EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and between
TECHNOLOGY HOLDINGS, INC.,
and
COLLEXIS HOLDINGS, INC.
February 13, 2007
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS................................................................1
ARTICLE II THE MERGER................................................................6
Section 2.1 Merger..............................................................6
Section 2.2 Effective Time......................................................6
Section 2.3 Certificate of Incorporation; By-laws; Directors and Officers.......6
Section 2.4 Effects of the Merger...............................................7
Section 2.5 Closing.............................................................7
ARTICLE III MERGER CONSIDERATION; CONVERSION OF SECURITIES...........................7
Section 3.1 Manner and Basis of Converting Capital Stock........................7
Section 3.2 Surrender and Exchange of Certificates..............................8
Section 3.3 Options, Warrants...................................................9
Section 3.4 Parent Common Stock................................................10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................10
Section 4.1 Organization.......................................................10
Section 4.2 Authorization; Validity of Agreement...............................11
Section 4.3 Capitalization.....................................................11
Section 4.4 Consents and Approvals; No Violations..............................11
Section 4.5 Financial Statements...............................................11
Section 4.6 No Undisclosed Liabilities.........................................12
Section 4.7 Litigation.........................................................12
Section 4.8 No Default; Compliance with Applicable Laws........................12
Section 4.9 Broker's and Finder's Fees.........................................12
Section 4.10 Assets and Contracts...............................................12
Section 4.11 Tax Returns and Audits.............................................13
Section 4.12 Patents and Other Intangible Assets................................13
Section 4.13 Employee Benefit Plans; ERISA......................................14
Section 4.14 Title to Property and Encumbrances.................................15
Section 4.15 Condition of Properties............................................15
Section 4.16 Insurance Coverage.................................................15
Section 4.17 Interested Party Transactions......................................15
Section 4.18 Environmental Matters..............................................15
Section 4.19 Disclosure.........................................................16
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT..................................17
Section 5.1 Organization.......................................................17
Section 5.2 Authorization; Validity of Agreement...............................17
Section 5.3 Consents and Approvals; No Violations..............................17
Section 5.4 Litigation.........................................................18
Section 5.5 No Default; Compliance with Applicable Laws........................18
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Section 5.6 Broker's and Finder's Fees; Broker/Dealer Ownership................18
Section 5.7 Capitalization of Parent...........................................18
Section 5.8 Validity of Shares.................................................19
Section 5.9 SEC Reporting and Compliance.......................................19
Section 5.10 Financial Statements...............................................20
Section 5.11 No General Solicitation............................................20
Section 5.12 Absence of Undisclosed Liabilities.................................20
Section 5.13 Changes............................................................20
Section 5.14 Tax Returns and Audits.............................................21
Section 5.15 Employee Benefit Plans; ERISA......................................21
Section 5.16 Interested Party Transactions......................................22
Section 5.17 Questionable Payments..............................................22
Section 5.18 Obligations to or by Stockholders..................................22
Section 5.19 Schedule of Assets and Contracts...................................22
Section 5.20 Environmental Matters..............................................23
Section 5.21 Employees..........................................................24
Section 5.22 Disclosure.........................................................24
ARTICLE VI CONDUCT OF BUSINESSES PENDING THE MERGER.................................24
Section 6.1 Conduct of Business by the Company Pending the Merger..............24
Section 6.2 Conduct of Business by Parent Pending the Merger...................25
ARTICLE VII ADDITIONAL AGREEMENTS...................................................26
Section 7.1 Access and Information.............................................26
Section 7.2 Additional Agreements..............................................27
Section 7.3 Publicity..........................................................27
Section 7.4 Appointment of Directors...........................................27
Section 7.5 Parent Name Change and Exchange Listing............................27
Section 7.6 Meeting of Stockholders............................................27
ARTICLE VIII CONDITIONS OF PARTIES' OBLIGATIONS.....................................28
Section 8.1 Company Obligations................................................28
Section 8.2 Parent Obligations.................................................29
ARTICLE IX INDEMNIFICATION AND RELATED MATTERS......................................31
Section 9.1 Indemnification by Parent..........................................31
Section 9.2 Survival...........................................................32
Section 9.3 Time Limitations...................................................32
Section 9.4 Limitation on Liability............................................32
Section 9.5 Notice of Claims...................................................32
Section 9.6 Payment of Damages.................................................33
ARTICLE X TERMINATION PRIOR TO CLOSING..............................................33
Section 10.1 Termination of Agreement...........................................33
Section 10.2 Termination of Obligations.........................................34
ARTICLE XI MISCELLANEOUS............................................................34
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Section 11.1 Amendments.........................................................34
Section 11.2 Notices............................................................34
Section 11.3 Entire Agreement...................................................35
Section 11.4 Expenses...........................................................35
Section 11.5 Severability.......................................................36
Section 11.6 Successors and Assigns; Assignment.................................36
Section 11.7 No Third Party Beneficiaries.......................................36
Section 11.8 Counterparts; Delivery by Facsimile................................36
Section 11.9 Waiver.............................................................36
Section 11.10 No Constructive Waivers............................................37
Section 11.11 Further Assurances.................................................37
Section 11.12 Recitals...........................................................37
Section 11.13 Headings...........................................................37
Section 11.14 Governing Law......................................................37
Section 11.15 Dispute Resolution.................................................37
Section 11.16 Interpretation.....................................................38
LIST OF EXHIBITS
Exhibits
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Exhibit A Certificate of Incorporation of Surviving Corporation
Exhibit B By-laws of Surviving Corporation
Exhibit C Directors and Officers of Surviving Corporation
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is entered into as of February 13. 2007
by and between TECHNOLOGY HOLDINGS ("Parent"), a Nevada corporation, and
COLLEXIS HOLDINGS, INC., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company is primarily engaged in the business of developing
and marketing software that enables discovery by pulling the key ideas out of
text;
WHEREAS, the Board of Directors of each of Parent and the Company has
approved, and deems it advisable and in the best interests of its stockholders
to consummate, the acquisition of the Company by Parent, which acquisition is to
be effected by the merger of the Company with and into the Parent, with the
Parent being the surviving entity (the "Merger"), upon the terms and subject to
the conditions set forth in this Agreement (as defined herein); and
WHEREAS, the parties hereto intend that the Merger shall qualify as a
reorganization within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual agreements and covenants
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement shall have the following
meanings:
"Acquisition Proposal" shall have the meaning given to such term in
Section 6.2 hereof.
"Action" shall mean any claim, action, suit, proceeding, investigation or
order.
"Affiliate" shall mean, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with, such Person.
For the purposes of this definition, "control" (including, with correlative
meaning, the terms "controlling," "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of management and policies of such Person through the
ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Agreement and Plan of Merger, including the
Company Disclosure Schedule, the Parent Disclosure Schedule and the exhibits
attached hereto or referred to herein, as the same may be amended or modified
from time to time in accordance with the provisions hereof.
"Balance Sheet" shall have the meaning given to such term in Section 4.5
hereof.
"Balance Sheet Date" shall have the meaning given to such term in Section
4.5 hereof.
"By-laws" shall have the meaning given to such term in Section 2.3(b)
hereof.
"Certificate of Incorporation" shall have the meaning given to such term
in Section 2.3(a) hereof.
"Closing" shall have the meaning given to such term in Section 2.5 hereof.
"Closing Date" shall have the meaning given to such term in Section 2.5
hereof.
"Code" shall have the meaning given to such term in the third recital to
this Agreement.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock Options" shall have the meaning given to such term in
Section 3.3(a) hereof.
"Company" shall have the meaning given to such term in the preamble to
this Agreement.
"Company Capital Stock" shall mean, collectively, the Company Common
Stock.
"Company Common Stock" shall mean the common stock, par value $0.001 per
share, of the Company.
"Company Material Adverse Effect" shall mean any change, effect or
circumstance that by itself, or together with other changes, effects and
circumstances is materially adverse or is reasonably likely to be materially
adverse to the business, assets, liabilities, condition (financial or otherwise)
or operations of the Company and its subsidiaries, taken as a whole.
"Contract" shall have the meaning given to such term in Section 4.4
hereof.
"Consents" shall mean any permits, filings, notices, licenses, consents,
authorizations, accreditation, waivers, approvals and the like of, to, with or
by any Person.
"DGCL" shall mean the General Corporation Law of the State of Delaware, as
amended.
"Dissenting Shares" shall have the meaning given to such term in Section
3.2(d) hereof.
"Effective Time" shall have the meaning given to such term in Section 2.2
hereof.
"Employee Benefit Plans" shall have the meaning assigned to it in Section
4.13 hereof.
"Environmental Law" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. xx.xx. 9601 et seq.; the Emergency
Planning and Community Right-to-Know Act of 1986, 42 U.S.C. xx.xx. 11001 et
seq.; the Resource Conservation and Recovery Act, 42 U.S.C. xx.xx. 6901 et seq.;
the Toxic Substances Control Act, 15 U.S.C. xx.xx. 2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. xx.xx. 136 et seq. and
comparable state statutes dealing with the registration, labeling and use of
pesticides and herbicides; the Clean Air Act, 42 U.S.C. xx.xx. 7401 et seq.; the
Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. xx.xx. 1251 et
seq.; the Safe Drinking Water Act, 42 U.S.C. xx.xx.
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300f et seq.; and the Hazardous Materials Transportation Act, 49 U.S.C. xx.xx.
1801 et seq., as any of the above referenced statutes have been amended as of
the date hereof, all rules, regulations and policies promulgated pursuant to any
of the above referenced statutes, and any other foreign, federal, state or local
law, statute, ordinance, rule, regulation or policy governing environmental
matters, as the same have been amended as of the date hereof.
"ERISA" shall mean the Employee Retirement Income Securities Act of 1974,
as amended, and the regulations issued thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations issued thereunder.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States consistently applied.
"Hazardous Material" means any substance or material meeting any one or
more of the following criteria: (a) it is or contains a substance designated as
or meeting the characteristics of a hazardous waste, hazardous substance,
hazardous material, pollutant, chemical substance or mixture, contaminant or
toxic substance under any Environmental Law; (b) its presence at some quantity
requires investigation, notification or remediation under any Environmental Law;
(c) it contains, without limiting the foregoing, asbestos, polychlorinated
biphenyls, petroleum hydrocarbons, petroleum derived substances or waste,
pesticides, herbicides, crude oil or any fraction thereof, nuclear fuel, natural
gas or synthetic gas; or (d) mold.
"Incentive Plans" shall have the meaning given to such term in Section
3.3(d) hereof.
"Indebtedness" shall mean any obligation of the Company that under GAAP is
required to be shown on the Balance Sheet of the Company as a Liability. Any
obligation secured by a Lien on, or payable out of the proceeds of production
from, property of the Company shall be deemed to be Indebtedness even though
such obligation is not assumed by the Company.
"Indebtedness for Borrowed Money" shall mean (a) all Indebtedness in
respect of money borrowed including, without limitation, Indebtedness which
represents the unpaid amount of the purchase price of any property and is
incurred in lieu of borrowing money or using available funds to pay such amounts
and not constituting an account payable or expense accrual incurred or assumed
in the ordinary course of business of the Company, (b) all Indebtedness
evidenced by a promissory note, bond or similar written obligation to pay money,
or (c) all such Indebtedness guaranteed by the Company or for which the Company
is otherwise contingently liable.
"Information Statement" shall have the meaning given to such term in
Section 7.7 hereof.
"Intellectual Property" shall have the meaning given to such term in
Section 4.12(b) hereof.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended.
"Letter of Transmittal" shall have the meaning assigned to it in Section
3.2 hereof.
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"Liability" shall mean any and all liability, debt, obligation,
deficiency, Tax, penalty, fine, claim, cause of action or other loss, cost or
expense of any kind or nature whatsoever, whether asserted or unasserted,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, and
whether due or to become due and regardless of when asserted.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including, without limitation, any conditional sale
or other title retention agreement, any lease in the nature thereof and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction and including any lien or charge arising by
statute or other law.
"Merger" shall have the meaning given to such term in the second recital
to this Agreement.
"Parent" shall have the meaning given to such term in the preamble to this
Agreement.
