AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of March
29, 2006, is entered into by and among AFG Enterprises USA, Inc., a Nevada
corporation ("AFG"), FP Merger Sub, Inc., a Delaware corporation and
wholly-owned subsidiary of AFG ("Merger Subsidiary"), FP Technology Holdings,
Inc., a Delaware corporation ("FP"). Capitalized terms used in this Agreement
and not defined in context shall have the meanings ascribed to them in Section
10.7 hereof.
WHEREAS, the respective Boards of Directors of AFG, Merger Subsidiary and
FP have approved the merger of Merger Subsidiary with and into FP, with FP being
the surviving corporation as a wholly-owned subsidiary of AFG (the "Merger"),
all upon the terms and subject to the conditions set forth herein;
WHEREAS, the Merger is a condition to a new financing transaction
contemplated by AFG involving the issuance of approximately $50 million of
Senior Secured Nonconvertible Notes Due 2011 and Warrants, placed by Xxxxxx &
Xxxxxxx LLC, pursuant to a proposed Securities Purchase Agreement between AFG
and the investors listed on the Schedule of Buyers attached thereto (the "CAP
Financing"); and
WHEREAS, it is intended that, for federal income tax purposes, the Merger
shall qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code").
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
The Merger
Section 1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time, Merger Subsidiary shall be merged with
and into FP and the separate existence of Merger Subsidiary shall thereupon
cease. FP shall continue as the surviving corporation in the Merger (thereafter
referred to as the "Surviving Corporation") under the laws of the State of
Delaware as a wholly-owned subsidiary of AFG. Throughout this Agreement, the
term "FP" shall refer to such entity prior to the Merger and the term "Surviving
Corporation" shall refer to it in its status as the surviving corporation in the
Merger.
Section 1.2 Closing. The closing of the Transactions (the "Closing") will
take place as promptly as practicable (and in any event within two business
days) after satisfaction or waiver of the conditions set forth in Article VII
(other than conditions that require the delivery of documents, which may be
satisfied at the Closing). The Closing shall be held at the offices of Xxxxxxxx
& Xxxxxxxx LLP, 000 Xxxx Xxxxx Xx., Xxxxx 0000, Xxx Xxxxxxx, XX 00000, unless
another place is agreed to by the parties hereto. The date on which the Closing
occurs is referred to herein as the "Closing Date". At the Closing, each of AFG
and FP shall deliver the agreements, certificates and other documents required
to be delivered and which have not been delivered prior to the Closing. At the
end of the Closing, FP shall file with the Secretary of State of the State of
Delaware a certificate of merger (the "Certificate of Merger") with respect to
the Merger pursuant to and in compliance with this Agreement and Section 251 of
the General Corporation Law of the State of Delaware (the "Delaware Law").
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Section 1.3 Effective Time of the Merger. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, or at such later time as specified therein. When
used in this Agreement, the term "Effective Time" shall mean the time at which
the Certificate of Merger becomes effective in accordance with Delaware Law.
Section 1.4 Effect of the Merger. The Merger shall, from and after the
Effective Time, have all the effects provided by applicable Law. If, at any time
after the Effective Time, the Surviving Corporation shall consider or be advised
that any further deeds, conveyances, assignments or assurances in Law or any
other acts are necessary, desirable or proper to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation the title to any property or
rights of FP or Merger Subsidiary, by reason or as a result of the Merger, or
otherwise to carry out the purposes of this Agreement, FP and Merger Subsidiary
agree that the Surviving Corporation and its proper officers and directors shall
execute and deliver all such deeds, conveyances, assignments and assurances in
Law and do all things necessary, desirable or proper to vest, perfect or confirm
title to such property or rights in the Surviving Corporation and otherwise to
carry out the purposes of this Agreement, and that the proper officers and
directors of the Surviving Corporation are fully authorized in the name of each
of FP and Merger Subsidiary or otherwise to take any and all such action.
Section 1.5 Assumption of Trident Debentures. At the Closing, all of the
obligations, rights, responsibilities and liabilities of FP under that certain
12% Senior Secured Convertible Debenture No. 1, dated September 13, 2005, in the
initial principal amount of $2,000,000, and that certain 12% Senior Secured
Convertible Debenture No. 2, dated November 15, 2005, in the initial principal
amount of $500,000 (collectively, the "Trident Debentures"), shall be assigned
and transferred in their entirety to AFG. AFG hereby acknowledges and accepts
the terms of the Trident Debentures and assumes, from and after the Closing, all
of FP's obligations, rights, responsibilities and liabilities set forth in the
Trident Debentures, and agrees, from and after the Closing, to observe and
perform each and every term, covenant, provision and condition required to be
observed or performed by FP under the Trident Debentures as though the Trident
Debentures had been originally executed by AFG.
ARTICLE II
The Surviving Corporation
Section 2.1 Certificate of Incorporation. The certificate of incorporation
of FP shall continue as the certificate of incorporation of the Surviving
Corporation until thereafter duly amended.
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Section 2.2 By-Laws. The by-laws of FP shall continue after the Effective
Time as the by-laws of the Surviving Corporation until thereafter duly amended.
Section 2.3 Board of Directors; Officers. The members of the Board of
Directors and the officers of the Surviving Corporation and AFG following the
Merger shall be the directors and officers of FP immediately prior to the
Effective Time, and such directors and officers shall continue in office until
the earlier of their respective death, resignation or removal and the time that
their respective successors are duly elected or appointed and qualified.
ARTICLE III
Merger Consideration
Section 3.1 AFG Merger Consideration.
(a) As of the Effective Time, by virtue of the Merger and without
any action on the part of any stockholder of FP or Merger Subsidiary:
(i) Each share of common stock, par value $.01 per share, of
Merger Subsidiary that is issued and outstanding immediately prior to the
Effective Time shall be automatically converted without any further action into
one fully paid and non-assessable share of common stock, no par value per share,
of the Surviving Corporation, and shall constitute the only issued and
outstanding capital stock of the Surviving Corporation following the Merger.
(ii) Each share of the common stock of FP, par value $.01 per
share ("FP Common Stock"), that is owned by FP as treasury stock and any shares
of FP Common Stock that are owned by AFG shall be canceled and shall cease to
exist, and no stock of AFG or other consideration shall be delivered in exchange
therefor.
(iii) Subject to the provisions of this Section 3.1(a), the
shares of FP Common Stock, other than the shares canceled pursuant to Section
3.1(a)(ii), issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holders
thereof, be converted into the right to receive validly issued, fully paid and
non-assessable shares of common stock of AFG, par value $.001 per share ("AFG
Common Stock"), at an exchange ratio (the "Exchange Ratio") of 0.4032248 share
of AFG Common Stock for each share of FP Common Stock (the "Merger
Consideration").
