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AGREEMENT AND PLAN OF REORGANIZATION
by and among
FORMULA FOOTWEAR, INC. and
FORMULA ACQUISITION CORP.
and
VSUS TECHNOLOGIES INCORPORATED,
SAFE MAIL INTERNATIONAL LTD.,
SAFE MAIL DEVELOPMENT LTD. and
OFIR HOLDINGS LTD. and
HANNAH and XXXXXX XXXX and
TETRAKTYS LTD.
dated February 24, 2004
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is made
and entered into as of February 24, 2004, by and among Formula Footwear, Inc., a
Utah corporation ("Parent"), Formula Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Parent ("Acquisition Co."), VSUS Technologies
Incorporated, a Delaware corporation ("VSUS"), Safe Mail International, Ltd., a
company registered in the British Virgin Islands ("SMI") and Safe Mail
Development Ltd., a company registered in Israel ("SMD") (collectively, the
"Subsidiary", and together with VSUS, the "Company") and Ofir Holdings Ltd.,
Hannah and Xxxxxx Xxxx and Tetraktys Ltd. (collectively, the "Principal
Stockholders").
RECITALS:
A. Upon the terms and subject to the conditions of this Agreement and
in accordance with the General Corporation Law of the State of Utah (the "UGCL")
and the General Corporation Law of the State of Delaware (the "DGCL"), Parent
and VSUS will enter into a business combination transaction pursuant to which
Acquisition Co. will merge with and into VSUS (the "Merger") with VSUS being the
surviving corporation.
B. The Board of Directors of Parent (i) has determined that the Merger
is consistent with and in furtherance of the longterm business strategy of
Parent and fair to, and in the best interests of, Parent and its stockholders,
and (ii) has approved this Agreement, the Merger and the other transactions
contemplated by this Agreement.
C. The Board of Directors of VSUS (i) has determined that the Merger is
consistent with and in furtherance of the longterm business strategy of the
Company and fair to, and in the best interests of, VSUS and its shareholders,
and (ii) has approved this Agreement, the Merger and the other transactions
contemplated by this Agreement.
D. The shareholders beneficially owning a majority of the issued and
outstanding shares of common stock of VSUS have approved this Agreement, the
Merger and the other transactions contemplated by this Agreement.
E. The stockholder of Acquisition Co. has approved this Agreement, the
Merger and other transactions contemplated by this Agreement.
F. Parent, Acquisition Co. and the Company desire to make certain
representations and warranties and other agreements in connection with the
Merger.
G. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Code, and to cause the
Merger to qualify as a reorganization under the provisions of Section 368(a) of
the Code.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises contained herein, and for other good and valuable
consideration, the receipt and
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sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. In addition to terms defined elsewhere in this
Agreement, the following defined terms have the meanings indicated below:
"Acquisition" shall mean any transaction resulting in the acquisition
by Parent of another entity (including, without limitation, by means of a stock
purchase, reorganization, merger or consolidation).
"Acquisition Co." has the meaning set forth in the first paragraph of
this Agreement.
"Acquisition Co. Common Stock" means the shares of common stock of
Acquisition Co., $0.001 par value.
"Actions or Proceedings" means any action, suit, proceeding,
arbitration, Order, inquiry, hearing, assessment with respect to fines or
penalties or litigation (whether civil, criminal, administrative, investigative
or informal) commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental or Regulatory Authority.
"Affiliate" means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such Person.
"Assets and Properties" and "Assets or Properties" of any Person each
means all assets and properties of every kind, nature, character and description
(whether real, personal or mixed, whether tangible or intangible, whether
absolute, accrued, contingent, fixed or otherwise and wherever situated),
including the goodwill related thereto, operated, owned or leased by such
Person, including, without limitation, cash, cash equivalents, accounts and
notes receivable, chattel paper, documents, instruments, general intangibles,
real estate, equipment, inventory, goods and Intellectual Property.
"Benefit Plan" means any Plan established, arranged or maintained by
the Company or any corporate group of which the Company is or was a member,
existing at the Closing Date or prior thereto, to which the Company contributes
or has contributed, or under which any employee, officer, director or former
employee, officer or director of the Company or any beneficiary thereof is
covered, is eligible for coverage or has benefit rights.
"Books and Records" of any Person means all files, documents,
instruments, papers, books, computer files (including but not limited to files
stored on a computer's hard drive or on floppy disks), electronic files and
records in any other medium relating to the business, operations or condition of
such Person.
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"Breach" means a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement or any other agreement or document will be deemed to
have occurred if there is or has been (a) any inaccuracy in, a breach of, or any
failure to perform or comply with, such representation, warranty, covenant,
obligation, or other provision, or (b) any claim (by any Person) or other
occurrence or circumstance that is or was inconsistent with such representation,
warranty, covenant, obligation, or other provision, and the term "Breach" means
any such inaccuracy, breach, failure, claim, occurrence or circumstance.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Disclosure Schedule" means the disclosure schedule attached
hereto which sets forth the exceptions to the representations and warranties
contained in Article III hereof and certain other information called for by this
Agreement.
"Consent" means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions" means all of the transactions contemplated
by this Agreement, including: (a) the Merger; (b) the performance by Parent and
VSUS of their respective covenants and obligations under this Agreement; and (c)
Parent's acquisition and ownership of VSUS Shares and exercise of control over
VSUS.
"Contract" means any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DGCL" shall mean the General Corporation Law of the State of Delaware.
"Copyrights" has the meaning set forth in the definition of
"Intellectual Property."
"Encumbrances" means any mortgage, pledge, assessment, security
interest, deed of trust, lease, lien, adverse claim, equitable interest, levy,
charge, community property interest, right of first refusal or other encumbrance
of any kind, or any conditional sale or title retention agreement or other
agreement to give any of the foregoing in the future.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means United States generally accepted accounting principles, as
currently defined by the Financial Accounting Standards Board ("FASB") and other
agencies permitted by law to issue such pronouncements.
"Governmental Authorization" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental or Regulatory Authority
or pursuant to any Legal Requirement.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States or other
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country, any state, county, city or other political subdivision.
"Intellectual Property" means (i) 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 (collectively, "Patents"); (ii) trademarks, service
marks, trade dress, logos, trade names and corporate names, together with all
translations, adaptations, derivations and combinations thereof and including
all goodwill associated therewith, and all applications, registrations and
renewals in connection therewith (collectively, "Trademarks"), (iii)
copyrightable works, all copyrights and all applications, registrations and
renewals in connection therewith and mask works and all applications,
registrations and renewals in connection therewith (collectively, "Copyrights");
(iv) trade secrets and confidential business information (including without
limitation, product specifications, data, knowhow, inventions and ideas, past,
current and planned research and development, customer lists, current and
anticipated customer requirements, price lists, market studies, business plans),
however documented; (v) proprietary computer software and programs (including
object code and source code) and other proprietary rights and copies and
tangible embodiments thereof (in whatever form or medium); (vi) database
technologies, systems, structures and architectures (and related processes,
formulae, compositions, improvements, devices, knowhow, inventions, discoveries,
concepts, ideas, designs, methods and information) and any other related
information, however, documented; (vii) any and all information concerning the
business and affairs of a Person (which includes historical financial
statements, financial projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds of key personnel
and personnel training and techniques and materials), however documented; (viii)
any and all notes, analysis, compilations, studies, summaries, and other
material prepared by or for a Person containing or based, in whole or in part,
on any information included in the foregoing, however documented; (ix) all
industrial designs and any registrations and applications therefor; (x) all
databases and data collections and all rights therein; and (xi) any similar or
equivalent rights to any of the foregoing anywhere in the world.
"Interim Financial Statements" means the unaudited consolidated balance
sheet and the related unaudited consolidated profit and loss statements for the
Company, in each case for the nine month period ended September 30, 2003,
prepaid in accordance with GAAP and accompanied by appropriate supporting
schedules.
"Knowledge of the Company" or "Known to the Company" means the
knowledge of Xxxxxx Xxxx and/or Xxxxx Xxxxx of the Company. Xxxxxx Xxxx and/or
Xxxxx Xxxxx will be deemed to have knowledge of a particular fact or other
matter if: (i) such individual is actually aware of such fact or other matter;
or (ii) a prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter.
"Knowledge of Parent" or "Known to Parent" means the knowledge of any
officer or director of Parent. An officer or director of Parent will be deemed
to have Knowledge of a particular fact or other matter if: (i) such individual
is actually aware of such fact or other matter; or (ii) a prudent individual in
such a position should be aware of such fact or other matter in the ordinary
course of performing his duties or responsibilities.
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"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute or
treaty.
"Material Adverse Effect" means, for any Person, a material adverse
effect whether individually or in the aggregate (a) on the business, operations,
financial condition, Assets and Properties, material liabilities or prospects of
such Person, or (b) on the ability of such Person to consummate the transactions
contemplated hereby.
"Merger" has the meaning set forth in the first recital of this
Agreement.
"Order" means any award, decision, writ, judgment, decree, ruling,
subpoena, verdict, injunction or similar order of any Governmental or Regulatory
Authority (in each such case whether preliminary or final).
"Ordinary Course of Business" means the action of a Person that is (i)
consistent with the past practices of such Person and is taken in the ordinary
course of the normal day to day operations of such Person; (ii) not required to
be authorized by the board of directors of the Company; and (iii) similar in
nature and magnitude to actions customarily taken, without the action of the
board of directors or similar body, in the ordinary course of the normal day to
day operations of other Persons that are in the same line of business as the
Company.
"OTCBB" shall mean the National Association of Securities Dealers, Inc.
Over the Counter Bulletin Board.
"Parent" has the meaning set forth in the first paragraph of this
Agreement.
"Parent Common Stock" means the shares of common stock of Parent,
$0.001 par value.
"Parent Disclosure Schedule" means the disclosure schedule attached
hereto which sets forth the exceptions to the representations and warranties
contained in Article IV hereof and certain other information called for by this
Agreement.
"Parent SEC Documents" means each form, report, schedule, statement and
other document required to be filed by the Parent since November 1, 2001 through
the date of this Agreement under the Exchange Act or the Securities Act or by
the rules and regulations of the OTCBB, including any amendment to such
document, whether or not such amendment is required to be so filed.
"Patents" has the meaning set forth in the definition of "Intellectual
Property."
"Permits" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations and similar consents granted or issued
by any Governmental or Regulatory Authority.
"Permitted Encumbrance" means (a) any Encumbrance for taxes not yet due
or delinquent or being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP (or other
applicable law) and (b) any minor imperfection of title or similar Encumbrance
which individually or in the aggregate with
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other such Encumbrances does not impair the value of the property subject to
such Encumbrance or the use of such property in the conduct of the business of
the Company.
"Person" means any natural person, corporation, general partnership,
limited partnership, limited liability company, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory Authority.
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workers' compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral.
"Principal Stockholders" has the meaning set forth in the first
paragraph of this Agreement.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted, or heard by or before,
or otherwise involving, any Governmental or Regulatory Authority.
"Qualified Plan" means each Benefit Plan which is intended to qualify
under Section 401 of the Code (or other applicable law).
