AGREEMENT
AND PLAN OF MERGER
BY AND AMONG
SATTEL GLOBAL NETWORKS, INC.,
XXXXXX ACQUISITION CORP.
AND
XXXXXXX'X EPICUREO, LTD. D/B/A XXXXXX TRUFFLES & CAVIAR U.S.A.
____________________
August 7, 2001
____________________
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated August 7,
2001, is made and entered into by and among Sattel Global Networks, Inc., a
Colorado corporation ("Parent"), Xxxxxx Acquisition Corp., a New York
corporation and wholly owned subsidiary of Parent ("Merger Sub"), and
Xxxxxxx'x Epicureo, Ltd. d/b/a Xxxxxx Truffles & Caviar U.S.A., a New York
corporation (the "Company"). Merger Sub and the Company are sometimes
collectively referred to as the "Constituent Corporations."
WITNESSETH:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have determined that it is advisable and in the best interests of the
respective corporations and their shareholders that Merger Sub be merged with
and into the Company in accordance with New York Business Corporation Law (the
"NYBCL") and the terms of this Agreement, pursuant to which the Company will
be the surviving corporation and will be a wholly owned subsidiary of Parent
(the "Merger"); and
WHEREAS, for United States federal income tax purposes, the parties
intend that the Merger shall qualify as a "reorganization" under Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that
this Agreement constitutes a "plan of reorganization" within the meaning of
the Code; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants, and agreements in connection with, and
establish various conditions precedent to, the Merger; and
WHEREAS, as a condition to, and upon the execution of, this Agreement,
certain officers of the Company, including Xxxxxxx Xxxxxx, are entering into
employment agreements with the Company; and
WHEREAS, as consideration for entering into this Agreement, certain
shareholders, (specifically Seville Consulting, Inc.), of the Parent are
concurrently herewith entering into a Voting Agreement (the "Voting
Agreement") in substantially the form to be attached hereto as Exhibit A,
whereby each such shareholder agrees to vote in favor of the Merger and all
other transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth in this Agreement and in the Articles of
Merger (as defined in Section 1.3 hereof), the parties hereto, intending to be
legally bound, agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. At the Effective Time (as defined in Section 1.3
hereof), subject to the terms and conditions of this Agreement and the
Articles of Merger (as defined in Section 1.3 hereof),
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Merger Sub shall be merged with and into the Company, the separate existence
of Merger Sub shall cease, and the Company shall continue as the surviving
corporation. The Company, in its capacity as the corporation surviving the
Merger, is hereinafter sometimes referred to as the "Surviving Corporation."
1.2. Effect of Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement, the Articles of Merger and the
applicable provisions of the NYBCL. Without limiting the generality of the
foregoing, the Surviving Corporation shall succeed to and possess all the
properties, rights, privileges, immunities, powers, franchises and purposes,
and be subject to all the duties, liabilities, debts, obligations,
restrictions and disabilities, of the Constituent Corporations, all without
further act or deed.
1.3. Effective Time. Subject to the terms and conditions of this
Agreement, the parties hereto will cause the Articles of Merger, the form of
which shall be appended hereto (the "Articles of Merger") to be executed,
delivered and filed with the Secretary of State of the State of New York in
accordance with the applicable provisions of the NYBCL at the time of the
Closing (as defined in Section 1.7 hereof). The Merger shall become effective
upon filing of the Articles of Merger with the Secretary of State of the State
of New York, or at such later time as may be agreed to by the parties and set
forth in the Articles of Merger. The time of effectiveness is herein referred
to as the "Effective Time." The day on which the Effective Time shall occur
is herein referred to as the "Effective Date."
1.4. Articles of Incorporation; Bylaws. From and after the Effective
Time and until further amended in accordance with applicable law, the Articles
of Incorporation of the Company, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation, as amended as set forth in an exhibit to the Articles of Merger.
From and after the Effective Time and until further amended in accordance with
law, the Bylaws of Merger Sub as in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation.
1.5. Directors and Officers. From and after the Effective Time, the
directors of the Surviving Corporation and the Parent shall be the persons who
were the directors of Company immediately prior to the Effective Time, and the
officers of the Surviving Corporation shall be the persons who were the
officers of Company immediately prior to the Effective Time. Said directors
and officers of the Surviving Corporation shall hold office for the term
specified in, and subject to the provisions contained in, the Articles of
Incorporation and Bylaws of the Surviving Corporation and applicable law. If,
at or after the Effective Time, a vacancy shall exist on the Board of
Directors or in any of the offices of the Surviving Corporation, such vacancy
shall be filled in the manner provided in the Articles of Incorporation and
Bylaws of the Surviving Corporation.
1.6. Taking of Necessary Action; Further Action. Parent, Merger Sub and
the Company, respectively, shall each use its or their commercially reasonable
best efforts to take all such action as may be necessary or appropriate to
effectuate the Merger under the NYBCL at the time specified in Section 1.3
hereof. If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation with full right, title and possession to all
properties, rights, privileges, immunities, powers and franchises of either of
the Constituent Corporations, the officers of the Surviving Corporation are
fully authorized in the name of each Constituent Corporation or otherwise to
take, and shall take, all such lawful and necessary action.
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1.7. The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Salon Marrow,
Xxxxxxx & Xxxxxx LLP, 000 Xxxxx Xxx., Xxx Xxxx Xxxx, Xxx Xxxx 00000, within
three business days after the date on which the last of the conditions set
forth in Article VI shall have been satisfied or waived, or at such other
place and on such other date as is mutually agreeable to Parent and the
Company, but in no event later than December 31, 2001, (the "Closing Date").
The Closing will be effective as of the Effective Time.
ARTICLE II
CONVERSION OF SECURITIES
2.1. Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub, or the
Company, the holder of any shares of Company Common Stock (as defined below)
or the holder of any options, warrants or other rights to acquire or receive
shares of Company Common Stock, the following shall occur:
(a) Conversion of Company Common Stock. At the Effective Time, each
share of common stock, par value $10.00 per share, of the Company (the
"Company Common Stock") issued and outstanding immediately prior to the
Effective Time (other than any shares of Company Common Stock to be canceled
pursuant to Section 2.1(b) will be canceled and extinguished and be converted
automatically into the right to receive 50,625 shares (the "Exchange Ratio")
of common stock, par value $.001 per share, of the Parent (the "Parent Common
Stock") after giving effect to a 10:1 reverse split of the Parent common
shares which shall occur prior to closing. In the event the reverse split of
the common shares of the Parent is greater or less than a 10:1 the exchange
ratio shall be adjusted to properly reflect the issuance of that number of
shares of Parent common capital stock which will result the in the
shareholders of Company owning 67.5% of the Parent at the Effective Time.
(b) Cancellation of Company Common Stock Owned by Parent or Company.
At the Effective Time, all shares of Company Common Stock that are owned by
the Company as treasury stock and each share of Company Common Stock owned by
Parent or any direct or indirect wholly owned subsidiary of Parent or of the
Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
(c) Capital Stock of Merger Sub. At the Effective Time, each share
of common stock, $.01 par value, of Merger Sub ("Merger Sub Common Stock")
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, $.01 par value, of the Surviving
Corporation, and the Surviving Corporation shall be a wholly owned subsidiary
of Parent. Each stock certificate of Merger Sub evidencing ownership of any
such shares shall continue to evidence ownership of such shares of capital
stock of the Surviving Corporation.
(d) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted in the event of (i) any stock split, stock dividend (including any
dividend or distribution of securities convertible into Parent Common Stock or
Company Common Stock), reorganization, recapitalization, combination, exchange
of shares, adjustment or other like change with respect to Parent Common Stock
or Company Common Stock occurring after the date hereof and prior to the
Effective Time, except as anticipated herein, or (ii) any increase in the
number of shares of Company Common Stock on a fully diluted, as-converted
basis (i.e., assuming issuance of all shares of Common Stock issuable upon the
exercise or conversion of all securities outstanding immediately
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prior to the Effective Time which are convertible into or exercisable for
shares of Company Common Stock, whether or not vested), other than increases
resulting from transactions permitted in Section 5.1 hereof, so as to provide
holders of Company Common Stock and Parent the same economic effect as
contemplated by this Agreement prior to such stock split, stock dividend,
reorganization, recapitalization, combination, exchange of shares, adjustment
or like change or increase.
(e) Fractional Shares. No fraction of a share of Parent Common
Stock will be issued, but in lieu thereof each holder of shares of Company
Common Stock who would otherwise be entitled to a fraction of a share of
Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock to be received by such holder) shall receive from Parent an amount of
cash without interest (rounded to the nearest whole cent) equal to the product
of (i) such fraction, multiplied by (ii) the closing sale price for a share of
Parent Common Stock on the OTC-BB Market on the trading day immediately prior
to the Effective Time.
(f) Dissenting Shares. Company represents and warrants that there
will be no dissenting shares.
(g) Stock Options. Other than pursuant to the terms of existing
commitments (all of which commitments are identified in Section 2.1 of the
Company Disclosure Letter (as defined in the preamble to Article III hereof)),
the Company shall not, and shall cause any Company Stock Option Plan
administrator not to, take any action prior to the Effective Time that will
create any Company Stock Option or other right to purchase any Company shares
unless otherwise permitted herein.
2.2. Warrants. At the Effective Time, each warrant to purchase shares of
Company Common Stock outstanding immediately prior to the Effective Date
(each, a "Company Warrant") shall be assumed by Parent and converted into a
warrant (each a "Parent Warrant") (in an amount equal to 400,000 Parent shares
(200,000 shares priced at $1.00 per share and 200,000 shares priced at $1.50
per share) to acquire, on substantially the same terms and conditions, the
number of whole shares of Parent Common Stock equal to the number of shares of
Company Common Stock that were issuable upon exercise of such Company Warrant
immediately prior to the Effective Time multiplied by the Exchange Ratio, as
adjusted pursuant to Section 2.1(d) above (rounded down to the nearest whole
number of shares of Parent Common Stock), and the per share exercise price of
the shares of the Parent Common Stock issuable upon exercise of such Parent
Warrant shall be One Dollar ($1.00) per share for the first 200,000 shares and
One Dollar and Fifty Cents ($1.50) per share for the second 200,000 shares
based upon a capitalization of 17,400,000 shares of common stock issued and
outstanding on a fully diluted basis. Other than pursuant to the terms of
existing commitments (all of which commitments are identified in Section 2.3
of the Company Disclosure Letter), the Company shall not take any action prior
to the Effective Time that will extend the exercise period of any Company
Warrant or otherwise amend the terms of outstanding Company Warrants.
2.3. Exchange of Certificates.
(a) Prior to the Effective Time, Parent shall designate a law firm,
commercial bank, trust company or other financial institution, which may
include Parent's stock transfer agent, to act as exchange agent ("Exchange
Agent") in the Merger.
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(b) Promptly at the Effective Time, Parent shall make available to
the Exchange Agent for exchange in accordance with this Article II the
aggregate number of shares of Parent Common Stock issuable pursuant to Section
2.1 in exchange for outstanding shares of Company Common Stock. At the
Effective Time or as soon as thereafter practicable after the Effective Time,
the Parent shall cause to be mailed to each holder of record of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certificates") (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Exchange Agent, and shall be in such form and have
such other provisions as Parent may reasonably specify and which shall be
reasonably acceptable to the Company) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock. Upon surrender of a Certificate
for cancellation to the Exchange Agent, together with such letter of
transmittal, duly completed and validly executed, and such other documents as
may be reasonably required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange a certificate
representing the number of whole shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.1, and the Certificate so surrendered
shall forthwith be canceled. Until surrendered as contemplated by this
Section 2.3, each Certificate that, prior to the Effective Time, represented
shares of Company Common Stock will be deemed from and after the Effective
Time, for all corporate purposes, other than the payment of dividends, to
evidence the right to receive the number of full shares of Parent Common Stock
into which such shares of Company Common Stock shall have been so converted.
