AGREEMENT AND PLAN OF REORGANIZATION
by and among
INTRAOP MEDICAL, INC.,
INTRAOP MEDICAL CORPORATION,
February 24, 2004
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LIST OF EXHIBITS
Exhibit A Articles of Merger
Exhibit B Amended and Restated Articles of Incorporation
Exhibit C Amended and Restated Bylaws
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of February 24, 2004 by and among Intraop Medical,
Inc., a Delaware corporation ("Target") and Intraop Medical
Corporation, a Nevada corporation ("Acquiror").
RECITALS
A. The Boards of Directors of Target and Acquiror believe it is in the
best interests of their respective companies and the shareholders of
their respective companies that Acquiror acquire Target through the
statutory merger of Target with and into Acquiror (the "Merger") and,
in furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, the outstanding shares
of Target common stock, $0.001 par value ("Target Common Stock"), shall
be converted into the right to receive shares of Acquiror common stock,
$0.001 par value ("Acquiror Common Stock") (assuming the conversion of
all of the outstanding shares of Target preferred stock, $0.001 par
value ("Target Preferred Stock") into shares of Target Common Stock
(collectively, the Target Preferred Stock and Target Common Stock are
referred to herein as "Target Capital Stock")), upon the terms and
subject to the conditions set forth herein.
C. Target and Acquiror desire to make certain representations and
warranties and other agreements in connection with the Merger.
D. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"), and to cause the Merger
to qualify as a reorganization under the provisions of Section 368(a)
of the Code.
NOW, THEREFORE, in consideration of the covenants and representations
set forth herein, and for other good and valuable consideration, the
parties agree as follows:
1. The Merger.
1.1 The Merger. At the Effective Time (as defined in Section 1.2
herein) and subject to and upon the terms and conditions of this
Agreement, the Articles of Merger attached hereto as Exhibit A (the
"Articles of Merger") and under the applicable provisions of the Nevada
Revised Statutes ("Nevada Law") and Delaware General Corporation Law
("Delaware Law"), Target shall be merged with and into Acquiror, the
separate corporate existence of Target shall cease, and Acquiror shall
continue as the surviving corporation. Acquiror as the surviving
corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
1.2 Closing; Effective Time. The closing of the transactions
contemplated hereby (the "Closing") shall take place as soon as
practicable, but no later than three (3) business days after the
satisfaction or waiver of each of the conditions set forth in Section7
hereof, or at such other time as the parties hereto agree (the "Closing
Date"). The Closing shall take place at the offices of Gray Xxxx Xxxx
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& Freidenrich LLP, or at such other location as the parties hereto
agree. In connection with the Closing, the parties hereto shall cause
the Merger to be consummated by filing the Articles of Merger with the
Secretaries of State of the States of Nevada and Delaware in accordance
with the relevant provisions of Nevada Law and Delaware Law (the time
of the later of such filings being the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Articles of Merger,
and the applicable provisions of Nevada Law and Delaware Law. Without
limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers, and
franchises of Target shall vest in the Surviving Corporation, and all
debts, liabilities, and duties of Target shall become the debts,
liabilities, and duties of the Surviving Corporation.
Articles of Incorporation; Bylaws.
1.4 At the Effective Time,
(a) The Articles of Incorporation of the Surviving Corporation shall
be amended and restated as set forth in Exhibit B hereto.
(b) The Bylaws of the Surviving Corporation shall be amended and
restated as set forth in Exhibit C hereto.
1.5 Directors and Officers. At the Effective Time, the directors and
officers of Target immediately prior to the Effective Time shall be the
directors and officers of the Surviving Corporation, until their
respective successors are duly elected or appointed and qualified.
1.6 Effect on Capital Stock.
(a) Conversion of Target Common Stock. In connection with the Merger,
at the Effective Time, each one (1) share of Target Common Stock issued
and outstanding immediately prior to the Effective Time shall be
cancelled and extinguished and automatically converted into the right
to receive one (1) share of Acquiror Common Stock, upon the surrender
of the applicable certificate in the manner provided in Section 1.7
hereof, or, in the case of a lost, stolen, or destroyed certificate,
upon delivery of an affidavit (and bond, if required) in the manner
provided in Section 1.9 hereof (the Acquiror Common Stock to be issued
in the Merger shall be referred to herein as the "Merger
Consideration"). In no event shall the Merger Consideration exceed 22
million shares of Acquiror Common Stock.
(b) Conversion of Target Preferred Stock. In connection with the
Merger and subject to the vote requirement under the Target's
Certificate, at the Effective Time, each share of Target Preferred
Stock issued and outstanding immediately prior to the Effective Time
shall be converted into shares of Target Common Stock at the then
effective conversion price with respect to each share of Target
Preferred Stock, and each share of Target Common Stock thereby
resulting shall be cancelled and extinguished and automatically
converted into the right to receive one (1) share of Acquiror Common
Stock in accordance with Section 1.6(a) hereof.
(c) Cancellation of Shares of Currently Outstanding Acquiror Common
Stock. At the Effective Time, Acquiror shall, in accordance with that
certain Agreement for the Purchase of Common Stock Dated October 3,
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2003, by and between Xxxxx Xxxxx and Xxxxxx, Xxxxxxxx & Xxxxxxxx, Inc.
("PCS"), and certain other parties (the "Principal Shareholder
Agreement"), cause up to 19,982,265 shares of Acquiror Common Stock
held by Xxxxx Xxxxx to be cancelled and extinguished. Target shall
have the right to dictate to Acquiror the amount of shares of Acquiror
Common Stock held by Xxxxx Xxxxx to be cancelled.
(d) Target Stock Options. At the Effective Time, all options to
purchase Target Common Stock then outstanding under the Target Stock
Option Plan (as defined in Section 2.4 herein), shall be assumed by
Acquiror in accordance with Section 1.12.
(e) Fractional Shares. No fraction of a share of Acquiror Common
Stock will be issued, but in lieu thereof each holder of shares of
Target Common Stock who would otherwise be entitled to a fraction of a
share of Acquiror Common Stock (after aggregating all fractional shares
of Acquiror Common Stock to be received by such holder) shall receive
from Acquiror an amount of cash (rounded to the nearest whole cent)
equal to the product of (i) such fraction, multiplied by (ii) the fair
market value of a share of stock as shall be determined by the
Surviving Corporation's board of directors in good faith. The
fractional share interests of each Target shareholder shall be
aggregated, so that no Target shareholder shall receive cash in respect
of fractional share interests in an amount greater than the value of
one full share of Acquiror Common Stock.
(f) Appraisal Rights. Notwithstanding any provision of this Agreement
to the contrary, any shares of Target Capital Stock or Acquiror Common
Stock held by a holder who has perfected such holder's right to demand
payment of the fair value of such shares in accordance with Delaware
Law or Nevada Law and who, as of the Effective Time, has not
effectively withdrawn or lost such right to demand payment of the fair
value ("Dissenting Shares"), if any, shall not be converted into the
Merger Consideration but shall instead be converted into the right to
receive such consideration as may be determined to be due with respect
to such Dissenting Shares pursuant to Delaware Law or Nevada Law. Each
holder of Dissenting Shares ("Dissenting Shareholder") who, pursuant to
the provisions of Delaware Law or Nevada Law, as applicable, becomes
entitled to payment of the fair value for shares of Target Capital
Stock or Acquiror Common Stock shall receive payment therefor (but only
after the value therefor shall have been agreed upon or finally
determined pursuant to such provisions). If, after the Effective Time,
any Dissenting Shares shall lose their status as Dissenting Shares, the
Surviving Corporation shall issue and deliver, upon surrender by such
shareholder of a certificate or certificates representing shares of
Target Capital Stock, the portion of the Merger Consideration to which
the Target shareholder would otherwise be entitled under this Section
1.6.
(g) Convertible Notes. At the Effective Time, except to the extent
that notes convertibles into shares of Target Capital Stock (the
"Target Convertible Notes") have been otherwise extinguished or
satisfied or amended pursuant to separate agreement of the parties
thereto, all of the Target Convertible Notes outstanding and
unconverted as of the Effective Time shall be assumed by Acquiror.
(h) Warrants. At the Effective Time, except to the extent that
warrants to purchase shares of Target Capital Stock (the "Target
Warrants") have previously terminated or expired in accordance with
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their terms or amended pursuant to separate agreement of the parties
thereto, all of the unexercised Target Warrants outstanding and
unexercised as of the Effective Time shall be assumed by Acquiror.
(i) Registration Rights. The registration rights of the Target
equity interest holders shall be assumed by the Acquiror in accordance
with their terms and effected by the Surviving Corporation.
1.7 Surrender of Certificates.
(a) Exchange Agent. Interwest Transfer or such other institution
selected by Target with the reasonable consent of Acquiror shall act as
exchange agent (the "Exchange Agent") in the Merger.
(b) Acquiror to Provide Common Stock. Promptly after the Effective
Time, Acquiror in the case of subsection (i) below and Target in the
case of subsection (ii) below, shall supply or cause to be supplied to
the Exchange Agent for exchange in accordance with this Section 1
through such reasonable procedures as Acquiror and Target may adopt (i)
certificates evidencing the shares of Acquiror Common Stock issuable
pursuant to Section 1.6(a) in exchange for shares of Target Capital
Stock outstanding immediately prior to the Effective Time, and (ii)
cash in an amount sufficient to permit payment of cash in lieu of
fractional shares pursuant to Section 1.6(e) (collectively, (i) and
(ii) shall be referred to as the "Exchange Fund").
