EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
BY AND AMONG
EC2000, INC.,
TVP CAPITAL CORP., XXXXX & XXXXXXX, LLP AND XX. XXXXX XXXXXXXX
GRAND ACQUISITION CORP.,
GRAND ENTERPRISES, INC.,
AND
KILKENNY GROUP LLC, RATHGAR LLC, FINGLAS LLC,
MONKSTOWN LLC, AND CAPITAL ADVISORY PARTNERS, LLC
TABLE OF CONTENTS
1. Definitions
2. The Merger
3. Conversion of the Company Shares
4. Obligations to the Company Shareholders
5. Representations and Warranties of the Principal Company
Shareholders
6. Representations and Warranties of the Company
7. Representations and Warranties of the Parent
8. Covenants of the Principal Company Shareholders
9. Covenants of the Parent
10. Mutual Covenants
11. Conditions to the Closing
12. The Closing
13. Indemnification
14. Survival of Provisions
15. Expenses
16. Miscellaneous
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SCHEDULES:
Schedule 5(e) Company Shareholders and Share Ownership
Schedule 5(f) Broker, finder or advisor engaged by a Principal Company
Shareholder
Schedule 6(g) Indebtedness, Liabilities, and Other Obligations Not
Reserved Against in the Company's September 30, 2000
Balance Sheet
Schedule 6(h)(5) Liability for Borrowed Money and Agreements Relating to
Incurring Additional debt
Schedule 6(h)(14) Lease of Real property
Schedule 6(k) Litigation, audit, investigation or other proceedings
pending or threatened against the Company
Schedule 6(m) Licenses and Permits
Schedule 6(o) Contracts of the Company, Excluding Contracts in the
Ordinary Course of Business Which are Not Material and
Which Do Not Have an Aggregate Future Liability of More
than $10,000
Schedule 6(q) Lease of Real Property
Schedule 6(r) Employee Benefit Plans
Schedule 6(s) General Liability, Product Liability, Fire and Casualty,
Motor Vehicle, and Other Insurance
Schedule 6(v) Suppliers and Customers Doing Business in Excess of
$10,000
Schedule 6(w) Contracts between Company and Affiliates
Schedule 6(aa) Directors, officers, Safes, ETC. and Persons with
Authorized Access, and Bank Accounts and Authorized
Signatories
Schedule 6(bb) Intellectual Property of the Company
Schedule 6(cc) Broker, finder or advisor engaged by the Company
Schedule 7(g) Litigation, audit, investigation or other proceedings
pending or threatened against Newco
Schedule 7(h) Contracts of Newco, Excluding Contracts in the Ordinary
Course of Business Which are Not Material and Which Do
Not Have an Aggregate Future Liability of More than
$10,000
Schedule 7(i) Intellectual Property of Newco
Schedule 14(b) Principal Company Shareholders - Personal Guarantees
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EXHIBITS:
Exhibit 6(b) Board of Directors Resolutions of the Company
Exhibit 7(b) Board of Directors Resolutions of the Parent and Newco
Directors
Exhibit 13(b) Form of Opinion of the Company's Counsel
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
This Agreement and Plan of Reorganization and Merger (this "Agreement")
is executed and delivered effective as of March 25, 2001 by and among EC2000,
Inc., a Delaware corporation (the "Company"), Grand Acquisition Corp., a
Delaware corporation ("Newco"), Grand Enterprises, Inc., a Delaware corporation
(the "Parent"), the Principal Company Shareholders (as the term "Principal
Company Shareholders" is hereinafter defined), and the Parent Shareholders (as
the term "Parent Shareholders" is hereinafter defined) (each of the foregoing
individually a "Party," collectively the "Parties").
WHEREAS, The Company, the Parties desire to cause the merger of the
Company into Newco (the "Merger"); and
WHEREAS, the parties desire that the Merger shall constitute a
"reorganization" within the meaning of Section 368(a)(1)(A) and (a)(2)(D) of the
Code (as the term "Code" is hereinafter defined);
NOW, THEREFORE, for and in consideration of the premises and the mutual
promises, agreements, representations, warranties, and covenants hereinafter set
forth, the Parties hereby agree as follows:
1. DEFINITIONS
-----------
Certain of the capitalized terms used in this Agreement shall have the
following meanings unless the context otherwise specifically requires:
"AFFILIATE" means any of the Company Shareholders (as the term "Company
Shareholders" is hereinafter defined) and any parent, grandparent, child,
brother or sister, or spouse of any of the foregoing, and any corporation,
partnership, trust, or other entity controlled by or under common control with
any such persons.
"CLOSING" means the completion of the transactions contemplated in this
Agreement as provided in Section 12 below.
"CLOSING DATE" means the date on which the Closing is completed.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY SHAREHOLDERS" means the persons named on the attached Schedule
5(e), representing all of the shareholders of the Company.
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"COMPANY SHARES" means all of the issued and outstanding shares of
capital stock of the Company, the same being eighteen million five hundred
thousand (18,500,000) shares of $.001 par value common stock.
"EFFECTIVE DATE" has the meaning given in Section 2(b) below.
"PARENT SHARES" means the authorized common stock of the Parent, par
value $.0001 per share, now issued and outstanding, and to be issued hereunder,
and "Parent Share" means one (1) share of the Parent Shares.
"PARENT SHAREHOLDERS" means Kilkenny LLC, Rathgar LLC, Finglas LLC,
Monkstown LLC, and Capital Advisory Partners, LLC, representing all of the
shareholders of the Parent.
"PRINCIPAL COMPANY SHAREHOLDERS" means TVP Capital, Xxxxx & Xxxxxxx,
LLP and Xx. Xxxxx Xxxxxxxx.
"SECTION" means, unless otherwise indicated, a section of this
Agreement.
"TAX" OR "TAXES" means all Federal, state, local, and foreign taxes and
tax assessments of any kind imposed on the Company for all periods prior to the
Effective Date, including all interest, penalties, and additions imposed with
respect to such amounts.
2. THE MERGER
----------
(a) THE MERGER. Upon the terms and subject to the conditions set forth
herein, at the Effective Date the Company shall be merged with and into Newco,
the separate existence and corporate organization of the Company shall cease,
and thereupon the Company and Newco shall be a single corporation (the
"Surviving Corporation"). The name of the Surviving Corporation shall be EC
International, Inc. The Merger shall have the effects set forth in Section 259
of the General Corporation Law of the State of Delaware.
(b) EFFECTIVE DATE OF THE MERGER. The Merger shall become effective on
the date of the Closing provided however a properly executed certificate of
merger is duly filed with the Secretary of State of the State of Delaware (which
filing date may also be the Closing Date).
(c) CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate of
Incorporation of Newco in effect immediately prior to the Effective Date shall
be the Certificate of Incorporation of
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the Surviving Corporation. The By-Laws of Newco in effect immediately prior to
the Effective Date shall be the By-Laws of the Surviving Corporation.
(d) DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The number of
directors of the Parent and the Surviving Corporation shall be five (5) all of
whom shall be chosen by the directors of the Company, and shall hold office from
the Closing Date until their respective successors are duly elected or appointed
and qualify in the manner provided in the Certificate of Incorporation and the
By-Laws of the Parent and the Surviving Corporation, respectively, or as
otherwise provided by law. The officers of the Company immediately prior to the
Closing Date shall be the officers of the Parent and the Surviving Corporation,
respectively, and shall hold office from the Closing Date until their respective
successors are duly elected or appointed and qualify in the manner provided in
the Certificate of Incorporation and the By-Laws of the Parent and the Surviving
Corporation, respectively, or as otherwise provided by law.
3. CONVERSION OF THE COMPANY SHARES
--------------------------------
(a) THE COMPANY SHARES. At the Closing, the Company Shareholders shall
be issued under this Agreement, pro rata, eighteen million five hundred thousand
(18,500,000) Parent Shares.
(b) TRANSFER TAXES. If any certificates for any of the Parent Shares
are to be issued in a name other than that in which the certificate(s)
representing the Company Shares surrendered in exchange therefor is registered,
it shall be a condition of such exchange that the person requesting such
exchange shall pay any transfer or other taxes required by reason of the
issuance of certificates for such Parent Shares in a name other than that of the
registered holder of the certificate surrendered, or shall establish to the
satisfaction of the Parent that such tax has been paid or is not applicable.
Notwithstanding the foregoing, no Party shall be liable to a Company Shareholder
for any Parent Shares or dividends thereon or, in accordance with Section 3(c)
below, proceeds of the sale of fractional interests, delivered to a public
official pursuant to applicable escheat laws.
(c) NO FRACTIONAL SECURITIES. No certificates or scrip representing
fractional Parent Shares shall be issued pursuant to this Section 3, and no
capital change shall relate to any fractional security, and such fractional
interests shall not entitle the owner thereof to vote or to any rights of a
security holder. In lieu of any fractional shares, each Company Shareholder who
would otherwise have been entitled to a fraction of a Parent
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Share will be paid cash at the time that the Parent Shares due are delivered to
him, in an amount equal to the fair market value of such fraction.
(d) NO REGISTRATION RIGHTS. The Parent Shares to be issued and
delivered hereunder shall be unregistered and subject to the restrictions of
Rule 144 of the Securities Act of 1933, as amended.
4. THE COMPANY'S OBLIGATIONS
TO THE COMPANY SHAREHOLDERS
---------------------------
Neither the Parent nor Newco shall assume (or be obligated to pay,
perform, discharge, or guarantee) any liabilities or obligations (whether
absolute or contingent, disclosed or undisclosed) of the Company to any Company
Shareholder or Affiliate.
5. REPRESENTATIONS AND WARRANTIES
OF THE PRINCIPAL COMPANY SHAREHOLDERS
-------------------------------------
Each Principal Company Shareholder hereby separately represents and
warrants to the Parent and Newco as follows:
(a) AUTHORIZATION. The execution, delivery, and performance of this
Agreement has been duly authorized by all necessary action on the part of such
Principal Company Shareholder.
