Exhibit 2.1
EXECUTION COUNTERPART
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), is made
and entered into as of November 8, 2006, by and among AEROBIC CREATIONS, INC., a
Delaware corporation (the "PARENT"), AEROBIC MERGER SUB INC., a Delaware
corporation and a newly-formed, wholly owned subsidiary of Parent (the "MERGER
SUB"), and MARITIME LOGISTICS US HOLDINGS, INC., a Delaware corporation (the
"Company") (Parent, Merger Sub and Company are sometimes collectively referred
to hereinafter as the "PARTIES"), with reference to the following facts:
RECITALS
A. WHEREAS, the Company is a privately held corporation
engaged in the business of providing logistics services to third parties and the
Parent is a publicly reporting corporation not currently engaged in any active
business;
B. WHEREAS, the Parent and the Company have agreed to a merger
on certain terms set forth herein;
C. WHEREAS, the respective Boards of Directors of the Company,
the Parent and Merger Sub have each determined that it is advisable and in the
best interests of their respective stockholders that the Parent acquire the
Company pursuant to the terms and conditions of this Agreement, and, in
furtherance of such acquisition, such Boards of Directors have approved the
merger of Merger Sub with and into the Company (the "MERGER") in accordance with
the terms of this Agreement and the applicable provisions of the Delaware
General Corporation Law (the "DELAWARE CORPORATION LAW");
D. WHEREAS, Parent has formed Merger Sub for the purposes of
effecting the Merger;
E. WHEREAS, for United States federal income tax purposes, it
is intended that the Merger shall qualify as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"CODE"), and that this Agreement shall be, and is hereby, adopted as a "plan of
reorganization" for purposes of Section 368(a) of the Code;
F. WHEREAS, pursuant to the Merger, (i) each outstanding share
of Company Common Stock, $.001 par value per share, ("COMPANY COMMON STOCK"),
shall be converted into the right to receive 16.289156 shares of Parent Common
Stock, and (ii) each outstanding option or warrant to purchase shares of Company
Common Stock shall be exchanged for an option or warrant to purchase a
corresponding number of shares of Parent Common Stock at the exchange ratio set
forth herein;
G. WHEREAS, the Parties have determined it to be in their best
interest for the Parent to issue its Parent Common Stock pursuant to the Merger
under the exemption made available pursuant to Section 4(2) of the Securities
Act of 1933, as amended (the "SECURITIES ACT"); and
H. WHEREAS, the Parties desire to make certain
representations, warranties, covenants, and agreements in connection with, and
establish certain conditions precedent to, the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the Parties agree as follows.
ARTICLE I
THE MERGER
1.1 THE MERGER; THE MERGER CONSIDERATION.
(a) As of the date of this Agreement and immediately prior to
the Effective Time (as defined below) and the Placement, the Parent has (and
will have) outstanding (i) 2,761,635 shares of Parent Common Stock, and (ii) no
shares of Preferred Stock, $.001 par value per share (the "PARENT PREFERRED
STOCK").
(b) In connection with the Merger, (i) each holder of shares
of Company Common Stock will receive 16.289156 shares of Parent Common Stock for
each one share of Company Common Stock held of record at the time of the Merger,
and (ii) the Company will be operated as a wholly owned subsidiary of the
Parent, which shall own all of the issued and outstanding capital stock of the
Company. All debts, liabilities, obligations, contracts and assets of the Merger
Sub will, by operation of law as of the Effective Time, become the debts,
obligations, contracts, liabilities and assets of the Company and Merger Sub
will cease to exist.
1.2 CERTIFICATE OF MERGER. A certificate of merger (the "CERTIFICATE OF
MERGER"), in the form attached hereto as EXHIBIT A, shall be executed and
delivered to the Secretary of State of the State of Delaware (the "DELAWARE
SECRETARY") for filing on the Closing Date, as defined in Section 3, in
accordance with the Delaware Corporation Law.
1.3 EFFECTIVE TIME. The Merger shall become effective upon the filing
of the Certificate of Merger with the Delaware Secretary in accordance with the
provisions of the Delaware Corporation Law. The date and time of the filing with
the Delaware Secretary is referred to herein as the "Effective Time."
1.4 TAX-FREE MERGER. The Parties intend that the Merger will be treated
as a tax-free reorganization under Section 368 of the Code.
ARTICLE II
EFFECT OF THE MERGER
2.1 GENERAL. Subject to the terms and conditions of this Agreement, at
the Effective Time, Merger Sub shall merge with and into the Company in
accordance with the Delaware Corporation Law, the separate corporate existence
of Merger Sub shall cease, and the Company shall continue as the surviving (and
successor) corporation in the Merger. The Company, in its
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capacity as the corporation surviving the Merger, is sometimes referred to
herein as the "Surviving Corporation." The Surviving Corporation shall possess
all the rights, privileges, powers, immunities and franchises, of Merger Sub
(sometimes referred to hereinafter as the "Disappearing Corporation"); all
property, real, personal and mixed, and all debts due on whatever account,
including subscriptions for shares, stock options and warrants, and all choses
in action, and all and every interest, of or belonging to or due the
Disappearing Corporation shall be taken and deemed to be transferred to and
vested in the Surviving Corporation without further act or deed; and the title
to any real estate, or any interest therein, vested in the Disappearing
Corporation shall not revert or be in any way impaired by reason of the Merger.
The Surviving Corporation shall have all the rights, privileges, immunities and
powers and shall be subject to all the duties and liabilities of a corporation
organized under the Delaware Corporation Law.
2.2 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of any Party or the holder of any of
the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time and owned beneficially or of record by
Company stockholders shall be converted into and become 16.289156 validly
issued, fully paid and non-assessable shares of Parent Common Stock.
(b) Each option, warrant and security convertible by its terms
into Company Common Stock that is outstanding immediately prior to the Effective
Time shall be assumed by the Parent and shall be deemed to constitute an option,
warrant or convertible security, as the case may be, to acquire, on the terms
and conditions as were applicable under such option, warrant or convertible
security, the same number of shares of Parent Common Stock as the holder of such
option, warrant or convertible security would have been entitled to receive
pursuant to the Merger had such holder exercised such option or warrant, or
converted such convertible security, in full immediately prior to the Effective
Time (not taking into account whether such option, warrant or convertible
security was in fact exercisable or convertible at such time), and the exercise
or conversion price thereof shall be proportionately adjusted. As soon as
practicable after the Effective Time, the Parent shall deliver to each holder of
a Company option, warrant and convertible security an option, warrant or
convertible security, as the case may be, in the Parent, having substantially
identical terms as the original Company option, warrant or convertible security,
as the case may be.
