EXHIBIT 2.1
AGREEMENT
AND PLAN OF ACQUISITION
BY AND BETWEEN
TECHNOL FUEL CONDITIONERS, INC.
AND
ALLIED SYNDICATIONS, INC.
APRIL 10, 2005
20
AGREEMENT AND PLAN OF ACQUISITION
This AGREEMENT AND PLAN OF ACQUISITION (this "Agreement"), dated as of, April
10, 2005, is made and entered into by and between Technol Fuel Conditioners,
Inc., a Colorado corporation ("Parent"), and Allied Syndications, Inc., a Texas
corporation (the "Company"). Parent and the Company are sometimes collectively
referred to as the "Constituent Corporations."
WITNESSETH:
WHEREAS, the respective Boards of Directors of Parent and the Company have
determined that it is advisable and in the best interests of the respective
corporations and their shareholders that Allied be acquired by Parent on a share
exchange basis pursuant to the terms of this Agreement, pursuant to which Allied
be a wholly owned subsidiary of Parent; and
WHEREAS, for United States federal income tax purposes, the parties intend that
the Acquisition shall qualify as a "reorganization" under Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and that this Agreement
constitutes a "plan of reorganization" within the meaning of the Code; and
WHEREAS, Parent and the Company desire to make certain representations,
warranties, covenants, and agreements in connection with, and establish various
conditions precedent to, the Acquisition; and
WHEREAS, as a condition to, and upon the execution of this Agreement, Xxxxxxx
Xxxxxxxxx, the respective Founder is to be employed by contractual agreement
with the Company to ensure the continuity of management of the Company, and
WHEREAS, the parties have agreed that the existing assets and business of
Parent, through its wholly owned subsidiary, Technol Fuel Conditioners, Inc., a
New Jersey Corporation, will be sold to Technol Fuel Acqusition Corp. a New
Jersey corporation, which will assume all the current subsidiary payables and
obligations pursuant to the attached Asset Purchase Agreement to be consummated
immediately after the effective date of this Agreement; and
WHEREAS, the Parties and certain persons who are stockholders of Parent have
entered into certain Escrow Agreement attached hereto as Exhibit C (the "Escrow
Agreement") whereby the amount of shares of the common stock of Parent that may
be sold by said stockholders does not unduely burden the trading market for the
Parent's common stock for a period of time following the Closing of this
Agreement.
WHEREAS: the Company has entered into that certain Responsible Party Agreement
attached hereto as Exhibit D (the "Responsible Party Agreement") to ensure that
certain filings and reports required by the Securities Exchange Act of 1934 (the
"1934 Act") are timely filed in accordance with the 1934 Act and the rules and
regulations promulgated by the U.S. Securities and Exchange Commission
thereunder.Ver6
WHEREAS, as an inducement to Parent to enter into this Agreement, certain
shareholders of the Company are concurrently herewith entering into a Voting
Agreement (the "Voting Agreement") in substantially the form attached hereto as
Exhibit B, whereby each such shareholder agrees to vote in favor of the
Acquisition and all other transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties, covenants
and agreements set forth in this Agreement and in the Articles of Acquisition
(as defined in Section 1.3 hereof), the parties hereto, intending to be legally
bound, agree as follows:
A.
THE ACQUISITION
1. THE ACQUISITION. At the Effective Time (as defined in Section 1.3
hereof), subject to the terms and conditions of this Agreement the Company,
shall be acquired in its entirety by Parent subject to the planned "step
transaction" anticipated by the Constituent Corporations to ensure the Company's
compliance with applicable state securities laws, the Securities Act of 1933,
and the Securities Exchange Act of 1934 as reasonably determined by the Company
and by each of the Constituent Corporations (the "Securities Compliance
Requirement")
1.2 EFFECT OF ACQUISITION. At the Effective Time, the effect of the
Acquisition shall be as provided in this Agreement, the applicable provisions of
the Colorado Business Corporations Act ("CBCA").
1.3 EFFECTIVE TIME. Subject to the terms and conditions of this
Agreement, the Acquisition shall become effective upon filing any required
notices with Texas or Colorado.The time of effectiveness is herein referred to
as the "Effective Time." The day on which the Effective Time shall occur is
herein referred to as the "Effective Date."
1.4 DIRECTORS AND OFFICERS. From and after the Effective Time, the
directors of the Parent Corporation (Technol) shall be the persons who were the
directors of the Company immediately prior to the Effective Time as elected by
the existing directors of Parent, prior to their resignations, and the officers
of the Parent Corporation shall be the persons who were the officers of the
Company immediately prior to the Effective Time. Said directors and officers of
the Parent Corporation shall hold office for the term specified in, and subject
to the provisions contained in, the Articles of Incorporation and Bylaws of the
Parent Corporation and applicable law. If, at or after the Effective Time, a
vacancy shall exist on the Board of Directors or in any of the offices of the
Parent Corporation, such vacancy shall be filled in the manner provided in the
Articles of Incorporation and Bylaws of the Parent Corporation.1.5 Taking of
Necessary Action; Further Action. Subject to the Securities Compliance
Requirement, Parent, Subsidiary and the Company, respectively, shall each use
its or their commercially reasonable best efforts to take all such action as may
be necessary or appropriate to effectuate the Acquisition under the CBCA at the
time specified in Section 1.3 hereof. If, at any time after the Effective Time,
any further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Parent Corporation with full right, title and
possession to all properties, rights, privileges, immunities, powers and
franchises of either of the Constituent Corporations, the officers of the Parent
Corporation are fully authorized in the name of each Constituent Corporation or
otherwise to take, and shall take, all such lawful and necessary action.
1.5 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of the Company, within
three business days after the date on which the last of the conditions set forth
in Article VI shall have been satisfied or waived, or at such other place and on
such other date as is mutually agreeable to Parent and the Company (the "Closing
Date"). The Closing will be effective as of the Effective Time.
B.
CONVERSION OF SECURITIES
1. Conversion of Securities. At the Effective Time, by virtue of the
Acquisition and without any action on the part of Parent, Subsidiary, the
Company, the holder of any shares of Company Common Stock (as defined below) or
the holder of any options, warrants or other rights to acquire or receive shares
of Company Common Stock, the following shall occur:
(a) Conversion of Company Common Stock. At the Effective Time,
each share of common stock, no par value, of the Company (the "Company Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than any shares of Company Common Stock to be canceled pursuant to Section
2.1(b) and any Dissenting Shares (as defined in Section 2.1(g) below)) will be
canceled and extinguished and be converted automatically into the right to
receive forty hundred twenty nine (429) (or such conversion which, when
converted will deliver to Company shareholders Forty Hundred Twenty Nine
Thousand (429,000) shares of Parent Series A Convertible Preferred Stock (the
"Exchange Ratio") of the Parent (the "Parent Series A Convertible Preferred
Stock") pursuant to the attached designation of such Series A Convertible
Preferred Stock. The Parties acknowledge and agree that the timing and
arrangements for the actions to be taken to effect the purposes of this Section
2.1 of this Agreement shall be undertaken only at such time with such protective
measures so as to allow the Company to be reasonably assured that exchange of
the Company Common Stock for the Series A Preferred Stock can be effected with
reasonable assurance that the Company is in compliance with the requirements of
the Securities Act of 1933, applicable state securities laws, and the Texas
Business Corporation Act.
(b) Cancellation of Company Common Stock Owned by Parent or
Company. At the Effective Time, all shares of Company Common Stock that are
owned by the Company as treasury stock and each share of Company Common Stock
owned by Parent or any direct or indirect wholly owned subsidiary of Parent or
of the Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
(c) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted in the event of (i) any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Parent
Common Stock or Company Common Stock), reorganization, re-capitalization,
combination, exchange of shares, adjustment or other like change with respect to
Parent Common Stock or Company Common Stock occurring after the date hereof and
prior to the Effective Time or (ii) any increase in the number of shares of
Company Common Stock on a fully diluted, as-converted basis (i.e., assuming
issuance of all shares of Common Stock issuable upon the exercise or conversion
of all securities outstanding immediately prior to the Effective Time which are
convertible into or exercisable for shares of Company Common Stock, whether or
not vested), other than increases resulting from transactions permitted in
Section 5.1 hereof, so as to provide holders of Company Common
Stock and Parent the same economic effect as contemplated by this Agreement
prior to such stock split, reverse split, stock dividend, reorganization,
re-capitalization, combination, exchange of shares, adjustment or like change or
increase.
(d) Fractional Shares. No fraction of a share of Parent Series A
Convertible Preferred Stock will be issued, but in lieu thereof each holder of
shares of Company Common Stock who would otherwise be entitled to a fraction of
a share of Parent Series A Convertible Preferred Stock (after aggregating all
fractional shares of Parent Series A Convertible Preferred Stock to be received
by such holder) shall receive from Parent one whole share of Parent Series A
Convertible Preferred Stock
(e) Dissenting Shares. (i) Notwithstanding anything in this
Agreement to the contrary, if dissenters rights exist under the Texas Business
Corporations Act (TBCA) which are applicable to the Acquisition, shares of
Company Common Stock that are issued and outstanding prior to the Effective Date
and which are held by shareholders who (A) have not voted such shares in favor
of the Acquisition, (B) shall have delivered, prior to any vote on the
Acquisition, a written demand for the fair value of such shares in the manner
provided in the TBCA and (C) as of the Effective Time, shall not have
effectively withdrawn or lost such right to dissenters' rights ("Dissenting
Shares"), shall not be converted into or represent a right to receive the shares
of Parent Series A Convertible Preferred Stock pursuant to Section 2.1 hereof,
but the holders thereof shall be entitled only to such rights as are granted by
the CBCA. Each holder of Dissenting Shares who becomes entitled to payment for
such shares pursuant to the TBCA shall receive payment therefore from the Parent
Corporation in accordance with the TBCA; provided, however, that if any such
holder of Dissenting Shares shall have effectively withdrawn such holder's
demand for appraisal of such shares or lost such holder's right to appraisal and
payment of such shares under the TBCA, such holder or holders (as the case may
be) shall forfeit the right of appraisal of such shares and each such share
shall thereupon be deemed to have been canceled, extinguished and converted, as
of the Effective Time, into and represent the right to receive payment from the
Parent Corporation of the applicable shares of Parent Series A Convertible
Preferred Stock, as provided in Section 2.1 hereof.
(ii) The Company shall give Parent (A) prompt notice of any written
demand for fair value, any withdrawal of a demand for fair value and any other
instrument served pursuant to the TBCA received by the Company, and (B) the
opportunity to direct all negotiations and proceedings with respect to demands
for fair value under the TBCA. The Company shall not, except with the prior
written consent of Parent, voluntarily make any payment with respect to any
demand for fair value or offer to settle or settle any such demand.
2. STOCK OPTIONS.
(a) At the Effective Time, each outstanding option to purchase
shares of Company Common Stock under any Company Stock Option Plans (each, a
"Company Option"), whether vested or unvested immediately prior to the Effective
Time, shall be assumed by Parent and converted into an option (each, a "Parent
Option") to acquire, on substantially the same terms and conditions, including
but not limited to any performance criteria with respect to the Company's
business operations set forth in the applicable stock option agreements as were
applicable under such Company Option, the number of whole shares of Parent
Series A Convertible Preferred Stock equal to the number of shares of Company
Common Stock that were issuable upon exercise of such Company Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, as adjusted
pursuant to Section 2.1(e) above (rounded down to
the nearest whole number of shares of Parent Series A Convertible Preferred
Stock), and the per share exercise price of the shares of Parent Series A
Convertible Preferred Stock issuable upon exercise of such Parent Option shall
be equal to the exercise price per share of Company Common Stock at which such
Company Option was exercisable immediately prior to the Effective Time divided
by the Exchange Ratio, as adjusted pursuant to Section 2.1(e) above (rounded up
to the nearest whole cent). Other than pursuant to the terms of existing
commitments (all of which commitments are identified in Section 2.2 of the
Company Disclosure Letter (as defined in the preamble to Article III hereof)),
the Company shall not, take any action prior to the Effective Time that will
extend the exercise period of any Company Option or cause the vesting period of
any Company Option to accelerate under any circumstances, regardless of whether
such circumstances are to occur before or after the Effective Time, or otherwise
amend the terms of outstanding Company Options.
(b) All outstanding rights of the Company which it may hold
immediately prior to the Effective Time to repurchase unvested shares of Company
Common Stock (the "Repurchase Options") shall continue in effect following the
Acquisition and shall continue to be exercisable by the Parent upon the same
terms and conditions in effect immediately prior to the Effective Time, except
that the shares purchasable pursuant to the Repurchase Options and the purchase
price per shall be adjusted to reflect the conversion to Parent Series A
Convertible Preferred Stock and the Exchange Ratio.
(c) Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Parent Series A Convertible
Preferred Stock for delivery upon exercise of the Parent Options and/or debt
conversion.
(d) Parent will make good faith efforts to ensure, to the extent
permitted by the Code and to the extent required by and subject to the terms of
any such Incentive Stock Options, that Company Options which qualified as
Incentive Stock Options prior to the Closing Date continue to qualify as
Incentive Stock Options of Parent after the Closing.
(e) Warrants. At the Effective Time, each warrant, if any, to
purchase shares of Company Common Stock outstanding immediately prior to the
Effective Date (each, a "Company Warrant") shall be assumed by Parent and
converted into a warrant (each a "Parent Warrant") to acquire, on substantially
the same terms and conditions, the number of whole shares of Parent Series A
Convertible Preferred Stock equal to the number of shares of Company Common
Stock that were issuable upon exercise of such Company Warrant immediately prior
to the Effective Time multiplied by the Exchange Ratio, as adjusted pursuant to
Section 2.1(e) above (rounded down to the nearest whole number of shares of
Parent Series A Convertible Preferred Stock), and the per share exercise price
of the shares of the Parent Series A Convertible Preferred Stock issuable upon
exercise of such Parent Warrant shall be equal to the exercise price per share
of Company Common Stock at which such Company Warrant was exercisable
immediately prior to the Effective Time divided by the Exchange Ratio, as
adjusted pursuant to Section 2.1(e) above (rounded up to the nearest whole
cent). Other than pursuant to the terms of existing commitments (all of which
commitments are identified in Section 2.3 of the Company Disclosure Letter), the
Company shall not take any action prior to the Effective Time that will extend
the exercise period of any Company Warrant or otherwise amend the terms of
outstanding Company Warrants.
3. EXCHANGE OF CERTIFICATES.
(a) Prior to the Effective Time, Parent shall designate a law
firm, transfer agent, a commercial bank, trust company or other financial
institution, which may include Parent's stock transfer agent, to act as exchange
agent ("Exchange Agent") in the Acquisition.
(b) Promptly after the Effective Time, Parent shall make available
to the Exchange Agent for exchange in accordance with this Article II, (i) the
aggregate number of shares of Parent Series A Convertible Preferred Stock
issuable pursuant to Section 2.1 in exchange for outstanding shares of Company
Common Stock, and (ii) cash in an amount sufficient to permit payment of cash in
lieu of fractional shares pursuant to Section 2.1(f) (the "Exchange Fund").
Subject to the Company's reasonable assurance of compliance with state and
federal securities laws and a contemplated "step transaction" to effect the
purposes of the exchange, then within ten (10) business days after the Effective
Time, the Parent shall cause to be mailed to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates") (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent, and shall be in such form
and have such other provisions as Parent may reasonably specify and which shall
be reasonably acceptable to the Company) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Series A Convertible Preferred Stock (and cash in
lieu of fractional shares). Upon surrender of a Certificate for cancellation to
the Exchange Agent, together with such letter of transmittal, duly completed and
validly executed, and such other documents as may be reasonably required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange a certificate representing the number of whole shares of
Parent Series A Convertible Preferred Stock, plus cash in lieu of fractional
shares in accordance with Section 2.1(f), to which such holder is entitled
pursuant to Section 2.1, and the Certificate so surrendered shall forthwith be
canceled. Until surrendered as contemplated by this Section 2.5, each
Certificate that, prior to the Effective Time, represented shares of Company
Common Stock will be deemed from and after the Effective Time, for all corporate
purposes, other than the payment of dividends, to evidence the right to receive
the number of full shares of Parent Series A Convertible Preferred Stock into
which such shares of Company Common Stock shall have been so converted and the
right to receive an amount of cash in lieu of the issuance of any fractional
shares in accordance with Section 2.1(f). The Constituent Corporations recognize
and agree that the timing and procedures described in this Section 2.4(c) shall,
at all times, be subject to the Company's reasonable assurance that its
performance of the foregoing actions will not conflict with its obligations and
ensure its compliance under state and federal securities laws and the Company
shall have the right, in the exercise of its good faith, to amend or adjust the
actions contemplated by this Section 2.4(c) to ensure the performance of said
obligations and compliance.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to Parent Series A Convertible Preferred Stock with
a record date after the Effective Time will be paid to the holder of any
un-surrendered Certificate with respect to the shares of Parent Series A
Convertible Preferred Stock represented thereby until the holder of record of
such Certificate shall surrender such Certificate. Subject to applicable law,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates
representing whole shares of Parent Series A Convertible Preferred Stock issued
in exchange therefore, without interest, at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Series A Convertible Preferred Stock.
(d) None the Parent Corporation or the Exchange Agent shall be
liable to any holder of shares of Company Common Stock for any amount properly
delivered to a public official in compliance with any abandoned property,
escheat or similar law.
(e) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall be no further registration of transfers of
shares of Company Common Stock thereafter on the records of the Company. From
and after the Effective Time, the holders of certificates representing shares of
Company Common Stock outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such shares of Company Common Stock
except as otherwise provided in this Agreement or by law.
