Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
BROADBAND MARITIME, INC.
PRIME RESOURCE, INC.
and
PRIME ACQUISITION, INC.
Dated as of January 15, 2007
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of the 15th
day of January, 2007, among BROADBAND MARITIME, INC., a Delaware corporation
(the "Company"), PRIME RESOURCE, INC., a Utah corporation ("Parent"), and PRIME
ACQUISITION, INC., a Utah corporation and a wholly owned subsidiary of Parent
("Merger Sub," the Company, Parent, and Merger Sub together are referred to as
the "Constituent Corporations").
RECITALS
WHEREAS, the respective boards of directors of each of Parent, Merger Sub
and the Company have approved the merger of Merger Sub with and into the Company
(the "Merger") upon the terms and subject to the conditions set forth in this
Agreement and have adopted, approved and declared advisable this Agreement;
WHEREAS, it is the intent of the Constituent Corporations that immediately
following the Effective Time of the Merger, the Merger Sub will have merged with
and into the Company; that the Company shall be known as Broadband Maritime,
Inc. and be the sole surviving wholly owned subsidiary of the Parent; and that
the directors and officers of both the Surviving Corporation and the Parent will
be the directors and officers of the Company plus one current director of the
Parent;
WHEREAS, the Parent intends to recommend to its shareholders certain
amendments to its Articles of Incorporation to be effected at or prior to the
closing of the Merger; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement;
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
The Merger; Closing; Effective Time
1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, at the Effective Time (as defined in Section 1.3)
Merger Sub shall be merged with and into the Company and the separate corporate
existence of Merger Sub shall thereupon cease. The Company shall be the
surviving corporation in the Merger (sometimes referred to as the "Surviving
Corporation"), such that, at the Effective Time the Company will be a wholly
owned operating subsidiary of the Parent, and the separate corporate existence
of the Company with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger, except as set forth in
Article II. The Merger shall have the effects specified in the Delaware General
Corporation Law, as amended (the "DGCL"). Without limiting the generality of the
foregoing and subject thereto, at the Effective Time, all of the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities, restrictions,
disabilities and duties of each of the Company and Merger Sub shall become the
debts, liabilities, restrictions, disabilities and duties of the Surviving
Corporation.
1.2. Closing. Unless otherwise mutually agreed in writing between the
Company and Parent, the closing of the Merger (the "Closing") shall take place
(i) at the offices of Broadband Maritime Inc., 00 Xxxxxxxx, Xxxxx 0000, Xxx
Xxxx, XX 00000, at 10:00 a.m. (Eastern Time) on February 16, 2007 (the "Closing
Date") or at such other location or on such other date as the parties shall
mutually agree.
1.3. Effective Time. As promptly as practicable following the Closing,
the Company and Parent will (a) cause a Certificate of Merger (the "Delaware
Certificate of Merger") to be executed, acknowledged and filed with the
Secretary of State of the State of Delaware as provided in Section 252 of the
DGCL and (b) cause the Articles of Merger (the "Utah Articles of Merger"), so
executed and in such form as is required under the Utah Revised Business
Corporation Act (the "UTRBCA"), to be delivered to the Secretary of State of the
State of Utah for filing as provided in Section 16-10a-1105 of the UTRBCA. The
Merger shall become effective as of the date on which the last of the following
occurs: (x) the Utah Articles of Merger have been duly filed with the Secretary
of State of the State of Utah and (y) Delaware Certificate of Merger has been
duly filed with the Secretary of State of the State of Delaware, or at such
later time as may be agreed by the parties and specified in the Delaware
Certificate of Merger (the "Effective Time").
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ARTICLE II
Certificate of Incorporation and By-Laws
of the Surviving Corporation and Parent
2.1. The Certificate of Incorporation. The certificate of
incorporation of the Company as in effect immediately prior to the Effective
Time shall be the certificate of incorporation of the Surviving Corporation (the
"Charter"), until duly amended as provided therein or by applicable Law.
2.2. The By-Laws. The parties hereto shall take all actions necessary
so that the by-laws of Merger Sub in effect immediately prior to the Effective
Time shall be the by-laws of the Surviving Corporation (the "By-Laws"), until
thereafter amended as provided therein or by applicable Law.
2.3. Articles of Incorporation of Parent. Parent shall take all
actions necessary so that its Articles of Incorporation are amended, at or prior
to the Effective Time, to change its name to "BBM Holdings, Inc.," to create a
class and series of preferred capital stock (shares of the series to be declared
to be issuable as a distribution to Parent shareholders prior to the Effective
Time, and to include certain shareholder voting supermajority provisions, all as
set forth in Exhibit 2.3 to this Agreement (the "Parent Articles Amendments").
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1. Directors of Surviving Corporation. The parties hereto shall take
all actions necessary so that Xxxxxx Xxxxxxx and the members of the board of
directors of the Company at the Effective Time shall, from and after the
Effective Time, be the directors of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Charter and the
By-Laws.
3.2. Officers. The parties hereto shall take all actions necessary so
that the officers of the Company at the Effective Time shall, from and after the
Effective Time, be the officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Charter and the
By-Laws.
3.3. Directors of Parent. The parties hereto shall take all actions
necessary so that Xxxxxx Xxxxxxx and the members of the board of directors of
the
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Company at the Effective Time shall, from and after the Effective Time, be the
directors of the Parent until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Articles of Incorporation of Parent and the By-Laws of
Parent.
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1. Effect on Capital Stock. At the Effective Time, as a result of
the Merger and without any action on the part of the Company, Parent, Merger Sub
or any holder of any capital stock of the Company:
(a) Merger Consideration. Each share of Common Stock, par value
$0.0001 per share, of the Company (each, a "Common Share") and each share of
Class A 5% Convertible Preferred Stock, par value $0.0001 per share, of the
Company (each, a "Preferred Share") (the Common Shares and the Preferred Shares,
collectively, the "Shares") issued and outstanding immediately prior to the
Effective Time (other than the Shares that are owned by shareholders of the
Company ("Dissenting Shareholders") who have perfected and not withdrawn a
demand for, or otherwise lost, the appraisal rights pursuant to Section 262 of
the DGCL (each, an "Excluded Share" and collectively, "Excluded Shares")) shall
be converted into the right to receive, respectively: (i) in the case of a
Preferred Share, one (1) share of Common Stock, no par value, of Parent ("Parent
Common Stock") per 0.0595589330784 Class A Share (the "Preferred Merger
Consideration") and (ii) in the case of a Common Share, one (1) share of Parent
Common Stock per 59.5589330784 Common Shares (the "Common Merger
Consideration"). At the Effective Time, all of the Shares shall cease to be
outstanding, shall be cancelled and shall cease to exist, and each certificate
(a "Certificate") formerly representing any of such Shares (other than Excluded
Shares) shall thereafter represent only the right to receive the Class A Merger
Consideration or the Common Merger Consideration, as applicable, and each
certificate formerly representing Shares owned by Dissenting Shareholders shall
thereafter represent only the right to receive the payments set forth in Section
4.3. Schedule 4.1(a) to this Agreement, incorporated herein by reference, sets
forth the issued and outstanding capital stock of Parent immediately following
the Effective Time, assuming that there are no Dissenting Shareholders, that no
shareholders of Parent have dissented and demanded to be paid for their shares
and that the Company issues five hundred thousand (500,000) additional shares of
Class A 5% Convertible Preferred Stock (together with Warrants for the purchase
of up to two hundred fifty million (250,000,000) shares of Common Stock of the
Company.
(b) Cancellation of Shares. Subject to Section 4.3, each Excluded
Share shall, by virtue of the Merger and without any action on the part of the
holder
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thereof, cease to be outstanding, shall be cancelled without payment of any
consideration therefor and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of common stock, no
par value per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into the right to receive one share of
common stock of the Surviving Corporation. At the Effective Time, all of the
stock of Merger Sub of any class shall cease to be outstanding, shall be
cancelled and shall cease to exist, and each Certificate formerly representing
any share of common stock, no par value per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall thereafter represent
only the right to receive one share of common stock of the Surviving
Corporation. The Parent shall surrender to the Surviving Corporation the
certificate representing all the issued and outstanding shares of the Merger Sub
or, in the event such certificate is lost, stolen or destroyed, an Affidavit and
Indemnity of Lost Certificate in a form acceptable to the Surviving Corporation
in exchange for a certificate issued to the Parent representing all the issued
and outstanding shares of the Surviving Corporation.
(d) Restricted Stock. The shares of Parent common stock issued to
shareholders of the Company as Preferred Merger Consideration and Common Merger
Consideration will be "restricted securities" within the meaning of Securities
and Exchange Commission Rule 144 (Reg. Section 230.144).
(e) Post-Merger Capitalization of Surviving Corporation. The
authorized capital stock of the Surviving Corporation will consist of one
hundred thousand (100,000) shares of Common Stock, par value $0.0001 per share,
ten thousand (10,000) of which will be validly issued and outstanding and the
Parent will be the sole shareholder of the Surviving Corporation.