No dividends or other distributions declared or made after the Effective Time
with respect to Parent Common Stock with a record date after the Effective
Time will be paid to the holder of any unsurrendered Certificate with respect
to the shares of Parent Common Stock represented thereby until the holder of
record of such Certificate shall surrender such Certificate. Subject to
applicable law, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of
Parent Common Stock issued in exchange therefor, without interest, at the time
of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
whole shares of Parent Common Stock.
(c) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall be no further registration of transfers of
shares of Company Common Stock thereafter on the records of the Company. From
and after the Effective Time, the holders of certificates representing shares
of Company Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of Company Common
Stock except as otherwise provided in this Agreement or by law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Merger Sub and Parent that the
statements contained in this Article III are true and correct, except as set
forth in the letter delivered by the Company to Merger Sub on the date hereof
(the "Company Disclosure Letter") (which Company Disclosure Letter sets forth
the exceptions to the representations and warranties contained in this Article
III under captions referencing the Sections to which such exceptions apply):
3.1. Organization and Qualification. Each of the Company and its
Subsidiaries, if any, (as defined below) is a company duly incorporated,
validly existing and, if applicable, in good standing under the laws of the
jurisdiction of its incorporation and each such entity has all requisite
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corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified or licensed to carry on its business as it is
now being conducted, and is qualified to conduct business, in each
jurisdiction where the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except for
failures to be so qualified that would not, individually or in the aggregate,
have a Company Material Adverse Effect (as defined below). Neither the
Company nor any of its Subsidiaries is in violation of any of the provisions
of its Articles of Incorporation or other applicable charter document (any
such document of any business entity hereinafter referred to as its "Charter
Document") or its Bylaws, or other applicable organizational document (any
such documents of any business entity hereinafter referred to as its
"Governing Document"). The Company has delivered to Merger Sub accurate and
complete copies of the respective Charter Documents and Governing Documents,
as currently in effect, of each of the Company and its Subsidiaries. As used
in this Agreement, the term "Company Material Adverse Effect" means any
change, effect, event or condition that (i) has a material adverse effect on
the assets, business or financial condition of the Company and its
Subsidiaries, taken as a whole (other than any such change, effect, event or
condition that arises as a result of the transactions contemplated hereby), or
(ii) would prevent or materially impair the Company's ability to consummate
the transactions contemplated hereby. As used in this Agreement, the term
"Subsidiary" when used with respect to any party means any corporation or
other organization, whether incorporated or unincorporated, of which such
party directly or indirectly owns or controls at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions.
3.2. Capital Stock of Subsidiaries. Neither the Company nor any of its
Subsidiaries owns, controls or holds with the power to vote, directly or
indirectly, of record, beneficially or otherwise, any share of capital stock
or any equity or ownership interest in any company, corporation, partnership,
association, joint venture, business, trust or other entity, except for the
Subsidiaries described in Section 3.2 of the Company Disclosure Letter, and
except for ownership of securities in any publicly traded company held for
investment by the Company or any of its Subsidiaries and comprising less than
five percent of the outstanding stock of such company. Except as set forth in
Section 3.2 of the Company Disclosure Letter, the Company is directly or
indirectly the record and beneficial owner of all of the outstanding shares of
capital stock of each of its Subsidiaries and no equity securities of any of
such Subsidiaries are or may be required to be issued by reason of any
options, warrants, scrip, rights to subscribe for, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of any capital stock of any such Subsidiary, and
there are no contracts, commitments, understandings or arrangements by which
the Company or any such Subsidiary is bound to issue, transfer or sell any
shares of such capital stock or securities convertible into or exchangeable
for such shares. Other than as set forth in Section 3.2 of the Company
Disclosure Letter, all of such shares so owned by the Company are validly
issued, fully paid and nonassessable and are owned by it free and clear of any
claim, lien, pledge, security interest or other encumbrance of any kind
(collectively "Liens") with respect thereto other than restrictions on
transfer pursuant to applicable securities laws.
3.3. Capitalization. The authorized capital stock of the Company
consists of 200 shares of Company Common Stock, $10.00 par value per share,
and no shares of preferred stock are authorized nor issued. As of the close
of business on June 30, 2001 (the "Company Measurement Date"), (a) 200 shares
of Company Common Stock were issued and outstanding, (b) no shares of Company
Preferred Stock were authorized, issued and or outstanding, (c) the Company
had no shares of Company Common Stock held in its treasury, (d) No Company
Options to purchase shares of
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Company Common Stock in the aggregate had been granted or remained outstanding
under any Company Stock Option Plans, (e) Company Warrants to purchase 7.90
shares of Company Common Stock were outstanding (based upon the current
exchange ratio), and (f) except for the Company Warrants, there were no
outstanding Rights (defined below). Except as permitted by Section 5.1(b),
since the Company Measurement Date, no additional shares in the Company have
been issued and no Rights have been granted. Except as described in the
preceding sentence or as set forth in Section 3.3 of the Company Disclosure
Letter, the Company has no outstanding bonds, debentures, notes or other
securities or obligations the holders of which have the right to vote or which
are convertible into or exercisable for securities having the right to vote on
any matter on which any shareholder of the Company has a right to vote. All
issued and outstanding shares of Company Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights.
There are not as of the date hereof any existing options, warrants, stock
appreciation rights, stock issuance rights, calls, subscriptions, convertible
securities or other rights which obligate the Company or any of its
Subsidiaries to issue, exchange, transfer or sell any shares of the capital
stock of the Company or any of its Subsidiaries. As of the date hereof, there
are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, re-price, redeem or otherwise acquire any shares
of the capital stock of the Company or any of its Subsidiaries. As of the
date hereof, there are no outstanding contractual obligations of the Company
to vote or to dispose of any shares of the capital stock of any of its
Subsidiaries.
3.4. Authority Relative to this Agreement. The Company has the requisite
corporate power and authority to execute and deliver, and perform its
obligations under, this Agreement and to consummate the Merger and the other
transactions contemplated hereby and thereby under applicable law. The
execution and delivery of this Agreement and the consummation of the Merger
and other transactions contemplated hereby and thereby have been duly and
validly authorized by the Board of Directors of the Company and no other
corporate proceedings on the part of the Company are necessary to authorize
this Agreement or to consummate the Merger or other transactions contemplated
hereby and thereby. This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof by Parent and Merger Sub, each constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors rights generally or by general
equitable principles.
3.5. No Conflict; Required Filings and Consents.
(a) Assuming that all filings, permits, authorizations, consents and
approvals or waivers thereof have been duly made or obtained as contemplated
by Section 3.5(b) hereof, neither the execution and delivery of this Agreement
by the Company nor the consummation of the Merger or other transactions
contemplated hereby or thereby nor compliance by the Company with any of the
provisions hereof will (i) 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, or result in the
termination or suspension of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any Lien upon any of the properties or assets of the Company or
any of its Subsidiaries under, any of the terms, conditions or provisions of
(x) their respective Charter Documents or Governing Documents, (y) any note,
bond, charge, lien, pledge, mortgage, indenture or deed of trust to which the
Company or any such Subsidiary is a party or to which they or any of their
respective properties or assets may be subject, or (z) any license, lease,
agreement or other instrument or obligation to which the Company or any
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such Subsidiary is a party or to which they or any of their respective
properties or assets may be subject, or (ii) violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company or any of its Subsidiaries or any of their respective properties or
assets, except, in the case of clauses (i) (y) and (z) and (ii) above, for
such violations, conflicts, breaches, defaults, terminations, suspensions,
accelerations, rights of termination or acceleration or creations of liens,
security interests, charges or encumbrances which would not, individually or
in the aggregate, have a Company Material Adverse Effect.
(b) No filing or registration with or notification to and no permit,
authorization, consent or approval of any court, commission, governmental
body, regulatory authority, agency or tribunal wherever located (a
"Governmental Entity") is required to be obtained, made or given by the
Company in connection with the execution and delivery of this Agreement or the
Company Option Agreement or the consummation by the Company of the Merger or
other transactions contemplated hereby or thereby except (i) the filing of the
Articles of Merger as provided in Section 1.3 hereof. amended, or (ii) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws, or (iii)
where the failure to obtain any such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not, individually or
in the aggregate, have a Company Material Adverse Effect.
3.6. Financial Statements.
(a) The Company is not required to file any report, form or other
document with the SEC.
(b) The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company and its Subsidiaries
attached hereto (collectively, the "Financial Statements") have been prepared
in accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
otherwise indicated in the notes thereto) and present fairly, in all material
respects, the financial position and results of operations and cash flows of
the Company and its Subsidiaries on a consolidated basis at the respective
dates and for the respective periods indicated (except, in the case of all
such financial statements that are interim financial statements, for footnotes
and normal year-end adjustments).
(c) Neither the Company nor any of its Subsidiaries has any
liabilities or obligations of any nature, whether absolute, accrued,
unmatured, contingent or otherwise whether due or to become due, known or
unknown, or any unsatisfied judgments or any leases of personalty or realty or
unusual or extraordinary commitments that are required to be shown on the face
of a balance sheet or disclosed in notes to financial statements under United
States generally accepted accounting principles, except (i) liabilities
recorded on the Company's balance sheet at December 31, 2000 (the "Balance
Sheet") included in the financial statements referred in Section 3.6(a) hereof
and the notes thereto, or (ii) liabilities or obligations incurred since
December 31, 2000 (whether or not incurred in the ordinary course of business
and consistent with past practice) that would not, individually or in the
aggregate, have a Company Material Adverse Effect.
3.7. Absence of Changes or Events. Except as set forth in Section 3.7 of
the Company Disclosure Letter, since December 31, 2000 through the date of
this Agreement, the Company and its Subsidiaries have not incurred any
liability or obligation that has resulted or would reasonably be expected to
result in a Company Material Adverse Effect, and there has not been any change
in the
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business, financial condition or results of operations of the Company or any
of its Subsidiaries which has had, or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, and the
Company and its Subsidiaries have conducted their respective businesses in the
ordinary course consistent with their past practices.
3.8. Litigation. Except as set forth in Section 3.8 of the Company
Disclosure Letter, there is no (a) claim, action, suit or proceeding pending
or, to the Knowledge (as defined in Section 8.6 hereof) of the Company or any
of its Subsidiaries, threatened against or relating to the Company or any of
its Subsidiaries, or (b) outstanding judgment, order, writ, injunction or
decree (collectively, "Orders"), or application, request or motion therefor,
in a proceeding to which the Company, any Subsidiary of the Company or any of
their respective assets was or is a party except actions, suits, proceedings
or Orders that, individually or in the aggregate, has not had or would not
reasonably be expected to have a Company Material Adverse Effect, and neither
the Company nor any Subsidiary is in default in any material respect with
respect to any such Order.
