Exhibit 99.2
PLAN OF REORGANIZATION
AND
AGREEMENT OF MERGER
PLAN OF REORGANIZATION AND AGREEMENT OF MERGER, dated as of September 19,
2005, among Cyber Acquisition Sub, Inc., an Oklahoma corporation ("Sub");
Techsphere Systems International, Inc., a Georgia corporation ( "TSI") (Sub and
TSI being sometimes called the "Constituent Corporations"); Cyber Defense
Systems, Inc., a Florida corporation ("Cyber"), sole shareholder of Sub; and the
Persons listed on Exhibit 3.2(a) hereto, constituting all of the holders of the
issued and outstanding capital stock of TSI (the "TSI Shareholders"), of which
Xxxx Xxxxxx, Xxxxx Xxxxxx, Xx Xxxxxxx, Xxxxx Xxxxxxx and Xxxx Xxxxxxxxx are
hereinafter referred to as the "Active Shareholders." The foregoing are
sometimes referred to herein collectively as the "Parties," and individually as
a "Party."
Recitals:
WHEREAS, the Boards of Directors of Sub, TSI and Cyber desire to adopt a
plan of reorganization for a transaction intended to qualify as a reorganization
within the meaning of Section 368(a)(1)(A) and (a)(1)(D) of the Internal Revenue
Code of 1986, as amended; deem the merger of Sub into TSI on the terms herein
set forth to be desirable and in the best interests of their respective
shareholders; and have approved this Plan of Reorganization and Agreement of
Merger ("Agreement"); and
WHEREAS, the "TSI Shareholders", in order to induce Cyber to exercise its
option to enter into this transaction, have executed a Unanimous Written Consent
in Lieu of Shareholders' Meeting and Agreement Regarding the Merger of Cyber
Acquisition Sub, Inc., with Cyber and TSI (the "Consent Agreement"); and
WHEREAS, Cyber has agreed to exercise its option to merge Sub with and
into TSI pursuant to the terms and conditions of this Agreement;
NOW, THEREFORE, in accordance with the applicable provisions of the
Georgia Business Corporation Code, the parties agree that Sub shall be merged
into TSI, with TSI as the surviving corporation, and that the plan, terms and
conditions of such merger shall be as follows:
ARTICLE I
THE MERGER AND RELATED MATTERS
1.1 The Merger. At the Effective Time, Sub shall be merged into TSI (the
"Merger"), the separate existence of Sub shall cease, and TSI shall be the
surviving corporation and shall continue its corporate existence under the laws
of the State of Georgia under the name of Techsphere Systems International,
Inc.; and all the rights, privileges, powers and franchises, of a public and
private nature, and all the property, real, personal and mixed, of each of the
Constituent Corporations, and all debts due to either of them on whatever
account, including subscriptions to shares and all other things in action, or
belonging to either of them, shall be taken and deemed to be transferred to, and
shall be vested in, the Surviving Corporation without further act or deed; and
all property, rights, privileges, powers and franchises and all and every other
interest shall be thereafter as effectively the property of the Surviving
Corporation as they were of the Constituent Corporations, and the title to any
real estate vested by deed or otherwise in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of the Merger;
but the Surviving Corporation shall thence forth be liable for all debts,
liabilities, obligations, duties and penalties of each of the Constituent
Corporations and all said debts, liabilities, obligations, duties and penalties
shall thenceforth attach to the Surviving Corporation and may be enforced
against it to the same extent as if said debts, liabilities, obligations, duties
and penalties had been incurred or contracted by it. No liability or obligation
due or to become due at the Effective Time, or any claim or demand for any cause
then existing against either of the Constituent Corporations or any stockholder,
officer or director thereof, shall be released or impaired by the Merger, and
all rights of creditors and all liens upon property of either of the Constituent
Corporations shall be preserved unimpaired.
1.2 Effective Time. The merger shall become effective on the filing by the
Georgia Secretary of State of a certificate of merger in the form and manner
required by Section 14-2-1105 of the Georgia Business Corporation Code (the
"Certificate of Merger"). The date of such filing shall be called the "Effective
Time".
1.3 Delivery for Filing. Unless this Agreement shall have been terminated
prior thereto under the provisions of Article XII hereof, the Certificate of
Merger shall be delivered to the Georgia Secretary of State for filing, such
delivery to be no later than thirty-five days after the approval of this
Agreement and the Merger herein contemplated by the stockholders of Cyber and
TSI, or such other date agreed to in writing by TSI and Cyber.
1.4 Certificate of Incorporation. The Certificate of Incorporation of TSI
shall be amended as of the Effective Time to read as set forth in Exhibit 1.4.
1.5 By-Laws. The By-Laws of TSI shall be amended as of the Effective Time
to read as set forth in Exhibit 1.5.
1.6 Officers and Directors. The officers and directors of TSI, as of the
Effective Time, shall be as provided for in Article XI of this document.
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1.7 The Closing. The closing of the transaction contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxx Xxxxx
Xxxxxxx, XXX,0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000 on
September 19, 2005, or at such other place, time and date as TSI, Cyber and Sub
shall agree (the "Closing Date").
1.8 Definitions. Capitalized terms used but not defined herein shall have
the meanings ascribed to them in Exhibit 1.8.
ARTICLE II
CONVERSION AND EXCHANGE OF SHARES
2.1 Conversion Ratio. The manner of converting or exchanging the shares of
each of the Constituent Corporations shall be as follows: All shares of TSI
capital stock issued and outstanding at the Effective Time (100,000 shares
total) shall be by virtue of the Merger and at the Effective Time surrendered in
exchange for (a) 23,076,923 shares of Cyber Class A Common Stock, par value
$0.001 per share ("Cyber Class A Stock"), and (b) 245,455 shares of Cyber Class
B Common Stock, par value $0.001 per share ("Cyber Class B Stock") which after
the issuance of such shares at the Effective Time shall constitute 45% of the
total issued and outstanding shares of Cyber Class B Stock. Each share of TSI
common stock issued and outstanding at the Effective Time (except shares of TSI
common stock issued and held in the treasury of TSI or beneficially owned by
Cyber or Sub) shall by virtue of the Merger and at the Effective Time be owned
by Cyber and thereafter TSI shall be a wholly-owned Subsidiary of Cyber. The
shares of Cyber Class A Stock and Cyber Class B Stock to be issued hereunder are
sometimes referred to herein as the "Cyber Stock."
2.2 Shares Owned by TSI. Each share of TSI common stock issued and held in
the treasury of TSI at the Effective Time shall be automatically cancelled and
retired, and no shares of stock or other securities of Cyber shall be issuable
with respect thereto.
2.3 Fractional Shares. No fractional shares of Cyber Stock shall be issued
pursuant to Section 2.1.
2.4 Exchange of Shares. At and after the Effective Time, each holder of
TSI common stock, upon presentation and surrender of a certificate or
certificates therefor to Sub, shall be entitled to receive in exchange therefor
a certificate or certificates representing the number of shares of Cyber Stock
to which he is entitled as provided in Section 2.1. Exhibit 2.4 lists for each
TSI Shareholder the number of shares of Cyber Class A Stock and Cyber Class B
Stock to be issued to the shareholder upon the surrender of TSI common stock.
Until so presented and surrendered in exchange for a certificate representing
Cyber Stock, each certificate which represented issued and outstanding shares of
TSI common stock at the Effective Time shall be deemed for all purposes to
evidence ownership of the number of shares of Cyber Stock into which such shares
of TSI common stock have been converted pursuant to the Merger. Until surrender
of such certificates in exchange for certificates representing Cyber Stock, the
holder thereof shall not be entitled to vote at any meeting of Cyber
stockholders or to receive any dividend or other distribution payable to holders
of shares of Cyber Stock; provided, however, that upon surrender of such
certificates representing TSI common stock in exchange for certificates
representing Cyber Stock, there shall be paid to the record holder of the
certificate representing Cyber Stock issued upon such surrender the amount of
dividends or other distributions (without interest) which theretofore became
payable with respect to the number of shares of Cyber Stock represented by the
certificate issued upon such surrender.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TSI AND THE ACTIVE SHAREHOLDERS
TSI and the Active Shareholders jointly and severally represent and
warrant to Cyber and Sub that the statements contained in this Article III are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Article
III), except as set forth in a disclosure schedule delivered by Cyber and the
Active Shareholders to Cyber on the date hereof and initialed by the Parties
(the "Disclosure Schedule"). Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein,
however, unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. The
disclosure Schedule will be arranged in paragraphs corresponding to the numbered
and lettered sections contained in this Article III.
3.1 Corporate Organization and Good Standing. TSI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia, and is qualified to do business as a foreign corporation in each
jurisdiction, if any, in which its property or business requires such
qualification.
3.2 Capitalization; Equity Owners. TSI's authorized capital stock consists
of 100,000 shares of TSI Common Stock, no par value, of which 100,000 shares are
issued and outstanding, fully paid and nonassessable. All of the TSI
Shareholders, and the respective share ownership of each shareholder, are listed
on Exhibit 3.2(a). There are no options, warrants or rights outstanding to
purchase shares of TSI Common Stock from TSI.
3.3 Subsidiaries.
(a) TSI has one operating Subsidiary, TSI Holding Company, LLC, a
Georgia limited liability company ("Techsphere LLC"). TSI owns 100% of the
interest in profits and capital of Techsphere LLC. As of the Effective Time, TSI
will have not conducted any operations other than by and through Techsphere LLC.
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(b) TSI has three (3) remaining corporations that it has caused to
be formed: 21st Century Airships USA, Inc., a Georgia corporation; Techsphere
Government Applications Inc., a Georgia corporation; and Telesphere
Communications Inc., a Georgia corporation. No capital stock has yet been issued
by these corporations, and there are no options, warrants or rights outstanding
to purchase shares of capital stock of any such Subsidiary. None of the
foregoing Subsidiaries of TSI have ever (i) owned any assets, (ii) had or
incurred any liabilities (whether known or unknown, asserted or unasserted,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due
or to become due, including any liability for Taxes), (iii) conducted any
operations, or (iv) filed any Tax Returns. In the event any of these
corporations are activated in the future, they will be assigned either to TSI or
Cyber.
