AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 19, 2004
BY AND AMONG
THINKING TOOLS, INC.,
GVI SECURITY ACQUISITION CORP.,
and
GVI SECURITY, INC.
TABLE OF CONTENTS
PAGE
----
1. CERTAIN DEFINITIONS.......................................................1
1.1 Defined Terms....................................................1
1.2 References to Dollars............................................6
2. THE MERGER................................................................6
2.1 The Merger.......................................................6
2.2 Consummation of the Merger and Effective Time....................7
2.3 Conversion or Cancellation of Shares.............................7
2.4 Merger Consideration.............................................7
2.5 Certificate of Incorporation and By laws.........................8
2.6 Directors and Officers...........................................8
3. THE CLOSING...............................................................8
3.1 Closing..........................................................8
3.2 Issuance of Purchaser Shares.....................................8
3.3 Exchange of Certificates.........................................8
4. REPRESENTATIONS AND WARRANTIES OF GVI.....................................9
4.1 Organization and Good Standing...................................9
4.2 Capitalization of GVI; Title to the GVI Shares...................9
4.3 Authority Relative to Agreement.................................10
4.4 Absence of Conflict.............................................10
4.5 Consents and Approvals; Effect of Change in Control.............10
4.6 Financial Statements............................................11
4.7 Title to Property; Sufficiency; Encumbrances....................11
4.8 Leased Property.................................................12
4.9 Intellectual Property Rights....................................12
4.10 Litigation......................................................13
4.11 Tax Matters.....................................................13
4.12 Absence of Certain Changes or Events............................13
4.13 Employee Benefits; Executive Officers; Labor....................15
4.14 Insurance; Claims...............................................15
4.15 Contracts and Commitments.......................................15
4.16 Status of Agreements............................................16
4.17 Compliance with Law.............................................17
4.18 Transactions with Related Parties...............................17
4.19 Bank Accounts...................................................17
4.20 No Guaranties...................................................17
4.21 Records.........................................................17
4.22 No Brokers or Finders...........................................18
4.23 Investment Representations......................................18
4.24 Tax Reporting...................................................18
4.25 Disclosure......................................................18
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PURCHASER SUBSIDIARY.....19
5.1 Organization and Good Standing..................................19
5.2 Capitalization of Purchaser.....................................19
5.3 Authority Relative to Agreement.................................19
5.4 Absence of Conflict.............................................20
5.5 No Brokers or Finders...........................................20
5.6 SEC Documents: Financial Statements.............................20
5.7 Litigation......................................................21
5.8 Tax Matters.....................................................21
5.9 Absence of Certain Changes or Events............................21
5.10 Employee Benefits; Executive Officers; Labor....................22
5.11 Contracts and Commitments.......................................23
5.12 Status of Agreements............................................24
5.13 Bank Accounts...................................................24
5.14 No Guaranties...................................................24
5.15 Records.........................................................24
5.16 No Brokers or Finders...........................................24
5.17 Tax Reporting...................................................25
5.18 Purchaser Subsidiary's Operations...............................25
5.19 Disclosure......................................................25
6. CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND PURCHASER SUBSIDIARY......25
6.1 Legal Opinion...................................................25
6.2 No Injunction...................................................25
6.3 Representations, Warranties and Agreements......................25
6.4 Approvals.......................................................26
6.5 No Material Adverse Effect......................................26
6.6 Investment Representations Certificate..........................26
6.7 Resignations....................................................26
6.8 Corporate Approval..............................................26
6.9 Secretary of State Certificates.................................26
6.10 Secretary's Certificate of GVI..................................26
6.11 Voting Agreement................................................26
7. CONDITIONS TO THE OBLIGATIONS OF GVI.....................................26
7.1 Legal Opinion...................................................26
7.2 No Injunction...................................................27
7.3 Representations, Warranties and Agreements......................27
7.4 Approvals.......................................................27
7.5 Corporate Approval..............................................27
7.6 Secretary of State Certificates.................................27
7.7 Secretary's Certificate.........................................27
7.8 Indebtedness....................................................27
7.9 Accrued Fees....................................................27
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8. FURTHER AGREEMENTS OF THE PARTIES........................................28
8.1 Expenses........................................................28
8.2 Access Prior to the Closing.....................................28
8.3 Publicity.......................................................29
8.4 Conduct of Business of GVI......................................29
8.5 Further Assurances..............................................30
8.6 Amending Schedules..............................................30
8.7 Consents: Regulatory Approval..................................30
8.8 Charter Amendment...............................................30
9. INDEMNIFICATION AND RELATED MATTERS......................................31
9.1 Indemnification by Purchaser....................................31
9.2 Survival........................................................32
9.3 Time Limitations................................................32
9.4 Limitation on Liability.........................................32
9.5 Notice of Claims................................................32
9.6 Payment of Damages..............................................33
9.7 Third Party Beneficiaries.......................................33
10. TERMINATION..............................................................34
10.1 Termination Procedures..........................................34
10.2 Effect of Termination...........................................34
11. MISCELLANEOUS............................................................34
11.1 Entire Agreement................................................34
11.2 Governing Law...................................................34
11.3 Headings........................................................35
11.4 Notices.........................................................35
11.5 Binding Effect; Assignment......................................36
11.6 Counterparts....................................................36
11.7 Amendment and Waiver............................................36
11.8 Dispute Resolution..............................................36
EXHIBITS
Exhibit A Certificate of Merger
Exhibit B Certificate of Designations of Purchaser Preferred Stock
Exhibit C Investment Representation Letter
Exhibit D Registration Rights Agreement
Exhibit E Europa Promissory Note
Exhibit F Stock Option Plan
Exhibit G Voting Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of February 19,
2004, by and among Thinking Tools, Inc., a Delaware corporation ("Purchaser"),
GVI Security Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Purchaser ("Purchaser Subsidiary") and GVI Security Inc., a
Delaware corporation ("GVI").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Board of Directors of each of Purchaser, Purchaser Subsidiary
and GVI has determined that it is in the best interests of each such company and
its respective stockholders for Purchaser Subsidiary to merge with and into GVI
upon the terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of each of Purchaser and Purchaser
Subsidiary and the stockholder of Purchaser Subsidiary have adopted resolutions
approving this Agreement and the transactions contemplated hereby pursuant to
Section 251 of the Delaware General Corporation Law (the "DGCL");
WHEREAS, the Board of Directors and the stockholders of GVI have adopted
resolutions approving this Agreement and the transactions contemplated hereby
pursuant to Section 251 of the DGCL; and
WHEREAS, the Parties hereto intend that the merger contemplated herein
shall qualify as a reorganization within the meaning of Section 368(a)(1)(A) of
the Internal Revenue Code of 1986, as amended (the "Code"), by reason of Section
368(a)(2)(E) of the Code.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto do hereby agree as follows:
1. CERTAIN DEFINITIONS.
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the meanings specified or referred to below (terms defined in the singular
to have the correlative meaning in the plural and vice versa):
"Accounting Fees" shall have the meaning set forth in Section 7.9.
"Affiliate" of any Person shall mean any Person which, directly or
indirectly, controls or is controlled by that Person, or is under common control
with that Person. For the purposes of this definition, "control" (including,
with correlative meaning, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such person, whether through the ownership of voting securities
or by contract or otherwise.
"Agreement" shall have the meaning set forth in the recitals.
"Approvals" shall have the meaning set forth in Section 4.5.
"Assets" shall have the meaning set forth in Section 4.7(b).
"Business Day" shall mean any day that is not a Saturday or a Sunday
or a day on which banks located in New York City are authorized or required to
be closed.
"Certificate of Merger" shall have the meaning set forth in Section
2.2.
"Charter Amendment" shall have the meaning set forth in Section 8.8.
"Claims Deadline" shall have the meaning set forth in Section 9.3.
"Closing" shall have the meaning set forth in Section 3.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended. All
citations to the Code or to the regulations promulgated thereunder shall include
any amendments or any substitute or successor provisions thereto. All references
to the Code or to the regulations promulgated thereunder in this Agreement shall
be deemed to include a reference to any comparable provisions of state, local or
foreign income tax law, without prejudice to the construction of references to
the Code or to the regulations promulgated thereunder in any other section
hereof.
"Competing Enterprise" shall mean any Person engaged in the same or
a competitive business as GVI, Purchaser or any of their Affiliates, as
conducted as of the date of this Agreement.
"Contemplated Transactions" shall mean the merger of Purchaser
Subsidiary with and into GVI and the execution, delivery and performance of and
compliance with this Agreement and all other agreements to be executed and
delivered pursuant to this Agreement, including, without limitation, the
Transaction Documents.
"Contract" shall have the meaning set forth in Section 4.15.
"Damages" shall have the meaning set forth in Section 9.1.
"Determination Date" shall have the meaning set forth in Section
9.6.
"DGCL" shall have the meaning set forth in the recitals.
"Effective Time" shall mean the date and time of consummation of the
Merger, as evidenced by the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware.
"Encumbrance" shall mean any security interest, pledge, mortgage,
lien, charge, encumbrance, license, easement, right-of-way, adverse claim or
restriction of any kind, including, but not limited to, any restriction on the
use, voting, transfer, receipt of income or other exercise of any attributes of
ownership.
2
"Environmental Laws" shall mean any Law, now or hereafter in effect
and as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to the environment, health, safety or Hazardous Materials, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended through the date hereof; the Resource
Conservation and Recovery Act, 42 U.S.C.ss.ss.6901 et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C.ss.ss.6901 et seq.; the Clean Water Act,
33 U.S.C.ss.ss.1251 et seq.; the Toxic Substances Control Act, 15
U.S.C.ss.ss.2601 et seq.; the Clean Air Act, 42 U.S.C.ss.ss.7401 et seq.; the
Safe Drinking Water Act, 42 U.S.C.ss.ss.300f et seq.; the Atomic Energy Act, 42
U.S.C.ss.ss.2011 et seq.; the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C.ss.ss.136 et seq.; and the Federal Food, Drug and Cosmetic Act, 21
X.X.X.xx.xx. 301 et seq.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the regulations and publications thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean, with respect to a share of Common
Stock on any Determination Date, the average of the daily closing prices for the
10 consecutive business days prior to such date. The closing price for each day
shall be the last sales price or in case no sale takes place on such day, the
average of the closing high bid and low asked prices, in either case (a) as
officially quoted by the NASD over the counter bulletin board, Nasdaq SmallCap
Market or the Nasdaq National Market or such other market on which the Common
Stock is then listed for trading, or (b) if, in the reasonable judgment of the
Board of Directors of Purchaser, the NASD over-the-counter bulletin board, the
Nasdaq SmallCap Market or the Nasdaq National Market is no longer the principal
United States market for the Common Stock, then as quoted on the principal
United States market for the Common Stock, as determined by the Board of
Directors of Purchaser, or (c) if, in the reasonable judgment of the Board of
Directors of the Purchaser, there exists no principal United States market for
the Common Stock, then as reasonably determined by the Board of Directors of
Purchaser.
"Financial Statements" shall have the meaning set forth in Section
4.6.
"GAAP" shall mean generally accepted accounting principles in the
United States.
"Governmental Body" shall mean any United States federal, state or
local governmental, regulatory or administrative authority, agency or commission
or any court, tribunal or judicial or arbitral body.
"GVI" shall mean GVI Security, Inc., a Delaware corporation.
"GVI Indemnified Parties" shall have the meaning set forth in
Section 9.1.
"GVI Intellectual Property" shall have the meaning set forth in
Section 4.9.
"GVI Options" shall have the meaning set forth in Section 2.3.4.
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"GVI Shares" shall have the meaning set forth in Section 2.3.1.
"Hazardous Materials" shall mean (a) petroleum and petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain polychlorinated biphenyls, and radon gas, (b) any other chemicals,
materials or substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "contaminants" or "pollutants", or words of
similar import, under any applicable Environmental Law, and (c) any other
chemical, material or substances exposure to which is regulated by any
Governmental Body.
