock are duly authorized, validly issued, fully paid and nonassessable
and are without, and were not issued in violation of, preemptive rights. Other
than as set forth in the Company Disclosure Schedule, there are no shares of
Company Common Stock or other equity securities of the Company outstanding or
any securities convertible into or exchangeable for such interests, securities
or rights. Other than as set forth on the Company Disclosure Schedule and
pursuant to this Agreement, there is no subscription, option, warrant, call,
right, contract, agreement, commitment, understanding or arrangement to which
the Company is a party, or by which it is bound, with respect to the issuance,
sale, delivery or transfer of the capital securities of the Company, including
any right of conversion or exchange under any security or other instrument.
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2.4 AUTHORIZATION, ETC. The Company has all requisite corporate power
and authority to enter into, execute, deliver, and, subject to its obtaining
approval for the Merger from the holders of Company Common Stock, perform its
obligations under this Agreement. This Agreement has been duly and validly
executed and delivered by the Company and is the valid and binding legal
obligation of the Company enforceable against the Company in accordance with its
terms, subject to bankruptcy, moratorium, principles of equity and other
limitations limiting the rights of creditors generally.
2.5 NON-CONTRAVENTION. Except as set forth in the Company Disclosure
Schedule, neither the execution, delivery and performance of this Agreement, and
each other agreement to be entered into in connection with this Agreement, nor
the consummation of the transactions contemplated herein will:
(a) violate, contravene or be in conflict with any provision
of the articles of incorporation or bylaws of the Company;
(b) be in conflict with, or constitute a default, however
defined (or an event which, with the giving of due notice or lapse of
time, or both, would constitute such a default), under, or cause or
permit the acceleration of the maturity of, or give rise to any right
of termination, cancellation, imposition of fees or penalties under any
debt, note, bond, lease, mortgage, indenture, license, obligation,
contract, commitment, franchise, permit, instrument or other agreement
or obligation to which the Company is a party or by which the Company
or any of the Company's properties or assets is bound;
(c) result in the creation or imposition of any pledge, lien,
security interest, restriction, option, claim or charge of any kind
whatsoever ("ENCUMBRANCES") upon any property or assets of the Company
under any debt, obligation, contract, agreement or commitment to which
the Company is a party or by which the Company or any of the Company's
assets or properties is bound; or
(d) materially violate any statute, treaty, law, judgment,
writ, injunction, decision, decree, order, regulation, ordinance or
other similar authoritative matters (referred to herein individually as
a "LAW" and collectively as "LAWS") of any foreign, federal, state or
local governmental or quasi-governmental, administrative, regulatory or
judicial court, department, commission, agency, board, bureau,
instrumentality or other authority applicable to the Company or its
assets and properties (referred to herein individually as an
"AUTHORITY" and collectively as "AUTHORITIES").
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2.6 CONSENTS AND APPROVALS. Except as set forth in the Company
Disclosure Schedule, with respect to the Company, no consent, approval, order or
authorization of or from, or registration, notification, declaration or filing
with ("CONSENT") any individual or entity, including without limitation any
Authority, is required in connection with the execution, delivery or performance
of this Agreement by the Company or the consummation by the Company of the
transactions contemplated herein.
2.7 FINANCIAL STATEMENTS. The Company Disclosure Schedule contains a
copy of the financial statements of the Company for the fiscal year ended June
30, 2004 and 2003, and the period ended March 31, 2005 (the "COMPANY FINANCIAL
STATEMENTS"). Except as disclosed therein or in the Company Disclosure Schedule,
the aforesaid Company Financial Statements: (i) are in accordance with the books
and records of the Company and have been prepared in conformity with United
States Generally Accepted Accounting Principals ("GAAP") (except as stated
therein or in the notes thereto); and (ii) are true, complete and accurate in
all material respects and fairly present the financial position of the Company
as of the date thereof, and the income or loss for the period then ended.
2.8 ABSENCE OF UNDISCLOSED LIABILITIES. The Company does not have any
material liabilities or obligations or claims of any kind whatsoever, whether
secured or unsecured, accrued or unaccrued, fixed or contingent, matured or
unmatured, known or unknown, direct or indirect, contingent or otherwise and
whether due or to become due (referred to herein individually as a "LIABILITY"
and collectively as "LIABILITIES"), other than: (a) Liabilities that are fully
reflected or reserved for in the Balance Sheet or not required to be reflected
thereon pursuant to GAAP; (b) Liabilities that are set forth on the Company
Disclosure Schedule; (c) Liabilities incurred by the Company in the ordinary
course of business after the date of the Balance Sheet and consistent with past
practice; (d) Liabilities in an amount not to exceed $50,000 individually or in
the aggregate unless such amounts are disclosed on the Company Disclosure
Schedule; or (e) Liabilities for express executory obligations to be performed
after the Closing under the contracts described in Section 2.14 of the Company
Disclosure Schedule.
2.9 ABSENCE OF CERTAIN CHANGES. Except as set forth in the Company
Disclosure Schedule, since March 31, 2005, the Company has owned and operated
its assets, properties and business in the ordinary course of business and
consistent with past practice. Without limiting the generality of the foregoing,
subject to the aforesaid exceptions:
(a) the Company has not experienced any change that has had or
could reasonably be expected to have a Material Adverse Effect on the
Company; and
(b) the Company has not suffered (i) any loss, damage,
destruction or other property or casualty (whether or not covered by
insurance) or (ii) any loss of officers, employees, dealers,
distributors, independent contractors, customers or suppliers, which
had or may reasonably be expected to result in a Material Adverse
Effect on the Company.
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2.10 ASSETS. Except as set forth in the Company Disclosure Schedule,
the Company has good and marketable title to all of its assets and properties,
whether or not reflected in the Balance Sheet or acquired after the date thereof
(except for properties sold or otherwise disposed of since the date thereof in
the ordinary course of business and consistent with past practices), that relate
to or are necessary for the Company to conduct its business and operations as
currently conducted (collectively, the "ASSETS"), free and clear of any
mortgage, pledge, lien, security interest, conditional or installment sales
agreement, encumbrance, claim, easement, right of way, tenancy, covenant,
encroachment, restriction or charge of any kind or nature (whether or not of
record) (a "LIEN"), other than (i) liens securing specific Liabilities shown on
the Balance Sheet with respect to which no breach, violation or default exists;
(ii) mechanics', carriers', workers' or other like liens arising in the ordinary
course of business; (iii) minor imperfections of title that do not individually
or in the aggregate, impair the continued use and operation of the Assets to
which they relate in the operation of the Company as currently conducted; and
(iv) liens for current taxes not yet due and payable or being contested in good
faith by appropriate proceedings ("PERMITTED LIENS").
2.11 RECEIVABLES AND PAYABLES.
(a) Except as set forth on the Company Disclosure Schedule,
all accounts receivable of the Company represent sales in the ordinary
course of business and, to the Company's knowledge, are current and
collectible net of any reserves shown on the Balance Sheet and none of
such receivables is subject to any Lien other than a Permitted Lien.
(b) Except as set forth on the Company Disclosure Schedule,
all payables by the Company arose in bona fide transactions in the
ordinary course of business and no such payable is delinquent by more
than sixty (60) days beyond the due date in its payment.
2.12 INTELLECTUAL PROPERTY RIGHTS. The Company owns or has the
unrestricted right to use all patents, patent applications, patent rights,
registered and unregistered trademarks, trademark applications, tradenames,
service marks, service xxxx applications, copyrights, internet domain names,
computer programs and other computer software, inventions, know-how, trade
secrets, technology, proprietary processes, trade dress, software and formulae
(collectively, "INTELLECTUAL PROPERTY RIGHTS") used in, or necessary for, the
operation of its Business as currently conducted or proposed to be conducted.
Except as set forth on the Company Disclosure Schedule, to the Company's
knowledge, the use by the Company of all Intellectual Property Rights necessary
or required for the conduct of the Business of the Company as presently
conducted and as proposed to be conducted does not infringe or violate the
Intellectual Property Rights of any person or entity. Except as described on the
Company Disclosure Schedule, to the Company's knowledge: (a) the Company does
not own or use any Intellectual Property Rights pursuant to any written license
agreement (other than a so-called "shrink wrap" license agreements or similar
agreements related to off-the-shelf software for which aggregate licensing fees
do not, or would not exceed $1,000, per year (a "SHRINK-WRAP LICENSE"); (b) the
Company has not granted any person or entity any rights, pursuant to a written
license agreement or otherwise, to use the Intellectual Property Rights; and (c)
the Company owns, has unrestricted right to use and has sole and exclusive
possession of and has good and valid title to, all of the Intellectual Property
Rights owned by the Company, free and clear of all Liens and Encumbrances. All
license agreements relating to Intellectual Property Rights are binding and
there is not, under any of such licenses, any existing default or event of
default (or event which with notice or lapse of time, or both, would constitute
a default, or would constitute a basis for a claim on non-performance) on the
part of the Company or, to the knowledge of the Company, any other party
thereto.