3.4 Financial Statements. TSI's unaudited balance sheet as of August 31,
2005, and December 31, 2004 and 2003, and the related statements of income and
retained earnings for the years then ended, copies of which are included in ss.
3.4 of the Disclosure Schedule, fairly present the financial condition of TSI as
of said dates and the results of its operations for the periods then ended, in
conformity with GAAP for the periods covered (excluding footnotes).
3.5 Absence of Undisclosed Liabilities. TSI does not have any liabilities
(whether known or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, or due or to become due,
including any liability for Taxes), except for (i) liabilities set forth on the
face of TSI's balance sheet as of August 31, 2005 ("Most Recent TSI Balance
Sheet"), or (ii) liabilities that have arisen after that date in the Ordinary
Course of Business.
3.6 Absence of Certain Changes. Since the date of the Most Recent TSI
Balance Sheet, there has not been any Material Adverse Change.
3.7 Non-contravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which TSI or any of its Subsidiaries is subject
or any provision of the charter or bylaws of TSI or any of its Subsidiaries, or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which TSI or any of its
Subsidiaries is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Lien upon any of its assets), except
where the violation, conflict, breach, default, acceleration, termination,
modification, cancellation, failure to give notice, or Lien would not have a
Material Adverse Effect. Neither TSI nor any of its Subsidiaries needs to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement, except where the
failure to give notice, to file, or to obtain any authorization, consent, or
approval would not have a Material Adverse Effect.
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3.8 Legal Compliance. Each of TSI and its Subsidiaries has complied with
all applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder and including the
Foreign Corrupt Practices Act, 15 U.S.C. 78dd-1 et seq.) of federal, state,
local, and foreign governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any failure so to
comply, except where the failure to comply would not have a Material Adverse
Effect.
3.9 Tax Matters.
(a) Each of TSI and its Subsidiaries has filed all federal Income
Tax Returns and all other material Tax Returns that it was required to file. All
such Tax Returns were correct and complete in all material respects. All Taxes
due and owing by TSI or any of its Subsidiaries (whether or not shown on any Tax
Return) have been paid or no Taxes were due. Neither TSI nor any of its
Subsidiaries is currently the beneficiary of any extension of time within which
to file any Tax Return. There are no Liens for Taxes (other than Taxes not yet
due and payable) upon any of the assets of TSI or any of its Subsidiaries.
(b) There is no material dispute or claim concerning any Tax
liability of TSI or any of its Subsidiaries either (i) claimed or raised by any
authority in writing or (B) as to which any of the Active Shareholders has
Knowledge based upon personal contact with any agent of such authority.
(c) Section 3.9 of the Disclosure Schedule lists all federal, state,
local, and foreign Tax Returns filed with respect to TSI or any of its
Subsidiaries for taxable periods ended on or after December 31, 2001. A copy of
each such Tax Return has been furnished to Cyber. Neither TSI nor any of its
Subsidiaries has waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or deficiency.
(d) Neither TSI nor any of its Subsidiaries now has, nor will it
have, any liability for unpaid Taxes for any taxable period ending on or prior
to the Closing Date.
3.10 Real Property.
(a) Neither TSI nor any of its Subsidiaries now owns, nor has it
ever owned, any real property.
(b) Section 3.10(b) of the Disclosure Schedule sets forth the
address of each parcel of Leased Real Property, and a true and complete list of
all Leases for each such Leased Real Property (including the date and name of
the parties to such Lease document). TSI has delivered to Cyber a true and
complete copy of each such Lease document, and in the case of any oral Lease, a
written summary of the material terms of such Lease. With respect to each of the
Leases:
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(i) such Lease is legal, valid, binding, enforceable and in
full force and effect;
(ii) the transactions contemplated by this Agreement do not
require the consent of any other party to such Lease, and will not
otherwise cause such Lease to cease to be legal, valid, binding,
enforceable and in full force and effect on identical terms
following the Closing;
(iii) possession and quiet enjoyment of the Leased Real
Property under such Lease has been disturbed and, to the Knowledge
of any of the Active Shareholders, there are no disputes with
respect to such Lease; and
(iv) to the Knowledge of any of the Active Shareholders,
neither TSI, nor any of its Subsidiaries nor any other party to the
Lease is in breach of or default under such Lease, and, to the
Knowledge of any of the Active Shareholders, no event has occurred
or circumstance exists that, with the delivery of notice, the
passage of time or both, would constitute such a breach or default,
or permit the termination, modification or acceleration of rent
under such Lease;
3.11 Intellectual Property.
(a) Neither TSI nor any of its Subsidiaries has interfered with,
infringed upon, misappropriated, or violated any material Intellectual Property
rights of third parties in any material respect, and neither TSI, any of its
Subsidiaries or any of the Active Shareholders has ever received any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that TSI or
any of its Subsidiaries must license or refrain from using any Intellectual
Property rights of any third party). To the Knowledge of any of the Active
Shareholders, no third party has interfered with, infringed upon,
misappropriated, or violated any material Intellectual Property rights of TSI or
any of its Subsidiaries in any material respect.
(b) Section 3.11(b) of the Disclosure Schedule identifies each
patent or registration which has been issued to TSI or any of its Subsidiaries
with respect to any of its Intellectual Property, identifies each pending patent
application or application for registration that TSI or any of its Subsidiaries
has made with respect to any of its Intellectual Property, and identifies each
material license, sublicense, agreement, or other permission that TSI or any of
its Subsidiaries has granted to any third party with respect to any of its
Intellectual Property (together with any exceptions). TSI has delivered to Cyber
correct and complete copies of all such patents, registrations, applications,
licenses, sublicenses, agreements, and permissions (as amended to date). Section
3.11(b) of the Disclosure Schedule also identifies each material trade name or
unregistered trademark, service xxxx, corporate name, Internet domain name,
copyright and material computer software item used by TSI or any of its
Subsidiaries in connection with its business. With respect to each item of
Intellectual Property required to be identified in Section 3.11(b) of the
Disclosure Schedule:
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(i) TSI and its Subsidiaries possess all right, title, and
interest in and to the item, free and clear of any Lien, license, or
other restriction;
(ii) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge
of any of the Active Shareholders, is threatened that challenges the
legality, validity, enforceability, use, or ownership of the item;
and
(iv) neither TSI nor any of its Subsidiaries has ever agreed
to indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with respect to
the item.
(c) Section 3.11(c) of the Disclosure Schedule identifies each
material item of Intellectual Property that any third party owns and that TSI or
any of its Subsidiaries uses pursuant to license, sublicense, agreement, or
permission. TSI has delivered to Cyber correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to date). With
respect to each item of Intellectual Property required to be identified in
Section 3.11(c) of the Disclosure Schedule:
(i) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force
and effect in all material respects;
(ii) no party to the license, sublicense, agreement, or
permission is in material breach or default, and no event has
occurred that with notice or lapse of time would constitute a
material breach or default or permit termination, modification, or
acceleration thereunder;
(iii) no party to the license, sublicense, agreement, or
permission has repudiated any material provision thereof;
(iv) neither TSI nor any of its Subsidiaries has granted any
sublicense or similar right with respect to the license, sublicense,
agreement, or permission; and
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(v) no loss or expiration of the item is threatened, pending,
or reasonably foreseeable, except for patents expiring at the end of
their statutory terms (and not as a result of any act or omission by
TSI or any of its Subsidiaries, including without limitation, a
failure by TSI or any of its Subsidiaries to pay any required
maintenance fees).
3.12 Tangible Assets. The buildings, machinery, equipment, and other
tangible assets that TSI and its Subsidiaries own or lease are free from
material defects (patent and latent), have been maintained in accordance with
normal industry practice, and are in good operating condition and repair
(subject to normal wear and tear).
3.13 Inventory. The inventory of TSI and its Subsidiaries consists of raw
materials and supplies, manufactured and processed parts, work in process, and
finished goods, all of which is merchantable and fit for the purpose for which
it was procured or manufactured, and none of which is slow-moving, obsolete,
damaged, or defective.
3.14 Contracts. Section 3.14 of the Disclosure Schedule lists the
following contracts and other agreements to which TSI or any of its Subsidiaries
is a party:
(a) any agreement (or group of related agreements) for the lease of
personal property to or from any Person;
(b) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance of which
will extend past the Closing Date or involve any cash consideration;
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, under which it has imposed a Lien on
any of its assets, tangible or intangible;
(e) any material agreement concerning confidentiality or
non-competition;
(f) any material agreement with any of the TSI Shareholders and
their Affiliates (other than TSI and its Subsidiaries);
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers,
managers, or employees;
(h) any collective bargaining agreement;
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(i) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing any compensation or
providing material severance benefits;
(j) any agreement under which it has advanced or loaned any amount
to any of its directors, officers, managers or employees outside the Ordinary
Course of Business;
(k) any agreement under which the consequences of a default or
termination could have a Material Adverse Effect;
(l) any agreement under which it has granted any Person any
registration rights (including, without limitation, demand and piggyback
registration rights);
(m) any settlement, conciliation or similar agreement, the
performance of which will involve payment after the Closing Date of any
consideration;
(n) any agreement under which TSI or any of its Subsidiaries has
advanced or loaned any other Person any amount; or
(o) any other agreement (or group of related agreements) the
performance of which involves any cash consideration or the performance of
services.
TSI has delivered to Cyber a correct and complete copy of each written agreement
listed in Section 3.14 of the Disclosure Schedule (as amended to date) and a
written summary setting forth the material terms and conditions of each oral
agreement referred to in Section 3.14 of the Disclosure Schedule. With respect
to each such agreement: (A) the agreement is legal, valid, binding, enforceable,
and in full force and effect in all material respects; (B) no party is in
material breach or default, and no event has occurred that with notice or lapse
of time would constitute a material breach or default, or permit termination,
modification, or acceleration, under the agreement; and (C) no party has
repudiated any material provision of the agreement.