"Intellectual Property" shall mean any and all United States: (a)
patent registrations and patent applications (including all reissues, divisions,
continuations, continuations-in-part, extensions and reexaminations) and all
rights therein and all improvements to the inventions disclosed in each such
registration, patent or application, (b) trademarks, service marks, trade dress,
trade names and corporate names, whether or not registered, including but not
limited to all common law rights, and registrations and applications for
registration thereof, (c) copyrights (including but not limited to copyrights on
designs) (registered or otherwise) and registrations and applications for
registration thereof, (d) computer software, including, without limitation,
source code, operating systems and specifications, data, data bases, files,
documentation and other materials related thereto, data and documentation, (e)
trade secrets and confidential technical and business information (including but
not limited to formulas, compositions, and inventions reduced to practice,
whether or not patentable), (f) confidential technology (including know-how and
show-how), manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, plans, proposals,
technical data, copyrightable works, financial, marketing and business data,
pricing and cost information, business and marketing plans and customer and
supplier lists and information, (g) any right arising under any law providing
protection to industrial or other designs, (h) all rights to obtain and rights
to apply for patents, and to register trademarks and copyrights, and (i) all
rights to xxx or recover and retain damages and costs and attorneys fees for
present and past infringement of any of the foregoing.
"Knowledge" shall mean, and an individual will be deemed to have
"knowledge" of a particular fact or other matter, if such individual is actually
aware of such fact or other matter. For purposes of this Agreement, "to GVI's
knowledge" or "to the knowledge of GVI" shall mean the knowledge of Xxxxxx Xxxx,
and "to Purchaser's knowledge" or "to the knowledge of Purchaser" shall mean the
knowledge of Xxxxx Xxxxx.
"Laws" shall have the meaning set forth in Section 4.17(a).
"Leases" shall have the meaning set forth in Section 4.8
"Licenses" shall have the meaning set forth in Section 4.17(a).
"Material Adverse Effect" shall mean a change in (or effect on) the
condition (financial or otherwise), properties, assets, liabilities, rights,
obligations, operations, business, or prospects which change (or effect),
individually or in the aggregate, would be materially adverse to such condition,
properties, assets, liabilities, rights, obligations, operations, business, or
prospects.
4
"Merger" shall mean the merger of Purchaser Subsidiary with and into
GVI, as contemplated by this Agreement.
"Merger Consideration" shall have the meaning set forth in Section
2.4.
"Party" shall mean any of Purchaser, Purchaser Subsidiary and GVI.
"Permitted Encumbrances" shall have the meaning set forth in Section
4.7(b).
"Person" shall mean any individual, corporation, limited liability
company, partnership, joint venture, trust, association, unincorporated
organization, other entity or Governmental Body.
"Plans" shall have the meaning set forth in Section 4.13(a).
"Purchaser" shall mean Thinking Tools, Inc., a Delaware corporation.
"Purchaser Common Stock" shall mean the Common Stock, par value
$.001 per share, of Purchaser.
"Purchaser Financial Statements" shall have the meaning set forth in
Section 5.7.
"Purchaser Preferred Stock" shall mean the Series E Convertible
Preferred Stock, par value $.001 per share, of Purchaser, with substantially the
designations, powers, preferences and restrictions and limitations set forth on
Exhibit B.
"Purchaser SEC Documents" shall have the meaning set forth in
Section 5.6.
"Purchaser Shares" shall have the meaning set forth in Section 2.4.
"Purchaser Subsidiary" shall mean GVI Acquisition Corp., a Delaware
corporation.
"Recent Balance Sheet" shall have the meaning set forth in Section
4.6(a).
"SEC" means the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stock Option Plan" shall mean the 2004 Long-Term Incentive Option
Plan of Purchaser, in the form attached hereto as Exhibit F, approved by the
Board of Directors of Purchaser on or before the Closing and providing for
386,094,320 shares of Common Stock of Purchaser to be reserved for the issuance
upon exercise of stock options and other stock-based awards to be issued
thereunder to directors, officers, employees and consultants of the Purchaser
and/or the Surviving Corporation.
5
"Stockholder Representative" shall mean GVI Acquisition, LLC, a
California limited liability company.
"Stockholders" shall mean the stockholders of GVI immediately prior
to the Effective Time.
"Subsidiary" shall mean with respect to any specified Person, any
other Person (a) whose board of directors or similar governing body, or a
majority thereof, may presently be directly or indirectly elected or appointed
by such specified Person, (b) whose management decisions and corporate actions
are directly or indirectly subject to the present control of such specified
Person, or (c) whose voting securities or equity securities are more than fifty
percent (50%) owned, directly or indirectly, by such specified Person.
"Surviving Corporation" shall have the meaning set forth in Section
2.1.
t 12 "Taxes" shall mean all taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, together with any interest and any penalties, fines, additions to
tax or additional amounts imposed by any Governmental Body and shall include any
transferee liability in respect of Taxes.
"Tax Returns" means any federal, state, local or foreign return,
report, information return or other document (including any related or
supporting information) filed or required to be filed with any Governmental Body
in connection with the determination, assessment or collection of any Taxes or
the administration of any laws, regulations or administrative requirements
relating to any Taxes.
"Third Party" shall mean a Person who or which is neither a Party
nor an Affiliate of a Party.
"Transaction Documents" shall mean the Registration Rights Agreement
between Purchaser and the Stockholders.
1.2 References to Dollars. References to dollars or "$" in this Agreement
shall mean United States dollars.
2. THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions hereof, and
in accordance with the provisions of the DGCL, Purchaser Subsidiary shall be
merged with and into GVI as soon as practicable following the satisfaction or
waiver of the conditions set forth in Articles 6 and 7 hereof. Following the
Merger, GVI shall continue as the surviving corporation (the "Surviving
Corporation") under its current name and shall continue its existence under the
laws of the State of Delaware and the separate existence of Purchaser Subsidiary
shall thereupon cease. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, by virtue of the Merger and without
further act or deed, all properties, rights, privileges, powers and franchises
of GVI and Purchaser Subsidiary shall vest in the Surviving Corporation, and all
debts, liabilities, obligations and duties of GVI and Purchaser Subsidiary shall
become the debts, liabilities, obligations and duties of the Surviving
Corporation.
6
2.2 Consummation of the Merger and Effective Time. The Merger shall be effected
by the filing of a certificate of merger with the Secretary of State of the
State of Delaware in the form of Exhibit A to this Agreement (the "Certificate
of Merger"), pursuant to Section 251 of the DGCL. The Parties hereto shall take
all such other and further actions as may be required by Law to make the Merger
effective.
2.3 Conversion or Cancellation of Shares. The manner of converting or
canceling shares of GVI or Purchaser Subsidiary in the Merger shall be as
follows. At the Effective Time,
2.3.1 The shares of GVI's common stock, $.001 par value (the "GVI
Shares"), issued and outstanding immediately prior to the Effective Time, other
than the GVI Shares held in the treasury of GVI shall, by virtue of the Merger
and without any action on the part of the holders thereof, be converted into the
right to receive the Merger Consideration. All GVI Shares by virtue of the
Merger and without any action on the part of the holders thereof, shall no
longer be outstanding and shall be canceled and retired and shall cease to
exist. The holders of certificates representing GVI Shares shall thereafter
cease to have any rights with respect to such GVI Shares, except the right to
receive the Merger Consideration upon the surrender of such certificates.
2.3.2 Each GVI Share issued and held in GVI's treasury shall cease
to be outstanding, shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
2.3.3 Each share of Purchaser Subsidiary's common stock, par value
$.001 per share, issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into one fully paid and non-assessable share of the
Surviving Corporation's common stock, par value $.001 per share.
2.3.4 At the Effective Time, each option to purchase shares of GVI
Common Stock (the "GVI Options") validly issued and outstanding immediately
prior to the Effective Time, whether or not then exercisable, shall by reason of
the Merger and without any action from the holder thereof, be converted into the
right to receive options to purchase shares of Purchaser Common Stock under
Purchaser's Stock Option Plan (in accordance with this Section 2.3.4), and the
GVI Options shall be deemed cancelled. As a result of such conversion, each
former holder of GVI Options shall receive options to purchase such number of
shares of Purchaser Common Stock set forth next to such holder's name on
Schedule 2 hereto, at the exercise prices set forth on such Schedule.
2.4 Merger Consideration. The "Merger Consideration" shall mean for each
GVI Share, 4.347826 shares of the Purchaser Preferred Stock having the rights
and preferences set forth in the Certificate of Designation of Preferred Stock
attached hereto as Exhibit B. The shares of the Purchaser Preferred Stock which
constitute the Merger Consideration are hereinafter referred to as the
"Purchaser Shares."
7
2.5 Certificate of Incorporation and By laws. The Certificate of
Incorporation and the Bylaws of GVI shall be and remain the Certificate of
Incorporation and Bylaws of the Surviving Corporation.
2.6 Directors and Officers. At the Effective Time, the directors and
officers of Purchaser and the Surviving Corporation shall be as set forth on
Schedule 2.6.
3. THE CLOSING.
3.1 Closing. (a) Unless this Agreement shall have been terminated pursuant
to Section 10, a closing of the Merger (the "Closing") will be held at the
offices of Kronish Xxxx Xxxxxx & Xxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, on the date on which the conditions set forth in Sections
6 and 7 shall be satisfied or duly waived (or such other place and date as
Purchaser and GVI may agree in writing).
(b) At the Closing:
(1) GVI shall deliver to Purchaser or Purchaser Subsidiary, as
applicable, all documents contemplated by Article 6, to the extent
not theretofore delivered.
(2) Purchaser or Purchaser Subsidiary, as applicable, shall
deliver to GVI all documents contemplated by Article 7, to the
extent not theretofore delivered.
(3) Purchaser shall, subject to Section 3.2.1 below, deliver
to the Stockholders certificates representing the Purchaser Shares.
3.2 Issuance of Purchaser Shares.
3.2.1 At the Effective Time or as soon as practicable thereafter,
upon surrender by the Stockholders of certificates evidencing the GVI Shares,
Purchaser shall issue certificates to each Stockholder, registered in the name
of such Stockholder and bearing the legends set forth in Section 4.23(d),
representing the number of Purchaser Shares to which it is entitled pursuant to
Section 2.4 and such certificates previously evidencing the GVI Shares shall
forthwith be cancelled.
3.2.2 Prior to the Effective Time, Purchaser shall have the right to
establish reasonable and/or customary rules, not inconsistent with the terms of
this Agreement, for the issuance and delivery of certificates for the Purchaser
Shares into which the GVI Shares are converted in the Merger.
8
3.3 Exchange of Certificates. If any stock certificate representing
Purchaser Shares is to be issued in a name other than that in which the stock
certificate (previously representing GVI Shares) surrendered is registered, it
shall be a condition of exchange that the stock certificate so surrendered shall
be properly endorsed or otherwise in proper form for transfer and that the
person requesting such exchange shall pay any transfer or other taxes required
by reason of the exchange with a Person other than the registered holder of the
stock certificates surrendered or establish to the reasonable satisfaction of
Purchaser that such tax has been paid or is not applicable.
4. REPRESENTATIONS AND WARRANTIES OF GVI.
GVI represents and warrants to Purchaser and Purchaser Subsidiary as
follows:
4.1 Organization and Good Standing.
(a) GVI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. GVI (i) has all requisite
corporate power to own, operate and lease its properties and carry on its
business as the same is now being conducted and (ii) is duly qualified and in
good standing as a foreign corporation under the laws of each jurisdiction where
the properties owned, leased or operated, or the business conducted by it,
require such qualification, except with respect to any jurisdiction whereby the
failure to be so duly qualified and in good standing will not have a Material
Adverse Effect on GVI. Schedule 4.1 sets forth the jurisdictions in which GVI is
authorized to do business.
(b) Complete and correct copies of the certificate of incorporation
and bylaws of GVI as currently in effect have been delivered to Purchaser. GVI
has no Subsidiaries nor does it own any equity interest in, or control directly
or indirectly, any other entity. GVI is not a party to any joint venture or
partnership arrangement. Since the date of the Recent Balance Sheet (as defined
below), GVI has not assumed by merger, contract, assignment or assumption any
liabilities of any other Person.
