Exhibit 10.1
AGREEMENTAND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
and entered into as of May 5, 2006, by and among THE XXXXXXX XXXXXX COMPANY, a
Florida corporation (the "Parent"), JKRI Acquisition Corp., a Texas corporation
("Merger Sub"), and UTSI International Corporation, a Texas corporation (the
"Company"), and the shareholders of the Company who are signatories hereto
(each, a "Shareholder" and collectively, the "Shareholders"). Capitalized terms
used in this Agreement without definition shall have the meanings set forth or
referenced in Article XI.
W I T N E S S E T H:
WHEREAS, the Shareholders are collectively the beneficial and
record owners of all of the issued and outstanding capital stock of the Company,
comprised of 1,529,871 shares of common stock, $0.01 par value per share
(collectively, the "Company Shares");
WHEREAS, the respective Boards of Directors of the Parent,
Merger Sub and the Company have approved the merger (the "Merger") of the
Company into the Merger Sub on the terms and subject to the conditions set forth
in this Agreement, whereby each issued Company Share not owned by the Parent,
Merger Sub or the Company shall be converted into the right to receive the
Merger Consideration (as defined in Section 2.1 below); and
WHEREAS, for Federal income tax purposes it is intended that
the Merger qualify as a "reorganization" within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Parent, Merger Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. On the terms and subject to the conditions set forth in
this Agreement, and in accordance with the applicable provisions of the Texas
Business Corporation Act (the "TBCA"), the Company shall be merged into the
Merger Sub at the Effective Time. At the Effective Time and as a result of the
Merger, the separate corporate existence of the Company shall cease and Merger
Sub shall continue as the surviving entity (the "Surviving Entity"). The Merger,
the issuance by the Parent of shares of preferred stock, par value $0.001 per
share, of the Parent (the "Parent Preferred Stock") in connection with the
Merger (the "Share Issuance") and the other transactions contemplated by this
Agreement are referred to in this Agreement as the "Transactions."
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1.2 Closing. The closing (the "Closing") of the Merger shall take place
at the offices of Weycer, Kaplan, Pulaski & Xxxxx, P.C., 0000 Xxxxxx Xxxxx, 00
Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxx at 10:00 a.m., Central Daylight Time, on the
third (3rd) Business Day following the satisfaction (or, to the extent permitted
by Law, waiver by the party or parties entitled to the benefits thereof) of the
conditions set forth in Sections 4.1 and 4.2 (other than those conditions that
by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions), or at such other place, time and
date as shall be agreed in writing by the Parent and the Company. The date on
which the Closing occurs is referred to in this Agreement as the "Closing Date."
1.3 Effective Time. The Merger shall become effective at such time as
the Articles of Merger is duly filed with such Secretary of State on the Closing
Date, or at such later time as the Parent and the Company shall agree and
specify in the Articles of Merger (the time the Merger becomes effective being
the "Effective Time").
1.4 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided herein and in the applicable provisions of the TBCA.
1.5 Articles of Incorporation and By-laws.
(a) The articles of incorporation of the Merger Sub, as in
effect immediately prior to the Effective Time, shall be the articles of
incorporation of the Surviving Entity until thereafter changed or amended.
(b) The by-laws of the Merger Sub, as in effect immediately
prior to the Effective Time, shall be the by-laws of the Surviving Entity until
thereafter changed or amended as provided therein or by applicable Law.
1.6 Directors. The directors of the Surviving Entity shall be Xxxxxx X.
Xxxxxx and Xxxxx X. Xxxxxx, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
1.7 Officers. The officers of the Surviving Entity shall be Xxxxxx X.
Xxxxxx as Chairman of the Board, Chief Executive Officer and President, until
the earlier of their resignation or removal or until their respective successors
are duly elected or appointed and qualified, as the case may be.
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ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any Company Shares or
any shares of capital stock of Merger Sub:
(a) Capital Stock of Surviving Entity . Each issued and
outstanding share of capital stock of Merger Sub shall continue to be issued and
outstanding and shall constitute the only issued and outstanding shares of the
Surviving Entity.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
Each Company Share that is owned by the Company, Merger Sub or Parent (or any
direct or indirect wholly-owned subsidiary of Parent or Merger Sub) shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and no cash, Parent Common Stock or other consideration shall be
delivered or deliverable in exchange therefor.
(c) Conversion of Company Shares.
(1) Subject to Sections 2.1(b) and 2.1(d), all issued
and outstanding Company Shares prior to the Effective Time shall be converted
into the right to receive 2,200,000 shares of Series C Preferred Stock in JKRI
(the "Merger Consideration") with substantially the rights, privileges and
preferences set forth on Exhibit A hereto (the "Series C_Preferred Stock"); and
(2) As of the Effective Time, all such Company Shares
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any such
Company Shares shall cease to have any rights with respect thereto, except the
right to receive Merger Consideration upon surrender of such certificate in
accordance with Section 2.2.
(d) Dissenters Rights. Notwithstanding anything in this
Agreement to the contrary, Company Shares ("Dissenter Shares") that are
outstanding immediately prior to the Effective Time and that are held by any
person who is entitled to demand and properly demands payment for such Dissenter
Shares pursuant to, and who complies in all respects with, Articles 5.12 and
5.13, et. seq. of the TBCA (the "Dissenter Rights") shall not be converted into
Merger Consideration as provided in Section 2.1(c)(1), but rather the holders of
Dissenter Shares shall be entitled to payment for such Dissenter Shares in
accordance with the Dissenter Rights; provided, however, that if any such holder
shall fail to perfect or otherwise shall waive, withdraw or lose the right to
receive payment under the Dissenter Rights, then the right of such holder to be
paid in accordance with the Dissenter Rights shall cease and such Dissenter
Shares shall be deemed to have been converted as of the Effective Time into, and
to have become exchangeable solely for the right to receive, Merger
Consideration as provided in Section 2.1(c)(1). The Company shall serve prompt
notice to the Parent of any written notice of intent to demand payment, or any
written demand for payment, received by the Company in respect of any Company
Shares, and the Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, without the prior written consent of the
Parent, make any payment with respect to, or settle or offer to settle, any such
demands, or agree to do any of the foregoing.
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2.2 Exchange of Certificates.
(a) Exchange Agent. Weycer, Kaplan, Pulaski & Xxxxx, PC, shall
serve as Exchange Agent (the "Exchange Agent") for payment of Merger
Consideration upon surrender of certificates representing Company Shares. The
Exchange Agent shall also act as the agent for the Company's stockholders for
the purpose of receiving and holding their Certificates and shall obtain no
rights or interest in such shares. Promptly following the Effective Time, Parent
shall deposit with the Exchange Agent, for the benefit of the holders of Company
Shares, for exchange in accordance with this Article II, through the Exchange
Agent certificates representing the number of shares of Parent Series C
Preferred Stock issuable pursuant to this Agreement. The Exchange Agent shall,
pursuant to irrevocable instructions, deliver the Merger Consideration
contemplated to be issued pursuant to Section 2.1.
(b) Exchange Procedures. As soon as practicable after the
Effective Time, the Exchange Agent, or its designee, shall mail to each holder
of a certificate or certificates (the "Certificates") that immediately prior to
the Effective Time represented outstanding shares of Company Shares whose shares
were converted into the right to receive Merger Consideration pursuant to
Section 2.1(c) (i) a letter of transmittal (which shall specify that delivery
shall be effected and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as Parent shall reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange Agent,
the holder of such Certificate shall be entitled to receive in exchange
therefore the number of shares of Parent Series C Preferred Stock in to which
the aggregate number of Company Shares previously represented by such
Certificate shall have been converted pursuant to Section 2.1(c), and the
Certificate so surrendered shall forthwith be canceled.
(c) Restricted Securities. The shares of Parent Preferred
Stock (and the shares issuable upon conversion thereof) (i) shall not be
registered under the Securities Act or any state securities laws, (ii) will be
offered and sold in reliance upon exemptions provided in the Securities Act and
state securities laws for transactions not involving any public offering, and
(iii) therefore, shall constitute "restricted securities" within the meaning of
the Securities Act and cannot be resold or transferred until they are
subsequently registered under the Securities Act and such applicable state
securities laws or unless an exemption from such registration is available.
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(d) Investment Representation Letters . On or before the
Closing Date, each of the Shareholders shall execute and deliver an Investment
Representation Letter, in the form attached hereto as Exhibit B (the "Investor
Representation Letter"), which contains certain representations designed to
confirm the availability to the Parent of the exemption from registration under
Section 4(2) of the Securities Act in connection with the issuance of the Parent
Preferred Stock pursuant to this Agreement. Notwithstanding anything to the
contrary in this Agreement, in the event that any Shareholder (a "Defaulting
Shareholder") is unable or fails to execute and deliver an Investor
Representation Letter in favor of the Parent, or the Parent has a reasonable
basis to believe that the representations of such Shareholder in the Investor
Representation Letter are not true and correct in any material respects, then
the Parent may in its sole and absolute discretion refuse to issue the Merger
Consideration allocable to the Defaulting Shareholder.
(e) No Further Ownership Rights in Company Shares. The Merger
Consideration paid and/or issued in accordance with the terms of this Article II
upon conversion of any Company Shares shall be deemed to have been paid and/or
issued in full satisfaction of all rights pertaining to such Company Shares,
subject, however, to the Company's obligation to pay any dividends or make any
other distributions with a record date prior to the Effective Time that may have
been declared or made by the Company on such Company Shares in accordance with
the terms of this Agreement or prior to the date of this Agreement and which
remain unpaid at the Effective Time, and after the Effective Time there shall be
no further registration of transfers on the stock transfer books of the Company
of Company Shares that were outstanding immediately prior to the Effective Time.
If, after the Effective Time, any Certificates formerly representing Company
Shares are presented to the Company or the Exchange Agent for any reason, they
shall be canceled and exchanged as provided in this Article II.
(f) No Liability. None of Parent or the Company or the
Exchange Agent shall be liable to any person in respect of any Merger
Consideration (or dividends or distributions with respect thereto) delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar Law. If any Certificate has not been surrendered prior to five years
after the date on which the final Merger Consideration becomes due (or
immediately prior to such earlier date on which Merger Consideration in respect
of such Certificate would otherwise escheat to or become the property of any
Governmental Entity), any such cash, shares, dividends or distributions in
respect of such Certificate shall, to the extent permitted by applicable Law,
become the property of the Surviving Entity , free and clear of all claims or
interest of any person previously entitled thereto.
(h) Income Tax Treatment. It is intended by the parties hereto
that the Merger qualify as a "reorganization" within the meaning of Section
368(a) of the Code. The parties hereto hereby adopt this Agreement as a "plan of
reorganization" within the meanings of Sections 1.368-2(g) and 1.368-3(a) of the
U.S. Treasury Regulations promulgated under the Code.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties concerning the Company. The Company
hereby represents and warrants to the Parent as follows:
(a) Authority. The Company has the corporate power and
authority to enter into and deliver this Agreement and each of the other
agreements, certificates, instruments and documents contemplated hereby
(collectively, the "Ancillary Documents") to which it is a party, to carry out
its obligations hereunder and under any Ancillary Document and to consummate the
transactions contemplated hereby and by the Ancillary Documents. All actions,
authorizations and consents required by Law for the execution, delivery, and
performance by the Company of this Agreement and each Ancillary Document to
which it is a party, and the consummation of the transactions contemplated
hereby and thereby, have been properly taken or obtained, including without
limitation, the approval of this Agreement and the transactions contemplated by
it by the Board of Directors of the Company.