(f) Post-Merger Capitalization of Parent. The authorized capital stock
of the Parent will consist of (i) fifty million (50,000,000) shares of Common
Stock, no par value per share, twenty-five million eight hundred ninety-three
thousand six hundred twenty-one (25,893,621) of which (assuming that there are
no Dissenting Shareholders and that no shareholders of the Parent have dissented
and demanded to be paid for their shares and that no shares have been issued or
redeemed by either Parent or the Company other than the issuance by the Company
of five hundred thousand (500,000) additional shares of Class A 5% Convertible
Preferred Stock (together with Warrants for the purchase of up to two hundred
fifty million (250,000,000) shares of Common Stock of the Company)) will be
validly issued and outstanding and (ii) ten million (10,000,000) shares of
Preferred Stock, no par value per share, one million four hundred fifty-four
thousand ninety (1,454,090) of which shares are designated as Series A Preferred
Shares, all of which Series A Preferred Shares will have been issued as a
dividend pro rata to holders of Common Stock prior to the Effective Time.
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4.2. Exchange of Certificates.
(a) Immediately after the Effective Time, upon surrender by a holder
of Shares to the Surviving Corporation of the certificates which immediately
prior to the Effective Time represented shares of Common Shares or Preferred
Shares, together with a duly executed stock power relating to such Shares, the
Surviving Corporation shall deliver to such holder such holder's Common Merger
Consideration or Preferred Merger Consideration, as applicable. In the event of
any lost, stolen or destroyed certificate representing Shares, the record owner
of such certificate may tender in lieu of such certificate an Affidavit and
Indemnity of Lost Certificate in a form acceptable to the Surviving Corporation.
(b) Transfers. From and after the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the Shares that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, any Certificate is presented to the Surviving Corporation or Parent for
transfer, it shall be cancelled and exchanged for Common Merger Consideration or
Preferred Merger Consideration, as applicable, to which the holder thereof is
entitled pursuant to this Article IV.
(c) Withholding Rights. Each of Parent and the Surviving Corporation
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of the Shares such amounts as
it is required to deduct and withhold with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the "Code"), or any other
applicable state, local or foreign Tax (as defined in Section 5.1(l)) law. To
the extent that amounts are so withheld by the Surviving Corporation or Parent,
as the case may be, such withheld amounts (i) shall be remitted by Parent or the
Surviving Corporation, as applicable, to the applicable Governmental Entity, and
(ii) shall be treated for all purposes of this Agreement as having been paid to
the holder of the Shares in respect of which such deduction and withholding was
made by the Surviving Corporation or Parent, as the case may be.
4.3. Appraisal Rights. (a) Company Appraisal Rights. No Person who has
perfected a demand for appraisal rights pursuant to DEGCL Section 262 shall be
entitled to receive the Common Merger Consideration, the Preferred Merger
Consideration or any dividends or other distributions pursuant to this Article
IV unless and until the holder thereof shall have effectively withdrawn the
demand for, or otherwise lost such holder's right to, appraisal under the DEGCL,
and any Dissenting Shareholder shall be entitled to receive only the payment
provided by DEGCL Section 262 with respect to Shares owned by such Dissenting
Shareholder. For the purposes of this Agreement, the term "Person" shall mean
any individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, governmental entity or other entity of any kind or
nature. If any Dissenting Shareholder shall have effectively withdrawn the
demand for, or otherwise lost the right to, appraisal with respect to any
Shares, such Dissenting Shareholder shall be entitled to
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receive only the amount to which such shareholder would be entitled pursuant to
this Article IV. The Company shall give Parent (i) prompt notice of any written
demands for appraisal, attempted withdrawals of such demands, and any other
instruments served pursuant to applicable law received by the Company relating
to shareholders' rights of appraisal and (ii) the opportunity to direct all
negotiations and proceedings with respect to demand for appraisal under the
DEGCL. The Company shall provide such notices and take such actions as are
required by law with respect to the administration of the appraisal rights
provided pursuant to the DEGCL.
(b) Parent Appraisal Rights. Any Person who has perfected a demand for
appraisal rights pursuant to Utah Revised Business Corporation Act (URBCA)
Section 16-10(a)-1301-1333 (a "Prime Dissenter") shall be entitled to receive
the fair value of their shares unless and until the holder thereof shall have
effectively withdrawn the demand for, or otherwise lost such holder's right to,
appraisal under the URBCA. The Parent shall give Company (i) prompt notice of
any written demands for appraisal, attempted withdrawals of such demands, and
any other instruments served pursuant to applicable law received by the Parent
relating to shareholders' rights of appraisal. The Parent shall provide such
notices and take such actions as are required by law with respect to extending
appraisal rights pursuant to the UTRBCA with respect to the transactions
contemplated by this Agreement. The Parent shall provide the Company with a
reasonable opportunity to review and comment on written material provided to
shareholders in connection with the granting and administration of appraisal
rights.
4.4. Treatment of Stock Plans, Phantom Shares and Share Loans
(a) Treatment of Options and Warrants. At the Effective Time, each
debenture, warrant, option and other right with respect to shares of any class
of the Company granted and unexercised immediately prior to the Effective Time
(a "Company Option"), vested or unvested, shall be converted into a debenture,
warrant, option or other right, as the case may be, to acquire Common Stock of
the Parent at the rate of one (1) share of Parent Common Stock per 59.5589330784
Common Shares and one (1) share of Parent Common Stock per 0.0595589330784
Preferred Share issuable upon exercise of the Company Option. The debentures,
warrants, options or other rights that will be granted and exercisable for
shares of Parent Common Stock at the Effective Time, in the aggregate, are set
forth on Schedule 4.1(a) to this Agreement.
(b) Corporate Actions. At or prior to the Effective Time, the Company,
the board of directors of the Company shall adopt any resolutions and take any
actions which are necessary or appropriate to effectuate the provisions of
Section 4.4(a).
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ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company. Except as set
forth in the corresponding sections or subsections of the disclosure letter
delivered to Parent by the Company prior to entering into this Agreement (the
"Company Disclosure Letter"), (it being agreed that disclosure of any item in
any section or subsection of the Company Disclosure Letter shall be deemed
disclosure with respect to any other section or subsection to which the
relevance of such item is reasonably apparent), the Company hereby represents
and warrants to Parent and Merger Sub that:
(a) Organization, Good Standing and Qualification. The Company is a
legal entity duly organized, validly existing and in good standing (where
applicable) under the Laws (as defined in Section 5.1(i)) of its jurisdiction of
organization and has all requisite corporate power and authority to own, lease
and operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership, leasing or operation of
its assets or properties or conduct of its business requires such qualification,
except where the failure to be so organized, qualified or in such good standing,
or to have such power or authority, are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect (as defined below).
As used in this Agreement, the term "Company Material Adverse Effect" means a
material adverse effect on the financial condition, business or results of
operations of the Company, taken as a whole; provided, however, that none of the
following, or the results thereof, shall constitute a Company Material Adverse
Effect:
(A) any change in the economy, capital markets, financial markets,
regulatory or political conditions (including any change in foreign exchange
rates) generally in the United States or other countries in which the Company
conducts material operations or as a result of an act of war, terrorism, civil
unrest of similar event, in each case, that does not have a materially
disproportionate effect on the Company relative to other business entities
affected in the relevant jurisdiction or market;
(B) any change that is the result of factors generally affecting the
industries in which the Company operate that does not have a materially
disproportionate effect on the Company relative to other business entities
affected in the relevant jurisdiction or market;
(C) any loss of, or adverse change in, the relationship of the
Company, contractual or otherwise, with its customers, employees or suppliers
arising out of the execution, delivery or performance of this Agreement, the
consummation of the transactions contemplated by this Agreement or the
announcement of any of the foregoing;
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(D) any change in the applicable GAAP or in any statute, rule or
regulation (or the official interpretation thereof) unrelated to the Merger and
of general applicability after the date hereof that does not have a materially
disproportionate effect on the Company relative to other business entities
affected in the relevant jurisdiction or market;
(E) any action, suit or claim brought, or any public campaign started,
by or on behalf of a competitor of the Company, in each case, after the date of
this Agreement;
(F) any action or omission by the Company required or expressly
permitted by the terms of this Agreement or taken with the consent of Parent;
(G) any failure by the Company to meet any estimates of revenues or
earnings for any period ending on or after the date of this Agreement and prior
to the Closing; provided, that the exception in this clause (G) shall not
prevent or otherwise affect a determination that any change, effect, event,
occurrence, state of facts or development underlying such failure has resulted
in, or contributed to, a Company Material Adverse Effect;
(H) any existing event or occurrence or circumstance with respect to
which Parent has knowledge as of the date hereof; and
(I) any action taken, or any omission to act, by Parent or any of its
Affiliates.
(b) Capitalization.
(i) The authorized capital stock of the Company consists of two
billion two hundred million (2,200,000,000) shares of Common Stock, par value
$0.0001 per share, and one million seventy-two thousand twenty (1,072,020)
shares of Preferred Stock, par value $0.0001 per share, of which all are
designated Class A 5% Convertible Preferred Stock.
(ii) The Company has fewer than thirty-five non-accredited
shareholders, all of whom are sophisticated, within the meaning of Rule 501
under Regulation D of the Securities Act of 1933 ("Securities Act"). The Company
will prepare and deliver offering materials, with respect to the Parent common
stock constituting the Common Merger Consideration and the Preferred Merger
Consideration, that satisfy the requirements of Rule 502 under Regulation D of
the Securities Act.
