AGREEMENT AND PLAN OF MERGER
BY AND AMONG
IMMUNOTECHNOLOGY, INC., a Delaware corporation
ULTIMATE SECURITY SYSTEMS CORPORATION, a Nevada corporation
AND
THE OTHER PARTIES SIGNATORY HERETO
Dated as of April __, 2003
TABLE OF CONTENTS
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Article 1 THE MERGER..............................................................................................1
1.1 The Merger..........................................................................................1
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1.2 Effective Time......................................................................................2
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1.3 Effect of the Merger on Constituent Corporations....................................................2
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1.4 Certificate of Incorporation and Bylaws of Surviving Corporation....................................2
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1.5 Directors and Officers of Surviving Corporation.....................................................2
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1.6 Maximum Number of Shares of IMNT Common Stock to be Issued; Effect on Outstanding Securities of USSC3
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1.7 Reservation of Shares...............................................................................4
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1.8 Adjustments to Exchange Ratio.......................................................................4
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1.9 Fractional Shares...................................................................................4
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1.10 Dissenting Shares...................................................................................4
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1.11 Exchange Procedures.................................................................................5
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1.12 No Further Ownership Rights in USSC Common Stock....................................................6
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1.13 Lost, Stolen or Destroyed Certificates..............................................................6
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1.14 Tax Consequences....................................................................................6
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1.15 Taking of Necessary Action: Further Action..........................................................7
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Article 2 REPRESENTATIONS AND WARRANTIES OF USSC..................................................................7
2.1 Organization and Qualification......................................................................7
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2.2 Authority Relative to this Agreement................................................................7
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2.3 Capital Stock.......................................................................................8
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2.4 No Subsidiaries.....................................................................................9
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2.5 Directors and Officers..............................................................................9
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2.6 No Conflicts........................................................................................9
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2.7 Books and Records; Organizational Documents........................................................10
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2.8 USSC Financial Statements..........................................................................10
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2.9 Absence of Changes.................................................................................10
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2.10 No Undisclosed Liabilities.........................................................................12
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2.11 Taxes..............................................................................................12
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2.12 Legal Proceedings..................................................................................15
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2.13 Compliance with Laws and Orders....................................................................15
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2.14 Employee Benefit Plans and Employee Matters........................................................15
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2.15 Real Property......................................................................................18
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2.16 Tangible Personal Property.........................................................................18
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2.17 Intellectual Property..............................................................................18
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2.18 Contracts..........................................................................................22
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2.19 Insurance..........................................................................................24
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2.20 Affiliate Transactions.............................................................................25
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2.21 Employees; Labor Relations.........................................................................25
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2.22 Environmental Matters..............................................................................26
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2.23 Substantial Customers and Suppliers................................................................27
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2.24 Accounts Receivable................................................................................28
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2.25 Inventory..........................................................................................28
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2.26 Other Negotiations; Brokers; Third Party Expenses..................................................28
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2.27 Banks and Brokerage Accounts.......................................................................29
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2.28 Warranty Obligations...............................................................................29
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2.29 Foreign Corrupt Practices Act......................................................................29
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2.30 Tax-Free Reorganization............................................................................29
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2.31 Financial Projections..............................................................................30
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2.32 Approvals..........................................................................................30
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2.33 Information Statement..............................................................................30
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2.34 No Solicitation....................................................................................31
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2.35 Disclosure.........................................................................................31
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Article 3 REPRESENTATIONS AND WARRANTIES OF IMNT.................................................................31
3.2 Authority Relative to this Agreement...............................................................32
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3.3 Issuance of IMNT Common Stock......................................................................32
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3.6 Books and Records; Organizational Documents........................................................34
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3.7 Legal Proceedings..................................................................................34
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3.8 Compliance with Laws and Orders....................................................................35
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3.9 Banks and Brokerage Accounts.......................................................................35
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3.10 Other Negotiations; Brokers; Third Party Expenses..................................................35
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3.11 Foreign Corrupt Practices Act......................................................................36
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3.12 Approvals..........................................................................................36
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3.13 Information Statement..............................................................................37
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3.14 Disclosure.........................................................................................37
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3.16 Investment Advisors................................................................................37
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3.17 Tax-Free Reorganization............................................................................37
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Article 4 CONDUCT BEFORE THE EFFECTIVE TIME......................................................................38
4.1 Conduct of Business of USSC........................................................................38
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4.2 No Solicitation....................................................................................38
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Article 5 ADDITIONAL AGREEMENTS..................................................................................39
5.1 Information Statement..............................................................................39
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5.5 Stockholder Approval...............................................................................39
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5.6 Access to Information..............................................................................40
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5.7 Confidentiality....................................................................................40
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5.8 Expenses...........................................................................................41
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5.9 Public Disclosure..................................................................................41
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5.10 Approvals..........................................................................................41
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5.12 Notification of Certain Matters....................................................................41
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5.15 Additional Documents and Further Assurances; Cooperation...........................................41
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5.18 USSC' s Auditors...................................................................................42
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5.20 Takeover Statutes..................................................................................42
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5.21 Treatment as Reorganization........................................................................42
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5.22 Intellectual Property..............................................................................42
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Article 6 CONDITIONS TO THE MERGER...............................................................................42
6.1 Conditions to Obligations of Each Party Under this Agreement.......................................43
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6.2 Additional Conditions to Obligations of USSC.......................................................43
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6.3 Additional Conditions to the Obligations of IMNT...................................................44
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Article 7 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS......................................45
7.1 Survival of Representations, Warranties, Covenants and Agreements..................................45
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Article 8 TERMINATION, AMENDMENT AND WAIVER......................................................................45
8.1 Termination........................................................................................45
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8.2 Effect of Termination..............................................................................46
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8.3 Amendment..........................................................................................46
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8.4 Extension; Waiver..................................................................................46
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Article 9 MISCELLANEOUS PROVISIONS...............................................................................47
9.1 Notices............................................................................................47
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9.2 Entire Agreement...................................................................................48
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9.3 Amendment..........................................................................................48
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9.4 Further Assurances; Post-Closing Cooperation.......................................................48
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9.5 Waiver.............................................................................................48
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9.6 Remedies...........................................................................................48
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9.7 Third Party Beneficiaries..........................................................................48
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9.8 No Assignment; Binding Effect......................................................................48
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9.9 Invalid Provisions.................................................................................48
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9.10 Governing Law......................................................................................49
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9.11 Waiver of Trial by Jury............................................................................49
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9.12 Costs and Expenses.................................................................................49
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9.13 Construction.......................................................................................49
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9.14 Counterparts.......................................................................................49
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9.15 Specific Performance...............................................................................49
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Article 10 DEFINITIONS...........................................................................................50
10.1 Definitions........................................................................................50
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10.2 Construction.......................................................................................60
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EXHIBITS
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Exhibit A--Certificate of Merger to be filed with Nev. Sec. of State
Exhibit B--Delaware Certificate of Merger
Exhibit C--IMNT officers' Certificate re: rep's and warranties
Exhibit D--USSC officers' Certificate re: rep's and warranties
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of April __, 2003 by and among Immunotechnology, Inc., a
Delaware corporation ("IMNT"), and Ultimate Security Systems Corporation, a
Nevada corporation ("USSC"). Capitalized terms used and not otherwise defined
herein have the meanings set forth in Article 10.
RECITALS
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A. The Boards of Directors of each of IMNT and USSC have approved this
Agreement and deem it advisable and in the best interests of IMNT and USSC,
respectively, and their respective stockholders that IMNT acquire USSC by the
merger of USSC with and into IMNT (the "Merger") and, in furtherance thereof,
have approved the Merger, this Agreement and the transactions contemplated
hereby.
B. Before the Effective Time and as a condition to consummation of the
Merger, all outstanding shares of USSC Preferred Stock will be converted into
outstanding shares of USSC Common Stock and all holders of USSC Preferred Stock
shall have agreed to accept shares of IMNT common stock in exchange for all
accrued but unpaid dividends.
C. Pursuant to the Merger, among other things, and subject to the terms and
conditions of this Agreement, (i) all of the outstanding shares of USSC Common
Stock that are issued and outstanding immediately before the Effective Time of
the Merger shall be converted into the right to receive shares of Common Stock,
par value $0.001 per share, of IMNT ("IMNT Common Stock"), and (ii) all USSC
Options, USSC Warrants and USSC Stock Purchase Rights then outstanding (whether
vested or unvested) shall become exercisable for IMNT Common Stock, on the terms
and subject to the conditions set forth in this Agreement.
D. IMNT and USSC intend that the Merger shall constitute a reorganization
within the meaning of Section 368(a) of the Code and in furtherance thereof
intend that this Agreement shall be a "plan of reorganization" within the
meaning of Sections 354(a) and 361(a) of the Code.
E. USSC and IMNT desire to make certain representations, warranties,
covenants and agreements in connection with the Merger.
NOW, THEREFORE, AS CONSIDERATION FOR the covenants, promises,
representations and warranties set forth herein, and for other good and valuable
consideration (the receipt and sufficiency of which hereby are acknowledged by
the parties), intending to be legally bound hereby, the parties hereby agree as
follows:
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Article 1
THE MERGER
1.1 The Merger. At the Effective Time and on the terms and subject to the
conditions of this Agreement and the applicable provisions of the applicable
Nevada Delaware Law, USSC shall be merged with and into IMNT, the separate
corporate existence of USSC shall cease, and IMNT shall continue as the
surviving corporation. IMNT sometimes is referred to herein as the "Surviving
Corporation."
1.2 Effective Time. Unless this Agreement is terminated earlier pursuant to
Section 8.1 hereof, the closing of the Merger (the "Closing") is expected to
occur on the date that the Registration Statement on Form S-4 is declared
"effective" by the Securities and Exchange Commission and will occur no later
than five (5) Business Days following satisfaction or waiver of the conditions
set forth in Article 6, at the offices of MC Law Group, 0000 Xxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, unless another place or time is
agreed to by IMNT and USSC. The date on which the Closing actually occurs is
referred to herein as the "Closing Date." On the Closing Date, the parties
hereto shall cause the Merger to be consummated by filing an Certificate of
Merger (or similar instrument), in substantially the form attached hereto as
Exhibit A (the "Nevada Certificate of Merger"), with the Nevada Secretary of
State and filing a Certificate of Merger (or similar instrument), in
substantially the form attached hereto as Exhibit B (the "Delaware Certificate
of Merger"), with the Delaware Secretary of State, in each case in accordance
with the relevant provisions of applicable law (the time of acceptance by the
Delaware Secretary of State of such filing or such later time as may be agreed
to by the parties and set forth in the Delaware Certificate of Merger being
referred to herein as the "Effective Time").
1.3 Effect of the Merger on Constituent Corporations. At the Effective
Time, the effect of the Merger shall be as provided in the applicable provisions
of Delaware and Nevada Law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of IMNT and USSC shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of IMNT and USSC shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation and Bylaws of Surviving Corporation.
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(a) At the Effective Time, the Certificate of Incorporation of
IMNT, as in effect immediately before the Effective Time, shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended as provided by law and such certificate of incorporation and the bylaws
of the Surviving Corporation.
(b) At the Effective Time, the Bylaws of IMNT, as in effect
immediately before the Effective Time, shall be the bylaws of the Surviving
Corporation until thereafter amended as provided by such bylaws, the certificate
of incorporation of the Surviving Corporation and applicable law.
1.5 Directors and Officers of Surviving Corporation. Effective immediately
upon the Closing, all of the current directors of IMNT will appoint the current
directors of USSC as directors of the Surviving Corporation (the "Post-Closing
Directors") and, thereafter, will resign as of the Effective Time, each
Post-Closing Director to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation. Effective immediately
upon the Closing, all of the current officers of IMNT will resign and the
Post-Closing Directors shall appoint new officers, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation.
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1.6 Maximum Number of Shares of IMNT Common Stock to be Issued; Effect on
Outstanding Securities of USSC . The maximum number of shares of IMNT Common
Stock to be issued (including IMNT Common Stock to be reserved for issuance upon
exercise of USSC Options, USSC Warrants (if any) or USSC Stock Purchase Rights
to be assumed by IMNT as provided herein) in exchange for the acquisition by
IMNT of all shares of USSC Common Stock that are issued and outstanding
immediately before the Effective Time and all vested and unvested USSC Options,
USSC Warrants (if any) and USSC Stock Purchase Rights that then are outstanding
(other than USSC Warrants that by their terms expire without payment,
conversion, adjustment or other consideration at the Effective Time) shall not
exceed the Aggregate Share Number. No adjustment shall be made in the number of
shares of IMNT Common Stock issued in the Merger as a result of any
consideration (in any form whatsoever) received by USSC from the date hereof to
the Effective Time as a result of any exercise, conversion or exchange of USSC
Options, USSC Warrants or USSC Stock Purchase Rights. On the terms and subject
to the conditions of this Agreement, at the Effective Time, because of the
Merger and without any action on the part of IMNT, USSC or the holders of shares
of USSC Common Stock or USSC Options, USSC Warrants or USSC Stock Purchase
Rights, the following shall occur:
(a) Conversion of USSC Common Stock. Each share of USSC Common
Stock (assuming conversion of all outstanding shares of USSC Preferred Stock)
issued and outstanding immediately before the Effective Time (other than
Dissenting Shares (as provided in Section 1.10)) shall be cancelled and
extinguished, and each share of USSC Common Stock that is issued and outstanding
immediately before the Effective Time shall be converted automatically into the
right to receive, following the expiration or early termination of any waiting
period under the HSR Act that is applicable to the holder of such share at the
Effective Time, that number of shares of IMNT Common Stock equal to the Exchange
Ratio (subject to Section 1.9).
(b) IMNT Common Stock. Each share of IMNT Common Stock that is
issued and outstanding immediately before the Effective Time shall remain
outstanding as one validly issued, fully-paid and nonassessable share of the
same class of common stock of the Surviving Corporation, with identical rights
and privileges. From and after the Effective Time, each share certificate of
IMNT theretofore evidencing ownership of such shares shall continue to evidence
ownership of such shares of capital stock of the Surviving Corporation.
(c) USSC Options and USSC Stock Option Plan. All unexpired and
unexercised USSC Options, USSC Warrants and USSC Stock Purchase Rights then
outstanding, whether vested or unvested, together with the USSC Stock Option
Plan, shall be assumed by IMNT in accordance with the following: Each unexpired
and unexercised USSC Option, USSC Warrant and USSC Stock Purchase Right then
outstanding, whether vested or unvested, shall be, in connection with the
Merger, assumed by IMNT, together with the USSC Stock Option Plan, if any. Each
USSC Option, USSC Warrant and USSC Stock Purchase Right so assumed by IMNT under
this Agreement shall continue to have, and be subject to, the same terms and
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conditions as were applicable to such USSC Option, USSC Warrant or USSC Stock
Purchase Right immediately before the Effective Time (including all repurchase
rights or vesting provisions), provided that (A) such USSC Option, USSC Warrant
or USSC Stock Purchase Right, as the case may be, shall be exercisable for that
number of whole shares of IMNT Common Stock equal to the product of the number
of shares of USSC Common Stock that were issuable upon exercise of such USSC
Option, USSC Warrant or USSC Stock Purchase Right immediately before the
Effective Time (assuming such USSC Option, USSC Warrant or USSC Stock Purchase
Right were exercisable in full) multiplied by the Exchange Ratio (rounded down
to the nearest whole number of shares of IMNT Common Stock), and (B) the
per-share exercise price for the shares of IMNT Common Stock issuable upon
exercise of such assumed USSC Option, USSC Warrant or USSC Stock Purchase Right,
as the case may be, shall be equal to the quotient determined by dividing the
exercise price per share of USSC Common Stock at which such USSC Option, USSC
Warrant or USSC Stock Purchase Right was exercisable immediately before the
Effective Time by the Exchange Ratio (rounded up to the nearest whole cent). It
is the intention of the parties that USSC Options assumed by IMNT shall qualify
following the Effective Time as incentive stock options as defined in Section
422 of the Code to the same extent USSC Options qualified as incentive stock
options immediately before the Effective Time. The provisions of this Section
1.6(c) shall be applied consistent with the intent described in the preceding
sentence.
1.7 Reservation of Shares. IMNT shall reserve sufficient shares of IMNT
Common Stock for issuance pursuant to Section 1.6.
1.8 Adjustments to Exchange Ratio. The Exchange Ratio shall be equitably
adjusted to accommodate fully the effect of any stock split, reverse split,
stock combination, stock dividend (including any dividend or distribution of
securities convertible into IMNT Common Stock or USSC Common Stock),
reorganization, reclassification, recapitalization or other similar change with
respect to IMNT Common Stock or USSC Common Stock the effective date of which
occurs after the date of this Agreement and before the Effective Time.
1.9 Fractional Shares. No fraction of a share of IMNT Common Stock will be
issued in the Merger, but in lieu thereof each holder of shares of USSC Common
Stock who otherwise would be entitled to a fraction of a share of IMNT Common
Stock (after aggregating all fractional shares of IMNT Common Stock to be
received by such holder) shall be entitled to receive from IMNT an amount of
cash (rounded to the nearest whole cent) equal to the product of (a) such
fraction multiplied by (b) the Closing Price.
1.10 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, shares of USSC Common Stock held by a holder who has demanded and
perfected appraisal rights for such shares in accordance with the Nevada Code,
and who, as of the Effective Time, has not effectively withdrawn or lost such
appraisal or dissenters' rights ("Dissenting Shares"), shall not be converted
into or represent a right to receive IMNT Common Stock pursuant to Section 1.6,
but the holder thereof shall be entitled only to such rights as are granted by
the Nevada Code.
(b) Notwithstanding the provisions of Section 1.10(a), if any
holder of shares of USSC Common Stock who demands appraisal of such shares in
accordance with the Nevada Code effectively withdraws or loses (through failure
to perfect or otherwise) the right to appraisal, then, as of the later of (i)
the Effective Time or (ii) the occurrence of such event, such holder's shares
shall be converted automatically into and represent only the right to receive
IMNT Common Stock as provided in Section 1.6, without interest thereon, upon
surrender to the Surviving Corporation of the certificate representing such
shares in accordance with Section 1.11.
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(c) USSC shall give IMNT (i) prompt notice of its receipt of any
written demand for appraisal of shares of USSC Common Stock, withdrawals of such
demands and any other instrument relating to the Merger served in accordance
with the Nevada Code and received by USSC and (ii) the opportunity to
participate in all negotiations and proceedings with respect to demands for
appraisal in accordance with the Nevada Code. USSC shall not, except with the
prior written consent of IMNT or as may be required in accordance with
applicable law, voluntarily make any payment with respect to any demand for
appraisal of USSC Common Stock or offer to settle or settle any such demand.
1.11 Exchange Procedures.
(a) IMNT Common Stock. On the Closing Date, IMNT shall issue or
cause to be issued for exchange in accordance with Section 1.6(a) the aggregate
number of shares of IMNT Common Stock issuable as of the Effective Time in
exchange for issued and outstanding shares of USSC Common Stock as of the
Effective Time
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Surviving Corporation shall cause to be mailed to each
holder of record of a certificate or certificates that immediately before the
Effective Time represented issued and outstanding shares of USSC Common Stock
(the "Certificates") and that were converted into the right to receive shares of
IMNT Common Stock pursuant to Section 1.6, instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing shares
of IMNT Common Stock and cash in lieu of fractional shares. Upon surrender of a
Certificate for cancellation to the Surviving Corporation or to such other agent
or agents as may be appointed by IMNT, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions
contained therein, the holder of such Certificate shall be entitled to receive
in exchange therefor a certificate representing the number of whole shares of
IMNT Common Stock to which such holder is entitled pursuant to Section 1.6 and
cash in lieu of fractional shares to which such holder is entitled pursuant to
Section 1.9, and the Certificate so surrendered shall be canceled. As soon as
practicable after the Effective Time IMNT shall cause to be distributed to such
holder a certificate or certificates (in such denominations as may be requested
by such holder) representing that number of shares of IMNT Common Stock to which
such holder shall be entitled in accordance with the Exchange Ratio, which
certificate or certificates shall be registered in the name of such holder.