(c)Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause to be delivered to each holder of
record of a certificate or certificates (the "Certificates") which
immediately prior to the Effective Time represented outstanding shares
of Target Common Stock (including converted Target Preferred Stock),
whose shares were converted into the right to receive shares of
Acquiror Common Stock (and cash in lieu of fractional shares) pursuant
to Section 1.6, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon receipt of the Certificates by the
Exchange Agent, and shall be in such form and have such other
provisions as Target may reasonably specify), (ii) instructions for use
in effecting the surrender of the Certificates in exchange for
certificates representing shares of Acquiror Common Stock (and cash in
lieu of fractional shares) and (iii) such other customary documents as
may be required pursuant to such instructions. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other
agent or agents as may be appointed by Target, together with such
letter of transmittal and other documents, duly completed and validly
executed in accordance with the instructions thereto, the holder of
such Certificate shall be entitled to receive in exchange therefor (A)
a certificate representing the number of whole shares of Acquiror
Common Stock, (B) any dividends or other distributions to which such
holder is entitled pursuant to Section 1.7(d), and (C) cash (without
interest) in respect of fractional shares as provided in Section 1.6(e)
and the Certificate so surrendered shall forthwith be canceled. Until
so surrendered, each outstanding Certificate that, prior to the
Effective Time, represented shares of Target Capital Stock will be
deemed from and after the Effective Time, for all corporate purposes,
other than the payment of dividends, to evidence the ownership of the
number of full shares of Acquiror Common Stock into which such shares
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of Target Capital Stock shall have been so converted and the right to
receive an amount in cash in lieu of the issuance of any fractional
shares in accordance with Section 1.6.
(d) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions with respect to Acquiror Common Stock with a record
date on or after the Effective Time will be paid to the holder of any
unsurrendered Certificate with respect to the shares of Acquiror Common
Stock represented thereby until the holder of record of such
Certificate shall surrender such Certificate. Subject to applicable
law, following surrender of any such Certificate, there shall be paid
to the record holder of the certificates representing whole shares of
Acquiror Common Stock issued in exchange therefor, without interest at
the time of such surrender, the amount of any such dividends or other
distributions with a record date on or after the Effective Time
theretofore payable (but for the provisions of this Section 1.7(d))
with respect to such shares of Acquiror Common Stock.
(e) Transfers of Ownership. At the Effective Time, the stock transfer
books of the Target shall be closed and there shall be no further
registration of transfers of Target Capital Stock thereafter on the
records of the Target. If any certificate for shares of Acquiror
Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be
a condition of the issuance thereof that the Certificate so surrendered
will be properly endorsed and otherwise in proper form for transfer and
that the person requesting such exchange will have paid to Acquiror or
any agent designated by it any transfer or other taxes required by
reason of the issuance of a certificate for shares of Acquiror Common
Stock in any name other than that of the registered holder of the
Certificate surrendered, or established to the satisfaction of Acquiror
or any agent designated by it that such tax has been paid or is not
payable.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the shareholders of Target one year
after the Effective Time shall be delivered to Acquiror, upon demand,
and any shareholders of Target who have not previously complied with
this Section 1.7 shall thereafter look only to Acquiror for payment of
their claim for the Merger Consideration and any dividends or
distributions with respect to Acquiror Common Stock.
(g) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, none of the Exchange Agent, the Surviving Corporation, or
any party hereto shall be liable to any person for any amount properly
paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(h) Dissenting Shares. The provisions of this Section 1.7 shall also
apply to Dissenting Shares that lose their status as such, except that
the obligations of Acquiror under this Section 1.7 shall commence on
the date of loss of such status and the holder of such shares shall be
entitled to receive in exchange for such shares the Merger
Consideration to which such holder is entitled pursuant to Section 1.6
hereof.
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(i) Certificate Legends. The shares of Acquiror Common Stock to be
issued pursuant to this Section shall not have been registered and
shall be characterized as "restricted securities" under the federal
securities laws, and under such laws such shares may be resold without
registration under the Securities Act of 1933, as amended (the
"Securities Act"), only in certain limited circumstances. Each
certificate evidencing shares of Acquiror Common Stock to be issued
pursuant to this Section shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION WITHOUT AN EXEMPTION UNDER THE SECURITIES
ACT OR AN OPINION OF LEGAL COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED."
and any legends required by state securities laws.
1.8 No Further Ownership Rights in Target Capital Stock. The Merger
Consideration delivered upon the surrender for exchange of shares of
Target Capital Stock in accordance with the terms hereof (including any
dividends, distributions, or cash paid in lieu of fractional shares)
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Target Capital Stock. If, after the
Effective Time, Certificates are presented to the Surviving Corporation
for any reason, they shall be canceled and exchanged as provided in
this Section 1.
1.9 Lost, Stolen, or Destroyed Certificates. If any Certificates
shall have been lost, stolen, or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen, or destroyed Certificates,
upon the making of an affidavit of that fact by the holder thereof,
such Merger Consideration (and dividends, distributions, and cash in
lieu of fractional shares) as may be required pursuant to Section 1.6;
provided, however, that Target may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such
lost, stolen, or destroyed Certificates to deliver a bond in such sum
as it may reasonably direct as indemnity against any claim that may be
made against Target, the Surviving Corporation, or the Exchange Agent
with respect to the Certificates alleged to have been lost, stolen, or
destroyed.
1.10 Tax Consequences. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Section
368(a) of the Code.
1.11 Taking of Necessary Action; Further Action. Each of Acquiror and
Target will take all such reasonable and lawful action as may be
necessary or desirable in order to effectuate the Merger in accordance
with this Agreement as promptly as possible. If, at any time after the
Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title, and possession to all assets,
property, rights, privileges, powers, and franchises of Target, the
officers and directors of Target and Acquiror are fully authorized in
the name of their respective corporations or otherwise to take, and
will take, all such lawful and necessary action, so long as such action
is not inconsistent with this Agreement.
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1.12 Target Options.
At the Effective Time, each option outstanding under the Target Stock
Option Plan ("Target Options"), whether vested or unvested, will be
assumed by Acquiror. A true and complete list as of the date hereof of
all holders of outstanding Target Options, including the number of
shares of Target Common Stock subject to each such option, the exercise
or vesting schedule, the exercise price per share, and the term of each
such option is set forth in the Target Disclosure Schedule (as
hereafter defined). On the Closing Date, Target shall deliver to
Acquiror an update of such list current as of such date. Each such
option so assumed by Acquiror under this Agreement shall continue to
have, and be subject to, the same terms and conditions set forth in the
Target Stock Option Plan and any other document governing such option
immediately prior to the Effective Time, and any restriction on the
exercisability of such Target Option shall continue in full force and
effect, and the term, exercisability, vesting schedule, and other
provisions of such Target Option shall remain unchanged. Consistent
with the terms of the Target Stock Option Plan and the documents
governing the outstanding options under such Plan, the Merger will not
terminate any of the outstanding options under the Target Stock Option
Plan or accelerate the exercisability or vesting of such options or the
shares of Acquiror Common Stock which will be subject to those options
upon the Acquiror's assumption of the options in the Merger. It is the
intention of the parties that the options so assumed by Acquiror
following the Effective Time will remain incentive stock options as
defined in Section 422 of the Code to the extent such options qualified
as incentive stock options prior to the Effective Time. Within 30
business days after the Effective Time, Acquiror will issue to each
person who, immediately prior to the Effective Time was a holder of an
outstanding option under the Target Stock Option Plan, a document in
form and substance satisfactory to Target evidencing the foregoing
assumption of such option by Acquiror.
2. Representations and Warranties of Target. Target represents and
warrants to Acquiror that the statements contained in this Section 2
are true and correct, except as disclosed in a document of even date
herewith and delivered by Target to Acquiror referring to the
representations and warranties in this Agreement (the "Target
Disclosure Schedule"). The Target Disclosure Schedule will be arranged
in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Section 2, and the disclosure in any such numbered
and lettered section of the Target Disclosure Schedule shall qualify
only the corresponding subsection in this Section 2 (except to the
extent disclosure in any numbered and lettered section of the Target
Disclosure Schedule is specifically cross-referenced in another
numbered and lettered section of the Target Disclosure Schedule).
2.1 Organization, Standing, and Power. Target is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Target has the corporate power to own
its properties and to carry on its business as now being conducted and
is duly qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified and in good
standing would have a Material Adverse Effect (as defined in Section
10.2 hereof) on Target. Target has delivered a true and correct copy
of the Certificate of Incorporation and Bylaws of Target, each as
amended to date, to Acquiror. Target is not in violation of any of the
provisions of its Certificate of Incorporation or Bylaws. Target does
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not directly or indirectly own any equity or similar interest in, or
any interest convertible or exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, joint venture or
other business association or entity.
2.2 Authority. Target has all requisite corporate power and authority
to enter into this Agreement and the documents and instruments
contemplated hereby to which it is a party (the "Transaction
Documents"), and to consummate the transactions contemplated thereby.
he execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of Target
subject only to the approval of the Merger by Target's shareholders as
contemplated by Section 7.1. The affirmative vote of the holders of a
majority of the shares of Target's Capital Stock outstanding on the
record date or the written consent of Shareholders relating to this
Agreement is the only vote of the holders of any of Target's Capital
Stock necessary under Delaware Law to approve the Transaction Documents
and the transactions contemplated thereby. The Board of Directors of
Target has unanimously (i) approved this Agreement and the Merger, (ii)
determined that in its opinion the Merger is in the best interests of
the shareholders of Target and is on terms that are fair to such
shareholders and (iii) recommended that the shareholders of Target
approve this Agreement and the Merger. This Agreement has been duly
executed and delivered by Target and constitutes the valid and binding
obligation of Target enforceable against Target in accordance with its
terms, except that such enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
creditors' rights generally, and is subject to general principles of
equity. The execution and delivery of this Agreement by Target does
not, and execution of the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby will
not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a
right of termination, cancellation or acceleration of any material
obligation or loss of any material benefit under (i) any provision of
the Certificate of Incorporation or Bylaws of Target or any of its
subsidiaries, as amended, or (ii) any mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Target or any of its subsidiaries or
any of their properties or assets. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental
authority or instrumentality ("Governmental Entity") is required by or
with respect to Target or any of its subsidiaries in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) the filing of the
Articles of Merger as provided in Section 1.2; (ii) such consents,
approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws and
the securities laws of any foreign country; (iii) such other consents,
authorizations, filings, approvals and registrations which, if not
obtained or made, would not have a Material Adverse Effect on Target
and would not prevent, alter or delay any of the transactions
contemplated by this Agreement.
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2.3 Governmental Authorization. Target and each of its subsidiaries
have obtained each federal, state, county, local or foreign
governmental consent, license, permit, grant, or other authorization of
a Governmental Entity (i) pursuant to which Target or any of its
subsidiaries currently operates or holds any interest in any of its
properties or (ii) that is required for the operation of Target's or
any of its subsidiaries' business or the holding of any such interest
and all of such authorizations are in full force and effect.