(b) NO CONFLICTS. Neither the execution and delivery of this Agreement
by such Principal Company Shareholder or any other document or instrument to be
executed by the Principal Company Shareholders pursuant to this Agreement or
otherwise in connection herewith (collectively the "Principal Company
Shareholder Documents"), nor the consummation by such Principal Company
Shareholder of the transactions contemplated hereby or thereby, will result in
any breach of or constitute a default (or with notice or lapse of time or both
would become a default), or give to others any rights of termination,
acceleration, or cancellation, or result in the creation of any lien, charge, or
encumbrance upon any of the assets or properties of such Principal Company
Shareholder, under the Articles of Incorporation or the By-Laws of the Company,
or the terms of any contract, instrument, or other agreement to which such
Principal Company Shareholder is a party or is otherwise bound, or any judgment,
decree, order, statute, law, ordinance, rule, or regulation applicable to such
Principal Company Shareholder.
(c) BINDING EFFECT. Such Principal Company Shareholder has the right,
power, capacity, and authority to execute, deliver, and
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perform this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by such Principal Company
Shareholder, and constitutes, and upon execution and delivery of each Principal
Company Shareholder Document, will constitute, the legal, valid, and binding
obligation of such Principal Company Shareholder, enforceable against such
Principal Company Shareholder in accordance with its respective terms, subject
to applicable bankruptcy, insolvency, and other similar laws affecting the
enforceability of creditors' rights generally and the discretion of the courts
with respect to equitable remedies.
(d) NO CONSENTS. No consent, approval, license, permit, order, or
authorization of, or registration, declaration, or filing with, any court,
administrative agency, commission, or other governmental authority or
instrumentality, or any other third party, is necessary or otherwise required to
be obtained or made in connection with the execution, delivery, or performance
of this Agreement by such Principal Company Shareholder or with respect to the
consummation by such Principal Company Shareholder of the transactions
contemplated hereby.
(e) OWNERSHIP OF COMMON STOCK. To the knowledge of such Principal
Company Shareholder, the Company Shareholders collectively own all of the
Company Shares, such Company Shareholders are the owners, free and clear of all
liens, claims, pledges, encumbrances, options, charges, restrictions, and
adverse rights or interests whatsoever, of the number of Company Shares
reflected on the attached Schedule 5(e) and no Company Shareholder is a party to
or bound by any option, contract, or other commitment relating to any issued or
unissued stock or any other security issued or to be issued by the Company. By
virtue of such Company Shareholder's ownership of the Company Shares reflected
on Schedule 5(e), such Company Shareholder owns the percentage of the total
issued and outstanding capital stock of the Company set forth beside such
Company Shareholder's name on Schedule 5(e). Other than as set forth on Schedule
5(e), such Company Shareholder owns no capital stock or other securities of the
Company or any right of any kind to have any such capital stock or other
security issued. To the knowledge of such Principal Company Shareholder, no
former or present holder of the Company Shares of any Company Shareholder has
any legally cognizable claim against the Company based on any transfer by such
Company Shareholder of the Company Shares owned by such Company Shareholder as
reflected on Schedule 5(e). To the knowledge of such Principal Company
Shareholder, no action or failure to act of any Company Shareholder (or of his
predecessor in interest) of any nature or kind with respect to any capital stock
or other securities (including offers, options, warrants, or
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convertible debt or other securities with respect thereto) of the Company, or
any corporation which has been merged into the Company, has given or may give
rise to any claim or action by any person involving such a matter which is
enforceable against the Company Shares of such Company Shareholder, the Company,
or the Parent, and, to the knowledge of such Principal Company Shareholder, no
fact or circumstance exists which could give rise to any such right, claim, or
action on behalf of any person.
(f) BROKERS AND ADVISORS. Except as shown on the attached Schedule
5(f), no Principal Company Shareholder has engaged the services of any broker,
finder, or advisor, nor has he taken any action which would give rise to a valid
claim against any Party for a brokerage commission, finder's fee, or like
payment.
(g) INVESTMENT INTENT. To the knowledge of such Principal Company
Shareholder, each Company Shareholder is acquiring the Parent Shares hereunder
for his own account, for investment purposes only, and not with the intent or
view to resell, fractionalize, or further distribute such shares.
(h) PARENT SHARES NOT REGISTERED. Each Principal Company Shareholder
acknowledges and understands that: (1) the offer and the issuance of the Parent
Shares hereunder has not been registered with the Securities and Exchange
Commission or any other State securities agency, and is being made pursuant to
exemptions from the registration provisions of the Securities Act of 1933, as
amended, and any other applicable State securities laws; (2) the Parent Shares
are restricted under applicable securities laws and must be held indefinitely
unless the offer and sale thereof is subsequently registered under the
Securities Act of 1933, as amended, and any other State securities laws, or
unless an exemption from registration is available; (3) certificates
representing the Parent Shares will bear an appropriate restrictive legend to
this effect; and (4) the Principal Company Shareholders have informed the other
Company Shareholders, in writing, as to the foregoing.
(i) APPROVAL OF MERGER. The Principal Company Shareholders will vote
their shares of the Company in favor of the Merger.
(j) ACCREDITED INVESTOR. Each Principal Company Shareholder is an
Accredited Investor (as the term "Accredited Investor" is defined in Section
2(15) of the Securities Act of 1933, as amended, and Rule 501 of Regulation D
promulgated thereunder).
(k) DISCLOSURE. No representation or warranty made by the Company in
this Agreement or in any statement, certificate, or
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other document delivered to the Parent or Newco by the Company or any Principal
Company Shareholder in connection herewith contains or will contain any untrue
statement of a material fact, or omits to state any material fact necessary to
make the statements contained herein or therein not misleading.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company warrants to the Parent and Newco as follows:
(a) ORGANIZATION AND STANDING. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and any other State in which the failure to be qualified or registered
as a foreign corporation would have a material adverse impact on its business,
and has all requisite power and authority to own its assets and carry on its
business as presently conducted, and to enter into and perform this Agreement.
The Company does not own any controlling interest in any corporation,
partnership, joint venture, or other business entity. Copies of the Articles of
Incorporation and the By-Laws of the Company have been delivered to Parent and
Newco, and such copies are true, complete, and correct, and in full force and
effect.
(b) AUTHORIZATION; BINDING EFFECT. The execution, delivery, and
performance of this Agreement has been duly authorized by all necessary action
on the part of the Company. A certified copy of the resolutions adopted by the
Board of Directors of the Company in this regard is attached as Exhibit 6(b).
This Agreement has been duly executed and delivered by the Company and
constitutes, and upon execution and delivery will constitute, the legal, valid,
and binding obligation of the Company, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, and other similar laws
affecting the enforceability of creditors' rights generally and the discretion
of the courts with respect to equitable remedies.
(c) NO CONFLICTS. Neither the execution and delivery of this Agreement
by the Company or any other document or instrument to be executed by the Company
pursuant to this Agreement or otherwise in connection herewith (collectively,
the "Company Documents"), nor the consummation by the Company and the Company
Shareholders of the transactions contemplated hereby or thereby, will result in
any breach of or constitute a default (or, with notice or lapse of time or both,
would become a default), or give to others any rights of termination,
acceleration, or cancellation, or result in the creation of any lien, charge, or
encumbrance upon any of the assets or properties of the Company, under the
Articles of
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Incorporation or the By-Laws of the Company, or the terms of any contract,
instrument, or other agreement to which the Company is a party or is otherwise
bound, or any judgment, decree, order, statute, law, ordinance, rule, or
regulation applicable to the Company.
(d) CAPITALIZATION OF THE COMPANY. The Company's authorized capital
stock consists of (1) eighty million (80,000,000) shares of common stock, $.001
par value per share, of which eighteen million five hundred thousand
(18,500,000) shares are issued and outstanding, and owned by the Company
Shareholders, and (2) twenty million (20,000,000) shares of preferred stock,
$.001 par value per share, none of which are issued or outstanding. All issued
and outstanding shares of capital stock of the Company have been duly
authorized, are validly issued and outstanding, are fully paid and
non-assessable, and have not been issued in violation of any preemptive rights.
The Company has no other shares of capital stock or other securities authorized,
issued, or outstanding. The Company is not a party to or bound by any option,
warrant, contract, convertible or exchangeable securities, or any other
commitment of any character relating to any capital stock or other security
issued or to be issued by the Company.
(e) OWNERSHIP OF COMMON STOCK. The Company Shares constitute all of the
issued and outstanding shares of capital stock of the Company. No present or
past holder of shares of capital stock of the Company, or their predecessors, or
any other person, has any right to receive or to otherwise have issued to them
any shares of capital stock or other securities of the Company. The Company is
not obligated by contract, operation of law, or otherwise to issue any
additional shares of capital stock or other security, and no third party has any
right to receive from the Company, or its predecessors in interest, any capital
stock or other securities of the Company.
(f) FINANCIAL STATEMENTS. The Company has delivered to the Parent and
Newco true and correct copies of the Company's balance sheet dated December 31,
2000 and the related statement of income and retained earnings for the period
then ended (collectively, the "Financial Statements"). The Financial Statements
have been prepared from the books and records of the Company in accordance with
generally accepted accounting principles consistently applied, and present
fairly in all material respects the financial position and results of operations
of the Company as of the dates thereof and for the periods covered thereby.
(g) NO UNDISCLOSED LIABILITIES. Except as otherwise expressly reflected
or reserved against in the Company's December 31, 2000
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balance sheet or as expressly set forth in the attached Schedule 6(g), the
Company has no indebtedness or liabilities or other obligations of any nature
whatsoever (whether direct or indirect, asserted or unasserted, known or
unknown, accrued, absolute, contingent, or otherwise), except accounts payable
and other liabilities incurred in the ordinary and customary course of business
since December 31, 2000, except for legal fees incurred by the Company after the
signing of a letter of intent with the Parent dated December 15, 2000.