(b) If, at any time during the period between the date of this
Agreement and the Effective Time, FP changes the number of shares of FP Common
Stock issued and outstanding or AFG changes the number of shares of AFG Common
Stock issued and outstanding, in each case as a result of a stock split, reverse
stock split, stock dividend, recapitalization, redenomination of share capital
or other similar transaction with an effective date or record date, as
applicable, prior to the Effective Time, and in a transaction that the other
parties to this Agreement have provided their consent to if such consent is
required hereunder, then the Exchange Ratio and any other items dependent
thereon shall be appropriately adjusted.
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(c) AFG agrees after the Closing to issue such shares of AFG Common
Stock as are issuable pursuant to the terms of options or warrants issued by FP
which, by their terms, are or become exercisable for AFG Common Stock after the
Merger.
Section 3.2 Stockholders' Rights at the Effective Time. On and after the
Effective Time, the certificates that immediately prior to the Effective Time
represented shares of FP Common Stock (the "Certificates"), shall cease to
represent any rights with respect to FP Common Stock and shall only represent
the right to receive the Merger Consideration. As of the Effective Time, the
holders of FP Common Stock as of the Effective Time who are entitled to receive
shares of AFG Common Stock as Merger Consideration shall be deemed to be record
owners of such shares of AFG Common Stock as of the Effective Time and shall
thereupon be entitled to exercise any rights as a holder of AFG Common Stock,
including the right to vote such AFG Common Stock, whether or not the
Certificates are surrendered and exchanged pursuant to this Agreement.
Section 3.3 Surrender and Exchange of Share Certificates.
(a) Promptly after the Closing Date, AFG shall make available to
Corporate Stock Transfer, the transfer agent of AFG (the "Exchange Agent"),
certificates evidencing such number of shares of AFG Common Stock as will enable
the Exchange Agent to deliver the AFG Common Stock as Merger Consideration
pursuant to Section 3.1(a). The number of shares of AFG Common Stock that each
FP Stockholder will be entitled to receive will be determined by multiplying the
number of shares of FP Common Stock held by such stockholder by the Exchange
Ratio. Notwithstanding any other provision of this Agreement, no fractional
shares of AFG Common Stock will be issued in connection with the Merger. Any FP
Stockholder who is entitled to receive a fractional share shall be entitled to
receive the next whole number of shares of AFG Common Stock.
(b) At or after the Closing, each holder of a Certificate shall
surrender and deliver such Certificate to the Exchange Agent together with a
duly completed and executed transmittal letter. Upon such surrender and
delivery, the holder shall receive the Merger Consideration. Until so
surrendered and exchanged, each Certificate formerly representing an outstanding
share of FP Common Stock shall, after the Effective Time, be deemed for all
purposes to evidence only the right to receive the Merger Consideration as
provided in Section 3.1(a)(iii).
(c) At the Effective Time, the stock transfer books of FP shall be
closed and no transfer of shares of FP Common Stock shall be recorded
thereafter, other than transfers of shares of FP Common Stock that have occurred
prior to the Effective Time. In the event that, after the Effective Time,
Certificates are presented for transfer to FP, Merger Subsidiary or AFG, they
shall be delivered to the Exchange Agent and exchanged for the Merger
Consideration as provided for in this Section 3.3.
(d) Any Merger Consideration that remains undistributed to the
stockholders of FP as of the Effective Time after four months have elapsed
following the Effective Time shall be delivered to AFG by the Exchange Agent,
upon demand, and any former stockholders of FP who have not previously complied
with this Section 3.3 shall thereafter look only to AFG for payment of their
claim for the Merger Consideration or dividends or distributions with respect to
AFG Common Stock.
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(e) Neither the Exchange Agent, nor any of FP, Merger Subsidiary or
AFG shall be liable to any holder of shares of FP Common Stock with respect to
any Merger Consideration (or dividends or distributions with respect to AFG
Common Stock) delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
(f) In the event any Certificates shall have been lost, stolen or
destroyed, the Exchange Agent shall deliver the Merger Consideration and any
dividends or other distributions with respect to AFG Common Stock to which such
holder is entitled in exchange for such lost, stolen or destroyed Certificates,
upon the making of an affidavit of that fact by the record holder thereof and
the delivery of such bond as the Exchange Agent may reasonably require.
(g) No transfer taxes shall be payable by any stockholder of FP in
respect of the issuance of the AFG Common Stock under this Section 3.3, except
that if any AFG Common Stock is to be issued in a name other than that in which
the Certificate surrendered has been registered, it shall be a condition of such
issuance that the Person requesting such issuance shall pay to AFG any transfer
taxes payable by reason thereof, or of any prior transfer of such surrendered
Certificate, or establish to the satisfaction of AFG that such taxes have been
paid or are not payable.
Section 3.4 No Further Rights. From and after the Effective Time, holders
of Certificates theretofore evidencing shares of FP Common Stock shall cease to
have any rights as stockholders of FP, except as provided herein or by Law.
Section 3.5 Resale Restrictions.
(a) The stockholders of FP who received shares of AFG Common Stock
as Merger Consideration may not offer or sell any shares of AFG Common Stock
unless such offer or sale is made (i) pursuant to an effective registration of
such AFG Common Stock under the Securities Act of 1933, as amended ("Securities
Act"), or (ii) pursuant to an available exemption from the registration
requirements of the Securities Act. AFG shall refuse to register the transfer of
any AFG Common Stock not made in accordance with this Section 3.5 and for such
purpose may place stop order instructions with its transfer agent with respect
to the AFG Common Stock issued as Merger Consideration. A proposed transfer
shall be deemed to comply with this Section 3.5 if the applicable stockholder
delivers to AFG a legal opinion in form and substance satisfactory to AFG from
counsel reasonably satisfactory to AFG to the effect that such transfer complies
with this Section 3.5.
(b) Each certificate representing shares of AFG Common Stock issued
as Merger Consideration will bear the following legend or one substantially
similar thereto: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE `ACT'), OR ANY
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, MORTGAGED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS."
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ARTICLE IV
Representations and Warranties of FP
FP represents and warrants to AFG and Merger Subsidiary that, except as
disclosed in the FP Disclosure Schedule which has been delivered to AFG prior to
the execution of this Agreement (the "FP Disclosure Schedule"):
Section 4.1 Organization and Qualification. FP is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. FP has the requisite corporate power and authority to carry on its
business as it is now being conducted and is duly qualified or licensed to do
business, and, if applicable, is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification or licensing necessary, except where the
failure to be so organized, qualified, licensed or in good standing, or to have
such power and authority, when taken together with all other such failures would
not have an FP Material Adverse Effect. FP has heretofore made available to AFG
and Merger Subsidiary a complete and correct copy of the certificate of
incorporation, by-laws or other governing documents, each as amended to the date
hereof, of FP. FP does not own or control, directly or indirectly, any equity
interest in any corporation, company, association, partnership, joint venture or
other entity or own any real estate.
Section 4.2 Capitalization.
(a) The authorized capital stock of FP consists of 20,000,000 shares
of FP Common Stock and 10,000,000 shares of preferred stock, par value $.01 per
share ("FP Preferred Stock"). There are 9,900,033 shares of FP Common Stock
issued and outstanding, all of which were validly issued, fully paid and
non-assessable, and there are no shares of FP Preferred Stock issued or
outstanding.