4.2 Capitalization of GVI; Title to the GVI Shares.
(a) The authorized capital stock of GVI consists of 1,000,000 shares
of common stock, $.001 par value, of which 230,000 shares (constituting the GVI
Shares) are issued and outstanding. All of the GVI Shares have been duly
authorized and validly issued and are fully paid and nonassessable, free of any
Encumbrances. Except for the GVI Options and as set forth on Schedule 4.2(a),
there are no outstanding subscriptions, options, rights, warrants, convertible
securities, preemptive rights or other agreements (other than this Agreement) or
calls, demands or commitments of any kind relating to the issuance, sale or
transfer of any capital stock or other equity securities of GVI, whether
directly or upon the exercise or conversion of other securities. GVI has
previously provided Purchaser with a true and complete list of the prices at
which outstanding GVI Options may be exercised, the number of GVI Options
outstanding at each such price and the vesting schedule of the GVI Options for
each employee or consultant of GVI. There are no outstanding contractual
obligations of GVI to repurchase, redeem or otherwise acquire any shares of
GVI's capital stock or to provide funds to, or make any investment (in the form
of a loan, capital contribution or otherwise) in, any other Person.
9
(b) Schedule 4.2(b) sets forth (i) the name and address of each
Person owning shares of capital stock of GVI and (ii) the certificate number of
each certificate evidencing shares of capital stock issued by GVI, the number of
shares evidenced by each such certificate, the date of issuance thereof and, in
the case of cancellation, the date of cancellation.
(c) Except as set forth on Schedule 4.2(c), there are no voting
trusts, stockholder agreements, proxies or other agreements or understandings in
effect with respect to the voting or transfer of any shares of capital stock of
or any other interests in GVI.
(d) Each Stockholder owns the GVI Shares of record and beneficially,
free and clear of all Encumbrances. The delivery of the certificates
representing the GVI Shares in accordance with Section 3.2 in consideration of
the payment of the Merger Consideration therefor will transfer record and
beneficial ownership of, and good and valid title to, the GVI Shares, free and
clear of all Encumbrances.
4.3 Authority Relative to Agreement. GVI has all requisite power and
authority, corporate or otherwise, to execute, deliver and perform its
obligations under this Agreement and the Transaction Documents to which it is a
party and has taken all action necessary, corporate or otherwise, in order to
execute and deliver this Agreement and the other Transaction Documents to which
it is a party and to consummate the Contemplated Transactions, including, but
not limited to, obtaining all required Board of Directors and stockholder
approvals. This Agreement has been duly executed and delivered by GVI. Each of
this Agreement and the other Transaction Documents constitute valid and binding
obligations of GVI, enforceable against GVI and in accordance with their
respective terms, subject to laws relating to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshaling or other laws and rules of
law affecting the enforcement generally of creditors' rights and remedies
(including such as may deny giving effect to waivers of debtors' or guarantors'
rights).
4.4 Absence of Conflict. Neither the execution and delivery of this
Agreement and the other Transaction Documents nor the consummation of the
Contemplated Transactions will (a) violate, conflict with, result in a breach or
termination of, constitute a default under or give rise to a right to terminate
or accelerate (or an event which, with notice or lapse of time or both, would
constitute the same) (i) any agreement, commitment, deed of trust, indenture,
lease, mortgage or other instrument to which GVI is a party or by which any of
its properties or assets is bound, (ii) the certificate of incorporation or
bylaws of GVI or (iii) any Law, order of a Governmental Body or any other
restriction of any kind or character applicable to GVI or any of its properties
or assets, or (b) result in the creation or imposition of any Encumbrance upon
any properties or assets of GVI under any agreement or commitment to which GVI
is a party or by which GVI or its properties or assets may be bound.
4.5 Consents and Approvals; Effect of Change in Control. Except for the
filing of a Certificate of Merger as provided in Section 2.2 and as set forth in
Schedule 4.5, no consent, waiver, registration, certificate, approval, grant,
franchise, permit, license, exception or authorization of, or declaration or
filing with, or notice or report to, (a) any Governmental Body or (b) any other
Person (including, but not limited to, any party to a Contract or other
agreement or commitment of GVI) (collectively, the "Approvals"), is required in
connection with the execution, delivery or performance of this Agreement or the
consummation of the Contemplated Transactions by GVI, other than Approvals which
have already been obtained.
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4.6 Financial Statements.
(a) GVI has delivered to Purchaser the unaudited balance sheet of
GVI as at September 30, 2003 (the "Recent Balance Sheet") and the related
unaudited statements of income and retained earnings, and cash flows of GVI for
the three-month period then ended, and the audited balance sheet of GVI as at
June 30, 2003 and the related audited statements of income and retained
earnings, and cash flows of GVI for the twelve-month period then ended, together
with the report thereon of Xxxxxx & Xxxxxxx, L.L.P. (collectively, the
"Financial Statements"). The Financial Statements were prepared from the
respective books and records of GVI, have been prepared in accordance with GAAP
consistently applied throughout the periods indicated, and fairly present in all
material respects the financial position, results of operations and cash flows
of GVI as at the respective dates thereof and for the periods therein referred
to, subject in the case of the interim financial statements, to the absence of
footnotes and for normal, year-end adjustments.
(b) GVI does not have any liabilities or obligations (whether known
or unknown, absolute, accrued, contingent or otherwise and whether due or to
become due) that were not fully reflected or reserved against in the Recent
Balance Sheet, except for non-material liabilities and obligations incurred in
the ordinary course of business and consistent with past practice since the date
thereof. To the knowledge of GVI, the reserves reflected in the Recent Balance
Sheet are adequate, appropriate and reasonable and are in accordance with GAAP
consistently applied.
(c) Since the date of the Recent Balance Sheet, there has been no
material adverse change in the business, operations, financial condition or
prospects of GVI or any event, condition or contingency that could reasonably be
expected to have a Material Adverse Effect.
(d) The accounts receivable of GVI reflected in the Recent Balance
Sheet constitute valid and enforceable claims arising from bona fide
transactions in the ordinary course of business. GVI has not received written
notice of any counterclaims or setoffs against such accounts receivable for
which reserves have not been established in accordance with GAAP. There has been
no material adverse change since the date of the Recent Balance Sheet in the
amount of accounts receivable or other debts due GVI or the allowances with
respect thereto, or accounts payable of GVI, from that reflected in the Recent
Balance Sheet.
4.7 Title to Property; Sufficiency; Encumbrances.
(a) GVI has never owned any real property or any interest in real
property.
(b) Except as disclosed in Schedule 4.7(b), GVI leases or owns all
the properties and assets used in the conduct of its business and, with respect
to contract rights, is a party to and enjoys the right to the benefits of all
contracts, agreements and other arrangements used by GVI in the conduct of its
business (all such properties, assets and contract rights being the "Assets").
GVI has good and marketable title to, or, in the case of leased Assets, valid
and subsisting leasehold interests in, all the Assets, free and clear of all
Encumbrances, except for Permitted Encumbrances. As used herein, "Permitted
Encumbrances" means (i) those Encumbrances disclosed in the Financial Statements
or the notes thereto; (ii) statutory liens for current taxes or assessments not
yet due or delinquent or the validity of which are being contested in good faith
by appropriate proceedings and for which adequate reserves are reflected on the
Recent Balance Sheet; and (iii) those Encumbrances disclosed on Schedule 4.7.
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(c) All the Assets are in good operating condition and repair,
reasonable wear and tear excepted, and are suitable for the purposes for which
they are used.
(d) Following the consummation of the Contemplated Transactions, the
Surviving Corporation will continue to own, pursuant to good and marketable
title, or lease, under valid and subsisting leases, or otherwise retain its
respective interest in, the Assets without incurring any penalty or other
adverse consequence, including, without limitation, any increase in rentals,
royalties, or licenses or other fees imposed as a result of, or arising from,
the consummation of the Contemplated Transactions. Immediately following the
Effective Time, the Surviving Corporation shall own and possess all documents,
books, records, agreements and financial data of any sort used by GVI in the
conduct of its business.
4.8 Leased Property. Schedule 4.8 sets forth a true and complete list of
each lease under which GVI is a lessee or lessor (each, a "Lease"). GVI has
delivered to Purchaser complete and correct copies of each such Lease. Each such
Lease is a valid and binding obligation of GVI, enforceable in accordance with
its terms, is in full force and effect, and except as set forth on Schedule 4.8,
upon consummation of the Contemplated Transactions, will continue to entitle the
Surviving Corporation to the use and possession of the property specified in
such lease for the purposes for which such property is now being used by GVI.
4.9 Intellectual Property Rights. GVI owns, or is licensed or otherwise
has the valid rights to use, all Intellectual Property used in the conduct of
its business. Schedule 4.9 contains an accurate and complete list of all
material (a) Intellectual Property owned by GVI, (b) Intellectual Property
licensed to GVI, including a list of all Contracts related thereto, (c) licenses
granted by GVI to others to use GVI's Intellectual Property, including a list of
all Contracts related thereto (in each case excluding licenses available in
consumer retail stores or subject to "shrink-wrap" license agreements)
(collectively, the "GVI Intellectual Property"). Except as set forth in Schedule
4.9, GVI owns all right, title and interest in and to the Intellectual Property
owned by it, free and clear of any Encumbrances, other than Permitted
Encumbrances. Except as set forth in Schedule 4.9, GVI has the sole and
exclusive right to use the GVI Intellectual Property licensed to it, and the
consummation of the Contemplated Transactions will not alter or impair any such
rights. No claims have been asserted by any Person challenging or questioning
the validity or effectiveness of any licenses or agreements related to the
Intellectual Property licensed by, or licensed to, GVI, and to the knowledge of
GVI, there is no valid basis for any such claim. To the knowledge of GVI, the
use by GVI of any Intellectual Property owned or licensed to it does not violate
or infringe the rights of any Person. To the knowledge of GVI, neither GVI nor
any other Person is in default under any license or other agreement relating to
any GVI Intellectual Property, and all such licenses and agreements are valid,
in full force and effect and enforceable. GVI has taken reasonable steps to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, the GVI Intellectual Property. No present or former employee or
consultant of GVI owns or has any proprietary, financial or other interest,
direct or indirect (other than through ownership of GVI Shares), in whole or in
part, in any GVI Intellectual Property. Schedule 4.9 lists all confidentiality
and non-disclosure agreements to which GVI is a party.
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4.10 Litigation. There is no action, suit, inquiry, arbitration,
proceeding or investigation by or before any court or Governmental Body or
arbitration pending or, to the knowledge of GVI, threatened against or involving
GVI or the Assets or which questions or challenges the validity of this
Agreement or the Contemplated Transactions, and GVI has not received any notice
of any event or occurrence which could result in any such action, suit, inquiry,
proceeding or investigation nor, to the knowledge of GVI, is there any valid
basis for any such action, suit, inquiry, proceeding or investigation.
4.11 Tax Matters.
(a) GVI has timely (having regard to all applicable extension
periods) filed all federal, state, local and foreign Tax Returns and other Tax
reports required to be filed by it, and has timely (having regard to all
applicable extension periods) paid all Taxes that have become due and payable,
whether or not so shown on any such return or report, except such amounts as are
set forth on Schedule 4.11(a) and are being contested diligently and in good
faith. GVI has not received any notice of, nor does it have any knowledge of,
any deficiency, assessment or audit, or proposed deficiency, assessment or audit
from any Governmental Body that could affect or result in the imposition of an
Encumbrance, other than a Permitted Encumbrance, upon the Assets or create any
transferee or other liability upon Purchaser.
(b) Within the past three (3) years, no claim has been made by a
Governmental Body of any jurisdiction in which GVI does not file Tax Returns
that GVI is or may be subject to taxation by that jurisdiction in respect of the
Assets or the business of GVI.
(c) GVI (i) has not agreed to or is required to make any adjustment
pursuant to Section 481(a) of the Code by reason of a change in accounting
method initiated by GVI, (ii) is not aware of any such adjustment or change in
accounting method proposed by the Internal Revenue Service, and (iii) does not
have an application pending with any Governmental Body requesting permission for
any change in accounting method.
(d) Except as set forth on Schedule 4.11(d), GVI does not have and
has not had, either (i) a permanent establishment in any foreign country, as
defined in any applicable tax treaty or convention between the United States and
such foreign country, or (ii) a business activity in any country other than the
United States that would subject it to a Tax in such country that would not
apply to a United States person without a business activity in such country.