(f) Subject to any applicable escheat or similar laws, any portion
of the Exchange Fund that remains unclaimed by the former shareholders of the
Company for one year after the Effective Time shall be delivered by the Exchange
Agent to Parent, upon demand of Parent, and any former shareholders of the
Company shall thereafter look only to Parent for satisfaction of their claim for
certificates representing shares of Parent Series A Convertible Preferred Stock
in exchange for their shares of Company Common Stock pursuant to the terms of
Section 2.1 hereof.
(g) If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact, in form and substance reasonably
acceptable to the Exchange Agent, by the person claiming such Certificate to be
lost, stolen or destroyed, and complying with such other conditions as the
Exchange Agent may reasonably impose (including the execution of an
indemnification undertaking or the posting of an indemnity bond or other surety
in favor of the Exchange Agent and Parent with respect to the Certificate
alleged to be lost, stolen or destroyed), the Exchange Agent will deliver to
such person, such shares of Parent Series A Convertible Preferred Stock and cash
in lieu of fractional shares, if any, as may be required pursuant to Section
2.1.
C.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and its Subsidiary that to the
Knowledge of the Company, the statements contained in this Article III are true
and correct, except as set forth in the letter delivered by the Company to
Parent on the date hereof (the "Company Disclosure Letter") (which Company
Disclosure Letter sets forth the exceptions to the representations and
warranties contained in this Article III under captions referencing the Sections
to which such exceptions apply):
1. ORGANIZATION AND QUALIFICATION. To the Knowledge of the Company,
each of the Company and its Subsidiaries (as defined below) is a company duly
incorporated, validly existing and, if applicable, in good standing under the
laws of the jurisdiction of its incorporation and each such entity has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. To the Knowledge of the
Company, each of the Company and its Subsidiaries is duly qualified or licensed
to carry on its business as it is now being conducted, and is qualified to
conduct business, in each jurisdiction where the character of its properties
owned or leased or the nature of its activities makes such qualification
necessary, except for failures to be so qualified that would not, individually
or in the aggregate, have a Company Material Adverse Effect (as defined below).
Neither the Company nor any of its Subsidiaries is in violation of any of the
provisions of its Articles of Incorporation or other applicable charter document
(any such document of any business entity hereinafter referred to as its
"Charter Document") or its Bylaws, or other applicable organizational document
(any such documents of any business entity hereinafter referred to as its
"Governing Document"). The Company has delivered to Parent accurate and complete
copies of the respective Charter Documents and Governing Documents, as currently
in effect, of each of the Company and its Subsidiaries. As used in this
Agreement, the term "Company Material Adverse Effect" means any change, effect,
event or condition that (i) has a material adverse effect on the assets,
business or financial condition of the Company and its Subsidiaries, taken as a
whole (other than any such change, effect, event or condition that arises as a
result of the transactions contemplated hereby), or (ii) would prevent or
materially impair the Company's ability to consummate the transactions
contemplated hereby. Notwithstanding the foregoing, the term "Company Material
Adverse Effect" shall, for all purposes under this Agreement, not include any
one or more changes, effects, events, or conditions that create or result in
liabilities, costs, expenses that are less than two hundred fifty thousand
dollars ($250,000). As used in this Agreement, the term "Subsidiary" when used
with respect to any party means any corporation or other organization, whether
incorporated or unincorporated, of which such party directly or indirectly owns
or controls at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the board of directors
or others performing similar functions.
2. CAPITAL STOCK OF SUBSIDIARIES. To the Knowledge of the Company,
neither the Company nor any of its Subsidiaries owns, controls or holds with the
power to vote, directly or indirectly, of record, beneficially or otherwise, any
share of capital stock or any equity or ownership interest in any company,
corporation, partnership, association, joint venture, business, trust or other
entity, except as listed in Section 3.2 of the Company Disclosure Letter. Except
as set forth in Section 3.2 of the Company Disclosure Letter, the Company is
directly or indirectly the record and beneficial owner of all of the outstanding
shares of capital stock of each of its Subsidiaries and no equity securities of
any of such Subsidiaries are or may be required to be issued by reason of any
options, warrants, scrip, rights to subscribe for, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of any capital stock of any such Subsidiary, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any such Subsidiary is bound to issue, transfer or sell any shares of
such capital stock or securities convertible into or exchangeable for such
shares. Other than as set forth in Section 3.2 of the Company Disclosure Letter,
all of such shares so owned by the Company are validly issued, fully paid and
non-assessable and are owned by it free and clear of any claim, lien, pledge,
security interest or other encumbrance of any kind (collectively "Liens") with
respect thereto other than restrictions on transfer pursuant to applicable
securities laws.
3. CAPITALIZATION. The authorized capital stock of the Company consists
of 10,000,000 shares of Company Common Stock, no par value per share and no
other form of equity shares are authorized. As of the close of business on
December 31, 2004(the "Company Measurement Date"), (a)no more than ten million
(10,000,000) shares of Company Common
Stock were issued and outstanding (the "Outstanding Shares"), (b) no shares of
Company Preferred Stock were issued and outstanding, (c) the Company had no
shares of Company Common Stock held in its treasury, (d) no Company Options to
purchase shares of Company Common Stock in the aggregate have been granted and
remain outstanding under the Company Stock Option Plans ("Company Option
Plans"), (e) no Company Warrants to purchase shares of Company Common Stock were
outstanding, and (f) except for the Company Options and Company Warrants, there
were no outstanding Rights (defined below). Except as permitted by Section
5.1(b) and except as provided by the last sentence of this Section 3.3 of this
Agreement, since the Company Measurement Date, no additional shares in the
Company have been issued and no Rights have been granted. Except as described in
the preceding sentence or as set forth in Section 3.3 of the Company Disclosure
Letter, the Company has: (1) no outstanding bonds, debentures, notes or other
securities or obligations the holders of which have the right to vote or which
are convertible into or exercisable for securities having the right to vote on
any matter on which any shareholder of the Company has a right to vote; (2) all
issued and outstanding shares of Company Common Stock are duly authorized,
validly issued, fully paid, non-assessable and free of preemptive rights; and
(3) there are not, as of the date hereof, any existing options, warrants, stock
appreciation rights, stock issuance rights, calls, subscriptions, convertible
securities or other rights which obligate the Company or any of its Subsidiaries
to issue, exchange, transfer or sell any shares of the capital stock of the
Company or any of its Subsidiaries, other than rights to purchase shares under
the Company Stock Option Plans and Company Warrants, or awards granted pursuant
thereto (collectively, "Rights"). As of the date hereof, there are no
outstanding contractual obligations of the Company or any of its Subsidiaries to
repurchase, re-price, redeem or otherwise acquire any shares of the capital
stock of the Company or any of its Subsidiaries. As of the date hereof, there
are no outstanding contractual obligations of the Company to vote or to dispose
of any shares of the capital stock of any of its Subsidiaries. Notwithstanding
the representations and warranties made in this Section 3.3 of this Agreement,
the Parties acknowledge that the Company has undertaken and has continued to
undertake prior to the Effective Date, an exempt offering of its common stock to
certain investors pursuant to claims of exemption under state and federal
securities with the result that the Company has issued and has received
subscriptions receivable for the issuance of additional shares of the Company's
Common Stock.
4. AUTHORITY RELATIVE TO THIS AGREEMENT. To the Knowledge of the
Company, the Company has the requisite corporate power and authority to execute
and deliver, and perform its obligations under, this Agreement and the Company
Option Agreement and, subject to obtaining the necessary approval of its
shareholders, to consummate the Acquisition and the other transactions
contemplated hereby and thereby under applicable law. To the Knowledge of the
Company, the execution and delivery of this Agreement and the consummation of
the Acquisition and other transactions contemplated hereby and thereby have been
duly and validly authorized by the Board of Directors of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the Acquisition or other transactions
contemplated hereby and thereby (other than approval by the Company's
shareholders required by applicable law). To the Knowledge of the Company, this
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery hereof by Parent each
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors
rights generally or by general equitable principles.
5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming that all filings, permits, authorizations, consents
and approvals or waivers thereof have been duly made or obtained as contemplated
by Section 3.5(b) hereof, to the Knowledge of the Company neither the execution
and delivery of this Agreement by the Company nor the consummation of the
Acquisition or other transactions contemplated hereby or thereby nor compliance
by the Company with any of the provisions hereof will (i) violate, conflict
with, or result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination or suspension of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any Lien upon any of the properties or
assets of the Company or any of its Subsidiaries under, any of the terms,
conditions or provisions of (x) their respective Charter Documents or Governing
Documents, (y) any note, bond, charge, lien, pledge, mortgage, indenture or deed
of trust to which the Company or any such Subsidiary is a party or to which they
or any of their respective properties or assets may be subject, or (z) any
license, lease, agreement or other instrument or obligation to which the Company
or any such Subsidiary is a party or to which they or any of their respective
properties or assets may be subject, or (ii) violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company or any of its Subsidiaries or any of their respective properties or
assets, except, in the case of clauses (i) (y) and (z) and (ii) above, for such
violations, conflicts, breaches, defaults, terminations, suspensions,
accelerations, rights of termination or acceleration or creations of liens,
security interests, charges or encumbrances which would not, individually or in
the aggregate, have a Company Material Adverse Effect.
(b) To the Knowledge of the Company, o filing or registration with
or notification to and no permit, authorization, consent or approval of any
court, commission, governmental body, regulatory authority, agency or tribunal
wherever located (a "Governmental Entity") is required to be obtained, made or
given by the Company in connection with the execution and delivery of this
Agreement or the consummation by the Company of the Acquisition or other
transactions contemplated hereby or thereby except such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable state securities laws or any country other than the
United States, or (ii) where the failure to obtain any such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not,
individually or in the aggregate, have a Company Material Adverse Effect.
6. SECURITIES FILINGS; FINANCIAL STATEMENTS.
(a) To the Knowledge of the Company, the Company and/or its
predecessor, has filed all forms, reports, schedules, statements and other
documents required to be filed by it since its inception in 2003 to the date
hereof (collectively, as supplemented and amended since the time of filing, the
"Company Securities Reports") with any applicable governing body in Texas or
Kentucky. The Company Securities Reports (i) were prepared in all material
respects with all applicable requirements of the Securities Acts of Texas and/or
Kentucky as applicable, as the case may be and (ii) did not at the time they
were filed contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The representation in clause (ii) of the preceding sentence does
not apply to any misstatement or omission in any Company Securities Report filed
prior to the date of this
Agreement which was superseded by a subsequent Company Securities Report filed
prior to the date of this Agreement. No Subsidiary of the Company is or was
required to file any report, form or other document with any regulatory body.
(b) To the Knowledge of the Company, the un-audited consolidated
financial statements and un-audited consolidated interim financial statements of
the Company and its Subsidiaries included (collectively, the "Financial
Statements") have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be otherwise indicated in the notes thereto) and present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Company and its Subsidiaries on a consolidated
basis at the respective dates and for the respective periods indicated (except,
in the case of all such financial statements that are interim financial
statements, for footnotes and normal year-end adjustments).
(c) Neither the Company nor any of its Subsidiaries has any
liabilities or obligations of any nature, whether absolute, accrued, un-matured,
contingent or otherwise whether due or to become due, known or unknown, or any
unsatisfied judgments or any leases of personalty or realty or unusual or
extraordinary commitments that are required to be shown on the face of a balance
sheet or disclosed in notes to financial statements under United States
generally accepted accounting principles, except (i) liabilities recorded on the
Company's un-audited balance sheet at September 30, 2004 (the "Balance Sheet")
included in the financial statements referred in Section 3.6(a) hereof and the
notes thereto, or (ii) liabilities or obligations incurred since September 30,
2004 (whether or not incurred in the ordinary course of business and consistent
with past practice) that would not, individually or in the aggregate, have a
Company Material Adverse Effect not otherwise reflected in the Company
disclosure schedules attached hereto under Schedule 3.2(c).
7. ABSENCE OF CHANGES OR EVENTS. EXCEPT AS SET FORTH IN SECTION 3.7 OF
THE COMPANY DISCLOSURE LETTER, SINCE DECEMBER 31, 2004 THROUGH THE DATE OF THIS
AGREEMENT AND TO THE KNOWLEDGE OF THE COMPANY, THE COMPANY AND ITS SUBSIDIARIES
HAVE NOT INCURRED ANY LIABILITY OR OBLIGATION THAT HAS RESULTED OR WOULD
REASONABLY BE EXPECTED TO RESULT IN A COMPANY MATERIAL ADVERSE EFFECT, AND THERE
HAS NOT BEEN ANY CHANGE IN THE BUSINESS, FINANCIAL CONDITION OR RESULTS OF
OPERATIONS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES WHICH HAS HAD, OR WOULD
REASONABLY BE EXPECTED TO HAVE, INDIVIDUALLY OR IN THE AGGREGATE, A COMPANY
MATERIAL ADVERSE EFFECT, AND THE COMPANY AND ITS SUBSIDIARIES HAVE CONDUCTED
THEIR RESPECTIVE BUSINESSES IN THE ORDINARY COURSE CONSISTENT WITH THEIR PAST
PRACTICES.
8. LITIGATION. EXCEPT AS SET FORTH IN SECTION 3.8 OF THE COMPANY
DISCLOSURE LETTER AND TO THE KNOWLEDGE OF THE COMPANY, THERE IS NO (a) CLAIM,
ACTION, SUIT OR PROCEEDING PENDING OR, TO THE KNOWLEDGE (AS DEFINED IN SECTION
8.6 HEREOF) OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, THREATENED AGAINST OR
RELATING TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR (b) OUTSTANDING JUDGMENT,
ORDER, WRIT, INJUNCTION OR DECREE (COLLECTIVELY, "ORDERS"), OR APPLICATION,
REQUEST OR MOTION THEREFOR, IN A PROCEEDING TO WHICH THE COMPANY, ANY SUBSIDIARY
OF THE COMPANY OR ANY OF THEIR RESPECTIVE ASSETS WAS OR IS A PARTY EXCEPT
ACTIONS, SUITS, PROCEEDINGS OR ORDERS THAT, INDIVIDUALLY OR IN THE AGGREGATE,
HAS NOT HAD OR WOULD NOT REASONABLY BE EXPECTED TO HAVE A COMPANY MATERIAL
ADVERSE EFFECT, AND NEITHER THE COMPANY NOR ANY SUBSIDIARY IS IN DEFAULT IN ANY
MATERIAL RESPECT WITH RESPECT TO ANY SUCH ORDER.
9. TITLE TO PROPERTIES. THE COMPANY DOES NOT OWN ANY REAL PROPERTY. THE
COMPANY HAS HERETOFORE MADE AVAILABLE TO PARENT CORRECT AND COMPLETE COPIES OF
ALL LEASES, SUBLEASES AND OTHER AGREEMENTS (COLLECTIVELY, THE "REAL PROPERTY
LEASES") UNDER WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES USES OR OCCUPIES OR
HAS THE RIGHT TO USE OR OCCUPY, NOW OR IN THE FUTURE, ANY REAL PROPERTY OR
FACILITY (THE "LEASED REAL PROPERTY"), INCLUDING WITHOUT LIMITATION ALL
MODIFICATIONS, AMENDMENTS AND SUPPLEMENTS THERETO. EXCEPT IN EACH CASE WHERE THE
FAILURE WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, WOULD REASONABLY BE
EXPECTED TO HAVE A COMPANY MATERIAL ADVERSE EFFECT OR EXCEPT AS OTHERWISE SET
FORTH IN SECTION 3.9 OF THE COMPANY DISCLOSURE LETTER, (i) THE COMPANY OR ONE OF
ITS SUBSIDIARIES HAS A VALID LEASEHOLD INTEREST IN EACH PARCEL OF LEASED REAL
PROPERTY FREE AND CLEAR OF ALL LIENS EXCEPT LIENS OF RECORD AND OTHER PERMITTED
LIENS AND EACH REAL PROPERTY LEASE IS IN FULL FORCE AND EFFECT, (ii) ALL RENT
AND OTHER SUMS AND CHARGES DUE AND PAYABLE BY THE COMPANY OR ITS SUBSIDIARIES AS
TENANTS THEREUNDER ARE CURRENT IN ALL MATERIAL RESPECTS, (iii) NO TERMINATION
EVENT OR CONDITION OR UNCURED DEFAULT OF A MATERIAL NATURE ON THE PART OF THE
COMPANY OR ANY SUCH SUBSIDIARY OR, TO THE KNOWLEDGE OF THE COMPANY OR ANY SUCH
SUBSIDIARY, THE LANDLORD, EXISTS UNDER ANY REAL PROPERTY LEASE, (iv) THE COMPANY
OR ONE OF ITS SUBSIDIARIES IS IN ACTUAL POSSESSION OF EACH LEASED REAL PROPERTY
AND IS ENTITLED TO QUIET ENJOYMENT THEREOF IN ACCORDANCE WITH THE TERMS OF THE
APPLICABLE REAL PROPERTY LEASE AND APPLICABLE LAW, AND (v) THE COMPANY AND ITS
SUBSIDIARIES OWN OUTRIGHT ALL OF THE PERSONAL PROPERTY (EXCEPT FOR LEASED
PROPERTY OR ASSETS FOR WHICH IT HAS A VALID AND ENFORCEABLE RIGHT TO USE) WHICH
IS REFLECTED ON THE BALANCE SHEET, EXCEPT FOR PROPERTY SINCE SOLD OR OTHERWISE
DISPOSED OF IN THE ORDINARY COURSE OF BUSINESS AND CONSISTENT WITH PAST PRACTICE
AND EXCEPT FOR LIENS OF RECORD AND OTHER PERMITTED LIENS. EXCEPT WHERE THE
FAILURE WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, HAVE A COMPANY MATERIAL
ADVERSE EFFECT, THE PLANT, PROPERTY AND EQUIPMENT OF THE COMPANY AND ITS
SUBSIDIARIES THAT ARE USED IN THE OPERATIONS OF THEIR BUSINESSES ARE IN
REASONABLE OPERATING CONDITION AND REPAIR, SUBJECT TO ORDINARY WEAR AND TEAR,
AND, SUBJECT TO NORMAL MAINTENANCE, ARE AVAILABLE FOR USE.