"Related Person" means with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled
by such individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of
such individual's Family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or
one or more members of such individual's Family serve as a director, officer,
partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer,
partner, executor, or trustee of such specified Person (or in a similar
capacity);
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(d) any Person in which such specified Person holds a
Material Interest;
(e) any Person with respect to which such specified
Person serves as a general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in
clause (b) or (c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse and former spouses,
and (iii) any other natural person who resides with such individual, and (b)
"Material Interest" means direct or indirect benefit ownership (as defined in
Rule 13d3 under the Exchange Act) of voting securities or other voting interests
representing at least 10% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 10% of the
outstanding equity securities or equity interests in a Person.
Safe Mail Financial Statements" means (i) the unaudited balance sheet
of the Company for the fiscal period ended December 31, 2002, and the unaudited
profit and loss statements of the Company for the fiscal periods ended December
31, 2001 and 2002, and (ii) the Interim Financial Statements.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Noteholders" means those certain holders of promissory notes in
the aggregate principal amount of $1,400,000 issued by Company on November 10,
2003, and identified on Schedule I annexed hereto.
"Subsidiary" has the meaning set forth in the first paragraph of this
Agreement.
"Subsidiary Stockholders" means the holders of the issued and
outstanding shares of common stock, par value $0.001, of Subsidiary.
"Tax" (and, with correlative meaning, "Taxes," "Taxable" and "Taxing")
means: (i) any federal, state, local or foreign income, alternative or addon
minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed by any Governmental or Regulatory
Authority responsible for the imposition of any such tax (domestic or foreign),
(ii) any liability for payment of any amounts of the type described in (i) as a
result of being a member of an affiliated, consolidated, combined, unitary or
other group for any Taxable period and (iii) any liability for the payment of
any amounts of the type described in (i) or (ii) as a result of any express or
implied obligation to indemnify any other person.
"Tax Return" means any return, report, information return, schedule or
other document (including any related or supporting information) filed or
required to be filed with respect to any taxing authority with respect to Taxes.
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"VSUS Common Stock" shall mean the Common Stock of VSUS, $0.001 par
value.
"VSUS Stockholders" means the holders of Outstanding Common Stock,
including the Principal Stockholders.
"Threatened" means a claim, Proceeding, dispute, action or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made in writing, or any notice has been given in writing, or if any other event
has occurred or any other circumstances exist that would lead a prudent Person
to conclude that such a claim, proceeding, dispute, action, or other matter is
likely to be asserted, commenced, taken, or otherwise pursued in the future.
"Trademarks" has the meaning set forth in the definition of
"Intellectual Property."
"Trade Secrets and Other Proprietary Information" has the meaning set
forth in the definition of "Intellectual Property."
"UGCL" shall mean the General Corporation Law of the State of Utah.
ARTICLE II
THE MERGER
2.1 THE MERGER. At the Effective Time and subject to and upon the terms
and conditions of this Agreement and the applicable provisions of the UGCL and
the DGCL, Acquisition Co. shall be merged with and into VSUS, the separate
corporate existence of Acquisition Co. shall cease and VSUS shall continue as
the surviving corporation. VSUS as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation."
2.2 EFFECTIVE TIME. Subject to the provisions of this Agreement, the
parties hereto shall cause the Merger to be consummated by the filing of a
Certificate of Merger substantially in the form attached hereto as Exhibit A
(the "Certificate of Merger") with the Secretary of State of the State of
Delaware, in accordance with the relevant provisions of the DGCL (the time of
acceptance by the Secretary of State of the State of Delaware of such filing,
being the "Effective Time") as soon as practicable on the Closing Date. Unless
the context otherwise requires, the term "Agreement" as used herein refers
collectively to this Agreement and the Certificate of Merger.
2.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time all the property, rights, privileges, powers and
franchises of VSUS and Acquisition Co. shall vest in the Surviving Corporation,
and all debts, liabilities and duties of VSUS and Acquisition Co. shall become
the debts, liabilities and duties of the Surviving Corporation.
2.4 ARTICLES OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Articles of Incorporation of VSUS
shall be the Articles of Incorporation of the Surviving Corporation.
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(b) At the Effective Time, the Bylaws of VSUS shall be the Bylaws
of the Surviving Corporation.
2.5 DIRECTORS AND OFFICERS. The directors of Surviving Corporation
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, to serve until their respective successors are duly
elected or appointed and qualified. The officers of Surviving Corporation
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, to serve until their successors are duly elected or
appointed or qualified.
2.6 EFFECT ON CAPITAL STOCK/MERGER CONSIDERATION.
(a) Conversion of VSUS Common Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of any Person, each
share of VSUS Common Stock issued and outstanding immediately prior to the
Effective Time (the "Outstanding VSUS Common Stock"), shall be canceled and
automatically converted into the right to receive, upon surrender of the
certificates representing such shares and a letter of transmittal (which shall
be in such form and have such provisions as Parent may reasonably specify), a
ratable portion of the Stock Consideration as determined in Section 2.6(d)
below. All shares of Parent Common Stock shall be "restricted securities" that
are not freely publicly tradable except in accordance with the applicable
provision of the Securities Act and/or the general rule rules and regulations of
the Securities and Exchange Commission promulgated thereunder. At the Effective
Time, all rights in respect of such Outstanding VSUS Common Stock shall cease to
exist, other than the right to receive the Stock Consideration, and all such
shares shall be cancelled and retired.
(b) Conversion of VSUS Options and Warrants. At the Effective Time,
by virtue of the Merger and without any action on the part of any Person, each
option or warrant to acquire VSUS Common Stock outstanding immediately prior to
the Effective Time (the "Outstanding VSUS Options"), shall be canceled and
automatically converted into the right to receive, upon surrender of the options
or warrants, as the case may be, and a letter of transmittal (which shall be in
such form and have such provisions as Parent may reasonably specify) like
options and warrants of Parent to acquire shares of Parent Common Stock, and
that a sufficient number of shares of Parent authorized common stock be reserved
for issuance in the event of the exercise of such options and warrants. All
shares of Parent Common Stock underlying such options and warrants shall be
"restricted securities" that are not freely publicly tradable except in
accordance with the applicable provision of the Securities Act and/or the
general rules and regulations of the Securities and Exchange Commission
promulgated thereunder. At the Effective Time, all rights in respect of such
outstanding VSUS Options shall cease to exist other than the right to receive
the Option Consideration as determined in Section 2.6(d) below and all such
options and warrants shall be canceled.
(c) No Fractional Shares. In lieu of fractional shares that would
otherwise be issued to holders of Outstanding VSUS Common Stock under this
Agreement, each holder of Outstanding VSUS Common Stock that would have been
entitled to receive a fractional share shall receive such whole number of shares
of Parent Common Stock as is equal to the precise number of shares of Parent
Common Stock to which such person would be entitled rounded down to the nearest
whole number.
(d) Merger Consideration. The merger consideration shall consist of
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11,836,012 shares of Parent Common Stock (the "Merger Consideration") which
shall be issued, pro rata, to the VSUS Stockholders at Closing (as defined in
Section 2.7 below) and shall represent approximately 96% of the post-Merger
issued and outstanding shares of Parent Common Stock.
(e) Actions at the Effective Time. At the Effective Time:
(i) Each share of Outstanding VSUS Common Stock will
automatically, by virtue of the Merger and without any action on the part of the
holder thereof, be canceled and converted into a right to receive from Parent
the Stock Consideration in the amount as determined pursuant to this Section
2.6.
(ii) The Outstanding VSUS Options will be automatically, by
virtue of the Merger and without any action on the part of the holder thereof,
be canceled and converted into a right to receive from Parent the Option
Consideration in the amount as determined pursuant to this Section 2.6.
(iii) Each share of common stock of Acquisition Co.
("Acquisition Co. Common Stock") issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock of the Surviving Corporation
and shall constitute the only shares of capital stock of the Surviving
Corporation outstanding immediately after the Effective Time. Each stock
certificate of Acquisition Co. evidencing ownership of any such shares shall
continue to evidence ownership of such shares of capital stock of the Surviving
Corporation.
2.7 CLOSING.
(a) Time and Place. The consummation of the Merger under this
Agreement (the "Closing") shall take place at the offices of Xxxxx & Xxxxxxx
LLP, 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, at 10:00 a.m. on
February 24, 2004, or at such time and in such manner as the parties mutually
agree (the "Closing Date").
(b) Closing Deliveries by VSUS and the Principal Stockholders. At
the Closing, VSUS and the Principal Stockholders, as the case may be, shall have
delivered or caused to be delivered to Parent and/or Acquisition Co., as the
case may be:
(i) the Certificate of Merger, duly executed by VSUS;
(ii) a certificate of an officer of VSUS substantially in the
form of Exhibit B attached hereto, duly executed by VSUS;
(iii) a certificate of the Secretary of VSUS substantially in
the form of Exhibit C attached hereto, certifying as of the Closing Date (A) a
true and complete copy of the organizational documents of VSUS certified as of a
recent date by the Secretary of State of Delaware, (B) a certificate of each
appropriate Secretary of State certifying the good standing of VSUS in its state
of incorporation and all states in which it is qualified to do business, (C) a
true and complete copy of the resolutions of the board of directors of VSUS and
the resolutions of the Principal Stockholders of VSUS, each authorizing the
execution, delivery and performance of this Agreement by VSUS and the
consummation of the transactions contemplated hereby and
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(D) incumbency matters; and
(iv) such other documents as Parent may reasonably request for
the purpose of facilitating the consummation of the Contemplated Transactions.
(c) Closing Deliveries By Parent. At the Closing, Parent and/or
Acquisition Co., as the case may be, shall have delivered or caused to be
delivered to VSUS and/or the VSUS Stockholders, as the case may be:
(i) a certificate of an officer of Parent, substantially in the
form of Exhibit D attached hereto, duly executed by Parent;
(ii) a certificate of the Secretary of Parent, on behalf of
Parent and Acquisition Co., substantially in the form of Exhibit E attached
hereto, certifying as of the Closing Date (A) a true and complete copy of the
organizational documents of Parent and Acquisition Co. certified as of a recent
date by the Secretaries of State of Utah and Delaware, (B) a true and complete
copy of the resolutions of the board of directors of Parent and Acquisition Co.
authorizing the execution, delivery and performance of this Agreement by Parent
and the consummation of the transactions contemplated hereby and (C) incumbency
matters;
(iii) resignation letter of each of the officers and directors
of Parent dated effective as of the Closing;
(iv) a Guaranty and Security Agreement, substantially in the
form to be mutually agreed upon in good faith by Parent and the Company and to
be attached hereto as Exhibits F and G prior to the Closing (the "Note"), duly
executed by Parent for the assumption of all of the Company's obligations
whatsoever under the Loan Documents (as that term is defined in the Loan
Agreement dated November 10, 2003 by and between VSUS and the several lenders
set forth on the signature pages thereto) to the Senior Noteholders of Company;
and
(v) such other documents as VSUS may reasonably request for the
purpose of facilitating the consummation of the Contemplated Transactions.