4.12 Absence of Certain Changes or Events. Since the date of the Recent
Balance Sheet, except as set forth in Schedule 4.12, GVI has conducted its
business only in the ordinary course consistent with past practice and has not:
(a) declared or paid any dividend or made any other payment or
distribution in respect of its capital stock;
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(b) purchased, redeemed, issued, sold or otherwise acquired or
disposed of, either directly or indirectly, any of its capital stock or
reclassified, split or otherwise changed any of its capital stock or granted or
entered into any options, warrants, puts or calls or other rights to purchase,
sell or convert any obligation into any of, its capital stock;
(c) paid, discharged or satisfied any Encumbrance (other than an
Encumbrance then required to be paid, discharged or satisfied), claim, liability
or obligation (whether fixed, accrued, contingent or otherwise, whether due or
to become due), other than a claim, liability or obligation that is a current
liability shown on the Recent Balance Sheet or incurred since the date of the
Recent Balance Sheet in the ordinary course of business consistent with past
practice;
(d) canceled or compromised any debt or claim, or waived or released
any material right, other than adjustments in the ordinary course of business
which, in the aggregate, are not material;
(e) sold, assigned, transferred, conveyed, leased, pledged,
encumbered or otherwise disposed of any of its Assets (real or personal,
tangible or intangible) except in the ordinary course of business consistent
with past practice.
(f) transferred or granted any right under, or entered into any
settlement regarding the breach or infringement of, any Intellectual Property
right, or modified any existing right with respect thereto;
(g) made or granted any general increase in the compensation
(whether salary, commission, bonus, benefits (retirement, severance or other) or
other direct or indirect remuneration) of any of GVI's employees (other than
individual increases which were generally consistent in amount with GVI's
historical practices), or made or granted any increase in the compensation of
the officers of GVI, or entered into any employment, severance, bonus or similar
agreement with any employee of GVI;
(h) changed accounting methods other than in accordance with GAAP;
(i) received any notice of termination of any Contract or suffered
any damage, destruction or loss adversely affecting GVI's Assets;
(j) made any capital expenditures or additions to property, plant or
equipment or acquired of any other property or assets (other than raw materials
and supplies) at a cost in excess of $25,000 individually or $50,000 in the
aggregate;
(k) incurred or assumed any indebtedness for money borrowed or
guarantied any indebtedness or other obligation of another Person;
(l) suffered any Material Adverse Effect; or
(m) agreed or otherwise committed, whether in writing or otherwise,
to do, or taken any action or omitted to take any action that would result in,
any of the foregoing.
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4.13 Employee Benefits; Executive Officers; Labor.
(a) No employees of GVI are covered by collective bargaining
agreements or are members of unions. Schedule 4.13(a) sets forth a true and
complete list of (i) all written employment and consulting agreements to which
GVI is a party, indicating those which will terminate at the Effective Time; and
(ii) all written executive compensation plans, bonus plans, incentive
compensation plans, deferred compensation plans or agreements, employee pension
plans or retirement plans, employee profit sharing plans, employee stock
purchase plans, group life insurance, hospitalization insurance, severance or
other employee benefit plans (as defined in Section 3(3) of ERISA) of GVI (the
"Plans") providing for benefits for any employees of GVI. There are no other
binding plans or commitments of the type referred to in this Section 4.13(a)
which are not reduced to writing, and GVI has no agreement or commitment to
create any additional such Plan. GVI has no unfunded obligations relating to the
Plans. To the extent applicable, the Plans comply in all material respects with
ERISA.
(b) Schedule 4.13(b) includes a true and complete list of all
officers or other employees of GVI and the compensation (including bonuses,
incentives and similar compensation) received by each. To the knowledge of GVI,
no past or present officer or other executive employee of GVI has ever been
indicted, tried or convicted of a criminal felony. To the knowledge of GVI, no
officer or other employee of GVI is in violation of (a) any material term of any
employment agreement, non-disclosure agreement, noncompete agreement or other
similar agreement with any previous employer (and to the knowledge of GVI, the
employment of such employee by Surviving Corporation, Purchaser or any of their
Affiliates will not result in a violation of any such agreement) or (b) any
obligation binding on such employee which would prohibit the use of information
obtained from such employee which GVI has used.
(c) Neither the execution and delivery of this Agreement nor the
consummation of any of the Contemplated Transactions will entitle any current or
former employee of GVI to severance pay or other similar payment, or accelerate
the time of payment or increase the amount of compensation due to any such
employee or former employee. To the knowledge of GVI, GVI has no threatened or
pending labor disputes with any of its employees.
4.14 Insurance; Claims. Schedule 4.14 sets forth a true, correct and
complete list of all insurance policies of any kind or nature maintained by or
on behalf of GVI and relating to its business and/or assets, indicating the type
of coverage, name of insured, name of insurance carrier or underwriter, premium
thereon, policy limits and expiration date of each policy. All such insurance
policies are in full force and effect, and GVI is not in default with respect to
its obligations under any such insurance policy, except with respect to any such
default which would not cause a Material Adverse Effect on GVI, and no notice of
cancellation or termination has been received with respect to any such policy.
GVI has delivered to Purchaser complete and correct copies of such insurance
policies (together with all riders and amendments thereto).
4.15 Contracts and Commitments. Schedule 4.15 contains a true, complete
and accurate list of each of the following written, and to GVI's knowledge,
oral, contracts, agreements, understandings or other obligations to which GVI is
a party or by which any of its assets or properties are bound (together with
each of the agreements disclosed on Schedule 4.8, 4.9 and 4.13, a "Contract"):
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(a) all rental or use agreements, contracts, covenants or
obligations which may involve the payment by or to GVI of more than $25,000;
(b) any contract, agreement, commitment or obligation to make any
capital expenditures in excess of $25,000;
(c) contracts, agreements, commitments or other obligations with any
Person containing any provision or covenant limiting the ability of GVI to
engage in any line of business or to compete with or to obtain products or
services from any Person or limiting the ability of any Person to compete with
or to provide products or services to, or obtain products or services from, GVI,
or covering indemnification of another Person other than in the ordinary course
of business;
(d) any profit-sharing or similar contract, agreement, understanding
or obligation with any Person;
(e) contracts, agreements, commitments or other obligations with
respect to the purchase or sale by or to GVI of any product, equipment,
facility, or similar item that by their respective terms do not expire or
terminate or are not terminable by GVI, without penalty, premium or other
liability within 30 days or may involve the payment by or to GVI of more than
$25,000;
(f) license, royalty, franchise, distributorship, dealer, service,
sales agency, consulting, advisory, public relations or advertising contracts,
agreements, commitments or other obligations;
(g) contracts, agreements, commitments or other obligations to
provide services or facilities by or to GVI or to or by another Person which is
not terminable by GVI within 30 days without penalty, premium or other liability
or involving payment by GVI or the other Person of more than $25,000;
(h) all other contracts, agreements, commitments, or other
obligations whether or not made in the ordinary course of business which either
(i) may involve the expenditure by GVI of funds in excess of $25,000 per
commitment (or under a group of similar commitments), or (ii) are not terminable
within 30 days from the date hereof without penalty, premium or other liability,
or are otherwise material to GVI;
(i) contracts, agreements, commitments or other obligations with any
Person requiring indemnification by GVI of another Person other than in the
ordinary course of business; or
(j) all other contracts, agreements, commitments, or other
obligations of any kind that involve or relate to any Stockholder, officer,
director, employee or consultant of GVI or any Affiliate or relative thereof.
4.16 Status of Agreements. All Contracts to which GVI is a party are in
full force and effect and constitute valid and binding obligations of GVI and to
the knowledge of GVI, are binding on the other parties thereto. There are no
existing defaults (or events which, with notice or lapse of time or both, would
constitute a default) by GVI, except with respect to any default that would not
cause a Material Adverse Effect on GVI, or any other party thereunder, and GVI
has not received notice of any claim by another party to any Contract that GVI
is in default thereunder.
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4.17 Compliance with Law.
(a) Schedule 4.17(a) is a true and complete list of each license,
permit, order, authorization or approval of Governmental Bodies ("Licenses")
held or obtained by GVI in connection with the business conducted by GVI. The
operations of GVI have been conducted in all material respects in accordance
with all applicable laws, regulations and other requirements of all Governmental
Bodies having jurisdiction over GVI (collectively "Laws"). GVI has not received
any notification of any asserted present or past failure to comply with any such
Laws. GVI has all Licenses required for the conduct of GVI's business, other
than any such License the failure of which to hold or obtain would not cause a
Material Adverse Effect on GVI, and GVI is not in violation of any such License.
All such Licenses are in full force and effect and no suspension or cancellation
thereof has been threatened.
(b) To the knowledge of GVI, (i) it is not in violation of any
applicable Environmental Law, and (ii) no material expenditures are or will be
required in order to comply with any such applicable Environmental Law. No
Hazardous Materials are used or have been used, stored, or disposed of by GVI
or, to GVI's knowledge, by any other Person on any property owned, leased or
used by GVI.
4.18 Transactions with Related Parties. Except as disclosed in Schedule
4.18, GVI is not a party to any contract, lease, license, commitment or
arrangement, written or oral, which, were GVI a "Registrant" under the Exchange
Act, would be required to be disclosed pursuant to Item 404(a) or (c) of
Regulation S-K as promulgated by the SEC, and there are no loans outstanding to
or from any Person specified in Item 404(a) of Regulation S-K from or to GVI.
4.19 Bank Accounts. Schedule 4.19 sets forth a true, correct and complete
list of the names and addresses of all banks and other financial institutions in
which GVI maintains an account, deposit or safe-deposit box or lockbox account,
together with the names of all Persons authorized to draw on such accounts or
deposits or to have access to such boxes.
4.20 No Guaranties. None of the obligations or liabilities of GVI incurred
in connection with the operation of its business is guaranteed by or subject to
a similar contingent obligation of any other Person. GVI has not guaranteed or
become subject to a similar contingent obligation in respect of the obligations
or liabilities of any other Person. There are no outstanding letters of credit,
surety bonds or similar instruments of GVI or any of its Affiliates.
4.21 Records. The books of account, corporate records and minute books of
GVI are complete and correct in all material respects. Complete and accurate
copies of all such books of account, corporate records and minute books and of
the stock register of GVI have been provided to Purchaser.
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4.22 No Brokers or Finders. GVI has not, and its Affiliates, officers,
directors or employees have not, employed any broker or finder or incurred any
liability for any brokerage or finder's fee or commissions or similar payment in
connection with any of the Contemplated Transactions.
4.23 Investment Representations.
(a) For the purpose of this Section 4.23, the term "Purchaser
Shares" shall include any securities into which the Purchaser Shares may be
exchanged or converted.
(b) GVI has informed each of the Stockholders (i) that the Purchaser
Shares to be issued to such Stockholder pursuant to this Agreement have not been
registered for sale under any federal or state securities laws and that such
Purchaser Shares are being offered and sold to such Stockholder pursuant to an
exemption from registration provided under Section 4(2) of the Securities Act,
(ii) that such Stockholder is acquiring such Purchaser Shares for such
Stockholder's own account for investment purposes and without a view to any
distribution thereof, (iii) that Purchaser intends to rely on a certificate
signed by each Stockholder containing the representations and warranties set
forth in Exhibit C hereto for purposes of claiming such exemption, and (iv) that
such Stockholder must bear the economic risk of the investment in such Purchaser
Shares for an indefinite period of time as such Purchaser Shares cannot be sold
unless subsequently registered under such laws or unless an exemption from
registration is available.
(c) Each Stockholder is an "accredited investor" within the meaning
of Rule 501 of Regulation D under the Securities Act.
(d) GVI agrees that the certificates evidencing the Purchaser Shares
shall bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT."
4.24 Tax Reporting. Consistent with the intent of the parties hereto, GVI
shall treat, and cause its Affiliates to so treat, the Merger as a
reorganization under Section 368(a)(1)(A) by reason of Section 368(a)(2)(E) with
respect to all Tax Returns, to the extent consistent with Law.
4.25 Disclosure. No representations or warranties by GVI in this Agreement
and no statement contained in any schedules, exhibits or certificates furnished
or to be furnished by GVI or any Stockholder to Purchaser or Purchaser
Subsidiary or any of their representatives pursuant to the provisions hereof,
contains or will contain any untrue statement of material fact or omits or will
omit to state any material fact necessary, in light of the circumstances under
which it was made, in order to make the statements herein or therein not
misleading. Documents delivered or to be delivered by GVI or any Stockholder to
Purchaser or Purchaser Subsidiary pursuant to this Agreement are or will be true
and complete copies of what they purport to be.