3.15 Notes and Accounts Receivable. All notes and accounts receivable of
TSI and its Subsidiaries are reflected properly on their books and records, are
valid receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts.
3.16 Powers of Attorney. There are no material outstanding powers of
attorney executed on behalf of TSI or any of its Subsidiaries.
3.17 Insurance. Section 3.17 of the Disclosure Schedule sets forth the
following information with respect to each material insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) with respect to which TSI or any of
its Subsidiaries is a party, a named insured, or otherwise the beneficiary of
coverage:
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(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(c) the policy number and the period of coverage;
(d) the scope (including an indication of whether the coverage is on
a claims made, occurrence, or other basis) and amount (including a description
of how deductibles and ceilings are calculated and operate) of coverage; and
(e) a description of any retroactive premium adjustments or other
material loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect in all material respects; (B)
neither TSI, nor any of its Subsidiaries, nor any other party to the policy is
in material breach or default (including with respect to the payment of premiums
or the giving of notices), and no event has occurred that, with notice or the
lapse of time, would constitute such a material breach or default, or permit
termination, modification, or acceleration, under the policy; and (C) no party
to the policy has repudiated any material provision thereof. Section 3.17 of the
Disclosure Schedule describes any material self-insurance arrangements affecting
TSI or any of its Subsidiaries.
3.18 Litigation. Neither TSI nor any of its Subsidiaries (i) has been or
currently is subject to any outstanding injunction, judgment, order, decree,
ruling, or charge or (ii) has been or currently is a party or, to the Knowledge
of any of the Active Shareholders, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator.
3.19 Product Warranty. Substantially all of the products manufactured,
sold, leased, and delivered by TSI and its Subsidiaries have conformed in all
material respects with all applicable contractual commitments and all express
and implied warranties, and neither TSI nor any of its Subsidiaries has any
material liability (whether known or unknown, asserted or unasserted, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to
become due) for replacement or repair thereof or other damages in connection
therewith.
3.20 Product Liability. Neither TSI nor any of its Subsidiaries has any
material liability (whether known or unknown, asserted or unasserted, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to
become due) arising out of any injury to individuals or property as a result of
the ownership, possession, or use of any product manufactured, sold, leased, or
delivered by TSI and its Subsidiaries.
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3.21 Employees. To the Knowledge of any of the Active Shareholders, no
executive, key employee, or significant group of employees of TSI or any of its
Subsidiaries plans to terminate employment with TSI or any of its Subsidiaries
during the next 12 months. Neither TSI nor any of its Subsidiaries is a party to
or bound by any collective bargaining agreement, nor has TSI or any of its
Subsidiaries experienced any strike or material grievance, claim of unfair labor
practices, or other collective bargaining dispute. Neither TSI nor any of its
Subsidiaries has committed any material unfair labor practice. To the Knowledge
of any of the Active Shareholders, no organizational effort is presently being
made or threatened by or on behalf of any labor union with respect to employees
of TSI or any of its Subsidiaries. With respect to this transaction, any notice
required under any law or agreement has been given, and all obligations with any
employee representative have been, or prior to the Closing Date will be,
satisfied. Neither TSI nor any of its Subsidiaries has implemented any plant
closing or layoff of employees that could implicate the Worker Adjustment and
Retraining Notification Act of 1988, as amended, or any similar foreign, state,
or local law, regulation, or ordinance (collectively, the "WARN Act"), and no
such action will be implemented without advance notification to Cyber.
3.22 Employee Benefits.
(a) Section 3.22 of the Disclosure Schedule lists each Employee
Benefit Plan that TSI or any of its Subsidiaries maintains or to which TSI or
any of its Subsidiaries contributes or has any obligation to contribute.
(i) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) has been maintained, funded and
administered in accordance with the terms of such Employee Benefit
Plan and complies in form and in operation in all material respects
with the applicable requirements of ERISA, the Code, and other
applicable laws.
(ii) All required reports and descriptions (including Form
5500 annual reports, summary annual reports, and summary plan
descriptions) have been timely filed and/or distributed in
accordance with the applicable requirements of ERISA and the Code
with respect to each such Employee Benefit Plan. The requirements of
COBRA have been met in all material respects with respect to each
such Employee Benefit Plan and each Employee Benefit Plan maintained
by an ERISA Affiliate that is an Employee Welfare Benefit Plan
subject to COBRA.
(iii) All contributions (including all employer contributions
and employee salary reduction contributions) that are due have been
made within the time periods prescribed by ERISA and the Code to
each such Employee Benefit Plan that is an Employee Pension Benefit
Plan and all contributions for any period ending on or before the
Closing Date that are not yet due have been made to each such
Employee Pension Benefit Plan or accrued in accordance with the past
custom and practice of TSI and its Subsidiaries. All premiums or
other payments for all periods ending on or before the Closing Date
have been paid with respect to each such Employee Benefit Plan that
is an Employee Welfare Benefit Plan.
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(iv) Each such Employee Benefit Plan that is intended to meet
the requirements of a "qualified plan" under Code ss.401(a) has
received a determination from the Internal Revenue Service that such
Employee Benefit Plan is so qualified, and none of the Active
Shareholders are aware of any facts or circumstances that could
adversely affect the qualified status of any such Employee Benefit
Plan.
(v) There have been no Prohibited Transactions with respect to
any such Employee Benefit Plan or any Employee Benefit Plan
maintained by an ERISA Affiliate. No Fiduciary has any liability for
material breach of fiduciary duty or any other material failure to
act or comply in connection with the administration or investment of
the assets of any such Employee Benefit Plan. No action, suit,
proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Employee
Benefit Plan (other than routine claims for benefits) is pending or,
to the Knowledge of any of the Active Shareholders, threatened.
(vi) TSI has delivered to Cyber correct and complete copies of
the plan documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue Service, the
most recent annual report (Form 5500, with all applicable
attachments), and all related trust agreements, insurance contracts,
and other funding arrangements which implement each such Employee
Benefit Plan.
(b) Neither TSI, nor any of its Subsidiaries, nor any ERISA
Affiliate contributes to, has any obligation to contribute to, or has any
material liability under or with respect to any Employee Pension Benefit Plan
that is a "defined benefit plan" (as defined in ERISA ss.3(35)).]
(c) Neither TSI, nor any of its Subsidiaries, nor any ERISA
Affiliate contributes to, has any obligation to contribute to, or has any
material liability (including withdrawal liability as defined in ERISA ss.4201)
under or with respect to any Multiemployer Plan.
(d) Neither TSI nor any of its Subsidiaries maintains, contributes
to or has an obligation to contribute to, or has any material liability or
potential liability with respect to, any Employee Welfare Benefit Plan providing
health or life insurance or other welfare-type benefits for current or future
retired or terminated employees (or any spouse or other dependent thereof) of
TSI or any of its Subsidiaries other than in accordance with COBRA.
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3.23 Guaranties. Neither TSI nor any of its Subsidiaries is a guarantor or
otherwise responsible for any liability or obligation (including indebtedness)
of any other Person.
3.24 Environmental, Health, and Safety Matters.
(a) Each of TSI, its Subsidiaries, and their respective predecessors
and Affiliates has complied and is in compliance, in each case in all material
respects, with all Environmental, Health, and Safety Requirements.
(b) Without limiting the generality of the foregoing, each of TSI,
its Subsidiaries, and their respective predecessors and Affiliates has obtained,
has complied, and is in compliance with, in all material respects, all material
permits, licenses and other authorizations that are required pursuant to
Environmental, Health, and Safety Requirements for the occupation of its
facilities and the operation of its business; and a list of all such material
permits, licenses and other authorizations is set forth on Section 3.24 of the
Disclosure Schedule.
(c) Neither TSI, nor any of its Subsidiaries, nor their respective
predecessors and Affiliates has received any written or oral notice, report or
other information regarding any actual or alleged material violation of
Environmental, Health, and Safety Requirements, or any material liabilities or
potential material liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any material investigatory, remedial or
corrective obligations, relating to it or its facilities arising under
Environmental, Health, and Safety Requirements.
(d) Except as set forth on Section 4.26 of the Disclosure Schedule,
none of the following exists at any property or facility owned, leased or
operated by TSI or any of its Subsidiaries: (1) underground storage tanks, (2)
asbestos-containing material in any friable and damaged form or condition, (3)
materials or equipment containing polychlorinated biphenyls, or (4) landfills,
surface impoundments, or disposal areas.
(e) Neither TSI, nor any of its Subsidiaries, nor their respective
predecessors and Affiliates has treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, manufactured, distributed, or
released any substance, including without limitation any hazardous substance, or
owned or operated any property or facility (and no such property or facility is
contaminated by any such substance) so as to give rise to any current or future
material liabilities, including any material liability for fines, penalties,
response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorneys' fees, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") or the Solid Waste Disposal Act, as amended ("SWDA") or any other
Environmental, Health, and Safety Requirements.
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(f) Neither this Agreement nor the consummation of the transactions
that are the subject of this Agreement will result in any material obligations
for site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Requirements.
(g) Neither TSI, nor any of its Subsidiaries, nor their respective
predecessors and Affiliates has designed, manufactured, sold, marketed,
installed, or distributed products or other items containing asbestos and is not
now nor will it become subject to any Asbestos Liabilities.
(h) TSI has furnished to Cyber all environmental audits, reports and
other material environmental documents relating to past or current properties,
facilities, or operations of TSI, any of its Subsidiaries, or their respective
predecessors and Affiliates that are in the possession or under the reasonable
control of TSI and its Subsidiaries.
3.25 Business Continuity. None of the computer software, computer hardware
(whether general or special purpose), telecommunications capabilities (including
all voice, data and video networks) and other similar or related items of
automated, computerized, and/or software systems and any other networks or
systems and related services that are used by or relied on by TSI and/or its
Subsidiaries in the conduct of their business (collectively, the "Systems") have
experienced bugs, failures, breakdowns, or continued substandard performance in
the past twelve (12) months that has caused any substantial disruption or
interruption in or to the use of any such Systems by TSI or any of its
Subsidiaries.