(c) Distributions With Respect to Unexchanged Shares of USSC
Common Stock. No dividends or other distributions with respect to IMNT Common
Stock declared or made after the Effective Time and with a record date after the
Effective Time will be paid to the holder of any unsurrendered Certificate with
respect to the shares of IMNT Common Stock represented thereby until the holder
of record of such Certificate surrenders such Certificate. Subject to applicable
law, following surrender of any such Certificate, there shall be paid to the
record holder of the certificates representing whole shares of IMNT Common Stock
issued in exchange therefor, without interest, at the time of such surrender,
the amount of dividends or other distributions with a record date after the
Effective Time theretofore payable (but for the provisions of this Section
1.11(c)) with respect to such whole shares of IMNT Common Stock.
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(d) Transfers of Ownership. If any certificate for shares of IMNT
Common Stock is to be issued pursuant to the Merger in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it shall
be a condition of the issuance thereof that (i) the Certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and that
the Person requesting such exchange shall have paid to IMNT or any agent
designated by it all transfer and other taxes required by reason of the issuance
of a certificate for shares of IMNT Common Stock in any name other than that of
the registered holder of the Certificate surrendered, or it shall have been
established to the satisfaction of IMNT or any agent designated by it that such
taxes have been paid or are not payable, and (ii) the Person surrendering such
Certificate shall provide the Surviving Corporation with an opinion of counsel,
acceptable to the Surviving Corporation, that such transfer does not violate
state or federal securities laws.
(e) No Liability. Notwithstanding anything to the contrary in this
Section 1.11, neither USSC, the Surviving Corporation, nor IMNT shall be liable
to a holder of shares of USSC Common Stock for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
1.12 No Further Ownership Rights in USSC Common Stock. All shares of IMNT
Common Stock issued upon the surrender for exchange of shares of USSC Common
Stock in accordance with the terms of this Agreement (including any cash in lieu
of fractional shares) shall be deemed to have been issued in full and complete
satisfaction of all rights and privileges pertaining to such shares of USSC
Common Stock, and there shall be no additional registration of transfers on the
records of USSC of shares of USSC Common Stock that were issued and outstanding
immediately before the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, such
Certificates shall be canceled and exchanged as provided in this Article 1.
1.13 Lost, Stolen or Destroyed Certificates. In the event that Certificates
have been lost, stolen or destroyed, the Surviving Corporation shall issue or
cause to be issued Certificates representing such shares of IMNT Common Stock
and cash in lieu of fractional shares in exchange for such lost, stolen or
destroyed Certificates, upon the execution and delivery of an affidavit of that
fact by the holder thereof; provided, however, that IMNT may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed Certificates to provide an indemnity against any claim
that may be made against IMNT with respect to the Certificates alleged to have
been lost, stolen or destroyed.
1.14 Tax Consequences. It is intended by the parties that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code.
The parties hereto hereby adopt this Agreement as the "plan of reorganization"
within the meaning of Sections 354(a) and 361(a) of the Code and as described in
Sections 1.368-2(g) and 1.368-3(a) of the Income Tax Regulations.
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1.15 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any such further action is necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of USSC, or to effect the assignment to the Surviving Corporation
of any and all USSC Intellectual Property created by a founder, employee or
consultant of USSC, or to complete and prosecute all domestic and foreign patent
filings related to such USSC Intellectual Property, the officers and directors
of the Surviving Corporation are fully authorized to take, and shall take, all
such lawful and necessary action.
Article 2
REPRESENTATIONS AND WARRANTIES OF USSC
USSC hereby represents and warrants to IMNT, subject to such exceptions as
are specifically disclosed with respect to specific numbered and lettered
sections and subsections of this Article 2 in the disclosure schedule and
schedule of exceptions (the "USSC Disclosure Schedule") delivered herewith and
dated as of the date hereof, and numbered with corresponding numbered and
lettered sections and subsections, as follows:
2.1 Organization and Qualification. USSC is a corporation duly organized,
validly existing and in good standing pursuant to the Laws of the state of its
incorporation and has full and complete corporate power and authority to conduct
its business as now conducted and as currently proposed to be conducted and to
own, use, license and lease its Assets and Properties. USSC is duly qualified,
licensed or admitted to do business and is in good standing as a foreign
corporation in each jurisdiction in which the ownership, use, licensing or
leasing of its Assets and Properties, or the conduct or nature of its business,
makes such qualification, licensing or admission necessary, except for such
failures to be so duly qualified, licensed or admitted and in good standing that
could not reasonably be expected to have a material adverse effect on the
Business or Condition of USSC. Section 2.1 of the USSC Disclosure Schedule sets
forth each jurisdiction where USSC is so qualified, licensed or admitted to do
business and separately lists each other jurisdiction in which USSC owns, uses,
licenses or leases its Assets and Properties, or conducts business or has
employees or engages independent contractors.
2.2 Authority Relative to this Agreement. Subject only to the requisite
approval of the Merger and this Agreement and the transactions contemplated by
this Agreement by the stockholders of USSC, USSC has full corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. USSC's board
of directors has approved this Agreement and declared its advisability. The
execution and delivery by USSC of this Agreement and the consummation by USSC of
the transactions contemplated hereby, and the performance by USSC of its
obligations hereunder, have been duly and validly authorized by all necessary
action by the Board of Directors of USSC and no other action on the part of the
board of directors of USSC is required to authorize the execution, delivery and
performance of this Agreement and the consummation by USSC of the transactions
contemplated hereby. This Agreement has been or will be, as applicable, duly and
validly executed and delivered by USSC and, assuming the due authorization,
execution and delivery hereof by IMNT will constitute a legal, valid and binding
obligation of USSC, enforceable against USSC in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar Laws relating
to the enforcement of creditors' rights generally and by general principles of
equity.
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2.3 Capital Stock.
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(a) The authorized capital stock of USSC consists only of the
following: (i) 50,000,000 shares of Common Stock, $.001 par value per share (the
"USSC Common Stock"), of which 12,292,558 shares of Common Stock are issued and
outstanding as of the date hereof; (ii) 10,000,000 shares of Series A
Convertible Preferred Stock, $.001 par value per share, of which 7,601,854
shares are issued and outstanding as of the date hereof; and (iii) 4,000,000
shares of Series B Convertible Preferred Stock, $.001 par value per share, of
which 3,418,329 shares are issued and outstanding as of the date hereof. The
Series A Convertible Preferred Stock and the Series B Convertible Preferred
Stock shall collectively be referred to herein as the "USSC Preferred Stock".
All of the issued and outstanding shares of USSC Common Stock and USSC Preferred
Stock are validly issued, fully-paid and nonassessable and have been issued in
compliance with all applicable federal, state and foreign securities Laws.
Except as set forth in Section 2.3(a) of the USSC Disclosure Schedule, no shares
of USSC Common Stock or USSC Preferred Stock are held in treasury or are
authorized or reserved for issuance.
(b) Section 2.3(b) of the USSC Disclosure Schedule lists the name,
address and state of residence of each holder of USSC Common Stock (as provided
by such holder to USSC) and the number of shares of USSC Common Stock held by
such holder. Except as disclosed in Section 2.3(b) of the USSC Disclosure
Schedule, there are no other shares of USSC Common Stock issued and outstanding.
(c) With respect to any USSC Common Stock that has been issued and
currently is issued and outstanding subject to a repurchase option on the part
of USSC, Section 2.3(c) of the USSC Disclosure Schedule sets forth the holder
thereof, the number and type of securities subject thereto and the vesting
schedule thereof (including a specific description of the circumstances pursuant
to which such vesting schedule for each such security can or will be
accelerated).
(d) With respect to each USSC Option, USSC Warrant, USSC Stock
Purchase Right, Restricted Stock Purchase Agreement or share of USSC Restricted
Stock or agreements, arrangements or understandings to which USSC is a party
(written or oral) to issue Options or other equity securities with respect to
USSC, Section 2.3(d) of the USSC Disclosure Schedule sets forth the holder
thereof, the number and type of securities issuable thereunder and, if
applicable, the exercise price therefor, the exercise period and vesting
schedule thereof (including a specific description of the circumstances under
which such vesting schedule for each such security can or will be accelerated).
Except as set forth in Section 2.3(d) of the USSC Disclosure Schedule, there are
no outstanding USSC Options, USSC Warrants, USSC Stock Purchase Rights,
Restricted Stock Purchase Agreements or shares of USSC Restricted Stock or
agreements, arrangements or understandings to which USSC is a party (written or
oral) to issue Options with respect to USSC. All of the USSC Options, USSC
Warrants and USSC Stock Purchase Rights were issued in compliance with all
applicable federal, state and foreign securities Laws.
8
(e) Except as set forth in Section 2.3(e) of the USSC Disclosure
Schedule, there are no preemptive rights or agreements, arrangements or
understandings to issue preemptive rights with respect to the issuance or sale
of USSC Common Stock created by statute, the Articles of Incorporation or Bylaws
of USSC, or any agreement or other arrangement to which USSC is a party (written
or oral) or to which USSC is obligated, and there are no agreements,
arrangements or understandings to which USSC is a party (written or oral),
pursuant to which USSC has the right to elect to satisfy any Liability by
issuing USSC Common Stock or Equity Equivalents.
(f) USSC is not a party or subject to any agreement or
understanding, and there is no agreement, arrangement or understanding between
or among Persons that affects, restricts or relates to voting, giving of written
consents, dividend rights or transferability of shares with respect to USSC
Common Stock, including any voting trust agreement or proxy.
(g) Except as set forth in Section 2.3(g) of the USSC Disclosure
Schedule, no debt securities of USSC are issued and outstanding.
2.4 No Subsidiaries. USSC has no (and before the Closing will have no)
Subsidiaries and does not (and before the Closing will not) otherwise hold any
equity, membership, partnership, joint venture or other ownership interest in
any Person.
2.5 Directors and Officers. The names of each director and officer of USSC
on the date hereof, and his or her position with USSC, are listed in Section 2.5
of the USSC Disclosure Schedule.
2.6 No Conflicts. The execution and delivery by USSC of this Agreement does
not, and the performance by USSC of its obligations pursuant to this Agreement
and the consummation of the transactions contemplated hereby do not, and will
not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the Articles of Incorporation or bylaws of
USSC ;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Section 2.6(c) of the
USSC Disclosure Schedule, if any, conflict with or result in a violation or
breach of any Law or Order applicable to USSC or any of its Assets and
Properties; or
(c) except as disclosed in Section 2.6(c) of the USSC Disclosure
Schedule, (i) conflict with or result in a violation or breach of, (ii)
constitute a default (or an event that, with or without notice or lapse of time
or both, would constitute a default) pursuant to, (iii) require USSC to obtain
any consent, approval or action of, make any filing with or give any notice to
any Person as a result or pursuant to the terms of (except for (A) the filing of
the Nevada and Delaware Certificate of Merger, together with the required
officers' certificates; (B) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required pursuant to
applicable state or federal securities laws; and (C) such filings as may be
required pursuant to the HSR Act), (iv) result in or give to any Person any
right of termination, cancellation, acceleration or modification in or with
respect to, (v) result in or give to any Person any additional right or
entitlement to increased, additional, accelerated or guaranteed payments or
performance pursuant to, (vi) result in the creation or imposition of (or the
obligation to create or impose) any Lien upon USSC or any of its Assets and
Properties pursuant to or (vii) result in the loss of any material benefit
pursuant to, any of the terms, conditions or provisions of any Contract or
License to which USSC is a party or by which any of USSC' s Assets and
Properties is obligated.
9
2.7 Books and Records; Organizational Documents. The minute books and stock
record books and other similar records of USSC have been provided or made
available to IMNT or its counsel before the execution of this Agreement, are
complete and correct in all respects and have been maintained in accordance with
reasonable and consistent business practices. Such minute books contain a true
and complete record of all actions taken at all meetings and by all written
consents in lieu of meetings of the directors, stockholders and committees of
the Board of Directors of USSC from the date of USSC's incorporation through the
date hereof. USSC has before the execution of this Agreement delivered to IMNT
true and complete copies of its Articles of Incorporation and Bylaws, both as
amended through the date hereof. USSC is not in violation of any provision of
its Articles of Incorporation or Bylaws.
2.8 USSC Financial Statements.
(a) Section 2.8(a) of the USSC Disclosure Schedule sets forth the
USSC Financials. The USSC Financials delivered to IMNT are correct and complete
in all material respects and have been prepared in accordance with GAAP applied
on a basis consistent throughout the periods indicated and consistent with each
other (except as may be indicated in the notes thereto as delivered to IMNT
before the date hereof, and, in the case of the Interim Financial Statements,
subject to normal year-end adjustments, which adjustments will not be material
in amount or significance). The USSC Financials present fairly and accurately
the financial condition and operating results of USSC as of the dates and during
the periods indicated therein, subject, in the case of the Interim Financial
Statements, to normal year-end adjustments, which adjustments will not be
material in amount or significance and except that the Interim Financial
Statements may not contain footnotes.
(b) Except as set forth in Section 2.8(b) of the USSC Disclosure
Schedule, since January 1, 2003, there has been no change in any accounting
policy, principle, method or practice, including any change with respect to
reserves (whether for bad debts, contingent liabilities or otherwise), of USSC.
2.9 Absence of Changes. Since the Audited Financial Statement Date, except
as set forth in Section 2.9 of the USSC Disclosure Schedule, there has not been
any material adverse effect on the Business or Condition of USSC or any
occurrence or event, which, individually or in the aggregate, could reasonably
be expected to have any material adverse effect on the Business or Condition of
USSC. Without limiting the generality of the foregoing, except as expressly
contemplated by this Agreement and except as disclosed in Section 2.9 of the
USSC Disclosure Schedule, since the Audited Financial Statement Date:
(a) USSC has not entered into any Contract, commitment or
transaction or incurred any Liability outside of the ordinary course of business
consistent with past practice;
10
(b) USSC has not entered into any Contract in connection with any
transaction involving a Business Combination;
(c) there has not been any material amendment or other material
modification (or agreement to do so) or violation of the terms of any of the
Contracts set forth or described in Section 2.18(a) of the USSC Disclosure
Schedule, except as described in Section 2.9(c) of the USSC Disclosure Schedule;
(d) USSC has not entered into any transaction with any officer,
director, stockholder, Affiliate or Associate of USSC, other than (i) pursuant
to any Contract in effect on the Audited Financial Statement Date and disclosed
to IMNT pursuant to (and identified in) Section 2.9(d), Section 2.18(a) or
Section 2.20 of the USSC Disclosure Schedule or (ii) pursuant to any contract of
employment and listed pursuant to Section 2.18(a) of the USSC Disclosure
Schedule;
(e) no Action or Proceeding has been commenced or, to the
knowledge of USSC, threatened by or against USSC ;
(f) USSC has not made or agreed to make any disposition or sale
of, waiver of rights to, license or lease of, or incurrence of any Lien in an
amount exceeding $10,000.00 individually or $25,000.00 in the aggregate, on any
of the Assets and Properties of USSC, other than dispositions of inventory, or
nonexclusive licenses of products to Persons to whom USSC had granted licenses
of its products at the Audited Financial Statement Date, in the ordinary course
of business of USSC consistent with past practice;
(g) USSC has not made or agreed to make any write-off or
write-down, or any determination to write off or write-down, or revalue, any of
the Assets and Properties of USSC, or change any reserve or liability associated
therewith, individually or in the aggregate in an amount exceeding $10,000.00.
(h) USSC has not made or agreed to make payment, discharge or
satisfaction, in an amount in excess of $10,000.00, in any one case, or
$25,000.00 in the aggregate, of any claim, Liability or obligation, other than
the payment, discharge or satisfaction in USSC's ordinary course of business of
Liabilities presented or reserved against in the USSC Financials;
(i) USSC has not failed to pay or otherwise satisfy any Liability
currently due and payable of USSC, except such Liabilities that are being
contested in good faith by appropriate means or procedures and that,
individually or in the aggregate, are immaterial in amount;
(j) USSC has not incurred any Indebtedness or guaranteed any
Indebtedness in an aggregate amount exceeding $25,000.00 or issued or sold debt
securities of USSC or guarantied debt securities of others;
(k) to the knowledge of USSC after consultation with USSC's
independent accountants, USSC has not taken or approved any action, including
the acceleration of vesting of any USSC Option, USSC Warrant or other right to
acquire shares of USSC Common Stock, which could reasonably be expected to
jeopardize the status of the Merger as a tax-free reorganization;
11
(l) USSC has not made any change in accounting policies,
principles, methods, practices or procedures (including for bad debts,
contingent liabilities or otherwise, respecting capitalization or expense of
research and development expenditures, depreciation or amortization rates or
timing of recognition of income and expense);
(m) other than in the ordinary course of business, USSC has not
made any representation or proposal to, or engaged in substantive discussions
with, any of the holders (or their representatives) of any Indebtedness, or to
or with any Person that has issued a letter of credit that benefits USSC ;
(n) USSC has not failed to renew any material insurance policy; no
material insurance policy of USSC has been cancelled or materially amended; and
USSC has given all notices and presented all claims (if any) pursuant to all
such policies in a timely fashion;
(o) there has been no material amendment or non-renewal of any of
USSC's Approvals, and USSC has used commercially reasonable efforts to maintain
such Approvals and has observed in all material respects all Laws and Orders
applicable to the conduct of USSC's business or USSC's Assets and Properties;
(p) USSC has taken all action required to procure, maintain,
renew, extend or enforce any USSC Intellectual Property, including submission of
required documents or fees during the prosecution of patent, trademark or other
applications for Registered Intellectual Property rights;
(q) there has been no physical damage, destruction or other
casualty loss (whether or not insured) affecting any of the real or personal
property or equipment of USSC individually or in the aggregate in an amount
exceeding $25,000.00; and
(r) USSC has not entered into or approved any contract,
arrangement or understanding or acquiesced in respect of any arrangement or
understanding to do, engage in or cause or having the effect of any of the
foregoing, including with respect to any Business Combination not otherwise
restricted by the foregoing paragraphs.
2.10 No Undisclosed Liabilities. Except as presented or reserved against in
the USSC Financials (including the notes thereto) or as disclosed in Section
2.10 of the USSC Disclosure Schedule, there are no Liabilities of, relating to
or affecting USSC or any of USSC's Assets and Properties, other than Liabilities
incurred in the ordinary course of business consistent with past practice since
the Audited Financial Statement Date and in accordance with the provisions of
this Agreement, which, individually and in the aggregate, are not material to
the Business or Condition of USSC and are not for tort or for breach of
contract.
2.11 Taxes. Except as set forth in Section 2.11 of the USSC Disclosure
Schedule:
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(a) All Tax Returns required to have been filed by or with respect
to USSC or any affiliated, consolidated, combined, unitary or similar group of
which USSC is or was a member (a "RELEVANT GROUP") have been duly and timely
filed (including all extensions (if any)), and each such Tax Return correctly
and completely specifies Tax liability and all other information required to be
reported thereon. All such Tax Returns are true, complete and correct in all
material respects. All Taxes due and payable by USSC or any member of a Relevant
Group, whether or not shown on any Tax Return, or claimed to be due by any Tax
Authority, for periods (or portions of periods) contemplated by the USSC
Financials have been paid or accrued on the balance sheet included in the USSC
Financials.