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5. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PURCHASER SUBSIDIARY
Purchaser and Purchaser Subsidiary hereby represent and warrant to GVI as
follows:
5.1 Organization and Good Standing. Each of Purchaser and Purchaser
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Purchaser (i) has all
requisite corporate power to own, operate and lease its properties and carry on
its business as the same is now being conducted and (ii) is duly qualified and
in good standing as a foreign corporation under the laws of each jurisdiction
where the properties owned, leased or operated, or the business conducted by it
require such qualification, except with respect to any jurisdiction whereby the
failure to be so duly qualified and in good standing will not have a Material
Adverse Effect on Purchaser or Purchaser Subsidiary. Complete and correct copies
of the certificate of incorporation and bylaws of Purchaser and Purchaser
Subsidiary as currently in effect have been delivered to GVI. Other than
Purchaser Subsidiary, Purchaser has no Subsidiaries.
5.2 Capitalization of Purchaser. (a) The authorized capital stock of
Purchaser consists of (i) 20,000,000 shares of common stock, par value $.001 per
share, of which 10,204,637 shares are issued and outstanding as of the date
hereof, and (ii) 3,000,000 shares of preferred stock, par value $.001 per share,
of which (w) 1,148,800 shares have been designated Series A Convertible
Preferred Stock of which 1,148,799 are issued and outstanding, (x) 200 shares
have been designated Series B Convertible Preferred Stock, all of which are
issued and outstanding, (y) 10,000 have been designated Series D Convertible
Preferred Stock, all of which are issued and outstanding, and (z) 1,000,000 have
been designated Series E Convertible Preferred Stock, none of which are issued
and outstanding. Except as set forth on Schedule 5.2(a), there are no
outstanding subscriptions, options, rights, warrants, convertible securities,
preemptive rights or other agreements (other than this Agreement) or calls,
demands or commitments of any kind relating to the issuance, sale or transfer of
any capital stock or other equity securities of Purchaser, whether directly or
upon the exercise or conversion of other securities. There are no outstanding
contractual obligations of Purchaser to repurchase, redeem or otherwise acquire
any shares of Purchaser's capital stock or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
other Person.
(b) All of the issued and outstanding shares of Purchaser Subsidiary
are owned by Purchaser. All of the Purchaser Shares to be issued to the
Stockholders in the Merger will, as of the Effective Time, be duly authorized
and validly issued, fully paid and nonassessable.
5.3 Authority Relative to Agreement. Each of Purchaser and Purchaser
Subsidiary, as applicable, has all requisite power and authority, corporate or
otherwise, to execute, deliver and perform their obligations under this
Agreement and the Transaction Documents and has taken all action necessary,
corporate or otherwise, in order to execute and deliver this Agreement and the
other Transaction Documents and to consummate the Contemplated Transactions.
This Agreement has been duly executed and delivered by Purchaser and Purchaser
Subsidiary. Each of this Agreement and the other Purchaser Documents constitute
valid and binding obligations of Purchaser and Purchaser Subsidiary, as
applicable, enforceable against Purchaser and Purchaser Subsidiary in accordance
with their respective terms, subject to laws relating to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, marshaling or other laws and
rules of law affecting the enforcement generally of creditors' rights and
remedies (including such as may deny giving effect to waivers of debtors' or
guarantors' rights).
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5.4 Absence of Conflict. Neither the execution and delivery of this
Agreement and the other Documents to which it is a party nor the consummation of
the Contemplated Transactions will (a) violate, conflict with, result in a
breach or termination of, constitute a default under or give rise to a right to
terminate or accelerate (or an event which, with notice or lapse of time or
both, would constitute the same) (i) any agreement, commitment, deed of trust,
indenture, lease, mortgage or other instrument to which Purchaser is a party or
by which any of its properties or assets is bound; (ii) the certificate of
incorporation or bylaws of Purchaser and Purchaser Subsidiary or (iii) any Law,
order of a Governmental Body or any other restriction of any kind or character
applicable to Purchaser or any of its properties or assets, or (b) result in the
creation or imposition of any Encumbrance upon any properties or assets of
Purchaser or Purchaser Subsidiary under any agreement or commitment to which
Purchaser or Purchaser Subsidiary is a party or by which Purchaser or Purchaser
Subsidiary or their respective properties or assets may be bound.
5.5 No Brokers or Finders. Purchaser and Purchaser Subsidiary have not,
nor have any of their officers, directors or employees, employed any broker or
finder or incurred any liability for any brokerage or finder's fee or
commissions or similar payment in connection with any of the Contemplated
Transactions.
5.6 SEC Documents: Financial Statements.
(a) As of their respective filing dates (i) each quarterly and other
report and registration statement (without exhibits) filed by Purchaser with the
SEC since January 1, 2002 (the "Purchaser SEC Documents"), complied in all
material respects with the applicable requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) none of the Purchaser SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading.
The financial statements of Purchaser included in the Purchaser SEC Documents
(the "Purchaser Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
conformity with GAAP consistently applied (except as may be indicated in the
notes thereto or, in the case of unaudited financial statements, as permitted by
the rules and regulations of the SEC) and present fairly, in all material
respects, the financial position of Purchaser and its consolidated subsidiaries
at the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal, recurring and certain non-recurring audit adjustments).
(b) Purchaser does not have any liabilities or obligations (whether
known or unknown, absolute, accrued, contingent or otherwise and whether due or
to become due) that were not fully reflected or reserved against in its recent
balance sheet dated as of September 30, 2003 included in the Purchaser Financial
Statements (the "Purchaser Balance Sheet"), except for non-material liabilities
and obligations incurred in the ordinary course of business and consistent with
past practice since the date thereof, liabilities and obligations incurred in
connection with the Contemplated Transactions, and the Accounting Fees to be
paid prior to Closing pursuant to Section 7.9. The reserves reflected in such
balance sheet are in accordance with GAAP consistently applied.
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(c) Since the date of the Purchaser Balance Sheet, Purchaser has not
had any operations, and there has been no material adverse change in the
financial condition or prospects of Purchaser or any event, condition or
contingency that could reasonably be expected to have a Material Adverse Effect
on Purchaser.
5.7 Litigation. Except as disclosed in the Purchaser SEC Documents or in
Schedule 5.7 hereto, there is no action, suit, inquiry, arbitration, proceeding
or investigation by or before any court or Governmental Body or arbitration
pending or, to the knowledge of Purchaser, threatened against or involving
Purchaser or its assets or which questions or challenges the validity of this
Agreement or the Contemplated Transactions, and Purchaser has not received any
notice of any event or occurrence which could result in any such action, suit,
inquiry, proceeding or investigation nor, to the knowledge of Purchaser, is
there any valid basis for any such action, suit, inquiry, proceeding or
investigation.
5.8 Tax Matters. Except as set forth on Schedule 5.8, Purchaser has filed
all federal, state, local and foreign Tax Returns and other Tax reports required
to be filed by it. Except for Tax payments required to be made by Purchaser with
California Governmental Bodies described on Schedule 5.8, Purchaser has paid all
Taxes that have become due and payable, whether or not so shown on any such
return or report. Except as set forth on Schedule 5.8, Purchaser does not have
any knowledge of, any deficiency, assessment or audit, or proposed deficiency,
assessment or audit from any Governmental Body that could affect or result in
the imposition of a Lien upon the assets of Purchaser or create any transferee
or other liability upon Purchaser.
5.9 Absence of Certain Changes or Events. Since the date of the Purchaser
Balance Sheet, except as set forth in Schedule 5.9, Purchaser has not conducted
any active business, and has not:
(a) declared or paid any dividend or made any other payment or
distribution in respect of its capital stock;
(b) purchased, redeemed, issued, sold or otherwise acquired or
disposed of, either directly or indirectly, any of its capital stock or
reclassified, split or otherwise changed any of its capital stock or granted or
entered into any options, warrants, puts or calls or other rights to purchase,
sell or convert any obligation into any of, its capital stock;
(c) paid, discharged or satisfied any Encumbrance (other than an
Encumbrance then required to be paid, discharged or satisfied), claim, liability
or obligation (whether fixed, accrued, contingent or otherwise, whether due or
to become due), other than a claim, liability or obligation that is a current
liability shown on the Purchaser Balance Sheet or incurred since the date of the
Purchaser Balance Sheet in the ordinary course of business consistent with past
practice;
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(d) canceled or compromised any debt or claim, or waived or released
any material right, other than adjustments in the ordinary course of business
which, in the aggregate, are not material;
(e) sold, assigned, transferred, conveyed, leased, pledged,
encumbered or otherwise disposed of any of its assets (real or personal,
tangible or intangible) except in the ordinary course of business consistent
with past practice.
(f) made or granted any general increase in the compensation
(whether salary, commission, bonus, benefits (retirement, severance or other) or
other direct or indirect remuneration) of any of Purchaser's employees (other
than individual increases which were generally consistent in amount with
Purchaser's historical practices), or made or granted any increase in the
compensation of the officers of Purchaser, or entered into any employment,
severance, bonus or similar agreement with any employee of Purchaser;
(g) changed accounting methods other than in accordance with GAAP;
(h) received any notice of termination of any Contract or suffered
any damage, destruction or loss adversely affecting Purchaser's assets;
(i) incurred or assumed any indebtedness for money borrowed or
guarantied any indebtedness or other obligation of another Person;
(j) suffered any Material Adverse Effect; or
(k) agreed or otherwise committed, whether in writing or otherwise,
to do, or taken any action or omitted to take any action that would result in,
any of the foregoing.
5.10 Employee Benefits; Executive Officers; Labor.
(a) Except as set forth on Schedule 5.10(a), Purchaser has no
employees and is not a party to any written employment or consulting agreements,
written executive compensation plans, bonus plans, incentive compensation plans,
deferred compensation plans or agreements, employee pension plans or retirement
plans, employee profit sharing plans, employee stock purchase plans, group life
insurance, hospitalization insurance, severance or other employee benefit plans
(as defined in Section 3(3) of ERISA) (the "Purchaser Plans") providing for
benefits for any employees of Purchaser. There are no other binding plans or
commitments of the type referred to in this Section 5.10(a) which are not
reduced to writing, and Purchaser has no agreement or commitment to create any
additional such Purchaser Plan.
(b) Schedule 5.10(b) includes a true and complete list of all
officers of Purchaser and the compensation (including bonuses, incentives and
similar compensation) received by each. To the knowledge of Purchaser, no past
or present officer or other executive employee of Purchaser has ever been
indicted, tried or convicted of a criminal felony. To the knowledge of
Purchaser, no officer or other employee of Purchaser is in violation of (a) any
material term of any employment agreement, non-disclosure agreement, noncompete
agreement or other similar agreement with any previous employer (and to the
knowledge of Purchaser, the employment of such employee by Surviving Corporation
or any of its Affiliates will not result in a violation of any such agreement)
or (b) any obligation binding on such employee which would prohibit the use of
information obtained from such employee which Purchaser has used.
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(c) Neither the execution and delivery of this Agreement nor the
consummation of any of the Contemplated Transactions will entitle any current or
former employee of Purchaser to severance pay or other similar payment, or
accelerate the time of payment or increase the amount of compensation due to any
such employee or former employee. To the knowledge of Purchaser, it has no
threatened or pending labor disputes with any of its employees.