2.3 DISSENTING SHARES. Notwithstanding any provision of this Agreement
to the contrary, dissenting shares of the Company as defined in the Delaware
Corporation Law ("Dissenting Shares") shall not be converted into the right to
receive shares of Parent Common Stock at or after the Effective Time unless and
until the holder of such Dissenting Shares withdraws his or her demand for
payment of the fair value of such shares in accordance with the provisions of
the Delaware Corporation Law or becomes ineligible for such payment. If a holder
of Dissenting Shares shall withdraw his or her demand for payment of the fair
value of such shares in accordance with the Delaware Corporation Law or shall
become ineligible to receive such payment, then, as of the later of the
Effective Time or the occurrence of such event, such holder's Dissenting Shares
shall be automatically converted into a corresponding number of shares of Parent
Common Stock in accordance with the terms of this Agreement. The Company shall
give the Parent prompt notice of any notices of intent to assert dissenters'
rights and to
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demand payment or withdrawals of notices of intent to assert dissenters' rights
and will not, except with the prior written consent of the Parent, settle or
compromise or offer to settle or compromise any such notices, voluntarily make
any payment with respect to any notice of intent to demand payment for shares of
Company Common Stock or approve any withdrawal of any such notice. Each holder
of Dissenting Shares shall have only such rights and remedies as are granted to
such holder under the Delaware Corporation Law. This Section notwithstanding, in
the event that five percent (5.0%) or more of the outstanding shares of the
Company are Dissenting Shares, the Company has the sole discretion to terminate
this Agreement, which shall forthwith become void and of no further force and
effect and the Parties shall be released from any and all obligations hereunder;
provided, however, that nothing herein shall relieve any Party from liability
for the breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
2.4 EXCHANGE OF CERTIFICATES.
(a) Prior to the Closing Date, the Parent shall appoint its
transfer agent or such other person or entity as the Company may reasonably
request to act as exchange agent (the "EXCHANGE AGENT") in the Merger.
(b) As soon as practicable after the Effective Time, the
Parent shall cause the Exchange Agent to deliver to each holder of record of
shares of Company Common Stock to be exchanged for the Parent Common Stock
("OUTSTANDING SHARES"), a form letter of transmittal (the "LETTER OF
TRANSMITTAL") for use in effecting the surrender of the stock certificates
representing the Outstanding Shares (the "CERTIFICATES"). As of the Effective
Time, Parent shall deposit or shall cause to be deposited with the Exchange
Agent for the benefit of the holder of shares of Company Common Stock for
exchange through the Exchange Agent certificates evidencing such number of
shares of Parent Common Stock issuable pursuant to Section 2.2 in exchange for
outstanding shares of Company Common Stock which will be converted into Parent
Common Stock in the Merger. To the extent that holders of Outstanding Shares
(each a "HOLDER") deliver Certificates along with a duly executed and completed
Letter of Transmittal to the Parent or the Exchange Agent, then as soon as
reasonably practicable after the Effective Time the Parent shall deliver (or
cause and instruct the Exchange Agent to deliver) to such each Holder, a
certificate(s) representing the number of shares of Parent Common Stock to which
the Holder is entitled pursuant to Section 2.2 above. The Parent or Exchange
Agent shall effect delivery of the certificate for Parent Common Stock within
three (3) Business Days after due receipt of the Holder's Certificate and duly
completed and executed Letter of Transmittal. For purposes of this Agreement,
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday or day when
commercial banks are not generally open to the public in New York, New York.
Each Certificate surrendered shall immediately be canceled. At the Effective
Time, no Holder of a Certificate shall have any rights with respect to shares of
Company Common Stock other than to surrender such Certificate pursuant to this
Section 2.4 or, if the Holder holds Dissenting Shares, to demand payment of the
fair value thereof pursuant to the Delaware Corporation Law or to exercise any
other rights under the Delaware Corporation Law.
(c) The Parent and Exchange Agent shall follow the same
procedure with respect to lost, stolen or mutilated Certificates as the Company
followed with respect to lost, stolen or mutilated certificates prior to the
Effective Time which procedures shall include, at a
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minimum, receipt of an affidavit and indemnity of lost certificate in customary
form (but without the requirement of any bond or security for such indemnity).
After the Effective Time and until surrender as contemplated herein, each
Certificate shall be deemed to evidence only a right to receive upon such
surrender that merger consideration represented by the Parent Common Stock.
2.5 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock evidenced thereby, until the holder of such Certificate shall
surrender such Certificate. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the holder of the
certificates evidencing shares of Parent Common Stock issued in exchange
therefore (i) the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such shares of Parent
Common Stock and (ii) at the appropriate payment date, the amount of dividends
or other distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such shares of Parent Common Stock. No interest shall be paid on any amounts
payable under this Section 2.5.
2.6 NO FURTHER RIGHTS IN COMPANY STOCK. All shares of Parent Common
Stock issued upon exchange of the shares of Company Common Stock in accordance
with the terms hereof shall be deemed to have been issued in full satisfaction
of all rights pertaining to such shares of Company Common Stock.
2.7 NO FRACTIONAL SHARES. No certificates or scrip evidencing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of the Parent. In
lieu of fractional shares of Parent Common Stock, any fractional share will be
rounded up to the nearest whole share of Parent Common Stock.
2.8 NO TRANSFERS OF STOCK AFTER EFFECTIVE TIME. After the Effective
Time, there shall be no transfers of any shares of Company Common Stock on the
stock transfer books of the Surviving Corporation. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be forwarded
to the Parent or Exchange Agent and exchanged in accordance with Section 2.4(b),
subject to applicable law in the case of Dissenting Shares.
2.9 RESTRICTIONS ON TRANSFER OF NEW PARENT SHARES. The shares of Parent
Common Stock that are being issued in connection with the Merger (the "New
Parent Shares"), and any shares of Parent Common Stock issuable upon exercise or
conversion of options or warrants issued pursuant to Section 2.2(b),
(collectively with the New Parent Shares, the "New Parent Securities") are being
issued pursuant to an exemption from registration provided for in Section 4(2)
of the Securities Act of 1933, as amended (the "SECURITIES Act");. Each
certificate representing any New Parent Securities shall be subject to stop
transfer instructions and shall bear all legends required under all applicable
federal and state securities laws.
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2.10 CERTIFICATE OF INCORPORATION AND BYLAWS OF SURVIVING CORPORATION.
(a) The Certificate of Incorporation of the Company in effect
at the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation.
(b) The Bylaws of the Company in effect at the Effective Time
shall be the Bylaws of the Surviving Corporation.