(h) ABSENCE OF ADVERSE CHANGES OR EVENTS. Since April 6, 2000 the
Company has conducted its business only in the ordinary course, consistent in
all material respects with past practice, and there has not occurred any
material adverse change in the business, assets, liabilities, financial
condition, or results of operations of the Company, and since April 6, 2000 the
Company has not:
(1) Amended its Certificate of Incorporation or its By- Laws;
(2) Declared or paid any dividend or made any distribution or
payment of any kind in respect of its capital stock;
(3) Amended or modified any collective bargaining agreement (except
as required by law);
(4) Entered into, or adopted, any employee benefit plan or any
employment contract, or increased the salaries or compensation of its officers
or other employees, or paid any bonuses to any of such officers or other
employees (other than bonuses in the ordinary course of the Company's business
consistent with the Company's past practice);
(5) Except to the extent reflected on the attached Schedule
6(h)(5), incurred any liability for borrowed money, encumbered any of its
assets, or entered into any agreements relating to incurring additional debt,
other than incurring accounts payable in the ordinary course of business
consistent in all material respects with past practice;
(6) Acquired or agreed to acquire by merging or consolidating with,
purchasing substantially all of the assets of, or otherwise, any business
corporation, partnership, association, or other entity or individual;
(7) Sold or otherwise disposed of any real property or other
tangible assets, including capital or fixed assets, in excess
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of five thousand dollars ($5,000) per item or ten thousand dollars ($10,000) in
the aggregate, other than the sale of inventory in the ordinary course of
business;
(8) Hired any new management employees;
(9) Made commitments or entered into any agreement or contract
outside the ordinary course of business which involves payments from the Company
in excess of ten thousand dollars ($10,000) individually or twenty thousand
dollars ($20,000) in the aggregate;
(10) Permitted or allowed any assets or properties to become
subject to any mortgage, pledge, lien, encumbrance, restriction or charge of any
kind except: (A) such as existed on December 31, 2000, (B) liens imposed by law,
and (C) those incurred in the ordinary course of business for obligations not
yet due and payable to landlords, carriers, warehouses, laborers, materialmen,
and the like;
(11) Canceled any material indebtedness to the Company or waived
any claims or rights of substantial value;
(12) Entered into any contract, lease, commitment, arrangement, or
understanding with any Affiliate;
(13) Made any change in any method of accounting or accounting
practice or policy other than as required by generally accepted accounting
principles;
(14) Except as shown on the attached Schedule 6(h)(14), entered
into any lease of real property or any other material lease involving any other
property, or amended, modified, terminated, or permitted to lapse any lease of
real property or any other material lease of personal property;
(15) Entered into any agreement the terms of which would be
violated by the consummation of the transactions contemplated hereby;
(16) Changed its credit collection or billing procedures or
policies;
(17) Effectuated a "plant closing" or "mass layoff" as those terms
are defined in the Worker Adjustment and Retraining Notification Act of 1988,
affecting in whole or in part any employment facility, operating unit,
department, or employees of the Company;
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(18) Made any change or revoked any tax election or entered into or
amended any agreement or settlement with any taxing authority;
(19) Dealt with any other party concerning the sale of any of the
Company Shares, any merger, consolidation, or sale of all or a substantial
portion of the assets of the Company, or any other similar transaction involving
the Company;
(20) Taken any action which would cause any representation or
warranty of the the Company Shareholders contained herein to become false or
incorrect;
(21) Failed to use the Company's reasonable efforts consistent in
all material respects with past practice to preserve its business organization
intact, keep available the service of its officers and employees, and preserve
the goodwill of its suppliers, customers, dealers, distributors, contractors,
and others doing business with it;
(22) Failed to pay all trade payables and other amounts payable to
creditors as they became due in accordance, and in all material respects, with
past practices (except to the extent any such amounts were reasonably and in
good faith disputed by the Company);
(23) Failed to maintain all buildings, equipment, and other
tangible assets owned or used by the Company in substantially the same condition
and repair as existed as of April 6,2000, ordinary wear and tear excepted; or
(24) Agreed, whether in writing or otherwise, to do any of the
foregoing.
(i) ACCOUNTS RECEIVABLE. All accounts receivable of the Company have
arisen from bona fide transactions in the ordinary course of business and
reflect in all material respects amounts properly due and owed to the Company.
None of the accounts receivable of the Company are subject to any material
counterclaim, right of offset, defense, or other material adverse interest
whatsoever.
(j) INVENTORIES. The inventories of the Company consist in all material
respects of items of a quality and quantity usable and salable in the normal
course of business, the recorded value of all items of inventory which were
obsolete, damaged, or unsalable have been properly written off or down to
realizable market value, or adequate reserves provided therefor, and the values
at which such
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inventories are and will be carried on the books of the Company reflect the
Company's normal inventory valuation policy of stating inventories at the lower
of cost or market.
(k) LITIGATION. Except as shown on the attached Schedule 6(k), there is
no claim, action, suit, litigation, audit, investigation, or other proceeding
pending, or, to the knowledge of the Company, threatened against the Company or
its assets, properties, or business, or the transactions contemplated by this
Agreement, and neither the Company nor its assets or properties are subject to
or bound by any order, writ, injunction, judgment, or decree of any court or
governmental regulatory agency, commission, board, or administrative body.
(l) COMPLIANCE WITH LAWS. The Company, the use and occupancy of its
assets and properties, and the conduct of its business are, and at all times on
or prior to the date hereof have been, in compliance with, and not in violation
of, all Federal, State and local laws, ordinances, rules, regulations, orders,
judgments, and decrees applicable to the Company and its assets, properties, and
business, including, without limitation, all Environmental Laws (as the term
"Environmental Laws" is hereinafter defined), and all laws, rules, and
regulations dealing with antitrust matters, fair trade and competition, and
government corrupt practices.
(m) GOVERNMENTAL LICENSES AND PERMITS. The attached Schedule 6(m) sets
forth a true, correct and complete list of all material governmental licenses,
permits, franchises, and other authorizations held or otherwise maintained by
the Company in connection with the conduct of its business or the ownership or
possession of its assets and properties (the "Licenses and Permits"), other than
nonmaterial local licenses required of businesses generally. All such Licenses
and Permits are in full force and effect, there are no existing violations in
connection therewith, and no proceeding is pending or, to the knowledge of the
Company, threatened with respect to the revocation or limitation of the same.
(n) LABOR MATTERS. None of the Company's employees are covered by a
collective bargaining agreement, and no organizational efforts with respect to
any employees of the Company are pending or, to the knowledge of the Company,
threatened. No formal or otherwise labor dispute, strike, or work stoppage with
respect to any employees of the Company is pending or, to the knowledge of the
Company, is threatened. There are no existing employee claims (other than
nonmaterial health insurance, disability insurance, and workers' compensation
claims in the ordinary and customary course of business, which are fully covered
by insurance), grievances, or
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unfair labor practice complaints pending or outstanding against the Company. The
Company is, and at all times on or prior to the date hereof has been, in
compliance with, and not in violation of, the Fair Labor Standards Act, as
amended, the Age Discrimination in Employment Act, as amended, the National
Labor Relations Act, as amended, the Occupational Safety and Health Act, as
amended, the Vocational Rehabilitation Act of 1973, as amended, and all
applicable Federal and State civil rights laws.
(o) CONTRACTS. Set forth on the attached Schedule 6(o) is a true,
correct, and complete list of: (1) each contract, lease, agreement, or other
commitment, understanding, or arrangement (oral or written) to which the Company
is a party or by which it or any of its assets or properties is otherwise bound
or subject (collectively, the "Contracts"); (2) any employment contract not
terminable at will by the Company without liability or penalty; (3) any lease of
real property; (4) any material lease of personal property; (5) any agreement
for the purchase, sale, or other disposition of any materials, equipment,
supplies, or inventory, or the provision of any services, outside the ordinary
course of business; (6) any covenant not to compete or other contract containing
any restrictions on the operations of the Company; (7) any extraordinary
purchase or sales orders; (8) any employee collective bargaining agreement or
other contract with any labor union; (9) any contract with any Affiliate; (10)
any material license or other agreement relating to any Company intellectual
property; and (11) any note, bond, mortgage, indenture, loan agreement, security
agreement, or deed of trust; but in each case excluding from such Schedule any
Contract in the ordinary course of business which is not material to the Company
and which does not have an aggregate future liability to the Company of more
than ten thousand dollars ($10,000). Each of the Contracts is valid, binding,
and in full force and effect, and is enforceable by the Company in accordance
with its terms in a manner that obtains for, or imposes upon, the parties the
primary benefits and obligations of such agreements, and the Company has not
received any notice terminating, revoking, or rescinding any of the Contracts,
or expressing any interest to do the same and, to the knowledge of the Company,
no other party to any of the Contracts has any intent to take any action to
terminate, rescind, or revoke any of such Contracts. The Company has performed
in all material respects all obligations, and complied in all material respects
with all covenants, required to be performed and complied with by it to date
under the Contracts, and the Company is not (with or without lapse of time, the
giving of notice, or both) in breach of or default under any material provision
of the Contracts and, to the knowledge of the Company, no other party to any of
the Contracts is (with or without the lapse of time, the giving of notice, or
both) in breach of or default thereunder. True, correct, and complete copies of
the
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Contracts have been supplied by the Company to the Parent and Newco.
(p) TAX MATTERS. The Company, and any affiliated group (within the
meaning of Section 1504 of the Code) of which the Company is or has been a
member, has timely filed all Tax returns, reports, and forms which it was
obligated to file under applicable law, rule, or regulation with the appropriate
governmental authorities. All such Tax returns, reports, and forms were properly
prepared in accordance with all applicable laws, rules, and regulations, and
truly and accurately reflect the Tax liabilities of the Company for the periods
covered thereby. All Taxes shown to be due on such returns, reports, and forms,
as well as any and all other Taxes required by applicable law, rule, or
regulation to be paid by the Company, have been timely paid in full to the
appropriate taxing authority. No Tax liens have been filed against the Company
or any of its assets or properties, and no claims, audits, investigations, or
proceedings are pending, or to the knowledge of the Company, is threatened with
respect to any Taxes. The Company is not presently bound by any agreements
extending the statute of limitations with respect to any Taxes, and the Company
has not made any election under Section 341(f) of the Code nor has it agreed, or
is it required, to make any adjustment under Section 481 of the Code. The
Company has properly withheld or otherwise collected all Taxes and other amounts
which it was required to withhold or collect under any applicable law,
including, without limitation, any amounts required to be withheld or collected
with respect to employee income tax withholding, social security, unemployment
compensation, sales or use taxes, and all such amounts have been timely remitted
to the proper authorities.