5.11 Contracts and Commitments. Schedule 5.11 contains a true, complete
and accurate list of each of the following written contracts, agreements,
understandings or other obligations to which Purchaser is a party or by which
any of its assets or properties are bound (together with each of the agreements
disclosed on Schedule 5.10, a "Purchaser Contract"):
(a) all rental or use agreements, contracts, covenants or
obligations which may involve the payment by or to Purchaser of more than
$25,000;
(b) any contract, agreement, commitment or obligation to make any
capital expenditures in excess of $25,000;
(c) contracts, agreements, commitments or other obligations with any
Person containing any provision or covenant limiting the ability of Purchaser to
engage in any line of business or to compete with or to obtain products or
services from any Person or limiting the ability of any Person to compete with
or to provide products or services to, or obtain products or services from,
Purchaser, or covering indemnification of another Person other than in the
ordinary course of business;
(d) any profit-sharing or similar contract, agreement, understanding
or obligation with any Person;
(e) contracts, agreements, commitments or other obligations with
respect to the purchase or sale by or to Purchaser of any product, equipment,
facility, or similar item that by their respective terms do not expire or
terminate or are not terminable by Purchaser, without penalty, premium or other
liability within 30 days or may involve the payment by or to Purchaser of more
than $25,000;
(f) license, royalty, franchise, distributorship, dealer, service,
sales agency, consulting, advisory, public relations or advertising contracts,
agreements, commitments or other obligations;
(g) contracts, agreements, commitments or other obligations to
provide services or facilities by or to Purchaser or to or by another Person
which is not terminable by Purchaser within 30 days without penalty, premium or
other liability or involving payment by Purchaser or the other Person of more
than $25,000;
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(h) all other contracts, agreements, commitments, or other
obligations whether or not made in the ordinary course of business which either
(i) may involve the expenditure by Purchaser of funds in excess of $25,000 per
commitment (or under a group of similar commitments), or (ii) are not terminable
within 30 days from the date hereof without penalty, premium or other liability,
or are otherwise material to Purchaser;
(i) contracts, agreements, commitments or other obligations with any
Person requiring indemnification by Purchaser of another Person other than in
the ordinary course of business; or
(j) all other contracts, agreements, commitments, or other
obligations of any kind that involve or relate to any officer, director,
employee or consultant of Purchaser or any Affiliate or relative thereof.
5.12 Status of Agreements. All Purchaser Contracts to which Purchaser is a
party are in full force and effect and constitute valid and binding obligations
of Purchaser and to the knowledge of Purchaser, are binding on the other parties
thereto. There are no existing defaults (or events which, with notice or lapse
of time or both, would constitute a default) by Purchaser, except with respect
to any default that would not cause a Material Adverse Effect on Purchaser, or
any other party thereunder, and Purchaser has not received notice of any claim
by another party to any Purchaser Contract that Purchaser is in default
thereunder.
5.13 Bank Accounts. Schedule 5.13 sets forth a true, correct and complete
list of the names and addresses of all banks and other financial institutions in
which Purchaser maintains an account, deposit or safe-deposit box or lockbox
account, together with the names of all Persons authorized to draw on such
accounts or deposits or to have access to such boxes.
5.14 No Guaranties. Except as disclosed in the Purchaser SEC Documents,
(i) none of the obligations or liabilities of Purchaser incurred in connection
with the operation of its business is guaranteed by or subject to a similar
contingent obligation of any other Person, (ii) Purchaser has not guaranteed or
become subject to a similar contingent obligation in respect of the obligations
or liabilities of any other Person, and (iii) there are no outstanding letters
of credit, surety bonds or similar instruments of Purchaser or any of its
Affiliates.
5.15 Records. The books of account, corporate records and minute books of
Purchaser are complete and correct in all material respects. Complete and
accurate copies of all such books of account, corporate records and minute books
have been provided to GVI.
5.16 No Brokers or Finders. Purchaser has not, and its Affiliates,
officers, directors or employees have not, employed any broker or finder or
incurred any liability for any brokerage or finder's fee or commissions or
similar payment in connection with any of the Contemplated Transactions.
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5.17 Tax Reporting. Consistent with the intent of the parties hereto,
Purchaser (i) shall treat, and cause its Affiliates to so treat, the Merger as a
reorganization under Section 368(a) with respect to all Tax Returns, to the
extent consistent with Law, and (ii) agrees that this Agreement constitutes a
"plan of reorganization" within the meaning of Section 1.368-2(g) of the income
tax regulations promulgated under the Code, and Purchaser will not, and will
cause its Affiliates to not, take any action to treat this Agreement otherwise.
5.18 Purchaser Subsidiary's Operations. Purchaser Subsidiary was formed
solely for the purpose of engaging in the Contemplated Transactions and has not
(i) engaged in any business activities, (ii) conducted any operations other than
in connection with the Contemplated Transactions, (iii) incurred any liabilities
other than in connection with the Contemplated Transactions or (iv) owned any
assets or property.
5.19 Disclosure. No representations or warranties by Purchaser or
Purchaser Subsidiary in this Agreement and no statement contained in any
schedules, exhibits or certificates furnished or to be furnished by Purchaser or
Purchaser Subsidiary to GVI pursuant to the provisions hereof, contains or will
contain any untrue statement of material fact or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make the statements herein or therein not misleading. Documents
delivered or to be delivered by Purchaser or Purchaser Subsidiary to GVI
pursuant to this Agreement are or will be true and complete copies of what they
purport to be.
6. CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND PURCHASER SUBSIDIARY
The obligations of Purchaser and Purchaser Subsidiary to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of each
of the following conditions, any one or more of which may be waived by
Purchaser, to the extent permitted by applicable law:
6.1 Legal Opinion. Purchaser and Purchaser Subsidiary shall have received
the opinion of counsel to GVI, dated the Effective Time and addressed to
Purchaser and Purchaser Subsidiary, in substantially the form of Exhibit 6.1.
6.2 No Injunction. There shall not be in effect or threatened any
injunction, order or decree of a Governmental Body of competent jurisdiction
that prohibits or delays, or seeks to prohibit or delay, consummation of any
material part of the Contemplated Transactions.
6.3 Representations, Warranties and Agreements. (a) The representations
and warranties of GVI set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Effective
Time with the same effect as though made as of the Effective Time, unless made
as of another date, in which case they shall be true and correct in all
materials respects as of such date, (b) GVI shall have performed and complied in
all material respects with the agreements contained in this Agreement required
to be performed and complied with by them prior to or as of the Effective Time
and (c) Purchaser shall have received a certificate to the foregoing effect
signed by an authorized executive officer of GVI.
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6.4 Approvals. All Approvals necessary in connection with the execution,
delivery and performance of this Agreement by GVI for the consummation of the
Contemplated Transactions shall have been obtained or made and shall be in full
force and effect.
6.5 No Material Adverse Effect. No event, occurrence, fact, condition,
change, development or effect shall have occurred, exist or come to exist since
the date of this Agreement that, individually or in the aggregate, has
constituted or resulted in, or could reasonably be expected to constitute or
result in a Material Adverse Effect.
6.6 Investment Representations Certificate. Each Stockholder shall have
delivered to Purchaser a certificate containing investment representations with
respect to such Stockholder in the form of Exhibit C hereto.
6.7 Resignations. The directors of GVI other than those listed on Schedule
2.6 shall have delivered to GVI duly executed resignations as of the Effective
Time.
6.8 Corporate Approval. Prior to the Effective Time, this Agreement, the
other Transaction Documents and the Contemplated Transactions shall have been
duly approved by the Board of Directors of GVI and the Stockholders of GVI, in
accordance with applicable law.
6.9 Secretary of State Certificates. Purchaser shall have received
certificates of the Secretary of State of the State of Delaware with respect to
GVI, and of each state in which GVI is qualified to do business as a foreign
corporation, as of a recent date, showing GVI to be validly existing and in good
standing in the State of Delaware and qualified to do business and in good
standing in such other states as a foreign corporation, as the case may be.
6.10 Secretary's Certificate of GVI. Purchaser shall have received a
certificate of the Secretary or Assistant Secretary of GVI certifying (i) a true
and complete copy of the resolutions duly and validly adopted by the Board of
Directors and Stockholders of GVI, evidencing the authorization of the execution
and delivery of this Agreement, the other Transaction Documents to which it is a
party and the consummation of the Contemplated Transactions, (ii) the names and
signatures of the officers of GVI authorized to sign this Agreement and the
other documents to be delivered hereunder and (iii) a true and complete copy of
the certificate of incorporation and bylaws of GVI.
6.11 Voting Agreement. The holders of a majority of the GVI Shares shall
have entered into a voting agreement in the form of Exhibit G pursuant to which
such holders have agreed to vote in favor of, among other matters, the Charter
Amendment and the adoption of the Stock Option Plan.
7. CONDITIONS TO THE OBLIGATIONS OF GVI.
The obligations of GVI to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any one or more of which may be waived by GVI, to the extent
permitted by applicable law:
7.1 Legal Opinion. GVI shall have received the legal opinion of Kronish
Xxxx Xxxxxx & Xxxxxxx LLP, counsel to Purchaser, in substantially the form of
Exhibit 7.1.
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7.2 No Injunction. There shall not be in effect or threatened any
injunction, order or decree of a Governmental Body of competent jurisdiction
that prohibits or delays, or seeks to prohibit or delay, consummation of any
material part of the Contemplated Transactions.
7.3 Representations, Warranties and Agreements. (a) The representations
and warranties of Purchaser and Purchaser Subsidiary set forth in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement and as of the Effective Time with the same effect as though made as of
the Effective Time, unless made as of another date, in which case they shall be
true and correct in all material respects as of such date, (b) Purchaser and
Purchaser Subsidiary shall have performed and complied in all material respects
with the agreements contained in this Agreement required to be performed and
complied with by it prior to or at the Closing and (c) GVI shall have received a
certificate to the foregoing effect signed by an authorized executive officer of
Purchaser.
7.4 Approvals. All Approvals necessary in connection with the execution,
delivery and performance of this Agreement by Purchaser and Purchaser Subsidiary
or for the consummation of the Contemplated Transactions shall have been
obtained or made and shall be in full force and effect.
7.5 Corporate Approval. Prior to the Effective Time, this Agreement, the
Purchaser Documents to which it is a party and the Contemplated Transactions
shall have been duly approved by the Board of Directors of Purchaser and
Purchaser Subsidiary and the stockholder of Purchaser Subsidiary, in accordance
with applicable law.
7.6 Secretary of State Certificates. GVI shall have received certificates
of the Secretary of State of the State of Delaware with respect to Purchaser and
of each state in which Purchaser is qualified to do business as a foreign
corporation as of a recent date, showing Purchaser to be validly existing and in
good standing in the State of Delaware and qualified to do business and in good
standing in such other states as a foreign corporation, as the case may be.
7.7 Secretary's Certificate. GVI shall have received certificates of the
Secretary or Assistant Secretary of Purchaser and Purchaser Subsidiary
certifying (i) a true and complete copy of the resolutions duly and validly
adopted by the Board of Directors of Purchaser and Purchaser Subsidiary, as
applicable, evidencing the authorization of the execution and delivery of this
Agreement, the other Transaction Documents to which it is a party and the
consummation of the Contemplated Transactions, (ii) the names and signatures of
the officers of Purchaser and Purchaser Subsidiary, as applicable, authorized to
sign this Agreement and the other documents to be delivered hereunder and (iii)
a true and complete copy of the certificate of incorporation and bylaws of each
of Purchaser and Purchaser Subsidiary.
7.8 Indebtedness. Indebtedness of Purchaser in excess of $195,000 owed to
Europa International, Inc. shall have been converted into equity securities of
Purchaser or cancelled, and the remaining $195,000 amount shall be evidenced by
a Promissory Note in the form attached hereto as Exhibit E.
7.9 Accrued Fees. All accrued fees of Purchaser's auditors, including all
legal and accounting fees incurred by Purchaser in connection with (a) the audit
of Purchaser for the calendar years ended 2001 and 2002 and (b) Purchaser
becoming current in its SEC reporting requirements under the Securities Exchange
Act, shall have been paid in full by the Purchaser (collectively, the
"Accounting Fees").
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7.10 Conversion of Preferred Stock. All issued and outstanding Preferred
Stock of Purchaser, other than (i) the Preferred Stock issued as Merger
Consideration hereunder, (iii) the Series D Preferred Stock held by Europa
International, Inc. which will be converted into Purchaser Common Stock upon
filing of the Charter Amendment, (iii) the Purchaser's Series A Preferred Stock
which will be converted into Purchaser Common Stock upon filing of the Charter
Amendment, and (iv) the Purchaser's Series B Preferred Stock, shall be converted
into Common Stock of Purchaser, or otherwise cancelled, and the Purchaser shall
take all actions necessary and appropriate to eliminate the existence of any
such Preferred Stock from Purchaser's Certificate of Incorporation.
7.11 Stock Option Plan. Purchaser's Board of Directors shall have (i)
adopted and approved the Stock Option Plan, and (ii) recommended the Stock
Option Plan for approval by the stockholders of Purchaser.