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2.13 LITIGATION. Except as set forth in the Company Disclosure
Schedule, there is no legal, administrative, arbitration, or other proceeding,
suit, claim or action of any nature or investigation, review or audit of any
kind, or any judgment, decree, decision, injunction, writ or order pending,
noticed, scheduled, or, to the knowledge of the Company, threatened or
contemplated by or against or involving the Company, its assets, properties or
business or its directors, officers, agents or employees (but only in their
capacity as such), whether at law or in equity, before or by any person or
entity or Authority, or which questions or challenges the validity of this
Agreement or any action taken or to be taken by the parties hereto pursuant to
this Agreement or in connection with the transactions contemplated herein.
2.14 CONTRACTS AND COMMITMENTS; NO DEFAULT.
(a) Except as set forth in the Company Disclosure Schedule,
the Company is not a party to, nor are any of the Assets bound by, any
written OR ORAL:
(i) employment, non-competition, consulting or
severance agreement, collective bargaining agreement, or
pension, profit-sharing, incentive compensation, deferred
compensation, stock purchase, stock option, stock appreciation
right, group insurance, severance pay or retirement plan or
agreement;
(ii) indenture, mortgage, note, installment
obligation, agreement or other instrument relating to the
borrowing of money by the Company;
(iii) contract, agreement, lease (real or personal
property) or arrangement that (A) is not terminable on less
than 30 days' notice without penalty, (B) is not over one year
in length of obligation of the Company, or (C) involves an
obligation of more than $50,000 over its term;
(iv) contract, agreement, commitment or license
relating to Intellectual Property Rights (other than a
Shrink-Wrap License);
(v) obligation or requirement to provide funds to or
make any investment (in the form of a loan, capital
contribution or otherwise) in any person or entity; or
(vi) outstanding sales or purchase contracts,
commitments or proposals that will result in any material loss
upon completion or performance thereof after allowance for
direct distribution expenses, or bound by any outstanding
contracts, bids, sales or service proposals quoting prices
that are not reasonably expected to result in a normal profit.
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(b) True and complete copies (or summaries, in the case of
oral items) of all agreements disclosed pursuant to this Section 2.14
(the "COMPANY CONTRACTS") have been provided to Parent for review or
are available on the SEC's XXXXX website. Except as set forth in the
Company Disclosure Schedule, all of the Company Contracts items are
valid and enforceable by and against the Company in accordance with
their terms, and are in full force and effect. The Company is not in
breach, violation or default, however defined, in the performance of
any of its obligations under any of the Company Contracts, and no facts
and circumstances exist which, whether with the giving of due notice,
lapse of time, or both, would constitute such breach, violation or
default thereunder or thereof by the Company, and, to the knowledge of
the Company, no other parties thereto are in a breach, violation or
default, however defined, thereunder or thereof, and no facts or
circumstances exist which, whether with the giving of due notice, lapse
of time, or both, would constitute such a breach, violation or default
thereunder or thereof.
2.15 COMPLIANCE WITH LAW; PERMITS AND OTHER OPERATING RIGHTS. Except as
set forth in the Company Disclosure Schedule, the Assets, properties, business
and operations of the Company are and have been in compliance in all respects
with all Laws applicable to the Company's assets, properties, business and
operations, except where the failure to comply would not have a Material Adverse
Effect. The Company possesses all material permits, licenses and other
authorizations from all Authorities necessary to permit it to operate its
business in the manner in which it presently is conducted, except where the
failure to possession such permits, licenses and other operations would not have
a Material Adverse Effect) and the consummation of the transactions contemplated
by this Agreement will not prevent the Company from being able to continue to
use such permits and operating rights. The Company has not received notice of
any violation of any such applicable Law, and is not in default with respect to
any order, writ, judgment, award, injunction or decree of any Authority.
2.16 BROKERS. Neither the Company nor, to the knowledge of the Company,
any of the its directors, officers or employees, has employed any broker,
finder, investment banker or financial advisor or incurred any liability for any
brokerage fee or commission, finder's fee or financial advisory fee, in
connection with the transactions contemplated hereby, nor is there any basis
known to the Company for any such fee or commission to be claimed by any person
or entity. The parties agree that amounts payable by the Company to Tryant
hereunder do not constitute a fee within the scope of this Section 2.16.
2.17 ISSUANCE OF PARENT COMMON STOCK. To the Company's knowledge, as of
the date of this Agreement and as of the Effective Time, no facts or
circumstances exist or will exist that could cause the issuance of Parent Common
Stock pursuant to the Merger to fail to meet the exemption from the registration
requirements of the Securities Act set forth in Rule 506 of Regulation D under
of the Securities Act.
2.18 BOOKS AND RECORDS. The books of account, minute books, stock
record books, and other material records of the Company, all of which have been
made available to Parent, are complete and correct in all material respects and
have been maintained in accordance with reasonable business practices. The
minute books of the Company contain accurate and complete records of all formal
meetings held of, and corporate action taken by, the directors and officers, the
managers and committees of the managers of the Company. At the Closing, all of
those books and records will be in the possession of the Company.
11
2.19 BUSINESS GENERALLY; ACCURACY OF INFORMATION. No representation or
warranty made by the Company in this Agreement, the Company Disclosure Schedule,
or in any document, agreement or certificate furnished or to be furnished to
Parent at the Closing by or on behalf of the Company in connection with any of
the transactions contemplated by this Agreement contains or will contain any
untrue statement of material fact or omit or will omit to state any material
fact necessary in order to make the statements herein or therein not misleading
in light of the circumstances in which they are made, and all of the foregoing
completely and correctly present the information required or purported to be set
forth herein or therein.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PARENT
AND THE MERGER SUBSIDIARY
Parent and Merger Subsidiary hereby represent and warrant to the
Company that the statements contained in this Article 3 are correct and complete
as of the date of this Agreement and will be correct and complete as of the
Effective Time (as though made then and as though the Effective Time were
substituted for the date of this Agreement throughout this Article 3), except as
set forth in the disclosure schedule delivered by Parent and Merger Subsidiary
in connection with the Agreement (the "PARENT DISCLOSURE SCHEDULE"). The Parent
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs and subparagraphs contained in this Section 3. Any
matter disclosed on the Parent Disclosure Schedule in respect of a particular
representation will be deemed to have been disclosed in respect of any other
representation calling for a similar or related type of disclosure (even if such
matter is not specifically referenced to the lettered and numbered paragraphs
relating to such representation), if and only to the extent that, it is clear
from a reading of the disclosure that it applies to such other representation.
3.1 [intentionally omitted]
3.2 CORPORATE ORGANIZATION, STANDING AND POWER. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware; and Merger Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
Each of Parent and Merger Subsidiary has all corporate power and authority to
own its properties and to carry on its business as now being conducted and is
duly qualified to do business and is in good standing in each jurisdiction in
which the failure to be so qualified would have a Material Adverse Effect on
Parent and Merger Subsidiary. Parent owns all of the outstanding capital stock
of Merger Subsidiary. Parent does not own or control any capital stock of any
corporation or any interest in any partnership, joint venture or other entity,
other than Merger Subsidiary.
3.3 AUTHORIZATION. Each of Parent and the Merger Subsidiary has all the
requisite corporate power and authority to enter into this Agreement and to
carry out the transactions contemplated herein. The Board of Directors of Parent
and the Merger Subsidiary, and Parent as the sole shareholder of the Merger
Subsidiary, have taken all action required by law, their respective articles of
incorporation and bylaws or otherwise to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein. This Agreement is the valid and binding legal obligation of
Parent and the Merger Subsidiary enforceable against each of them in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws that affect creditors'
rights generally.
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3.4 CAPITALIZATION. The authorized capital securities of the Parent and
Merger Subsidiary are set forth in the Parent Disclosure Schedule. The number of
shares of Parent Common Stock, as of the date of this Agreement and as set forth
in the Parent Disclosure Schedule, represent all of the issued and outstanding
capital securities of the Parent. All issued and outstanding shares of Parent
Common Stock are duly authorized, validly issued, fully paid and nonassessable
and are without, and were not issued in violation of, preemptive rights. There
are no shares of Parent Common Stock or other equity securities of Parent
outstanding or any securities convertible into or exchangeable for such
interests, securities or rights. Other than as set forth on the Parent
Disclosure Schedule and pursuant to this Agreement, there is no subscription,
option, warrant, call, right, contract, agreement, commitment, understanding or
arrangement to which Parent is a party, or by which it is bound, with respect to
the issuance, sale, delivery or transfer of the capital securities of Parent,
including any right of conversion or exchange under any security or other
instrument.