3.9. Title to Properties. The Company does not own any real property.
The Company has heretofore made available to Parent correct and complete
copies of all leases, subleases and other agreements (collectively, the "Real
Property Leases") under which the Company or any of its Subsidiaries uses or
occupies or has the right to use or occupy, now or in the future, any real
property or facility (the "Leased Real Property"), including without
limitation all modifications, amendments and supplements thereto. Except in
each case where the failure would not, individually or in the aggregate, have
a Company Material Adverse Effect or except as otherwise set forth in Section
3.9 of the Company Disclosure Letter, (i) the Company or one of its
Subsidiaries has a valid leasehold interest in each parcel of Leased Real
Property free and clear of all Liens except liens of record and other
permitted liens and each Real Property Lease is in full force and effect, (ii)
all rent and other sums and charges due and payable by the Company or its
Subsidiaries as tenants thereunder are current in all material respects, (iii)
no termination event or condition or uncured default of a material nature on
the part of the Company or any such Subsidiary or, to the Knowledge of the
Company or any such Subsidiary, the landlord, exists under any Real Property
Lease, (iv) the Company or one of its Subsidiaries is in actual possession of
each Leased Real Property and is entitled to quiet enjoyment thereof in
accordance with the terms of the applicable Real Property Lease and applicable
law, and (v) the Company and its Subsidiaries own outright all of the personal
property (except for leased property or assets for which it has a valid and
enforceable right to use) which is reflected on the Balance Sheet, except for
property since sold or otherwise disposed of in the ordinary course of
business and consistent with past practice and except for liens of record and
other permitted liens. Except where the failure would not, individually or in
the aggregate, have a Company Material Adverse Effect, the plant, property and
equipment of the Company and its Subsidiaries that are used in the operations
of their businesses are in good operating condition and repair, subject to
ordinary wear and tear, and, subject to normal maintenance, are available for
use.
3.10. Certain Contracts. Neither the Company nor any of its Subsidiaries
has breached, or received in writing any claim or notice that it has breached,
any of the terms or conditions of (i) any agreement, contract or commitment
required to be filed as an exhibit to the Company Disclosure Statement or any
agreements, contracts or commitments entered into since December 31, 2000,
(ii) any agreements, contracts or commitments with manufacturers, suppliers,
sales representatives, distributors, or OEM strategic partners of the Company
pursuant to which the Company recognized revenues or payments in excess of
$100,000 for the twelve-month period ended December 31, 2000, or (iii) any
agreements, contracts or commitments containing covenants that limit the
ability of the Company or any of its Subsidiaries to compete in any line of
business or with any Person (as defined
9
in Section 8.6 hereof), or that include any exclusivity provision or involve
any restriction on the geographic area in which the Company or any of its
Subsidiaries may carry on its business (collectively, "Company Material
Contracts"), in such a manner as, individually or in the aggregate, has had or
would reasonably be expected to have a Company Material Adverse Effect.
Section 3.10 of the Company Disclosure Letter lists each Company Material
Contract described in clauses (ii) and (iii) of the preceding sentence. Each
Company Material Contract that has not expired by its terms is in full force
and effect and is the legal, valid and binding obligation of the Company
and/or its Subsidiaries, enforceable against them in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity), except
where the failure of such Company Material Contract to be in full force and
effect or to be legal, valid, binding or enforceable against the Company
and/or its Subsidiaries has not had and would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Except as set forth in Section 3.10 of the Company Disclosure Letter, no
consent, approval, waiver or authorization of, or notice to any Person is
needed in order that each such Company Material Contract shall continue in
full force and effect in accordance with its terms without penalty,
acceleration or rights of early termination by reason of the consummation of
the Merger and the other transactions contemplated by this Agreement.
3.11. Compliance with Law. Except where the failure would not have a
Company Material Adverse Effect, to the best of the Company's knowledge and
belief, all activities of the Company and its Subsidiaries have been, and are
currently being, conducted in compliance in all material respects with all
applicable United States federal, state, provincial and local and other
foreign laws, ordinances, regulations, interpretations, judgments, decrees,
injunctions, permits, licenses, certificates, governmental requirements, and
Orders of any court or other Governmental Entity or any nongovernmental
self-regulatory agency, and no notice has been received by the Company or any
Subsidiary of any claims filed against the Company or any Subsidiary alleging
a violation of any such laws, regulations or other requirements which would be
required to be disclosed in any Company SEC Report. The Company and its
Subsidiaries have all permits, licenses and franchises from Governmental
Entities required to conduct their businesses as now being conducted, except
for such permits, licenses and franchises the absence of which has not had and
would not, individually or in the aggregate, have a Company Material Adverse
Effect.
3.12. Taxes.
(a) "Tax" or "Taxes" shall mean all United States federal, state,
provincial, local or foreign taxes and any other applicable duties, levies,
fees, charges and assessments that are in the nature of a tax, including
income, gross receipts, property, sales, use, license, excise, franchise, ad
valorem, value-added, transfer, social security payments, and health taxes and
any deductibles relating to wages, salaries and benefits and payments to
subcontractors for any jurisdiction in which the Company or any of its
Subsidiaries does business (to the extent required under applicable Tax law),
together with all interest, penalties and additions imposed with respect to
such amounts.
10
(b) Except as set forth in (or resulting from matters set forth in)
Section 3.13 of the Company Disclosure Letter or as could not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect:
(i) the Company and its Subsidiaries have prepared and timely
filed with the appropriate governmental agencies all franchise, income,
sales and all other material Tax returns and reports required to be
filed on or before the Effective Time (collectively "Returns"), taking
into account any extension of time to file granted to or obtained on
behalf of the Company and/or its Subsidiaries;
(ii) all Taxes of the Company and its Subsidiaries shown on
such Returns or otherwise known by the Company to be due or payable have
been timely paid in full to the proper authorities, other than such
Taxes as are being contested in good faith by appropriate proceedings or
which are adequately reserved for in accordance with generally accepted
accounting principles;
(iii) all deficiencies resulting from Tax examinations of
income, sales and franchise and all other material Returns filed by the
Company and its Subsidiaries in any jurisdiction in which such Returns
are required to be so filed have either been paid or are being contested
in good faith by appropriate proceedings;
(iv) no deficiency has been asserted or assessed against the
Company or any of its Subsidiaries which has not been satisfied or
otherwise resolved, and no examination of the Company or any of its
Subsidiaries is pending or, to the Knowledge of the Company, threatened
for any material amount of Tax by any taxing authority;
(v) no extension of the period for assessment or collection of
any material Tax is currently in effect and no extension of time within
which to file any material Return has been requested, which Return has
not since been filed;
(vi) all Returns filed by the Company and its Subsidiaries are
correct and complete in all material respects or adequate reserves have
been established with respect to any additional Taxes that may be due
(or may become due) as a result of such Returns not being correct or
complete;
(vii) to the Knowledge of the Company, no Tax liens have been
filed with respect to any Taxes;
(viii) neither the Company nor any of its Subsidiaries have
made since January 1, 2001 and none will make, any voluntary adjustment
by reason of a change in their accounting methods for any pre-Merger
period;
(ix) the Company and its Subsidiaries have made timely payments
of the Taxes required to be deducted and withheld from the wages paid to
their employees;
(x) the Company and its Subsidiaries are not parties to any Tax
sharing or Tax matters agreement; and
(xi) to the Knowledge of the Company, neither the Company nor
any of its Subsidiaries is liable to be assessed for or made accountable
for any Tax for which any
11
other person or persons may be liable to be assessed or made accountable
whether by virtue of the entering into or the consummation of the Merger
or by virtue of any act or acts done by or which may be done by or any
circumstance or circumstances involving or which may involve any other
person or persons.
(c) The Company and its Subsidiaries are not parties to any
agreement, contract, or arrangement that would, as a result of the
transactions contemplated hereby, result, separately or in the aggregate, in
(i) the payment of any "excess parachute payments" within the meaning of
Section 280G of the Code by reason of the Merger or (ii) the payment of any
form of compensation or reimbursement for any Tax incurred by any Person
arising under Section 280G of the Code.
3.13. Employees. Neither the Company nor any of its Subsidiaries is a
party to any collective bargaining agreement, arrangement or labor contract
with a labor union or labor organization, whether formal or otherwise, except
as set forth in Section 3.13 of the Company Disclosure Letter. The Company
Disclosure Letter, under the caption referencing this Section 3.13, lists all
employment, severance and change of control agreements (or any other
agreements that may result in the acceleration of outstanding options) of the
Company or its Subsidiaries. To the Company's knowledge, each of the Company
and its Subsidiaries is in compliance with all applicable laws (including,
without limitation, all applicable extension orders) respecting employment and
employment practices, terms and conditions of employment, equal opportunity,
anti-discrimination laws, and wages and hours, except where such noncompliance
has not had and would not, individually or in the aggregate, reasonably be
expected to have, a Company Material Adverse Effect. There is no labor
strike, slowdown or stoppage pending (or, to the Knowledge of the Company or
any of its Subsidiaries, any unfair labor practice complaints, labor
disturbances or other controversies respecting employment which are pending or
threatened which, if they actually occurred, would reasonably be expected to
have a Company Material Adverse Effect) against the Company or any of its
Subsidiaries.
3.14. Employee Benefit Plans and policies.
(a) With the exception of the plans referred to in Schedule 3.14(a)
attached hereto (the "Employee Benefit Plans"), the Company does not maintain
or have an obligation to contribute to, and has at no time since the effective
date of ERISA maintained or had an obligation to contribute to, any "employee
pension benefit plan" as defined in Section 3(2) of ERISA with regard to any
employee, past or present, and the Company is not and has at no time since the
effective date of the Multiemployer Pension Plan Amendment Act of 1980 been a
party to, nor during such period made any contribution to, any "Multiemployer
Plan" as defined in Section 3(37) of ERISA with regard to any employee, past
or present. The Employee Benefit Plans are, and at all times, have been, in
material compliance with ERISA and they are and at all times, have been in
material compliance with the requirements for qualification under Section
401(a), and with the minimum funding standards of Section 412, of the Code as
amended, and the rules and regulations promulgated thereunder.
(b) The funding method used in connection with each of the Employee
Benefit Plans is acceptable under ERISA. The Employee Benefit Plans are the
only plans of the Company with regard to any employee, past or present, which
are, or ever were, subject to the provisions of Part 3 of Title I of ERISA,
Section 412 of the Code, or the provisions of Title IV of ERISA.
12
(c) Except as set forth in Schedule 3.14(c), the Corporations are
not in material default in performing any of its obligations (including
funding obligations) with respect to the Employee Benefit Plans.
3.15. Environmental Matters.
(a) The Company and its Subsidiaries, to the best of their knowledge
and belief, (i) have been in compliance and are presently complying in all
material respects with all applicable health, safety and Environmental Laws
(defined below), and (ii) have obtained all material permits, licenses and
authorizations which are required under all applicable health, safety and
Environmental Laws and are in compliance in all material respects with such
permits, licenses and authorizations, except in each case for such failure to
comply or to obtain permits, licenses or authorizations that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. To the Knowledge of the Company, (i) none of the
Leased Real Property (including without limitation soils and surface and
ground waters) are contaminated with any Hazardous Materials in quantities
which require investigation or remediation under Environmental Laws, (ii)
neither the Company nor any of its Subsidiaries is liable for any off-site
contamination, and (iii) there is no environmental matter which could
reasonably be expected to expose the Company or any of its Subsidiaries to a
claim to clean-up any Hazardous Materials or otherwise to remedy any pollution
or damage at any of the properties utilized in the Company's business under
any Environmental Laws, that would, with respect to any of (i), (ii) or (iii)
above, be required to be disclosed in the Parent's SEC Reports.