7.12 Registration Rights. Purchaser shall have entered into a registration
rights agreement in the form of Exhibit D pursuant to which Purchaser shall
agree to register (i) the shares of Purchaser Common Stock issuable upon
conversion of the Purchaser Shares, and (ii) the shares of Purchaser Common
Stock, and shares of Purchaser Common Stock issuable upon conversion of
convertible securities, held by Xxxxx Capital Management, L.P. and its
Affiliates.
8. FURTHER AGREEMENTS OF THE PARTIES.
8.1 Expenses. The Parties shall each bear their own respective expenses
incurred in connection with this Agreement and the Contemplated Transactions,
except as otherwise specifically provided Section 10.2 and except that in the
event the Merger is consummated, Purchaser shall bear the costs of the fees and
expenses of counsel to GVI incurred in connection with the Contemplated
Transactions.
8.2 Access Prior to the Closing. (a) Between the date of this Agreement
and the Effective Time, GVI shall as Purchaser may from time to time request
with reasonable notice to GVI, (i) give Purchaser and its authorized
representatives full and complete access to all properties, personnel,
facilities and offices of GVI and to the books and records of GVI (and permit
Purchaser to make copies thereof), (ii) permit Purchaser to make inspections
thereof, (iii) cause the officers and employees of, and consultants to, GVI to
furnish Purchaser with all financial information and operating data and other
information with respect to the business and properties of GVI, and to discuss
with Purchaser and its authorized representatives the affairs of GVI.
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(b) Between the date of this Agreement and the Effective Time, each of the
Parties shall and shall cause their respective Affiliates and officers and
directors, and shall use reasonable efforts to cause all their other respective
employees, auditors, attorneys, consultants, advisors and agents, to treat as
confidential and hold in strict confidence, unless compelled to disclose by
judicial or administrative process or, in the opinion of its counsel, by other
requirements of Law, and after prior written notice to the other Party, all
confidential information of GVI or Purchaser, as the case may be, furnished to
Purchaser by GVI or to GVI by Purchaser, as the case may be, or any of their
respective representatives in connection with the Contemplated Transactions and
will not release or disclose such confidential information to any other Person,
except their respective auditors, attorneys, financial advisors and other
consultants, agents and advisors in connection with the consummation of the
Contemplated Transactions. If the Closing does not occur (i) such confidence
shall be maintained by the Parties and each Party shall cause its officers and
directors and Affiliates and shall use reasonable efforts to cause such other
Persons to maintain such confidence, except to the extent such information comes
into the public domain (other than as a result of an action by such Party, its
officers, directors or such other persons in contravention of this Agreement),
(ii) each Party shall and shall cause its officers and directors and Affiliates
and shall use reasonable efforts to cause such other Persons to refrain from
using any of such confidential information except in connection with this
Agreement, and (iii) upon the request of any Party, the other Party shall
promptly return to the requesting Party any written materials remaining in its
possession, which materials it has received from the requesting Party, or their
respective representatives.
8.3 Publicity. Between the date of this Agreement and the Effective Time,
except to the extent required by Law, neither Purchaser nor GVI shall, and none
of them shall permit any Affiliate to, issue any press release or public
announcement of any kind concerning, or otherwise publicly disclose, the
Contemplated Transactions without the consent of the other; and in the event any
such public announcement, release or disclosure is required by Law, the Parties
will consult prior to the making thereof and use their best efforts to agree
upon a mutually satisfactory text.
8.4 Conduct of Business of GVI. Except as expressly permitted by this
Agreement, between the date of this Agreement and the Effective Time, GVI shall
conduct its business only in the ordinary course in substantially the same
manner as heretofore conducted, and use all its reasonable efforts to preserve
intact its present business organization and employees and to preserve the
goodwill of Persons having business relations with GVI. Without limiting the
generality of the foregoing, except as otherwise expressly provided in this
Agreement, between the date of this Agreement and the Effective Time, GVI shall
pay accounts payable and pay and perform other obligations of the business of
GVI when they become due and payable in the ordinary course of business
consistent with past practice, or when required to be performed, as the case may
be, and shall not:
(a) amend its articles or certificate of incorporation or bylaws;
(b) organize any Subsidiary or acquire any capital stock or other
equity securities of any Person or any equity or ownership interest in any
business;
(c) enter into any instrument which would constitute a Contract or
enter into any material amendment, supplement or waiver in respect of any such
Contract;
(d) incur any severance pay obligation by reason of this Agreement
or the Contemplated Transactions;
29
(e) grant or extend any power of attorney other than in the ordinary
course of business which does not affect a material part of GVI's business;
(f) keep in full force and effect insurance comparable in amount and
scope of coverage to insurance now carried by it;
(g) not take, or permit to be taken, any action which is represented
and warranted in Section 4.12 not to have been taken since the Recent Balance
Sheet Date;
(h) promptly advise Purchaser in writing of any Material Adverse
Effect with respect to GVI; or
(i) agree or otherwise commit, whether in writing or otherwise, to
do, or take any action or omit to take any action that would result in, any of
the foregoing.
8.5 Further Assurances. Following the Closing, the Parties shall, and
shall cause each of their Affiliates to, from time to time, execute and deliver
such additional instruments, documents, conveyances or assurances and take such
other actions as shall be necessary, or otherwise reasonably requested by the
other Party, to confirm and assure the rights and obligations provided for in
this Agreement and in the Transaction Documents and render effective the
consummation of the Contemplated Transactions.
8.6 Amending Schedules. From time to time prior to the Closing, GVI and
Purchaser shall promptly supplement or amend the Schedules hereto with respect
to any matter arising after the date of this Agreement which, if existing or
occurring at the date of this Agreement, would have been required to have been
set forth in the Schedules hereto. Such supplement or amendment shall have the
effect of curing any related misrepresentation or breach of warranty made in
connection with the transactions contemplated by this Agreement; provided,
however, each party shall have a commercially reasonable period of time
following receipt of any supplemented or amended Schedules to elect (i) to
terminate this Agreement without any further liability to Purchaser or GVI or
(ii) in such non-amending party's sole discretion, to elect to waive such breach
and consummate the transactions contemplated by this Agreement.
8.7 Consents: Regulatory Approval. Each Party will take all such
commercially reasonable actions as may be necessary to obtain all Approvals from
Persons or Governmental Bodies in order to permit the consummation of the
Contemplated Transactions.
8.8 Charter Amendment.
(a) As soon as practicable following the Effective Time, but in no
event later than twenty (20) business days after such date, Purchaser shall
prepare and cause to be filed with the SEC a Proxy Statement and/or Information
Statement (together with any amendments or supplements thereto, the "Filing") in
connection with the requisite approval and adoption of (i) an amendment to its
certificate of incorporation so that Purchaser shall have sufficient shares of
unissued Purchaser Common Stock so as to permit the conversion of all of the
Purchaser Shares as well as other convertible securities of Purchaser then
outstanding (the "Charter Amendment"), and (ii) the Stock Option Plan. The
Filing shall comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated thereunder. Purchaser
shall immediately advise the Stockholder Representative if the Filing, including
any amendments or supplements thereto, at the time filed with the SEC, or at any
other time, contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order to make
the statement therein, in light of the circumstances under which it is made, not
misleading. Purchaser shall respond promptly to any comments of the SEC or its
staff with respect thereto and use its best efforts to have the Filing cleared
or declared effective by the SEC as soon as practicable after its filing.
Purchaser shall also promptly furnish to the Stockholder Representative and its
counsel copies of any correspondence received from the SEC.
30
(b) As promptly as practicable, Purchaser shall properly prepare and
file any other filings required under the Securities Act, the Exchange Act or
any other Laws (including, without limitation, state securities and "blue sky"
laws) relating to the Charter Amendment and the Stock Option Plan.
(c) Purchaser shall provide copies of drafts of the Filing to the
Stockholder Representative and its counsel at least two (2) business days prior
to the date of filing of such document with the SEC (including with respect to
each amendment or supplement thereto) so as to allow GVI to review and comment
on such documents. Such review shall not be deemed a review by GVI or its
counsel as to whether the Purchaser has properly complied with SEC rules or
regulations. Prior to the filing of the Filing with the SEC, Purchaser shall
consider in good faith any comments made by, or changes requested by, GVI or its
counsel.
(d) As soon as practicable after clearance or declaration of
effectiveness by the SEC of the Filing, Purchaser shall take all action
necessary in accordance with applicable Laws and its charter, as applicable, to
either (i) if the Filing is a Proxy Statement, duly call, give notice of,
convene and hold a meeting of its stockholders solely to consider and approve
the Charter Amendment and the Stock Option Plan, and following such meeting, if
so approved, cause the Charter Amendment to be filed with the Secretary of State
of the State of Delaware, or (ii) if the Filing is an Information Statement,
cause the Charter Amendment to be filed with the Secretary of State of the State
of Delaware.
(e) Upon filing of the Charter Amendment, Purchaser shall cause all
(i) issued and outstanding shares of Series A Preferred Stock of Purchaser, and
(ii) shares of Series D Preferred Stock of Purchaser of Europa International,
Inc., to be converted into Purchaser Common Stock, or otherwise cancelled, and
the Purchaser shall take all actions necessary and appropriate to eliminate the
existence of any such Preferred Stock from Purchaser's Certificate of
Incorporation.
9. INDEMNIFICATION AND RELATED MATTERS.
9.1 Indemnification by Purchaser. Purchaser shall indemnify and hold
harmless GVI and each of the Stockholders (the "GVI Indemnified Parties"), and
shall reimburse the GVI Indemnified Parties for, any loss, liability, claim,
damage, expense (including, but not limited to, costs of investigation and
defense and reasonable attorneys' fees) or diminution of value (collectively,
"Damages") arising from or in connection with (a) any inaccuracy, in any
material respect, in any of the representations and warranties of Purchaser and
Purchaser Subsidiary in this Agreement or in any certificate delivered by
Purchaser and Purchaser Subsidiary to GVI pursuant to this Agreement, or any
actions, omissions or statements of fact inconsistent with any such
representation or warranty, (b) any failure by Purchaser or Purchaser Subsidiary
to perform or comply in any material respect with any agreement in this
Agreement, (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with Purchaser or Purchaser
Subsidiary (or any Person acting on their behalf) in connection with any of the
Contemplated Transactions, (d) Taxes attributable to any transaction or event
occurring on or prior to the Closing to the extent such liabilities exceed the
amount of the reserve for Taxes accrued on the Recent Balance Sheet, (e) any
claim by any Person relating to or arising out of any liabilities reflected on
the Purchaser Balance Sheet or with respect to Accounting Fees arising
thereafter, excluding liabilities in respect of $195,000 of indebtedness of
Purchaser to Europa International, Inc. or (f) any litigation, action, claim,
proceeding or investigation by any third party relating to or arising out of the
business or operations of Purchaser, or the actions of Purchaser or any holder
of Purchaser capital stock prior to the Effective Time.
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9.2 Survival. All representations, warranties, covenants and agreements of
Purchaser and Purchaser Subsidiary contained in this Agreement or in any
certificate delivered pursuant to this Agreement shall survive the Closing for
the time period set forth in Section 9.3 notwithstanding any investigation
conducted with respect thereto. The representations and warranties of GVI
contained in this Agreement or in any certificate delivered pursuant to this
Agreement shall not survive the Closing.
9.3 Time Limitations. Neither Purchaser nor Purchaser Subsidiary shall
have any liability (for indemnification or otherwise) with respect to any
representation or warranty, or agreement to be performed and complied with prior
to the Effective Time, unless on or before the six-month anniversary of the
Effective Time (the "Claims Deadline"), Purchaser is given notice of a claim
with respect thereto, in accordance with Section 9.7, specifying the factual
basis therefor in reasonable detail to the extent then known by the GVI
Indemnified Parties.
9.4 Limitation on Liability. The obligations to Purchaser and Purchaser
Subsidiary to the GVI Indemnified Parties set forth in Section 9.1 shall be
subject to the following limitations:
(a) The aggregate liability of Purchaser and Purchaser Subsidiary to
the GVI Indemnified Parties under this Agreement shall not exceed five hundred
thousand dollars ($500,000), and shall be payable by the issuance of additional
shares of Common Stock to the Stockholders pursuant to Section 9.6.