(q) TITLE TO ASSETS AND PROPERTIES. The Company has good, valid, and
marketable title (or in the case of licenses, leases, or other rights in any
agreements, the right to exercise its rights under such agreements) to all the
assets and properties reflected on the Company's December 31, 2000 balance sheet
or thereafter acquired or otherwise used by the Company in the conduct of its
business, except inventories and other nonmaterial assets sold since such date
in the ordinary course of business, in each case free and clear of all liens,
claims, encumbrances, security interests, restrictions, or adverse rights or
interests whatsoever, except: (1) liens and encumbrances with respect to
liabilities reflected on the Company's December 31, 2000 balance sheet or
otherwise expressly disclosed in this Agreement; (2) property taxes for the
current year which are not yet delinquent; (3) with respect to any real
property, liens imposed by law and incurred in the ordinary course of business
for obligations not yet due and payable
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to landlords, warehousemen, laborers, materialmen, and the like; and (4) such
utility easements and minor imperfections of title as do not individually or in
the aggregate materially impair the continued use and operation of such property
in the business of the Company. The attached Schedule 6(q) sets forth a complete
list of all real property and interests in real property owned in fee or leased
by the Company. None of the real property owned or leased by the Company is
subject to any pending or (to the knowledge of the Company) threatened
condemnation proceeding or proceedings to take all or any part thereof by
eminent domain, and no part of any real property owned or leased by the Company
is located within any area designated as a flood plain by any governmental
agency. To the knowledge of the Company, no material part of any of the real
property owned or leased by the Company requires any material structural repair
necessary for the continued use of such property in the manner in which such
property has been historically used in the business of the Company.
(r) EMPLOYEE BENEFIT PLANS.
(1) The attached Schedule 6(r) sets forth a true, correct, and
complete list of each employee pension, profit- sharing, deferred compensation,
severance pay, stock bonus, stock option, stock purchase, bonus, incentive, or
any other form of retirement or compensation plan, and each hospitalization,
dental, vision, or other health plan, vacation, disability, sick pay, accident
insurance, or other welfare plan, fund, program, policy, contract, or
arrangement providing employee benefits, maintained or contributed to by the
Company in which any employees or former employees of the Company have
participated or under which any such person has accrued and remains entitled to
benefits (collectively, the "Plans"). The Company has delivered to the Parent
and Newco true and complete copies of (or, where copies do not exist, summaries
of) each of the Plans, and all amendments thereto, all trust agreements,
insurance contracts, and other documents, including, but not limited to, summary
plan descriptions, if any, currently in effect with respect to the Plans.
(2) Each of the Plans has been operated in accordance with its
terms and in accordance with all applicable laws, rules, and regulations
relating thereto, including, but not limited to, the Employee Retirement Income
Security Act of 1974 ("ERISA"), the Code, and the Consolidated Omnibus Budget
Reconciliation Act of 1986 ("COBRA"). All required governmental filings have
been made with respect to the Plans.
(3) The Company has not contributed, nor been obligated to
contribute to, and no employees, former employees, or retired
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employees of the Company are as a result of their employment with the Company
participants in, any "multi-employer plan" which is a "pension plan," as such
terms are defined in Sections 3(2) and 3(37) of ERISA, and the Company has no
current, contingent, or potential liability with respect to any such plan.
(4) Neither the Company nor any corporation, trade, or business
(whether or not incorporated) which would be treated as a member of the
controlled group (the "Controlled Group") of the Company under Section
4001(a)(14) of ERISA would be liable for any amount pursuant to Sections 4062,
4063, or 4064 of ERISA, if any Plan which is the subject to Title IV of ERISA (a
"Title IV Plan") were to terminate.
(5) Neither the Company nor any member of the Controlled Group has
been involved in any transactions that would cause the Company to be subject to
liability with respect to a Title IV Plan or any other plan subject to Title IV
of ERISA to which the Company or any member of the Controlled Group contributed
or was obligated to contribute during the six (6) year period ending on the
Closing Date under Sections 4062, 4069, or 4212(c) of ERISA. Neither the Company
nor any member of the Controlled Group has incurred any liability under Title IV
of ERISA which could become or remain a liability of the Parent after the
Closing Date.
(6) Neither the Company nor any of the Plans or any trusts created
thereunder, nor any trustee or administrator thereof, has engaged in a
transaction as a result of which the Company, the trustee, or the administrator
of the Plans or any such trust could become subject to a liability or civil
penalty assessed pursuant to Sections 409, 502(i), or 502(l) of ERISA or a tax
imposed pursuant to Sections 4975 or 4976 of the Code.
(7) There are no pending or (to the knowledge of the Company)
threatened claims by or on behalf of any of the Plans, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits pursuant to the terms thereof). All
notices required to be given under COBRA have been timely and properly made in
accordance with COBRA and the rules and regulations thereunder, and no employee,
former employee, or "qualified beneficiary," as defined in COBRA, has any claim
or contingent claim against the Company for failure to comply with COBRA and the
rules and regulations thereunder.
(8) No condition exists and no event has occurred with respect to
any Plan that is a multi-employer plan (as defined in Section 4001(a)(3) of
ERISA) which presents a risk of complete or
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partial withdrawal under Subtitle E of Title IV of ERISA, nor has the Company or
any member of the Controlled Group been notified that any such Plan is insolvent
or in reorganization within the meaning of Section 4241 of ERISA.
(9) None of the Plans or any trusts established thereunder has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and in Section 412 of the Code), whether or not waived, as of the last day
of the most recent fiscal year of each of the Plans. No contribution failure has
occurred with respect to any Plans sufficient to give rise to a lien under
Section 302(f) of ERISA.
(10) No policy, plan, practice, program, arrangement,
understanding, or agreement exists which could result in the payment by the
Company of money or any other property or rights, or accelerate or provide any
other rights or benefits, to any employee of the Company as a result of the
transactions contemplated herein, whether or not such payment would constitute a
parachute payment within the meaning of Section 280G of the Code.
(s) INSURANCE. The attached Schedule 6(s) contains a true, correct, and
complete list of all general liability, product liability, fire and casualty,
motor vehicle, and other insurance maintained by the Company. Regarding such
insurance: (1) all such insurance is in full force and effect, all premiums due
thereunder have been timely and properly paid and the Company is in compliance
in all material respects with all requirements, terms, and provisions thereof;
(2) true and correct copies of all insurance policies relating to such coverage
have been provided by the Company to the Parent and Newco; (3) none of the
insurance policies maintained by the Company is subject to any retroactive rate
adjustment; (4) the Company has not received any notice of cancellation or
nonrenewal (or which expresses an intent to cancel or not renew) of any
insurance coverage maintained by the Company; and (5) the Company has no
knowledge of an intention on the part of any insurance carrier providing
insurance to the Company to cancel or otherwise not renew any such insurance.
(t) ENVIRONMENTAL MATTERS. Regarding the assets or properties owned,
leased, or otherwise used by the Company: (1) neither the Company nor the assets
or properties owned, leased, or otherwise used by the Company, nor any
operations of the Company, are presently, or have been in the past, in violation
of any applicable Federal, State or local law, rule, regulation, order, decree,
or ordinance relating to environmental protection or pollution, including,
without limitation, any laws, rules, regulations, orders, decrees, or ordinances
relating to emissions, discharges, releases, or threatened releases of
pollutants,
-17-
contaminants, or hazardous or toxic materials, or wastes into ambient air,
surface water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transportation, or
handling of pollutants, contaminants or hazardous or toxic or highly toxic
materials or wastes, including, without limitation, the Resource Conservation
and Recovery Act, as amended by the Hazardous and Solid Waste Amendments of
1984, the Comprehensive Environmental Response, Compensation and Liability Act,
the Hazardous Materials Transportation Act, the Toxic Substances Control Act,
the Federal Insecticide and Rodenticide Act, the Clean Air Act, the Clean Water
Act, and all regulations, rules, and ordinances adopted and promulgated
thereunder, all as may be amended from time to time (each an "Environmental
Law," collectively "Environmental Laws"); (2) no notice of, charge, or
investigation is pending or, to the knowledge of the Company, is threatened with
respect to the violation of any Environmental Law; (3) the Company has obtained,
and is in compliance with, all licenses, permits and other authorizations which
are required by applicable Environmental Laws and all such licenses, permits,
and other authorizations are in full force and effect; (4) the Company is in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables contained in
any Environmental Laws or in any code, plan, judgment, order, notice, or demand
letter issued, entered, promulgated, or approved thereunder; and (5) there is no
fact, event, circumstance, activity, incident, plan, or condition presently
existing, or having occurred in the past, which (A) may give rise to any claim,
charge, or assertion that the Company or any of its respective assets or
properties owned, leased, or otherwise used by the Company, or the operations of
the Company is or has been in violation of any Environmental Law, or (B) could
otherwise form the basis for any liability, claim, action, suit, proceeding,
investigation, assessment for response costs, or remediation or hearing based
upon or related to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation, handling, emission, discharge, release, or
threatened release into the environment of any pollutant, contaminant, or
hazardous or toxic or highly toxic material, substance, or waste.
(u) NO PENDING TRANSACTIONS. Except for the Merger, the Company is not
a party to, bound by, or the subject of any agreement, undertaking, or
commitment to: (1) merge or consolidate with, or acquire all or substantially
all of the property and assets of, any other corporation or person; or (2) sell,
lease, or exchange all or substantially all of its property and assets to any
other corporation or person.
-18-
(v) MAJOR CUSTOMERS AND SUPPLIERS. The attached Schedule 6(v) sets
forth a true, correct, and complete list of each of the Company's suppliers and
customers doing business with the Company in an amount exceeding ten thousand
dollars ($10,000) per year, each as measured in terms of dollar volume paid or
received during the year ended December 31, 2000. The Company has no knowledge
of any intention by any of the Company's material customers or suppliers to
terminate or materially reduce their relationship with the Company, whether by
reason of the transactions contemplated hereby or otherwise.
(w) TRANSACTIONS WITH AFFILIATES. Except as shown on the attached
Schedule 6(w), the Company is not a party to or bound by any contract,
commitment, loan, lease, or other arrangement or understanding with any
Affiliate, and none of such persons owns any interest in any corporation,
partnership, or other business or entity that is a party to any business
arrangements or relationships of any kind with the Company.
(x) BOOKS AND RECORDS. The books and records of the Company provided to
the Parent and Newco are true, correct, and complete in all material respects,
and have not been altered in anticipation of the transactions contemplated by
this Agreement, and to the knowledge of the Company no corporate minutes or
written consents of the Company Shareholders or the Board of Directors of the
Company, or any other corporate records or instruments have been removed from
the corporate records of the Company.