(b) USSC has incurred no material liability for Taxes in the
period after the Audited Financial Statement Date. The unpaid Taxes of USSC (i)
did not, as of the most recent fiscal year end, exceed by any material amount
the reserve for Liability for Income Tax (other than the reserve for deferred
taxes established to accommodate timing differences between book and tax income)
or Other Tax set forth on the face of the most recent balance sheet included in
the USSC Financials and (ii) will not exceed by any material amount such reserve
as adjusted for operations and transactions in the ordinary course of business
through the Closing Date.
(c) USSC is not a party to any agreement extending the time within
which to file any Tax Return. No claim ever has been made by a Taxing Authority
of any jurisdiction in which USSC or any member of any Relevant Group does not
file Tax Returns that USSC or such member is or may be subject to taxation by
that jurisdiction.
(d) USSC and each member of any Relevant Group has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor or independent contractor.
(e) USSC does not have knowledge of any action by any Taxing
Authority in connection with assessing additional Taxes against or in respect of
USSC or any Relevant Group for any past period. There is no dispute or claim
concerning any Tax Liability of USSC either (i) threatened, claimed or raised by
any Taxing Authority or (ii) of which USSC otherwise is aware. There are no
Liens for Taxes on the Assets and Properties of USSC other than Liens for Taxes
not yet due. Section 2.11(e) of the USSC Disclosure Schedule indicates those Tax
Returns, if any, of USSC and each member of any Relevant Group that have been
audited or examined by Taxing Authorities and indicates those Tax Returns of
USSC and each member of any Relevant Group that currently are the subject of
audit or examination. USSC has delivered to IMNT complete and correct copies of
all federal, state, local and foreign income Tax Returns filed by, and all Tax
examination reports and statements of deficiencies assessed against or agreed to
by, USSC and each member of any Relevant Group since the fiscal year ended
December 31, 2002.
(f) There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Return that is required to
be filed by, or that includes or is treated as including, USSC or with respect
to any Tax assessment or deficiency affecting USSC or any Relevant Group.
(g) USSC has not received any written ruling related to Taxes or
entered into any agreement with a Taxing Authority relating to Taxes.
13
(h) USSC has no liability for the Taxes of any Person other than
USSC (i) pursuant to Section 1.1502-6 of the Treasury regulations (or any
similar provision of state, local or foreign Law), (ii) as a transferee or
successor, (iii) by Contract or (iv) otherwise.
(i) USSC (i) neither has agreed to make nor is required to make
any adjustment pursuant to Section 481 of the Code because of a change in
accounting method and (ii) is not a "consenting corporation" within the meaning
of Section 341(f)(1) of the Code.
(j) USSC is not a party to or obligated by any obligation pursuant
to any tax sharing, tax allocation, tax indemnity or similar agreement or
arrangement.
(k) USSC is not involved in, subject to, or a party to any joint
venture, partnership, Contract or other arrangement that is treated as a
partnership for federal, state, local or foreign Income Tax purposes.
(l) USSC was not included and is not includible in the Tax Return
of any Relevant Group with any corporation other than such a return of which
USSC is the common parent corporation.
(m) USSC has not made any payment, is not obligated to make any
payment, nor is a party to any Contract, agreement or arrangement covering any
current or former employee or consultant of USSC that pursuant to certain
circumstances could require USSC to make or result in any payment that is not
deductible as a result of the provisions set forth in Section 280G of the Code
or the treasury regulations thereunder or would result in an excise tax to the
recipient of any such payment pursuant to Section 4999 of the Code.
(n) There currently is no limitation on the utilization of the net
operating losses, built-in losses, capital losses, Tax credits or other similar
items of USSC pursuant to (i) Section 382 of the Code, (ii) Section 383 of the
Code, (iii) Section 384 of the Code and (iv) Section 1502 of the Code and
Treasury regulations promulgated thereunder.
(o) Each material election with respect to income Taxes affecting
USSC is set forth in Section 2.11(o) of the USSC Disclosure Schedule.
(p) USSC is not nor has it ever been a United States real property
holding corporation within the meaning of Section 897(c)(1)(A)(ii) of the Code.
(q) None of the assets of USSC constitutes tax-exempt bond
financed property or tax-exempt use property, within the meaning of Section 168
of the Code. USSC is not a party to any "safe harbor lease" that is subject to
the provisions of Section 168(f)(8) of the Code as in effect before the Tax
Reform Act of 1986 or to any "long-term contract" within the meaning of Section
460 of the Code.
(r) USSC has substantial authority for the treatment of, or has
disclosed (in accordance with Section 6662(d)(2)B)(ii) of the Code) on its
federal income Tax Returns, all items specified on USSC's relevant federal
income Tax Returns that could result in a substantial understatement of federal
income Tax within the meaning of Section 6662(d) of the Code.
14
2.12 Legal Proceedings.
(a) Except as set forth in Section 2.12(a) of the USSC Disclosure
Schedule:
(i) there are no Actions or Proceedings pending or, to the
knowledge of USSC, threatened against, relating to or affecting USSC or any of
its Assets and Properties;
(ii) there are no facts or circumstances known to USSC that could
reasonably be expected to result in any Action or Proceeding against, relating
to or affecting USSC or any of its Assets and Properties;
(iii) USSC has not received notice and otherwise does not have
knowledge of any Order outstanding against USSC; and
(iv) USSC has not received notice and does not otherwise have
knowledge of any defect, dangerous or substandard condition in the products or
materials sold, distributed, or currently proposed to be sold or distributed, by
USSC that could cause bodily injury, sickness, disease, death or damage to
property, or result in loss of use of property, or any claim, litigation, demand
for arbitration or notice seeking damages for bodily injury, sickness, disease,
death, damage to property or loss of use of property.
(b) Before the execution of this Agreement, USSC has delivered to
IMNT all responses of counsel for USSC to auditor's requests for information for
the preceding three (3) years (together with all updates provided by such
counsel (if any)) regarding Actions or Proceedings pending or threatened
against, relating to or affecting USSC. Section 2.12(b) of the USSC Disclosure
Schedule sets forth all Actions or Proceedings relating to or affecting, or, to
the knowledge of USSC, threatened against, USSC or any of its Assets and
Properties during the three (3) year period before the date hereof.
2.13 Compliance with Laws and Orders. Neither USSC nor any of its
directors, officers, Affiliates, agents or employees has violated in any
material respect since the incorporation of USSC, or currently is in default or
violation in any material respect pursuant to, any Law or Order applicable to
USSC or any of its Assets and Properties, and USSC is not aware of any claim of
violation, or of any actual violation, of any of such Laws and Orders by USSC
since the incorporation of USSC.
2.14 Employee Benefit Plans and Employee Matters.
(a) Section 2.14(a) of the USSC Disclosure Schedule sets forth:
(i) the name, current annual compensation amount (including bonus
and commissions), title, current salary or wage amount, accrued bonus, accrued
sick leave, accrued severance pay and accrued vacation benefits for each present
officer, director, employee, independent contractor or consultant of USSC ;
(ii) organizational charts of USSC ;
15
(iii) each collective bargaining, union or other employee
association agreement to which USSC is party or pursuant to which USSC could
have any Liability;
(iv) each employee confidentiality and every other agreement
protecting proprietary processes, formulae or information;
(v) each consulting, independent contractor, employment,
managerial, advisory, change in control, retention, incentive, bonus, severance,
relocation, expatriation, repatriation, visa and work permit agreement,
arrangement and understanding, whether written or oral, between USSC and (i) any
current employee, officer or director of, or any independent contractor or
advisor to, USSC and (ii) any former employee, officer or director of, or any
independent contractor or advisor to, USSC, pursuant to which USSC could have
any Liability (collectively, the "Employment Agreements");
(vi) all reports and plans prepared or adopted pursuant to the
Equal Employment Opportunity Act of 1972, as amended; and
(vii) each Plan.
USSC has no plan or commitment to establish any new Plan or
Employment Agreement, to modify any Plan or Employment Agreement (except to the
extent required by law or to conform any such Plan or Employment Agreement to
the requirements of applicable law, in each case as previously disclosed to IMNT
in writing, or as required by this Agreement) or to adopt or enter into any Plan
or Employment Agreement.
(b) For each Plan, except as set forth in Section 2.14(b) of the
USSC Disclosure Schedule, each of the following is true:
(i) if such Plan is an employee pension benefit plan (as such term
is defined in ERISA Section 3(2)) intended to qualify pursuant to the Code, such
Plan has received at least one favorable determination, opinion, notification or
advisory letter as to its qualification pursuant to the Code (or such a letter
has been or will be applied for before expiration of the applicable remedial
amendment period) from the IRS, and nothing has occurred, whether by action or
failure to act, that would cause the loss of such qualification or that would
result in material costs to USSC pursuant to the IRS's Employee Plans Compliance
Resolution System;
(ii) the financial statements of USSC specify all employee
liabilities arising pursuant to such Plan in a manner satisfying the applicable
requirements of Statement of Financial Accounting Standards Nos. 87, 88, 106,
112, 123 and 132, each as applicable;
(iii) none of USSC, the members of the Controlled Group or any
other party has, with respect to any Plan, engaged in a non-exempt prohibited
transaction, as such term is defined in Code Section 4975 or ERISA Section 406;
(iv) no event has occurred and no condition exists that could
subject USSC or IMNT to any Tax pursuant to Chapter 43 of the Code or to a fine
pursuant to Section 502(c) of ERISA;
16
(v) all contributions, insurance premiums or other payments
required as of the Effective Time have been paid;
(vi) there are no leased employees (as such term is defined in
Section 414(n) of the Code) who must be considered for the requirements of
Section 414(n)(3) of the Code;
(vii) there are no audits, inquiries or proceedings pending or, to
the knowledge of USSC, threatened by the IRS, DOL or other governmental agency
with respect to any Plan; and
(viii) each Plan (including any plan relating to any former
officer, director, employee, independent contractor or consultant of USSC ) can
be amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to USSC or IMNT (other than
ordinary administrative expenses).
(c) For each Plan and Employment Agreement, each of the following
is true and correct:
(i) there are no actions, litigation matters or claims (other than
routine claims for benefits in the ordinary course) pending, or to the knowledge
of USSC, threatened or reasonably anticipated, and to the knowledge of USSC,
there are no facts that could result in any such action, litigation matters or
claim (other than routine claims for benefits in the ordinary course);
(ii) the requirements of ERISA, the Code and all other applicable
laws, orders, rules and regulations have been complied with in all material
respects;
(iii) all forms, documents and other materials have been filed
with the SEC or otherwise distributed as required by the Securities Act or the
Exchange Act or any regulation or rule promulgated thereunder;
(iv) the execution and delivery of this Agreement by USSC and the
consummation of the transactions contemplated hereby, either alone or upon the
occurrence of any additional or subsequent event, will not constitute an event
pursuant to any Plan, Employment Agreement, trust or loan that will or may
result in any payment (whether severance pay, a bonus or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee, director
or officer of, or consultant or advisor, to USSC, except as expressly required
by this Agreement. No payment or benefit that will or may be made by USSC or any
member of its Controlled Group with respect to any such employee, director,
officer, consultant or advisor will be characterized as a "parachute payment"
within the meaning of Section 280G(b)(2) of the Code.
(d) Neither USSC nor any other member of the Controlled Group
sponsors or maintains (or has ever sponsored or maintained) an "employee pension
benefit plan" (within the meaning of Section 3(2) of ERISA) that is subject to
Title IV of ERISA or to the minimum funding requirements of Section 412 of the
Code or Part 3 of Title I of ERISA.
17
(e) Neither USSC nor any other member of the Controlled Group
contributes or is obligated to contribute (or ever has been obligated to
contribute) to a "multiemployer plan" (within the meaning of Section 4001(a)(3)
of ERISA).
(i) No Plan is intended to be an employee stock ownership plan
(within the meaning of Section 4975(e)(7) of the Code) or a tax credit employee
stock ownership plan (within the meaning of Section 409(a) of the Code).
(f) No Plan provides, specifies or represents any liability to
provide retiree life insurance, retiree health or other retiree employee welfare
benefits to any Person for any reason, except as may be required by COBRA or any
other applicable statute, and USSC never has represented, promised or contracted
(whether in oral or written form) to any current or former employee, officer or
director of, or any advisor or consultant to, USSC, either individually or as a
group, or to any other Person that such employee, officer or director of, or any
advisor or consultant to, USSC would be provided with retiree health, life or
other welfare benefit, except to the extent required by applicable law.
2.15 Real Property. USSC does not own any real property.
-------------
2.16 Tangible Personal Property. USSC is in possession of and has good and
marketable title to, or has valid leasehold interests in or valid rights
pursuant to Contract to use, all tangible personal property used in the conduct
of its business, including all tangible personal property specified on USSC
Financials and tangible personal property acquired since the Audited Financial
Statement Date, other than property disposed of since such date in the ordinary
course of business consistent with past practice. Except as disclosed in Section
2.16 of the USSC Disclosure Schedule, all such tangible personal property
(including plant, property and equipment) is free and clear of all Liens and is
adequate and suitable in all material respects for the conduct by USSC of its
business as currently conducted and is in good working order and condition in
all material respects, ordinary wear and tear excepted, and its use complies in
all material respects with all applicable Laws.
2.17 Intellectual Property.
(a) Section 2.17(a) of the USSC Disclosure Schedule lists all of
the USSC Registered Intellectual Property (including all trademarks and service
marks that USSC has used with the intent of creating or benefiting from any
common law right relating to such marks) and lists all proceedings or actions
pending as of the date hereof before any court or tribunal (including the PTO or
equivalent authority anywhere in the world) related to any of the USSC
Registered Intellectual Property.
(b) USSC has all requisite right, title and interest in or valid
and enforceable rights pursuant to Contracts or Licenses to use all USSC
Intellectual Property necessary to the conduct of its business as currently
conducted.
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(i) Except as set forth in Section 2.17(b)(i) of the USSC
Disclosure Schedule, each item of USSC Intellectual Property, including all USSC
Registered Intellectual Property listed in Section 2.17(a) of the USSC
Disclosure Schedule, is owned exclusively by USSC (excluding Intellectual
Property licensed to USSC under any License disclosed pursuant to Section
2.17(f) of the USSC Disclosure Schedule) and is free and clear of all Liens.
Without limiting the generality of the foregoing, USSC owns exclusively all
trademarks, service marks and trade names used by USSC in connection with the
operation or conduct of the business of USSC as currently conducted or as
currently contemplated to be conducted, including the sale of all products or
technology or the provision of any service by USSC; provided, however, that USSC
may use trademarks, service marks and trade names of third parties that are
licensed to USSC, as disclosed in Section 2.17(f) of the USSC Disclosure
Schedule, or that are in the public domain.
(ii) Without limiting the generality of the foregoing, USSC owns
exclusively, and has good title to, each copyrighted work that is a USSC product
and each other work of authorship that USSC otherwise purports to own or is used
by USSC in connection with the operation or conduct of the business of USSC as
currently conducted or provision of services by USSC, other than works disclosed
in Section 2.17(f) of the USSC Disclosure Schedule.
(c) To the extent that any USSC Intellectual Property has been
developed or created by any Person other than USSC, USSC has a written agreement
with such Person with respect thereto, and USSC either (i) has obtained
ownership of, and is the exclusive owner of, all such Intellectual Property by
operation of law or by valid assignment of such rights or (ii) has obtained a
License pursuant to or to such Intellectual Property as disclosed in Section
2.17(f) of the USSC Disclosure Schedule.
(d) Except pursuant to agreements described in Section 2.17(d) of
the USSC Disclosure Schedule, USSC has not transferred ownership of any
Intellectual Property that is or was USSC Intellectual Property to any other
Person.
(e) Except as set forth in Section 2.17(e) of the USSC Disclosure
Schedule, the USSC Intellectual Property constitutes all the Intellectual
Property used in and/or necessary to the conduct of USSC' s business as it
currently is conducted and as is currently contemplated to be conducted,
including the design, development, distribution, marketing, manufacture, use,
import, license and sale of the products, technology and services of USSC
(including products, technology or services currently under development).
(f) Section 2.17(f)(i) of the USSC Disclosure Schedule lists all
Contracts to which USSC is a party that grant licenses to Intellectual Property,
other than Licenses for off-the-shelf, shrink-wrap software or "open source"
code that is commercially available on reasonable terms to any Person for a
license fee of no more than $5,000.00. Except as set forth in Section
2.17(f)(ii) of the USSC Disclosure Schedule, USSC is not in breach of, nor has
it failed to perform pursuant to, any of the foregoing Contracts and Licenses,
and, to USSC' s knowledge, no other party to such Contracts and Licenses is in
material breach of or has failed materially to perform thereunder.
(g) Section 2.17(g)(i) of the USSC Disclosure Schedule lists all
Contracts, Licenses and agreements between USSC and any other Person, other than
Licenses for off-the-shelf, shrink-wrap software or "open source" code that is
commercially available on reasonable terms to any Person for a license fee of no
more than $5,000.00, wherein or whereby USSC has agreed to, or assumed, any
obligation or duty to warrant, indemnify, reimburse, hold harmless, guaranty or
otherwise assume or incur any obligation or Liability or provide a right of
rescission with respect to the infringement or misappropriation by USSC or such
other Person of the Intellectual Property of any Person other than USSC. Except
as set forth in Section 2.17(g)(ii) of the USSC Disclosure Schedule, USSC is not
in breach of, nor has it failed to perform pursuant to, any of the foregoing
Contracts, Licenses and agreements, and, to USSC's knowledge, no other party to
such Contracts, Licenses and agreements is in breach of or has failed to perform
thereunder.
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(h) Except as set forth in Section 2.17(h) of the USSC Disclosure
Schedule, the operation of the business of USSC as currently conducted,
including USSC's design, development, use, import, manufacture and sale of the
products, technology or services (including products, technology or services
currently under development) of USSC, does not (A) infringe or misappropriate
the Intellectual Property of any Person, (B) violate any term or provision of
any License or Contract concerning such Intellectual Property (including any
provision required by or imposed pursuant to 35 U.S.C. Sections 200 through 212,
inclusive, in any License or Contract to which USSC is a party requiring that
products be manufactured substantially in the United States ("Made-in-America
Requirements")), (C) violate the rights of any Person (including rights to
privacy or publicity), or (D) constitute unfair competition or an unfair trade
practice pursuant to any Law; and USSC has not received notice from any Person
claiming that such operation or any act, product, technology or service
(including products, technology or services currently under development) of USSC
infringes or misappropriates the Intellectual Property of any Person or
constitutes unfair competition or trade practices pursuant to any Law, including
notice of third-party patent or other Intellectual Property rights from a
potential licensor of such rights, nor is USSC aware of any basis for any such
claim.
