AGREEMENT AND PLAN OF MERGER
among
SENSEC INTERNATIONAL, INC.
a Delaware corporation,
ENSEC ACQUISITION CORPORATION
a Florida corporation,
ENSEC INTERNATIONAL, INC.
a Florida corporation,
SENTECH ACQUISITION CORPORATION
a Florida corporation,
and
SENTECH EAS CORPORATION
a Florida corporation
OCTOBER 28, 1998
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I DEFINITIONS........................................................1
ARTICLE II THE ENSEC PLAN OF MERGER..........................................10
2.1. The Ensec Merger ..............................................10
2.2. Effective Time.................................................10
2.3. Certificate of Incorporation and Bylaws........................10
2.4. Directors and Officers.........................................10
2.5. Conversion or Cancellation of Ensec Shares.....................10
2.6. Exchange of Ensec Shares.......................................11
2.7. Options and Warrants...........................................12
2.8. Adjustments....................................................13
2.9. Merger Subsidiary Capital Stock................................13
2.10. No Further Transfer of Shares.................................13
2.11. Dissenting Shares ............................................14
ARTICLE III THE SENTECH PLAN OF MERGER.......................................14
3.1. The Sentech Merger ............................................14
3.2. Effective Time.................................................14
3.3. Certificate of Incorporation and Bylaws........................14
3.4. Directors and Officers.........................................14
3.5. Conversion or Cancellation of Sentech Shares...................15
3.6. Exchange of Sentech Shares....................................15
3.7. Options and Warrants...........................................16
3.8. Adjustments....................................................17
3.9. Merger Subsidiary Capital Stock................................17
3.10. No Further Transfer of Shares.................................18
3.11. Dissenting Shares ............................................18
ARTICLE IV THE CLOSING ......................................................18
4.1. Location, Date.................................................18
4.2. Deliveries.....................................................18
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ENSEC............................19
5.1. Corporate......................................................19
5.2. Authorization..................................................19
5.3. Validity of Contemplated Transactions..........................19
5.4. Capitalization and Stock Ownership.............................20
5.5. [Reserved].....................................................20
5.6. Proxy Statement................................................20
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5.7. Ensec SEC Reports; Financial Statements........................20
5.8. Taxes..........................................................21
5.9. Title to Assets and Related Matters............................22
5.10. Real Property.................................................22
5.11. Subsidiaries..................................................22
5.12. Legal Proceedings; Compliance with Law; Governmental Permits..23
5.13. Contracts and Commitments.....................................23
5.14. Employee Relations............................................24
5.15. ERISA.........................................................24
5.16. Patents, Trademarks, etc......................................26
5.17. Absence of Certain Changes....................................26
5.18. Corporate Records.............................................27
5.19. Finder's Fees.................................................27
5.20. Reorganization................................................27
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF SENTECH.........................27
6.1. Corporate......................................................27
6.2. Authorization..................................................28
6.3. Validity of Contemplated Transactions..........................28
6.4. Capitalization and Stock Ownership.............................28
6.5. [Reserved].....................................................29
6.6. Proxy Statement................................................29
6.7. Sentech SEC Reports; Financial Statements......................29
6.8. Taxes..........................................................30
6.9. Title to Assets and Related Matters............................31
6.10. Real Property.................................................31
6.11. Subsidiaries..................................................31
6.12. Legal Proceedings; Compliance with Law; Governmental
Permits......................................................31
6.13. Contracts and Commitments.....................................32
6.14. Employee Relations............................................33
6.15. ERISA.........................................................33
6.16. Patents, Trademarks, etc......................................34
6.17. Absence of Certain Changes....................................35
6.18. Corporate Records.............................................36
6.19. Finder's Fees.................................................36
6.20. Interests; Reorganization.....................................36
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF SENSEC.........................36
7.1. Corporate......................................................36
7.2. Authorization..................................................36
7.3. Validity of Contemplated Transactions..........................37
7.4. Capitalization and Stock Ownership.............................37
7.5. [Reserved].....................................................37
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7.6. Proxy Statement................................................37
7.7. Reorganization.................................................38
7.8. Ownership of Merger Subsidiary; No Prior Activities............38
ARTICLE VIII COVENANTS OF THE PARTIES........................................38
8.1. Proxy/Registration Statement...................................38
8.2. No Solicitation................................................39
8.3. Notification of Certain Matters................................41
8.4. Access to Information..........................................41
8.5. Public Announcements...........................................42
8.6. Cooperation....................................................42
8.7. Reorganization; Pooling........................................42
ARTICLE IX COVENANTS OF ENSEC................................................42
9.1. Operation of the Business......................................42
9.2. Ensec Stockholder Meeting......................................44
9.3. Maintenance of the Assets......................................44
9.4. Employees and Business Relations...............................44
9.5. Rule 145 Affiliates............................................44
9.6. Expenses.......................................................45
9.7. Certain Tax Matters............................................45
9.8. Employment Arrangements........................................45
9.9. State Anti-Takeover Law........................................45
ARTICLE X COVENANTS OF SENTECH...............................................45
10.1. Operation of the Business.....................................45
10.2. Sentech Stockholder Meeting...................................47
10.3. Maintenance of the Assets.....................................47
10.4. Employees and Business Relations..............................47
10.5. Rule 145 Affiliates...........................................47
10.6. Expenses......................................................47
10.7. Certain Tax Matters...........................................48
10.8. State Anti-Takeover Law.......................................48
ARTICLE XI COVENANTS OF SENSEC...............................................48
11.1. Appointment to the Board of Directors of Sensec...............48
11.2. Expenses......................................................48
11.3. Indemnification, Directors' and Officers' Insurance...........48
11.4. Interim Financial Report......................................49
ARTICLE XII CONDITIONS PRECEDENT TO OBLIGATIONS OF ALL PARTIES...............49
12.1. Legality......................................................49
12.2. Registration Statement........................................49
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12.3. Approval by Sentech Stockholders and Ensec Stockholders.......49
12.4. Concurrent Mergers............................................49
12.5. Tax Opinions..................................................49
ARTICLE XIII CONDITIONS PRECEDENT TO OBLIGATIONS OF ENSEC....................50
13.1. Representations and Warranties................................50
13.2. Agreements, Conditions and Covenants..........................50
13.3. Certificates..................................................50
13.4. Material Adverse Effect.......................................50
13.5. Ancillary Documents...........................................50
13.6. Board Recommendation..........................................50
13.7. Fairness Opinion..............................................50
ARTICLE XIV CONDITIONS PRECEDENT TO OBLIGATIONS OF SENTECH...................51
14.1. Representations and Warranties................................51
14.2. Agreements, Conditions and Covenants..........................51
14.3. Certificates..................................................51
14.4. Material Adverse Effect.......................................51
14.5. Ancillary Documents...........................................51
14.6. Board Recommendation..........................................51
14.7. Fairness Opinion..............................................51
ARTICLE XV CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
SENSEC PARTIES............................................................52
15.1. Representations and Warranties................................52
15.2. Agreements, Conditions and Covenants..........................52
15.3. Certificates..................................................52
15.4. Required Consents.............................................52
15.5. Material Adverse Effect.......................................52
15.6. Ancillary Documents...........................................52
15.7. Employment Agreements.........................................52
15.8. Board Recommendation..........................................52
ARTICLE XVI TERMINATION.....................................................53
16.1. Grounds for Termination.......................................53
16.2. Effect of Termination.........................................55
ARTICLE XVII GENERAL MATTERS................................................55
17.1. Survival of Representations and Warranties....................55
17.2. Contents of Agreement.........................................55
17.3. Amendment, Parties in Interest, Assignment, Etc...............56
17.4. Interpretation................................................56
17.5. Notices.......................................................56
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17.6. Governing Law.................................................57
17.7. Counterparts..................................................57
17.8. Waivers.......................................................57
17.9. Modification..................................................57
17.10. Enforcement of Agreement.....................................58
17.11. Waiver of Jury Trial.........................................58
17.12. Severability.................................................58
v
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of October 28, 1998 by and
among Sensec International, Inc. a Delaware corporation ("Sensec"), Ensec
Acquisition Corporation, a Florida Corporation (the "Ensec Merger Subsidiary"
and together with Sensec, the "Sensec/Ensec Parties"), Ensec International,
Inc., a Florida corporation ("Ensec"), Sentech Acquisition Corporation, a
Florida corporation (the "Sentech Merger Subsidiary" and together with Sensec,
the "Sensec/Sentech Parties"), and SenTech EAS Corporation, a Florida
corporation ("Sentech"). Sensec, Ensec Merger Subsidiary, Sentech Merger
Subsidiary, Ensec and Sentech are collectively referred to herein as the
"Parties"). Certain other terms are used herein as defined below in Article I or
elsewhere in this Agreement.
BACKGROUND
This Agreement sets forth the terms and conditions under which (i) the
Ensec Merger Subsidiary, which is a Wholly-Owned Subsidiary of Sensec, will
merge with and into Ensec (the "Ensec Merger"), and (ii) the Sentech Merger
Subsidiary, which is a Wholly-Owned Subsidiary of Sensec, will merge with and
into Sentech (the "Sentech Merger"). The Parties intend that (a) upon completion
of the Ensec Merger, Ensec will be a Wholly-Owned Subsidiary of Sensec, (b) upon
completion of the Sentech Merger, Sentech will be a Wholly-Owned Subsidiary of
Sensec, and (c) for federal income tax purposes, each of the Ensec Merger and
Sentech Merger will qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended.
Ensec Merger Subsidiary and Sentech Merger Subsidiary are each a
Wholly-Owned Subsidiary of Sensec and each has been formed solely to facilitate
the Ensec Merger and Sentech Merger, respectively, and has conducted and will
conduct no business or activity other than in connection with the Ensec Merger
and Sentech Merger, respectively.
WITNESSETH
NOW, THEREFORE, in consideration of the respective covenants contained
herein and intending to be legally bound hereby, the Parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
For convenience, certain terms used in more than one part of this
Agreement are listed in alphabetical order and defined or referred to below
(such terms as well as any other terms defined elsewhere in this Agreement shall
be equally applicable to both the singular and plural forms of the terms
defined).
"Acquisition Proposal" is defined in Section 8.2(a).
1
"Affiliates" means, with respect to a particular Party, persons or
entities controlling, controlled by or under common control with that Party, as
well as any executive officers, directors and majority-owned entities of that
Party and of its other Affiliates.
"Agreement" means this Agreement and the Exhibits and Disclosure
Schedules hereto.
"Assets" means, with respect to Sensec, Ensec or Sentech, as shown by
the context in which used, all of the assets, properties, goodwill and rights of
every kind and description, real and personal, tangible and intangible, wherever
situated and whether or not reflected in such Party's most recent financial
statements, that are owned or possessed by such Party and its Subsidiaries,
taken as a whole.
"Assumed Ensec Option" and "Assumed Sentech Option" are defined in
Sections 2.7(a) and 3.7(a), respectively.
"Benefit Plan" means all employee benefit, health, welfare,
supplemental unemployment benefit, bonus, pension, profit sharing, deferred
compensation, severance, incentive, stock compensation, stock purchase,
retirement, hospitalization insurance, medical, dental, legal, disability,
fringe benefit and similar plans, programs, arrangements or practices,
including, without limitation, each "employee benefit plan" as defined in
Section 3(3) of ERISA.
"Business" means with respect to Sensec, Ensec or Sentech, as shown by
the context in which used, the entire business and operations of such Party and
its Subsidiaries, taken as a whole.
"Charter Documents" means an entity's certificate or articles of
incorporation, certificate defining the rights and preferences of securities,
articles of organization, general or limited partnership agreement, certificate
of limited partnership, joint venture agreement or similar document governing
the entity.
"Closing" is defined in Section 4.1.
"Closing Date" is defined in Section 4.1.
"Code" means the Internal Revenue Code of 1986, as amended. All
citations to provisions of the Code, or to the Treasury Regulations promulgated
thereunder, shall include any amendments thereto and any substitute or successor
provisions thereto.
"Confidentiality Agreement" is defined in Section 8.4(b).
"Contract" means any written or oral contract, agreement, letter of
intent, agreement in principle, lease, instrument or other commitment that is
binding on any Person or its property under applicable Law.
2
"Copyrights" means registered copyrights, copyright applications and
unregistered copyrights.
"Court Order" means any judgment, decree, injunction, order or ruling
of any federal, state, local or foreign court or governmental or regulatory body
or authority, or any arbitrator that is binding on any Person or its property
under applicable Law.
"Default" means (i) a breach, default or violation, (ii) the occurrence
of an event that with or without the passage of time or the giving of notice, or
both, would constitute a breach, default or violation or (iii) with respect to
any Contract, the occurrence of an event that with or without the passage of
time or the giving of notice, or both, would give rise to a right of
termination, renegotiation or acceleration or a right to receive damages or a
payment of penalties.
"Dissenting Shares" of Ensec and Sentech are defined in Sections 2.11
and 3.11, respectively.
"DGCL" means the Delaware General Corporation Law, as amended.
"Effective Time" shall mean the time that the Sentech Merger
Certificate and the Ensec Merger Certificate are filed with the Florida
Secretary of State, which certificates shall be filed simultaneously.
"Encumbrances" means any lien, mortgage, security interest, pledge,
restriction on transferability, defect of title or other claim, charge or
encumbrance of any nature whatsoever on any property or property interest.
"Ensec" is defined above in the Preamble.
"Ensec Assets" means the Assets of Ensec.
"Ensec Balance Sheet" is defined in Section 5.7.
"Ensec Balance Sheet Date" is defined in Section 5.7.
"Ensec Benefit Plan" is defined in Section 5.16(a).
"Ensec Business" means the Business of Ensec.
"Ensec Certificate of Merger" is defined in Section 2.2.
"Ensec Certificates" is defined in Section 2.7(a).
"Ensec Common Shares" is defined in Section 2.6(a).
3
"Ensec Common Stock" means the common stock, par value $0.01 per share,
of Ensec.
"Ensec Companies" means Ensec and any Ensec Subsidiaries.
"Ensec Conversion Number" is defined in Section 2.6(b).
"Ensec Disclosure Schedule" means the Disclosure Schedule containing
information relating to Ensec pursuant to Article V and other provisions hereof
that has been provided to the other Parties on the date hereof.
"Ensec Holder" means a recordholder, as of the Effective Time, of an
outstanding certificate or certificates that immediately prior to the Effective
Time represented Ensec Shares.
"Ensec's knowledge" or "knowledge of Ensec" with reference to any item
means that which an executive officer of Ensec actually knows.
"Ensec Merger" is defined above in the Background.
"Ensec Merger Certificate" is defined in Section 2.2.
"Ensec Merger Consideration" is defined in Section 2.5(c).
"Ensec Merger Subsidiary" is defined above in the Preamble.
"Ensec Personnel" is defined in Section 5.21(a).
"Ensec Required Consents" is defined in Section 5.3.
"Ensec SEC Reports" is defined in Section 5.7.
"Ensec Shares" is defined in Section 2.5(a).
"Ensec Stockholder Meeting" is defined in Section 9.2.
"Ensec Subsidiary" means any Subsidiary of Ensec.
"Ensec Surviving Corporation" is defined in Section 2.1.
"Ensec 10-KSB" is defined in Section 5.10.
"Ensec Warrants" means any warrants to purchase Ensec Common Stock that
are outstanding immediately prior to the Closing.
4
"Ensec Welfare Plan" is defined in Section 5.16(f).
"Environmental Condition" means any condition or circumstance,
including the presence of Hazardous Substances which does or would (i) require
assessment, investigation, abatement, correction, removal or remediation under
any Environmental Law, (ii) give rise to any civil or criminal Liability under
any Environmental Law, (iii) create or constitute a public or private nuisance
or (iv) constitute a violation of or non-compliance with any Environmental Law.
"Environmental Law" means all Laws, Court Orders, principles of common
law, and permits, licenses, registrations, approvals or other authorizations of
any Governmental Authority relating to Hazardous Substances, pollution,
protection of the environment or human health.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" is defined in Section 2.6(a).
"Existing Ensec Option" and "Existing Sentech Option" are defined in
Sections 2.7(a) and 3.7(a), respectively.
"FBCA" means the Florida Business Corporation Act of 1989, as amended.
"GAAP" means United States generally accepted accounting principles, as
amended from time to time.
"Governmental Authority" means any federal, state, local, municipal or
foreign or other government or governmental agency or body.
"Governmental Permit" is defined in Section 5.12(c).
"Hazardous Substances" means any material, waste or substance
(including, without limitation, any product) that may or could pose a hazard to
the environment or human health or safety including, without limitation, (i) any
"hazardous substances" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss.9601 et seq. and its implementing
regulations, (ii) any "extremely hazardous substance," "hazardous chemical" or
"toxic chemical" as those terms are defined by the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. ss.11001 et seq. and its implementing
regulations, (iii) any "hazardous waste," as defined under the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act, 42
U.S.C. ss.6901 et seq. and its implementing regulations (iv) any "pollutant," as
defined under the Water Pollution Control Act, 33 U.S.C. ss.1251 et seq. and its
implementing regulations as any of such Laws in clauses (i) through (iv) may be
amended from time to time, and (v) any material, substance or waste regulated
under any Laws or Court Orders that currently exist
5
or that may be enacted, promulgated or issued in the future by any Governmental
Authority concerning protection of the environment, pollution, health or safety
or the public welfare.
"Intellectual Property" means any Copyrights, Patents, Trademarks,
technology, licenses, trade secrets, computer software and other intellectual
property.
"Law" means any statute, law, ordinance, regulation, order, rule,
common law principles or consent agreements of any Governmental Authority,
including, without limitation, those covering environmental, energy, safety,
health, transportation, bribery, record keeping, zoning, antidiscrimination,
antitrust, wage and hour, and price and wage control matters.
"Liability" means any direct or indirect liability, indebtedness,
obligation, expense, claim, loss, damage, deficiency, guaranty or endorsement of
or by any Person.
"Litigation" means any lawsuit, action, arbitration, administrative or
other proceeding, criminal prosecution or governmental investigation or inquiry.
"Material Adverse Effect" means a fact or event which has had or is
reasonably likely to have a material adverse effect on the Assets, Business,
financial condition or results of operations of Sensec and its Subsidiaries
taken as a whole, Ensec and its Subsidiaries taken as a whole, or Sentech and
its Subsidiaries taken as a whole, as indicated by the context in which used,
and when used with respect to representations, warranties, conditions, covenants
or other provisions hereof means the individual effect of the situation to which
it relates and also the aggregate effect of all similar situations unless the
context indicates otherwise.
"Merger" shall mean the Ensec Merger and Sentech Merger, collectively.
"Parties" is defined above in the Preamble.
"Party Representatives" is defined in Section 8.4(b).
"Patents" means patents, patent applications, reissue patents, patents
of addition, divisions, renewals, continuations, continuations-in-part,
substitutions, additions and extensions of any of the foregoing.