2.11 MANAGEMENT OF SURVIVING CORPORATION AND PARENT.
(a) One or more of the directors of the Company immediately
prior to the Effective Time shall be the initial directors of Surviving
Corporation and shall hold office from the Effective Time until their respective
successors are duly elected or appointed and qualified in the manner provided in
the Certificate of Incorporation or Bylaws of the Surviving Corporation or as
otherwise provided by applicable law.
(b) The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation or Bylaws of the Surviving Corporation or as
otherwise provided by applicable law.
(c) Upon the delivery of the Certificate of Merger to the
Secretary of State of the State of Delaware as contemplated by Section 1.2
hereof, the officers and directors of the Parent shall resign, to be replaced by
the officers and directors designated on Schedule 2.11 (c) hereto, who shall
immediately take such offices. The resignation of the directors of the Parent
and the appointment of new directors in accordance with the terms of this
Section 2.11(c) shall accomplished through the filling of vacancies in the Board
of Directors of the Parent in compliance with the applicable provisions of the
Delaware Corporation Law and the Bylaws of the Parent and without the vote (by
written consent or otherwise) of the shareholders of the Parent.
2.12 TAKING OF NECESSARY ACTION, FURTHER ASSURANCES. Each of the
Company, the Parent and Merger Sub shall use its or their commercially
reasonable efforts to take all such action as may be necessary or appropriate to
effectuate the Merger in accordance with this Agreement as promptly as possible
and at the time contemplated by this Agreement. If, at any time after the
Effective Time, any such further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company, the Parent and Merger Sub immediately prior to the Effective Time are
fully authorized in the name of their respective corporations or otherwise to
take, and will take, all such lawful and necessary action.
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ARTICLE III
CLOSING
3.1 CLOSING. Subject to the provisions of this Agreement, the closing
of the transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of Xxxxx Xxxxxxx Xxxxxxx Israels LLP, Seven Time Square,
New York, NY, within two (2) Business Days after the date on which the last of
the conditions to Closing set forth in Article VIII shall have been satisfied or
waived, or at such other place and on such other date as is mutually agreeable
to Parent and the Company (the "Closing Date"). The Closing will be effective as
of the Effective Time.
3.2 CLOSING DELIVERIES. At the Closing, each of the Parties shall make
the Closing deliveries required of it pursuant to Article VIII of this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule attached hereto as
EXHIBIT B (the "COMPANY DISCLOSURE SCHEDULE"), the Company represents and
warrants to the Parent that the statements contained in this Article IV are
true, correct and complete as of the date of this Agreement (or if made as of a
specified date, as of such date) and will be true, correct and complete as of
the Closing Date (or, if made as of a specified date, as of such date). As
appropriate, for the purposes of this Article 4, the Company shall be deemed to
include both the Company and its subsidiaries listed in Section 4.1(b) of the
Disclosure Schedule.
4.1 ORGANIZATION AND QUALIFICATION.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power and authority to carry on its business as it is
now being conducted. There is no pending or threatened proceeding for the
dissolution or liquidation of the Company.
(b) The Company (i) does not, directly or indirectly, own any
interest in any corporation, partnership, joint venture, limited liability
company, or other Person and (ii) is not subject to any obligation or
requirement to provide funds to or to make any investment (in the form of a
loan, capital contribution or otherwise) in or to any Person. For purposes of
this Agreement, "PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, government, entity or government or any group
comprised of one or more of the foregoing.
(c) The Company is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the nature of its business
or the properties owned or leased by it makes such qualification or licensing
necessary, except for any such jurisdiction where the failure to so qualify or
be licensed, individually and in the aggregate for all such jurisdictions, would
not reasonably be expected to have a Material Adverse Effect. For purposes of
this
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Agreement, as to the Company, "MATERIAL ADVERSE EFFECT" means an action, event
or occurrence if it has, or could reasonably be expected to have, a material
adverse effect on the capitalization, financial condition or results of
operations of the Company. Any item or event susceptible of measurement in
monetary terms which, when considered together with similar items or events,
does not exceed the amount of $100,000.00, shall not be considered a Material
Adverse Effect.
(d) The Company has provided to the Parent complete and
accurate copies of the Certificate of Incorporation and Bylaws of the Company,
as currently in effect, and minutes and other records of the meetings and other
proceedings of the Board of Directors and stockholders of the Company. The
Company is not violation of any provisions of its Certificate of Incorporation
or Bylaws.
4.2 CAPITALIZATION. The authorized capital stock of Company consists of
1,000,000 shares of Company Common Stock, $.001 par value, of which 1,000,000
shares of Company Common Stock are issued and outstanding. No shares of
Preferred Stock are authorized, issued or outstanding. All issued and
outstanding shares of Company Common Stock are validly issued and outstanding,
fully paid and non-assessable and free of preemptive rights. Other than as set
forth in the Company Disclosure Schedule, (i) there are no shares of capital
stock or other equity securities of Company outstanding and (ii) there are no
outstanding options, warrants, subscription rights (including any preemptive
rights), calls, or commitments, or convertible securities of any character
whatsoever to which the Company is a party or is bound, requiring or which could
require the issuance, sale or transfer by the Company of any shares of capital
stock of the Company or any securities convertible into or exchangeable or
exercisable for, or rights to purchase or otherwise acquire, any shares of
capital stock of the Company. There are no stock appreciation rights or similar
rights relating to the Company.
4.3 AUTHORITY.
(a) The Company has the requisite corporate power and
authority to enter into this Agreement, to perform its obligations hereunder,
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to approval by its
stockholders. This Agreement has been duly executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company,
enforceable against it in accordance with its terms.
(b) The execution and delivery by the Company of this
Agreement does not, and the consummation of the transactions contemplated
thereby will not, (i) conflict with, or result in a violation of, any provision
of bylaws or other charter documents of the Company, (ii) constitute or result
in a breach of or default (or an event which with notice or lapse of time, or
both, would constitute a default) under, or result in the termination or
suspension of, or accelerate the performance required by, or result in a right
of termination, cancellation or acceleration of any obligation or a loss of a
benefit under, any note, bond, mortgage, indenture, deed of trust, lease,
permit, concession, franchise, license, agreement or other instrument or
obligation to which the Company is a party or to which the properties or assets
of the Company are subject, (iii) create any lien upon any of the properties or
assets of the Company, or (iv)
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constitute, or result in, a violation of any law applicable to the Company or
any of the properties or assets of the Company.