"Parent Balance Sheet" shall have the meaning assigned to such term in
Section 5.13 hereof.
"Parent Balance Sheet Date" shall have the meaning assigned to it in
Section 5.13 hereof.
"Parent Common Stock" shall have the meaning given to such term in the
fourth recital to this Agreement.
"Parent Employee Benefit Plans" shall have the meaning assigned to such
term in Section 5.16 hereof.
"Parent Financial Statements" shall have the meaning assigned to such term
in Section 5.11 hereof.
"Parent Material Adverse Effect" means any change, effect or circumstance
that by itself, or together with other changes, effects and circumstances is
materially adverse or is reasonably likely to be materially adverse to the
business, assets, liabilities, condition (financial or otherwise) or operations
of Parent and its subsidiaries, taken as a whole.
"Parent SEC Documents" shall have the meaning assigned to such term in
Section 5.10(b) hereof.
"Permitted Liens" shall mean (a) Liens for taxes and assessments or
governmental charges or levies not at the time due or in respect of which the
validity thereof shall currently be contested in good faith by appropriate
proceedings; (b) Liens in respect of pledges or deposits under workmen's
compensation laws or similar legislation, carriers', warehousemen's, mechanics',
laborers' and materialmens' and similar Liens, if the obligations secured by
such Liens are not then delinquent or are being contested in good faith by
appropriate proceedings; and (c) Liens incidental to the conduct of the business
of the Company that were not incurred in connection with the borrowing of money
or the obtaining of advances or credits and which do not in the aggregate
materially detract from the value of its property or materially impair the use
made thereof by the Company in its business.
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"Person" shall mean any individual, corporation, limited liability
company, partnership, joint venture, trust or other entity or organization,
including any government or political subdivision or an agency or
instrumentality thereof.
"Private Placement" shall mean the private placement offering to
accredited investors of units consisting of shares of Parent Common Stock.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations issued thereunder.
"Stockholder" shall mean any record holder of Company Capital Stock.
"Surviving Corporation" shall have the meaning given to such term in
Section 2.1 hereof.
"Tax" or "Taxes" shall mean (a) any and all taxes, assessments, customs,
duties, levies, fees, tariffs, imposts, deficiencies and other governmental
charges of any kind whatsoever (including, but not limited to, taxes on or with
respect to net or gross income, franchise, profits, gross receipts, capital,
sales, use, ad valorem, value added, transfer, real property transfer, transfer
gains, transfer taxes, inventory, capital stock, license, payroll, employment,
social security, unemployment, severance, occupation, real or personal property,
estimated taxes, rent, excise, occupancy, recordation, bulk transfer,
intangibles, alternative minimum, doing business, withholding and stamp),
together with any interest thereon, penalties, fines, damages costs, fees,
additions to tax or additional amounts with respect thereto, imposed by the
United States (federal, state or local) or other applicable jurisdiction; (b)
any liability for the payment of any amounts described in clause (a) as a result
of being a member of an affiliated, consolidated, combined, unitary or similar
group or as a result of transferor or successor liability, including, without
limitation, by reason of Code Section 1.1502-6; and (c) any liability for the
payments of any amounts as a result of being a party to any Tax Sharing
Agreement or as a result of any express or implied obligation to indemnify any
other Person with respect to the payment of any amounts of the type described in
either clauses (a) or (b).
"Tax Return" shall include all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns
(including Form 1099 and partnership returns filed on Form 1065)) required to be
supplied to a Tax authority relating to Taxes.
"Tax Sharing Agreements" shall have the meaning given to such term in
Section 4.15 hereof.
ARTICLE II
THE MERGER
Section 2.1 Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time, the Company shall be merged with and into the
Parent in accordance with Section 92A.190 of the Revised Statutes of the State
of Nevada and Section 252 of the DGCL. Following the Effective Time, the
separate corporate existence of the Company shall cease, and the Parent shall
continue as the corporation surviving the Merger (sometimes hereinafter referred
to as the "Surviving Corporation").
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Section 2.2 Effective Time. The Company and Parent shall cause a
certificate of merger to be filed on the Closing Date (or on such other date as
the Company and Parent may agree in writing) with the Secretary of State of the
State of Nevada as provided in Section 92A.190 of the Revised Statutes of the
State of Nevada and with the Secretary of State of Delaware as provided in
Section 252 of the DGCL, and shall make all other filings or recordings required
by the Revised Statutes of the the State of Nevada and the DGCL in connection
with the Merger. The Merger shall become effective at such time as the
certificates of merger are duly filed in accordance with the Revised Statutes of
Nevada and the DGCL with the Secretaries of State of the States of Nevada and
Delaware or such later time as specified in the certificates of merger, and such
time is hereinafter referred to as the "Effective Time."
Section 2.3 Certificate of Incorporation; By-laws; Directors and
Officers.
(a) The articles of incorporation of Parent. as in effect
immediately prior to the Effective Time, with such changes as are set
forth in the copy of such articles attached as Exhibit A hereto, shall be
the articles of incorporation of the Surviving Corporation (the
"Certificate of Incorporation") from and after the Effective Time until
thereafter changed or amended as provide therein or in accordance with
applicable law.
(b) The by-laws of the Parent, as in effect immediately prior to
the Effective Time, a copy of which is attached as Exhibit B hereto, shall
be the by-laws of the Surviving Corporation (the "By-laws") from and after
the Effective Time until thereafter changed or amended as provided therein
or in accordance with applicable law.
(c) The individuals identified on Exhibit C hereto under the
heading "Directors" shall, from and after the Effective Time, be the
directors of the Surviving Corporation until their successors have been
duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation
and By-laws. The individuals identified on Exhibit C hereto under the
heading "Officers" shall, from and after the Effective Time, be the
officers of the Surviving Corporation until their successors have been
duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation
and By-laws.
Section 2.4 Effects of the Merger. The Merger shall have the effects set
forth in Section 92A.190 of the Revised Statutes of the State of Nevada. Without
limiting the generality of the foregoing, at the Effective Time, except as
otherwise provided herein, all of the property, rights, privileges, powers and
franchises of the Company shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company shall become the debts, liabilities
and duties of the Surviving Corporation. The Company acknowledges that, upon the
effectiveness of the Merger, Parent shall have the absolute and unqualified
right to deal with the assets and business of the Surviving Corporation as its
own property without limitation on the disposition or use of such assets or the
conduct of such business.
Section 2.5 Closing. The consummation of the transactions contemplated
by this Agreement, including the Merger (the "Closing"), shall take place: (a)
at the offices of Xxxxxxxxx & Kahr, 000 Xxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx
Xxxx at 10:00 a.m. local time on the date on which all of the conditions to the
Closing set forth in Article VIII hereof shall be
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fulfilled or waived in accordance with this Agreement (other than conditions
that can be satisfied only at the Closing, but subject to the fulfillment or
waiver of those conditions at the Closing); or (b) at such other place, time and
date as the Company and Parent may agree in writing (the "Closing Date").
ARTICLE III
MERGER CONSIDERATION; CONVERSION OF SECURITIES
Section 3.1 Manner and Basis of Converting Capital Stock. At the
Effective Time, by virtue of the Merger and without any action on the part of
the Company or Parent or the holders of any outstanding shares of capital stock
or other securities of the Company or Parent:
(a) Company Common Stock. Except as provided in Section 3.1(c)
and Section 3.2(d) hereof, each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time shall be converted
into the right to receive 15,394.12333334 shares of Parent Common Stock.
(b) Treasury Stock. Notwithstanding any provision of this
Agreement to the contrary, each share of Company Capital Stock held in the
treasury of the Company and each share of Company Capital Stock, if any,
owned by Parent or any direct or indirect wholly-owned subsidiary of
Parent immediately prior to the Effective Time shall be canceled in the
Merger and shall not be converted into the right to receive any shares of
capital stock or other securities of Parent.
(c) No Fractional Shares. No fractional shares of Parent Common
Stock shall be issued in, or as a result of, the Merger. Any fractional
share of Parent Common Stock that a holder of record of Company Capital
Stock would otherwise be entitled to receive as a result of the Merger
shall be aggregated. If a fractional share of Parent Common Stock results
from such aggregation, the number of shares required to be issued to such
record holder shall be rounded up to the nearest whole number of shares of
Parent Common Stock.
Section 3.2 Surrender and Exchange of Certificates.
(a) Letter of Transmittal. Promptly after the Effective Time,
Parent shall mail, or cause to be mailed, to each record holder of
certificate(s) formerly representing ownership of Company Capital Stock
that was converted into the right to receive Parent Common Stock pursuant
to Section 3.1 hereof (i) a letter of transmittal ("Letter of
Transmittal") for delivery of such certificate(s) to Parent and (ii)
instruction for use in effecting the surrender of certificate(s), in each
case in form and substance mutually agreeable to the Company and Parent.
Delivery shall be effected, and risk of loss and title to the Parent
Common Stock shall pass, only upon delivery to the Parent (or a duly
authorized agent of Parent) of certificate(s) formerly representing
ownership of Company Capital Stock (or an affidavit of lost certificate
and indemnification or surety bond) and a properly completed and duly
executed Letter of Transmittal, as described in Section 3.2(b) hereof.
Notwithstanding the foregoing, Parent shall not be required to mail, or
cause to be mailed, a Letter of Transmittal to any record holder of
certificate(s) formerly representing ownership of Company Capital Stock if
such holder has previously agreed
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or consented to the exchange of certificates that are held in custody by
the Company for the benefit of such holder.
(b) Exchange Procedures. Parent shall issue to each former
record holder of Company Capital Stock, upon delivery to Parent (or a duly
authorized agent of Parent) of (i) certificate(s) formerly representing
ownership of Company Capital Stock endorsed in blank or accompanied by
duly executed stock powers (or an affidavit of lost certificate and
indemnification in form and substance reasonably acceptable to Parent
stating that, among other things, the former record holder has lost his or
her certificate(s) or that such certificate(s) have been destroyed) and
(ii) a properly completed and duly executed Letter of Transmittal in form
and substance reasonably satisfactory to Parent, a certificate or
certificates registered in the name of such former record holder
representing the number of shares of Parent Common Stock that such former
record holder is entitled to receive in accordance with Section 3.1
hereof. Subject to Section 3.2(d) hereof, until the certificate(s) (or
affidavit) is delivered together with the Letter of Transmittal in the
manner contemplated by this Section 3.2(b), each certificate (or
affidavit) previously representing ownership of Company Capital Stock
shall be deemed at and after the Effective Time to represent only the
right to receive Parent Common Stock and the former record holders thereof
shall cease to have any other rights with respect to his or her Company
Capital Stock.
(c) Termination of Exchange Process. Any Parent Common Stock
that remains unclaimed by a former record holder of Company Capital Stock
at the first anniversary of the Effective Time may be deemed "abandoned
property" subject to applicable abandoned property, escheat and other
similar laws in the State in which the former record holder resides. None
of the Company, Parent or the Surviving Corporation shall be liable to any
person in respect of any Parent Company Stock delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
(d) Dissenting Shares. Notwithstanding any provision of this
Agreement to the contrary, shares of Company Capital Stock issued and
outstanding immediately prior to the Effective Time and held by a
Stockholder who has not voted in favor of the Merger or consented thereto
in writing and who has demanded appraisal for such shares of Company
Capital Stock in accordance with applicable provisions of the Revised
Statutes of Nevada or the DGCL ("Dissenting Shares") shall not be entitled
to vote for any purpose or receive dividends, shall not be converted into
the right to receive Parent Common Stock in accordance with Section 3.1
hereof, and shall only be entitled to receive such consideration as shall
be determined pursuant to the Revised Statutes of Nevada or the DGCL;
provided, however, that if, after the Effective Time, such Stockholder
fails to perfect or withdraws or loses his or her right to appraisal or
otherwise fails to establish the right to be paid the value of such
Stockholder's shares of Company Capital Stock under the Revised Statutes
of Nevada or the DGCL, such shares of Company Capital Stock shall be
treated as if they had converted as of the Effective Time into the right
to receive Parent Common Stock in accordance with Section 3.1 hereof, and
such shares of Company Capital Stock shall no longer be Dissenting Shares.