10. CERTAIN CONTRACTS. TO THE KNOWLEDGE OF THE COMPANY, NEITHER THE
COMPANY NOR ANY OF ITS SUBSIDIARIES HAS BREACHED, OR RECEIVED IN WRITING ANY
CLAIM OR NOTICE THAT IT HAS BREACHED, ANY OF THE TERMS OR CONDITIONS OF (i) ANY
AGREEMENT, CONTRACT OR COMMITMENT REQUIRED TO BE FILED AS AN EXHIBIT TO THE
COMPANY SECURITIES REPORTS (INCLUDING ANY AGREEMENTS, CONTRACTS OR COMMITMENTS
ENTERED INTO SINCE SEPTEMBER 30, 2004 THAT WILL BE REQUIRED TO BE FILED BY THE
COMPANY WITH THE SEC IN ANY REPORT), (ii) ANY AGREEMENTS, CONTRACTS OR
COMMITMENTS WITH MANUFACTURERS, SUPPLIERS, SALES REPRESENTATIVES, DISTRIBUTORS,
OR OEM STRATEGIC PARTNERS OF THE COMPANY PURSUANT TO WHICH THE COMPANY
RECOGNIZED REVENUES OR PAYMENTS IN EXCESS OF $50,000 FOR THE TWELVE-MONTH PERIOD
ENDED DECEMBER 31, 2004, OR (iii) ANY AGREEMENTS, CONTRACTS OR COMMITMENTS
CONTAINING COVENANTS THAT LIMIT THE ABILITY OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES TO COMPETE IN ANY LINE OF BUSINESS OR WITH ANY PERSON (AS DEFINED
IN SECTION 8.6 HEREOF), OR THAT INCLUDE ANY EXCLUSIVITY PROVISION OR INVOLVE ANY
RESTRICTION ON THE GEOGRAPHIC AREA IN WHICH THE COMPANY OR ANY OF ITS
SUBSIDIARIES MAY CARRY ON ITS BUSINESS (COLLECTIVELY, "COMPANY MATERIAL
CONTRACTS"), IN SUCH A MANNER AS, INDIVIDUALLY OR IN THE AGGREGATE, HAS HAD OR
WOULD REASONABLY BE EXPECTED TO HAVE A COMPANY MATERIAL ADVERSE EFFECT. SECTION
3.10 OF THE COMPANY DISCLOSURE LETTER LISTS EACH COMPANY MATERIAL CONTRACT
DESCRIBED IN CLAUSES (ii) AND (iii) OF THE PRECEDING SENTENCE. EACH COMPANY
MATERIAL CONTRACT THAT HAS NOT EXPIRED BY ITS TERMS IS IN FULL FORCE AND EFFECT
AND IS THE LEGAL, VALID AND BINDING OBLIGATION OF THE COMPANY AND/OR ITS
SUBSIDIARIES, ENFORCEABLE AGAINST THEM IN ACCORDANCE WITH ITS TERMS, SUBJECT TO
APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM AND
SIMILAR LAWS AFFECTING CREDITORS RIGHTS AND REMEDIES GENERALLY AND SUBJECT, AS
TO ENFORCEABILITY, TO GENERAL PRINCIPLES OF EQUITY (REGARDLESS OF WHETHER
ENFORCEMENT IS SOUGHT IN A PROCEEDING AT LAW OR IN EQUITY), EXCEPT WHERE THE
FAILURE OF SUCH COMPANY MATERIAL CONTRACT TO BE IN FULL FORCE AND EFFECT OR TO
BE LEGAL, VALID, BINDING OR ENFORCEABLE AGAINST THE COMPANY AND/OR ITS
SUBSIDIARIES HAS NOT HAD AND WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE,
REASONABLY BE EXPECTED TO HAVE A COMPANY MATERIAL ADVERSE EFFECT. EXCEPT AS SET
FORTH IN SECTION 3.10 OF THE COMPANY DISCLOSURE LETTER, NO CONSENT, APPROVAL,
WAIVER OR AUTHORIZATION OF, OR NOTICE TO ANY PERSON IS NEEDED IN ORDER THAT EACH
SUCH COMPANY MATERIAL CONTRACT SHALL CONTINUE IN FULL FORCE AND EFFECT IN
ACCORDANCE WITH ITS TERMS WITHOUT PENALTY, ACCELERATION OR RIGHTS OF EARLY
TERMINATION BY REASON OF THE CONSUMMATION OF THE ACQUISITION AND THE OTHER
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
11. COMPLIANCE WITH LAW. TO THE KNOWLEDGE OF THE COMPANY, AND EXCEPT
WHERE THE FAILURE WOULD NOT HAVE A COMPANY MATERIAL ADVERSE EFFECT, ALL
ACTIVITIES OF THE COMPANY AND ITS SUBSIDIARIES HAVE BEEN, AND ARE CURRENTLY
BEING, CONDUCTED IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL APPLICABLE
UNITED STATES FEDERAL, STATE, PROVINCIAL AND LOCAL AND OTHER FOREIGN LAWS,
ORDINANCES, REGULATIONS, INTERPRETATIONS, JUDGMENTS, DECREES, INJUNCTIONS,
PERMITS, LICENSES, CERTIFICATES, GOVERNMENTAL REQUIREMENTS, AND ORDERS OF ANY
COURT OR OTHER GOVERNMENTAL ENTITY OR ANY NONGOVERNMENTAL SELF-REGULATORY
AGENCY, AND THE COMPANY IS NOT AWARE OF ANY NOTICE THAT HAS BEEN RECEIVED BY THE
COMPANY'S BOARD OF DIRECTORS OR ANY SUBSIDIARY OF ANY CLAIMS FILED AGAINST THE
COMPANY OR ANY SUBSIDIARY ALLEGING A VIOLATION OF ANY SUCH LAWS, REGULATIONS OR
OTHER REQUIREMENTS WHICH WOULD BE REQUIRED TO BE DISCLOSED IN ANY COMPANY
SECURITIES REPORT. TO THE KNOWLEDGE OF THE COMPANY, THE COMPANY STOCK OPTION
PLANS AND WARRANTS, IF ANY, HAVE BEEN DULY AUTHORIZED, APPROVED AND OPERATED IN
COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL APPLICABLE SECURITIES, CORPORATE
AND OTHER LAWS OF EACH JURISDICTION IN WHICH PARTICIPANTS OF SUCH PLANS ARE
LOCATED. TO THE KNOWLEDGE OF THE COMPANY, THE COMPANY AND ITS SUBSIDIARIES HAVE
ALL PERMITS, LICENSES AND FRANCHISES FROM GOVERNMENTAL ENTITIES REQUIRED TO
REASONABLY CONDUCT THEIR BUSINESSES AS NOW BEING CONDUCTED, EXCEPT FOR SUCH
PERMITS, LICENSES AND FRANCHISES THE ABSENCE OF WHICH HAS NOT HAD AND WOULD NOT,
INDIVIDUALLY OR IN THE AGGREGATE, HAVE A COMPANY MATERIAL ADVERSE EFFECT.
12. INTELLECTUAL PROPERTY RIGHTS;
(a) To the Knowledge of the Company, the Company and its
Subsidiaries own, or are validly licensed or otherwise possess legally
enforceable rights to use, all patents, trademarks, trade names, service marks,
domain names and copyrights, any applications for and registrations of such
patents, trademarks, trade names, service marks, domain names and copyrights,
and all database rights, net lists, processes, formulae, methods, schematics,
technology, know-how, computer software programs or applications and tangible or
intangible proprietary information or material that are reasonably necessary to
conduct the business of the Company and its Subsidiaries as currently conducted,
or presently planned to be conducted, except for such rights the absence of
which would not be reasonably expected to have a Company Material Adverse Effect
(the "Company Intellectual Property Rights"). The Company and its Subsidiaries
have taken all action reasonably necessary to protect the Company Intellectual
Property Rights which is customary in the industry, including without
limitation, use of reasonable secrecy measures to protect the trade secrets
included in the Company Intellectual Property Rights.
(b) The execution and delivery of this Agreement and consummation
of the transactions contemplated hereby will not result in the breach of, or
create on behalf of any third party the right to terminate or modify, any
material license, sublicense or other agreement relating to the Company
Intellectual Property Rights, or any material licenses, sublicenses or other
agreements as to which the Company or any of its Subsidiaries is a party and
pursuant to which the Company or any of its Subsidiaries is authorized to use
any third party patents, trademarks, copyrights or trade secrets ("Company Third
Party Intellectual Property Rights"), the breach of which would, individually or
in the aggregate, be reasonably likely to have a Company Material Adverse
Effect. The Company Disclosure Letter, under the caption referencing this
Section 3.12, lists all royalties, license fees, sublicense fees of the Company.
(c) To the Knowledge of the Company, all patents, mining claims,
energy royalty agreements, natural resources interests, registered trademarks,
service marks, domain names and copyrights which are held by the Company or any
of its Subsidiaries, the loss or invalidity of which would reasonably be
expected to cause a Company Material Adverse Effect, are valid and subsisting.
The Company's Board of Directors is not aware that it:(i) has not been sued in
any suit, action or proceeding, or received in writing any claim or notice,
which involves a claim of infringement or misappropriation of any patents,
trademarks, service marks, domain names, copyrights or violation of any trade
secret or other proprietary right of any third party; and (ii) has no Knowledge
that the manufacturing, marketing, licensing or sale of its products or services
infringe upon, misappropriate or otherwise come into conflict with any patent,
trademark, service xxxx, copyright, trade secret or other proprietary right of
any third party, which infringement, misappropriation or conflict in the cases
of clause (i) and (ii) would, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. To the Knowledge of the
Company, no other Person has interfered with, infringed upon, or otherwise come
into conflict with any Company Intellectual Property Rights or other proprietary
information of the Company or any of its Subsidiaries which has or would,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(d) Except where the failure to do so would not have a Company
Material Adverse Effect, each employee, agent, consultant or contractor who has
materially contributed to or participated in the creation or development of any
copyrightable, patentable or trade secret material on behalf of the Company, any
of its Subsidiaries or any predecessor in interest thereto either: (i) is a
party to an agreement under which the Company or such Subsidiary is deemed to be
the original owner/author of all property rights therein; or (ii) has executed
an assignment or an agreement to assign in favor of the Company, such Subsidiary
or such predecessor in interest, as applicable, all right, title and interest in
such material.
13. TAXES.
(a) "Tax" or "Taxes" shall mean all U.S Internal Revenue, federal,
state, provincial, local or foreign taxes and any other applicable duties,
levies, fees, charges and assessments that are in the nature of a tax, including
income, gross receipts, property, sales, use, license, excise, franchise, ad
valorem, value-added, transfer, social security payments, and health taxes and
any deductibles relating to wages, salaries and benefits and payments to
subcontractors for any jurisdiction in which the Company or any of its
Subsidiaries does business (to the extent required under applicable Tax law),
together with all interest, penalties and additions imposed with respect to such
amounts.
(b) To the Knowledge of the Company, and except as set forth in
(or resulting from matters set forth in) Section 3.13 of the Company Disclosure
Letter or as could not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect:
TO THE KNOWLEDGE OF THE COMPANY, THE COMPANY AND ITS
SUBSIDIARIES HAVE PREPARED AND TIMELY FILED WITH THE APPROPRIATE
GOVERNMENTAL AGENCIES ALL FRANCHISE, INCOME, SALES AND ALL OTHER MATERIAL
TAX RETURNS AND REPORTS REQUIRED TO BE FILED ON OR BEFORE THE EFFECTIVE
TIME (COLLECTIVELY "RETURNS"), TAKING INTO ACCOUNT ANY EXTENSION OF TIME
TO FILE GRANTED TO OR OBTAINED ON BEHALF OF THE COMPANY AND/OR ITS
SUBSIDIARIES;
TO THE KNOWLEDGE OF THE COMPANY, ALL TAXES OF THE COMPANY AND
ITS SUBSIDIARIES SHOWN ON SUCH RETURNS OR OTHERWISE KNOWN BY THE COMPANY
TO BE DUE OR PAYABLE HAVE BEEN TIMELY PAID IN FULL TO THE PROPER
AUTHORITIES, OTHER THAN SUCH TAXES AS ARE BEING CONTESTED IN GOOD FAITH BY
APPROPRIATE PROCEEDINGS OR WHICH ARE ADEQUATELY RESERVED FOR IN ACCORDANCE
WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES;
ALL DEFICIENCIES RESULTING FROM TAX EXAMINATIONS OF INCOME,
SALES AND FRANCHISE AND ALL OTHER MATERIAL RETURNS FILED BY THE COMPANY
AND ITS SUBSIDIARIES IN ANY JURISDICTION IN WHICH SUCH RETURNS ARE
REQUIRED TO BE SO FILED HAVE EITHER BEEN PAID OR ARE BEING CONTESTED IN
GOOD FAITH BY APPROPRIATE PROCEEDINGS;
NO DEFICIENCY HAS BEEN ASSERTED OR ASSESSED AGAINST THE
COMPANY OR ANY OF ITS SUBSIDIARIES WHICH HAS NOT BEEN SATISFIED OR
OTHERWISE RESOLVED, AND NO EXAMINATION OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES IS PENDING OR, TO THE KNOWLEDGE OF THE COMPANY, THREATENED
FOR ANY MATERIAL AMOUNT OF TAX BY ANY TAXING AUTHORITY;
NO EXTENSION OF THE PERIOD FOR ASSESSMENT OR COLLECTION OF ANY
MATERIAL TAX IS CURRENTLY IN EFFECT AND NO EXTENSION OF TIME WITHIN WHICH
TO FILE ANY MATERIAL RETURN HAS BEEN REQUESTED, WHICH RETURN HAS NOT SINCE
BEEN FILED;
TO THE KNOWLEDGE OF THE COMPANY, ALL RETURNS FILED BY THE
COMPANY AND ITS SUBSIDIARIES ARE CORRECT AND COMPLETE IN ALL MATERIAL
RESPECTS OR ADEQUATE RESERVES HAVE BEEN ESTABLISHED WITH RESPECT TO ANY
ADDITIONAL TAXES THAT MAY BE DUE (OR MAY BECOME DUE) AS A RESULT OF SUCH
RETURNS NOT BEING CORRECT OR COMPLETE;
TO THE KNOWLEDGE OF THE COMPANY, NO TAX LIENS HAVE BEEN FILED
AGAINST THE COMPANY OR ANY SUBSIDIARIES OF THE COMPANY WITH RESPECT TO ANY
TAXES;
NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES HAVE MADE
SINCE JUNE OF 2003, AND NONE WILL MAKE, ANY VOLUNTARY ADJUSTMENT BY REASON
OF A CHANGE IN THEIR ACCOUNTING METHODS FOR ANY PRE-ACQUISITION PERIOD;
TO THE KNOWLEDGE OF THE COMPANY, THE COMPANY AND ITS
SUBSIDIARIES HAVE MADE TIMELY PAYMENTS OF THE TAXES REQUIRED TO BE
DEDUCTED AND WITHHELD FROM THE WAGES PAID TO THEIR EMPLOYEES;
THE COMPANY AND ITS SUBSIDIARIES ARE NOT PARTIES TO ANY TAX
SHARING OR TAX MATTERS AGREEMENT; AND
TO THE KNOWLEDGE OF THE COMPANY, NEITHER THE COMPANY NOR ANY
OF ITS SUBSIDIARIES IS LIABLE TO BE ASSESSED FOR OR MADE ACCOUNTABLE FOR
ANY TAX FOR WHICH ANY OTHER PERSON OR PERSONS MAY BE LIABLE TO BE ASSESSED
OR MADE ACCOUNTABLE WHETHER BY VIRTUE OF THE ENTERING INTO OR THE
CONSUMMATION OF THE ACQUISITION OR BY VIRTUE OF ANY ACT OR ACTS DONE BY OR
WHICH MAY BE DONE BY OR ANY CIRCUMSTANCE OR CIRCUMSTANCES INVOLVING OR
WHICH MAY INVOLVE ANY OTHER PERSON OR PERSONS.