2.4 Capital Structure. As of the date hereof, the authorized capital
stock of Target consists of 22,000,000 shares of Target Common Stock,
par value $0.001 per share, of which there are issued and outstanding
6,695,925 shares, and 5,600,000 shares of Target Preferred Stock, par
value $0.001 per share, of which there are issued and outstanding
507,000 shares of Series 1 Preferred Stock, 1,584,750 shares of Series
2 Preferred Stock, 997,017 shares of Series 3 Preferred Stock, and
1,590,000 shares of Series 4 Preferred Stock, all of which series of
Preferred Stock are convertible into shares of Common Stock pursuant to
the terms of the Target's Certificate. Also outstanding on the date
hereof are the Convertible Notes, which are convertible in accordance
with the terms of the Convertible Notes into 1,481,250 shares of Common
Stock, and Warrants exercisable for 928,591 shares of Common Stock.
All outstanding shares of Target Common Stock and Target Preferred
Stock are duly authorized, validly issued, fully paid, and non-
assessable. As of the date hereof, there are 1,019,500 shares of
Common Stock reserved for issuance under option agreements (the "Target
Stock Option Plan"). Except for the rights created pursuant to this
Agreement and the rights disclosed in the preceding sentences, there
are no other options, warrants, calls, rights, commitments or
agreements of any character to which Target is a party or by which it
is bound obligating Target to issue, deliver, sell, repurchase or
redeem or cause to be issued, delivered, sold, repurchased or redeemed,
any shares of Target Capital Stock or obligating Target to grant,
extend, accelerate the vesting of, change the price of, or otherwise
amend or enter into any such option, warrant, call, right, commitment
or agreement. All shares of Common Stock issuable upon conversion of
the Preferred Stock or upon exercise of the options or warrants
described in this Section 2.4, will be, when issued pursuant to the
respective terms of such Preferred Stock or options or warrants, duly
authorized, validly issued, fully paid and nonassessable. There are no
other contracts, commitments or agreements relating to voting,
purchase, or sale of Target's Capital Stock (i) between or among Target
and any of its shareholders and (ii) to Target's knowledge, between or
among any of Target's shareholders. All shares of outstanding Target
Capital Stock and rights to acquire Target Capital Stock were issued in
compliance with all applicable federal and state securities laws.
2.5 Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration, or investigation pending before any
Governmental Entity, foreign or domestic, or, to the knowledge of
Target or any of its subsidiaries, threatened against Target or any of
its subsidiaries or any of their respective properties or any of their
respective officers or directors (in their capacities as such). There
is no judgment, decree, or order against Target or any of its
subsidiaries, or, to the knowledge of Target and its subsidiaries, any
of their respective directors or officers (in their capacities as
such). All litigation to which Target is a party (or, to the knowledge
of Target, threatened to become a party) is disclosed in the Target
Disclosure Schedule.
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2.6 Restrictions on Business Activities. There is no agreement,
judgment, injunction, order or decree binding upon Target or any of its
subsidiaries which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any current business
practice of Target or any of its subsidiaries, any acquisition of
property by Target or any of its subsidiaries or the conduct of
business by Target or any of its subsidiaries as currently conducted by
Target or any of its subsidiaries.
2.7 Complete Copies of Materials. Target has delivered or made
available true and complete copies of each document which has been
requested by Acquiror or its counsel in connection with their legal and
accounting review of Target and its subsidiaries.
2.8 Compliance With Laws. Each of Target and its subsidiaries has
complied with, is not in violation of, and has not received any notices
of violation with respect to, any federal state, local or foreign
statute, law or regulation with respect to the conduct of its business,
or the ownership or operation of its business.
2.9 Disclaimer. Except as expressly set forth in this Agreement,
Target expressly disclaims any representations or warranties of any
kind or nature and except as otherwise set forth herein specifically
disclaims any representation or warranty of merchantability,
suitability or fitness for any particular purpose with respect to its
assets or properties, or any part thereof, or as to the condition or
workmanship thereof, or absence of any defects therein, whether latent
or patent.
3. Representations and Warranties of the Acquiror. The Acquiror
represents and warrants to Target that the statements contained in this
Section 3 are true and correct, except as disclosed in a document of
even date herewith and delivered by Acquiror to Target on the date
hereof referring to the representations and warranties in this
Agreement (the "Acquiror Disclosure Schedule"). The Acquiror
Disclosure Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this Section 3, and the
disclosure in any such numbered and lettered section of the Acquiror
Disclosure Schedule shall qualify only the corresponding section in
this Section 3 (except to the extent disclosure in any numbered and
lettered section of the Acquiror Disclosure Schedule is specifically
cross-referenced in another numbered and lettered section of the
Acquiror Disclosure Schedule).
3.1 Organization, Standing and Power. Acquiror is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Acquiror has the corporate power to own
its properties and to carry on its business as now being conducted and
as proposed to be conducted and is duly qualified to do business and is
in good standing in each jurisdiction in which the failure to be so
qualified and in good standing would have a Material Adverse Effect on
Acquiror. Acquiror has delivered a true and correct copy of the
Articles of Incorporation and Bylaws or other charter documents, as
applicable, of Acquiror, as amended to date, to Target. Acquiror is
not in violation of any of the provisions of its Articles of
Incorporation or Bylaws or equivalent organizational documents.
Acquiror is the owner of all outstanding shares of capital stock of
13
each of its subsidiaries listed in the Acquiror Disclosure Schedule and
all such shares are duly authorized, validly issued, fully paid and
nonassessable.
3.2 Authority. Acquiror has all requisite corporate power and
authority to enter into this Agreement and the other Transaction
Documents, and to consummate the transactions contemplated thereby.
The execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of Acquiror
subject only to the approval of the Merger by Xxxxxxxx's shareholders
as contemplated by Section 7.2. The affirmative vote of the holders of
a majority of the shares of Acquiror's Capital Stock outstanding on the
record date or the written consent of Shareholders relating to this
Agreement is the only vote of the holders of any of Acquiror's Capital
Stock necessary under applicable law to approve the Transaction
Documents and the transactions contemplated thereby. The Board of
Directors of Acquiror has unanimously (i) approved this Agreement and
the Merger, (ii) determined that in its opinion the Merger is in the
best interests of the shareholders of Acquiror and is on terms that are
fair to such shareholders and (iii) recommended that the shareholders
of Acquiror approve this Agreement and the Merger. This Agreement has
been duly executed and delivered by Acquiror and constitutes the valid
and binding obligation of Acquiror enforceable against Acquiror in
accordance with its terms, except that such enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to creditors' rights generally, and is subject to
general principles of equity. The execution and delivery of this
Agreement by Acquiror does not, and execution of the other Transaction
Documents and the consummation of the transactions contemplated hereby
and thereby will not, conflict with, or result in any violation of, or
default under (with or without notice or lapse of time, or both), or
give rise to a right of termination, cancellation or acceleration of
any material obligation or loss of any material benefit under (i) any
provision of the Certificate of Incorporation or Bylaws of Acquiror or
any of its subsidiaries, as amended, or (ii) any mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Acquiror or any of its subsidiaries or
any of their properties or assets. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental
authority or instrumentality ("Governmental Entity") is required by or
with respect to Acquiror or any of its subsidiaries in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) the filing of the
Articles of Merger as provided in Section 1.2; (ii) such consents,
approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws and
the securities laws of any foreign country; (iii) such other consents,
authorizations, filings, approvals and registrations which, if not
obtained or made, would not have a Material Adverse Effect on Acquiror
and would not prevent, alter or delay any of the transactions
contemplated by this Agreement.
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3.3 SEC Documents.
(a) Acquiror has filed all forms, reports and documents required to be
filed by it with the SEC since September 1, 2000. All such required
forms, reports, and documents, and all exhibits and schedules thereto
and documents incorporated by reference therein, (including those filed
by Acquiror after the date hereof) are referred to herein as the
"Acquiror SEC Reports." As of their respective dates, the Acquiror
SEC Reports (i) complied in all material respects with the applicable
requirements of the Securities Act of 1933 and the Securities Exchange
Act of 1934, as the case may be, and the applicable rules and
regulations of the SEC promulgated thereunder; and (ii) did not at the
time each such Acquiror SEC Report was filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the
date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of the
subsidiaries of Acquiror is required to file any forms, reports, or
other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Acquiror SEC Reports
(including any Acquiror SEC Reports filed by Acquiror after the date
hereof until the Closing) (collectively, the "Acquiror Financial
Statements"), (i) complied as to form in all material respects with the
published rules and regulations of the SEC in effect, at the time of
filing, with respect thereto; (ii) was prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto or, in the case of unaudited
interim financial statements, as may be permitted by the SEC on Form
10-Q under the Exchange Act); and (iii) fairly presented the
consolidated financial position of Acquiror and its consolidated
subsidiaries as of the respective dates thereof and the consolidated
results of operations and cash flows of Acquiror and its consolidated
subsidiaries for the periods indicated therein, except that the
unaudited interim financial statements were or are subject to normal
and recurring year-end adjustments which were not, or are not expected
to be, material in amount.
(c) Neither Acquiror nor any of its subsidiaries has any Liabilities
of a nature required to be disclosed on a balance sheet or in the
related notes to consolidated financial statements prepared in
accordance with GAAP which are, individually or in the aggregate,
material to the business, results of operations or financial condition
of Acquiror and its subsidiaries taken as a whole, except Liabilities
(i) reflected in the Acquiror Balance Sheet; or (ii) incurred since the
date of the Acquiror Balance Sheet in the ordinary course of business
consistent with past practices.
(d) Acquiror has heretofore furnished to Target a true and complete
copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed following the date
hereof, to forms, reports and documents which previously had been filed
by Acquiror with the SEC pursuant to the Securities Act or the Exchange
Act.