All negotiations with respect to payment for Dissenting Shares shall be
handled jointly by Parent and the Company prior to the Closing and
exclusively by Parent thereafter.
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(e) Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company will be closed and there will be no further
registration of transfers of shares of Company Capital Stock thereafter on
the records of the Company. If, after the Effective Time, certificates
formerly representing Company Capital Stock are presented to the Surviving
Corporation, these certificates shall be canceled and exchanged for the
number of shares of Parent Common Stock to which the former record holder
may be entitled pursuant to Section 3.1 hereof.
Section 3.3 Options, Warrants.
(a) Common Stock Options. The Company has issued and outstanding
warrants and options to purchase shares of Company Common Stock
(collectively, the "Common Stock Options"). At the Effective Time, by
virtue of the Merger and without any action on the part of the Company,
Parent or Acquisition Corp. or the holders of any outstanding Common Stock
Options, the right to acquire a share of Company Common Stock under each
Common Stock Option shall be converted into the right to acquire
15,394.12333334 shares of Parent Common Stock at an exercise price equal
to the exercise price stated in the Common Stock Option adjusted
reciprocally (i.e., such that the aggregate exercise price for all shares
subject to any Common Stock Option shall remain the same after the
Effective Time as before), subject in all respects to all other terms and
conditions of the Common Stock Option. Except for the change in security
underlying the Common Stock Options from Company Common Stock to Parent
Common Stock and the change in the number of shares covered and the per
share exercise price, it is the intent of the parties hereto that the
Common Stock Options shall continue after the Effective Time, and that the
terms and conditions of the Common Stock Options shall otherwise remain
unchanged.
(b) Issuance of Replacement Securities. In order to effect the
foregoing transactions referenced in this Section 3.3, the Common Stock
Options shall be terminated and the Parent shall issue new forms of
options or warrants, as applicable, to purchase Parent Common Stock
consistent with the adjustments and changes set forth in this Section 3.3.
(c) No Fractional Shares. Notwithstanding anything to the
contrary in this Section 3.3, no fractional shares of the Parent Common
Stock shall be issued in, or as a result of, the Merger. Any fractional
share of the Parent Common Stock that a Person would otherwise be entitled
to receive as a result of the transactions referenced in this Section 3.3
shall be rounded up to the nearest whole number of shares of Parent Common
Stock.
Section 3.4 Parent Common Stock. Parent shall reserve a sufficient
number of shares of Parent Common Stock to complete the conversion and exchange
of Company Capital Stock into Parent Common Stock contemplated by Sections 3.1
and 3.2 hereof and the issuance of any Parent Common Stock in accordance with
Section 3.3 hereof and in the Private Placement. Parent covenants and agrees
that immediately prior to the Effective Time there will be no more than
10,800,000 shares of Parent Common Stock issued and outstanding, exclusive of
any shares of Parent Common Stock issued or to be issued in the Private
Placement, and that no other common or preferred stock or equity securities of
the Parent, or any options, warrants, rights or
9
other agreements or instruments convertible, exchangeable or exercisable into
common or preferred stock or equity securities of the Parent, shall be issued or
outstanding at the Effective Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent as follows:
Section 4.1 Organization. The Company and each of its subsidiaries (i)
is duly organized, validly existing and in good standing (or its equivalent)
under the laws of its state, province or country of incorporation or
organization, (ii) has all licenses, permits, authorizations and other Consents
necessary to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted and (iii) has all requisite corporate
or other applicable power and authority to own, lease and operate its properties
and assets and to carry on its business as it is now being conducted and
presently proposed to be conducted, except where such failure would not have, or
be reasonably likely to have, a Company Material Adverse Effect. The Company and
each of its subsidiaries is duly qualified or authorized to conduct business and
is in good standing (or its equivalent) as a foreign corporation or other entity
in all jurisdictions in which the ownership or use of its assets or nature of
the business conducted by it makes such qualification or authorization
necessary, except where the failure to be so duly qualified, authorized and in
good standing would not have a Company Material Adverse Effect.
Section 4.2 Authorization; Validity of Agreement. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby, have been duly authorized by the Board of
Directors of the Company and no other action (except the approval of the
Stockholders solely with respect to consummation of the Merger) on the part of
the Company or any of its Stockholders or subsidiaries is necessary to authorize
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company (and assuming due and valid authorization, execution
and delivery hereof by Parent) is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforcement is limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity.
Section 4.3 Capitalization.
(a) As of the date hereof, the authorized capital stock of the Company
consists of 3,000 shares of Company Common Stock. As of the date hereof, there
are 3,000 shares of Company Common Stock and no shares of Company Preferred
Stock issued and outstanding. All the outstanding shares of Company Capital
Stock are duly authorized, validly issued, fully paid and non-assessable. There
are issued and outstanding Company Stock Options to purchase 1,257.3707 shares
of Company Common Stock.
(b) The subsidiaries of the Company set forth on Schedule 4.3(b) of the
Company Disclosure Schedule are all the subsidiaries of the Company. All of the
outstanding shares of capital stock (or limited liability company interests) of
each subsidiary of the Company are owned beneficially and of record as set forth
on Schedule 4.3(b) of the Company Disclosure
10
Schedule, free and clear of Liens. All of the outstanding shares of capital
stock (or limited liability company interests) of each subsidiary are duly
authorized, validly issued, fully paid and non-assessable. There are no options,
warrants, calls, subscriptions or other rights, convertible securities,
agreements or commitments of any character obligating any subsidiary of the
Company to issue, transfer or sell any shares of capital stock or other equity
interest in, such subsidiary or securities convertible into or exchangeable for
such shares or equity interests.
Section 4.4 Consents and Approvals; No Violations. Except for (a)
approval of the Merger by the Stockholders and (b) filing of the certificate of
merger with the Secretary of State of the State of Delaware and the Secretary of
State of the State of Nevada, neither the execution, delivery or performance of
this Agreement by the Company nor the consummation of the transactions
contemplated hereby will (i) violate any provision of its certificate of
incorporation or by-laws; (ii) violate, conflict with or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, require the consent of
or result in the creation of any encumbrance upon any of the properties of the
Company or any of its subsidiaries under, any material note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, lease, contract, agreement
or other instrument (collectively, "Contract") to which the Company or any its
subsidiaries or any of their respective properties may be bound; (iii) require
any Consent, approval or authorization of, or notice to, or declaration, filing
or registration with, any governmental entity by or with respect to the Company
or any of its subsidiaries; or (iv) violate any order, writ, judgment,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any of its subsidiaries or any of their respective properties or assets.
Section 4.5 Financial Statements. The Company has delivered or made
available as of the date hereof or shall, prior to the Closing Date, deliver or
make available to Parent the balance sheet (the "Balance Sheet") of the Company
for the fiscal year ended December 31, 2005 and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows of the
Company for the fiscal year ended December 31, 2005 (the "Balance Sheet Date").
The foregoing financial statements (including any notes thereto) (i) have been
prepared based upon the books and records of the Company, (ii) have been
prepared in accordance with GAAP (except as otherwise noted therein), and (iii)
present fairly, in all material respects, the financial position, results of
operations and cash flows of the Company as at their respective dates and for
the periods then ended. To the knowledge of the Company, there is no existing
fact that has not been disclosed to Parent that has had or could reasonably be
expected to have a Company Material Adverse Effect.
Section 4.6 No Undisclosed Liabilities. Except (a) for Liabilities
reflected on the face of the Balance Sheet and (b) Liabilities of the same type,
magnitude and scope as those reflected on the Balance Sheet which have arisen
since the Balance Sheet Date in the ordinary course of business, and which would
not, individually or in the aggregate, result in a Company Material Adverse
Effect, the Company does not have any Liability.
Section 4.7 Litigation. There is no Action pending or, to the knowledge
of the Company, threatened, involving the Company or its subsidiaries or
affecting any of the officers, directors or employees of the Company or its
subsidiaries with respect to the Company's or any subsidiary's business by or
before any governmental entity or by any third party and neither the Company nor
any of its subsidiaries have received notice that any such Action is threatened.
11
Neither the Company nor any of its subsidiaries is in default under any
judgment, order or decree of any governmental entity applicable to its business.
Section 4.8 No Default; Compliance with Applicable Laws. The Company is
not in default or violation of any material term, condition or provision of (i)
its certificate of incorporation or by-laws or (ii) any law applicable to the
Company or its property and assets, and the Company has not received notice of
any violation of or Liability under any of the foregoing (whether material or
not).
Section 4.9 Broker's and Finder's Fees. No Person has, or as a result of
the transactions contemplated or described herein will have, any right or valid
claim against the Company, Parent or any Stockholder for any commission, fee or
other compensation as a finder or broker, or in any similar capacity.
Section 4.10 Assets and Contracts. Except for this Agreement and except
as set forth on Schedule 4.10, neither the Company nor any of its subsidiaries
is a party to any Contract not made in the ordinary course of business that is
material to the Company and its subsidiaries taken as a whole. Except as listed
on Schedule 4.10, neither the Company nor any of its subsidiaries is a party to
any contract (a) with a labor union, (b) for the purchase of fixed assets or for
the purchase of materials, supplies or equipment in excess of normal operating
requirements, (c) for the employment of any officer, individual employee or
other Person on a full-time basis, (d) with respect to bonus, pension, profit
sharing, retirement, stock purchase, deferred compensation, medical,
hospitalization or life insurance or similar plan, contract or understanding any
or all of the employees of the Company or any of its subsidiaries or any other
Person, (e) relating to or evidencing Indebtedness for Borrowed Money or
subjecting any asset or property of the Company or any of its subsidiaries to
any Lien or evidencing any Indebtedness, (f) guaranteeing any Indebtedness, (g)
under which the Company or any of its subsidiaries is lessee of or holds or
operates any property, real or personal, owned by any other Person under which
payments to such Person exceed $100,000 per year and with an unexpired term
(including any period covered by an option to renew exercisable by any other
party) of more than 60 days, (h) under which the Company or any of its
subsidiaries is lessor or permits any Person to hold or operate any property,
real or personal, owned or controlled by the Company or any such subsidiary, (i)
granting any preemptive right, right of first refusal or similar right to any
Person, (j) with any Affiliate of the Company or any present or former officer,
director or Stockholder of the Company, (k) obligating the Company or any of its
subsidiaries to pay any royalty or similar charge for the use or exploitation of
any tangible or intangible property, (1) containing a covenant not to compete or
other restriction on the Company's or any of its subsidiaries' ability to
conduct a business or engage in any other activity, (m) with respect to any
distributor, dealer, manufacturer's representative, sales agency, franchise or
advertising contract or commitment, (n) regarding registration of securities
under the Securities Act, (o) characterized as a collective bargaining
agreement, or (p) with any Person continuing for a period of more than three
months from the Closing Date which involves an expenditure or receipt by the
Company or any of its subsidiaries in excess of $100,000. The Company has made
available to Parent true and complete copies of all Contracts and other
documents requested by Parent.
Section 4.11 Tax Returns and Audits. All required federal, state and
local and foreign Tax Returns of the Company and its subsidiaries have been
accurately prepared and duly and timely filed, and all federal, state, local and
foreign Taxes required to be paid with respect to the
12
periods covered by such returns have been paid. Neither the Company nor any of
its subsidiaries is and none of them has been delinquent in the payment of any
Tax. Neither the Company nor any of its subsidiaries has had a Tax deficiency
proposed or assessed against it and none of them has executed a waiver of any
statute of limitations on the assessment or collection of any Tax. None of the
Company's federal income Tax Returns nor any state or local income or franchise
Tax Returns has been audited by governmental authorities. The reserves for Taxes
reflected on the Balance Sheet are and will be sufficient for the payment of all
unpaid Taxes payable by the Company or its subsidiaries as of the Balance Sheet
Date. Since the Balance Sheet Date, the Company has made adequate provisions on
its books of account for all Taxes with respect to its business, properties and
operations for such period. The Company and its subsidiaries have withheld or
collected from each payment made to each of their employees the amount of all
Taxes (including, but not limited to, federal, state, local and foreign income
taxes, Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act
taxes) required to be withheld or collected therefrom, and has paid the same to
the proper Tax receiving officers or authorized depositaries. There are no
federal, state, local or foreign audits, actions, suits, proceedings,
investigations, claims or administrative proceedings relating to Taxes or any
Tax Returns of the Company or any of its subsidiaries now pending, and the
Company has not received any notice of any proposed audits, investigations,
claims or administrative proceedings relating to Taxes or any Tax Returns. The
Company is not obligated to make a payment, nor is it a party to any agreement
that under certain circumstances could obligate it to make a payment, that would
not be deductible under Section 280G of the Code. The Company has not agreed nor
is required to make any adjustments under Section 481(a) of the Code (or any
similar provision of state, local and foreign law) by reason of a change in
accounting method or otherwise for any Tax period for which the applicable
statute of limitations has not yet expired. The Company is not a party to, is
not bound by and does not have any obligation under, any Tax sharing agreement,
Tax indemnification agreement or similar contract or arrangement, whether
written or unwritten (collectively, "Tax Sharing Agreements"), nor does it have
any potential liability or obligation to any Person as a result of, or pursuant
to, any Tax Sharing Agreements.