"Person" means any natural person, corporation, partnership, limited
liability company, proprietorship, association, trust or other legal entity.
"Post-Signing Returns" is defined in Section 9.7.
"Proxy/Registration Statement" is defined in Section 8.1(a).
"Proxy Statement" is defined in Section 8.1(a).
6
"Registration Statement" is defined in Section 8.1(a).
"Regulation" means any federal, state, local or foreign rule or
regulation.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Act Affiliates" is defined in Section 9.5.
"Sensec" is defined above in the Preamble.
"Sensec Assets" means the Assets of Sensec.
"Sensec Balance Sheet" is defined in Section 7.7.
"Sensec Balance Sheet Date" is defined in Section 7.7.
"Sensec Business" means the Business of Sensec.
"Sensec Common Stock" means the common stock, par value $0.001 per
share, of Sensec.
"Sensec Companies" mean Sensec and any Sensec Subsidiaries.
"Sensec Disclosure Documents" is defined in Section 7.7.
"Sensec/Ensec Parties" and "Sensec/Sentech Parties" are defined above
in the Preamble.
"Sensec knowledge" or "knowledge of Sensec" with reference to any item
means that which an executive officer of Sensec actually knows.
"Sensec Parties" means Sensec, Sentech Acquisition Corporation and
Ensec Acquisition Corporation
"Sensec Shares" means shares of Sensec Common Stock.
"Sensec Subsidiary" means any Subsidiary of Sensec.
"Sensec Warrants" means warrants to purchase Sensec Common Stock.
"Sentech" means SenTech EAS Corporation, a Florida corporation.
7
"Sentech Assets" means the Assets of Sentech
"Sentech Balance Sheet" is defined in Section 6.7.
"Sentech Balance Sheet Date" is defined in Section 6.7.
"Sentech Benefit Plan" is defined in Section 6.16(a).
"Sentech Business" means the Business of Sentech.
"Sentech Certificates" is defined in Section 3.7(a).
"Sentech Certificate of Merger" is defined in Section 3.2.
"Sentech Common Shares" is defined in Section 3.6(a).
"Sentech Common Stock" means the common stock, par value $0.00024 per
share, of Sentech.
"Sentech Companies" means Sentech and any Sentech Subsidiaries.
"Sentech Conversion Number" is defined in Section 3.6(b).
"Sentech Disclosure Schedule" means the Disclosure Schedule containing
information relating to Sentech pursuant to Article V and other provisions
hereof that has been provided to the other Parties on the date hereof.
"Sentech Holder" means a recordholder, as of the Effective Time of an
outstanding certificate or certificates that immediately prior to the Effective
Time represented Sentech Shares.
"Sentech's knowledge" or "knowledge of Sentech" with reference to any
item means that which an executive officer of Sentech actually knows.
"Sentech Merger" is defined above in the Background.
"Sentech Merger Certificate" is defined in Section 3.2.
"Sentech Merger Consideration" is defined in Section 3.5(c)
"Sentech Personnel" is defined in Section 6.21(a).
"Sentech Required Consents" is defined in Section 6.3.
8
"Sentech SEC Reports" is defined in Section 6.7.
"Sentech Shares" is defined in Section 2.6(a).
"Sentech Stockholder Meeting" is defined in Section 10.2.
"Sentech Subsidiary" means any Subsidiary of Sentech.
"Sentech Surviving Corporation" is defined in Section 3.1.
"Sentech 10-KSB" is defined in Section 6.10.
"Sentech Warrants" means any warrants to purchase Sentech Common Stock
that are outstanding immediately prior to the Closing.
"Sentech Welfare Plan" is defined in Section 6.15(f).
"Subsidiary" means any corporation or other legal entity of which
Sensec, Ensec or Sentech, as the case may be (either above or through or
together with any other Subsidiary) owns, directly or indirectly, more than 50%
of the stock or other equity interests the holders of which are generally
entitled to vote for the election of directors or other governing body of such
corporation or other entity.
"Taxes" means any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions, levies and
liabilities, including, without limitation, taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, gains, franchise, withholding, payroll, recapture,
employment, excise, unemployment, insurance, social security, business license,
occupation, business organization, stamp, environmental and property taxes,
together with all interest, penalties and additions imposed with respect to such
amounts. For purposes of this Agreement, "Taxes" also includes any obligations
under any agreements or arrangements with any Person with respect to the
liability for, or sharing of, Taxes (including pursuant to Treas. Reg. Section
1.1502-6 or comparable provisions of state, local or foreign Tax Law) and
including any liability for Taxes as a transferee or successor, by Contract or
otherwise.
"Tax Return" means any report, return, election, notice, estimate,
declaration, information statement and other forms and documents (including all
schedules, exhibits and other attachments thereto) relating to and filed or
required to be filed with a taxing authority in connection with any Taxes
(including, without limitation, estimated Taxes).
"Termination Date" means February 28, 1999.
"Trademarks" means registered trademarks, registered service marks,
trademark and service
9
xxxx applications and unregistered trademarks and service marks.
"Transaction Documents" means this Agreement and the Employment
Agreement.
"Transactions" means the Ensec Merger, the Sentech Merger, the exchange
of Ensec Shares and the Sentech Shares for Sensec Shares, the assumption by
Sensec of the Existing Ensec Options and the Existing Sentech Options, the
exchange of Ensec Warrants and the Sentech Warrants for Sensec Warrants, and the
other transactions contemplated by the Transaction Documents.
"Wholly-Owned Subsidiary" means any Subsidiary in which all of the
stock or other equity interests is owned, directly or indirectly, by Sensec,
Ensec or Sentech, as the case may be.
ARTICLE II
THE ENSEC PLAN OF MERGER
2.1. THE ENSEC MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the DGCL and FBCA, the
Ensec Merger Subsidiary shall be merged with and into Ensec. Following the
Merger, Ensec shall continue as the surviving corporation (the "Ensec Surviving
Corporation") and shall continue its existence under the Laws of the State of
Florida, and the separate corporate existence of the Ensec Merger Subsidiary
shall cease.
2.2. EFFECTIVE TIME. As soon as practicable, but in any event within
one business day after the satisfaction or waiver of all conditions to the
Merger, Ensec and the Ensec Merger Subsidiary shall file with the Secretary of
State of the State of Florida a certificate of merger (the "Ensec Certificate of
Merger") in such form as is required by the FBCA. The Merger shall become
effective at the Effective Time.
2.3. CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation of Ensec as in effect immediately prior to the Effective Time
shall be the initial Certificate of Incorporation of the Surviving Corporation.
The bylaws of Ensec as in effect immediately prior to the Effective Time shall
be the initial bylaws of the Surviving Corporation.
2.4. DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation shall be Xxxxxx Xxxxxxx, Chairman, Xxxxx Xxxxxxxxxx, Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxx, and Xxxxxx Xxxxxxx xx Xxxxx. The initial chief
executive officer of the Surviving Corporation shall be Xxxxxxx Xxxxxx. Such
persons shall hold such positions as directors and executive officers until
their successors are elected or appointed in accordance with the Certificate of
Incorporation and the bylaws of the Surviving Corporation.
2.5. CONVERSION OR CANCELLATION OF ENSEC SHARES.
(a) Each share of Ensec Common Stock (an "Ensec Share")
outstanding immediately prior to the Effective Time shall by virtue of the
Merger and without any action on the
10
part of the Ensec Holder thereof, be converted into the right to receive
0.2180149 (the "Ensec Conversion Number") Sensec Shares. Each Ensec Share that,
immediately prior to the Effective Time, is held by Ensec as treasury stock
shall be canceled, and no consideration shall be delivered with respect thereto.
(b) No fractional Sensec Shares shall be issued in the Merger.
Each Ensec Holder who would otherwise be entitled to receive a fractional share
shall be entitled to receive, in lieu thereof, an amount in cash determined by
multiplying $5.00 by the fraction of a Sensec Share to which such Ensec Holder
would otherwise have been entitled.
(c) The consideration to be received by the Ensec Holders in
respect of each Ensec Share pursuant to this Section 2.5 is hereinafter referred
to as the "Ensec Merger Consideration."
2.6. EXCHANGE OF ENSEC SHARES.
(a) Prior to the Effective Time, Sensec shall appoint an agent
(the "Exchange Agent") for the purpose of exchanging certificates that
immediately prior to the Effective Time represented Ensec Shares (the "Ensec
Certificates") for the Ensec Merger Consideration. Promptly after the Effective
Time, Sensec will send, or will cause the Exchange Agent to send, to each Ensec
Holder (other than Ensec and any Subsidiary of Ensec) a letter of transmittal
for use in such exchange. Sensec will deposit with the Exchange Agent in trust
for the Ensec Holder the aggregate Ensec Merger Consideration to be paid in
respect of the Ensec Shares.
(b) Each Ensec Holder, upon surrender to the Exchange Agent of
a Certificate or Certificates together with a properly completed letter of
transmittal covering such Certificates, will be entitled to receive the Ensec
Merger Consideration payable in respect of the Ensec Shares formerly represented
thereby, after giving effect to any required withholding Tax. Until so
surrendered, each Certificate shall, after the Effective Time, represent for all
purposes, only the right to receive such Ensec Merger Consideration. In no event
will a Ensec Holder be entitled to interest on the Ensec Merger Consideration.
(c) If any portion of the Ensec Merger Consideration is to be
paid to a Person other than the registered holder of the Ensec Shares formerly
represented by the Certificate or Certificates surrendered in exchange for the
Ensec Merger Consideration, it shall be a condition to such payment that the
Certificate or Certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting such
payment shall pay to the Exchange Agent any transfer or other Taxes required as
a result of such payment to a Person other than the registered holder of such
Ensec Shares or establish to the satisfaction of the Exchange Agent that such
Tax has been paid or is not payable.
(d) Any portion of the Ensec Merger Consideration made
available to the Exchange Agent pursuant to this Section 2.6 that remains
unclaimed by the Ensec Holders twelve
11
(12) months after the Effective Time shall be returned to Sensec, upon demand,
and any such Person who has not exchanged his Certificate or Certificates for
the Ensec Merger Consideration in accordance with this Article II prior to that
time shall thereafter look only to Sensec for payment of the Ensec Merger
Consideration. Notwithstanding the foregoing, Sensec shall not be liable to any
Person for any amount paid to a public official pursuant to applicable abandoned
property Laws. Any amounts remaining unclaimed under this Article II two years
after the Effective Time (or such earlier date immediately prior to such time as
such amounts would otherwise escheat to or become property of any governmental
entity) shall, to the extent permitted by applicable Law, become the property of
Sensec free and clear of any claims or interest of any Person previously
entitled thereto.
(e) No dividends or other distributions with respect to
securities of Sensec constituting part of the Ensec Merger Consideration shall
be paid to the Ensec Holder of any unsurrendered Certificates until such
Certificates are surrendered as provided in this Article II. Upon such
surrender, there shall be paid, without interest, to the Person in whose name
the Certificates representing the securities of Sensec into which such Ensec
Shares were converted are registered, all dividends and other distributions
payable in respect of such securities on a date subsequent to, and in respect of
a record date after, the Effective Time, less the amount of withholding Taxes
which may be required thereon.
(f) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Sensec, the
posting by such person of a bond in such reasonable amount as Sensec may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Certificate the consideration provided for, and in accordance with the
procedures set forth, in this Article II and, if applicable, any unpaid
dividends and distributions with respect to securities of Sensec constituting
part of the Ensec Merger Consideration deliverable with respect thereof and any
cash in lieu of fractional shares, in each case pursuant to this Agreement.
2.7. OPTIONS AND WARRANTS.
(a) At the Effective Time, Sensec shall assume Ensec's rights
and obligations under each of the outstanding stock options previously granted
by Ensec to certain of its employees, directors and consultants that are
outstanding immediately prior to the Effective Time (each such stock option
existing immediately prior to the Effective Time is referred to herein as an
"Existing Ensec Option" and each such assumed stock option existing immediately
after the Effective Time is referred to herein as an "Assumed Ensec Option").
Under each Assumed Ensec Option, the optionee shall have the right to receive
from Sensec, in accordance with the terms and subject to the conditions of the
Existing Ensec Option, the Ensec Merger Consideration that such optionee would
have been entitled to receive had the optionee exercised his or her Existing
Ensec Option immediately prior to the Effective Time, but only in accordance
with the terms and conditions of the Existing Ensec Option (including payment of
the aggregate exercise price thereof). Except as provided in this Section
2.7(a), the Assumed Ensec Option shall not give the optionee any additional
12
benefits that the holder thereof did not have under the Existing Ensec Option;
provided, however, that the terms of such Existing Ensec Options shall govern
the vesting thereof, including, if applicable, any vesting of Existing Ensec
Options as a result of the Merger. Each Assumed Ensec Option shall constitute a
continuation of the Existing Ensec Option, substituting Sensec for Ensec and, in
the case of employees, employment by an Sensec Company for employment by an
Ensec Company. Notwithstanding the foregoing, the terms of any Assumed Ensec
Option shall be such that the substitution of the Assumed Ensec Option for the
Existing Ensec Option would not constitute a modification of the Existing Ensec
Option within the meaning of Section 424(h)(3) of the Code and the Regulations
promulgated thereunder.
(b) If and to the extent required by the terms of the plans
governing the Existing Ensec Options or pursuant to the terms of any Existing
Ensec Option granted thereunder, Ensec shall use reasonable efforts to obtain
the consent of each holder of outstanding Existing Ensec Options to the
treatment of the Existing Ensec Options provided in Section 2.7(a).
(c) Each Ensec Warrant that is outstanding immediately prior
to the Effective Time and that does not expire at the Effective Time by the
terms thereof shall, by virtue of the Merger and pursuant to the terms of the
Ensec Warrant or with the consent of the majority of the holders thereof, be
converted into and exchanged for a Sensec Warrant exercisable for the Conversion
Number of Sensec Shares for each share of Ensec Common Stock for which the Ensec
Warrant is exercisable immediately prior to the Effective Time, at an exercise
price per Sensec Share that has been adjusted in accordance with the terms of
the Ensec Warrant converted hereunder as a result of the Merger. Except as
provided in this Section 2.7(c), the Sensec Warrants shall have the terms and
conditions of the Ensec Warrants converted hereunder. At the Effective Time, the
Sensec/Ensec Parties shall make available to any holders of Ensec Warrants
converted hereunder a new warrant evidencing the Sensec Warrant.
2.8. ADJUSTMENTS. If at any time during the period between the date of
this Agreement and the Effective Time, any change in the outstanding shares of
capital stock of Ensec or Sensec shall occur by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, or any stock dividend thereon with a record date during such period or
any similar event, this Article II shall be appropriately adjusted.
2.9. MERGER SUBSIDIARY CAPITAL STOCK. Each share of capital stock of
the Ensec Merger Subsidiary issued and outstanding immediately prior to the
Effective Time shall be converted, by virtue of the Merger, into one share of
common stock of the Surviving Corporation.
2.10. NO FURTHER TRANSFER OF SHARES. After the Effective Time, there
shall be no transfers of Ensec Shares that were outstanding immediately prior to
the Effective Time on the stock transfer books of the Surviving Corporation. If,
after the Effective Time, Certificates are presented to the Ensec Surviving
Corporation for transfer, they shall be canceled and exchanged for the Ensec
Merger Consideration as provided in this Article II. At the Effective Time, the
stock ledger of Ensec shall be closed.
13
2.11. DISSENTING SHARES. Notwithstanding Section 2.5, the Ensec Common
Shares that are issued and outstanding immediately prior to the Effective Time
and that are held by Ensec Holders who did not vote in favor of the Merger and
who comply with all of the relevant provisions of Section 607.1302 of the FBCA
(the "Dissenting Shares") shall not be converted into the right to receive the
Merger Consideration, unless and until such Ensec Holders shall have waived in
writing or failed to perfect or shall have effectively withdrawn or lost their
rights to appraisal under the FBCA; and any such Ensec Holder shall have only
such rights in respect of the Dissenting Shares owned by them as are provided by
Section 607.1302 of the FBCA. If any such Ensec Holder shall have waived in
writing or failed to perfect or shall have effectively withdrawn or lost such
right, such Ensec Holder's Dissenting Shares shall thereupon be deemed to have
been converted into and to have become exchangeable, as of the Effective Time,
for the right to receive the Merger Consideration without any interest thereon,
pursuant to the terms of Section 2.5. Prior to the Effective Time, Ensec will
not, except with the prior written consent of Sensec, voluntarily make any
payment with respect to, or settle or offer to settle, any claim made by the
stockholders owning the Dissenting Shares.
ARTICLE III
THE SENTECH PLAN OF MERGER
3.1. THE SENTECH MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the DGCL and FBCA, the
Sentech Merger Subsidiary shall be merged with and into Sentech. Following the
Merger, Sentech shall continue as the surviving corporation (the "Surviving
Corporation") and shall continue its existence under the Laws of the State of
Florida, and the separate corporate existence of the Sentech Merger Subsidiary
shall cease.
3.2. EFFECTIVE TIME. As soon as practicable, but in any event within
one business day after the satisfaction or waiver of all conditions to the
Merger, Sentech and the Sentech Merger Subsidiary shall file with the Secretary
of State of the State of Florida a certificate of merger (the "Sentech
Certificate of Merger") in such form as is required by the FBCA. The Merger
shall become effective at the Effective Time.
3.3. CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation of Sentech as in effect immediately prior to the Effective Time
shall be the initial Certificate of Incorporation of the Surviving Corporation.
The bylaws of Sentech as in effect immediately prior to the Effective Time shall
be the initial bylaws of the Surviving Corporation.
3.4. DIRECTORS AND OFFICERS. The initial directors of the Sentech
Surviving Corporation shall be Xxxxxx Xxxxxxx, Chairman, Xxxxx Xxxxxxxxxx,
Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxx, and Xxxxxx Xxxxxxx xx Xxxxx. The initial chief
executive officer of the Sentech Surviving Corporation shall be Xxxxxxx Xxxxxx.
Such persons shall hold such positions as directors and executive officers until
their successors are elected or appointed in accordance with the Certificate
14
of Incorporation and the bylaws of the Surviving Corporation.
3.5. CONVERSION OR CANCELLATION OF SENTECH SHARES.
(a) Each share of Sentech Common Stock (a "Sentech Share")
outstanding immediately prior to the Effective Time shall by virtue of the
Sentech Merger and without any action on the part of the Sentech Holder thereof,
be converted into the right to receive 0.4792299 (the "Sentech Conversion
Number") Sensec Shares. Each Sentech Common Share that, immediately prior to the
Effective Time, is held by Sentech as treasury stock shall be canceled, and no
consideration shall be delivered with respect thereto.
(b) No fractional Sensec Shares shall be issued in the Merger.
Each Sentech Holder who would otherwise be entitled to receive a fractional
share shall be entitled to receive, in lieu thereof, an amount in cash
determined by multiplying $5.00 by the fraction of an Sensec Share to which such
Sentech Holder would otherwise have been entitled.