14. EMPLOYEES. NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES IS A
PARTY TO ANY COLLECTIVE BARGAINING AGREEMENT, ARRANGEMENT OR LABOR CONTRACT WITH
A LABOR UNION OR LABOR ORGANIZATION, WHETHER FORMAL OR OTHERWISE. THE COMPANY
DISCLOSURE LETTER, UNDER THE CAPTION REFERENCING THIS SECTION 3.14, LISTS ALL
EMPLOYMENT, SEVERANCE AND CHANGE OF CONTROL AGREEMENTS (OR ANY OTHER AGREEMENTS
THAT MAY RESULT IN THE ACCELERATION OF OUTSTANDING OPTIONS) OF THE COMPANY OR
ITS SUBSIDIARIES. EACH OF THE COMPANY AND ITS SUBSIDIARIES IS IN COMPLIANCE WITH
ALL APPLICABLE LAWS (INCLUDING, WITHOUT LIMITATION, ALL APPLICABLE EXTENSION
ORDERS) RESPECTING EMPLOYMENT AND EMPLOYMENT PRACTICES, TERMS AND CONDITIONS OF
EMPLOYMENT, EQUAL OPPORTUNITY, ANTI-DISCRIMINATION LAWS, AND WAGES AND HOURS,
EXCEPT WHERE SUCH NONCOMPLIANCE HAS NOT HAD AND WOULD NOT, INDIVIDUALLY OR IN
THE AGGREGATE, REASONABLY BE EXPECTED TO HAVE, A COMPANY MATERIAL ADVERSE
EFFECT. THERE IS NO LABOR STRIKE, SLOWDOWN OR STOPPAGE PENDING (OR, TO THE
KNOWLEDGE OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, ANY UNFAIR LABOR PRACTICE
COMPLAINTS, LABOR DISTURBANCES OR OTHER CONTROVERSIES RESPECTING EMPLOYMENT
WHICH ARE PENDING OR THREATENED WHICH, IF THEY ACTUALLY OCCURRED, WOULD
REASONABLY BE EXPECTED TO HAVE A COMPANY MATERIAL ADVERSE EFFECT) AGAINST THE
COMPANY OR ANY OF ITS SUBSIDIARIES.
15. EMPLOYEE BENEFIT PLANS.
(a) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and "Plan" means every plan, fund, contract, program and
arrangement (whether written or not) which is maintained or contributed to by
the Company and its Subsidiaries for the benefit of present or former employees
or with respect to which the Company and its Subsidiaries otherwise has current
or potential liability. "Plan" includes any arrangement intended to provide: (i)
medical, surgical, health care, hospitalization, dental, vision, workers'
compensation, life insurance, death, disability, legal services, severance,
sickness, accident, or cafeteria plan benefits (whether or not defined in
Section 3(1) of ERISA), (ii) pension, profit sharing, stock bonus, retirement,
supplemental retirement or deferred compensation benefits (whether or not tax
qualified and whether or not defined in Section 3(2) of ERISA), (iii) bonus,
incentive compensation, stock option, stock appreciation right, phantom stock or
stock purchase benefits, change in control benefits or (iv) salary continuation,
unemployment, supplemental unemployment, termination pay, vacation or holiday
benefits (whether or not defined in Section 3(3) of ERISA). The Company
Disclosure Letter, under the caption referencing this Section 3.15(a), sets
forth all material Plans by name and brief description.
(b) To the Knowledge of the Company and to the extent required
(either as a matter of law or to obtain the intended tax treatment and tax
benefits), all Plans comply and have complied with the requirements of ERISA,
the Code and other applicable law, except where such noncompliance would not,
individually or in the aggregate, have a Company Material Adverse
Effect. With respect to the Plans, (i) all required contributions which are due
have been made and an accrual required by generally accepted accounting
principles has been made on the books and records of the Company or its
Subsidiaries for all future contribution obligations; (ii) there are no actions,
suits or claims pending, other than routine uncontested claims for benefits; and
(iii) there have been no nonexempt prohibited transactions (as defined in
Section 406 of ERISA or Section 4975 of the Code), except for such transactions,
if any, which have not had and would not, individually or in the aggregate,
reasonably be expected to have, a Company Material Adverse Effect. Except as
otherwise disclosed in the Company Disclosure Letter under the caption
referencing this Section 3.15(b), all benefits under the Plans (other than Code
Section 125 cafeteria plans) are payable either through a fully-funded trust or
an insurance contract and no welfare benefit Plan (as defined in Section 3(1) of
ERISA) is self-funded.
(c) Parent has received true and complete copies of (i) all Plan
documents, including related trust agreements or funding arrangements; (ii) the
most recent determination letter, if any, received by the Company or its
Subsidiaries from the Internal Revenue Service (the "IRS") regarding the Plans
and any amendment to any Plan made subsequent to any Plan amendments covered by
any such determination letter; (iii) current summary plan descriptions; and (iv)
annual returns/reports on Form 5500 and summary annual reports for the most
recent plan year. To the Knowledge of the Company, nothing has occurred that
could materially adversely affect the qualification of the Plans and their
related trusts under Section 401(a) of the Code.
(d) Except as set forth in Section 3.15 of the Company Disclosure
Letter, the Company does not maintain or contribute to (and has never
contributed to) any multi-employer plan, as defined in Section 3(37) of ERISA.
Neither the Company nor any of its Subsidiaries has any actual or potential
material liabilities under Title IV of ERISA, including under Section 4201 of
ERISA for any complete or partial withdrawal from a multi-employer plan.
(e) To the Knowledge of the Company, neither the Company nor any
of its Subsidiaries has any actual or potential material liability for death or
medical benefits after separation from employment
(f) To the Knowledge of the Company, neither the Company nor any
of its Subsidiaries, nor any of their respective directors, officers, employees
or other "fiduciaries", as such term is defined in Section 3(21) of ERISA, has
committed any breach of fiduciary responsibility imposed by ERISA or any other
applicable law with respect to the Plans which would subject the Company, Parent
or any of their respective directors, officers or employees to any liability
under ERISA or any applicable law, except for such breaches, if any, which have
not had and would not, individual or in the aggregate, reasonably be expected to
have, a Company Material Adverse Effect.
(g) Except with respect to Taxes on benefits paid or provided, no
Tax has been waived or excused, has been paid or is owed by any person
(including, but not limited to, any Plan, any Plan fiduciary or the Company)
with respect to the operations of, or any transactions with respect to, any Plan
which would, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect. No action has been taken by the Company, nor
has there been any failure by the Company to take any action, nor is any action
or failure to take action contemplated by the Company (including all actions
contemplated under this Agreement), that would subject any person or entity to
any liability or Tax imposed by the IRS or DOL in
connection with any Plan, except for such liability or Tax that has not had and
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect. No reserve for any Taxes has been established
with respect to any Plan by the Company nor has any advice been given to the
Company with respect to the need to establish such a reserve, except for such
reserves which would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(h) To the Knowledge of the Company, there are no (i) legal,
administrative or other proceedings or governmental investigations or audits, or
(ii) complaints to or by any Governmental Entity, which are pending, anticipated
or, to the Knowledge of the Company, threatened, against any Plan or its assets,
or against any Plan fiduciary or administrator, or against the Company or its
officers or employees with respect to any Plan which would, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(i) Each Plan may be terminated directly or indirectly by Parent
and the Company, in their sole discretion, at any time before or after the
Effective Date in accordance with its terms, without causing the Parent or the
Company to incur any liability to any person, entity or government agency for
any conduct, practice or omission of the Company which occurred prior to the
Effective Date, except for (i) liabilities to, and the rights of, the employees
thereunder accrued prior to the Effective Date, or if later, the time of
termination, (ii) continuation rights required by the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, or other applicable law, and
(iii) liabilities which would not have a Company Material Adverse Effect.
16. ENVIRONMENTAL MATTERS.
(a) To the Knowledge of the Company, the Company and its
Subsidiaries (i) have been in compliance and are presently complying in all
material respects with all applicable health, safety and Environmental Laws
(defined below), and (ii) have obtained all material permits, licenses and
authorizations which are required under all applicable health, safety and
Environmental Laws and are in compliance in all material respects with such
permits, licenses and authorizations, except in each case for such failure to
comply or to obtain permits, licenses or authorizations that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. To the Knowledge of the Company, (i) none of the Leased
Real Property (including without limitation soils and surface and ground waters)
are contaminated with any Hazardous Materials in quantities which require
investigation or remediation under Environmental Laws, (ii) neither the Company
nor any of its Subsidiaries is liable for any off-site contamination, and (iii)
there is no environmental matter which could reasonably be expected to expose
the Company or any of its Subsidiaries to a claim to clean-up any Hazardous
Materials or otherwise to remedy any pollution or damage at any of the
properties utilized in the Company's business under any Environmental Laws, that
would, with respect to any of (i), (ii) or (iii) above, be required to be
disclosed under U.S. Securities Laws.
(b) For purposes of this Agreement, the term (i) "Environmental
Laws" means all applicable United States federal, state, provincial, local and
other foreign laws, rules, regulations, codes, ordinances, orders, decrees,
directives, permits, licenses and judgments relating to pollution, contamination
or protection of the environment (including, without limitation, all applicable
United States federal, state, provincial, local and other foreign laws,
rules, regulations, codes, ordinances, orders, decrees, directives, permits,
licenses and judgments relating to Hazardous Materials in effect as of the date
of this Agreement), and (ii) "Hazardous Materials" means any dangerous, toxic or
hazardous pollutant, contaminant, chemical, waste, material or substance as
defined in or governed by any United States federal, state, provincial, local or
other foreign law, statute, code, ordinance, regulation, rule or other
requirement relating to such substance or otherwise relating to the environment
or human health or safety, including without limitation any waste, material,
substance, pollutant or contaminant that might cause any injury to human health
or safety or to the environment or might subject the Company or any of its
Subsidiaries to any imposition of costs or liability under any Environmental
Law.
17. FOREIGN CORRUPT PRACTICES ACT. NEITHER THE COMPANY NOR ANY OF ITS
SUBSIDIARIES (NOR ANY PERSON REPRESENTING THE COMPANY OR ANY OF ITS
SUBSIDIARIES) HAS AT ANY TIME DURING THE LAST FIVE YEARS (a) MADE ANY PAYMENT IN
VIOLATION OF THE FOREIGN CORRUPT PRACTICES ACT OR SIMILAR LAWS OF OTHER
COUNTRIES WHERE THE COMPANY ENGAGES IN BUSINESS, OR (b) MADE ANY PAYMENT TO ANY
FOREIGN, FEDERAL OR STATE GOVERNMENTAL OFFICER OR OFFICIAL, OR OTHER PERSON
CHARGED WITH SIMILAR PUBLIC OR QUASI-PUBLIC DUTIES, OTHER THAN PAYMENTS REQUIRED
OR PERMITTED BY THE LAWS OF THE UNITED STATES OR ANY JURISDICTION THEREOF.
18. EXPORT CONTROL LAWS. THE COMPANY HAS CONDUCTED ITS EXPORT
TRANSACTIONS IN ACCORDANCE IN ALL MATERIAL RESPECTS WITH APPLICABLE PROVISIONS
OF UNITED STATES EXPORT CONTROL LAWS AND REGULATIONS, INCLUDING BUT NOT LIMITED
TO THE EXPORT ADMINISTRATION ACT AND IMPLEMENTING EXPORT ADMINISTRATION
REGULATIONS.
19. FINDERS OR BROKERS. EXCEPT FOR SUCH PERSONS AS SET FORTH IN SECTION
3.19 OF THE COMPANY DISCLOSURE LETTER, WHOSE FEES WILL BE PAID BY THE COMPANY,
NONE OF THE COMPANY, THE SUBSIDIARIES OF THE COMPANY, THE BOARD OF DIRECTORS OF
THE COMPANY (THE "COMPANY BOARD") OR ANY MEMBER OF THE COMPANY BOARD HAS
EMPLOYED ANY AGENT, INVESTMENT BANKER, BROKER, FINDER OR INTERMEDIARY IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY WHO MIGHT BE ENTITLED TO A
FEE OR ANY COMMISSION IN CONNECTION WITH THE ACQUISITION OR THE OTHER
TRANSACTIONS CONTEMPLATED HEREBY.
20. BOARD RECOMMENDATION. THE COMPANY BOARD HAS, AT A MEETING OF SUCH
COMPANY BOARD DULY APPROVED AND ADOPTED THIS AGREEMENT, THE ACQUISITION, AND THE
OTHER TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, DECLARED THE ADVISABILITY OF
THE ACQUISITION AND RECOMMENDED THAT THE SHAREHOLDERS OF THE COMPANY APPROVE THE
ACQUISITION AND THE OTHER TRANSACTIONS CONTEMPLATED HEREBY, AND HAS NOT AS OF
THE DATE HEREOF RESCINDED OR MODIFIED IN ANY RESPECT ANY OF SUCH ACTIONS.
21. VOTE REQUIRED. THE AFFIRMATIVE VOTE OF THE HOLDERS OF ALL OF THE
SHARES OF COMPANY COMMON STOCK OUTSTANDING IS THE ONLY VOTE OF THE HOLDERS OF
ANY OF THE COMPANY'S CAPITAL STOCK NECESSARY TO APPROVE THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY.
TAX MATTERS. NEITHER THE COMPANY NOR, TO ITS KNOWLEDGE, ANY OF ITS AFFILIATES
HAS TAKEN OR AGREED TO TAKE ANY ACTION, OR KNOWS OF ANY CIRCUMSTANCES, THAT
(WITHOUT REGARD TO ANY ACTION TAKEN OR AGREED TO BE TAKEN BY PARENT OR ANY OF
ITS AFFILIATES) WOULD PREVENT THE BUSINESS COMBINATION TO BE EFFECTED BY THE
ACQUISITION FROM CONSTITUTING A TRANSACTION QUALIFYING AS A REORGANIZATION
WITHIN THE MEANING OF SECTION 368 OF THE CODE.
3.23 STATE TAKEOVER STATUTES; RIGHTS AGREEMENT. THE COMPANY BOARD HAS
TAKEN ALL ACTIONS SO THAT THE RESTRICTIONS CONTAINED IN THE TBCA APPLICABLE TO A
"BUSINESS COMBINATION" (AS DEFINED IN THE TBCA) WILL NOT APPLY TO THE EXECUTION,
DELIVERY OF PERFORMANCE OF THIS AGREEMENT OR THE COMPANY OPTION AGREEMENT OR THE
CONSUMMATION OF THE ACQUISITION OR THE OTHER TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR BY THE COMPANY OPTION AGREEMENT.
3.24 ISSUANCE DISCLOSURE STATEMENT; THE INFORMATION SUPPLIED BY THE
COMPANY FOR INCLUSION IN THE ISSUANCE DISCLOSURE STATEMENT AND/OR FILINGS AND/OR
FORM 8K, 14F OR 15c-211 (OR SUCH OTHER OR SUCCESSOR FORM AS SHALL BE
APPROPRIATE) PURSUANT TO WHICH THE SHARES OF PARENT SERIES A CONVERTIBLE
PREFERRED STOCK TO BE ISSUED IN THE ACQUISITION WILL BE REGISTERED DELIVERED TO
THE SHAREHOLDERS OF COMPANY (THE "ISSUANCE DISCLOSURE STATEMENT") SHALL NOT AT
THE TIME THE ISSUANCE STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
THERETO) CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE ANY
MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY IN ORDER TO MAKE THE
STATEMENTS THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE,
NOT MISLEADING. THE INFORMATION SUPPLIED BY THE COMPANY FOR INCLUSION IN THE
STATEMENT TO BE SENT TO THE SHAREHOLDERS OF COMPANY, AFTER THE CLOSING OF THE
TRANSACTION BY COMPANY MAJORITY SHAREHOLDER CONSENT, IN CONNECTION WITH THE
REQUIRED NOTICE TO THE COMPANY'S SHAREHOLDERS AFTER THE ACQUISITION (THE
"COMPANY NOTICE") AND TO THE STOCKHOLDERS OF PARENT IN CONNECTION WITH THE
MEETING OF PARENT'S STOCKHOLDERS TO CONSIDER THE AMENDMENTS TO PARENT ARTICLES
OF INCORPORATION (THE "PARENT STOCKHOLDERS MEETING"), IF APPLICABLE, SHALL NOT,
ON THE DATE THE ISSUANCE DISCLOSURE STATEMENT IS FIRST MAILED TO COMPANY'S
SHAREHOLDERS AND THE PARENT STOCKHOLDERS, AT THE TIME OF THE COMPANY
SHAREHOLDERS MEETING AND THE PARENT STOCKHOLDERS MEETING OR 14(f) NOTIFICATION
AND AT THE EFFECTIVE TIME, CONTAIN ANY STATEMENT WHICH, AT SUCH TIME, IS FALSE
OR MISLEADING WITH RESPECT TO ANY MATERIAL FACT, OR OMIT TO STATE ANY MATERIAL
FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS MADE THEREIN, IN LIGHT OF THE
CIRCUMSTANCES UNDER WHICH THEY ARE MADE, NOT FALSE OR MISLEADING; OR OMIT TO
STATE ANY MATERIAL FACT NECESSARY TO CORRECT ANY STATEMENT IN ANY EARLIER
COMMUNICATION WITH RESPECT TO THE SOLICITATION OF PROXIES FOR THE COMPANY
SHAREHOLDERS MEETING OR THE PARENT STOCKHOLDERS MEETING WHICH HAS BECOME FALSE
OR MISLEADING.
IF AT ANY TIME PRIOR TO THE EFFECTIVE TIME ANY EVENT OR INFORMATION SHOULD
BE DISCOVERED BY THE COMPANY WHICH SHOULD BE SET FORTH IN AN AMENDMENT TO THE
ISSUANCE STATEMENT OR A SUPPLEMENT TO THE ISSUANCE DISCLOSURE STATEMENT, THE
COMPANY SHALL PROMPTLY INFORM PARENT. NOTWITHSTANDING THE FOREGOING, THE COMPANY
MAKES NO REPRESENTATION, WARRANTY OR COVENANT WITH RESPECT TO ANY INFORMATION
SUPPLIED BY PARENT WHICH IS CONTAINED IN ANY OF THE FOREGOING DOCUMENTS.