2.8 EXEMPTION FROM REGISTRATION. The issuance of the Parent Common
Stock issuable as Stock Consideration will be exempt from registration
requirements of the Securities Act pursuant to the private placement exemption
provided by Regulation S and/or Rule 505 and/or 506 of Regulation D promulgated
under the Securities Act and/or Section 4(2) of the Securities Act.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Parent and Acquisition Co. as of
the date hereof and as of the Closing Date, except as set forth on the Company
Disclosure Schedule furnished to Parent specifically identifying the relevant
subparagraphs hereof, which exceptions shall be deemed to be representations and
warranties as if made hereunder, as follows:
3.1 ORGANIZATION OF THE COMPANY. The Company is a corporation duly
organized,
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validly existing, and in good standing under the laws of the State of Delaware,
the state of Israel, or the British Virgin Islands, as the case may be. The
Company is duly authorized to conduct business and is in good standing in
Delaware, in Israel, in the British Virgin Islands and each jurisdiction where
such qualification is required except for any jurisdiction where failure so to
qualify would not have a Material Adverse Effect upon the Company. The Company
has full power and authority, and holds all Permits and authorizations necessary
to carry on its business and to own and use the Assets and Properties owned and
used by the Company except where the failure to have such power and authority or
to hold such Permit or authorization would not have a Material Adverse Effect on
the Company's business. The Company has delivered to Parent correct and complete
copies of its charter documents and organizational documents, each as amended to
date.
3.2 CAPITAL STOCK OF THE COMPANY.
(a) The authorized capital stock of VSUS consists of (i)
100,000,000 shares of Common Stock, par value $0.001 per share, of which
11,836,012 are issued and outstanding as of the date hereof; (ii) no shares of
Preferred Stock; and (ii) no shares of capital stock of VSUS in treasury. Each
share of the issued and outstanding VSUS Common Stock is duly authorized,
validly issued, fully paid and nonassessable. Section 3.2(a) of the Company
Disclosure Schedule sets forth a complete and accurate list specifying the
number of shares of VSUS Common Stock held by each VSUS Stockholder.
(b) The authorized stock of SMI consists of (i) 50,000 shares of
Common Stock, par value $0.001 per share ("SMI Common Stock"), of which 10,000
are issued and outstanding as of the date hereof; (ii) no shares of Preferred
Stock; and (iii) no shares of capital stock in treasury.
The authorized stock of SMD consists of (i) 50,000 shares of
Ordinary Shares, par value $0.001 per share ("SMD Common Stock"), of which
10,000 are issued and outstanding as of the date hereof; (ii) no shares of
Preferred Stock; and (iii) no shares of capital stock in treasury.
Each share of the issued and outstanding SMI Common Stock and
SMD Common Stock is duly authorized validly issued, fully paid and
nonassessable. Section 3.2(b) of the Company Disclosure Schedule sets forth a
complete and accurate list specifying the number of shares of SMI Common Stock
and SMD Common Stock held by each Subsidiary Stockholder.
(c) Except as disclosed in Section 3.2(c) of the Company Disclosure
Schedule there are no subscriptions, options, warrants, calls, commitments and
other rights of any kind for the purchase or acquisition of, and any securities
convertible or exchangeable for, any capital stock of the Company.
(d) There are no agreements to which the Company, the Company
Stockholders or Subsidiary Stockholders are parties or by which they are bound
with respect to the voting (including voting trusts or proxies), registration
under the Securities Act, or sale or transfer (including agreements relating to
preemptive rights, rights of first refusal, cosale rights or "dragalong" rights)
of any securities of the Company.
3.3 OWNERSHIP OF SHARES. Each of the Company Stockholders owns
beneficially and
13
of record that number of shares of Company Common Stock or Subsidiary Common
Stock, as the case may be, listed opposite such stockholder's name in Section
3.2(a) of the Company Disclosure Schedule, free and clear of all Encumbrances,
and has good and valid title to such shares. The delivery of the stock
certificate(s) representing the Outstanding Company Common Stock and owned by
the Company Stockholders in the manner provided in Section 2.6 will transfer to
the Parent good and valid title thereto free and clear of all Encumbrances.
3.4 AUTHORITY OF THE COMPANY. VSUS has all necessary power and
authority and has taken all action necessary to enter into this Agreement, to
consummate the transactions contemplated hereby and to perform its obligations
hereunder and no other proceedings on the part of VSUS are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by VSUS and
constitutes a legal, valid and binding obligation of VSUS enforceable against
VSUS in accordance with its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.
3.5 NO AFFILIATES. Except as disclosed in Section 3.5 of the Company
Disclosure Schedule, VSUS does not have any Affiliates or subsidiaries and is
not a partner in any partnership or a party to a joint venture.
3.6 CONSENTS AND GOVERNMENTAL APPROVALS AND FILINGS. No consent,
approval or action of, filing with or notice to any Governmental or Regulatory
Authority on the part of the Company is required in connection with the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
3.7 BOOKS AND RECORDS. The minute books and other corporate records of
the Company as made available to Parent contain a true and complete record of
all actions taken at all meetings and by all written consents in lieu of
meetings of the shareholders, the boards of directors and committees of the
boards of directors of the Company. The Company has delivered or made available
true and complete copies of each document which has been requested by Parent or
its counsel in connection with their legal and accounting review of the Company.
The stock transfer ledgers and other similar records of the Company accurately
reflect all issuances and record transfers in the capital stock of the Company.
The other Books and Records of the Company are true, correct and complete and
have been maintained in accordance with sound business practices.
3.8 COMPANY FINANCIAL STATEMENTS. The Company has previously delivered
to Parent the Company Financial Statements. Such Company Financial Statements
(i) are true, correct and complete, (ii) have been prepared in accordance with
the Books and Records of the Company, (iii) have been prepared in conformity
with GAAP, and (iv) fairly present the financial condition and results of
operations of the Company as of the respective dates thereof and for the periods
covered thereby; provided that the Interim Financial Statements are subject to
normal year end adjustments and lack footnotes and certain other presentation
items.
3.9 ABSENCE OF CHANGES. Except for the execution and delivery of this
Agreement and the transactions to take place pursuant hereto on or prior to the
Closing Date, since December 31, 2002, there has not been any material adverse
change, or any event or
14
development which, individually or together with other such events, could
reasonably be expected to result in a Material Adverse Effect on the Company.
3.10 NO UNDISCLOSED LIABILITIES. Except as disclosed in Section 3.10 of
the Company Disclosure Schedule or in the Safe Mail Financial Statements, there
are no liabilities (whether known or unknown, whether asserted or unasserted
whether absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due, including but not limited to
any liability for Taxes), nor any basis for any claim against the Company for
any such liabilities, relating to or affecting the Company or any of its Assets
and Properties, other than such liabilities incurred after December 31, 2002 in
the Ordinary Course of Business which have not had, and could not reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Effect on the Company.
3.11 BENEFIT PLANS.
(a) Section 3.11 (a) of the Company Disclosure Schedule lists each
Benefit Plan together with a brief description of the type of plan and benefit
provided thereunder. The Company has no commitment, proposal, or communication
to employees regarding the creation of an additional Plan or any increase in
benefits under any Benefit Plan. The Company has provided to Parent (i) a copy
of each Benefit Plan (including amendments) or, where substantially similar
arrangements exist, a sample copy and a list of persons participating in such
arrangement, (ii) the three most recent annual reports for each Benefit Plan
required to file any such report and (iii) the most recent trustee's report for
each Benefit Plan funded through a trust.
(b) Each Benefit Plan has been operated and administered in all
material respects in accordance with its terms and, as of the Closing Date, will
be in full compliance, in form and operation, with all applicable laws. The
reserves reflected in the Safe Mail Financial Statements for the obligations of
the Company under all Benefit Plans are adequate and were determined in
accordance with applicable law.
(c) The consummation of the transactions contemplated by this
Agreement will not, either immediately or upon the occurrence of any event
thereafter, (i) entitle any current or former employee or officer or director of
the Company to severance pay, unemployment compensation or any other payment, or
(ii) accelerate the time of payment or vesting, or increase the amount of
compensation otherwise due any such individual.
3.12 REAL PROPERTY. The Company does not own any real property. Section
3.12 of the Company Disclosure Schedule contains a complete and accurate legal
description of each parcel of real property leased by the Company (as lessee or
lessor) (the "Real Property") and all Encumbrances (other than Permitted
Encumbrances) relating to or affecting the Real Property. The Company has a
valid leasehold interest in, all real property used in or relating to the
conduct of the Company's business, free and clear of all Encumbrances other than
Permitted Encumbrances.
3.13 INTELLECTUAL PROPERTY RIGHTS.
(a) Section 3.13(a) of the Company Disclosure Schedule sets forth,
for the Intellectual Property owned, in whole or in part, including jointly with
others (such schedule specifies if such Intellectual Property is owned jointly),
by the Company, a complete and
15
accurate list of all United States and foreign (a) Patents and Patent
applications; (b) Trademark registrations and applications and unregistered
Trademarks; (c) copyright registrations and applications, indicating for each,
the applicable jurisdiction, registration number (or application number) and
date issued (or date filed); and (d) all other Intellectual Property to which
the Company has any ownership rights (including common law rights).
(b) The Company owns or possesses adequate licenses, remarketing
or sublicensing rights, or other rights to use, free and clear of Encumbrances,
orders and arbitration awards, all of its Intellectual Property used in its
business. The products used, manufactured, marketed, sold or licensed by the
Company, and all Intellectual Property used in the conduct of the Company's
business as currently conducted, do not infringe upon, violate or constitute the
unauthorized use of any rights owned or controlled by any third party, including
any Intellectual Property of any third party.
(c) No litigation is now or, within the three years prior to the
date of this Agreement, was pending and no notice or other claim in writing has
been received by the Company, (A) alleging that the Company has engaged in any
activity or conduct that infringes upon, violates or constitutes the
unauthorized use of the Intellectual Property rights of any third party or (B)
challenging the ownership, use, validity or enforceability of any Intellectual
Property owned or exclusively licensed by or to the Company.
(d) To the Knowledge of the Company, no third party is
misappropriating, infringing, diluting or violating any Intellectual Property
owned or licensed by the Company, and no such claims have been brought against
any third party by the Company.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
(a) Except as set forth in Section 3.14 (a) of the Company
Disclosure Schedule to the Knowledge of the Company:
(i) the Company is, and at all times since its incorporation
has been, in full compliance with each material Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or the ownership
or use of any of its Assets;
(ii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or result in a material
violation by the Company of, or material failure on the part of the Company to
comply with, any Legal Requirement, or (B) may give rise to any material
obligation on the part of the Company to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature; and
(iii) the Company has not received any notice or other
communication (whether oral or written) from any Governmental or Regulatory
Authority or any other Person regarding (A) any actual, alleged, possible, or
potential material violation of, or material failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible, or potential material
obligation on the part of the Company to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature.
(b) Section 3.14(b) of the Company Disclosure Schedule contains a
complete and accurate list of each material Governmental Authorization that is
held by the Company or
16
that otherwise relates to the business of, or to any of the assets owned or used
by, the Company. Each Governmental Authorization listed or required to be listed
in Section 3.14(b) of the Company Disclosure Schedule is valid and is in full
force and effect. Except as set forth on Section 3.14(b) of the Company
Disclosure Schedule:
(i) the Company is, and at all times has been, in full
compliance with all of the material terms and requirements of each Governmental
Authorization identified or required to be identified in Section 3.14(b) of the
Company Disclosure Schedule;
(ii) no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure to comply with any material term or
requirement of any Governmental Authorization listed or required to be listed in
Section 3.14(b) of the Company Disclosure Schedule, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any material Governmental Authorization
listed or required to be listed in Section 3.14(b) of the Company Disclosure
Schedule;
(iii) the Company has not received any notice or other
communication (whether oral or written) from any Governmental or Regulatory
Authority or any other Person regarding (A) any actual, alleged, possible, or
potential violation of or failure to comply with any material term or
requirement of any Governmental Authorization, or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any material Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
Section 3.14(b) of the Company Disclosure Schedule have been duly filed on a
timely basis with the appropriate Governmental or Regulatory Authority, and all
other filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the appropriate
Governmental or Regulatory Authority.