(b) Except as set forth in Section 4.2 of the FP Disclosure
Schedule, there are no preemptive or other outstanding rights, options,
warrants, conversion rights (including pursuant to convertible securities),
stock appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind relating to the issued or
unissued capital stock of FP or obligating FP to issue or sell any shares of
capital stock of, or other equity interests in, FP. As of the date of this
Agreement, there are no outstanding contractual obligations of FP to repurchase,
redeem or otherwise acquire any shares of capital stock of FP or to provide
material funds to, or make any material investment (in the form of a loan,
capital contribution or otherwise) in, any Person.
Section 4.3 Authority Relative to this Agreement and the Transactions. FP
has all corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the Merger. The execution
and delivery by FP of this Agreement, and the consummation by FP of the
Transactions to which it is a party, have been duly and validly authorized by
all necessary corporate action and no other corporate proceedings on the part of
FP are necessary to authorize the execution and delivery of this Agreement or to
consummate the Transactions to which it is a party other than, with respect to
the Merger, the adoption of this Agreement by the affirmative vote of the
holders of a majority of the outstanding shares of FP Common Stock and the
filing and recordation of appropriate merger documents as required by Delaware
Law. This Agreement has been duly and validly executed and delivered by FP and,
assuming the due authorization, execution and delivery by the other parties
hereto, constitutes a legal, valid and binding obligation of FP, enforceable
against FP in accordance with its terms.
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Section 4.4 No Conflicts, Required Filings and Consents.
(a) The execution and delivery of this Agreement by FP does not, and
the performance of this Agreement and consummation of the Transactions by FP
will not: (i) conflict with or violate the certificate of incorporation or
by-laws of FP, (ii) conflict with or violate any Law applicable to FP or by
which any property or asset of FP is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration, or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of FP pursuant
to, any Contract to which FP is a party or by which FP or any property or asset
of FP is bound or affected, except in the case of clauses (ii) and (iii) for any
such conflicts, violations, breaches, defaults or other occurrences of the type
referred to above which would not have an FP Material Adverse Effect.
(b) The execution and delivery of this Agreement by FP does not, and
the performance of this Agreement by FP will not, require any consent, approval,
authorization, waiver or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic, foreign or supranational (a
"Governmental Entity"), except for filing and recordation of the Certificate of
Merger as required by Delaware Law.
Section 4.5 Status of FP Stockholders. Each stockholder of FP is an
"accredited investor" as such term is defined in Rule 501 promulgated under the
Securities Act and has been advised that the shares of AFG Common Stock that
will be received by such stockholder in the Merger have not been registered
under the Securities Act, will be "restricted securities" as such term is
defined in Rule 144(a) promulgated under the Securities Act, and may not be sold
by such stockholder unless such shares are registered for resale or an exemption
from such registration is available.
Section 4.6 Brokers. No agent, broker, finder, investment banker or other
firm or Person is or will be entitled to any broker's or finder's fee or other
similar commission or fee in connection with the Transactions based upon
arrangements made by or on behalf of FP.
Section 4.7 Financial Statements; Absence of Changes.
(a) Section 4.7(a) of the FP Disclosure Schedule sets forth copies
of (i) the audited financial statements of FP as of October 31, 2004 and 2003
and for the twelve (12) month periods ended October 31, 2004 and October 31,
2003, together with the report thereon of Singer Lewack Xxxxxxxxx & Xxxxxxxxx
independent certified public accountants; (ii) audited financial statements of
FP for the eight (8)-month period ended June 30, 2005 together with the report
thereon of Xxxxxx, Demgen & Xxxxx, LLP, independent certified public
accountants; and (iii) the unaudited quarterly financial statements of FP for
the quarters ended September 30, 2005 and December 31, 2005 (the "FP Financial
Statements"). The FP Financial Statements fairly present the financial condition
and the results of operations, changes in stockholders' equity and cash flow of
FP as at the respective dates of and for the periods referred to in such FP
Financial Statements, all in accordance with U.S. generally accepted accounting
principles ("GAAP"), and are consistent with the books and records of FP;
provided, however, that the FP Financial Statements referred to in clause (iii)
above are subject to normal recurring year-end adjustments (which will not be
material) and do not include footnotes.
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(b) Except for liabilities incurred in connection with the
Transactions, since June 30, 2005, FP has conducted its business only in the
ordinary course, and since such date there has not occurred any event having an
FP Material Adverse Effect or, to FP's knowledge, any event or development which
is reasonably likely to cause an event having an FP Material Adverse Effect.
Section 4.8 Litigation. Except as set forth on Section 4.8 of the FP
Disclosure Schedule, there is no suit, action, proceeding, arbitration or claim
(collectively, "Litigation") pending or, to the knowledge of FP, threatened
against or affecting FP that, individually or in the aggregate, would, if
decided adversely to FP, reasonably be expected to have an FP Material Adverse
Effect, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against FP having, or which would
reasonably be expected to have, individually or in the aggregate, an FP Material
Adverse Effect.
Section 4.9 Environmental. There have been no Releases of any Hazardous
Materials at, on or under any facility or property currently or formerly owned,
leased, or operated by FP that, individually or in the aggregate, would
reasonably be expected to have an FP Material Adverse Effect. FP is not the
subject of any pending or, to FP's knowledge, threatened investigation or
proceeding under Environmental Law relating in any manner to the off-site
treatment, storage or disposal of any Hazardous Materials generated at any
facility or property currently or formerly owned, leased or operated by FP that,
individually or in the aggregate, could reasonably be expected to have an FP
Material Adverse Effect. FP has not assumed or otherwise agreed to be
responsible for any liabilities arising under Environmental Law which,
individually or in the aggregate, could reasonably be expected to have an FP
Material Adverse Effect. The term "Environmental Law" means any and all
applicable laws or regulations or other requirements of any Governmental Entity
concerning the protection of human health or the environment. The term
"Hazardous Materials" means all explosive or regulated radioactive materials,
hazardous or toxic substances, wastes or chemicals, petroleum (including crude
oil or any fraction thereof), and all other materials or chemicals regulated
under any Environmental Law. The term "Release" means any spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching,
emanation or migration in, into, onto, or through the environment.
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Section 4.10 Intellectual Property.
(a) FP has such ownership of or such rights by license or otherwise
in all patents and patent applications, mask works, trademarks and service
marks, trademark and service xxxx registrations and applications, trade names,
logos, brands, titles, copyrights, subsidiary rights, copyright registrations
and applications, trade secrets, names and likenesses, know-how, proprietary
processes, compositions of matter, formulae, designs, computer software programs
and other proprietary rights as are necessary to conduct and permit the conduct
of the business of FP as currently conducted (collectively, the "Intellectual
Property Rights"), except where the failure to have such ownership or right by
license or otherwise, individually and in the aggregate, would not reasonably be
expected to have an FP Material Adverse Effect. Section 4.10 of the FP
Disclosure Schedule sets forth a list of all (i) registered Intellectual
Property Rights owned by FP and (ii) material registered Intellectual Property
Rights licensed or otherwise used by FP in the conduct of its business.