D.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that the statements contained in
this Article IV are true and correct:
1. ORGANIZATION AND QUALIFICATION. PARENT IS A CORPORATION DULY
INCORPORATED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE STATE
OF COLORADO, WITH THE CORPORATE POWER AND AUTHORITY TO OWN, LEASE AND OPERATE
ITS PROPERTIES AND TO CARRY ON ITS BUSINESS AS NOW BEING CONDUCTED. PARENT IS A
CORPORATION VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF
COLORADO. EACH OF PARENT AND ITS SUBSIDIARY, WHICH IS DOMICILED IN NEW JERSEY,
IS DULY QUALIFIED OR LICENSED TO CARRY ON ITS BUSINESS AS IT IS NOW BEING
CONDUCTED, AND IS QUALIFIED TO CONDUCT BUSINESS, IN EACH JURISDICTION WHERE THE
CHARACTER OF ITS PROPERTIES OWNED OR LEASED OR THE NATURE OF ITS ACTIVITIES
MAKES SUCH QUALIFICATION NECESSARY, EXCEPT FOR FAILURES TO BE SO QUALIFIED THAT
WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, HAVE, OR WOULD NOT REASONABLY BE
EXPECTED TO HAVE, A PARENT MATERIAL ADVERSE EFFECT (AS DEFINED BELOW). PARENT
NOR ITS SUBSIDIARY IS NOT IN VIOLATION OF ANY OF THE PROVISIONS OF ITS CHARTER
DOCUMENT OR ITS GOVERNING DOCUMENT. AS USED IN THIS AGREEMENT, THE TERM "PARENT
MATERIAL ADVERSE EFFECT" MEANS ANY CHANGE, EFFECT, EVENT, OR CONDITION THAT (i)
HAS A MATERIAL ADVERSE EFFECT ON THE ASSETS, BUSINESS OR FINANCIAL CONDITION OF
PARENT AND ITS SUBSIDIARIES, TAKEN AS A WHOLE, OR (ii) WOULD PREVENT OR
MATERIALLY DELAY PARENT'S OR ITS SUBSIDIARY'S ABILITY TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED HEREBY WHERE, IN EITHER CASE, THE LIABILITIES, COSTS,
OR EXPENSES EQUAL OR EXCEED TEN THOUSAND DOLLARS ($10,000) EXCEPT THAT ANY COSTS
OR EXPENSES IN EXCESS OF ONE THOUSAND DOLLARS ($1,000) INCURRED BY THE COMPANY
OR THE PARENT IN CONNECTION WITH THE PREPARATION AND FILING OF THE PARENT
DELINQUENT REPORTS OR THE PARENT SEC REPORTS (AS DEFINED IN SECTION 4.5(a) OF
THIS AGREEMENT) SHALL BE DEEMED TO BE A PARENT MATERIAL ADVERSE EFFECT
IRRESPECTIVE OF THE REASON THAT CAUSED SAID COSTS OR EXPENSES TO BE INCURRED
2. CAPITALIZATION. THE AUTHORIZED CAPITAL STOCK OF PARENT CONSISTS OF
200,000,000 SHARES OF PARENT COMMON CAPITAL STOCK, $.001 PAR VALUE PER SHARE,
AND 10,000,000 SHARES OF PREFERRED STOCK, $.01 PAR VALUE PER (THE "PARENT
PREFERRED STOCK"). AS OF THE CLOSE OF BUSINESS ON MAY 30, 2005 (THE "PARENT
MEASUREMENT DATE"), (a) 19,675,000 SHARES OF PARENT COMMON STOCK WERE ISSUED AND
OUTSTANDING, (b) NO SHARES OF PARENT PREFERRED STOCK WERE ISSUED AND
OUTSTANDING, (c) OPTIONS TO PURCHASE AND (d) EXCEPT FOR THE OPTIONS, WARRANTS OR
RIGHTS TO ACQUIRE SHARES OF PARENT COMMON STOCK UNDER EXISTING CONVERTIBLE
NOTES, THERE WERE NO OUTSTANDING PARENTAL RIGHTS (AS DEFINED BELOW). SINCE THE
PARENT MEASUREMENT DATE, NO ADDITIONAL SHARES OF PARENT COMMON STOCK HAVE BEEN
ISSUED AND ARE OUTSTANDING, EXCEPT PURSUANT TO THE EXERCISE OF OPTIONS AND THE
PARENT WARRANTS, AND NO PARENTAL RIGHTS HAVE BEEN GRANTED. ALL ISSUED AND
OUTSTANDING SHARES OF PARENT COMMON STOCK ARE DULY AUTHORIZED, VALIDLY ISSUED,
FULLY PAID, NON-ASSESSABLE AND FREE OF PREEMPTIVE RIGHTS CREATED BY THE GENERAL
CORPORATION LAW OF THE STATE OF COLORADO ("CBCA") OR PARENT'S CHARTER DOCUMENT
OR GOVERNING DOCUMENT, OR ANY OTHER AGREEMENT WITH THE COMPANY. THERE ARE NOT,
EXCEPT AS DISCLOSED ON SCHEDULE 4.2 HERETO, AT THE DATE OF THIS AGREEMENT ANY
EXISTING OPTIONS, WARRANTS, CALLS, SUBSCRIPTIONS, CONVERTIBLE SECURITIES OR
OTHER RIGHTS WHICH OBLIGATE PARENT OR ANY OF ITS SUBSIDIARIES TO ISSUE,
EXCHANGE, TRANSFER OR SELL ANY SHARES OF CAPITAL STOCK OF PARENT OR ANY OF ITS
SUBSIDIARIES, OTHER THAN SHARES OF PARENT COMMON STOCK
ISSUABLE UNDER THE PARENT STOCK PLANS AND THE PARENT WARRANTS, OR AWARDS GRANTED
PURSUANT THERETO. (COLLECTIVELY, "PARENTAL RIGHTS").
4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. PARENT HAS THE REQUISITE
CORPORATE POWER AND AUTHORITY TO EXECUTE AND DELIVER, AND TO PERFORM ITS
OBLIGATIONS UNDER, THIS AGREEMENT, SUBJECT TO OBTAINING THE NECESSARY CONSENT OR
APPROVAL OF ITS STOCKHOLDERS, TO CONSUMMATE THE ACQUISITION AND THE OTHER
PROVISIONS CONTEMPLATED HEREBY AND THEREBY UNDER APPLICABLE LAW. THE EXECUTION
AND DELIVERY BY PARENT OF THIS AGREEMENT AND THE CONSUMMATION OF THE ACQUISITION
AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, HAVE BEEN DULY AND VALIDLY
AUTHORIZED BY THE BOARD OF DIRECTORS OF PARENT AND NO OTHER CORPORATE
PROCEEDINGS ON THE PART OF PARENT ARE NECESSARY TO AUTHORIZE THIS AGREEMENT OR
TO CONSUMMATE THE ACQUISITION OR OTHER TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY (OTHER THAN APPROVAL BY THE PARENT'S STOCKHOLDERS REQUIRED BY APPLICABLE
LAW). THIS AGREEMENT HAS BEEN DULY AND VALIDLY EXECUTED AND DELIVERED BY PARENT
AND, ASSUMING THE DUE AUTHORIZATION, EXECUTION AND DELIVERY OF THIS AGREEMENT BY
THE COMPANY, IS A VALID AND BINDING OBLIGATION OF PARENT, ENFORCEABLE AGAINST
THEM IN ACCORDANCE WITH ITS TERMS, EXCEPT TO THE EXTENT THAT ITS ENFORCEABILITY
MAY BE LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM
OR OTHER LAWS AFFECTING THE ENFORCEMENT OF CREDITORS RIGHTS GENERALLY OR BY
GENERAL EQUITABLE PRINCIPLES. THE SHARES OF PARENT SERIES A CONVERTIBLE
PREFERRED STOCK TO BE ISSUED BY PARENT PURSUANT TO THE ACQUISITION, AS WELL AS
THE PARENT OPTIONS, IF ANY, AND THE SHARES OF PARENT COMMON OR PREFERRED STOCK
TO BE ISSUED UPON EXERCISE THEREOF: (i) HAVE BEEN DULY AUTHORIZED, AND, WHEN
ISSUED IN ACCORDANCE WITH THE TERMS OF THE ACQUISITION AND THIS AGREEMENT (OR
THE APPLICABLE OPTION AGREEMENTS), WILL BE VALIDLY ISSUED, FULLY PAID AND
NON-ASSESSABLE AND WILL NOT BE SUBJECT TO PREEMPTIVE RIGHTS, (ii) WILL, WHEN
ISSUED IN ACCORDANCE WITH THE TERMS OF THE ACQUISITION AND THIS AGREEMENT (OR
THE APPLICABLE OPTION AGREEMENTS), BE REGISTERED UNDER THE SECURITIES ACT, AND
REGISTERED OR EXEMPT FROM REGISTRATION UNDER APPLICABLE UNITED STATES "BLUE SKY"
LAWS, (iii) WILL, WHEN ISSUED IN ACCORDANCE WITH THE TERMS OF THE ACQUISITION
AND THIS AGREEMENT (OR THE APPLICABLE OPTION AGREEMENTS), BE LISTED ON THE PINK
SHEET QUOTATION SYSTEM AND (iv) WILL BE ISSUED FREE AND CLEAR OF ANY LIENS.
4.4 NO CONFLICTS; REQUIRED FILINGS AND CONSENTS.
(a) Neither the execution, delivery or performance of this
Agreement by Parent, nor the consummation of the transactions contemplated
hereby, nor compliance by Parent or Subsidiary with any provision hereof will
(i) violate, conflict with or result in a breach of any provision of the Charter
Documents or Governing Documents of Parent, (ii) cause a default or give rise to
any right of termination, cancellation or acceleration or loss of a material
benefit under, or result in the creation of any lien, charge or other
encumbrance upon any of the properties or assets of Parent or Subsidiary under
any of the terms, conditions or provisions of any note, license, bond, deed of
trust, mortgage or indenture, or any other material instrument, obligation or
agreement to which Parent or Subsidiary is a party or by which its properties or
assets may be bound or (iii) violate any law, judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Parent or binding
upon any of its properties, except for, in the case of clauses (ii) and (iii),
such defaults or violations which would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
NO FILING OR REGISTRATION WITH OR NOTIFICATION TO AND NO PERMIT, AUTHORIZATION,
CONSENT OR APPROVAL OF ANY GOVERNMENTAL ENTITY IS REQUIRED TO BE OBTAINED, MADE
OR GIVEN BY PARENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF THIS
AGREEMENT OR THE CONSUMMATION BY PARENT OF THE ACQUISITION OR OTHER TRANSACTIONS
CONTEMPLATED HEREBY EXCEPT (i) (A) IN CONNECTION WITH THE APPLICABLE
REQUIREMENTS OF THE SECURITIES ACT OR SECURITIES EXCHANGE ACT OR (B) SUCH
CONSENTS, APPROVALS, ORDERS, AUTHORIZATIONS, REGISTRATIONS, DECLARATIONS AND
FILINGS AS MAY BE REQUIRED UNDER APPLICABLE STATE SECURITIES LAWS AND THE LAWS
OF ANY COUNTRY OTHER THAN THE UNITED STATES, OR (ii) WHERE THE FAILURE TO OBTAIN
ANY SUCH CONSENTS, APPROVALS, AUTHORIZATIONS OR PERMITS, OR TO MAKE SUCH FILINGS
OR NOTIFICATIONS, WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE
EXPECTED TO HAVE A PARENT MATERIAL ADVERSE EFFECT. 4.5 SEC FILINGS; FINANCIAL
STATEMENTS.
(a) Parent is delinquent in filing periodic reports with the U.S.
Securities and Exchange Commission and Parent has not filed all forms, reports,
schedules, statements and other documents required to be filed by it pursuant to
Section 13(a) of the Securities Exchange Act of 1934 (the "Parent Delinquent
Reports") since February 12, 2002 to the date hereof (collectively, as
supplemented and amended since the time of filing, the "Parent SEC Reports")
with the SEC. In as much as the Parent SEC Reports have not been timely filed
the Parent has been de-listed to the Pink Sheet Quotation service until such
time as all of its reporting requirements are brought current and a new Form
15c2-11 Information Statement is filed and approved. The filed Parent SEC
Reports of record (i) were prepared in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, as the case may be, and
(ii) did not at the time they were filed contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading: provided that certain
expenses of the Company not previously recorded on the financial statements
advanced by shareholders for the benefit of the Parent have not been recognized
and are being reduced to convertible notes, a schedule of which is attached
hereto as Exhibit "F". The representation in clause (ii) of the preceding
sentence does not apply to any misstatement or omission in any Parent SEC Report
filed prior to the date of this Agreement which was superseded by a subsequent
Parent SEC Report filed prior to the date of this Agreement. The Parent reports
will be modified to reflect its status as a Colorado corporation rather than an
Oregon corporation as well as the financial adjustments and corresponding
amended filings.
(b) The audited consolidated financial statements and un-audited
consolidated interim financial statements of Parent and its Subsidiaries
included or incorporated by reference in such Parent SEC Reports have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may otherwise be indicated in the notes thereto) and present fairly, in all
material respects, the financial position and results of operations and cash
flows of Parent and its Subsidiaries on a consolidated basis at the respective
dates and for the respective periods indicated (except, in the case of all such
financial statements that are interim financial statements, for normal year-end
adjustments and other adjustments since March 31, 2004).
(b) Neither Parent nor any of its Subsidiaries has any liabilities
or obligations of any nature, whether absolute, accrued, un-matured, contingent
or otherwise, whether due or to become due, known or unknown, or any unsatisfied
judgments or any leases of personalty or realty or unusual or extraordinary
commitments that are required to be disclosed under United States generally
accepted accounting principles, except (i) as set forth in the Parent SEC
Reports,
(ii) the liabilities recorded on Parent's consolidated balance sheet at
September 30, 2004 included in the financial statements referred in Section
4.5(a) hereof and the notes thereto, (iii) liabilities or obligations incurred
since September 30, 2004 and those itemized under Parent disclosure 4.5(a)
referenced above (whether or not incurred in the ordinary course of business and
consistent with past practice) that would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect, or (iv)
liabilities that would not be required by United States generally accepted
accounting principles to be disclosed in financial statements or in the notes
thereto and that would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect.
4.6 Matter of Parent SEC Reports. Parent warrants and represents that it
has not received or is aware of any letter or other communication from the U.S.
Securities and Exchange Commission regarding: (i) the failure of Parent to meet
its filing obligations under Section 13(a) of the Securities Exchange Act of
1934 or otherwise that Parent has not satisfied any other obligations to file
its Parent SEC Reports; (ii) the failure of Parent to maintain the accuracy of
its Form 15c2-11 Information Statement, or (iii) the failure of Parent to meet
its obligations under the securities laws of any state or other jurisdiction.
4.7 ABSENCE OF CHANGES OR EVENTS. EXCEPT AS SET FORTH IN SCHEDULE 4.6,
THE PARENT SEC REPORTS, SINCE SEPTEMBER 30, 2004 THROUGH THE DATE OF THIS
AGREEMENT, PARENT AND ITS SUBSIDIARIES HAVE NOT INCURRED ANY LIABILITY OR
OBLIGATION THAT HAS RESULTED OR WOULD REASONABLY LIKELY BE EXPECTED TO RESULT IN
A PARENT MATERIAL ADVERSE EFFECT, AND THERE HAS NOT BEEN ANY CHANGE IN THE
BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS OF PARENT OR ANY OF ITS
SUBSIDIARIES WHICH HAS HAD, OR IS REASONABLY EXPECTED TO HAVE, INDIVIDUALLY OR
IN THE AGGREGATE, A PARENT MATERIAL ADVERSE EFFECT, AND PARENT AND ITS
SUBSIDIARIES HAVE CONDUCTED THEIR RESPECTIVE BUSINESSES IN THE ORDINARY COURSE
CONSISTENT WITH THEIR PAST PRACTICES.
4.8 Litigation. Except as disclosed in the Parent SEC Reports, there is
no (i) claim, action, suit or proceeding pending or, to the Knowledge of Parent,
threatened against or relating to Parent or any of its Subsidiaries, or (ii)
outstanding Orders, or application, request or motion therefore, in a proceeding
to which Parent, any Subsidiary of Parent or any of their respective assets was
or is a party except actions, suits, proceedings or Orders that, individually or
in the aggregate, has not had or would not reasonably be expected to have a
Parent Material Adverse Effect, and neither Parent nor any Subsidiary is in
default in any material respect with respect to any such Order.
4.9 COMPLIANCE WITH LAW. ALL ACTIVITIES OF PARENT HAVE BEEN, AND ARE
CURRENTLY BEING, CONDUCTED IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL
APPLICABLE UNITED STATES FEDERAL, STATE AND LOCAL AND OTHER FOREIGN LAWS,
ORDINANCES, REGULATIONS, INTERPRETATIONS, JUDGMENTS, DECREES, INJUNCTIONS,
PERMITS, LICENSES, CERTIFICATES, GOVERNMENTAL REQUIREMENTS, ORDERS AND OTHER
SIMILAR ITEMS OF ANY COURT OR OTHER GOVERNMENTAL ENTITY OR ANY NONGOVERNMENTAL
SELF-REGULATORY AGENCY, AND NO NOTICE HAS BEEN RECEIVED BY PARENT OF ANY CLAIMS
FILED AGAINST PARENT ALLEGING A VIOLATION OF ANY SUCH LAWS, REGULATIONS OR OTHER
REQUIREMENTS WHICH WOULD BE REQUIRED TO BE DISCLOSED IN THE PARENT SEC REPORTS.