3.4 Capitalization. The authorized capital stock of the Acquiror
consists of 50,000,000 shares of Common Stock, $0.001 par value per
share ("Acquiror Common Stock"), of which 22,284,000 shares were issued
15
and outstanding, and 5,000,000 shares of Preferred Stock, $0.001 par
value per share ("Acquiror Preferred Stock"), of which none were issued
and outstanding. All of the issued and outstanding shares of Acquiror
Common Stock have been duly authorized and validly issued and are fully
paid and nonassessable. There is (i) no subscription, warrant, option,
convertible security, or other right (contingent or otherwise) to
purchase or acquire any shares of capital stock of the Acquiror or any
of its subsidiaries authorized or outstanding, (ii) no obligation
(contingent or otherwise) to issue any subscription, warrant, option,
convertible security or other such right or to issue or distribute to
holders of any shares of its capital stock any evidences of
indebtedness or assets of the Acquiror or any of its subsidiaries, and
(iii) no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any shares of the capital stock of the Acquiror or
any of its subsidiaries or any interest therein or to pay any dividend
or make any other distribution in respect thereof. All of the issued
and outstanding shares of capital stock of the Acquiror have been
offered, issued and sold by the Acquiror in compliance with applicable
federal and state securities laws.
3.5 Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any
agency, court or tribunal, foreign or domestic, or, to the knowledge of
Acquiror, threatened against Acquiror or any of its subsidiaries or any
of their respective properties or any of their respective officers or
directors (in their capacities as such) that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect on Acquiror. There is no judgment, decree, or order against
Acquiror or any of its subsidiaries or, to the knowledge of Acquiror,
any of their respective directors or officers (in their capacities as
such) that could prevent, enjoin, or materially alter or delay any of
the transactions contemplated by this Agreement, or that could
reasonably be expected to have a Material Adverse Effect on Acquiror.
3.6 Absence of Certain Changes. Since December 31, 2003 (the
"Acquiror Balance Sheet Date"), Acquiror has conducted its business in
the ordinary course consistent with past practice and there has not
occurred: (i) any change, event or condition (whether or not covered
by insurance) that has resulted in, or might reasonably be expected to
result in, a Material Adverse Effect to Acquiror; (ii) any sale or
transfer of or material loss, or destruction of or damage to, any
material asset of Acquiror or any of its subsidiaries; or (iii) any
change in accounting methods or practices (including any change in
depreciation or amortization policies or rates) by Acquiror or any
revaluation by Acquiror of any of its or any of its subsidiaries'
assets.
3.7 Absence of Undisclosed Liabilities. Acquiror has no material
obligations or liabilities of any nature (matured or unmatured, fixed
or contingent) other than (i) those set forth or adequately provided
for in its financial statements included in the Acquiror Form 10K as at
December 31, 2003 (the "Acquiror Balance Sheet"), (ii) those incurred
in the ordinary course of business and not required to be set forth in
the Acquiror Balance Sheet under generally accepted accounting
principles, (iii) those incurred in the ordinary course of business
since the Acquiror Balance Sheet Date and consistent with past
practice; and (iv) those incurred in connection with the execution of
this Agreement.
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3.8 Compliance With Laws. Each of Acquiror and its subsidiaries has
complied with, is not in violation of and has not received any notices
of violation with respect to, any federal state, local or foreign
statute, law or regulation with respect to the conduct of its business,
or the ownership or operation of its business.
3.9 Taxes.
(a) Acquiror and each of its subsidiaries have timely filed all
federal, state, local and foreign returns, estimates, information
statements and reports ("Returns") relating to Taxes required to be
filed by Acquiror and each of its subsidiaries with any Tax authority,
except such Returns which are not material to Acquiror. Acquiror and
each of its subsidiaries have paid all Taxes shown to be due on such
Returns.
(b) Neither Acquiror nor any of its subsidiaries has been delinquent
in the payment of any material Tax nor is there any material Tax
deficiency outstanding, proposed or assessed against Acquiror or any of
its subsidiaries, nor has Acquiror or any of its subsidiaries executed
any unexpired waiver of any statute of limitations on or extending the
period for the assessment or collection of any Tax.
(c) No audit or other examination of any Return of Acquiror or any of
its subsidiaries by any Tax authority is presently in progress, nor has
Acquiror or any of its subsidiaries been notified of any request for
such an audit or other examination.
(d) Neither Acquiror nor any of its subsidiaries has any Liability for
any material unpaid Taxes which has not been accrued for or reserved on
Acquiror Balance Sheet in accordance with GAAP, which is material to
Acquiror.
(e) There is no contract, agreement, plan or arrangement to which
Acquiror or any of its subsidiaries is a party as of the date of this
Agreement (including, without limitation, this Agreement), covering any
employee or former employee of Acquiror or any of its subsidiaries
that, individually or collectively, would reasonably be expected to
give rise to the payment of any amount that would not be deductible
pursuant to Sections 280G, 404 or 162(m) of the Code. There is no
contract, agreement, plan or arrangement to which Acquiror or any of
its subsidiaries is a party or by which Acquiror or any of its
subsidiaries is bound to compensate any individual for excise taxes
paid pursuant to Section 4999 of the Code.
(f) Neither Acquiror nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as defined in Section 341(f)(4) of the Code) owned by Acquiror
or any of its subsidiaries.
3.10 Agreements, Contracts and Commitments.
Neither Acquiror nor any of its subsidiaries is a party to or is bound
by:
(a) any employment or consulting agreement, contract or commitment
with any executive officer or member of the Board of Directors of
Acquiror, other than those that are terminable by Acquiror or any of
its subsidiaries on no more than thirty (30) days' notice without
Liability or financial obligation to Acquiror;
17
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting of benefits
of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement;
(c) any agreement of indemnification or any guaranty other than any
agreement of indemnification entered into in connection with the sale
or license of products or services in the ordinary course of business;
(d) any agreement, contract or commitment containing any covenant
limiting in any respect the right of Acquiror or any of its
subsidiaries to engage in any line of business or to compete with any
person or granting any exclusive distribution rights;
(e) any agreement, contract or commitment currently in force relating
to the disposition or acquisition by Acquiror or any of its
subsidiaries after the date of this Agreement of a material amount of
assets not in the ordinary course of business or pursuant to which
Acquiror has any material ownership interest in any corporation,
partnership, joint venture or other business enterprise other than its
subsidiaries; or
(f) any mortgages, indentures, guarantees, loans or credit agreements,
security agreements or other agreements or instruments relating to the
borrowing of money or extension of credit.
(g) Neither Acquiror nor any of its subsidiaries, nor to the knowledge
of Acquiror any other party to a Acquiror Contract (as defined below),
is in breach, violation or default under, and neither Acquiror nor any
of its subsidiaries has received written notice that it has breached,
violated or defaulted under, any of the material terms or conditions of
any of the agreements, contracts or commitments to which Acquiror or
any of its subsidiaries is a party or by which Acquiror or any of its
subsidiaries is bound that are required to be disclosed in the Acquiror
Schedules pursuant to this Agreement (any such agreement, contract or
commitment, a "Acquiror Contract") in such a manner as would permit any
other party to cancel or terminate any such Acquiror Contract, or would
permit any other party to seek material damages or other material
remedies (for any or all of such breaches, violations or defaults, or
all of them in the aggregate).
3.11 Brokers' and Finders' Fee. No broker, finder, or investment
banker is entitled to brokerage or finders' fees or agents' commissions
or investment bankers' fees or any similar charges in connection with
the Merger, this Agreement or the other Transaction Documents or any
transaction contemplated hereby or thereby.
4. Conduct Prior To The Effective Time.
4.1 Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, Acquiror agrees (except to the
extent expressly contemplated by this Agreement or as consented to in
writing by Target, such consent not to be unreasonably withheld or
delayed) to carry on its and its subsidiaries' business in the usual
18
regular and ordinary course in substantially the same manner as
heretofore conducted; to pay and to cause its subsidiaries to pay debts
and Taxes when due subject to good faith disputes over such debts or
Taxes to pay or perform other obligations when due, subject to good
faith disputes. Acquiror agrees to promptly notify Target of (i) any
event or occurrence not in the ordinary course of its or its
subsidiaries' business, and of any event which could reasonably be
expected to have a Material Adverse Effect on Acquiror and (ii) any
change in its capitalization as set forth in Section 3.4. Without
limiting the foregoing, except as expressly contemplated by this
Agreement or as listed in Section 4.1 of the Acquiror Disclosure
Schedule, Acquiror shall not do, cause, or permit any of the following,
or allow, cause, or permit any of its subsidiaries to do, cause or
permit any of the following, without the prior written consent of
Target, which consent shall not be unreasonably withheld or delayed:
(a) Charter Documents. Cause or permit any amendments to its
Articles of Incorporation or Bylaws;
(b) Dividends; Changes in Capital Stock. Declare or pay any dividends
on or make any other distributions (whether in cash, stock or property)
in respect of any of its capital stock, or split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or repurchase or otherwise acquire,
directly or indirectly, any shares of its capital stock;
(c) Material Contracts. Enter into any contract or commitment, which
would constitute a Material Contract or violate, amend, or otherwise
modify or waive any of the terms of any of its Material Contracts;
(d) Issuance of Securities. Issue, deliver, sell or authorize, or
propose the issuance, delivery, or sale of, or purchase or propose the
purchase of, any shares of its capital stock or securities convertible
into, or subscriptions, rights, warrants or options to acquire, or
other agreements or commitments of any character obligating it to issue
any such shares or other convertible securities;
(e) Dispositions. Sell, lease, license or otherwise dispose of or
encumber any of its properties or assets, except in the ordinary course
of business, consistent with past practice;
(f) Indebtedness. Incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(g) Agreements. Enter into, terminate or amend any agreement which is
material to the business or prospects of Acquiror or which is or would
be a Material Contract;
(h) Payment of Obligations. Pay, discharge, or satisfy in an amount
in excess of $1,000 in the aggregate, any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise) arising other than in the ordinary course of business, other
than the payment, discharge or satisfaction of liabilities reflected or
reserved against in the Acquiror Financial Statements;
(i) Capital Expenditures. Make any capital expenditures, capital
additions or capital improvements in excess of $1,000;
19
(j) Termination or Waiver. Terminate or waive any right of
substantial value;
(k) Lawsuits. Commence a lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where it in good faith
determines that failure to commence suit would result in the material
impairment of a valuable aspect of its business, provided that it
consults with Acquiror prior to the filing of such a suit, or (iii) for
a breach of this Agreement;
(l) Acquisitions. Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets which are
material individually or in the aggregate, to its business, taken as a
whole;
(m) Taxes. Make or change any material election in respect of Taxes,
adopt or change any accounting method in respect of Taxes, file or fail
to file any material Tax Return or file any amendment to a material Tax
Return, enter into any closing agreement, settle or consent to any
extension or waiver of the limitation period applicable to any material
claim or assessment in respect of Taxes; or
(n) Other. Take or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(a) through (m) above, or any action
which would cause a material breach of its representations or
warranties contained in this Agreement or prevent it from materially
performing or cause it not to materially perform its covenants
hereunder.