(y) POWERS OF ATTORNEY. The Company does not presently have outstanding
any power of attorney authorizing any third party to act by or on behalf of the
Company.
(z) GUARANTIES. The Company has not guaranteed, co-signed, or otherwise
become obligated (contingently or otherwise) with respect to the indebtedness or
obligations of any other person.
(aa) OFFICERS AND DIRECTORS. The attached Schedule 6(aa) sets forth a
complete and accurate list of: (1) the names of all directors of the Company;
(2) the names of the president, executive vice president, secretary, and
treasurer of the Company; (3) all safes, vaults and safety deposit boxes
maintained by or on behalf of the Company or in which assets or properties of
the Company are held, and the names of all persons authorized to have access
thereto; and (4) all bank accounts of the Company and the names of all
authorized signatories with respect to such accounts.
(bb) INTELLECTUAL PROPERTY. The attached Schedule 6(bb) sets forth a
true, correct, and complete list of all United States and
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foreign patents, patent applications, licenses, trademarks, trademark
applications, copyrights, trade names, service marks, service, names and other
proprietary rights owned or otherwise used by the Company. To the knowledge of
the Company: (1) the Company possesses all necessary rights to utilize such
property in the course of its business; (2) the Company has not used any
intellectual property of the Company in violation of the rights or interests of
any third party or any contractual agreement with respect thereto; (3) none of
the intellectual property of the Company has been declared invalid, been limited
in any respect by any court or by agreement or otherwise, and no such property
is subject to any infringement, interference, or other similar proceeding or
challenge; and (4) the Company is not infringing, or otherwise acting adversely
to, the right of any person or entity under or in respect to any patent, patent
application, license, trademark, trademark application, copyright, trade name,
service xxxx, service name, or similar proprietary right.
(cc) BROKERS AND ADVISORS. Except as shown on the attached Schedule
6(cc), the Company has not engaged the services of any broker, finder, or
advisor, and has not taken any action which would give rise to a valid claim
against any Party for a brokerage commission, finder's fee, or like payment.
(dd) DISCLOSURE. No representation or warranty made by the Principal
Company Shareholders in this Agreement or in any statement, certificate, or
other document delivered to the Parent and Newco by the Principal Company
Shareholders or the Company in connection herewith contains or will contain any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements contained herein or therein not misleading.
7. REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND NEWCO
-----------------------
The Parent and Newco hereby represent and warrant to the Company and
the Company Shareholders as follows:
(a) ORGANIZATION AND STANDING. The Parent and Newco are corporations
duly organized, validly existing, and in good standing under the laws of the
State of Delaware, respectively, and any other State in which the failure to be
qualified or registered as a foreign corporation would have a material adverse
impact on its business, and has all requisite corporate power and authority to
own its assets and carry on its business as it is now being conducted, and the
business it will conduct after the Merger, and to enter into and perform this
Agreement.
-20-
(b) AUTHORIZATION; BINDING EFFECT. The execution, delivery, and
performance of this Agreement has been duly authorized by all necessary action
on the part of the Parent and Newco. A certified copy of the resolutions adopted
by the Board of Directors of the Parent, and of the Board of Directors of Newco,
in this regard are attached as Exhibit 7(b). This Agreement has been duly
executed and delivered by the Parent and Newco and constitutes, and upon
execution and delivery will constitute, the legal, valid, and binding
obligations of the Parent and Newco, enforceable against them in accordance with
its terms, subject to applicable bankruptcy, insolvency, and other similar laws
affecting the enforrceability of creditors' rights generally and the discretion
of the courts with respect to equitable remedies.
(c) NO CONFLICTS. Neither the execution and delivery by the Parent or
Newco of this Agreement, or any other document or instrument to be executed by
the Parent or Newco pursuant to this Agreement or otherwise in connection
herewith (collectively, the "Parent/Newco Documents"), nor the consummation by
the Parent or Newco of the transactions contemplated hereby or thereby, will
result in any breach of or constitute a default (or, with notice or lapse of
time or both, would become a default), or give to others any rights of
termination, acceleration, or cancellation, or result in the creation of any
lien, charge, or encumbrance upon any of their properties, under the Articles of
Incorporation or the By- Laws of the Parent or Newco, or the terms of any
contract, instrument, or other agreement to which the Parent or Newco is a party
or is otherwise bound, or any judgment, decree, order, statute, law, ordinance,
rule, or regulation applicable to the Parent or Newco.
(d) CAPITALIZATION OF THE PARENT. The Parent is authorized to issue (1)
one hundred million (100,000,000) shares of common stock, $.0001 par value per
share, of which four million (4,000,000) shares are presently issued and
outstanding, and owned by the Parent Shareholders, and (2) twenty million
(20,000,000) shares of preferred stock, $.0001 par value per share, none of
which are issued or outstanding. After the issuance of the eighteen million five
hundred thousand (18,500,000) parent Shares set forth in Section 3(a), the total
outstanding Parent Shares will be nineteen million five hundred thousand
(22,500,000) Parent Shares. All issued and outstanding shares of capital stock
of the Parent have been duly authorized, are validly issued and outstanding, are
fully paid and non-assessable, and have not been issued in violation of any
preemptive rights. The Parent has no other shares of capital stock or other
securities authorized, issued, or outstanding. The Parent is not a party to or
bound by any option, warrant, contract, convertible or exchangeable
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securities, or any other commitment of any character relating to any capital
stock or other security issued or to be issued by the Parent.
(e) ACCESS TO INFORMATION. The Parent and Newco each acknowledge that
they have been provided with access to all financial and other information
concerning the Company Shares, the Company, and this transaction which each
deemed necessary in order to make an informed investment decision. The Parent
and Newco have had a reasonable opportunity to ask questions of, and receive
answers from, the Company and its officers, agents, and advisors in connection
with this transaction.
(f) SEC FILINGS. The Parent is subject to the reporting requirements of
Section 13 of the Securities Exchange Act of 1934 (the "Act"), and is current in
respect to all required filings under the Act. All of such filings, including
financial statements, are true and correct, and do not omit to state any
material fact necessary to make the statements contained therein not misleading.
(g) LITIGATION. Except as shown on the attached Schedule 7(g), there is
no claim, action, suit, litigation, audit, investigation, or other proceeding
pending, or, to the knowledge of the Parent and Newco, threatened against the
Parent or Newco or their assets, properties, or business, or the transactions
contemplated by this Agreement, and neither the Parent, Newco, nor their assets
or properties are subject to or bound by any order, writ, injunction, judgment,
or decree of any court or governmental regulatory agency, commission, board, or
administrative body.
(h) CONTRACTS. Set forth on the attached Schedule 7(h) is a true,
correct, and complete list of: (1) each contract, lease, agreement, or other
commitment, understanding, or arrangement (oral or written) to which the Parent
and/or Newco is a party or by which it or any of their assets or properties is
otherwise bound or subject (collectively, the "Contracts"); (2) any employment
contract not terminable at will by the Parent or Newco without liability or
penalty; (3) any lease of real property; (4) any material lease of personal
property; (5) any agreement for the purchase, sale, or other disposition of any
materials, equipment, supplies, or inventory, or the provision of any services,
outside the ordinary course of business; (6) any covenant not to compete or
other contract containing any restrictions on the operations of the Parent or
Newco; (7) any extraordinary purchase or sales orders; (8) any employee
collective bargaining agreement or other contract with any labor union; (9) any
contract with any affiliate of the Parent; (10) any material license or other
agreement relating to any Parent or Newco intellectual property; and (11) any
note, bond,
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mortgage, indenture, loan agreement, security agreement, or deed of trust; but
in each case excluding from such Schedule any Contract in the ordinary course of
business which is not material to the Parent or Newco and which does not have an
aggregate future liability to the Parent or Newco of more than ten thousand
dollars ($10,000). Each of the Contracts is valid, binding, and in full force
and effect, and is enforceable by the Parent or Newco in accordance with its
terms in a manner that obtains for, or imposes upon, the parties the primary
benefits and obligations of such agreements, and neither the Parent or Newco has
received any notice terminating, revoking, or rescinding any of the Contracts,
or expressing any interest to do the same and, to the knowledge of the Parent
and Newco, no other party to any of the Contracts has any intent to take any
action to terminate, rescind, or revoke any of such Contracts. The Parent and/or
Newco has performed in all material respects all obligations, and complied in
all material respects with all covenants, required to be performed and complied
with by it to date under the Contracts, and they are not (with or without lapse
of time, the giving of notice, or both) in breach of or default under any
material provision of the Contracts and, to the knowledge of the Parent and
Newco, no other party to any of the Contracts is (with or without the lapse of
time, the giving of notice, or both) in breach of or default thereunder. True,
correct, and complete copies of the Contracts have been supplied by the Parent
to the Company.
(i) GUARANTIES. Neither the Parent nor Newco has guaranteed, co-signed,
or otherwise become obligated (contingently or otherwise) with respect to the
indebtedness or obligations of any other person.
(j) INTELLECTUAL PROPERTY. The attached Schedule 7(j) sets forth a
true, correct, and complete list of all United States and foreign patents,
patent applications, licenses, trademarks, trademark applications, copyrights,
trade names, service marks, service names, and other proprietary rights owned or
otherwise used by the Parent and/or Newco. To the knowledge of the Parent and
Newco: (1) the Parent and/or Newco possess all necessary rights to utilize such
property in the course of their business; (2) neither the Parent nor Newco has
used any intellectual property of the Parent or Newco in violation of the rights
or interests of any third party or any contractual agreement with respect
thereto; (3) none of the intellectual property of the Parent or Newco has been
declared invalid, been limited in any respect by any court or by agreement or
otherwise, and no such property is subject to any infringement, interference, or
other similar proceeding or challenge; and (4) neither the Parent nor Newco is
infringing, or otherwise acting adversely to, the right of any person or entity
-23-
under or in respect to any patent, patent application, license, trademark,
trademark application, copyright, trade name, service xxxx, service name, or
similar proprietary right.
(k) RECEIPT OF THE COMPANY'S FINANCIAL STATEMENTS. The Parent and Newco
have received and reviewed the Financial Statements, and their officers have had
discussions with the Chief Executive Officer of the Company regarding all
elements of the Company's financial performance over the past years, including
the period covered by the Financial Statements.
