AGREEMENT AND PLAN OF MERGER BETWEEN AND AMONG DIGITAL COMPUTER INTEGRATION CORPORATION, DEFENSE TECHNOLOGY SYSTEMS, INC., ZENON MACIEKOWICZ AND SKYLYNX COMMUNICATIONS, INC. AND SKYLYNX ACQUISITION CORP. DATED AS OF DECEMBER 16, 2005 AGREEMENT AND...
BETWEEN AND AMONG
DIGITAL COMPUTER INTEGRATION CORPORATION,
DEFENSE TECHNOLOGY SYSTEMS, INC.,
SKYLYNX COMMUNICATIONS, INC.
DATED AS OF DECEMBER 16, 2005
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered into this 16th day of December, 2005, by and among DIGITAL COMPUTER INTEGRATION CORPORATION, a Texas corporation ("DCI"); DEFENSE TECHNOLOGY SYSTEMS, INC., a Delaware corporation ("DFTS"), a shareholder of DCI; XXXXX XXXXXXXXXXX and XXXXX XXXX XXXXXXXXXXX, ("ZM")individually, collectively and as shareholders of DCI; (hereafter, DFTS and ZM may each be referred to as a "Shareholder" and collectively be referred to as "Shareholders"); SKYLYNX COMMUNICATIONS, INC., a Delaware corporation ("SkyLynx"); and SKYLYNX ACQUISITION CORP., a Colorado Subsidiary of SKYLYNX ("SAC"). DCI, DFTS, ZM, SKYLYNX and SAC are hereinafter sometimes individually referred to as a "party" and collectively as the "parties".
WITNESETH:
WHEREAS, DCI is engaged in the development, sale and installation of high-value quality communications, information technology and security systems for federal, state, and local governments, as well as commercial customers; and
WHEREAS, DFTS is the record and beneficial owner of shares of common stock of DCI representing 51% of the total issued and outstanding shares of equity securities of DCI; and ZM is the record and beneficial owner of shares of common stock of DCI representing 49% of the total issued and outstanding shares of equity securities of DCI; and
WHEREAS, SKYLYNX is the owner in the aggregate of ten (10) shares (the "Shares") of the issued and outstanding Common Stock of SAC, $.001 par value per share, representing all the issued and outstanding shares of the capital stock of SAC;
WHEREAS, for federal income tax purposes, the merger of SAC and DCI is intended to qualify as a tax-free reorganization pursuant to Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the parties hereto desire to set forth certain representations, warranties and covenants under which a merger of SAC and DCI will occur.
NOW, THEREFORE, for and in consideration of the premises, the mutual representations, warranties and covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:
SECTION 1: GENERAL DEFINITIONS
For purposes of this Agreement, the following terms shall have the respective meanings set forth below:
1.1 Affiliate. "Affiliate" of any Person shall mean any Person Controlling, Controlled by or under common Control with such Person.
1.2 Agreement. "Agreement" shall include this Agreement and any and all documents and instruments executed in connection with the Merger (as hereinafter defined).
1.5 Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
1.6 Fiscal Year. "Fiscal Year" shall mean a twelve-month period beginning July 1.
1.14 Securities Act. "Securities Act" shall mean the Securities Act of 1933, as amended.
SECTION 3: APPROVALS AND REGULATORY MATTERS
The shares represented by this certificate have not been registered under the Securities Act of 1933 ("the Act") and are "restricted securities" as that term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. |
SECTION 4. ADDITIONAL AGREEMENTS
4.2 DCI Financial Condition. At Closing, after giving effect to the exchange of the DCI Note to NMKT for the SkyLynx Convertible Note (as defined in Section 5.___ below), except for the liabilities set forth in the DCI Financial Statements, DCI shall have no liabilities or obligations of any nature, whether liquidated, unliquidated, accrued, absolute, contingent or otherwise, whether due or to become due except for (i) the obligations and liabilities set forth herein and in Exhibit 4.2 hereof, (ii) ongoing contractual commitments (the "DCI Contracts"), and (iii) obligations incurred in the ordinary course of business. DFTS agrees to indemnify, defend and hold harmless SKYLYNX from any debt, damage, liability or obligation incurred prior to the Closing Date not specifically approved in writing by SKYLYNX or otherwise disclosed in this Agreement (an "Undisclosed Liability"). If indemnity is not promptly paid for any Undisclosed Liability, then the shares to be distributed to DFTS from the Closing Escrow shall be reduced by the value of any Undisclosed Liability as set forth in the Closing Escrow.
SECTION 5: CONVERSION OR CANCELLATION OF SHARES
(a) The shares of DCI Common Stock issued and outstanding immediately prior to the Effective Time, excluding any such shares held in the treasury of DCI, owned by DFTS shall be converted automatically into an aggregate of 572,776 shares of SkyLynx Series B Convertible Preferred Stock having a Stated Value of $1.00 per share (the "Series B Preferred"). Subject to the provisions of Section 5.4 below, such right may be exercised by the surrender of the certificates representing such shares of DCI Common Stock in accordance with Section 5.2 hereof. The Series B Preferred Stock shall have the following rights and preferences:
Voting Rights: Each issued and outstanding share of Series B Preferred shall entitle a holder to one (1) vote for each share of SkyLynx Common Stock issuable upon conversion of the Series B Preferred on any and all matters presented to the shareholders of SkyLynx for approval, including the election of directors. The Series B Preferred shall vote together with all other outstanding shares of voting securities, voting as a single class. |
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Dividend: None. |
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Redemption Right: SkyLynx shall have the right to call for redemption any or all of the outstanding shares of Series B Preferred upon 30 days' written notice. The redemption price to be paid for the shares called for redemption (the "Redemption Price") shall be equal to the Stated Value thereof. Each holder of shares of Series B Preferred called for redemption shall have until the date immediately preceding the redemption date to convert the shares of Series B Preferred into Common Stock of SkyLynx. |
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Conversion: Each share of Series B Preferred is convertible into shares of SkyLynx Common Stock, at any time, at the option of the holder, at a conversion price (the "Series B Conversion Price") equal to the average of the three highest closing prices of the Common Stock during the twenty (20) trading days immediately preceding the conversion date, subject to adjustment under certain circumstances. In addition, one-third (1/3) of the Series B Preferred (190,925 shares) will automatically convert into shares of SkyLynx Common Stock at the Series B Conversion Price on each of the first three anniversaries following the date of issue. |
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Liquidation Preference. $1.00 per share of Preferred Stock, subordinate to the Stated Value of outstanding shares of Series A Preferred, pari passu with the Stated Value of the Series C Preferred Stock, and senior to the rights of holders of Common Stock. |
(b) The shares of DCI Common Stock issued and outstanding immediately prior to the Effective Time, excluding any such shares held in the treasury of DCI, owned by ZM shall be converted automatically into an aggregate of 3,748,518 shares of SkyLynx Series C Convertible Preferred Stock having a Stated Value of $1.00 per share (the "Series B Preferred"). Subject to the provisions of Section 5.4 below, such right may be exercised by the surrender of the certificates representing such shares of DCI Common Stock in accordance with Section 5.2 hereof. The Series C Preferred Stock shall have the following rights and preferences:
Voting Rights: Each issued and outstanding share of Series C Preferred shall entitle a holder to one (1) vote for each share of SkyLynx Common Stock issuable upon conversion of the Series C Preferred on any and all matters presented to the shareholders of SkyLynx for approval, including the election of directors. The Series C Preferred shall vote together with all other outstanding shares of voting securities, voting as a single class. |
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Dividend: None. |
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Redemption Right: SkyLynx shall have the right to call for redemption any or all of the outstanding shares of Series C Preferred upon 30 days' written notice. The redemption price to be paid for the shares called for redemption (the "Redemption Price") shall be equal to the Stated Value thereof. Each holder of shares of Series C Preferred called for redemption shall have until the date immediately preceding the redemption date to convert the shares of Series C Preferred into Common Stock of SkyLynx. |
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Conversion: Each share of Series C Preferred is convertible into shares of SkyLynx Common Stock, at any time, at the option of the holder, at a conversion price (the "Series C Conversion Price") equal to the average of the three highest closing prices of the Common Stock during the twenty (20) trading days immediately preceding the conversion date, subject to adjustment under certain circumstances. |
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Liquidation Preference. $1.00 per share of Preferred Stock, subordinate to the Stated Value of outstanding shares of Series A Preferred, pari passu with the Stated Value of the Series C Preferred Stock, and senior to the rights of holders of Common Stock. |
(c) Of the 3,748,518 shares of Series C Preferred issued on conversion of the outstanding shares of DCI owned by ZM, an aggregate of 3,500,000 shares of Series C Preferred (the "Escrow Shares") shall be deposited and held in escrow with SkyLynx legal counsel, as escrow agent, Xxxxxxxx X. Xxxxxx, Esq., 0000 Xxxx Xx., Xxxxxxx, XX, under the terms of an Escrow Agreement to be executed at Closing. The Escrow Agreement shall provide that the Escrow Shares shall be released upon the satisfaction of the following conditions:
1. |
750,000 shares shall be released, pro rata, upon DCI achieving annual gross revenues of at least $6.0 million. |
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2. |
750,000 shares to be released, pro rata, upon DCI achieving a net profit for a fiscal year of at least 5% of revenues. |
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3. |
750,000 shares shall be released, pro rata, upon DCI achieving annual gross revenues of at least $8.0 million. |
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4. |
750,000 shares to be released, pro rata, upon DCI achieving a net profit for a fiscal year of at least 8% of revenues. |
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5. |
500,000 shall be released upon closing L3 business totaling at least $2.5 million. |
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Should any of the foregoing conditions fail to be satisfied within the first five (5) years following closing, provided, the number of Escrow Shares allocated under such condition shall be forfeited and returned to the unauthorized capital stock of SkyLynx. For so long as the Escrow Shares remain in escrow, the holder(s) shall not exercise any voting rights with respect to the Shares. |
(d) Each share of Series B and Series C Preferred, issued under paragraph (a) and (b) above, and all shares of SkyLynx Common Stock issuable upon conversion thereof, shall be restricted securities pursuant to Rule 144 promulgated under the Securities Act.
(e) Each share of DCI Common Stock, if any, held in DCI's treasury immediately prior to the Effective Time shall be canceled and retired and no payment shall be made in respect thereof.
(f) At the Effective Time, all outstanding shares of SAC shall be converted into an aggregate of 100 shares of Common Stock of DCI. Each share of SAC Common Stock, if any, held in SAC's treasury immediately prior to the Effective Time shall be canceled and retired and no payment shall be made in respect thereof.
(g) At the Effective Time, all outstanding options, warrants and other rights to acquire shares of DCI common stock shall be cancelled.
(h) The full rights and preferences of the Series B and Series C Preferred respectively shall be defined in Certificates of Designation to be attached hereto as Exhibits 5.1.1 and 5.1.2
5.5 Exchange of DCI Note. At closing SkyLynx will issue a promissory note in the amount of $1,200,000 (the "SkyLynx" Note which is subject to adjustments). DCI currently has outstanding indebtedness in the form of a promissory note owed to NewMarket Technology, Inc., ("NMKT"), in the aggregate amount of approximately $1.2 million including accrued interest (the "DCI Note"). At Closing, that note (the DCI Note), shall be assigned to DFTS without recourse. The SkyLynx Convertible Note shall be substantially in the form of Exhibit 5.5 hereto. The SkyLynx Convertible Note shall accrue interest at the rate of 6% per annum, payable annually, at the option of SkyLynx, in cash or shares of SkyLynx Common Stock valued at Market Price on the date of payment. Market Price shall mean the average of the three highest closing prices of the Common Stock on the Principal Trading Market during the twenty trading days immediately prior to payment. The Note shall mature and be due and payable in two (2) years from the date of issuance. The Note shall be convertible, at the option of the holder, into shares of SkyLynx Common Stock at a price equal to the Market Price on the date of conversion. The holder may convert 50% of the note twelve (12) months from the date of issuance and the balance upon maturity.
SECTION 6: CERTAIN EFFECTS OF MERGER
SECTION 7: POST-MERGER GOVERNANCE
7.2 Directors. Officers and Employees.
(a) Directors of SKYLYNX. The Board of Directors of SkyLynx shall remain unchanged as a result of the Merger.
Xxxxx Xxxxxxxxxxx, Xx. |
President |
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Xxxxx Xxxxx |
Chief Executive Officer |
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Xxxxx Xxxxxx |
Chief Financial Officer |
(e) Employment Agreements of DCI. At Closing, DCI shall enter into a written Employment Agreement with Xxxxx Xxxxxxxxxxx, Xx. and Xxxxx Xxxxxx substantially in the form of Exhibit 7.2(e)(i) and (ii) hereto.
SECTION 8: COVENANTS AND CONDITIONS OF CLOSING
(i) |
SKYLYNX and DFTS Board of Directors and DCI Common Stockholder approval of all the transactions contemplated pursuant to this Agreement; and |
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(ii) |
All regulatory approvals necessary for DCI to conduct business in the ordinary course in each jurisdiction where such approval may be required and the failure to obtain such approval would cause a material adverse affect to the financial condition, business or operations of DCI. |
(r) Intentionally Omitted.
(i) |
SKYLYNX and DFTS Board of Directors and DCI Common Stockholder approval of all the transactions contemplated pursuant to this Agreement; and |
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(ii) |
All regulatory approvals necessary for SAC to conduct business in the ordinary course in each jurisdiction where such approval may be required. |
(q) Intentionally Omitted.