(b) Execution and Delivery. This Agreement has been, and each
Ancillary Document to which the Company is a party will be at the Closing, duly
authorized, executed and delivered by the Company and constitutes a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with their respective terms and conditions, except as enforceability
thereof may be limited by applicable bankruptcy, reorganization, insolvency or
other similar laws affecting or relating to creditors' rights generally or by
general principles of equity.
(c) No Conflicts. Except as set forth on Schedule 3.1(c), the
execution, delivery and performance by the Company of this Agreement and each
Ancillary Document to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not violate,
conflict with or result in a breach of any term, condition or provision of, or
require the consent of any Person under, or result in the creation of or right
to create any Lien upon any of the assets of the Company under, (i) any Laws to
which the Company or any of its assets are subject, (ii) any permit, judgment,
order, writ, injunction, decree or award of any Governmental Authority to which
the Company or any of its assets are subject, (iii) the articles of
incorporation or bylaws of the Company, or (iv) any license, indenture,
promissory note, bond, credit or loan agreement, lease, agreement, commitment or
other instrument or document to which the Company is a party or by which the
Company or any of its assets are bound, except where, in the case of the
immediately preceding clause, such violation, conflict, breach, etc. would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
(d) Governmental Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority, is required to be obtained by the Company in connection with or as a
result of the execution and delivery of this Agreement or any of the Ancillary
Documents, or the performance of its obligations hereunder and thereunder.
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(e) Organization, Standing and Qualification. The Company is a
corporation duly incorporated, validly existing, and in good standing under the
Laws of the State of Texas. The Company has corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted, to use its name and is duly qualified, licensed or authorized to do
business and in good standing, in each jurisdiction where the nature of the
activities conducted by it or the character of the properties owned, leased or
operated by it require such qualification, licensing or authorization. Each such
jurisdiction is identified on Schedule 3.1(e). The Company's corporate minute
books reflect all resolutions approved and other material actions taken by its
shareholders or Board of Directors and any committees thereof since the date of
its incorporation. The Shareholders or the Company have previously delivered to
the Parent true, correct and complete copies of the Articles of Incorporation
and Bylaws of the Company, each as currently in effect (collectively, the
"Organization Documents").
(f) Capitalization. The authorized capital stock of the
Company consists solely of 100,000,000 shares of common stock, of which
1,529,871 shares are issued and outstanding, and 0 shares of preferred stock, of
which 0 shares are issued and outstanding. As of the date hereof, each
Shareholder owns of record such number of shares of Common Stock as is set forth
opposite such Shareholder's name on Schedule 3.1(f). The Company Shares
constitute all of the issued and outstanding capital stock of the Company. All
of the issued and outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid and non-assessable. No shares of Common
Stock are held in treasury. Except as disclosed in Schedule 3.1(f), there are no
outstanding subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible or exchangeable securities, profits interests,
conversion rights, preemptive rights, rights of first refusal or other rights,
agreements, arrangements or commitments of any nature whatsoever under which the
Company is or may become obligated to issue, redeem, assign or transfer any
shares of capital stock or purchase or make payment in respect of any shares of
capital stock of the Company now or previously outstanding, and there are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to or any shares of its capital stock.
(g) No Subsidiaries or Other Equity Interests. The Company
does not, nor has it ever at any time since its organization, had a direct or
indirect Subsidiary or owned, directly or indirectly, any equity, investment or
other equity interest, or any right (contingent or otherwise) to acquire the
same, in any other Person.
(h) Financial Statements. The Company has previously delivered
to the Parent true, complete and correct copies of unaudited financial
statements of the Company for the fiscal year ended June 30, 2005 (the
"Financial Statements"). The Financial Statements comply as to form in all
material respects with the applicable accounting requirements and the published
rules and regulations with respect thereto, were prepared in accordance with
GAAP applied on a consistent basis during the periods involved and fairly
present in all material respects the financial position of the Company as of the
respective dates thereof and the results of its operations and cash flows for
the respective periods then ended.
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(i) Absence of Undisclosed Liabilities. Except to the extent
adequately reflected on or reserved against in the Financial Statements and
except for recurring Liabilities incurred in the ordinary course of business
consistent with recent past practice, as of December 31, 2005 (the "Balance
Sheet Date"), the Company had no direct or indirect Liabilities for any period
prior to such date or arising out of transactions entered into or any set of
facts existing prior thereto. Since the Balance Sheet Date, the Company has not
incurred any Liabilities except in the ordinary course of business consistent
with recent past practice, none of which are, individually or in the aggregate,
material.
(j) Ordinary Course. Since the Balance Sheet Date, except as
otherwise disclosed on Schedule 3.1(j), the Company has operated its business in
the ordinary course consistent with past practice and there has not occurred:
(i) any change in the condition (financial or
otherwise), properties, assets, liabilities, business, prospects, operations or
results of operations that has had or could reasonably be expected to have a
Material Adverse Effect on the Company;
(ii) any amendments or changes in any of its
Organization Documents;
(iii) any issuance or sale of any shares of or
interests in, or rights of any kind to acquire any shares of or interests in, or
receipt of any payment based on the value of, its capital stock or any
securities convertible or exchangeable into shares of its capital stock
(including, without limitation, any stock options, phantom stock or stock
appreciation rights) or any adjustment, split, combination or reclassification
of its capital stock, or any declaration or payment of any dividend or any
distribution on, or any redemption, purchase, retirement or other Merger,
directly or indirectly, of any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock;
(iv) any investment of a capital nature on its own
account in excess of $50,000 individually or $100,000 in the aggregate;
(v) any entering into, amendment of, modification in,
relinquishment, termination, or non-renewal by the Company of any contract,
lease, transaction, commitment or other right or obligation, except for purchase
and sale commitments entered into in the ordinary course of business consistent
with recent past practice;
(vi) any waiver, forfeiture, or failure to assert any
rights of a material value or made, whether directly or indirectly, any payment
of any material Liability before the same came due in accordance with its terms;
(vii) any material damage, destruction or loss of the
Company's assets or properties, whether covered by insurance or not;
(viii) any payment of (or any making of oral or
written commitments or representations to pay) any bonus, increased salary or
special remuneration to any director, officer, employee or consultant or any
entry into or alterations of the terms of any employment, consulting or
severance agreement with any such person; any payment of any severance or
termination pay (other than payments made in accordance with existing plans or
agreements); any grant of stock option or issuance of any restricted stock; any
entry into or modification of any agreement or Employee Benefit Plan (except as
required by law) or any similar agreement;
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(ix) any modification of any term of benefits payable
under any Employee Benefit
Plan;
(x) (A) any creation, incurrence or assumption of any
Liability for borrowed money except those Liabilities incurred in the ordinary
course of business consistent with recent past practice, (B) issuance or sale of
any securities convertible into or exchangeable for debt securities of the
Company; or (C) issuance or sale of options or other rights to acquire from the
Company, directly or indirectly, debt securities of the Company or any
securities convertible into or exchangeable for any such debt securities;
(xi) any material change in the amounts or scope of
coverage of insurance policies;
(xii) any merger or consolidation with any other
Person, acquisition of any capital stock or other securities of any other
Person, or acquisition of all or a significant portion of the assets of any
other Person, or acquisition of any assets or properties from any Shareholder or
its affiliate or family member;
(xiii) any assumption or guarantee of any Liability
or responsibility (whether primarily, secondarily, contingently or otherwise)
for the obligations of any other Person;
(xiv) any loan, advance (including, without
limitation, any loan or advance to any stockholder, officer, director or
employee of such Company) or capital contribution to, or investment in, any
Person, except travel advances or advances of no more than $50,000 to employees
in the ordinary course of business consistent with recent past practice;
(xv) any sale, transfer or lease to others of, any
grant, creation or assumption of Liens against, or otherwise disposed of, any of
its material assets, whether tangible or intangible;
(xvi) any lapse, failure to take any actions to
protect, or any adverse change in respect of any of its Proprietary Rights;
(xvii) any consummation of any other transaction that
is not in the Company's ordinary course of business consistent with recent past
practice;
(xviii) any collection of the Company's accounts
receivable, or any payment of the Company's accounts payable, in each case that
is not in the Company's ordinary course of business consistent with recent past
practice; or
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(xix) any agreement or commitment, in writing or
otherwise, to take any of the actions described in the foregoing subclauses (i)
through (xviii).
(k) Title to Assets. Except as disclosed on Schedule 3.1(k),
the Company has good and marketable title to all of the tangible and intangible
assets owned by it, free and clear of any Liens, and none of such assets are
owned by any Person other than the Company. The Company owns, leases, licenses
or otherwise has the contractual right to use all of the assets used in or
necessary for the conduct of its business as currently conducted. The Company
has delivered to the Parent a schedule of the fixed assets of the Company dated
within thirty (30) days prior to the date hereof. All personal property owned or
leased by the Company, taken as a whole, is in good repair and is operational
and usable in the operation of the Company, subject to ordinary wear and tear.
(l) Receivables and Payables. Except as disclosed on Schedule
3.1(l), (i) the accounts and notes receivable reflected on the Financial
Statements or arising since the Balance Sheet Date (collectively, the
"Receivables"), are bona fide, represent valid obligations to the Company, and
have arisen or were acquired in the ordinary course of business and in a manner
consistent with recent past practice and with the Company's regular credit
practices; (ii) the Company's provision for doubtful accounts reflected on its
Financial Statements or reserved on its books since the Balance Sheet Date has
been determined in accordance with the generally accepted accounting principles
consistently applied; (iii) the Receivables have been collected or are
collectible in full, net of any allowance for uncollectibles recorded on the
Financial Statements or properly reserved on its books since the Balance Sheet
Date, in a manner consistent with past practice in the ordinary course of
business and without resort to litigation; (iv) to the Knowledge of the Company,
none of the Receivables is or will at the Closing Date be subject to any
defense, counterclaim or setoff; (v) since the Balance Sheet Date, the Company
has not canceled, reduced, discounted, credited or rebated or agreed to cancel,
reduce, discount, credit or rebate, in whole or in part, any Receivables; and
(vi) there has been no material adverse change since the Balance Sheet Date in
the amounts of Receivables or the allowances with respect thereto, or accounts
payable of the Company, from those reflected in the balance sheet of the Company
as of such date. The Company has provided to the Parent a schedule of aged
Receivables and payables for the Company as of a date which is within three (3)
business days of the date hereof.
(m) Real Property.
(i) The Company does not now own, and has never
owned, any real property.
(ii) Schedule 3.1(m) sets forth a true and complete
list of all real property leased or otherwise used by the Company, identifying
the lessor or other owner thereof (the "Real Property").
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(iii) There is not existing or proposed as a matter
of public record or, to the Knowledge of the Company, presently contemplated,
any condemnation or similar action, or zoning action or proceeding, with respect
to any portion of the Real Property. None of the existing buildings and
improvements which in part comprise the Real Property fails to comply fully with
all size, height, set back, use and other zoning restrictions and regulations
applicable thereto, including, without limitation, the parking space
requirements of all applicable zoning ordinances and regulations. The Company or
its landlord has obtained all licenses, permits, approvals, certificates, and
other authorizations required by applicable Laws for the use and occupancy of
the Real Property as it is currently being utilized. None of the Real Property
is subject to any encumbrance, easement, right-of-way, building or use
restriction, exception, variance, reservation, limitation or other Liens which
might in any material respect interfere with or impair the continued use thereof
as currently utilized or proposed to be utilized by the Company.
(n) Proprietary Rights.
(i) To the Knowledge of the Company, the Company owns
or possesses licenses or other rights to use all trademarks, trade and business
names, internet domain names, service marks, service names, copyrights, customer
lists, trade secrets and inventions (whether or not patentable) (collectively,
"Proprietary Rights") that are necessary to the conduct of the Company's
business as currently conducted or anticipated.