(b) For purposes of this Agreement, the term (i) "Environmental
Laws" means all applicable United States federal, state, provincial, local and
other foreign laws, rules, regulations, codes, ordinances, orders, decrees,
directives, permits, licenses and judgments relating to pollution,
contamination or protection of the environment (including, without limitation,
all applicable United States federal, state, provincial, local and other
foreign laws, rules, regulations, codes, ordinances, orders, decrees,
directives, permits, licenses and judgments relating to Hazardous Materials in
effect as of the date of this Agreement), and (ii) "Hazardous Materials" means
any dangerous, toxic or hazardous pollutant, contaminant, chemical, waste,
material or substance as defined in or governed by any United States federal,
state, provincial, local or other foreign law, statute, code, ordinance,
regulation, rule or other requirement relating to such substance or otherwise
relating to the environment or human health or safety, including without
limitation any waste, material, substance, pollutant or contaminant that might
cause any injury to human health or safety or to the environment or might
subject the Company or any of its Subsidiaries to any imposition of costs or
liability under any Environmental Law.
3.16. Insurance. The Company, to the best of its knowledge and belief,
is adequately covered by insurance policies currently in force with respect to
its business and properties. Except as disclosed in Section 3.16 of the
Company Disclosure Letter, there are no claims outstanding under any insurance
policy which could, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect and, to the knowledge of the Company
or any of its Subsidiaries, neither the Company nor any of its Subsidiaries
has failed to give any notice or to present any such claim with respect to its
business under any such policy in due and timely fashion, except where such
failure would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect.
13
3.17. Foreign Corrupt Practices Act. Neither the Company nor any of its
Subsidiaries (nor any person representing the Company or any of its
Subsidiaries) has at any time during the last five years (a) made any payment
in violation of the Foreign Corrupt Practices Act or similar laws of other
countries where the Company engages in business, or (b) made any payment to
any foreign, federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.
3.18. Export Control Laws. The Company has conducted its export
transactions in accordance in all material respects with applicable provisions
of United States export control laws and regulations, including but not
limited to the Export Administration Act and implementing Export
Administration Regulations.
3.19. Finders or Brokers. Except for such Persons as set forth in
Section 3.19 of the Company Disclosure Letter, whose fees will be paid by the
Company, none of the Company, the Subsidiaries of the Company, the Board of
Directors of the Company (the "Company Board") or any member of the Company
Board has employed any agent, investment banker, broker, finder or
intermediary in connection with the transactions contemplated hereby who might
be entitled to a fee or any commission in connection with the Merger or the
other transactions contemplated hereby.
3.20. Board Recommendation. The Company Board has, at a meeting of such
Company Board duly held on July__, 2001, approved and adopted this Agreement,
the Merger, the Company Option Agreement and the other transactions
contemplated hereby and thereby, declared the advisability of the Merger and
recommended that the shareholders of the Company approve the Merger and the
other transactions contemplated hereby, and has not as of the date hereof
rescinded or modified in any respect any of such actions.
3.21. Vote Required. The affirmative vote of the holders of a majority
of the shares of Company Common Stock outstanding on the record date set for
the Company Shareholders Meeting is the only vote of the holders of any of the
Company's capital stock necessary to approve this Agreement and the
transactions contemplated hereby.
3.22. Tax Matters. Neither the Company nor, to its Knowledge, any of its
affiliates has taken or agreed to take any action, or knows of any
circumstances, that (without regard to any action taken or agreed to be taken
by Parent or any of its affiliates) would prevent the business combination to
be effected by the Merger from constituting a transaction qualifying as a
reorganization within the meaning of Section 368 of the Code.
3.23. State Takeover Statutes; Rights Agreement. The Company Board has
taken all actions so that the restrictions contained in the New York Business
Code applicable to a "business combination" will not apply to the execution,
delivery of performance of this Agreement or the consummation of the Merger or
the other transactions contemplated by this Agreement.
14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND PARENT
Merger Sub and Parent jointly and severally represent and warrant to the
Company that the statements contained in this Article IV are true and correct:
4.1. Organization and Qualification. Parent is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Colorado, with the corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Merger Sub is a corporation validly existing and in good standing under the
laws of the State of New York formed on August ____2001 and has no liabilities
of any kind whatsoever and has not conducted any business since inception.
Each of Merger Sub and Parent is duly qualified or licensed to carry on its
business as it is now being conducted, and is qualified to conduct business,
in each jurisdiction where the character of its properties owned or leased or
the nature of its activities makes such qualification necessary, except for
failures to be so qualified that would not, individually or in the aggregate,
have, or would not reasonably be expected to have, a Parent Material Adverse
Effect (as defined below). Neither Parent nor Merger Sub is in violation of
any of the provisions of its Charter Document or its Governing Document. As
used in this Agreement, the term "Parent Material Adverse Effect" means any
change, effect, event or condition that (i) has a material adverse effect on
the assets, business or financial condition of Parent and its Subsidiaries,
taken as a whole, or (ii) would prevent or materially delay Merger Sub's or
Parent's ability to consummate the transactions contemplated hereby.
4.2. Capitalization. A. The authorized capital stock of Parent consists
of 100,000,000 shares of Parent Common Stock, $.001 par value per share, and
10,000,000 shares of preferred stock, .01 par value. As of the close of
business on March 31, 2001 (the "Parent Measurement Date"), (a) 30,410,017
shares of Parent Common Stock were issued and outstanding, which number of
issued and outstanding shares shall be reduced to 4,875,000 at the Effective
Time by effectuating a proposed 10:1 (which may be more or less) reverse
split of the common shares and the issuance of certain other shares for
services, expenses and other costs; (b) no shares of Parent Preferred Stock
were issued and outstanding, (c) warrants to purchase 2,000,000 (1,000,000
shares priced @$1.00 per share and 1,000,000 shares priced @$1.50 per share)
shares of Parent Common Stock in the aggregate had been granted and remained
outstanding after the reverse split of the common stock which are
non-cancelable for a period of three years from July 31, 2001. Since the
Parent Measurement Date, no additional shares of Parent Common Stock have been
issued and are outstanding, except pursuant to the exercise of options. All
issued and outstanding shares of Parent Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights
created by the General Corporation Law of the State of Colorado or Parent's
Charter Document or Governing Document, or any other agreement with the
Company. All of the Parents' common shares have been validly issued pursuant
to resolution and opinion of counsel and are, to the Company's knowledge and
belief, after due inquiry, in compliance with all applicable state and federal
securities laws, rules and regulations. There are not, at the date of this
Agreement, any existing options, warrants, calls, subscriptions, convertible
securities or other rights which obligate Parent or any of its Subsidiaries to
issue, exchange, transfer or sell any shares of capital stock of Parent or any
of its Subsidiaries except as disclosed in herein.
4.2 B. The Parent Disclosure statement sets forth all of the Parent's
Common Stock issuances in the past 36 months to the best of current
management's information, knowledge and
15
belief after due inquiry; including a stockholders list, certified by
Signature Stock Transfer, the Parent's Transfer Agent listing all
stockholdings and beneficial interests of key stockholders.
4.3 Authority Relative to this Agreement. Each of Parent and Merger Sub
has the requisite corporate power and authority to execute and deliver, and to
perform its obligations under, this Agreement and the Company Option Agreement
and, subject to obtaining the necessary approval of its stockholders, to
consummate the Merger and the other provisions contemplated hereby and thereby
under applicable law. The execution and delivery by Parent and Merger Sub of
this Agreement and the Company Option Agreement, and the consummation of the
Merger and the transactions contemplated hereby and thereby, have been duly
and validly authorized by the Board of Directors of Parent and Merger Sub and
no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or the Company Option Agreement or to
consummate the Merger or other transactions contemplated hereby and thereby
(other than approval by the Parent's stockholders required by applicable law).
This Agreement and the Company Option Agreement have been duly and validly
executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution and delivery of this Agreement, is a valid and
binding obligation of Parent and Merger Sub, enforceable against them in
accordance with its terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors rights generally or by
general equitable principles. The shares of Parent Common Stock to be issued
by Parent pursuant to the Merger, as well as the Parent Options and the shares
of Parent Common Stock to be issued upon exercise thereof: (i) have been duly
authorized, and, when issued in accordance with the terms of the Merger and
this Agreement (or the applicable option agreements), will be validly issued,
fully paid and nonassessable and will not be subject to preemptive rights,
(ii) be listed on the OTC-BB Market and (iii) will be issued free and clear of
any Liens.
4.3. No Conflicts; Required Filings and Consents.
(a) Neither the execution, delivery or performance of this Agreement
by Merger Sub or Parent, nor the consummation of the transactions contemplated
hereby, nor compliance by Merger Sub or Parent with any provision hereof will
(i) violate, conflict with or result in a breach of any provision of the
Charter Documents or Governing Documents of Merger Sub or Parent, (ii) cause a
default or give rise to any right of termination, cancellation or acceleration
or loss of a material benefit under, or result in the creation of any lien,
charge or other encumbrance upon any of the properties or assets of Merger Sub
or Parent under any of the terms, conditions or provisions of any note,
license, bond, deed of trust, mortgage or indenture, or any other material
instrument, obligation or agreement to which Merger Sub or Parent is a party
or by which its properties or assets may be bound or (iii) violate any law,
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to Merger Sub or Parent or binding upon any of its properties,
except for, in the case of clauses (ii) and (iii), such defaults or violations
which would not, individually or in the aggregate, reasonably be expected to
have a Parent Material Adverse Effect.
(b) No filing or registration with or notification to and no permit,
authorization, consent or approval of any Governmental Entity is required to
be obtained, made or given by Merger Sub or Parent in connection with the
execution and delivery of this Agreement or the consummation by Merger Sub of
the Merger or other transactions contemplated hereby except (i) (A) in
connection with the applicable requirements of the NYBCL, (B) the filing of a
14(c) Notification Statement with the SEC, if applicable, in accordance with
the Securities Act, or (C) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state
16
securities laws and the laws of any country other than the United States, or
(ii) where the failure to obtain any such consents, approvals, authorizations
or permits, or to make such filings or notifications, would not, individually
or in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect.
4.4. SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports, schedules, statements and
other documents required to be filed by it since March 6, 1997 to the date
hereof (collectively, as supplemented and amended since the time of filing,
the "Parent SEC Reports") with the SEC. The Parent SEC Reports (i) were
prepared in all material respects with all applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and (ii) did not at
the time they were filed contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The representation in clause (ii) of
the preceding sentence does not apply to any misstatement or omission in any
Parent SEC Report filed prior to the date of this Agreement which was
superseded by a subsequent Parent SEC Report filed prior to the date of this
Agreement.
(b) The audited consolidated financial statements and unaudited
consolidated interim financial statements of Parent and its Subsidiaries
included or incorporated by reference in such Parent SEC Reports have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (except
as may otherwise be indicated in the notes thereto) and present fairly, in all
material respects, the financial position and results of operations and cash
flows of Parent and its Subsidiaries on a consolidated basis at the respective
dates and for the respective periods indicated (except, in the case of all
such financial statements that are interim financial statements, for normal
year-end adjustments).
(c) Neither Parent nor any of its Subsidiaries has any liabilities
or obligations of any nature, whether absolute, accrued, unmatured, contingent
or otherwise, whether due or to become due, known or unknown, or any
unsatisfied judgments or any leases of personalty or realty or unusual or
extraordinary commitments that are required to be disclosed under United
States generally accepted accounting principles, except (i) as set forth in
the Parent SEC Reports, (ii) the liabilities recorded on Parent's consolidated
balance sheet at December 31, 2000 included in the financial statements
referred in Section 4.5(a) hereof and the notes thereto, (iii) liabilities or
obligations incurred since December 31,2000 (whether or not incurred in the
ordinary course of business and consistent with past practice) that would not,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect, or (iv) liabilities that would not be required by
United States generally accepted accounting principles to be disclosed in
financial statements or in the notes thereto and that would not, individually
or in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect.