3.5 NON-CONTRAVENTION. Neither the execution, delivery and performance
of this Agreement nor the consummation of the transactions contemplated herein
will:
(a) violate any provision of the articles of incorporation or
bylaws of Parent or the Merger Subsidiary; or
(b) be in conflict with, or constitute a default, however
defined (or an event which, with the giving of due notice or lapse of
time, or both, would constitute such a default), under, or cause or
permit the acceleration of the maturity of, or give rise to, any right
of termination, cancellation, imposition of fees or penalties under,
any debt, note, bond, lease, mortgage, indenture, license, obligation,
contract, commitment, franchise, permit, instrument or other agreement
or obligation to which Parent or the Merger Subsidiary is a party or by
which Parent or the Merger Subsidiary or any of their respective
properties or assets is bound;
(c) result in the creation or imposition of any Encumbrance
upon any property or assets of Parent or the Merger Subsidiary under
any debt, obligation, contract, agreement or commitment to which Parent
or the Merger Subsidiary is a party or by which Parent or the Merger
Subsidiary or any of their respective properties or assets is bound; or
(d) violate any Law of any Authority.
3.6 CONSENTS AND APPROVALS. No Consent is required by any person or
entity, including without limitation any Authority, in connection with the
execution, delivery and performance by Parent or Merger Subsidiary of this
Agreement, or the consummation of the transactions contemplated herein, other
than any Consent which, if not made or obtained, will not, individually or in
the aggregate, have a Material Adverse Effect on the business of Parent or
Merger Subsidiary.
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3.7 VALID ISSUANCE. The Parent Common Stock to be issued in connection
with the Merger will be duly authorized and, when issued, delivered and paid for
as provided in this Agreement, will be validly issued, fully paid and
non-assessable.
3.8 FINANCIAL STATEMENTS. The Parent Disclosure Schedule contains a
copy of the financial statements of the Parent as of the years ended December
31, 2004 and 2003, and the period ended March 31, 2005 (the "PARENT FINANCIAL
STATEMENTS"). Except as disclosed therein or in the Parent Disclosure Schedule,
the aforesaid Parent Financial Statements: (i) are in accordance with the books
and records of the Parent and have been prepared in conformity with GAAP (except
as stated therein or in the notes thereto); and (ii) are true, complete and
accurate in all material respects and fairly present the financial position of
the Parent as of the date thereof, and the income or loss for the period then
ended.
3.9 NO LIABILITIES. As of the date hereof, Parent does not have any
Liabilities, except for (i) Liabilities expressly stated in the most recent
balance sheet included in the Parent Disclosure Schedule or the notes thereto,
or (ii) Liabilities which do not exceed $1,000 in the aggregate. As of the
Effective Time, Parent will not have any Liabilities.
3.10 NO ASSETS. As of the Closing, Parent will not have any assets or
operations of any kind, except as identified in the most recent balance sheet
and notes thereto included in the Parent Disclosure Schedule.
3.11 ABSENCE OF CERTAIN CHANGES. Except as set forth in the Parent
Disclosure Schedule, Parent has owned and operated its assets, properties and
business in the ordinary course of business and consistent with past practice.
Without limiting the generality of the foregoing, subject to the aforesaid
exceptions, Parent has not experienced any change that has had or could
reasonably be expected to have a Material Adverse Effect on the Parent.
3.12 LITIGATION. Except as disclosed in the Parent Disclosure Schedule,
there is no legal, administrative, arbitration, or other proceeding, suit, claim
or action of any nature or investigation, review or audit of any kind, or any
judgment, decree, decision, injunction, writ or order pending, noticed,
scheduled, or, to the knowledge of the Parent or the Merger Subsidiary,
threatened or contemplated by or against or involving the Parent, its assets,
properties or business or its directors, officers, agents or employees (but only
in their capacity as such), whether at law or in equity, before or by any person
or entity or Authority, or which questions or challenges the validity of this
Agreement or any action taken or to be taken by the parties hereto pursuant to
this Agreement or in connection with the transactions contemplated herein.
3.13 CONTRACTS AND COMMITMENTS; NO DEFAULT. The Parent is not a party
to, nor are any of its Assets bound by, any contract, agreement, commitment,
note, covenant or promise, written or oral (a "PARENT CONTRACT"); that is not
disclosed in the Parent Disclosure Schedule. Except as disclosed in the Parent
Disclosure Schedule, none of the Parent Contracts contains a provision requiring
the consent of any party with respect to the consummation of the transactions
contemplated by this Agreement. The Parent is not in breach, violation or
default, however defined, in the performance of any of its obligations under any
of the Parent Contracts, and no facts and circumstances exist which, whether
with the giving of due notice, lapse of time, or both, would constitute such
breach, violation or default thereunder or thereof, and, to the knowledge of the
Parent, no other parties thereto are in a breach, violation or default, however
defined, thereunder or thereof, and no facts or circumstances exist which,
whether with the giving of due notice, lapse of time, or both, would constitute
such a breach, violation or default thereunder or thereof.
14
3.14 NO BROKER OR FINDER. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the Merger
or any of the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Parent.
3.15 INTERCOMPANY AND AFFILIATE TRANSACTIONS; INSIDER INTERESTS. Except
as expressly identified in the Parent Disclosure Schedule or in the Consent of
Directors of Parent approving the Merger which has been executed and provided to
the Company prior to execution, there are, and during the last two years there
have been, no transactions, agreements or arrangements of any kind, direct or
indirect, between the Parent, on the one hand, and any director, officer,
employee, stockholder, or affiliate of the Parent, on the other hand, including,
without limitation, loans, guarantees or pledges to, by or for the Parent or
from, to, by or for any of such persons, that are currently in effect.
3.16 BUSINESS GENERALLY; ACCURACY OF INFORMATION. No representation or
warranty made by the Parent or Merger Subsidiary in this Agreement, the Parent
Disclosure Schedule, or in any document, agreement or certificate furnished or
to be furnished to the Company at the Closing by or on behalf of the Parent or
Merger Subsidiary in connection with any of the transactions contemplated by
this Agreement contains or will contain any untrue statement of material fact or
omit or will omit to state any material fact necessary in order to make the
statements herein or therein not misleading in light of the circumstances in
which they are made, and all of the foregoing completely and correctly present
the information required or purported to be set forth herein or therein.
3.17 COMPLIANCE WITH LAW; PERMITS AND OTHER OPERATING RIGHTS. The
assets, properties, business and operations of Parent and Merger Subsidiary are
and have been in compliance in all respects with all Laws applicable to the
Parent assets, properties, business and operations, except where the failure to
comply would not have a Material Adverse Effect. Parent and Merger Subsidiary
possess all material permits, licenses and other authorizations from all
Authorities necessary to permit it to operate their businesses in the manner in
which they presently are conducted, except where the failure to possession such
permits, licenses and other operations would not have a Material Adverse Effect)
and the consummation of the transactions contemplated by this Agreement will not
prevent the Parent or Merger Subsidiary from being able to continue to use such
permits and operating rights. Parent has not received notice of any violation of
any such applicable Law, and is not in default with respect to any order, writ,
judgment, award, injunction or decree of any Authority. Merger Subsidiary has
not had operations at any time and was created after June 15, 2005 for the sole
purpose of becoming a party to this Agreement.
15
3.18 BOOKS AND RECORDS. The books of account, minute books, stock
record books, and other material records of Parent and Merger Subsidiary, all of
which have been made available to the Company, are complete and correct in all
material respects and have been maintained in accordance with reasonable
business practices. The minute books of the Parent and Merger Subsidiary contain
accurate and complete records of all formal meetings held of, and corporate
action taken by, the directors and officers, the managers and committees of the
managers of the Parent and Merger Subsidiary. Immediately following Closing, all
of those books and records shall be transferred to the Company.
3.19 MATERIAL LIABILITY TO AN AUTHORITY. Parent has filed all reports
or returns related to all federal, state or local taxes of any time owed or
owing by Parent, and Parent has paid all federal, state and local taxes and
assessments owed by Parent with respect to time periods prior to the Effective
Time. Parent has complied and is in compliance in all respects with all
applicable federal, state, and local laws, statutes, ordinances and regulations,
and any judicial or administrative interpretation thereof, relating to
regulation and protection of human health, safety, the environment and natural
resources (including ambient air, surface water, groundwater, wetlands, land
surface or subsurface strata, wildlife, aquatic species and vegetation). Parent
has no obligations under, or with respect to, any retirement plan, employee
benefit plan or plan of any kind subject to the Employee Retirement Income
Security Act of 1974.
ARTICLE 4
COVENANTS OF THE PARTIES
4.1 CONDUCT OF BUSINESS. Except as contemplated by this Agreement or as
contemplated by Section 4.1 of the Company Disclosure Schedule, during the
period from the date of this Agreement to the Closing Date, each of Parent, the
Company and Merger Subsidiary will conduct its business and operations according
to its ordinary and usual course of business consistent with past practices.