8. COVENANTS OF THE PRINCIPAL COMPANY SHAREHOLDERS
-----------------------------------------------
The Principal Company Shareholders covenant to the Parent and Newco as
follows:
(a) DISCLOSURE. Each Principal Company Shareholder will inform the
Parent promptly of anything which comes to his attention that would make any
representation or warranty of the Company or of such Principal Company
Shareholder made herein untrue or misleading, or which constitutes a breach of
any covenant of the Company or such Principal Company Shareholder contained
herein.
(b) RETENTION OF EMPLOYEES. The Principal Company Shareholders will use
their reasonably best efforts to persuade the Company's employees to remain
employed after the Closing Date.
(c) MUTUAL RELEASES. At the Closing, mutual releases will be executed
by the Company, the Principal Company Shareholders, and the Company's directors
and executive officers covering any and all matters which arose prior to the
Closing Date out of the operation of the Company's business.
(d) ADDITIONAL FINANCIAL INFORMATION. The Principal Company
Shareholders will provide to the Parent and Newco audited financial statements
of the Company from the Company's inception through the Financial Statements.
(e) QUESTIONNAIRES. The Principal Company Shareholders will use their
best efforts to provide to the Parent, upon the Parent's request, questionnaires
of the Company's officers and directors.
(f) MINIMUM MONEY. As a result of the Merger, the Parent will have at
the Closing an amount of money that is not less than one hundred fifty thousand
dollars ($150,000), all of which money will be under the sole control of the
Parent after the Merger.
9. COVENANTS OF THE PARENT
-----------------------
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The Parent covenants to the Company Shareholders as follows:
(a) INDEBTEDNESS. The Parent and Newco will have no liabilities at the
Closing, except for transfer agent expenses accrued by the Parent or Newco after
the signing of the letter of intent between the Company and the Parent dated
December 15, 2000, and legal fees payable to the Parent's counsel relating to
the Merger, including the preparation and filing of a Form 8-K with the
Securities and Exchange Commission, and the preparation and filing of an S-8
Registration Statement in connection with the Parent's adoption of an Employee
Stock Option Plan (which fees are estimated to be thirty-five thousand dollars
($35,000).
(b) AVOIDANCE OF CERTAIN ACTIONS. Neither the Parent nor Newco will
take any action on or after the Closing Date that would jeopardize the status
of the Merger as a "reorganization" within the meaning of Section 368(a)(1)(A)
and (a)(2)(D) of the Code, including but not limited to any action that
would violate the rules of U.S. Treasury Regulation ss.1.368-1(d) or (e)
(relating to continuity of business enterprise and continuity of interest).
(c) SEC FILINGS. The Parent will provide to the Company all of the
Parent's filings with the SEC from the Parent's inception, and the Parent's
present officers, directors, and principal shareholders will cooperate with the
filing of the S-8 Registration statement.
(d) THE PARENT'S DISTRIBUTION OF MONEY. Prior to the Closing Date, the
board of directors of the Parent shall approve a pro rata distribution to the
Parent Shareholders of one hundred fifty thousand dollars ($150,000) and
immediately after the Closing Date, the Parent shall distribute such one hundred
fifty thousand dollars ($150,000) to the Parent Shareholders (and only to the
Parent Shareholders) in such Shareholders' capacity as the shareholders of the
Parent immediately prior to the Closing Date.
10. MUTUAL COVENANTS
----------------
(a) EFFORTS, COOPERATION AND THIRD PARTY CONSENTS. Subject to the terms
and conditions of this Agreement, each Party will use its reasonably best
efforts to cooperate with the others so as to cause the Closing to occur as
provided herein and to obtain any third-party consents that may be required to
consummate the transactions contemplated by this Agreement.
(b) CONFIDENTIALITY. The Parties agree that, except to the extent
required by law or by valid legal process: (1) each Party
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will treat all information provided by another party hereunder ("Confidential
Information") as permanently confidential; (2) no Party will use any
Confidential Information it receives from another Party hereunder other than in
connection with performing its obligations under this Agreement; and (3) no
Party will disclose any Confidential Information to any third party without
prior written consent of the disclosing Party. However, notwithstanding the
preceding sentence, a Party may disclose Confidential Information to those of
its representatives who need to know such Confidential Information for purposes
of assisting such party with the transactions contemplated by this Agreement and
who agree or are otherwise legally bound to hold such Confidential Information
in confidence. All Confidential Information is and will remain the property of
the disclosing Party. Each Party represents and warrants that prior to the
execution hereof it has not disclosed any of the terms, conditions, obligations
or matters contained in or relating to this Agreement and the transactions
contemplated herein, and covenants and agrees that following the execution of
this Agreement it shall not disclose to any person, individual, or entity any of
such terms, conditions, or matters, and to keep the same confidential. However,
the foregoing obligations of confidentiality shall not apply to any information
that: (4) is already known to the receiving person, free of any restrictions at
the time it is obtained by the receiving person; (5) is or becomes publicly
known through no wrongful act of the receiving person; (6) is rightfully
received by the receiving person from a third party without restriction; (7) is
independently developed without breach of any agreements or use of confidential,
proprietary, trade secret and/or sensitive information disclosed to or obtained
by the receiving person from the disclosing Party; or (8) is disclosed pursuant
to the lawful requirement of a governmental agency or is required by operation
of law.
(c) PUBLICITY. The Parent, the Company, and the Company Shareholders
each agrees that no public release or announcement concerning the transactions
contemplated hereby shall be issued by any of them without the prior written
consent of the others, except for releases and announcements as are required to
be made by applicable law, in which case the Party required to make the release
or announcement shall allow the other Parties reasonable time to comment on such
release or announcement in advance of its issuance.
(d) TAXES. The Principal Company Shareholders shall be responsible, at
their expense, for preparing and timely filing, or causing an independent
certified accounting firm to prepare and timely file, all returns and reports
for the Company's Federal and State income Taxes for the taxable periods ending
on or before the
-26-
Closing Date, including any returns with respect to the carryback of net
operating losses generated during such taxable periods. In preparing such
returns of Taxes for such taxable periods, the Principal Company Shareholders
shall not, or shall cause such independent certified accounting firm not to,
deviate from the manner in which any item of income or expense of the Company
was reported in prior years, except as otherwise required by law. Such Tax
returns or reports shall be submitted to the Parent for review at least
twenty-one (21) business days prior to the filing date for any such return or
report (without regard to extensions). Within fifteen (15) days following the
date on which such Tax returns are provided to the Parent, the Parent shall
provide to the Principal Company Shareholders a written statement of any
objections to the Tax returns. During such time period, the Principal Company
Shareholders' accountant shall provide Parent and its representatives with
access to his tax work-papers and the methods utilized for purposes of preparing
such Tax returns and shall make members of the Principal Company Shareholders'
accounting firm reasonably available for discussion with the Parent's
accountants. In the event the Parties have not reached agreement on the Tax
returns prior to the due date thereof, such Tax returns shall be extended and
the disputed issues will be submitted to an independent third party certified
public accounting firm mutually acceptable to the Parties for resolution. The
determination of such public accounting firm shall be binding upon the Parties
absent manifest error. The cost of such independent third party accounting firm
shall be borne equally by the Parent on the one hand and the Principal Company
Shareholders on the other hand. Once the form of the Tax returns is agreed upon
or otherwise determined as provided above, such returns will be filed by the
Principal Company Shareholders. The Parent shall be responsible for filing or
causing the Company to file all returns and reports for Taxes for the taxable
periods of the Company ending after the Closing Date.
(e) ACCESS TO BOOKS AND RECORDS. Pending the Effective Date, the Parent
and the Company shall give each other or their designated representatives, full
access to their books of original entry, ledgers, bank statements, minute books,
shareholder lists, contracts, patents, trademarks, and all other documents
maintained by them in connection with their business operations. In addition,
prior to the Merger, each of the Parent and Newco will furnish to the Company or
the Company's counsel copies of the Parent's and Newco's Certificate of
Incorporation, By-Laws, Board of Directors minutes, shareholders minutes, stock
ledgers, and such other documents that the Company might reasonably request, and
the Company will furnish to the Parent or the Parent's's counsel copies of the
Company's Certificate of Incorporation, By-Laws, Board of
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Directors minutes, shareholders minutes, stock ledgers, contracts, purchase
orders, license agreements, and such other documents that the Parent might
reasonably request.
(f) INDEBTEDNESS. Pending the Effective Date, neither the Parent,
Newco, nor the Company will incur any indebtedness other than in the ordinary
course of business, and will not commit themselves to any material undertakings,
programs, or projects, other than pursuant to existing agreements, which would
have a material negative impact on their balance sheets, without the prior
written consent of the other Parties.
(g) CONSERVATION OF ASSETS. Other than paying current liabilities, the
Parent, Newco, and the Company will operate their businesses in a manner
consistent with the conservation of their assets, including their cash reserves.
(h) PRESERVATION OF AND ACCESS TO RECORDS. The Parent agrees that it
shall use reasonably commercial efforts to preserve and keep material records of
the Company until the later of: (1) December 31, 2004; (2) any longer period as
may be required by any governmental agency or ongoing litigation; or (3) in the
case of records relating to the proper assessment or the payment of Taxes, until
the expiration of the applicable statute of limitations (including waivers and
extensions). The Parent shall allow the Principal Company Shareholders, at the
Principal Company Shareholders' cost, to inspect and copy such records during
normal business hours and upon reasonable written notice as may be reasonably
required in connection with any legal proceedings against, or governmental
investigations of, the Company or in connection with any Tax examination of the
Company; provided, however, that the Principal Company Shareholders will have
potential liability with respect to such matter only as provided pursuant to the
terms of this Agreement. If the Principal Company Shareholders request
assistance hereunder, they shall reimburse the Parent for reasonable
out-of-pocket expenses incurred in providing such assistance. In the event the
Parent wishes to destroy such records after the time periods specified above, it
shall first give ninety (90) days' prior written notice to the Principal Company
Shareholders, and the Principal Company Shareholders shall have the right at
their option to object to such destruction by prior written notice given to the
Parent within such ninety (90)-day period, in which case the Parent at its
option will either continue to retain possession of such records or it will hand
over such records to the Principal Company Shareholders within one hundred
eighty (180) days after the date of the Principal Company Shareholders' notice
to the Parent hereunder. If written objection is not received by the Parent
within such ninety (90)-day period,
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the Parent shall be free to dispose of such records as it chooses. In the event
such records are delivered to the Principal Company Shareholders as aforesaid,
the Principal Company Shareholders shall maintain the confidentiality thereof,
and shall not disclose to any third party or otherwise make public any
information therein, except as required by applicable law, and the Principal
Company Shareholders agree to execute and deliver to the Parent, on behalf of
themselves and Principal Company Shareholders, a reasonable confidentiality
agreement in this regard containing provisions similar to those provisions
contained in the Confidentiality Agreement.