(c) No consent, approval, order or authorization of, notice
to, registration or filing with any governmental authority or other Person is
required to be obtained or made by the Company in connection with the execution
and delivery of this Agreement by the Company or the consummation by the Company
of the transactions contemplated by this Agreement, except for (i) filing of the
Certificate of Merger with the Delaware Secretary, and (ii) the filing of a Form
D and related state securities law notices in connection with the issuance of
the securities contemplated by the terms of a Private Placement Memorandum,
dated October 23, 2006 (the "PPM"), whereby the Company is offering up to 50,000
units (the "Units") of the Parent, at a purchase price of $1,000.00 per Unit,
each Unit consisting of 100 shares of Parent Common Stock, $.001 par value
("PARENT COMMON STOCK") and warrants to purchase 75 shares of Parent Common
Stock (the "PLACEMENT").
4.4 FINANCIAL STATEMENTS.
(a) The Company Disclosure Schedule sets forth copies of the
audited balance sheet of the Company as of June 30, 2006 (the "COMPANY 6/30/06
BALANCE SHEET"), and the audited statements of operations and stockholders'
deficit and cash flows for the period from inception (February 6, 2006) to June
30, 2006 (collectively, the "COMPANY FINANCIAL STATEMENTS"). To the knowledge of
the Company, the Company Financial Statements (including the related notes) have
been prepared in accordance with United States generally accepted accounting
principles consistently applied ("GAAP") during the periods involved (except as
may be indicated therein or in the notes thereto), and present fairly, in all
material respects, the consolidated financial position of the Company as of the
respective dates set forth therein, and the consolidated results of the
Company's operations and its cash flows for the respective periods set forth
therein in accordance with GAAP (subject, in case of any unaudited interim
financial statements, to normal year-end adjustments).
(b) The books and records of the Company are being maintained
in material compliance with applicable legal and accounting requirements.
(c) Except as and to the extent reflected, disclosed or
reserved against in the Company Financial Statements (including the notes
thereto) or in the Company Disclosure Schedule, as of June 30, 2006, the Company
had no liabilities, whether absolute, accrued, contingent or otherwise, material
to the business, operations, assets, financial condition or prospects of the
Company which were required by GAAP (consistently applied) to be disclosed in
the Company's consolidated financial statements as of June 30, 2006, or the
notes thereto. The Company has not incurred any liabilities except in the
ordinary course of business and consistent with past practice, except as related
to the transactions contemplated by this Agreement or in the Company Disclosure
Schedule.
(d) The Company possesses, or expects to possess on or before
the required filing date, all of the financial statements and financial
information required to be included in the Report on Form 8-K to be filed by the
Parent within four (4) business days after the consummation of the transactions
contemplated by the PPM.
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4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as related to the
transactions contemplated by this Agreement, there has not been any material
adverse change in the business, operations, assets or financial condition of the
Company since June 30, 2006 and, to the best of the Company's knowledge, no
facts or condition exists which the Company believes will cause such a material
adverse change in the future.
4.6 LITIGATION. There are no legal actions (i) pending or, to the
knowledge of the Company, threatened against the Company or the transactions
contemplated by this Agreement or (ii) pending or, to the knowledge of the
Company, threatened against any current employee, officer or director of the
Company that, in any way relates to the Company. The Company is not subject to
any order, judgment, writ, injunction or decree of any governmental authority.
4.7 TAXES. The Company has timely filed all material tax returns and
reports required to be filed by it (after giving effect to any filing extension
properly granted by a governmental entity having authority to do so) ("COMPANY
TAX RETURN"). Each such Company Tax Return is true, correct and complete in all
material respects. The Company has paid, within the time and manner prescribed
by law, all material taxes that are due and payable. To the Knowledge of the
Company, no Company Tax Return is the subject of any investigation, audit or
other proceeding by any federal, state or local tax authority.
4.8 CONTRACTS.
(a) The Company is not in violation or breach of any material
contract, except such violations which, in the aggregate, do not and are not
reasonably expected to have a Material Adverse Effect. There does not exist any
event or condition that, after notice or lapse of time or both, would constitute
an event of default or breach under any material contract on the part of the
Company or, to the knowledge of the Company, any other party thereto or would
permit the modification, cancellation or termination of any material contract or
result in the creation of any lien upon, or any person acquiring any right to
acquire, any assets of the Company. The Company has not received in writing any
claim or threat that the Company has breached any of the terms and conditions of
any material contract.
(b) The consent of, or the delivery of notice to or filing
with, any party to a material contract is not required for the execution and
delivery by the Company of this Agreement or the consummation of the
transactions contemplated under the Agreement.
4.9 EMPLOYEE BENEFIT PLANS. The Company does not maintain or contribute
to any "employee pension benefit plan" (the "COMPANY PENSION PLANS"), as such
term is defined in Section 3 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), "employee welfare benefit plan," as such term is
defined in Section 3 of ERISA, stock option plan, stock purchase plan, deferred
compensation plan, cafeteria plan, severance plan, bonus plan, employment
agreement or other similar plan, program or arrangement. The Company has not
contributed to, or been required to contribute to, any "Multiemployer Plan", as
such term is defined in Section 3(37) of ERISA.
4.10 COMPLIANCE WITH APPLICABLE LAW. To the Company's knowledge, the
Company has complied in all material respects with all applicable federal, state
and local laws and
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regulations to which it or its business may be subject, except where the failure
to so comply did not have and would not be a Material Adverse Effect, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand or notice has been filed or commenced against or, to the Company's
knowledge, has been threatened against the Company alleging any failure to so
comply.
4.11 INTELLECTUAL PROPERTY.
(a) The Company owns, or has the right to use pursuant to
valid license, sublicense, agreement, or permission, all intellectual property
rights used in or necessary for the operation of the Company's business as
presently conducted. Except as set forth in the Company Disclosure Schedule, (i)
such intellectual property rights are owned free and clear of royalty
obligations, liens and encumbrances, (ii) the execution and delivery of this
Agreement and the closing of the transaction contemplated hereby will not alter
or impair any such rights, (iii) the use of all such intellectual property by
the Company does not infringe or violate the intellectual property rights of any
person or entity, and (iv) the Company has not granted any person or entity any
rights, pursuant to written license agreement or otherwise, to use such
intellectual property. The Company has taken, and shall continue to take through
the Closing Date, all necessary action to maintain and protect each item of
intellectual property that it owns or uses.
(b) The Company Disclosure Schedule identifies (i) each
patent, trademark, trade name, service name or copyright with respect to any of
the Company's intellectual property, all applications and registration
statements therefor and renewals thereof (and sets forth correct and complete
copies of all such patents, registrations and applications (as amended to date))
and (ii) all intellectual property that the Company uses pursuant to license,
sublicense, agreement, or permission, all of which are valid and in full force
and effect, and the execution and delivery of this Agreement and the closing of
the transaction contemplated hereby will not alter or impair any such rights.