(i) Each item of USSC Registered Intellectual Property is valid
and subsisting, and all necessary registration, maintenance, renewal fees,
annuity fees and taxes in connection with such Registered Intellectual Property
have been paid, and all necessary documents and certificates in connection with
such USSC Registered Intellectual Property have been filed with the relevant
patent, copyright, trademark or other authorities in the United States or
foreign jurisdictions where USSC has filed documents for such purpose, as the
case may be, for the purposes of maintaining such Registered Intellectual
Property. Section 2.17(i)(i) of the USSC Disclosure Schedule lists all actions
that must be taken by USSC within 180 days from the date hereof, including the
payment of any registration, maintenance or renewal fee, annuity fee and tax or
the filing of any document, application or certificate for the purposes of
maintaining, perfecting or preserving or renewing any USSC Registered
Intellectual Property. In each event in which USSC has acquired ownership of any
Intellectual Property right from any Person, USSC has obtained a valid and
enforceable assignment sufficient to transfer irrevocably all rights in such
Intellectual Property (including the right to seek past and future damages with
respect to such Intellectual Property) to USSC and, to the maximum extent
provided for by and required to protect USSC' s ownership rights in and to such
Intellectual Property in accordance with applicable Laws, USSC has recorded each
such assignment of Registered Intellectual Property with the relevant
Governmental or Regulatory Authority, including the PTO, the U.S. Copyright
Office or their respective equivalents in any foreign jurisdiction where USSC
has filed documents for such purpose, as the case may be. To USSC' s knowledge,
there are no facts or circumstances that would render any USSC Registered
Intellectual Property invalid or unenforceable other than as set forth in
Section 2.17(i)(ii) of the USSC Disclosure Schedule. Without limiting the
foregoing, to USSC' s knowledge, no information, materials, facts or
circumstances exist, including any information or fact that would constitute
prior art, that would render any of the USSC Registered Intellectual Property
invalid or unenforceable, or would affect adversely any pending application for
any USSC Registered Intellectual Property. USSC has not misrepresented, or
failed to disclose, and is not aware of any misrepresentation or failure to
disclose, any fact or circumstance in any application for any USSC Registered
Intellectual Property that would constitute fraud or a material
misrepresentation with respect to such application or that otherwise would
affect the validity or enforceability of any USSC Registered Intellectual
Property.
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(j) Except as set forth in Section 2.17(j) of the USSC Disclosure
Schedule, there are no Contracts or Licenses among USSC and any other Person
with respect to USSC Intellectual Property pursuant to which there is any
dispute (or, to USSC's knowledge, facts that may reasonably result in a dispute)
known to USSC, including any dispute or facts that may reasonably result in a
dispute regarding the nature of the Intellectual Property Rights granted in such
Contract or License, or performance pursuant to such Contract or License,
including with respect to any payment to be made or received by USSC thereunder.
(k) No Person is infringing or misappropriating any USSC
Intellectual Property owned by USSC.
(l) Neither this Agreement nor any transaction contemplated by
this Agreement will result in IMNT's or the Surviving Corporation's granting any
right or license with respect to the Intellectual Property of IMNT or the
Surviving Corporation to any Person pursuant to any Contract to which USSC is a
party or by which any of USSC's Assets and Properties is obligated. Neither this
Agreement nor any transaction contemplated by this Agreement will result in the
loss of any ownership or License right of USSC, before the Closing Date, or the
Surviving Corporation, from and after the Closing Date, in any of the USSC
Intellectual Property or require or obligate IMNT or the Surviving Corporation
(i) to grant to any third party any right or license with respect to any USSC
Intellectual Property; or (ii) to pay any royalty or other amount. Neither this
Agreement nor any transaction contemplated by this Agreement will give to any
third party the right to terminate, in whole or in part, any Contract or License
to which USSC is a party with respect to any Intellectual Property, except for
the Contracts or Licenses set forth in Section 2.17(l) of the USSC Disclosure
Schedule.
(m) Section 2.17(m) of the USSC Disclosure Schedule sets forth a
list of (i) all software that USSC has licensed from any third party that is
used by USSC in its products, in providing services or otherwise in its business
(other than off-the-shelf, shrink-wrap software that is commercially available
on reasonable terms to any Person for a license fee of no more than $5,000.00
and (ii) a list of all "freeware," "shareware" and "open source" code
incorporated into any product now or heretofore shipped by USSC. USSC has all
rights necessary to the use of such software, "freeware," "shareware" and "open
source" code.
(n) USSC has taken all necessary and appropriate action to protect
and preserve its exclusive ownership of USSC Intellectual Property. USSC has
secured valid written assignments from all consultants and employees who
contributed to the creation or development of USSC Intellectual Property. In the
event that a consultant is or was concurrently employed by USSC and a third
party, USSC has taken additional action to ensure that any USSC Intellectual
Property developed by such consultant does not belong to such third party or
conflict with such third party's employment agreement.
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2.18 Contracts.
(a) Section 2.18(a) of the USSC Disclosure Schedule (with
paragraph references corresponding to those set forth below) contains a true and
complete list of each of the following Contracts or other arrangements (true and
complete copies of which or, if none, reasonably complete and accurate written
descriptions thereof, together with all amendments and supplements thereto and
all waivers of any of the terms thereof, have been provided to or made available
to IMNT before the execution of this Agreement), to which USSC is a party or by
which any of USSC's Assets and Properties is obligated:
(i) (A) all Contracts to which USSC is a party (excluding Plans)
providing for a commitment of employment or consultant services for a specified
or unspecified term, the name, capacity and amount of compensation of each
Person party to such a Contract and the expiration date of each such Contract;
and (B) all written or unwritten representations, commitments, promises,
communications or courses of conduct involving an obligation of USSC to make
payments (with or without notice, passage of time or both) to any Person in
connection with, or as a consequence of, the transactions contemplated by this
Agreement or to any employee whose identity is disclosed in Section Error!
Reference source not found.(i) of the USSC Disclosure Schedule, other than with
respect to salary or incentive compensation payments in the ordinary course of
business consistent with past practice;
(ii) all Contracts to which USSC is a party with any Person
containing any provision or covenant prohibiting or limiting the ability of USSC
to engage in any business activity or compete with any Person or prohibiting or
limiting the ability of any Person to compete with USSC or prohibiting or
limiting disclosure of confidential or proprietary information;
(iii) all partnership, joint venture, stockholders' or other
similar Contracts to which USSC is a party with any Person;
(iv) all Contracts to which USSC is a party relating to
Indebtedness in an amount of $10,000.00 or more of USSC ;
(v) any trust indenture, mortgage, promissory note, loan agreement
or other Contract for the borrowing of money, any currency exchange, commodities
or other hedging arrangement or any leasing transaction of the type required to
be capitalized in accordance with GAAP;
(vi) all Contracts to which USSC is a party entered into outside
the ordinary course of business (A) with independent contractors, distributors,
dealers, manufacturers' representatives, sales agencies or franchisees; (B) with
aggregators, manufacturers and equipment vendors; and (C) with respect to the
sale of services, products or both, to customers;
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(vii) all guaranties of any Indebtedness made by USSC or other
obligations of USSC to any Person, including, without limitation, any agreement
of guarantie, support, indemnification, assumption or endorsement of, or any
similar commitment with respect to, the obligations, Liabilities or Indebtedness
of any other Person;
(viii) all Contracts to which USSC is a party relating to (A) the
future disposition or acquisition of any of USSC's Assets and Properties with an
aggregate value of $10,000.00 or more and (B) any Business Combination;
(ix) all Contracts between or among USSC, on the one hand, and any
current or former officer, director, stockholder, Affiliate or Associate of USSC
or any Associate of any such officer, director, stockholder or Affiliate, on the
other hand, other than Contracts disclosed pursuant to Section 2.20(a)(i);
(x) all collective bargaining or similar labor contracts to which
USSC is a party;
(xi) all Contracts to which USSC is a party that (A) limit or
contain restrictions on the ability of USSC to declare or pay dividends on, to
make any other distribution in respect of, or to issue or purchase, redeem or
otherwise acquire, its capital stock, to incur Indebtedness, to incur or permit
to exist any Lien, to purchase or sell any of the Assets and Properties, to
change the lines of business in which it participates or engages; (B) require
USSC to maintain specified financial ratios or amounts of net worth or other
indicia of financial condition; or (C) require USSC to maintain insurance in
certain amounts or with certain coverages;
(xii) any Contract to which USSC is a party that expires or may be
renewed at the option of any Person other than USSC, so as to expire more than
one year after the date of this Agreement;
(xiii) any Contract to which USSC is a party that is not
terminable by USSC upon 30 days (or less) notice by USSC without penalty or
obligation to make payments because of such termination and that (i) requires
payments by USSC in excess of $10,000.00 (either alone or pursuant to a series
of related contracts) or (ii) requires USSC (or the Surviving Corporation) to
provide services to any Person after the Closing;
(xiv) all powers of attorney and comparable delegations of
authority; and
(xv) all other Contracts not otherwise required to be disclosed
above in Section 2.18(a) of the USSC Disclosure Schedule that are material to
the Business or Condition of USSC.
(b) Each Contract required to be disclosed in Section 2.18(a) of
the USSC Disclosure Schedule is in full force and effect and constitutes a
legal, valid and obligating agreement, enforceable in accordance with its terms,
and, to the knowledge of USSC, each other party thereto; and, except as
disclosed in Section 2.18(b) of the USSC Disclosure Schedule, to the knowledge
of USSC, no other party to such Contract is, nor has received notice that it is,
in violation or breach of or default pursuant to any such Contract (or with
notice or lapse of time or both, would be in violation or breach of or default
pursuant to any such Contract).
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(c) Except as disclosed in Section 2.18(c) of the USSC Disclosure
Schedule, USSC is not a party to or obligated by any Contract that has been or
could reasonably be expected to be, individually or in the aggregate with any
other similar Contract, materially adverse to the Business or Condition of USSC
as currently conducted or as currently proposed to be conducted or that has been
or could reasonably be expected to result, individually or in the aggregate with
any of such other Contracts, in Losses to USSC or be materially adverse to the
Business or Condition of USSC as currently conducted or as currently proposed to
be conducted.
(d) Except as disclosed in Section 2.18(d) of the USSC Disclosure
Schedule, USSC is not a party to or obligated by any Contract that (i)
automatically terminates or allows termination by the other party thereto upon
consummation of the transactions contemplated by this Agreement or (ii) contains
any covenant or other provision that limits USSC's ability to compete with any
Person in any line of business or in any area or territory.
2.19 Insurance.
(a) Section 2.19(a) of the USSC Disclosure Schedule contains a
true and complete list (including the names and addresses of the insurers, the
expiration dates thereof, the annual premiums and payment terms thereof, the
periods of time for which the applicable insurance is provided and a brief
description of the interests insured thereby) of all liability, property,
workers' compensation, directors' and officers' liability and other insurance
policies currently in effect that insure any of the business, operations or
employees of USSC or affect or relate to the ownership, use or operation of any
of the Assets and Properties of USSC and that (i) have been issued to USSC or
(ii) to the knowledge of USSC, have been issued to any Person (other than USSC )
for the benefit of USSC. The insurance provided by the policies set forth in
Section 2.19(a) of the USSC Disclosure Schedule will not terminate or lapse by
reason of any of the transactions contemplated by this Agreement. Each policy
listed in Section 2.19(a) of the USSC Disclosure Schedule is valid and binding
and in full force and effect, all premiums due thereunder have been paid when
due, and neither USSC nor the Person to whom such policy has been issued has
received any notice of cancellation or termination in respect of any such policy
or is in default thereunder, and USSC has no knowledge of any reason or state of
facts that could reasonably be expected to result in the cancellation of such
policies or of any threatened termination of, or material premium increase with
respect to, any of such policies. The insurance policies listed in Section
2.19(a) of the USSC Disclosure Schedule, (i) considering the business, location,
operations and Assets and Properties of USSC, are in amounts and have coverages
that are reasonable and customary for Persons engaged in similar businesses and
operations and having similar Assets and Properties and (ii) are in amounts and
have coverages as required by any Contract to which USSC is a party or by which
any of the Assets and Properties of USSC is obligated.
(b) Section 2.19(b) of the USSC Disclosure Schedule contains a
list of all claims made pursuant to any insurance policy insuring USSC in the
last 2 years. USSC has not received notice that any insurer pursuant to any
policy listed (or required to be listed) in Section 2.19(b) of the USSC
Disclosure Schedule is denying, disputing or questioning liability with respect
to a claim thereunder or defending under a reservation of rights clause. USSC
has, in the reasonable judgment of USSC, considering its business, location,
operations and Assets and Properties, maintained, at all times, without
interruption, appropriate insurance, both in nature and amount of coverages.
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2.20 Affiliate Transactions.
(a) Except as disclosed in Section 2.9(d) or Section 2.20(a) of
the USSC Disclosure Schedule, (i) there are no Contracts or Liabilities between
USSC, on the one hand, and (A) any current or former officer, director,
stockholder or, to USSC' s knowledge, any Affiliate or Associate of USSC or (B)
any Person who, to USSC's knowledge, is an Associate of any such officer,
director, stockholder or Affiliate, on the other hand; (ii) USSC does not
provide or cause to be provided any asset, service or facility to any such
current or former officer, director, stockholder, Affiliate or Associate; (iii)
neither USSC nor any such current or former officer, director, stockholder,
Affiliate or Associate provides or causes to be provided any asset, service or
facility to USSC; and (iv) USSC does not beneficially own, directly or
indirectly, any Investment Asset of any such current or former officer,
director, stockholder, Affiliate or Associate.
(b) Except as disclosed in Section 2.20(b) of the USSC Disclosure
Schedule, each of the Contracts and Liabilities listed in Section 2.20(a) of the
USSC Disclosure Schedule was entered into or incurred, as the case may be, on
terms no less favorable to USSC (in the reasonable judgment of USSC ) than if
such Contract or Liability was entered into or incurred on an arm's length basis
on competitive terms. Any Contract to which USSC is a party and in which any
director of USSC has a financial interest in such Contract was approved by a
majority of the disinterested members of the Board of Directors of USSC or
stockholders of USSC, as the case may be, in accordance with Section 310 of the
Nevada Code.
2.21 Employees; Labor Relations.
(a) USSC is not a party to any collective bargaining agreement,
and there is no unfair labor practice or labor arbitration proceeding pending
with respect to USSC, or, to the knowledge of USSC, threatened, and there are no
facts or circumstances known to USSC that could reasonably be expected to result
in any such complaint or claim. To the knowledge of USSC, there are no
organizational efforts currently underway or threatened involving any employee
of USSC or any of the employees performing work for USSC but provided by an
outside employment agency, if any. There has been no work stoppage, strike or
other concerted action by employees of USSC.
(b) Since January 1, 2003, there have been no federal or state
claims based on sex, sexual or other harassment, age, disability, race or other
discrimination or common law claims, including claims of wrongful termination,
by any employee of USSC or by any of the employees performing work for USSC but
provided by an outside employment agency, and there are no facts or
circumstances known to USSC that could reasonably be expected to result in any
such complaint or claim. USSC has complied in all material respects with all
laws related to the employment of employees, and, except as set forth in Section
2.21(b) of the USSC Disclosure Schedule, since January 1, 2003, USSC has not
received any notice of any claim that it has not complied in any material
respect with any Law relating to the employment of employees, including any
provision thereof relating to wages, hours, collective bargaining, the payment
of social security and similar taxes, equal employment opportunity, employment
discrimination, the WARN Act, employee safety, or that USSC is liable for any
arrearage of wages or any tax or penalty for failure to comply with any of the
foregoing.
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(c) USSC has no written policies or employee handbooks or manuals,
except as described in Section 2.21(c) of the USSC Disclosure Schedule. True and
correct copies of all of such written policies or employee handbooks or manuals
have been provided to IMNT.
(d) To the knowledge of USSC, no officer, employee or consultant
of USSC is obligated pursuant to any Contract or other agreement or subject to
any Order or Law that would interfere with USSC's business as currently
conducted or as reasonably contemplated to be conducted. Neither the execution
nor the delivery of this Agreement nor the conduct of USSC's business as
currently conducted or as reasonably contemplated to be conducted, nor any
activity of such officers, employees or consultants of USSC in connection with
the conduct of USSC's business as currently conducted or as reasonably
contemplated to be conducted, will conflict with or result in a breach of the
terms, conditions or provisions of, constitute a default pursuant to or cause to
occur a condition precedent to any right pursuant to any Contract or other
agreement under which any of such officers, employees or consultants currently
is obligated.
(e) Each current and former employee, officer, independent
contractor and consultant of USSC has executed a Proprietary Information and
Inventions Agreement. No current or former employee, officer, independent
contractor or consultant of USSC has excluded works or inventions with USSC from
his or her assignment of inventions pursuant to such employee's, officer's or
consultant's Proprietary Information and Inventions Agreement.
2.22 Environmental Matters. Except as set forth in Section 2.22 of the
USSC Disclosure Schedule:
(a) USSC possesses any and all Environmental Permits necessary to
or required for the operation of its business as currently conducted or as
reasonably contemplated to be conducted. USSC will obtain, before the Closing,
any Environmental Permit that must be obtained as of or immediately after the
Closing in order for the Surviving Corporation to conduct the business of USSC
as it was conducted before the Closing.
(b) USSC is in compliance with (i) all terms, conditions and
provisions of its Environmental Permits and (ii) all Environmental Laws.
(c) Neither USSC nor any predecessor of USSC nor any entity
previously owned by USSC has received any notice of alleged, actual or potential
responsibility for, or any inquiry regarding, (i) any Release or threatened or
suspected Release of any Hazardous Material or (ii) any violation of
Environmental Law, and there is no outstanding civil, criminal or administrative
investigation, action, litigation, hearing or proceeding pending or threatened
against USSC pursuant to any Environmental Law.
26
(d) Neither USSC nor any predecessor of USSC nor any entity
previously owned by USSC has any obligation or liability with respect to any
Hazardous Material, including any Release or threatened or suspected Release of
any Hazardous Material and any violation of Environmental Law, and there have
been no events, facts or circumstances that could form the basis of any such
obligation or liability.
(e) No Releases of Hazardous Materials have occurred at, from, in,
to, on or under any Site, and no Hazardous Material is present in, on, about or
migrating to or from any Site.
(f) Neither USSC, nor any predecessor of USSC, nor any entity
previously owned by USSC, has transported or arranged for the treatment,
storage, handling, disposal or transportation of any Hazardous Material at, from
or to any site or other location.
(g) No Site is a current or proposed Environmental Clean-up Site.
(h) There are no Liens pursuant to any Environmental Law on any
Site.
(i) There is no (i) underground storage tank, active or abandoned,
(ii) polychlorinated biphenyl containing equipment, (iii) asbestos-containing
material, (iv) radon, (v) lead-based paint or (vi) urea formaldehyde at any
Site. Each underground storage tank satisfies all current applicable upgrade
requirements.
(j) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted with respect to any Site that
have not been delivered to IMNT before execution of this Agreement.
(k) USSC is not a party, whether as a direct signatory or as
successor, assign, third-party beneficiary, guarantor or otherwise, to, and is
not otherwise obligated by, any lease or other contract pursuant to which USSC
is obligated or may be obligated by any representation, warranty, covenant,
restriction, indemnification or other undertaking regarding Hazardous Materials
or pursuant to which any other Person is or has been released regarding
Hazardous Materials.
(l) USSC and any predecessor of USSC and any entity previously
owned by USSC have provided all notifications and warnings, made all reports and
kept and maintained all records required pursuant to Environmental Laws.
2.23 Substantial Customers and Suppliers. Section 2.23(a) of the USSC Disclosure
Schedule lists the 10 largest customers of USSC, collectively, on the basis of
revenues collected or accrued for the most recent complete fiscal year. Section
2.23(b) of the USSC Disclosure Schedule lists the 5 largest suppliers of USSC on
the basis of cost of goods or services purchased for the most recent fiscal
year. Except as disclosed in Section 2.23(c) of the USSC Disclosure Schedule, no
such customer or supplier has ceased or materially reduced its purchases from or
sales or provision of services to USSC since January 1, 2003, or, to the
knowledge of USSC, has threatened to cease or materially reduce such purchases
or sales or provision of services after the date hereof. Except as disclosed in
Section 2.23(d) of the USSC Disclosure Schedule, to the knowledge of USSC, no
such customer or supplier is threatened with bankruptcy or insolvency.