(c) Corporate Authority; Approval and Fairness. (i) The Company has
all requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement, subject only to approval of the plan of Merger contained in this
Agreement by the holders of (A) a majority of the outstanding Preferred Shares,
voting as a single class, and (B) a
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majority of the outstanding Common Shares, voting as a single class, in each
case, entitled to vote on such matter at a shareholders' meeting duly called and
held for such purpose (together, the "Requisite Company Vote"), and to
consummate the Merger. This Agreement has been duly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by
Parent and Merger Sub, constitutes a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar Laws of general applicability relating to or affecting creditors' rights
and to general equity principles (the "Bankruptcy and Equity Exception").
(ii) On or prior to the date of this Agreement, the board of directors
of the Company has (A) determined that the Merger is in the best interests of
the Company and its shareholders, adopted a plan of Merger contained in this
Agreement, approved the Merger and the other transactions contemplated hereby
and, subject to Section 6.2(c), resolved to recommend approval of the plan of
Merger contained in this Agreement to the holders of Shares entitled to vote
thereon (the "Company Recommendation") and (B) directed that the plan of Merger
contained in this Agreement be submitted to the holders of Shares entitled to
vote thereon for their approval.
(d) Governmental Filings; No Violations; Certain Contracts, Etc. To
the Company's knowledge (except with respect to any state or federal securities
law filings or approvals):
(i) No notices, reports or other filings are required to be made by
the Company with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Company from, any domestic
(including federal, state or local) or foreign governmental or regulatory
authority, agency, commission, body, court or other legislative, executive or
judicial governmental entity (each, a "Governmental Entity"), in connection with
the execution, delivery and performance of this Agreement by the Company and the
consummation of the Merger and the other transactions contemplated hereby,
except those that the failure to make or obtain are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect or
prevent, materially delay or materially impair the consummation of the
transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by the
Company do not, and the consummation of the Merger and the other transactions
contemplated hereby will not, constitute or result in (A) a breach or violation
of, a termination (or right of termination) or a default under, the creation or
acceleration of any obligations or the creation of a Lien on any of the assets
of the Company pursuant to any agreement, lease, license, contract, note,
mortgage, indenture, arrangement or other obligation not otherwise terminable by
the other party thereto on 90 days' or less notice (each, a "Contract") binding
upon the Company or, assuming (solely with respect to performance of this
Agreement and consummation of the Merger and the other transactions contemplated
hereby) compliance with the matters referred to in Section
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5.1(d)(i), under any Law to which the Company is subject or (B) any change in
the rights or obligations of any party under any Contract binding on the
Company, except for any such breach, violation, termination, default, creation,
acceleration or change that, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect or prevent, materially delay or
materially impair the consummation of the transactions contemplated by this
Agreement.
The term "knowledge" when used in this Agreement with respect to: (1)
the Company or the executive officers of the Company shall mean the actual
knowledge of Xxxx Xxxxx Xxxxxx, President and (2) the Parent or the Merger Sub
or the executive officers of Parent shall mean the actual knowledge of Xxxxxx
Xxxxxxx, Xxxxx Xxxx, and Xxxxx Xxxx, in each case, having made reasonable review
and inquiry.
(e) Litigation. As of the date of this Agreement, there are no civil,
criminal or administrative actions, suits, claims, hearings, arbitrations,
inquiries, investigations or other proceedings pending or, to the knowledge of
the executive officers of the Company, threatened against the Company, except
for those that are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect. As of the date of this Agreement, the
Company is not a party to or subject to the provisions of any judgment, order,
writ, injunction, decision, determination, decree or award of any Governmental
Entity which is, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect or prevent, materially delay or materially
impair the consummation of the transactions contemplated by this Agreement.
(f) Employee Benefits.
(i) The Company (i) has satisfied all contribution obligations in
respect of each of its employee benefit plans, and (ii) is and has at all times
been in compliance in all material respects with all applicable provisions of
the federal Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Internal Revenue Code of 1986, as amended (the "Code"), with
respect to each such plan. No employee benefit plan or trust created thereunder
has at no time incurred any accumulated funding deficiency (as such term is
defined in Section 302 of ERISA), whether or not waived.
(ii) Neither the Company nor any employee benefit plan thereof, or any
trust created thereunder or any trustee or administrator thereof, has engaged in
any prohibited transaction (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) that would subject any person to the penalty or tax on
such transactions imposed by Section 502 of ERISA or 4975 of the Code. As used
in this Section, the term "employee benefit plan" shall have the meaning
specified in Section 3 of ERISA.
(g) Compliance with Laws; Licenses. To the Company's knowledge, the
businesses of the Company is not being conducted in violation of any United
States (federal, state or local) or non-United States law, statute or ordinance,
common law or
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any rule, regulation, standard, judgment, order, writ, injunction, decree,
agency requirement, license or permit of any Governmental Entity or any award or
directive of any arbitration or mediation panel (collectively, "Laws"), except
for violations that, individually or in the aggregate, are not reasonably likely
to have a Company Material Adverse Effect. The Company has obtained and is in
compliance with all permits, licenses, certifications, approvals,
authorizations, registrations, consents, authorizations, franchises, variances,
exemptions and orders issued or granted by a Governmental Entity ("Licenses")
necessary to conduct its business as presently conducted except for the absence
of such Licenses or such non-compliance which is not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect.
(h) Takeover Statutes. Assuming the accuracy of Parent's and Merger
Sub's representations in Section 5.2(j), no "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute or regulation (each a
"Takeover Statute") or any anti-takeover provision in the Company's articles of
incorporation and by-laws is applicable to Parent, the Shares, the Merger or the
other transactions contemplated by this Agreement.
(i) Environmental Matters.
(A) The Company is in compliance with all applicable Environmental
Laws, except for such noncompliance as is not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect.
(B) The Company possesses all permits, licenses, registrations,
identification numbers, authorizations and approvals required under applicable
Environmental Laws for the operation of the business as presently conducted,
other than as is not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect.
(C) The Company has not received any written claim, notice of
violation or citation concerning any violation or alleged violation of any
applicable Environmental Law during the past three years, except as is not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect.
(D) There are no writs, injunctions, decrees, orders or judgments
outstanding, or any actions, suits or proceedings pending or, to the knowledge
of the executive officers of the Company, threatened, concerning compliance by
the Company with any Environmental Law, except as is not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect.
(ii) Notwithstanding any other representation and warranty in Article
V, the representations and warranties contained in this Section constitute the
sole representations and warranties of the Company relating to any Environmental
Law.
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(iii) As used herein, the term "Environmental Law" means any
applicable law, regulation, code, license, permit, order, decree or injunction
from any Governmental Entity relating to the protection of the environment
(including air, water, soil and natural resources).
(j) Taxes. Except as would not, individually or in the aggregate,
reasonably be likely to have a Company Material Adverse Effect, the Company (i)
has duly and timely filed (taking into account any extension of time within
which to file) all Tax Returns (as defined below) required to be filed it and
all such filed Tax Returns are complete and accurate in all material respects;
(ii) has paid all Taxes (as defined below) that are shown as due on such filed
Tax Returns or that the Company is obligated to withhold from amounts owing to
any employee, creditor or third party, except with respect to matters contested
in good faith or for which adequate reserves have been established; and (iii)
has not waived any statute of limitations with respect to Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency. Except as is
not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect, as of the date hereof, there are not pending or, to the
knowledge of the executive officers of the Company threatened in writing, any
audits, examinations, investigations or other proceedings in respect of Taxes or
Tax matters.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the term "Taxes") includes all federal, state, local and
foreign income, profits, franchise, gross receipts, environmental, customs duty,
capital stock, severance, stamp, payroll, sales, employment, unemployment,
disability, use, property, withholding, excise, production, value added,
occupancy and other taxes, duties or assessments of any nature whatsoever,
together with all interest, penalties and additions imposed with respect to such
amounts and any interest in respect of such penalties and additions, and (ii)
the term "Tax Return" includes all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to a Tax authority relating to Taxes.
(k) Labor Matters. As of the date of this Agreement, (i) the Company
is not a party to or otherwise bound by any collective bargaining agreement or
other Contract with a labor union or labor organization, nor is the Company
subject of any material proceeding asserting that the Company has committed an
unfair labor practice or seeking to compel it to bargain with any labor union or
labor organization nor is there pending or, to the knowledge of the executive
officers of the Company, threatened, nor has there been for the past five years,
any labor strike, dispute, walk-out, work stoppage, slow-down or lockout
involving the Company, and (ii) to the knowledge of the executive officers of
the Company, there are no organizational efforts with respect to the formation
of a collective bargaining unit presently being made involving employees of the
Company.
(l) Intellectual Property. Except as is not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect:
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(i) the Company has sufficient rights to use all Intellectual Property
used in its business as presently conducted and there is no litigation,
opposition, cancellation, proceeding, objection or claim pending, asserted or,
to the knowledge of the executive officers of the Company, threatened,
concerning the ownership, validity, registerability, enforceability,
infringement or use of, or licensed right to use, any Intellectual Property.
(ii) the Company has not granted any licenses or other rights to third
parties to use its Intellectual Property, other than non-exclusive licenses
granted in the ordinary course of business pursuant to standard terms.