4.2 No Solicitation.
(a) From and after the date of this Agreement until the Effective
Time, Acquiror shall not, directly or indirectly through any officer,
director, employee, representative or agent of Acquiror or otherwise
take any of the following actions with any other party other than
Target and its designees: (i) solicit, initiate, entertain or encourage
any inquiries or proposals that constitute, or could reasonably be
expected to lead to, a proposal or offer for a merger, consolidation,
share exchange, business combination, sale of a material portion of
Acquiror's assets, shares of capital stock or similar transactions
involving Acquiror other than the transactions contemplated by this
Agreement (any of the foregoing inquiries or proposals being referred
to in this Agreement as an "Acquisition Proposal"), (ii) engage or
participate in negotiations or discussions concerning, or provide any
non-public information to any person or entity relating to, any
Acquisition Proposal, or (iii) agree to, enter into, accept, approve,
recommend, authorize any statement with respect to or solicit in
support of any Acquisition Proposal. Acquiror represents and warrants
that it has the legal right to terminate any pending discussions or
negotiations relating to an Acquisition Proposal without payment of any
fee or other penalty.
(b) Acquiror shall notify Target immediately (and no later than 24
hours) after receipt by Acquiror (or its advisors) of any Acquisition
Proposal or any request for nonpublic information in connection with an
Acquisition Proposal or for access to the properties, books or records
20
of Acquiror by any person or entity that informs Acquiror that it is
considering making, or has made, an Acquisition Proposal. Such notice
shall be made orally and in writing and shall indicate in reasonable
detail the identity of the offeror and the specific terms and
conditions of such proposal, inquiry or contact, as the case may be,
and such other information related thereto as Target may reasonably
request.
(c) Except as contemplated by this Agreement, disclosure by Acquiror
of the terms hereof (other than the prohibition of this Section 4.2),
shall be deemed to be a violation of this Section 4.2.
4.3 Notification of Certain Matters. Acquiror and shall give prompt
notice to Target, and Target shall give prompt notice to Acquiror, of
(i) the occurrence or non-occurrence of any event, the occurrence or
non-occurrence of which is likely to cause any representation or
warranty of Acquiror contained in this Agreement to be untrue or
inaccurate at or prior to the Effective Time and (ii) any failure of
the Acquiror to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder, such that
the conditions set forth in Section 6.2(a) or (b) or Section 6.3(a) or
(b) would not be satisfied; provided, however, that the delivery of
any notice pursuant to this Section 4.3 shall not (a) limit or
otherwise affect any remedies available to the party receiving such
notice under this Agreement or (b) limit or otherwise effect any
remedies or defenses available to the party giving such notice under
this Agreement.
5. Additional Agreements.
5.1 Preparation of Information Statement.
(a) As soon as practicable after the execution of this Agreement, each
of Acquiror and Target shall prepare a solicitation statement for the
solicitation of approval of the shareholders of each of Target and
Acquiror describing this Agreement and the transactions contemplated
hereby (the "Information Statement"). Each of Target and Acquiror
shall provide such information about each other as Acquiror, Target and
their counsel shall reasonably request. The information supplied by
Target for inclusion in the Information Statement to be sent to the
shareholders of Target, and in any other document filed by Acquiror
with the Securities and Exchange Commission, shall not, on the date the
Information Statement is first mailed to Target's shareholders or at
the Effective Time, contain any statement that, at such time, is false
or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made therein,
in light of the circumstances under which they are made, not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication that has become false or
misleading. Notwithstanding the foregoing, Target makes no
representation, warranty or covenant with respect to any information
supplied by Acquiror that is contained in any of the foregoing
documents. The information supplied by Acquiror for inclusion in the
Information Statement shall not, on the date the Information Statement
is first mailed to Target's shareholders or at the Effective Time,
contain any statement that, at such time, is false or misleading with
respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not false or misleading, or
omit to state any material fact necessary to correct any statement in
21
any earlier communication that has become false or misleading.
Notwithstanding the foregoing, Acquiror makes no representation,
warranty or covenant with respect to any information supplied by Target
that is contained in any of the foregoing documents.
(b) The Information Statement shall constitute a disclosure document
for the offer and issuance of shares of Acquiror Common Stock to be
received by the holders of Target Capital Stock in the Merger.
Acquiror and Target shall each use reasonable commercial efforts to
cause the Information Statement to comply with applicable federal and
state securities laws requirements. Each of Acquiror and Target agrees
to provide promptly to the other such information concerning its
business and financial statements and affairs as, in the reasonable
judgment of the providing party or its counsel, may be required or
appropriate for inclusion in the Information Statement or in any
amendments or supplements thereto, and to cause its counsel and
auditors to cooperate with the other's counsel and auditors in the
preparation of the Information Statement. Target will promptly advise
Acquiror, and Acquiror will promptly advise Target, in writing if at
any time prior to the Effective Time either Target or Acquiror shall
obtain knowledge of any facts that might make it necessary or
appropriate to amend or supplement the Information Statement in order
to make the statements contained or incorporated by reference therein
not misleading or to comply with applicable law. The Information
Statement shall contain the recommendation of the Board of Directors of
Target that the Target shareholders approve the Merger and this
Agreement and the conclusion of the Board of Directors that the terms
and conditions of the Merger are fair and reasonable to the
shareholders of Target. Anything to the contrary contained herein
notwithstanding, Target shall not include in the Information Statement
any information with respect to Acquiror or its affiliates or
associates, the form and content of which information shall not have
been approved by Acquiror prior to such inclusion.
5.2 Shareholder Approval. Each of the parties shall promptly take all
action necessary in accordance with Nevada Law and Delaware Law and its
Articles or Certificate of Incorporation and Bylaws to obtain the
written consent of its shareholders approving the Merger as soon as
practicable. Subject to Section 6.1, each of the parties shall use its
efforts to solicit from its respective shareholders written consents in
favor of the Merger and shall take all other action necessary or
advisable to secure the vote or consent of shareholders required to
effect the Merger.
5.3 Sale of Shares Pursuant to Regulation D. The parties hereto
acknowledge and agree that the shares of Acquiror Common Stock issuable
to the Target shareholders pursuant to Section 1.6 hereof shall
constitute "restricted securities" within the Securities Act. The
certificates of Acquiror Common Stock shall bear the legends set forth
in Section 2.6(i). Target will use its best efforts to cause each
Target shareholder to execute and deliver to Acquiror an Investor
Status Questionnaire or similar document indicating each shareholder's
accredited or non-accredited status.
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5.4 Access to Information.
(a) Acquiror shall afford Target and its accountants, counsel and
other representatives, reasonable access during normal business hours
during the period prior to the Effective Time to (i) all of Acquiror's
and its subsidiaries' properties, personnel books, contracts,
commitments and records, and (ii) all other information concerning the
business, properties and personnel of Acquiror and its subsidiaries as
Target may reasonably request.
(b) Subject to compliance with applicable law, from the date hereof
until the Effective Time, Acquiror shall confer on a regular and
frequent basis with one or more representatives of Target to report
operational matters of materiality and the general status of ongoing
operations.
(c) Acquiror shall make its key personnel available to Target to
answer questions regarding Acquiror and shall provide Target with
reasonably requested information and such other information as is
available pursuant to the Acquiror SEC Filings and any amendments or
supplements thereto.
(d) No information or knowledge obtained in any investigation pursuant
to this Section 5.4 shall affect or be deemed to modify any
representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
5.5 Public Disclosure. Unless otherwise permitted by this Agreement,
Acquiror and Target shall consult with each other before issuing any
press release or otherwise making any public statement or making any
other public (or non-confidential) disclosure (whether or not in
response to an inquiry) regarding the terms of this Agreement and the
transactions contemplated hereby, and neither shall issue any such
press release or make any such statement or disclosure without the
prior approval of the other (which approval shall not be unreasonably
withheld or delayed), except as may be required by law.
5.6 Regulatory Approval: Further Assurances.
(a) Each party shall use all reasonable efforts to file, as promptly
as practicable after the date of this Agreement, all notices, reports
and other documents required to be filed by such party with any
Governmental Entity with respect to the Merger and the other
transactions contemplated by this Agreement, and to submit promptly any
additional information requested by any such Governmental Entity. Each
of Target and Acquiror shall (i) give the other party prompt notice of
the commencement of any legal proceeding by or before any Governmental
Entity with respect to the Merger or any of the other transactions
contemplated by this Agreement, and (ii) keep the other party informed
as to the status of any such legal proceeding.
(b) Acquiror and Target shall use all commercially reasonable efforts
to take, or cause to be taken, all actions necessary to effectuate the
Merger and make effective the other transactions contemplated by this
Agreement.
5.7 Legal Requirements. Each of Acquiror and Target will take
commercially reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on them with respect to the
consummation of the transactions contemplated by this Agreement and
will promptly cooperate with and furnish information to any party
23
hereto necessary in connection with any such requirements imposed upon
such other party in connection with the consummation of the
transactions contemplated by this Agreement and will take all
reasonable actions necessary to obtain (and will cooperate with the
other parties hereto in obtaining) any consent, approval, order or
authorization of or any registration, declaration or filing with, any
Governmental Entity or other person, required to be obtained or made in
connection with the taking of any action contemplated by this
Agreement.
5.8 Blue Sky Laws. Acquiror shall take such steps as may be necessary
to comply with the securities and blue sky laws of all jurisdictions
which are applicable to the issuance of the Acquiror Common Stock and
the assumption of the Target Options (and the issuance of Acquiror
Common Stock upon exercise thereof) in connection with the Merger.
Target shall use its commercially reasonable efforts to assist Acquiror
as may be necessary to comply with the securities and blue sky laws of
all jurisdictions which are applicable in connection with the issuance
of Acquiror Common Stock in connection with the Merger.