(ii) Schedule 3.1(n)(ii) sets forth a true and
complete list of all trademarks, trade names, service marks, service names,
internet domain names, copyrights and patents included in the Proprietary Rights
of the Company (identifying which are owned and which are licensed), including
all United States, state and foreign registrations or applications for
registration thereof and all agreements relating thereto. All filing,
registration, maintenance or similar fees payable in connection with each
registration (or application therefor) of Proprietary Rights set forth on
Schedule 3.1(n)(ii) have been paid and each such registration is valid and in
full force and effect.
(iii) Except as disclosed in Schedule 3.1(n)(iii),
the Company is not required to pay any royalty, license fee or similar
compensation in connection with the conduct of its business as currently
conducted.
(iv) To the Knowledge of the Company, the Company has
not interfered with, infringed upon, misappropriated or otherwise come into
conflict with the Proprietary Rights of any other Person or committed any acts
of unfair competition, and no claims have been asserted by any Person alleging
such interference, infringement, misappropriation, conflict or act of unfair
competition.
(v) To the Knowledge of the Company, no Person is
infringing upon its Proprietary
Rights.
(vi) There are no Proprietary Rights developed by any
shareholder, director, officer, consultant or employee of the Company that are
used in the Company's business and that have not been transferred to, or are not
owned free and clear of any Liens by, the Company.
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(o) Material Agreements. Schedule 3.1(o)(1) sets forth a true
and complete list, and the Company has provided to the Parent complete copies
(including all amendments and extensions thereof and all waivers thereunder) or,
if oral, an accurate and complete description, of each of the following, whether
written or oral, to which the Company is a party or is otherwise bound (each, a
"Material Agreement"):
(i) all loan agreements, indentures, mortgages,
notes, installment obligations, capital leases or other agreements or
instruments relating to the borrowing of money (or guarantees thereof);
(ii) all continuing contracts or commitments for the
future purchase, sale or manufacture of products, materials, supplies, equipment
or services requiring payment to or from the Company in an amount in excess of
$50,000 per annum which are not terminable on 30 days' or less notice without
cost or other liability at or any time after the Closing Date, or in which the
Company has granted or received manufacturing rights, most favored nation
pricing provisions or exclusive rights relating to any product or service;
(iii) all contracts with any Governmental Authority;
(iv) all leases, subleases or any other agreements or
arrangements under which the Company has the right or license to use any
personal property, whether tangible or intangible, owned or licensed by another
Person;
(v) all agreements or arrangements under which any
other Person has the right or license to use any real property or personal
property, whether tangible or intangible, owned, leased or licensed by the
Company;
(vi) all contracts or understandings which by their
terms restrict the ability of the Company to conduct its business or to
otherwise compete, including as to manner or place;
(vii) all joint venture or similar agreements or
understandings;
(viii) lease and other agreements pertaining to the
Real Property;
(ix) all collective bargaining, employment,
severance, consulting, nondisclosure or confidentiality agreements, and
agreements requiring a charge of control or parachute payments, or any other
type of contract or understanding with any officer, employee or consultant,
other than pursuant to Employee Benefit Plans, which is not immediately
terminable by the Company without cost or other liability to the Company;
(x) all agreements with sales agents or
representatives, wholesalers, distributors
and dealers;
(xi) all agreements concerning any Hazardous
Materials; and
Page 12 of 42
(xii) all other contracts, without regard to monetary
amount, which were not entered into in the ordinary course of business
consistent with past practice or which are material to the conduct of the
Company's business and not listed above.
Except as disclosed on Schedule 3.1(o)(2), the
Company is not, and to the Knowledge of the Company, any other party thereto is
not, in default under any Material Agreement and no event has occurred or is
reasonably expected to occur which (after notice or lapse of time or both) would
become a breach or default under, or would otherwise permit modification,
cancellation, acceleration or termination of, any Material Agreement or would
result in the creation of or right to obtain any Lien upon, or any Person
obtaining any right to acquire, any assets, rights or interests of the Company.
Except as disclosed on Schedule 3.1(o)(3): (i) each Material Agreement is in
full force and effect and is a valid and binding obligation of the Company, and,
to the Knowledge of the Company, the other parties thereto; (ii) there are no
unresolved disputes with respect to any Material Agreement; and (iii) the
Company has no reasonable basis to believe that any party to a Material
Agreement intends either to modify, cancel or terminate such Material Agreement.
(p) Litigation. Except as disclosed on Schedule 3.1(p), there
is no claim, legal action, suit, arbitration, investigation or other proceeding
pending, or to the Knowledge of the Company, threatened against or relating to
the Company or its assets. Neither the Company nor any of its assets are subject
to any outstanding judgment, order, writ, injunction or decree of any
Governmental Authority. There is currently no investigation or review by any
Governmental Authority with respect to the Company pending or, to the Knowledge
of the Company, threatened, nor has any Governmental Authority notified the
Company of its intention to conduct the same.
(q) Compliance with Laws. To the Knowledge of the Company, the
Company has all licenses, permits and other authorizations from all applicable
Governmental Authorities necessary or desirable for the conduct of its business
as currently conducted or as currently expected to be conducted following the
Closing Date. Schedule 3.1(q) hereto sets forth a true and complete list of all
such licenses, permits and other authorizations obtained by the Company, each of
which is in full force and effect and no violations thereunder have been
recorded. To the Knowledge of the Company, the Company is in compliance, and has
complied, in all material respects with all Laws applicable to it and has not
received any notice of any violation thereof.
(r) Environmental Matters. To the Knowledge of the Company,
except as disclosed in Schedule 3.1(r):
(i) During the period that the Company has owned,
leased or operated any properties or facilities, neither it nor any other Person
has disposed, released, or participated in or authorized the release or
threatened release of Hazardous Materials on, from or under such properties or
facilities. There is not now nor has there ever been any presence, disposal,
release or threatened release of Hazardous Materials on, from or under any of
such properties or facilities, which may have occurred prior to the Company
having taken possession of any of such properties or facilities. For the
purposes of this Agreement, the terms "disposal," "release," and "threatened
release" shall have the definitions assigned thereto by the Comprehensive
Environmental Response Compensation and Liability Act of 1980, 42 U. S.C. ss.
9601 et seq., as amended ("CERCLA").
Page 13 of 42
(ii) The operations of the Company and properties
that the Company owns, leases or operates, are in compliance in all material
respects with Environmental Law. During the time that the Company has owned,
leased or operated its properties and facilities, neither the Company nor any
other Person has used, generated, manufactured or stored on, under or about such
properties or facilities or transported or arranged for disposal to or from such
properties or facilities, any Hazardous Materials which may be considered a
violation of applicable Environmental Law.
(iii) During the time that the Company has owned,
leased or operated its properties and facilities, there has been no litigation
or proceeding brought or, to the Knowledge the Company, threatened against the
Company by, or any settlement reached the Company with, any Persons alleging the
presence, disposal, release or threatened release of any Hazardous Materials, on
from or under any of such properties or facilities.
(iv) There are no facts, circumstances or conditions
relating to the properties and facilities owned, leased or operated by the
Company which could give rise to a claim under any Environmental Law or to any
material Environmental Costs and Liabilities.
(s) Related Party Transactions. Except as disclosed on
Schedule 3.1(s), no Related Party has been directly or indirectly a party to any
contract or other arrangement (whether written or oral) with the Company
providing for services (other than as an employee of the Company), products,
goods or supplies, rental of real or personal property, or other wise requiring
payments from or to the Company. For purposes hereof, the term "Related Party"
shall mean any Shareholder or a director or officer of the Company or any member
of his or her family or any corporation, partnership, limited liability company,
other business entity or trust in which he or she or any member of his or her
family has greater than a ten percent (10%) interest, or of which he or she or
any member of his or her family is an officer, director, general partner, member
or trustee.
(t) Insurance. Schedule 3.1(t)(l) sets forth a list of the
Company's insurance policies (including property, casualty, liability (general,
professional and directors and officers) and workers' compensation), listing for
each policy the identity of the insurance carrier, the policy period, the limits
and retentions and any special exclusions. Except as set forth on Schedule
3.1(t)(2), such insurance coverage and coverage amounts are, in the opinion of
the Company, customary for the business engaged in by the Company. Such policies
are currently in full force and effect, all premiums have been paid in full with
respect thereto and the Company has not received any notice of termination or
modification from the insurance carriers. Schedule 3.1(t)(l) also sets forth a
true and complete description of any self-insurance arrangement by or affecting
the Company, including any reserves established thereunder, if any.
Page 14 of 42
(u) Taxes.
(i) The Company has timely filed with the appropriate
taxing authorities all returns and reports in respect of Taxes ("Returns")
required to be filed by it (taking into account any extension of time to file
granted to or on the account of the Company). The information on such Returns is
complete and accurate in all material respects. The Company has paid on a timely
basis all Taxes (whether or not shown on any Return) due and payable. There are
no Liens for Taxes (other than for current Taxes not yet due and payable) upon
the assets of the Company. As used in this Section 3.1(u), the Company shall
mean, individually and collectively, (i) the Company and (ii) any individual,
trust, corporation, partnership or other entity as to which the Company may be
liable for Taxes incurred by such individual or entity as a transferee or
pursuant to any provision of federal, state, local or foreign law or regulation.
(ii) No unpaid (or unreserved in accordance with
generally accepted accounting principles applied on a consistent basis)
deficiencies for Taxes have been claimed, proposed or assessed by any taxing
authority or other Governmental Authority with respect to the Company for any
Pre-Closing Period and, to the best knowledge of the Company or the Shareholder,
there are no pending audits, investigations or claims for or relating to any
liability in respect of Taxes of the Company, nor has the Company been notified
of any request for such an audit, investigation or claim. The Company has not
requested any extension of time within which to file any currently unfiled
returns in respect of any Taxes and no extension of a statute of limitations
relating to any Taxes is in effect with respect to the Company.
(iii) (1) The Company has made or will make provision
for all Taxes payable by it with respect to any Pre-Closing Period which are not
payable prior to the Closing Date; (2) the provisions for Taxes with respect to
the Company for the Pre-Closing Period are adequate to cover all Taxes with
respect to such period; (3) the Company has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third party;
(4) all material elections with respect to Taxes made by or, to the Knowledge of
the Company, affecting the Company as of the date hereof are set forth in
Schedule 3.1(u)(iii)(4); (5) the Company is not a "consenting corporation" under
Section 341(f) of the Code, or any corresponding provision of state, local or
foreign law; (6) there are no private letter rulings in respect of any Tax
pending between the Company and any taxing authority; (7) the Company has never
been a member of an affiliated group within the meaning of Section 1504 of the
Code, or filed or been included in a combined, consolidated or unitary return of
any Person other than the Company; (8) the Company is not liable for Taxes of
any other Person, or is currently under any contractual obligation to indemnify
any Person with respect to Taxes, or is a party to any tax sharing agreement or
any other agreement providing for payments by the Company with respect to Taxes;
(9) the Company is not, and has not been, a real property holding corporation
(as defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code; (10) the Company is not a
person other than a United States person within the meaning of the Code; (11)
the Company is not a party to any joint venture, partnership, or other
arrangement or contract which could be treated as a partnership for federal
income tax purposes; (12) the Company has not entered into any sale leaseback or
any leveraged lease transaction that fails to satisfy the requirements of
Revenue Procedure 75-21 (or similar provisions of foreign law); (13) the Company
has not agreed and is not required, as a result of a change in method of
accounting or otherwise, to include any adjustment under Section 481 of the Code
(or any corresponding provision of state, local or foreign law) in taxable
income; (14) the Company is not a party to any agreement, contract, arrangement
or plan that would result (taking into account the transactions contemplated by
this Agreement), separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code; (15) the
Company has never been a Subchapter S corporation (as defined in Section
1361(a)(1) of the Code); (16) Schedule 3.1(u)(iii)(16) contains a list of all
jurisdictions to which any Tax is properly payable by the Company; (17) the
Company is not a personal holding company within the meaning of Section 542 of
the Code; (18) the Company has not made an election and is not required to treat
any of its assets as owned by another Person for federal income tax purposes or
as tax-exempt bond financed property or tax-exempt use property within the
meaning of Section 168 of the Code (or any corresponding provision of state,
local or foreign law).