3.26 Certain Business Relationships With TSI and its Subsidiaries. None of
the TSI Shareholders and no director, officer, manager or employee of TSI or any
of its Subsidiaries (i) has been involved in any material business arrangement
or relationship with TSI or any of its Subsidiaries within the past 12 months,
or (ii) owns any material asset, tangible or intangible, that is used in the
business of TSI or any of its Subsidiaries.
3.27 Disclosure. The representations and warranties contained in this
Article III do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Article III not misleading.
3.28 Authorization. Execution, delivery and performance of this Agreement
has been duly authorized and approved by TSI's Board of Directors and all of the
TSI Shareholders.
3.29 Investment Intent; Restrictive Legend. The TSI Shareholders have been
advised by Cyber that the shares of Cyber Stock to be issued pursuant to the
Merger have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), or the securities laws of any state, and therefore
cannot be sold unless the shares are registered under the Securities Act and the
securities laws of all applicable state, or unless an exemption from
registration is available. Each TSI Shareholder represents and warrants that (i)
the shares of Cyber Stock are being acquired solely for the account of the TSI
Shareholder, for investment and not with a view to or for distribution,
assignment, or resale and are not being purchased for subdivision or
fractionalization thereof, and (ii) the TSI Shareholder has no contract,
undertaking, agreement, or arrangement with any Person to sell, transfer, or
pledge to such Person, or to anyone else, the shares of Cyber Stock that the TSI
Shareholder will receive pursuant to the Merger, or any part thereof, and the
TSI Shareholder has no present plan to enter into any such contract,
undertaking, agreement, or arrangement. Each TSI Shareholder understands that
the following restrictive Legend will be placed on the reverse of the
certificates representing the shares of Cyber Stock issued hereunder:
-15-
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE. THE SHARES MUST BE ACQUIRED FOR
INVESTMENT PURPOSES ONLY, AND MAY NOT BE SOLD OR TRANSFERRED FOR VALUE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OF THEM UNDER THE ACT AND
UNDER THE SECURITIES LAWS OF ALL APPLICABLE STATES, OR AN OPINION OF
COUNSEL SATISFACTORY TO CYBER THAT REGISTRATION IS NOT REQUIRED UNDER
THE ACT AND SUCH STATE LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE
RESTRICTIONS ON TRANSFER SET FORTH IN AN AGREEMENT BETWEEN THE
TRANSFEROR AND CYBER DATED AS OF SEPTEMBER 19, 2005, AS AMENDED FROM
TIME TO TIME, A COPY OF WHICH IS ON FILE IN THE OFFICE OF CYBER.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CYBER
Cyber represents and warrants to TSI as follows:
4.0 Status as a Public Company and Availability of Information. Cyber is a
corporation publicly traded on the OTC Bulletin Board under the ticker "CYDF."
Cyber incorporates herein by reference all of the information set forth in its
Registration Statement under cover of form SB-2, ordered effective by the
Securities and Exchange Commission ("SEC") on or about August 4, 2005 (the
"Registration Statement"), its Form 424(b)(2) Prospectus dated August 4, 2005
(the "Prospectus"), and its quarterly report on Form 10-Q for the quarter ended
June 30, 2005. These and other materials are on file with the SEC and can be
accessed through the investor relations section of Cyber's website at or the SEC
website, , or can be copied at the Public Reference Room maintained by the SEC
at Judiciary Plaza, 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000. Information
relating the Reference Room can by obtained by calling the SEC at
1-800-SEC-0330.
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4.1 Corporate Organization, Good Standing and Capitalization. Cyber is a
corporation duly organized, existing and in good standing under the laws of the
State of Florida, with the corporate power to own its properties and to carry on
its business as now being conducted. Complete and correct copies of Cyber's
Certificate of Incorporation and Bylaws are included as exhibits to the
Registration Statement. Information regarding Cyber's capitalization is set
forth in the Prospectus.
4.2 Corporate Authority. This Agreement has been approved by the Board of
Directors of Cyber. Neither the execution and delivery of this Agreement, nor
performance hereunder, will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, the Certificate of
Incorporation or Bylaws of Cyber or any agreement or instrument to which Cyber
is a party or by which it is bound.
4.3 Financial Statements of Cyber. Cyber's consolidated financial
statements are set forth in the Prospectus. Such financial statements present,
and will present, fairly the financial position of Cyber and its consolidated
subsidiaries on the dates indicated, and the result of their operations for the
periods then ended, in conformity with GAAP, except as noted therein.
4.4 Shares to be Issued. The shares of Cyber Stock to be issued and
delivered pursuant to this Agreement will be duly and validly issued, fully paid
and nonassessable.
4.5 No Material Adverse Change. Since the effective date of the prospectus
(August 4, 2005) there has not been any change in the business, assets,
operations or financial condition of Cyber or its consolidated subsidiaries that
materially and adversely affects the business of Cyber and its consolidated
subsidiaries as a whole.
4.6 Information Provided by Cyber. The information provided and to be
provided by Cyber to TSI and the TSI Shareholders in connection with the Merger,
does not and will not contain any statement which is false or misleading with
respect to any material fact, or which omits to state any material fact
necessary in order to make the statement not false or misleading.
4.7 Investment Intent. The TSI common stock to be acquired by Cyber as a
result of the Merger is being acquired for its own account, for investment and
not with a view to the distribution thereof, and Cyber will neither sell nor
transfer any of such shares in violation of any applicable law, rule or
regulation, federal or state.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SUB
Sub represents and warrants to TSI as follows:
5.1 Corporate Organization, Good Standing and Capitalization. Sub is a
corporation duly organized, existing and in good standing under the laws of the
State of Oklahoma, with authorized capital stock of 1,000 shares of common
stock, $0.01 par value, all of which are issued, outstanding and owned on the
date hereof by Cyber.
5.2 Corporate Authority. This Agreement has been approved by the Board of
Directors of Sub. Neither the execution and delivery of this Agreement, nor
performance hereunder, will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, the Certificate of
Incorporation or Bylaws of Sub or any agreement or instrument to which Sub is a
party or by which it is bound.
5.3 Liabilities. Sub has no liabilities except liabilities for
organizational expenses and expenses in connection with the Merger contemplated
by this Agreement.
ARTICLE VI
CONDUCT OF TSI PENDING THE EFFECTIVE TIME
TSI agrees that between the date of this Agreement and the Effective Time:
6.1 Certificate of Incorporation and Bylaws. No change will be made in
TSI's Certificate of Incorporation or bylaws.
6.2 Capitalization, etc. TSI will not make any change in its authorized or
issued capital stock, declare or pay any dividend or other distribution, or
issue, encumber, purchase or otherwise acquire any of its capital stock.
6.3 No Change in Consent TSI Shareholders. By signing below, each TSI
Shareholder will ratify the Consent Agreement signed by the TSI Shareholders to
induce Cyber to exercise its option. Pending the Effective Time, no TSI
Shareholder will take any action to change the Consent Agreement.
6.4 Conduct of Business. TSI will use its best efforts to maintain and
preserve its business organization, employee relationships and goodwill intact,
and will not, without the written consent of Cyber, enter into any material
commitment except in the ordinary course of business or increase, directly or
indirectly, the compensation of any officer or employee.
-18-
ARTICLE VII
COVENANTS OF CYBER AND SUB
PENDING THE EFFECTIVE TIME
Cyber and Sub agree that between the date hereof and the Effective Time:
7.1 Meeting of Sub Shareholders. Cyber will vote by unanimous written
consent in lieu of a shareholder's meeting all the outstanding shares of common
stock of Sub in favor of the Merger of TSI into Sub.
7.2 Information. Cyber will furnish TSI with all information reasonably
required concerning Cyber and Sub for inclusion in TSI's proxy soliciting
material or any application made by TSI to the Securities and Exchange
Commission, to the Internal Revenue Service, or to any other governmental or
regulatory agency in connection with the transactions contemplated by this
Agreement.
ARTICLE VIII
COVENANTS OF CYBER AND TSI
PENDING THE EFFECTIVE TIME
8.1 Announcement. Prior to the Effective Time, neither TSI nor Cyber,
without the prior approval of the other, will make any announcement or other
statement to the public, and each will promptly forward to the other a copy of
any general announcement or statement to its employees, customers or suppliers
concerning the transactions covered by this Agreement.
8.2 Access to Information. During the period commencing on the date hereof
and ending on the Closing Date, each party shall, upon reasonable notice, afford
to the other party and its respective counsel, accountants and other authorized
representatives, full access during normal business hours to the properties,
books and records of the other party in order that they may have the opportunity
to make such reasonable investigations as they shall desire of the affairs of
such other party, and such other party shall cause its officers and employees to
furnish such additional financial and operating data and other information as
the requesting party shall from time to time reasonably request.
8.3 Confidentiality. No information disclosed heretofore or hereafter by
either party to the other shall be used by such other party otherwise than as
contemplated herein, and all such information shall be kept confidential by the
other and disclosed only on a "need to know" basis to the other's officers,
directors, shareholders, employees, counsel and accountants, and shall not be
disclosed except to the extent that: it was known when received; it is or
hereafter becomes lawfully obtainable from other sources; it is necessary to
disclose the information to regulatory authorities or as may otherwise be
required by law; or such duty as to confidentiality is waived by the party
entitled to claim the benefits of this Section 8.3.
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ARTICLE IX
CONDITIONS TO OBLIGATIONS OF CYBER AND SUB
The obligations of Cyber and Sub to effect the Merger hereunder are, at
the option of Cyber or Sub, subject to the following conditions:
9.1 Representations and Warranties True. The representations and
warranties of TSI and the Active Shareholders contained herein shall be true at
and as of the Effective Time with the same effect as though made at and as of
such date; TSI shall have performed all obligations and complied with all
covenants required by this Agreement to be performed or complied with by it
prior to the Effective Time; and TSI and the Active Shareholders shall have
delivered to Cyber and Sub a certificate, dated the Effective Time of the Merger
and signed by TSI's President and its Treasurer, to both such effects.