4.5. Absence of Changes or Events. Except as set forth in the Parent SEC
Reports, since December 31, 2000 through the date of this Agreement, Parent
and its Subsidiaries have not incurred any liability or obligation that has
resulted or would reasonably likely be expected to result in a Parent Material
Adverse Effect, and there has not been any change in the business, financial
condition or results of operations of Parent or any of its Subsidiaries which
has had, or is reasonably expected to have, individually or in the aggregate,
a Parent Material Adverse Effect, and Parent and
17
its Subsidiaries have conducted their respective businesses in the ordinary
course consistent with their past practices.
4.6. Litigation. Except as disclosed in the Parent SEC Reports, there is
no (i) claim, action, suit or proceeding pending or, to the Knowledge of
Parent, threatened against or relating to Parent or any of its Subsidiaries,
or (ii) outstanding Orders, or application, request or motion therefor, in a
proceeding to which Parent, any Subsidiary of Parent or any of their
respective assets was or is a party except actions, suits, proceedings or
Orders that, individually or in the aggregate, has not had or would not
reasonably be expected to have a Parent Material Adverse Effect, and neither
Parent nor any Subsidiary is in default in any material respect with respect
to any such Order.
4.7. Compliance with Law. All activities of Merger Sub and Parent to the
best of the Parent and Merger Sub's knowledge and belief after due inquiry
have been, and are currently being, conducted in compliance in all material
respects with all applicable United States federal, state and local and other
foreign laws, ordinances, regulations, interpretations, judgments, decrees,
injunctions, permits, licenses, certificates, governmental requirements,
Orders and other similar items of any court or other Governmental Entity or
any nongovernmental self-regulatory agency, and no notice has been received by
Parent of any claims filed against either Merger Sub or Parent alleging a
violation of any such laws, regulations or other requirements which would be
required to be disclosed in the Parent SEC Reports. Merger Sub and Parent
have all permits, licenses and franchises from Governmental Entities required
to conduct their businesses as now being conducted, except for such permits,
licenses and franchises the absence of which would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect.
4.8. Finders or Brokers. Neither Parent, Merger Sub, the other
Subsidiaries of Parent, the Boards of Directors of Parent and Merger Sub or
any member of such Boards of Directors has employed any agent, investment
banker, broker, finder or intermediary in connection with the transactions
contemplated hereby who might be entitled to a fee or any commission in
connection with the Merger or the other transactions contemplated hereby.
4.9. Tax Matters. Neither Parent nor, to its knowledge, any of its
affiliates has taken or agreed to take any action, or knows of any
circumstances, that (without regard to any action taken or agreed to be taken
by the Company or any of its affiliates) would prevent the business
combination to be effected by the Merger from constituting a transaction
qualifying as a reorganization within the meaning of Section 368 of the Code.
4.10Disclosure. Parent has disclosed in writing, or pursuant to this
Agreement and the Schedules attached hereto, all facts material to the
business, assets, prospects and condition (financial or otherwise) of Parent.
No representation or warranty to the Company by Parent contained in this
Agreement, and no statement contained in the Schedules attached hereto, any
certificate, list or other writing furnished to the Company by Parent pursuant
to the provisions hereof or in connection with the transactions contemplated
hereby, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading. All statements contained in this Agreement, the Schedules
attached hereto, and any certificate, list, document or other writing
delivered pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed a representation and warranty of Parent for all
purposes of this Agreement.
18
4.11 The Board of Directors of the Parent has voted to recommend
approval of the transactions contemplated by this Agreement and a majority of
the stockholders of the Parent have ratified the action of the Board of
Directors of the Parent.
4.12 Listing. Parent is listed on the National Association of
Securities Dealers, Inc. OTC Bulletin Board (the ?Principal Market?). Parent
shall maintain the Common Stock's authorization for quotation on the Principal
Market. Parent shall not take any action which would be reasonably expected
to result in the delisting or suspension of the Common Stock on the Principal
Market (excluding suspensions of not more than one trading day resulting from
business announcements by Parent). Parent shall promptly provide to the
Company copies of any notices it receives from the Principal Market regarding
the continued eligibility of the Common Stock for listing on the Principal
Market.
4.13 The Parent is not a party to any contract, understanding, agreement
or commitment (written or oral) that would be required to be filed as an
exhibit to the Parent?s SEC Reports.
4.14 The Parent has provided to the Company all material agreements,
certificates, correspondence and other items, documents and information
requested by Company counsel in such counsel?s Corporate Review Memorandum
dated August __ , 2001.
ARTICLE V
COVENANTS AND AGREEMENTS
5.1. Conduct of Business of the Parent, Merger Sub and Company Pending
the Merger. Except as contemplated by this Agreement or as expressly agreed
to in writing by Parent or Company, as applicable, during the period from the
date of this Agreement to the earlier of (i) the termination of this Agreement
or (ii) the Effective Time, each of the Parent, Merger Sub and the Company and
its Subsidiaries will conduct their respective operations according to its
ordinary course of business consistent with past practice, and will use
commercially reasonable best efforts consistent with past practice and
policies to preserve intact its business organization, to keep available the
services of its officers and employees and to maintain satisfactory
relationships with suppliers, distributors, customers and others having
business relationships with it and will take no action which would adversely
affect the ability of the parties to consummate the transactions contemplated
by this Agreement, or the timing thereof. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this Agreement,
prior to the Effective Time, the Company will not nor will it permit any of
its Subsidiaries to, without the prior written consent of Parent or Company,
as applicable:
(a) amend any of its Charter Documents or Governing Documents;
authorize for issuance, issue, sell, deliver, grant any options, warrants,
stock appreciation rights, or stock issuance rights for, or otherwise agree or
commit to issue, sell, deliver, pledge, dispose of or otherwise encumber any
shares of any class of its capital stock or any securities convertible into
shares of any class of its capital stock, except pursuant to and in accordance
with the terms of Company Warrants outstanding on the Company Measurement
Date,
(b) subdivide, cancel, consolidate or reclassify any shares of its
capital stock, issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for
19
shares of its capital stock, declare, set aside or pay any dividend or other
distribution (whether in cash, shares or property or any combination thereof)
in respect of its capital stock or purchase, redeem or otherwise acquire any
shares of its own capital stock or of any of its Subsidiaries, except as
otherwise expressly provided in this Agreement;
(c) (i) incur or assume any long-term or short-term debt or issue
any debt securities except for borrowings under existing lines of credit in
the ordinary course of business consistent with past practice; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the material obligations of any other
person (other than Subsidiaries of the Company); or (iii) make any material
loans, advances or capital contributions to, or investments in, any other
person (other than to Subsidiaries of the Company);
(d) except as otherwise expressly contemplated by this Agreement,
(i) increase in any manner the compensation of (A) any employee who is not an
officer of the Company or any Subsidiary (a "Non-Executive Employee"), except
in the ordinary course of business consistent with past practice or (B) any of
its directors or officers, except in the ordinary course of business,
consistent with past practice, after consultation with Parent, (ii) pay or
agree to pay any pension, retirement allowance or other employee benefit not
required, or enter into, amend or agree to enter into or amend any agreement
or arrangement with any such director or officer or employee, whether past or
present, relating to any such pension, retirement allowance or other employee
benefit, except as required to comply with law or under currently existing
agreements, plans or arrangements or with respect to Non-Executive Employees,
in the ordinary course of business consistent with past practice; (iii) grant
any rights to receive any severance or termination pay to, or enter into or
amend any employment or severance agreement with, any employee or any of its
directors or officers, except as required by applicable law or with respect to
severance or termination pay to Non-Executive Employees in the ordinary course
of business, consistent with past practices; or (iv) except as may be required
to comply with applicable law, become obligated (other than pursuant to any
new or renewed collective bargaining agreement) under any new pension plan,
welfare plan, multiemployer plan, employee benefit plan, benefit arrangement,
or similar plan or arrangement, which was not in existence on the date hereof,
including any bonus, incentive, deferred compensation, share purchase, share
option, share appreciation right, group insurance, severance pay, retirement
or other benefit plan, agreement or arrangement, or employment or consulting
agreement with or for the benefit of any person, or amend any of such plans or
any of such agreements in existence on the date hereof; provided, however,
that this clause (iv) shall not prohibit the Company from renewing any such
plan, agreement or arrangement already in existence on terms no more favorable
to the parties to such plan, agreement or arrangement;
(e) except as otherwise expressly contemplated by this Agreement,
enter into, amend in any material respect or terminate any Company Material
Contracts other than in the ordinary course of business consistent with past
practice;
(f) sell, lease, license, mortgage or dispose of any of its
properties or assets, other than (i) transactions in the ordinary course of
business consistent with past practice, (ii) sales of assets, for the fair
market value thereof, which sales do not individually or in the aggregate
exceed $5,000 or (iii) as may be required or contemplated by this Agreement,
except for leases of property to the Company;
20
(g) except as otherwise contemplated by the Merger, acquire or agree
to acquire by merging or consolidating with, or by purchasing a substantial
portion of the assets of or equity in, or by any other manner, any business or
any corporation, limited liability company, partnership, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any assets, other than the acquisition of assets that is in the
ordinary course of business consistent with past practice without the prior
written consent of Parent, which consent will not be unreasonably withheld;
(h) alter (through merger, liquidation, reorganization,
restructuring or in any fashion) the corporate structure or ownership of the
Parent, Merger Sub or the Company or any Subsidiary;
(i) make any change in the accounting methods or accounting
practices followed by the Company, except as required by generally accepted
accounting principles or applicable law;
(j) make any election under any applicable Tax laws which would,
individually or in the aggregate, have a Company or Parent Material Adverse
Effect;
(k) settle any action, suit, claim, investigation or proceeding
(legal, administrative or arbitrative) requiring a payment by the Company or
its Subsidiaries in excess of $5,000 without the consent of Parent or Company,
as applicable, which consent shall not be unreasonably withheld or delayed;
(l) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their terms, of
claims, liabilities or obligations reflected or reserved against in, or
contemplated by, the most recent financial statements (or the notes thereto)
of the Company included in the Company SEC Reports or incurred in the ordinary
course of business consistent with past practice; or
(m) agree or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing; provided, however, that nothing
contained herein shall limit the ability of Parent to exercise its rights
under the Company Option Agreement.
(n) Parent shall maintain the listing of its Common Stock on the
OTC-BB Market;
(i) Parent shall file SEC Reports, at its expense, in
accordance with the 1934 Act; and (ii) Parent shall comply with the
requirements of Rule 14C of the 1934 Act with the cooperation of the
Company.
5.2. Company Shareholder and Parent Stockholder Meetings.
(a) The Company shall, promptly after the date hereof, take all
action necessary in accordance with the New York Business Code and its
Articles of Incorporation and Bylaws to convene the Company Shareholders
Meeting or obtain unanimous shareholder written consent within 45 days of the
Signing of this Agreement, whether or not the Company Board determines at any
time after the date hereof that the Merger is no longer advisable. The
adoption of the Merger by the shareholders of the Company shall be recommended
by the Company Board unless, in the good faith
21
judgment of the Company Board, after consultation with outside counsel, taking
such action would be inconsistent with its fiduciary obligations under
applicable law. The Company Shareholders Meeting will be convened, held and
conducted, and any proxies will be solicited, in compliance with the New York
Business Code. The Company shall consult with Parent regarding the date of
the Company Shareholders Meeting. Subject to Section 5.2 and Section 5.3
hereof, the Company shall use commercially reasonable best efforts to solicit
from shareholders of the Company proxies in favor of the Merger and shall take
all other commercially reasonable actions necessary or advisable to secure the
vote or consent of shareholders required to effect the Merger.