Without limiting the generality of the foregoing, and, except as otherwise
expressly provided in this Agreement or as otherwise disclosed on the Parent
Disclosure Schedule or Company Disclosure Schedule, respectively, prior to the
Closing Date, without the prior written consent of the other party, not to be
unreasonably delayed, none of Parent, Merger Subsidiary or the Company will:
(a) amend its articles of incorporation or bylaws;
(b) issue, reissue, sell, deliver or pledge or authorize or
propose the issuance, reissuance, sale, delivery or pledge of shares of
capital stock of any class, or securities convertible into capital
stock of any class, or any rights, warrants or options to acquire any
convertible securities or capital stock;
(c) adjust, split, combine, subdivide, reclassify or redeem,
purchase or otherwise acquire, or propose to redeem or purchase or
otherwise acquire, any shares of its capital stock, or any of its other
securities;
(d) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock, redeem or otherwise acquire
any shares of its capital stock or other securities, alter any term of
any of its outstanding securities;
16
(e) (i) except as required under any employment agreement,
increase in any manner the compensation of any of its directors,
officers or other employees; (ii) pay or agree to pay any pension,
retirement allowance or other employee benefit not required or
permitted by any existing plan, agreement or arrangement to any such
director, officer or employee, whether past or present; or (iii) commit
itself to any additional pension, profit-sharing, bonus, incentive,
deferred compensation, stock purchase, stock option, stock appreciation
right, group insurance, severance pay, retirement or other employee
benefit plan, agreement or arrangement, or to any employment agreement
or consulting agreement (arising out of prior employment ) with or for
the benefit of any person, or, except to the extent required to comply
with applicable law, amend any of such plans or any of such agreements
in existence on the date of this Agreement;
(f) incur, assume, suffer or become subject to, whether
directly or by way of guarantee or otherwise, any Liabilities which,
individually or in the aggregate, exceed $10,000 in the case of Parent
or $50,000 in the case of the Company;
(g) make or enter into any commitment for capital expenditures
in excess of $10,000 in the case of Parent or $50,000 in the case of
the Company;
(h) pay, lend or advance any amount to, or sell, transfer or
lease any properties or assets (real, personal or mixed, tangible or
intangible) to, or enter into any agreement or arrangement with, any of
its officers or directors or any affiliate or associate of any of its
officers or directors;
(i) terminate, enter into or amend in any material respect any
contract, agreement, lease, license or commitment, or take any action
or omit to take any action which will cause a breach, violation or
default (however defined) under any contract, except in the ordinary
course of business and consistent with past practice;
(j) acquire any of the business or assets of any other person
or entity;
(k) permit any of its current insurance (or reinsurance)
policies to be cancelled or terminated or any of the coverage
thereunder to lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies providing coverage equal to
or greater than coverage remaining under those cancelled, terminated or
lapsed are in full force and effect;
(l) enter into other material agreements, commitments or
contracts not in the ordinary course of business or in excess of
current requirements;
(m) settle or compromise any suit, claim or dispute, or
threatened suit, claim or dispute (other than any settlement or
compromise having no effect upon the Company, its assets, operations or
financial position); or
(n) agree in writing or otherwise to take any of the foregoing
actions or any action which would make any representation or warranty
in this Agreement untrue or incorrect in any material respect.
Nothing herein shall prevent the Company from operating its business in
the ordinary course and consistent with past practice.
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4.2 FULL ACCESS. Throughout the period prior to Closing, each party
will afford to the other and its directors, officers, employees, counsel,
accountants, investment advisors and other authorized representatives and
agents, reasonable access to the facilities, properties, books and records of
the party in order that the other may have full opportunity to make such
investigations as it will desire to make of the affairs of the disclosing party.
Each party will furnish such additional financial and operating data and other
information as the other will, from time to time, reasonably request, including
without limitation access to the working papers of its independent certified
public accountants; PROVIDED, HOWEVER, that any such investigation will not
affect or otherwise diminish or obviate in any respect any of the
representations and warranties of the disclosing party.
4.3 CONFIDENTIALITY. Each of the parties hereto agrees that it will not
use, or permit the use of, any of the information relating to any other party
hereto furnished to it in connection with the transactions contemplated herein
("INFORMATION") in a manner or for a purpose detrimental to such other party or
otherwise than in connection with the transaction, and that they will not
disclose, divulge, provide or make accessible (collectively, "DISCLOSE"), or
permit the Disclosure of, any of the Information to any person or entity, other
than their respective directors, officers, employees, investment advisors,
accountants, counsel and other authorized representatives and agents, except as
may be required by judicial or administrative process or, in the opinion of such
party's counsel, by other requirements of Law; provided, however, that prior to
any Disclosure of any Information permitted hereunder, the disclosing party will
first obtain the recipients' undertaking to comply with the provisions of this
Section with respect to such information. The term "INFORMATION" as used herein
will not include any information relating to a party that the party disclosing
such information can show: (i) to have been in its possession prior to its
receipt from another party hereto; (ii) to be now or to later become generally
available to the public through no fault of the disclosing party; (iii) to have
been available to the public at the time of its receipt by the disclosing party;
(iv) to have been received separately by the disclosing party in an unrestricted
manner from a person entitled to disclose such information; or (v) to have been
developed independently by the disclosing party without regard to any
information received in connection with this transaction. Each party hereto also
agrees to promptly return to the party from whom it originally received such
information all original and duplicate copies of written materials containing
Information should the transactions contemplated herein not occur. A party
hereto will be deemed to have satisfied its obligations to hold the Information
confidential if it exercises the same care as it takes with respect to its own
similar information.
4.4 FILINGS; CONSENTS; REMOVAL OF OBJECTIONS. Subject to the terms and
conditions herein provided, the parties hereto will use their best efforts to
take or cause to be taken all actions and do or cause to be done all things
necessary, proper or advisable under applicable Laws to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated
hereby, including without limitation obtaining all Consents of any person or
entity, whether private or governmental, required in connection with the
consummation of the transactions contemplated herein. In furtherance, and not in
limitation of the foregoing, it is the intent of the parties to consummate the
transactions contemplated herein at the earliest practicable time, and they
respectively agree to exert commercially reasonable efforts to that end,
including without limitation: (i) the removal or satisfaction, if possible, of
any objections to the validity or legality of the transactions contemplated
herein; and (ii) the satisfaction of the conditions to consummation of the
transactions contemplated hereby.
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4.5 FURTHER ASSURANCES; COOPERATION; NOTIFICATION.
(a) Each party hereto will, before, at and after Closing,
execute and deliver such instruments and take such other actions as the
other party or parties, as the case may be, may reasonably require in
order to carry out the intent of this Agreement. Without limiting the
generality of the foregoing, at any time after the Closing, at the
reasonable request of Parent and without further consideration, the
Company and Merger Subsidiary will execute and deliver such instruments
of sale, transfer, conveyance, assignment and confirmation and take
such action as Parent may reasonably deem necessary or desirable in
order to more effectively consummate the transactions contemplated
hereby.
(b) At all times from the date hereof until the Closing, each
party will promptly notify the other in writing of the occurrence of
any event which it reasonably believes will or may result in a failure
by such party to satisfy the conditions specified in this Article 4.
4.6 SUPPLEMENTS TO DISCLOSURE SCHEDULE. Prior to the Closing, each
party will supplement or amend its respective Disclosure Schedule with respect
to any event or development which, if existing or occurring at or prior to the
date of this Agreement, would have been required to be set forth or described in
the Disclosure Schedule or which is necessary to correct any information in the
Disclosure Schedule or in any representation and warranty of the Company which
has been rendered inaccurate by reason of such event or development. For
purposes of determining the accuracy as of the date hereof of the
representations and warranties of the Company contained in Article 2 hereof or
Parent in Article 3 hereof in order to determine the fulfillment of the
conditions set forth herein, the Disclosure Schedule of each party will be
deemed to exclude any information contained in any supplement or amendment
hereto delivered after the delivery of the Disclosure Schedule.
4.7 PUBLIC ANNOUNCEMENTS. None of the parties hereto will make any
public announcement with respect to the transactions contemplated herein without
the prior written consent of the other parties, which consent will not be
unreasonably withheld or delayed; PROVIDED, HOWEVER, that any of the parties
hereto may at any time make any announcements that are required by applicable
Law so long as the party so required to make an announcement promptly upon
learning of such requirement notifies the other parties of such requirement and
discusses with the other parties in good faith the exact proposed wording of any
such announcement.
4.8 SATISFACTION OF CONDITIONS PRECEDENT. Each party will use
commercially reasonable efforts to satisfy or cause to be satisfied all the
conditions precedent that are applicable to them, and to cause the transactions
contemplated by this Agreement to be consummated, and, without limiting the
generality of the foregoing, to obtain all material consents and authorizations
of third parties and to make filings with, and give all notices to, third
parties that may be necessary or reasonably required on its part in order to
effect the transactions contemplated hereby.