(a) To be delivered by DFTS and/or (in triplicate original):
(i) |
Copy of corporate resolutions authorizing the execution of this Agreement, and the consummation by DFTS of the transactions contemplated by this Agreement. |
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(ii) |
A certificate of the President of DCI stating that the representations and warranties of DCI set forth in this Agreement are true and correct. Said certificate shall further verify and affirm that all consents or waivers, if any, which may be necessary to execute and deliver this Agreement have been obtained and are in full force and effect. |
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(iii) |
A certificate dated the Closing Date, signed by the Chief Executive Officer and the Chief Financial Officer of DCI, in form and substance reasonably satisfactory to the other party and its legal counsel, certifying that all conditions precedent set forth in this Agreement to the obligations of DCI to close, have been fulfilled, and that no event of default hereunder and no event which, with the giving of notice or passage of time, or both, would be an event of default, has occurred as of such date. |
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(iv) |
Certificates dated the Closing Date, signed by the Secretary of DFTS, (i) certifying resolutions duly adopted by the Board of Directors of DFTS, authorizing the execution of this Agreement and all of the other transactions to be consummated pursuant thereto; (ii) certifying the names and incumbency of the officers of DFTS who are empowered to execute the foregoing documents for and on behalf of such company; |
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(v) |
Certificates dated the Closing Date, signed by the Secretary of DCI, (i) certifying the authenticity of copies of the Articles of Incorporation and Bylaws of DCI; and (ii) certifying the authenticity of a reasonably current Certificate of Good Standing, from all jurisdictions in which the company is qualified to conduct business. |
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(vi) |
The Closing Escrow Agreement substantially in the form of Exhibit 5.4. |
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(vii) |
Articles of Merger and Statement of Merger in proper form to be filed with the Secretaries of States of Colorado and Texas in such form as may be required to consummate the Merger as of the Effective Time. |
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(viii) |
Employment Agreements with Xxxxx Xxxxxxxxxxx, Xx. and Xxxxx Xxxxxx, substantially in the form of Exhibits 7.2(e)(i) and (ii). |
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(ix) |
The NMKT Series G Convertible Preferred Stock to be delivered to DFTS. |
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(x) |
The License Agreement to DFTS. |
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(xi) |
By DFTS, the DCI Note to NMKT in exchange for a new note from DFTS to NMKT. |
(b) To be delivered by Shareholders of DCI (in triplicate original):
(i) |
Certificate or certificates representing 100% of the issued and outstanding common shares of DCI, which stock certificates shall be endorsed in favor of SKYLYNX. |
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(ii) |
Fully executed Subscription Agreements substantially in the form of Exhibit 5.3. |
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(iii) |
The Closing Escrow Agreement substantially in the form of Exhibit 5.4. |
(c) To be delivered by SKYLYNX and SAC (in triplicate original):
(i) |
Certificate or certificates representing shares of SKYLYNX Series B and Series C Preferred, which certificates shall be issued in the names of DFTS AND ZM, respectively, and delivered in escrow under the Closing Escrow Agreement; |
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(ii) |
Copy of corporate resolution authorizing the execution of this Agreement and the consummation by SKYLYNX and SAC of the transactions contemplated by this Agreement, including, but not limited to, the issuance of SKYLYNX Common Stock in the amounts and manner set forth in Section 5.1 above; |
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(iii) |
A certificate dated the Closing Date, signed by the Chief Executive Officer and the Chief Financial Officer of SKYLYNX and SAC, in form and substance reasonably satisfactory to the other party and its legal counsel, certifying that all conditions precedent set forth in this Agreement to the obligations of SKYLYNX and SAC to close, have been fulfilled, and that no event of default hereunder and no event which, with the giving of notice or passage of time, or both, would be an event of default, has occurred as of such date. |
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(iv) |
Certificates dated the Closing Date, signed by the Secretary of SKYLYNX and SAC, (i) certifying resolutions duly adopted by the Board of Directors of SKYLYNX and SAC, authorizing the execution of this Agreement and all of the other transactions to be consummated pursuant thereto; (ii) certifying the names and incumbency of the officers of SKYLYNX and SAC who are empowered to execute the foregoing documents for and on behalf of such company; (iii) certifying the authenticity of copies of the Articles of Incorporation and Bylaws of SKYLYNX and SAC; and (iv) certifying the authenticity of a reasonably current Certificate of Good Standing, from all jurisdictions in which SKYLYNX and SAC are qualified to conduct business. |
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(v) |
The Closing Escrow Agreement substantially in the form of Exhibit 5.4. |
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(vi) |
Statement of Merger and Certificate of Merger in proper form to be filed with the Secretaries of States of Colorado and Texas in such form as may be required to consummate the Merger as of the Effective Time. |
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(vii) |
The SkyLynx Convertible Note to DFTS. |
SECTION 9: REPRESENTATIONS AND WARRANTIES OF DCI
As a material inducement to SKYLYNX to enter into this Agreement and with the understanding and expectations that SKYLYNX will be relying thereon in consummating the Merger contemplated hereunder, DCI (hereinafter DCI shall be referred to as the "Corporation" unless the context otherwise requires for the purposes of this Section 9 only) hereby represents and warrants as follows:
9.4 Corporate Authority. Except as set forth on Exhibit 9.4 hereto, the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby or the compliance by the Corporation with any on the provisions hereof will not:
(a) Conflict with or result in a breach of any provision of its Articles of Incorporation or By-Laws or similar documents of any Subsidiary;
(b) Result in a default (or give rise to any right of termination, cancellation, or acceleration) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, agreement or other instrument or obligation to which the Corporation is a party, or by which any of its properties or assets may be bound except for such default (or right of termination, cancellation, or acceleration) as to which requisite waivers or consents shall either have been obtained by the Corporation prior to the Closing Date or the obtaining of which shall have been waived by SKYLYNX; or
(c) Violate any order, writ, injunction, decree or, to the Corporation's Best Knowledge, any statute, rule or regulation applicable to the Corporation or any of its properties or assets. No consent or approval by any Governmental Authority is required in connection with the execution and delivery by the Corporation of this Agreement or the consummation by the Corporation of the transactions contemplated hereby, except for possible notice under plant closing laws.
9.5 Financial Information. In connection with the investigations performed by and audit to be undertaken by DCI, DCI furnished certain financial information and data including, without limitation, tax and accounting records, financial records, statements, worksheets and other information requested by SKYLYNX and its auditors necessary to undertake and complete the audited financial examinations. DCI represents and warrants that any and all such information furnished in connection with the conduct of such investigations and audits shall be true, accurate and complete in all material respects and shall not contain any material misstatements nor any material omissions of fact or information respecting the financial condition or results of operation of the business for the respective periods covered by the audits.
9.7 Taxes. Except as set forth in Exhibit 9.7:
(a) The Corporation has filed (or has obtained extensions for filing) all income, excise, sales, corporate franchise, property, payroll and other tax returns or reports required to be filed by it, as of the date hereof by the United States of America, any state or other political subdivision thereof or any foreign country and has paid all Taxes or assessments relating to the time periods covered by such returns or reports; and
(b) The Corporation has paid all tax liabilities imposed or assessed by any governmental authority for all periods prior to the Closing Date for which such taxes have become due and payable and has received no notice from any such governmental authority of any deficiency or delinquency with respect to such obligation. The Corporation is not currently undergoing any audit conducted by any taxing authority and has received no notice of audit covering any prior period for which taxes have been paid or are or will be due and payable prior to the Closing Date. There are no present disputes as to taxes of any nature payable by the Corporation.