27
2.24 Accounts Receivable. Except as set forth in Section 2.24 of the USSC
Disclosure Schedule, the accounts and notes receivable of USSC specified on the
USSC Financials and all accounts and notes receivable accruing after the
Financial Statement Date (a) have resulted from bona fide sales transactions in
the ordinary course of business, consistent with past practice, and are payable
on ordinary trade terms; (b) are legal, valid and binding obligations of the
respective debtors, enforceable in accordance with their respective terms; (c)
are not subject to any valid set-off or counterclaim; and (d) do not represent
obligations for goods sold on consignment, on approval or on a sale-or-return
basis or subject to any other repurchase or return arrangement.
2.25 Inventory. All inventory of USSC specified on the balance sheet included in
the USSC Financials consisted, and all such inventory acquired since the Audited
Financial Statement Date consists, of a quality and quantity usable and salable
in the ordinary course of business as currently conducted or as reasonably
contemplated to be conducted. Except as disclosed in the notes to the USSC
Financials or in Section 2.25 of the USSC Disclosure Schedule, all items
included in the inventory of USSC are the property of USSC, free and clear of
any Lien, have not been pledged as collateral, are not held by USSC on
consignment from others and conform in all material respects to all standards
applicable to such inventory or its use or sale imposed by Governmental or
Regulatory Authorities.
2.26 Other Negotiations; Brokers; Third Party Expenses.
(a) Neither USSC nor any of its officers, directors, employees,
agents or, to the knowledge of USSC, any of its stockholders or Affiliates (nor
any investment banker, financial advisor, attorney, accountant or other Person
retained by or acting for or on behalf of USSC or any such Affiliate) (i) has
entered into any Contract that conflicts with any of the transactions
contemplated by this Agreement or (ii) has entered into any Contract or had any
discussion with any Person regarding any transaction involving USSC that could
result in IMNT, USSC or any general partner, limited partner, manager, officer,
director, employee, agent or Affiliate of any of them being subject to any claim
for liability to such Person as a result of entering into this Agreement or
consummating the transactions contemplated by this Agreement.
(b) No broker, investment banker, financial advisor or other
Person is entitled to any broker's, finder's, financial advisor's or similar fee
or commission in connection with this Agreement and the transactions
contemplated by this Agreement based on arrangements made by or on behalf of
USSC.
(c) Section 2.26 of the USSC Disclosure Schedule sets forth the
principal terms and conditions of any Contract with respect to, and a reasonable
estimate of, all Third Party Expenses expected to be incurred by USSC in
connection with the negotiation and effectuation of the terms and conditions of
this Agreement and the transactions contemplated hereby ("Estimated Third Party
Expenses").
28
2.27 Banks and Brokerage Accounts. Section 2.27 of the USSC Disclosure
Schedule sets forth (a) a true and complete list of the names and locations of
all banks, trust companies, securities brokers and other financial institutions
at which USSC has an account or safe deposit box or maintains a banking,
custodial, trading or other similar relationship; (b) a true and complete list
and description of each such account, box and relationship, indicating in each
case the account number and the names of the respective officers, employees,
agents or other similar representatives of USSC having signatory power with
respect thereto; and (c) a list of each Investment Asset, the name of the record
and beneficial owner thereof, the location of the certificates therefor, if any,
the maturity date, if any, and all stock or bond powers or other authority for
transfer granted with respect thereto if any.
2.28 Warranty Obligations.
(a) Section 2.28(a) of the USSC Disclosure Schedule sets forth (i)
a list of all forms of written warranties, guarantees and written warranty
policies of USSC in respect of any of USSC' s products and services, which
currently are in effect (the "Warranty Obligations"), and the duration of each
such Warranty Obligation; (ii) each of the Warranty Obligations that is subject
to any dispute or, to the knowledge of USSC, threatened dispute; and (iii) the
experience of USSC with respect to warranties, guarantees and warranty policies
of or relating to USSC' s products and services. True and correct copies of the
Warranty Obligations have been delivered to IMNT before the execution of this
Agreement.
(b) Except as disclosed in Section 2.28(b) of the USSC Disclosure
Schedule, (i) there has not been any material deviation from the Warranty
Obligations, and no salesperson, employee or agent of USSC is authorized to
undertake obligations to any customer or other Person in excess of such Warranty
Obligations, and (ii) the balance sheet included in the Interim Financial
Statements specifies adequate reserves for Warranty Obligations. All products
manufactured, designed, licensed, leased, rented or sold by USSC (A) are and
were free from material defects in construction and design and (B) satisfy any
and all Contract or other specifications related thereto to the extent stated in
writing in such Contracts or specifications, in each case, in all material
respects.
2.29 Foreign Corrupt Practices Act. Neither USSC nor, to the knowledge of
USSC, any agent, employee or other Person associated with or acting on behalf of
USSC has, directly or indirectly, used corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns
from corporate funds, violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment,
kickback or other similar unlawful payment.
2.30 Tax-Free Reorganization. To the knowledge of USSC after consultation
with USSC' s tax advisors, neither USSC nor any of its directors, officers or
stockholders has taken any action that could reasonably be expected to
jeopardize the status of the Merger as a "reorganization" within the meaning of
Section 368(a) of the Code.
29
2.31 Financial Projections(a) . USSC has made available to IMNT certain
financial projections with respect to USSC's business, which projections were
prepared for internal use only. USSC makes no representation or warranty
regarding the accuracy of such projections or as to whether such projections
will be achieved, except that USSC represents and warrants that such projections
were prepared in good faith and are based on assumptions believed by USSC to be
reasonable as of the date of preparation of such projections and of this
Agreement.
2.32 Approvals.
(a) Section 2.32(a) of the USSC Disclosure Schedule contains a
list of all material Approvals of Governmental or Regulatory Authorities
relating to the business conducted by USSC that are required to be given to or
obtained by USSC from any and all Governmental or Regulatory Authorities in
connection with the consummation of the transactions contemplated by this
Agreement (other than the filing of the Delaware and Nevada Certificate of
Merger, together with the required officers' certificates, and such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under state or federal securities laws).
(b) Section 2.32(b) of the USSC Disclosure Schedule contains a
list of all material Approvals that are required to be given to or obtained by
USSC from any and all third parties other than Governmental or Regulatory
Authorities in connection with the consummation of the transactions contemplated
by this Agreement.
(c) All material Approvals from Governmental or Regulatory
Authorities necessary to conduct the business conducted by USSC as such business
is being conducted currently are set forth in Section 2.32(c)(1) of the USSC
Disclosure Schedule. Except as set forth in Section 2.32(c)(2) of the USSC
Disclosure Schedule, USSC has obtained all material Approvals from Governmental
or Regulatory Authorities necessary to conduct the business conducted by USSC in
the manner as such business is being conducted currently, and there has been no
written notice received by USSC of any material violation or material
non-compliance with any of such Approvals.
(d) Assuming all the currently issued and outstanding USSC
Preferred Stock is converted into USSC Common Stock prior to the Closing, the
affirmative vote or consent of the holders of a majority of the shares of USSC
Common Stock issued and outstanding as of the applicable record date, voting
separately as a class, are the only votes of the holders of any of USSC Capital
Stock necessary to approve this Agreement, the Merger and the transactions
contemplated by this Agreement.
2.33 Information Statement. The information supplied by USSC for inclusion
in the information statement to be sent to the stockholders of USSC in
connection with USSC stockholders' consideration of the Merger (the "USSC
Stockholder Action") (such information statement as amended or supplemented is
referred to herein as the "Information Statement") shall not, on the date on
which the Information Statement first is mailed to USSC's stockholders, at the
time of the USSC Stockholder Action and at the Effective Time contain any
information that, at such time, is false or misleading with respect to any
30
material fact, or omit to specify any material fact necessary in order to make
the information specified therein, considering the circumstances pursuant to
which that information is furnished, not false or misleading; or omit to specify
any material fact necessary to correct any information in any earlier
communication with respect to the solicitation of proxies or written consents
for the USSC Stockholder Action that has become false or misleading.
Notwithstanding the foregoing, USSC makes no representation, warranty or
covenant with respect to any information supplied by IMNT that is contained in
the Information Statement.
2.34 No Solicitation. Since January 1, 2003, USSC has not taken, nor has
USSC permitted any of USSC's officers, directors, employees, stockholders,
attorneys, investment advisors, agents, representatives, Affiliates or
Associates (collectively, "Representatives") to take (directly or indirectly),
any of the actions prohibited from being taken on or after the date of this
Agreement by Section 4.2 with any Person other than IMNT and its designees.
2.35 Disclosure. No representation or warranty made by USSC contained in
this Agreement, and no information contained in the USSC Disclosure Schedule or
in any certificate, list or other writing furnished to IMNT pursuant to any
provision of this Agreement (including the USSC Financials and the notes
thereto) contains any untrue information or fails to specify any information
necessary in order to make the information herein or therein, considering the
circumstances pursuant to which such information was furnished, not misleading.
USSC has provided IMNT with all of the Contracts and Licenses heretofore
requested on behalf of IMNT in writing and all other material information
concerning USSC in the possession, custody or control of USSC.
Article 3
REPRESENTATIONS AND WARRANTIES OF IMNT
IMNT hereby represents and warrants to USSC, subject to such exceptions as
are specifically disclosed with respect to specific numbered and lettered
sections and subsections of this Article 3 in the disclosure schedule and
schedule of exceptions (the "IMNT Disclosure Schedule") delivered herewith and
dated as of the date hereof, and numbered with corresponding numbered and
lettered sections and subsections.
3.1 Organization. IMNT is a corporation duly organized, validly existing
and in good standing pursuant to the Laws of the state of its incorporation and
has full and complete corporate power and authority to conduct its business as
now conducted and as currently proposed to be conducted and to own, use, license
and lease its Assets and Properties. IMNT is duly qualified, licensed or
admitted to do business and is in good standing as a foreign corporation in each
jurisdiction in which the ownership, use, licensing or leasing of its Assets and
Properties, or the conduct or nature of its business, makes such qualification,
licensing or admission necessary, except for such failures to be so duly
qualified, licensed or admitted and in good standing that could not reasonably
be expected to have a material adverse effect on the Business or Condition of
IMNT. Section 2.1 of the IMNT Disclosure Schedule sets forth each jurisdiction
where IMNT is so qualified, licensed or admitted to do business and separately
lists each other jurisdiction in which IMNT owns, uses, licenses or leases its
Assets and Properties, or conducts business or has employees or engages
independent contractors.
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3.2 Authority Relative to this Agreement. Subject only to the requisite
approval of the merger and this Agreement and the transactions contemplated by
this Agreement by the stock- holders of IMNT, IMNT has full corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery by IMNT of this Agreement and the consummation by IMNT of the
transactions contemplated hereby have been duly and validly authorized by all
necessary action by the board of directors of IMNT, and no other action on the
part of the Board of Directors of IMNT is required to authorize the execution,
delivery and performance of this Agreement and the consummation by IMNT of the
transactions contemplated hereby. This Agreement has been or will be, as
applicable, duly and validly executed and delivered by IMNT and, assuming the
due authorization, execution and delivery hereof by USSC constitutes or will
constitute, as applicable, a legal, valid and binding obligation of IMNT
enforceable against IMNT in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar Laws relating to the
enforcement of creditors' rights generally and by general principles of equity.
3.3 Issuance of IMNT Common Stock(a) .
(a) The authorized capital stock of IMNT consists only of 50,000,000 shares
of Common Stock, par value $.00001 per share (the "IMNT Common Stock"), of which
10,000,000 shares of Common Stock are issued and outstanding as of the date
hereof and 5,000,0000 shres of Preferred Stock, par value $.00001 per share, of
which none are issued and outstanding as of the date hereof. All of the issued
and outstanding shares of IMNT Common Stock and IMNT Preferred Stock are validly
issued, fully-paid and nonassessable and have been issued in compliance with all
applicable federal, state and foreign securities Laws. Except as set forth in
Section 2.3(a) of the IMNT Disclosure Schedule, no shares of IMNT Common Stock
or IMNT Preferred Stock are held in treasury or are authorized or reserved for
issuance.
(b) Section 2.3(b) of the IMNT Disclosure Schedule lists the name,
address and state of residence of each holder of IMNT Common Stock (as provided
by such holder to IMNT) and the number of shares of IMNT Common Stock held by
such holder. Except as disclosed in Section 2.32.3(b) of the IMNT Disclosure
Schedule, there are no other shares of IMNT Common Stock issued and outstanding.
(c) With respect to any IMNT Common Stock that has been issued and
currently is issued and outstanding subject to a repurchase option on the part
of IMNT, Section 2.3(c) of the IMNT Disclosure Schedule sets forth the holder
thereof, the number and type of securities subject thereto and the vesting
schedule thereof (including a specific description of the circumstances pursuant
to which such vesting schedule for each such security can or will be
accelerated).
(d) With respect to each IMNT Option, IMNT Warrant, IMNT Stock
Purchase Right, Restricted Stock Purchase Agreement or share of IMNT Restricted
Stock or agreements, arrangements or understandings to which IMNT is a party
(written or oral) to issue Options or other equity securities with respect to
IMNT, Section 2.3(d) of the IMNT Disclosure Schedule sets forth the holder
thereof, the number and type of securities issuable thereunder and, if
applicable, the exercise price therefor, the exercise period and vesting
schedule thereof (including a specific description of the circumstances under
which such vesting schedule for each such security can or will be accelerated).
32
Except as set forth in Section 2.3(d) of the IMNT Disclosure Schedule, there are
no outstanding IMNT Options, IMNT Warrants, IMNT Stock Purchase Rights,
Restricted Stock Purchase Agreements or shares of IMNT Restricted Stock or
agreements, arrangements or understandings to which IMNT is a party (written or
oral) to issue Options with respect to IMNT. All of the IMNT Options, IMNT
Warrants and IMNT Stock Purchase Rights were issued in compliance with all
applicable federal, state and foreign securities Laws.
(e) Except as set forth in Section 2.3(e) of the IMNT Disclosure
Schedule, there are no preemptive rights or agreements, arrangements or
understandings to issue preemptive rights with respect to the issuance or sale
of IMNT Common Stock created by statute, the Articles of Incorporation or Bylaws
of IMNT, or any agreement or other arrangement to which IMNT is a party (written
or oral) or to which IMNT is obligated, and there are no agreements,
arrangements or understandings to which IMNT is a party (written or oral),
pursuant to which IMNT has the right to elect to satisfy any Liability by
issuing IMNT Common Stock or Equity Equivalents.
(f) The terms of the IMNT Stock Option Plan and the applicable
stock option agreements related to the outstanding IMNT Options permit the
assumption or substitution of options to purchase IMNT Common Stock as provided
in this Agreement, without the consent or approval of the holders of such
securities, IMNT Stockholder Action or otherwise and without any acceleration of
the exercise schedule or vesting provisions in effect for those IMNT Options.
True and complete copies of all agreements and instruments relating to or issued
under the IMNT Stock Option Plan have been provided to IMNT, and such agreements
and instruments have not been amended, modified or supplemented, and there are
no agreements to amend, modify or supplement such agreements or instruments in
any case from the form provided to IMNT.
(g) Except for the Support Agreements, IMNT is not a party or
subject to any agreement or understanding, and there is no agreement,
arrangement or understanding between or among Persons that affects, restricts or
relates to voting, giving of written consents, dividend rights or
transferability of shares with respect to IMNT Common Stock, including any
voting trust agreement or proxy.
(h) Except as set forth in Section 2.32.3(g) of the IMNT Disclosure
Schedule, no debt securities of IMNT are issued and outstanding.
3.4 Subsidiaries and Equity Investments. IMNT has no (and before the
Closing will have no) Subsidiaries and does not (and before the Closing will
not) otherwise hold any equity, membership, partnership, joint venture or other
ownership interest in any Person.
3.5 No Conflicts. The execution and delivery by IMNT of this Agreement does
not, and the performance by IMNT of its obligations under this Agreement and the
consummation of the transactions contemplated by this Agreement do not and will
not:
33
(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the Certificate of Incorporation or Bylaws of IMNT;
(b) conflict with or result in a violation or breach of any Law or Order
applicable to IMNT or its Assets or Properties; or
(c) except as would not have a material adverse effect on the Business or
Condition of IMNT, (i) conflict with or result in a violation or breach of, (ii)
constitute a default (or an event that, with or without notice or lapse of time
or both, would constitute a default)pursuant to, (iii) require IMNT to obtain
any consent, approval or action of, make any filing with or give any notice to
any Person as a result of the terms of (except for (A) the filing of the
Delaware Certificate of Merger and the Nevada Certificate of Merger, together
with the required officers' certificates; (B) such consents approvals, orders,
authorizations, registrations, declarations and filings as may be required
pursuant to applicable state or federal securities laws; and (C) such filings as
may be required pursuant to the HSR Act), (iv) result in or give to any Person
any right of termination, cancellation, acceleration or modification in or with
respect to, (v) result in or give to any person any additional right or
entitlement to increased, additional, accelerated or guaranteed payments or
performance pursuant to, (vi) result in the creation or imposition of (or the
obligation to create or impose) any Lien upon IMNT or any of its Assets or
Properties, or (vii) result in the loss of a material benefit pursuant to , any
of the terms, conditions or provisions of any Contract or License to which IMNT
is a party or by which any of its Assets and Properties is obligated.
3.6 Books and Records; Organizational Documents. The minute books and stock
record books and other similar records of IMNT have been provided or made
available to IMNT or its counsel before the execution of this Agreement, are
complete and correct in all respects and have been maintained in accordance with
reasonable and consistent business practices. Such minute books contain a true
and complete record of all actions taken at all meetings and by all written
consents in lieu of meetings of the directors, stockholders and committees of
the Board of Directors of IMNT from the date of IMNT's incorporation through the
date hereof. IMNT has before the execution of this Agreement delivered to IMNT
true and complete copies of its Articles of Incorporation and Bylaws, both as
amended through the date hereof. IMNT is not in violation of any provision of
its Articles of Incorporation or Bylaws.
3.7 Legal Proceedings.
(a) Except as set forth in Section 2.12(a) of the IMNT Disclosure Schedule:
(i) there are no Actions or Proceedings pending or, to the
knowledge of IMNT, threatened against, relating to or affecting IMNT or any of
its Assets and Properties;
(ii) there are no facts or circumstances known to IMNT that could
reasonably be expected to result in any Action or Proceeding against, relating
to or affecting IMNT or any of its Assets and Properties;
(iii) IMNT has not received notice and otherwise does not have
knowledge of any Order outstanding against IMNT; and
34
(iv) IMNT has not received notice and does not otherwise have
knowledge of any defect, dangerous or substandard condition in the products or
materials sold, distributed, or currently proposed to be sold or distributed, by
IMNT that could cause bodily injury, sickness, disease, death or damage to
property, or result in loss of use of property, or any claim, litigation, demand
for arbitration or notice seeking damages for bodily injury, sickness, disease,
death, damage to property or loss of use of property.
(b) Before the execution of this Agreement, IMNT has delivered to IMNT all
responses of counsel for IMNT to auditor's requests for information for the
preceding three (3) years (together with all updates provided by such counsel
(if any)) regarding Actions or Proceedings pending or threatened against,
relating to or affecting IMNT. Section 2.12(b) of the IMNT Disclosure Schedule
sets forth all Actions or Proceedings relating to or affecting, or, to the
knowledge of IMNT, threatened against, IMNT or any of its Assets and Properties
during the three (3) year period before the date hereof.
3.8 Compliance with Laws and Orders. Neither IMNT nor any of its directors,
officers, Affiliates, agents or employees has violated in any material respect
since the incorporation of IMNT, or currently is in default or violation in any
material respect pursuant to, any Law or Order applicable to IMNT or any of its
Assets and Properties, and IMNT is not aware of any claim of violation, or of
any actual violation, of any of such Laws and Orders by IMNT since the
incorporation of IMNT.