Section 4.12 Patents and Other Intangible Assets.
(a) Except as set forth in the Memorandum, the Company and its
subsidiaries (i) own or have the right to use, free and clear of all
Liens, all patents, trademarks, service marks, trade names, copyrights,
licenses and rights with respect to the foregoing used in or necessary for
the conduct of its business as now conducted or proposed to be conducted
without infringing upon or otherwise acting adversely to the right or
claimed right of any Person under or with respect to any of the foregoing
and (ii) is not obligated or under any obligation to make any payments by
way of royalties, fees or otherwise to any owner or licensor of, or other
claimant to, any patent, trademark, service xxxx, trade name, copyright or
other intangible asset, with respect to the use thereof or in connection
with the conduct of its business or otherwise.
(b) To the best knowledge of the Company, the Company and its
subsidiaries own and have the unrestricted right to use all trade secrets,
if any, including know-how, negative know-how, formulas, patterns,
programs, devices, methods, techniques, inventions, designs, processes,
computer programs and technical data and all information that derives
independent economic value, actual or potential, from not being generally
known or known by competitors (collectively, "Intellectual Property")
required for or
13
incident to the development, operation and sale of all products and
services sold by the Company and its subsidiaries, free and clear of any
right, Lien or claim of others. All Intellectual Property can and will be
transferred by the Company to the Surviving Corporation as a result of the
Merger and without the consent of any Person other than the Company.
Section 4.13 Employee Benefit Plans; ERISA.
(a) All "employee benefit plans" (within the meaning of Section
3(3) of the ERISA) of the Company and its subsidiaries and other employee
benefit or fringe benefit arrangements, practices, contracts, policies or
programs of every type, other than programs merely involving the regular
payment of wages, commissions, or bonuses established, maintained or
contributed to by the Company or any of its subsidiaries, whether written
or unwritten and whether or not funded (each, an "Employee Benefit Plan"),
are in material compliance with the applicable requirements of ERISA, the
Code and any other applicable state, federal or foreign law.
(b) There are no pending claims or lawsuits that have been
asserted or instituted against any Employee Benefit Plan, the assets of
any of the trusts or funds under the Employee Benefit Plans, the plan
sponsor or the plan administrator of any of the Employee Benefit Plans or
against any fiduciary of an Employee Benefit Plan with respect to the
operation of such plan, nor does the Company have any knowledge of any
incident, transaction, occurrence or circumstance which might reasonably
be expected to form the basis of any such claim or lawsuit.
(c) There is no pending or, to the knowledge of the Company,
contemplated investigation, or pending or possible enforcement action by
the Pension Benefit Guaranty Corporation, the Department of Labor, the
Internal Revenue Service or any other government agency with respect to
any Employee Benefit Plan and the Company has no knowledge of any
incident, transaction, occurrence or circumstance which might reasonably
be expected to trigger such an investigation or enforcement action.
(d) No actual or, to the knowledge of the Company, contingent
Liability exists with respect to the funding of any Employee Benefit Plan
or for any other expense or obligation of any Employee Benefit Plan,
except as disclosed on the Balance Sheet, and no contingent Liability
exists under ERISA with respect to any "multi-employer plan," as defined
in Section 3(37) or Section 4001(a)(3) of ERISA.
(e) No events have occurred or are reasonably expected to occur
with respect to any Employee Benefit Plan that would cause a material
change in the costs of providing benefits under such Employee Benefit Plan
or would cause a material change in the cost of providing such Employee
Benefit Plan.
Section 4.14 Title to Property and Encumbrances. The Company and its
subsidiaries have good and valid title to all properties and assets used in the
conduct of their business (except for property held under valid and subsisting
leases which are in full force and effect and which are not in default) free of
all Liens except Permitted Liens and such ordinary and customary
14
imperfections of title, restrictions and encumbrances as do not, individually or
in the aggregate constitute a Company Material Adverse Effect.
Section 4.15 Condition of Properties. All facilities, machinery,
equipment, fixtures and other properties owned, leased or used by the Company
and its subsidiaries are in operating condition, subject to ordinary wear and
tear, and are adequate and sufficient for the Company's existing business.
Section 4.16 Insurance Coverage. There is in full force and effect one or
more policies of insurance issued by insurers of recognized responsibility
insuring the Company and its subsidiaries and their properties, products and
business against such losses and risks, and in such amounts, as are customary
for corporations of established reputation engaged in the same or similar
business and similarly situated. The Company and its subsidiaries have not been
refused any insurance coverage sought or applied for, and the Company has no
reason to believe that it will be unable to renew its existing insurance
coverage as and when the same shall expire upon terms at least as favorable to
those currently in effect, other than possible increases in premiums that do not
result from any act or omission of the Company or any of its subsidiaries. No
suit, proceeding or action or, to the best current actual knowledge of the
Company, threat of suit, proceeding or action has been asserted or made against
the Company or any of its subsidiaries due to alleged bodily injury or property
damage arising out of the function or malfunction of a product, procedure or
service designed, manufactured, sold or distributed by the Company.
Section 4.17 Interested Party Transactions. Except as set forth in
Section 4.17 of the Company Disclosure Schedule, no officer, director or
stockholder of the Company or any Affiliate of any such Person or the Company
has or has had, either directly or indirectly, (a) an interest in any Person
that (i) furnishes or sells services or products that are furnished or sold or
are proposed to be furnished or sold by the Company or (ii) purchases from or
sells or furnishes to the Company any goods or services, or (b) a beneficial
interest in any Contract to which the Company is a party or by which it may be
bound or affected.
Section 4.18 Environmental Matters.
(a) To the knowledge of the Company, the Company and its
subsidiaries have never generated, used, handled, treated, released,
stored or disposed of any Hazardous Materials on any real property on
which it now has or previously had any leasehold or ownership interest,
except in compliance with all applicable Environmental Laws.
(b) To the knowledge of the Company, the historical and present
operations of the business of the Company and its subsidiaries are in
compliance with all applicable Environmental Laws, except where any
non-compliance has not had and would not reasonably be expected to have a
Company Material Adverse Effect.
(c) There are no material pending or, to the knowledge of the
Company, threatened, demands, claims, information requests or notices of
noncompliance or violation against or to the Company or any of its
subsidiaries relating to any Environmental Law; and, to the knowledge of
the Company, there are no conditions or occurrences on any of the real
property used by the Company or its subsidiaries in connection with their
business that would reasonably be expected to lead to any such
15
demands, claims or notices against or to the Company or any of its
subsidiaries, except such as have not had, and would not reasonably be
expected to have, a Company Material Adverse Effect.
(d) To the knowledge of the Company, (i) neither the Company nor
any of its subsidiaries has sent or disposed of, otherwise had taken or
transported, arranged for the taking or disposal of (on behalf of itself,
a customer or any other party) or in any other manner participated or been
involved in the taking of or disposal or release of a Hazardous Material
to or at a site that is contaminated by any Hazardous Material or that,
pursuant to any Environmental Law, (A) has been placed on the "National
Priorities List", the "CERCLIS" list, or any similar state or federal
list, or (B) is subject to or the source of a claim, an administrative
order or other request to take "removal", "remedial", "corrective" or any
other "response" action, as defined in any Environmental Law, or to pay
for the costs of any such action at the site; (ii) neither the Company nor
any of its subsidiaries is involved in (and has no basis to reasonably
expect to be involved in) any suit or proceeding and has not received (and
has no basis to reasonably expect to receive) any notice, request for
information or other communication from any governmental authority or
other third party with respect to a release or threatened release of any
Hazardous Material or a violation or alleged violation of any
Environmental Law, and has not received (and has no basis to reasonably
expect to receive) notice of any claims from any Person relating to
property damage, natural resource damage or to personal injuries from
exposure to any Hazardous Material; and (iii) the Company and its
subsidiaries have timely filed every report required to be filed, acquired
all necessary certificates, approvals and permits, and generated and
maintained all required data, documentation and records under all
Environmental Laws, in all such instances except where the failure to do
so would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
Section 4.19 Disclosure. There is no fact relating to the Company and its
subsidiaries that the Company has not disclosed to Parent in writing that has
had or is currently having a Company Material Adverse Effect. No representation
or warranty by the Company herein and no information disclosed in the Company
Disclosure Schedule or exhibits hereto by the Company contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION CORP.
Parent hereby represents and warrants to the Company as follows:
Section 5.1 Organization. Parent. (i) is duly organized, validly
existing and in good standing under the laws of its State of incorporation or
organization, (ii) has all licenses, permits, authorizations and other Consents
necessary to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted and (iii) has all requisite corporate
or other applicable power and authority to own, lease and operate its properties
and assets and to carry on its business as it is now being conducted and
presently proposed to be conducted, in each case except where such failures
would not have, or be reasonably likely to have, a Parent Material Adverse
Effect. Parent is duly qualified or authorized to conduct business and is in
16
good standing as a foreign corporation or other entity in all jurisdictions in
which the ownership or use of its assets or nature of the business conducted by
it makes such qualification or authorization necessary, except where the failure
to be so duly qualified, authorized and in good standing would not have an
Parent Material Adverse Effect. Parent has no subsidiaries.
Section 5.2 Authorization; Validity of Agreement. Parent has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance by Parent of this Agreement and all other agreements and
instruments to be executed pursuant to this Agreement, and the consummation of
the transactions contemplated hereby, have been duly authorized by the Board of
Directors of Parent and the stockholders of Parent, and no other action on the
part of Parent is necessary to authorize the execution and delivery of this
Agreement and the consummation by Parent of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Parent (and
assuming due and valid authorization, execution and delivery hereof by the
Company) is a valid and binding obligation of Parent, enforceable against it in
accordance with its terms, except as such enforcement is limited by bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity.
Section 5.3 Consents and Approvals; No Violations. Except for filing of
the certificate of merger with the Secretary of State of the State of Delaware
and the Secretary of State of the State of Nevada, neither the execution,
delivery or performance of this Agreement by Parent nor the consummation of the
transactions contemplated hereby will (i) violate any provision of the
certificate of incorporation or by-laws of Parent; (ii) violate, conflict with
or result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
require the consent of or result in the creation of any Lien upon any of the
properties of Parent under, any Contract to which Parent or any of its
properties may be bound; (iii) require any Consent, approval or authorization
of, or notice to, or declaration, filing or registration with, any governmental
entity by or with respect to Parent, or (iv) violate any law applicable to any
of Parent or any of its properties or assets.
Section 5.4 Litigation. There is no Action pending or, to the knowledge
of the Parent, threatened, involving Parent or affecting the officers, directors
or employees of Parent with respect to Parent's business by or before any
governmental entity or by any third party and Parent has not received notice
that any such Action is threatened. Parent is not in default under any judgment,
order or decree of any governmental entity applicable to its business.
Section 5.5 No Default; Compliance with Applicable Laws. Parent is not
in default or violation of any material term, condition or provision of (i) its
certificate of incorporation, by-laws or similar organizational documents or
(ii) any law applicable to Parent or its property and assets and Parent has not
received notice of any violation of or Liability under any of the foregoing
(whether material or not).