9.13 Registered Rights and Proprietary Information.
(a) Exhibit 9.13 hereto contains a true and complete list of all patents, letters patent and patent applications, service marks, trademark and service xxxx registrations and applications, copyright, copyright registrations and applications, grants of licenses and rights to the Corporation with respect to the foregoing, both domestic and foreign, claimed by the Corporation or used or proposed to be used by the Corporation in the conduct of its business (collectively herein, "DCI Registered Rights"). Exhibit 9.13 hereto also contains a true and complete list of all and every trade secret, know-how, process, formula, discovery, development, research, design, technique, customer and supplier list, contracts, product development plans, product development concepts, author contracts, marketing and purchasing strategy, invention, and any other matter required for, incident to, or related to the conduct of its business (hereafter collectively the "DCI Proprietary Information"). Except as described in Exhibit 9.13 hereto, the Corporation is not obligated or under any liability whatever to make any payments by way of royalties, fees or otherwise to any owner or licensor of, or other claimant to, any DCI Registered Right or DCI Proprietary Information with respect to the use thereof in the conduct of the business of DCI or otherwise.
(b) Except as described in Exhibit 9.13 hereto, to the Corporation's Best Knowledge, the Corporation owns and has the unrestricted right to use the DCI Registered Rights and DCI Proprietary Information required for or incident to the design, development, manufacture, operation, sale and use of all products and services sold or rendered or proposed to be sold or rendered by the Corporation or relating to the conduct or proposed conduct of its business free and clear of any right, title, interest, equity or claim of others. As soon as practicable following the execution of this Agreement, and except as described in Exhibit 9.13 hereto, the Corporation agrees to take all necessary steps (including without limitation entering into appropriate confidentiality, assignment of rights and non-competition agreements with all officers, directors, employees and consultants of the Corporation and others with access to or knowledge of the DCI Proprietary Information) to safeguard and maintain the secrecy and confidentiality of, and its proprietary rights in, the DCI Proprietary Information and all related documentation and intellectual property rights therein necessary for the conduct or proposed conduct of its business.
(c) Except as described in Exhibit 9.13 hereto, the Corporation has not sold, transferred, assigned, licensed or subjected to any right, lien, encumbrance or claim of others, any DCI Proprietary Information, including without limitation any DCI Registered Right, or any interest therein, related to or required for the design, development, manufacture, operation, sale or use of any product or service currently under development or manufactured, or proposed to be developed, sold or manufactured, by it. Exhibit 9.13 contains a true and complete list and description of all licenses of DCI Proprietary Information granted to the Corporation by others or to others by the Corporation. Except as described in Exhibit 9.13 hereto, there are no claims or demands of any person pertaining to, or any proceedings that are pending or threatened, which challenge the rights of the Corporation in respect of any DCI Proprietary Information used in the conduct of its business.
(d) Except as described in Exhibit 9.13 hereto, the Corporation owns and on the Closing Date shall own, has and shall have, holds and shall hold, exclusively all right, title and interest in the DCI Registered Rights, free and clear of all liens, encumbrances, restrictions, claims and equities of any kind whatsoever, has and shall have the exclusive right to use, sell, license or dispose of, and has and shall have the exclusive right to bring action for the infringement of the DCI Registered Rights and the DCI Proprietary Information. To the Best Knowledge of Corporation, the marketing, promotion, distribution or sale by the Corporation of any products or interests subject to the DCI Registered Rights or making use of DCI Proprietary Information shall not constitute an infringement of any patent, copyright, trademark, service xxxx or misappropriation or violation of any other party's proprietary rights or a violation of any license or agreement by the Corporation. Except as described in Exhibit 9.13 hereto, to the knowledge of the Corporation after due inquiry no facts or circumstances exist that could result in the invalidation of any of the DCI Registered Rights.
9.17 Contract Schedules.. Attached as Exhibit 9.17 hereto is an accurate list of the following:
(a) All contracts, leases, agreements, covenants, licenses, instruments or commitments of DCI pertaining to the business of DCI calling for the payment of Five Thousand Dollars ($5,000) or more or which is otherwise material to the business of DCI, including, without limitation, the following:
(i) |
Licenses and contracts held in the ordinary course of business; |
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Executory contracts for the purchase, sale or lease of any assets; |
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(iii) |
Management or consulting contracts; |
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(iv) |
Patent, trademark and copyright applications, registrations or licenses, and know-how, intellectual property and trade secret agreements or other licenses; |
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(v) |
Note agreements, loan agreements, indentures and the like, other than those entered into and executed in the ordinary course of business; |
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(vi) |
All sales, agency, distributorship or franchise agreements; and |
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(vii) |
Any other contracts not in the ordinary course of business. |
(b) All labor contracts, employment agreements and collective bargaining agreements to which DCI is a party.
(c) All instruments evidencing any liens or security interest securing any indebtedness of DCI covering any asset of DCI.
(d) All profit sharing, pension, stock option, severance pay, retirement, bonus, deferred compensation, group life and health insurance or other employee benefit plans, agreements, arrangements or commitments of any nature whatsoever, whether or not legally binding, and all agreements with any present or former officer, director or shareholder of the Corporation.
(e) Any and all documents, instruments and other writings not listed in any other schedule hereto which are material to the business operations of DCI.
Except as set forth in Exhibit 9.17, all of such contracts, agreements, leases, licenses, plans, arrangements and commitments and all other such items set forth above are valid, binding and in full force and effect in accordance with their terms and conditions, except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, fraudulent transfer, reorganization or other similar laws affecting the enforcement of contracts generally, and there is no existing material default thereunder or breach thereof by the Corporation, or to DCI's knowledge by any party to such contracts, or any conditions which, with the passage of time or the giving of notice or both, might constitute such a default by the Corporation or by any other party to the contracts.