(c) The consideration to be received by the Sentech Holders in
respect of each Sentech Share pursuant to this Section 3.5 is hereinafter
referred to as the "Sentech Merger Consideration."
3.6. EXCHANGE OF SENTECH SHARES.
(a) Prior to the Effective Time, Sensec shall appoint the
Exchange Agent for the purpose of exchanging certificates that immediately prior
to the Effective Time represented Sentech Shares (the "Sentech Certificates")
for the Sentech Merger Consideration. Promptly after the Effective Time, Sensec
will send, or will cause the Exchange Agent to send, to each Sentech Holder
(other than Sentech and any Subsidiary of Sentech) a letter of transmittal for
use in such exchange. Sensec will deposit with the Exchange Agent in trust for
the Sentech Holders the aggregate Merger Consideration to be paid in respect of
the Sentech Shares.
(b) Each Sentech Holder, upon surrender to the Exchange Agent
of a Certificate or Certificates together with a properly completed letter of
transmittal covering such Certificates, will be entitled to receive the Sentech
Merger Consideration payable in respect of the Sentech Shares formerly
represented thereby, after giving effect to any required withholding Tax. Until
so surrendered, each Certificate shall, after the Effective Time, represent for
all purposes, only the right to receive such Sentech Merger Consideration. In no
event will a Sentech Holder be entitled to interest on the Sentech Merger
Consideration.
(c) If any portion of the Sentech Merger Consideration is to
be paid to a Person other than the registered holder of the Sentech Shares
formerly represented by the Certificate or Certificates surrendered in exchange
for the Sentech Merger Consideration, it shall be a condition to such payment
that the Certificate or Certificates so surrendered shall be properly endorsed
or otherwise be in proper form for transfer and that the Person requesting such
payment shall pay to
15
the Exchange Agent any transfer or other Taxes required as a result of such
payment to a Person other than the registered holder of such Sentech Shares or
establish to the satisfaction of the Exchange Agent that such Tax has been paid
or is not payable.
(d) Any portion of the Sentech Merger Consideration made
available to the Exchange Agent pursuant to this Section 3.6 that remains
unclaimed by the Sentech Holders twelve (12) months after the Effective Time
shall be returned to Sensec, upon demand, and any such Person who has not
exchanged his Certificate or Certificates for the Sentech Merger Consideration
in accordance with this Article II prior to that time shall thereafter look only
to Sensec for payment of the Sentech Merger Consideration. Notwithstanding the
foregoing, Sensec shall not be liable to any Person for any amount paid to a
public official pursuant to applicable abandoned property Laws. Any amounts
remaining unclaimed under this Article II two years after the Effective Time (or
such earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any governmental entity) shall, to the extent
permitted by applicable Law, become the property of Sensec free and clear of any
claims or interest of any Person previously entitled thereto.
(e) No dividends or other distributions with respect to
securities of Sensec constituting part of the Sentech Merger Consideration shall
be paid to the Sentech Holder of any unsurrendered Certificates until such
Certificates are surrendered as provided in this Article II. Upon such
surrender, there shall be paid, without interest, to the Person in whose name
the Certificates representing the securities of Sensec into which such Sentech
Shares were converted are registered, all dividends and other distributions
payable in respect of such securities on a date subsequent to, and in respect of
a record date after, the Effective Time, less the amount of withholding Taxes
which may be required thereon.
(f) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Sensec, the
posting by such person of a bond in such reasonable amount as Sensec may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Certificate the consideration provided for, and in accordance with the
procedures set forth, in this Article II and, if applicable, any unpaid
dividends and distributions with respect to securities of Sensec constituting
part of the Sentech Merger Consideration deliverable with respect thereof and
any cash in lieu of fractional shares, in each case pursuant to this Agreement.
3.7. OPTIONS AND WARRANTS.
(a) At the Effective Time, Sensec shall assume Sentech's
rights and obligations under each of the outstanding stock options previously
granted by Sentech to certain of its employees, directors and consultants that
are outstanding immediately prior to the Effective Time (each such stock option
existing immediately prior to the Effective Time is referred to herein as an
"Existing Sentech Option" and each such assumed stock option existing
immediately after the Effective Time is referred to herein as an "Assumed
Sentech Option"). Under each Assumed Sentech
16
Option, the optionee shall have the right to receive from Sensec, in accordance
with the terms and subject to the conditions of the Existing Sentech Option, the
Sentech Merger Consideration that such optionee would have been entitled to
receive had the optionee exercised his or her Existing Sentech Option
immediately prior to the Effective Time, but only in accordance with the terms
and conditions of the Existing Sentech Option (including payment of the
aggregate exercise price thereof). Except as provided in this Section 3.7(a),
the Assumed Sentech Option shall not give the optionee any additional benefits
that the holder thereof did not have under the Existing Sentech Option;
provided, however, that the terms of such Existing Sentech Options shall govern
the vesting thereof, including, if applicable, any vesting of Existing Sentech
Options as a result of the Merger. Each Assumed Sentech Option shall constitute
a continuation of the Existing Sentech Option, substituting Sensec for Sentech
and, in the case of employees, employment by an Sensec Company for employment by
an Sentech Company. Notwithstanding the foregoing, the terms of any Assumed
Sentech Option shall be such that the substitution of the Assumed Sentech Option
for the Existing Sentech Option would not constitute a modification of the
Existing Sentech Option within the meaning of Section 424(h)(3) of the Code and
the Regulations promulgated thereunder.
(b) If and to the extent required by the terms of the plans
governing the Existing Sentech Options or pursuant to the terms of any Existing
Sentech Option granted thereunder, Sentech shall use reasonable efforts to
obtain the consent of each holder of outstanding Existing Sentech Options to the
treatment of the Existing Options provided in Section 3.7(a).
(c) Each Sentech Warrant that is outstanding immediately prior
to the Effective Time and that does not expire at the Effective Time by the
terms thereof shall, by virtue of the Merger and pursuant to the terms of the
Sentech Warrant or with the consent of the majority of the holders thereof, be
converted into and exchanged for a Sensec Warrant exercisable for the Conversion
Number of Sensec Shares for each share of Sentech Common Stock for which the
Sentech Warrant is exercisable immediately prior to the Effective Time, at an
exercise price per Sensec Share that has been adjusted in accordance with the
terms of the Sentech Warrant converted hereunder as a result of the Merger.
Except as provided in this Section 3.7(c), the Sensec Warrants shall have the
terms and conditions of the Sentech Warrants converted hereunder. At the
Effective Time, the Sensec/Sentech Parties shall make available to any holders
of Sentech Warrants converted hereunder a new warrant evidencing the Sensec
Warrant.
3.8. ADJUSTMENTS. If at any time during the period between the date of
this Agreement and the Effective Time, any change in the outstanding shares of
capital stock of Sentech or Sensec shall occur by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date during
such period or any similar event, this Article II shall be appropriately
adjusted.
3.9. MERGER SUBSIDIARY CAPITAL STOCK. Each share of capital stock of
the Sentech Merger Subsidiary issued and outstanding immediately prior to the
Effective Time shall be converted, by virtue of the Merger, into one share of
common stock of the Sentech Surviving Corporation.
17
3.10. NO FURTHER TRANSFER OF SHARES. After the Effective Time, there
shall be no transfers of Sentech Shares that were outstanding immediately prior
to the Effective Time on the stock transfer books of the Sentech Surviving
Corporation. If, after the Effective Time, Certificates are presented to the
Sentech Surviving Corporation for transfer, they shall be canceled and exchanged
for the Sentech Merger Consideration as provided in this Article II. At the
Effective Time, the stock ledger of Sentech shall be closed.
3.11. DISSENTING SHARES. Notwithstanding Section 3.5, the Sentech
Common Shares that are issued and outstanding immediately prior to the Effective
Time and that are held by Sentech Holders who did not vote in favor of the
Merger and who comply with all of the relevant provisions of Section 607.1302 of
the FBCA (the "Dissenting Shares") shall not be converted into the right to
receive the Merger Consideration, unless and until such Sentech Holders shall
have waived in writing or failed to perfect or shall have effectively withdrawn
or lost their rights to appraisal under the FBCA; and any such Sentech Holder
shall have only such rights in respect of the Dissenting Shares owned by them as
are provided by Section 607.1302 of the FBCA. If any such Sentech Holder shall
have waived in writing or failed to perfect or shall have effectively withdrawn
or lost such right, such Sentech Holder's Dissenting Shares shall thereupon be
deemed to have been converted into and to have become exchangeable, as of the
Effective Time, for the right to receive the Merger Consideration without any
interest thereon, pursuant to the terms of Section 3.5. Prior to the Effective
Time, Sentech will not, except with the prior written consent of Sensec,
voluntarily make any payment with respect to, or settle or offer to settle, any
claim made by the stockholders owning the Dissenting Shares.
ARTICLE IV
THE CLOSING
4.1. LOCATION, DATE. The closing for the Transactions (the "Closing")
shall be held at the offices of Gersten, Savage, Kaplowitz & Xxxxxxxxxx, LLP in
New York, New York at 9:00 a.m. (local time) as promptly as practicable (and in
any event within one business day) after satisfaction or waiver of the
conditions to the consummation of the Transactions set forth in Articles XII,
XIII and XIV. The date on which the Closing occurs is referred to herein as the
"Closing Date."
4.2. DELIVERIES. At the Closing,
(a) the Ensec Merger Subsidiary and Ensec shall deliver or
cause to be delivered to the Secretary of State of the State of Florida a duly
executed Certificate of Merger as required under the FBCA and the Parties shall
take all such other and further actions as may be required by the FBCA and any
other applicable Law to make the Ensec Merger effective upon the terms and
subject to the conditions hereof; and
(b) the Sentech Merger Subsidiary and Sentech shall deliver or
cause to be delivered to the Secretary of State of the State of Florida a duly
executed Certificate of Merger as
18
required under the FBCA and the Parties shall take all such other and further
actions as may be required by the FBCA and any other applicable Law to make the
Sentech Merger effective upon the terms and subject to the conditions hereof;
and
(c) the Parties shall also deliver to each other the
respective agreements and other documents and instruments specified with respect
to them in Articles XII, XIII, XIV and XV.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ENSEC
Ensec hereby represents and warrants to the Sensec/Sentech Parties as
follows, except as otherwise set forth in the Ensec Disclosure Schedule (items
disclosed in one Section of such Schedule shall apply to all other Sections
unless specified otherwise):
5.1. CORPORATE. Each Ensec Company is a corporation duly organized,
validly existing and in good standing under the Laws under which it was
incorporated. Each Ensec Company is qualified to do business as a foreign
corporation in any jurisdiction where it is required to be so qualified, except
where the failure to so qualify would not have a Material Adverse Effect. The
Charter Documents and bylaws of each Ensec Company (all of which have been
delivered or made available to Sensec) have been duly adopted and are current,
correct and complete. Each Ensec Company has all necessary corporate power and
authority to own, lease and operate its part of the Ensec Assets and to carry on
its part of the Ensec Business as it is now being conducted.
5.2. AUTHORIZATION. Ensec has the requisite corporate power and
authority to execute and deliver the Transaction Documents to which it is a
party and to perform the Transactions to be performed by it. Such execution,
delivery and performance by Ensec have been duly authorized by all necessary
corporate action, other than the approval of this Agreement and consummation of
the Ensec Merger is subject to the approval of the holders of a majority of the
outstanding Ensec Common Shares, which are the only consents or approvals of
holders of Ensec capital stock required for the consummation of the
Transactions. Each Transaction Document executed and delivered by Ensec as of
the date hereof has been duly executed and delivered by Ensec and constitutes a
valid and binding obligation of Ensec, enforceable against Ensec in accordance
with its terms. Any Transaction Document executed and delivered by Ensec after
the date hereof will be duly executed and delivered by Ensec and will constitute
a valid and binding obligation of Ensec, enforceable against Ensec in accordance
with its terms, except as otherwise limited by bankruptcy, insolvency,
reorganization and other laws affecting creditors rights generally, and except
that the remedy of specified performance or other equitable relief is available
only at the discretion of the court before which enforcement is sought.
5.3. VALIDITY OF CONTEMPLATED TRANSACTIONS. Except for compliance with
(i) the Securities Act and the Exchange Act and (ii) the filing of the Ensec
Certificate of Merger with the Secretary of State of the State of Florida and
for any items specified in the Ensec Disclosure Schedule (the "Ensec Required
Consents"), neither the execution and delivery by Ensec of the
19
respective Transaction Documents to which it is or will be a party, nor the
performance of the Transactions to be performed by it, will require any filing,
consent or approval under or constitute a Default, or result in a loss of
material benefit under, (a) any Law or Court Order to which any Ensec Company is
subject, (b) the Charter Documents or bylaws of any Ensec Company, (c) any
customer Contract (other than letters of intent and agreements in principle) or
any other Contracts to which any Ensec Company is a party or by which any of the
Ensec Assets may be subject, except for Defaults which would not have a Material
Adverse Effect.
5.4. CAPITALIZATION AND STOCK OWNERSHIP. The total authorized capital
stock of Ensec consists of (a) 20,000,000 shares of Ensec Common Stock, and (b)
3,000,000 shares of Preferred Stock, par value $0.01 per share. Of such
authorized capital stock, the only issued and outstanding shares on the date
hereof are 6,016,250 Ensec Common Shares. Except as listed in the Ensec
Disclosure Schedule, there are no existing options, warrants, calls, commitments
or other rights of any character (including conversion or preemptive rights)
relating to the acquisition of any issued or unissued capital stock or other
securities of Ensec. The Ensec Disclosure Schedule sets forth, as of the date
hereof, as to each option or warrant, the holder, date of grant, exercise price
and number of shares subject thereto. All of the issued and outstanding Ensec
Common Shares are validly issued fully paid and non-assessable. Following the
Effective Time, no options, warrants, calls, commitments or other rights of any
character (including conversion or preemptive rights) will entitle any Person to
acquire any securities of the Ensec Surviving Corporation or any subsidiary
thereof.
5.5. [Reserved]
5.6. PROXY STATEMENT. None of the information supplied or to be
supplied by or on behalf of any Ensec Company specifically for inclusion or
incorporation by reference in the Registration Statement will (except to the
extent revised or superseded by amendments or supplements contemplated hereby),
at the time the Registration Statement becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the information supplied or to be supplied by or on behalf
of any Ensec Company specifically for inclusion or incorporation by reference in
the Proxy Statement will (except to the extent revised or superseded by
amendments or supplements contemplated hereby), at the date it (or any such
amendment or supplement) is mailed to the stockholders of Ensec and at the time
of the Ensec Stockholder Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Registration Statement and the
Proxy Statement (except for information relating solely to any Sensec Company or
any Sentech Company) will comply in all material respects with the requirements
of the Securities Act and the Exchange Act and the Regulations promulgated
thereunder.
5.7. ENSEC SEC REPORTS; FINANCIAL STATEMENTS. Ensec has filed all
required
20
forms, reports, statements, schedules and other documents with the SEC since
January 1, 1997, including its (a) Annual Reports on Form 10-KSB for the fiscal
years ended December 31, 1996 and 1997, (b) all proxy statements relating to
Ensec's meetings of stockholders (whether annual or special) held since January
1, 1997, and (c) all other reports or registration statements filed by Ensec
with the SEC since January 1, 1997 (collectively, the "Ensec SEC Reports"). Each
of such Ensec SEC Reports, at the time it was filed, complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act, and with the forms and Regulations of the SEC promulgated thereunder, and
did not contain at the time filed any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The financial statements, including all related
notes and schedules, contained in the Ensec SEC Reports (or incorporated by
reference therein) fairly present the consolidated financial position of Ensec
as at the respective dates thereof and the consolidated results of operations
and cash flows of Ensec for the periods indicated in accordance with GAAP
applied on a consistent basis throughout the periods involved (except for
changes in accounting principles disclosed in the notes thereto) and subject in
the case of interim financial statements to normal year-end adjustments and the
absence of notes. For purposes of this Agreement, the balance sheet of Ensec as
of June 30, 1998 is referred to as the "Ensec Balance Sheet" and the date
thereof is referred to as the "Ensec Balance Sheet Date."
5.8. TAXES.
(a) Except as set forth in the Ensec Disclosure Schedule,
Ensec and each of its Subsidiaries (i) have filed (or, in the case of Tax
Returns not yet due, will file) with the appropriate governmental agencies all
material Tax Returns required to be filed on or before the Effective Time and
all such Tax Returns filed were true, correct and complete in all material
respects, and (ii) have paid (or, in the case of Taxes not yet due, will pay),
all Taxes shown on such Tax Returns.
(b) Except as set forth in the Ensec Disclosure Schedule, each
Ensec Company has (i) duly paid or caused to be paid all material Taxes and all
Taxes shown on Tax Returns that are or were due, except to the extent that a
sufficient reserve for Taxes has been reflected on the Ensec Balance Sheet and
(ii) provided a sufficient reserve on the Ensec Balance Sheet for the payment of
all Taxes not yet due and payable.
(c) Except as set forth in the Ensec Disclosure Schedule, no
deficiency in respect of any Taxes which has been assessed against an Ensec
Company remains unpaid, except for Taxes being contested in good faith, and
Ensec has no knowledge of any unassessed Tax deficiencies or of any audits or
investigations pending or threatened against an Ensec Company with respect to
any Taxes.
(d) Except as set forth in the Ensec Disclosure Schedule, no
Ensec Company has extended or waived the application of any applicable statute
of limitations of any jurisdiction regarding the assessment or collection of any
Tax or any Tax Return.
21
(e) Except as set forth in the Ensec Disclosure Schedule,
there are no liens for Taxes upon any assets of any Ensec Company except for
liens for current Taxes not yet due.
(f) Except as set forth in the Ensec Disclosure Schedule, each
Ensec Company has to its knowledge (i) complied with all material provisions of
the Code relating to the withholding and payment of Taxes and (ii) has made all
deposits required by applicable Law to be made with respect to employees'
withholding and other payroll, employment or other withholding or related Taxes.
(g) Except as set forth in the Ensec Disclosure Schedule, no
Ensec Company is a party to any contract, agreement, plan or arrangement that,
individually or in the aggregate, or when taken together with any payment that
may be made under this Agreement or any agreements contemplated hereby, could
give rise to the payment of any "excess parachute payment" within the meaning of
Section 280G of the Code. Ensec is not, and has not been within the past five
years, a "United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code.
(h) Except as set forth in the Ensec Disclosure Schedule, no
Ensec Company is a party to any agreement relating to the allocating or sharing
of the payment of, or liability for, Taxes for any period (or portion thereof).
(i) To Ensec's knowledge, except for the group of which Ensec
is presently the ultimate parent, no Ensec Company has ever been a member of an
affiliated group of corporations (within the meaning of Section 1504 of the
Code).