(b) Parent shall, promptly after the date hereof, take all action
necessary in accordance with the Colorado Corporations Code and its
Certificate of Incorporation and Bylaws to convene the Parent Stockholders
Meeting within 45 days of the signing of this Agreement, whether or not the
Parent Board determines at any time after the date hereof that the Merger is
no longer advisable. The approval by the stockholders of the Parent of the
transactions contemplated by this Agreement shall be recommended by the Parent
Board unless, in the good faith judgment of the Parent Board, after
consultation with outside counsel, taking such action would be inconsistent
with its fiduciary obligations under applicable law. The Parent Stockholders
Meeting will be convened, held and conducted, and any proxies will be
solicited, in compliance with the Colorado Corporations Code and applicable
securities laws. Parent shall consult with the Company regarding the date of
the Parent Stockholders Meeting. Subject to Section 5.2 and Section 5.3
hereof, Parent shall use commercially reasonable best efforts to solicit from
stockholders of Parent proxies in favor of the Merger and the transactions
contemplated herein and shall take all other commercially reasonable actions
necessary or advisable to secure the vote or consent of stockholders required
to effect the Merger.
5.3. Additional Agreements, Cooperation.
(a) 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 advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, and to cooperate,
subject to compliance with applicable law, with each other in connection with
the foregoing, including using its commercially reasonable best efforts (i) to
obtain all necessary waivers, consents and approvals from other parties to
loan agreements, material leases and other material contracts, (ii) to obtain
all necessary consents, approvals and authorizations as are required to be
obtained under any United States federal or state, foreign law or regulations,
(iii) to defend all lawsuits or other legal proceedings challenging this
Agreement or the Company Option Agreement or the consummation of the
transactions contemplated hereby or thereby, (iv) to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby, (v) to
effect all necessary registrations and filings and submissions of information
requested by Governmental Entities, and (vi) to fulfill all conditions to this
Agreement.
(b) Each of the parties hereto agrees, subject to compliance with
applicable law, to furnish to each other party hereto such necessary
information and reasonable assistance as such other party may request in
connection with its preparation of necessary filings or submissions to any
regulatory or governmental agency or authority, including, without limitation,
any filing necessary under the provisions of the Exchange Act, the Securities
Act or any other United States federal or state, or foreign statute or
regulation. Each party hereto shall promptly inform each other party of
22
any material communication from the U.S. Federal Trade Commission or any other
government or governmental authority regarding any of the transactions
contemplated hereby.
(c) Preparation of Information and Registration Statements. The
Company and the Parent shall cooperate with each other in order for Parent, at
its expense, to prepare and file with the Securities and Exchange Commission
the (i) information statement required pursuant to Rule 14C of the Securities
Exchange Act for the amendment of the Certificate of Incorporation, and (ii)
the registration statement for the shares of common stock underlying the
Company and Parent Warrants and such other shares as the Parent and Company
may agree prior to closing.
5.4. Publicity. Except as otherwise required by law or the rules of any
applicable securities exchange or the OTC-BB Market, so long as this Agreement
is in effect, Parent and the Company will not, and will not permit any of
their respective affiliates or representatives to, issue or cause the
publication of any press release or make any other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld or
delayed. Parent and the Company will cooperate with each other in the
development and distribution of all press releases and other public
announcements with respect to this Agreement and the transactions contemplated
hereby, and will furnish the other with drafts of any such releases and
announcements as far in advance as possible.
5.5. No Solicitation.
(a) Immediately upon execution of this Agreement, the Company shall
(and shall cause its officers, directors, employees, investment bankers,
attorneys and other agents or representatives to) cease all discussions,
negotiations, responses to inquiries (except as set forth in the proviso to
this sentence) and other communications relating to any potential business
combination with all third parties who, prior to the date hereof, may have
expressed or otherwise indicated any interest in pursuing an Acquisition
Proposal (as hereinafter defined) with the Company; provided that, this
Section 5.5(a) shall not prohibit activities permitted by Section 5.5(b) in
response to an inquiry initiated after the date hereof.
(b) Prior to termination of this Agreement pursuant to Article VII
hereof, the Company and its Subsidiaries shall not, nor shall the Company
authorize or permit any officers, directors or employees of, or any investment
bankers, attorneys or other agents or representatives retained by or acting on
behalf of, the Company or any of its Subsidiaries to, (i) initiate, solicit or
encourage, directly or indirectly, any inquiries or the making of any proposal
that constitutes an Acquisition Proposal, (ii) engage or participate in
negotiations or discussions with, or furnish any information or data to, or
take any other action to, facilitate any inquiries or making any proposal by,
any third party relating to an Acquisition Proposal, (iii) enter into any
agreement with respect to any Acquisition Proposal or approve an Acquisition
Proposal, or (iv) make or authorize any statement, recommendation or
solicitation in support of any possible Acquisition Proposal Without limiting
the foregoing, the Company understands and agrees that any violation of the
restrictions set forth in this Section 5.5(b) by the Company or any of its
Subsidiaries, or by any director or officer of the Company or any of its
Subsidiaries or any financial advisor, attorney or other advisor or
representative of the Company or any of its Subsidiaries, whether or not such
person is purporting to act on behalf of the Company or any of its
Subsidiaries or otherwise, shall be deemed to be a breach of this Section
5.5(b) sufficient to enable Parent to terminate this Agreement pursuant to
Section 7.1(d)(i) hereof.
23
(c) In addition to the foregoing, the Company shall not enter into
any agreement concerning an Acquisition Proposal unless and until this
Agreement is terminated.
5.6. Access to Information. From the date of this Agreement until the
Effective Time, and upon reasonable notice, the Company and Parent and their
authorized representatives (including counsel, other consultants, accountants
and auditors) shall have reasonable access during normal business hours to all
facilities, personnel and operations and to all books and records of the other
party and its Subsidiaries, and will permit Company or Parent to make such
inspections as it may reasonably require, will cause its officers and those of
its Subsidiaries to furnish Company or Parent with such financial and
operating data and other information with respect to its business and
properties as Company or Parent may from time to time reasonably request and
confer with Company or Parent to keep it reasonably informed with respect to
operational and other business matters relating to the Company or Parent and
its Subsidiaries and the status of satisfaction of conditions to the Closing,
other than information that may not be disclosed under applicable law or in
violation of an agreement or if such disclosure would result in a waiver of
the attorney-client privilege; provided, however, that in any such event the
parties shall cooperate in good faith to obtain waivers of such prohibitions
or implement alternative methods of disclosure of material information. All
information obtained by Company or Parent pursuant to this Section 5.6 shall
be kept confidential in accordance with the Letter of Intent dated June 22,
2001.
5.7. Notification of Certain Matters. The Company or Parent, as the case
may be, shall promptly notify the other of (a) its obtaining of Knowledge as
to the matters set forth in clauses (i), (ii) and (iii) below, or (b) the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be likely to cause (i) any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof to the Effective Time, (ii) any material failure of the
Company or Parent, as the case may be, or of any officer, director, employee
or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement or (iii)
the institution of any claim, suit, action or proceeding arising out of or
related to the Merger or the transactions contemplated hereby; provided,
however, that no such notification shall affect the representations or
warranties of the parties or the conditions to the obligations of the parties
hereunder.
5.8. Resignation of Officers and Directors. At or prior to the Effective
Time, the Merger Sub and the Parent shall deliver to the Company the
resignations of the officers and directors of the Parent and the Merger Sub.
5.9. Indemnification.
(a) As of the Effective Time and for a period of one year following
the Effective Time, Parent will indemnify and hold harmless from and against
all claims, damages, losses, obligations or liabilities ("Losses") any persons
who were shareholders, directors or officers of the Company or any Subsidiary
prior to the Effective Time (the "Indemnified Persons") to the fullest extent
such person could have been indemnified for such Losses under applicable law,
under the Governing Documents of the Company or any Subsidiary or under the
indemnification agreements listed on Schedule 5.9 in effect immediately prior
to the date hereof, with respect to any act or failure to act by any such
Indemnified Person at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement).
24
(b) Any determination required to be made with respect to whether an
Indemnified Person's conduct complies with the standards set forth under the
Colorado Corporations Code or the NYBCL or other applicable law shall be made
by independent counsel selected by Parent and reasonably acceptable to the
Indemnified Persons. Parent shall pay such counsel's fees and expenses so
long as the Indemnified Persons do not challenge any such determination by
such independent counsel).
(c) In the event that Parent or any of its successors or assigns (i)
consolidates with, merges or otherwise enters a business combination into or
with any other person, and Parent or such successor or assign is not the
continuing or surviving corporation or entity of such consolidation, merger or
business combination, or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each case, proper provision
shall be made so that such person or the continuing or surviving corporation
assumes the obligations set forth in this Section 5.9 and none of the actions
described in clauses (i) and (ii) above shall be consummated until such
provision is made.
(d) In the event any claim, action, suit, proceeding or
investigation (a "Claim") for which indemnification is provided under this
Section 5.9 is brought against an Indemnified Person (whether arising before
or after the Effective Time) after the Effective Time Parent shall defend such
Indemnified Person from such claim with counsel reasonably acceptable to such
Indemnified Person; provided, however, that in the event Parent fails to
provide a defense to such Claim or it would be inappropriate due to conflicts
of interests that counsel for Parent also represent such Indemnified Person,
(i) such Indemnified Person may retain separate counsel reasonably acceptable
to Parent, (ii) the indemnifying party shall pay all reasonable fees and
expenses of such counsel for such Indemnified Person as statements therefor
are received, and (iii) the indemnifying party will use all commercially
reasonable best efforts to assist in the defense of any such matter, provided
that the indemnifying party shall not be liable for any settlement of any
Claim without its written consent, which consent shall not be unreasonably
withheld, and provided further, however, that not more than one such separate
counsel may be retained for all Indemnified Persons at the expense of the
indemnifying party (unless, and to the extent that, the joint representation
of all Indemnified Persons poses an actual conflict of interest). Any
Indemnified Person desiring to claim indemnification under this Section 5.9,
upon learning of any Claim, shall notify the indemnifying party (but the
failure to so notify shall not relieve the indemnifying party from any
liability which it may have under this Section 5.9 except to the extent such
failure materially prejudices such indemnifying party).
(e) This Section 5.9 is intended to benefit the Indemnified Persons,
shall be enforceable by each Indemnified Person and his or her heirs and
representatives.
5.10. Employee Benefit Plans.
(a) 401(k) Plan. Company shall take the following steps with
respect to the Xxxxxxx'x Epicureo, Ltd. d/b/a Xxxxxx Truffles & Caviar U.S.A.
Salary Savings Plan (401(k) Plan): at least three days prior to the Effective
Time, the Company shall terminate the 401(k) Plan pursuant to written
resolutions, the form and substance of which shall be satisfactory to Parent.
Individuals employed by the Company at the Effective Time ("Company
Employees") shall be allowed to participate in Parent's 401(k) plan effective
as of the first payroll following the Effective Time; and all service with the
Company shall be considered service with Parent for purposes of determining
eligibility, vesting, and benefit accrual (i.e., any matching contributions)
under Parent's 401(k) plan.
25
As soon as administratively feasible after assets are distributed from the
401(k) Plan, Company Employees shall be offered an opportunity to roll their
401(k) Plan account balances into Parent's 401(k) Plan, if any.