5.9 Reorganization. Each party hereto shall treat the Merger
contemplated hereby for income tax purposes as a reorganization within
the meaning of Section 368(a) of the Code. From and after the date
hereof, no party to this Agreement shall take any action, or fail to
take any action that would, in the reasonable determination of such
party, jeopardize qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code.
5.10 Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement, the
negotiations thereof and the transactions contemplated hereby
(including all fees and expenses of accountants, attorneys, finders,
brokers or financial advisors and all other expenses incurred) shall be
expenses of the party incurring such expense. In the event the Merger
is consummated, all such fees and expenses of Target shall be deemed to
be expenses of Acquiror and shall be assumed in the Merger.
5.11 Officer/Director Indemnity. From and after the Effective Time,
Acquiror and the Surviving Corporation shall, to the fullest extent
permitted under applicable law or under the Target's Articles of
Incorporation or By-Laws as in effect as of the date hereof as provided
to Acquiror, indemnify and hold harmless each present and former
director or officer of the Target or any of its subsidiaries (together
with their respective successors, assigns, heirs, executors,
administrators and representatives, collectively, the "Indemnified
Parties") against any costs or expenses (including attorneys' fees),
judgments, fines, losses, claims, damages and liabilities incurred in
connection with, and amounts paid in settlement of, any claim, action,
suit, proceeding or investigation, whether civil, criminal,
administrative or investigative and wherever asserted, brought or
filed, arising out of or pertaining to any acts or omissions or alleged
acts or omissions by them in their capacity as such, in each case for a
period of four years after the Effective Time, including, without
limitation, the transactions contemplated hereby. In the event of any
such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) any counsel retained by the
Indemnified Parties for any period after the Effective Time shall be
reasonably satisfactory to Acquiror, (ii) after the Effective Time,
24
Acquiror shall pay the reasonable fees and expenses of such counsel,
promptly after statements therefor are received, and (iii) the
Surviving Corporation will cooperate in the defense of any such matter;
provided, however, that the Surviving Corporation shall not be liable
for any settlement effected without its written consent (which consent
shall not be unreasonably withheld or delayed) and provided further
that it shall not be unreasonable to withhold consent to any settlement
which requires any action by the Surviving Corporation other than the
payment of money damages; and provided, further, that, in the event
that any claim or claims for indemnification are asserted or made
within such four-year period, all rights to indemnification in respect
of any such claim or claims shall continue until the disposition of any
and all such claims. The Indemnified Parties as a group may retain
only one law firm to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a
conflict between the positions of any two or more Indemnified Parties.
The indemnity agreements of Acquiror and the Surviving Corporation in
this Section 5.11 shall extend, on the same terms to, and shall inure
to the benefit of and shall be enforceable by, each person or entity
who controls, or in the past controlled, any present or former director
or officer of Target or any of its subsidiaries.
6. Conditions to the Merger.
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to consummate
and effect this Agreement and the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Effective Time
of each of the following conditions, any of which may be waived, in
writing, by agreement of all the parties hereto:
(a) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or
regulatory restraint or prohibition preventing the consummation of the
Merger shall be and remain in effect, nor shall any proceeding brought
by an administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of the
foregoing be pending, which would have a Material Adverse Effect on
either Acquiror or on Acquiror combined with the Surviving Corporation
after the Effective Time, nor shall there be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger
illegal.
(b) Governmental Approval. Acquiror and Target, and their respective
subsidiaries and other shareholders of Target, as applicable, shall
have timely obtained from each Governmental Entity all approvals,
waivers and consents, if any, necessary for consummation of or in
connection with the Merger and the several transactions contemplated
hereby, including such approvals, waivers and consents as may be
required under the Securities Act, under state Blue Sky laws, other
than filings and approvals relating to the Merger or affecting
Acquiror's ownership of Target or any of its properties if failure to
obtain such approval, waiver or consent would not have a Material
Adverse Effect on Acquiror after the Effective Time.
25
(c) Securities Laws. The issuance of the Merger Consideration by
Acquiror in accordance with this Agreement will be exempt from
registration with the Securities and Exchange Commission and no other
filings, approvals, registrations, or qualifications shall be required
under applicable federal or state securities laws for the consummation
of the Merger in accordance with this Agreement.
(d) Shareholder Approval. This Agreement, the Merger and the
transactions contemplated herein shall be approved and adopted by the
shareholders of both Acquiror and Target by the requisite vote under
applicable law and Acquiror's Articles of Incorporation and Target's
Certificate of Incorporation.
(e) Conversion of Preferred. The holders of Target Preferred Stock
shall have approved the conversion of their shares into shares of
Target Common Stock by the requisite vote under applicable law and
Target's Certificate of Incorporation.
6.2 Additional Conditions to the Obligations of Target. The
obligations of Target to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction
at or prior to the Effective Time of each of the following conditions,
any of which may be waived, in writing, by Target:
(a) Representations, Warranties and Covenants. The representations
and warranties of Acquiror in this Agreement (i) shall be true and
correct in all material respects except that representations and
warranties qualified by materiality shall be true and correct to the
extent of such qualification on and as of the date of this Agreement
and (ii) shall be true and correct on and as of the Closing as though
such representations and warranties were made on and as of such time
except to the extent that any such failure to be true and correct
(without regard to any qualification as to materiality contained in
such representation or warranty) would not be reasonably likely to have
a Material Adverse Effect on Target nor materially and adversely affect
the consummation of the Merger (except, in any case, for such
representations and warranties that speak specifically as of the date
hereof or as of another date, which shall be true and correct as of
such date).
(b) Performance of Obligations. Acquiror shall have performed and
complied in all material respects with all covenants, obligations and
conditions of this Agreement required to be performed and complied with
by it as of the Closing.
(c) Certificate of Officers. Target shall have received a certificate
executed on behalf of Acquiror by the chief executive officer of
Acquiror certifying that the conditions set forth in Section 6.2(a) and
Section 6.2(b) have been satisfied.
(d) Third Party Consents. All consents or approvals listed in
Schedule 6.2(d), if any, shall have been obtained and shall be in full
force and effect.
(e) No Governmental Litigation. There shall not be pending or
threatened any legal proceeding in which a Governmental Entity is or is
threatened to become a party or is otherwise involved, and no party
hereto shall have received any communication from any Governmental
Entity in which such Governmental Entity indicates the probability of
26
commencing any legal proceeding or taking any other action: (a)
challenging or seeking to restrain or prohibit the consummation of the
Merger; (b) relating to the Merger and seeking to obtain from Acquiror
or any of its subsidiaries or Target, any damages or other relief that
would be material to Acquiror or Target; (c) seeking to prohibit or
limit in any material respect Target's ability to vote, receive
dividends with respect to or otherwise exercise ownership rights with
respect to the stock of Acquiror; or (d) which would materially and
adversely affect the right of Acquiror or Target to own the assets or
operate the business of Target.
(f) No Other Litigation. There shall not be pending any legal
proceeding: (a) challenging or seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions
contemplated by this Agreement; (b) relating to the Merger and seeking
to obtain from Acquiror or any of its subsidiaries or Target any
damages or other relief that would be material to Acquiror or Target;
(c) seeking to prohibit or limit in any material respect Target's
ability to vote, receive dividends with respect to or otherwise
exercise ownership rights with respect to the stock of Acquiror; or (d)
which would affect adversely the right of Target or Acquiror to own the
assets or operate the business of Target.
(g) No Material Adverse Effect. There shall not have occurred any
Material Adverse Effect on Acquiror.
(h) Officers and Director Resignations. All persons serving as
directors or officers of Acquiror shall have resigned such positions
effective as of the Closing Date.
(i) Shareholder Approval. This Agreement, the Merger and the
transactions contemplated herein shall be approved and adopted by the
shareholders of Acquiror by the requisite vote under applicable law and
Acquiror's Articles of Incorporation.
(j) Dissenters' Rights. Not more than ten percent (10 percent) of the
shares of Target Common Stock (including shares of Target Preferred
Stock on an as-converted basis) outstanding immediately prior to the
Effective Time shall be eligible as Dissenting Shares.
(k) Due Diligence Review. Target, at the sole discretion of its Board
of Directors, shall have determined that it is satisfied with its due
diligence review of the Acquiror, including, but not limited to, the
Acquiror's SEC Filings, the Acquiror's Tax filings, the Acquiror's
Financial Statements, and the curative actions of the Acquiror and
related parties in connection with the Merger and the transactions
contemplated hereunder.
6.3 Additional Conditions to Obligations of Acquiror. The obligations
of Acquiror and to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction
at or prior to the Effective Time of each of the following conditions,
any of which may be waived, in writing, by Acquiror:
(a) Representations, Warranties and Covenants. The representations
and warranties of Target in this Agreement (i) shall be true and
correct in all material respects except that representations and
warranties qualified by materiality shall be true and correct to the
27
extent of such qualification on and as of the date of this Agreement
and (ii) shall be true and correct on and as of the Closing as though
such representations and warranties were made on and as of such time
except to the extent that any such failure to be true and correct
(without regard to any qualification as to materiality contained in
such representation or warranty) would not be reasonably likely to have
a Material Adverse Effect on Acquiror (except, in any case, for such
representations and warranties that speak specifically as of the date
hereof or as of another date, which shall be true and correct as of
such date).
(b) Performance of Obligations. Target shall have performed and
complied in all material respects with all covenants, obligations and
conditions of this Agreement required to be performed and complied with
by them as of the Closing.
(c) Certificate of Officers. Acquiror shall have received a
certificate executed on behalf of Target by an officer of Target
certifying that the conditions set forth in Sections 6.3(a) and 6.3(b)
have been satisfied.
(d) No Material Adverse Effect. There shall not have occurred any
Material Adverse Effect on the Target prior to the Closing Date.
(e) No Governmental Litigation. There shall not be pending or
threatened any legal proceeding in which a Governmental Entity is or is
threatened to become a party or is otherwise involved, and no party
hereto shall have received any communication from any Governmental
Entity in which such Governmental Entity indicates the probability of
commencing any legal proceeding or taking any other action: (a)
challenging or seeking to restrain or prohibit the consummation of the
Merger or (b) relating to the Merger and seeking to obtain from
Acquiror, any damages or other relief that would be material to them.