(iii) (A) the IT Assets operate and perform in accordance with their
documentation and functional specifications and otherwise as required by the
Company in connection with its business; (B) to the knowledge of the executive
officers of the Company, as of the date hereof, no person has gained
unauthorized access to the IT Assets; and (C) the Company has implemented
reasonable backup and disaster recovery technology consistent with industry
practices.
For purposes of this Agreement, the following terms have the following
meanings:
"Intellectual Property" means all (i) trademarks, service marks, brand
names, certification marks, collective marks, d/b/a's, Internet domain names,
logos, symbols, trade dress, trade names, and other indicia of origin, all
applications and registrations for the foregoing, and all goodwill associated
therewith and symbolized thereby, including all renewals of same; (ii)
inventions and discoveries, whether patentable or not, and all patents,
registrations, invention disclosures and applications therefor, including
divisions, continuations, continuations-in-part and renewal applications, and
including renewals, extensions and reissues; (iii) confidential information,
trade secrets and know-how, including processes, schematics, business methods,
formulae, drawings, prototypes, models, designs, customer lists and supplier
lists (collectively, "Trade Secrets"); (iv) published and unpublished works of
authorship, whether copyrightable or not (including without limitation databases
and other compilations of information), copyrights therein and thereto, and
registrations and applications therefor, and all renewals, extensions,
restorations and reversions thereof; and (v) all other intellectual property or
proprietary rights, in each case, to the extent recognized by applicable Law.
"IT Assets" of a Person means computers, computer software, firmware,
middleware, servers, workstations, routers, hubs, switches, and other
information technology equipment owned by such Person.
(m) Insurance. As of the date of this Agreement, each of the Company's
insurance policies is in full force and effect and all premiums due with respect
to such insurance policies have been paid, with such exceptions that,
individually or in the aggregate, are not reasonably likely to have a Company
Material Adverse Effect.
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(n) Brokers and Finders. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders, fees in connection
with the Merger or the other transactions contemplated by this Agreement, except
that the Company has employed Xxxxxxx Securities, Inc. as its financial advisor,
the arrangements with which have been disclosed in writing to the Parent prior
to the date hereof.
(o) No Other Representations and Warranties. Except as expressly set
forth in this Section 5.1, the Company makes no representation or warranty,
express or implied, at law or in equity, in respect of the Company or its
assets, liabilities or operations, on which Parent or Merger Sub may rely, and
any such other representations or warranties are hereby expressly disclaimed.
5.2. Representations and Warranties of Parent and Merger Sub. Except
as set forth in the corresponding sections or subsections of the disclosure
letter delivered to the Company by Parent prior to entering into this Agreement
(the "Parent Disclosure Letter"), (it being agreed that disclosure of any item
in any section or subsection of the Parent Disclosure Letter shall be deemed
disclosure with respect to any other section or subsection to which the
relevance of such item is reasonably apparent), Parent and Merger Sub each
hereby represent and warrant to the Company that:
(a) Organization, Good Standing and Qualification. Each of Parent and
Merger Sub is a legal entity duly organized, validly existing and in good
standing (where applicable) under the Laws of its respective jurisdiction of
organization and has all requisite corporate power and authority to own, lease
and operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership, leasing or operation of
its assets or properties or conduct of its business requires such qualification,
except where the failure to be so organized, qualified or in such good standing,
or to have such power or authority, are not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect (as defined below).
As used in this Agreement, the term "Parent Material Adverse Effect" means a
material adverse effect on the financial condition, business or results of
operations of the Parent and/or the Merger Sub, taken as a whole or delay or
impair the ability of the Parent and/or the Merger Sub to consummate the Merger
and the other transactions contemplated by this Agreement provided, however,
that none of the following, or the results thereof, shall constitute a Parent
Material Adverse Effect:
(A) any change in the economy, capital markets, financial markets,
regulatory or political conditions (including any change in foreign exchange
rates) generally in the United States or other countries in which the Parent
and/or the Merger Sub conducts material operations or as a result of an act of
war, terrorism, civil unrest of similar event, in each case, that does not have
a materially disproportionate effect on the Parent and/or the Merger Sub
relative to other business entities affected in the relevant jurisdiction or
market;
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(B) any change that is the result of factors generally affecting the
industries in which the Parent and/or the Merger Sub operate that does not have
a materially disproportionate effect on the Parent and/or the Merger Sub
relative to other business entities affected in the relevant jurisdiction or
market;
(C) any loss of, or adverse change in, the relationship of the Parent
and/or the Merger Sub, contractual or otherwise, with its customers, employees
or suppliers arising out of the execution, delivery or performance of this
Agreement, the consummation of the transactions contemplated by this Agreement
or the announcement of any of the foregoing;
(D) any change in the applicable GAAP or in any statute, rule or
regulation (or the official interpretation thereof) unrelated to the Merger and
of general applicability after the date hereof that does not have a materially
disproportionate effect on the Parent and/or the Merger Sub relative to other
business entities affected in the relevant jurisdiction or market;
(E) any action, suit or claim brought, or any public campaign started,
by or on behalf of a competitor of the Parent and/or the Merger Sub, in each
case, after the date of this Agreement;
(F) any action or omission by the Parent and/or the Merger Sub
required or expressly permitted by the terms of this Agreement or taken with the
consent of the Company;
(G) any failure by the Parent and/or the Merger Sub to meet any
estimates of revenues or earnings for any period ending on or after the date of
this Agreement and prior to the Closing; provided, that the exception in this
clause (G) shall not prevent or otherwise affect a determination that any
change, effect, event, occurrence, state of facts or development underlying such
failure has resulted in, or contributed to, a Parent Material Adverse Effect;
(H) any existing event or occurrence or circumstance with respect to
which the Company has knowledge as of the date hereof; and
(I) any action taken, or any omission to act, by the Company or any of
its Affiliates..
Parent has made available to the Company a complete and correct copy of Parent's
and Merger Sub's certificates of incorporation and by-laws or comparable
governing documents, each as amended to the date hereof, and each as so
delivered is in full force and effect.
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(b) Capitalization
(i) Capitalization of Parent; Subsidiary. The authorized capital stock
of Parent consists of (i) fifty million (50,000,000) shares of Parent Common
Stock, one million five hundred eighteen thousand eight hundred sixty
(1,518,860) of which are validly issued treasury shares, but are not
outstanding, and one million four hundred fifty-four thousand ninety (1,454,090)
of which are validly issued and outstanding and (ii) ten million (10,000,000)
shares of Preferred Stock, no par value per share, one million four hundred
fifty-four thousand ninety (1,454,090) of which shares are designated as Series
A Preferred Shares, which will have been declared as a distributable to
shareholders of record prior to the Effective Time but which are not issued and
outstanding. The authorized and issued capital stock of Parent is set forth in
Schedule 5.2(b)(i) to this Agreement. There are (i) no other shares of capital
stock or voting securities of Parent, (ii) no securities of Parent convertible
into or exchangeable for shares of capital stock or voting securities of Parent
and (iii) no options or other rights to acquire from Parent, and no obligations
of Parent to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Parent. Except as set forth in Section 5.2 (b)(ii) of the Parent Disclosure
Letter, Parent has not conducted any business since May 1, 2006 and has no, and
prior to the Effective Time will have no, assets, liabilities or obligations of
any nature other than those pursuant to this Agreement and the Merger and the
other transactions contemplated by this Agreement. Other than the Merger Sub,
the Parent does not have any subsidiaries and does not own any capital stock or
membership interest in any other entity.
(ii) Capitalization of Merger Sub. The authorized capital stock of
Merger Sub consists of 100,000 shares of Common Stock, no par value per share,
10,000 of which are validly issued and outstanding. All of the issued and
outstanding capital stock of Merger Sub is, and at the Effective Time will be,
owned by Parent, and there are (i) no other shares of capital stock or voting
securities of Merger Sub, (ii) no securities of Merger Sub convertible into or
exchangeable for shares of capital stock or voting securities of Merger Sub and
(iii) no options or other rights to acquire from Merger Sub, and no obligations
of Merger Sub to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Merger Sub. Merger Sub has not conducted any business prior to the date hereof
and has no, and prior to the Effective Time will have no, assets, liabilities or
obligations of any nature other than those incident to its formation and
pursuant to this Agreement and the Merger and the other transactions
contemplated by this Agreement.
(c) Corporate Authority.