(c) The Company has at all times used reasonable efforts to
protect all trade secrets related to its intellectual property.
4.12 PROPERTIES. The Company has good and marketable title to all
material assets and properties, whether real or personal, tangible or
intangible, listed on the Company 6/30/06 Balance Sheet or the Company
Disclosure Schedule, subject to no encumbrances, liens, mortgages, security
interests or pledges, except (i) those items that secure liabilities that are
reflected in said Balance Sheet or the note thereto or that secure liabilities
incurred in the ordinary course of business after the date of the Company
6/30/06 Balance Sheet, (ii) statutory liens for amounts not yet delinquent or
which are being contested in good faith and (iii) such title imperfections that
are not in the aggregate material to the business, operations, assets, financial
condition or prospects of the Company. Except as affected by the transactions
contemplated hereby, the Company as lessee has the right under valid and
subsisting leases to occupy, use, possess and control all real property listed
on the Company Disclosure Schedule in all material respects as presently
occupied, used, possessed and controlled by the Company.
4.13 INSURANCE. The business operations and all insurable properties
and assets of the Company are insured for their benefit against all risks which,
in the reasonable judgment of the
11
management of the Company, should be insured against, in each case under
policies or bonds issued by insurers of recognized responsibility, in such
amounts with such deductibles and against such risks and losses as are in the
opinion of the management of the Company adequate for the business engaged in by
the Company. The Company has not received any notice of cancellation or notice
of a material amendment of any such insurance policy or bond.
4.14 DISCLOSURE. This Agreement, including the Company Disclosure
Schedules, does not contain and will not contain any untrue statement of a
material fact by the Company and does not omit and will not omit to state any
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PARENT
Except as set forth in the disclosure schedule attached hereto as
EXHIBIT C (the "PARENT DISCLOSURE SCHEDULE"), the Parent represents and warrants
to the Company that the statements contained in this Article V are true, correct
and complete as of the date of this Agreement (or if made as of a specified
date, as of such date) and will be true, correct and complete as of the Closing
Date (or, if made as of a specified date, as of such date). Unless the context
otherwise requires, all references to the Parent contained in this Article V
will be read to include the Parent together with any of its direct or indirect
subsidiaries (including Merger Sub).
5.1 ORGANIZATION AND QUALIFICATION.
(a) The Parent is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware and has
the requisite corporate power and authority to carry on its business as it is
now being conducted. There is no pending or threatened proceeding for the
dissolution or liquidation of the Parent.
(b) Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Merger
Sub was formed solely for the purpose of the Merger and has no business, assets,
liabilities, contracts or commitments other than as set forth in this Agreement.
There is no pending or threatened proceeding for the dissolution or liquidation
of Merger Sub.
(c) Except for Merger Sub, the Parent (i) does not, directly
or indirectly, own any interest in any corporation, partnership, joint venture,
limited liability company, or other Person, and (ii) is not subject to any
obligation or requirement to provide funds to or to make any investment (in the
form of a loan, capital contribution or otherwise) in any Person.
(d) The Parent is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the nature of its business
or the properties owned or leased by it makes such qualification or licensing
necessary, except for any such jurisdiction where the failure to so qualify or
be licensed, individually and in the aggregate for all such jurisdictions, would
not reasonably be expected to have a Material Adverse Effect. For purposes of
this Agreement, as to the Parent, "MATERIAL ADVERSE EFFECT" means an action,
event or occurrence if it has, or could reasonably be expected to have, a
material adverse effect on the capitalization,
12
financial condition or results of operations of the Parent. Any item or event
susceptible of measurement in monetary terms which, when considered together
with similar items or events, does not exceed the amount of $25,000.00, shall
not be considered a Material Adverse Effect.
(e) The Parent has provided complete and accurate copies of
the Certificate of Incorporation and Bylaws of the Parent and Merger Sub, as
currently in effect, and minutes and other records of the meetings and other
proceedings of the Board of Directors and stockholders of the Parent. Neither
the Parent nor Merger Sub is in violation of any provisions of its Certificate
of Incorporation or Bylaws.
5.2 CAPITALIZATION.
(a) The authorized capital stock of the Parent consists of (i)
99,000,000 shares of Parent Common Stock, and (ii) 1,000,000 shares of Parent
Preferred Stock. The issued and outstanding capital stock of the Parent consists
entirely of (i) 2,761,635 shares of Parent Common Stock. All issued and
outstanding shares of Parent Common Stock are validly issued and outstanding,
fully paid and nonassessable and free of preemptive rights. There are no
outstanding options, warrants, subscription rights (including any preemptive
rights), calls, or commitments, or convertible notes or instruments of any
character whatsoever to which the Parent is a party or is bound, requiring or
which could require the issuance, sale or transfer by the Parent of any shares
of capital stock of the Parent or any securities convertible into or
exchangeable or exercisable for, or rights to purchase or otherwise acquire, any
shares of capital stock of the Parent. There are no stock appreciation rights or
similar rights relating to the Parent.
(b) The authorized capital of Merger Sub consists of 3,000
shares of common stock, $.01 par value per share, of which all 3,000 shares are
issued and outstanding and held by the Parent. Other than such outstanding
shares, there are no shares of capital stock or other equity securities of
Merger Sub outstanding and no outstanding options, warrants, subscription rights
(including any preemptive rights), calls, or commitments, or convertible notes
or instruments of any character whatsoever to which the Parent or Merger Sub is
a party or is bound, requiring or which could require the issuance, sale or
transfer by the Parent or Merger Sub of any shares of capital stock of Merger
Sub, any securities convertible into or exchangeable or exercisable for, or
rights to purchase or otherwise acquire, any shares of capital stock of Merger
Sub. There are no stock appreciation rights or similar rights relating to Merger
Sub.
(c) Upon completion of the Merger, and other than any
outstanding options, warrants or convertible securities issued by the Company
and converted into options, warrants or convertible securities of the Parent as
a result of the Merger, there are no outstanding options, warrants, subscription
rights (including any preemptive rights), calls, or commitments, or convertible
notes or instruments of any character whatsoever to which the Parent is a party
or is bound, requiring or which could require the issuance, sale or transfer by
the Parent of any shares of capital stock of the Parent or any securities
convertible into or exchangeable or exercisable for, or rights to purchase or
otherwise acquire, any shares of capital stock of the Parent.