(a) To the Best Knowledge of DCI, no real property (or the subsurface soil and the ground water thereunder) now or previously leased by DCI (the "Leased Premises") either contains any Hazardous Substance (as hereinafter defined) or has underneath it any underground fuel or liquid storage tanks;
(b) To the Best Knowledge of DCI, there has been no generation, transportation, storage, treatment or disposal of any Hazardous Substance on or beneath the Leased Premises, now or in the past;
(c) DCI is not aware of any pending or threatened litigation or proceedings before any court or administrative agency in which any person alleges, or threatens to allege, the presence, release, threat of release, placement on or in the Leased Premises, or the generation, transportation, storage, treatment or disposal at the Leased Premises, of any Hazardous Substance;
(d) DCI has not received any written notice and has no knowledge that any Governmental Authority or any employee or agent thereof has determined or alleged, or is investigating the possibility, that there is or has been any presence, release, threat of release, placement on or in the Leased Premises, or any generation, transportation, storage, treatment or disposal at the Leased Premises, of any Hazardous Substance;
(e) To the Best Knowledge of DCI, there have been no communications or agreements with any Governmental Authority or agency (federal, state, or local) or any private person or entity (including, without limitation, any prior owner of the Leased Premises and any present or former occupant or tenant of the Leased Premises) relating in any way to the presence, release, threat of release, placement on or in the Leased Premises, or any generation, transportation, storage, treatment or disposal at the Leased Premises, of any Hazardous Substance. DCI further agrees and covenants that DCI will not store or deposit on, otherwise release or bring onto or beneath, the Leased Premises any Hazardous Substance prior to the Closing Date; and
(f) There is no litigation, proceeding, citizen's suit or governmental or other investigation pending, or, to DCI's Best Knowledge, threatened, against DCI, and DCI knows of no facts or circumstances which might give rise to any future litigation, proceeding, citizen's suit or governmental or other investigation, which relate to DCI's compliance with environmental laws, regulations, rules, guidelines and ordinances.
For purposes of this Section 9.20, "Hazardous Substance" shall mean and include (i) a hazardous substance as defined in 42 U.S.C. Section 9601(14), the Regulations at 40 C.F.R. Part 302, (2) any substance regulated under the Emergency Planning and Community Right to Know Act (including without limitation any extremely hazardous substances listed at 40 C.F.R. Part 355 and any toxic chemical listed at 40 C.F.R. Part 372), (iii) hazardous wastes and hazardous substances as specified under any Texas state or local Governmental Requirement governing water pollution, groundwater protection, air pollution, solid wastes, hazardous wastes, spills and other releases of toxic or hazardous substances, transportation of hazardous substances, materials and wastes and occupational or employee health and safety, and (iv) any other material, gas or substance known or suspected to be toxic or hazardous (including, without limitation, any radioactive substance, methane gas, volatile hydrocarbon, industrial solvent, and asbestos) or which could cause a material detriment to, or materially impair the beneficial use of, the Leased Premises, or constitute a material health, safety or environmental risk to any person exposed thereto or in contact therewith. For purposes of this Section 9.20, "Hazardous Substance" shall not mean and shall not include the following, to the extent used normally and required for everyday uses or normal housekeeping or maintenance: (a) fuel oil and natural gas for heating, (b) lubricating, cleaning, coolant and other compounds customarily used in building maintenance, (c) materials routinely used in the day-to-day operations of an office, such as copier toner, (d) consumer products, (e) material reasonably necessary and customarily used in construction and repair of an office project, and (f) fertilizers, pesticides and herbicides commonly used for routine office landscaping.
10.1 Preservation of Business. Until Closing, DCI shall use its best efforts to cause DCI to:
(a) Preserve intact the present business organization of DCI; and
(b) Maintain its property and assets in its present state of repair, order and condition, reasonable wear and tear excepted; and
(c) Preserve and protect the goodwill and advantageous relationships of DCI with its customers and all other persons having business dealings with DCI; and
(d) Preserve and maintain in force all licenses, permits, registrations, franchises, patents, trademarks, tradenames, trade secrets, service marks, copyrights, bonds and other similar rights of DCI; and
(e) Comply with all laws applicable to the conduct of its business
(a) Sell, mortgage, pledge or encumber or agree to sell, mortgage, pledge or encumber, any of its property or assets, other than in the ordinary course of business;
(b) Incur any obligation (contingent or otherwise) or purchase, acquire, transfer, or convey, any material assets or property or enter into any contract or commitment, except in the ordinary course of business.
(c) Without the consent of SKYLYNX, which consent shall not be unreasonably withheld, pay or retire any debt or liabilities except for (i) general, administrative and overhead expenses, (ii) salaries and other employee obligations previously committed, (iii) normal trade payables and vendor liabilities (iv) payments due under the Marquette Commerical Finance, and (v) other expenses incurred in the ordinary course of business.
(a) change or alter the physical contents or character of the inventories of its business, so as to materially affect the nature of the Corporation's business or materially and adversely change the total dollar valuation of such inventories, other than in the ordinary course of business;
(b) incur any obligations or liabilities (absolute or contingent) other than current liabilities incurred and obligations under contracts entered into in the ordinary course of business;
(c) mortgage, pledge or voluntarily subject to lien, charge or other encumbrance any assets, tangible or intangible, other than the lien of current property taxes not due and payable;
(d) sell, assign or transfer any of its assets or cancel any debts or claims, other than in the ordinary course of business;
(e) waive any right of any substantial value;
(f) declare or make any payment or distribution to Shareholders or issue, purchase or redeem any shares of its capital stock or other equity securities or issue or sell any rights to acquire the same or effect any stock split, recapitalization, combination, or reclassification of its capital stock, or reorganization;
(g) grant any increase in the salary or other compensation of any of its directors, officers, or employees or make any increase in any benefits to which such employees might be entitled or enter into any employment agreement or consulting agreement;
(h) institute any bonus, benefit, profit sharing, stock option, pension, retirement plan or similar arrangement, or make any changes in any such plans or arrangements presently existing;
(i) enter into any transactions or series of transactions other than in the ordinary course of business;
(j) amend or propose to amend its Articles of Incorporation or By-Laws;
(k) make any change in accounting methods, principles or practices;
(l) authorize capital expenditures or make any acquisition of, or investment in, assets or stock of any other Person;
(m) enter into or amend any material contract or agreement other than in the ordinary course of business;
(n) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability;
(o) permit any material insurance policy to be canceled or terminated, except in the ordinary course of business;
(p) assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person or make any loans or advances;
(q) maintain its real and personal properties in as good a state of operating condition and repair as they are on the date of this Agreement, except for ordinary wear and tear or insured casualty in amounts less than $5,000;
(r) terminate or modify any material leases, contracts, licenses, and permits or other authorizations or agreements affecting its business or its real and/or personal property, or the operation thereof, or enter into any additional lease or contract requiring expenditure by it of any amount affecting such properties or the operation thereof; or
(s) discharge, satisfy or pay any liens, encumbrances, obligations or liabilities relating to it, whether absolute or contingent (including litigation claims), other than liabilities shown on Exhibit 4.1 and liabilities incurred after the date thereof in the ordinary course of business, and no such discharge, satisfaction or payment shall be effected other than in accordance with the ordinary payment terms relating to the liability discharged, satisfied or paid.