Section 5.6 Broker's and Finder's Fees; Broker/Dealer Ownership. No
person, firm, corporation or other entity is entitled by reason of any act or
omission of Parent to any broker's or finder's fees, commission or other similar
compensation with respect to the execution and delivery of this Agreement or
with respect to the consummation of the transactions contemplated hereby.
17
Section 5.7 Capitalization of Parent. The authorized capital stock of
Parent consists of (a) 90,000,000] shares of Parent Common Stock, of which not
more than 10,800,000 shares will be, following the Effective Time, issued and
outstanding without taking into consideration the issuance of Parent Common
Stock in the Merger or the Private Placement, and (b) 10,000,000 shares of
preferred stock, of which no shares are issued and outstanding. Parent has no
outstanding options, rights or commitments to issue shares of Parent Common
Stock or any capital stock or other securities of Parent, and there are no
outstanding securities convertible or exercisable into or exchangeable for
shares of Parent Common Stock or any capital stock or other securities of
Parent. There is no voting trust, agreement or arrangement among any of the
beneficial holders of Parent Common Stock affecting the nomination or election
of directors or the exercise of the voting rights of Parent Common Stock. All
outstanding shares of the capital stock of Parent are validly issued and
outstanding, fully paid and nonassessable, and none of such shares have been
issued in violation of the preemptive rights of any person.
Section 5.8 Validity of Shares. The shares of Parent Common Stock to be
issued in accordance with Article III hereof, when issued and delivered in
accordance with the terms hereof, shall be duly and validly issued, fully paid
and nonassessable.
Section 5.9 SEC Reporting and Compliance.
(a) Parent filed a registration statement on Form SB-2 under the
Securities Act which became effective on December 23, 2004. Since that
date, Parent has filed with the Commission all registration statements,
proxy statements, information statements and reports required to be filed
pursuant to the Exchange Act. Parent has not filed with the Commission a
certificate on Form 15 pursuant to Rule 12h-3 of the Exchange Act.
(b) Parent has delivered to the Company true and complete copies
of the registration statements, information statements and other reports
(collectively, the "Parent SEC Documents") filed by the Parent with the
Commission. None of the Parent SEC Documents, as of their respective
dates, contained any untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements contained
therein not misleading.
(c) Parent has not filed, and nothing has occurred with respect
to which Parent would be required to file, any report on Form 8-K since
June 30, 2006. Prior to and until the Closing, Parent will provide to the
Company copies of any and all amendments or supplements to the Parent SEC
Documents filed with the Commission since June 30, 2006 and all subsequent
registration statements and reports filed by Parent subsequent to the
filing of the Parent SEC Documents with the Commission and any and all
subsequent information statements, proxy statements, reports or notices
filed by the Parent with the Commission or delivered to the stockholders
of Parent.
(d) Parent is not an "investment company" within the meaning of
Section 3 of the Investment Company Act.
(e) Between the date hereof and the Closing Date, Parent shall
continue to satisfy the filing requirements of the Exchange Act and all
other requirements of applicable securities laws.
18
(f) To the best knowledge of the Parent, the Parent has complied
with the Securities Act, Exchange Act and all other applicable federal and
state securities laws.
Section 5.10 Financial Statements. The balance sheets, and statements of
income, stockholders' equity and cash flows contained in the Parent SEC
Documents (the "Parent Financial Statements") (i) have been prepared in
accordance with GAAP, (ii) are in accordance with the books and records of the
Parent, and (iii) present fairly in all material respects the financial
condition of the Parent at the dates therein specified and the results of its
operations and changes in financial position for the periods therein specified.
Section 5.11 No General Solicitation. In issuing Parent Common Stock in
the Merger hereunder, neither Parent nor anyone acting on its behalf has offered
to sell Parent Common Stock by any form of general solicitation or advertising.
Section 5.12 Absence of Undisclosed Liabilities. Parent has no Liability
arising out of any transaction entered into at or prior to the Closing, except
(a) as disclosed in the Parent SEC Documents, (b) to the extent set forth on or
reserved against in the balance sheet of Parent as of June 30, 2006 (the "Parent
Balance Sheet") or the notes to the Parent Financial Statements, (c) current
Liabilities incurred and obligations under agreements entered into in the usual
and ordinary course of business since June 30, 2006 (the "Parent Balance Sheet
Date"), none of which, individually or in the aggregate, constitutes a Parent
Material Adverse Effect and (d) by the specific terms of any written agreement,
document or arrangement attached as an exhibit to the Parent SEC Documents.
Section 5.13 Changes. Since the Parent Balance Sheet Date, except as
disclosed in the Parent SEC Documents, the Parent has not (a) incurred any
debts, obligations or Liabilities, absolute, accrued or, to the Parent's
knowledge, contingent, whether due or to become due, except for current
Liabilities incurred in the usual and ordinary course of business, (b)
discharged or satisfied any Liens other than those securing, or paid any
obligation or Liability other than, current liabilities shown on the Parent
Balance Sheet and current Liabilities incurred since the Parent Balance Sheet
Date, in each case in the usual and ordinary course of business, (c) mortgaged,
pledged or subjected to Lien any of its assets, tangible or intangible, other
than in the usual and ordinary course of business, (d) sold, transferred or
leased any of its assets, except in the usual and ordinary course of business,
(e) cancelled or compromised any debt or claim, or waived or released any right
of material value, (f) suffered any physical damage, destruction or loss
(whether or not covered by insurance) that could reasonably be expected to have
a Parent Material Adverse Effect, (g) entered into any transaction other than in
the usual and ordinary course of business, (h) encountered any labor union
difficulties, (i) made or granted any wage or salary increase or made any
increase in the amounts payable under any profit sharing, bonus, deferred
compensation, severance pay, insurance, pension, retirement or other employee
benefit plan, agreement or arrangement, other than in the ordinary course of
business consistent with past practice, or entered into any employment
agreement, (j) issued or sold any shares of capital stock, bonds, notes,
debentures or other securities or granted any options (including employee stock
options), warrants or other rights with respect thereto, (k) declared or paid
any dividends on or made any other distributions with respect to, or purchased
or redeemed, any of its outstanding capital stock, (l) suffered or experienced
any change in, or condition affecting, the financial condition of the Parent
other than changes, events or conditions in the usual and ordinary course of its
business, none of which (either by itself or in conjunction with all such
19
other changes, events and conditions) could reasonably be expected to have a
Parent Material Adverse Effect, (m) made any change in the accounting
principles, methods or practices followed by it or depreciation or amortization
policies or rates theretofore adopted, (n) made or permitted any amendment or
termination of any material Contract, agreement or license to which it is a
party, (o) suffered any material loss not reflected in the Parent Balance Sheet
or its statement of income for the year ended on the Parent Balance Sheet Date,
(p) paid, or made any accrual or arrangement for payment of, bonuses or special
compensation of any kind or any severance or termination pay to any present or
former officer, director, employee, stockholder or consultant, (q) made or
agreed to make any charitable contributions or incurred any non-business
expenses in excess of $1,000 in the aggregate, or (r) entered into any Contract,
agreement or license, or otherwise obligated itself, to do any of the foregoing.
Section 5.14 Tax Returns and Audits. All required federal, state and
local Tax Returns of the Parent have been accurately prepared in all material
respects and duly and timely filed, and all federal, state and local Taxes
required to be paid with respect to the periods covered by such returns have
been paid to the extent that the same are material and have become due, except
where the failure so to file or pay could not reasonably be expected to have a
Parent Material Adverse Effect. The Parent is not and has not been delinquent in
the payment of any Tax. The Parent has not had a Tax deficiency assessed against
it. None of the Parent's federal income Tax Returns nor any state or local
income or franchise Tax Returns has been audited by governmental authorities.
The reserves for Taxes reflected on the Parent Balance Sheet are sufficient for
the payment of all unpaid Taxes payable by the Parent with respect to the period
ended on the Parent Balance Sheet Date. There are no federal, state, local or
foreign audits, actions, suits, proceedings, investigations, claims or
administrative proceedings relating to Taxes or any Tax Returns of the Parent
now pending, and the Parent has not received any notice of any proposed audits,
investigations, claims or administrative proceedings relating to Taxes or any
Tax Returns.
Section 5.15 Employee Benefit Plans; ERISA.
(a) Except as disclosed in the Parent SEC Documents, there are
no "employee benefit plans" (within the meaning of Section 3(3) of ERISA)
nor any other employee benefit or fringe benefit arrangements, practices,
contracts, policies or programs other than programs merely involving the
regular payment of wages, commissions, or bonuses established, maintained
or contributed to by the Parent. Any plans listed in the Parent SEC
Documents are hereinafter referred to as the "Parent Employee Benefit
Plans."
(b) Any current and prior material documents, including all
amendments thereto, with respect to each Parent Employee Benefit Plan have
been made available to the Company.
(c) All Parent Employee Benefit Plans are in material compliance
with the applicable requirements of ERISA, the Code and any other
applicable state, federal or foreign law.
(d) There are no pending, or to the knowledge of the Parent,
threatened, claims or lawsuits that have been asserted or instituted
against any Parent Employee Benefit Plan, the assets of any of the trusts
or funds under the Parent Employee Benefit
20
Plans, the plan sponsor or the plan administrator of any of the Parent
Employee Benefit Plans or against any fiduciary of a Parent Employee
Benefit Plan with respect to the operation of such plan.
(e) There is no pending, or to the knowledge of the Parent,
threatened, investigation or pending or possible enforcement action by the
Pension Benefit Guaranty Corporation, the Department of Labor, the
Internal Revenue Service or any other government agency with respect to
any Parent Employee Benefit Plan.
(f) No actual or, to the knowledge of Parent, contingent
Liability exists with respect to the funding of any Parent Employee
Benefit Plan or for any other expense or obligation of any Parent Employee
Benefit Plan, except as disclosed on the Parent Financial Statements or
the Parent SEC Documents, and to the knowledge of the Parent, no
contingent Liability exists under ERISA with respect to any
"multi-employer plan," as defined in Section 3(37) or Section 4001(a)(3)
of ERISA.
Section 5.16 Interested Party Transactions. Except as disclosed in the
Parent SEC Documents, no officer, director or stockholder of the Parent or any
Affiliate of any such Person or the Parent has or has had, either directly or
indirectly, (a) an interest in any Person that (i) furnishes or sells services
or products that are furnished or sold or are proposed to be furnished or sold
by the Parent or (ii) purchases from or sells or furnishes to the Parent any
goods or services, or (b) a beneficial interest in any Contract to which the
Parent is a party or by which it may be bound or affected.
Section 5.17 Questionable Payments. Neither Parent nor, to the knowledge
of the Parent, any director, officer, agent, employee or other Person associated
with or acting on behalf of the Parent, has a used any corporate funds for (a)
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity, (b) made any direct or indirect unlawful payments to
government officials or employees from corporate funds, (c) established or
maintained any unlawful or unrecorded fund of corporate monies or other assets,
(d) made any false or fictitious entries on the books of record of any such
corporations, or (e) made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.
Section 5.18 Obligations to or by Stockholders. Except as disclosed in
the Parent SEC Documents, the Parent has no Liability or obligation or
commitment to any stockholder of Parent or any Affiliate or "associate" (as such
term is defined in Rule 405 under the Securities Act) of any stockholder of
Parent, nor does any stockholder of Parent or any such Affiliate or associate
have any Liability, obligation or commitment to the Parent.
Section 5.19 Schedule of Assets and Contracts. Except as expressly set
forth in this Agreement, the Parent Balance Sheet or the notes thereto, the
Parent is not a party to any Contract not made in the ordinary course of
business that is material to the Parent. Parent does not own any real property.