(i) No vote of holders of capital stock of Parent is necessary to
approve this Agreement and the Merger or any of the other transactions
contemplated hereby. Each of Parent and Merger Sub has all requisite corporate
power and authority and has taken all corporate action necessary in order to
execute, deliver and perform its
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obligations under this Agreement, subject only to the adoption of this Agreement
by Parent as the sole stockholder of Merger Sub (the "Requisite Parent Vote"),
and to consummate the Merger. This Agreement has been duly executed and
delivered by each of Parent and Merger Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a valid and binding agreement
of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
(ii) On or prior to the date of this Agreement, the board of directors
of the Merger Sub has determined that the Merger is in the best interests of the
Merger Sub and its shareholders, adopted a plan of Merger contained in this
Agreement, approved the Merger and the other transactions contemplated hereby
and, subject to Section 6.2(c), resolved to recommend approval of the plan of
Merger contained in this Agreement to the holders of Shares entitled to vote
thereon (the "Board Recommendation")
(d) Governmental Filings; No Violations; Etc. To the Parent's
knowledge (except with respect to any state or federal securities law filings or
approvals):
(i) No notices, reports or other filings are required to be made by
Parent or Merger Sub with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by Parent or Merger Sub from,
any Governmental Entity in connection with the execution, delivery and
performance of this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the Merger and the other transactions contemplated
hereby or in connection with the continuing operation of the business of Parent
following the Effective Time, except those that the failure to make or obtain
are not, individually or in the aggregate, reasonably likely to prevent,
materially delay or materially impair Parent's or Merger Sub's ability to
consummate the Merger and the other transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by
Parent and Merger Sub do not, and the consummation by Parent and Merger Sub of
the Merger and the other transactions contemplated hereby will not, constitute
or result in (A) a material breach or violation of the certificate of
incorporation or by-laws or equivalent organizational documents of Parent and
Merger Sub or the comparable governing instruments of any of its Subsidiaries,
(B) with or without notice, lapse of time or both, a breach or violation of, a
termination (or right of termination) or a default under, the creation or
acceleration of any obligations or the creation of a Lien on any of the assets
of Parent or any of its Subsidiaries pursuant to, any Contracts binding upon
Parent or any of its Subsidiaries, or, assuming (solely with respect to
performance of this Agreement and consummation of the Merger and the other
transactions contemplated hereby) compliance with the matters referred to in
Section 5.2(d)(i), under any Laws or governmental or non-governmental permits or
licenses to which Parent or any of its Subsidiaries is subject or (C) any change
in the rights or obligations of any party under any Contract binding on Parent
or any of its Subsidiaries, except, in the case of clause (B)
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or (C) above, for any such breach, violation, termination, default, creation,
acceleration or change that, individually or in the aggregate, is not reasonably
likely to prevent, materially delay or materially impair Parent's or Merger
Sub's ability to consummate the Merger and the other transactions contemplated
by this Agreement.
(e) Litigation. As of the date of this Agreement, there are no civil,
criminal, administrative or legislative actions, suits, claims, hearings,
arbitrations, inquiries, investigations or other proceedings pending or, to the
knowledge of the executive officers of Parent, threatened against, and no Law
(including any Orders of any Governmental Entity) involving, Parent or Merger
Sub that enjoin or have, or seek to enjoin or are reasonably likely to have, the
effect of preventing, making illegal or otherwise interfering with, the Merger
or any of the other transactions contemplated by this Agreement, except for
those that are not, individually or in the aggregate, reasonably likely to
prevent, materially delay or materially impair Parent's or Merger Sub's ability
to consummate the Merger and the other transactions contemplated by this
Agreement. As of the date of this Agreement, neither the Parent nor any of its
Subsidiaries is a party to or subject to the provisions of any judgment, order,
writ, injunction, decision, determination, decree or award of any Governmental
Entity which is, individually or in the aggregate, reasonably likely to prevent,
materially delay or materially impair Parent's or Merger Sub's ability to
consummate the transactions contemplated by this Agreement.
(f) Employee Benefits.
(i) The Parent (i) has satisfied all contribution obligations in
respect of each of its employee benefit plans, and (ii) is and has at all times
been in compliance in all material respects with all applicable provisions of
ERISA and Code, with respect to each such plan. No employee benefit plan or
trust created thereunder has at no time incurred any accumulated funding
deficiency (as such term is defined in Section 302 of ERISA), whether or not
waived.
(ii) Neither the Parent nor any employee benefit plan thereof, or any
trust created thereunder or any trustee or administrator thereof, has engaged in
any prohibited transaction (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) that would subject any person to the penalty or tax on
such transactions imposed by Section 502 of ERISA or 4975 of the Code. As used
in this Section, the term "employee benefit plan" shall have the meaning
specified in Section 3 of ERISA.
(iii) Since January 1, 2007, Parent has had no employees, no payroll
with respect to its or any other Person's employees and no payroll obligations
of any nature.
(g) Compliance with Laws; Licenses. To the Parent's knowledge, the
business of the Parent has not at any time been conducted in violation of any
Laws (as defined in Section 5.1(g)).
(h) Environmental Matters.
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(A) The Parent and Merger Sub are in compliance with all applicable
Environmental Laws, except for such noncompliance as is not, individually or in
the aggregate, reasonably likely to have a Parent Material Adverse Effect.
(B) The Parent and the Merger Sub possess all permits, licenses,
registrations, identification numbers, authorizations and approvals required
under applicable Environmental Laws for the operation of their respective
business as presently conducted, other than as is not, individually or in the
aggregate, reasonably likely to have a Parent Material Adverse Effect.
(C) Neither the Parent nor the Merger Sub has received any written
claim, notice of violation or citation concerning any violation or alleged
violation of any applicable Environmental Law during the past three years,
except as is not, individually or in the aggregate, reasonably likely to have a
Parent Material Adverse Effect.
(D) To the Parent's knowledge, there are no writs, injunctions,
decrees, orders or judgments outstanding, or any actions, suits or proceedings
pending or, to the knowledge of the executive officers of the Parent,
threatened, concerning compliance by either the Parent or the Merger Sub with
any Environmental Law, except as is not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect.
(ii) Notwithstanding any other representation and warranty in Article
V, the representations and warranties contained in this Section constitute the
sole representations and warranties of the Parent and the Merger Sub relating to
any Environmental Law.
(i) Taxes.
(A) The Parent (i) has duly and timely filed (taking into account any
extension of time within which to file) all Tax Returns required to be filed it
and all such filed Tax Returns are complete and accurate in all material
respects; (ii) has paid all Taxes that are shown as due on such filed Tax
Returns or that the Parent is obligated to withhold from amounts owing to any
employee, creditor or third party, except with respect to matters contested in
good faith or for which adequate reserves have been established; and (iii) has
not waived any statute of limitations with respect to Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency. As of the date
hereof, there are not pending or, to the knowledge of the executive officers of
the Parent threatened in writing, any audits, examinations, investigations or
other proceedings in respect of Taxes or Tax matters.
(B) The Parent and the Parent's subsidiaries have complied in all
material respects with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes.
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(C) The Parent has not received any written notice of any action,
suit, proceeding, audit or claim now proposed or pending against or with respect
to the Parent or any subsidiary of the Parent.
(D) There are no liens or encumbrances for Taxes on any of the assets
of the Parent or its subsidiaries.
(E) Neither the Parent nor any of its subsidiaries is a party to any
tax allocation, tax sharing, tax indemnity or similar agreement (whether or not
in writing), arrangement or practice with respect to Taxes.
(j) Ownership of Shares. Neither Parent nor any of its Subsidiaries
"beneficially owns," or is the "beneficial owner" of, any Shares (terms in
quotation marks in this Section 5.2(j) having the meaning ascribed to such terms
under Rule 13d-3(a) under the Securities Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act")).
(k) Brokers and Finders. Neither the Parent nor the Merger Sub nor any
of their respective officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finders
fees in connection with the Merger or the other transactions contemplated in
this Agreement.
(l) Available Funds. Parent has, and as of the Closing Date will have,
available to it all funds necessary to satisfy all of its obligations hereunder
and in connection with the Merger and any other transactions contemplated
hereunder
(m) Parent SEC Documents
(i) The Parent has made available to the Company all reports, filings,
registration statements and other documents required to be filed by Parent with
the SEC (collectively, the "Parent SEC Documents"). The Parent has filed all
reports, filings, registration statements and other documents required to be
filed by it with the SEC. No subsidiary of the Parent is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act and no
subsidiary of the Parent is an investment company registered or required to be
registered under the Investment Company Act of 1940.
(ii) As of its filing date, each Parent SEC Document complied as to
form in all material respects with the applicable requirements of the Securities
Act and/or the Exchange Act, as the case may be.
(iii) No Parent SEC Document filed pursuant to the Exchange Act
contained, as of its filing date, any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. No Parent SEC Document, as amended or supplemented, if applicable,
filed pursuant to the Securities Act contained, as of the date such document or
amendment became effective, any untrue
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statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading.
(n) Financial Statements; No Material Undisclosed Liabilities.
(A) The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Parent included in the Company
10-KSB and the Company 10-QSB fairly present in all material respects, in
conformity with generally accepted accounting principles applied on a consistent
basis ("GAAP") (except as may be indicated in the notes thereto), the
consolidated financial position of the Parent and its consolidated Parent
subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended (subject
to normal year-end adjustments in the case of any unaudited interim financial
statements).
(B) There are no liabilities of the Parent or any Parent subsidiary of
any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, in each case, that are required by GAAP to be set
forth on a consolidated balance sheet of the Parent, other than:
a. liabilities or obligations disclosed or provided for in the
Parent's most recent balance sheet or disclosed in the notes
thereto; and
b. liabilities or obligations under this Merger Agreement or
incurred in connection with the transactions contemplated hereby
(o) Contracts.