(a) DCI will promptly pay and discharge, or cause to be paid and discharged, when due and payable, all lawful taxes, assessments, and governmental charges or levies imposed upon the income, profits, property or business of DCI or any subsidiary; provided, however, that any such tax, assessment, charge or levy need not be paid if the validity thereof shall currently be contested in good faith by appropriate proceedings and if DCI shall have set aside on its books adequate reserves therefor; and provided, further, that DCI will pay all such taxes, assessments, charges or levies forthwith upon the commencement of proceedings to foreclose any lien that may have attached as security therefor. DCI will promptly pay or cause to be paid when due, or in conformance with customary trade terms, all other indebtedness incident to the operations of DCI;
(b) DCI will keep its properties and those of its subsidiaries in good repair, working order and condition, reasonable wear and tear excepted, and from time to time make all needful and proper repairs, renewals, replacements, additions and improvements thereto; and DCI will at all times comply with the provisions of all material leases to which any of them is a party or under which any of them occupies property so as to prevent any loss or forfeiture thereof or thereunder;
(c) DCI will keep its assets that are of an insurable character insured by financially sound and reputable insurers against loss or damage by fire, extended coverage and explosion insurance in amounts customary for companies in similar businesses similarly situated; and immediately following the Closing, DCI will maintain, with financially sound and reputable insurers, insurance against other hazards, risks and liabilities to persons and property to the extent and in the manner customary for companies in similar businesses similarly situated;
(d) DCI will keep true records and books of account in which full, true and correct entries will be made of all dealings or transactions in relation to its business and affairs in accordance with its past practices consistently applied;
(e) DCI will comply with the requirements of all applicable laws, rules, regulations and orders of any governmental authority, a breach of which could have a material adverse effect on its business or credit;
(e) DCI shall maintain in full force and effect its corporate existence, rights and franchises and all licenses and other rights to use patents, processes, licenses, trademarks, trade names or copyrights owned or possessed by it or any subsidiary and deemed by DCI to be necessary to the conduct of its business;
(f) DCI will, consistent with its practices in the ordinary course of business, endeavor to retain its business relationships with its customers and suppliers that it believes to be advantageous; and
(g) DCI shall deliver to SKYLYNX copies of its statements of operation and financial condition and similar statements as and when prepared (if at all) in the ordinary course of its business.
(a) Except in connection with the transactions contemplated by this Agreement, DCI shall not, nor shall it permit any of its subsidiaries to, nor shall it authorize or permit any officer, director or employee of or any investment banker, attorney or other advisor or representative of, DCI or any of its subsidiaries to, (i) solicit, initiate or encourage the submission of, any takeover proposal, (ii) enter into any agreement with respect to any takeover proposal or (iii) participate in any discussions or negotiations regarding, or furnish to any person any information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any takeover proposal. Without limiting the foregoing, it is understood that any violation of the restrictions set forth in the preceding sentence by any executive officer of DCI or any of its subsidiaries or any investment banker, attorney or other advisor or representatives of DCI or any of its subsidiaries or otherwise, shall be deemed to be a breach of this Section by DCI. For purposes of this Agreement, "takeover proposal" means any proposal for a merger, consolidation or reorganization or other business combination involving DCI or any of its subsidiaries or any proposal or offer to acquire in any manner, directly or indirectly, an equity interest in, any voting securities of, or options, rights, warrants or other interests convertible or exercisable for or into such voting securities, or a substantial or material portion of the assets or business of DCI or any of its subsidiaries, other than the transactions contemplated by this Agreement.
(b) Except upon a material breach of this Agreement by SKYLYNX or SAC or following termination hereof and except for action permitted or contemplated by this Agreement, including a party's right to terminate this Agreement under certain circumstances, neither the Board of Directors of DCI nor any committee thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to SKYLYNX, the approval or recommendation by such Board of Directors of any such committee of this Agreement or the Exchange or (ii) approve or recommend, or propose to approve or recommend, any takeover proposal.
(c) DCI promptly shall advise SKYLYNX orally and in writing of any takeover proposal or any inquiry with respect to or which could lead to any takeover proposal and the identity of the person making any such takeover proposal or inquiry. DCI will keep SKYLYNX fully informed of the status and details of any such takeover proposal or inquiry.
(d) The provisions of this Section 10.7 shall not be construed to prevent any investment banker, attorney or other advisor or representative of DCI to engage in discussions with third parties in the ordinary course of business with respect to transactions not involving the parties to this Agreement.
SECTION 11: REPRESENTATIONS AND WARRANTIES OF SKYLYNX AND SAC
As a material inducement to DCI to enter into this Agreement and with the understanding and expectation that DCI will be relying thereon in consummating the Merger contemplated hereunder, SKYLYNX and SAC (which hereafter may collectively be referred to in Sections 11 and 12 only as the "Corporation") represent and warrant as follows:
(a) Conflict with or result in a breach of any provision of its Articles of Incorporation or By-Laws or similar documents of any Subsidiary;
(b) Result in a default (or give rise to any right of termination, cancellation, or acceleration) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, agreement or other instrument or obligation to which the Corporation is a party, or by which any of its properties or assets may be bound except for such default (or right of termination, cancellation, or acceleration) as to which requisite waivers or consents shall either have been obtained by the Corporation prior to the Closing Date or the obtaining of which shall have been waived by DCI; or
(c) Violate any order, writ, injunction, decree or, to the Corporation's Best Knowledge, any statute, rule or regulation applicable to the Corporation or any of its properties or assets. No consent or approval by any Governmental Authority is required in connection with the execution and delivery by the Corporation of this Agreement or the consummation by the Corporation of the transactions contemplated hereby, except for possible notice under plant closing laws.
As of their respective dates, all of SKYLYNX's reports, statements and other filings with the Commission (the "SEC Documents") complied in all material respects with the requirements of the Act or the Exchange Act as the case may be and the rules and regulations of the Commission promulgated thereunder and other federal, state and local laws, rules and regulations applicable to such SEC Documents, and none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of SKYLYNX included in the SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of SKYLYNX as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
11.8 Taxes. Except as set forth in Exhibit 11.8:
(a) The Corporation has filed (or has obtained extensions for filing) all income, excise, sales, corporate franchise, property, payroll and other tax returns or reports required to be filed by it, as of the date hereof by the United States of America, any state or other political subdivision thereof or any foreign country and has paid all Taxes or assessments relating to the time periods covered by such returns or reports; and
(b) The Corporation has paid all tax liabilities imposed or assessed by any governmental authority for all periods prior to the Closing Date for which such taxes have become due and payable and has received no notice from any such governmental authority of any deficiency or delinquency with respect to such obligation. The Corporation is not currently undergoing any audit conducted by any taxing authority and has received no notice of audit covering any prior period for which taxes have been paid or are or will be due and payable prior to the Closing Date. There are no present disputes as to taxes of any nature payable by the Corporation.