9.2 Absence of Litigation. There shall be no actual or threatened
litigation to restrain or invalidate the Merger or any other transaction
contemplated in this Agreement, the defense of which would, in the judgment of
the Board of Directors of Cyber, made in good faith and based upon the advice of
counsel, involve expense or lapse of time that would be materially adverse to
the interests of Cyber.
9.3 Requisite Approvals. The requisite approvals of this Agreement and the
transactions contemplated herein shall have been given by the Boards of
Directors and stockholders of Cyber, Sub and TSI and the consent of any other
party to the transfer to Sub of all the rights of TSI in, to and under any
contract, agreement, lease or other instrument and any property or asset,
tangible or intangible, pursuant to the Merger contemplated by this Agreement,
shall have been obtained.
9.4 Governmental Permits, etc. All governmental authorizations and permits
necessary for the consummation of the Merger shall have been secured.
9.5 Opinion of TSI's Counsel. Cyber shall have received a favorable
opinion, dated the Closing Date, of counsel for TSI, in form and substance
satisfactory to Cyber and its counsel, to the effect that:
(1) TSI is a corporation duly incorporated, validly existing
and in good standing under the laws of Georgia, is qualified to
transact business as a foreign corporation in each jurisdiction, if
any, in which its property or business requires such qualification,
and has full corporate power to own its properties and conduct its
business as now being conducted;
(2) the par value and number of shares of authorized stock of
TSI which are issued and outstanding are as set forth in Section 3.2
of this Agreement, and all of said outstanding shares are duly
authorized, validly issued, fully paid and non-assessable;
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(3) the record owners of all the issued and outstanding shares
of capital stock of TSI, and the respective share ownership of each
such shareholder, are listed on Exhibit 3.2(a);
(4) Techsphere LLC is a limited liability company duly
organized, validly existing and in good standing under the laws of
Georgia, is qualified to transact business as a foreign corporation
in each jurisdiction, if any, in which its property or business
requires such qualification, and has full power to own its
properties and conduct its business as now being conducted;
(5) all corporate acts required to be taken by or on the part
of TSI to approve and adopt this Agreement and to authorize the
Merger have been duly and validly taken;
(6) this Agreement has been duly executed and delivered by TSI
and the TSI Shareholders, and is the legal, valid and binding
obligation of TSI and the TSI Shareholders, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors
generally and except that equitable remedies may not be available in
connection with the enforcement thereof;
(7) said counsel has no knowledge, without any independent
verification or investigation, that any suit, proceeding or
investigation is pending or threatened against TSI, Techsphere LLC
or any TSI Shareholder which might result in any material adverse
change in the financial condition or business of TSI or Techsphere
LLC, or which questions the validity of this Agreement or any action
taken or to be taken pursuant to or in connection with this
Agreement; and
(8) the execution and performance of this Agreement will not
result in a breach of or constitute a default under any provision of
the Certificate of Incorporation or the bylaws of TSI, or, to the
knowledge of said counsel, without any independent verification or
investigation, under any agreement, decree, order or rule of any
court of other governmental authority which is binding on TSI,
Techsphere LLC or any TSI Shareholder.
ARTICLE X
CONDITIONS TO OBLIGATIONS OF TSI
The obligations of TSI to effect the Merger hereunder are, at the option
of TSI, subject to the conditions that:
10.1 Representations and Warranties True. The representations and
warranties of Cyber and Sub contained herein shall be true at and as of the
Effective Time with the same effect as though made at and as of such date; Cyber
and Sub shall have performed all obligations and complied with all covenants
required by this Agreement to be performed or complied with by them prior to the
Effective Time; and the Cyber and Sub shall have delivered to Company a
certificate, dated the Effective Time of the Merger and signed by the President
and Treasurer of each of Cyber and Sub, to both such effects.
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10.2 Absence of Litigation. There shall be no actual or threatened
litigation to restrain or invalidate the Merger or any other transaction
contemplated in this Agreement, the defense of which would, in the judgment of
the Board of Directors of TSI or its shareholders, made in good faith and based
upon the advice of counsel, involve expense or lapse of time that would be
materially adverse to the interests of TSI or its shareholders.
10.3 Requisite Approvals. The requisite approvals of this Agreement and
the transactions contemplated herein shall have been given by the Boards of
Directors and stockholders of Cyber, Sub and TSI and the consent of any other
party to the transfer to Sub of all the rights of TSI in, to and under any
contract, agreement, lease or other instrument and any property or asset,
tangible or intangible, pursuant to the Merger contemplated by this Agreement,
shall have been obtained.
10.4 Governmental Permits, etc. All governmental authorizations and
permits necessary for the consummation of the Merger shall have been secured.
10.5 Opinion of the Cyber's Counsel. TSI shall have received a favorable
opinion, dated the Effective Time, of counsel to Cyber, in form and substance
satisfactory to TSI and its counsel, to the effect that:
(1) Cyber is a corporation duly organized and legally existing
in good standing under the laws of the State of Florida;
(2) all corporate acts required to be taken by or on the part
of Cyber and Sub to approve and adopt this Agreement and to
authorize the Merger have been duly and validly taken;
(3) this Agreement has been duly executed and delivered by
Cyber and by Sub and is the legal, valid and binding agreement of
Cyber and of Sub enforceable in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and except that equitable remedies may
not be available in connection with the enforcement thereof; and
(4) The shares of Cyber Stock that are to be issued and
delivered to the TSI Shareholders upon the consummation of the
Merger are validly authorized and, when so issued, will be validly
issued, fully paid, and nonassessable.
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ARTICLE XI
POST CLOSING COVENANTS
11.1 TSI Board. Commencing the Effective Time of the Merger, and subject
to the remaining provisions of this Section 11.1, during the three (3) twelve
(12) month periods beginning April 1, 2006, the Active Shareholders shall have
the right to designate a majority of the seven (7) person TSI Board of Directors
(the "TSI Board") and the Existing Cyber Controlling Shareholders shall have the
right to designate the remaining members of the TSI Board. At the annual
election of the TSI Board, Cyber shall vote its shares in favor of the
individuals designated by each of the Existing Cyber Controlling Shareholders
and the Active Shareholders in accordance with the foregoing.
(a) In the event TSI fails to earn a positive Adjusted Net Income
(as hereafter defined) for any twelve (12) month period (i.e., April 1 to March
31) during the three-year (or extended) term beginning April 1, 2006, at the
next annual election of the TSI Board the post-Merger Cyber Board of Directors
shall nominate all the members to the TSI Board. As used herein "Adjusted Net
Income" shall mean the sum of the net income (or net loss) of TSI for the twelve
(12) month period, but shall not include the following amounts paid by TSI
during the twelve (12) month period: (i) all license fees paid by TSI or on
behalf of TSI as described herein to 21st Century Airships, Inc. ("C21"),
pursuant to the License Agreement dated January 16, 2004 (the "C21 License
Agreement"), and (ii) all amounts paid by or on behalf of TSI to the holders of
the outstanding Xxxxxx/XxXxxxx/Xxxxxxxx Notes, including principal and interest.
(b) As soon as is reasonably practicable after the Effective Time,
Cyber shall present a marketing and sales business plan with a budget for both
companies for approval by the boards of TSI and Cyber. Cyber will actively work
with the TSI Board of Directors or its designee on the sales and marketing of
TSI Airships.
(c) Except as otherwise provided in Section 11.1(b), the post-Merger
Cyber Board shall have the right to approve TSI's budget and business plan
immediately following the Merger and at least annually thereafter, and the TSI
Board shall have the right to operate the Airship business (including leasing)
and make all business decisions within such approved budget and business plan
without need of prior approval by Cyber.
(d) The post-Merger Cyber Board shall have the right to approve all
compensation for the management of TSI, and all contracts between TSI and any
Affiliate of TSI's management or any TSI Shareholder.
(e) The existing employment agreements between Techsphere LLC and
each Active Shareholder are hereby cancelled and replaced with new agreements
between TSI and the Active Shareholders, previously circulated among the Active
Shareholders.
11.2 Cyber Board. Commencing the Effective Time of the Merger, the
nomination procedure for the individuals who shall stand for election to the
Cyber Board of Directors (the "Cyber Board") shall be as follows: The Active
Shareholders will have the right to nominate three (3) nominees; the Existing
Cyber Controlling Shareholders will have the right to nominate three (3)
nominees; each group of three will have the right to nominate one (1) outside
nominee; and those two (2) outside nominees will nominate a third outside
nominee for a total of nine (9) nominees to stand for election to Cyber's Board.
At the annual election of the Cyber Board, the Existing Cyber Controlling
Shareholders and the Active Shareholders shall vote their respective shares in
favor of the nominees chosen in accordance with the above procedures.
-23-
11.3 Other Post-Merger Covenants.
(a) If TSI secures a contract with Sierra Nevada Corporation ("SNC")
to build at least six (6) Airships during the twelve (12) month period following
the Merger, upon request of the TSI Board, Cyber will use its best efforts to
fund (or in the alternative back the funding of) the expansion of the existing
facility or leasing (or purchase) of another facility in Columbus or elsewhere
in Georgia to enable TSI to meet its contractual obligations.
(b) If TSI obtains viable commercial contracts, Cyber will use its
best efforts to fund (or in the alternative back the funding of) expansion of
TSI's facilities to meet the demands of expected increased production.
(c) Cyber will use its best efforts to fund (or in the alternative
back the funding of) the four (4) Marketing Airships as described the April 24
Agreement over a two (2) year period as previously agreed, notwithstanding that
the April 24 Agreement may no longer be in effect.
(d) Cyber agrees to register and diligently prosecute the right of
the Active Shareholders to sell all of the Active Shareholders' Cyber Class A
Stock in accordance with the terms and conditions set forth in Exhibit 11.3(d).