5.11. Determination of Warrant holders. At least ten business days
before the Effective Time, the Company shall provide Parent and Parent shall
provide the Company with a true and complete list, as of such date, of (a) the
holders of Company or Parent Warrants, (b) the number of shares of Company or
Parent Common Stock subject to Company or Parent Warrants held by each such
warrant holder and (c) the address of each such warrant holder as set forth in
the books and records of the Company, Parent or any Subsidiary, following upon
which there shall be no additional grants of Company Options without Parent's
prior consent. From the date such list is provided to Company or Parent until
the Effective Time, the Parent and the Company shall provide a daily option
activity report to each other containing such information as each shall
reasonably request.
5.12. Preparation of Tax Returns. The Company shall file (or cause to be
filed) at its own expense, on or prior to the due date thereof, all Returns
required to be filed on or before the Closing Date. The Company shall provide
Parent with a copy of appropriate workpapers, schedules, drafts and final
copies of each foreign and domestic, federal, provincial and state income Tax
return or election of the Company (including returns of all Employee Benefit
Plans) at least ten days before filing such return or election and shall
consult with Parent with respect thereto prior to such filing.
5.13. Affiliates.
(a) Promptly following the date of this Agreement, the Company shall
deliver to Parent a list of names and addresses of those persons who are
affiliates within the meaning of Rule 145 of the rules and regulations
promulgated under the Securities Act or otherwise applicable SEC accounting
releases with respect to the Company (the "Company Affiliates"). The Company
shall provide Parent such information and documents as Parent shall reasonably
request for purposes of reviewing such list. The Company shall deliver to
Parent, on or prior to the Closing, an affiliate letter in the form attached
hereto as Exhibit D, executed by each of the Company Affiliates identified in
the foregoing list. Parent shall be entitled to place legends as specified in
such affiliate letters on the certificates evidencing any of the Parent Common
Stock to be received by such Company Affiliates pursuant to the terms of this
Agreement, and to issue appropriate stop transfer instructions to the transfer
agent for the Parent Common Stock, consistent with the terms of such letters.
(b) Parent shall procure, on or prior to the Effective Time, an
affiliate letter in the form attached hereto as Exhibit E, executed by
appropriate affiliates of Parent.
(c) For so long as re-sales of shares of Parent Common Stock issued
pursuant to the Merger are subject to the resale restrictions set forth in
Rule 145 under the Securities Act, Parent will use good faith efforts to
comply with Rule 144(c)(1) under the Securities Act.
5.14. Tax-Free Reorganization. Parent and the Company shall each use all
commercially reasonable best efforts to cause the Merger to qualify as a
reorganization within the meaning of Section 368(a) of the Code. Neither
Parent nor the Company shall take or fail to take, or cause any third party to
take or fail to take, any action that would cause the Merger to fail to
qualify as a "reorganization" within the meaning of Section 368(a) of the
Code.
26
5.15. SEC Filings; Compliance. The Company and Parent shall each cause
the forms, reports, schedules, statements and other documents required to be
filed with the SEC by the Company and Parent, respectively, between the date
of this Agreement and the Effective Time (with respect to either the Company
or Parent, the "New SEC Reports") to be prepared in all material respects with
all applicable requirements of the Securities Act and the Exchange Act, as the
case may be, and such New SEC Reports will not at the time they are filed
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading.
5.16. Agreement for Additional Share Issuance. Parent covenants to cause
the Stock Purchase Warrants to be exercised such that the gross proceeds to
the Parent will be equal to at least $500,000.00, of which gross proceeds of
at least $250,000.00 of the $500,000.00 shall be within 90 days of the
Effective Time and the balance of $250,000.00 of gross proceeds shall be
received within 270 days of the Effective Time. In the event the Parent has
not received gross proceeds of at least $500,000.00 within 270 days of the
Effective Time, then the Parent shall issue to the Company stockholders, the
number of additional shares of Common Stock equal to the difference between
(i) 9,750,000 and (ii) a fraction, the numerator of which shall be equal to
the product of (a) 9,750,000 and (b) the gross proceeds from the exercise of
the Stock Purchase Warrants and the denominator of which shall be equal to
500,000. Company shareholders shall at all times cooperate with warrant
holders in providing such information as may reasonably be needed to allow the
warrant holder to make an informed decision as to such investment. In that
regard, Company shareholders shall agree to maintain all regulatory filings in
a timely manner and otherwise comply with all statutes, rules and regulations
of the Securities and Exchange Commission and the NASD.
5.17. Registration of Parent and Company warrants. Company shareholders
agree, that upon the effective date of the merger, they shall commence the
process or direct the commencement of the process required to register all
shares of common stock Parent underlying the outstanding warrants under a form
SB-2 or SB-3 or similar appropriate registration statement in a timely manner.
The cost of such registration shall be borne by the Parent.
5.18. Covenant Not to Issue Additional Shares. Except in connection with
a bona-fide purchase or acquisition and/or the Company's stock option plan
which meets reasonable guidelines for similar such companies, Company
shareholders agree that, upon the effective date of the merger, they will
direct or cause to be directed such action(s) as may be necessary to assure
that no additional shares of Parent Common or Preferred Stock is issued nor
any reverse split of the outstanding shares is effected for a period of one
year from the Effective Time without the prior written consent of Xxx
Xxxxxxxxxxx, controlling shareholder of Seville Consulting, Inc. which consent
shall not be unreasonably withheld.
ARTICLE VI
CONDITIONS TO CLOSING
6.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Effective Date of the following
conditions:
(a) Company Shareholder and Parent Stockholder Approval. This
Agreement and the Merger shall have been approved and adopted by the requisite
vote of (i) the shareholders of
27
the Company under the New York Business Code and the Company's Charter
Document and Governing Documents and (ii) the stockholders of Parent under the
Colorado Corporations Code the NYBCL and the Parent's Charter Document and
Governing Documents with respect to the matters described in Section 6.1.
(b) Governmental Action; No Injunction or Restraints. No action or
proceeding shall be instituted by any Governmental Entity seeking to prevent
consummation of the Merger, asserting the illegality of the Merger or this
Agreement or seeking damages (in an amount or to the extent that, if they were
incurred or paid by the Company, would constitute a Company Material Adverse
Effect) directly arising out of the transactions contemplated hereby which
continues to be outstanding. No judgment, order, decree, statute, law,
ordinance, rule or regulation entered, enacted, promulgated, enforced or
issued by any court or other Governmental Entity of competent jurisdiction or
other legal restraint or prohibition shall be in effect (i) imposing or
seeking to impose sanctions, damages or liabilities (in an amount or to the
extent that, if they were incurred or paid by the Company, would constitute a
Company Material Adverse Effect) directly arising out of the Merger on the
Company or any of its officers or directors; or (ii) preventing the
consummation of the Merger.
(c) Governmental Consents. All necessary authorizations, consents,
orders or approvals of, or declarations or filings with, or expiration or
waiver of waiting periods imposed by, any Governmental Entity of any
applicable jurisdiction required for the consummation of the transactions
contemplated by this Agreement shall have been filed, expired or obtained, as
to which the failure to obtain, make or occur would have the effect of making
the Merger or this Agreement or any of the transactions contemplated hereby
illegal or which, individually or in the aggregate, would have a Parent
Material Adverse Effect (assuming the Merger had taken place), including, but
not limited to: the expiration or termination of the applicable waiting
period, or any extensions thereof, pursuant to the Securities Act.
(d) Delivery of Certificates. On the closing date, Parent will
deliver to each holder of certificates which represent Company Common Stock
prior to the Effective Time the stock certificates contemplated by this
Agreement.
(e) No De-listing Notice. Parent shall be listed on the OTC-BB and
shall not have received any notice of de-listing as of the Effective Time.
(f) Satisfaction with Due Diligence. The Company shall have been
satisfied, in its sole discretion, with the results of its legal, financial,
accounting and business due diligence.
(g) Certificate of Incorporation. Parent shall cause its
shareholders to ratify the amendment to its certificate of incorporation which
increases the number of authorized shares of Common Stock to effect a reverse
split, change the name of the Parent, to re-incorporate in Delaware and to
effect such other changes to the Parent's Charter Documents as reasonably
requested by the Company.
(h) Parent and Merger Sub Liabilities. Neither the Parent nor the
Merger Sub shall have any liabilities absolute or contingent, matured or
unmatured or of any kind whatsoever or any litigation pending or threatened as
of the Effective Time.
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(i) Opinion of Counsel The Company shall have received an opinion
of Counsel from Xxxxxx X. Xxxxxxx, P.C., in form and substance satisfactory to
counsel to the Company.
(j) Contract with Columbia Financial Group. The Parent shall have
entered into or arranged for a pre-paid agreement with Columbia Financial
Group of Lutherville Maryland to provide investor relations and public
relations for the Parent for a period of one year from the Effective Time.
6.2. Conditions to Obligations of Parent. The obligation of Parent to
effect the Merger is further subject to satisfaction or waiver of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth herein shall be true and correct both when
made and at and as of the Effective Date, as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case as
of such date), except where the failure of such representations and warranties
to be so true and correct (without giving effect to any limitation as to
materiality or material adverse effect set forth therein) does not have, and
would not, individually or in the aggregate, reasonably be expected to have, a
Company Material Adverse Effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Effective Date.
(c) No Injunctions or Restraints. No final judgment, order, decree,
statute, law, ordinance, rule or regulation entered, enacted, promulgated,
enforced or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition shall be in effect (i)
imposing material limitations on the ability of Parent to acquire or hold or
to exercise full rights of ownership of any securities of the Company; (ii)
imposing material limitations on the ability of Parent or its Affiliates to
combine and operate the business and assets of the Company; (iii) imposing
other material sanctions, damages, or liabilities directly arising out of the
Merger on Parent or any of its officers or directors; or (iv) requiring
divestiture by Parent of any significant portion of the business, assets or
property of the Company or of Parent.
(d) Delivery of Closing Documents. At or prior to the Effective
Time, the Company shall have delivered to Parent all of the following:
(i) a certificate of the President and the Chief Financial
Officer of the Company, dated as of the Effective Date, stating that the
conditions precedent set forth in Sections 6.2(a), (b) and (c) hereof
have been satisfied; and
(ii) a copy of (A) the Articles of Incorporation of the
Company, dated as of a recent date, certified by the Secretary of State
of the State of New York, (B) the Bylaws of the Company and (C) the
resolutions of the Company Board and shareholders authorizing the Merger
and the other transactions contemplated by this Agreement, certified by
the Secretary of the Company.
(e) Company Affiliate Letters. Parent shall have received all of
the letters described in Section 5.14(a) hereof executed by each of the
Company Affiliates.
29
(f) Dissenting Shares. None.
(h) Leak Out Agreements with Key Shareholders. Parent and Company
shall have received agreements from certain key shareholders holding not less
than 2,000,000 shares at the effective date to leak-out such shares in equal
amounts over 24 months on a cumulative basis.
6.3. Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is further subject to satisfaction or waiver of
the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub set forth herein shall be true and correct
both when made and at and as of the Effective Date, as if made at and as of
such time (except to the extent expressly made as of an earlier date, in which
case as of such date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any limitation
as to materiality or material adverse effect set forth therein) does not have,
and would not, individually or in the aggregate, reasonably be expected to
have a Parent Material Adverse Effect.
(b) Performance of Obligations of Parent. Parent shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Date.
(c) Delivery of Closing Documents. At or prior to the Effective
Time, the Parent shall have delivered to the Company a certificate of the
President and the Chief Financial Officer of Parent, dated as of the Effective
Date, stating that the conditions precedent set forth in Sections 6.3(a) and
(b) hereof have been satisfied.