The Governmental Authorizations listed in Section 3.14(b) of the
Company Disclosure Schedule collectively constitute all of the Governmental
Authorizations necessary to permit the Company to lawfully conduct and operate
its business in the manner it currently conducts and operates such business and
to permit the Company to own and use its assets in the manner in which it
currently owns and uses such assets.
3.15 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Section 3.15(a) of the Company
Disclosure Schedule, to the Knowledge of the Company there is no pending
Proceeding:
(i) that has been commenced by or against the Company or that
otherwise relates to or may materially affect the business of, or any of the
assets owned or used by the Company; or
(ii) that challenges, or that may have the effect of
materially preventing, delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions.
17
To the Knowledge of the Company, (1) no such Proceeding has been
Threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding. The
Company has delivered to Parent copies of all pleadings, correspondence, and
other documents relating to each Proceeding listed in Section 3.15(a) of the
Company Disclosure Schedule. The Proceedings listed in Section 3.15(a) of the
Company Disclosure Schedule will not have a Material Adverse Effect on the
business, operations, assets, condition, or prospects of the Company.
3.16 CONTRACTS.
(a) To the Knowledge of the Company, Section 3.16 of the Company
Disclosure Schedule contains a true and complete list of each of the following
contracts, agreements or other arrangements to which the Company is a party or
by which any of its Assets and Properties is bound (and, to the extent oral,
accurately describes the terms of such contracts, agreements and arrangements):
(i) all material collective bargaining or similar labor
agreements;
(ii) all material contracts for the employment of any officer,
employee or other person or entity on a full time, part time, consulting or
other basis;
(iii) all material loan agreements, indentures, debentures,
notes or letters of credit relating to the borrowing of money or to mortgaging,
pledging or otherwise placing a lien on any material asset or material group of
assets of the Company;
(iv) each material written warranty, guaranty, or other
similar undertaking with respect to contractual performance extended by the
Company;
(v) all material leases or agreements under which the Company
is lessee or lessor of, or holds, or operates, any property, real or personal,
owned by any other party;
(vi) all material commitments, contracts, sales contracts,
purchase orders, mortgage agreements or groups of related agreements with the
same party or any group or affiliated parties which require or may in the future
require payment of any consideration by the Company; (vii) each Contract for
capital expenditures in excess of $50,000;
(viii) all contracts or commitments that in any way restrict
the Company from carrying on its business anywhere in the world;
(ix) all other contracts and agreements that (A) involve the
payment or potential payment in excess of $50,000, pursuant to the terms of any
such contract or agreement, by the Company and (B) cannot be terminated within
30 days after giving notice of termination without resulting in any cost or
penalty to the Company; and
(x) each amendment, supplement, and modification (whether oral
or written) in respect to any of the foregoing.
18
(b) A correct and complete copy of each Contract disclosed in the
Company Disclosure Schedule has been previously provided to Parent. Each
contract, agreement or other arrangement disclosed in the Company Disclosure
Schedule is in full force and effect and constitutes a legal, valid and binding
agreement, enforceable in accordance with its terms, of the Company, and to the
Knowledge of the Company, the other parties thereto; and the Company has
performed all of its required obligations under, and is not in violation or
breach of or default under, any such contract, agreement or arrangement. There
are no renegotiations of, attempts to renegotiate or outstanding rights to
renegotiate any material amounts paid or payable to the Company under current or
complete Contract with any Person and, to the Knowledge of the Company, no such
Person has made written demand for such renegotiation. The Contracts relating to
the provision of services by the Company have been entered into in the Ordinary
Course of Business and have been entered into without the commission of any act
alone or in concert with any other Person, or any consideration having been paid
or promised, that would be in violation of any Legal Requirement.
3.17 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of the Company, the Company is in compliance
with all applicable "Environmental Laws" (as defined below) and there are no
circumstances which may materially prevent or interfere with such compliance in
the future. The Company has not received any communication (whether written or
oral), whether from a Governmental or Regulatory Authority, citizen group,
employee or otherwise, that alleges that the Company or any of the Assets or
Properties used in the Company's business is not in full compliance with
Environmental Laws.
(b) There are no past or present actions, activities,
circumstances, conditions, events or incidents arising from the operation,
ownership or use of any property currently or formerly owned, operated or used
by the Company (or any entity formerly an Affiliate of the Company), including,
without limitation, the release, emission, discharge or disposal of any
"Material" (as defined below) into the "Environment" (as defined below), that
could reasonably be expected to result in the incurrence of costs under
Environmental Laws.
(c) For purposes of this Section 3.17:
(i) "Environment" means any surface water, ground water,
drinking water supply, land surface or subsurface strata, ambient air and any
indoor workplace.
(ii) "Environmental Laws" means all national, state, local and
foreign laws, codes, regulations, common law, requirements, directives, Orders,
and administrative or judicial interpretations thereof, all as in effect on the
date hereof or on the Closing Date, that may be enforced by any Governmental or
Regulatory Authority, relating to pollution, the protection of the Environment
or the emission, discharge, disposal, release or threatened release of Materials
in or into the Environment.
(iii) "Material" means pollutants, contaminants or chemical,
industrial, hazardous or toxic materials or wastes, including, without
limitation, petroleum and petroleum products.
19
3.18 ACCOUNTS RECEIVABLE. All accounts receivable of the Company that
are reflected on the Safe Mail Financial Statements or the accounting records of
Subsidiary as of the Closing (collectively, the "Accounts Receivable") represent
or will represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. Unless paid prior to the
Closing, the Accounts Receivable are or will be as of the Closing current and
collectible, net of the respective reserves shown on the Safe Mail Financial
Statements or on the accounting records of Subsidiary as of the Closing (which
reserves are adequate and calculated consistent with past practice and, in the
case of the reserve as of the Closing, will not represent a greater percentage
of the Accounts Receivable as of the Closing than the reserve reflected in the
Safe Mail Financial Statements and will not represent a material adverse change
in the composition of such Accounts Receivable in terms of aging). Subject to
such reserves, each of the Accounts Receivable either has been or will be
collected in full, without any setoff, within 90 days after the date on which it
first becomes due and payable.
3.19 INSURANCE. Set forth in Section 3.19 of the Company Disclosure
Schedule is a complete and accurate list of all primary, excess and umbrella
policies, bonds and other forms of insurance currently owned or held by or on
behalf of and/or providing insurance coverage to the Company or the Assets and
Properties of the Company (or any of the Company's directors, officers,
salespersons, agents or employees), including the following information for each
such policy: type(s) of insurance coverage provided; name of insurer; effective
dates; policy number; per occurrence and annual aggregate deductibles or
self-insured retentions; per occurrence and annual aggregate limits of liability
and the extent, if any, to which the limits of liability have been exhausted.
All policies set forth on the Company Disclosure Schedule are in full force and
effect, and with respect to such policies, all premiums currently payable or
previously due have been paid, and no notice of cancellation or termination has
been received with respect to any such policy.
3.20 TAX MATTERS.
(a) To the Knowledge of the Company, the Company has filed on a
timely basis all Tax Returns that it was required to file, and all such Tax
Returns were complete and accurate in all material respects. Since 2000, the
Company has been a member of a group of corporations with which it has filed (or
been required to file) consolidated, combined or unitary Tax Returns. To the
Knowledge of the Company, the Company has paid on a timely basis all Taxes that
were due and payable including, without limitation, employment taxes and any
fines, interest and penalties thereon; the Company has no actual or potential
liability for any Tax obligation of any other taxpayer (including any affiliated
group of corporations or other entities that included the Company during a prior
period); and all Taxes that the Company is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental or Regulatory Authority.
(b) The Company has delivered to Parent complete and accurate
copies of all Tax Returns, examination reports and statements of deficiencies
assessed against or agreed to by the Company. The Tax Returns of the Company
have been audited by Varzily Partners or are closed by the applicable statute of
limitations for all taxable years through the taxable year specified in Section
3.20(b) of the Company Disclosure Schedule. The Company has delivered or made
available to Parent complete and accurate copies of all other Tax Returns of the
Company, together with all related examination reports and statements of
deficiency for all periods from and after incorporation. No examination or audit
of any Tax Return of the
20
Company by any Governmental or Regulatory Authority is currently in progress or,
to the Knowledge of the Company, threatened or contemplated. The Company has not
been informed by any jurisdiction that the jurisdiction believes that the
Company was required to file any Tax Return that was not filed. The Company has
not waived any statute of limitations with respect to Taxes or agreed to an
extension of time with respect to a Tax assessment or deficiency.
3.21 LABOR AND EMPLOYMENT RELATIONS. To the Knowledge of the Company,
no material officer, executive or group of five or more employees of the Company
has or have any plans to terminate his, her or their employment with the
Company. The Company is not a party to or bound by any collective bargaining
agreement with any labor organization, group or association covering any of its
employees, and to the Knowledge of the Company, there are no attempts to
organize any of the Company's employees by any person, unit or group seeking to
act as their bargaining agent. To the Knowledge of the Company, the Company has
complied with all material applicable laws relating to the employment of labor,
including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining, discrimination against race, color, national origin,
religious creed, physical or mental disability, sex, age, ancestry, medical
condition, marital status or sexual orientation, occupational health and safety
and the withholding and payment of social security and other Taxes. To the
Knowledge of the Company, the Company is not liable for the material payment of
any compensation, damages, taxes, fines, penalties or other amounts, however
designated, for the failure to comply with any of the foregoing Legal
Requirements.
3.22 CUSTOMERS. The Company has previously provided to Parent a true
and correct list of the Company's current customers and the Company's customers
during the 2001 and 2002 fiscal years related to the Company business. Since
January 1, 2003, no single customer or group of affiliated customers
contributing more than $50,000 per annum to the gross revenues of the Company's
business has stopped doing business with the Company, and no such customer has
given notice to the Company of an intention to discontinue doing business or
reduce the level of gross revenues from that in fiscal year 2002 with the
Company.
3.23 BANK ACCOUNTS. Section 3.23 of the Company Disclosure Schedule
contains a complete and accurate list of each deposit account or asset
maintained by or on behalf of the Company with any bank, brokerage house or
other financial institution, specifying with respect to each the name and
address of the institution, the name under which the account is maintained, the
account number, and the name and title or capacity of each Person authorized to
have access thereto.
3.24 THIRD PARTY CONSENTS. To the Knowledge of the Company, no consent,
approval or authorization of any third party on the part of the Company is
required in connection with the consummation of the transactions contemplated
hereunder except as otherwise provided in Section 3.24 of the Company Disclosure
Schedule.