11. COVENANTS OF THE PARENT SHAREHOLDERS
------------------------------------
In consideration of Parent's receipt of the one hundred fifty thousand
dollars ($150,000) referred to in Section 8(f), the Parent Shareholders shall,
at the Closing, grant to such person or persons designated in writing to the
Parent (the "Designee") a six (6)- month written option (the "Option") pursuant
to which the Designee may purchase all (or less than all) of the four million
Parent Shares, which will be owned by the Parent Shareholders at the Closing
Date (the "Optioned Shares"). The option price for the Optioned Shares will be
fifty cents ($.50) per Share. If all or any part of the Option is exercised, the
closing of the Designee's purchase of the Optioned Shares shall be held no later
than thirty (30) days after the end of the foregoing six (6)-month period, and
the purchase price shall be paid by certified check(s) upon the Designee's
receipt of the certificate(s) for the Optioned Shares that are subject to the
exercise accompanied by a duly executed stock power.
12. CONDITIONS TO THE CLOSING
-------------------------
The Merger shall be conditioned on:
(a) PARENT APPROVAL. Its approval by the Board of Directors of the
Parent and, if required, the Parent's shareholders;
(b) COMPANY APPROVAL. Its approval by the Board of Directors of the
Company and the Company Shareholders; and
(c) DUE DILIGENCE. The satisfactory completion of a "due diligence"
investigation by the Parent and the Company.
13. THE CLOSING
-----------
(a) TIME AND PLACE. The Closing of the transactions contemplated by
this Agreement (other than the purchase of the
-29-
Optioned Shares) shall take place at the offices of Xxxxx & Xxxxxxx, LLP at
9:30a.m. Eastern time on March __, 2001, or at such other time and place
mutually agreeable to the Parties. The Closing shall be deemed effective as of
the close of business on the Closing Date.
(b) DELIVERIES AT THE CLOSING BY THE COMPANY. The Company shall cause
the following to be delivered to the Parent at the Closing:
(1) An opinion of counsel to the Company, Xxxxx & Schloss LLP in
the form attached as Exhibit 13(b);
(2) A certificate of good standing dated within thirty (30) days of
the Closing Date from the Delaware Secretary of State on behalf of the Company;
and
(3) Such other documents and instruments required by the terms of
this Agreement to be delivered by the Company or the Principal Company
Shareholders at the Closing or otherwise reasonably necessary to consummate the
transactions contemplated hereby (except to the extent unable to do so for
reasons outside their reasonable control, such as for example such items are to
be provided by third parties).
(c) DELIVERIES AT THE CLOSING BY THE PARENT. The Parent shall cause the
following to be delivered to the Company at the Closing:
(1) Instructions to the Parent's transfer agent for the issuance of
the certificates for the Parent Shares as provided in Section 3(a); and
(2) Such other documents and instruments required by the terms of
this Agreement to be delivered by the Parent at the Closing or otherwise
reasonably necessary to consummate the transactions contemplated hereby (except
to the extent unable to do so for reasons outside its reasonable control, such
as for example such items are to be provided by third parties).
14. INDEMNIFICATION
---------------
(a) INDEMNIFICATION BY THE PRINCIPAL COMPANY SHAREHOLDERS. Each
Principal Company Shareholder hereby covenants and agrees:
(1) To severally indemnify and hold harmless the Parent from and
against any loss, liability, claim, cost, damage, or expense (including
reasonable legal fees and expenses) (collectively, a "Loss") arising out of or
resulting from, any
-30-
breach of any representation, warranty, covenant, or other agreement on the part
of such Principal Company Shareholder contained in this Agreement or in any
certificate, instrument, or other document delivered by the Principal Company
Shareholders pursuant hereto, or any covenant or agreement by or on behalf of
such Principal Company Shareholder set forth in this Agreement which is breached
by such Principal Company Shareholder but not by all Principal Company
Shareholders;
(2) To jointly and severally indemnify and hold harmless the Parent
from and against any Loss arising out of or resulting from: (A) any breach of
any other representation, warranty, covenant, or other agreement on the part of
the Principal Company Shareholders contained in this Agreement or in any
certificate, instrument or other document delivered by the Principal Company
Shareholders to the Parent pursuant hereto; (B) any Tax liabilities of the
Company with respect to the periods on or prior to the Closing Date; (C) the
fees and commissions of any broker or advisor engaged by any Company Shareholder
in connection with this transaction; or (D) for any accounts receivable in
excess of the reserve, if any, in the Closing Date balance sheet, that are
uncollected one hundred eighty (180) days after the Closing Date; and
(3) To jointly and severally indemnify and hold harmless the Parent
and Newco and their respective directors and officers from and against any Loss
arising from or relating to any claims now existing or hereafter asserted by any
former shareholder of the Company relating to the Company and/or any agreements,
understandings, or obligations of any or all of the Principal Company
Shareholders and/or the Company, which indemnity obligations will survive for a
period of six (6) years following the Closing Date.
(b) INDEMNIFICATION BY THE PARENT. The Parent hereby covenants and
agrees to indemnify and hold harmless the Company Shareholders from and against
any Loss arising out of or resulting from:
(1) Any breach of any representation, warranty, covenant, or other
agreement on the part of the Parent contained in this Agreement or in any
certificate, instrument, or other document delivered by the Parent to the
Company Shareholders pursuant hereto, or any covenant or agreement by or on
behalf of Parent set forth in this Agreement which is breached by the Parent,
including the covenant contained in Section 9(d) above, and in the case of such
a breach, the Loss shall include the interest and any penalty due by the Company
Shareholders, but not the amount of taxes due by
-31-
each, with respect to the taxes due by them by virtue of such breach, arising by
virtue of the fact that the Merger failed to qualify as a "reorganization"
within the meaning of Section 368(a)(1)(A) and (a)(2)(D) of the Code; and
(2) The fees and commissions of any broker or advisor engaged by
the Parent in connection with this transaction. In addition, the Parent
covenants and agrees to indemnify and hold harmless the Company Shareholders
from and against any personal guarantees made by the Principal Company
Shareholders prior to the Closing with respect to any debts, lease commitments,
or other obligations of the Company to the extent disclosed in Schedule 14(b).
(c) NOTICE AND DEFENSE. The obligations of the Principal Company
Shareholders and the Parent hereunder with respect to their respective
indemnities pursuant to this Section 14, resulting from any claim or other
assertion of liability by third parties (hereinafter collectively, "Third Party
Claim(s)"), shall be subject to the following terms and conditions:
(1) The Party seeking indemnification hereunder (the "Indemnified
Party") shall give written notice (a "Claim Notice") of any such Third Party
Claim(s) to the Party from whom indemnification is sought hereunder (the
"Indemnifying Party") within a reasonable time after the Indemnified Party
receives notice thereof; provided, however, that the failure to give notice
timely shall not affect the Indemnifying Party's obligations hereunder except to
the extent that such failure prejudices the Indemnifying Party or its ability to
defend such Third Party Claim(s);
(2) The Indemnifying Party shall have the right to undertake, with
counsel or other representatives of its own choosing and reasonably acceptable
to the Indemnified Party, the defense or settlement of any such Third Party
Claim(s);
(3) In the event that the Indemnifying Party shall fail to notify
the Indemnified Party within ten (10) days of receipt of the Claim Notice that
it has elected to undertake such defense or settlement, or if at any time the
Indemnifying Party shall otherwise fail to diligently defend or pursue
settlement of such claim, then the Indemnified Party shall have the right to
undertake the defense, compromise, or settlement of such claim, with counsel
reasonably acceptable to the Indemnifying Party; and
(4) No Party shall settle any Third Party Claim(s) without the
prior written consent of the other Parties, which
-32-
consent shall not be unreasonably withheld or delayed. In the event the
Indemnifying Party submits to the Indemnified Party a bona fide settlement offer
from the third party claimant of any Third Party Claim(s) (which settlement
offer shall include as an unconditional term thereof the giving by the claimant
or the plaintiff to the Indemnified Party of a release from all liability in
respect of such claim) and the Indemnified Party refuses to consent to such
settlement, then thereafter the Indemnifying Party's liability to the
Indemnified Party for indemnification hereunder with respect to such Third Party
Claim(s) shall not exceed the settlement amount included in such bona fide
settlement offer, and the Indemnified Party shall either assume the defense of
such Third Party Claim(s) or pay the Indemnifying Party's attorneys fees and
other out of pocket costs incurred thereafter in continuing the defense of such
claim. Regardless of which Party is conducting the defense of any such Third
Party Claim(s), the other Parties, with counsel or other representatives of its
own choosing and at their sole cost and expense, shall have the right to consult
with the Party conducting the defense of such claim and its counsel or other
representatives concerning such claim and the Indemnified Party and their
respective counsel or other representatives shall cooperate with respect to such
claim, and the Party conducting the defense of any such claim and its counsel
shall in any case keep the other Parties and their counsel (if any) fully
informed as to the status of any claim and any matters relating thereto. Each
Party shall provide to the other Parties such records, books, documents, and
other materials as shall reasonably be necessary for such Parties to conduct or
evaluate the defense of any Third Party Claim(s) and will generally cooperate
with respect to any matters relating thereto.
(d) LIMITATIONS ON INDEMNIFICATION. The foregoing indemnification
obligations shall be subject to the following limitations:
(1) RECOVERY BY INDEMNIFIED PARTY. The amount of any indemnified
Loss hereunder shall be reduced by the amount, if any, of the recovery actually
received by the Indemnified Party with respect to such indemnified Loss (net of
any out-of-pocket collection costs) under applicable insurance policies or from
persons or entities not parties to this Agreement (not including any successor
in interest or assign of any Party). In the event such a recovery is received by
the Indemnified Party after it receives payment or other credit under this
Agreement with respect to an indemnified Loss, then the Indemnified Party shall
promptly pay to the Indemnifying Party the lesser of (A) the amount of the
recovery actually received; or (B) the amount of the indemnity payment made by
the Indemnifying Party to the Indemnified Party
-33-
with respect to such indemnified Loss. Notwithstanding anything herein to the
contrary, the terms of this Section 14(d)(i) shall not apply to the extent such
provisions would operate to invalidate or otherwise prejudice any claim for
insurance or against any third party.