(A) As of the date hereof, the exhibit index to the Parent's most
recently filed Annual Report on Form 10-KSB, includes each contract (including
all amendments thereto) to which the Parent or any Parent subsidiaries is a
party or by which any of them is bound and (i) which would be required, pursuant
to the Exchange Act and the rules and regulations thereunder, to be filed as an
exhibit to an Annual Report of the Parent on Form 10-KSB, a Quarterly Report of
the Parent on Form 10-QSB or a Current Report of the Parent on Form 8-K (without
regard to whether such report is now due to be filed) or (ii) involves payments
by or to the Parent or any Parent subsidiary in calendar year 2006 or any
subsequent calendar year (collectively, the "Parent Contracts").
(B) Each Parent Contract is in full force and effect, constitutes a
valid and binding obligation of and is legally enforceable in accordance with
its terms against the Parent or Parent Subsidiary, as applicable and, to the
knowledge of the Parent, (i) the Parent Contracts are valid, binding and
enforceable obligations of the other parties thereto, except as such
enforceability may be subject to the effects of any applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws
affecting creditors' rights generally or subject to the effects of general
equitable
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principles (whether considered in a proceeding in equity or at law); (ii) the
Parent and/or each Parent Subsidiary, as the case may be, has complied with all
of the provisions of such Parent Contracts and is not in default thereunder, and
there has not occurred any event which (whether with or without notice, lapse of
time, or the happening or occurrence of any other event) would constitute such a
default, and the execution of this Merger Agreement by the Parent and its
performance hereunder will not cause, or result in, a breach or default under
any Parent Contract; (iii) there has not been (A) any failure by the Parent or
any Parent Subsidiary or, to the knowledge of the Parent or any Parent
Subsidiary, any other party to any such Parent Contract to comply with all
material provisions thereof, (B) any default by the Parent or any Parent
Subsidiary or, to the knowledge of the Parent or any Parent Subsidiary, any
other party thereunder or (C) to the knowledge of the Parent (1) any
cancellation thereof in writing which has not been cured or (2) any outstanding
dispute thereunder which has not been cured.
(C) Neither the Parent nor any Parent subsidiary is a guarantor or
otherwise liable for any liability or obligation (including any indebtedness of
any kind) of any Person.
(D) No officer, director or significant stockholder of the Parent or
any Parent subsidiary, or affiliate of such officer, director or significant
stockholder, is currently a party to any transaction, understanding or
commitment with the Parent or any Parent subsidiary, including, without
limitation, any Agreement providing for the employment of, furnishing of
services by, rental of assets from or to, requiring payments on a change of
control of the Parent or otherwise requiring payments to, any such officer,
director, significant stockholder or affiliate.
(E) Neither the Parent nor any Parent subsidiary is a party to any
contract with the United States government or to any other material government
contract.
(p) Certain Agreements. None of the Parent, any subsidiary of Parent
or any of their respective affiliates are parties to or otherwise bound by any
agreement or arrangement that limits or otherwise restricts, in any material
respect, the Parent, any subsidiary of Parent or any of their respective
affiliates from engaging or competing in any line of business or in any
locations.
(q) Affiliates. Except as set forth in Section 5.2(q) of the Parent
Disclosure Letter (the "Parent Affiliates"), there are no affiliates of the
Parent as of the date hereof as that term is used in SEC Rule 145.
(r) No Other Representations and Warranties. Except as expressly set
forth in this Section 5.2, neither Parent nor Merger Sub makes any
representation or warranty, express or implied, at law or in equity, in respect
of Parent, Merger Sub or any of their respective Subsidiaries or any of their
respective assets, liabilities or operations, on which the Company may rely, and
any such other representations or warranties are hereby expressly disclaimed.
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ARTICLE VI
Covenants
6.1. Publicity. The initial press release regarding the Merger shall
be a joint press release and thereafter the Company and Parent each shall
consult with each other prior to issuing any press releases or otherwise making
public announcements with respect to the Merger and the other transactions
contemplated by this Agreement and prior to making any filings with any third
party and/or any Governmental Entity (including any national securities exchange
or interdealer quotation service) with respect thereto, except (x) for any
statements or announcements made in connection with any litigation between the
parties to this Agreement or (y) as may be required by Law or by obligations
pursuant to any listing agreement with or rules of any national securities
exchange or interdealer quotation service or by the instruction or request of
any Government Entity, provided that nothing in this Section shall amend, modify
or limit in any manner the Parent's reporting obligations under the Exchange
Act..
6.2. Employee Benefits. Parent shall, and shall cause the Surviving
Corporation to, honor all employee benefit obligations to current and former
employees under the Company Benefit Plans in existence on the date hereof.
6.3. Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the Merger and the other
transactions contemplated by this Agreement shall be paid by the party incurring
such expense.
6.4. Takeover Statutes. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, the Company and its board of directors shall grant such approvals and
take such actions as are necessary so that such transactions may be consummated
as promptly as practicable on the terms contemplated by this Agreement and
otherwise act to eliminate or minimize the effects of such statute or regulation
on such transactions.
6.5. Parent Vote. Parent shall vote (or majority consent with respect
to) or cause to be voted (or a consent to be given with respect to) any Shares
and any shares of common stock of Merger Sub beneficially owned by it or any of
its Subsidiaries or with respect to which it or any of its Subsidiaries has the
power (by agreement, proxy or otherwise) to cause to be voted (or to provide a
consent), in favor of the adoption and approval of this Agreement at any meeting
of shareholders of the Merger Sub at which this Agreement shall be submitted for
adoption and approval and at all adjournments or postponements thereof (or, if
applicable, by any action of shareholders the Merger Sub by majority consent in
lieu of a meeting). Parent shall hold a meeting (or obtain the written majority
consent) of its shareholders to adopt and approve this Agreement and the Merger
and to adopt the Parent Articles Amendments, in the manner and as required under
the Articles of Incorporation and Bylaws of Parent and the URBCA.
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6.6. Control of Operations. Nothing contained in this Agreement shall
give Parent or Merger Sub, directly or indirectly, the right to control or
direct the operations of the Company prior to the Effective Time. Prior to the
Effective Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its
operations.
6.7. Investigation by Parent and the Company; No Knowledge of
Misrepresentations or Omissions.
(a) Parent and the Company each agrees and acknowledges that they have
conducted its own independent investigation, review and analysis of the
business, operations, assets, liabilities and prospects of the other party,
which investigation, review and analysis was done by the respective party and
its respective representatives. Parent agrees and acknowledges that it and its
representatives have been provided access to the personnel, properties, premises
and records of the Company for such purpose. Company agrees and acknowledges
that it and its representatives have been provided access to the personnel and
records of the Parent and Merger Sub for such purpose. In entering into this
Agreement, Parent agrees and acknowledges that it has relied solely upon the
aforementioned investigation, review and analysis and not on any factual
representations of the Company, or their respective agents or representatives
(except for the specific representations and warranties of the Company set forth
in Section 5.1).
(b) Parent and Company each agrees and acknowledges that none of the
Company or Parent, respectively, or any of its directors, officers,
stockholders, employees, Affiliates, controlling persons, attorneys or agents or
representatives makes or has made any representation or warranty, either express
or implied, as to the Company or Parent, respectively, or as to the accuracy or
completeness of any of the information regarding the Company or Parent,
respectively, provided or made available to Parent or Company, respectively or
its directors, officers, employees, Affiliates, controlling persons, attorneys
or agents or representatives (except for the specific representations and
warranties of the Company set forth in Section 5.1), and neither the Company or
Parent, respectively, nor any of its directors, officers, employees, Affiliates,
controlling persons, attorneys or agents or representatives shall have or be
subject to any liability to Parent, Merger Sub or the Company, respectively, or
any other Person resulting from the distribution to such Person, or such
Person's use of or reliance on, any such information or any information,
documents or material made available to Parent, Merger Sub, or the Company,
respectively, or any other in expectation of, or in connection with, the
transactions contemplated hereby. Parent and Company each further agrees and
acknowledges that, as of the date hereof, neither Parent nor Company,
respectively, is aware of (x) any representation and warranty of the Company or
Parent, respectively, being inaccurate, or (y) a breach of any provision of this
Agreement by the Company or Parent, respectively.
(c) Without limiting the generality of the foregoing Sections 6.7(a)
and (b), in connection with Parent's investigation of the Company, Parent has
received
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from the Company and its Affiliates, agents and/or representatives certain
projections and other forecasts, including projected financial statements, cash
flow items and other data of the Company and certain business plan information
of the Company. Parent agrees and acknowledges that (1) there are uncertainties
inherent in attempting to make such projections and other forecasts and plans
and accordingly is not relying on them, (2) Parent is familiar with such
uncertainties, (3) Parent is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all projections and other forecasts
and plans so furnished to it, and (4) Parent shall have no claim against any
Person with respect thereto.
(d) The Company agrees and acknowledges that the Company has conducted
its own independent investigation, review and analysis of the business,
operations, assets, liabilities and prospects of Parent, which investigation,
review and analysis was done by the Company and its representatives. The Company
agrees and acknowledges that it and its representatives have been provided
access to the records of Parent for such purpose. In entering into this
Agreement, the Company agrees and acknowledges that it has relied solely upon
the aforementioned investigation, review and analysis and not on any factual
representations of Parent or its agents or representatives (except for the
specific representations and warranties of Parent and Merger Sub set forth in
Section 5.2).
6.8. Fiscal Year. As soon as practicable following the Effective Time,
the Parent will take such actions as are reasonably necessary or required to
effect a change of its fiscal year from a December 31 year end to a September 30
year end.