(b) The conduct of the business of FP as currently conducted does
not infringe upon the intellectual property rights of any third party or violate
the privacy rights of any third party or defame any third party and there are no
such present or, to the knowledge of FP, threatened infringements or violations
of the Intellectual Property Rights by any third party, except, in either case,
for such infringements or violations which, individually and in the aggregate,
would not reasonably be expected to have an FP Material Adverse Effect.
(c) To the knowledge of FP, no other person or entity is infringing,
violating or misappropriating any of the Intellectual Property Rights.
Section 4.11 Contracts. Except as set forth on Section 4.11(b) of the FP
Disclosure Schedule, as of the date of this Agreement, FP is not a party to or
bound by, and none of its properties or assets are bound by or subject to, any
written, electronic or oral:
(a) Contract that restricts in any material respect the manner in
which, or the localities in which, all or a material portion of the business of
FP is conducted;
(b) Contract under which FP has (i) incurred any indebtedness for
borrowed money that is currently outstanding, (ii) given any guarantee in
respect of indebtedness for borrowed money or (iii) granted any pledge, mortgage
or other security interest in any property or assets of FP; or
(c) Contract in respect of any joint venture, partnership, business
alliance or similar arrangement between FP and any third party involving a
material ownership interest in any such entity.
Each Contract of FP is in full force and effect and is a legal, valid and
binding agreement of FP and, to the knowledge of FP, enforceable against FP and
against the other party or parties thereto, in each case, in accordance with its
terms, in each case, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the rights and
remedies of creditors generally and to general principles of equity (regardless
of whether considered in a proceeding in equity or at law), except for such
failures to be in full force and effect or enforceable that, individually and in
the aggregate, would not reasonably be expected to have an FP Material Adverse
Effect. Except as would not reasonably be expected, individually and in the
aggregate, to have an FP Material Adverse Effect, FP has performed or is
performing all obligations required to be performed by it under its Contracts
and is not (with or without notice or lapse of time or both) in breach or
default thereunder, and, to the knowledge of FP, no other party to any of its
Contracts is (with or without notice or lapse of time or both) in breach or
default thereunder.
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Section 4.12 Benefit Plans.
(a) Section 4.12(a) of the FP Disclosure Schedule lists (i) each
individual employment, termination, or severance agreement with employees or
former employees of FP whose annual compensation is at a base rate equal to or
exceeding $100,000, (ii) all employee benefit plans as that term is defined in
Section 3(3) of the Employee Retirement and Income Security Act of 1974
("ERISA") and (iii) all other plans maintained or contributed to by FP for the
benefit of its employees (or former employees) and/or its beneficiaries
("Benefit Plans"). An arrangement will not fail to be a Benefit Plan simply
because it only covers one individual.
(b) FP has delivered to AFG a true and complete copy of the
following documents (to the extent that they are applicable): (i) each Benefit
Plan and any related funding agreements, including all amendments (and Section
4.12(b) of the FP Disclosure Schedule includes a description of any such
amendment that is not in writing), and (ii) the two most recent Form 5500s
(including all applicable schedules and the opinions of the independent
accountants) that were filed on behalf of any Benefit Plan.
(c) To the knowledge of FP, there are no investigations,
proceedings, or lawsuits, either currently in progress or expected to be
instituted in the future, relating to any Benefit Plan, by any Governmental
Entity.
(d) FP and all Benefit Plans are in compliance in all material
respects with the currently applicable provisions of ERISA and the Code and the
regulations thereunder.
(e) There are no unfunded obligations under any Benefit Plan
providing benefits after termination of employment to any employee of FP (or to
any beneficiary of any such employee), including but not limited to retiree
health coverage and deferred compensation, but excluding continuation of health
coverage required to be continued under Section 4980B of the Code and insurance
conversion privileges under state law.
(f) No act or omission has occurred and no condition exists with
respect to any Benefit Plan maintained by FP that would subject FP to any
material fine, penalty, tax or liability of any kind imposed under ERISA or the
Code.
Section 4.13 Taxes.
(a) FP has filed all material Tax Returns required to be filed by it
and all such returns are complete and correct in all material respects, or
requests for extensions to file such Tax Returns have been timely filed, granted
and have not expired. FP has paid (or caused to be paid) all Taxes shown as due
on such tax returns, and the FP Financial Statements reflect an adequate reserve
(in addition to any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) of tax for all Taxes payable by FP for
all Taxable periods and portions thereof accrued through the date of such
financial statements.
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(b) No Tax Return of FP is under audit or examination by any taxing
authority, and no notice of such an audit or examination has been received by
FP. There is no deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by FP. Each deficiency
resulting from any completed audit or examination relating to Taxes by any
Taxing authority has been timely paid, except for such deficiencies being
contested in good faith and for which adequate reserves are reflected on the
financial statements of FP.
(c) No liens for Taxes (other than for current Taxes not yet due and
payable) exist with respect to any assets or properties of FP. FP is not bound
by any agreement with respect to Taxes.
(d) As used in this Agreement, (a) "Taxes" shall include (A) all
forms of taxation, whenever created or imposed, and whether domestic or foreign,
and whether imposed by a national, Federal, state, provincial, local or other
Governmental Entity, including all interest, penalties and additions imposed
with respect to such amounts, (B) liability for the payment of any amounts of
the type described in clause (A) as a result of being a member of an affiliated,
consolidated, combined or unitary group and (C) liability for the payment of any
amounts as a result of being party to any tax sharing agreement or as a result
of any express or implied obligation to indemnify any other Person with respect
to the payment of any amount described in clause (A) or (B) and (b) "Tax
Returns" shall mean all domestic or foreign (whether national, Federal, state,
provincial, local or otherwise) returns, declarations, statements, reports,
schedules, forms and information returns relating to Taxes and any amended Tax
Return.
ARTICLE V
Representations and Warranties of AFG
AFG represents and warrants to FP that, except as disclosed in the AFG
Disclosure Schedule which has been delivered to FP prior to the execution of
this Agreement (the "AFG Disclosure Schedule"):
Section 5.1 Organization and Qualification. AFG is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, and Merger Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Each of AFG and
the Merger Subsidiary has the requisite corporate power and authority to carry
on its business as it is now being conducted and is duly qualified or licensed
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary. AFG has heretofore made available
to FP a complete and correct copy of the organizational documents, each as
amended to the date hereof, of AFG and Merger Subsidiary. Except for Merger
Subsidiary, neither AFG nor Merger Subsidiary owns or controls, directly or
indirectly, any equity interest in any corporation, company, association,
partnership, joint venture or other entity or owns any real estate. Prior to the
date hereof, AFG (i) owned a subsidiary named Data Drive Marketing, Inc., which
held no material assets, and (ii) transferred away all of its right, title and
interest in such company.