5.9. TITLE TO ASSETS AND RELATED MATTERS. Each Ensec Company has good
and marketable title to its part of the Ensec Assets, free from any Encumbrances
except (a) those Encumbrances specified on Section 5.9 of the Ensec Disclosure
Schedule or any Encumbrance in favor of any Ensec Company, (b) items described
in any notes to the consolidated financial statements of Ensec contained in
Ensec's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1997
(the "Ensec 10-KSB") included in the Ensec SEC Reports, (c) minor matters that
would not have a Material Adverse Effect, (d) constitutional and statutory liens
arising from the obligation to pay for the provision of materials or services
not yet in Default and Taxes not yet due and (e) Ensec Assets transferred among
the Ensec Companies.
5.10. REAL PROPERTY. All material real estate leased by any Ensec
Company as of the date hereof and used in the operation of the Ensec Business
are disclosed in the Ensec SEC Reports. Other than as disclosed in the Ensec SEC
Reports or on Section 5.10 of the Ensec Disclosure Schedule, as of the date
hereof, none of the Ensec Companies owns any real property.
5.11. SUBSIDIARIES. Except as set forth on Section 5.11 of the Ensec
Disclosure Schedule and except for its subsidiaries set forth on Exhibit 21.1 of
the Ensec 10-KSB, as of the date hereof none of the Ensec Companies owns,
directly or indirectly, any interest or investment (whether
22
equity or debt) in any corporation, partnership, limited liability company,
business trust, joint venture or other legal entity. Ensec (or another Ensec
Company) owns all of the issued and outstanding shares of capital stock of each
Ensec 10-KSB") included in the Ensec SEC Reports, (c) minor matters that
Subsidiary, free and clear of any Encumbrances, other than as set forth in
Section 5.11 of the Ensec Disclosure Schedule or Encumbrances in favor of any
Ensec Company. Except with respect to Wholly-Owned Subsidiaries of Ensec, there
are no existing options, warrants, calls, commitments or other rights of any
character (including conversion or preemptive rights) relating to the
acquisition or voting of any issued or unissued capital stock or other
securities of any Ensec Subsidiary. All of the shares of capital stock of each
Ensec Subsidiary are duly and validly authorized and issued, fully paid and
non-assessable.
5.12. LEGAL PROCEEDINGS; COMPLIANCE WITH LAW; GOVERNMENTAL
PERMITS.
(a) Except as set forth on Section 5.12 of the Ensec
Disclosure Schedule or in the Ensec SEC Reports, there is no Litigation that is
pending or, to Ensec's knowledge, threatened against any Ensec Company that
would have a Material Adverse Effect. Except as described in the Ensec SEC
Reports, Ensec is and has been in compliance with all applicable Laws, except
where the failure to be in compliance would not have a Material Adverse Effect.
Except as described in the Ensec SEC Reports, there has been no Default under
any Laws applicable to any Ensec Company, including Environmental Laws, except
for any Defaults that would not have a Material Adverse Effect. There has been
no Default with respect to any Court Order applicable to any Ensec Company.
Except as set forth on Section 5.12 of the Ensec Disclosure Schedule or except
as described in the Ensec SEC Reports, no Ensec Company has received any written
notice and, to the knowledge of any Ensec Company, no other communication has
been received to the effect that it is not in compliance with any applicable
Laws, and Ensec has no reason to believe that any presently existing
circumstances are likely to result in violations of any applicable Laws, except
to the extent that such failures to comply or violations would not have a
Material Adverse Effect.
(b) To Ensec's Knowledge, there is no Environmental Condition
at any property presently or formerly owned or leased by an Ensec Company which
is reasonably likely to have a Material Adverse Effect.
(c) The Ensec Companies have all material consents, permits,
franchises, licenses, concessions, registrations, certificates of occupancy,
approvals and other authorizations of Governmental Authorities (collectively,
the "Governmental Permits") required in connection with the operation of their
respective businesses as now being conducted, all of which are in full force and
effect, except where the failure to obtain any such Governmental Permit or of
any such Governmental Permit to be in full force and effect, would not have a
Material Adverse Effect. Each Ensec Company has complied, in all material
respects, with all of its Governmental Permits, except where the failure to so
comply would not have a Material Adverse Effect.
5.13. CONTRACTS AND COMMITMENTS. The Ensec SEC Reports or Section 5.13
of
23
the Ensec Disclosure Schedule describes:
(a) To Ensec's knowledge, customer Contracts (excluding
letters of intent and agreements in principle) involving any Ensec Company in
amounts in excess of $60,000.
(b) Other than Contracts listed as Exhibits to the Ensec SEC
Reports, (i) all employment, consulting, management, severance or agency
Contracts providing for annual payments of at least $60,000 (y) with any
executive officers or directors of Ensec, or (z) allowing the other party to
terminate and receive payment based on the execution of this Agreement and
consummation of the Transactions, and (ii) any employment agreements with any
Person to whom any Ensec Company makes annual salary payments in excess of
$60,000.
(c) All Contracts limiting the freedom of any Ensec Company to
compete in any line of business, or with any Person, or in any geographic area
or market.
Each Contract providing for payments in excess of $60,000 to which any Ensec
Company is a party (i) is legal, valid, binding and enforceable against Ensec or
the applicable Subsidiary except as otherwise limited by bankruptcy, insolvency,
reorganization and other laws affecting creditors' rights generally, and except
that the remedy of specific performance or other equitable relief is available
only at the discretion of the court before which enforcement is sought, and (ii)
neither Ensec nor the applicable Subsidiary, nor to Ensec's knowledge, any other
party, is in Default under any such Contract, other than in the case of (i) and
(ii) above where the failure to be so would not have a Material Adverse Effect.
5.14. EMPLOYEE RELATIONS. No Ensec Company is (a) a party to, involved
in or, to Ensec's knowledge, threatened by, any labor dispute or unfair labor
practice charge, or (b) currently negotiating any collective bargaining
agreement, and no Ensec Company has experienced any work stoppage during the
last three years.
5.15. ERISA.
(a) The Ensec Disclosure Schedule contains a complete list of
all Benefit Plans sponsored or maintained by any Ensec Company or under which
any Ensec Company may be obligated for its employees, directors or independent
contractors ("Ensec Benefit Plans"). Ensec has delivered or made available to
Sensec and Sentech (i) accurate and complete copies of all Ensec Benefit Plan
documents and of any summary plan descriptions, summary annual reports and
insurance contracts relating thereto, (ii) accurate and complete detailed
summaries of all unwritten Ensec Benefit Plans, (iii) accurate and complete
copies of the most recent financial statements and actuarial reports with
respect to all Ensec Benefit Plans for which financial statements or actuarial
reports are required or have been prepared and (iv) accurate and complete copies
of all annual reports for all Ensec Benefit Plans (for which annual reports are
required) prepared within the last two years.
(b) All Ensec Benefit Plans conform in all material respects
to, and are being
24
administered and operated in material compliance with, the requirements of
ERISA, the Code and all other applicable Laws, including applicable Laws of
foreign jurisdictions. There have not been any "prohibited transactions," as
such term is defined in Section 4975 of the Code or Section 406 of ERISA
involving any of the Ensec Benefit Plans, that could subject any Ensec Company
to any material penalty or tax imposed under the Code or ERISA.
(c) Except as set forth on the Ensec Disclosure Schedule, any
Ensec Benefit Plan that is intended to be qualified under Section 401(a) of the
Code and exempt from tax under Section 501(a) of the Code has been determined by
the Internal Revenue Service to be so qualified, and such determination remains
in effect and has not been revoked. Nothing has occurred since the date of any
such determination that is reasonably likely to affect adversely such
qualification or exemption, or result in the imposition of excise taxes or
income taxes on unrelated business income under the Code or ERISA with respect
to any Ensec Benefit Plan.
(d) Except as set forth on the Ensec Disclosure Schedule, (i)
no Ensec Company has a current or contingent obligation to contribute to any
multiemployer plan (as defined in Section 3(37) of ERISA) and (ii) no Ensec
Company, nor any entity that has been treated as a single employer with any
Ensec Company under Sections 414(b), (c), (m) or (o) of the Code, has any
liability, contingent or otherwise, under Title IV of ERISA or Section 412 of
the Code.
(e) There are no pending or, to the knowledge of Ensec,
threatened claims by or on behalf of any Ensec Benefit Plans, or by or on behalf
of any individual participants or beneficiaries of any Ensec Benefit Plans,
alleging any breach of fiduciary duty on the part of any Ensec Company or any of
the officers, directors or employees of any Ensec Company under ERISA or any
other applicable Regulations, or claiming benefit payments other than those made
in the ordinary operation of such plans, or alleging any violation of any other
applicable Laws. To Ensec's knowledge, the Ensec Benefit Plans are not the
subject of any investigation, audit or action by the Internal Revenue Service,
the Department of Labor or the Pension Benefit Guaranty Corporation ("PBGC").
Each Ensec Company has made all required contributions under the Ensec Benefit
Plans including the payment of any premiums payable to the PBGC and other
insurance premiums.
(f) With respect to any Ensec Benefit Plan that is an employee
welfare benefit plan (within the meaning of Section 3(1) of ERISA) (an "Ensec
Welfare Plan"), (i) each Ensec Welfare Plan for which contributions are claimed
as deductions under any provision of the Code is in material compliance with all
applicable requirements pertaining to such deduction, (ii) with respect to any
welfare benefit fund (within the meaning of Section 419 of the Code) related to
an Ensec Welfare Plan, there is no disqualified benefit (within the meaning of
Section 4976(b) of the Code) that would result in the imposition of a tax under
Section 4976(a) of the Code, and (iii) any Ensec Benefit Plan that is a group
health plan (within the meaning of Section 4980B(g)(2) of the Code) complies,
and in each and every case has complied, with all of the material requirements
of Section 4980B of the Code, ERISA, Title XXII of the Public Health Service Act
and the applicable provisions of the Social Security Act.
25
(g) Except as set forth on the Ensec Disclosure Schedule or
for any Ensec Benefit Plan listed as an exhibit to the Ensec 10-KSB, the
execution of this Agreement and the performance of the Transactions will not
(either alone or in combination with the occurrence of any additional or
subsequent events) constitute an event under any Ensec Benefit Plan that will or
may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any current or former employee,
director or consultant of any Ensec Company.
5.16. PATENTS, TRADEMARKS, ETC. Except as disclosed in the Ensec SEC
Reports, to Ensec's knowledge, no Ensec Company infringes upon or unlawfully or
wrongfully uses any Intellectual Property owned or claimed by another Person and
no Person infringes on or wrongfully uses any Intellectual Property owned or
claimed by Ensec, except for those situations that would not have a Material
Adverse Effect. The Ensec Companies own or have valid rights to use all
Intellectual Property used in the conduct of their business except where the
failure to have valid rights to use such Intellectual Property will not have a
Material Adverse Effect, free and clear of all Encumbrances, other than
Encumbrances which would not have a Material Adverse Effect.
5.17. ABSENCE OF CERTAIN CHANGES. Since the Ensec Balance Sheet Date,
the Ensec Companies have conducted the Ensec Business in the ordinary course,
and except as described in the Ensec Disclosure Schedule or in the Ensec SEC
Reports, as of the date hereof, there has not been:
(a) any Material Adverse Effect on the Ensec Business or, in
the aggregate, Liabilities of the Ensec Companies;
(b) any distribution or payment declared or made in respect of
Ensec's capital stock by way of dividends, purchase or redemption of shares or
otherwise;
(c) any increase in the compensation payable or to become
payable to any current director or officer of any Ensec Company, except for
merit and seniority increases for employees made in the ordinary course of
business, nor any material change in any existing employment, severance,
consulting arrangements or any Ensec Benefit Plan;
(d) any sale, assignment or transfer of any Ensec Assets, or
any additions to or transactions involving any Ensec Assets, other than those
made in the ordinary course of business or those solely involving the Ensec
Companies;
(e) other than in the ordinary course of business, any waiver
or release of any material claim or right or cancellation of any material debt
held by any Ensec Company;
(f) any change in practice with respect to Taxes, or any
election, change of any election, or revocation of any election with respect to
Taxes, or any settlement or compromise of any dispute involving a Tax liability;
26
(g) (i) any creation, assumption or maintenance of any
long-term debt or any short-term debt for borrowed money other than under
existing notes payable, lines of credit or other credit facility or in the
ordinary course of business or with respect to its Wholly-Owned Subsidiaries;
(ii) any assumption, granting of guarantees, endorsements or otherwise becoming
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other Person except its Wholly-Owned Subsidiaries; or (iii)
any loans, advances or capital contributions to, or investments in, any other
Person except its Wholly-Owned Subsidiaries;
(h) any material agreement, commitment or contract, except
agreements, commitments or contracts for the purchase, sale or lease of goods or
services in the ordinary course of business;
(i) other than in the ordinary course of business, any
authorization, recommendation, proposal or announcement of an intention to
authorize, recommend or propose, or enter into any Contract with respect to, any
(i) plan of liquidation or dissolution, (ii) acquisition of a material amount of
assets or securities, (iii) disposition or Encumbrance of a material amount of
assets or securities, (iv) merger or consolidation or (v) material change in its
capitalization; or
(j) any change in accounting or Tax procedure or practice.
5.18. CORPORATE RECORDS. The minute books of Ensec contain accurate,
complete and current copies of all Charter Documents and of all minutes of
meetings, resolutions and other proceedings of its Board of Directors and
stockholders.
5.19. FINDER'S FEES. No Person is or will be entitled to any
commission, finder's fee or other payment in connection with the Transactions
based on arrangements made by or on behalf of Ensec.
5.20. REORGANIZATION. No Ensec Company has or, as of the Closing Date,
will have taken any action or failed to take any action which action or failure
would result in the failure of the Ensec Merger to qualify as a reorganization
within the meaning of Code Section 368(a). Ensec has no knowledge of any fact or
circumstance that is reasonably likely to prevent the Ensec Merger from
qualifying as a reorganization within the meaning of Code Section 368(a).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SENTECH
Sentech hereby represents and warrants to the Sensec/Ensec Parties as
follows, except as otherwise set forth in the Sentech Disclosure Schedule (items
disclosed in one Section of such Schedule shall apply to all other Sections
unless specified otherwise):
6.1. CORPORATE. Each Sentech Company is a corporation duly organized,
validly
27
existing and in good standing under the Laws under which it was incorporated.
Each Sentech Company is qualified to do business as a foreign corporation in any
jurisdiction where it is required to be so qualified, except where the failure
to so qualify would not have a Material Adverse Effect. The Charter Documents
and bylaws of each Sentech Company (all of which have been delivered or made
available to Sensec and Ensec) have been duly adopted and are current, correct
and complete. Each Sentech Company has all necessary corporate power and
authority to own, lease and operate its part of the Sentech Assets and to carry
on its part of the Sentech Business as it is now being conducted.
6.2. AUTHORIZATION. Sentech has the requisite corporate power and
authority to execute and deliver the Transaction Documents to which it is a
party and to perform the Transactions to be performed by it. Such execution,
delivery and performance by Sentech have been duly authorized by all necessary
corporate action, other than the approval of this Agreement and consummation of
the Sentech Merger is subject to the approval of the holders of a majority of
the outstanding Sentech Common Shares, which are the only consents or approvals
of holders of Sentech capital stock required for the consummation of the
Transactions. Each Transaction Document executed and delivered by Sentech as of
the date hereof has been duly executed and delivered by Sentech and constitutes
a valid and binding obligation of Sentech, enforceable against Sentech in
accordance with its terms. Any Transaction Document executed and delivered by
Sentech after the date hereof will be duly executed and delivered by Sentech and
will constitute a valid and binding obligation of Sentech, enforceable against
Sentech in accordance with its terms, except as otherwise limited by bankruptcy,
insolvency reorganization and other laws affecting creditors rights generally,
and except that the remedy of specified performance or other equitable relief is
available only at the discretion of the court before which enforcement is
sought.
6.3. VALIDITY OF CONTEMPLATED TRANSACTIONS. Except for compliance with
(i) the Securities Act and the Exchange Act and (ii) the filing of the Sentech
Certificate of Merger with the Secretary of State of the State of Florida and
for any items specified in the Sentech Disclosure Schedule (the "Sentech
Required Consents"), neither the execution and delivery by Sentech of the
respective Transaction Documents to which it is or will be a party, nor the
performance of the Transactions to be performed by it, will require any filing,
consent or approval under or constitute a Default, or result in a loss of
material benefit under, (a) any Law or Court Order to which any Sentech Company
is subject, (b) the Charter Documents or bylaws of any Sentech Company, (c) any
other Contracts to which any Sentech Company is a party or by which any of the
Sentech Assets may be subject, except for Defaults which would not have a
Material Adverse Effect.
6.4. CAPITALIZATION AND STOCK OWNERSHIP. The total authorized capital
stock of Sentech consists of 20,833,333 shares of Sentech Common Stock, par
value $0.00024 per share. Of such authorized capital stock, the only issued and
outstanding shares on the date hereof are 1,746,381 Sentech Common Shares.
Except as listed in the Sentech Disclosure Schedule, there are no existing
options, warrants, calls, commitments or other rights of any character
(including conversion or preemptive rights) relating to the acquisition of any
issued or unissued capital stock or other securities of Sentech. The Sentech
Disclosure Schedule sets forth, as of the date hereof, as
28
to each option or warrant, the holder, date of grant, exercise price and number
of shares subject thereto. All of the issued and outstanding Sentech Common
Shares are validly issued, fully paid and non-assessable. Following the
Effective Time, no options, warrants, calls, commitments or other rights of any
character (including conversion or preemptive rights) will entitle any Person to
acquire any securities of the Sentech Surviving Corporation or any subsidiary
thereof.
6.5. [Reserved]
6.6. PROXY STATEMENT. None of the information supplied or to be
supplied by or on behalf of any Sentech Company specifically for inclusion or
incorporation by reference in the Registration Statement will (except to the
extent revised or superseded by amendments or supplements contemplated hereby),
at the time the Registration Statement becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the information supplied or to be supplied by or on behalf
of any Sentech Company specifically for inclusion or incorporation by reference
in the Proxy Statement will (except to the extent revised or superseded by
amendments or supplements contemplated hereby), at the date it (or any such
amendment or supplement) is mailed to the stockholders of Sentech and at the
time of the Sentech Stockholder Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Registration
Statement and the Proxy Statement (except for information relating solely to any
Sensec Company or any Ensec Company) will comply in all material respects with
the requirements of the Securities Act and the Exchange Act and the Regulations
promulgated thereunder.