Parent is not a party to any Contract (a) with any labor union, (b) for the
purchase of fixed assets or for the purchase of materials, supplies or equipment
in excess of normal operating requirements, (c) for the employment of any
officer, individual employee or other Person on a full-time basis or any
contract with any Person for consulting services, (d) with respect to bonus,
pension, profit sharing, retirement, stock purchase, stock option, deferred
compensation, medical, hospitalization or life insurance or similar plan,
contract or
21
understanding with any or all of the employees of Parent or any other Person,
(e) relating to or evidencing Indebtedness for Borrowed Money or subjecting any
asset or property of Parent to any Lien or evidencing any Indebtedness, (f)
guaranteeing of any Indebtedness, (g) under which Parent is lessee of or holds
or operates any property, real or personal, owned by any other Person, (h) under
which Parent is lessor or permits any Person to hold or operate any property,
real or personal, owned or controlled by Parent, (i) granting any preemptive
right, right of first refusal or similar right to any Person, (j) with any
Affiliate of Parent or any present or former officer, director or stockholder of
Parent, (k) obligating Parent to pay any royalty or similar charge for the use
or exploitation of any tangible or intangible property, (1) containing a
covenant not to compete or other restriction on the parent's ability to conduct
a business or engage in any other activity, (m) with respect to any distributor,
dealer, manufacturer's representative, sales agency, franchise or advertising
contract or commitment, (n) regarding the registration of securities under the
Securities Act, (o) characterized as a collective bargaining agreement, or (p)
with any Person continuing for a period of more than three months from the
Closing Date that involves an expenditure or receipt by Parent in excess of
$1,000. The Parent maintains no insurance policies and insurance coverage of any
kind with respect to Parent, its business, premises, properties, assets,
employees and agents. Parent has furnished to the Company true and complete
copies of all agreements and other documents requested by the Company.
Section 5.20 Environmental Matters.
(a) The Parent has never generated, used, handled, treated,
released, stored or disposed of any Hazardous Materials on any real
property on which it now has or previously had any leasehold or ownership
interest, except in compliance with all applicable Environmental Laws.
(b) The historical and present operations of the business of the
Parent compliance with all applicable Environmental Laws, except where any
non-compliance has not had and would not reasonably be expected to have a
Parent Material Adverse Effect.
(c) (i) The Parent has not, sent or disposed of, otherwise had
taken or transported, arranged for the taking or disposal of (on behalf of
itself, a customer or any other party) or in any other manner participated
or been involved in the taking of or disposal or release of a Hazardous
Material to or at a site that is contaminated by any Hazardous Material or
that, pursuant to any Environmental Law, (A) has been placed on the
"National Priorities List", the "CERCLIS" list, or any similar state or
federal list, or (B) is subject to or the source of a claim, an
administrative order or other request to take "removal", "remedial",
"corrective" or any other "response" action, as defined in any
Environmental Law, or to pay for the costs of any such action at the site;
(ii) the Parent is not involved in (and has no basis to reasonably expect
to be involved in) any suit or proceeding and has not received (and has no
basis to reasonably expect to receive) any notice, request for information
or other communication from any governmental authority or other third
party with respect to a release or threatened release of any Hazardous
Material or a violation or alleged violation of any Environmental Law, and
has not received (and has no basis to reasonably expect to receive) notice
of any claims from any Person relating to property damage, natural
resource damage or to personal injuries from
22
exposure to any Hazardous Material; and (iii) the Parent has timely filed
every report required to be filed, acquired all necessary certificates,
approvals and permits, and generated and maintained all required data,
documentation and records under all Environmental Laws, in all such
instances except where the failure to do so would not reasonably be
expected to have, individually or in the aggregate, a Parent Material
Adverse Effect.
Section 5.21 Employees. Other than pursuant to ordinary arrangements of
employment compensation, Parent is not under any obligation or liability to any
officer, director, employee or Affiliate of Parent.
Section 5.22 Disclosure. There is no fact relating to Parent that Parent
has not disclosed to the Company in writing that has had or is having a Parent
Material Adverse Effect. No representation or warranty by Parent herein or
exhibits hereto by Parent contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained herein
or therein misleading.
ARTICLE VI
CONDUCT OF BUSINESSES PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the Merger. Prior
to the Effective Time, unless Parent shall otherwise agree in writing or as
otherwise contemplated by this Agreement:
(i) the business of the Company shall be conducted only
in the ordinary course consistent with the past practice;
(ii) the Company shall not (A) directly or indirectly
redeem, purchase or otherwise acquire or agree to redeem, purchase
or otherwise acquire any shares Company Capital Stock; (B) amend its
certificate of incorporation or by-laws except to effectuate the
transactions contemplated in this Agreement; or (C) split, combine
or reclassify the outstanding Company Capital Stock or declare, set
aside or pay any dividend payable in cash, stock or property or make
any distribution with respect to any such stock;
(iii) the Company shall not (A) issue any additional
shares of, or options, warrants or rights of any kind to acquire any
shares of, Company Capital Stock, except to issue shares of Company
Capital Stock in connection with the exercise of Common Stock
Options; (B) acquire or dispose of any fixed assets or acquire or
dispose of any other substantial assets other than in the ordinary
course of business; (C) incur additional Indebtedness or any other
Liabilities or enter into any other transaction other than in the
ordinary course of business; (D) enter into any Contract, agreement,
commitment or arrangement with respect to any of the foregoing
except this Agreement; or (E) except as contemplated by this
Agreement, enter into any Contract, agreement, commitment or
arrangement to dissolve, merge, consolidate or enter into any other
material business combination;
23
(iv) the Company shall use its reasonable best efforts to
preserve intact the business of the Company, to keep available the
service of its present officers and key employees, and to preserve
the good will of those having business relationships with it; and
(v) the Company will not enter into any new employment
agreements with any of its officers or employees or grant any
increases in the compensation or benefits of its officers and
employees or amend any employee benefit plan or arrangement other
than in the ordinary course of business and consistent with past
practice.
Section 6.2 Conduct of Business by Parent Pending the Merger. Prior to
the Effective Time, unless the Company shall otherwise agree in writing or as
otherwise contemplated expressly permitted by this Agreement:
(i) the business of Parent shall be conducted only in
the ordinary course consistent with past practice;
(ii) Parent shall not (A) directly or indirectly redeem,
purchase or otherwise acquire or agree to redeem, purchase or
otherwise acquire any shares of its capital stock; (B) amend its
certificate of incorporation or by-laws; or (C) split, combine or
reclassify its capital stock or declare, set aside or pay any
dividend payable in cash, stock or property or make any distribution
with respect to such stock; and
(iii) Parent shall not (A) issue or agree to issue any
additional shares of, or options, warrants or rights of any kind to
acquire shares of, its capital stock; (B) acquire or dispose of any
assets other than in the ordinary course of business; (C) incur
additional Indebtedness or any other Liabilities or enter into any
other transaction except in the ordinary course of business; (D)
enter into any Contract, agreement, commitment or arrangement with
respect to any of the foregoing except this Agreement, or (E) except
as contemplated by this Agreement, enter into any Contract,
agreement, commitment or arrangement to dissolve, merge; consolidate
or enter into any other material business contract or enter into any
negotiations in connection therewith.
(iv) Parent shall use its best efforts to preserve intact
the business of Parent, to keep available the service of its present
officers and key employees, and to preserve the good will of those
having business relationships with Parent;
(v) Parent will not, nor will it authorize any director
or authorize or permit any officer or employee or any attorney,
accountant or other representative retained by them to, make,
solicit, encourage any inquiries with respect to, or engage in any
negotiations concerning, any Acquisition Proposal (as defined
below). Parent will promptly advise the Company in writing of any
such inquiries or Acquisition Proposal (or requests for information)
and the substance thereof. As used in this paragraph, "Acquisition
Proposal" shall mean any proposal for a merger or other business
combination involving the Parent or for the acquisition
24
of a substantial equity interest in either of them or any material
assets of either of them other than as contemplated by this
Agreement. Parent will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any Person
conducted heretofore with respect to any of the foregoing; and
(vi) Parent will not enter into any new employment
agreements with any of their officers or employees or grant any
increases in the compensation or benefits of their officers and
employees.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information. The Company and Parent shall each
afford to the other and to the other's accountants, counsel and other
representatives reasonable access during normal business hours throughout the
period prior to the Effective Time of all of its properties, books, contracts,
commitments and records (including but not limited to Tax Returns) and during
such period, each shall furnish promptly to the other all information concerning
its business, properties and personnel as such other party may reasonably
request, provided that no investigation pursuant to this Section 7.1 shall
affect any representations or warranties made herein. Each party shall hold, and
shall cause its employees and agents to hold, in confidence all such information
(other than such information that (i) becomes generally available to the public
other than as a result of a disclosure by such party or its directors, officers,
managers, employees, agents or advisors, or (ii) becomes available to such party
on a non-confidential basis from a source other than a party hereto or its
advisors, provided that such source is not known by such party to be bound by a
confidentiality agreement with or other obligation of secrecy to a party hereto
or another party until such time as such information is otherwise publicly
available; provided, however, that: (A) any such information may be disclosed to
such party's directors, officers, employees and representatives of such party's
advisors who need to know such information for the purpose of evaluating the
transactions contemplated hereby (it being understood that such directors,
officers, employees and representatives shall be informed by such party of the
confidential nature of such information); (B) any disclosure of such information
may be made as to which the party hereto furnishing such information has
consented in writing; and (C) any such information may be disclosed pursuant to
a judicial, administrative or governmental order or request provided, that the
requested party will promptly so notify the other party so that the other party
may seek a protective order or appropriate remedy and/or waive compliance with
this Agreement and if such protective order or other remedy is not obtained or
the other party waives compliance with this provision, the requested party will
furnish only that portion of such information which is legally required and will
exercise its best efforts to obtain a protective order or other reliable
assurance that confidential treatment will be accorded the information
furnished. If this Agreement is terminated, each party will deliver to the other
all documents and other materials (including copies) obtained by such party or
on its behalf from the other party as a result of this Agreement or in
connection herewith, whether so obtained before or after the execution hereof.
Section 7.2 Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its commercially
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or
25
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including using its
commercially reasonable best efforts to satisfy the conditions precedent to the
obligations of any of the parties hereto to obtain all necessary waivers, and to
lift any injunction or other legal bar to the Merger (and, in such case, to
proceed with the Merger as expeditiously as possible). In order to obtain any
necessary governmental or regulatory action or non-action, waiver, Consent,
extension or approval, each of Parent and the Company agrees to take all
reasonable actions and to enter into all reasonable agreements as may be
necessary to obtain timely governmental or regulatory approvals and to take such
further action in connection therewith as may be necessary. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and/or directors of
Parent and the Company shall take all such necessary action.
Section 7.3 Publicity. No party shall issue any press release or public
announcement pertaining to the Merger that has not been agreed upon in advance
by Parent and the Company, except as Parent reasonably determines to be
necessary in order to comply with the rules of the Commission; provided that in
such case Parent will use its best efforts to allow Company to review and
reasonably approve any same prior to its release.
Section 7.4 Appointment of Directors. Immediately upon the Effective
Time, Parent shall accept the resignations of the current officers and directors
of Parent as provided by Section 8.2(f)(6) hereof, and shall cause the persons
listed as directors in Exhibit C hereto to be elected to the Board of Directors
of Parent. At the first annual meeting of Parent stockholders and thereafter,
the election of members of Parent's Board of Directors shall be accomplished in
accordance with the by-laws of Parent.
Section 7.5 Parent Name Change and Exchange Listing. At the Effective
Time, Parent shall take all required legal actions to change its corporate name
to Collexis Holdings, Inc. .
Section 7.6 Stockholder Consent.
(a) So long as the Board of Directors of the Company shall not
have withdrawn, modified or changed its recommendation in accordance with
the provisions of Section 7.6(b) hereof, the Company, acting through its
Board of Directors, shall, in accordance with the DGCL and its certificate
of incorporation and by-laws, take all actions reasonably necessary to
establish a record date for, duly call, give notice of, convene and hold a
stockholders meeting for the purpose of obtaining the requisite approval
and adoption of this Agreement and the transactions contemplated hereby by
the Stockholders as required by the DGCL and otherwise. The Company shall
cause such stockholder meeting to be held in accordance with the DGCL on
or prior to October 31, 2005. The Company shall notify each Stockholder,
whether or not entitled to vote, of the proposed Company stockholders'
meeting in accordance with the DGCL and the certificate of incorporation
and by-laws. Such meeting notice shall state that the purpose, or one of
the purposes, of the meeting is to consider the Merger and shall contain
or be accompanied by a copy or summary of this Agreement. Notwithstanding
the foregoing, the Board of Directors of the Company shall not be required
to take all actions reasonably necessary to establish a record date for,
duly call, give notice of, convene and hold a
26
stockholders meeting for the purpose of obtaining the requisite approval
and adoption of this Agreement and the transactions contemplated hereby by
the Stockholders if the Company Board of Directors and Stockholders
otherwise takes all actions reasonably necessary to approve this Agreement
and the transactions contemplated hereby by written consent in lieu of a
meeting of the stockholders of the Company to the extent permitted by the
DGCL.