(e) Each Active Shareholder desiring to sell shares of Cyber Stock
agrees to comply with Rule 144 promulgated by the SEC under the Securities Act,
as well as all other rules governing the sale of publicly traded stock, and
further agrees that the right to sell is subject to any currently existing
agreement with Cyber's investors regarding the sale of his stock, a description
of which is attached as Exhibit 11.3(e). This right to sell shall also be
subject to any restrictions that may be imposed by any Persons who may become
future investors in Cyber, as long as the following conditions are met: (i) the
proceeds received from the investors are used for the purpose of funding all or
any part of the funds Cyber furnished or will furnish pursuant to the First
Agreement or the provisions of this Section 11.3, (ii) the investors are not
Affiliates of the Existing Cyber Controlling Shareholders, and (iii) the
restrictions imposed by the investors will apply to the Existing Cyber
Controlling Shareholders to the same extent they will apply to the Active
Shareholders.
-24-
(f) If either Cyber or TSI or TSI is found, by final order of a
court of competent jurisdiction, arbitration panel or a final determination by
the OIG/SEC, to have committed any pre-merger fraud in its transactions with the
government or securities fraud within the applicable statute of limitations, the
aggrieved party shall have a right of rescission.
(g) If another Person wants to acquire a majority interest in Cyber,
then tag-a-long rights shall be given to all Active Shareholders to participate
pro rata. In addition, if another Person wants to acquire all of the issued and
outstanding shares of Cyber Class A Stock, the holders of a majority of such
stock shall have drag-along rights to compel the minority holders of such stock
to sell their shares at the same price and terms as the majority.
(h) "Best efforts," as used in this Agreement with respect to
specified goals, shall mean Cyber's agreement to pursue the goals in good faith
and in a manner consistent with Cyber's past practices without resort to
extraordinary measures.
ARTICLE XII
TERMINATION
12.1 Circumstances of Termination. This Agreement may be terminated
(notwithstanding approval by the shareholders of any party hereto);
(1) By the mutual consent in writing of the Boards of
Directors of TSI and Cyber.
(2) By the Board of Directors of TSI if any condition provided
in Article X hereof has not been satisfied or waived on or before
the Effective Time.
(3) By the Board of Directors of Cyber if any condition
provided in Article IX hereof has not been satisfied or waived on or
before the Effective Time.
(4) By the Board of Directors of either TSI or Cyber if the
Effective Time has not occurred by December 31, 2005.
12.2 Effect of Termination. In the event of a termination of this
Agreement pursuant to Section 12.1 hereof, each Party shall pay the costs and
expenses incurred by it in connection with this Agreement, and no Party (or any
of its officers, directors and shareholders) shall be liable to any other party
for any costs, expenses, damage or loss of anticipated profits hereunder.
-25-
ARTICLE XIII
GENERAL PROVISIONS
13.1 Further Assurances. From time to time as and when requested by TSI or
its successors or assigns, the officers and directors of Sub last in office
shall execute and deliver such deeds and other instruments and shall take or
cause to be taken such other actions as shall be necessary to vest or perfect in
or to confirm of record or otherwise TSI's title to, and possession of, all the
property, interests, assets, rights, privileges, immunities, powers, franchises
and authority of Sub, and otherwise to carry out the purposes of this Agreement.
13.2 Survival of Representations and Warranties. All representations and
warranties contained in this Agreement (and in any certificate or other
instrument delivered by or on behalf of any party pursuant hereto or in
connection with the transactions contemplated hereby) are true in all material
respects on and as of the date so made, will be true in all material respects on
and as of the Closing Date and will survive such Closing Date regardless of any
investigation made by or on behalf of any party.
13.3 Notices. Any notice to any party under this Agreement shall be in
writing, shall be effective on the earlier of (i) the date when received by such
party, or (ii) the date which is three days after mailing (postage prepaid) by
certified or registered mail, return receipt requested, to the address of such
party set forth herein, or to such other address as shall have previously been
specified in writing by such party to all parties hereto:
If to Cyber or Sub:
Cyber Defense Systems, Inc.
00000 Xxxxxxxxx Xxxx.
Xxxxx 000X
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, CEO
With a copy to:
H. Xxxxx Xxxxxx, Esq.
Doerner, Saunders, Xxxxxx & Xxxxxxxx, LLP
000 X. Xxxxxx Xxx., Xxxxx 000
Xxxxx, Xxxxxxxx 00000-0000
-26-
If to TSI, Active Shareholders or other TSI Shareholders:
Techsphere Systems International, L.L.C.
000 Xxxxxxx Xxxxx, Xxxxxxxx 00, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxx, President
With a copy to:
Xxxxxxx X. Xxxxxxx, XX, Esq.
Xxxxxxx Xxxxx Xxxxxxx, LLC
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
13.4 Severability. If any provision of this Agreement is declared void or
unenforceable, such provision shall be deemed severed from this Agreement, which
shall otherwise remain in full force and effect.
13.5 Attorney Fees. In the event suit is brought (or arbitration
instituted) or an attorney is retained by any party to this Agreement to enforce
the terms of this Agreement or to collect any money due hereunder, or to collect
money damages for breach hereof, the prevailing party shall be entitled to
recover, in addition to any other remedy, reimbursement for reasonable attorney
fees, court costs, costs of investigation and other related expenses incurred in
connection therewith.
13.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective successors in
interest and assigns, but in no event shall any party be relieved of its
obligations hereunder without the express written consent of each other party.
13.7 Counterparts. This Agreement may be executed in any number of
counterparts, all such counterparts shall be deemed to constitute one and the
same instrument, and each of said counterparts shall be deemed an original
hereof.
13.8 Waiver. Failure of any party to exercise any right or option arising
out of a breach of this Agreement shall not be deemed a waiver of any right or
option with respect to any subsequent or different breach, or the continuance of
any existing breach.
13.9 Integration Clause; Oral Modification. This Agreement represents the
entire agreement of the parties with respect to the subject matter hereof, and
all agreements entered into prior hereto are revoked and superseded by this
Agreement, and no representations, warranties, inducements or oral agreements
have been made by any of the parties except as expressly set forth herein, or in
other contemporaneous written agreements. Specifically, it is agreed that this
Agreement supersedes and replaces Sections 2, 3, 4, 5 and 6 of the First
Agreement. This Agreement may not be changed, modified or rescinded except in
writing, signed by all parties hereto, and any attempt at oral modification of
this Agreement shall be void and of no effect.
-27-
13.10 Captions. Captions and paragraph headings used herein are for
convenience only and are not a part of this Agreement and shall not be deemed to
limit or alter any provisions hereof and shall not be deemed relevant in
construing this Agreement.
13.11 Governing Law. Except for all provisions regarding the Merger, which
shall be governed by the laws of the State of Georgia, this Agreement shall be
deemed to be made under, and shall be construed in accordance with and shall be
governed by, the laws of the State of Florida.
13.12 Mediation; Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall after the parties have
met and conferred in good faith to resolve the problem or dispute, first be
referred to mediation to be conducted by an independent mediator selected by
mutual agreement, or in the absence of mutual agreement within fifteen (15) days
after a party has requested mediation, then by a mediator appointed by the
American Arbitration Association ("AAA") through its office located in St.
Louis, Missouri. If any controversy or claim arising out of or related to this
Agreement, or the breach thereof, cannot be resolved through good faith
mediation, the parties agree that either party may submit the dispute to final
and binding arbitration before a single arbitrator under the AAA Commercial
Arbitration Rules to be held at the AAA office described above (or at any other
place mutually acceptable to the parties so involved). Any dispute between the
parties as to whether an issue is subject to arbitration shall be resolved by
the arbitrator. The arbitrator shall have no authority to award punitive damages
or other damages not measured by the prevailing party's actual damages and may
not, in any event, make any ruling, finding or award that does not conform to
the terms and conditions of this Agreement. The expenses of the arbitration
shall be borne equally by the parties to the arbitration; provided that each
party shall pay for and bear the cost of its own experts, evidence and counsel's
fees unless the arbitrator determines otherwise. Judgment on the award rendered
by the arbitrator may be entered into any court having jurisdiction thereof.
Each party agrees that a final judgment in any action or proceeding so brought
shall be conclusive and may be enforced by suit on the judgment or in any other
manner provided by law or in equity.
13.13 Indemnity. Each Party to this Agreement agrees to indemnify each
other Party, and hold it harmless, for, from and against all claims, damages,
costs and expenses (including reasonable attorney fees) attributable, directly
or indirectly, to the breach by such indemnifying party of any obligation
hereunder or the inaccuracy of any representation or warranty made by such
indemnifying party herein or in any instrument delivered pursuant hereto or in
connection with the transactions contemplated hereby.
13.14 Interpretations. To the extent permitted by the context in which
used, words in the singular number shall include the plural, words in the
masculine gender shall include the feminine and neuter, and vice versa, and (ii)
references to "persons" or "parties" in this Agreement shall be deemed to refer
to natural persons, partnerships, corporations, limited liability companies,
associations, joint stock companies, trusts, joint ventures, unincorporated
organizations, all other business entities, or governmental entities (or any
department, agency, or political subdivision thereof).
-28-
13.15 Specific Performance. In addition to such other remedies as may be
available under applicable law, the parties acknowledge that the remedies of
specific performance and/or injunctive relief shall be available and proper in
the event any party fails or refuses to perform its duties hereunder.
13.16 Exhibits. Any Exhibit attached hereto shall be deemed to have been
incorporated herein by this reference, with the same force and effect as if
fully set forth in the body hereof.
13.17 No Broker or Finder. Each party hereto represents and warrants to
the other parties that it has not employed any broker or finder in connection
with the transactions contemplated by this Agreement and, further, that all
negotiations relative to the subject matter of this Agreement have been carried
on directly by such party, without the intervention of any other person,
although each of the parties hereto has retained the services of financial
advisors and attorneys, the fees of which will be paid by the retaining party.