4.9 RESIGNATION OF OFFICERS AND DIRECTORS. At the Closing, the
pre-Closing officers and directors of Parent shall submit their written
resignations from such offices effective as of the Closing. Prior to their
resignations, the pre-Closing directors of Parent shall appoint to the board of
directors of Parent those persons indicated in Section 1.8(b), effective as of
the Closing.
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4.10 PREPARATION OF PROXY STATEMENT/PRIVATE PLACEMENT MEMORANDUM. The
parties shall jointly and immediately complete the preparation of a Proxy
Statement/Private Placement Memorandum (the "MEMORANDUM") pursuant to which
Company shall solicit the approval of its Shareholders to the transactions
contemplated by this Agreement as provided below, and Parent shall offer to the
Shareholders the shares of Parent Common Stock to be issued to Shareholders
pursuant to the transactions contemplated by this Agreement. The Company and
Parent each undertake to the other that all information provided for inclusion
in the Memorandum by Company on the one hand and Parent on the other hand will
not contain any untrue statement of material fact or omit to state a material
fact required to be stated herein or therein necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading.
The parties shall jointly seek to ensure that the Memorandum complies with all
requirements of applicable state and federal securities laws with respect to the
solicitations of approvals by the Shareholders of the transactions contemplated
herein and the offer and issuance of the shares of Parent Common Stock to the
Shareholders pursuant to the transactions contemplated by this Agreement.
4.11 INVESTMENT LETTERS. In connection with its efforts to obtain
Company Shareholder approval of this Agreement and the Merger and the other
transactions contemplated by this Agreement, the Company shall send to each
Shareholder with the Memorandum an Investment Representation Letter in a form
and substance approved by Parent (an "INVESTMENT REPRESENTATION LETTER"). The
Company shall use reasonable efforts to cause all shareholders to execute and
deliver to Company an Investment Representation Letter as soon as practicable
possible (and shall deliver copies of the same to Parent). In the event that any
Shareholder is not an "ACCREDITED INVESTOR," as defined in Rule 501(a) under the
Securities Act, the Company and Parent shall take steps reasonably designed to
confirm that such Shareholder is (i) capable of evaluating the merits and risks
of investing in the shares of Parent Common Stock, or (ii) advised by a
Purchaser Representative (as defined in Rule 501(h) promulgated under the
Securities Act) in connection with such shareholder's evaluation of the Merger
and the execution of the Investment Representation Letter. Parent and the
Company shall each provide any Shareholders with all non-confidential
information requested by such Shareholder in connection with the solicitation of
the Investment Representation Letter or approval for the Merger from such
Company Shareholder.
ARTICLE 5
CONDITIONS TO THE OBLIGATIONS OF THE PARENT
AND MERGER SUBSIDIARY
Notwithstanding any other provision of this Agreement to the contrary,
the obligation of Parent and Merger Subsidiary to effect the transactions
contemplated herein will be subject to the satisfaction at or prior to the
Closing, or waiver by Parent, of each of the following conditions:
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5.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Company contained in this Agreement, including without
limitation in the Company Disclosure Schedule (and not including any changes or
additions delivered to Parent pursuant to Section 4.6), will be true, complete
and accurate in all material respects as of the date when made and at and as of
the Closing Date as though such representations and warranties were made at and
as of such time, except for changes specifically permitted or contemplated by
this Agreement, and except insofar as the representations and warranties relate
expressly and solely to a particular date or period, in which case they will be
true and correct at the Closing with respect to such date or period.
5.2 PERFORMANCE. The Company will have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by the Company on or
prior to the Closing.
5.3 REQUIRED APPROVALS AND CONSENTS.
(a) All action required by law and otherwise to be taken by
the shareholders of the Company to authorize the execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby will have been duly and validly taken.
(b) All Consents of or from all Authorities required hereunder
to consummate the transactions contemplated herein, will have been
delivered, made or obtained, and Parent will have received copies
thereof.
5.4 AGREEMENTS AND DOCUMENTS. Parent and Merger Subsidiary will have
received the following agreements and documents, each of which will be in full
force and effect:
(a) a certificate executed on behalf of the Company by its
Chief Executive Officer confirming that the conditions set forth in
Sections 5.1, 5.2, 5.3, 5.5, 5.6 and 5.7 have been duly satisfied
(unless any such condition has been waived by Parent); and
(b) resolutions of the board of directors of the Company and
the stockholders of the Company, certified by the secretary of the
Company, approving the transactions contemplated by this Agreement,
including the Merger;
(c) Tryant shall have executed and delivered the
Indemnification Agreement in the form attached hereto as Exhibit
5.4(c)(i) (the "INDEMNIFICATION AGREEMENT") and the Lock-Up/Lock-Out
and Registration Rights Agreement, Parent shall have executed and
delivered Lock-Up/Lock-Out and Registration Rights Agreement in the
form attached hereto as Exhibit 5.4(c)(ii) (THE "LOCK-UP/LOCK-OUT AND
REGISTRATION RIGHTS AGREEMENT") and the Company shall have paid all
sums and issued all securities required to be issued thereunder.
5.5 ADVERSE CHANGES. No material adverse change will have occurred in
the business, financial condition, prospects, assets or operations of the
Company since March 31, 2005, except as set forth in the Company Disclosure
Schedule or on Schedule 5.5 attached hereto.
21
5.6 NO PROCEEDING OR LITIGATION. No suit, action, investigation,
inquiry or other proceeding by any Authority or other person or entity will have
been instituted or threatened which delays or questions the validity or legality
of the transactions contemplated hereby or which, if successfully asserted,
would, in the reasonable judgment of Parent, individually or in the aggregate,
otherwise have a Material Adverse Effect on the Company's business, financial
condition, prospects, assets or operations or prevent or delay the consummation
of the transactions contemplated by this Agreement.
5.7 LEGISLATION. No Law will have been enacted which prohibits,
restricts or delays the consummation of the transactions contemplated hereby or
any of the conditions to the consummation of such transaction.
5.8 APPROPRIATE DOCUMENTATION. The Parent will have received, in a form
and substance reasonably satisfactory to Parent, dated the Closing Date, all
certificates and other documents, instruments and writings to evidence the
fulfillment of the conditions set forth in this Article 5 as Parent may
reasonably request.
5.9 QUALIFICATIONS OF PENGE STOCKHOLDERS. All Shareholders shall be
either "accredited investors" or "sophisticated investors" as defined under Rule
506 of Regulation D promulgated under the Securities Act; and there shall be no
more than 35 "sophisticated investors."
ARTICLE 6
CONDITIONS TO OBLIGATIONS OF THE COMPANY
Notwithstanding anything in this Agreement to the contrary, the
obligation of the Company to effect the transactions contemplated herein will be
subject to the satisfaction at or prior to the Closing of each of the following
conditions:
6.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Parent and Merger Subsidiary contained in this Agreement will be
true, complete and accurate in all material respects as of the date when made
and at and as of the Closing, as though such representations and warranties were
made at and as of such time, except for changes permitted or contemplated in
this Agreement, and except insofar as the representations and warranties relate
expressly and solely to a particular date or period, in which case they will be
true and correct at the Closing with respect to such date or period.
6.2 PERFORMANCE. The Parent will have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by Parent at or
prior to the Closing, including the obligations of the pre-Close officers and
directors of Parent set forth in Section 4.9.
6.3 REQUIRED APPROVALS AND CONSENTS.
(a) All action required by law and otherwise to be taken by
the directors and stockholders of the Parent to authorize the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will have been
duly and validly taken.
22
(b) All Consents of or from all Authorities required hereunder
to consummate the transactions contemplated herein, will have been
delivered, made or obtained, and the Company will have received copies
thereof.
6.4 AGREEMENTS AND DOCUMENTS. The Company will have received the
following agreements and documents, each of which will be in full force and
effect:
(a) a certificate executed on behalf of Parent by its Chief
Executive Officer confirming that the conditions set forth in Sections
6.1, 6.2, 6.3, 6.5, 6.6 and 6.7 have been duly satisfied (unless any
such condition has been waived by the Company);
(b) resolutions of the board of directors of Parent and the
board of directors and sole stockholder of Merger Subsidiary, certified
by the secretary of Parent, approving the transactions contemplated by
this Agreement, including the Merger, the issuance of the Merger
Consideration, the Indemnification Agreement and the Lock-Up/Leak-Out
and Registration Rights Agreement.
(d) Tryant shall have executed and delivered the
Indemnification Agreement and the Lock-Up/Leak-Out and Registration
Rights Agreement, and Parent shall have executed and delivered the
Lock-Up/Leak-Out and Registration Rights Agreement.
6.5 ADVERSE CHANGES. No material adverse change will have occurred in
the business, financial condition, prospects, assets or operations of Parent
since March 31, 2005, except as set forth on Schedule 6.5 attached hereto.