3.25 RELATIONSHIPS WITH RELATED PERSONS. No Principal Stockholder or
any Related Person of the Company has or since December 31, 2001 has had, any
interest in the property, whether real, personal or mixed, or whether tangible
or intangible, used in or pertaining to the Company's businesses. Except as set
forth in Section 3.25 of the Company Disclosure Schedule, no Principal
Stockholder or any Related Person of the Company owns, or since December 31,
2001 has owned (of record or as beneficial owner) an equity interest or any
other financial or profit interest in a Person that has (i) had business
dealings or a material financial interest in any
21
transaction with the Company or (ii) engaged in competition with the Company
with respect to any line of the products or services of the Company. Except as
set forth in Section 3.25 of the Company Disclosure Schedule, no Principal
Stockholder nor any Related Person of the Company is a party to any Contract
with or has any right or claim against the Company.
3.26 BROKERS. Except as set forth in Section 3.26 of the Company
Disclosure Schedule, neither the Principal Stockholders nor the Company have
retained any broker in connection with the transactions contemplated hereunder.
Parent has, and will have, no obligation to pay any broker's, finder's,
investment banker's, financial advisor's or similar fee in connection with this
Agreement or the transactions contemplated hereby by reason of any action taken
by or on behalf of the Principal Stockholders or the Company.
3.27 MATERIAL MISSTATEMENTS AND OMISSIONS. The statements,
representations and warranties of the Company contained in this Agreement
(including the exhibits and schedules hereto) and in each document, statement,
certificate or exhibit furnished or to be furnished by or on behalf of the
Company pursuant hereto, or in connection with the transactions contemplated
hereby, taken together, do not contain and will not contain any untrue statement
of a material fact and do not or will not omit to state a material fact
necessary to make the statements or facts contained herein or therein, in light
of the circumstances made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION CO.
Parent and Acquisition Co., jointly and severally, represent and
warrant to the Company as of the date hereof and as of the Closing Date, except
as set forth on the Parent Disclosure Schedule furnished to Company specifically
identifying the relevant subparagraphs hereof, which exceptions shall be deemed
to be representations and warranties as if made hereunder, as follows:
4.1 ORGANIZATION: Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of the Utah.
Acquisition Co. is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware. Each of Parent and Acquisition
Co. is duly authorized to conduct business and is in good standing under the
laws of each jurisdiction where such qualification is required except for any
jurisdiction where failure so to qualify would not have a Material Adverse
Effect upon Parent or Acquisition Co., as the case may be. Parent and
Acquisition Co. have delivered to Company correct and complete copies of their
charter documents and organizational documents, each as amended to date.
4.2 AUTHORITY . Each of Parent and Acquisition Co. has all necessary
corporate power and corporate authority and has taken all corporate actions
necessary to enter into this Agreement, to consummate the transactions
contemplated hereby and to perform its respective obligations hereunder and no
other proceedings on the part of Parent or Acquisition Co. are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of
Parent and Acquisition Co. and constitutes a legal, valid and binding obligation
of Parent and Acquisition Co., respectively, enforceable against each of Parent
and Acquisition Co. in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
22
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
4.3 NO AFFILIATES. Except as disclosed in Section 4.3 of the Parent
Disclosure Schedule, Parent and Acquisition Co. do not have any Affiliates or
subsidiaries and are not a partner in any partnership or a party to a joint
venture.
4.4 CAPITAL STOCK OF THE PARENT.
(a) The authorized capital stock of Parent consists of (i)
50,000,000 shares of Common Stock, par value $0.001 per share, of which 557,884
(following the cancellation of 1,768,785 and issuance of 500,000 shares of
Parent Common Stock pursuant to the Indemnity Agreement executed simultaneously
herewith) are issued and outstanding as of the date hereof; (ii) no shares of
Preferred Stock; and (ii) no shares of capital stock of Parent in treasury. Each
share of the issued and outstanding Parent Common Stock is duly authorized,
validly issued, fully paid and nonassessable. Section 4.4(a) of the Parent
Disclosure Schedule sets forth a complete and accurate list specifying the
number of shares of Parent Common Stock held by each Parent stockholder.
(b) The authorized stock of Acquisition Co. consists of (i) 1,000
shares of Common Stock, par value $0.001 per share ("Acquisition Co. Common
Stock"), of which 1,000 are issued and outstanding as of the date hereof; (ii)
no shares of Preferred Stock; and (iii) no shares of capital stock in treasury.
Each share of the issued and outstanding Acquisition Co. Common Stock is duly
authorized validly issued, fully paid and nonassessable. Section 4.4(b) of the
Parent Disclosure Schedule sets forth a complete and accurate list specifying
the number of shares of Acquisition Co. Common Stock held by each Acquisition
Co. stockholder.
(c) There are no subscriptions, options, warrants, calls,
commitments and other rights of any kind for the purchase or acquisition of, and
any securities convertible or exchangeable for, any capital stock of Parent or
Acquisition Co.
(d) There are no agreements to which the Parent, Acquisition Co.,
Parent stockholders or Acquisition stockholders are parties or by which they are
bound with respect to the voting (including voting trusts or proxies),
registration under the Securities Act, or sale or transfer (including agreements
relating to preemptive rights, rights of first refusal, cosale rights or
"dragalong" rights) of any securities of Parent or Acquisition Co., as the case
may be.
4.5 OWNERSHIP OF SHARES. The delivery of the stock certificate(s)
representing the Merger Consideration in the manner provided in Section 2.6 will
transfer to the VSUS Stockholders good and valid title thereto free and clear of
all Encumbrances.
4.6 CONSENTS AND GOVERNMENTAL APPROVALS AND FILINGS. Except as set
forth in Section 4.6 of the Parent Disclosure Schedule, no consent, approval or
action of, filing with or notice to any Governmental or Regulatory Authority on
the part of Parent or Acquisition Co. is required in connection with the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
4.7 BOOKS AND RECORDS. The minute books and other corporate records of
the Parent
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and Acquisition Co. as made available to Company contain a true and complete
record of all actions taken at all meetings and by all written consents in lieu
of meetings of the shareholders, the boards of directors and committees of the
boards of directors of the Parent and Acquisition Co. Parent and Acquisition Co.
have delivered or made available true and complete copies of each document which
have been requested by Parent or its counsel in connection with their legal and
accounting review of the Parent and Acquisition Co. The stock transfer ledgers
and other similar records of Parent and Acquisition Co. accurately reflect all
issuances and record transfers in the capital stock of Parent and Acquisition
Co. The other Books and Records of Parent and Acquisition Co. are true, correct
and complete and have been maintained in accordance with sound business
practices.
4.8 REPORTS AND FINANCIAL STATEMENTS. As of the date hereof, the Parent
has furnished or made available to the Company true and complete copies of all
Parent SEC Documents. As of their respective filing dates, all such Parent SEC
Documents complied in all material respects with the requirements of the
Securities Act, the Exchange Act and the rules and regulations of the OTCBB, as
the case may be, and none of such Parent SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a document subsequently filed with the SEC or OTCBB. The Parent
Financial Statements comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
and OTCBB with respect thereto, have been prepared in accordance with GAAP
consistently applied (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-QSB of the SEC) and
present fairly the financial position of the Parent at the dates thereof and the
results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal audit adjustments). As of the date
hereof, there has been no change in the Parent accounting policies except as
described in the notes to Parent Financial Statements.
4.9 ABSENCE OF CHANGES. Except for the execution and delivery of this
Agreement and the transactions to take place pursuant hereto on or prior to the
Closing Date, since September 30, 2003, there has not been any material adverse
change, or any event or development which, individually or together with other
such events, could reasonably be expected to result in a Material Adverse Effect
on Parent.
4.10 NO UNDISCLOSED LIABILITIES. There are no liabilities (whether
known or unknown, whether asserted or unasserted whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due, including but not limited to any liability for Taxes), nor
any basis for any claim against the Parent and Acquisition Co. for any such
liabilities, relating to or affecting Parent and Acquisition Co. or any of their
respective Assets and Properties, other than such liabilities incurred after
September 30, 2003 in the Ordinary Course of Business which have not had, and
could not reasonably be expected to result in, individually or in the aggregate,
a Material Adverse Effect on Parent or Acquisition Co.
4.11 BENEFIT PLANS. Except as disclosed in Section 4.11 of the Parent
Disclosure Schedule, Parent does not have any Benefit Plans.
4.12 REAL PROPERTY. Parent does not own or lease any real property.
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4.13 INTELLECTUAL PROPERTY RIGHTS. Parent does not own, in whole or in
part, any Intellectual Property.
4.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
(a) Except as set forth in Section 4.14(a) of the Parent
Disclosure Schedule, to the Knowledge of Parent:
(i) Parent is, and at all times since its incorporation has
been, in full compliance with each material Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or the ownership
or use of any of its Assets;
(ii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or result in a material
violation by Parent of, or material failure on the part of Parent to comply
with, any Legal Requirement, or (B) may give rise to any material obligation on
the part of Parent to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature; and
(iii) Parent has not received any notice or other
communication (whether oral or written) from any Governmental or Regulatory
Authority or any other Person regarding (A) any actual, alleged, possible, or
potential material violation of, or material failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible, or potential material
obligation on the part of Parent to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature.
(b) Section 4.14(b) of the Parent Disclosure Schedule contains a
complete and accurate list of each Governmental Authorization that is held by
Parent or that otherwise relates to the business of, or to any of the assets
owned or used by, Parent. Each Governmental Authorization listed or required to
be listed in Section 4.14(b) of the Parent Disclosure Schedule is valid and is
in full force and effect. Except as set forth on Section 4.14(b) of the Parent
Disclosure Schedule:
(i) Parent is, and at all times has been, in full compliance
with all of the material terms and requirements of each Governmental
Authorization identified or required to be identified in Section 4.14(b) of the
Parent Disclosure Schedule;
(ii) no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure to comply with any material term or
requirement of any Governmental Authorization listed or required to be listed in
Section 4.14(b) of the Parent Disclosure Schedule, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any Governmental Authorization listed or
required to be listed in Section 4.14(b) of the Parent Disclosure Schedule;
(iii) Parent has not received any notice or other
communication (whether oral or written) from any Governmental or Regulatory
Authority or any other Person regarding (A) any actual, alleged, possible, or
potential violation of or failure to comply with any material term or
requirement of any Governmental Authorization, or (B) any actual, proposed,
25
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
Section 4.14(b) of the Parent Disclosure Schedule have been duly filed on a
timely basis with the appropriate Governmental or Regulatory Authority, and all
other filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the appropriate
Governmental or Regulatory Authority.
The Governmental Authorizations listed in Section 4.14(b) of the Parent
Disclosure Schedule collectively constitute all of the Governmental
Authorizations necessary to permit the Parent to lawfully conduct and operate
its business in the manner it currently conducts and operates such business and
to permit Parent to own and use its assets in the manner in which it currently
owns and uses such assets.
4.15 LEGAL PROCEEDINGS; ORDERS.
(a) To the Knowledge of Parent, there is no pending Proceeding:
(i) that has been commenced by or against Parent or that
otherwise relates to or may materially affect the business of, or any of the
assets owned or used by Parent; or
(ii) that challenges, or that may have the effect of
materially preventing, delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions.
To the Knowledge of Parent, (1) no such Proceeding has been Threatened,
and (2) no event has occurred or circumstance exists that may give rise to or
serve as a basis for the commencement of any such Proceeding.