Page 15 of 42
(v) Employee Benefit Plans.
(i) Schedule 3.1(v)(i) lists all Employee Benefit
Plans which have been maintained or contributed to by the Company or to which
the Company has been obligated to contribute. Except as set forth on Schedule
3.1(v)(ii), neither the Company nor any of its ERISA Affiliates (as defined
below), maintains or has maintained, contributed to or been obligated to
contribute to a Pension Plan subject to Title IV of ERISA or Section 412 of the
Code. To the Knowledge of the Company, except as set forth on Schedule
3.1(v)(iii), each Pension Plan and Welfare Plan disclosed on Schedule 3.1(v)(i)
has been maintained in compliance with its material terms and all material
provisions of ERISA and the Code, applicable thereto (including rules and
regulations thereunder).
(ii) The Company has delivered or made available to
Parent prior to the date hereof complete and correct copies of (a) any
employment agreements and any procedures and policies relating to the employment
of employees of the Company and the use of temporary employees and independent
contractors by the Company (including summaries of any procedures and policies
that are unwritten), (b) plan instruments and amendments thereto for all
Employee Benefit Plans and related trust agreements, insurance and other
contracts, summary plan descriptions, summaries of material modifications and
material communications distributed to the participants of each Employee Benefit
Plan (and written summaries of any unwritten Employee Benefit Plans,
modifications to Employee Benefit Plans and employee communications), (c) to the
extent annual reports on Form 5500 are required with respect to any Employee
Benefit Plan, the three most recent annual reports and attached schedules for
each Employee Benefit Plan as to which such report is required to be filed, (d)
where applicable, the most recent (A) opinion, notification and determination
letters, (B) actuarial valuation reports, and (C) nondiscrimination tests
performed under the Code (including 401(k) and 401(m) tests) for each Employee
Benefit Plan, (e) all material communications received from or sent to the
Internal Revenue Service or the Department of Labor (including a written
description of any oral communication), and (f) any Forms 5330 required to be
filed by the Company or any Affiliate, whether related to an Employee Benefit
Plan or otherwise.
Page 16 of 42
(iii) Except as disclosed on Schedule 3.1(v)(vi), all
contributions required to be paid under the terms of each Employee Benefit Plan
identified in Schedule 3.1(v)(i) hereto have been made. As of and including the
Closing Date, the Company shall have made all contributions required to be made
by it up to and including the Closing Date with respect to each Employee Benefit
Plan, or adequate accruals therefor will have been provided for and will be
reflected on an unaudited balance sheet of the Company provided to Parent by the
Company.
(iv) Neither the Company nor any of its ERISA
Affiliates has maintained or contributed to, been obligated or required to
contribute to, or withdrawn in a partial or complete withdrawal from, a
"Multiemployer Plan," as such term is defined in Section 4001(a)(3) of ERISA.
(v) Except as disclosed on Schedule 3.1(v), except as
required by law or by the terms of an Employee Benefit Plan, the Company has not
proposed or agreed to any changes to any Employee Benefit Plan that would cause
an increase in benefits under any such Employee Benefit Plan (or the creation of
new benefits or plans) nor to change any employee coverage which would cause an
increase in the expense of maintaining any such Employee Benefit Plan.
(vi) Except as disclosed on Schedule 3.1(vi), no
Employee Benefit Plan provides benefits or payments based on or measured by the
value of an equity security of or interest in the Company or any ERISA
Affiliate.
(vii) Except as disclosed on Schedule 3.1(v)(vii), no
Employee Benefit Plan is a plan, agreement or arrangement providing for
benefits, in the nature of severance benefits, and the Company does not have
outstanding any liabilities with respect to any severance benefits available
under any Employee Benefit Plan.
(w) Employee Matters.
(i) The Company has provided to the Parent lists all
current employees of the Company and their hourly rates of compensation or base
salaries (as applicable), the date of last increase in such compensation or
salaries, and all other compensation paid to such employees. To the Knowledge of
the Company, no employee of the Company has notified the Company of such
employee's plans to terminate employment with the Company. To the Knowledge of
the Company, the Company has complied in all material respects with all Laws
relating to the hiring of employees and the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining and the withholding and payment of social security and other Taxes.
(ii) Except as set forth on Schedule 3.1(w): (A) the
Company is not delinquent in payments to any of its employees for any wages,
salaries, commissions, bonuses or other direct compensation for any services
performed by them to date or amounts required to be reimbursed to such employees
and, upon termination of the employment of any such employees, neither the
Parent nor the Company will by reason of any event, fact or circumstance
occurring or existing prior to the Closing be liable to any of such employees
for severance pay or any other payments; (B) there is no unfair labor practice
complaint against the Company pending before the National Labor Relations Board
or any other Governmental Authority; (C) there is no labor strike, material
dispute, slowdown or stoppage actually pending or, to the Knowledge of the
Company, threatened against the Company; (D) the Company has not experienced any
significant deterioration in its relationship with its employees; and (E) no
labor union currently represents the employees of the Company and, to the
Knowledge of the Company, no labor union has taken any action with respect to
organizing the employees of the Company.
Page 17 of 42
(iii) Except for payment of the Merger Consideration
to the Shareholders and except as disclosed on Schedule 3.1(w), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will: (A) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute,
bonus or otherwise) becoming due to any director or employee of the Company,
under any Employee Benefit Plan or otherwise; (B) increase any compensation or
benefits payable under any Employee Benefit Plan or otherwise; or (C) result in
the acceleration of the time of payment or vesting of any such compensation
benefits. No Employee Benefit Plan or other arrangement provides benefits or
payments contingent upon, triggered by or increased as a result of a change in
the ownership or effective control of the Company.
(x) Brokerage Fees. Company has not engaged or authorized any
broker, investment banker or other Person to act on its behalf, directly or
indirectly, as a broker or finder who might be entitled to a fee, commission or
other remuneration in connection with the transactions contemplated by this
Agreement.
(y) Books and Records. All accounts, books, ledgers and
official and other records prepared and kept by the Company are true, complete
and accurate in all material respects and have been kept in accordance with
sound business practices.
(z) Disclosure. No representation or warranty made by the
Company in this Agreement, nor any information contained in any Ancillary
Document to be delivered by the Company or the Shareholder pursuant hereto, or
any information relating to the Company provided or made available to the Parent
in connection with the transactions contemplated hereby, contains any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements or facts contained herein or therein not
misleading in any material respect in light of the circumstances under which
they were made.
3.2 Representations and Warranties of the Shareholders. The
Shareholders, severally but not jointly, hereby represent and warrant to the
Parent as follows:
(a) Authority. Each Shareholder has all corporate or limited
liability company power or legal capacity and authority to enter into and
deliver this Agreement and each of the Ancillary Documents to which such
Shareholder is a party, to carry out such Shareholder's obligations hereunder
and under such Ancillary Document and to consummate the transactions
contemplated hereby and by such Ancillary Documents. All actions, authorizations
and consents required by Law for the execution, delivery and performance by each
Shareholder of this Agreement and each Ancillary Document to which such
Shareholder is a party, and the consummation of the transactions contemplated
hereby and thereby, have been properly taken or obtained.
Page 18 of 42
(b) Execution and Delivery. This Agreement has been, and each
Ancillary Document to which it is a party will be at the Closing, duly
authorized, executed and delivered by such Shareholder and constitutes or will
constitute at the Closing a legal, valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with their
respective terms and conditions, except as enforceability thereof may be limited
by applicable bankruptcy, reorganization, insolvency or other similar laws
affecting or relating to creditors' rights generally or by general principles of
equity.
(c) No Conflicts. The execution, delivery and performance by
each Shareholder of this Agreement and each Ancillary Document to which it is a
party, and the consummation of the transactions contemplated hereby and thereby,
do not and will not violate, conflict with or result in a breach of any term,
condition or provision of, or require the consent of any Person under, or result
in the creation of or right to create any Lien upon any of the assets of such
Shareholder under, (i) any Laws to which such Shareholder or any of its or his
assets are subject, (ii) any permit, judgment, order, writ, injunction, decree
or award of any Governmental Authority to which such Shareholder or any of its
or his assets are subject, (iii) with respect to a Shareholder that is an
entity, the certificate of formation or incorporation or the operating agreement
or bylaws of such Shareholder (or their equivalent), or (iv) any license,
indenture, promissory note, bond, credit or loan agreement, lease, agreement,
commitment or other instrument or document to which such Shareholder is a party
or by which such Shareholder or any of its or his assets are bound.
(d) Governmental Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority, is required to be obtained by each Shareholder in connection with or
as a result of the execution and delivery of this Agreement or any of the
Ancillary Documents, or the performance of such Shareholder's obligations
hereunder or thereunder.
(e) Organization, Standing and Qualification. Each Shareholder
that is an entity is a corporation or limited liability company duly
incorporated, validly existing and in good standing under the Laws of the
jurisdiction of its organization. Each such Shareholder has all corporate or
limited liability company power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
(f) Ownership. Each Shareholder owns, beneficially and of
record, free and clear of any Liens, such number of shares of Common Stock as is
set forth opposite his or its name on Schedule 3.1(f). At the Closing, upon
delivery of and payment for such Shares as provided in this Agreement, all of
the Shares owned by each Shareholder shall be transferred to the Parent, and the
Parent shall have good and valid title to such Shares, free and clear of any
Liens. Except as disclosed in Schedule 3.1(f), there are no outstanding
subscriptions, options, warrants, calls, contracts, demands, commitments,
convertible or exchangeable securities, profits interests, conversion rights,
preemptive rights, rights of first refusal or other rights, agreements,
arrangements or commitments of any nature whatsoever under which a Shareholder
is or may become obligated to sell, assign or transfer any shares of capital
stock of the Company owned by such Shareholder.
Page 19 of 42
(g) Brokerage Fees. None of the Shareholders have engaged or
authorized any broker, investment banker or other Person to act on its behalf,
directly or indirectly, as a broker or finder who might be entitled to a fee,
commission or other remuneration in connection with the transactions
contemplated by this Agreement.
3.3 Representations and Warranties of the Parent. The Parent hereby
represents and warrants to the Shareholders as follows:
(a) Authority. The Parent has all necessary power and
authority to enter into and deliver this Agreement and each of the Ancillary
Documents to which it is a party, to carry out its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and by the
Ancillary Documents. All actions, authorizations and consents required by Law
for the execution, delivery and performance by Parent of this Agreement and each
Ancillary Document to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, have been or prior to the Closing
will have been properly taken or obtained, including without limitation, the
approval of this Agreement and the transactions contemplated by it by the Board
of Directors of the Parent.
(b) Execution and Delivery. This Agreement has been, and each
Ancillary Document to which the Parent is a party will be at the Closing, duly
authorized, executed and delivered by the Parent and constitutes a legal, valid
and binding obligation of the Parent, enforceable against the Parent in
accordance with its terms and conditions, except as enforceability thereof may
be limited by applicable bankruptcy, reorganization, insolvency or other similar
laws affecting or relating to creditors' rights generally or by general
principles of equity.