6.6 NO PROCEEDING OR LITIGATION. No suit, action, investigation,
inquiry or other proceeding by any Authority or other person or entity will have
been instituted or threatened which delays or questions the validity or legality
of the transactions contemplated hereby or which, if successfully asserted,
would, in the reasonable judgment of the Company, individually or in the
aggregate, otherwise have a Material Adverse Effect on Parent's business,
financial condition, prospects, assets or operations or prevent or delay the
consummation of the transactions contemplated by this Agreement.
6.7 LEGISLATION. No Law will have been enacted which prohibits,
restricts or delays the consummation of the transactions contemplated hereby or
any of the conditions to the consummation of such transaction.
6.8 APPROPRIATE DOCUMENTATION. The Company will have received, in a
form and substance reasonably satisfactory to Company, dated the Closing Date,
all certificates and other documents, instruments and writings to evidence the
fulfillment of the conditions set forth in this Article 6 as the Company may
reasonably request.
6.9 INDEMNIFICATION AGREEMENT. Tryant and Parent shall have executed
the Indemnification Agreement.
6.10 LOCK-UP AGREEMENT. The officers, directors and the holders of 5%
or more of Parent Common Stock shall have executed and delivered to the Parent a
Lock-Up/Leak-Out and Registration Rights Agreement.
23
6.11 CHANGE OF FISCAL YEAR. Parent shall have changed its fiscal year
end to June 30.
6.12 RESIGNATION OF DIRECTORS. The directors of Parent immediately
prior to the Effective Time shall have executed and deliver to the Company and
irrevocable resignation and consent, in form and substance reasonably
satisfactory to the Company, pursuant to which, as of the Effective Time, all of
the directors of Parent resign, the number of directors constituting the whole
board of directors of Parent changed to three directors and Xxxx Xxxxxxx, Xxxxx
Xxxxxxx and Xxxx Xxxxxxx are appoints as directors of Parent.
6.13 OUTSTANDING SHARES OF PARENT. The number of shares of Parent
Common Stock outstanding at the Effective Time, together with the number of
shares of Parent Common Stock subject to any and all rights to purchase or
receive Parent Common Stock outstanding at the Effective Time, shall be no more
than 6.98% of the number of shares of Company Common Stock outstanding at the
Effective Time.
6.14 FINANCIAL STATEMENTS. Profile will have delivered to the Company
an audited balance sheet as of December 31, 2004, audited statements of
operations, cash flows and shareholders' equity for each of the two years and
December 31, 2004 and unaudited financial statements for the period ended March
31, 2004.
ARTICLE 7
TERMINATION AND ABANDONMENT
7.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated at
any time prior to the Closing by the written consent of the Company and Parent.
7.2 TERMINATION DUE TO DELAY. This Agreement may be terminated by
either the Company or Parent if the Closing is not consummated by the
Termination Date (provided that the right to terminate this Agreement under this
Section 7.2 will not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the failure
of the Closing to occur on or before such date).
7.3 TERMINATION FOR BREACH. This Agreement may be terminated by the
board of directors of either Company or Parent if (a) representation or warranty
of the other party is inaccurate or untrue in a material way, or (b) a material
default is be made by the other party in the observance or in the due and timely
performance of any of its covenants and agreements herein contained and, with
respect to (b), such default is not cured by the defaulting party prior to the
earlier of the day prior to the Effective Time or within 7 days after receipt of
written notice from the non-defaulting party which indicates the basis for such
default.
7.4 PROCEDURE AND EFFECT OF TERMINATION. In the event of termination of
this Agreement and abandonment of the transactions contemplated hereby by the
Company or Parent pursuant to this Article 7, written notice thereof will be
given to all other parties and this Agreement will terminate and the
transactions contemplated hereby will be abandoned, without further action by
any of the parties hereto. If this Agreement is terminated as provided herein:
(a) Each of the parties will, upon request, redeliver all
documents, work papers and other material of the other parties relating
to the transactions contemplated hereby, whether obtained before or
after the execution hereof, to the party furnishing the same;
24
(b) All rights and obligations of the parties hereunder shall
terminate without any Liability of any party to any other party (except
for any Liability of any party then in breach related to such breach).
(c) All filings, applications and other submissions made
pursuant to the terms of this Agreement will, to the extent
practicable, be withdrawn from the agency or other person to which
made.
ARTICLE 8
MISCELLANEOUS PROVISIONS
8.1 EXPENSES. The Parent and the Company will each bear their own costs
and expenses relating to the transactions contemplated hereby, including without
limitation, fees and expenses of legal counsel, accountants, investment bankers,
brokers or finders, printers, copiers, consultants or other representatives for
the services used, hired or connected with the transactions contemplated hereby.
8.2 SURVIVAL. As among the parties hereto, the representations and
warranties of the parties shall not survive the Effective Time, at which time
any action or claim based upon a breach of any representation or warranty with
respect to which a complaint has not been filed shall be time barred. The
foregoing shall not be deemed to limit any claim that the Company may make
against Tryant under the Indemnification Agreement or alter any survival period
set forth therein with respect to the representations and warrants of Parent or
Merger Subsidiary.
8.3 AMENDMENT AND MODIFICATION. Subject to applicable Law, this
Agreement may be amended or modified by the parties hereto at any time with
respect to any of the terms contained herein; PROVIDED, HOWEVER, that all such
amendments and modifications must be in writing duly executed by all of the
parties hereto.
8.4 WAIVER OF COMPLIANCE; CONSENTS. Any failure of a party to comply
with any obligation, covenant, agreement or condition herein may be expressly
waived in writing by the party entitled hereby to such compliance, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition will not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. No single or partial exercise
of a right or remedy will preclude any other or further exercise thereof or of
any other right or remedy hereunder. Whenever this Agreement requires or permits
the consent by or on behalf of a party, such consent will be given in writing in
the same manner as for waivers of compliance.
8.5 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement will
entitle any person or entity (other than a party hereto and his, her or its
respective successors and assigns permitted hereby) to any claim, cause of
action, remedy or right of any kind.
8.6 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder will be made in writing and will be deemed to
have been duly given and effective: (i) on the date of delivery, if delivered
personally or by express courier; (ii) on the earlier of the fourth (4th) day
after mailing or the date of the return receipt acknowledgement, if mailed,
postage prepaid, by certified or registered mail, return receipt requested; or
(iii) on the date of transmission, if sent by facsimile, telecopy, telegraph,
telex or other similar telegraphic communications equipment (with written
confirmation of delivery):
25
If to the Company prior to the Merger: With a copy to:
Penge Corp. Xxxx Xxxxxxxx Xxxxx Xxx & Xxxxxxxx
0000 Xxxxxxx Xxxxxx Xxxxxx 0, Xxxxx 000 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxx 00000 Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxx Xxxxxxx Attn: Xxxxx X. Xxxxx
Fax: 000-000-0000 Fax: (000) 000-0000
or to such other person or address as either the Company will furnish to the
other parties hereto in writing in accordance with this subsection.
If to the Parent or Merger Subsidiary With a copy to:
prior to the Merger:
Profile Diagnostic Sciences, Inc. Xxxxxxx X. Xxxxxxxxxx, Esq.
1608 West 0000 Xxxxx 000 Xxxx 000 Xxxxx, #000
Xxxxx Xxxxx, Xxxx 00000 Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxx X. Xxxxxx Fax: 000-000-0000
Fax: 000-000-0000
or to such other person or address as Parent will furnish to the other parties
hereto in writing in accordance with this subsection.
8.7 ASSIGNMENT. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder will be assigned (whether
voluntarily, involuntarily, by operation of law or otherwise) by any of the
parties hereto without the prior written consent of the other parties.
8.8 GOVERNING LAW. This Agreement and the legal relations among the
parties hereto will be governed by and construed in accordance with the internal
substantive laws of the State of Nevada (without regard to the laws of conflict
that might otherwise apply) as to all matters, including without limitation
matters of validity, construction, effect, performance and remedies.
8.9 JURISDICTION AND VENUE. EACH OF THE PARTIES SUBMITS TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE OF
UTAH IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND AGREES THAT ALL CLAIMS IN RESPECT OF THE ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN ANY SUCH COURT. EACH PARTY ALSO AGREES NOT TO BRING ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY OTHER COURT.
EACH OF THE PARTIES WAIVES ANY DEFENSE OF INCONVENIENT FORUM TO THE MAINTENANCE
OF ANY ACTION OR PROCEEDING SO BROUGHT AND WAIVES ANY BOND, SURETY, OR OTHER
SECURITY THAT MIGHT BE REQUIRED OF ANY OTHER PARTY WITH RESPECT THERETO. ANY
PARTY MAY MAKE SERVICE ON ANY OTHER PARTY BY SENDING OR DELIVERING A COPY OF THE
PROCESS (I) TO THE PARTY TO BE SERVED AT THE ADDRESS AND IN THE MANNER PROVIDED
FOR THE GIVING OF NOTICES IN SECTION 8.6 ABOVE OR THE GIVING OF NOTICES IN
SECTION 8.6 ABOVE. EACH PARTY AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR
PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE AND MAY BE ENFORCED BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW OR IN EQUITY.