11
Section 5.2 Capitalization.
(a) The authorized capital stock of AFG consists of 300,000,000
shares of AFG Common Stock and 5,000,000 shares of preferred stock, par value
$0.001 per share ("AFG Preferred Stock"). As of the date hereof there are, and
as of the Closing Date and immediately prior to the Effective Time there will be
1,108,502 shares of AFG Common Stock issued and outstanding, all of which have
been validly issued, fully paid and non-assessable. There are no shares of AFG
Preferred Stock issued or outstanding. The names of the stockholders
beneficially holding 5% or more of the AFG Common Stock, and the number of
shares of AFG Common Stock held by each such stockholder, are set forth in
Section 5.2(a) to the AFG Disclosure Schedule. All of the issued and outstanding
shares of AFG Common Stock were issued in compliance with all applicable Laws
including, without limitation, the Securities Act, the Exchange Act and
applicable Blue Sky Laws. Except as set forth in Section 5.2(a) to the AFG
Disclosure Schedule, there are no preemptive or other outstanding rights,
options, warrants, conversion rights (including pursuant to convertible
securities), stock appreciation rights, redemption rights, repurchase rights,
agreements, arrangements, calls, commitments or rights of any kind relating to
the issued or unissued capital stock of AFG or obligating AFG to issue or sell
any shares of capital stock of, or other equity interests in, AFG. As of the
date of this Agreement, there are no outstanding contractual obligations of AFG
to repurchase, redeem or otherwise acquire any shares of capital stock of AFG or
to provide material funds to, or make any material investment (in the form of a
loan, capital contribution or otherwise) in, any Person.
(b) The authorized capital stock of Merger Subsidiary consists of
100 shares of common stock, par value $.01 per share. There are 100 shares of
common stock of Merger Subsidiary issued and outstanding, all of which were
validly issued, fully paid and non-assessable. All of the outstanding shares of
Merger Subsidiary's common stock are held beneficially and of record by AFG,
free and clear of all liens or encumbrances of any kind. There are no preemptive
or other outstanding rights, options, warrants, conversion rights (including
pursuant to convertible securities), stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements, calls, commitments or
rights of any kind relating to the issued or unissued capital stock of Merger
Subsidiary or obligating Merger Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, Merger Subsidiary.
Section 5.3 Authority Relative to this Agreement. Each of AFG and Merger
Subsidiary has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its or his obligations hereunder and to
consummate the Transactions to which each of them is a party. The execution and
delivery of this Agreement by AFG and Merger Subsidiary and the consummation by
AFG and Merger Subsidiary of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of AFG or Merger Subsidiary are necessary to authorize the execution
and delivery of this Agreement or to consummate the Transactions other than,
with respect to the Merger, the filing and recordation of appropriate merger
documents as required by Delaware Law. This Agreement has been duly and validly
executed and delivered by AFG and Merger Subsidiary and, assuming the due
authorization, execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of AFG and Merger Subsidiary,
enforceable against each of them in accordance with its terms.
12
Section 5.4 No Conflicts, Required Filings and Consents.
(a) The execution and delivery of this Agreement by AFG and Merger
Subsidiary does not and will not, and the performance of this Agreement and the
consummation of the Transactions by AFG and Merger Subsidiary will not: (i)
conflict with or violate the articles or certificate of incorporation or by-laws
of AFG or Merger Subsidiary, (ii) conflict with or violate any Laws applicable
to AFG or Merger Subsidiary or by which any property or asset of AFG or Merger
Subsidiary is bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration, or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of AFG or Merger Subsidiary pursuant to any
Contract to which any of them is a party or by which any of their property or
asset is bound or affected.
(b) The execution and delivery of this Agreement by AFG or Merger
Subsidiary does not and will not, and the performance of this Agreement and the
consummation of the Transactions by any of them will not, require any consent,
approval, authorization, waiver or permit of, or filing with or notification to,
any Governmental Entity, except for applicable requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Securities Act of
1933, as amended (the "Securities Act"), state securities or "blue sky" laws
("Blue Sky Laws"), filing and recordation of the Certificate of Merger as
required by Delaware Law, and applications for listing and other filings
required by the rules of Pink Sheets, LLC.
Section 5.5 SEC Reports; Absence of Changes.
(a) Except as set forth in Section 5.5(a) to the AFG Disclosure
Schedule, AFG has filed with the SEC all forms, reports, schedules, registration
statements and preliminary or definitive proxy or information statements
required to be filed by it with the SEC since January 20, 2005 (such reports,
the "AFG SEC Reports"). As of their respective dates, the AFG SEC Reports
complied as to form in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such AFG SEC Reports. As of
their respective dates, the AFG SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. AFG has filed all
material contracts and agreements and other documents or instruments required to
be filed as exhibits to the AFG SEC Reports.
(b) Except as set forth in Section 5.5(b) to the AFG Disclosure
Schedule, since the date of the most recent financial statements appearing in
the AFG SEC Reports, except for liabilities incurred in connection with the
Transactions, since such date AFG has conducted its business only in the
ordinary course, and since such date there has not occurred any event having an
AFG Material Adverse Effect or, to AFG's knowledge, any event or development
which is reasonably likely to cause an event having an AFG Material Adverse
Effect.
Section 5.6 Liabilities and Contracts. Except as set forth in Section 5.6
to the AFG Disclosure Schedule, neither AFG nor Merger Subsidiary has
outstanding any liability or obligation of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due).
Neither AFG nor the Merger Subsidiary is or was a party to, nor are or were
AFG's or the Merger Subsidiary's assets bound or affected by, any Contract
except for Contracts under which neither of them has any further rights or
obligations because the Contract has been fully performed or validly and
irrevocably terminated.
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Section 5.7 Litigation. As of the date hereof, there is no suit, action or
proceeding pending or, to the knowledge of AFG, threatened against or affecting
AFG or Merger Subsidiary, nor is there any judgment, decree, injunction or order
of any Governmental Entity or arbitrator outstanding against AFG or Merger
Subsidiary. Without limiting the generality of the foregoing, none of AFG or
Merger Subsidiary has any notice that the SEC, any state securities or "blue
sky" regulatory authority or any other governmental entity (each, a "Securities
Regulator") is investigating or contemplating taking any action against AFG and,
to the knowledge of AFG, no Securities Regulator is planning or considering
taking such action.
Section 5.8 Brokers. No agent, broker, finder, investment banker or other
firm or Person is or will be entitled to any broker's or finder's fee or other
similar commission or fee in connection with the Transactions based upon
arrangements made by or on behalf of AFG.
Section 5.9 Formation of Merger Subsidiary. Merger Subsidiary was formed
exclusively for the purpose of effecting the Merger and the Transactions and has
engaged in no business activities or incurred no liabilities other than as
contemplated by this Agreement.
Section 5.10 Reorganization of AFG.