(f) Shareholder Approval. This Agreement, the Merger and the
transactions contemplated herein shall be approved and adopted by the
shareholders of Target by the requisite vote under applicable law and
Target's Certificate of Incorporation.
7. Termination, Amendment and Waiver.
7.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time (with respect to Section 8.1(b) through Section
8.1(d), by written notice by the terminating party to the other party):
(a) by the mutual written consent of Xxxxxxxx and Target;
(b) by either Acquiror or Target if the Merger shall not have been
consummated by June 30, 2004, provided, however, that the right to
terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date;
(c) by either Acquiror or Target if a court of competent jurisdiction
or other Governmental Entity shall have issued a nonappealable final
order, decree or ruling or taken any other action, in each case having
the effect of permanently restraining, enjoining or otherwise
28
prohibiting the Merger, except, if the party relying on such order,
decree or ruling or other action has not complied with its obligations
under this Agreement;
(d) by Acquiror or Target, if there has been a breach of any
representation, warranty, covenant or agreement on the part of the
other party set forth in this Agreement, which breach (i) causes the
conditions set forth in Section 6.1 or 6.3 (in the case of termination
by Acquiror) or Section 6.1 or 6.2 (in the case of termination by
Target) not to be satisfied and (ii) shall not have been cured within
ten (10) business days following receipt by the breaching party of
written notice of such breach from the other party;
(e) by Target, if its Board of Directors determines in its sole
discretion that it is not satisfied with its due diligence review of
the Acquiror, including, but not limited to, the Acquiror's SEC
Filings, the Acquiror's Tax filings, the Acquiror's Financial
Statements, and the curative actions of the Acquiror and related
parties in connection with the Merger and the transactions contemplated
hereunder.
7.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, there shall be no liability or
obligation on the part of Acquiror, Target, or their respective
officers, directors, or shareholders, except to the extent that such
termination results from the willful breach by a party of any of its
representations, warranties or covenants set forth in this Agreement;
provided that the provisions of Sections 5.9 (Expenses) and 6.1
(Termination) shall remain in full force and effect and survive any
termination of this Agreement.
7.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto
(by a duly authorized officer thereof, in the case of a corporate
party).
7.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective
Boards of Directors (in the case of Target or Acquiror), may, to the
extent legally allowed, (i) extend the time for the performance of any
of the obligations or other acts of the other parties hereto, (ii)
waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed
on behalf of such party (by a duly authorized officer, thereof in the
case of a corporate party).
8. Indemnification.
(a) Survival of Warranties. All representations, warranties and
covenants made by Target and Acquiror herein, or in any certificate,
schedule or exhibit delivered pursuant hereto, shall survive the
Closing and continue in full force and effect until the first
anniversary of the Closing. Notwithstanding the preceding sentence,
any claim for indemnity for breach of a representation or warranty in
respect of which indemnity may be sought under this Agreement shall
29
survive the time at which such representation or warranty otherwise
would terminate pursuant to the preceding sentence, if notice of the
inaccuracy or breach thereof giving rise to such right of indemnity
shall have been given to the party against whom such indemnity may be
sought prior to such time.
(b) From and after the Closing Date, subject to the limitations set
forth in this Section 8, the Acquiror will indemnify, defend, and hold
harmless the Surviving Corporation and its respective officers,
directors, agents, attorneys and employees, and each person, if any,
who controls or may control the Surviving Corporation within the
meaning of the Securities Act (the "Indemnified Persons") from and
against any and all losses, costs, damages, liabilities and expenses
arising from claims, demands, actions, causes of action, including,
without limitation, attorneys' fees and expenses of investigation and
defense (net of any directly related insurance payments or recoveries
received or to be received from third party insurers) (collectively,
"Damages") arising out of any misrepresentation or breach of or default
in connection with any of the representations, warranties, covenants
and agreements given or made by the Acquiror in this Agreement, the
Acquiror Disclosure Schedules, or any exhibit or schedule to this
Agreement (collectively, "Acquiror Breaches").
(c) From and after the Closing Date, subject to the terms, conditions
and limitations contained in this Section 8, Target shall indemnify,
defend and hold harmless Acquiror and its respective officers,
directors, agents, attorneys and employees, and each person, if any,
who controls or may control Acquiror within the meaning of the
Securities Act from and against all Damages arising out of any
misrepresentation or breach of or default in connection with any of the
representations, warranties, covenants and agreements given or made by
Target in this Agreement, the Target Disclosure Schedules or any
exhibit or schedule to this Agreement (collectively, "Target
Breaches").
(d) In no event shall the shareholders of Target be liable to Acquiror
or the other indemnitees described in Section 8.2(b), or Acquiror be
liable to Target or the other indemnitees described in Section 8.2(c),
for any consequential, exemplary, punitive, or speculative damages,
except to the extent any such otherwise excluded damages are a
component of Damages which arise out of a third party claim for which
such indemnified party becomes liable and for which third party claim
they are entitled to indemnification pursuant to this Section 8.
9. General Provisions.
9.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed duly delivered if delivered personally
(upon receipt), or three (3) business days after being mailed by
registered or certified mail, postage prepaid (return receipt
requested), or one (1) business day after it is sent by commercial
overnight courier service, or upon transmission, if sent via facsimile
(with confirmation of receipt) to the parties at the following address
(or at such other address for a party as shall be specified by like
notice):
30
(a) if to Acquiror, to:
Intraop Medical Corporation, formerly known as
Xxxxxxxxxxxxxxx.xxx, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx Xxxx, XX 00000
Attention: Xx. Xxxxx Xxxxx
Xxx: (000) 000-0000
Tel: (000) 000-0000
(b) if to Target, to:
Intraop Medical, Inc.
0000 Xx Xx Xxxx Xxxx., Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attention: Dr. Xxx Xxxx
Fax: (000) 000-0000
Tel: (000) 000-0000
with a copy to
Gray Xxxx Xxxx & Freidenrich
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Fax: (000) 000-0000
Tel: (000) 000-0000
9.2 Definitions. In this Agreement any reference to a party's
"knowledge" means such party's actual knowledge after reasonable
inquiry of officers, directors and other employees of such party
reasonably believed to have knowledge of such matters. In this
Agreement any reference to any event, change, condition or effect being
"material" with respect to any entity or group of entities means any
material event, change, condition or effect related to the financial
condition, properties, assets (including intangible assets),
liabilities, business, operations or results of operations of such
entity or group of entities. In this Agreement any reference to a
"Material Adverse Effect" with respect to any entity or group of
entities means any event, change or effect that is materially adverse
to the financial condition, properties, assets, liabilities, business,
operations, results of operations or prospects of such entity and its
subsidiaries, taken as a whole, other than changes directly caused by
(i) conditions affecting national, regional or world economies, or (ii)
conditions affecting the industries of Target or Acquiror, as
applicable, as a whole.
9.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties,
it being understood that all parties need not sign the same
counterpart.
9.4 Entire Agreement; Nonassignability; Parties in Interest. This
Agreement and the documents and instruments and other agreements
specifically referred to herein or delivered pursuant hereto, including
the Exhibits, the Target Disclosure Schedule and the Acquiror
Disclosure Schedule (a) constitute the entire agreement among the
31
parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof except for the
Confidentiality Agreement, which shall continue in full force and
effect, and shall survive any termination of this Agreement or the
Closing, in accordance with its terms; (b) are not intended to confer
upon any other person any rights or remedies hereunder, and shall not
be assigned by operation of law or otherwise without the written
consent of the other party.
9.5 Severability. In the event that any provision of this Agreement,
or the application thereof becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the
remainder of this Agreement will continue in full force and effect and
the application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
9.6 Remedies Exclusive. From and after the Closing Date, the remedies
provided in this Agreement shall be the exclusive remedy with respect
to the Agreement and transactions contemplated thereby except with
respect to fraud or criminal activity.
9.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of California applicable to
parties residing in California, without regard to applicable principles
of conflicts of law, except to the extent that matters are governed by
Nevada Law or Delaware Law as herein provided. Subject to Section 9.8,
each of the parties hereto irrevocably consents to the exclusive
jurisdiction of any court located within Santa Xxxxx or San Mateo
County, California, in connection with any matter based upon or arising
out of this Agreement or the matters contemplated hereby and it agrees
that process may be served upon it in any manner authorized by the laws
of the State of California for such persons and waives and covenants
not to assert or plead any objection which it might otherwise have to
such jurisdiction and such process.
9.8 Dispute Resolution.
(a) Subsequent to closing of the Merger all disputes arising out of or
relating to this Agreement, including without limitation, controversies
or claims arising out of the provisions of Section 9, but not in any
case, claims of fraud, shall be settled by binding arbitration as
provided in this Section 9.8. In the event of such dispute, any party
may send another party written notice identifying the matter in
dispute. Within thirty (30) days after such written notice is given,
one or more principals of each party involved in the dispute shall meet
at a mutually agreeable location for the purpose of determining whether
they can resolve the dispute themselves.
(b) If such parties fail to resolve the dispute by written agreement
within said thirty (30) day period, any such party may thereafter
commence arbitration with respect to such dispute.
32
(c) The Arbitration shall be conducted by one arbitrator. Acquiror
and Target shall agree on the arbitrator, provided that if they cannot
agree on such arbitrator, any of them can request that Judicial
Arbitration and Mediation Services ("JAMS") select the arbitrator. The
arbitrator shall set a limited time period and establish procedures
designed to reduce the cost and time for discovery while allowing the
parties an opportunity, adequate in the sole judgment of the
arbitrator, to discover relevant information from the opposing parties
about the subject matter of the dispute. The arbitrator shall rule
upon motions to compel or limit discovery and shall have the authority
to impose sanctions, including attorneys' fees and costs, to the same
extent as a court of competent law or equity, should the arbitrator
determine that discovery was sought without substantial justification
or that discovery was refused or objected to without substantial
justification. The decision of the arbitrator shall be in writing,
shall be in accordance with applicable law and with this Agreement, and
shall be supported by written findings of fact and conclusion of law
which shall set forth the basis for the decision of the arbitrator.