(b) Other than claims based on fraud or for specific performance,
injunctive or other equitable relief, the indemnity provided in this Article 9
shall be the sole and exclusive remedy of the GVI Indemnified Parties against
Purchaser and Purchaser Subsidiary at law or equity for any matter covered by
Section 9.1.
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9.5 Notice of Claims.
(a) If, at any time on or prior to the Claims Deadline, GVI
Indemnified Parties shall assert a claim for indemnification pursuant to Section
9.1, such GVI Indemnified Parties shall submit to Purchaser a written claim in
good faith signed by an authorized officer of GVI or the requisite number of
Stockholders under Section 9.7, as applicable, stating: (i) that a GVI
Indemnified Party incurred or reasonably believes it may incur Damages and the
reasonable estimate of the amount of any such Damages (not to exceed $500,000);
(ii) in reasonable detail, the facts alleged as the basis for such claim and the
section or sections of this Agreement alleged as the basis or bases for the
claim; and (iii) if the Damages have actually been incurred, the number of
additional shares of Common Stock to which the Stockholders are entitled with
respect to such Damages, which shall be determined as provided in Section 9.6
below. If the claim is for Damages which the GVI Indemnified Parties reasonably
believe may be incurred or are otherwise unliquidated, the written claim of the
applicable GVI Indemnified Parties shall state the reasonable estimate of such
Damages, in which event a claim shall be deemed to have been asserted under this
Article 9 in the amount of such estimated Damages, but no distribution of
additional shares of Common Stock to the Stockholders pursuant to Section 9.6
below shall be made until such Damages have actually been incurred.
(b) In the event that any action, suit or proceeding is brought
against any GVI Indemnified Party with respect to which Purchaser may have
liability under Article 9, the Purchaser shall have the right, at its cost and
expense, to defend such action, suit or proceeding in the name and on behalf of
the GVI Indemnified Party; provided, however, that a GVI Indemnified Party shall
have the right to retain its own counsel, with fees and expenses paid by
Purchaser, if representation of the GVI Indemnified Party by counsel retained by
Purchaser would be inappropriate because of actual or potential differing
interests between Purchaser and the GVI Indemnifying Party. In connection with
any action, suit or proceeding subject to Article 9, Purchaser and each GVI
Indemnified Party agree to render to each other such assistance as may
reasonably be required in order to ensure proper and adequate defense of such
action, suit or proceeding. Purchaser shall not, without the prior written
consent of the applicable GVI Indemnified Parties, which consent shall not be
unreasonably withheld or delayed, settle or compromise any claim or demand if
such settlement or compromise does not include an irrevocable and unconditional
release of such GVI Indemnified Parties for any liability arising out of such
claim or demand.
9.6 Payment of Damages. In the event that the GVI Indemnified Parties
shall be entitled to indemnification pursuant to this Article 9 for actual
Damages incurred by them, Purchaser shall, within thirty (30) days after the
final determination of the amount of such Damages, issue to the Stockholders
that number of additional shares of Common Stock in an aggregate amount equal to
the quotient obtained by dividing (x) the amount of such Damages (not to exceed
$500,000), by (y) the Fair Market Value per share of the Common Stock as of the
date (the "Determination Date") of the submission of the notice of claim to
Purchaser pursuant to Section 9.5. Such shares of Common Stock shall be issued
to the Stockholders pro rata, in proportion to the number of Purchaser Shares
issued (or issuable) to the Stockholders at the Effective Time.
9.7 Third Party Beneficiaries. The Parties acknowledge and agree that each
of the Stockholders are direct beneficiaries with respect to the provisions of
this Article 9 and may enforce each of its provisions as if such Stockholders
were a Party hereto, provided, however, that no action, claim, notification or
other writing of the Stockholders pursuant to this Article 9 shall be valid and
binding upon Purchaser or have any force or effect unless such action, claim,
notification or writing is executed by Stockholders, or their duly appointed
proxies, holding a majority of the GVI Shares immediately prior to the Effective
Time.
33
10. TERMINATION.
10.1 Termination Procedures. This Agreement may be terminated before the
Effective Time only as follows:
(a) by written agreement of GVI and the Purchaser at any time;
(b) by GVI, by notice to Purchaser at any time:
(c) by Purchaser, by notice to GVI, if (x) satisfaction of any of
the conditions to Purchaser's or Purchaser Subsidiary's obligations set forth in
Section 6 becomes impossible, and such condition has not been waived by
Purchaser or (y) the Closing has not occurred by April 30, 2004, in either case,
other than by the breach or default of Purchaser; or
(d) by GVI, by notice to Purchaser, if (x) satisfaction of any of
the conditions to GVI's obligations set forth in Section 7 becomes impossible,
and such condition has not been waived by GVI or (y) the Closing has not
occurred by April 30, 2004, in either case other than by the breach or default
by GVI.
10.2 Effect of Termination. In the event that this Agreement is terminated
pursuant to Section 10.1(a) or (d), this Agreement shall terminate without any
liability or further obligation of any Party to another, except for the
obligations of the Parties under Sections 8.1 and 8.2(b). In the event this
Agreement is terminated under Section 10.1(b) or (c) then GVI shall pay
Purchaser $75,000 in liquidated damages plus all cost and expenses (including
legal and accounting) incurred by Purchaser in connection with the Contemplated
Transactions and the negotiation and preparation of this Agreement in an amount
not to exceed $110,000.
11. MISCELLANEOUS.
11.1 Entire Agreement. This Agreement and the Transaction Documents
contain, and are intended as, a complete statement of all of the terms and the
arrangements between the Parties with respect to the matters provided for,
supersede any previous agreements and understandings between the Parties with
respect to those matters and cannot be changed or terminated orally. No Party
makes, and each Party hereby expressly disclaims reliance upon, any
representations or warranties with respect to the Contemplated Transactions
other than as expressly set forth herein as limited by the exceptions contained
in the Schedules hereto or in the other Transaction Documents.
11.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of New York applicable to agreements made
and to be performed therein without giving effect to conflicts of law
principles.
34
11.3 Headings. The section headings contained in this Agreement are solely
for the purpose of reference, are not part of the Agreement of the Parties and
shall not in any way affect the meaning or interpretation of this Agreement. All
references in this Agreement to Sections, Schedules and Exhibits are to
sections, schedules and exhibits to this Agreement, unless otherwise indicated.
11.4 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when (a) delivered by hand, (b)
transmitted by facsimile (and confirmed by return facsimile), or (c) delivered,
if sent by Express Mail, Federal Express or other express delivery service, or
registered or certified mail, return receipt requested, to the addressee at the
following addresses or telecopier numbers (or to such other addresses, telex
number or telecopier number as a party may specify by notice given to the other
party pursuant to this provision):
If to Purchaser, Purchaser Subsidiary or the Surviving Corporation to:
Thinking Tools, Inc.
c/o Knoll Capital Management
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Kronish Xxxx Xxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to GVI, to:
GVI Security, Inc.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxxx & Markiles, LLP
00000 Xxxxxxx Xxxxxxxxx Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile No.: 000-000-0000
If to the Stockholder Representative, to:
GVI Acquisition, LLC
0000 Xxxxxx Xxxxxx Xxxx.
Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxxx & Markiles, LLP
00000 Xxxxxxx Xxxxxxxxx Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile No.: 000-000-0000
35
11.5 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns. Except as provided in Article 9, nothing in this Agreement
shall create or be deemed to create any third party beneficiary rights in any
Person who is not a Party. No assignment of this Agreement or of any rights or
obligations hereunder may be made by the parties and any such attempted
assignment shall be void.
11.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.7 Amendment and Waiver. This Agreement may be amended, or any provision
of this Agreement may be waived, provided that such amendment or waiver will be
binding on Purchaser only if such amendment or waiver is set forth in a writing
executed by Purchaser, and provided that any such amendment or waiver will be
binding upon GVI only if such amendment or waiver is set forth in a writing
executed by GVI. The waiver of any Party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any other
breach.
11.8 Dispute Resolution. The Parties agree to attempt initially to solve
all claims, disputes or controversies arising under, out of or in connection
with this Agreement by conducting good faith negotiations. If the Parties are
unable to settle the matter between themselves, the matter shall thereafter be
resolved by alternative dispute resolution, starting with mediation and
including, if necessary, a final and binding arbitration. Whenever a Party shall
decide to institute arbitration proceedings, it shall give written notice to
that effect to the other Party. The Party giving such notice shall refrain from
instituting the arbitration proceedings for a period of sixty (60) days
following such notice. During such period, the Parties shall make good faith
efforts to amicably resolve the dispute without arbitration. Any arbitration
hereunder shall be conducted under the rules of the American Arbitration
Association. Each such arbitration shall be conducted by a panel of three
arbitrators: one arbitrator shall be appointed by each of Purchaser and GVI and
the third shall be appointed by the American Arbitration Association. Any such
arbitration shall be held in New York, New York. The arbitrators shall have the
authority to grant specific performance. Judgment upon the award so rendered may
be entered in any court having jurisdiction or application may be made to such
court for judicial acceptance of any award and an order of enforcement, as the
case may be. In no event shall a demand for arbitration be made after the date
when institution of a legal or equitable proceeding based on such claim, dispute
or other matter in question would be barred under this Agreement or by the
applicable statute of limitations. The prevailing party in any such arbitration
shall be entitled to recover from the other party, in addition to any other
remedies, all reasonable costs, attorneys' fees and other expenses incurred by
such prevailing party.
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IN WITNESS WHEREOF, the Parties hereto have executed this
instrument as of the date and year first above written.
THINKING TOOLS, INC.
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
Title: President and
Chief Executive Officer
GVI ACQUISITION CORP.
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
Title: President
GVI SECURITY INC.
By: /s/ Xxxxxx Xxxx
------------------------------------
Name: Xxxxxx Xxxx
Title: President
37
EXHIBIT A
CERTIFICATE OF MERGER
EXHIBIT B
CERTIFICATE OF DESIGNATIONS OF PURCHASER PREFERRED STOCK
EXHIBIT C
INVESTMENT REPRESENTATION LETTER
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
EXHIBIT E
EUROPA PROMISSORY NOTE
EXHIBIT F
STOCK OPTION PLAN
SCHEDULE 2
NON-QUALIFIED STOCK OPTIONS
Optionee Number of Shares Exercise Price Expiration Date Vesting Schedule
-------- ---------------- -------------- --------------- ----------------
Xxxxxx Xxxx 128,376,360 $.0049 7/22/2013 (1)
Xxxxxxxxx Xxxxx 18,339,480 $.0049 7/22/2013 (1)
Xxxx Xxxxx 9,010,266 $.0049 7/22/2013 (2)
Xxxxxxxx Xxxxxxxxxx 9,010,266 $.0049 7/22/2013 (2)
Xxxx Czjaka 3,428,685 $.0049 7/22/2013 (2)
Xxxx Xxxxxx 2,870,527 $.0049 7/22/2013 (2)
Matt Sabre 3,428,685 $.0049 7/22/2013 (2)
Xxxxx Xxxxx 1,594,737 $.0049 7/22/2013 (2)
Xxxxx Xxxxxx 2,870,527 $.0049 7/22/2013 (2)
Xxxxx Xxxxxxxx 1,594,737 $.0049 7/22/2013 (2)
Xxxx Xxxxxxx 1,833,948 $.0049 7/22/2013 (2)
Xxxxx Xxxxxxx 1,036,579 $.0049 7/22/2013 (2)
(1) 50% to vest immediately; 25% to vest on May 22, 2004; and 25% to vest on
May 22, 2005.
(2) 25% to vest immediately; 25% to vest on May 22, 2004; 25% to vest on May
22, 2005; and 25% to vest on May 22, 2006.
SCHEDULE 2.6
DIRECTORS AND OFFICERS
Purchaser Directors
Xxxx Xxxxx
Xxxx Xxxxx
Xxxxx Xxxxx
Purchaser Officers
Xxxx Xxxxx, Chairman of the Board
Xxxxx Xxxxx, President, Chief Executive Officer and Secretary
Surviving Corporation Directors
Xxxxxx Xxxx
Xxxxx Xxx
Xxxx Xxxxxx
Xxxxx Xxxxxx
Surviving Corporation Officers
Xxxxxx Xxxx, Chairman of the Board, President and Chief Executive Officer
Xxxxxxxxx Xxxxx, Secretary