4.16 CONTRACTS.
(a) To the Knowledge of Parent, Section 4.16 of the Parent
Disclosure Schedule contains a true and complete list of each of the following
contracts, agreements or other arrangements to which Parent is a party or by
which any of its Assets and Properties is bound (and, to the extent oral,
accurately describes the terms of such contracts, agreements and arrangements):
(i) all material collective bargaining or similar labor
agreements;
(ii) all material contracts for the employment of any officer,
employee or other person or entity on a full time, part time, consulting or
other basis;
(iii) all material loan agreements, indentures, debentures,
notes or letters of credit relating to the borrowing of money or to mortgaging,
pledging or otherwise placing a lien on any material asset or material group of
assets of Parent;
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(iv) each material written warranty, guaranty, or other
similar undertaking with respect to contractual performance extended by Parent;
(v) all material leases or agreements under which Parent is
lessee or lessor of, or holds, or operates, any property, real or personal,
owned by any other party;
(vi) all material commitments, contracts, sales contracts,
purchase orders, mortgage agreements or groups of related agreements with the
same party or any group or affiliated parties which require or may in the future
require payment of any consideration by Parent;
(vii) each Contract for capital expenditures in excess of
$50,000;
(viii) all contracts or commitments that in any way restrict
Parent from carrying on its business anywhere in the world;
(ix) all other contracts and agreements that (A) involve the
payment or potential payment in excess of $50,000, pursuant to the terms of any
such contract or agreement, by Parent and (B) cannot be terminated within 30
days after giving notice of termination without resulting in any cost or penalty
to Parent; and
(x) each amendment, supplement, and modification (whether oral
or written) in respect to any of the foregoing.
(b) A correct and complete copy of each Contract disclosed in the
Parent Disclosure Schedule has been previously provided to Company. Each
contract, agreement or other arrangement disclosed in the Parent Disclosure
Schedule is in full force and effect and constitutes a legal, valid and binding
agreement, enforceable in accordance with its terms, of Parent, and to the
Knowledge of Parent, the other parties thereto; and Parent has performed all of
its required obligations under, and is not in violation or breach of or default
under, any such contract, agreement or arrangement. There are no renegotiations
of, attempts to renegotiate or outstanding rights to renegotiate any material
amounts paid or payable to Parent under current or complete Contract with any
Person and, to the Knowledge of Parent, no such Person has made written demand
for such renegotiation. The Contracts relating to the provision of services by
Parent have been entered into in the Ordinary Course of Business and have been
entered into without the commission of any act alone or in concert with any
other Person, or any consideration having been paid or promised, that would be
in violation of any Legal Requirement.
4.17 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Parent, Parent is in compliance with all
applicable "Environmental Laws" (as defined below) and there are no
circumstances which may materially prevent or interfere with such compliance in
the future. Parent has not received any communication (whether written or oral),
whether from a Governmental or Regulatory Authority, citizen group, employee or
otherwise, that alleges that Parent or any of the Assets or Properties used in
Parent's business is not in full compliance with Environmental Laws.
27
(b) There are no past or present actions, activities,
circumstances, conditions, events or incidents arising from the operation,
ownership or use of any property currently or formerly owned, operated or used
by Parent (or any entity formerly an Affiliate of the Company), including,
without limitation, the release, emission, discharge or disposal of any
"Material" (as defined below) into the "Environment" (as defined below), that
could reasonably be expected to result in the incurrence of costs under
Environmental Laws.
(c) For purposes of this Section 4.17:
(i) "Environment" means any surface water, ground water,
drinking water supply, land surface or subsurface strata, ambient air and any
indoor workplace.
(ii) "Environmental Laws" means all national, state, local and
foreign laws, codes, regulations, common law, requirements, directives, Orders,
and administrative or judicial interpretations thereof, all as in effect on the
date hereof or on the Closing Date, that may be enforced by any Governmental or
Regulatory Authority, relating to pollution, the protection of the Environment
or the emission, discharge, disposal, release or threatened release of Materials
in or into the Environment.
(iii) "Material" means pollutants, contaminants or chemical,
industrial, hazardous or toxic materials or wastes, including, without
limitation, petroleum and petroleum products.
4.18 ACCOUNTS RECEIVABLE. Parent does not have any accounts receivable.
4.19 INSURANCE. Parent does not own or hold any primary, excess and
umbrella policies, bonds or other forms of insurance currently owned or held by
or on behalf of and/or providing insurance coverage to Parent or the Assets and
Properties of Parent (or any of Parent's directors, officers, salespersons,
agents or employees).
4.20 TAX MATTERS.
(a) To the Knowledge of Parent, Parent has filed on a timely basis
all Tax Returns that it was required to file, and all such Tax Returns were
complete and accurate in all material respects. Prior to January 1, 2004, Parent
was not and has never been a member of a group of corporations with which it has
filed (or been required to file) consolidated, combined or unitary Tax Returns.
To the Knowledge of Parent, Parent has paid on a timely basis all Taxes that
were due and payable including, without limitation, employment taxes and any
fines, interest and penalties thereon; the unpaid Taxes of Parent for tax
periods through September 30, 2003 do not exceed the accruals and reserves for
Taxes (excluding accruals and reserves for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on Parent's most
recent balance sheet; Parent has no actual or potential liability for any Tax
obligation of any other taxpayer (including any affiliated group of corporations
or other entities that included Parent during a prior period); and all Taxes
that Parent is or was required by law to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental or Regulatory Authority.
(b) Parent has delivered to Company complete and accurate copies
of all Tax Returns, examination reports and statements of deficiencies assessed
against or agreed to by
28
Parent. The Tax Returns of Parent have been audited by the Internal Revenue
Service or are closed by the applicable statute of limitations for all taxable
years through the taxable year specified in Section 4.20(b) of the Parent
Disclosure Schedule. Parent has delivered or made available to Company complete
and accurate copies of all other Tax Returns of Parent, together with all
related examination reports and statements of deficiency for the prior three
years. No examination or audit of any Tax Return of Parent by any Governmental
or Regulatory Authority is currently in progress or, to the Knowledge of Parent,
threatened or contemplated. Parent has not been informed by any jurisdiction
that the jurisdiction believes that Parent was required to file any Tax Return
that was not filed. Parent has not waived any statute of limitations with
respect to Taxes or agreed to an extension of time with respect to a Tax
assessment or deficiency.
4.21 LABOR AND EMPLOYMENT RELATIONS. Parent is not a party to or bound
by any collective bargaining agreement with any labor organization, group or
association covering any of its employees. To the Knowledge of Parent, Parent
has complied with all material applicable laws relating to the employment of
labor, including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining, discrimination against race, color, national origin,
religious creed, physical or mental disability, sex, age, ancestry, medical
condition, marital status or sexual orientation, occupational health and safety
and the withholding and payment of social security and other Taxes. To the
Knowledge of Parent, Parent is not liable for the material payment of any
compensation, damages, taxes, fines, penalties or other amounts, however
designated, for the failure to comply with any of the foregoing Legal
Requirements.
4.22 BANK ACCOUNTS. Parent does not have any deposit account or other
asset maintained by or on behalf of Parent with any bank, brokerage house or
other financial institution.
4.23 THIRD PARTY CONSENTS. To the Knowledge of Parent, no consent,
approval or authorization of any third party on the part of Parent is required
in connection with the consummation of the transactions contemplated hereunder.
4.24 RELATIONSHIPS WITH RELATED PERSONS. No stockholder or any Related
Person of Parent has or since December 31, 2001 has had, any interest in the
property, whether real, personal or mixed, or whether tangible or intangible,
used in or pertaining to Parent's business. No stockholder or any Related Person
of Parent owns, or since December 31, 2001 has owned (of record or as beneficial
owner) an equity interest or any other financial or profit interest in a Person
that has (i) had business dealings or a material financial interest in any
transaction with Parent or (ii) engaged in competition with Parent with respect
to any line of the products or services of Parent. Except as set forth in
Section 4.24 of the Parent Disclosure Schedule, no stockholder nor any Related
Person of Parent is a party to any Contract with or has any right or claim
against Parent.
4.25 BROKERS. Except as set forth in Section 4.25 of the Parent
Disclosure Schedule, neither Parent nor Acquisition Co. has retained any broker
in connection with the transactions contemplated hereunder. Neither the Company
nor the Principal Stockholders has, and will have, any obligation to pay any
broker's, finder's, investment banker's, financial advisor's or similar fee in
connection with this Agreement or the transactions contemplated hereby by reason
of any action taken by or on behalf of Parent or Acquisition Co.
4.26 MATERIAL MISSTATEMENTS AND OMISSIONS. The statements,
representations and
29
warranties of Parent and Acquisition Co. contained in this Agreement (including
the exhibits and schedules hereto) and in each document, statement, certificate
or exhibit furnished or to be furnished by or on behalf of Parent and
Acquisition Co. pursuant hereto, or in connection with the transactions
contemplated hereby, taken together, do not contain and will not contain any
untrue statement of a material fact and do not or will not omit to state a
material fact necessary to make the statements or facts contained herein or
therein, in light of the circumstances made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PRINCIPAL STOCKHOLDERS
Each Principal Stockholder hereby represents and warrants to Parent and
Acquisition Co. as follows (such representations and warranties do not lessen or
obviate the representations and warranties of the Company and the Stockholders
set forth in Article III above):
5.1 REQUISITE POWER AND AUTHORITY. Such Principal Stockholder has all
necessary power and authority under all applicable provisions of law to execute
and deliver this Agreement and to carry out its provisions. All action on such
Principal Stockholder's part required for the lawful execution and delivery of
this Agreement has been or will be effectively taken prior to the Closing. Upon
execution and delivery, this Agreement will be the valid and binding obligation
of such Principal Stockholder, enforceable in accordance with its terms.
5.2 INVESTMENT REPRESENTATIONS. Such Principal Stockholder understands
that the shares of the Parent Common Stock have not been registered under the
Securities Act. Such Principal Stockholder also understands that the shares of
Parent Common Stock are being offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part upon such Principal
Stockholder's representations and warranties contained in this Agreement. Such
Principal Stockholder hereby represents and warrants as follows:
(a) Such Principal Stockholder is an "accredited investor" as
defined in Rule 501 (a) of the Securities Act.
(b) Such Principal Stockholder has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to Parent so that he, she or it is capable of evaluating the
merits and risks of his, her or its investment in Parent and has the capacity to
protect his, her or its own interests. Such Principal Stockholder must bear the
economic risk of this investment indefinitely unless the shares of Parent Common
Stock are registered pursuant to the Securities Act, or an exemption from
registration is available. Such Principal Stockholder also understands that
there is no assurance that any exemption from registration under the Securities
Act will be available and that, even if available, such exemption may not allow
such Principal Stockholder to transfer all or any portion of the shares of
Parent Common Stock under the circumstances, in the amounts or at the times such
Principal Stockholder might propose.
(c) Such Principal Stockholder is acquiring the shares of Parent
Common Stock for such Principal Stockholder's own account for investment only,
and not with a view towards their distribution.