PARENT HAS ALL PERMITS, LICENSES AND FRANCHISES FROM GOVERNMENTAL ENTITIES
REQUIRED TO CONDUCT THEIR BUSINESSES AS NOW BEING CONDUCTED, EXCEPT FOR SUCH
PERMITS, LICENSES AND FRANCHISES THE ABSENCE OF WHICH WOULD NOT, INDIVIDUALLY OR
IN THE AGGREGATE, REASONABLY BE EXPECTED TO HAVE A PARENT MATERIAL ADVERSE
EFFECT.
4.10 FINDERS OR BROKERS. EXCEPT FOR THOSE PARTIES LISTED ON SCHEDULE 4.9
HERETO, WHOSE FEES WILL BE PAID BY PARENT OR THE OTHER SUBSIDIARIES OF PARENT,
NEITHER THE BOARDS OF DIRECTORS OF PARENT NOR ANY MEMBER OF SUCH BOARDS OF
DIRECTORS HAS EMPLOYED ANY AGENT, INVESTMENT BANKER, BROKER, FINDER OR
INTERMEDIARY IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY WHO MIGHT
BE ENTITLED TO A FEE OR ANY COMMISSION IN CONNECTION WITH THE ACQUISITION OR THE
OTHER TRANSACTIONS CONTEMPLATED HEREBY.
4.11 TAX MATTERS. NEITHER PARENT NOR, TO ITS KNOWLEDGE, ANY OF ITS
AFFILIATES HAS TAKEN OR AGREED TO TAKE ANY ACTION, OR KNOWS OF ANY
CIRCUMSTANCES, THAT (WITHOUT REGARD TO ANY ACTION TAKEN OR AGREED TO BE TAKEN BY
THE COMPANY OR ANY OF ITS AFFILIATES) WOULD PREVENT THE BUSINESS COMBINATION TO
BE EFFECTED BY THE ACQUISITION FROM CONSTITUTING A TRANSACTION QUALIFYING AS A
REORGANIZATION WITHIN THE MEANING OF SECTION 368 OF THE CODE.
4.12 INFORMATION STATEMENTS. THE INFORMATION SUPPLIED BY PARENT FOR
INCLUSION IN THE 14(f) OR OTHER SEC OR NASD FILINGS ("THE FILINGS") SHALL NOT,
AT THE TIME THE FILING(S) IS/ARE MADE (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
THERETO, CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE ANY
MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS THEREIN, IN LIGHT OF THE
CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING. THE INFORMATION
SUPPLIED BY PARENT FOR INCLUSION IN THE FILINGS SHALL NOT, ON THE DATE THE
FILING IS FIRST MAILED TO THE COMPANY'S SHAREHOLDERS AND THE PARENT
STOCKHOLDERS, AT THE TIME OF THE COMPANY SHAREHOLDERS MEETING AND THE PARENT
STOCKHOLDERS MEETING AND AT THE EFFECTIVE TIME, WILL NOT CONTAIN ANY STATEMENT
WHICH, AT SUCH TIME, IS FALSE OR MISLEADING WITH RESPECT TO ANY MATERIAL FACT,
OR OMIT TO STATE ANY MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS
THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH IT IS MADE, NOT FALSE OR
MISLEADING; OR OMIT TO STATE ANY MATERIAL FACT NECESSARY TO CORRECT ANY
STATEMENT IN ANY EARLIER COMMUNICATION WITH RESPECT TO THE SOLICITATION OF
PROXIES FOR THE COMPANY SHAREHOLDERS MEETING OR THE PARENT STOCKHOLDERS MEETING
WHICH HAS BECOME FALSE OR MISLEADING. IF AT ANY TIME PRIOR TO THE EFFECTIVE TIME
ANY EVENT OR INFORMATION SHOULD BE DISCOVERED BY PARENT WHICH SHOULD BE SET
FORTH IN AN AMENDMENT TO ANY FILING OR A SUPPLEMENT TO ANY FILING WILL PROMPTLY
INFORM THE COMPANY. NOTWITHSTANDING THE FOREGOING, PARENT MAKES NO
REPRESENTATION, WARRANTY OR COVENANT WITH RESPECT TO ANY INFORMATION SUPPLIED BY
THE COMPANY WHICH IS CONTAINED IN ANY OF THE FOREGOING DOCUMENTS.
E.
COVENANTS AND AGREEMENTS
Conduct of Business of the Company Pending the Acquisition. Except as
contemplated by this Agreement or as expressly agreed to in writing by Parent,
during the period from the date of this Agreement to the earlier of (i) the
termination of this Agreement or (ii) the Effective Time, each of the Company
and its Subsidiaries will conduct their respective operations according to its
ordinary course of business consistent with past practice, and will use
commercially reasonable best efforts consistent with past practice and policies
to preserve intact its business organization, to keep available the services of
its officers and employees and to maintain satisfactory relationships with
suppliers, distributors, customers and others having business relationships with
it and will take no action which would adversely affect the ability of the
parties to consummate the transactions contemplated by this Agreement, or the
timing thereof. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, prior to the Effective Time, the
Company will not nor will it permit any of its Subsidiaries to, without the
prior written consent of Parent:
(a) amend any of its Charter Documents or Governing Documents;
(b) authorize for issuance, issue, sell, deliver, grant any
options, warrants, stock appreciation rights, or stock issuance rights for, or
otherwise agree or commit to issue, sell, deliver, pledge, dispose of or
otherwise encumber any shares of any class of its capital stock or any
securities convertible into shares of any class of its capital stock, except:
(i) pursuant to and in accordance with the terms of Company Options outstanding
on the Company Measurement Date or granted pursuant existing agreements as
defined herein and as provided in Section 3.3 herein; (ii) pursuant to and in
accordance with the terms of Company Warrants outstanding on the Company
Measurement Date; and (iii) such additional shares as described in the last
sentence of Section 3.3 of this Agreement.
(c) subdivide, cancel, consolidate or reclassify any shares of its
capital stock, issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
shares or property or any combination thereof) in respect of its capital stock
or purchase, redeem or otherwise acquire any shares of its own capital stock or
of any of its Subsidiaries, except as otherwise expressly provided in this
Agreement;
(d) (i) incur or assume any long-term or short-term debt or issue
any debt securities except for borrowings under existing lines of credit in the
ordinary course of business consistent with past practice; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the material obligations of any other person
(other than Subsidiaries of the Company); or (iii) make any material loans,
advances or capital contributions to, or investments in, any other person (other
than to Subsidiaries of the Company);
(e) except as otherwise expressly contemplated by this Agreement,
(i) increase in any manner the compensation of (A) any employee who is not an
officer of the Company or any Subsidiary (a "Non Executive Employee"), except in
the ordinary course of business consistent with past practice or (B) any of its
directors or officers, except in the ordinary course
of business, consistent with past practice, after consultation with Parent, (ii)
pay or agree to pay any pension, retirement allowance or other employee benefit
not required, or enter into, amend or agree to enter into or amend any agreement
or arrangement with any such director or officer or employee, whether past or
present, relating to any such pension, retirement allowance or other employee
benefit, except as required to comply with law or under currently existing
agreements, plans or arrangements or with respect to Non Executive Employees, in
the ordinary course of business consistent with past practice; (iii) grant any
rights to receive any severance or termination pay to, or enter into or amend
any employment or severance agreement with, any employee or any of its directors
or officers, except as required by applicable law or with respect to severance
or termination pay to Non Executive Employees in the ordinary course of
business, consistent with past practices; or (iv) except as may be required to
comply with applicable law, become obligated (other than pursuant to any new or
renewed collective bargaining agreement) under any new pension plan, welfare
plan, multi employer plan, employee benefit plan, benefit arrangement, or
similar plan or arrangement, which was not in existence on the date hereof,
including any bonus, incentive, deferred compensation, share purchase, share
option, share appreciation right, group insurance, severance pay, retirement or
other benefit plan, agreement or arrangement, or employment or consulting
agreement with or for the benefit of any person, or amend any of such plans or
any of such agreements in existence on the date hereof; provided, however, that
this clause (iv) shall not prohibit the Company from renewing any such plan,
agreement or arrangement already in existence on terms no more favorable to the
parties to such plan, agreement or arrangement;
(f) except as otherwise expressly contemplated by this Agreement,
enter into, amend in any material respect or terminate any Company Material
Contracts other than in the ordinary course of business consistent with past
practice;
(g) sell, lease, license, mortgage or dispose of any of its
properties or assets, other than (i) transactions in the ordinary course of
business consistent with past practice, (ii) sales of assets, for the fair
market value thereof, which sales do not individually or in the aggregate exceed
$5,000 or (iii) as may be required or contemplated by this Agreement;
(h) except as otherwise contemplated by the Acquisition, acquire
or agree to acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of or equity in, or by any other manner, any
business or any corporation, limited liability company, partnership, association
or other business organization or division thereof or otherwise acquire or agree
to acquire any assets, other than the acquisition of assets that is in the
ordinary course of business consistent with past practice and which are
contemplated within the budget previously provided in writing by the Company to
the Parent without the prior written consent of Parent, which consent will not
be unreasonably withheld;
(i) alter (through Acquisition, liquidation, reorganization,
restructuring or in any fashion) the corporate structure or ownership of the
Company or any Subsidiary;
(j) authorize or commit to make any material capital expenditures
not within the budget previously provided in writing by the Company to Parent
without the prior written consent of Parent, which consent shall not be
unreasonably withheld;
(k) make any change in the accounting methods or accounting
practices followed by the Company, except as required by generally accepted
accounting principles or applicable law;
(l) make any election under any applicable Tax laws which would,
individually or in the aggregate, have a Company Material Adverse Effect;
(m) settle any action, suit, claim, investigation or proceeding
(legal, administrative or arbitrative) requiring a payment by the Company or its
Subsidiaries in excess of $2,000 without the consent of Parent, which consent
shall not be unreasonably withheld or delayed;
(n) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of claims, liabilities or obligations reflected or reserved against in,
or contemplated by, the most recent financial statements (or the notes thereto)
of the Company included in the Company SEC Reports or incurred in the ordinary
course of business consistent with past practice; or
2. PREPARATION OF INFORMATION STATEMENT AND 15c211 FILING.
(A) Subject to the terms and conditions of the Responsible Party
Agreement attached hereto and the obligations assumed by the Responsible Party
thereunder, the Responsible Party shall prepare (with the assistance of the
Company and the Parent), and the Parent shall file all delinquent reports due to
be filed with the SEC (including, but not limited to, the Parent Delinquent
Reports, the Parent SEC Reports, and any related filings as described in Section
4.5 of this Agreement) together with the NASD a Form 15c2-11 Information
Statement (as described in Section 4.5 of this Agreement), in which the audited
financial statements of Parent and Constituent Companies will be included as
part thereof. Parent and the Company shall use all commercially reasonable best
efforts to have such Filing approved by the NASD for trading on the OTC-BB as
promptly as practicable after filing.
(B) The Joint 15 c-211 and any other Filings will, when prepared
pursuant to this Section 5.2 and, if required, be mailed to the Company's
shareholders, comply in all material respects with the applicable requirements
of the Exchange Act and the Securities Act. All such Filings shall be reviewed
and approved by Parent and Parent's counsel prior to any mailing of same. Parent
shall also take any action required to be taken under any applicable provincial
or state securities laws (including "Blue Sky" laws) in connection with the
issuance of the Parent Series A Convertible Preferred Stock in the Acquisition;
provided, however, that neither Parent nor the Company shall be required to
register or qualify as a foreign corporation or to take any action that would
subject it to service of process in any jurisdiction where any such entity is
not now so subject, except as to matters and transactions arising solely from
the offer and issuance of Parent Series A Convertible Preferred Stock or the
Parent Options. For purposes of this Section 5.2 and notwithstanding any term or
provision of this Agreement, the Parties agree that certain responsible parties
listed on Exhibit D attached hereto (the "Responsible Parties") have agreed,
pursuant to the Responsible Party Agreement, to assume all responsibilities,
costs, and expenses for the preparation and filing of Parent Delinquent Reports,
the Parent SEC Reports, and the Form 15c2-11 Information Statement. Further, the
Parties hereto acknowledge and agree that the
Responsible Parties shall, on or before the Effective Date: (1) retain legal,
accounting, and independent auditors acceptable to the Company; and (2) assume
all costs and expenses to prepare, complete, and file all said Parent Delinquent
Reports, Parent SEC Reports (including, but not limited to, the costs, expenses,
and fees independent auditors for an audit of the Company and Parent and the
costs and expenses of legal counsel in furtherance of all of the above) and the
Form 15c2-11 no later than sixty (60) days immediately following the Closing
Date (the "Report Filing Date") so as to allow the Parent to fulfill all
obligations it has under the Securities Exchange Act of 1934 and to allow the
Parent's common stock to regain tradability on the OTC Bulletin Board. The
Parties also acknowledge and agree that the Company's sole obligation with
respect to the above matters, shall be to cooperate with the Responsible Parties
as set forth in the Responsible Party Agreement. Further, in the event that the
Responsible Parties fail to fully satisfy their obligations set forth in this
Section 5.2 or as provided in the Responsible Party Agreement attached hereto as
Exhibit D, the Company shall have the right to rescind or unwind this Agreement
and all obligations it has hereunder upon giving written notice to the Parent
and the Responsible Parties at the address given in the Responsible Party
Agreement and in the event that the Responsible Parties have not effected a cure
of any defect or delinquency in fulfilling their obligations within the time
period provided in the Responsible Party Agreement, then the Company shall have
the right to take all further actions reasonably necessary or appropriate, as
deemed by the Company, to effect a rescission or unwinding of this Agreement and
its obligations hereunder irrespective of any other term or provision of this
Agreement.
3. COMPANY SHAREHOLDER AND PARENT STOCKHOLDER MEETINGS.
(a) The Company shall, promptly after the date hereof, take all
action necessary in accordance with the Texas Business Corporations Act and its
Articles of Incorporation and Bylaws to obtain shareholder consent, or if
required, convene the Company Shareholders Meeting whether or not the Company
Board determines at any time after the date hereof that the Acquisition is no
longer advisable. The adoption of the Agreement by the consent of the majority
of shareholders of the Company shall be recommended by the Company Board unless,
in the good faith judgment of the Company Board, after consultation with outside
counsel, taking such action would be inconsistent with its fiduciary obligations
under applicable law. Subject to Section 5.2 and Section 5.6 hereof, the Company
shall use its best efforts to take all commercially reasonable actions necessary
or advisable to secure the vote or consent of shareholders required to effect
the Acquisition.
(b) Parent shall, promptly after the date hereof, take all action
necessary in accordance with the CBCA and its Certificate of Incorporation and
Bylaws to convene the Parent Stockholders Meeting, if required, whether or not
the Parent Board determines at any time after the date hereof that the
Acquisition is no longer advisable. The approval by the stockholders of the
Parent of the transactions contemplated by this Agreement shall be recommended
by the Parent Board unless, in the good faith judgment of the Parent Board,
after consultation with outside counsel, taking such action would be
inconsistent with its fiduciary obligations under applicable law. The Parent
Stockholders Meeting will be convened, held and conducted, and any proxies will
be solicited, in compliance with the CBCA and applicable securities laws. Parent
shall consult with the Company regarding the date of the Parent Stockholders
Meeting. Subject to Section 5.2 and Section 5.6 hereof, Parent shall use
commercially reasonable best efforts to solicit from stockholders of Parent
proxies in favor of the Acquisition and shall take all other
commercially reasonable actions necessary or advisable to secure the vote or
consent of stockholders required to effect the Acquisition.
(c) The Company and the Parent agree that they shall use their
best eforts to take all commercially reasonable actions necessary or advisable
to effect the conversion of the Company's Common Stock into the Parent Series A
Convertible Preferred Stock (the "Conversion Transactions") subject to
compliance with Securities Act of 1933 and the Securities Exchange Act of 1934
and the rules and regulations promulgated by the U.S. Securities and Exchange
Commission thereunder together with the requirements of applicable state and
other jurisdiction securities laws. The Parties acknowledge and agree that they
anticipate that the Conversion Transactions will be undertaken in one or more
steps on a "step transaction basis" to ensure compliance with the laws described
in this Section 5.3(c) so that, upon completion of the Conversion Transactions
and subject to TBCA, the Company will become a wholly-owned subsidiary of the
Parent.
4. ADDITIONAL AGREEMENTS, COOPERATION, ASSET PURCHASE.
(a) Subject to the terms and conditions herein provided, each of
the parties hereto agrees to use its commercially reasonable best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, and to
cooperate, subject to compliance with applicable law, with each other in
connection with the foregoing, including using its commercially reasonable best
efforts (i) to obtain all necessary waivers, consents and approvals from other
parties to loan agreements, material leases and other material contracts, (ii)
to obtain all necessary consents, approvals and authorizations as are required
to be obtained under any United States federal or state, foreign law or
regulations, (iii) to defend all lawsuits or other legal proceedings challenging
this Agreement or the Company Option Agreement or the consummation of the
transactions contemplated hereby or thereby, (iv) to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby, (v) to effect
all necessary registrations and filings and submissions of information requested
by Governmental Entities, and (vi) to fulfill all conditions to this Agreement.
(b) Each of the parties hereto agrees, subject to compliance with
applicable law, to furnish to each other party hereto such necessary information
and reasonable assistance as such other party may request in connection with its
preparation of necessary filings or submissions to any regulatory or
governmental agency or authority, including, without limitation, any filing
necessary under the provisions of the Exchange Act, the Securities Act or any
other United States federal or state, or foreign statute or regulation. Each
party hereto shall promptly inform each other party of any material
communication from any government or governmental authority regarding any of the
transactions contemplated hereby.