3.9 Banks and Brokerage Accounts. Section 2.27 of the IMNT Disclosure
Schedule sets forth (a) a true and complete list of the names and locations of
all banks, trust companies, securities brokers and other financial institutions
at which IMNT has an account or safe deposit box or maintains a banking,
custodial, trading or other similar relationship; (b) a true and complete list
and description of each such account, box and relationship, indicating in each
case the account number and the names of the respective officers, employees,
agents or other similar representatives of IMNT having signatory power with
respect thereto; and (c) a list of each Investment Asset, the name of the record
and beneficial owner thereof, the location of the certificates therefor, if any,
the maturity date, if any, and all stock or bond powers or other authority for
transfer granted with respect thereto if any.
3.10 Other Negotiations; Brokers; Third Party Expenses.
(a) Neither IMNT nor any of its officers, directors, employees, agents or,
to the knowledge of IMNT, any of its stockholders or Affiliates (nor any
investment banker, financial advisor, attorney, accountant or other Person
retained by or acting for or on behalf of IMNT or any such Affiliate) (i) has
entered into any Contract that conflicts with any of the transactions
contemplated by this Agreement or (ii) has entered into any Contract or had any
discussion with any Person regarding any transaction involving IMNT that could
result in IMNT, USSC or any general partner, limited partner, manager, officer,
director, employee, agent or Affiliate of any of them being subject to any claim
for liability to such Person as a result of entering into this Agreement or
consummating the transactions contemplated by this Agreement.
(b) No broker, investment banker, financial advisor or other Person is
entitled to any broker's, finder's, financial advisor's or similar fee or
commission in connection with this Agreement and the transactions contemplated
by this Agreement based on arrangements made by or on behalf of IMNT.
35
(c) Section 2.26 of the IMNT Disclosure Schedule sets forth the principal
terms and conditions of any Contract with respect to, and a reasonable estimate
of, all Third Party Expenses expected to be incurred by IMNT in connection with
the negotiation and effectuation of the terms and conditions of this Agreement
and the transactions contemplated hereby ("Estimated Third Party Expenses").
3.11 Foreign Corrupt Practices Act. Neither IMNT nor, to the knowledge of
IMNT, any agent, employee or other Person associated with or acting on behalf of
IMNT has, directly or indirectly, used corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns
from corporate funds, violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment,
kickback or other similar unlawful payment.
3.12 Approvals.
(a) Section 2.32(a) of the IMNT Disclosure Schedule contains a list of all
material Approvals of Governmental or Regulatory Authorities relating to the
business conducted by IMNT that are required to be given to or obtained by IMNT
from any and all Governmental or Regulatory Authorities in connection with the
consummation of the transactions contemplated by this Agreement (other than the
filing of the Delaware Certificate of Merger and the Nevada Certificate of
Merger, together with the required officers' certificates, and such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under state or federal securities laws).
(b) Section 2.32(b) of the IMNT Disclosure Schedule contains a list of all
material Approvals that are required to be given to or obtained by IMNT from any
and all third parties other than Governmental or Regulatory Authorities in
connection with the consummation of the transactions contemplated by this
Agreement.
(c) All material Approvals from Governmental or Regulatory Authorities
necessary to conduct the business conducted by IMNT as such business is being
conducted currently are set forth in Section 2.32(c)(1) of the IMNT Disclosure
Schedule. Except as set forth in Section 2.32(c)(2) of the IMNT Disclosure
Schedule, IMNT has obtained all material Approvals from Governmental or
Regulatory Authorities necessary to conduct the business conducted by IMNT in
the manner as such business is being conducted currently, and there has been no
written notice received by IMNT of any material violation or material
non-compliance with any of such Approvals.
(d) The affirmative vote or consent of the holders of a majority of the
shares of IMNT Common Stock issued and outstanding as of the applicable record
date, voting separately as a class, are the only votes of the holders of any of
IMNT Capital Stock necessary to approve this Agreement, the Merger and the
transactions contemplated by this Agreement.
36
3.13 Information Statement. The information supplied by IMNT for inclusion
in the information statement to be sent to the stockholders of IMNT in
connection with IMNT stockholders' consideration of the Merger (the "IMNT
Stockholder Action") (such information statement as amended or supplemented is
referred to herein as the "Information Statement") shall not, on the date on
which the Information Statement first is mailed to IMNT's stockholders, at the
time of the IMNT Stockholder Action and at the Effective Time contain any
information that, at such time, is false or misleading with respect to any
material fact, or omit to specify any material fact necessary in order to make
the information specified therein, considering the circumstances pursuant to
which that information is furnished, not false or misleading; or omit to specify
any material fact necessary to correct any information in any earlier
communication with respect to the solicitation of proxies or written consents
for the IMNT Stockholder Action that has become false or misleading.
Notwithstanding the foregoing, IMNT makes no representation, warranty or
covenant with respect to any information supplied by IMNT that is contained in
the Information Statement.
3.14 Disclosure. No representation or warranty made by IMNT contained in
this Agreement, and no information contained in the IMNT Disclosure Schedule or
in any certificate, list or other writing furnished to IMNT pursuant to any
provision of this Agreement (including the IMNT Financials and the notes
thereto) contains any untrue information or fails to specify any information
necessary in order to make the information herein or therein, considering the
circumstances pursuant to which such information was furnished, not misleading.
IMNT has provided IMNT with all of the Contracts and Licenses heretofore
requested on behalf of IMNT in writing and all other material information
concerning IMNT in the possession, custody or control of IMNT.
3.15 Information to be Supplied by IMNT. The information supplied by IMNT
for inclusion in the Information Statement shall not, on the date the
Information Statement first is mailed to USSC' s stockholders, at the time of
the USSC Stockholder Action and at the Effective Time contain any statement
that, at such time, is false or misleading with respect to any material fact, or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which it is made, not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies or written consents for the USSC Stockholder Action that has become
false or misleading. Notwithstanding the foregoing, IMNT makes no
representation, warranty or covenant with respect to any information supplied by
USSC that is contained in any of the foregoing documents.
3.16 Investment Advisors. No broker, investment banker, financial advisor
or other Person is entitled to any broker's, finder's, financial advisor's or
similar fee or commission in connection with this Agreement and the transactions
contemplated hereby based on arrangements made by or on behalf of IMNT.
3.17 Tax-Free Reorganization. To the knowledge of IMNT after consultation
with IMNT's tax advisors, neither IMNT nor any of its directors, officers or
stockholders has taken any action that could reasonably be expected to
jeopardize the status of the Merger as a "reorganization" within the meaning of
section 368(a) of the Code.
37
ARTICLE 4
CONDUCT BEFORE THE EFFECTIVE TIME
4.1 Conduct of Business of USSC(a) . During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement and the Effective Time, USSC agrees (unless USSC is required to take
such action pursuant to this Agreement or IMNT gives its prior consent in
writing) to carry on its business in the usual, regular and ordinary course
consistent with past practice, to pay its Liabilities and Taxes consistent with
USSC' s past practices (and in any event when due), to pay or perform other
obligations when due consistent with USSC' s past practices (other than
Liabilities, Taxes and other obligations, if any, contested in good faith
through appropriate proceedings) and, to the extent consistent with such
business, to use all commercially reasonable efforts and institute all policies
required to preserve intact its present business organization, keep available
the services of its present officers and key employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees,
independent contractors and other Persons having business dealings with it, all
with the express purpose and intent of preserving unimpaired USSC' s goodwill
and ongoing business at the Effective Time. Except as expressly contemplated by
this Agreement, USSC shall not, without the prior written consent of IMNT, take
or agree in writing or otherwise to take, any action that would make any of its
representations or warranties contained in this Agreement untrue or incorrect in
any material respect or prevent USSC from performing or cause USSC not to
perform its agreements and covenants specified in this Agreement or knowingly
cause any condition to IMNT's closing obligations in Section 6.3 not to be
satisfied.
4.2 No Solicitation. Until the earlier of the Effective Time and the date
of termination of this Agreement pursuant to the provisions of Section 8.1, USSC
shall not take (and since January 1, 2003, has not taken), nor will USSC (and
since January 1, 2003, has not permitted) permit any of USSC' s Representatives
to take (directly or indirectly) any of the following actions with any Person
other than IMNT and its designees: (a) solicit, encourage, initiate, entertain,
review or encourage any proposal or offer from, or participate in or conduct
discussions with or engage in negotiations with, any Person relating to any
offer, indication of interest or proposal, oral, written or otherwise, formal or
informal (a "Competing Proposed Transaction"), with respect to any possible
Business Combination with USSC, (b) provide information not customarily
disclosed consistent with USSC' s past practices with respect to USSC to any
Person, other than IMNT, relating to (or which USSC believes or should
reasonably know would be used for the purpose of formulating an offer,
indication of interest or proposal with respect to), or otherwise assist,
cooperate with, facilitate or encourage any effort or attempt by any such Person
with regard to, any possible Business Combination with USSC, (c) agree to, or
enter into a Contract with any Person, other than IMNT, providing for, or
approving a Business Combination with USSC, (d) make or authorize any statement,
recommendation, solicitation or endorsement in support of any possible Business
Combination with USSC other than by IMNT, or (e) authorize or permit any of
USSC' s Representatives to take any such action. USSC shall immediately cease
and cause to be terminated any such contact or negotiation with any Person
relating to any such transaction or Business Combination. In addition to the
foregoing, if USSC receives before the Effective Time or the termination of this
Agreement any offer, indication of interest or proposal (formal or informal,
oral, written or otherwise) relating to, or any inquiry or contact from any
Person with respect to, a Competing Proposed Transaction, USSC shall immediately
notify IMNT thereof, such notice to include the identity of the Person or
Persons making such offer, indication of interest or proposal and the terms
thereof, and shall keep IMNT apprised on a current basis of the status of any
such offer, indication of interest or proposal and of any modification to the
terms thereof; provided, however, that this provision shall not in any way be
deemed to limit the obligations of USSC and its Representatives set forth in the
first sentence of this Section 4.2. Each of USSC and IMNT acknowledges that this
Section 4.2 was a significant inducement for IMNT to enter into this Agreement
and that the absence of such provision would have resulted in either (i) a
material reduction in the consideration to be paid to the stockholders of USSC
in the Merger or (ii) a failure to induce IMNT to enter into this Agreement.
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ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Proxy Statement. As soon as reasonably practicable after the execution
of this Agreement, USSC shall prepare, with the full cooperation of IMNT, a
Proxy Statement for the stockholders of USSC noticing a special meeting at which
USSC will ask its Common Stock Shareholders as well as its Preferred Stock
Shareholders to approve this Agreement, the Agreement of Merger and the
transactions contemplated hereby. IMNT and USSC each shall use commercially
reasonable efforts to cause the Proxy Statement to comply with applicable
federal and state securities laws requirements. Each of IMNT and USSC agrees to
provide promptly to the other such information concerning its business and
financial statements and affairs as, in the reasonable judgment of the providing
party or its counsel, may be required or appropriate for inclusion in the Proxy
Statement, or in any amendment or supplement thereto, and to cause its counsel
and auditors to cooperate with the other's counsel and auditors in the
preparation of the Proxy Statement. USSC shall promptly advise IMNT, and IMNT
shall promptly advise USSC, in writing, if at any time before the Effective Time
either USSC or IMNT, as applicable, obtains knowledge of any fact that might
make it necessary or appropriate to amend or supplement the Proxy Statement in
order to make the statements contained or incorporated by reference therein not
misleading or to comply with applicable law. The Proxy Statement shall contain
the unanimous recommendation of the board of directors of USSC that USSC's
stockholders approve the Merger and this Agreement and the conclusion of the
board of directors of USSC that the terms and conditions of the Merger are
advisable and fair and reasonable to, and in the best interests of, the
stockholders of USSC. Anything to the contrary contained herein notwithstanding,
USSC shall not include in the Proxy Statement any information with respect to
IMNT or its affiliates or associates, the form and content of which information
has not been approved by IMNT before such inclusion.
5.2 Stockholder Approval. As soon as reasonably practicable following the
execution and delivery of this Agreement, USSC shall give written notice of this
Agreement and the proposed Merger to all USSC stockholders and shall use
commercially reasonable efforts to take all other actions necessary in
accordance with the Nevada Code and USSC's articles of incorporation and bylaws
to convene a meeting of the stockholders of USSC or to secure the required
written consent of its stockholders, both Common Stock Shareholders and
Preferred Stock Shareholders (the "USSC Stockholder Action"). USSC shall submit
this Agreement and the Agreement of Merger to its stockholders for adoption
whether or not USSC's board of directors determines at any time after declaring
its advisability that this Agreement no longer is advisable and recommends that
its stockholders reject it. USSC shall use all commercially reasonable efforts
required to solicit and obtain from stockholders of USSC proxies or written
consents in favor of the Merger and this Agreement and shall take all other
actions necessary or advisable to secure the vote or written consent of
stockholders required to effect the Merger.
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5.3 Access to Information. Between the date of this Agreement and the
earlier of the Effective Time or the termination of this Agreement, upon
reasonable notice USSC shall (a) give IMNT and its officers, employees,
accountants, counsel, financing sources and other agents and representatives
reasonable access to all buildings, offices and other facilities and to all
Books and Records of USSC, whether located on the premises of USSC or at another
location; (b) permit IMNT to make such inspections as it may require; (c) cause
its officers to furnish IMNT such financial, operating, technical and product
data and other information with respect to the business and Assets and
Properties of USSC as IMNT from time to time may request, including financial
statements and schedules; (d) allow IMNT the opportunity to interview such
employees and other personnel and Affiliates of USSC with USSC' s prior written
consent, which consent shall not be unreasonably withheld or delayed; and (e)
assist and cooperate with IMNT in the development of integration plans for
implementation by IMNT and the Surviving Corporation following the Effective
Time; provided, however, that no investigation pursuant to this Section 5.3
shall affect or be deemed to modify any representation or warranty made by USSC
herein.
5.4 Confidentiality. The parties acknowledge that IMNT and USSC previously
executed a Letter of Intent, dated as of March __, 2003 and all valid amendments
thereto, which contains, among other provisions, confidentiality provisions (the
"Confidentiality Provisions"), which Confidentiality Provisions shall continue
in full force and effect as of the date hereof. Without limiting the foregoing,
all information furnished to IMNT and its officers, employees, accountants and
counsel by USSC, and all information furnished to USSC by IMNT and its officers,
employees, accountants and counsel, shall be covered by the Confidentiality
Provisions, and IMNT and USSC shall be fully liable and responsible under the
Confidentiality Provisions for any breach of the terms and conditions thereof by
their respective subsidiaries, officers, employees, accountants, counsel and
other Representatives. Furthermore, without limiting the foregoing, each of the
parties hereto hereby agrees to keep the terms of this Agreement (except to the
extent contemplated hereby) and such information or knowledge obtained in any
investigation pursuant to Section 5.33, or pursuant to the negotiation and
execution of this Agreement or the effectuation of the transactions contemplated
hereby, confidential; provided, however, that the foregoing shall not apply to
information or knowledge that (a) a party can demonstrate was already lawfully
in its possession before the disclosure thereof by the other party, (b) is
generally known to the public and did not become so known through any violation
of Law, (c) became known to the public through no fault of such party, (d) is
later lawfully acquired by such party without confidentiality restrictions from
other sources not bound by applicable confidentiality restrictions, (e) is
required to be disclosed by order of court or Governmental or Regulatory
Authority with subpoena powers (provided that such party shall have provided the
other party with prior notice of such order and an opportunity to object or seek
a protective order and take any other available action) or (f) that is disclosed
in the course of any Action or Proceeding between any of the parties hereto.
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5.5 Expenses. Whether or not the Merger is consummated, all fees and
expenses incurred in connection with the Merger, including all legal,
accounting, financial advisory, consulting and all other fees and expenses of
third parties ("Third Party Expenses") incurred by a party in connection with
the negotiation and effectuation of the terms and conditions of this Agreement
and the transactions contemplated hereby shall be the obligation of the
respective party incurring such fees and expenses. In the event the Merger is
consummated, the Surviving Corporation shall be responsible for the payment of
all reasonable Third Party Expenses, including reasonable Third Party Expenses
incurred by USSC. Notwithstanding anything to the contrary contained in this
Agreement, to the extent that Third Party Expenses incurred by USSC exceed
$20,000 in the aggregate, such excess shall be deemed a Loss for the purposes of
Article 7 and shall be immediately reimbursable to IMNT in accordance with
Article 7 (without regard to the Basket and without counting toward the Basket).
5.6 Public Disclosure. Unless otherwise required by Law (including federal
and state securities laws) or, as to IMNT, by the rules and regulations of the
NASD, before the Effective Time, no public disclosure (whether or not in
response to any inquiry) of the existence of any subject matter of, or the terms
and conditions of, this Agreement shall be made by any party hereto unless
approved by IMNT and USSC before release; provided, however, that such approval
shall not be unreasonably withheld or delayed.
5.7 Approvals. USSC shall use commercially reasonable efforts to obtain all
Approvals from Governmental or Regulatory Authorities or under any of the
Contracts, Licenses or other agreements as may be required in connection with
the Merger (all of which Approvals are set forth in the USSC Disclosure
Schedule) so as to preserve all rights of and benefits to USSC thereunder, and
IMNT shall provide USSC with such assistance and information as is reasonably
required to obtain such Approvals.
5.8 Notification of Certain Matters. USSC shall give prompt notice to IMNT,
and IMNT shall give prompt notice to USSC, of (a) the occurrence or
non-occurrence of any event, the occurrence or non-occurrence of which likely is
to cause any representation or warranty of USSC or IMNT, respectively, contained
in this Agreement to be untrue or inaccurate at or before the Closing Date and
(b) any failure of USSC or IMNT, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.8 shall not limit or otherwise affect any remedy available to the
party receiving such notice.
5.9 Additional Documents and Further Assurances; Cooperation. Each party
hereto, at the request of the other party hereto, shall execute and deliver such
other instruments and do and perform such other acts and things (including all
action reasonably necessary to seek and obtain any and all consents, waivers and
approvals of any Governmental or Regulatory Authority or Person required in
connection with the Merger; provided, however, that IMNT shall not be obligated
to consent to any divestiture or operational limitation or activity in
connection therewith, and no party shall be obligated to make a payment of money
as a condition to obtaining any such consent, waiver or approval) as may be
necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby. Each party agrees to use
commercially reasonable efforts to cause the conditions set forth in Article 6
to be satisfied, where the satisfaction of such conditions depends on action or
forbearance from action by such party.
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5.10 USSC' s Auditors. USSC shall cause its management and its independent
auditors to facilitate on a timely basis (a) the preparation of financial
statements (including pro forma financial statements if required) as required by
IMNT to comply with applicable SEC regulations, (b) the review of any USSC audit
or review work papers, including the examination of selected interim financial
statements and data and (c) the delivery of such representations from USSC' s
independent accountants as may be reasonably requested by IMNT or its
accountants.
5.11 Takeover Statutes. If any Takeover Statute is or may become applicable
to the transactions contemplated hereby, the board of directors of USSC shall
grant such approvals and take such actions as are necessary so that the
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate the
effects of any Takeover Statute on any of the transactions contemplated hereby.
5.12 Treatment as Reorganization. Neither IMNT nor USSC shall take any
action before or following the Closing that would cause the Merger to fail to
qualify as a "reorganization" within the meaning of section 368(a) of the Code.