(c) No Conflicts. The execution, delivery and performance by
the Parent of this Agreement and each Ancillary Document to which it is a party,
and the consummation of the transactions contemplated hereby and thereby, do not
and will not violate, conflict with or result in a breach of any term, condition
or provision of, or require the consent of any Person under, or result in the
creation of or right to create any Lien upon any of the assets of the Parent
under, (i) any Laws to which the Parent or any of its assets are subject, (ii)
any judgment, order, writ, injunction, decree or award of any Governmental
Authority to which the Parent or any of its assets are subject, (iii) the
Certificate of Incorporation or Bylaws of the Parent, or (iv) any license,
indenture, promissory note, bond, credit or loan agreement, lease, agreement,
commitment or other instrument or document to which the Parent is a party or by
which any of its assets are bound, except where, in the case of clause (iv),
such violation, conflict, breach, etc. would not, individually or in the
aggregate, have a Material Adverse Effect on the Parent.
(d) Governmental Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority, is required to be obtained by the Parent in connection with or as a
result of the execution and delivery of this Agreement or any of the Ancillary
Documents, or the performance of its obligations thereunder.
Page 20 of 42
(e) Organization, Standing and Qualification. The Parent is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Florida (or such other applicable jurisdiction of
incorporation or formation). The Parent has all requisite power and authority to
own, lease and operate its properties and to carry on their businesses as now
being conducted, to use their names and are duly qualified, licensed or
authorized to do business and in good standing, in each jurisdiction where the
nature of the activities conducted by them or the character of the properties
owned, leased or operated by them require such qualification, licensing or
authorization.
(f) Parent Stock. The authorized capital stock of the Parent
consists solely of 5,000,000,000 shares of common stock, par value $.00001 per
share ("Parent Common Stock"), of which 138,777,624 shares are issued and
outstanding and 1,000,000,000 shares of Parent Preferred Stock, of which (i)
1,000,000 shares have been designated as Series A Preferred Stock of which
960,000 are issued and outstanding and (ii) 8,413,607 have been designated as
Series B Preferred Stock of which 1,000,000 shares are issued and outstanding.
All of the issued and outstanding shares of capital stock of the Parent have
been, and all of the shares of the Parent Preferred Stock issuable to the
Shareholders pursuant to this Agreement will be when issued, duly authorized,
validly issued, fully paid and non-assessable. Except as disclosed in Schedule
3.3(f) or in any SEC Document, there are no outstanding subscriptions, options,
warrants, calls, contracts, demands, commitments, convertible or exchangeable
securities, profits interests, conversion rights, preemptive rights, rights of
first refusal or other rights, agreements, arrangements or commitments of any
nature whatsoever under which the Parent is or may become obligated to issue,
redeem, assign or transfer any shares of capital stock or purchase or make
payment in respect of any shares of capital stock of the Parent now or
previously outstanding, and there are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to or any shares of
its capital stock. Except as set forth on Schedule 3.3(f), none of the Parent's
stock purchase agreements or stock option documents contains a provision for
acceleration of vesting (or lapse of a repurchase right) upon the occurrence of
any event or combination of events. Except as set forth on Schedule 3.3(f), the
Parent has never adjusted or amended the exercise price of any stock options
previously awarded, whether through amendment, cancellation, replacement grant,
repricing, or any other means.
Page 21 of 42
(g) SEC Documents; Financial Statements. Except as otherwise
set forth on Schedule 3.3(g), the Parent has filed, on a timely basis (except as
permitted by Rule 12b-25 under the Exchange Act), all forms, reports and
documents required to be filed with the SEC since August 31, 2005 (the "SEC
Documents"). The SEC Documents (i) complied in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations promulgated thereunder, and (ii)
did not at the time they were filed (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing) contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. All material agreements to which the Parent is a party or to which
the property or assets of the Parent are subject are included as part of or
specifically identified in the SEC Documents to the extent required by the rules
and regulations of the SEC as in effect at the time of filing. The Parent has
prepared and filed with the SEC all filings and reports required by the
Securities Act and the Exchange Act to make the Parent's filings and reports
current in all respects. Since August 31, 2005, the financial statements
included in SEC Documents filed by the Parent (the "Parent Financial
Statements") fairly present in all material respects, and the Parent Financial
Statements included in SEC Documents filed after the date of this Agreement will
fairly present in all material respects, the consolidated financial position of
the Parent as of the dates indicated and the consolidated income, changes in
shareholders' equity and cash flows of the Parent for the periods then ended and
each such financial statement has been or will be, as the case may be, prepared
in conformity with GAAP applied on a consistent basis, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments (which individually and in the aggregate are not material),
and may not contain certain related notes as may be permitted by the applicable
rules promulgated by the SEC. The Parent Financial Statements included in the
SEC Documents comply in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto in
effect at the time of filing. All "off-balance sheet arrangements" (as defined
in Item 303(a)(4) of Regulation S-K promulgated by the SEC) which the Parent is
required to disclose under Item 303(a) of Regulation S-K in its SEC Documents
are set forth in the SEC Documents. The Parent maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences, and (v) the Parent
is otherwise in compliance with the Securities Act, the Exchange Act and all
other rules and regulations promulgated by the SEC and applicable to the Parent,
including such rules and regulations to implement the Xxxxxxxx-Xxxxx Act of
2002, as amended. Neither the Parent, nor any of its directors, officers, or 10%
shareholders: Are currently the subject of an investigation by the Securities
Exchange Commission ("SEC") or any governmental body or agency; has been
convicted in a criminal proceeding or are currently the named subject of a
pending criminal proceeding, other that traffic violations or other minor
offenses; has been the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court permanently or
temporarily enjoining such from engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of federal or state securities laws or federal commodities laws; or
has been found by a court of competent jurisdiction in a civil action or by the
SEC to have violated any federal or state securities law (other than a judgment
in such civil action or a finding by the SEC that has been subsequently
reversed, suspended or vacated).
Page 22 of 42
(h) Brokerage Fees. The Parent has not engaged or authorized
any broker, investment banker or other Person to act on its behalf, directly or
indirectly, as a broker or finder who might be entitled to a fee, commission or
other remuneration in connection with the transactions contemplated by this
Agreement.
(i) Disclosure. No representation or warranty made by the
Parent in this Agreement, nor any information contained in any Ancillary
Document to be delivered by the Parent pursuant hereto, or any information
relating to the Parent provided or made available to the Parent in connection
with the transactions contemplated hereby, including any SEC Document, contains
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements or facts contained herein or
therein not misleading in any material respect in light of the circumstances
under which they were made.
ARTICLE IV
CERTAIN COVENANTS
4.1 Conduct of Business Pending the Closing. The Company hereby
covenants and agrees that, prior to the Closing, except as contemplated by this
Agreement or as set forth in Schedule 4.1, it shall (and each of the
Shareholders hereby covenants and agrees to cause the Company to comply with the
provisions of this Section 4.1):
(a) conduct its business in the usual, regular and ordinary
course consistent with recent past practice and use its commercially reasonable
efforts to take, or refrain from taking, as the case may be, any action which
would cause the representations and warranties made in Section 4.1 to become
untrue or inaccurate; and
(b) use its commercially reasonable efforts to maintain and
preserve its business organization and relationships with its customers,
vendors, suppliers and others having business dealings with it and retain the
services of its officers and employees.
4.2 Conduct of the Business Post Closing. Following the Closing,
(a) the Parent covenants and agrees (and the Surviving Entity
shall cooperate in): that it will complete an audit of the Company's financial
statements (including an audit of the Company's financial statements prior to
Closing) as required by Form 8-K promulgated under the Securities Exchange Act
of 1934, with a PCAOB approved auditor (the "Post Closing Audit"). The Parent
and the Surviving Entity shall attempt to complete the Post Closing Audit for a
cost of no more than $50,000;
(b) the Company covenants and agrees that the gross revenues
of the Surviving Entity for the 12 month period following the Closing will equal
or exceed twenty percent (20%) of the revenues of the Company during the 12
month period prior to the Closing.
4.3 Post-Closing Financing for the Parent; Market Capitalization.
(a) As used herein, the term "Post Closing Financing" shall
mean the receipt by the Company of a firm commitment from a funding source to
provide at least One Million Dollars ($1,000,000.00) of equity funding over a
period of two (2) years from and after the date of the Closing (such equity
funding to be solely in the form of equity funding and not debt funding) (the
date that is two (2) years from and after the Closing Date is sometimes
hereinafter referred to as the "Post Closing Financing Deadline").
Page 23 of 42
(b) The Parent shall attain a market capitalization of its
common stock of at least Three Million Dollars ($3,000,000.00) by February 28,
2008. (For purposes of this Agreement, "market capitalization" being determined
by multiplying the number of outstanding shares by the "Market Price." "Market
Price" means that price which shall be computed as the arithmetic average of the
Closing Sale Prices for the Parent's Common Stock during the 20 consecutive
trading days immediately preceding such date of determination. "Closing Sales
Price" shall mean the last closing trade price for such security at 4:00 p.m.
Eastern Standard Time on the Nasdaq National Market as reported by Bloomberg,
or, if the Nasdaq National Market is not the principal securities exchange or
trading market for such security, the last closing trade price of such security
at 4:00 p.m. Eastern Standard Time on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg,
or if the foregoing do not apply, the last closing trade price of such security
at 4:00 p.m. Eastern Standard Time in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no
last closing trade price is reported for such security by Bloomberg, the average
of the bid and ask prices of such security as reported by Bloomberg, or, if no
bid or ask prices are reported for such security by Bloomberg, the average of
the bid and ask prices of any market makers for such security as reported in the
"pink sheets" by the National Quotation Bureau, Inc.). In the event of a default
under this Section 4.3(b) and the Company and the Shareholders (acting through
the Shareholder Representative) has the right to and elects to unwind and
rescind the Merger in accordance with Section 8.2 of this Agreement, the Parent
shall retain an amount of Common Stock of the Surviving Entity equal to one
percent (1%) for every $100,000 that the Parent provided to the Surviving Entity
after the Closing Date in the form of cash, debt retirement, or other agreement
upon financing, and the Surviving Entity, the Parent, and the Shareholders shall
each sign mutually agreed upon covenants not to compete.
4.4 No Solicitation. The Company shall not, and none of the
Shareholders shall, directly or indirectly (through their respective Affiliates,
employees, agents or representatives), initiate contact with, solicit,
encourage, respond to or participate in any way in discussions or negotiations
with, or provide any information or assistance to, or take any other action
intended or designed to facilitate the efforts of (including without limitation,
the execution of any letter of intent, term sheet or definitive agreement), any
Person other than the Parent concerning any acquisition of equity interest in
the Company or any significant portion of the assets of the Company (including
by merger or other similar transaction). The Company or the Shareholders shall
promptly notify the Parent if they are contacted or approached in respect of any
such transaction, as well as the material terms of the proposed transaction and
the identity of the contacting party.
4.5 Reasonable Efforts; Assurances. Upon the terms and subject to the
conditions of this Agreement, each of the parties hereto shall use all
reasonable efforts to take or cause to be taken all action, and to do or cause
to be done, and to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including using commercially reasonable efforts to (a) obtain all consents or
approvals required or desirable in connection with the transactions contemplated
hereby, (b) effect promptly all necessary or appropriate registrations or
filings with any Governmental Authorities, and (c) fulfill or cause the
fulfillment of the conditions to Closing set forth in Article V. In case at any
time after the Closing Date any further action is reasonably necessary or
desirable to carry out the purposes of this Agreement, each of the parties
hereto shall take such further action without additional consideration.