(c) Completion of Asset Purchase Agreement. Immediately subsequent
to the effective date provided herein, Parent shall complete the Asset Purchase
Agreement between Parent, its existing wholly owned subsidiary (Technol Fuel
Conditioners, Inc a New Jersey corporation) and Technol Fuel Acquisition Corp.,
a New Jersey corporation, pursuant to the attached Asset Purchase Agreement.
5. Publicity. Except as otherwise required by law or the rules of any
applicable securities exchange or the Pink Sheet Quotation Service or OTC-BB, so
long as this Agreement
is in effect, Parent and the Company will not, and will not permit any of their
respective affiliates or representatives to, issue or cause the publication of
any press release or make any other public announcement with respect to the
transactions contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld or delayed. Parent and
the Company will cooperate with each other in the development and distribution
of all press releases and other public announcements with respect to this
Agreement and the transactions contemplated hereby, and will furnish the other
with drafts of any such releases and announcements as far in advance as
possible.
6. NO SOLICITATION.
(a) Immediately upon execution of this Agreement, the Company
shall (and shall cause its officers, directors, employees, investment bankers,
attorneys and other agents or representatives to) cease all discussions,
negotiations, responses to inquiries (except as set forth in the proviso to this
sentence) and other communications relating to any potential business
combination with all third parties who, prior to the date hereof, may have
expressed or otherwise indicated any interest in pursuing an Acquisition
Proposal (as hereinafter defined) with the Company.
(b) Prior to termination of this Agreement pursuant to Article VII
hereof, the Company and its Subsidiaries shall not, nor shall the Company
authorize or permit any officers, directors or employees of, or any investment
bankers, attorneys or other agents or representatives retained by or acting on
behalf of, the Company or any of its Subsidiaries to, (i) initiate, solicit or
encourage, directly or indirectly, any inquiries or the making of any proposal
that constitutes an Acquisition Proposal, (ii) engage or participate in
negotiations or discussions with, or furnish any information or data to, or take
any other action to, facilitate any inquiries or making any proposal by, any
third party relating to an Acquisition Proposal, (iii) enter into any agreement
with respect to any Acquisition Proposal or approve an Acquisition Proposal, or
(iv) make or authorize any statement, recommendation or solicitation in support
of any possible Acquisition Proposal.
(c) For the purposes of this Agreement, "Acquisition Proposal"
shall mean any proposal, whether in writing or otherwise, made by any person
other than Parent and its Subsidiaries to acquire "beneficial ownership" (as
defined under Rule 13(d) of the Exchange Act) of 20% or more of the assets of,
or 20% or more of the outstanding capital stock of any of the Company or its
Subsidiaries pursuant to a Acquisition, consolidation, exchange of shares or
other business combination, sale of shares of capital stock, sales of assets,
tender offer or exchange offer or similar transaction involving the Company or
its Subsidiaries.
7. Access to Information. From the date of this Agreement until the
Effective Time, and upon reasonable notice, the Company will give Parent and its
authorized representatives (including counsel, other consultants, accountants
and auditors) reasonable access during normal business hours to all facilities,
personnel and operations and to all books and records of it and its
Subsidiaries, will permit Parent to make such inspections as it may reasonably
require, will cause its officers and those of its Subsidiaries to furnish Parent
with such financial and operating data and other information with respect to its
business and properties as Parent may from time to time reasonably request and
confer with Parent to keep it reasonably informed with respect to operational
and other business matters relating to the Company and its Subsidiaries and the
status of satisfaction of conditions to the Closing, other than information that
may not be disclosed under applicable law or in violation of an agreement or if
such disclosure would result in a
waiver of the attorney-client privilege; provided, however, that in any such
event the parties shall cooperate in good faith to obtain waivers of such
prohibitions or implement alternative methods of disclosure of material
information. All information obtained by Parent pursuant to this Section 5.7
shall be kept confidential in accordance with the Reciprocal Confidentiality
Agreement.
8. Notification of Certain Matters. The Company or Parent, as the case
may be, shall promptly notify the other of (a) its obtaining of Knowledge as to
the matters set forth in clauses (i), (ii) and (iii) below, or (b) the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be likely to cause (i) any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof to the Effective Time, (ii) any material failure of the
Company or Parent, as the case may be, or of any officer, director, employee or
agent thereof, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement or (iii) the
institution of any claim, suit, action or proceeding arising out of or related
to the Acquisition or the transactions contemplated hereby; provided, however,
that no such notification shall affect the representations or warranties of the
parties or the conditions to the obligations of the parties hereunder.
9. Resignation of Officers and Directors. At or prior to the Effective
Time, the Parent shall deliver to Company the resignations of such officers and
directors of the Parent and shall use its commercially reasonable best efforts
to deliver to Company the resignations of such officers and directors of its
Subsidiaries (in each case, in their capacities as officers and directors, but
not as employees if any of such persons are employees of the Company or any
Subsidiary) as Parent shall specify, which resignations shall be effective at
the Effective Time in the order required under this Agreement and as required to
elect the new Board of Directors. The existing Parent directors shall resign in
the following sequence:
1. Xxxxxx Xxxxxxxx at or prior to the time of execution of this Agreement.
2. Xxxxxx Xxxxxx at the Effective Time after appointment of Xxxxxxx X.
Xxxxxxxxx as the new initial Board of the Parent.
10. INDEMNIFICATION.
(a) As of the Effective Time and for a period of six years
following the Effective Time, Parent will indemnify and hold harmless from and
against all claims, damages, losses, obligations or liabilities ("Losses") any
persons who were directors or officers of the Company or any Subsidiary prior to
the Effective Time (the "Indemnified Persons") to the fullest extent such person
could have been indemnified for such Losses under applicable law, under the
Governing Documents of the Company or any Subsidiary or under the
indemnification agreements listed on Schedule 5.10 in effect immediately prior
to the date hereof, with respect to any act or failure to act by any such
Indemnified Person at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement).
(b) Any determination required to be made with respect to whether
an Indemnified Person's conduct complies with the standards set forth under the
CBCA or other applicable law shall be made by independent counsel selected by
Parent and reasonably acceptable to the Indemnified Persons. Parent shall pay
such counsel's fees and expenses so
long as the Indemnified Persons do not challenge any such determination by such
independent counsel).
(c) In the event that Parent or any of its successors or assigns
(i) consolidates with, merges or otherwise enters a business combination into or
with any other person, and Parent or such successor or assign is not the
continuing or Parent corporation or entity of such consolidation, Acquisition or
business combination, or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each case, proper provision
shall be made so that such person or the continuing or Parent corporation
assumes the obligations set forth in this Section 5.10 and none of the actions
described in clauses (i) and (ii) above shall be consummated until such
provision is made.
(d) In the event any claim, action, suit, proceeding or
investigation (a "Claim") for which indemnification is provided under this
Section 5.10 is brought against an Indemnified Person (whether arising before or
after the Effective Time) after the Effective Time Parent shall, consistent with
the terms of any directors' and officers' liability insurance policy defend such
Indemnified Person from such claim with counsel reasonably acceptable to such
Indemnified Person; provided, however, that in the event Parent fails to provide
a defense to such Claim or it would be inappropriate due to conflicts of
interests that counsel for Parent also represent such Indemnified Person, (i)
such Indemnified Person may retain separate counsel reasonably acceptable to
Parent, (ii) the indemnifying party shall pay all reasonable fees and expenses
of such counsel for such Indemnified Person as statements therefore are
received, and (iii) the indemnifying party will use all commercially reasonable
best efforts to assist in the defense of any such matter, provided that the
indemnifying party shall not be liable for any settlement of any Claim without
its written consent, which consent shall not be unreasonably withheld, and
provided further, however, that not more than one such separate counsel may be
retained for all Indemnified Persons at the expense of the indemnifying party
(unless, and to the extent that, the joint representation of all Indemnified
Persons poses an actual conflict of interest). Any Indemnified Person desiring
to claim indemnification under this Section 5.10, upon learning of any Claim,
shall notify the indemnifying party (but the failure to so notify shall not
relieve the indemnifying party from any liability which it may have under this
Section 5.10 except to the extent such failure materially prejudices such
indemnifying party).
(e) This Section 5.10 is intended to benefit the Indemnified
Persons, shall be enforceable by each Indemnified Person and his or her heirs
and representatives.
11. Shareholder Litigation. The Company shall give Parent the reasonable
opportunity to participate in the defense of any shareholder litigation against
or in the name of the Company and/or its respective directors relating to the
transactions contemplated by this Agreement.
12. Determination of Option Holders and Warrant Holders. At least ten
business days before the Effective Time, the Company shall provide Parent with a
true and complete list, as of such date, of (a) the holders of Company Options
and Company Warrants, (b) the number of shares of Company Common Stock subject
to Company Options and Company Warrants held by each such option holder and
warrant holder and (c) the address of each such option holder and warrant holder
as set forth in the books and records of the Company or any Subsidiary,
following upon which there shall be no additional grants of Company Options
without Parent's prior consent. From the date such list is provided to Parent
until the Effective Time, the Company
33
shall provide a daily option activity report to Parent containing such
information as Parent shall reasonably request.
13. Preparation of Tax Returns. The Company shall file (or cause to be
filed) at its own expense, on or prior to the due date thereof, all Returns
required to be filed on or before the Closing Date. The Company shall provide
Parent with a copy of appropriate work papers, schedules, drafts and final
copies of each foreign and domestic, federal, provincial and state income Tax
return or election of the Company (including returns of all Employee Benefit
Plans) at least ten days before filing such return or election and shall consult
with Parent with respect thereto prior to such filing.
14. Tax-Free Reorganization. Parent and the Company shall each use all
commercially reasonable best efforts to cause the Acquisition to qualify as a
re-organization within the meaning of Section 368(a) of the Code. Neither Parent
nor the Company shall take or fail to take, or cause any third party to take or
fail to take, any action that would cause the Acquisition to fail to qualify as
a "reorganization" within the meaning of Section 368(a) of the Code.
15. SEC Filings; Compliance. Subject to the terms and provisions of the
Responsible Party Agreement attached hereto as Exhibit D and the obligations
assumed by the Responsible Party thereunder, Parent shall each cause the
required forms, reports, schedules, statements and other documents required to
be filed with the SEC by the Parent, respectively, between the date of this
Agreement and the Effective Time (with respect to either the Company or Parent,
the "New SEC Reports") to be prepared in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, as the case
may be, and such New SEC Reports will not at the time they are filed contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
5.16 The Company covenants and agrees that the Conversion Transactions shall be
undertaken in accordance with Section 5.3 of this Agreement.
F.
CONDITIONS TO CLOSING
1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE ACQUISITION. The
respective obligation of each party to effect the Acquisition is subject to the
satisfaction or waiver on or prior to the Effective Date of the following
conditions:
(a) Company Shareholder and Parent Stockholder Approval. This
Agreement and the Acquisition shall have been approved and adopted by the
consent or requisite vote of (i) the shareholders of the Company under the TBCA
and the Company's Charter Document and Governing Documents and (ii) the
directors of Parent and if required, the stockholders of Parent under the CBCA
and the Parent's Charter Document and Governing Document.
(b) Governmental Action; No Injunction or Restraints. No action or
proceeding shall be instituted by any Governmental Entity seeking to prevent
consummation of the Acquisition, asserting the illegality of the Acquisition or
this Agreement or seeking damages (in an amount or to the extent that, if they
were incurred or paid by the Company, would
constitute a Company Material Adverse Effect) directly arising out of the
transactions contemplated hereby which continues to be outstanding. No judgment,
order, decree, statute, law, ordinance, rule or regulation entered, enacted,
promulgated, enforced or issued by any court or other Governmental Entity of
competent jurisdiction or other legal restraint or prohibition shall be in
effect (i) imposing or seeking to impose sanctions, damages or liabilities (in
an amount or to the extent that, if they were incurred or paid by the Company,
would constitute a Company Material Adverse Effect) directly arising out of the
Acquisition on the Company or any of its officers or directors; or (ii)
preventing the consummation of the Acquisition.
(c) Governmental Consents. All necessary authorizations, consents,
orders or approvals of, or declarations or filings with, or expiration or waiver
of waiting periods imposed by, any Governmental Entity of any applicable
jurisdiction required for the consummation of the transactions contemplated by
this Agreement shall have been filed, expired or obtained, as to which the
failure to obtain, make or occur would have the effect of making the Acquisition
or this Agreement or any of the transactions contemplated hereby illegal or
which, individually or in the aggregate, would have a Parent Material Adverse
Effect (assuming the Acquisition had taken place).
2. CONDITIONS TO OBLIGATIONS OF PARENT. THE OBLIGATION OF PARENT TO
EFFECT THE ACQUISITION IS FURTHER SUBJECT TO SATISFACTION OR WAIVER OF THE
FOLLOWING CONDITIONS:
(a) Representations and Warranties. The representations and
warranties of the Company set forth herein shall be true and correct both when
made and at and as of the Effective Date, as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case as of
such date), except where the failure of such representations and warranties to
be so true and correct (without giving effect to any limitation as to
materiality or material adverse effect set forth therein) does not have, and
would not, individually or in the aggregate, reasonably be expected to have, a
Company Material Adverse Effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Date.
(c) No Injunctions or Restraints. No final judgment, order,
decree, statute, law, ordinance, rule or regulation entered, enacted,
promulgated, enforced or issued by any court or other Governmental Entity of
competent jurisdiction or other legal restraint or prohibition shall be in
effect (i) imposing material limitations on the ability of Parent to acquire or
hold or to exercise full rights of ownership of any securities of the Company;
(ii) imposing material limitations on the ability of Parent or its Affiliates to
combine and operate the business and assets of the Company; (iii) imposing other
material sanctions, damages, or liabilities directly arising out of the
Acquisition on Parent or any of its officers or directors; or (iv) requiring
divestiture by Parent of any significant portion of the business, assets or
property of the Company or of Parent.
(d) Delivery of Closing Documents. At or prior to the Effective
Time, the Company shall have delivered to Parent all of the following:
(1) a certificate of the President and the Chief Financial
Officer of the Company, dated as of the Effective Date, stating that the
conditions precedent set forth in Sections 6.2(a), (b) and (c) hereof have
been satisfied; and
(2) a copy of (A) the Articles of Incorporation of the
Company, dated as of a recent date, certified by the Secretary of State of
the State of Texas, (B) the Bylaws of the Company and (C) the resolutions
of the Company Board and shareholders authorizing the Acquisition and the
other transactions contemplated by this Agreement, certified by the
Secretary of the Company.
(e) Dissenting Shares. The aggregate amount of Dissenting Shares
(as defined in Section 2.1(g) hereof) shall not exceed ten percent (10%) of the
total number of shares of Company Common Stock, on a fully diluted, as-converted
basis (i.e., assuming issuance of all shares of Common Stock issuable upon the
exercise or conversion of all securities outstanding immediately prior to the
Effective Time which are convertible into or exercisable for shares of Company
Common Stock, whether or not vested), issued and outstanding immediately prior
to the Effective Time.
3. CONDITIONS TO OBLIGATIONS OF THE COMPANY. THE OBLIGATION OF THE
COMPANY TO EFFECT THE ACQUISITION IS FURTHER SUBJECT TO SATISFACTION OR WAIVER
OF THE FOLLOWING CONDITIONS:
(a) Representations and Warranties. The representations and
warranties of Parent set forth herein shall be true and correct both when made
and at and as of the Effective Date, as if made at and as of such time (except
to the extent expressly made as of an earlier date, in which case as of such
date), except where the failure of such representations and warranties to be so
true and correct (without giving effect to any limitation as to materiality or
material adverse effect set forth therein) does not have, and would not,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
(b) Performance of Obligations of Parent. Parent shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Date.
(c) Delivery of Closing Documents. At or prior to the Effective
Time, the Parent shall have delivered to the Company a certificate of the
President and the Chief Financial Officer of Parent, dated as of the Effective
Date, stating that the conditions precedent set forth in Sections 6.3(a) and (b)
hereof have been satisfied.
(d) Delivery of the Responsible Party Agreement. At or prior to
the Effective Time, the Responsible Party Agreement, as fully executed, shall be
delivered to the Company in a form and with such assurances as deemed acceptable
to the Company.
(e) Delivery of the Lock-Up Agreements. At or prior to the
Effective Time, the Lock-Up Agreements, as fully executed, shall be delivered to
the Company in a form and with such assurances as deemed acceptable to the
Company.
(f) Delivery of Exhibit F. At or prior to the Effective Time,
Exhibit F with a fully executed and completed copy of all documents referenced
and identified therein, shall be delivered to the Company.
(g) The Company's reasonable satisfaction that the timing and
procedures to complete the Acquisition will satisfy the Securities Compliance
Requirement.
G.