(a) On January 20, 2005 ("PoR Date"), the Bankruptcy Court for the
District of Colorado approved AFG's plan of reorganization (the "PoR") pursuant
to 28 U.S.C. Section 157(b)(1) and (b)(2)(L), which became effective and not
subject to further appeal on February 2, 2005.
(b) Except as set forth in Section 5.10(b) to the AFG Disclosure
Schedule, since the PoR Date, AFG has engaged in no material business activities
other than in connection with (i) maintaining its corporate existence, (ii)
taking actions contemplated by the PoR, (iii) completing various filings with
the Securities and Exchange Commission and Bankruptcy Court filings and (iv) as
contemplated by this Agreement.
(c) To the knowledge of AFG, no dispute currently exists with
respect to any prior action, transaction, event or liability involving AFG which
would be reasonably likely to have an AFG Material Adverse Effect.
ARTICLE VI
Covenants
Section 6.1 Conduct of Business by FP Pending the Merger. From and after
the date hereof until the Closing Date, except as contemplated by this Agreement
or unless AFG shall otherwise agree in writing, FP covenants and agrees that it
shall: (a) carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, (b) use all reasonable
efforts to preserve intact its present business organization, keep available the
services of its employees and consultants and preserve its relationships and
goodwill with customers, suppliers, licensors, licensees, distributors and
others having business dealings with it, and (c) use commercially reasonable
efforts (i) to protect its intellectual property rights to the end that its
goodwill and on-going businesses shall not be impaired in any material respect
as of the Closing Date and (ii) to maintain the assets and properties of FP in
their current condition, normal wear and tear excepted. Without limiting the
generality of the foregoing, except as expressly contemplated by this Agreement
or unless AFG shall otherwise agree in writing, prior to the Closing, FP shall
not:
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(i) declare, set aside, or pay any dividends on, or make any
other distributions in respect of, 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; purchase, redeem or otherwise
acquire any shares of capital stock of FP or any rights, warrants, or options to
acquire any such shares;
(ii) grant, award or enter into any compensation or change of
control arrangement with any employee of FP;
(iii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of FP's capital stock, any other voting securities of FP or
any securities convertible into, or any rights, warrants or options to acquire,
any such shares or voting securities (other than the issuance of FP Common Stock
upon the exercise of FP Options) or amend the terms of any such securities,
rights, warrants or options or take any action to accelerate the vesting
thereof;
(iv) amend the certificate of incorporation or by-laws of FP;
(v) 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, joint venture, association
or other business organization or division thereof, or any assets that are
material, individually or in the aggregate, to FP, except, in any such case, in
the ordinary course of business;
(vi) adopt a plan of complete or partial liquidation;
(vii) incur or modify any indebtedness for borrowed money or
guarantee any such indebtedness of another Person; issue or sell any debt
securities of FP; guarantee any debt securities of another Person;
(viii) except in the ordinary course of business, make any
loans, advances or capital contributions to, or investments in, any other Person
or settle or compromise any material claims or litigation;
(ix) take any action or omit to take any action that would
cause any of its representations and warranties herein to become untrue in any
material respect;
(x) authorize any of, or commit or agree to take any of, the
foregoing actions;
15
(xi) sell, lease, license, encumber or otherwise dispose of
any tangible real property or personal property;
(xii) encumber any material assets of FP;
(xiii) take any action with respect to accounting policies or
procedures;
(ix) increase the compensation payable or to become payable or
the benefits provided to its directors, officers or employees, except for
increases in the ordinary course of business and consistent with past practice
in salaries or wages of employees who are not directors or officers of FP, or
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or other employee of FP; or
(x) enter into any Contract or amend, modify or waive any
rights under any Contract to which it is a party;
Section 6.2 Covenant of AFG. From and after the date hereof until the
Closing Date, except as contemplated by this Agreement, disclosed in the
Disclosure Schedules or unless FP shall otherwise agree in writing, AFG
covenants and agrees that it shall not, and shall cause the Merger Subsidiary
not to:
(a) declare, set aside, or pay any dividends on, or make any other
distributions in respect of, 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; purchase, redeem or otherwise acquire any
shares of its capital stock or any rights, warrants, or options to acquire any
such shares;
(b) enter into any Contract or amend, modify or waive any rights
under any Contract to which it is a party, except in connection with or as
contemplated under the transaction documents related to the CAP Financing;
(c) issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of its capital stock or other securities, or any securities
convertible into, or any rights, warrants or options to acquire, any such shares
or securities or amend the terms of its outstanding capital stock;
(d) amend its articles of incorporation or by-laws;
(e) acquire or dispose of any assets or satisfy, settle or
compromise any liability, claim, litigation or other obligation;
(f) adopt a plan of complete or partial liquidation;
(g) incur or modify any indebtedness for borrowed money or guarantee
any such indebtedness of another Person; issue or sell any debt securities; or
guarantee any debt securities of another Person;
16
(h) make any loans, advances or capital contributions to, or
investments in, any other Person;
(i) take any action or omit to take any action that would cause any
of its representations and warranties herein to become untrue in any material
respect; or
(j) authorize any of, or commit or agree to take any of, the
foregoing actions.
Section 6.3 Stockholder Approval. FP and the Merger Subsidiary shall each
take all actions necessary, in accordance with applicable Law and its respective
certificate of incorporation and by-laws, to cause as promptly as reasonably
practicable after the date hereof the stockholders of FP and Merger Subsidiary
(and AFG in its capacity as the sole stockholder of the Merger Subsidiary) to
approve the Transactions. The respective boards of directors of FP, AFG and
Merger Subsidiary shall recommend such approval and shall take all lawful
actions to solicit and obtain such approval.
Section 6.4 Further Action; Consents; Filings. Upon the terms and subject
to the conditions hereof, each of the parties hereto shall use its reasonable
best efforts to take, or cause to be taken, all appropriate actions and do, or
cause to be done, all things necessary, proper or advisable under applicable Law
or otherwise to consummate and make effective as promptly as practicable the
Transactions and to cooperate with each other in connection with the foregoing.
Without limiting the generality of the foregoing, each of the parties agrees to
take all appropriate actions to obtain from Governmental Entities any
Governmental Authorizations required to be obtained or made by AFG, FP or the
Merger Subsidiary in connection with the authorization, execution and delivery
of this Agreement and the consummation of the Transactions, and to make all
necessary filings, and thereafter make any other required submissions that are
required under the Exchange Act, the Securities Act, the Blue Sky Laws, or any
other applicable Law. The parties hereto shall cooperate with each other in
connection with the making of all such filings, including by providing copies of
all such documents to the nonfiling party and its advisors prior to filing and,
if requested, by accepting all reasonable additions, deletions or changes
suggested in connection therewith.