26
8.10 COUNTERPARTS. This Agreement may be executed simultaneously in one
or more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. A facsimile copy of any
counterpart signature page to this Agreement shall be valid as an original.
8.11 HEADINGS. The table of contents and the headings of the sections
and subsections of this Agreement are inserted for convenience only and will not
constitute a part hereof.
8.12 ENTIRE AGREEMENT. This Agreement, the Disclosure Schedule and the
exhibits and other writings attached to or delivered at Closing in connection
with this Agreement, together they embody the entire agreement and understanding
of the parties hereto in respect of the transactions contemplated by this
Agreement and together they are referred to as this "Agreement" or the
"Agreement." There are no restrictions, promises, warranties, agreements,
covenants or undertakings, other than those expressly set forth or referred to
in this Agreement. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the transaction or
transactions contemplated by this Agreement. Provisions of this Agreement will
be interpreted to be valid and enforceable under applicable Law to the extent
that such interpretation does not materially alter this Agreement; PROVIDED,
HOWEVER, that if any such provision becomes invalid or unenforceable under
applicable Law such provision will be stricken to the extent necessary and the
remainder of such provisions and the remainder of this Agreement will continue
in full force and effect.
8.13 DEFINITION OF MATERIAL ADVERSE EFFECT. "MATERIAL ADVERSE EFFECT"
with respect to a party means a material adverse change in or effect on the
business, operations, financial condition, properties or liabilities of that
party taken as a whole; provided, however, that a Material Adverse Effect will
not be deemed to include (i) changes as a result of the announcement of this
transaction, (ii) events or conditions arising from changes in general business
or economic conditions or (iii) changes in generally accepted accounting
principles.
SIGNATURE PAGE FOLLOWS
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PROFILE DIAGNOSTIC SCIENCES, INC. PENGE CORP.
By: /S/ XXXXXXX XXXXXX By: /S/ XXXX XXXXXXX
---------------------------------- ----------------
Xxxxxxx X. Xxxxxx, President By: Xxxx Xxxxxxx
Its:CEO
PENGE ACQUISITION CORP.
By: /S/ XXXXXXX XXXXXX
----------------------------------
Xxxxxxx X. Xxxxxx, President
SIGNATURE PAGE - MERGER AGREEMENT
28
EXHIBIT 1.2
Articles of Merger
29
EXHIBIT 5.4(C)(I)
Indemnification Agreement
30
Penge Corp.
0000 Xxxxxxx Xxxxxx Xxxxxx, Xxxxx 0-000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxx Xxxxxxx, CEO
Profile Diagnostic Sciences, Inc.
0000 X. 0000 Xxxxx
Xxxxx Xxxxx, Xxxx 00000
Re: Indemnity Agreement pursuant to the Agreement and Plan of
Merger ("Merger Agreement"), among Penge Corp., a Nevada corporation
("Penge"), Penge Acquisition Corp., a Nevada corporation ("Merger
Subsidiary"), and Profile Diagnostic Sciences, Inc., a Delaware
corporation ("Profile" together with Penge and Merger Subsidiary, the
"Parties"); payment of the sum of $150,000 to Tryant LLC, a Delaware
limited liability company ("Tryant"); and issuance of shares of Profile
common stock to Tryant
Gentlemen:
In partial consideration of the closing of the transactions
contemplated by the Merger Agreement and all other related agreements (the
"Closing"), the issuance by Profile to Tryant at or before the Closing of shares
of Profile common stock as set forth below, and Penge's payment to Tryant
$150,000 ($50,000 of which has already been paid) as set forth in the Merger
Agreement, the Parties agree as follows:
1. Tryant shall indemnify and hold Penge, its officers, directors, employees and
agents and each person, if any, who controls Penge within the meaning of Section
15 of the Securities Act of 1933, as amended (the "Securities Act") or Section
20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
stockholders of Penge and, following the Closing, Profile and all of its then
officers, directors, employees and agents and each person, if any, who then
controls Profile within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, harmless from and against any and all
liabilities (and all expenses related to the defense, compromise or settlement
of any action with respect to such liabilities (including attorneys' fees)) (a)
of any type or nature whatsoever of Profile existing at the Closing or arising
after the Closing but relating to acts or omissions occurring at or prior to
Closing, including but not limited to the expenses of Profile owed to Tryant for
advances, loans or services or otherwise that were incurred prior to the Closing
and audit fees for the preparation by Profile's auditors of its financial
statements for the period ended June 30, 2005, or (b) arising as a result of any
breach by Profile or Merger Subsidiary of, or any inaccuracy in, any of
representations, warranties or covenants under the Merger Agreement at or prior
to the Closing (including any diminution in value arising from any such
inaccuracy or breach).
31
2. In case any action shall be commenced involving any person in respect of
which indemnity may be sought pursuant hereto (the "Indemnified Party"), the
Indemnified Party shall notify Tryant in writing. A delay in giving notice shall
only relieve Tryant of liability to the extent Tryant suffers actual prejudice
because of the delay. Tryant shall have the right, at its option and expense, to
participate in the defense of such a proceeding or claim, but not to control the
defense, negotiation or settlement thereof, which control shall at all times
rest with the Indemnified Party. The parties hereto agree to cooperate fully
with each other in connection with the defense, negotiation or settlement of any
such proceeding or claim.
3. In consideration of the covenants of Tryant under this Agreement, Profile
shall immediately prior to the Effective Time (and contingent upon the Effective
Time actually occurring) issue to Tryant 759,848 shares of common stock of
Profile.
4. Following completion of the closing, Tryant will pay audit fees associated
with, and assist Profile in providing, two years audited income statements and a
one year audited balance sheet for the period ended June 30, 2005.
5. The parties agree that all representations and warranties of Profile and
Merger Subsidiary under the Merger Agreement shall survive the Closing for a
period of one year following the Closing. At any time, and from time to time,
each party will execute such additional instruments and take such action as may
be reasonably requested by the other party to carry out the intent and purposes
of this letter agreement (this "Agreement").
6. Tryant represents and warrants to Penge that Profile is presently in
compliance with all requirements applicable to it as an entity whose stock is
quoted on the NASD "pink sheets," including any requirements arising as a result
of the reverse stock split effected by Profile as of June 27, 2005. The CUSIP
number applicable to the common stock of Profile following such reverse stock
split is 743157 30 7.
7. Any failure on the part of any party hereto to comply with any of its
obligations, agreements or conditions hereunder may be waived only by written
consent of the party to whom such compliance is owed.
8. All notices and other communications hereunder shall be in writing and shall
be deemed to have been given if delivered in person or sent by prepaid
first-class registered or certified mail, return receipt requested, as follows:
If to Tryant: 0000 X. 0000 Xxxxx Xxxxx Xxxxx, Xxxx 00000
If to Penge: 0000 Xxxxxxx Xxxxxx Xxxxxx, Xxxxx 0-000
Xxx Xxxxx, Xxxxxx 00000
32
If to Profile: 0000 Xxxx 0000 Xxxxx
Xxxxx Xxxxx, Xxxx 00000
9. This Agreement constitutes the entire agreement between the parties and
supersedes and cancels any other agreement, representation or communication,
whether oral or written, between the parties hereto relating to the transaction
contemplated herein or the subject matter hereof.
10. This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Utah without giving effect to principles of
conflicts of laws, and any action to enforce the terms and provisions hereof may
only be brought in the federal and state courts situated in Salt Lake County,
Utah.
11. This Agreement shall inure to the benefit of, and be binding upon, the
parties hereto and their successors and assigns.
12. This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
13. In the event of default hereunder by either party, the prevailing party in
any proceeding to enforce this Agreement shall be entitled to recover attorney's
fees and costs and such other damages as may have been caused by the default of
the defaulting party.
14. This Agreement shall survive the Closing.
TRYANT, LLC
Dated: ___________________ By__________________________________
Xxxxxxx X. Xxxxxx, Manager
PROFILE DIAGNOSTIC SCIENCES, INC.
Dated: ___________________ By_________________________________
Xxxxxxx X. Xxxxxx, President
PENGE CORP.
Dated: ___________________ By_________________________________
Xxxx Xxxxxxx, CEO
33
EXHIBIT 5.4(C)(II)
Lock-Up/Leak-Out and Registration Rights Agreement
34
LOCK-UP/LEAK-OUT AND
REGISTRATION RIGHTS AGREEMENT
THIS LOCK-UP/LEAK-OUT AGREEMENT (the "Agreement") is made and entered
into as of June 30, 2005, between Profile Diagnostic Sciences, Inc., a Delaware
corporation (the "Company"), and Tryant LLC, a Delaware limited liability
company ("Tryant" or the "Shareholder").