6.7. SENTECH SEC REPORTS; FINANCIAL STATEMENTS. Sentech has filed all
required forms, reports, statements, schedules and other documents with the SEC
since January 1, 1998, including its (a) Annual Reports on Form 10-KSB for the
fiscal year ended December 31, 1997, (b) all proxy statements relating to
Sentech's meetings of stockholders (whether annual or special) held since
January 1, 1998, and (c) all other reports or registration statements filed by
Sentech with the SEC since January 1, 1998 (collectively, the "Sentech SEC
Reports"). Each of such Sentech SEC Reports, at the time it was filed, complied
in all material respects with all applicable requirements of the Securities Act
and the Exchange Act, and with the forms and Regulations of the SEC promulgated
thereunder, and did not contain at the time filed any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The financial
statements, including all related notes and schedules, contained in the Sentech
SEC Reports (or incorporated by reference therein) fairly present the
consolidated financial position of Sentech as at the respective dates thereof
and the consolidated results of operations and cash flows of Sentech for the
periods indicated in accordance with GAAP applied on a consistent basis
throughout the periods involved (except for changes in accounting principles
disclosed in the notes thereto) and subject in the case of interim financial
statements to normal year-end adjustments and the absence
29
of notes. For purposes of this Agreement, the balance sheet of Sentech as of
June 30, 1998 is referred to as the "Sentech Balance Sheet" and the date thereof
is referred to as the "Sentech Balance Sheet Date."
6.8. TAXES.
(a) Except as set forth in the Sentech Disclosure Schedule,
Sentech and each of its Subsidiaries (i) have filed (or, in the case of Tax
Returns not yet due, will file) with the appropriate governmental agencies all
material Tax Returns required to be filed on or before the Effective Time and
all such Tax Returns filed were true, correct and complete in all material
respects, and (ii) have paid (or, in the case of Taxes not yet due, will pay),
all Taxes shown on such Tax Returns.
(b) Except as set forth in the Sentech Disclosure Schedule,
each Sentech Company has (i) duly paid or caused to be paid all material Taxes
and all Taxes shown on Tax Returns that are or were due, except to the extent
that a sufficient reserve for Taxes has been reflected on the Sentech Balance
Sheet and (ii) provided a sufficient reserve on the Sentech Balance Sheet for
the payment of all Taxes not yet due and payable.
(c) Except as set forth in the Sentech Disclosure Schedule, no
deficiency in respect of any Taxes which has been assessed against an Sentech
Company remains unpaid, except for Taxes being contested in good faith, and
Sentech has no knowledge of any unassessed Tax deficiencies or of any audits or
investigations pending or threatened against an Sentech Company with respect to
any Taxes.
(d) Except as set forth in the Sentech Disclosure Schedule, no
Sentech Company has extended or waived the application of any applicable statute
of limitations of any jurisdiction regarding the assessment or collection of any
Tax or any Tax Return.
(e) Except as set forth in the Sentech Disclosure Schedule,
there are no liens for Taxes upon any assets of any Sentech Company except for
liens for current Taxes not yet due.
(f) Except as set forth in the Sentech Disclosure Schedule,
each Sentech Company has to its knowledge (i) complied with all material
provisions of the Code relating to the withholding and payment of Taxes and (ii)
has made all deposits required by applicable Law to be made with respect to
employees' withholding and other payroll, employment or other withholding or
related Taxes.
(g) Except as set forth in the Sentech Disclosure Schedule, no
Sentech Company is a party to any contract, agreement, plan or arrangement that,
individually or in the aggregate, or when taken together with any payment that
may be made under this Agreement or any agreements contemplated hereby, could
give rise to the payment of any "excess parachute payment" within the meaning of
Section 280G of the Code. Sentech is not, and has not been within the past five
years,
30
a "United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code.
(h) Except as set forth in the Sentech Disclosure Schedule, no
Sentech Company is a party to any agreement relating to the allocating or
sharing of the payment of, or liability for, Taxes for any period (or portion
thereof).
(i) To Sentech's knowledge, except for the group of which
Sentech is presently the ultimate parent, no Sentech Company has ever been a
member of an affiliated group of corporations (within the meaning of Section
1504 of the Code).
6.9. TITLE TO ASSETS AND RELATED MATTERS. Each Sentech Company has good
and marketable title to its part of the Sentech Assets, free from any
Encumbrances except (a) those Encumbrances specified on Section 6.9 of the
Sentech Disclosure Schedule or any Encumbrance in favor of any Sentech Company,
(b) items described in any notes to the consolidated financial statements of
Sentech contained in Sentech's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997 (the "Sentech 10-KSB") included in the Sentech SEC
Reports, (c) minor matters that would not have a Material Adverse Effect, (d)
constitutional and statutory liens arising from the obligation to pay for the
provision of materials or services not yet in Default and Taxes not yet due and
(e) Sentech Assets transferred among the Sentech Companies.
6.10. REAL PROPERTY. All material real estate leased by any Sentech
Company as of the date hereof and used in the operation of the Sentech Business
are disclosed in the Sentech SEC Reports. As of the date hereof, none of the
Sentech Companies owns any real property.
6.11. SUBSIDIARIES. Except as set forth on Section 6.11 of the Sentech
Disclosure Schedule and except for its subsidiaries set forth in the Sentech
10-KSB, as of the date hereof none of the Sentech Companies owns, directly or
indirectly, any interest or investment (whether equity or debt) in any
corporation, partnership, limited liability company, business trust, joint
venture or other legal entity. Sentech (or another Sentech Company) owns all of
the issued and outstanding shares of capital stock of each Sentech Subsidiary,
free and clear of any Encumbrances, other than as set forth in Section 6.11 of
the Sentech Disclosure Schedule or Encumbrances in favor of any Sentech Company.
Except with respect to Wholly-Owned Subsidiaries of Sentech, there are no
existing options, warrants, calls, commitments or other rights of any character
(including conversion or preemptive rights) relating to the acquisition or
voting of any issued or unissued capital stock or other securities of any
Sentech Subsidiary. All of the shares of capital stock of each Sentech
Subsidiary are duly and validly authorized and issued, fully paid and
non-assessable.
6.12. LEGAL PROCEEDINGS; COMPLIANCE WITH LAW; GOVERNMENTAL
PERMITS.
(a) Except as set forth on Section 4.13 of the Sentech
Disclosure Schedule or in the Sentech SEC Reports, there is no Litigation that
is pending or, to Sentech's knowledge,
31
threatened against any Sentech Company that would have a Material Adverse
Effect. Except as disclosed in the Sentech SEC Reports, Sentech is and has been
in compliance with all applicable Laws, except where the failure to be in
compliance would not have a Material Adverse Effect. Except as disclosed in the
Sentech SEC Reports, there has been no Default under any Laws applicable to any
Sentech Company, including Environmental Laws, except for any Defaults that
would not have a Material Adverse Effect. There has been no Default with respect
to any Court Order applicable to any Sentech Company. Except as set forth on
Section 4.13 of the Sentech Disclosure Schedule, and except as disclosed in the
Sentech SEC Reports, no Sentech Company has received any written notice and, to
the knowledge of any Sentech Company, no other communication has been received
to the effect that it is not in compliance with any applicable Laws, and Sentech
has no reason to believe that any presently existing circumstances are likely to
result in violations of any applicable Laws, except to the extent that such
failures to comply or violations would not have a Material Adverse Effect.
(b) To Sentech's knowledge, there is no Environmental
Condition at any property presently or formerly owned or leased by an Sentech
Company which is reasonably likely to have a Material Adverse Effect.
(c) The Sentech Companies have all Governmental Permits
required in connection with the operation of their respective businesses as now
being conducted, all of which are in full force and effect, except where the
failure to obtain any such Governmental Permit or of any such Governmental
Permit to be in full force and effect, would not have a Material Adverse Effect.
Each Sentech Company has complied, in all material respects, with all of its
Governmental Permits, except where the failure to so comply would not have a
Material Adverse Effect.
6.13. CONTRACTS AND COMMITMENTS. The Sentech SEC Reports or Section
6.13 of the Sentech Disclosure Schedule describes:
(a) To Sentech's knowledge, customer Contracts (excluding
letters of intent and agreements in principle) involving any Sentech Company in
amounts in excess of $60,000.
(b) Other than Contracts listed as Exhibits to the Sentech SEC
Reports, (i) all employment, consulting, management, severance or agency
Contracts providing for annual payments of at least $60,000 (y) with any
executive officers or directors of Sentech, or (z) allowing the other party to
terminate and receive payment based on the execution of this Agreement and
consummation of the Transactions, and (ii) any employment agreements with any
Person to whom any Sentech Company makes annual salary payments in excess of
$60,000.
(c) All Contracts limiting the freedom of any Sentech Company
to compete in any line of business, or with any Person, or in any geographic
area or market.
Each Contract providing for payments in excess of $60,000 to which any Sentech
Company is a party (i) is legal, valid, binding and enforceable against Sentech
or the applicable Subsidiary except
32
as otherwise limited by bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally, and except that the remedy of specific
performance or other equitable relief is available only at the discretion of the
court before which enforcement is sought, and to Sentech's knowledge, against
each other party thereto, and is in full force and effect and (ii) neither
Sentech nor the applicable Subsidiary, nor to Sentech's knowledge, any other
party, is in Default under any such Contract, other than in the case of (i) and
(ii) above where the failure to be so would not have a Material Adverse Effect.
6.14. EMPLOYEE RELATIONS. No Sentech Company is (a) a party to,
involved in or, to Sentech's knowledge, threatened by, any labor dispute or
unfair labor practice charge, or (b) currently negotiating any collective
bargaining agreement, and no Sentech Company has experienced any work stoppage
during the last three years.
6.15. ERISA.
(a) The Sentech Disclosure Schedule contains a complete list
of all Benefit Plans sponsored or maintained by any Sentech Company or under
which any Sentech Company may be obligated for its employees, directors or
independent contractors ("Sentech Benefit Plans"). Sentech has delivered or made
available to Sensec and Ensec (i) accurate and complete copies of all Sentech
Benefit Plan documents and of any summary plan descriptions, summary annual
reports and insurance contracts relating thereto, (ii) accurate and complete
detailed summaries of all unwritten Sentech Benefit Plans, (iii) accurate and
complete copies of the most recent financial statements and actuarial reports
with respect to all Sentech Benefit Plans for which financial statements or
actuarial reports are required or have been prepared and (iv) accurate and
complete copies of all annual reports for all Sentech Benefit Plans (for which
annual reports are required) prepared within the last two years.
(b) All Sentech Benefit Plans conform in all material respects
to, and are being administered and operated in material compliance with, the
requirements of ERISA, the Code and all other applicable Laws, including
applicable Laws of foreign jurisdictions. There have not been any "prohibited
transactions," as such term is defined in Section 4975 of the Code or Section
406 of ERISA involving any of the Sentech Benefit Plans, that could subject any
Sentech Company to any material penalty or tax imposed under the Code or ERISA.
(c) Except as set forth on the Sentech Disclosure Schedule,
any Sentech Benefit Plan that is intended to be qualified under Section 401(a)
of the Code and exempt from tax under Section 501(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and such
determination remains in effect and has not been revoked. Nothing has occurred
since the date of any such determination that is reasonably likely to affect
adversely such qualification or exemption, or result in the imposition of excise
taxes or income taxes on unrelated business income under the Code or ERISA with
respect to any Sentech Benefit Plan.
(d) Except as set forth on the Sentech Disclosure Schedule,
(i) no Sentech
33
Company has a current or contingent obligation to contribute to any
multiemployer plan (as defined in Section 3(37) of ERISA) and (ii) no Sentech
Company, nor any entity that has been treated as a single employer with any
Sentech Company under Sections 414(b), (c), (m) or (o) of the Code, has any
liability, contingent or otherwise, under Title IV of ERISA or Section 412 of
the Code.
(e) There are no pending or, to the knowledge of Sentech,
threatened claims by or on behalf of any Sentech Benefit Plans, or by or on
behalf of any individual participants or beneficiaries of any Sentech Benefit
Plans, alleging any breach of fiduciary duty on the part of any Sentech Company
or any of the officers, directors or employees of any Sentech Company under
ERISA or any other applicable Regulations, or claiming benefit payments other
than those made in the ordinary operation of such plans, or alleging any
violation of any other applicable Laws. To Sentech's knowledge, the Sentech
Benefit Plans are not the subject of any investigation, audit or action by the
Internal Revenue Service, the Department of Labor or the Pension Benefit
Guaranty Corporation ("PBGC"). Each Sentech Company has made all required
contributions under the Sentech Benefit Plans including the payment of any
premiums payable to the PBGC and other insurance premiums.
(f) With respect to any Sentech Benefit Plan that is an
employee welfare benefit plan (within the meaning of Section 3(1) of ERISA) (an
"Sentech Welfare Plan"), (i) each Sentech Welfare Plan for which contributions
are claimed as deductions under any provision of the Code is in material
compliance with all applicable requirements pertaining to such deduction, (ii)
with respect to any welfare benefit fund (within the meaning of Section 419 of
the Code) related to an Sentech Welfare Plan, there is no disqualified benefit
(within the meaning of Section 4976(b) of the Code) that would result in the
imposition of a tax under Section 4976(a) of the Code, and (iii) any Sentech
Benefit Plan that is a group health plan (within the meaning of Section
4980B(g)(2) of the Code) complies, and in each and every case has complied, with
all of the material requirements of Section 4980B of the Code, ERISA, Title XXII
of the Public Health Service Act and the applicable provisions of the Social
Security Act.
(g) Except as set forth on the Sentech Disclosure Schedule or
for any Sentech Benefit Plan listed as an exhibit to the Sentech 10-KSB, the
execution of this Agreement and the performance of the Transactions will not
(either alone or in combination with the occurrence of any additional or
subsequent events) constitute an event under any Sentech Benefit Plan that will
or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any current or former
employee, director or consultant of any Sentech Company.
6.16. PATENTS, TRADEMARKS, ETC. Except as disclosed in the Sentech SEC
Reports, to Sentech's knowledge, no Sentech Company infringes upon or unlawfully
or wrongfully uses any Intellectual Property owned or claimed by another Person
and no Person infringes on or wrongfully uses any Intellectual Property owned or
claimed by Sentech, except for those situations that would not have a Material
Adverse Effect. The Sentech Companies own or have valid rights to use all
Intellectual Property used in the conduct of their business except where the
failure to have valid
34
rights to use such Intellectual Property will not have a Material Adverse
Effect, free and clear of all Encumbrances, other than Encumbrances which would
not have a Material Adverse Effect.
6.17. ABSENCE OF CERTAIN CHANGES. Since the Sentech Balance Sheet Date,
the Sentech Companies have conducted the Sentech Business in the ordinary
course, and except as described in the Sentech Disclosure Schedule or the
Sentech SEC reports, as of the date hereof, there has not been:
(a) any Material Adverse Effect on the Sentech Business or, in
the aggregate, Liabilities of the Sentech Companies;
(b) any distribution or payment declared or made in respect of
Sentech's capital stock by way of dividends, purchase or redemption of shares or
otherwise;
(c) any increase in the compensation payable or to become
payable to any current director or officer of any Sentech Company, except for
merit and seniority increases for employees made in the ordinary course of
business, nor any material change in any existing employment, severance,
consulting arrangements or any Sentech Benefit Plan;
(d) any sale, assignment or transfer of any Sentech Assets, or
any additions to or transactions involving any Sentech Assets, other than those
made in the ordinary course of business or those solely involving the Sentech
Companies;
(e) other than in the ordinary course of business, any waiver
or release of any material claim or right or cancellation of any material debt
held by any Sentech Company;
(f) any change in practice with respect to Taxes, or any
election, change of any election, or revocation of any election with respect to
Taxes, or any settlement or compromise of any dispute involving a Tax liability;
(g) (i) any creation, assumption or maintenance of any
long-term debt or any short-term debt for borrowed money other than under
existing notes payable, lines of credit or other credit facility or in the
ordinary course of business or with respect to its Wholly-Owned Subsidiaries;
(ii) any assumption, granting of guarantees, endorsements or otherwise becoming
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other Person except its Wholly-Owned Subsidiaries; or (iii)
any loans, advances or capital contributions to, or investments in, any other
Person except its Wholly-Owned Subsidiaries;
(h) any material agreement, commitment or contract, except
agreements, commitments or contracts for the purchase, sale or lease of goods or
services in the ordinary course of business;
(i) other than in the ordinary course of business, any
authorization,
35
recommendation, proposal or announcement of an intention to authorize, recommend
or propose, or enter into any Contract with respect to, any (i) plan of
liquidation or dissolution, (ii) acquisition of a material amount of assets or
securities, (iii) disposition or Encumbrance of a material amount of assets or
securities, (iv) merger or consolidation or (v) material change in its
capitalization; or
(j) any change in accounting or Tax procedure or practice.
6.18. CORPORATE RECORDS. The minute books of Sentech contain accurate,
complete and current copies of all Charter Documents and of all minutes of
meetings, resolutions and other proceedings of its Board of Directors and
stockholders.
6.19. FINDER'S FEES. No Person is or will be entitled to any
commission, finder's fee or other payment in connection with the Transactions
based on arrangements made by or on behalf of Sentech.
6.20. REORGANIZATION. No Sentech Company has or, as of the Closing
Date, will have taken any action or failed to take any action which action or
failure would result in the failure of the Sentech Merger to qualify as a
reorganization within the meaning of Code Section 368(a). Sentech has no
knowledge of any fact or circumstance that is reasonably likely to prevent the
Sentech Merger from qualifying as a reorganization within the meaning of Code
Section 368(a).
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF SENSEC
Sensec hereby represents and warrants to Ensec and Sentech as follows,
except as otherwise set forth in the Sensec Disclosure Schedule (items disclosed
in one Section of such Schedule shall apply to all other Sections unless the
context indicates otherwise):
7.1. CORPORATE. Each Sensec Company is a corporation duly organized,
validly existing and in good standing under the Laws under which it was
incorporated. Each Sensec Company is qualified to do business as a foreign
corporation in any jurisdiction where it is required to be so qualified, except
where the failure to so qualify would not have a Material Adverse Effect. The
Charter Documents and bylaws of Sensec and of each Sensec Company (which have
been delivered to Ensec and Sentech) have been duly adopted and are current,
correct and complete. Each Sensec Company has all necessary corporate power and
authority to own, lease and operate its part of the Sensec Assets and to carry
on its part of the Sensec Business as it is now being conducted.
7.2. AUTHORIZATION. Each Sensec Party has the requisite corporate power
and authority to execute and deliver the Transaction Documents to which it is a
party and to perform the Transactions to be performed by it. Such execution,
delivery and performance by each Sensec Party have been duly authorized by all
necessary corporate action. Each Transaction Document executed and delivered by
any Sensec Party as of the date hereof has been duly executed and delivered by
such Sensec Party and constitutes a valid and binding obligation of each Sensec
Party, enforceable
36
against each Sensec Party in accordance with its terms. Any Transaction Document
executed and delivered by any Sensec Party after the date hereof will be duly
executed and delivered by such Sensec Party and will constitute a valid and
binding obligation of such Sensec Party, enforceable against such Sensec Party
in accordance with its terms.