5.13 Intellectual Property. USSC shall give IMNT prompt notice of any
Person that has (a) commenced, or has notified USSC that it intends to commence,
an Action or Proceeding or (b) provided USSC with notice, in either case that
alleges that any of the Intellectual Property, including USSC Intellectual
Property, currently embodied, or proposed to be embodied, in USSC' s products or
services, infringes or otherwise violates the intellectual property rights of
such Person or otherwise alleges that USSC does not otherwise own or have the
right to exploit such Intellectual Property, including USSC Intellectual
Property. USSC shall cooperate with IMNT in making arrangements, before the
Closing Date, satisfactory to IMNT in its sole discretion, to effect the
assignment to USSC of all Intellectual Property created by USSC' s founders,
employees and consultants and to obtain the cooperation of such Persons to
complete all appropriate patent filings related thereto. USSC shall take
commercially reasonable actions to maintain, perfect, preserve or renew USSC
Registered Intellectual Property, including the payment of registration fees,
maintenance fees, renewal fees, annuity fees and taxes or the filing of
documents, applications or certificates related thereto, and to promptly respond
and prepare to respond to all requests, related to USSC Registered Intellectual
Property, received from Governmental or Regulatory Authorities.
ARTICLE 6
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party Under This Agreement. The
respective obligations of each party to effect the Merger and the other
transactions contemplated herein shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions, any or all of which may
be waived, in whole or in part, to the extent permitted by applicable Law:
42
(a)......Either: (i) A Registration Statement on Form S-4 (the
"Registration Statement") shall have been declared effective by the SEC under
the Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceedings for
that purpose shall have been initiated or, to the knowledge of IMNT or USSC,
threatened by the SEC; or (ii) USSC provides written confirmation that there are
no more than 35 non-accredited shareholders which are entitled to receive IMNT
Common Stock upon consummation of the Merger.
(b)......This Agreement and the Merger and the other transactions
contemplated hereby shall have been approved and adopted by the requisite vote
of the stockholders of IMNT and USSC, to the extent, in each case, that
stockholder approval is required under applicable law and governing documents.
Each party acknowledges that at least sixty-six and two-thirds percent (66 2/3%)
of the USSC Preferred Stock must vote in favor of the Merger in order for the
Merger to be consummated.
(c)......All holders of USSC Preferred Stock must agree, in
writing, to convert all accrued but unpaid dividends into shares of IMNT Common
Stock in lieu of receiving cash.
(c)......No Governmental Entity, nor any federal or state court of
competent jurisdiction or arbitrator shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
judgment, injunction or arbitration award or finding or other order (whether
temporary, preliminary or permanent), in any case which is in effect and which
prevents or prohibits consummation of the Merger or any other transactions
contemplated in this Agreement or any Ancillary Agreement.
(d) All consents, approvals and authorizations of any Governmental
Entity required to be set forth in the related sections of the IMNT Disclosure
Schedule or the USSC Disclosure Schedule shall have been obtained, in each case,
without (i) the imposition of conditions, (ii) the requirement of divestiture of
assets or property or (iii) the requirement of expenditure of money by IMNT or
USSC to a third party in exchange for any such consent.
6.2 Additional Conditions to Obligations of USSC . The obligations of
USSC to consummate the Merger and the other transactions contemplated by this
Agreement shall be subject to the satisfaction at or before the Closing of each
of the following conditions, any of which may be waived, in writing, exclusively
by USSC :
(a) Representations and Warranties. The representations and
warranties of IMNT contained in this Agreement shall be accurate in all respects
as of the date of this Agreement and shall be accurate in all respects as of the
Closing Date as if made on and as of the Closing Date (other than
representations and warranties that by their express terms are made solely as of
a specified earlier date, which shall be accurate as of such specified earlier
date), except that any inaccuracy in such representations and warranties shall
be disregarded if the circumstances giving rise to all such inaccuracies
(considered collectively) do not constitute, and would not reasonably be
expected to have, a material adverse change on the Business or Condition of
IMNT.
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(b) Performance. IMNT shall have performed and complied with in
all material respects each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by IMNT at or before the Closing.
(c) Officers' Certificates. IMNT shall have delivered to USSC a
certificate, dated the Closing Date and executed by IMNT's President, Chief
Executive Officer and Secretary substantially in the form set forth in Exhibit C
hereto.
6.3 Additional Conditions to the Obligations of IMNT. The obligations of
IMNT to consummate the Merger and the other transactions contemplated by this
Agreement shall be subject to the satisfaction at or before the Closing of each
of the following conditions, any of which may be waived, in writing, exclusively
by IMNT:
(a) Representations and Warranties. The representations and
warranties of USSC contained in this Agreement shall be accurate in all respects
as of the date of this Agreement and shall be accurate in all respects as of the
Closing Date as if made on and as of the Closing Date (other than
representations and warranties that by their express terms are made solely as of
a specified earlier date, which shall be accurate as of such specified earlier
date), except that any inaccuracy in such representations and warranties will be
disregarded if the circumstances giving rise to all such inaccuracies
(considered collectively) do not constitute, and would not reasonably be
expected to have, a material adverse change on the Business or Condition of
USSC.
(b) Performance. USSC shall have performed and complied with in
all material respects each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by USSC on or before the Closing
Date.
(c) Officers' Certificates. USSC shall have delivered to IMNT a
certificate, dated the Closing Date and executed by the President and Chief
Executive Officer of USSC, substantially in the form set forth in Exhibit D
hereto.
(d) Third Party Consents. IMNT shall have been furnished with
evidence satisfactory to it that USSC has obtained the consents, approvals and
waivers listed (or required to be listed) in Section 2.6 of the USSC Disclosure
Schedule (except for such consents, approvals and waivers the absence of which,
in the aggregate, could not reasonably be expected to have a material adverse
effect on USSC ) and that all such consents, approvals and waivers are in full
force and effect.
(e) Legal Proceedings. No Governmental or Regulatory Authority
shall have notified either party to this Agreement that such Governmental or
Regulatory Authority intends to commence proceedings to restrain or prohibit the
transactions contemplated hereby or force rescission, unless such Governmental
or Regulatory Authority has withdrawn such notice and abandoned any such
proceeding before the time that otherwise would have been the Closing Date.
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(f) Reporting Costs Pending Closing. During the period of time
that the Securities and Exchange Commission is reviewing the Registration
Statement on Form S-4 and prior to the "effective" date of such Registration
Statement, USSC shall pay the following costs, on behalf of IMNT, associated
with complying with IMNT's reporting obligations ("Reporting Costs): (i) SEC
filing fees, in any; (ii) auditing fees; (iii) attorneys' fees; and (iii)
EDGARizing fees. Prior to the execution of this Agreement, IMNT has provided
USSC with a written estimation, based on historical costs, of the Reporting
Costs. USSC shall not be obligated to pay Reporting Costs which exceed IMNT's
estimation by greater than ten percent (10%).
ARTICLE 7
SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
7.1 Survival of Representations, Warranties, Covenants and Agreements(a) .
Notwithstanding any right of IMNT or USSC (whether or not exercised) to
investigate the affairs of IMNT or USSC (whether pursuant to Section 5.3 or
otherwise) or a waiver by IMNT or USSC of any condition to Closing set forth in
Article 6, each party shall have the right to rely fully on the representations,
warranties, covenants and agreements of the other party contained in this
Agreement or in any instrument delivered pursuant to this Agreement. Except for
(i) the representation and warranties of USSC contained in Section 2.3 (which
shall survive as set forth in the last sentence of this Section 7.1) and (ii)
Article 7 (which shall survive until the satisfaction of all other obligations
described therein), all of the representations, warranties, covenants and
agreements of USSC and IMNT contained in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Merger and continue until
the date that is 18 months following the Closing Date (the "Expiration Date").
The representations and warranties of USSC made in Section 2.3, as well as
claims by IMNT based on fraud, shall survive and continue in full force and
effect until expiration of the statutes of limitations applicable to the
underlying claim.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. Except as provided in Section 8.2, this Agreement may be
terminated and the Merger abandoned at any time before the Effective Time:
(a) by mutual agreement of USSC and IMNT;
(b) by IMNT or USSC if: (i) there shall be a final nonappealable
order of a federal or state court in effect preventing consummation of the
Merger; or (ii) there shall be any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the Merger by any Governmental or
Regulatory Authority that would make consummation of the Merger illegal;
45
(c) by IMNT if there shall be any action taken, or any Law or
Order enacted, promulgated or issued or deemed applicable to the Merger, by any
Governmental or Regulatory Authority, which would: (i) prohibit IMNT's ownership
or operation of all or any portion of the business of USSC or (ii) compel IMNT
to dispose of or hold separate all or any portion of the Assets and Properties
of USSC as a result of the Merger;
(d) by IMNT if it is not in material breach of its
representations, warranties, covenants and agreements under this Agreement and
there has been a breach of any representation, warranty, covenant or agreement
contained in this Agreement on the part of USSC and (i) USSC is not using its
reasonable efforts to cure such breach, or has not cured such breach within
thirty (30) days, after notice of such breach to USSC (provided, however, that
no cure period shall be required for a breach that by its nature cannot be
cured), and (ii) as a result of such breach any of the conditions set forth in
Section Error! Reference source not found. or Section 6.3, as the case may be,
would not be satisfied before the Closing Date;
(e) by USSC if it is not in material breach of its
representations, warranties, covenants and agreements under this Agreement, and
there has been a breach of any representation, warranty, covenant or agreement
contained in this Agreement on the part of IMNT and (i) IMNT is not using its
reasonable efforts to cure such breach, or has not cured such breach within
thirty (30) days, after notice of such breach to IMNT (provided, however, that
no cure period shall be required for a breach that by its nature cannot be
cured), and (ii) as a result of such breach any of the conditions set forth in
Section 6.2 or Section 6.3, as the case may be, would not be satisfied as of the
Closing Date; or
(f) by IMNT, if the Merger shall not have been approved by the
requisite votes or consents, as applicable, of USSC's stockholders in accordance
with the Nevada Code and applicable governing documents at any meeting (or any
adjournment thereof) convened for the purpose of taking a vote with respect to
the Merger or, in any solicitation of stockholder written consents with respect
to the Merger, within twenty (20) days after the record date established for
determining the stockholders of USSC entitled to consent.
8.2 Effect of Termination. In the event of a valid termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become
void, and there shall be no liability or obligation on the part of IMNT or USSC,
or their respective officers, directors or stockholders or Affiliates or
Associates; provided, however, that each party shall remain liable for all
breaches of this Agreement before its termination; and provided, further, that,
the provisions of Sections 5.4, 5.5 and 8.2, Article 9 (exclusive of Section
9.4) and the applicable definitions set forth in Article 10 shall remain in full
force and effect and survive any termination of this Agreement.
8.3 Amendment. Except as is otherwise required by applicable law after the
stockholders of USSC approve the Merger and this Agreement, this Agreement may
be amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto.
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8.4 Extension; Waiver. At any time before the Effective Time, IMNT and USSC
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations of the other party hereto, (b) waive any inaccuracy in
the representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements, covenants or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1 Notices. All notices, requests and other communications hereunder must
be in writing and shall be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission against
facsimile confirmation or mailed by internationally recognized overnight courier
prepaid to the parties at the following addresses or facsimile numbers:
If to IMNT to: Immunotechnology, Inc.
Attention: Xxxx Xxxxxxxxx, president
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxx 00000
with a copy (which shall not Xxxx X. Xxxxxxxx & Associates, LLC
constitute notice) to: Attention: Xxxx Xxxxxxxx, Esq.
22 East 000 Xxxxx #000
Xxxx Xxxx Xxxx, Xxxx 00000
Facsimile No.: 801.606.2855
If to USSC to: Ultimate Security Systems Corporation
Attention: Xxxxx Xxxxxx, president
00000 Xxxx XxXxxxxxx, Xxxxx X
Xxxxxx, Xxxxxxxxxx 00000
with a copy (which shall not MC Law Group
constitute notice) to: Attn: Xxxxx X. Xxxxx, Esq.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Facsimile No.: 949.250.8656
All such notices, requests and other communications shall (a) if delivered
personally to the address as provided in this Section 9.1, be deemed given upon
delivery, (b) if delivered by facsimile transmission to the facsimile number as
provided for in this Section 9.1, be deemed given upon facsimile confirmation,
and (c) if delivered by overnight courier to the address as provided in this
Section 9.1, be deemed given on the earlier of the first Business Day following
the date sent by such overnight courier or upon receipt (in each case regardless
of whether such notice, request or other communication is received by any other
Person to whom a copy of such notice is to be delivered pursuant to this Section
9.1). Any party from time to time may change its address, facsimile number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
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9.2 Entire Agreement. This Agreement and the Exhibits and Schedules hereto,
including the USSC Disclosure Schedule and the IMNT Disclosure Schedule,
constitute the entire Agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
except for the Confidentiality Provisions, which shall continue in full force
and effect and shall survive any termination of this Agreement or the Closing in
accordance with their terms.
9.3 Amendment. This Agreement may be amended only in accordance with the
provisions of Section 8.3.
9.4 Further Assurances; Post-Closing Cooperation. At any time or from time
to time after the Closing, the parties shall execute and deliver to the other
party such other documents and instruments, provide such materials and
information and take such other actions as the other party may reasonably
request to consummate the transactions contemplated by this Agreement and
otherwise to cause the other party to fulfill its obligations under this
Agreement and the transactions contemplated hereby. Each party agrees to use
commercially reasonable efforts to cause the conditions to its obligations to
consummate the Merger to be satisfied.
9.5 Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion.
9.6 Remedies. All remedies, either under this Agreement or by Law or
otherwise afforded, shall be cumulative and not alternative.
9.7 Third Party Beneficiaries. The terms and provisions of this Agreement
are intended solely for the benefit of each party hereto and their respective
successors or permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights, and this Agreement does not confer any
such right, upon any other Person other than any Person entitled to indemnity
under Article 7.
9.8 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned (by operation of law or
otherwise) by any party without the prior written consent of the other party,
and any attempt to do so shall be void. Subject to the preceding sentence, this
Agreement is binding on, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and assigns.
9.9 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision shall be fully
severable, (b) this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision never had comprised a part hereof,
(c) the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom, and (d) in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
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9.10 Governing Law. This Agreement and all other closing documents shall be
governed by and construed in accordance with the domestic laws of the State of
California, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of California or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of California.
9.11 Waiver of Trial by Jury. IN ANY ACTION OR PROCEEDING ARISING HEREFROM,
THE PARTIES HERETO CONSENT TO TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER OR THEIR SUCCESSORS
IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT,
REGARDLESS OF THE FORM OF ACTION OR PROCEEDING.
9.12 Costs and Expenses. Except as otherwise provided herein, each of the
parties shall bear all costs and expenses incurred by it in connection with this
Agreement and in the consummation of the transactions contemplated hereby and in
preparation therefor.
9.13 Construction. The parties hereto agree that this Agreement is the
product of negotiation between sophisticated parties and individuals, all of
whom were represented by counsel, and each of whom had an opportunity to
participate in and did participate in the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentem. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.15 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or otherwise were breached.
Except where this Agreement specifically provides for arbitration, it is agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity. Except as otherwise provided herein (including as set forth in Article
7), any and all remedies herein expressly conferred upon a party shall be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy.
49
ARTICLE 10
DEFINITIONS
10.1 Definitions. As used in this Agreement, the following defined terms
shall have the meanings indicated below:
"Actions or Proceedings" means any action, suit, complaint, petition,
investigation, proceeding, arbitration, litigation or Governmental or Regulatory
Authority investigation, audit or other proceeding, whether civil or criminal,
in law or in equity, or before any arbitrator or Governmental or Regulatory
Authority.
"Affiliate" means, as applied to any Person, (a) any other Person directly
or indirectly controlling, controlled by or under common control with that
Person, (b) any other Person that owns or controls (i) ten percent (10%) or more
of any class of equity securities of that Person or any of its Affiliates or
(ii) ten percent (10%) or more of any class of equity securities (including any
equity securities issuable upon the exercise of any option or convertible
security) of that Person or any of its Affiliates or (c) as to a corporation,
each director and officer thereof, and as to a partnership, each general partner
thereof, and as to a limited-liability company, each managing member or
similarly authorized person thereof (including officers), and as to any other
entity, each Person exercising similar authority to those of a director or
officer of a corporation. For the purposes of this definition, "control"
(including with correlative meanings, the terms "controlling," "controlled by"
and "under common control with") as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through ownership of voting
securities or by contract or otherwise.
"Aggregate Common Number" means the aggregate number of shares of USSC
Common Stock that are (or would be) outstanding immediately before the Effective
Time (including all shares of USSC Common Stock issued or issuable upon
conversion of all shares of USSC Preferred Stock and upon exercise, conversion
or exchange in full of all unvested and vested USSC Options, USSC Warrants and
USSC Stock Purchase Rights that remain outstanding and are not exercised,
converted, exchanged or expired as of the Effective Time).
"Aggregate Share Number" means approximately 35,000,000 shares of IMNT
Common Stock and approximately 15,000,000 warrants to purchase IMNT Common
Stock, subject to adjustment pursuant to Section 1.8.
"Agreement" means this Agreement and Plan of Merger, including (unless the
context otherwise requires) the Exhibits and the Disclosure Schedules and the
certificates and instruments delivered in connection herewith, or incorporated
by reference, as the same may be amended or supplemented from time to time in
accordance with the terms hereof.
50
"Approval" means any approval, authorization, consent, permit,
qualification or registration, or any waiver of any of the foregoing, required
to be obtained from or made with, or any notice, statement or other
communication required to be filed with or delivered to, any Governmental or
Regulatory Authority or any other Person.
"Assets and Properties" of any Person means all assets and properties of
every kind, nature, character and description (whether real, personal or mixed,
whether tangible or intangible, whether absolute, accrued, contingent, fixed or
otherwise and wherever situated), including the goodwill related thereto,
operated, owned, licensed or leased by such Person, including cash, cash
equivalents, Investment Assets, accounts and notes receivable, chattel paper,
documents, instruments, general intangibles, real estate, equipment, inventory,
goods and Intellectual Property.
"Associate" means, with respect to any Person, any corporation or other
business organization of which such Person is an executive officer or partner or
is the beneficial owner, directly or indirectly, of ten percent (10%) or more of
any class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
"Audited Financial Statement Date" means December 31, 2002.
"Audited Financial Statements" means the audited balance sheet of USSC as
of the fiscal year ended December 31, 2002 and the related audited statements of
operations, stockholders' equity and cash flows for the fiscal year then ended,
including the notes thereto together with the unqualified report of USSC's
independent accountants with respect thereto.
"Basket" has the meaning set forth in Section Error! Reference source not
found..
"USSC" means Ultimate Security Systems Corporation, a Nevada corporation.
"USSC Capital Stock" means USSC Common Stock and USSC Preferred Stock.
"USSC Common Stock" has the meaning set forth in Section 2.3(a).
"USSC Disclosure Schedule" means the schedules delivered to IMNT by or on
behalf of USSC, containing all lists, descriptions, exceptions and other
information and materials as are required to be included therein in connection
with the representations and warranties made by USSC in Article 2 or otherwise.
"USSC Financials" means the Audited Financial Statements and the Interim
Financial Statements.
"USSC Intellectual Property" shall mean any Intellectual Property that (a)
is owned by; (b) is licensed to; (c) was developed or created by or for USSC or
(d) is used in or necessary for the conduct of the business of USSC as currently
or heretofore conducted, including any Intellectual Property created by any of
USSC's founders, employees, independent contractors or consultants for or on
behalf of USSC.
51
"USSC Option(s)" means any Option to purchase USSC Common Stock, excluding
USSC Preferred Stock and USSC Warrants.
"USSC Preferred Stock" has the meaning set forth in Section 2.3(a).