The decision of the arbitrator, including any decision as to the
validity and amount of any claim in an Officer's Certificate or Agent
Certificate, shall be binding and conclusive upon the parties to this
Agreement.
(d) Judgment upon any award rendered by the arbitrator may be entered
in any court having jurisdiction. Any such arbitration shall be held
in Santa Xxxxx County, California under the commercial rules in effect
of the American Arbitration Association. For purposes of this Section
9.8(b), any arbitration hereunder in which any claim or the amount
thereof stated in the Officer's Certificate, as the case may be, is at
issue, the party seeking indemnification shall be deemed to be the non-
prevailing party unless the arbitrator awards the party seeking
indemnification more than one-half (1/2) of the amount in dispute, plus
any amounts not in dispute; otherwise, the person against whom
indemnification is sought shall be deemed to be the non-prevailing
party. The non-prevailing party to an arbitration shall pay its own
expenses, the fees of the arbitrator, any administrative fee of JAMS,
and the expenses, including attorneys' fees and costs, reasonably
incurred by the other party to the arbitration.
9.9 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be
reasonably requested by any other party to better evidence and reflect
the transactions described herein and contemplated hereby and to carry
into effect the intents and purposes of this Agreement.
9.10 Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor shall be interpreted, to provide or create
any third party beneficiary rights or any other rights of any kind in
any client, customer, affiliate, shareholder, partner of any party
hereto or any other person or entity unless specifically provided
otherwise herein, and, except as so provided, all provisions hereof
shall be solely between the parties to this Agreement.
33
9.11 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waive the application of
any law, regulation, holding or rule of construction providing that
ambiguities in an agreement or other document will be construed against
the party drafting such agreement or document.
IN WITNESS WHEREOF, Target and Acquiror, have caused this Agreement to
be executed and delivered by each of them or their respective officers
thereunto duly authorized, all as of the date first written above.
INTRAOP MEDICAL CORPORATION,
formerly known as
XXXXXXXXXXXXXXX.XXX, INC.
/s/Xxxxx Xxxxx
-----------------------------
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: President
INTRAOP MEDICAL, INC.
/s/Xxxxxx Xxxx
-----------------------------
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: President
34
EXHIBIT A
ARTICLES OF MERGER
of
INTRAOP MEDICAL, INC.
(a Nevada corporation)
into
INTRAOP MEDICAL CORPORATION
(a Delaware corporation)
Pursuant to Section 92A.200 of the Nevada Revised Statutes and Section
251(c) of the General Corporation Law of the State of Delaware, the
undersigned parties to an Agreement and Plan of Merger (the "Merger
Agreement") dated February 10, 2004 between Intraop Medical
Corporation, a Nevada corporation ("Intraop Nevada"), and Intraop
Medical, Inc., a Delaware corporation ("Intraop Delaware"), certify as
follows:
1. That the name and state of incorporation of each of the constituent
corporations of the merger is as follows:
Name State of Incorporation
Intraop Medical Corporation Nevada
Intraop Medical, Inc. Delaware
2. The Merger Agreement providing for the merger of Intraop Delaware
with and into Intraop Nevada (the "Merger") has been approved, adopted,
certified, executed and acknowledged by the required consents of the
shareholders of both Intraop Delaware and Intraop Nevada in accordance
with Section 251(c) of the Delaware General Corporation Law and
Sections 78.320 and 92A.200 of the Nevada Revised Statutes.
3. The surviving corporation shall be Intraop Nevada (the "Surviving
Corporation"), and its name shall be Intraop Medical Corporation.
4. Pursuant to the Merger Agreement, the Articles of Incorporation of
the Surviving Corporation, shall be amended and restated in their
entirety as attached hereto as Exhibit A.
5. The complete executed Agreement and Plan of Merger is on file at
the principal place of business of the Surviving Corporation. The
address of said principal place of business is:
Intraop Medical Corporation
0000 Xx Xx Xxxx Xxxx., Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attention: Dr. Xxx Xxxx
Tel: (000) 000-0000
35
6. Copies of process may be sent by the Secretary of State to the
address set forth above.
7. A copy of the Agreement and Plan of Merger shall be furnished by
Intraop Nevada upon request and without charge to any stockholder of
any constituent corporation.
8. These Articles of Merger shall be effective immediately prior to
the close of business on March , 2004.
(Remainder of page intentionally left blank.)
36
IN WITNESS WHEREOF, the undersigned has caused this Articles of Merger
to be executed by its duly authorized officer this day of
, 2004.
INTRAOP MEDICAL CORPORATION,
formerly known as
XXXXXXXXXXXXXXX.XXX, INC.
By:-------------------------------
Name:
Title: President and Secretary
INTRAOP MEDICAL, INC.
By:-------------------------------
Name:
Title: President
By:-------------------------------
Name:
Title: Secretary
37
EXHIBIT B
EXHIBIT A to CERTIFICATE OF MERGER
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
INTRAOP MEDICAL CORPORATION
ARTICLE I
The name of the corporation is: Intraop Medical Corporation.
ARTICLE II
The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the Nevada
Revised Statutes other than the banking business, the trust company
business or the practice of a profession permitted to be incorporated
by the Nevada Revised Statutes.
ARTICLE III
The name and complete business address in the State of Nevada of the
corporation's initial agent for service of process are: Paracorp
Incorporated, 000 X. Xxxxxx Xx. #000, Xxxxxx Xxxx, XX 00000.
ARTICLE IV
The corporation is authorized to issue only one class of shares which
shall be designated "Common Stock," $0.001 par value per share. The
total number of shares which the corporation is authorized to issue is
one hundred million (100,000,000).
ARTICLE V
(a) The liability of directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under Nevada law.
(b) The corporation is authorized to provide indemnification of
officers, directors, employees or agents, through bylaw provisions,
agreements with officers, directors, employees or agents, vote of
shareholders or disinterested directors, or otherwise, in excess of the
indemnification otherwise permitted by Section 78.7502 of the Nevada
Revised Statutes, subject to the applicable limits set forth in
Sections 78.7502 and 78.751 of the Nevada Revised Statutes with respect
to actions for breach of duty to the corporation and its shareholders.
(c) Any amendment, repeal or modification of any provision of this
Article V shall not adversely affect any right or protection of an
agent of this corporation existing at the time of such amendment,
repeal or modification.
38
ARTICLE VI
The corporation shall have at least one (1) director. The first Board
of Directors shall consist of the following six members:
Xxxxxx X. Xxxx, Ph.D.
0000 Xx Xx Xxxx Xxxx., Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Xxxx X. Xxxxxx
0000 Xx Xx Xxxx Xxxx., Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Xxxxxxxx X. Xxxxxx
0000 Xx Xx Xxxx Xxxx., Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Xxxx Xxxxxx Xxxxx
0000 Xx Xx Xxxx Xxxx., Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Xxxxxxx Xxxxxx
0000 Xx Xx Xxxx Xxxx., Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Xxxxxxxx X. Xxxxxxxx, M.D.
0000 Xx Xx Xxxx Xxxx., Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
IN WITNESS WHEREOF, the undersigned has executed these Amended and
Restated Articles of Incorporation on , 2004.
------------------------------
(Name), (Title)
39
EXHIBIT C
AMENDED AND RESTATED BYLAWS
40
EXHIBIT D
DISCLOSURE SCHEDULES
41
TABLE OF CONTENTS
Page
1. The Merger 1
1.1 The Merger 1
1.2 Closing; Effective Time 1
1.3 Effect of the Merger 2
1.4 Articles of Incorporation; Bylaws 2
1.5 Directors and Officers 2
1.6 Effect on Capital Stock 2
1.7 Surrender of Certificates 4
1.8 No Further Ownership Rights in Target Capital Stock 6
1.9 Lost, Stolen, or Destroyed Certificates 6
1.10 Tax Consequences 6
1.11 Taking of Necessary Action; Further Action 6
1.12 Target Options 7
2. Representations and Warranties of Target 7
2.1 Organization, Standing, and Power 7
2.2 Authority 8
2.3 Governmental Authorization 8
2.4 Capital Structure 9
2.5 Litigation 9
2.6 Restrictions on Business Activities 9
2.7 Complete Copies of Materials 10
2.8 Compliance With Laws 10
2.9 Disclaimer 10
3. Representations and Warranties of the Acquiror 10
3.1 Organization, Standing and Power 10
3.2 Authority 10
3.3 SEC Documents 11
3.4 Capitalization 12
3.5 Litigation 12
3.6 Absence of Certain Changes 13
3.7 Absence of Undisclosed Liabilities 13
3.8 Compliance With Laws 13
3.9 Taxes 13
3.10 Agreements, Contracts and Commitments 14
3.11 Brokers' and Finders' Fee 15
4. Conduct Prior To The Effective Time 15
4.1 Conduct of Business of Acquiror 15
4.2 No Solicitation 17
4.3 Notification of Certain Matters 17
5. Additional Agreements 18
5.1 Preparation of Information Statement 18
5.2 Shareholder Approval 19
5.3 Sale of Shares Pursuant to Regulation D 19
5.4 Access to Information 19
5.5 Public Disclosure 20
5.6 Regulatory Approval: Further Assurances 20
5.7 Legal Requirements 20
5.8 Blue Sky Laws 20
5.9 Reorganization 21
5.10 Expenses 21
5.11 Officer/Director Indemnity 21
42
6. Conditions to the Merger 22
6.1 Conditions to Obligations of Each Party to
Effect the Merger 22
6.2 Additional Conditions to the Obligations of Target 22
6.3 Additional Conditions to Obligations of Acquiror 24
7. Termination, Amendment and Waiver 25
7.1 Termination 25
7.2 Effect of Termination 25
7.3 Amendment 26
7.4 Extension; Waiver 26
8. Indemnification 26
9. General Provisions 27
9.1 Notices 27
9.2 Definitions 28
9.3 Counterparts 28
9.4 Entire Agreement; Nonassignability; Parties in Interest 28
9.5 Severability 28
9.6 Remedies Exclusive 28
9.7 Governing Law 28
9.8 Dispute Resolution 29
9.9 Further Assurances 30
9.10 Absence of Third Party Beneficiary Rights 30
9.11 Rules of Construction 30
TABLE OF CONTENTS
(continued)
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TABLE OF CONTENTS
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