7.3. VALIDITY OF CONTEMPLATED TRANSACTIONS. Except for compliance with
the (i) the Securities Act and the Exchange Act and (ii) the filing of the Ensec
Certificate of Merger and Sentech Certificate of Merger with the Secretary of
State of the State of Florida, neither the execution and delivery by any Sensec
Party of the respective Transaction Documents to which it is or will be a party,
nor the performance of the Transactions to be performed by it, will require any
filing, consent or approval under or constitute a Default, or result in a loss
of material benefit under, (a) any Law or Court Order to which any Sensec
Company is subject, (b) the Charter Documents or bylaws of any Sensec Company or
(c) any Contract or other document to which any Sensec Company is a party or by
which any of the Sensec Assets may be subject, except Defaults which would not
have a Material Adverse Effect.
7.4. CAPITALIZATION AND STOCK OWNERSHIP. The total authorized capital
stock of Sensec consists of (a) 20,000,000 shares of Sensec Common Stock $0.001
par value per share, and (b) 1,000,000 shares of Sensec preferred stock, $0.001
par value per share. As of the date hereof, there are no issued or outstanding
capital stock of Sensec. As of the date hereof, there are no existing options,
warrants, calls, commitments or other rights of any character (including
conversion or preemptive rights) relating to the acquisition of any issued or
unissued capital stock or other securities of Sensec other than the issuance of
Sensec Common Stock upon the consummation of the Transactions. The shares of
Sensec to be issued in connection with the Ensec Merger, Sentech Merger and this
Agreement, when issued in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable, and shall be registered under
Section 12(g) of the Exchange Act. The total authorized capital stock of the
Ensec Merger Subsidiary consists of 1,000 shares of common stock, par value $.01
per share. All of the issued and outstanding shares of the such capital stock
are validly issued, fully paid and non-assessable, and, on the date hereof, are
held by Sensec. The total authorized capital stock of the Sentech Merger
Subsidiary consists of 1,000 shares of common stock, par value $.01 per share.
All of the issued and outstanding shares of such capital stock are validly
issued, fully paid and non-assessable, and, on the date hereof, are held by
Sensec.
7.5. [Reserved]
7.6. PROXY STATEMENT. None of the information supplied or to be
supplied by or on behalf of any Sensec Company specifically for inclusion or
incorporation by reference in the Registration Statement will (except to the
extent revised or superseded by amendments or supplements contemplated hereby),
at the time the Registration Statement becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the information supplied or to
37
be supplied by or on behalf of any Sensec Company specifically for inclusion or
incorporation by reference in the Proxy Statement will (except to the extent
revised or superseded by amendments or supplements contemplated hereby), at the
date it (or any such amendment of supplement) is mailed to the stockholders of
Ensec and Sentech and at the time of the Ensec Stockholder Meeting and Sentech
Stockholder meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement and the Proxy Statement (except
for information relating solely to any Ensec Company or any Sentech Company)
will comply in all material respects with the requirements of the Securities Act
and the Exchange Act and the Regulations promulgated thereunder.
7.7. REORGANIZATION. No Sensec Company has or, as of the Closing Date,
will have taken any action or failed to take any action which action or failure
would result in the failure of either the Ensec Merger or Sentech Merger to
qualify as a reorganization within the meaning of Code Section 368(a). Sensec
has no knowledge of any fact or circumstance that is reasonably likely to
prevent either the Ensec Merger or Sentech Merger from qualifying as a
reorganization within the meaning of Code Section 368(a).
7.8. OWNERSHIP OF MERGER SUBSIDIARY; NO PRIOR ACTIVITIES. Each of the
Ensec Merger Subsidiary and the Sentech Merger Subsidiary is a Wholly-Owned
Subsidiary of Sensec created solely for the purpose of effecting the Merger. As
of the date hereof and the Effective Time, except for Liabilities incurred in
connection with its incorporation or organization and the Transactions and
except for this Agreement and the other Transaction Documents, neither Sensec
the Ensec Merger Subsidiary or the Sentech Merger Subsidiary has, nor will have,
directly or indirectly, through any Subsidiary or Affiliate of Sensec, any
material Liabilities, engaged in any material business activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person.
ARTICLE VIII
COVENANTS OF THE PARTIES
8.1. PROXY/REGISTRATION STATEMENT. Sensec, Ensec and Sentech will
prepare and file with the SEC as soon as reasonably practicable after the date
hereof a proxy statement to be filed under the Exchange Act by Sensec and to be
distributed by Ensec and Sentech in connection with the Ensec Stockholder
Meeting and Sentech Stockholder Meeting, respectively (the "Proxy Statement"
and, together with the Registration Statement, the "Proxy/Registration
Statement"). Sensec will file a Registration Statement on Form S-4 under the
Securities Act in connection with the Ensec Merger and Sentech Merger for
purposes of registering the Sensec Shares and the Sensec Warrants (and the
shares of Sensec Common Stock issuable upon exercise of the Sensec Warrants) to
be issued in the Merger pursuant to Article II and Article III hereof (the
"Registration Statement") and Ensec shall cooperate with Sensec to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as practicable after such filing. The Parties shall also take such
action as may be reasonably required to cause the Sensec Shares and the Sensec
Warrants issuable
38
pursuant to the Ensec Merger and Sentech Merger (and the shares of Sensec Common
Stock issuable upon exercise of the Sensec Warrants) to be registered or to
obtain an exemption from registration under applicable state "blue sky" or
securities Laws. Each Party will furnish to the other Party all information
concerning itself and its Subsidiaries as the other Party or its counsel may
reasonably request and that is required or customary for inclusion in the
Proxy/Registration Statement.
8.2. NO SOLICITATION.
(a) From and after the date hereof, Ensec, without the prior
written consent of Sensec and Sentech, will not, and will not authorize or
permit any of its Subsidiaries or its Party Representatives to, directly or
indirectly, solicit, initiate or encourage (including by way of furnishing
information) or take any other action to facilitate knowingly any inquiries or
the making of any proposal which constitutes or may reasonably be expected to
lead to an Acquisition Proposal (as defined below) from any Person, or engage in
any discussion or negotiations relating thereto or accept any Acquisition
Proposal; provided, however, that notwithstanding any other provision hereof,
Ensec may at any time prior to the time Ensec's stockholders shall have voted to
approve this Agreement, engage in discussions or negotiations with a third party
who (without any solicitation, initiation, encouragement, discussion or
negotiation, directly or indirectly, by or with any Ensec Company or its Party
Representatives after the date hereof) seeks to initiate such discussions or
negotiations and may furnish such third party information concerning Ensec and
its Business and Assets if, and only to the extent that, (i)(x) the third party
has first made an Acquisition Proposal that is (as determined in good faith by
the Ensec Board of Directors after consultation with its legal and financial
advisor) financially superior to the Transactions and has demonstrated that the
funds necessary for the Acquisition Proposal are reasonably likely to be
available and the Acquisition Proposal is reasonably capable of consummation in
accordance with its terms (as determined in good faith in each case by Ensec's
Board of Directors after consultation with its legal and financial advisors) and
(y) Ensec's Board of Directors shall conclude in good faith, after considering
applicable provisions of applicable Law, on the basis of advice of its counsel,
that such action is necessary for the Board of Directors to act in a manner
consistent with its fiduciary duties under applicable Law and (ii) prior to
furnishing such information to or entering into discussions or negotiations with
such Person, Ensec (x) provides prompt notice to Sensec and Sentech to the
effect that it is furnishing information to or entering into discussions or
negotiations with such Person and (y) receives from such Person an executed
confidentiality agreement in reasonably customary form on terms not in the
aggregate materially more favorable to such Person than the terms contained in
the Confidentiality Agreement. Ensec shall immediately cease and terminate any
existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any Persons conducted heretofore by Ensec or its Party
Representatives with respect to the foregoing. Ensec shall not release any third
party from, or waive any provision of, any standstill agreement to which it is a
party or any confidentiality agreement between it and another Person who has
made an Acquisition Proposal, unless such Person has made an Acquisition
Proposal meeting the criteria set forth in clause (a)(i)(x) above and Ensec's
Board of Directors shall conclude in good faith, after considering applicable
provisions of applicable Law, on the basis of advice of its counsel, that such
action is necessary for the Board of Directors to act in a manner consistent
with its fiduciary duties under
39
applicable Law. Ensec shall immediately notify Sensec and Sentech orally (with a
prompt written confirmation) of any such inquiries, offers or proposals
(including the terms and conditions of any such proposal and the identity of the
Person making it and shall provide copies of any such written inquiries, offers
or proposals), shall keep Sensec and Sentech informed of the status and details
of any such inquiry, offer or proposal (and agrees that any material
modification of the terms of an inquiry or proposal shall constitute a new
inquiry or proposal), and shall give Sensec and Sentech two (2) business days'
advance notice of any agreement to be entered into with, or any information to
be supplied to, any Person making such inquiry, offer or proposal (no such
agreement, other than a confidentiality agreement as set forth in this Section,
to be executed or agreed prior to the termination of this Agreement in
accordance with its terms). As used herein, "Acquisition Proposal" shall mean a
bona fide proposal or offer (other than by Sensec) for a tender or exchange
offer, merger, consolidation or other business combination involving Ensec or
Sentech as the case may be or any Subsidiary thereof, or any proposal to acquire
in any manner a substantial equity interest in, or a substantial amount of the
assets of, Ensec or Sentech as the case may be or any such Subsidiary.
(b) From and after the date hereof, Sentech, without the prior
written consent of Sensec, will not, and will not authorize or permit any of its
Subsidiaries or its Party Representatives to, directly or indirectly, solicit,
initiate or encourage (including by way of furnishing information) or take any
other action to facilitate knowingly any inquiries or the making of any proposal
which constitutes or may reasonably be expected to lead to an Acquisition
Proposal (as defined below) from any Person, or engage in any discussion or
negotiations relating thereto or accept any Acquisition Proposal; provided,
however, that notwithstanding any other provision hereof, Sentech may at any
time prior to the time Sentech's stockholders shall have voted to approve this
Agreement, engage in discussions or negotiations with a third party who (without
any solicitation, initiation, encouragement, discussion or negotiation, directly
or indirectly, by or with any Sentech Company or its Party Representatives after
the date hereof) seeks to initiate such discussions or negotiations and may
furnish such third party information concerning Sentech and its Business and
Assets if, and only to the extent that, (i)(x) the third party has first made an
Acquisition Proposal that is (as determined in good faith by the Sentech Board
of Directors after consultation with its legal and financial advisor)
financially superior to the Transactions and has demonstrated that the funds
necessary for the Acquisition Proposal are reasonably likely to be available and
the Acquisition Proposal is reasonably capable of consummation in accordance
with its terms (as determined in good faith in each case by Sentech's Board of
Directors after consultation with its legal and financial advisors) and (y)
Sentech's Board of Directors shall conclude in good faith, after considering
applicable provisions of applicable Law, on the basis of advice of its counsel,
that such action is necessary for the Board of Directors to act in a manner
consistent with its fiduciary duties under applicable Law and (ii) prior to
furnishing such information to or entering into discussions or negotiations with
such Person, Sentech (x) provides prompt notice to Sensec and Ensec to the
effect that it is furnishing information to or entering into discussions or
negotiations with such Person and (y) receives from such Person an executed
confidentiality agreement in reasonably customary form on terms not in the
aggregate materially more favorable to such Person than the terms contained in
the Confidentiality Agreement. Sentech shall immediately cease and terminate any
existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any Persons
40
conducted heretofore by Sentech or its Party Representatives with respect to the
foregoing. Sentech shall not release any third party from, or waive any
provision of, any standstill agreement to which it is a party or any
confidentiality agreement between it and another Person who has made an
Acquisition Proposal, unless such Person has made an Acquisition Proposal
meeting the criteria set forth in clause (a)(i)(x) above and Sentech's Board of
Directors shall conclude in good faith, after considering applicable provisions
of applicable Law, on the basis of advice of its counsel, that such action is
necessary for the Board of Directors to act in a manner consistent with its
fiduciary duties under applicable Law. Sentech shall immediately notify Sensec
and Ensec orally (with a prompt written confirmation) of any such inquiries,
offers or proposals (including the terms and conditions of any such proposal and
the identity of the Person making it and shall provide copies of any such
written inquiries, offers or proposals), shall keep Sensec and Ensec informed of
the status and details of any such inquiry, offer or proposal (and agrees that
any material modification of the terms of an inquiry or proposal shall
constitute a new inquiry or proposal) , and shall give Sensec and Ensec two (2)
business days' advance notice of any agreement to be entered into with, or any
information to be supplied to, any Person making such inquiry, offer or proposal
(no such agreement, other than a confidentiality agreement as set forth in this
Section, to be executed or agreed prior to the termination of this Agreement in
accordance with its terms).
8.3. NOTIFICATION OF CERTAIN MATTERS. Each of Sensec, Ensec and Sentech
shall give prompt notice to each other of the following:
(a) the occurrence or nonoccurrence of any event whose
occurrence or nonoccurrence would be likely to cause either (i) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time, or (ii) directly or indirectly, any Material Adverse Effect;
(b) any material failure of such Party, or any officer,
director, employee or agent of any thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; and
(c) any facts relating to such Party which would make it
necessary or advisable to amend the Proxy Statement or the Registration
Statement in order to make the statements therein not misleading or to comply
with applicable Law; provided, however, that the delivery of any notice pursuant
to this Section 8.3 shall not limit or otherwise affect the remedies available
hereunder to the Party receiving such notice.
8.4. ACCESS TO INFORMATION.
(a) From the date hereof to the Effective Time, Sensec, Ensec
and Sentech shall, and shall cause its respective Subsidiaries, and its and
their officers, directors, employees, auditors, counsel and agents to afford the
officers, employees, auditors, counsel, financial advisors and agents of the
other Party complete access at all reasonable times to such Party's and its
Subsidiaries' officers, employees, auditors, counsel, agents, properties,
offices and other facilities and to all of
41
their respective books and records, and shall furnish the other with all
financial, operating and other data and information as such other Party may
reasonably request.
(b) All information so received from the other Party shall be
deemed received pursuant to the confidentiality agreement heretofore executed
and delivered by Sensec, Sentech and Ensec (the "Confidentiality Agreement"),
and each such Party shall, and shall cause its Subsidiaries and each of its and
their respective officers, directors, employees, auditors, counsel, financial
advisors and agents ("Party Representatives"), to comply with the provisions of
the Confidentiality Agreement with respect to such information. The provisions
of the Confidentiality Agreement are hereby incorporated herein by reference
with the same effect as if fully set forth herein.
8.5. PUBLIC ANNOUNCEMENTS. Sensec, Ensec and Sentech (a) shall use all
reasonable efforts to develop a joint communications plan and each Party shall
use all reasonable efforts to ensure that all press releases and other public
statements with respect to the Transactions shall be consistent with such joint
communications plan or, to the extent inconsistent therewith, shall have
received the prior written approval of the other and (b) before issuing any
press release or otherwise making any public statements with respect to the
Transactions, will consult with each other as to its form and substance and
shall not issue any such press release or make any such public statement prior
to such consultation, except for each of (a) and (b) above as may be required by
Law (it being agreed that the Parties hereto are entitled to disclose all
requisite information concerning the Transactions in any filings required with
the SEC) or the rules and regulations of the National Association of Securities
Dealers, Inc.
8.6. COOPERATION. Upon the terms and subject to the conditions hereof,
each of the Parties shall use its commercially reasonable efforts to take or
cause to be taken all actions and to do or cause to be done all things
necessary, proper or advisable to consummate as promptly as practicable the
Transactions and shall use its commercially reasonable efforts to obtain all
Ensec Required Consents and Sentech required consents, and to effect all
necessary filings under the Securities Act and the Exchange Act. Without
limiting the generality of the foregoing, each Party shall use all commercially
reasonable efforts to take, or cause to be taken, all other actions and to do,
or cause to be done, all other things necessary, proper or advisable to fulfill
the conditions under Articles XII, XIII, XIV and XV to the extent that the
fulfillment thereof is within a Party's control.
8.7. REORGANIZATION. From and after the date hereof and until the
Effective Time, neither Sensec, Ensec or Sentech, nor any of their respective
Subsidiaries shall knowingly take any action, or knowingly fail to take any
action, that would jeopardize qualification of either the Ensec Merger or
Sentech Merger as a reorganization within the meaning of Section 368(a) of the
Code.
ARTICLE IX
COVENANTS OF ENSEC
9.1. OPERATION OF THE BUSINESS. Except as set forth on Section 9.1 of
the Ensec Disclosure Schedule, as contemplated by this Agreement or as expressly
agreed to in writing by
42
Sensec and Sentech, during the period from the date of this Agreement to the
Effective Time, Ensec and its Subsidiaries will conduct their operations only in
the ordinary course of business consistent with sound financial, operational and
regulatory practice, and will take no action which would materially adversely
affect their ability to consummate the Transactions. Without limiting the
generality of the foregoing, except as otherwise expressly provided in this
Agreement or except as disclosed in the Ensec Disclosure Schedule, prior to the
Effective Time, neither Ensec nor any of its Subsidiaries will, without the
prior written consent of Sensec and Sentech:
(a) amend its Charter Documents or bylaws (or similar
organizational documents);
(b) authorize for issuance, issue, sell, deliver, grant any
options for, or otherwise agree or commit to issue, sell or deliver any shares
of its capital stock or any other securities, other than pursuant to and in
accordance with the terms of any Existing Options or Ensec Warrants listed on
the Ensec Disclosure Schedule;
(c) recapitalize, split, combine or reclassify any shares of
its capital stock; declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock; or purchase, redeem or otherwise acquire any of its or its
Subsidiaries' securities or modify any of the terms of any such securities;
(d) (i) create, incur, assume or permit to exist any long-term
debt or any short-term debt for borrowed money other than under existing notes
payable, lines of credit or other credit facilities or in the ordinary course of
business, or with respect to its Wholly-Owned Subsidiaries in the ordinary
course of business; (ii) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the obligations
of any other Person except its Wholly-Owned Subsidiaries in the ordinary course
of business or as otherwise may be contractually required and disclosed in the
Ensec Disclosure Schedule; or (iii) make any loans, advances or capital
contributions to, or investments in, any other Person except its Wholly-Owned
Subsidiaries;
(e) (i) amend any Ensec Benefit Plan or (ii) except in the
ordinary course of business consistent with usual practice or established policy
(a) increase in any manner the rate of compensation of any of its directors,
officers or other employees everywhere, except for increases in the ordinary
course of business; (b) pay or agree to pay any bonus, pension, retirement
allowance, severance or other employee benefit except as required under
currently existing Ensec Benefit Plans disclosed in the Ensec Disclosure
Schedule or in the ordinary course of business; or (c) amend, terminate or enter
into any employment, consulting, severance, change in control or similar
agreements or arrangements with any of its directors, officers or other
employees;
(f) enter into any material agreement, commitment or contract,
except agreements, commitments or contracts for the purchase, sale or lease of
goods or services in the ordinary course of business;
43
(g) other than in the ordinary course of business, authorize,
recommend, propose or announce an intention to authorize, recommend or propose,
or enter into any Contract with respect to, any (i) plan of liquidation or
dissolution, (ii) acquisition of a material amount of assets or securities,
(iii) disposition or Encumbrance of a material amount of assets or securities,
(iv) merger or consolidation or (v) material change in its capitalization;
(h) change any material accounting or Tax procedure or
practice;
(i) take any action the taking of which, or knowingly omit to
take any action the omission of which, would cause any of the representations
and warranties herein to fail to be true and correct in all material respects as
of the date of such action or omission as though made at and as of the date of
such action or omission;
(j) compromise, settle or otherwise modify any material claim
or litigation not identified in the Ensec Disclosure Schedule; or
(k) commit or agree to do any of the foregoing.