Page 24 of 42
4.6 Notification of Certain Matters. The Company and Parent shall
promptly notify each other in writing:
(a) if, subsequent to the date of this Agreement and prior to
the Closing Date, either of them becomes aware of the occurrence of any event or
the existence of any fact that would render any of the representations and
warranties made by it (and, in case of the Company, made by any Shareholder) in
Sections 3.1, 3.2 or 3.3, as the case may be, if made on or as of the date of
such event or the Closing Date, inaccurate or untrue (other than with respect to
representations and warranties made as of a specified date);
(b) of any breach by either of them of any of its (and, in
case of the Company, any of the Shareholders') covenant or agreement contained
in this Agreement;
(c) of any notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement;
(d) of any notice or other communication from any Governmental
Authority in connection with or relating to the transactions contemplated
hereby; or
(e) if the Company or any Shareholder become aware of any
material deterioration in the relationship with any customer, supplier or
employee of the Company.
4.7 Public Announcements. No party will issue or make or cause the
publication of, any press release or other public announcement with respect to
this Agreement or the transactions contemplated hereby without the prior written
consent of the other parties hereto; provided, however, that nothing herein will
prohibit any party from issuing, making or causing the publication of any such
press release or public announcement to the extent that such party is advised by
its legal counsel that such action is required by Law, in which case the party
making such determination will use reasonable efforts to allow the other parties
reasonable time to review and comment on such release or announcement in
advance. For the purposes of this Section, the Company shall be entitled to give
such prior written consent on behalf of the Shareholders.
4.8 Transfer Taxes. All stock transfer, real estate transfer,
documentary, stamp, recording and other similar Taxes (including interest,
penalties and additions to any such Taxes) ("Transfer Taxes") incurred in
connection with the Transactions shall be paid by the Company (provided any such
payments shall not be funded, directly or indirectly, by the Company), and the
Company shall cooperate with Parent in preparing, executing and filing any Tax
Returns with respect to such Transfer Taxes.
Page 25 of 42
ARTICLE V
CONDITIONS TO CLOSING
5.1 Conditions to Obligation of the Company. The obligation of the
Company to consummate the transactions contemplated hereby shall be subject to
the satisfaction on or prior to the Closing of the following conditions (any of
which may be waived in writing by the Company):
(a) the Parent shall have performed and complied with all
obligations and agreements required to be performed and complied with by it
hereunder on or prior to the Closing (including, without limitation, those
specified in Section 6.3);
(b) the representations and warranties of the Parent contained
in this Agreement shall be true and correct as of the Closing Date as if made as
of such date (other than those representations and warranties that address
matters only as of a particular date or only with respect to a specific period
of time, which need only be true and correct as of such date or with respect to
such period);
(c) there shall be no order, decree or ruling by any
Governmental Authority nor any action, suit, claim or proceeding by or before
any Governmental Authority shall be pending, which seeks to restrain, prevent or
materially delay or restructure the transactions contemplated hereby or by any
Ancillary Document, or which otherwise questions the validity or legality of any
such transactions;
(d) there shall be no statute, rules, regulation or order
enacted, entered or enforced or deemed applicable to the transactions
contemplated hereby which would prohibit or, render illegal the transactions
contemplated by this Agreement or the Ancillary Documents;
(e) each of the documents to be delivered by the Parent
pursuant to Section 6.3 shall have been so delivered by the Parent at the
Closing.
5.2 Conditions to Obligation of the Parent. The obligation of the
Parent to consummate the transactions contemplated hereby shall be subject to
the satisfaction on or prior to the Closing of the following conditions (any of
which may be waived in writing by the Parent):
(a) the Shareholders and the Company shall have performed or
complied with all obligations and agreements required to be performed or
complied with by any of them hereunder on or prior to the Closing (including,
without limitation, those specified in Section 6.2);
Page 26 of 42
(b) the representations and warranties of the Shareholders and
the Company contained in this Agreement shall be true and correct as of the
Closing Date as if made as of such date (other than those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time, which need only be true and correct as of
such date or with respect to such period);
(c) there shall be no order, decree or ruling by any
Governmental Authority nor any action, suit, claim or proceeding by or before
any Governmental Authority shall be pending, which seeks to restrain, prevent or
materially delay or restructure the transactions contemplated hereby or any
Ancillary Document, or which otherwise questions the validity or legality of any
such transactions;
(d) there shall be no statute, rules, regulation or order
enacted, entered or enforced or deemed applicable to the transactions
contemplated hereby which would prohibit or render illegal the transactions
contemplated by this Agreement or the Ancillary Documents;
(e) the Company shall have obtained on terms and conditions
satisfactory to the Parent all consents and approvals of third parties
(including Governmental Authorities) that are required (i) for the consummation
of the transactions contemplated hereby or any Ancillary Document, or (ii) in
order to prevent a breach of, a default under or a termination, material change
in the terms or conditions or material modification of, any Material Agreement
as a result of the consummation of the transactions contemplated hereby;
(f) each of the documents to be delivered by Shareholders or
the Company pursuant to Section 6.2 shall have been so delivered by Shareholders
or the Company at the Closing; and
(g) no Shareholder shall have exercised Dissenter's Rights.
ARTICLE VI
CLOSING AND POST-CLOSING MATTERS
6.1 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Weycer, Kaplan, Pulaski & Xxxxx,
P.C., 1400 Summit Tower, 00 Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxx, as soon as
practicable but in no event later than 10:00 a.m., Pacific time, on the third
(3rd) Business Day after the date on which each of the conditions set forth in
Sections 5.1 and 5.2 have been satisfied or waived by the party or parties
entitled to the benefit of such conditions, or at such other place, at such
other time or on such other date as the parties may mutually agree. The date on
which the closing actually occurs is referred to herein as the "Closing Date".
6.2 Deliveries by the Shareholders and the Company. Subject to the
terms and conditions hereof, the Shareholders and the Company shall deliver the
following to the Parent at or before the Closing:
Page 27 of 42
(a) the Certificates that immediately prior to the Effective
Time represented outstanding Company Shares whose shares were converted into the
right to receive Merger Consideration pursuant to Section 2.1(c) together with a
duly executed letter of transmittal;
(b) the corporate minute book, seal, and stock ledger of the
Company;
(c) evidence that the Company has obtained on terms and
conditions reasonably satisfactory to the Parent all consents and approvals of
third parties (including Governmental Authorities) that are required (i) for the
consummation of the transactions contemplated hereby or (ii) in order to prevent
a material breach of, a default under or a termination, material change in the
terms or conditions or material modification of, any Material Agreement as a
result of the consummation of the transaction contemplated hereby, provided,
however, it is understood and agreed that any required approvals relating to the
Spanish division of the Company shall be obtained after the Closing;
(d) original counterparts to a non-competition agreement, by
and between the Parent, Company, Xxxxxx X. Xxxxxx and Xxxxx X. Xxxxxxxx,
substantially in a form attached hereto as Exhibit C (the "Nagala Employment
Agreement" and the "Rossmann Employment Agreement"), duly executed by such
Persons;
(e) resolutions of the Board of Directors appointing Xxxxxx X.
Xxxxxx as Director Officer of the Parent;
(f) original counterparts to the Investor Representation
Letters duly executed by each Shareholder;
(g) certificates of the Company and the Shareholder
Representative, in form and substance reasonably satisfactory to the Parent,
dated the Closing Date, certifying compliance with the conditions set forth in
Sections 5.2(a), 5.2(b) and 5.2(g); and
6.3 Actions or Deliveries by the Parent. Subject to the terms and
conditions hereof, the Parent shall deliver the following to the Shareholders at
or before the Closing:
(a) the Merger Consideration in accordance with Section 2.2;
(b) a certificate of the Parent, in form and substance
reasonably satisfactory to the Shareholder Representative, dated the Closing
Date and signed by the President and the Chief Financial Officer of the Parent
evidencing compliance with the conditions set forth in Sections 5.1(a) and
5.1(b);
(c) original counterparts to the Nagala and Rossmann
Employment Agreements, duly executed by the Company; and
6.4 Other Documents. The parties agree to execute and deliver on or
before the Closing all other documents that are reasonably necessary or
desirable in order to consummate the transactions contemplated hereby and to
carry out the intent of this Agreement.
Page 28 of 42
6.5 Expenses. Except as otherwise specifically provided herein, the
Shareholders, the Company, and the Parent, shall each pay their own expenses,
including, but not limited to, attorneys', accountants', financial advisors' and
brokers' or finders' fees, incurred in connection with the transactions
contemplated hereby ("Expenses"), except that as having been incurred from the
professionals utilized in this transaction and the ordinary course of Company
business they will become the obligation of the Surviving Entity and paid by it
as was the manner and the custom of the Company. It is the express intention of
the parties that the Company shall remain responsible for all Expenses incurred
by the Company, its Affiliates or their respective agents in connection with the
transactions contemplated hereby. Notwithstanding the foregoing, any
administrative or other expenses incurred after Closing to obtain approvals with
respect to the Spanish division of the Company shall be the obligation of the
Surviving Entity.
6.6 Post-Closing Matters:
(a) Upon the later of (i) ninety (90) days after the Closing,
or (ii) fifteen (15) days after the completion of the Post Closing Audit (and
provided that the Post Closing Audit is completed), the Parent and the Surviving
Entity shall take all appropriate action to accomplish the following with
respect to that certain line of credit that the Company has with Xxxxx Fargo
Bank (the "Bank") which has an approximate outstanding balance of $275,000: (1)
remove Xxxxxx X. Xxxxxx as a guarantor of such line of credit; (2) replace the
personal collateral Xx. Xxxxxx has pledged to secure such line of credit with
collateral satisfactory to the Bank; and (3) if the Bank does not permit the
actions described in items (1) and (2) above, pay in full such line of credit
and indemnify Xx. Xxxxxx from any and all obligations relating to such line of
credit.
(b) Immediately upon the Closing, the Parent and the Surviving
Entity shall assume (1) those certain loans payable by the Company to Xxxxxx X.
Xxxxxx in the aggregate original principal amount of $38,571.13, with an
outstanding balance of $38,571.13, and shall issue a replacement note from the
Parent and the Surviving Entity containing the same payment terms and provisions
of such loans; and (2) that certain loan payable by the Company to Xxxxx X.
Xxxxxxxx in the original principal amount of $13,026.32, with an outstanding
balance of $13,026.32, and shall issue a replacement note from the Parent and
the Surviving Entity containing the same payment terms and provisions as such
loan.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual consent of the Parent and the Company;
(b) by either the Parent or the Company if the Closing shall
not have been consummated on or before June 30, 2006 (provided that the
terminating party is not otherwise in material breach of its obligations under
this Agreement), which date may be extended by written agreement of the Parent
and the Company; or
Page 29 of 42
(c) by either the Parent or the Company, if a permanent
injunction or other order by any Federal or state court which would make illegal
or otherwise restrain or prohibit the consummation of the transactions
contemplated hereby shall have been issued and shall have become final and
non-appealable.
7.2 Effect of Termination. In the event of the termination of this
Agreement in accordance with this Article VII, this Agreement shall thereafter
become void and there shall be no liability on the part of any party hereto or
their respective directors, officers, stockholders or agents, except that any
such termination shall be without prejudice to the rights of any party hereto
arising out of any breach by any other party of this Agreement. Surviving
clauses of confidentiality agreements of Parent and Company shall remain in
effect until such time as their respective expiration.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
8.1 Events of Default. Any one or more of the following events shall
constitute an Event of Default:
(a) By the Company: the Company breaches the covenants set
forth under Section 4.2 (b).
(b) By the Parent: Parent breaches the covenants set forth
under Section 4.3.