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(d) Such Principal Stockholder represents that by reason of his,
her or its business or financial experience, such Principal Stockholder has the
capacity to protect his, her or its own interests in connection with the
transactions contemplated in this Agreement. Further, such Principal Stockholder
is aware of no publication of any advertisement in connection with the
transactions contemplated in the Agreement.
(e) Such Principal Stockholder has received and read the Parent
SEC Filings and has had an opportunity to discuss Parent's business, management
and financial affairs with directors, officers and management of Parent and has
had the opportunity to review Parent's operations and facilities. Such Principal
Stockholder has also had the opportunity to ask questions of and receive answers
from Parent and its management regarding the terms and conditions of this
investment.
(f) Such Principal Stockholder acknowledges and agrees that the
shares of Parent Common Stock must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Such Principal Stockholder has been advised or is
aware of the provisions of Rule 144 promulgated under the Securities Act as in
effect from time to time, which permits limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things, the availability of certain current public information about
Parent, the resale occurring not less than one year after a party has purchased
and paid for the security to be sold, the sale being through an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Exchange Act) and the number of shares being sold
during any three month period not exceeding specified limitations.
(g) Such Principal Stockholder resides in the state or province
identified in the address of such Principal Stockholder set forth on the
signature page to this Agreement.
5.3 TRANSFER RESTRICTIONS. Such Principal Stockholder acknowledges and
agrees that the shares of Parent Common Stock are subject to restrictions on
transfer set forth in this Section 5.3. Except pursuant to Rule 144 or the
Lock-up Agreement of even date herewith, such Principal Stockholder agrees not
to make any disposition of all or any portion of the shares of Parent Common
Stock unless and until: (i) there is then in effect a registration statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with such registration statement; or (ii) the transferee
(except for transfers in compliance with Rule 144) has agreed in writing to be
bound by the terms of this Agreement, such Principal Stockholder shall have
notified Parent of the proposed disposition and shall have furnished Parent with
a detailed statement of the circumstances surrounding the proposed disposition
and if reasonably requested by Parent, such Principal Stockholder shall have
furnished Parent with an opinion of counsel, reasonably satisfactory to Parent,
that such disposition will not require registration of such shares under the
Securities Act. Notwithstanding the provisions of clauses (i) and (ii) above, no
such registration statement or opinion of counsel shall be necessary for a
transfer by such Principal Stockholder to a family member of such Stockholder or
trust for the benefit of such Principal Stockholder; provided, however, that in
each case the transferee will be subject to the terms of this Agreement to the
same extent as if he, she or it were an original Principal Stockholder
hereunder.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 OPERATION OF BUSINESS PRIOR TO EFFECTIVE TIME. Between the date
hereof and the Effective Time, the Company will operate its business in the
Ordinary Course of Business and, to the extent consistent therewith, with no
less diligence and effort than would be applied in the absence of this
Agreement, use all commercially reasonable efforts to seek to preserve intact
its current business organizations, keep available the service of its current
officers and employees and preserve its relationships with customers, suppliers,
distributors, lessors, creditors, employees, contractors and others having
business dealings with it with the intention that its goodwill and ongoing
businesses shall be unimpaired at the Effective Time.
6.2 NO SOLICITATION OR NEGOTIATION. Between the date hereof and the
earlier of the termination of this Agreement and January 26, 2004, the Company
will not (nor will the Company permit any of the Company's officers, directors,
employees, agents, representatives or affiliates to) directly or indirectly,
take any of the following actions with any person other than Parent and
Acquisition Co.: (i) solicit, initiate, entertain or encourage any proposals or
offers from, or conduct discussions with or engage in negotiations with any
person relating to any possible acquisition of the Company (whether by way of
merger, purchase of capital stock, purchase of assets or otherwise), any
material portion of its capital stock or assets or any equity interest in the
Company; (ii) provide information with respect to it or any person, other than
Parent and Acquisition Co., relating to, or otherwise cooperate with, facilitate
or encourage any effort or attempt by any such person with regard to, any
possible acquisition of the Company (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise), any portion of its or their
capital stock or assets or any equity interest in the Company; or (iii) enter
into any agreement with any person providing for the possible acquisition of the
Company (whether by way of merger, purchase of capital stock, purchase of assets
or otherwise), any portion of its capital stock or assets or any equity interest
in the Company.
6.3 ACCESS TO INFORMATION. Between the date hereof and the Effective
Time, the Company shall give Parent and its authorized representatives
(including, without limitation, its attorneys and accountants), upon reasonable
notice from Parent, reasonable access to all employees, customers, plants,
offices, warehouses and other facilities, to (and where necessary, provide
copies of) all books and records, contracts and all personnel files of current
employees of the Company as Parent may reasonably require, and will cause its
officers to furnish Parent with such financial and operating data and other
information with respect to the business and properties of the Company as Parent
may from time to time reasonably request.
6.4 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Parent of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which has caused or would be likely to cause any
representation or warranty contained in this Agreement by the Company to be
untrue or inaccurate at or prior to the Effective Time; or (ii) any failure by
the Company to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.4
shall not cure such breach or noncompliance by the Company, limit or otherwise
affect the remedies available hereunder to Parent, or constitute an amendment of
any representation, warranty or statement in this Agreement or the Company
Disclosure Schedules.
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6.5 FEES AND EXPENSES. Whether or not the Merger is consummated, all
fees, costs and expenses incurred in connection with the Merger, this Agreement
and the other agreements and transactions contemplated hereby and thereby,
including all legal, accounting, financial advisory, broker's consulting and
other fees and expenses of third parties incurred by a party in connection with
the negotiation, documentation and effectuation of the terms and conditions of
the Merger, this Agreement and the other agreements and transactions
contemplated hereby and thereby ("Third Party Expenses"), shall be the
obligation of the respective party incurring such Third Party Expenses.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligation of the
Company to effect the Merger is subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) the representations and warranties of Parent and Acquisition
Co. contained in this Agreement shall be true and correct in all material
respects at and as of the Effective Time with the same effect as if made at and
as of the Effective Time (except to the extent such representations specifically
relate to an earlier date, in which case such representations shall be true and
correct in all material respects as of such earlier date, and in any event,
subject to the foregoing materiality qualification) and, at the Closing, Parent
and Acquisition Co. shall have delivered to the Company a certificate to that
effect, executed by an officer of Parent and Acquisition Co.;
(b) each of the covenants and obligations of Parent and Acquisition
Co. to be performed at or before the Effective Time pursuant to the terms of
this Agreement shall have been duly performed in all material respects at or
before the Effective Time and, at the Closing, Parent and Acquisition Co. shall
have delivered to the Company a certificate to that effect, executed by an
officer of Parent and Acquisition Co.;
(c) Parent shall have delivered all of Closing deliveries set forth
in Section 2.7(c) above; and
(d) The pre-closing officers, directors, and the holders of 5% or
more of the Parent Company Stock shall execute an agreement to the effect that
they will not sell or otherwise dispose of any equity securities of Parent,
except in accordance with the terms and conditions of a mutually agreeable
leak-out schedule, for a period of one (1) year (the "Lock-up Period") following
the Closing Date. The certificates representing the Shares of Parent Common
Stock beneficially owned by such officers, directors and 5% shareholders shall
be held by a mutually acceptable escrow agent during the Lock-up Period.
7.2 CONDITIONS TO THE OBLIGATIONS OF PARENT AND ACQUISITION CO. The
respective obligations of Parent and Acquisition Co. to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) the representations and warranties of the Company contained in
this
33
Agreement shall be true and correct in all material respects at and as of the
Effective Time with the same effect as if made at and as of the Effective Time
(except to the extent such representations specifically relate to an earlier
date, in which case such representations shall be true and correct in all
material respects as of such earlier date) and, at the Closing, the Company
shall have delivered to Parent and Acquisition Co. a certificate to that effect,
executed by an executive officer of the Company;
(b) each of the covenants and obligations of the Company to be
performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or before
the Effective Time and, at the Closing, the Company shall have delivered to
Parent and Acquisition Co. a certificate to that effect, executed by an
executive officer of the Company;
(c) the consents specified on Section 3.24 of the Company
Disclosure Schedule and any other material third party consents necessary to
consummate the transactions contemplated hereby shall have been given, obtained
or complied with as applicable;
(d) the Company, the Company Stockholders and the Subsidiary
Stockholders, as the case may be, shall have delivered all of the Closing
deliveries set forth in Section 2.8(b) above;
(e) the holders of a majority of the issued and outstanding VSUS
Common Stock shall have approved this Agreement; and
(f) all proceedings taken by the Company, the Company Stockholders
and the Subsidiary Stockholders and all instruments executed and delivered by
the Company, the Company Stockholders and the Subsidiary Stockholders on or
prior to the Closing in connection with the Contemplated Transactions shall be
reasonably satisfactory in form and substance to counsel for the Parent and
Acquisition Co.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
8.1 TERMINATION. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time whether before or after
approval and adoption of this Agreement:
(a) by written consent of Parent, Acquisition Co., and the Company;
(b) by Parent and Acquisition Co. or the Company if (i) any court
of competent jurisdiction in the United States or other United States federal or
state governmental entity shall have issued a final order, decree or ruling, or
taken any other final action, restraining, enjoining or otherwise prohibiting
the Merger and such order, decree, ruling or other action is or shall have
become nonappealable, or (ii) the Merger has not been consummated by February
27, 2004; provided that no party may terminate this Agreement pursuant to this
clause (ii) if such party's failure to fulfill any of its obligations under this
Agreement shall have been a principal reason that the Effective Time shall not
have occurred on or before said date;
(c) by the Company if (i) there shall have been a material breach
of any
34
representations or warranties on the part of Parent or Acquisition Co.
set forth in this Agreement or if any representations or warranties of Parent or
Acquisition Co. shall have become untrue in any material respect, provided that
the Company has not breached any of its obligations hereunder in any material
respect; or (ii) there shall have been a breach by Parent or Acquisition Co. of
any of their respective covenants or agreements hereunder in any material
respect or materially adversely affecting (or materially delaying) the ability
of Parent, Acquisition Co. or the Company to consummate the Merger, and Parent
or Acquisition Co., as the case may be, has not cured such breach within ten
business days after notice by the Company thereof, provided that the Company has
not breached any of its obligations hereunder in any material respect; or (iii)
the results of Company's due diligence investigations are not satisfactory to
Company for any reason in its sole discretion.
(d) by Parent and Acquisition Co. if (i) there shall have been a
material breach of any representations or warranties on the part of the Company
set forth in this Agreement or if any representations or warranties of the
Company shall have become untrue in any material respect, provided that neither
Parent nor Acquisition Co. has breached any of their respective obligations
hereunder in any material respect; (ii) there shall have been a breach by the
Company of one or more of its covenants or agreements hereunder in any material
respect or materially adversely affecting (or materially delaying) the ability
of Parent, Acquisition Co. or the Company to consummate the Merger, and the
Company has not cured such breach within ten business days after notice by
Parent or Acquisition Co. thereof, provided that neither Parent nor Acquisition
has breached any of their respective obligations hereunder in any material
respect; or (iii) the results of Parent's due diligence investigations are not
satisfactory to Parent for any reason in its sole discretion.
8.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1 above, this Agreement
shall forthwith become void and have no effect without liability on the part of
any party hereto or its Affiliates, directors, officers or stockholders other
than the provisions of this Section 8.2 and Sections 6.2, 6.5, 8.3, 10.7, and
10.10.