13.18 Waiver of Appraisal Rights. BY SIGNING BELOW, EACH TSI SHAREHOLDER
HEREBY WAIVES ANY AND ALL APPRAISAL RIGHTS SUCH TSI SHAREHOLDER WOULD OTHERWISE
HAVE UNDER THE GEORGIA BUSINESS CORPORATION CODE.
(signatures follow)
-29-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
"TSI Shareholders"
----------------------------
Xxxxxxx X. Xxxxxx
----------------------------
Xxxxx X. Xxxxxxx
----------------------------
Xxxx X. Xxxxxxxxx
----------------------------
Xxxxxx X. Xxxxxxx
----------------------------
Xxxxxx Xxxxx Lively
----------------------------
Xxxxxxx X. Xxxxxxx, XX
----------------------------
Xxx XxXxxxxx
----------------------------
Xxxxx XxXxxxx
----------------------------
Mayo X. Xxxxxx, III
-30-
Axis Capital Partners, LLC
By:_________________________
Title:______________________
Airship Partners, LLC
By:_________________________
Title:______________________
Xxxxxxxx Enterprises, LLP
By:_________________________
Title:______________________
"TSI"
Techsphere Systems International, Inc.
By:_________________________
Title:______________________
"Cyber"
Cyber Defense Systems, Inc.
By:_________________________
Xxxxxxx X. Xxxxxxxx, CEO
"Sub"
Cyber Acquisition Sub, Inc.
By:_________________________
Xxxxxxx X. Xxxxxxxx, CEO
-31-
Exhibits:
1.4 Amended Certificate of Incorporation of TSI
1.5 Amended Bylaws of TSI
1.8 Definitions
2.4 Allocation of Shares of Cyber Stock Among TSI Shareholders
3.2(a) List of all TSI Shareholders and their Share Ownership
11.3(d) "Piggyback" Registration Rights
11.3(e) Transfer Restrictions Applicable to Cyber Stock Held by Active
Shareholders
-32-
Exhibit 1.4
AMENDED CERTIFICATE OF INCORPORATION OF TSI
-33-
Exhibit 1.5
AMENDED BYLAWS OF TSI
-34-
Exhibit 1.8
DEFINITIONS
The following terms, when used in this Agreement, shall have the meanings
ascribed to them:
"Agreement" means this Plan of Reorganization and Agreement of Merger, and
all Exhibits.
"Active Shareholders" has the meaning set forth in the preface to this
Agreement.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"April 24 Agreement" has the meaning set forth in Section 11.1(b).
"Asbestos Liabilities" shall mean any liabilities (whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, or due or to become due) arising from, relating to,
or based on the presence or alleged presence of asbestos or asbestos-containing
materials in any product or item designed, manufactured, sold, marketed,
installed, stored, transported, handled, or distributed at any time, or
otherwise based on the presence or alleged presence of asbestos or
asbestos-containing materials at any property or facility or in any structure,
including without limitation, any liabilities arising from, relating to or based
on any personal or bodily injury or illness.
"Best efforts" has the meaning set forth in Section 11.3(h).
"Closing" has the meaning set forth in Section 1.7.
"Closing Date" has the meaning set forth in Section 1.7.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of ERISA
and Code ss. 4980B and of any similar state law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consent Agreement" has the meaning set forth in the recitals to this
Agreement.
"Cyber" has the meaning set forth in the preface to this Agreement.
"Cyber Class A Stock" has the meaning set forth in Section 2.1.
-35-
"Cyber Class B Stock" has the meaning set forth in Section 2.1.
"Cyber Stock" has the meaning set forth in Section 2.1.
"Disclosure Schedule" has the meaning set forth in Article III.
"Effective Time" has the meaning set forth in Section 1.2.
"Employee Benefit Plan" means any "employee benefit plan" (as such term is
defined in ERISA ss.3(3)) and any other material employee benefit plan, program
or arrangement of any kind.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
ss.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
ss.3(1).
"Environmental, Health, and Safety Requirements" means all federal, state,
local, and foreign statutes, regulations, ordinances, and similar provisions
having the force or effect of law, all judicial and administrative orders and
determinations, and all common law concerning public health and safety, worker
health and safety, pollution, or protection of the environment, including all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
hazardous materials, substances, or wastes, chemical substances, or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise, or radiation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity that is treated as a single employer
with TSI for purposes of Code ss.414.
"Existing Cyber Controlling Shareholders" means Xxxxxxx X. Xxxxxxxx, Xxxxx
Xxxxx, Cherokee Raiders, L.P. and Proxity, Inc.
"Fiduciary" has the meaning set forth in ERISA ss.3(21).
"First Agreement" means the Agreement dated May 20, 2005, among Cyber,
TSI, the Existing Controlling Cyber Shareholders, and the Active Shareholders,
and all amendments thereto.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time, consistently applied.
-36-
"Xxxxxx/XxXxxxx/Xxxxxxxx Notes" means, collectively, (i) the Note
Extension Agreement by TSI in favor of Mayo X. Xxxxxx, dated July 7, 2004, in
the original face amount of $250,000, (ii) the Secured Note by TSI in favor of
Xxxxxxx X. XxXxxxx, dated November 25, 2003, in the original face amount of
$250,000, (iii) the Promissory Note by TSI in favor of Xxxxxxx X. Xxxxxxxx,
dated April 11, 2005, in the original face amount of $400,000 and having a
maturity date of July 1, 2005, and (iv) the Promissory Note by TSI in favor of
Xxxxxxx X. Xxxxxxxx, dated April 11, 2005, in the original face amount of
$400,000 and having a maturity date of December 31, 2005.
"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Intellectual Property" means all of the following in any jurisdiction
throughout the world: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, Internet domain names, and rights in telephone numbers,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including source code, executable code, data,
databases, and related documentation), (g) all material advertising and
promotional materials, (h) all other proprietary rights, and (i) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Leased Real Property" means all leasehold or subleasehold estates and
other rights to use or occupy any land, buildings, structures, improvements,
fixtures, or other interest in real property held by TSI or any of its
Subsidiaries.
"Leases" means all leases, subleases, licenses, concessions and other
agreements (written or oral), including all amendments, extensions, renewals,
guaranties, and other agreements with respect thereto, pursuant to which TSI or
any of its Subsidiaries holds any Leased Real Property.
-37-
"Lien" means any mortgage, pledge, lien, encumbrance, charge, or other
security interest, other than (a) liens for taxes not yet due and payable or for
taxes that the taxpayer is contesting in good faith through appropriate
proceedings, (b) purchase money liens and liens securing rental payments under
capital lease arrangements, and (c) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of money.
"Material Adverse Effect" or "Material Adverse Change" means any effect or
change that would be materially adverse to the business, assets, condition
(financial or otherwise), operating results, operations, or business prospects
of TSI and its Subsidiaries, taken as a whole, or to the ability of any Party to
consummate timely the transactions contemplated hereby.
"Most Recent TSI Balance Sheet" has the meaning set forth in Section 3.5.
"Multiemployer Plan" has the meaning set forth in ERISA ss.3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" and "Parties" have the meanings set forth in the preface to this
Agreement.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, any other business entity, or a
governmental entity (or any department, agency, or political subdivision
thereof).
"Prohibited Transaction" has the meaning set forth in ERISA ss.406 and
Code ss.4975.
"Reportable Event" has the meaning set forth in ERISA ss.4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"SNC" has the meaning set forth in Section 11.3(a).
"Sub" has the meaning set forth in the preface to this Agreement.
-38-
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association, or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers, or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof or (ii) if a limited
liability company, partnership, association, or other business entity (other
than a corporation), a majority the of partnership or other similar ownership
interests thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more Subsidiaries of that Person or a combination thereof
and for this purpose, a Person or Persons own a majority ownership interest in
such a business entity (other than a corporation) if such Person or Persons
shall be allocated a majority of such business entity's gains or losses or shall
be or control any managing director or general partner of such business entity
(other than a corporation). The term "Subsidiary" shall include all Subsidiaries
of such Subsidiary.
"Systems" has the meaning set forth in Section 3.25.
"Tax" or "Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Techsphere LLC" has the meaning set forth in Section 3.3(a).
"TSI" has the meaning set forth in the preface to this Agreement.
"TSI Shareholders" has the meaning set forth in the preface to this
Agreement.
-39-
Exhibit 2.4
ALLOCATION OF SHARES OF CYBER STOCK
AMONG TSI SHAREHOLDERS
Class A Stock Class B Stock
Name % (23,076,923 Shares) (245,455 Shares)
---- --- ------------------- ----------------
Xxxxxxx X. Xxxxxx 19.4500 4,488,461 47,741
Xxxxx X. Xxxxxxx 15.6125 3,602,885 38,322
Xxxx X. Xxxxxxxxx 15.6125 3,602,885 38,322
Xxxxxx X. Xxxxxxx 15.6125 3,602,885 38,322
Xxxxxx Xxxxx Lively 15.6125 3,602,885 38,322
Axis Capital Partners, LLC. 4.0000 923,077 9,818
Xxxxxxx X. Xxxxxxx, XX 1.5000 346,154 3,682
Xxx XxXxxxxx 2.5000 576,923 6,136
Xxxxx XxXxxxx 1.0000 230,769 2,454
Mayo X. Xxxxxx, III 1.0000 230,769 2,454
Airship Partners, LLC 2.0000 461,538 4,909
Xxxxxxxx Enterprises, LLP 6.1000 1,407,692 14,973
---------- ---------- ----------
TOTALS 100% 23,076,923 245,455
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Exhibit 3.2(a)
LIST OF ALL TSI SHAREHOLDERS
AND THEIR SHARE OWNERSHIP
Name % Ownership No. of Shares
---- ----------- -------------
Xxxxxxx X. Xxxxxx 19.4500 19,450.0
Xxxxx X. Xxxxxxx 15.6125 15,612.5
Xxxx X. Xxxxxxxxx 15.6125 15,612.5
Xxxxxx X. Xxxxxxx 15.6125 15,612.5
Xxxxxx Xxxxx Lively 15.6125 15,612.5
Axis Capital Partners, LLC. 4.0000 4,000.0
Xxxxxxx X. Xxxxxxx, XX 1.5000 1,500.0
Xxx XxXxxxxx 2.5000 2,500.0
Xxxxx XxXxxxx 1.0000 1,000.0
Mayo X. Xxxxxx, III 1.0000 1,000.0
Airship Partners, LLC 2.0000 2,000.0
Xxxxxxxx Enterprises, LLP 6.1000 6,100.0
--------- ---------
TOTALS 100% 100,000.0
-41-
Exhibit 11.3(d)
"PIGGYBACK" REGISTRATION RIGHTS
The following terms and conditions shall govern the registration rights
granted the Active Shareholders of TSI pursuant to Section 11.3(d) of the Plan
of Reorganization and Agreement of Merger.