8.2 Remedies Upon Event of Default. Without limiting any other rights
or remedies of the Shareholders or the Company or the Parent provided for
elsewhere in this Agreement, or by applicable Law, or in equity, or otherwise,
upon the occurrence, and during the continuance, of any Event of Default that
occurs at any time prior to two (2) years from and after the Closing Date, then
in such event:
The non-defaulting party may exercise the rights set forth under this
Section 8.2 and require that all parties to this Agreement take all actions
required to unwind and effectively rescind the Merger consummated hereunder
including, without, limitation:
(i) the Shareholders shall return to Parent all Merger Consideration received by
them against delivery of the items to be delivered by Parent under subsection
(ii) below;
(ii) Parent shall transfer certificate(s) representing all shares of the Company
and the Company held by it to the Shareholder Representative, duly endorsed or
delivered with blank stock powers appropriately executed, in the name of the
Shareholder Representative or in such other form as requested by the Shareholder
representative against delivery of the items to be delivered by the Shareholders
and the Shareholder Representative as set forth under subsections (i) and (ii)
above;
Page 30 of 42
(iii) the Parent shall retain an amount of Common Stock of the Surviving Entity
equal to one percent (1%) for every $100,000 that the Parent provided to the
Surviving Entity after the Closing Date in the form of cash, debt retirement, or
other agreement upon financing, and the Surviving Entity, and
(iv) the Parent, and the Shareholders shall each sign mutually agreed upon
covenants not to compete;
provided, however, that if the default giving rise to the remedies set forth
under this Section 8.2 are due to the actions of the Parent, or for whatever
reason the Post-Closing Financing does not occur by the Post-Closing Financing
Deadline, it is understood and agreed that the Company and the Shareholders
shall have no obligation to reimburse or pay the Parent for any Interim Funding
received from Parent, and all costs and expenses related to the audit of the
Company shall be borne by the Parent.
It is understood and agreed that the rights and remedies of the parties
under this Section 8.2 to unwind and rescind the Merger shall only apply until
two (2) years from and after the Closing Date.
ARTICLE IX
INDEMNIFICATION; SURVIVAL OR REPRESENTATIONS AND WARRANTIES
9.1 Survival; Indemnity. The representations, warranties, covenants and
agreements of the Company contained in Section 3.1 of this Agreement and the
Parent contained in Section 3.3, shall terminate upon the Closing.
Notwithstanding the foregoing, the representations and warranties of the
Shareholders under Section 3.2 shall only so survive until the first anniversary
of the Closing Date (the period from the Closing Date to such applicable date is
hereinafter referred to as the "Survival Period"). Nothing contained in the
foregoing sentence shall prevent recovery under this Article after the
expiration of the Survival Period so long as the party making a claim or seeking
recovery complies with the provisions of clause (x) and (y) of the following
sentence. No party shall have any claim or right of recovery for any breach of a
representation, warranty, covenant or agreement unless (x) written notice is
given in good faith by that party to the other party of the representation,
warranty, covenant or agreement pursuant to which the claim is made or right of
recovery is sought setting forth in reasonable detail the basis for the
purported breach of the representation, warranty, covenant or agreement, the
amount or nature of the claim being made, if then ascertainable, and the general
basis therefore and (y) such notice is given prior to the expiration of the
Survival Period.
9.2 General Indemnification by the Shareholders and the Company. The
Shareholders, severally but not jointly, agree to indemnify the Parent and its
officers, directors, shareholders, employees, Affiliates, attorneys, accountants
and agents (the "Parent Parties"), and hold them harmless from and against any
and all damages, losses, liabilities, costs and expenses (including, without
limitation, reasonable expenses of investigation and reasonable attorneys' fees
and expenses in connection with any action, suit or proceeding) (collectively,
"Parent Damages") incurred or suffered by the Parent Parties as a result of any
breach or inaccuracy of any representation or warranty of such Shareholder in
Section 3.2, or for any breach by a Shareholder of any of such Shareholder's
covenants or agreements contained in this Agreement, or for any breach of a
representation or warranty in any certificate delivered by the Shareholders
pursuant to this Agreement (including without limitation, any Investor
Representation Letter),. Notwithstanding the foregoing, from and after the
Closing, the Shareholders shall have no liability under this Section 9.2 arising
out of or as a result of a breach of any representation or warranty unless and
until such claim is made on or before the expiration of the Survival Period, and
such Shareholders shall not be liable for more than the amount of Merger
Consideration actually received by such Shareholder under this Agreement.
Page 31 of 42
9.3 Indemnification Procedures
(a) Notification of Claims. Upon any party (the "Indemnified
Party") becoming aware of a fact, condition or event that constitutes a basis
for a claim for Parent Damages, in respect thereof against the other party (the
"Indemnifying Party") under Section 9.2, if such a claim is to be made, the
Indemnified Party will with reasonable promptness and specificity notify the
Indemnifying Party or Parties in writing of such fact, condition or event. The
failure to notify the Indemnifying Party or Parties under this Section 9.3 shall
not relieve any Indemnifying Party of any liability that it may have to the
Indemnified Party except to the extent that such failure to notify shall have
resulted in a waiver of any lawful and valid affirmative defense to any
third-party claim or otherwise materially prejudices the Indemnifying Party or
Parties in connection with the administration or defense of such third-party
claim.
(b) Third-Party Claims.
(i) Upon receipt by the Indemnifying Party or Parties
of any notice of claim for indemnification hereunder arising from a third-party
claim, the Indemnifying Party or Parties shall assume the administration and
defense of such third-party claim with counsel that is reasonably satisfactory
to the Indemnified Party and shall proceed with the administration and defense
of such third-party claim diligently and in good faith; provided, however, that
any Indemnifying Party shall be entitled to assume the administration and
defense of such third-party claim only if it agrees in writing with the
Indemnified Party that it is obligated to indemnify the Indemnified Party
pursuant to this Article with respect to such third-party claim; and provided,
further that no Indemnifying Party shall be entitled to assume the
administration and defense of any third-party claim that (A) seeks an injunction
or other equitable relief that might materially and adversely affect any
Indemnified Party, or (B) involves any criminal action or any claim that could
reasonably be expected to result in a criminal action against any Indemnified
Party. Each parties' counsel in connection with this transaction shall be deemed
to be reasonably satisfactory to the other party for purposes of this Section
9.3(b)(i). The Indemnified Party shall be fully consulted by the Indemnifying
Party or Parties and shall have the right to participate, at its own expense, in
the investigation, administration and defense of such third-party claim. Any
party hereto receiving notice of any proposed settlement of any such third-party
claim shall promptly provide a copy of such notice to the other parties hereto.
The Indemnifying Party or Parties shall not have the right to settle or
compromise any third-party claim for which indemnification is being sought
hereunder without the consent of the Indemnified Party unless as a result of
such settlement or compromise the Indemnified Party is fully discharged and
released from any and all liability with respect to such third-party claim. The
Indemnified Party shall make available to the Indemnifying Party or Parties and
its counsel all books, records, documents and other information relating to any
third-party claim for which indemnification is sought hereunder, and the parties
to this Agreement shall render to each other reasonable assistance in the
defense of any such third-party claim.
Page 32 of 42
(ii) Notwithstanding any other provision of this
Agreement, if the Indemnified Party is not entitled to defend a third-party
claim under Section 9.3(b)(i), the Indemnified Party shall have the absolute
right, at its election (to be exercised in its sole discretion by written notice
to the Indemnifying Party or Parties) to assume from the Indemnifying Party or
Parties the administration and defense of any such third-party claim against the
Indemnified Party with counsel that is reasonably satisfactory to the
Indemnifying Party. In such event, the Indemnified Party shall proceed with the
administration and defense of such third-party claim(s) diligently and in good
faith, and the Indemnifying Party shall be fully consulted by the Indemnified
Party or Parties and shall have the right to participate, at its own expense, in
the investigation, administration and defense of such third-party claim. The
Indemnifying Party or Parties shall be responsible for the costs and expenses of
the administration and defense of such claim(s) incurred prior to the
Indemnified Party or Parties' assumption of the administration and defense of
such claim(s) and shall not be responsible for costs and expenses incurred after
such assumption, and the Indemnifying Party shall have the right to participate
in, but not control, the defense of such claim(s) at the sole cost and expense
of the Indemnifying Party.
ARTICLE X
SHAREHOLDER REPRESENTATIVE
10.1 Appointment and Powers of Shareholder Representative. By virtue of
their execution and delivery of this Agreement, the Shareholders shall be deemed
to have irrevocably constituted and appointed, effective as of the date of this
Agreement, Xxxxxx X. Xxxxxx (or if Xxxxxx X. Xxxxxx dies or becomes permanently
disabled, then such person as shall be appointed as his successor by a majority
in interest of the holders of Parent Series C Preferred Stock (the "Shareholder
Representative"), as their true and lawful agent and attorney-in-fact to enter
into any agreement in connection with the transactions contemplated by this
Agreement, to exercise all or any of the powers, authority and discretion
conferred on it hereunder, to waive any terms and conditions of this Agreement,
to give and receive notices and communications, to authorize delivery to the
Parent of any portion of the Merger Consideration in satisfaction of
indemnification claims by the Parent, to object to such deliveries, to agree to,
negotiate, enter into settlements and compromises of, and demand arbitration and
comply with orders of courts and awards of arbitrators with respect to such
claims, and to take all actions necessary or appropriate in the judgment of the
Shareholder Representative for the accomplishment of the foregoing.
Page 33 of 42
10.2 Notice of Third Party Claims; Binding Effect, Etc. Any notice of
any third party claim for which the Parent is an Indemnified Party shall be
deemed to have been delivered by the Parent to the Shareholders pursuant to
Section 8.4(b) if validly delivered to the Shareholder Representative. The
Shareholders shall be bound by all actions taken by and all omissions of the
Shareholder Representative in its capacity thereof. The Shareholder
Representative shall at all times act in its capacity as Shareholder
Representative in a manner that the Shareholder Representative believes in good
faith to be in the best interest of the Shareholders as a group.
10.3 Limitation on Liability. Neither the Shareholder Representative
nor its respective shareholders, officers, directors, affiliates, members,
agents or representatives shall be liable to any Shareholder or any of its or
his shareholders, officers, directors, affiliates, heirs, estate, successors,
assigns and agents for any error of judgment, or any action taken, suffered or
omitted to be taken, under this Agreement, except in the case of its fraud. The
Shareholder Representative may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts. The Shareholder Representative
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement. As to
any matters not expressly provided for in this Agreement, the Shareholder
Representative shall not be required to exercise any discretion or take any
action. Each Shareholder severally shall indemnify and hold harmless and shall
reimburse the Shareholder Representative from and against such Shareholder's
ratable share of any and all liabilities, losses, damages, claims, costs or
expenses suffered or incurred by the Shareholder Representative arising out of
or resulting from any action taken or omitted to be taken by the Shareholder
Representative under this Agreement, other than such liabilities, losses,
damages, claims, costs or expenses arising out of or resulting from the
Shareholder Representative's fraud (the "Shareholder Representative Expenses").
The Shareholder Representative shall make available to each Shareholder
reasonable documentation of the Shareholder Representative Expenses.
Notwithstanding anything to the contrary, in all matters relating to Article IX,
the Shareholder Representative shall be the only party entitled to assert the
rights of the Shareholders, and the Shareholder Representative shall perform all
of the obligations of the Shareholders hereunder. The Parent and the Company
shall be entitled to rely on all statements, representations and decisions of
the Shareholder Representative as those of the Shareholders, without any
independent investigation or verification.
ARTICLE XI
DEFINITIONS
For purposes of this Agreement, the following terms and phrases shall
have the following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 405
promulgated under the Securities Act.
Page 34 of 42
"Business Day" shall mean any Monday, Tuesday, Wednesday, Thursday or
Friday that is not a day on which banking institutions in the States of Texas
and New York are authorized by law, regulation or executive order to close.