6.9. Exchange Act Filings.
(a) The Parent will file a current report on Form 8-K and a
corresponding press release within four days of executing this Agreement and a
supplemental Form 8-K to be filed within four days of the Effective Time and
including the financial information required by Form 8-K.
(b) As soon as practicable following the Effective Time, the Parent
will prepare and file with the Securities and Exchange Commission such documents
and registration statements as reasonably required to effect the registration of
the shares delivered to former Company shareholders as Common Merger
Consideration and Preferred Merger Consideration. The principals and management
of the Parent prior to the Effective Time shall have a continuing duty to supply
information and documents relating to the Parent to the Parent and to reasonably
cooperate in such registration process.
6.10. Non-Disclosure. The parties acknowledge the existence of that
certain Non-Disclosure Agreement, dated May 11, 2006 ("Confidentiality
Agreement"). The Parent and the Merger Sub, until such time as the transactions
contemplated by this Agreement are consummated, agree to be bound by the terms
and conditions of the NDA
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as though an original "Party 1" thereto. This Section shall survive any
termination or expiration of this Agreement.
ARTICLE VII
Conditions
7.1. 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 at or prior to the Effective Time of each of the
following conditions:
(a) Shareholder Approval. (i) The plan of Merger contained in this
Agreement shall have been duly approved by holders of Shares in accordance with
applicable law and the certificate of incorporation and by-laws of the Company
and by the shareholders of Prime in accordance with applicable law, the
resolution of the directors of Prime submitting the Merger to majority
shareholder vote (or majority consent) and to URBCA Section 16-10(a)-1301 et
seq., and the Articles of Incorporation and by-laws of Parent.
(b) Litigation. No court or other Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Law, (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the Merger or the
other transactions contemplated by this Agreement (collectively, an "Order").
(c) Private Equity Financing. On or before February 15, 2007, the
Company shall have, in a private offering of its capital stock, sold or entered
into binding subscriptions for the sale by it contemporaneously with the
Closing, shares of its capital stock in an amount that will result in gross
proceeds to the Company of at least four million five hundred thousand dollars
($4,500,000).
7.2. Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are also subject to
the satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company set forth in this Agreement shall be true and correct
(giving effect to any limitation as to "materiality" or "Company Material
Adverse Effect" or any similar limitation contained herein) as of the Closing
Date as though made on and as of such date and time (except to the extent that
any such representation and warranty expressly speaks as of an earlier date, in
which case such representation and warranty shall be true and correct as of such
earlier date); and (ii) Parent shall have received at the Closing a certificate
signed on behalf of the Company by an authorized officer of the
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Company to the effect that the conditions set forth in this Section 7.2(a) have
been satisfied.
(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 Closing Date, and Parent shall have
received a certificate signed on behalf of the Company by an authorized officer
of the Company to such effect.
(c) No Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred a Company Material Adverse Effect.
(d) Lock-Up Agreements. The Company shall have delivered to Parent, at
the Closing, agreements in a form substantially similar to Exhibit 7.2(d) from
each of the Company's directors, executive officers (as defined in Exchange Act
Rule 3b-7) and holders of ten percent (10%) or more of the outstanding Company
voting securities (to be determined consistent with Exchange Act Rule 13d-3)
pursuant to which each undertakes to not sell his, her or its shares of Parent
Common Stock received as Common or Preferred Merger Consideration on any public,
secondary market for a period of 180 days from the effective date of a
registration statement on Form SB-2 filed with the Securities and Exchange
Commission registering such shares of Parent Common Stock.
(e) Articles of Merger. The Company shall have executed and delivered
in a form satisfactory for filing with the Secretary of State's Office for the
State of Delaware a Certificate of Merger satisfying the requirements of the
DEGCL, and any other documents necessary to effect the Merger.
7.3. Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Parent set forth in this Agreement shall be true and correct
(giving effect in the representations and warranties to any qualification or
limitation as to "material," "materiality," or "Parent Material Adverse Effect")
in all respects as of the Closing Date as though made on and as of such date and
time (except to the extent that any such representation and warranty expressly
speaks as of an earlier date, in which case such representation and warranty
shall be true and correct as of such earlier date); and (ii) the Company shall
have received at the Closing a certificate signed on behalf of Parent by an
authorized officer of Parent to the effect that the conditions set forth in this
Section 7.3(a) have been satisfied.
(b) Performance of Obligations of Parent and Merger Sub. Each of
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and
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the Company shall have received a certificate signed on
behalf of Parent and Merger Sub by an authorized officer of Parent to such
effect.
(c) Opinion of Counsel. The Company shall have received an opinion
from legal counsel to Parent, reasonably satisfactory to the Company, including
an opinion that the sale and issuance of Parent capital stock pursuant to this
Agreement constitutes a private placement transaction exempt from registration
under federal and state securities laws.
(d) Articles of Merger. The Merger Sub shall have executed and
delivered in a form satisfactory for filing with the Secretary of State's Office
for the State of Utah a Certificate of Merger satisfying the requirements of the
UTRBCA, and any other documents necessary to effect the Merger.
(e) Lock-Up Agreements. Messrs. Xxxxxx Xxxxxxx, Xxxxx Xxxx and Xxxxx
Xxxx shall have delivered to the Company, at the Closing, and acknowledgement
and consent in a form reasonably satisfactory to the Parent and the Company with
respect to each of the agreements required to be delivered under Section 7.2(d).
(f) Appraisal Rights. The Parent and the Prime Indemnifying Parties
shall have provided such written material and taken proper action, or properly
refrained from taking action in connection with the granting of, and
administration of, dissenters' appraisal rights pursuant to the UTRBCA with
respect to the merger transaction contemplated by this Agreement.
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by shareholders of the Company referred to in
Section 7.1(a), by mutual written consent of the Company and Parent by action of
their respective boards of directors.
8.2. Termination by Either Parent or the Company. This Agreement may
be terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the board of directors of either Parent or the Company if the
Merger shall not have been consummated by April 30, 2007, whether such date is
before or after the date of approval by the shareholders of the Company referred
to in Section 7.1(a) (the "Termination Date").
8.3. Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, this Agreement shall become void and of no effect with no
liability to any
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Person on the part of any party hereto (or of any of its Representatives or
Affiliates); provided, however, and notwithstanding anything in the foregoing to
the contrary, that (i) except as otherwise provided herein, no such termination
shall relieve any party hereto of any liability or damages to the other party
hereto resulting from any willful or intentional material breach of this
Agreement and (ii) the provisions set forth in the second sentence of Section
9.1 shall survive termination of this Agreement; and further provided that,
notwithstanding anything to the contrary in this Agreement, there shall be no
continuing indemnification liability of any individual in the event that this
Agreement is terminated.
ARTICLE IX
Indemnification
9.1. Indemnification Obligations of Parent Officers. From and after
the Effective Time, the persons set forth on Schedule 9.1, being the principal
officers of Parent immediately prior to the Effective Time (the "Prime
Indemnifying Parties") shall, jointly and severally, defend, indemnify and hold
harmless, to the fullest extent permitted under applicable Law (and shall,
jointly and severally, also advance expenses as incurred to the fullest extent
permitted under applicable Law), the Surviving Corporation against any Costs
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to (a) any material inaccuracy in or breach of any
representation and warranty made by Parent or the Merger Sub in this Agreement
or in any closing document delivered to Company in connection with this
Agreement, of which any Prime Indemnifying Party had knowledge (without giving
effect to any qualification or limitation in the representation or warranty as
to "material," "materiality," or Parent Material Adverse Effect"); (b) any
material breach by Parent or the Merger Sub or material failure by Parent or the
Merger Sub to comply with any of their covenants or obligations under this
Agreement provided, however, that no personal indemnity liability shall attach
under this Article as to the indemnifying individuals for any untrue material
statement or omission of the Parent referenced by Paragraph 5.2(m)(ii) and (iii)
of this Agreement, unless the indemnifying individuals actually knew, or should
have known through reasonable inquiry, of such untrue material statements or
omissions (without giving effect to any qualification or limitation in the
covenant or obligation as to "material," "materiality," or "Parent Material
Adverse Effect"); (c) the defense of claims of and payment pursuant to URBCA
Section 16-10(a)-1301 et seq. to Prime Dissenters; (d) any material claims by
parties other than the Company to the extent caused by acts or omissions of the
Parent or the Merger Sub on or prior to the Closing Date, including for Costs
which arise or arose out of the Parent's operation or disposition of its
business, (e) any Cost related to filings, delinquencies, or failures to file
reports under Section 16 of the Exchange Act by affiliates of the Parent and the
reporting of such failures or delinquencies by Parent and (f) any Costs arising
from third party claims asserted against Parent for any transfers of property or
interests or payments of money by Parent or its affiliates for which Prime would
be liable. "Costs"
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means all liabilities, demands, claims, actions or causes of action, regulatory,
legislative or judicial proceedings or investigations, assessments, levies,
losses, fines, penalties, damages, costs and expenses, including reasonable
attorneys', accountants', investigators', and experts' fees and expenses,
sustained or incurred in connection with the defense or investigation of any
claim, but shall not include any indirect or consequential damages of any
nature.