9.2. ENSEC STOCKHOLDER MEETING. Ensec shall cause a meeting of its
stockholders (the "Ensec Stockholder Meeting") to be duly called and held as
soon as reasonably practicable for the purpose of voting on the adoption of this
Agreement and the Merger as required by the FBCA. Subject to their fiduciary
duties, the directors of Ensec shall recommend such adoption of this Agreement
and the Merger by Ensec's stockholders. In connection with such meeting, Ensec
(a) will mail to its stockholders as promptly as practicable the Proxy Statement
and all other proxy materials for such meeting, (b) will use all reasonable
efforts to obtain the necessary approvals by its stockholders of this Agreement
and the Transactions, and (c) will otherwise comply with all legal requirements
applicable to such meeting.
9.3. MAINTENANCE OF THE ASSETS. Ensec shall, and shall cause each other
Ensec Company to, use its reasonable best efforts to continue to maintain and
service the Ensec Assets consistent with past practice. Ensec shall not, and
shall cause each other Ensec Company not to, directly or indirectly, sell or
encumber all or any part of the Ensec Assets, other than sales in the ordinary
course of business or sales to or Encumbrances in favor of any other Ensec
Company, or initiate or participate in any discussions or negotiations or enter
into any agreement to do any of the foregoing.
9.4. EMPLOYEES AND BUSINESS RELATIONS. Ensec shall, and shall cause
each other Ensec Company to, use commercially reasonable efforts to keep
available the services of its current employees and agents and to maintain its
relations and goodwill with its suppliers, customers, distributors and any
others having business relations with it.
9.5. RULE 145 AFFILIATES. Prior to the Effective Time, Ensec shall
identify in a letter
44
to Sensec and Sentech all Persons who might, at the time of the Ensec
Stockholder Meeting, be deemed to be "affiliates" of Sensec for the purposes of
Rule 145 under the Securities Act (the "Securities Act Affiliates"). Ensec shall
use commercially reasonable efforts to cause each Person who is identified as a
possible Securities Act Affiliate to enter into prior to the Effective Time a
lock-up agreement in form and substance as determined by Ensec and Sentech.
9.6. EXPENSES. Subject to Section 11.2, Ensec shall pay all of the
legal, accounting and other expenses incurred by any Ensec Company in connection
with the Transactions.
9.7. CERTAIN TAX MATTERS. From the date hereof until the Effective
Time, (a) Ensec and each of its Subsidiaries will prepare and file, in the
manner required by applicable Law, all Tax Returns (the "Post-Signing Returns")
required to be filed under applicable Law; (b) Ensec and each of its
Subsidiaries will timely pay all Taxes shown as due and payable on such
Post-Signing Returns that are so filed; (c) Ensec and each of its Subsidiaries
will make provision for all Taxes payable by Ensec and/or any such Subsidiary
under applicable Law for which no Post-Signing Return is due prior to the
Effective Time; and (d) Ensec will promptly notify Sensec and Sentech in writing
of any action, suit, proceeding, claim or audit pending against or with respect
to Ensec or any of its Subsidiaries in respect of any Tax that is not disclosed
on the Ensec Disclosure Schedule.
9.8. EMPLOYMENT ARRANGEMENTS. Ensec will use commercially reasonable
efforts to cause Xxxxxxx Xxxxxx to enter into an employment agreement in form
and substance as the Parties shall agree, containing the terms set forth
opposite such Person's name in such Section 9.8 of the Ensec Disclosure
Schedule.
9.9. STATE ANTI-TAKEOVER LAW. If any "business combination,"
"moratorium," "control share," "fair price," "interested shareholder,"
"affiliated transaction" or other anti-takeover statute or regulation under the
FBCA (i) prohibits or restricts Ensec's ability to perform its obligations under
this Agreement or any party's ability to consummate the Ensec Merger or the
other transactions contemplated hereby or thereby, or (ii) would have the effect
of invalidating or voiding this Agreement or any provision hereof, then Ensec
shall use its best efforts to obtain any necessary consents or approvals so that
the foregoing shall not apply.
ARTICLE X
COVENANTS OF SENTECH
10.1. OPERATION OF THE BUSINESS. Except as set forth on Section 10.1 of
the Sentech Disclosure Schedule, as contemplated by this Agreement or as
expressly agreed to in writing by Sensec and Ensec, during the period from the
date of this Agreement to the Effective Time, Sentech and its Subsidiaries will
conduct their operations only in the ordinary course of business consistent with
sound financial, operational and regulatory practice, and will take no action
which would materially adversely affect their ability to consummate the
Transactions. Without limiting the generality of the foregoing, except as
otherwise expressly provided in this Agreement or except as disclosed in the
Sentech Disclosure Schedule, prior to the Effective Time, neither Sentech nor
any
45
of its Subsidiaries will, without the prior written consent of Sensec and Ensec:
(a) amend its Charter Documents or bylaws (or similar
organizational documents);
(b) authorize for issuance, issue, sell, deliver, grant any
options for, or otherwise agree or commit to issue, sell or deliver any shares
of its capital stock or any other securities, other than pursuant to and in
accordance with the terms of any Existing Options or Sentech Warrants listed on
the Sentech Disclosure Schedule;
(c) recapitalize, split, combine or reclassify any shares of
its capital stock; declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock; or purchase, redeem or otherwise acquire any of its or its
Subsidiaries' securities or modify any of the terms of any such securities;
(d) (i) create, incur, assume or permit to exist any long-term
debt or any short-term debt for borrowed money other than under existing notes
payable, lines of credit or other credit facilities or in the ordinary course of
business, or with respect to its Wholly-Owned Subsidiaries in the ordinary
course of business; (ii) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the obligations
of any other Person except its Wholly-Owned Subsidiaries in the ordinary course
of business or as otherwise may be contractually required and disclosed in the
Sentech Disclosure Schedule; or (iii) make any loans, advances or capital
contributions to, or investments in, any other Person except its Wholly-Owned
Subsidiaries;
(e) (i) amend any Sentech Benefit Plan or (ii) except in the
ordinary course of business consistent with usual practice or established policy
(a) increase in any manner the rate of compensation of any of its directors,
officers or other employees everywhere, except for increases in the ordinary
course of business; (b) pay or agree to pay any bonus, pension, retirement
allowance, severance or other employee benefit except as required under
currently existing Sentech Benefit Plans disclosed in the Sentech Disclosure
Schedule or in the ordinary course of business; or (c) amend, terminate or enter
into any employment, consulting, severance, change in control or similar
agreements or arrangements with any of its directors, officers or other
employees;
(f) enter into any material agreement, commitment or contract,
except agreements, commitments or contracts for the purchase, sale or lease of
goods or services in the ordinary course of business;
(g) other than in the ordinary course of business, authorize,
recommend, propose or announce an intention to authorize, recommend or propose,
or enter into any Contract with respect to, any (i) plan of liquidation or
dissolution, (ii) acquisition of a material amount of assets or securities,
(iii) disposition or Encumbrance of a material amount of assets or securities,
(iv) merger or consolidation or (v) material change in its capitalization;
46
(h) change any material accounting or Tax procedure or
practice;
(i) take any action the taking of which, or knowingly omit to
take any action the omission of which, would cause any of the representations
and warranties herein to fail to be true and correct in all material respects as
of the date of such action or omission as though made at and as of the date of
such action or omission;
(j) compromise, settle or otherwise modify any material claim
or litigation not identified in the Sentech Disclosure Schedule; or
(k) commit or agree to do any of the foregoing.
10.2. SENTECH STOCKHOLDER MEETING. Sentech shall cause a meeting of its
stockholders (the "Sentech Stockholder Meeting") to be duly called and held as
soon as reasonably practicable for the purpose of voting on the adoption of this
Agreement and the Merger as required by the FBCA. Subject to their fiduciary
duties, the directors of Sentech shall recommend such adoption of this Agreement
and the Merger by Sentech's stockholders. In connection with such meeting,
Sentech (a) will mail to its stockholders as promptly as practicable the Proxy
Statement and all other proxy materials for such meeting, (b) will use all
reasonable efforts to obtain the necessary approvals by its stockholders of this
Agreement and the Transactions, and (c) will otherwise comply with all legal
requirements applicable to such meeting.
10.3. MAINTENANCE OF THE ASSETS. Sentech shall, and shall cause each
other Sentech Company to, use its reasonable best efforts to continue to
maintain and service the Sentech Assets consistent with past practice. Sentech
shall not, and shall cause each other Sentech Company not to, directly or
indirectly, sell or encumber all or any part of the Sentech Assets, other than
sales in the ordinary course of business or sales to or Encumbrances in favor of
any other Sentech Company, or initiate or participate in any discussions or
negotiations or enter into any agreement to do any of the foregoing.
10.4. EMPLOYEES AND BUSINESS RELATIONS. Sentech shall, and shall cause
each other Sentech Company to, use commercially reasonable efforts to keep
available the services of its current employees and agents and to maintain its
relations and goodwill with its suppliers, customers, distributors and any
others having business relations with it.
10.5. RULE 145 AFFILIATES. Prior to the Effective Time, Sentech shall
identify in a letter to Sensec and Ensec all Persons who might, at the time of
the Sentech Stockholder Meeting, be deemed to be Securities Act Affiliates.
Sentech shall use commercially reasonable efforts to cause each Person who is
identified as a possible Securities Act Affiliate to enter into prior to the
Effective Time a lock-up agreement in form and substance as determined by Ensec
and Sentech.
10.6. EXPENSES. Subject to Section 11.2, Sentech shall pay all of the
legal, accounting
47
and other expenses incurred by any Sentech Company in connection with the
Transactions.
10.7. CERTAIN TAX MATTERS. From the date hereof until the Effective
Time, (a) Sentech and each of its Subsidiaries will prepare and file, in the
manner required by applicable Law, all Post-Signing Returns required to be filed
under applicable Law; (b) Sentech and each of its Subsidiaries will timely pay
all Taxes shown as due and payable on such Post-Signing Returns that are so
filed; (c) Sentech and each of its Subsidiaries will make provision for all
Taxes payable by Sentech and/or any such Subsidiary under applicable Law for
which no Post-Signing Return is due prior to the Effective Time; and (d) Sentech
will promptly notify Sensec and Ensec in writing of any action, suit,
proceeding, claim or audit pending against or with respect to Sentech or any of
its Subsidiaries in respect of any Tax that is not disclosed on the Sentech
Disclosure Schedule.
10.8. STATE ANTI-TAKEOVER LAW. If any "business combination,"
"moratorium," "control share," "fair price," "interested shareholder,"
"affiliated transaction" or other anti-takeover statute or regulation under the
FBCA (i) prohibits or restricts Sentech's ability to perform its obligations
under this Agreement or any party's ability to consummate the Sentech Merger or
the other transactions contemplated hereby or thereby, or (ii) would have the
effect of invalidating or voiding this Agreement or any provision hereof or
thereof, then Sentech shall use its best efforts to obtain any necessary
consents or approvals so that the foregoing shall not apply.
ARTICLE XI
COVENANTS OF SENSEC
11.1. APPOINTMENT TO THE BOARD OF DIRECTORS OF SENSEC. At the Effective
Time, the Sensec Board of Directors shall be Xxxxxx Xxxxxxx, Xxxxx Xxxxxxxxxx,
Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxx, and Xxxxxx Xxxxxxx xx Xxxxx.
11.2. EXPENSES. Sensec shall pay all of the legal, accounting and other
expenses incurred by any Sensec Company in connection with the Transactions,
including fees of Sensec's transfer agent, fees of the Exchange Agent and fees,
SEC filing fees and printing and mailing costs payable with respect to the
Proxy/Registration Statement.
11.3. INDEMNIFICATION, DIRECTORS' AND OFFICERS' INSURANCE. For a period
of six years after the Effective Time, Sensec shall cause the Ensec Surviving
Corporation and the Sentech Surviving Corporation to (a) maintain in effect the
current provisions regarding indemnification of officers and directors contained
in the Charter Documents and bylaws of Ensec and Sentech, respectively, and in
any indemnification agreements of Ensec and Sentech, respectively, and (b)
indemnify the directors and officers of Ensec and Sentech, respectively, to the
fullest extent to which Ensec and Sentech respectively is permitted to indemnify
such officers and directors under its Charter Documents and bylaws and
applicable Law. For a period of six years after the Effective Time, Sensec shall
cause the Surviving Corporation to maintain in effect the current policies of
directors' and officers' liability insurance and fiduciary liability insurance
maintained by Ensec and Sentech respectively (provided that the Surviving
Corporation may substitute therefor
48
policies of at least the same coverage and amounts containing terms and
conditions which are, in the aggregate, no less advantageous to the insured in
any material respect) with respect to claims arising from facts or events which
occurred on or before the Effective Time, provided that in no event shall
Surviving Corporation be required to pay an annual premium of more than the
annual premium currently paid by either Ensec or Sentech, whichever is greater.
11.4. INTERIM FINANCIAL REPORT. Sensec shall provide within 20 days
after the end of the first full monthly period following the Closing a financial
report regarding the combined operation of Sensec, Ensec and Sentech
respectively that satisfies the requirements of Financial Reporting Release Xx.
0, XXX 000.
ARTICLE XII
CONDITIONS PRECEDENT AND CONCURRENT
TO OBLIGATIONS OF ALL PARTIES
The respective obligations of each Party to consummate the Merger and
the other Transactions shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions:
12.1. LEGALITY. All required governmental approvals shall have been
obtained and any applicable waiting periods, shall have expired. No Law or Court
Order shall have been enacted, entered, promulgated or enforced by any court or
governmental entity that is in effect and that has the effect of making the
Merger illegal or otherwise prohibiting the consummation of the Merger and no
legal action shall be pending or threatened which is reasonably likely to have a
Material Adverse Effect on Party.
12.2. REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act, no stop order suspending the
effectiveness of the Registration Statement shall have been issued, and no
proceedings for that purpose shall have been instituted.
12.3. APPROVAL BY SENTECH STOCKHOLDERS AND ENSEC STOCKHOLDERS.
This Agreement shall have been approved and adopted by the stockholders of Ensec
in accordance with the FBCA and its Charter Documents, and by the stockholders
of Sentech in accordance with the FBCA and its Charter Documents.
12.4. CONCURRENT MERGERS. The Ensec Merger is a condition concurrent to
the Sentech Merger and the Sentech Merger is a condition concurrent to the Ensec
Merger.
12.5. TAX OPINIONS. Ensec shall have received an opinion of Ensec's
counsel and Sentech shall have received an opinion of Sentech's counsel, each in
form and substance reasonably satisfactory to Sensec, each dated as of the
Closing Date, to the effect that the Ensec Merger and the Sentech Merger,
respectively, will constitute a reorganization within the meaning of Code
Section 368(a). In rendering such tax opinions, such counsel may require and
rely upon reasonably requested
49
representations contained in certificates of Sensec, Ensec, the Ensec Merger
Subsidiary, Sentech and the Sentech Merger Subsidiary.
ARTICLE XIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF ENSEC
The obligations of Ensec to consummate the Merger and the Transactions
shall be subject to the satisfaction or waiver, on or before the Effective Time,
of each of the following conditions:
13.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Sensec/Ensec Parties contained in this Agreement shall be true
and correct on the date hereof and (except to the extent such representations
and warranties speak as of an earlier date) shall also be true and correct on
and as of the Closing Date, except for changes contemplated by this Agreement,
with the same force and effect as if made on and as of the Closing Date;
provided, however, that for purposes of this Section 13.1 only, such
representations and warranties shall be deemed to be true and correct unless the
failure or failures of such representations and warranties to be so true and
correct (without regard to materiality qualifiers contained therein),
individually or in the aggregate, results or would reasonably be expected to
result in a Material Adverse Effect on Sensec or Sentech.
13.2. AGREEMENTS, CONDITIONS AND COVENANTS. The Sensec/Ensec Parties
shall have performed or complied in all material respects with all agreements,
conditions and covenants required by this Agreement to be performed or complied
with by them on or before the Effective Time.
13.3. CERTIFICATES. Ensec shall have received a certificate of an
executive officer of Sensec to the effect set forth in Sections 13.1 and 13.2.
13.4. MATERIAL ADVERSE EFFECT. There shall have been no Material
Adverse Effect on the Sentech Companies taken as a whole or the Sensec Companies
taken as a whole.
13.5. ANCILLARY DOCUMENTS. Each Sensec Party shall have tendered
executed copies of the respective Transaction Documents to which it is intended
to be a party.
13.6. BOARD RECOMMENDATION. The Board of Directors of Ensec will have
(a) approved and adopted this Agreement, including the Ensec Merger and the
other Transactions, and determined that the Ensec Merger is fair to the
stockholders of Ensec, and (b) subject to fiduciary obligations of the Ensec
Board of Directors, resolved to recommend approval and adoption of this
Agreement, including the Ensec Merger and the other Transactions, by the
stockholders of Ensec.
13.7. FAIRNESS OPINION. An investment banking firm reasonably
acceptable to the Parties will have delivered to Ensec's Board of Directors its
opinion to the effect that on the date of the opinion the Ensec Merger
Consideration is fair to the holders of Ensec Common Shares from a financial
point of view.
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ARTICLE XIV
CONDITIONS PRECEDENT TO OBLIGATIONS OF SENTECH
The obligations of Sentech to consummate the Sentech Merger and the
Transactions shall be subject to the satisfaction or waiver, on or before the
Effective Time, of each of the following conditions:
14.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Sensec/Sentech Parties contained in this Agreement shall be
true and correct on the date hereof and (except to the extent such
representations and warranties speak as of an earlier date) shall also be true
and correct on and as of the Closing Date, except for changes contemplated by
this Agreement, with the same force and effect as if made on and as of the
Closing Date; provided, however, that for purposes of this Section 14.1 only,
such representations and warranties shall be deemed to be true and correct
unless the failure or failures of such representations and warranties to be so
true and correct (without regard to materiality qualifiers contained therein),
individually or in the aggregate, results or would reasonably be expected to
result in a Material Adverse Effect on Sensec or Ensec.