8.3 AMENDMENT. This Agreement may be amended by action taken by the
Company, Parent and Acquisition Co. at any time before or after approval of the
Merger by the stockholders of the Company but after any such approval no
amendment shall be made that requires the approval of such stockholders under
applicable law without such approval. This Agreement (including the Company
Disclosure Schedule) may be amended only by an instrument in writing signed on
behalf of the parties hereto.
ARTICLE IX
ACTIONS BY THE PARTIES AFTER THE CLOSING
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC. The representations,
warranties and covenants contained in or made pursuant to this Agreement or any
certificate, document or instrument delivered pursuant to or in connection with
this Agreement in the transactions contemplated hereby shall survive the
execution and delivery of this Agreement and the Closing hereunder
(notwithstanding any investigation, analysis or evaluation by any party hereto
or their designees of the Assets and Properties, business, operations or
condition (financial or otherwise) of the other party), and thereafter the
representations and warranties of the parties herein shall continue to survive
in full force and effect.
35
9.2 INDEMNIFICATION.
(a) By the Company. The Company shall indemnify, defend and hold
harmless Parent, Acquisition Co. and their respective officers, directors,
employees, affiliates, agents, successors, subsidiaries and assigns
(collectively the "Parent Group") from and against any and all costs, losses,
liabilities, damages, lawsuits, deficiencies, claims and expenses (collectively,
the "Damages"), incurred in connection with, arising out of, resulting from or
incident to (i) any breach of any covenant, representation, warranty or
agreement or the inaccuracy of any representation, made by the Company in or
pursuant to this Agreement, or in the other documents delivered in connection
with the transactions contemplated in this Agreement.
(b) By the Principal Stockholders. The Principal Stockholders shall
indemnify, defend and hold harmless the Parent Group from and against any an all
Damages, incurred in connection with, arising out of, resulting from or incident
to (i) any breach of any covenant, representation, warranty or agreement or the
inaccuracy of any representation, made by the Principal Stockholders in or
pursuant to this Agreement or in the other documents delivered in connection
with the transactions contemplated in this Agreement.
(c) By the Parent and Acquisition Co. The Parent and Acquisition
Co. shall, jointly and severally, indemnify, defend and hold harmless Company
(and its officers, directors, employees, affiliates, agents, successors,
subsidiaries and assigns) and the Principal Stockholders from and against any
and all costs, losses, liabilities, damages, lawsuits, deficiencies, claims and
expenses (collectively, the "Damages") incurred in connection with, arising out
of, resulting from or incident to (i) any breach of any covenant,
representation, warranty or agreement or the inaccuracy of any representation,
made by the Parent or the Acquisition Co. in or pursuant to this Agreement, or
in the other documents delivered in connection with the transactions
contemplated in this Agreement.
(d) Limitation of Liability. The limitation of the Principal
Stockholders for indemnification under this Article IX shall be limited to the
fair market value of his ratable portion of the Parent Common Stock issued as
Stock Consideration. This limitation of liability shall not apply to any
intentional or fraudulent breach by any party of any representation, warranty,
covenant or obligation.
9.3 WAIVER OF RIGHTS OF INDEMNIFICATION IN ARTICLES OF INCORPORATION
AND BYLAWS. Notwithstanding anything to the contrary contained in the Company's
Articles of Incorporation or Bylaws, no Principal Company Stockholder nor any
other director or officer incumbent at any time prior to the Closing shall be
entitled to indemnification directly or indirectly under the Company's Articles
of Incorporation or Bylaws or otherwise for any matter upon which the Company or
any Principal Stockholder has or might have an indemnification obligation
hereunder and such Principal Company Stockholder and any other director or
officer incumbent at any time prior to the Closing expressly waives such rights.
However, the provisions of this Section 9.3 are intended only for the regulation
of relations between the Company and the Principal Stockholders and any
indemnified party. This Section 9.3 is not intended for the benefit of creditors
or other third parties and does not grant any rights to creditors or other third
parties.
9.4 NON-EXCLUSIVITY. Subject to the limitations set forth in Section
9.2(d), the parties
36
hereto acknowledge and agree that the indemnity obligations set forth above
shall not be the exclusive remedy of the indemnified parties with respect to the
Contemplated Transactions.
ARTICLE X
MISCELLANEOUS
10.1 FURTHER ASSURANCES. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as the other
party reasonably may request, all the sole cost and expense of the requesting
party (unless the requesting party is entitled to indemnification therefor under
Article IX).
10.2 NOTICES. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission with answer back
confirmation or mailed (postage prepaid by certified or registered mail, return
receipt requested) or by overnight courier to the parties at the following
addresses or facsimile numbers:
If to Parent or Acquisition Co.:
Formula Footwear, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx #000
Xxxx Xxxx Xxxx, Xxxx 00000
Facsimile No.: 000-000-0000
Attention: Chief Executive Officer
with copies to:
Xxxxxxx X. Xxxxxxxxxx, Esq.
455 East 000 Xxxxx #000
Xxxx Xxxx Xxxx, Xxxx 00000
Facsimile No.: 000-000-0000
If to Company:
VSUS Technologies Incorporated
Givat Ram
Xxxxxxxxx, Xxxxxx 00000
Facsimile No.: 97226480180
Attention: Xxxxxx Xxxx
If to Principal Stockholders:
Ofir Holdings, Ltd.
c/o VSUS Technologies Incorporated
Givat Ram
Xxxxxxxxx, Xxxxxx 00000
37
Facsimile No.: (000) 000-0000
Xxxxx and Xxxxxx Xxxx
c/o VSUS Technologies Incorporated
Givat Ram
Xxxxxxxxx, Xxxxxx 00000
Facsimile No.: (000) 000-0000
Tetraktys Ltd.
X/x Xxxxxx-Xxxxxx
Xxxxxxx-Xx
Xxxxx, Xxxxx 000-0000
Facsimile No.: 81359767079
with copies for the Company and the Principal Stockholders to:
D. Mirkin, Efrima, Barak, Milstein, Bonet & Co.
00 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx Xxxxx
Xxx Xxxx, Xxxxxx 66184
Facsimile No.: 972035669066
Attn: Udi Knaani
Xxxxx & Xxxxxxx LLP
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 10.2, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section 10.2, be deemed given upon proof of receipt, and (iii)
if delivered by mail in the manner described above to the address as provided in
this Section 10.2, be deemed given upon receipt (in each case regardless of
whether such notice, request or other communication is received by any other
Person to whom a copy of such notice, request or other communication is to be
delivered pursuant to this Section). Any party from time to time may change its
address, facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other parties hereto.
10.3 ENTIRE AGREEMENT. This Agreement (and all exhibits and schedules
attached hereto, all other documents delivered in connection herewith) supersede
all prior discussions and agreements among the parties with respect to the
subject matter hereof and contains the sole and entire agreement among the
parties hereto with respect thereto.
10.4 WAIVER. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party hereto of any term or condition of this Agreement, in any one
38
or more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by law or otherwise afforded, will be
cumulative and not alternative.
10.5 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third party beneficiary rights upon any other Person other
than any Person entitled to indemnity under Article IX.
10.6 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto and any attempt to
do so will be void, except that any party's rights to indemnification under
Article IX may be freely assigned. This Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
10.7 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and mutually
acceptable to the parties herein.
10.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to contracts
executed and performed in such State, without giving effect to conflicts of laws
principles.
10.9 CONSENT TO JURISDICTION AND FORUM SELECTION. Each of the Parent,
Acquisition Co. and the Company irrevocably agrees that any legal action or
proceeding with respect to this Agreement or for the recognition and enforcement
of any judgment in respect hereof brought by the other party hereto or its
successors or assigns will be brought and determined in either Delaware or the
United States District Court for Delaware, and each of the Parent, Acquisition
Co., the Principal Stockholders and the Company hereby irrevocably submits with
regard to any such action or proceeding for itself and in respect to its
property, generally and unconditionally, to the exclusive jurisdiction of the
aforesaid courts. Each of the Parent, Acquisition Co., the Principal
Stockholders and the Company hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, counterclaim or otherwise, in any action
or proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above named courts for any reason
other than the failure to lawfully serve process, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), (c) to the fullest extent permitted by applicable law, that (i) the
suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such suit, action, or proceeding is improper and (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts
39
and (d) any right to trial by jury.
10.10 CONSTRUCTION. No provision of this Agreement shall be construed
in favor of or against any party on the ground that such party or its counsel
drafted the provision. Any remedies provided for herein are not exclusive of any
other lawful remedies which may be available to either party. This Agreement
shall at all times be construed so as to carry out the purposes stated herein.
10.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by facsimile, each of which will be deemed an original, but all
of which together will constitute one and the same instrument.
10.12 ATTORNEY'S FEES. In the event any action is brought for
enforcement or interpretation of this Agreement, the prevailing party shall be
entitled to recover reasonable attorney's fees and costs incurred in said
action.
[THIS SPACE INTENTIONALLY LEFT BLANK]
40
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto, or their duly authorized officer, as of the date first
above written.
FORMULA FOOTWEAR, INC., a Utah corporation
By: /s/ Xxxxxxx X. Xxx
------------------------------------------
Name: Xxxxxxx X. Xxx
----------------------------------------
Title: President
----------------------------------------
FORMULA ACQUISITION CORP., a Delaware
corporation
By: /s/ Xxxxxxx X. Xxx
------------------------------------------
Name: Xxxxxxx X. Xxx
----------------------------------------
Title: President
----------------------------------------
VSUS TECHNOLOGIES INCORPORATED,
a Delaware corporation
By: /s/ Xxxxxx Xxxx
------------------------------------------
Name: Xxxxxx Xxxx
----------------------------------------
Title: Chief Executive Officer
----------------------------------------
SAFE MAIL INTERNATIONAL LTD.,
a British Virgin Island corporation
By: /s/ Xxxxxx Xxxx
------------------------------------------
Name: Xxxxxx Xxxx
----------------------------------------
Title: Chief Executive Officer
----------------------------------------
SAFE MAIL DEVELOPMENT LTD.,
an Israeli corporation
By: /s/ Xxxxxx Xxxx
------------------------------------------
Name: Xxxxxx Xxxx
----------------------------------------
Title: Chief Executive Officer
----------------------------------------
[SIGNATURE PAGE TO THE AGREEMENT AND PLAN OF REORGANIZATION]
41
PRINCIPAL STOCKHOLDERS:
/s/ Xxxxxx Xxxx
---------------------------------------------
Xxxxxx Xxxx
Place of Residence: Jerusalem
--------------------------
/s/ Xxxxxx Xxxx
---------------------------------------------
Xxxxxx Xxxx
Place of Residence: Jerusalem
--------------------------
OFIR HOLDINGS LTD.
By: /s/ Xxxxxx Xxxx
------------------------------------------
Name: Xxxxxx Xxxx
----------------------------------------
Title: Chief Executive Officer
---------------------------------------
TETRAKTYS LTD.
By: /s/ Xxxxxxxx Xxxxxx
------------------------------------------
Name: Xxxxxxxx Xxxxxx
----------------------------------------
Title: President
---------------------------------------
[SIGNATURE PAGE TO THE AGREEMENT AND PLAN OF REORGANIZATION]
42