(d) To the knowledge of the Parent, all of the shares of
Parent Common Stock issued and outstanding immediately prior to the Effective
Time have been issued in compliance with Securities Act and applicable state
securities laws in reliance on exemptions from
13
registration or qualification thereunder. The knowledge caveat contained in this
Section 5.2(d) shall not apply to shares of Parent Common Stock issued after
June 14, 2006.
(e) The list of all record holders of Parent Common Stock
delivered pursuant to Section 8.1(d) is complete and correct and accurately
reflects the share holdings of the Parent.
5.3 AUTHORITY.
(a) Each of the Parent and Merger Sub has the requisite
corporate power and authority to enter into this Agreement, to perform its
obligations thereunder, and to consummate the transactions contemplated thereby.
The execution and delivery of this Agreement by the Parent and Merger Sub and
the consummation by the Parent and Merger Sub of the transactions contemplated
thereby have been duly authorized by all necessary corporate action on the part
of the Parent and Merger Sub. This Agreement has been duly executed and
delivered by the Parent and Merger Sub and constitutes a legal, valid and
binding obligation of the Parent and Merger Sub, enforceable against each of
them in accordance with its terms. No vote or approval of the shareholders of
the Parent is required in connection with the Merger.
(b) The execution and delivery by the Parent and Merger Sub of
this Agreement does not, and the consummation of the transactions contemplated
thereby will not, (i) conflict with, or result in a violation of, any provision
of bylaws or other charter documents of the Parent or Merger Sub, (ii) to the
knowledge of the Parent, constitute or result in a breach of or default (or an
event which with notice or lapse of time, or both, would constitute a default)
under, or result in the termination or suspension of, or accelerate the
performance required by, or result in a right of termination, cancellation or
acceleration of any obligation or a loss of a benefit under, any note, bond,
mortgage, indenture, deed of trust, lease, permit, concession, franchise,
license, agreement or other instrument or obligation to which the Parent is a
party or to which the properties or assets of the Parent or Merger Sub are
subject, (iii) create any lien upon any of the properties or assets of the
Parent or Merger Sub, or (iv) constitute, or result in, a violation of any law
applicable to the Parent or Merger Sub or any of the properties or assets of
either of them.
(c) No consent, approval, order or authorization of, notice
to, registration or filing with any governmental authority or other Person is
necessary in connection with the execution and delivery of this Agreement by the
Parent and Merger Sub or the consummation by the Parent and Merger Sub of the
transactions contemplated by this Agreement, except for (i) filing of the
Certificate of Merger with the Delaware Secretary, (ii) the filing of a Form D
and related state securities law notices in connection with the issuance of
Parent Common Stock in connection with the Merger and (iii) the filing of a
current report on Form 8-K with the Securities and Exchange Commission (the
"SEC") announcing completion of the Merger.
5.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) To the knowledge of the Parent: (a) the Parent has timely
filed and made available to Company all forms, reports, schedules, statements
and other documents required to be filed by the Parent with the SEC
(collectively, the "PARENT SEC REPORTS") and (b) the Parent SEC Reports at the
time filed, (i) complied in all material respects with the applicable
requirements of the Securities Act and the Securities Exchange Act of 1934, as
amended (the
14
"EXCHANGE ACT"), as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such
Parent SEC Reports or necessary in order to make the statements in such Parent
SEC Reports, in light of the circumstances under which they were made, not
misleading. With respect to any Parent SEC Report filed, or required to be
filed, on or after June 14, 2006 and prior to the Closing Date, the
representations set forth in this Section 5.4(a) shall be deemed given without
the knowledge caveat of the Parent.
(b) Each of the financial statements (including, in each case,
any related notes), contained in the Parent SEC Reports, including any Parent
SEC Reports filed after the date of this Agreement until the Closing, complied,
as of its respective filing date, to the knowledge of the Parent, in all
material respects with all applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved and fairly presented the consolidated financial position of the Parent
as at the respective dates and the results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount.
(c) Between January 1, 2006 and the date hereof, except as
disclosed in the Parent SEC Reports, there has not been any change in the
business, operations or financial condition of the Parent that has had or
reasonably would be expected to have a material adverse effect on the Parent.
(d) The Parent and Merger Sub do not have any liability or
obligation (absolute, accrued, contingent or otherwise) other than those which
arose in the ordinary course of their respective activities or under this
Agreement.
(e) Nothing has come to the attention of the Parent which
would indicate: (i) that the accounting firm of Xxxx Xxxxxxxx Xxxx-Xxxxxx
Xxxxxxx, which has expressed its opinion in respect of the consolidated
financial statements of Parent for the fiscal year ended December 31, 2005 (the
"AUDIT OPINION"), is not independent of Parent pursuant to the standards set
forth in Rule 2-01 of Regulation S-X promulgated by the SEC, or that such firm
was not otherwise qualified to render the Audit Opinion and complete its review
under applicable law; or (ii) that since March 3, 2005, either Parent or, to the
knowledge of Parent, any director, officer or employee, of Parent, has received
or otherwise had or obtained knowledge of any material complaint, allegation,
assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of Parent or its
internal accounting controls, including any complaint, allegation, assertion or
claim that Parent has engaged in questionable accounting or auditing practices.
5.5 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
the other transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Parent, Merger Sub or any shareholder of the Parent.
15
5.6 OWNERSHIP OF MERGER SUB, NO PRIOR ACTIVITIES. As of the date hereof
and as of the Effective Time, except for obligations or liabilities incurred in
connection with its incorporation or organization and the transactions
contemplated by this Agreement and except for this Agreement and any other
agreements or arrangements contemplated hereby or thereby, Merger Sub has not
and will not have incurred, directly or indirectly, any obligations or
liabilities or engaged in any business activities of any type or kind whatsoever
or entered into any agreements or arrangements with any person.
5.7 LITIGATION. There are no legal actions (i) pending or, to the
knowledge of the Parent, threatened against the Parent, Merger Sub or the
transactions contemplated by this Agreement or (ii) pending or, to the knowledge
of the Parent, threatened against any current employee, officer or director of
the Parent that, in any way relates to the Parent. The Parent is not subject to
any order, judgment, writ, injunction or decree of any governmental authority.
5.8 TAXES. To the knowledge of the Parent, the Parent has timely filed
all material tax returns and reports required to be filed by it (after giving
effect to any filing extension properly granted by a governmental entity having
authority to do so) ("PARENT TAX RETURN"). No Parent Tax Returns were required
to be filed, or were filed, on or after June 14, 2006 and prior to the Closing
Date. To the knowledge of the Parent, each such Parent Tax Return is true,
correct and complete in all material respects. The Parent has paid, within the
time and manner prescribed by law, all material taxes that are due and payable.
To the knowledge of the Parent, no Parent Tax Return is the subject of any
investigation, audit or other proceeding by any federal, state or local tax
authority.