1. Certain Definitions. As used in this Exhibit 11.3(d) ("Exhibit"), the
following capitalized terms shall have the meanings ascribed to them. All other
capitalized terms used but not defined herein shall have the meanings ascribed
to them in Exhibit 1.8.
"Other Shareholders" shall mean holders of securities of Cyber who are
entitled by contract with Cyber or who are permitted by Cyber to have securities
included in a registration of Cyber's securities.
"Register," "Registered" and "Registration" shall refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act and applicable rules and regulations thereunder, and the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by Cyber in
compliance with this Exhibit, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel for Cyber,
blue sky fees and expenses, and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of Cyber, which shall be paid in any event by Cyber).
"Registrable Securities" shall mean the shares of restricted Cyber Class A
Stock issued to the Active Shareholders pursuant to the Merger and not
theretofore sold to the public.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities, all fees and
disbursements of counsel for any Active Shareholder and any blue sky fees and
expenses excluded from the definition of "Registration Expenses."
2. Company Registration.
(a) Notice of Registration. If Cyber shall determine to register any
of its securities either for its own account or the account of a security holder
or holders, other than a registration relating solely to employee benefit plans,
or a registration relating solely to a SEC Rule 145 transaction, or a
registration on any registration form which does not permit secondary sales,
Cyber will:
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(i) Promptly give to each Active Shareholder written notice
thereof (which shall include a list of the jurisdictions in which
Cyber intends to attempt to qualify such securities under the other
state securities.
(ii) Include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities
specified in a written request or requests, made by any Active
Shareholder within twenty (20) days after receipt of the written
notice from Cyber described in Section 2(a)(i) of this Exhibit,
subject to any limitations on the number of shares as set forth in
Section 2(b) of this Exhibit.
(b) Underwriting. If the registration of which Cyber gives notice is
for a registered public offering involving an underwriting, Cyber shall so
advise the Active Shareholders as part of the written notice given pursuant to
Section 2(a)(i) of this Exhibit. In such event, the right of any Active
Shareholder to registration pursuant to Section 2 of this Exhibit shall be
conditioned upon such Active Shareholder's participation in such underwriting
and the inclusion of such Active Shareholder's Registrable Securities in the
underwriting to the extent provided herein. All Active Shareholders proposing to
distribute their securities through such underwriting shall (together with
Cyber, directors and officers and the Other Shareholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for underwriting by
Cyber.
(i) Notwithstanding any other provision of this Section 2 of
this Exhibit, if the underwriter determines that marketing factors
require a limitation on the number of shares to be underwritten, the
underwriter may (subject to the allocation priority set forth below)
exclude from such registration and underwriting some or all of the
Registrable Securities which would otherwise be underwritten. Cyber
shall so advise all holders of securities requesting registration,
and the number of shares of securities that are entitled to be
included in the registration and underwriting shall be allocated in
the following manner. The number of shares that may be included in
the registration and underwriting on behalf of such Active
Shareholders, directors and officers and Other Shareholders shall be
allocated among such Active Shareholders, directors and officers and
Other Shareholders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities and other securities
which they had requested to be included in such registration at the
time of filing the registration statement.
(ii) Each Active Shareholder agrees, if so reasonably required
by the underwriter in a registration pursuant to this Section 2 of
this Exhibit, not to effect any public sale or distribution of
Registrable Securities or sales of such Registrable Securities
pursuant to Rule 144 or Rule 144A under the Securities Act, during
the seven (7) days prior to and the 180 days after any firm
commitment underwritten registration pursuant to this Section 2 of
this Exhibit has become effective (except as part of such
underwritten registration) or, if the managing underwriter advises
Cyber that, in its opinion, no such public sale or distribution
should be effected for a period of not more than 180 days after such
underwritten registration in order to complete the sale and
distribution of securities included in such registration and Cyber
gives notice to such effect to such Active Shareholders of such
advice, each Active Shareholder shall not effect any public sale or
distribution of Registrable Securities or sales of such Registrable
Securities pursuant to Rule 144 or Rule 144A under the Securities
Act during such period after such underwritten registration, except
as part of such underwritten registration, whether or not such
Active Shareholder participates in such registration.
-43-
(iii) If any Active Shareholder or any officer, director or
Other Shareholder disapproves of the terms of any such underwriting,
he may elect to withdraw therefrom by written notice to Cyber and
the underwriter. Any Registrable Securities or other securities
excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
3. Expenses of Registration. Cyber shall bear all Registration Expenses
incurred in connection with any registration, qualification and compliance by
Cyber pursuant to Section 2 of this Exhibit. All Selling Expenses shall be borne
by the holders of the securities so registered pro rata on the basis of the
number of their shares so registered.
4. Registration Procedures. In case of each registration effected by Cyber
pursuant to this Exhibit, Cyber will keep each Active Shareholder advised in
writing as to the initiation of each registration and as to the completion
thereof. Cyber will, at its expense:
(a) Keep such registration effective for a period of 180 days or
until the Active Shareholder or Active Shareholders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs;
(b) Furnish such number of prospectuses and other documents incident
thereto as a Active Shareholder from time to time may reasonably request; and
(c) Use its best efforts to register or qualify the Registrable
Securities under the securities laws or blue-sky laws of such jurisdictions as
any Active Shareholder may request; provided, however, that Cyber shall not be
obligated to register or qualify such Registrable Securities in any particular
jurisdiction in which Cyber would be required to execute a general consent to
service of process in order to effect such registration, qualification or
compliance, unless Cyber is already subject to service in such jurisdiction and
except as may be required by the Securities Act or applicable rules or
regulation, thereunder.
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5. Indemnification.
(a) Cyber, with respect to each registration, qualification and
compliance effected pursuant to this Exhibit, will indemnify and hold harmless
each Active Shareholder, each of its officers, directors, partners, and agents
and each party controlling such Active Shareholder, and each underwriter, if
any, and each party who controls any underwriter, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by
Cyber of the Securities Act or any rule or regulation thereunder applicable to
Cyber and relating to action or inaction required of Cyber in connection with
any such registration, qualification or compliance, and will reimburse each such
Active Shareholder, each of its officer, directors, partners, and agents, and
each party controlling such Active Shareholder, each such underwriter and each
party who controls any such underwriter, for any legal and any other expenses
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, provided that Cyber will not be able in any such
case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based solely upon
written information furnished to Cyber by such Active Shareholder or
underwriter, as the case may be, and stated to be specifically for use in any
prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance.
(b) Each Active Shareholder and Other Shareholder will, if
Registrable Securities held by him are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify and
hold harmless Cyber, each of its directors and officers and each underwriter, if
any, of Cyber's securities covered by such a registration statement, each party
who controls Cyber or such underwriter, each other such Active Shareholder and
other Shareholder and each of their respective officers, directors, partners,
and agents, and each party controlling such Active Shareholder or Other
Shareholder, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
Cyber and such Active Shareholders, Other Shareholders, directors, officers,
partners, agents, parties, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document solely in reliance upon and in
conformity with written information furnished to Cyber by such Active
Shareholder or Other Shareholder and stated to be specifically for use in any
prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance; provided, however, that the
obligations of such Active Shareholders and Other Shareholders hereunder shall
be limited to an amount equal to the proceeds to each such Active Shareholder or
Other shareholder of securities sold as contemplated herein.
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(c) Each party entitled to indemnification under this Section 5 of
this Exhibit (Indemnified Party) shall give notice to the party required to
provide indemnification (Indemnifying Party) promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense (unless the Indemnified Party shall have been
advised by counsel that actual or potential differing interests or defenses
exist or may exist between the Indemnifying Party and the Indemnified Party, in
which case such expense shall be paid by the Indemnifying Party), and provided
further that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 5 of this Exhibit. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall provide such information as
may be reasonably requested by an Indemnifying Party in order to enable such
Indemnifying Party to defend a claim as to which indemnity is sought.
7. Information by Active Shareholder. Each Active Shareholder, and each
Other Shareholder holding securities included in any registration, shall furnish
to Cyber such information regarding such Active Shareholder or Other Shareholder
as Cyber may reasonably request in writing and as shall be reasonably required
in connection with any registration, qualification or compliance referred to in
this Exhibit.
8. Transfer Restrictions Unaffected. Nothing in this Exhibit shall affect
each Active Shareholder's obligation to comply with the transfer restrictions
imposed pursuant to Section 11.3(e) of the Agreement.
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Exhibit11.3(d)
TRANSFER RESTRICTIONS APPLICABLE TO
CYBER STOCK HELD BY ACTIVE SHAREHOLDERS
In connection with a Cyber financing, the Existing Cyber Controlling
shareholders agreed to pledge their shares of Cyber Class A Stock for the
benefit of the investors. In connection therewith they entered into a guarantee
and stock pledge agreement and their shares were given to the investor to
perfect such security interest. The investor will hold such shares until the
notes are repaid or converted. Although the notes have a three year term it is
anticipated that they will be converted prior to their maturity.
The Active Shareholders will not be required to pledge their shares of
Cyber Class Stock to secure payment of the investors' notes. However, the Active
Shareholders do agree that they will not assign, transfer or hypothecate their
shares of Cyber Stock until such lien on the shares of the Existing Cyber
Controlling Shareholders has been released.
281017.10
9/21/2005 7:38 PM
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