Section 6.5 Plan of Reorganization. The Merger is intended to constitute a
"plan of reorganization" under the provisions of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code. From and after the date of this Agreement and until
the Closing, each party hereto shall use its reasonable best efforts to cause
the Merger to qualify, and will not knowingly take any action, cause any action
to be taken, fail to take any action or cause any action to fail to be taken
which action or failure to act could prevent the Merger from qualifying as a
reorganization under the provisions of Section 368(a) of the Code. Following the
Closing, neither Surviving Corporation, AFG nor any of their Affiliates shall
knowingly take any action, cause any action to be taken, fail to take any action
or cause any action to fail to be taken, which action or failure to act could
cause the Merger to fail to qualify as a reorganization under Section 368(a) of
the Code.
Section 6.6 Access to Information. From the date hereof until the Closing
or the earlier termination of this Agreement in accordance with its terms, AFG
shall afford to FP and its accountants, counsel and other representatives full
and reasonable access during normal business hours (and at such other times as
the parties may mutually agree) to its books, Contracts, commitments, records
and personnel and, during such period, shall furnish promptly to FP (i) a copy
of each report, schedule and other document filed or received by it pursuant to
the requirements of the Exchange Act or the Securities Act, and (ii) all other
information concerning its business as FP may reasonably request. FP shall
conduct its review in a manner reasonably calculated not to disrupt AFG's
business and operations. No investigation pursuant to this Section 6.6 and no
knowledge obtained thereby or otherwise shall limit any representation or
warranty of AFG or impair any rights of an FP Indemnified Party as a result
thereof.
17
Section 6.7 Public Announcements. On or before the Closing Date, neither
AFG nor FP shall (nor shall they permit any of their respective Affiliates to),
without prior consultation with the other parties and such other parties' review
of and consent to any public announcement concerning the Transactions, issue any
press release or make any public announcement with respect to Transactions
during such period, and AFG and FP shall, to the extent practicable, allow the
other parties reasonable time to review and comment on such release or
announcement in advance of its issuance and use reasonable efforts in good faith
to reflect the reasonable and good faith comments of such other party; provided,
however, no party shall be prevented from making any disclosure required by Law
at the time so required because of any delay on the part of another party.
Section 6.8 Notice of Breaches. FP shall give prompt notice to AFG, and
AFG shall give prompt notice to FP, of (i) any representation or warranty made
by it contained in this Agreement which has become untrue or inaccurate in any
respect, or (ii) the failure by it to comply with or satisfy any covenant,
condition, or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that such notification shall not excuse or
otherwise affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
Section 6.9 Confidentiality. AFG will instruct all of its employees,
representatives, agents, relatives and affiliates to, treat all Confidential
Material confidentially, not disclose it except in accordance herewith and not
use it for his or their own benefit or the benefit of any person other than AFG
or FP; provided, that (a) any disclosure of Confidential Material may be made
with the prior written consent of FP; and (b) Confidential Material may be
disclosed without liability hereunder to the extent required by law or by the
order or decree of any court or other governmental authority; provided, however,
that the party legally compelled to disclose the Confidential Material provides
FP with prompt notice of that fact so that FP may attempt to obtain a protective
order or other appropriate remedy. For purposes of this section, the term
"Confidential Material" means all information, documents and other materials
relating to the business, customers, products, services, prospects, plans or
other matters of FP; provided, however, that the term "Confidential Material"
will not include information that (i) becomes generally available to the public
other than as a result of a disclosure by AFG (prior to the Closing) or any of
its employees, representatives, agents, relatives or affiliates, or (ii) was
made available to AFG on a non-confidential basis from a source other than the
FP, provided, that such source is not bound by a confidentiality agreement
restricting such disclosure.
18
ARTICLE VII
Conditions Precedent
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) This Agreement and the Merger shall have been approved and
adopted by the holders of FP Common Stock, and the stockholders of Merger
Subsidiary, in the manner required by Law.
(b) The consummation of the Merger shall not be restrained, enjoined
or prohibited by any order, judgment, decree, injunction or ruling of a court of
competent jurisdiction.
Section 7.2 Conditions to Obligation of FP to Effect the Merger. The
obligation of FP to effect the Merger shall be subject to the fulfillment at or
before the Effective Time of the following additional conditions, unless waived
by FP:
(a) The representations and warranties of AFG contained in this
Agreement shall be true and correct in all material respects on the date hereof
and as of the Closing Date as if made on the Closing Date.
(b) AFG and Merger Subsidiary shall have performed or complied with
all agreements and covenants required to be performed by each of them under this
Agreement on or before the Closing Date.
(c) AFG shall have approved the Transactions in its capacity as the
sole stockholder of the Merger Subsidiary.
(d) FP shall have received copies of resignations of each of the
directors and officers of AFG which have been accepted by AFG.
(e) AFG shall not have suffered an AFG Material Adverse Effect.
(f) FP shall have received a certificate of an authorized officer of
AFG and Merger Subsidiary, on behalf of AFG and Merger Subsidiary, that the
conditions set forth in paragraphs (a) through (c) and (e) above have been
satisfied.
Section 7.3 Conditions to Obligations of AFG and Merger Subsidiary to
Effect the Merger. The obligations of AFG and Merger Subsidiary to effect the
Merger shall be subject to the fulfillment at or before the Effective Time of
the following additional conditions, unless waived by AFG:
(a) The representations and warranties of FP contained in this
Agreement shall be true and correct in all respects on the date hereof and as of
the Closing Date as if made on the Closing Date.
19
(b) FP shall have performed or complied in all material respects
with all agreements and covenants required to be performed by it under this
Agreement on or before the Closing Date.
(c) FP shall not have suffered an FP Material Adverse Effect.
(d) AFG shall have received a certificate of an authorized officer
of FP, on behalf of FP, that the conditions in paragraphs (a) through (d) above
have been satisfied.
ARTICLE VIII
Survival and Indemnification
Section 8.1 Survival of Representations, Warranties and Covenants. The
parties hereto hereby agree that the representations, warranties, covenants and
agreements contained in this Agreement shall survive the execution and delivery
of this Agreement, and the Closing but shall terminate twelve (12) months after
the Closing Date. Covenants and agreements of the parties shall survive until
fully performed.
ARTICLE IX
Termination, Amendment and Waiver
Section 9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of FP:
(a) by mutual written consent of AFG and FP;
(b) by FP, upon a material breach of this Agreement on the part of
AFG or Merger Subsidiary which has not been cured and which would cause the
conditions set forth in Section 7.2 to be incapable of being satisfied by June
30, 2006;
(c) by AFG, upon a material breach of this Agreement on the part of
FP which has not been cured and which would cause the conditions set forth in
Section 7.3 to be incapable of being satisfied by June 30, 2006;
(d) by AFG or FP if any court of competent jurisdiction shall have
issued, enacted, entered, promulgated or enforced any order, judgment, decree,
injunction or ruling which restrains, enjoins or otherwise prohibits the Merger;
or
(e) by AFG or FP if the Merger shall not have been consummated on or
before June 30, 2006; provided, that the right to terminate this Agreement under
this Section 9.1(e) shall not be available to any party whose failure to perform
any material covenant or obligation under this Agreement has been the cause of
or resulted in the failure of the Merger to occur on or before such date.