TERMINATION
1. TERMINATION. THIS AGREEMENT MAY BE TERMINATED AT ANY TIME PRIOR TO
THE EFFECTIVE TIME, WHETHER BEFORE OR AFTER APPROVAL OF THE ACQUISITION BY THE
COMPANY'S SHAREHOLDERS OR THE PARENT'S STOCKHOLDERS:
(a) by mutual written consent of the Company and Parent (on behalf
of Parent and Parent);
(b) by either the Company or Parent:
if the Acquisition shall not have been completed by, July
1, 2005; provided, however, that the right to terminate this Agreement
pursuant to this Section 7.1(b)(i) shall not be available to any party
whose failure to perform any of its obligations under this Agreement
results in the failure of the Acquisition to be consummated by such time;
if shareholder approval shall not have been obtained at the
Company Shareholders Meeting duly convened therefore or at any adjournment
or postponement thereof; provided, however, that the right to terminate
this Agreement pursuant to this Section 7.1(b)(ii) shall not be available
to any party whose failure to perform any of its obligations under this
Agreement results in the failure to obtain shareholder approval.
if stockholder approval is determined to be required and
shall not have been obtained at the Parent Stockholders Meeting duly
convened therefore or at any adjournment or postponement thereof;
provided, however, that the right to terminate this Agreement pursuant to
this Section 7.1(b)(iii) shall not be available to any party whose failure
to perform any of its obligations under this Agreement results in the
failure to obtain stockholder approval.
if any restraint having any of the effects set forth in
Section 6.1(b) or Section 6.2(c) hereof shall be in effect and shall have
become final and non-appealable; provided, however, that the right to
terminate this Agreement pursuant to this Section 7.1(b)(iv) shall not be
available to any party whose failure to perform any of its obligations
under this Agreement results in such restraint to continue in effect; or
if the Company enters into a Acquisition, acquisition or
other agreement (including an agreement in principle) or understanding to
effect a Superior Proposal or the Company Board or a committee thereof
resolves to do so; provided, however, that the Company may not terminate
this Agreement pursuant to this Section 7.1(b)(v) unless (a) the Company
has delivered to Parent a written notice of the Company's intent to enter
into such an agreement to effect such Acquisition Proposal, which notice
shall include, without limitation, the material terms and conditions of
the Acquisition Proposal and the identity of the Person making the
Acquisition Proposal, (b) three business days have elapsed following
delivery to Parent of such written notice by the Company and (c) during
such three-business-day period, the Company has cooperated with to allow
Parent within such three-business-day period to propose amendments to the
terms of this Agreement to be at least as favorable as the Superior
Proposal; provided, further, that the
Company may not terminate this Agreement pursuant to this Section
7.1(b)(v) unless, at the end of such three-business-day-period, the
Company Board continues reasonably to believe that the Acquisition
Proposal constitutes a Superior Proposal;
(c) by the Company
if Parent or Subsidiary shall have breached any of its
representations and warranties contained in Article IV hereof which breach
has had or is reasonably likely to have a Parent Material Adverse Effect
or Parent or Subsidiary shall have breached or failed to perform in any
material respect any of its covenants or other agreements contained in
this Agreement, in each case, which breach or failure to perform has not
been cured by Parent or Subsidiary within thirty days following receipt of
notice thereof from the Company;
if (a) the Parent Board or any committee thereof shall have
withdrawn or modified in a manner adverse to the Company its approval or
recommendation of this Agreement, or (b) the Parent Board or any committee
thereof shall have resolved to take any of the foregoing actions; or
(d) by Parent (on behalf of Parent and Subsidiary):
if the Company shall have breached any of its
representations and warranties contained in Article III hereof which
breach has had or is reasonably likely to have a Company Material Adverse
Effect or the Company shall have breached or failed to perform in any
material respect any of its covenants or other agreements contained in
this Agreement, in each case (other than a breach of Section 5.6(b)
hereof, as to which no materiality requirement and no cure period shall
apply), which breach or failure to perform has not been cured by the
Company within thirty days following receipt of notice thereof from
Parent; or
2. if (a) the Company Board or any committee thereof shall have
withdrawn or modified in a manner adverse to Parent its approval or
recommendation of the Acquisition or this Agreement, or approved or recommended
an Acquisition Proposal, or (b) the Company Board or any committee thereof shall
have resolved to take any of the foregoing actions. Effect of Termination. The
termination of this Agreement pursuant to the terms of Section 7.1 hereof shall
become effective upon delivery to the other party of written notice thereof. In
the event of the termination of this Agreement pursuant to the foregoing
provisions of this Article VII, there shall be no obligation or liability on the
part of any party hereto (except as provided in Section 7.3 hereof) or its
shareholders or directors or officers in respect thereof, except for agreements
which survive the termination of this Agreement, except for liability that
Parent or Subsidiary or the Company might have to the other party or parties
arising from a breach of this Agreement due to termination of this Agreement in
accordance with Sections 7.1(c)(i) or 7.1(d)(i) or due to the fraudulent or
willful misconduct of such party.
3. Fees and Expenses. Notwithstanding any other term or provision of
this Section 7.3 or any other term or provision of this Agreement, the
Constituent Corporations agree that the Responsible Party shall be responsible
for the payment of all fees, costs, and expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement,
including, but not limited to, retaining legal, accounting, XXXXX filing agents,
and all persons in connection with the matters described in this Agreement.
(a) Except as provided in this Section 7.3 (as described above),
whether or not the Acquisition is consummated, the Company, on the one hand, and
Parent and Subsidiary, on the other, shall bear their respective expenses
incurred in connection with the Acquisition, including, without limitation, the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, and all fees and expenses of investment bankers, finders,
brokers, agents, representatives, counsel, auditors, and accountants.
(b) Subject to the first sentence in this Section 7.3 of this
Agreement, if this Agreement is terminated as a result of a breach of this
Agreement in accordance with Sections 7.1(c)(i) or 7.1(d)(i), then the
non-breaching party shall be entitled to receive from the breaching party
damages resulting from such breach, including without limitation, all
out-of-pocket fees and expenses incurred or paid by or on behalf of the
non-breaching party or any Affiliate of the non-breaching party in connection
with this Agreement, the Acquisition and transactions contemplated herein,
including all fees and expenses of counsel, investment banking firm, accountants
and consultants.
H.
MISCELLANEOUS
1. Survival of Representations and Warranties. The representations and
warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time for a period four (4) years
thereafter. This Section 8.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time.
2. Waiver. At any time prior to the Effective Date, any party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of any other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements of any other party or with any conditions to its own obligations
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
duly authorized by and signed on behalf of such party.
8.3 Attorneys' Fees. Should suit be brought to enforce or interpret any part
of this Agreement, the prevailing party will be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees to
be fixed by the court (including, without limitation, costs, expenses and fees
on any appeal).
8.4. Notices. Any notice or communication to any party hereto shall be duly
given if in writing and delivered in person or mailed by first class mail and
airmail, if overseas (registered or return receipt requested), facsimile (with
receipt electronically acknowledged) or overnight air courier guaranteeing next
day delivery, to such other party's address.
If to Parent: Xx. Xxxxxx Xxxxxx, President
Technol Fuel Conditioners, Inc.
Xxx Xxxx Xx. #000
Xxxxxxxxx, XX. 00000
with copies to: Xxxxxx X. Xxxxxxx, P.C.
0000 Xxxxxxx 000 Xxxxx 000-000
Xxxxxxxxxx, Xx. 00000
Fax. 000-0000-0000
Email: xxxxxxxxxxxxxxx@xxxxx.xxx
If to the Company: Xx. Xxxxxxx X. Xxxxxxxxx
Allied Syndications, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xx. 00000
xxx.xxxxxxxxxxxx.xxx
mailto:xxx@xxxxxxxxxxxxx.xxx
with copies to: Xx. Xxxxxxx Xxx, Esq.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xx. 00000
Fax. 0-000-000-0000
xxxx@xxxx.xxx
(a) All notices and communications will be deemed to have been
duly given: at the time delivered by hand, if personally delivered; three
business days after being deposited in the mail, if mailed; when sent, if sent
by facsimile; and one business day after timely delivery to the courier, if sent
by overnight air courier guaranteeing next day delivery.
8.5 Counterparts. This Agreement may be executed via facsimile in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.6 Interpretation; Construction. The language used in this Agreement
and the other agreements contemplated hereby shall be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party. The headings of articles and
sections herein are for convenience of reference, do not constitute a part of
this Agreement, and shall not be deemed to limit or affect any of the provisions
hereof. As used in this Agreement, "Person" means any individual, corporation,
limited liability company, limited or general partnership, joint venture,
association, joint stock company, trust, unincorporated organization or other
entity;
8.7. Amendment. This Agreement may be amended by the parties at any time
before or after any required approval of matters presented in connection with
the Acquisition by the shareholders of the Company or the stockholders of
Parent; provided, however, that after any such approval, there shall not be made
any amendment that by law requires further approval by the shareholders of the
Company or the stockholders of Parent without obtaining such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
8.8. No Third Party Beneficiaries. Except for the provisions of Section
5.10 hereof (which is intended to be for the benefit of the persons referred to
therein, and may be enforced by such persons) nothing in this Agreement shall
confer any rights upon any person or entity which is not a party or permitted
assignee of a party to this Agreement.
8.9. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Colorado. Each party hereby
irrevocably waives the right to any jury trial in connection with any action or
proceeding brought or maintained in connection with this Agreement.
8.10 Entire Agreement. This Agreement (together with the Exhibits and the
Company Disclosure Letter, and the other documents delivered pursuant hereto or
contemplated hereby) constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof, in each case other than the Company Option Agreement
and the Reciprocal Confidentiality Agreement.
8.11 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
8.12 Any dispute or claim arising to or in any way related to this
Agreement shall be settled by arbitration in Bowling Green, Kentucky. All
arbitration shall be conducted in accordance with the rules and regulations of
the American Arbitration Association ("AAA"). AAA shall designate an arbitrator
from an approved list of arbitrators following both parties' review and deletion
of those arbitrators on the approved list having a conflict of interest with
either party. Each party shall pay its own expenses associated with such
arbitration (except as set forth in Section 8.3. Above). A demand for
arbitration shall be made within a reasonable
time after the claim, dispute or other matter has arisen and in no event shall
such demand be made after the date when institution of legal or equitable
proceedings based on such claim, dispute or other matter in question would be
barred by the applicable statutes of limitations. The decision of the
arbitrators shall be rendered within 60 days of submission of any claim or
dispute, shall be in writing and mailed to all the parties included in the
arbitration. The decision of the arbitrator shall be binding upon the parties
and judgment in accordance with that decision may be entered in any court having
jurisdiction thereof.
TECHNOL FUEL CONDITIONERS, INC.
By: (s)Xxxxxx Xxxxxx
-------------------------
Xxxxxx Xxxxxx, President and
Chief Executive Officer
ALLIED SYNDICATIONS, INC.
By: (s)Xxxxxxx X. Xxxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxxx, President
ARTICLE IX
DEFINITION AND USAGE.
--------------------
For purposes of this Agreement:
"Affiliate" means, with respect to any Person, any other Person, or
indirectly controlling, controlled by or under common control with such Person.
"Environmental Law" shall mean any federal, state or local law,
statute, rule or regulation or the common law relating to the environment or
occupational health and safety, including any statute, regulation,
administrative decision or order pertaining to: (i) treatment, storage,
disposal, generation and transportation of industrial, toxic or hazardous
materials or substances or solid or hazardous waste; (ii) air, water and noise
pollution; (iii) groundwater and soil contamination; (iv) the release or
threatened release into the environment of industrial, toxic or hazardous
materials or substances, or solid or hazardous waste, including emissions,
discharges, injections, spills, escapes or dumping of pollutants, contaminants
or chemicals; (v) the protection of wild life, marine life and wetlands,
including all endangered and threatened species; (vi) storage tanks, vessels,
containers, abandoned or discarded barrels and other closed receptacles; (vii)
health and safety of employees and other persons; and (viii) manufacturing,
processing, using, distributing, treating, storing, disposing, transporting or
handling of materials regulated under any law as pollutants, contaminants, toxic
or hazardous materials or substances or oil or petroleum products or solid or
hazardous waste. As used above, the terms "release" and "environment" shall have
the meaning set forth in the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (CERCLA).
"Knowledge of the Company" shall mean the actual knowledge of the
Company's Board of Directors in the ordinary conduct of their duties without
conducting any special or extraordinary investigation.
"Knowledge of the Parent" shall mean the knowledge of the Parent,
the Parent's Board of Directors, and officers after conducting a reasonable
investigation.
"Indebtedness" shall mean (a) any liabilities for borrowed money or
amounts owed, (b) all guaranties, endorsements and other contingent obligations,
whether or not the same are or should be reflected in the Company's balance
sheet or the notes thereto, except guaranties by endorsement of negotiable
instruments for deposit or collection in the ordinary course of business, and
(c) the present value of any lease payments under leases required to be
capitalized in accordance with GAAP.
"Material Adverse Effect" means any effect or change that is or
would be materially adverse to the business, operations, assets, prospects,
condition (financial or otherwise) or results of operations of the Company and
any of its subsidiaries, taken as a whole as elsewhere provided in this
Agreement
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality of the
foregoing.
"Securities Compliance Requirement" shall have the same meaning as
in Section 1.1 of this Agreement.
"Taxes" means any and all federal, state, local, foreign or other
taxes of any kind (together with any and all interest, penalties, additions to
tax and additional amounts imposed with respect thereto) imposed by any taxing
authority, including, without limitation, taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts, sales,
use, capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth, and taxes or other charges in the
nature of excise, withholding, ad valorem or value added.
BALANCE OF PAGE LEFT INTENTIONALLY BLANK
ARTICLE I THE ACQUISITION.................................................................... 2
1.1. The Acquisition........................................................................ 2
1.2. Effect of Acquisition.................................................................. 2
1.3. Effective Time......................................................................... 2
1.4. Directors and Officers................................................................. 2
1.5. Taking of Necessary Action; Further Action............................................. 2
1.6. The Closing............................................................................ 3
ARTICLE II CONVERSION OF SECURITIES........................................................... 3
2.1. Conversion of Securities............................................................... 3
2.2. Stock Options.......................................................................... 4
2.3. Warrants............................................................................... 5
2.4. Exchange of Certificates............................................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................... 7
3.1. Organization and Qualification......................................................... 7
3.2. Capital Stock of Subsidiaries.......................................................... 8
3.3. Capitalization......................................................................... 8
3.4. Authority Relative to this Agreement................................................... 9
3.5. No Conflict; Required Filings and Consents............................................. 10
3.6. SEC Filings; Financial Statements...................................................... 10
3.7. Absence of Changes or Events........................................................... 11
3.8. Litigation............................................................................. 11
3.9. Title to Properties.................................................................... 12
3.10. Certain Contracts...................................................................... 12
3.11. Compliance with Law.................................................................... 13
3.12. Intellectual Property Rights; Year 2004................................................ 13
3.13. Taxes.................................................................................. 14
3.14. Employees.............................................................................. 16
3.15. Employee Benefit Plans................................................................. 16
3.16. Environmental Matters.................................................................. 18
3.17. Foreign Corrupt Practices Act.......................................................... 19
3.18. Export Control Laws.................................................................... 19
3.19. Finders or Brokers..................................................................... 19
3.20. Board Recommendation................................................................... 19
3.21. Vote Required.......................................................................... 19
3.22. Tax Matters............................................................................ 20
3.23 State Takeover Statutes................................................................ 18
3.24 Information Statement; 15 c 211 Filing................................................. 20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT........................................... 21
4.1. Organization and Qualification......................................................... 21
4.2. Capitalization......................................................................... 21
4.3. Authority Relative to this Agreement................................................... 22
4.4. No Conflicts; Required Filings and Consents............................................ 22
4.5. SEC Filings; Financial Statements...................................................... 23
4.6. Absence of Changes or Events........................................................... 24
4.7. Litigation............................................................................. 24
4.8. Compliance with Law.................................................................... 25
4.9. Finders or Brokers..................................................................... 25
4.10. Tax Matters............................................................................ 25
4.11 Information Statements................................................................. 22
ARTICLE V COVENANTS AND AGREEMENTS........................................................... 26
5.1. Conduct of Business of the Company Pending the Acquisition............................. 26
5.2. Preparation of Information Statement; 15 c 211 Filing Statement........................ 28
5.3. Company Shareholder and Parent Stockholder Meetings.................................... 29
5.4. Additional Agreements, Cooperation..................................................... 30
5.5. Publicity.............................................................................. 30
5.6. No Solicitation........................................................................ 31
5.7. Access to Information.................................................................. 31
5.8. Notification of Certain Matters........................................................ 32
5.9. Resignation of Officers and Directors.................................................. 32
5.10. Indemnification........................................................................ 32
5.11. Shareholder Litigation................................................................. 33
5.12. Determination of Optionholders and Warrantholders...................................... 33
5.13. Preparation of Tax Returns............................................................. 34
5.14. Tax-Free Reorganization................................................................ 34
5.15. SEC Filings; Compliance................................................................ 34
5.16. Listing of Additional Shares...........................................................
ARTICLE VI CONDITIONS TO CLOSING.............................................................. 34
6.1. Conditions to Each Party's Obligation to Effect the Acquisition........................ 34
6.2. Conditions to Obligations of Parent.................................................... 35
6.3. Conditions to Obligations of the Company............................................... 36
ARTICLE VII TERMINATION........................................................................ 37
7.1. Termination............................................................................ 37
7.2. Effect of Termination.................................................................. 38
7.3. Fees and Expenses...................................................................... 38
ARTICLE VIII MISCELLANEOUS...................................................................... 39
8.1. Nonsurvival of Representations and Warranties.......................................... 39
8.2. Waiver................................................................................. 39
8.3. Attorneys' Fees........................................................................ 39
8.4. Notices................................................................................ 39
8.5. Counterparts........................................................................... 40
8.6. Interpretation; Construction........................................................... 41
8.7. Amendment.............................................................................. 41
8.8. No Third Party Beneficiaries........................................................... 41
8.9. Governing Law.......................................................................... 41
8.10. Entire Agreement....................................................................... 41
8.11. Validity............................................................................... 41
EXHIBITS
Company Disclosure Letter
Exhibit A - [omitted.]
Exhibit B - Voting Agreement
Exhibit C - Escrow Agreement
Exhibit D - [Omitted.]