RECITALS
WHEREAS, the Company intends to enter into an Agreement and Plan of
Merger (the "Merger Agreement") between the Company; a wholly-owned Nevada
subsidiary of the Company ("Subsidiary"); and Penge Corp., a Nevada corporation
("Penge"), pursuant to which the execution and delivery of this Agreement is a
condition precedent to the closing of the Merger Agreement; and
WHEREAS, all capitalized terms not defined herein shall have the
meanings ascribed to them in the Merger Agreement; and
WHEREAS, in order to facilitate the consummation of the transactions
contemplated by the Merger Agreement and to provide for an orderly market for
the post-Merger common stock of the Company (the " Common Stock"), the Company
and Tryant have agreed to enter into this Agreement and to restrict the sale,
assignment, transfer, conveyance, hypothecation or alienation of such Common
Stock, all on the terms set forth below.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Notwithstanding anything contained in this Agreement, the
Shareholder may transfer his/its shares of Common Stock to his/its affiliates,
partners in a partnership, subsidiaries and trusts, or spouses and lineal
descendants for estate planning purposes, provided that the transferee (or the
legal representative of the transferee) executes an agreement to be bound by all
of the terms and conditions of this Agreement in connection with the resale of
the Common Stock acquired.
2. In the event that the Company files a registration statement with
the Securities and Exchange Commission (the "SEC") for the Common Stock (a
"Registration Statement"), Tryant and succeeding holders of its Common Stock are
hereby granted piggy-back registration rights for all previously unsold shares
of Common Stock held by Tryant at the Effective Time, without cost or expense to
them, save for their respective attorneys' fees and underwriting costs and sales
commissions related to the sale of their Common Stock. Notwithstanding the
foregoing, if the SEC or any other regulatory agency or the Company determines
that the securities held by Tryant and its designees are subject to registration
requirements imposed by the so-called Xxxxx Letter correspondence of the SEC
dated January 21, 2000, Tryant and its designees are hereby granted piggy-back
registration rights on all Common Stock then held by Tryant and its designees on
the date of any such determination; and the Company shall be required to file a
registration statement with the SEC at its sole cost and expense within six (6)
months of any such determination, for the benefit of such holders.
35
3. Except as otherwise expressly provided herein, and except as the
Shareholder may be otherwise restricted from selling shares of Common Stock
under applicable United States or state securities laws, rules and regulations,
the Shareholder may only sell Common Stock subject to the following conditions
for the twenty-four (24) months commencing on the effective date of the
Registration Statement (the "Lock-Up/Leak-Out Period"):
3.1 With respect to fifty percent (50%) of the shares of
Common Stock owned by the Shareholder, the Shareholder shall be allowed
to sell 1/12th of such shares of Common Stock per month for the first
twelve (12) months of the Lock-Up/Leak-Out Period.
3.2 With respect to the remaining fifty percent (50%) of the
shares of Common Stock owned by the Shareholder, the Shareholder shall
be allowed to sell 1/12th of such shares of Common Stock per month for
the second twelve (12) months of the Lock-Up/Leak-Out Period.
3.3 All shares of Common Stock sold in accordance with
Sections 3.1 and 3.2 above shall be sold on a non-cumulative basis,
meaning that if Shareholder sold no Common Stock sold during a month
while Common Stock was qualified to be sold under Sections 3.1 and 3.2
above, those unsold shares could not be sold in the next successive
month; and like wise, if only part of the Common Stock that could be
sold during any monthly period was sold, the Shareholder may not
cumulate the unsold portion of that month's allotment to the next
month, and so forth. The Shareholder agrees that all sales of his/its
Common Stock will be made at no less than the best "asked" prices, and
no sales will be made at the "bid" prices for the Common Stock.
3.4 Except as otherwise provided herein, all Common Stock
shall be sold in "broker's transactions" and the Shareholder will
comply with the "manner of sale" requirements set forth in Rule 144(f)
under the Securities Act of 1933, as amended, during the
Lock-Up/Leak-Out Period.
3.5 An appropriate legend describing this Agreement shall be
imprinted on each stock certificate representing Common Stock covered
hereby, and the transfer records of the Company's transfer agent shall
reflect such appropriate restrictions.
3.6 The Shareholder agrees that he/it will not engage in any
short selling of the Common Stock during the Lock-Up/Leak-Out Period.
36
4. Notwithstanding anything to the contrary set forth herein,
the Company may, in its sole discretion, at any time and from time to
time, waive any of the conditions or restrictions contained herein to
increase the liquidity of the Common Stock or if such waiver would
otherwise be in the best interests of the development of the trading
market for the Common Stock.
5. In the event of a "Change of Control" (as defined
hereafter), then this Agreement shall terminate as of the closing of
such event and the Common Stock restricted pursuant hereto shall be
released from such restrictions. For the purposes of this paragraph,
"Change of Control" means a change in the beneficial ownership of the
Company after the Effective Time upon and as a result of:
(a) The acquisition by any "person" (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), other than
persons who were shareholders of the Company immediately after
the Effective Time, the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or any corporation or other entity owned, directly
or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of
Common Stock of beneficial ownership (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, in a single
transaction or a series of related transactions of securities
of the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities; or
(b) The shareholders of the Company approving and the
Company consummating a merger or consolidation of the Company
with any other entity, or the sale of all or substantially all
of the Company's assets to another entity, other than (A) a
merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than fifty percent (50%) of the
combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such
merger or consolidation, (B) a merger or consolidation
effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as herein above
defined) acquires 50 percent or more of the combined voting
power of the Company's then outstanding securities, or (C) a
sale or other transfer of all or substantially all of the
Company's assets to another entity if the shareholders of the
Company immediately prior to the sale own immediately after
the sale more than fifty percent (50%) of the combined voting
power of the equity interests in the acquirer.
6. Except as otherwise provided in this Agreement or any other
agreements between the parties, the Shareholder shall be entitled to
his/its respective beneficial rights of ownership of the Common Stock,
including the right to vote the Common Stock for any and all purposes.
37
7. The number of shares of Common Stock included in any
monthly allotment that can be sold by the Shareholder and the per share
price restrictions covered by this Agreement shall be appropriately
adjusted should the Company declare a dividend or distribution, undergo
a forward split or a reverse split or otherwise reclassify its shares
of Common Stock.
8. This Agreement may be executed in any number of
counterparts with the same force and effect as if all parties had
executed the same document.
9. All notices, instructions or other communications required
or permitted to be given pursuant to this Agreement shall be given in
writing and delivered by certified mail, return receipt requested,
overnight delivery or hand-delivered to all parties to this Agreement,
to the Company at 0000 Xxxx 0000 Xxxxx, Xxxxx Xxxxx, Xxxx 00000; and to
the Shareholder, at the address below. All notices shall be deemed to
be given on the same day if delivered by hand or on the following
business day if sent by overnight delivery or the second business day
following the date of mailing.
10. The resale restrictions on the Common Stock set forth in
this Agreement shall be in addition to all other restrictions on
transfer imposed by applicable United States and state securities laws,
rules and regulations.
11. If the Company or the Shareholder fail to fully adhere to
the terms and conditions of this Agreement, such party shall be liable
to the other party for any damages suffered by reason of any such
breach of the terms and conditions hereof. The Shareholder agrees that
in the event of a breach of any of the terms and conditions of this
Agreement by the Shareholder, that in addition to all other remedies
that may be available in law or in equity to the Company, a preliminary
and permanent injunction, without bond or surety, and an order of a
court requiring the Shareholder to cease and desist from violating the
terms and conditions of this Agreement and specifically requiring the
Shareholder to perform his/its obligations hereunder is fair and
reasonable by reason of the inability of the parties to this Agreement
to presently determine the type, extent or amount of damages that the
Company may suffer as a result of any breach or continuation thereof.
12. This Agreement sets forth the entire understanding of the
parties hereto with respect to the subject matter hereof, and may not
be amended except by a written instrument executed by the parties
hereto.
13. This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah applicable to contracts
entered into and to be performed wholly within said State; and the
Company and the Shareholder agree that any action based upon this
Agreement may be brought in the United States and state courts of Utah
only, and each submits himself/itself to the jurisdiction of such
courts for all purposes hereunder.
14. In the event of default hereunder, the non-defaulting
parties shall be entitled to recover reasonable attorney's fees
incurred in the enforcement of this Agreement.
38
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as of the day and year first above written.
PROFILE DIAGNOSTIC SCIENCES, INC.
Date: _______________. By___________________________________
Xxxxxxx X. Xxxxxx, President
SHAREHOLDER:
_______________________________________
Print Name
Date: _______________. _______________________________________
Sign Name
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Company Disclosure Schedule
40
Parent Disclosure Schedule
41