Section 9.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith terminate
and there shall be no liability hereunder on the part of any of FP, AFG or
Merger Subsidiary; provided, this Section 9.2, Section 9.3 (Fees and Expenses);
and Section 10.6 (Governing Law) shall survive the termination and remain in
full force and effect and; provided, further, that each party shall remain
liable for any breaches of or inaccuracies in such party's covenants,
representations and warranties hereunder which breach or inaccuracy occurred
prior to the termination of this Agreement.
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Section 9.3 Fees and Expenses. Whether or not the Merger is consummated,
all costs and expenses incurred in connection with this Agreement and the
Transactions shall be paid by the party incurring such expenses.
Section 9.4 Amendment. This Agreement may be amended by the parties hereto
at any time only by an instrument in writing signed on behalf of each of the
parties hereto.
Section 9.5 Waiver. At any time prior to the Closing, the parties hereto
may, to the extent permitted by applicable Law, (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties by any other
party contained herein or in any documents delivered by any other party pursuant
hereto and (iii) waive compliance with any of the agreements of any other party
or with any conditions to its own obligations contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.
ARTICLE X
General Provisions
Section 10.1 Notices. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy (with
confirmation of receipt), or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to FP:
FP Technology Holdings, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
---------
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
---------
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to AFG or Merger Subsidiary:
AFG Enterprises USA, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
---------
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx, Xxxxxxx & Xxxxxxx, P.C.
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, Esq.
---------
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section 10.1.
Section 10.2 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at Law or in equity.
Section 10.3 Entire Agreement. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
Section 10.4 Assignments; Parties in Interest. Neither this Agreement nor
any of the rights, interests or obligations hereunder may be assigned by any of
the parties hereto (whether by operation of Law or otherwise) without the prior
written consent of the other parties. Subject to the foregoing, this Agreement
shall be binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any Person not a party hereto any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, including to confer third party
beneficiary rights except that the stockholders of FP are intended third-party
beneficiaries of the representations, warranties and covenants of AFG .
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Section 10.5 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Delaware (without giving effect to the
provisions thereof relating to conflicts of Law).
Section 10.6 Headings; Disclosure. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement. Any disclosure by FP
or AFG in any portion of its respective Disclosure Schedule shall be deemed
disclosure in each other portion of such Disclosure Schedule to which such
disclosure reasonably relates on its face.
Section 10.7 Certain Definitions and Rules of Construction.
(a) As used in this Agreement:
"Affiliate" as applied to any Person, shall mean any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person; for purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as applied to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities, by contract or
otherwise.
"AFG Material Adverse Effect" shall be any circumstance, event or
occurrence that would be reasonably likely to have a material adverse effect on
the business, assets, operations, financial condition, revenues, results of
operations of AFG taken as a whole, but excluding any circumstance, event or
occurrence that does not, or is not reasonably likely to, result in dmamages,
costs or losses less than $50,000.
"Contract" means any contract, agreement, note, bond, mortgage, indenture,
credit agreement, lease, license, permit, franchise or other instrument,
obligation or understanding, whether written or oral.
"Debt" means, with respect to any Person, all indebtedness of such Person
for borrowed money or the deferred purchase price of property or services
(excluding trade payables and other accrued current liabilities arising in the
ordinary course of business), obligations of such Person evidenced by bonds,
notes, indentures or similar instruments, obligations of such Person under
interest rate agreements, currency hedging agreements, commodity price
protection agreements or similar hedging instruments, capital lease obligations
of such Person, redeemable capital stock of such Person and any other
obligations of such Person classified as indebtedness under GAAP.
"Laws" means any domestic (federal, state or local) or foreign law, rule,
regulation, order, judgment or decree.
"Litigation Expense" means any expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against under this Agreement, including,
court filing fees, court costs, arbitration fees or costs, witness fees and
reasonable fees and disbursements of legal counsel (whether incurred in any
action or proceeding between the parties to this Agreement or between any party
to this Agreement and any third person and whether or not any action or
proceeding is commenced), investigators, expert witnesses, accountants and other
professionals.
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"Loss" means any loss, obligation, claim, liability, settlement payment,
award, judgment, fine, penalty, interest charge, expense, damage or deficiency
or other charge, measured after accounting for any insurance proceeds actually
received with respect thereto, other than Litigation Expense.
"FP Material Adverse Effect" shall be any circumstance, event or
occurrence that would be reasonably likely to have a material adverse effect on
the business, assets, operations, financial condition, prospects, revenues,
results of operations of FP taken as a whole.
"Person" shall include individuals, corporations, partnerships, limited
liability companies, trusts, other entities and groups (which term shall include
a "group" as such term is defined in Section 13(d)(3) of the Exchange Act).
"Tax" shall mean any federal, state, local, foreign or provincial income,
gross receipts, property, sales, service, use, license, lease, excise,
franchise, employment, payroll, withholding, employment, unemployment insurance,
workers' compensation, social security, alternative or added minimum, ad
valorem, value added, stamp, business license, occupation, premium,
environmental, windfall profit, customs, duties, estimated, transfer or excise
tax, or any other tax, custom, duty, premium, governmental fee or other
assessment or charge of any kind whatsoever, together with any interest, penalty
or addition to tax imposed by any Governmental Entity.
"Transactions" shall mean the transactions contemplated by this Agreement.
(b) Other Rules of Construction.
(i) References in this Agreement to any gender shall include
references to all genders. Unless the context otherwise requires, references in
the singular include references in the plural and vice versa. References to a
party to this Agreement or to other agreements described herein means those
Persons executing such agreements.
(ii) The words "include", "including" or "includes" shall be
deemed to be followed by the phrase "without limitation" or the phrase "but not
limited to" in all places where such words appear in this Agreement. The word
"or" shall be deemed to be inclusive.
(iii) This Agreement is the joint drafting product of AFG and
FP, and each provision has been subject to negotiation and agreement and shall
not be construed for or against either party as drafter thereof.
(iv) In each case in this Agreement where this Agreement or a
Contract is represented or warranted to be enforceable will be deemed to include
as a limitation to the extent that enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar Laws affecting the enforcement of creditors' rights generally and to
general equitable principles, whether applied in equity or at Law.
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Section 10.8 Counterparts. This Agreement may be executed in two or more
counterparts which together shall constitute a single agreement.
Section 10.9 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economics or legal
substance of the Transactions are not affected in any manner materially adverse
to any party. Upon determination that any term or other provision hereof is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable Law in an acceptable manner to the end that the Transactions are
fulfilled to the extent possible.
[Signature page follows on next page]
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IN WITNESS WHEREOF, AFG, Merger Subsidiary and FP have each signed this
Agreement or caused this Agreement to be signed by their respective officers
thereunto duly authorized all as of the date first written above.
AFG Enterprises USA, Inc. FP Merger Sub, Inc.
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
------------------------------ ------------------------------
Name: Xxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer Title: Chief Executive Officer
FP Technology Holdings, Inc.
By: /s/ Xxxxxxx Xxxxx
------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
26