14.2. AGREEMENTS, CONDITIONS AND COVENANTS. The Sensec/Sentech Parties
shall have performed or complied in all material respects with all agreements,
conditions and covenants required by this Agreement to be performed or complied
with by them on or before the Effective Time.
14.3. CERTIFICATES. Sentech shall have received a certificate of an
executive officer of Sensec to the effect set forth in Sections 14.1 and 14.2.
14.4. MATERIAL ADVERSE EFFECT. There shall have been no Material
Adverse Effect on the Ensec Companies taken as a whole or the Sensec Companies
taken as a whole.
14.5. ANCILLARY DOCUMENTS. Each Sensec Party shall have tendered
executed copies of the respective Transaction Documents to which it is intended
to be a party.
14.6. BOARD RECOMMENDATION. The Board of Directors of Sentech will have
(a) approved and adopted this Agreement, including the Sentech Merger and the
other Transactions, and determined that the Sentech Merger is fair to the
stockholders of Sentech, and (b) subject to fiduciary obligations of the Sentech
Board of Directors, resolved to recommend approval and adoption of this
Agreement, including the Sentech Merger and the other Transactions, by the
stockholders of Sentech.
14.7. FAIRNESS OPINION. An investment banking firm reasonably
acceptable to the Parties will have delivered to Sentech's Board of Directors
its opinion to the effect that on the date of the opinion the Sentech Merger
Consideration is fair to the holders of Sentech Common Shares from a financial
point of view.
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ARTICLE XV
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SENSEC PARTIES
The obligations of the Sensec/Ensec Parties to consummate the Ensec
Merger and the Transactions and the obligations of the Sensec/Sentech Parties to
consummate the Sentech Merger and the Transactions shall be subject to the
satisfaction or waiver, on or before the Effective Time, of each of the
following conditions:
15.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Ensec and Sentech contained in this Agreement shall be true and
correct on the date hereof and (except to the extent such representations and
warranties speak as of an earlier date) shall also be true and correct on and as
of the Closing Date, except for changes contemplated by this Agreement, with the
same force and effect as if made on and as of the Closing Date; provided,
however, that for purposes of this Section 15.1 only, such representations and
warranties shall be deemed to be true and correct unless the failure or failures
of such representations and warranties to be so true and correct (without regard
to materiality qualifiers contained therein), individually or in the aggregate,
results or would reasonably be expected to result in a Material Adverse Effect
on Ensec or Sentech, respectively.
15.2. AGREEMENTS, CONDITIONS AND COVENANTS. Each of Ensec and Sentech
shall have performed or complied in all material respects with all agreements,
conditions and covenants required by this Agreement to be performed or complied
with by it on or before the Effective Time.
15.3. CERTIFICATES. Sensec shall have received a certificate of an
executive officer of each of Ensec and Sentech to the effect set forth in
Sections 15.1 and 15.2, respectively.
15.4. REQUIRED CONSENTS. Ensec and Sentech shall have obtained all
consents from third parties listed in Section 5.3 of the Ensec Disclosure
Schedule and Section 6.3 of the Sentech Disclosure Schedule, respectively, and
all other consents the absence of which would result in a Material Adverse
Effect on Ensec and Sentech, respectively.
15.5. MATERIAL ADVERSE EFFECT. There shall have been no Material
Adverse Effect on the Ensec Companies taken as a whole or the Sentech Companies
taken as a whole.
15.6. ANCILLARY DOCUMENTS. Each of Ensec and Sentech shall have
tendered executed copies of the Transaction Documents to which it is intended to
be a party.
15.7. EMPLOYMENT AGREEMENT. Xxxxxxx Xxxxxx shall have entered into an
Employment Agreement as contemplated by Section 9.8.
15.8. BOARD RECOMMENDATION. The Board of Directors of Sensec will have
approved and adopted this Agreement, including the Ensec Merger, the Sentech
Merger and the other
52
Transactions, and determined that each of the Ensec Merger and Sentech Merger is
fair to Sensec
ARTICLE XVI
TERMINATION
16.1. GROUNDS FOR TERMINATION. This Agreement may be terminated at any
time before the Effective Time, in each case as authorized by the respective
Boards of Directors of the Parties:
(a) By mutual written consent of each of Ensec and Sentech;
(b) By Ensec or Sentech if the Merger shall not have been
consummated on or before the Termination Date; provided, however, that the right
to terminate this Agreement under this Section 16.1(b) shall not be available to
any Party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Effective Time to occur on or
before the Termination Date;
(c) By Ensec or Sentech if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall have
issued a Court Order (which Court Order the Parties shall use commercially
reasonable efforts to lift) that permanently restrains, enjoins or otherwise
prohibits the Transactions, and such Court Order shall have become final and
nonappealable;
(d) By Sentech if Ensec shall have breached, or failed to
comply with, in any material respect, any of its obligations under this
Agreement or any representation or warranty made by Ensec shall have been
incorrect in any material respect when made, and such breach, failure or
misrepresentation is not cured within 20 days after notice thereof, and in
either case, any such breaches, failures or misrepresentations, individually or
in the aggregate, results or would reasonably be expected to result in a failure
to satisfy a condition to Ensec's obligations to consummate the transactions
contemplated hereby;
(e) By Ensec if Sentech shall have breached, or failed to
comply with, in any material respect, any of its obligations under this
Agreement or any representation or warranty made by it shall have been incorrect
in any material respect when made, and such breach, failure or misrepresentation
is not cured within 20 days after notice thereof, and in either case, any such
breaches, failures or misrepresentations, individually or in the aggregate,
results or would reasonably be expected to result in a failure to satisfy a
condition to Sentech's obligations to consummate the transactions contemplated
hereby;
(f) By Ensec if at the Ensec Stockholder Meeting (including
any adjournment thereof) this Agreement and the Ensec Merger shall fail to be
approved and adopted by the affirmative vote of the stockholders of Ensec as
required under the FBCA;
53
(g) By Sentech if at the Sentech Stockholder Meeting
(including any adjournment thereof) this Agreement and the Sentech Merger shall
fail to be approved and adopted by the affirmative vote of the stockholders of
Sentech as required under the FBCA;
(h) By Ensec, prior to the approval of this Agreement by the
stockholders of Ensec, upon five days notice to Sentech, if, as a result of an
Acquisition Proposal received by Ensec from a Person other than a Party to this
Agreement or any of its Affiliates, the Board of Directors of Ensec determines
in good faith that its fiduciary obligations under applicable Law require that
such Acquisition Proposal be accepted; provided, however, that (i) immediately
following such termination Ensec executes with such third party a definitive
agreement to implement such Acquisition Proposal, (ii) the Board of Directors of
Ensec shall have concluded in good faith, after considering applicable
provisions of applicable Law and after giving effect to all concessions which
may be offered by Sentech pursuant to clause (iii) below, on the basis of advice
of counsel, that such action is necessary for the Board of Directors to act in a
manner consistent with its fiduciary duties under applicable Law, and (iii)
prior to any such termination, (x) Ensec shall have provided Sentech with five
days' notice of the terms of the proposal and otherwise complied with Section
8.2(a) hereof (including making the finding contemplated by Section 8.2(a)(x)
hereof) and (y) Ensec shall, and shall cause its financial and legal advisors
to, negotiate with Sentech to make such adjustments in the terms and conditions
of this Agreement as would enable Ensec to proceed with the Transactions;
(i) By Sentech, prior to the approval of this Agreement by the
stockholders of Sentech, upon five days notice to Ensec, if, as a result of an
Acquisition Proposal received by Sentech from a Person other than a Party to
this Agreement or any of its Affiliates, the Board of Directors of Sentech
determines in good faith that its fiduciary obligations under applicable Law
require that such Acquisition Proposal be accepted; provided, however, that (i)
immediately following such termination Sentech executes with such third party a
definitive agreement to implement such Acquisition Proposal, (ii) the Board of
Directors of Sentech shall have concluded in good faith, after considering
applicable provisions of applicable Law and after giving effect to all
concessions which may be offered by Ensec pursuant to clause (iii) below, on the
basis of advice of counsel, that such action is necessary for the Board of
Directors to act in a manner consistent with its fiduciary duties under
applicable Law, and (iii) prior to any such termination, (x) Sentech shall have
provided Ensec with five days' notice of the terms of the proposal and otherwise
complied with Section 8.2(b) hereof (including making the finding contemplated
by Section 8.2(b)(i)(x) hereof) and (y) Sentech shall, and shall cause its
financial and legal advisors to, negotiate with Ensec to make such adjustments
in the terms and conditions of this Agreement as would enable Sentech to proceed
with the Transactions.
(j) By Ensec if the Board of Directors of Sentech shall
withdraw, modify or change its recommendation of this Agreement or the Sentech
Merger or shall have failed to reaffirm its recommendation within five business
days of Ensec's request that it do so or shall have recommended or issued a
neutral recommendation (or taken no position) with respect to any Acquisition
Proposal.
54
(j) By Sentech if the Board of Directors of Ensec shall
withdraw, modify or change its recommendation of this Agreement or the Ensec
Merger or shall have failed to reaffirm its recommendation within five business
days of Sentech's request that it do so or shall have recommended or issued a
neutral recommendation (or taken no position) with respect to any Acquisition
Proposal.
16.2. EFFECT OF TERMINATION.
(a) If this Agreement is terminated pursuant to Section
16.1(a), (b) or (c), this Agreement shall be terminated and there shall be no
liability on the part of any of the Parties; notwithstanding the foregoing,
nothing herein shall relieve any Party from liability for any willful breach
hereof; provided that the provisions of Sections 8.3, 8.4(b), 9.6, 10.6, 11.2
and this Section 16.2 shall survive the termination hereof.
(b) If this Agreement is terminated by Sentech pursuant to
Section 16.1(d) or (j) or by Ensec pursuant to Section 16.1(f), (h) or (k), then
Ensec shall reimburse Sentech for its reasonable out-of-pocket expenses in
connection with the Transactions, including, without limitation, attorneys',
accountants' and investment bankers' fees and expenses ("Transaction Fees") up
to an aggregate of $50,000.
(c) If this Agreement is terminated by Ensec pursuant to
Section 16.1(e) or (j) or by Sentech pursuant to Section 16.1(g), (i) or (l),
then Sentech shall reimburse Ensec for its Transaction Fees up to an aggregate
of $50,000.
Ensec acknowledges that the agreements contained in this Section 16.2 are an
integral part of the Transactions, and that, without these agreements, Sensec
would not enter into this Agreement; accordingly, if Ensec fails to promptly pay
the amount due pursuant to this Section 16.2, and, in order to obtain such
payment, Sensec commences a suit which results in a judgment against Ensec for
the fee set forth in this Section 16.2, Ensec shall pay to Sensec its costs and
expenses (including reasonable attorneys' fees) in connection with such suit,
together with interest on the amount of the fee at a rate equal to the prime
rate of Citibank, N.A. at the time of payment from the date such fee was
required to be paid.
ARTICLE XVII
GENERAL MATTERS
17.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties in this Agreement shall terminate at the Effective Time or upon
the termination of this Agreement pursuant to Section 16.1.
17.2. CONTENTS OF AGREEMENT. This Agreement and the Confidentiality
Agreement, together with the other Transaction Documents, set forth the entire
understanding of the Parties hereto with respect to the Transactions and
supersede all prior agreements or understandings among
55
the Parties regarding those matters.
17.3. AMENDMENT, PARTIES IN INTEREST, ASSIGNMENT, ETC. This Agreement
may be amended, modified or supplemented only by a written instrument duly
executed by each of the Parties hereto. If any provision of this Agreement shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective heirs, legal representatives, successors and permitted assigns
of the Parties hereto. No Party hereto shall assign this Agreement or any right,
benefit or obligation hereunder. Any term or provision of this Agreement may be
waived at any time by the Party entitled to the benefit thereof by a written
instrument duly executed by such Party. The Parties hereto shall execute and
deliver any and all documents and take any and all other actions that may be
deemed reasonably necessary by their respective counsel to complete the
Transactions. Nothing in this Agreement is intended or will be construed to
confer on any Person other than the Parties hereto any rights or benefits
hereunder.
17.4. INTERPRETATION. Unless the context of this Agreement clearly
requires otherwise, (a) references to the plural include the singular, the
singular the plural, the part the whole, (b) references to any gender include
all genders, (c) "or" has the inclusive meaning frequently identified with the
phrase "and/or," (d) "including," "includes" or similar words has the inclusive
meaning frequently identified with the phrase "but not limited to" and (e)
references to "hereunder" or "herein" relate to this Agreement. The section and
other headings contained in this Agreement are for reference purposes only and
shall not control or affect the construction of this Agreement or the
interpretation thereof in any respect. Section, subsection, Disclosure Schedule
and Exhibit references are to this Agreement unless otherwise specified. The
Exhibits and Schedules referred to in this Agreement will be deemed to be a part
of this Agreement. Each accounting term used herein that is not specifically
defined herein shall have the meaning given to it under GAAP.
17.5. NOTICES. All notices that are required or permitted hereunder
shall be in writing and shall be sufficient if personally delivered or sent by
mail, facsimile message or Federal Express or other delivery service. Any
notices shall be deemed given upon receipt at the address or fax number set
forth below, unless such address or fax number is changed by notice to the other
Party hereto:
If to Ensec:
Ensec International
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax (000) 000-0000
Attn: Xxxxxxx Xxxxxx
with a required copy to:
56
Atlas, Xxxxxxxx, Trop & Borkson, P.A.
000 Xxxx Xxx Xxxx Xxxx., Xxxxx 0000
Xxxx Xxxxxxxxxx, XX 00000
Fax (000) 000-0000
Attn: Xxxx X. Xxxxxxxxx, Esq.
If to Sentech:
Sentech EAS Corp.
000 X.X. 00xx Xxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000-0000
Fax (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx, Xx.
with a required copy to:
Gersten, Savage, Xxxxxxxxx & Xxxxxxxxxx, LLP
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax (000) 000-0000
Attn: Xxx X. Xxxxxxxxx, Esq.
If to Sensec, the Ensec Merger Subsidiary or the Sentech
Merger Subsidiary, to each of Ensec and Sentech as provided above.
17.6. GOVERNING LAW. This Agreement shall be construed and interpreted
in accordance with the Laws of the State of Florida without regard to its
provisions concerning conflict of laws.
17.7. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be binding as of the date first written above,
and all of which shall constitute one and the same instrument. Each such copy
shall be deemed an original, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
17.8. WAIVERS. Compliance with the provisions of this Agreement may be
waived only by a written instrument specifically referring to this Agreement and
signed by the Party waiving compliance. No course of dealing, nor any failure or
delay in exercising any right, will be construed as a waiver, and no single or
partial exercise of a right will preclude any other or further exercise of that
or any other right.
17.9. MODIFICATION. No supplement, modification or amendment of this
Agreement will be binding unless made in a written instrument that is signed by
all of the Parties hereto and that specifically refers to this Agreement.
57
17.10. ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of competent
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or equity.
17.11. WAIVER OF JURY TRIAL. Each party acknowledges and agrees that
any controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each such party hereby
irrevocably and unconditionally waives any right such party may have to a trial
by jury in respect of any litigation directly or indirectly arising out of or
relating to this Agreement, or the Transactions contemplated by this Agreement.
Each party certifies and acknowledges that (i) no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver, (ii) each party understands and has considered the implications of this
waiver, (iii) each party makes this waiver voluntarily, and (iv) each party has
been induced to enter into this Agreement by, among other things, the mutual
waivers and certifications in this Section 17.11.
17.12. SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable Law in an acceptable manner to the end that the
Transactions are fulfilled to the extent possible.
[Signatures on following page]
58
IN WITNESS WHEREOF, this Agreement has been executed by the Parties
hereto as of the day and year first written above.
SENSEC INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxxxxx
----------------------------------
Xxxxxx Xxxxxxx
Chairman of the Board
ENSEC ACQUISITION CORPORATION
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Xxxxxxx Xxxxxx
Chairman of the Board
SENTECH ACQUISITION CORPORATION
By: /s/ Xxxxxx Xxxxxxx
----------------------------------
Xxxxxx Xxxxxxx
Chairman of the Board
ENSEC INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Xxxxxxx Xxxxxx
Chairman of the Board and
Chief Executive Officer
SENTECH EAS CORPORATION
By: /s/ Xxxxxx Xxxxxxx
----------------------------------
Xxxxxx Xxxxxxx
Chairman of the Board
59
AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER
("Amendment") is made as of December 2, 1998 by and among Sensec International,
Inc. a Delaware corporation ("Sensec"), Ensec Acquisition Corporation, a Florida
Corporation (the "Ensec Merger Subsidiary" and together with Sensec, the
"Sensec/Ensec Parties"), Ensec International, Inc., a Florida corporation
("Ensec"), Sentech Acquisition Corporation, a Florida corporation (the "Sentech
Merger Subsidiary" and together with Sensec, the "Sensec/Sentech Parties"), and
SenTech EAS Corporation, a Florida corporation ("Sentech") to amend the
Agreement and Plan of Merger dated October 28, 1998 ("Merger Agreement").
Sensec, Ensec Merger Subsidiary, Sentech Merger Subsidiary, Ensec and Sentech
are collectively referred to herein as the "Parties"). Certain other Capitalized
terms used herein are defined in the Merger Agreement.
1. Section 3.5(a) of the Merger Agreement is amended to read as
follows:
3.5. CONVERSION OR CANCELLATION OF SENTECH SHARES.
(a) Each share of Sentech Common Stock (a "Sentech
Share") outstanding immediately prior to the Effective Time shall by
virtue of the Sentech Merger and without any action on the part of the
Sentech Holder thereof, be converted into the right to receive
0.4965541 (the "Sentech Conversion Number") Sensec Shares. Each Sentech
Common Share that, immediately prior to the Effective Time, is held by
Sentech as treasury stock shall be canceled, and no consideration shall
be delivered with respect thereto.
2. All other terms and provisions of the Merger Agreement shall remain
the same.
3. This Amendment may be executed in counterparts.
[Signatures on following page]
60
IN WITNESS WHEREOF, this Amendment has been executed by the Parties
hereto as of the day and year first written above.
SENSEC INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxxxxx
----------------------------------
Xxxxxx Xxxxxxx
Chairman of the Board
ENSEC ACQUISITION CORPORATION
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Xxxxxxx Xxxxxx
Chairman of the Board
SENTECH ACQUISITION CORPORATION
By: /s/ Xxxxxx Xxxxxxx
----------------------------------
Xxxxxx Xxxxxxx
Chairman of the Board
ENSEC INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Xxxxxxx Xxxxxx
Chairman of the Board and
Chief Executive Officer
SENTECH EAS CORPORATION
By: /s/ Xxxxxx Xxxxxxx
----------------------------------
Xxxxxx Xxxxxxx
Chairman of the Board
61