5.9 NO EMPLOYEES; LABOR MATTERS. Neither the Parent nor Merger Sub has
any employees or consultants. No unfair labor practice, or race, sex, age,
disability or other discrimination complaint is pending, nor is any such
complaint, to the knowledge of the Parent, threatened against the Parent before
the National Labor Relations Board, Equal Employment Opportunity Commission or
any other governmental authority, and no grievance is pending, nor is any
grievance, to the knowledge of the Parent, threatened against the Parent or
Merger Sub.
5.10 BENEFIT PLANS. The Parent has not adopted nor is it party to any
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical or
other employee benefit plan, arrangement or understanding (whether or not
legally binding) providing benefits to any current or former employee, officer
or director of the Parent or any person affiliated with the Parent under Section
414(b), (c), (m) or (o) of the Code; provided except to the extent permitted in
Section 6.1(b)(i) hereof.
5.11 CONTRACTS AND COMMITMENTS.
(a) Except for this Agreement and the agreements and
transactions specifically contemplated by this Agreement, neither the Parent nor
Merger Sub is a party to or subject to, nor plans to enter into:
(i) any agreement or other commitments requiring any
payments or performance of services by the Parent or Merger Sub;
16
(ii) any agreement or other commitments containing
covenants limiting the freedom of the Parent or Merger Sub to compete in any
line of business or with any Person or in any geographic location or to use or
disclose any information in their possession;
(iii) any license agreement (as licensor or licensee)
or royalty agreement;
(iv) any agreement of indemnification, other than
indemnification rights granted in the Bylaws of the Parent;
(v) any agreement or undertaking pursuant to which
the Parent is: (A) borrowing or is entitled to borrow any money; (B) lending or
has committed itself to lend any money; or (C) a guarantor or surety with
respect to the obligations of any Person;
(vi) any powers of attorney granted by the Parent;
and
(vii) any leases of real or personal property.
(b) The Parent is not in violation or breach of any contract.
There does not exist any event or condition that, after notice or lapse of time
or both, would constitute an event of default or breach under any contract on
the part of the Parent or, to the knowledge of the Parent, any other party
thereto or would permit the modification, cancellation or termination of any
contract or result in the creation of any lien upon, or any person acquiring any
right to acquire, any assets of the Parent or Merger Sub. The Parent has not
received in writing any claim or threat that Parent or Merger Sub has breached
any of the terms and conditions of any contract.
(c) The consent of, or the delivery of notice to or filing
with, any party to a contract is not required for the execution and delivery by
the Parent of this Agreement or the consummation of the transactions
contemplated under the Agreement.
5.12 BOOKS AND RECORDS. Since June 14, 2006: (a) the books and records
of the Parent have been maintained and preserved in accordance with applicable
regulations and business practices; (b) the corporate records of the Parent and
Merger Sub are complete and correct and the minutes and consents contained
therein accurately reflect actions taken at a duly called and held meeting or by
sufficient consent without a meeting; and (c) all actions by the Parent and
Merger Sub which required director or shareholder approval are reflected on the
respective corporate minute books. Nothing has come to the attention of the
Parent which would indicate, with respect to any period prior to June 14, 2006,
that: (a) the corporate records of the Parent are not complete and correct or
that the minutes and consents contained therein do not accurately reflect
actions taken at a duly called and held meeting or by sufficient consent without
a meeting; or (c) that all actions by the Parent which required director or
shareholder approval are not reflected in the corporate records.
5.13 ASSETS. The Parent has no fixtures, furniture, equipment,
inventory, intellectual property, accounts receivable or other assets other than
cash and its interest in this Agreement. The Parent is not a party to any leases
for real or personal property.
17
5.14 NO DISAGREEMENTS WITH ACCOUNTANTS AND LAWYERS. There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Parent to arise, between the accountants, and lawyers formerly or presently
employed by the Parent, and the Parent is current with respect to any fees owed
to its accountants and lawyers.
5.15 TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set forth in
the Parent SEC Reports, none of the current officers or directors of the Parent
and none of the Affiliates or employees of the Parent is presently a party to
any transaction with the Parent (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Parent, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.
5.16 LISTING ON THE OTCBB. The Parent Common Stock is quoted on the
Over-The-Counter Bulletin Board (the "OTCBB") and the Parent has and continues
to satisfy all of the requirements of the OTCBB for such listing and for the
trading of Parent Common Stock thereunder. The Parent have not been informed,
nor does it have any knowledge, that the NASD or any other regulatory agency
will take action to cease the Parent Common Stock from being quoted on the
OTCBB.
5.17 COMPLIANCE. To the Parent's knowledge, (i) the Parent has complied
in all material respects with all applicable federal, state and local laws and
regulations to which it or its business may be subject, (ii) no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
has been filed or commenced against or, to the Parent's knowledge, has been
threatened against the Parent alleging any failure to so comply; and (iii) the
Parent is not in violation of any term of, or in default under, its certificate
of incorporation or bylaws, respectively.
5.18 BOARD APPROVAL. The Board of Directors of Parent by resolutions
duly adopted by unanimous vote, that have not been subsequently rescinded or
modified in any way has duly determined that this Agreement and Merger are
advisable and in the best interest of the Parent and approved this Agreement and
Merger.
5.19 DISCLOSURE. The representations and warranties of the Parent and
Merger Sub herein, or in any document, exhibit, statement, certificate or
schedule furnished by or on behalf of the Parent or Merger Sub to Company as
required by this Agreement, do not contain and will not contain any untrue
statement of a material fact and do not omit and will not omit to state any
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
18
ARTICLE VI
PRE-CLOSING COVENANTS
6.1 OPERATION OF THE PARENT.
(a) Except as specifically provided in this Agreement between
the date of this Agreement and the Effective Time, the Parent shall:
(i) maintain its books of account and records in the
usual and ordinary manner, and in conformity with its past practices and
applicable law;
(ii) pay accounts payable and other obligations when
they become due and payable in the ordinary course of business consistent with
past practices except to the extent disputed in good faith;
(iii) conduct its business, if any, in the ordinary
course consistent with past practices, or as required by this Agreement;
(iv) pay all taxes when due and file all Parent Tax
Returns on or before the due date therefor except to the extent disputed in good
faith;
(v) make appropriate provisions in its books of
account and records for taxes relating to its operations during such period
(regardless of whether such taxes are required to be reflected in a tax return
having a due date on or prior to the Closing Date);
(vi) withhold all taxes required to be withheld and
remitted by or on behalf of the Parent in connection with amounts paid or owing
to any Parent personnel or other person, and pay such taxes to the proper
governmental authority or set aside such taxes in accounts for such purpose;
(vii) make all required filings on a timely basis
with the SEC or any other state, federal or local regulatory body, including,
without limitation, making all filings under the Securities Act and the Exchange
Act, on a timely basis so as to maintain the Parent's status as a reporting
company in good standing under the Exchange Act; and
(viii) take all steps reasonably necessary to
maintain Parent's listing on the OTC Bulletin Board.