"Company Stock Option" shall mean any option to purchase Company Shares
granted under the UTSI International Corporation, Nonqualified Stock Option
Plan, dated January 8, 1999 or otherwise.
"Company Stock Plan" shall mean the Company's Nonqualified Stock Option
Plan, dated January 8, 1999, and the corresponding Stock Prospectus, dated
December 11, 1998.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Employee Benefit Plan" shall mean any "employee benefit plan" as
defined in Section 3(3) of ERISA and any other plan, policy, program, practice,
agreement, understanding or arrangement (whether written or unwritten) providing
compensation or other benefits to any current or former director, officer,
employee or consultant (or to any dependent or beneficiary thereof), of the
Company or any ERISA Affiliate, which are now, or were within the past six
years, maintained by the Company or any ERISA Affiliate, or under which the
Company or any ERISA Affiliate has or could have any obligation or liability,
whether actual or contingent (and including, without limitation, any liability
arising out of an indemnification, guarantee, hold harmless or similar
agreement), including, without limitation, all incentive, bonus, deferred
compensation, vacation, holiday, cafeteria, medical, disability, stock purchase,
stock option, stock appreciation, phantom stock, restricted stock or other
stock-based compensation plans, policies, programs, practices or arrangements.
"Environmental Law" shall mean any federal, state, local or foreign law
(including any common law), statute, code, ordinance, rule, regulation or other
requirement relating to the environment, natural resources or public or employee
health and safety, and includes, but not limited to, CERCLA, the Hazardous
Materials Transportation Act, 49 U.S.C. ss. 1801 et seq., as amended, the
Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., as amended,
the Clean Water Act, 33 U.S.C. ss. 2601 et seq., as amended, the Clean Air Act,
42 U.S.C. ss. 7401 et seq., as amended, the Toxic Substances Control Act, 15
U.S.C. ss. 6901 et seq., as amended, the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. ss. 136 et seq., as amended, the Oil Pollution Act of
1990, 33 U.S.C. ss. 2701 et seq., as amended, the New York Navigation Law, as
amended, and the Occupational Safety and Health Act, 29 U.S.C. ss. 6901 et seq.,
as amended.
"Environmental Costs and Liabilities" shall mean any and all losses,
liabilities, obligations, damages, fines, penalties, judgments, actions, claims,
costs and expenses (including, without limitation, fees, disbursements and
expenses of legal counsel, experts, engineers and consultants and the costs of
investigation and feasibility studies and remedial activities) arising from or
under any Environmental Law or order or contract with any Governmental Authority
or any other Person.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
Page 35 of 42
"ERISA Affiliate" shall mean any entity that, together with the
Company, is or was treated as a single employer under Section 414(b), (c) or (m)
of the Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"GAAP" shall mean generally accepted accounting principles as in effect
in the United States.
"Governmental Authority" shall mean any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign.
"Hazardous Materials" shall mean any petroleum or petroleum products,
radioactive materials, asbestos-containing materials, radon gas, PCBs and any
other hazardous or toxic substance, material or waste which is or becomes prior
to the Closing regulated under, or defined as a "hazardous substance,"
"pollutant," "contaminant," "hazardous waste," "toxic chemical," "hazardous
materials," "toxic substance" or "hazardous chemical" under any Environmental
Law.
"Knowledge of the Company" shall mean the actual knowledge of Xxxxxx X.
Xxxxxx and Xxxxx X. Xxxxxxxx, upon due inquiry.
"Laws" shall mean all applicable statutes, rules, regulations,
ordinances, orders, writs, injunctions, judgments, decrees, awards or
restrictions of any governmental entity.
"Liabilities" shall mean any liability or obligation, including without
limitation, any direct or indirect indebtedness, guaranty, endorsement, claim,
loss, damage, deficiency, cost, expense, obligation or responsibility, whether
known or unknown, fixed or unfixed, xxxxxx or inchoate, liquidated or
unliquidated, secured or unsecured.
"Liens" shall mean any security interest, mortgage, lien, charge,
claims, option and encumbrance.
"Material Adverse Effect" used in connection with a party shall mean
any event, change or effect that is or is reasonably likely to become materially
adverse to the condition (financial or otherwise), properties, assets,
liabilities, businesses, operations, results of operations or prospects of such
party and its subsidiaries, if any, on a consolidated basis.
"Pension Plan" shall mean any qualified or non-qualified Employee
Pension Benefit Plan (including, any Multiemployer Plan), as such term is
defined in Section 3(2) of ERISA.
"Person" shall mean any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, governmental entity of any kind.
Page 36 of 42
"Pre-Closing Period" shall mean all taxable periods ending on or before
the Closing Date and the portion ending on or before the Closing Date of any
taxable period that includes (but does not end on) the Closing Date.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Documents" shall mean all reports and registration statements
filed, or required to be filed, by the Parent pursuant to the Securities Laws.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended; and the rules and
regulations of the SEC promulgated thereunder.
"Subsidiary" shall mean, as to any Person, any corporation,
partnership, limited liability company or other entity which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors, the general managers or other persons performing similar
functions, are at the time directly or indirectly owned by such Person; unless
otherwise specified, "Subsidiary" means a Subsidiary of the Company.
"Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts, and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, local or foreign taxing authority,
including (without limitation) (i) income, franchise, profits, gross receipts,
ad valorem, net worth, value added, sales, use, service, real or personal
property, special assessments, capital stock, license, payroll, withholding,
employment, social security, workers' compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, and (ii) interest, penalties, additional
taxes and additions to tax imposed with respect thereto.
"Welfare Plan" shall mean any Employee Welfare Benefit Plan, as such
term is defined in Section 3(1) of ERISA.
ARTICLE XII
MISCELLANEOUS
12.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered personally
(including delivery by courier service), transmitted by telecopy or mailed by
registered or certified mail, postage prepaid, return receipt requested, or sent
by a nationally recognized overnight courier service, as follows:
Page 37 of 42
(a) If to the Parent, to:
The Xxxxxxx Xxxxxx Company
000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
Telephone: 000.000.0000
Telecopy:
with a copy to:
Weycer, Kaplan, Pulaski & Xxxxx, P.C.
1400 Summit Tower, 00 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telephone: 000-000-0000
Telecopy: 713-961-5341
(b) If to the Company, the Surviving Entity , the Shareholders or the
Shareholder Representative, to:
UTSI International Corporation
Attention: President
0000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxx 00000
Telephone: 000 000 0000
Telecopy: 000 000 0000
with a copy to:
Xxxxxxx X. Xxxxxxx
00000 Xxxxxxxx, Xx. 00
Xxxxxxx, Xxxxx 00000
Telephone: 000 000 0000
Telecopy: 000 000 0000
or to such other address as the Person to whom notice is to be given may have
previously furnished to the other parties in writing in accordance herewith.
Notice shall be deemed given on the date received (or, if receipt thereof is
refused, on the date of such refusal).
12.2 Amendments and Waivers. This Agreement may not be amended,
modified or supplemented except by written agreement of the parties hereto. No
waiver by any party of any non-compliance, default, misrepresentation or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent non-compliance, default, misrepresentation
or breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
Page 38 of 42
12.3 Interpretation. The headings preceding the text of Articles and
Sections included in this Agreement and the headings to Exhibits and Schedules
attached to this Agreement are for convenience only and shall not be deemed part
of this Agreement or be given any effect in interpreting this Agreement. The use
of the masculine, feminine or neuter gender herein shall not limit any provision
of this Agreement. The use of the terms "including" or "include" shall in all
cases herein mean "including, without limitation" or "include, without
limitation," respectively. References to any "Article", "Section", "Exhibit" or
"Schedule" shall refer to an Article or Section of, or an Exhibit or Schedule
to, this Agreement. In any case where the concept of materiality is applied more
than once to qualify any provision of this Agreement (whether by
cross-referencing or incorporation or otherwise), such provision shall be
interpreted as if only one, but the broadest one, of such materiality
qualification applied to it. Any due diligence review, audit or other
investigation or inquiry undertaken or performed by or on behalf of a party
shall not limit, qualify, modify or amend the representations, warranties or
covenants of, or indemnities made by any other party pursuant to this Agreement,
irrespective of the knowledge and information received (or which should have
been received) therefrom by the investigating party and consummation of the
transactions contemplated herein by a party shall not be deemed a waiver of a
breach of or inaccuracy in any representation, warranty or covenant or of any
other party's rights and remedies with regard thereto.
12.4 Assignment; Binding Upon Successors and Assigns. None of the
parties hereto may assign or delegate any of its rights or obligations hereunder
without the prior written consent of the other parties hereto. This Agreement
will be binding upon and inure to the benefit of the parties hereto and their
respective successors, heirs, legatees, distributees and assigns.
12.5 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and their respective
successors, permitted assigns and legal representatives, and nothing in this
Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies of any nature.
12.6 Counterparts; Facsimiles. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to constitute an original and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other parties. Counterparts may be executed
either in original, faxed form, or ".pdf" form and the parties adopt any
signatures received by a receiving fax machine or an e-mail as original
signatures of the parties; provided, however, that any party providing its
signature in such manner shall promptly forward to the other party an original
of the signed copy of this Agreement which was so faxed or e-mailed.
12.7 Governing Law; Venue; Jurisdiction. The laws of the State of Texas
(irrespective of its choice of law principles) will govern the validity of this
Agreement, the construction of its terms and the interpretation and enforcement
of the rights and duties of the parties hereto. This Agreement shall be
enforceable in any court of competent jurisdiction. In furtherance of and not in
limitation of the foregoing, the parties hereto agree that service of process in
any such action or proceeding will be sufficient if sent by certified mail,
return receipt requested, to applicable address set forth above, and that such
service shall constitute "personal service,".
Page 39 of 42
12.8 Severability. If any term or provision of this Agreement shall, to
any extent, be held by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Agreement or the application of such term
or provision to Persons or circumstances other than those as to which it has
been held invalid or unenforceable, shall not be affected thereby and this
Agreement shall be deemed severable and shall be enforced otherwise to the full
extent permitted by law.
12.9 Entire Agreement. This Agreement (including the Schedules and
Exhibits referred to herein and which form a part hereof) and the Ancillary
Documents constitute the entire agreement among the parties hereto and
supersedes all prior agreements and understandings, oral and written, among the
parties hereto with respect to the subject matter hereof except for a
confidentiality agreement by and among the parties hereto, if any.
12.10 Schedules and Exhibits. The Schedules and Exhibits attached
hereto are incorporated herein and made a part hereof for all purposes.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
Page 40 of 42
IN WITNESS WHEREOF, this Agreement and Plan of Merger has been
duly executed and delivered by the parties hereto on the date first above
written.
PARENT:
THE XXXXXXX XXXXXX COMPANY
By: /s/ Xxxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer
By: /s/ Xxxxx Xxxxxx
--------------------------------
Name: Xxxxx Xxxxxx
Title: President
COMPANY:
UTSI International Corporation
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
Page 41 of 42
SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxxx
/s/ Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxx X. Xxxx
--------------------------------
Xxxx X. Xxxx
/s/ Xxxxx X. Clemenston
--------------------------------
Xxxxx X. Clemenston
/s/ Xxxxxx X. Debbrecth
--------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxxxx Xxxx Pereiras
--------------------------------
Xxxxxxxx Xxxx Xxxxxxxx
/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxxx
/s/ Xxxx X. Xxxxxxxxxxxxx
--------------------------------
Xxxx X. Xxxxxxxxxxxxx
/s/ Xxxxxxx X. X. Xxxxxxxx
--------------------------------
Xxxxxxx X.X. Xxxxxxxx
Page 42 of 42