(b) The Board of Directors of the Company shall unanimously
recommend such approval and shall use all reasonable efforts to solicit
and obtain such approval; provided, however, that the Board of Directors
of the Company may at any time prior to approval of the Stockholders (i)
decline to make, withdraw, modify or change any recommendation or
declaration regarding this Agreement or the Merger or (ii) recommend and
declare advisable any other offer or proposal, to the extent the Board of
Directors of the Company determines in good faith, based upon advice of
legal counsel, that withdrawing, modifying, changing or declining to make
its recommendation regarding this Agreement or the Merger or recommending
and declaring advisable any other offer or proposal is necessary to comply
with its fiduciary duties under applicable law (which declinations,
withdrawal, modification or change shall not constitute a breach by the
Company of this Agreement). The Company shall provide written notice to
Parent promptly upon the Company taking any action referred to in the
foregoing proviso.
(c) Pursuant to Section 252 of the DGCL, at any time before the
certificate of merger is filed with the Secretary of State of the State of
Delaware, including any time after the Merger is authorized by the
Stockholders, the Merger may be abandoned and this Agreement may be
terminated in accordance with the terms hereof, without further action by
the Stockholders.
ARTICLE VIII
CONDITIONS OF PARTIES' OBLIGATIONS
Section 8.1 Company Obligations. The obligations of Parent under this
Agreement are subject to the fulfillment at or prior to the Closing of the
following conditions, any of which may be waived in whole or in part by Parent.
(a) No Errors, etc. The representations and warranties of the
Company under this Agreement shall be deemed to have been made again on
the Closing Date and shall then be true and correct in all material
respects.
(b) Compliance with Agreement. The Company shall have performed
and complied in all material respects with all agreements and conditions
required by this Agreement to be performed or complied with by it on or
before the Closing Date.
(c) No Company Material Adverse Effect. Since the date hereof,
there shall not have been any event or circumstance that has resulted in a
Company Material Adverse Effect, and no event has occurred or circumstance
exists that would reasonably be expected to result in a Company Material
Adverse Effect.
(d) Certificate of Officers. The Company shall have delivered to
Parent a certificate dated the Closing Date, executed on its behalf by the
Chief Executive Officer
27
of the Company, certifying the satisfaction of the conditions specified in
paragraphs (a), (b) and (c) of this Section 8.1.
(e) No Restraining Action. No Action or proceeding before any
court, governmental body or agency shall have been threatened, asserted or
instituted to restrain or prohibit, or to obtain substantial damages in
respect of, this Agreement or the carrying out of the transactions
contemplated by this Agreement.
(f) Supporting Documents. Parent shall have received the
following:
(1) Copies of resolutions of the Board of Directors
and the stockholders of the Company, certified by the
Secretary of the Company, authorizing and approving the
Merger and the execution, delivery and performance of this
Agreement and all other documents and instruments to be
delivered pursuant hereto and thereto.
(2) A certificate of incumbency executed by the
Secretary of the Company certifying the names, titles and
signatures of the officers authorized to execute any
documents referred to in this Agreement and further
certifying that the certificate of incorporation and by-laws
of the Company delivered to Parent at the time of the
execution of this Agreement have been validly adopted and
have not been amended or modified since the date hereof.
(3) Evidence as of a recent date of the good
standing and corporate existence of the Company issued by
the Secretary of State of the State of Delaware.
Section 8.2 Parent Obligations. The obligations of the Company under
this Agreement are subject to the fulfillment at or prior to the Closing of the
following conditions any of which may be waived in whole or in part by the
Company:
(a) No Errors, etc. The representations and warranties of Parent
under this Agreement shall be deemed to have been made again on the
Closing Date and shall then be true and correct in all material respects.
(b) Compliance with Agreement. Parent shall have performed and
complied in all material respects with all agreements and conditions
required by this Agreement to be performed or complied with by them on or
before the Closing Date.
(c) No Parent Material Adverse Effect. Since the date hereof,
there shall not have been any event or circumstance that has resulted in a
Parent Material Adverse Effect and no event has occurred or circumstance
exists that would be reasonably expected to result in such a Parent
Material Adverse Effect.
(d) Certificate of Officers. Parent shall have delivered to the
Company a certificate dated the Closing Date, executed on their behalf by
their respective Presidents, certifying the satisfaction of the conditions
specified in paragraphs (a), (b), and (c) of this Section 8.2.
28
(e) Supporting Documents. The Company shall have received the
following:
(1) Copies of resolutions of Parent's board of
directors and the sole stockholder of Parent, certified by
its Secretary, authorizing and approving the Merger and the
execution, delivery and performance of this Agreement and
all other documents and instruments to be delivered by them
pursuant hereto.
(2) A certificate of incumbency executed by the
Secretary of Parent certifying the names, titles and
signatures of the officers authorized to execute the
documents referred to in paragraph (1) above and further
certifying that the certificate of incorporation and by-laws
of Parent appended thereto have not been amended or
modified.
(3) A certificate, dated the Closing Date, executed
by the Secretary of Parent, certifying that, except for the
filing of the certificate of merger with the Secretary of
State of the State of Delaware and the Secretary of State of
the State of Nevada: (i) all consents, authorizations,
orders and approvals of, and filings and registrations with,
any court, governmental body or instrumentality that are
required to be obtained by Parent for the execution and
delivery of this Agreement and the consummation of the
Merger shall have been duly made or obtained; and (ii) no
action or proceeding before any court, governmental body or
agency has been threatened, asserted or instituted against
Parent to restrain or prohibit, or to obtain substantial
damages in respect of, this Agreement or the carrying out of
the transactions contemplated by this Agreement.
(4) A certificate of Parent's transfer agent and
registrar, certifying as of the business day prior to the
Effective Time, a true and complete list of the names and
addresses of the record owners of all of the outstanding
shares of Parent Common Stock, together with the number of
shares of Parent Common Stock held by each record owner.
(5) (i) The executed resignations of all directors
and officers of Parent, with the director resignations to
take effect at the Effective Time, and (ii) executed
releases from each such director and officer in the form and
substance acceptable to the Company in its sole discretion.
(6) Evidence as of a recent date of the good
standing and corporate existence of Parent issued by the
Secretary of State of its states of incorporation.
(7) Such additional supporting documentation and
other information with respect to the transactions
contemplated hereby as the Company may reasonably request.
(f) Due Diligence. The Company shall have been and shall
continue to be satisfied in its sole discretion (regardless of (1) the
satisfaction of any or all of the other closing conditions, (2) any
knowledge of such matters on or prior to the Closing Date or
29
(3) any indication previously given by, or on behalf of, Company with
respect to the satisfaction of any such matter) with the results of its
and its representatives' due diligence investigation and evaluation of the
Parent and the transactions contemplated hereby.
(g) Limitation on Dissenting Shares. The holders of not more
than one percent (1.0%) of the outstanding shares of Company Capital Stock
shall have exercised and not withdrawn such holder's right to appraisal
and payment under applicable provisions of the DGCL or the Revised
Statutes of Nevada.
ARTICLE IX
INDEMNIFICATION AND RELATED MATTERS
Section 9.1 Indemnification by Parent. Parent shall indemnify and hold
harmless the Company and the Stockholders (the "Company Indemnified Parties"),
and shall reimburse the Company Indemnified Parties for, any loss, liability,
claim, damage, expense (including, but not limited to, costs of investigation
and defense and reasonable attorneys' fees) or diminution of value
(collectively, "Damages") arising from or in connection with (a) any inaccuracy,
in any material respect, in any of the representations and warranties of Parent
in this Agreement or in any certificate delivered by Parent to the Company
pursuant to this Agreement, or any actions, omissions or statements of fact
inconsistent with any such representation or warranty, (b) any failure by Parent
to perform or comply in any material respect with any covenant or agreement in
this Agreement, (c) any claim for brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding alleged to have been
made by any such party with Parent in connection with any of the transactions
contemplated by this Agreement, (d) Taxes attributable to any transaction or
event occurring on or prior to the Closing, (e) any claim relating to or arising
out of any Liabilities reflected on the Parent Financial Statements or with
respect to accounting fees arising thereafter, or (f) any litigation, action,
claim, proceeding or investigation by any third party relating to or arising out
of the business or operations of Parent, or the actions of Parent or any holder
of Parent capital stock prior to the Effective Time.
Section 9.2 Survival. All representations, warranties, covenants and
agreements of Parent contained in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive until twelve (12) months after the
Closing Date. The representations and warranties of the Company contained in
this Agreement or in any instrument delivered pursuant to this Agreement will
terminate at, and have no further force and effect after, the Effective Time.
Section 9.3 Time Limitations. Parent shall not have any liability (for
indemnification or otherwise) with respect to any representation or warranty, or
agreement to be performed and complied with prior to the Effective Time, unless
on or before the one-year anniversary of the Effective Time (the "Claims
Deadline"), Parent is given notice of a claim with respect thereto, in
accordance with Section 9.5, specifying the factual basis therefore in
reasonable detail to the extent then known by the Company Indemnified Parties.
Section 9.4 Limitation on Liability. The obligations to Parent and to
the Company Indemnified Parties set forth in Section 9.1 shall be subject to the
following limitations:
30
(a) The aggregate liability of Parent to the Company Indemnified
Parties under this Agreement shall not exceed $500,000.00.
(b) Other than claims based on fraud or for specific
performance, injunctive or other equitable relief, the Company Indemnified
Parties sole and exclusive remedy for any and all claims for Damages
pursuant to Section 9.1 hereof shall be the indemnification provided under
the terms and subject to the conditions of this Article IX.
Section 9.5 Notice of Claims.
(a) If, at any time on or prior to the Claims Deadline, Company
Indemnified Parties shall assert a claim for indemnification pursuant to
Section 9.1, such Company Indemnified Parties shall submit to Parent a
written claim stating: (i) that a Company Indemnified Party incurred or
reasonably believes it may incur Damages and the amount or reasonable
estimate thereof of any such Damages; and (ii) in reasonable detail, the
facts alleged as the basis for such claim and the section or sections of
this Agreement alleged as the basis or bases for the claim. If the claim
is for Damages which the Company Indemnified Parties reasonably believe
may be incurred or are otherwise unliquidated, the written claim shall be
deemed to have been asserted under this Article IX in the amount of such
estimated Damages, but no payment for indemnification shall be made until
such Damages have actually been incurred.
(b) In the event that any action, suit or proceeding is brought
against any Company Indemnified Party with respect to which Parent may
have liability under this Article IX, the Parent shall have the right, at
its cost and expense, to defend such action, suit or proceeding in the
name and on behalf of the Company Indemnified Party; provided, however,
that a Company Indemnified Party shall have the right to retain its own
counsel, with fees and expenses paid by Parent, if representation of the
Company Indemnified Party by counsel retained by Parent would be
inappropriate because of actual or potential differing interests between
Parent and the Company Indemnified Party. In connection with any action,
suit or proceeding subject to this Article IX, Parent and each Company
Indemnified Party agree to render to each other such assistance as may
reasonably be required in order to ensure proper and adequate defense of
such action, suit or proceeding. Parent shall not, without the prior
written consent of the applicable Company Indemnified Parties, which
consent shall not be unreasonably withheld or delayed, settle or
compromise any claim or demand if such settlement or compromise does not
include an irrevocable and unconditional release of such Company
Indemnified Parties for any liability arising out of such claim or demand.
Section 9.6 Payment of Damages. In the event that the Company
Indemnified Parties shall be entitled to indemnification pursuant to this
Article IX for actual Damages incurred by them, Parent shall, within thirty (30)
days after the final determination of the amount of such Damages, cause the
Parent Indemnitors to reimburse the Company Indemnified Parties for the amount
of such Damages pursuant to the Parent Stockholder Indemnification Agreement.