(a) issued, bought, redeemed or entered into any agreements, commitments or obligations to sell, buy or redeem any shares of its capital stock, including but not limited to any options or warrants to purchase any securities of the Corporation or any securities convertible into capital stock of the Corporation;
(b) incurred any obligation or liability (absolute or contingent), other than current liabilities incurred, and obligations under contracts entered into, in the ordinary course of business;
(c) discharged or satisfied any lien or encumbrance or paid any obligation or liability (absolute or contingent), other than current liabilities incurred in the ordinary course of business;
(d) mortgaged, pledged or subjected to lien charges, or other encumbrance any of its assets, other than the lien of current or real property taxes not yet due and payable;
(e) waived any rights of substantial value, whether or not in the ordinary course of business;
(f) suffered any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting its assets or its business;
(g) made or suffered any amendment or termination of any material contract or any agreement which adversely affects its business;
(h) received notice or had knowledge of any labor trouble other than routine grievance matters, none of which is material;
(i) increased the salaries or other compensation of any of its directors, officers or employees or made any increase in other benefits to which employees may be entitled, other than employee salary increases made in the ordinary course of business and reflected on an exhibit hereto;
(j) sold, transferred or otherwise disposed of any of its assets, other than in the ordinary course of business;
(k) declared or made any distribution or payments to any of its shareholders, officers or employees, other than wages and salaries made to employees in the ordinary course of business;
(l) revalued any of its assets; or
(m) ntered into any transactions not in the ordinary course of business.
SECTION 12: COVENANTS OF SKYLYNX AND SAC
(a) Preserve intact the present business organization of SKYLYNX;
(b) Maintain its property and assets in its present state of repair, order and condition, reasonable wear and tear excepted;
(c) Preserve and protect the goodwill and advantageous relationships of the Corporation with its customers and all other persons having business dealings with the Corporation;
(d) Preserve and maintain in force all licenses, permits, registrations, franchises, patents, trademarks, tradenames, trade secrets, service marks, copyrights, bonds and other similar rights of the Corporation; and
(e) Comply with all laws applicable to the conduct of its business.
(a) SKYLYNX will promptly pay and discharge, or cause to be paid and discharged, when due and payable, all lawful taxes, assessments, and governmental charges or levies imposed upon the income, profits, property or business of SKYLYNX or any subsidiary; provided, however, that any such tax, assessment, charge or levy need not be paid if the validity thereof shall currently be contested in good faith by appropriate proceedings and if SKYLYNX shall have set aside on its books adequate reserves therefor and deposited at Closing into an escrow account an amount to cover any such tax, assessment, charge or levy; and provided, further, that SKYLYNX will pay all such taxes, assessments, charges or levies forthwith upon the commencement of proceedings to foreclose any lien that may have attached as security therefor. The Corporation will promptly pay or cause to be paid when due, or in conformance with customary trade terms, all other indebtedness incident to the operations of the Corporation;
(b) SKYLYNX will keep its properties and those of its subsidiaries in good repair, working order and condition, reasonable wear and tear excepted, and from time to time make all needful and proper repairs, renewals, replacements, additions and improvements thereto; and SKYLYNX will at all times comply with the provisions of all material leases to which any of them is a party or under which any of them occupies property so as to prevent any loss or forfeiture thereof or thereunder;
(c) SKYLYNX will keep its assets that are of an insurable character insured by financially sound and reputable insurers against loss or damage by fire, extended coverage and explosion insurance in amounts customary for companies in similar businesses similarly situated; and SKYLYNX will maintain, with financially sound and reputable insurers, insurance against other hazards, risks and liabilities to persons and property to the extent and in the manner customary for companies in similar businesses similarly situated;
(d) SKYLYNX will keep true records and books of account in which full, true and correct entries will be made of all dealings or transactions in relation to its business and affairs in accordance with its past practices consistently applied;
(e) SKYLYNX will comply with the requirements of all applicable laws, rules, regulations and orders of any governmental authority, a breach of which could have a material adverse effect on its business or credit;
(e) SKYLYNX shall maintain in full force and effect its corporate existence, rights and franchises and all licenses and other rights to use patents, processes, licenses, trademarks, trade names or copyrights owned or possessed by it or any subsidiary and deemed by SKYLYNX to be necessary to the conduct of its business;
(f) SKYLYNX will, consistent with its practices in the ordinary course of business, endeavor to retain its business relationships with its customers and suppliers that it believes to be advantageous; and
(g) SKYLYNX shall deliver to DCI copies of its statements of operation and financial condition and similar statements as and when prepared (if at all) in the ordinary course of its business.
13.1 Termination. This Agreement may be terminated and abandoned solely as follows:
(a) At any time until the Closing Date by the mutual agreement of the Board of Directors of DFTS, SKYLYNX, SAC, and the Shareholders of DCI,.
(d) By either SKYLYNX, SAC, DFTS or the Shareholders of DCI, if for any reason the parties have failed to close this Agreement on or before January 15, 2005, provided that neither SKYLYNX, SAC, DFTS nor the Shareholders of DCI is then in default hereunder.
In the event of any termination pursuant to this Section 13.1 (other than pursuant to subparagraph 13.1(a)), written notice setting forth the reasons therefor shall forthwith be given by DFTS, if it is the terminating party, to SKYLYNX, SAC, and the Sherholders of DCI, or by SKYLYNX or SAC, if either of them is the terminating party, to DFTS and the Sharehodlers of DCI, or by the Shareholders of DCI, if it is the terminating party, to DFTS, SKYLYNX and SAC.
(a) Any inaccuracy in a representation or breach of a warranty made by the SKYLYNX or SAC and in this Agreement or in any document or instrument delivered to DFTS and the Shareholders of DCI in connection with this Agreement; or
(b) The failure of the SKYLYNX or SAC to comply with, or the breach by SKYLYNX or SAC of, any of the covenants contained in this Agreement or in any document or instrument delivered to DFTS and the Shareholders of DCI in connection with this Agreement, to be performed by SKYLYNX or SAC.
(a) Any inaccuracy in a representation or breach of a warranty made by DFTS and the Shareholders of DCI in this Agreement or in any document or instrument delivered to the SKYLYNX in connection with this Agreement; or
(b) The failure of DFTS and the Shareholders of DCI to comply with, or the breach by DFTS and the Shareholders of DCI of, any of the covenants contained in this Agreement or in any document or instrument delivered to SKYLYNX in connection with this Agreement, to be performed by DFTS and the Shareholders of DCI.
14.3 Limitations on Claims and Liability.
Notwithstanding any provision of this Agreement to the contrary, no party shall have liability to indemnify the other and neither party may assert a claim for indemnification for damages suffered by it until and unless the party's claims for damages for which the other party is entitled to indemnification equal or exceed, in the aggregate, the sum of $10,000 (the "Damages Threshold"). Upon a party's cumulative claims for indemnification equaling the Damages Threshold, a party may assert claims for indemnification pursuant to Section 14.4 below for the full amount of such party's damages for which it is entitled to indemnification hereunder.
(a) "Claims" shall mean all claims asserted pursuant to this Section 14, whether or not arising as a result of a Third Party Claim.
(b) "Indemnified Person" shall mean any DFTS and the Shareholders of DCI Indemnitee, any SKYLYNX Indemnitee or DFTS and the Shareholders of DCI Indemnitees, as the context requires.
(c) "Indemnifying Person" shall mean any person obligated to indemnify an Indemnified Person pursuant to this Section 14, as the context requires.