(2) ACT OR OMISSION OF THE INDEMNIFIED PARTY. The amount of any
indemnified Loss arising under this Agreement shall be fairly and equitably
reduced to the extent that such indemnified Loss arose by reason of, and is
directly attributable to, the negligent or intentional wrongful acts or
omissions of the Indemnified Party.
(3) TAXES. The amount of any indemnified Loss hereunder shall be
fairly and equitably reduced (or increased) by the amount of the actual
reduction (or increase) in income Tax liability of the Indemnified Party after
giving effect to incurring by the Indemnified Party of the liability giving rise
to the claim for indemnification, the payment by the Indemnified Party of such
claim, and the receipt by the Indemnified Party of any indemnity payment with
respect to such claim.
(e) SETOFF. Subject to compliance with Section 14(c) and Section 14(d)
above, the Parent shall have the right to set off any indemnified Loss for which
the Parent is entitled to indemnification hereunder against payments due
hereunder.
(f) DOLLAR LIMITATION. Notwithstanding anything in this Section 14 to
the contrary, the foregoing indemnification obligations shall be applicable in
respect of any Loss to the extent that such Loss, when taken as a whole, exceeds
an aggregate of fifty thousand dollars ($50,000), except that such limit shall
not apply to (1) indemnification obligations under Section 12(a)(3) above, (2)
indemnification obligations relating to Taxes, or (3) indemnification
obligations under the final sentence of Section 14(b) above.
15. SURVIVAL OF PROVISIONS
----------------------
The representations and warranties contained in this Agreement shall
survive the Closing for a period of three (3) years, except that the
representations and warranties contained in:
(a) OWNERSHIP OF STOCK. Section (e, Section 6(d), and section 7(d)
shall be perpetual;
(b) TAXES AND ANTITRUST. Section 6(p) and Section 9(b) shall survive
for a period of thirty (30) days following the day on which
-34-
the longest applicable statute of limitations expires relating to such matters;
and
(c) ENVIRONMENTAL MATTERS. Section 6(t) hereof with respect to
environmental matters affecting off-site properties (I.E., properties not owned
or leased by the Company) shall survive for a period of five (5) years, and any
intentional or fraudulent breach of warranty or misrepresentation shall survive
for a period of thirty (30) days following the day on which the longest
applicable statute of limitations expires with respect to such matter.
16. EXPENSES
--------
Except as otherwise specifically provided herein, each of the Company
Shareholders and the Company on the one hand, and each of the Parent and Newco
on the other hand shall pay all of its respective expenses relating to this
transaction, including fees and disbursements of its respective counsel,
accountants, brokers, investment bankers, and financial advisors, if the
transactions contemplated hereunder are abandoned.
17. MISCELLANEOUS
-------------
(a) ASSIGNMENT. This Agreement shall not be assignable or otherwise
transferable by the Parent, Newco, the Company,or the Principal Company
Shareholders without the prior written consent of the non-assigning Parties, and
shall be binding upon, and shall inure to the benefit of, the Parties, and their
respective legal representatives, heirs, devisees, legatees, beneficiaries, and
successors and permitted assigns.
(b) FEES OF LEGAL COUNSEL. In the event any Party shall employ legal
counsel to protect its rights hereunder or to enforce any term or provision
hereof, the Party prevailing in any such action shall have the right to recover
from the other Parties all of its reasonable attorneys' fees and expenses
incurred in relation to such claims, as approved by the court on the basis of
customary fees charged by attorneys in the State of Delaware.
(c) FURTHER ASSURANCES. The Parties shall from time to time hereafter,
upon request, will execute, acknowledge, and deliver such other instruments and
documents, and take such further action as may be reasonably necessary to carry
out the intent of this Agreement.
-35-
(d) MODIFICATION. No provision contained herein may be modified,
amended, or waived except by written agreement or consent signed by the Party to
be bound thereby.
(e) HEADINGS AND CAPTIONS. Subject headings and captions are included
for convenience purposes only, and shall not affect the interpretation of this
Agreement.
(f) NOTICES. All notices, requests, demands, and other communications
permitted or required hereunder shall be in writing, and either (1) delivered in
person; (2) sent by express mail or other overnight delivery service providing
receipt of delivery; (3) mailed by certified mail, postage prepaid, return
receipt requested; or (4) sent by telecopy or other facsimile transmission, with
proof of transmission thereof retained by the transmitter as follows:
If to the Parent:
Grand Enterprises, Inc.
00 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx
Tel: (000) 000-0000
If to the Company:
EC2000, Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxx, President
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxx & Xxxxxxx LLP
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Principal Company Shareholders:
TVP Capital Corp.
000 Xxxx 00xx Xxxxxx, Xxxxx 000
-00-
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxx, President
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxx & Schloss LLP
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Parent Shareholders
KILKENNY GROUP LLC
Attention: Xxxx Xxxxx, Managing Member
000 X. 00xx Xxxxxx, Xxx. 00-x
Xxx Xxxx, Xxx Xxxx 00000
RATHGAR LLC
Attention: Xx. Xxxxxx Xxxxx,Managing Member
000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxxxx, Xxx Xxxx 00000
FINGLAS LLC
Attention: Xxxxx Xxxxxxx, Managing Member
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
MONKSTOWN LLC
Attention: Xxx Xxxxxxxxx, Managing Member
000 Xxxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx 00000
CAPITAL ADVISORY PARTNERS, LLC
Attention: Xxxxxxxx Xxxxxx, Managing Member
00 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
or to such other address as any party may designate by notice. Any such notice
or communication, if given or made by prepaid, certified mail or by recorded
express delivery, shall be deemed to
-37-
have been made when actually received, but not later than three (3) business
days after the same was posted or given to such express delivery service and if
made properly by telecopy or other facsimile transmission such notice or
communication shall be deemed to have been made at the time of dispatch.
(g) SEVERABILITY. If any portion of this Agreement is held invalid,
illegal, or unenforceable, such determination shall not impair the
enforceability of the remaining terms and provisions herein.
(h) WAIVER. No waiver of a breach or violation of any provision of this
Agreement shall operate or be construed as a waiver of any subsequent breach, or
limit or restrict any right or remedy otherwise available.
(i) RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies expressed
herein are cumulative and not exclusive of any rights and remedies otherwise
available.
(j) ENTIRE AGREEMENT. This document (together with the Schedules and
any exhibits and attachments hereto) constitutes the entire agreement of the
Parties and supersedes any and all other prior agreements, oral or written, with
respect to the subject matter contained herein. There are no representations,
warranties, covenants, or agreements between the Parties with respect to this
matter except those expressly set forth herein.
(k) GOVERNING LAW; JURISDICTION. This agreement shall be subject to and
governed by the laws of the State of New York without regard to conflict of laws
principles of such State. The Parties consent to jurisdiction of any Federal or
State court located in New York, NY for resolution of disputes relating to this
Agreement.
(m) INCORPORATION BY REFERENCE. All Schedules, Exhibits and attachments
hereto, and other documents referred to in this Agreement, shall be deemed
incorporated herein by any reference thereto as if fully set out.
(n) COUNTERPARTS. This Agreement may be executed in one (1) or more
counterparts (all counterparts together reflecting the signatures of all the
Parties), each of which shall be deemed to be an original, and all of which
together shall constitute one (1) and the same instrument.
(o) THIRD PARTY BENEFICIARIES. Except with regard to issuance of Parent
Shares to the Company Shareholders as provided
-38-
in Section 3(a) above, and except as provided in Section 17(a), this Agreement
is not intended to create any right of enforcement by or in any third party.
(p) AUTHORITY. Each individual signing this Agreement in a
representative capacity acknowledges and represents that he is duly authorized
to execute this Agreement in such capacity in the name of, and on behalf of, the
designated corporation, partnership, trust, or other entity.
(q) GENDER, ETC. When used in this Agreement, the masculine shall
include the feminine and the neuter and vice versa, and the plural shall include
the singular and vice versa.
-39-
IN WITNESS WHEREOF, the Parties have executed this Agreement effective
as of the day and year first above written.
GRAND ENTERPRISES, INC.
By: /s/ Xxxxxxxx Xxxxxx
-----------------------------
Xxxxxxxx Xxxxxx, President
GRAND ACQUISITION CORP.
By: /s/ Xxxxxxxx Xxxxxx
-----------------------------
Xxxxxxxx Xxxxxx, President
EC2000, INC.
By: /s/ Xxxxxxxx Xxxxxx
-----------------------------
Xxxxxxxx Xxxxxx, President
PARENT COMPANY SHAREHOLDERS (AS TO SECTION 11 ONLY):
KILKENNY LLC
/s/ Xxxxxx Xxxxx
-----------------------------
By: Xxxxxx Xxxxx
Managing Member
RATHGAR LLC
/s/ Xxxxxx Xxxxx
-----------------------------
By: Xx. Xxxxxx Xxxxx
Managing Member
FINGLAS LLC
/s/ Xxxxx Xxxxxxx
-----------------------------
By: Xxxxx Xxxxxxx
Managing Member
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MONKSTOWN LLC
/s/ Xxxxxxxx Xxxxxxxxx
-----------------------------
By: Xxxxxxxx Xxxxxxxxx
Managing Member
CAPITAL ADVISORY PARTNERS, LLC
/s/ Xxxxxxxx Xxxxxx
-----------------------------
By: Xxxxxxxx Xxxxxx
Managing Member
PRINCIPAL COMPANY SHAREHOLDERS.
TVP CAPITAL CORP.
/s/ Xxxxxxxx X. Xxxxxx
--------------------------------
By: Xxxxxxxx X. Xxxxxx
President
XXXXX & SCHLOSS LLP
/s/ Xxxxxxx X. Xxxxx
--------------------------------
By: Xxxxxxx X. Xxxxx, Member
/s/ Xxxxx Xxxxxxxx
--------------------------------
Xx. Xxxxx Xxxxxxxx