(d) Tax Opinion. The Company shall have received an opinion as of
the Effective Time, substantially to the effect that, on the basis of the
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the Merger
will be treated for Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and that accordingly:
(i) No gain or loss will be recognized by the Company as a
result of the Merger;
(ii) No gain or loss will be recognized by the shareholders of
the Company who exchange Company Common Stock for Parent Common Stock
pursuant to the Merger (except with respect to cash received in lieu of
a fractional shares);
(iii) The tax basis of the Parent Common Stock received by the
stockholders who exchange all of their Company Common Stock in the
Merger will be the same as the tax basis of the Company Stock
surrendered in exchange therefor; and
(iv) The holding period of the Parent Common Stock received by
a shareholder of the Company pursuant to the Merger will include the
period during which the Company Common Stock surrendered therefor was
held, provided the Company Common Stock is a capital asset in the hands
of the shareholder of the Company at the time of the Merger.
30
In rendering such opinion, such counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of Parent, the Company and others.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the Merger by the
Company's shareholders or the Parent's stockholders:
(a) by mutual written consent of the Company and Parent (on behalf
of Parent and Merger Sub);
(b) by either the Company or Parent (on behalf of Parent and Merger
Sub):
(i) if the Merger shall not have been completed by December 31,
2001; provided, however, that the right to terminate this Agreement
pursuant to this Section 7.1(b)(i) shall not be available to any party
whose failure to perform any of its obligations under this Agreement
results in the failure of the Merger to be consummated by such time;
(ii) if shareholder approval shall not have been obtained at
the Company Shareholders Meeting duly convened therefor or at any
adjournment or postponement thereof; provided, however, that the right
to terminate this Agreement pursuant to this Section 7.1(b)(ii) shall
not be available to any party whose failure to perform any of its
obligations under this Agreement results in the failure to obtain
shareholder approval.
(iii) if stockholder approval shall not have been obtained at
the Parent Stockholders Meeting duly convened therefor or at any
adjournment or postponement thereof; provided, however, that the right
to terminate this Agreement pursuant to this Section 7.1(b)(iii) shall
not be available to any party whose failure to perform any of its
obligations under this Agreement results in the failure to obtain
stockholder approval.
(iv) if any restraint having any of the effects set forth in
Section 6.1(b) or Section 6.2(c) hereof shall be in effect and shall
have become final and nonappealable; provided, however, that the right
to terminate this Agreement pursuant to this Section 7.1(b)(iv) shall
not be available to any party whose failure to perform any of its
obligations under this Agreement results in such restraint to continue
in effect; or
(c) by the Company
(i) if Parent or Merger Sub shall have breached any of its
representations and warranties contained in Article IV hereof which
breach has had or is reasonably likely to have a Parent Material Adverse
Effect or Parent or Merger Sub shall have breached or failed to perform
in any material respect any of its covenants or other agreements
contained in this Agreement, in each case, which breach or failure to
perform has not been cured by Parent or Merger Sub within thirty days
following receipt of notice thereof from the Company;
(ii) if (a) the Parent Board or any committee thereof shall
have withdrawn or modified in a manner adverse to the Company its
approval or recommendation of this
31
Agreement, or (b) the Parent Board or any committee thereof shall have
resolved to take any of the foregoing actions; or
(d) by Parent (on behalf of Parent and Merger Sub):
(i) if the Company shall have breached any of its
representations and warranties contained in Article III hereof which
breach has had or is reasonably likely to have a Company Material
Adverse Effect or the Company shall have breached or failed to perform
in any material respect any of its covenants or other agreements
contained in this Agreement, in each case (other than a breach of
Section 5.5(b) hereof, as to which no materiality requirement and no
cure period shall apply), which breach or failure to perform has not
been cured by the Company within thirty days following receipt of notice
thereof from Parent; or
(ii) if (a) the Company Board or any committee thereof shall
have withdrawn or modified in a manner adverse to Parent its approval or
recommendation of the Merger or this Agreement, or approved or
recommended an Acquisition Proposal, or (b) the Company Board or any
committee thereof shall have resolved to take any of the foregoing
actions.
7.2 Effect of Termination. The termination of this Agreement pursuant
to the terms of Section 7.1 hereof shall become effective upon delivery to the
other party of written notice thereof. In the event of the termination of
this Agreement pursuant to the foregoing provisions of this Article VII, there
shall be no obligation or liability on the part of any party hereto (except as
provided in Section 7.3 hereof) or its shareholders or directors or officers
in respect thereof, except for agreements which survive the termination of
this Agreement, except for liability that Parent or Merger Sub or the Company
might have to the other party or parties arising from a breach of this
Agreement due to termination of this Agreement.
7.3 Fees and Expenses.
(a) Except as provided in this Section 7.3, whether or not the
Merger is consummated, the Company, on the one hand, and Parent and Merger
Sub, on the other, shall bear their respective expenses incurred in connection
with the Merger, including, without limitation, the preparation, execution and
performance of this Agreement and the transactions contemplated hereby, and
all fees and expenses of investment bankers, finders, brokers, agents,
representatives, counsel and accountants, except that the registration and
filing fees incurred in connection with this Agreement and all the filings by
the Parent and costs thereof with all regulatory body and all related costs
prior to the Closing and Effective date will be borne by the pre-closing
Parent.
(b) Notwithstanding any provision in this Agreement to the contrary,
if this Agreement is terminated as a result of a breach of this Agreement in
accordance with Sections 7.1(c)(i) or 7.1(d)(i), then the nonbreaching party
shall be entitled to receive from the breaching party damages resulting from
such breach, including without limitation, all out-of-pocket fees and expenses
incurred or paid by or on behalf of the nonbreaching party or any Affiliate of
the nonbreaching party in connection with this Agreement, the Merger and
transactions contemplated herein, including all fees and expenses of counsel,
investment banking firm, accountants and consultants.
32
(c) Notwithstanding any other provision in this Agreement to the
contrary, if (x) this Agreement is terminated by the Company or Parent at a
time when Parent or the Company is entitled to terminate this Agreement
pursuant to Section 7.1(b)(iii) (except if immediately prior to the Parent
Stockholder Meeting, an event or condition exists that would result in a
Company Material Adverse Effect), or (y) this Agreement is terminated by the
Company pursuant to Section 7.1(c)(ii) (except if the Parent Board's
withdrawal or modification of its approval or recommendation of this Agreement
occurs after a Company Material Adverse Effect), then, in each case Parent
shall immediately notify Company of such termination.
ARTICLE VIII
MISCELLANEOUS
8.1-Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
8.2-Waiver. At any time prior to the Effective Date, any party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of any other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements of any other party or with any conditions to its own obligations
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing duly authorized by and signed on behalf of such party.
8.3-Attorneys' Fees. Should suit be brought to enforce or interpret any
part of this Agreement, the prevailing party will be entitled to recover, as
an element of the costs of suit and not as damages, reasonable attorneys' fees
to be fixed by the court (including, without limitation, costs, expenses and
fees on any appeal).
8.4 -Notices. Any notice or communication to any party hereto shall be
duly given if in writing and delivered in person or mailed by first class mail
and airmail, if overseas (registered or return receipt requested), facsimile
(with receipt electronically acknowledged) or overnight air courier
guaranteeing next day delivery, to such other party's address.
If to Parent:
Sattel Global Networks, Inc.
0000 Xxxxx Xxxx Xxxx Xxxxx 0X
Xxxxxxxxxx, Xxxxxxxx 8002
Attention: Xxx Xxxxxxxxxxx
Phone 000-000-0000
33
with a copy to:
Xxxxxx X. Xxxxx and Associates
X.X.Xxx 00000
Xxxxxx Xxx Xxx, XX 00000
Attn: Xxxxxx X. Xxxxx
310-823-8300
If to the Company:
Xxxxxxx'x Epicureo, Ltd. d/b/a Xxxxxx Truffles & Caviar U.S.A.
00-00 00xx Xxx.
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
Phone: 000-000-0000
Attention: Xxxxxxx Xxxxxx, President
with copies to:
Salon Marrow Xxxxxxx & Xxxxxx LLP
000 Xxxxx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
000-000-0000
Attn: Xxxxxx Xxxxx, Esq.
(a) All notices and communications will be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, if mailed; when sent, if sent by
facsimile; and one business day after timely delivery to the courier, if sent
by overnight air courier guaranteeing next day delivery.
8.5-Counterparts. This Agreement may be executed via facsimile in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.6-Interpretation; Construction. The language used in this Agreement
and the other agreements contemplated hereby shall be deemed to be the
language chosen by the parties to express their mutual intent, and no rule of
strict construction shall be applied against any party. The headings of
articles and sections herein are for convenience of reference, do not
constitute a part of this Agreement, and shall not be deemed to limit or
affect any of the provisions hereof. As used in this Agreement, "Person"
means any individual, corporation, limited liability company, limited or
general partnership, joint venture, association, joint stock company, trust,
unincorporated organization or other entity; "Knowledge" means the actual
knowledge of a director or any executive officer of the applicable party or
any of its Subsidiaries, as such knowledge has been obtained or would have
been obtained after reasonable inquiry by such person in the normal conduct of
the business; and all amounts shall be deemed to be stated in U.S. dollars,
unless specifically referenced otherwise.
8.7-Amendment. This Agreement may be amended by the parties at any time
before or after any required approval of matters presented in connection with
the Merger by the shareholders of the Company or the stockholders of Parent;
provided, however, that after any such approval, there shall
34
not be made any amendment that by law requires further approval by the
shareholders of the Company or the stockholders of Parent without obtaining
such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
8.8-No Third Party Beneficiaries. Except for the provisions of Section
5.10 hereof (which is intended to be for the benefit of the persons referred
to therein, and may be enforced by such persons) nothing in this Agreement
shall confer any rights upon any person or entity which is not a party or
permitted assignee of a party to this Agreement.
8.9-Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York. Each party hereby
irrevocably waives the right to any jury trial in connection with any action
or proceeding brought or maintained in connection with this Agreement.
8.10-Entire Agreement. This Agreement (together with the Exhibits and
the Company Disclosure Letter, and the other documents delivered pursuant
hereto or contemplated hereby) constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof, in each case other than the
Company Option Agreement and the Reciprocal Confidentiality Agreement.
8.11 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
Upon such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the page.
8.12 Restrictions on Transfer of Parent Stock. Each Stockholder of the
Company, severally and not jointly with any other Person shall (i) acknowledge
that the Parent Common Stocks has not been registered under the Securities
Act and therefore may not be resold by that stockholder of the Company without
compliance with the Securities Act and (ii) covenants that none of said shares
of will be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of except after full compliance with all the applicable
provisions of the Securities Act and the rules and regulations of the
Commission and applicable state securities laws and regulations. All
certificates evidencing Parent Common Stock issued pursuant to this Agreement
will bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL SUCH SHARES ARE REGISTERED UNDER
SUCH ACT, OR SUCH STATE LAWS, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED."
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers all as of the day and year first
above written.
SATTEL GLOBAL NETWORKS, INC.
By: __________________________________
Xxx Xxxxxxxxx, President and
Chief Executive Officer
XXXXXX ACQUISITION CORP.
By: __________________________________
Xxx Xxxxxxxxxxx, President
XXXXXXX'X EPICUREO, LTD. D/B/A XXXXXX
TRUFFLES & CAVIAR U.S.A.
By: __________________________________
Xxxxxxx Xxxxxx, Chief Executive Officer
36