(d) "Third Party Claims" shall mean any Claim asserted by any person not a party to this Agreement (including without limitation any Governmental Authority), asserting that an Indemnified Person is liable for monetary or other obligations which may constitute or result in Damages for which such Indemnified Person may be entitled to indemnification pursuant to this Section 14.
(e) All Claims shall be made in writing and shall set forth with reasonable specificity the facts and circumstances of the Claim, as well as the basis upon which indemnification pursuant to this Section 14 is sought. Notwithstanding the foregoing, no delay or failure by any Indemnified Person to provide notification of any Claim shall preclude any Indemnified Person from recovering for Damages pursuant to this Section 14, except to the extent that such delay or failure materially compromises the rights of any Indemnifying Person under this Section 14.
(f) Within ten (10) days after receipt by an Indemnifying Person of any notification of a Claim, the Indemnifying Person may, upon written notice thereof to the Indemnified Person, assume (at the Indemnifying Person's expense) control of the defense of such action, suit or proceeding with counsel reasonably satisfactory to the Indemnified Person, provided the Indemnifying Person acknowledges in writing to the Indemnified Person that any Damages that may be assessed against the Indemnified Person in connection with such action, suit or proceeding constitute Damages for which the Indemnified Person shall be entitled to indemnification pursuant to this Section 14. If the Indemnifying Person does not so assume control of such defense, the Indemnified Person shall control such defense, but in so doing shall not waive or limit its right to recover under this Section 14 for any Damages that may be assessed against the Indemnified Person in connection with such action, suit or proceeding. The party not controlling such defense may participate therein at its own expense; provided that if the Indemnifying Person assumes control of such defense, and the Indemnified Person has been advised in writing by outside legal counsel that under the applicable standards of professional conduct, the Indemnifying Person and the Indemnified Person may not be represented by the same counsel with respect to such action, suit or proceeding, the reasonable fees and expenses of one law firm for the Indemnified Person shall be paid by the Indemnifying Person. The party controlling such defense shall keep the other party advised of the status of such action, suit or proceeding and the defense thereof and shall consider in good faith recommendations made by the other party with respect thereto. The Indemnified Person shall not agree to any settlement of such action, suit or proceeding without the prior written consent of the Indemnifying Person, which (with respect to an action, suit or proceeding as to which the Indemnifying Person has not elected to assume control of the defense) shall not be unreasonably withheld, conditioned or delayed. The Indemnifying Person shall not agree to any settlement of such action, suit or proceeding without the prior written consent of the Indemnified Person, which shall not be unreasonably withheld, conditioned or delayed so long as the settlement includes a complete release of the Indemnified Person from all liability and does not contain or contemplate any payment by, or injunctive or other equitable relief binding upon, the Indemnified Person.
SECTION 15: NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Each of the parties will pay all costs and expenses of its performance and compliance with this Agreement and the transactions contemplated hereby. In no event will any party to this Agreement be liable to any other party for incidental damages, lost profits, income tax consequences, lost savings or any other consequential damages, even if such party has been advised of the possibility of such damages, or for punitive damages, resulting from the breach of any obligation under this Agreement. The provisions of this Section 16 shall survive any termination hereof.
17.8 Governing Law - Construction. This Agreement, and the rights and obligations of the respective parties, shall be governed by and construed in accordance with the laws of the State of Delaware. Notwithstanding the preceding sentence, it is acknowledged that each party hereto is being represented by, or has waived the right to be represented by, independent counsel. Accordingly, the parties expressly agree that no provision of this Agreement shall be construed against any party on the ground that the party or its counsel drafted the provision. Nor may any provision of this Agreement be construed against any party on the grounds that party caused the provision to be present.
Notice shall be deemed to have been given immediately when sent by telefax and confirmed received or other electronic method and seventy-two hours after being deposited in the United States mail, or when personally delivered in the manner herein above described. Notice provided in any manner not specified above shall be effective only if and when received by the party or parties, person or persons to be, or provided to be notified.
All notices, requests, demands and other communications required or permitted under this Agreement shall be addressed as set forth below:
If SKYLYNX, to: |
SKYLYNX COMMUNICATIONS, INC. |
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000 Xxxx Xxxxxxxx Xxxxxxxxx |
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Xxxxxxxx, Xxxxxxx 00000 |
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Fax: (000) 000-0000 |
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With copy to: |
Xxxxxxxx X. Xxxxxx, Esq. |
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Xxxxxxxx X. Xxxxxx, P.C. |
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0000 Xxxx Xxxxxx |
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Xxxxxxx, Xxxxxxxx 00000 |
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Fax: (000) 000-0000 |
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If DFTS, to: |
DEFENSE TECHNOLOGY SYSTEMS, INC. |
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000 X Xxxxxx Xxxx. |
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Xxxxxxxxx, XX 00000 |
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Fax: (000)000-0000 |
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If DCI,to: |
DIGITAL COMPUTER INTEGRATION CORPORATION |
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0000 Xxxxxxx Xxxx, Xxxxx 000 |
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Xxxxx, XX 00000 |
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Fax (000) 000-0000 |
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If Shareholders of DCI, to: |
Xxxxx Xxxxxxxxxxx, Xx. |
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0000 Xxxxxxxx Xxxxx |
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Xxxxx, XX 00000 |
Any party receiving a facsimile transmission shall be entitled to rely upon a facsimile transmission to the same extent as if it were an original. Any party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 17.10 for the giving of notice.
For purposes of this Section, the term "Agreement" shall include this Agreement and the Exhibits and other documents attached hereto or described in this Section 17.17. This Agreement, and other documents delivered pursuant to this Agreement, contain all of the terms and conditions agreed upon by the parties relating to the subject matter of this Agreement and supersede all prior and contemporaneous agreements, letters of intent, representations, warranties, disclosures, negotiations, correspondence, undertakings and communications of the parties, oral or written, respecting that subject matter, including but not limited to the Original Agreement and Plan of Reorganization and the Amendment Agreements entered into by the parties.
17.17 Time. Time is of the essence of this Agreement and each of its provisions.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties have signed the Agreement the date and year first above written.
SKYLYNX ACQUISITION CORP., |
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/s/ Xxxxxx X. Xxxxx |
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SKYLYNX COMMUNICATIONS, INC., |
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a Delaware corporation |
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/s/ Xxxxxx X. Xxxxx |
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DIGITAL COMPUTER INTEGRATION CORPORATION |
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A Texas corporation |
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/s/ Xxxxx Xxxxxxxxxxx |
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Xxxxx Xxxxxxxxxxx, President |
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DEFENSE TECHNOLOGY SYSTEMS, INC. |
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A Delaware Corporation |
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/s/ Xxxxxxx X. Xxxxxx |
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Xxxxxxx X. Xxxxxx, President |
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DCI SHAREHOLDERS: |
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XXXXX XXXXXXXXXXX, XX. |
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/s/ Xxxxx Xxxxxxxxxxx |
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XXXXX XXXX XXXXXXXXXXX |
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/s/ Xxxxx Xxxx Xxxxxxxxxxx |