9.2. Limitations on Indemnification Obligations of Prime Indemnifying
Parties. Prime Indemnifying Parties' obligations pursuant to the provisions of
Section 9.1 hereof are subject to the following limitations:
(a) The Surviving Corporation shall not be entitled to recover under
Section 9.1 unless a claim has been asserted by written notice, setting forth
the basis for such claim (a "Notice of Loss"), delivered to the Prime
Indemnifying Parties on or prior to the first anniversary of the earlier of the
date on which the 2006 Parent audited financial statements and opinion of the
auditors of such audited statements are delivered to Parent or March 31, 2007;
provided, however, that the foregoing time limitation shall not apply to
recovery for Costs described in Section 9.1(f) to the extent such Costs do not
exceed $50,000 and are asserted on or before May 1, 2009, or any inaccuracy in a
representation or breach of a warranty contained in Section 5.1(i) (the
"Excluded Rep"); provided, further, that in the case of any inaccuracy in a
representation or breach of a warranty contained in Section 5.1(i), the time
limitation for the assertion of such claims shall be the expiration of the
applicable statute of limitations;
(b) The Surviving Corporation shall not be entitled to recover under
Section 9.1 to the extent that the aggregate claims actually paid by Prime
Indemnifying Parties to the Surviving Corporation thereunder would thereby
exceed $5,000,000); provided, however, that the foregoing limitation shall not
apply to recovery for any inaccuracy in a representation or breach of a warranty
contained in any Excluded Rep;
(c) Prime Indemnifying Parties hereby waive and release any and all
rights they may have under this Agreement or otherwise to assert claims of
contribution against the Company or the Parent or the Surviving Corporation,
except for material omissions or misrepresentations by the Company or its
principals which directly cause or contribute to third party claims against the
Surviving Corporation under the terms of this Article 9 for which the Prime
Indemnifying Parties may be liable.
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ARTICLE X
General
10.1. Non-Survival of Representations, Warranties and Agreements. None
of the representations, warranties, covenants or agreements in this Agreement
and in any certificate delivered pursuant to this Agreement (other than those
contained in Article IV, Article V, Article, VI, Article IX and this Article X)
shall survive the consummation of the Merger. This Article X, the agreements of
the Company, Parent and Merger Sub contained in Section 6.3 (Expenses), Section
8.3 (Effect of Termination and Abandonment), Section 6.10 (Non-Disclosure) and
the Confidentiality Agreement shall survive the termination of this Agreement.
No other representations, warranties, covenants or agreements in this Agreement
shall survive the termination of this Agreement.
10.2. Modification or Amendment. Subject to the provisions of
applicable Laws, at any time prior to the Effective Time, this Agreement may be
amended, modified or supplemented in writing by the parties hereto, by action of
the board of directors of the respective parties.
10.3. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
10.4. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
10.5. GOVERNING LAW AND VENUE; SPECIFIC PERFORMANCE. (a) THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK, EXCEPT THAT THE PROVISIONS OF THE DGCL SHALL GOVERN THE
MERGER. Notwithstanding the forgoing, the law of the principal place of business
of each of the Constituent Corporations shall govern any internal or corporate
affairs of the respective Constituent Corporation. The parties hereby
irrevocably submit to the personal jurisdiction of the United States District
Court for the Southern District of New York ("S.D.N.Y.") and of any court in
which appeals from judgments by that court may be heard and, if the S.D.N.Y.
lacks subject matter jurisdiction over the action, then the Supreme Court of the
State of New York, New York County, and of any court in which appeals from
judgments of that court may be heard
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(the "Designated Courts") solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents referred to
in this Agreement, and in respect of the transactions contemplated by this
Agreement (including the pursuit of injunctive (whether temporary, preliminary
or permanent) monetary or other, relief), and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding for the interpretation or
enforcement of this Agreement or of any such document, that that party is not
subject to personal jurisdiction in that court or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this Agreement or any such document
may not be enforced in or by such courts, and the parties hereto irrevocably
agree that all claims with respect to such action or proceeding shall be heard
and determined in one of the Designated Courts. The parties hereby consent to
and grant any such court jurisdiction over the person of such parties and, to
the extent permitted by law, over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 10.6 or in such other manner as may
be permitted by law shall be valid and sufficient service thereof.
(b) The parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in the Designated Courts, this being in addition to any other
remedy to which such party is entitled at law or in equity.
10.6. Notices. Any notice, request, instruction or other document to
be given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
if to Parent or Merger Sub:
Prime Resource, Inc.
0000 Xxxxxxxxx Xxxx
Xxxx Xxxx Xxxx XX 00000
Attention: Xxxxxx X. Xxxxxxx
Ph. 000-000-0000
fax: 000-000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxx LLP
000 X. Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
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Fax number: (000) 000-0000
if to the Company or the Surviving
Corporation:
Broadband Maritime Inc.
00 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx Xxxxxx, President
Telephone: 000-000-0000
Fax number: 000-000-0000
with a copy to:
McLane, Graf, Xxxxxxxxx & Middleton,
Professional Association
000 Xxx Xxxxxx, X.X. Xxx 000
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx
Telephone: 000-000-0000
Fax number: 000-000-0000
if to the Prime Indemnifying Parties:
Xxxxx X. Xxxx
00 Xxxx Xxxx
Xxxxxx, Xxxx 00000
Ph. 000-000-0000
fax: 000-000-0000
Xxxxx X. Xxxx
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Ph. 000-000-0000
fax: 000-000-0000
Xxxxxx X. Xxxxxxx
0000 Xxxx Xxxxx
Xxxxxx xx Xxxxx, Xxxx 00000
Ph. 000-000-0000
fax: 000-000-0000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above. Any notice, request, instruction
or other document given as provided above shall be deemed given to the receiving
party upon
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actual receipt, if delivered personally; three business days after deposit in
the mail, if sent by registered or certified mail; upon confirmation of
successful transmission if sent by facsimile (provided that if given by
facsimile such notice, request, instruction or other document shall be followed
up within one business day by dispatch pursuant to one of the other methods
described herein); or on the next business day after deposit with an overnight
courier, if sent by an overnight courier. For purposes of this Agreement, the
term "business day" shall mean any day ending at 11:59 p.m. (Eastern Time) other
than a Saturday or Sunday or a day on which banks are required or authorized to
close in the City of New York, New York.
10.7. Entire Agreement. This Agreement (including any exhibits
hereto), the Company Disclosure Letter, the Parent Disclosure Letter and the
Confidentiality Agreement constitute the entire agreement, and supersede all
other prior agreements, understandings, representations and warranties both
written and oral, among the parties, with respect to the subject matter hereof.
EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS AGREEMENT, NEITHER PARENT AND MERGER SUB NOR THE COMPANY MAKES
ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR
COMPLETENESS OF ANY OTHER INFORMATION MADE BY, OR MADE AVAILABLE BY, ITSELF OR
ANY OF ITS REPRESENTATIVES WITH RESPECT TO, OR IN CONNECTION WITH, THE
NEGOTIATION, EXECUTION OR DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR
THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH
RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
10.8. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
10.9. Interpretation; Construction. (a) The headings herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or
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Exhibit to this Agreement unless otherwise indicated. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
(b) The parties have participated jointly in negotiating and drafting
this Agreement. In the event that an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.
(c) Each party hereto has or may have set forth information in its
respective Disclosure Letter in a section thereof that corresponds to the
section of this Agreement to which it relates. The fact that any item of
information is disclosed in a Disclosure Letter to this Agreement shall not be
construed to mean that such information is required to be disclosed by this
Agreement.
(d) The following terms, when used in this Agreement, shall have the
following respective meanings: "USD" or "$" shall mean United States dollars.
(e) The terms defined in the singular shall have a correlative meaning
when used in the plural and vice versa.
(f) References herein to any gender include each other gender.
10.10. Assignment. This Agreement shall not be assignable by operation
of law or otherwise. Any purported assignment in violation of this Agreement is
void.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
BROADBAND MARITIME, INC. PRIME INDEMNIFYING PARTIES:
By: /s/ Xxxx Xxxxx Xxxxxx /s/ Xxxxx X. Xxxx
--------------------------------- ----------------------------------------
Xxxx Xxxxx Xxxxxx, President Xxxxx X. Xxxx, Individually
PRIME RESOURCE, INC.
By: /s/ Xxxxx X. Xxxx /s/ Xxxxx X. Xxxx
--------------------------------- ----------------------------------------
Xxxxx X. Xxxx, President Xxxxx X. Xxxx, Individually
PRIME ACQUISITION, INC.
By: /s/ Xxxxx X. Xxxx /s/ Xxxxxx X. Xxxxxxx
--------------------------------- ----------------------------------------
Xxxxx X. Xxxx, President Xxxxxx X. Xxxxxxx, Individually
[Signature page to the Agreement and Plan of Merger.]
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A copy of the following Exhibits and Schedules will be submitted to the
Commission supplementally upon request:
LIST OF EXHIBITS AND SCHEDULES
Exhibit/Schedule Description
---------------- -----------
Exhibit 2.3 Amendments to the Articles of Incorporation of Parent
Exhibit 7.2(d) Form of Lock-up Agreement
Schedule 4.1(a) Post-Merger Capitalization of Parent
Schedule 5.2(b)(i) Pre-Merger Capitalization of Parent
Schedule 9.1 Prime Indemnifying Parties
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