"USSC Registered Intellectual Property" means all Registered Intellectual
Property owned by, filed in the name of, assigned to or applied for by, USSC.
"USSC Restricted Stock" means shares of USSC Common Stock purchased
pursuant to an exercise of a USSC Stock Purchase Right which are subject to a
repurchase option by USSC.
"USSC Series A Preferred Stock" has the meaning set forth in Section
2.3(a).
"USSC Series B Preferred Stock" has the meaning set forth in Section
2.3(a).
"USSC Stock Option Plan" has the meaning set forth in Section 1.6(c)(ii).
"USSC Stock Purchase Right" means a right to purchase USSC Restricted Stock
granted pursuant to the USSC Stock Option Plan or otherwise.
"USSC Stockholder Action" has the meaning set forth in Section 2.33.
"USSC Warrants" means any and all warrants to purchase USSC Common Stock,
including the warrants listed in Section 2.3 of the USSC Disclosure Schedule.
"IMNT" has the meaning set forth in the forepart of this Agreement.
"IMNT Common Stock" has the meaning set forth in Recital C to this
Agreement.
"IMNT Disclosure Schedule" has the meaning set forth in the forepart of
Article 3.
"IMNT Indemnitees" has the meaning set forth in Section Error! Reference
source not found..
"Books and Records" means all files, documents, instruments, papers, books
and records relating to the Business or Condition of a Person, including
financial statements, internal reports, Tax Returns and related work papers and
letters from accountants, budgets, pricing guidelines, ledgers, journals, deeds,
title policies, minute books, stock certificates and books, stock transfer
ledgers, Contracts, Licenses, customer lists, computer files and programs
(including data processing files and records), retrieval programs, operating
data and plans and environmental studies and plans.
"Business Combination" means, with respect to any Person, (a) any merger,
consolidation, share exchange reorganization or other business combination
transaction to which such Person is a party, (b) any sale, dividend, split or
other disposition of any capital stock or other equity interest of such Person
(except for issuances of common stock upon conversion of preferred stock
outstanding on the date hereof or upon the exercise of options or warrants
52
outstanding on the date hereof or issued in accordance with the covenants of
this Agreement), (c) any tender offer (including a self tender), exchange offer,
recapitalization, restructuring, liquidation, dissolution or similar or
extraordinary transaction, (d) any sale, dividend or other disposition of all or
a material or significant portion of the Assets and Properties of such Person
(including by way of exclusive license or joint venture formation but excluding
non-exclusive licenses in connection with the sale of USSC products in the
ordinary course of business consistent with past practice) or (e) the entering
into of any agreement or understanding, the granting of any right or option,
with respect to any of the foregoing.
"Business Day" means a day other than Saturday, Sunday or any day on which
banks located in Orange County, California are authorized or obligated to close.
"Business or Condition of USSC" means the business, condition (financial or
otherwise), results of operations or Assets and Properties of USSC.
"Business or Condition of IMNT" means the business, condition (financial or
otherwise), results of operations or Assets and Properties of IMNT and its
Subsidiaries, considered in the aggregate.
"Nevada Code" means the Nevada Corporations Code and all amendments and
additions thereto.
"Cause" means (a) conviction (whether by plea of guilty or nolo contendere
or otherwise) of the employee in a court of law of any felony or of any crime
involving dishonesty; (b) participation by the employee in any fraud against
USSC, the Surviving Corporation or any of their respective Subsidiaries; (c)
willful violation of specific and lawful directions from USSC or the Surviving
Corporation or, if applicable, any of its Subsidiaries or excessive absenteeism
that continues after USSC or the Surviving Corporation or, if applicable, any of
its Subsidiaries has provided the employee with written notice of the violation
or absenteeism and given the employee a period of thirty (30) days following the
receipt of notice to correct the violation or absenteeism problem; (d) a
material breach by the employee of the provisions of such employee's
non-competition or non-disclosure agreements with USSC or the Surviving
Corporation or, if applicable, any of its Subsidiaries; or (e) unsatisfactory
performance of job duties, which is not corrected or continues after USSC or the
Surviving Corporation or, if applicable, any of its Subsidiaries has provided
the employee with written notice and given the employee a period of thirty (30)
days following receipt of the notice to correct the breach.
"Certificates" has the meaning set forth in Section 1.11(b).
"Closing" means the closing of the transactions contemplated by Section
1.2.
"Closing Date" has the meaning set forth in Section 1.2.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.
"Code" means the United States Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
53
"Competing Proposed Transaction" has the meaning set forth in Section 4.2.
"Confidentiality Provisions" has the meaning set forth in Section 5.4.
"Contract" means any legally binding agreement, lease, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract or
business arrangement (whether written or oral).
"Controlled Group" has the meaning set forth under the term "Plan" in this
Section 10.1.
"Delaware Certificate of Merger" has the meaning set forth in Section 1.2.
"Delaware Law" means the Delaware General Corporation Law and all
amendments and additions thereto.
"Disclosure Schedules" means the USSC Disclosure Schedule and the IMNT
Disclosure Schedule.
"Dissenting Shares" has the meaning set forth in Section 1.10(a).
"DOL" means the United States Department of Labor.
"Effective Time" has the meaning set forth Section 1.2.
"Employment Agreement" has the meaning set forth in Section 2.14(a).
"Encumbrance" has the meaning set forth in Section 3.4.
"Environment" means air, surface water, ground water or land, including
land surface or subsurface, and any receptor, such as persons, wildlife, fish,
biota or other natural resources.
"Environmental Clean-up Site" means any location that is listed or proposed
for listing on the National Priorities List, the Comprehensive Environmental
Response, Compensation and Liability Information System, or on any similar state
list of sites relating to investigation or cleanup, or that is the subject of
any pending or threatened action, suit, proceeding or investigation, formal or
informal, related to or arising from any location at which there has been a
Release or threatened or suspected Release of a Hazardous Material.
"Environmental Law" means any federal, state, local or foreign
environmental, health and safety or other Law relating to Hazardous Materials,
including the Comprehensive, Environmental Response Compensation and Liability
Act, the Clean Air Act, the Federal Water Pollution Control Act, the Solid Waste
Disposal Act, the Federal Insecticide, Fungicide and Rodenticide Act and the
California Safe Drinking Water and Toxic Enforcement Act.
"Environmental Permit" means any permit, license, approval, consent or
authorization required under or in connection with any Environmental Law and
includes any and all orders, consent orders or binding agreements issued by or
entered into with a Governmental or Regulatory Authority.
54
"Equity Equivalents" means securities (including Options to purchase shares
of USSC Common Stock) that, by their terms, are or may be exercisable,
convertible or exchangeable for or into common stock, preferred stock or other
securities at the election of the holder thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Estimated Third Party Expenses" has the meaning set forth in Section 2.26.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC thereunder.
"Exchange Ratio" means the quotient obtained by dividing (a) the Aggregate
Share Number by (b) the Aggregate Common Number.
"Expiration Date" has the meaning set forth in Section 7.1.
"Financial Statement Date" means December 31, 2002.
"GAAP" means generally accepted accounting principles in the United States,
as in effect from time to time.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, bureau, board, commission, department, official
or other instrumentality of the United States, any foreign country or any
domestic or foreign state, county, city or other political subdivision, and
shall include any stock exchange, quotation service and the NASD.
"Grossed-Up Basis" means, when used to describe the basis on which the
payment of a specified sum is to be made, a basis such that the amount of such
payment, after being reduced by the amount of all Taxes imposed on the recipient
of such payment as a result of the receipt or accrual of such payment, will
equal the specified sum.
"Hazardous Material" means (a) any chemical, material, substance or waste
including, containing or constituting petroleum or petroleum products, solvents
(including chlorinated solvents), nuclear or radioactive materials, asbestos in
any form that is or could become friable, radon, lead-based paint, urea
formaldehyde foam insulation or polychlorinated biphenyls, (b) any chemical,
material, substance or waste that is now defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants" or words of similar import under any Environmental Law; or
(c) any other chemical, material, substance, pollutant or waste that is
regulated by any Governmental or Regulatory Authority or that could constitute a
nuisance.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
55
"Income Tax" means (a) any income, alternative or add-on minimum tax, gross
income, gross receipts, franchise, profits, including estimated taxes relating
to any of the foregoing, or other similar tax or other like assessment or charge
of similar kind whatsoever, excluding any Other Tax, together with any interest
and any penalty, addition to tax or additional amount imposed by any Taxing
Authority responsible for the imposition of any such Tax (domestic or foreign);
or (b) any liability of a Person for the payment of any tax, interest, penalty,
addition to tax or like additional amount resulting from the application of
Treas. Reg. ss. 1.1502-6 or comparable provisions of any Taxing Authority in
respect of a Tax Return of a Relevant Group or any Contract.
"Income Tax Regulations" means Part 1 of Title 26 of the United States Code
of Federal Regulation, promulgated under the Code.
"Indebtedness" of any Person means all obligations of such Person (a) for
borrowed money, (b) evidenced by notes, bonds, debentures or similar
instruments, (c) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(d) under capital leases or (e) in the nature of guarantees of the obligations
described in clauses (a) through (d) above of any other Person.
"Information Statement" has the meaning set forth in Section 2.33.
"Intellectual Property" means all trademarks and trademark rights, trade
names and trade name rights, service marks and service xxxx rights, service
names and service name rights, patents and patent rights, utility models and
utility model rights, copyrights, mask work rights, brand names, trade dress,
product designs, product packaging, business and product names, logos, slogans,
rights of publicity, trade secrets, inventions (whether patentable or not),
invention disclosures, improvements, processes, formulae, industrial models,
processes, designs, specifications, technology, methodologies, computer software
(including all source code and object code), firmware, development tools, flow
charts, annotations, all Web addresses, sites and domain names, all data bases
and data collections and all rights therein, any other confidential and
proprietary right or information, whether or not subject to statutory
registration, and all related technical information, manufacturing, engineering
and technical drawings, know-how and all pending applications for and
registrations of patents, utility models, trademarks, service marks and
copyrights, and the right to xxx for past infringement, if any, in connection
with any of the foregoing, and all documents, disks, records, files and other
media on which any of the foregoing is stored.
"Interim Financial Statements" means the unaudited balance sheet of USSC as
of March 31, 2003, and the related unaudited statement of operations and
statement of cash flows for the three (3) month period ended on such date.
"Investment Assets" means all debentures, notes and other evidences of
Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by USSC.
"IRS" means the United States Internal Revenue Service or any successor
entity.
56
"Law" or "Laws" means any law, statute, order, decree, consent decree,
judgment, rule, regulation, ordinance or other pronouncement having the effect
of law, whether in the United States, any foreign country, or any domestic or
foreign state, county, city or other political subdivision or of any
Governmental or Regulatory Authority.
"Liabilities" means all Indebtedness, obligations and other liabilities of
a Person, whether absolute, accrued, asserted or unasserted, contingent (or
based upon any contingency), known or unknown, fixed or otherwise, or whether
due or to become due.
"License" means any Contract that grants a Person the right to use or
otherwise enjoy the benefits of any Intellectual Property (including any
covenant not to xxx with respect to any Intellectual Property).
"Liens" means any mortgage, pledge, assessment, security interest, lease,
lien, easement, license, covenant, condition, restriction, adverse claim, levy,
charge, option, equity, adverse claim or restriction or other encumbrance of any
kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing, except for any restriction on transfer
generally arising under any applicable federal or state securities law.
"Loss(es)" means any and all damages, fines, fees, Taxes, penalties,
deficiencies, losses (including lost profits or diminution in value) and
expenses, including interest, reasonable expenses of investigation, court costs,
reasonable fees and expenses of attorneys, accountants and other experts or
other expenses of litigation or other proceedings or of any claim, default or
assessment (such fees and expenses to include all fees and expenses, including
fees and expenses of attorneys, incurred in connection with (a) the
investigation or defense of any Third Party Claim or (b) asserting or disputing
any right under this Agreement against any party hereto or otherwise), net of
insurance proceeds actually received (without any adverse effect on the premiums
paid for such insurance) or proceeds received by virtue of third party
indemnification.
"Made-in-America Requirements" has the meaning set forth in Section
2.17(h).
"Merger" has the meaning set forth in Recital A of this Agreement.
"NASD" means the National Association of Securities Dealers, Inc.
"New Shares" has the meaning set forth in Section Error! Reference source
not found..
"Non-Prevailing Party" has the meaning set forth in Section Error!
Reference source not found.(iii).
"Officer's Certificate" has the meaning set forth in Section Error!
Reference source not found..
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract (other
than USSC Preferred Stock) that gives the right to (a) purchase or otherwise
receive or be issued shares of capital stock or other equity interests of such
Person or any security of any kind convertible into or exchangeable or
exercisable for shares of capital stock or other equity interests of such Person
or (b) receive any benefit or right similar to any right enjoyed by or accruing
to the holder of shares of capital stock or other equity interests of such
Person, including any right to participate in the equity, income or election of
directors or officers of such Person.
57
"Order" means any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Authority (in each such case whether preliminary
or final).
"Other Tax" means any sales, use, ad valorem, business license,
withholding, payroll, employment, excise, stamp, transfer, recording,
occupation, premium, property, value added, custom duty, severance, windfall
profit or license tax, governmental fee or other similar assessment or charge,
together with any interest and any penalty, addition to tax or additional amount
imposed by any Taxing Authority responsible for the imposition of any such tax
(domestic or foreign).
"Permit" means any license, permit, franchise or authorization.
"Permitted Grants" means grants of USSC Options in the ordinary course of
business, consistent in amount and terms with USSC' s past practice with the
advance written approval of IMNT after the date of this Agreement.
"Person" means any natural person, corporation, general partnership,
limited partnership, limited-liability company or partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.
"Plan" means each employee benefit or compensation plan, agreement, policy,
program or arrangement covering present or former employees, officers and
directors of, and advisors and consultants to, USSC, including, without
limitation, "employee benefit plans" within the meaning of section 3(3) of
ERISA, stock purchase, stock option or any other stock-based award, profit
sharing, fringe benefit, post-retirement health, health, life, vision and/or
dental insurance coverage (including any self-insured arrangement), disability
benefit, supplemental unemployment benefit, vacation benefit, change in control,
retention, severance, termination pay, bonus and deferred compensation plans,
agreements or funding arrangements (collectively, the "Plans"), whether written
or oral and whether sponsored, maintained or contributed to by (i) USSC or (ii)
any other organization that is a member of a controlled group of organizations
(within the meaning of sections 414(b), (c), (m) or (o) of the Code) of which
USSC is a member (the "Controlled Group").
"Post-Closing Directors" has the meaning set forth in Section 1.5.
"PTO" means the United States Patent and Trademark Office.
"Registered Intellectual Property" shall mean all United States,
international and foreign: (a) patents and patent applications (including
provisional applications); (b) registered trademarks and service marks,
applications to register trademarks and service marks, intent-to-use
applications, other registrations or applications to trademarks or service marks
or trademarks or service marks in which common law rights are owned or otherwise
controlled; (c) registered copyrights and applications for copyright
registration; (d) any mask work registration and application to register mask
works; and (e) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document issued by,
filed with or recorded by any state, government or other public legal authority.
58
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of a
Hazardous Material into the Environment.
"Relevant Group" has the meaning set forth in Section 2.11(a).
"Representatives" has the meaning set forth in Section 2.34.
"Restricted Stock Purchase Agreement" means a Restricted Stock Purchase
Agreement in the form attached to the USSC Stock Option Plan pursuant to which
USSC has sold USSC Restricted Stock or issued USSC Stock Purchase Rights or as
otherwise may have been entered into by USSC before the date of this Agreement.
"SEC" means the Securities and Exchange Commission or any successor entity.
"SEC Documents" means, with respect to any Person, each report, schedule,
form, statement or other document filed or required to be filed with the SEC by
such Person pursuant to section 13(a) of the Exchange Act.
"Securities Act" has the meaning set forth in Section 1.15.
"Site" means any of the real properties currently or previously owned,
leased, occupied, used or operated by USSC, any predecessor of USSC or any
entity previously owned by USSC, including all soil, subsoil, surface waters and
groundwater.
"Subsidiary" means any Person in which USSC or IMNT, as the context
requires, directly or indirectly through Subsidiaries or otherwise, beneficially
owns at least twenty percent (20%) of either the equity interest in, or the
voting control of, such Person, whether or not existing on the date hereof.
"Surviving Corporation" has the meaning set forth in Section 1.1.
"Takeover Statute" means a "fair price," "moratorium," "control share
acquisition" or other similar antitakeover statute or regulation enacted under
state or federal laws in the United States, including section 203 of the
Delaware Law.
"Tax" or "Taxes" means Income Taxes, Other Taxes or both, as the context
requires.
"Tax Laws" means the Code, federal, state, county, local or foreign laws
relating to Taxes and all regulations or other official administrative
pronouncements released thereunder.
"Tax Returns" means any return, report, information return, schedule,
certificate, statement or other document (including any related or supporting
information) filed or required to be filed with, or, where none is required to
be filed with a Taxing Authority, the statement or other document issued by, a
Taxing Authority in connection with any Tax.
59
"Taxing Authority" means any governmental agency, board, bureau, body,
department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.
"Third Party Claim" has the meaning set forth in Section Error! Reference
source not found..
"Third Party Expenses" has the meaning set forth in Section 5.5.
"Warranty Obligations" has the meaning set forth in Section 2.28.
10.2 Construction.
(a) Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender and the neuter, (ii) words using
the singular or plural number also include the plural or singular number,
respectively, (iii) the terms "hereof," "herein," "hereby" and derivative or
similar words refer to this entire Agreement as a whole and not to any
particular Article, Section or other subdivision, (iv) the terms "Article" or
"Section" or other subdivision refer to the specified Article, Section or other
subdivision of the body of this Agreement, (v) the phrases "ordinary course of
business" and "ordinary course of business consistent with past practice" refer
to the business and practice of USSC, (vi) the words "include," "includes" and
"including" shall be deemed to be followed by the phrase "without limitation,"
and (vii) when a reference is made in this Agreement to Exhibits, such reference
shall be to an Exhibit to this Agreement unless otherwise indicated. All
accounting terms used herein and not expressly defined herein shall have the
meanings given to them under GAAP. When used herein, the terms "party" or
"parties" refer to IMNT, on the one hand, and USSC, on the other, and the terms
"third party" or "third parties" refers to Persons other than IMNT or USSC.
(b) When used herein, the phrase "to the knowledge of" any Person,
"to the best knowledge of" any Person, "known to" any Person or any similar
phrase means (i) with respect to any Person who is an individual, the actual
knowledge of such Person, (ii) with respect to any other Person, the actual
knowledge of the directors and officers of such Person and other individuals
that have a similar position or have similar powers and duties as the officers
and directors of such Person, and (iii) in the case of each of (i) and (ii), the
knowledge of facts that such individuals should have after due inquiry. For this
purpose, "due inquiry" with respect to any matter means inquiry of and
consultations with (a) the directors and officers of such Person and other
individuals that have a similar position or have similar powers and duties as
such officers and directors, (b) other employees of and the advisors to such
Person, including legal counsel and outside auditors, who have principal
responsibility for the matter in question or otherwise are likely to have
information relevant to the matter and (c) the stockholders owning more than
twenty percent (20%) of the equity interests, by vote or value, of such Person.
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IN WITNESS WHEREOF, IMNT and USSC have caused this Agreement to be signed
by their duly authorized representatives, all as of the date first written
above.
ULTIMATE SECURITY SYSTEMS CORPORATION IMMUNOTECHNOLOGY, INC.
By: By:
------------------------------------ -----------------------------
Name: Xxxxx Xxxxxx Name: Xxxx Xxxxxxxxx
Title: president, chief executive Title: president, chief executive
officer, secretary officer
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