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ARTICLE X
TERMINATION PRIOR TO CLOSING
Section 10.1 Termination of Agreement. This Agreement may be terminated
at any time prior to the Closing:
(a) by the mutual written consent of the Company, Acquisition
Corp. and Parent;
(b) by the Company, if Parent (i) fails to perform in any
material respect any of its agreements contained herein required to be
performed by it on or prior to the Closing Date, (ii) materially breaches
any of its representations, warranties or covenants contained herein,
which failure or breach is not cured within thirty (30) days after the
Company has notified Parent and Acquisition Corp. of its intent to
terminate this Agreement pursuant to this paragraph (b);
(c) by Parent, if the Company (i) fails to perform in any
material respect any of its agreements contained herein required to be
performed by it on or prior to the Closing Date, (ii) materially breaches
any of its representations, warranties or covenants contained herein,
which failure or breach is not cured within thirty (30) days after Parent
or Acquisition Corp. has notified the Company of its intent to terminate
this Agreement pursuant to this paragraph (c);
(d) by either the Company, on the one hand, or Parent, on the
other hand, if there shall be any order, writ, injunction or decree of any
court or governmental or regulatory agency binding on Parent or the
Company, which prohibits or materially restrains any of them from
consummating the transactions contemplated hereby; provided that the
parties hereto shall have used their best efforts to have any such order,
writ, injunction or decree lifted and the same shall not have been lifted
within ninety (90) days after entry, by any such court or governmental or
regulatory agency;
(e) by either the Company, on the one hand, or Parent, on the
other hand, if the Closing has not occurred on or prior to March 31, 2007,
for any reason other than delay or nonperformance of the party seeking
such termination;
(f) by the Company, if the condition set forth in Section 8.2(h)
has not been satisfied on or prior to December 31, 2006; or
(g) by the Company if the Board of Directors of the Company
determines in good faith, based upon advice of legal counsel, that
termination pursuant to this Section 10.1(g) is necessary to comply with
its fiduciary duties under applicable law as provided in Section 7.6
hereof.
Section 10.2 Termination of Obligations. Termination of this Agreement
pursuant to Section 10.1 hereof shall terminate all obligations of the parties
hereunder, except for the obligations under Article IX, Article X, and Sections
11.4, 11.7, 11.14 and 11.15 hereof; provided, however, that termination pursuant
to paragraphs (b) or (c) of Section 10.1 shall not relieve the defaulting or
breaching party or parties from any liability to the other parties hereto.
32
ARTICLE XI
MISCELLANEOUS
Section 11.1 Amendments. Subject to applicable law, this Agreement may be
amended or modified by the parties hereto by written agreement executed by each
party to be bound thereby and delivered by duly authorized officers of the
parties hereto at any time prior to the Effective Time; provided, however, that
after the approval of the Merger by the Stockholders, no amendment or
modification of this Agreement shall be made that by law requires further
approval from the Stockholders without such further approval.
Section 11.2 Notices. Any notice, request, instruction, other document or
communications to be given hereunder by any party hereto to any other party
hereto shall be in writing and shall be deemed to have been duly given (a) when
delivered personally, (b) upon receipt of a transmission confirmation (with a
confirming copy delivered personally or sent by overnight courier) if sent by
facsimile or like transmission, or (c) on the next business day when sent by
Federal Express, United Parcel Service, U.S. Express Mail or other reputable
overnight courier for guaranteed next day delivery, as follows:
IF TO PARENT, TO: Technology Holdings, Inc.
Attention: Xxx Xxxxxx
0000 X. Xxxxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile:
WITH A COPY TO:
Cane Xxxxx, LLP
Attention: Xxxxxx Xxxx
0000 Xxxx Xxxx Xxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
IF TO THE COMPANY, TO: Collexis Holdings, Inc.
Attention: Xxxxx xxx Xxxxx
x/x Xxxxxxxx X.X.
X.X. Xxx 00
0000 XX Xxxxxxxxxxxx
The Netherlands
Telephone: x00 000 000000
Facsimile: x00 000 000000
33
WITH A COPY TO:
Xxxxxxxxx & Kahr
Attention: Xxxxxx X. Xxxxxxxx
000 Xxxx Xxxxxx - Xxxxx 000
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice. Nothing in this Section 11.2 shall be deemed to
constitute consent to the manner and address for service of process in
connection with any legal proceeding (including arbitration arising in
connection with this Agreement), which service shall be effected as required by
applicable law.
Section 11.3 Entire Agreement. This Agreement, the Company Disclosure
Schedule, the Parent Disclosure Schedule and the exhibits attached hereto or
referred to herein constitute the entire agreement of the parties hereto, and
supersede all prior agreements and undertakings, both written and oral, among
the parties hereto, with respect to the subject matter hereof and thereof.
Section 11.4 Expenses. Except as otherwise expressly provided herein,
whether or not the Merger occurs, all expenses and fees incurred by Parent on
one hand, and the Company on the other, shall be borne solely and entirely by
the party that has incurred the same; provided, that if the Merger occurs,
Parent agrees to pay, and shall cause the Surviving Corporation to pay, any
unpaid fees and expenses of the Company (including fees and expenses of its
counsel and other advisors) in connection with the consummation of the
transactions contemplated by this Agreement.
Section 11.5 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
will negotiate in good faith to amend or modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
Section 11.6 Successors and Assigns; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned or delegated by any of the parties
hereto without, in the case of Parent, the prior written approval of the Company
and, in the case of the Company, the prior written approval of Parent.
Section 11.7 No Third Party Beneficiaries. Except as set forth in Section
9.1, Section 11.6, and the introductory paragraph of Article V hereof, nothing
herein expressed or implied
34
shall be construed to give any person other than the parties hereto (and their
successors and assigns as permitted herein) any legal or equitable rights
hereunder.
Section 11.8 Counterparts; Delivery by Facsimile. This Agreement may be
executed in multiple counterparts, and by the different parties hereto in
separate counterparts, each of which when executed will be deemed to be an
original but all of which taken together will constitute one and the same
agreement. This Agreement and each other agreement or instrument entered into in
connection herewith or therewith or contemplated hereby or thereby, and any
amendments hereto or thereto, to the extent signed and delivered by means of a
facsimile machine, shall be treated in all manner and respects as an original
agreement or instrument and shall be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in person. At
the request of any party hereto or to any such agreement or instrument, each
other party hereto or thereto shall re-execute original forms thereof and
deliver them to all other parties. No party hereto or to any such agreement or
instrument shall raise the use of a facsimile machine to deliver a signature or
the fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine as a defense to the
formation or enforceability of a contract and each such party forever waives any
such defense.
Section 11.9 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto; (b) waive any inaccuracies in the
representations and breaches of the warranties of the other party contained
herein or in any document delivered pursuant hereto; and (c) waive compliance by
the other party with any of the agreements or conditions contained herein. Any
such extension or waiver will be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
Section 11.10 No Constructive Waivers. No failure or delay on the part of
any party hereto in the exercise of any right hereunder will impair such right
or be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty, agreement or covenant herein, nor will any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right. No waiver by any party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent 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.
Section 11.11 Further Assurances. The parties hereto shall use their
commercially reasonable efforts to do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments or documents as any other party
hereto may reasonably request in order to carry out fully the intent and
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
Section 11.12 Recitals. The recitals set forth above are incorporated
herein and, by this reference, are made part of this Agreement as if fully set
forth herein.
Section 11.13 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
35
Section 11.14 Governing Law. This Agreement and the agreements,
instruments and documents contemplated hereby shall be governed by and construed
and enforced in accordance with the laws of the State of Nevada without regard
to its conflicts of law principles.
Section 11.15 Dispute Resolution. The parties hereto shall initially
attempt to resolve all claims, disputes or controversies arising under, out of
or in connection with this Agreement by conducting good faith negotiations
amongst themselves. If the parties hereto are unable to resolve the matter
following good faith negotiations, the matter shall thereafter be resolved by
binding arbitration and each party hereto hereby waives any right it may
otherwise have to the resolution of such matter by any means other than binding
arbitration pursuant to this Section 11.15. Whenever a party shall decide to
institute arbitration proceedings, it shall provide written notice to that
effect to the other parties hereto. The party giving such notice shall, however,
refrain from instituting the arbitration proceedings for a period of sixty (60)
days following such notice. During this period, the parties shall make good
faith efforts to amicably resolve the claim, dispute or controversy without
arbitration. Any arbitration hereunder shall be conducted in the English
language under the commercial arbitration rules of the American Arbitration
Association. Any such arbitration shall be conducted in New York, New York by a
panel of three arbitrators: one arbitrator shall be appointed by each of Parent
and Company; and the third shall be appointed by the American Arbitration
Association. The panel of arbitrators shall have the authority to grant specific
performance. Judgment upon the award so rendered may be entered in any court
having jurisdiction or application may be made to such court for judicial
acceptance of any award and an order of enforcement, as the case may be. In no
event shall a demand for arbitration be made after the date when institution of
a legal or equitable proceeding based on the claim, dispute or controversy in
question would be barred under this Agreement or by the applicable statute of
limitations. The prevailing party in any arbitration in accordance with this
Section 11.15 shall be entitled to recover from the other party, in addition to
any other remedies specified in the award, all reasonable costs, attorneys' fees
and other expenses incurred by such prevailing party to arbitrate the claim,
dispute or controversy.
Section 11.16 Interpretation.
(a) When a reference is made in this Agreement to a section or
article, such reference shall be to a section or article of this Agreement
unless otherwise clearly indicated to the contrary.
(b) Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
(c) The words "hereof", "hereby", "herein" and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and article, section, paragraph, exhibit and schedule
references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified.
(d) The words "knowledge," or "known to," or similar terms, when
used in this Agreement to qualify any representation or warranty, refers
to the knowledge or awareness of certain specific facts or circumstances
related to such representation or warranty of the persons in the
Applicable Knowledge Group (as defined herein) which a
36
prudent business person would have obtained after reasonable investigation
or due diligence on the part of any such person. For the purposes hereof,
the "Applicable Knowledge Group" with respect to the Company shall be
Xxxxx xxx Xxxxx and Xxxxxxx Xxxxxxxx . For the purposes hereof, the
"Applicable Knowledge Group" with respect to Parent and the Acquisition
Corp. shall be Xxx Xxxxxx.
(e) The word "subsidiary" shall mean any entity of which at
least a majority of the outstanding shares or other equity interests
having ordinary voting power for the election of directors or comparable
managers of such entity is owned, directly or indirectly by another entity
or person.
(f) For purposes of this Agreement, "ordinary course of
business" means the ordinary course of business consistent with past
custom and practice (including with respect to quantity and frequency).
(g) The plural of any defined term shall have a meaning
correlative to such defined term, and words denoting any gender shall
include all genders. Where a word or phrase is defined herein, each of its
other grammatical forms shall have a corresponding meaning.
(h) A reference to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and
statutory instruments issued thereunder or pursuant thereto, unless the
context requires otherwise.
(i) The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any provisions of this Agreement.
[The remainder of this page intentionally blank]
37
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed as of the date first above written by their respective officers
thereunto duly authorized.
COMPANY:
COLLEXIS HOLDINGS, INC.
By: /s/XXXXX XXX XXXXX
-------------------------
Xxxxx xxx Xxxxx, CEO
PARENT:
TECHNOLOGY HOLDINGS, INC.
By: /s/XXX XXXXXX
-------------------------
Name: Xxx Xxxxxx
-------------------------
Title: President
-------------------------
EXHIBIT C
Directors and Officers of Surviving Corporation
Directors
Xxxx Xxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx xxx Xxxxx
Officers
Xxxxxxx Xxxxxxxx - President and CEO
Xxxxx xxx Xxxxx - CEO, Collexis Europe
Xxxxxxx X. Xxxxxx - Vice President Sales
Xxxxx Xxxxxxxxxx - Chief Technology Officer
Xxx Schijvenaars - Chief Scientific Officer
Xxxx Xxxxxxx - Vice President Strategy