(b) Without the prior written consent of the Company, between
the date of this Agreement and the Effective Time (or termination of this
Agreement), neither the Parent nor Merger Sub shall:
(i) issue any capital stock or any options, warrants
or other rights to subscribe for or purchase any capital stock or any securities
convertible into or exchangeable or exercisable for, or rights to purchase or
otherwise acquire, any shares of the capital stock of the Parent or Merger Sub;
19
(ii) directly or indirectly redeem, purchase, sell or
otherwise acquire any capital stock of the Parent, except as expressly provided
by this Agreement;
(iii) hire any employee or retain any consultant;
(iv) borrow or agree to borrow any funds, incur any
indebtedness or directly or indirectly guarantee or agree to guarantee the
obligations of others, or draw or borrow on any lines of credit that may be
available to the Parent or Parent Sub;
(v) except as expressly contemplated by this
Agreement, enter into any oral or written agreement, contract, lease or other
commitment;
(vi) place or allow to be placed a lien on any of the
assets of the Parent or Merger Sub;
(vii) except as expressly contemplated by this
Agreement, cancel, discount or otherwise compromise any indebtedness owing to
the Parent or any claims which the Parent may possess or waive any rights of
material value;
(viii) sell or otherwise dispose of any assets of the
Parent, except in the ordinary course of business consistent with past
practices;
(ix) commit any act or omit to do any act which will
cause a breach of this Agreement or any other material agreement, contract,
lease or commitment;
(x) violate any law or governmental approval,
including, without limitation any federal or state securities laws;
(xi) make any loan, advance, distribution or payment
of any type or to any Person other than as expressly contemplated by this
Agreement;
(xii) amend its Certificate of Incorporation or
Bylaws;
(xiii) merge or consolidate with, or agree to merge
or consolidate with, or purchase substantially all of the assets of, or
otherwise acquire any business or any Person or division thereof;
(xiv) make any tax election or settle or compromise
any tax liability other than in the ordinary course of business consistent with
past practices;
(xv) lease or purchase or agree to lease or purchase
any assets or properties;
(xvi) take any action or series of actions that
results in or is likely to result in (i) the delisting of the Parent Common
Stock from trading on the OTC Bulletin Board, or (ii) the Parent losing its
status as a reporting company in good standing under the Exchange Act; or
20
(xvii) enter into any negotiations, commitments or
agreements that would result in undertaking any of the actions specified in this
Subsection 6.1(b).
6.2 OPERATION OF COMPANY.
(a) Except as specifically provided in this Agreement, between
the date of this Agreement and the Effective Time, the Company shall:
(i) maintain its books of account and records in the
usual and ordinary manner, and in conformity with its past practices;
(ii) pay accounts payable and other obligations when
they become due and payable in the ordinary course of business consistent with
past practices except to the extent disputed in good faith;
(iii) conduct its business, if any, in the ordinary
course consistent with past practices, or as contemplated by this Agreement or
the PPM;
(iv) pay all taxes when due and file all Company Tax
Returns on or before the due date therefor except to the extent disputed in good
faith;
(v) make appropriate provisions in its books of
account and records for taxes relating to its operations during such period
(regardless of whether such taxes are required to be reflected in a tax return
having a due date on or prior to the Closing Date); and
(vi) withhold all taxes required to be withheld and
remitted by or on behalf of the Company in connection with amounts paid or owing
to any Company personnel or other person, and pay such taxes to the proper
governmental authority or set aside such taxes in accounts for such purpose.
(b) Without the prior written consent of the Parent, between
the date of this Agreement and the Effective Time (or the termination of this
Agreement), the Company shall not (except in connection with the transactions
contemplated hereby including the Placement and the senior debt financing in the
approximate amount of $70 million and convertible note financing in the
approximate amount of $60 million that the Company is pursuing (the "DEBT
FINANCINGS"):
(i) issue any capital stock or any options, warrants
or other rights to subscribe for or purchase any capital stock or any securities
convertible into or exchangeable or exercisable for, or rights to purchase or
otherwise acquire, any shares of the capital stock of the Company;
(ii) directly or indirectly redeem, purchase, sell or
otherwise acquire any capital stock of the Company, except as specifically
contemplated by this Agreement;
(iii) grant any increase in the compensation payable,
or to become payable, to any Company personnel or enter into any bonus,
insurance, pension, severance, change-in-control or other benefit plan, payment,
agreement or arrangement for or with any
21
Company personnel, except as consistent with past practices in the ordinary
course of business or in accordance with prior recommendations of the
Compensation Committee of the Company;
(iv) agree to borrow any funds, incur any
indebtedness or directly or indirectly guarantee or agree to guarantee the
obligations of others, or draw or borrow on any lines of credit that may be
available to Company;
(v) place or allow to be placed a lien on any of the
assets of the Company;
(vi) sell or otherwise dispose of any assets of the
Company, except in the ordinary course of business consistent with past
practices;
(vii) commit any act or omit to do any act which will
cause a breach of this Agreement or any other material agreement, contract,
lease or commitment to which the Company is party;
(viii) violate any law or governmental approval,
including, without limitation any federal or state securities laws;
(ix) make any loan, advance, distribution or payment
of any type or to any Person other than as contemplated by this Agreement or the
PPM;
(x) amend its Certificate of Incorporation or Bylaws;
(xi) except as contemplated by this Agreement,
consolidate with, or agree to merge or consolidate with, or purchase
substantially all of the assets of, or otherwise acquire any business or any
Person or division thereof;
(xii) make any tax election or settle or compromise
any tax liability other than in the ordinary course of business consistent with
past practices;
(xiii) lease or purchase or agree to lease or
purchase any assets or properties; or
(xiv) enter into any negotiations, commitments or
agreements that would result in undertaking any of the actions specified in this
Subsection 6.2(b).
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 ACCESS TO INFORMATION.
(a) From the date hereof to the Effective Time, the Company
shall afford, and shall cause its officers, directors, employees,
representatives and agents to afford, to the Parent and to the officers,
employees and agents of the Parent reasonable access during normal business
hours to the Company's officers, employees, agents, representatives, properties,
books, records and contracts, and shall furnish to the Parent all financial,
operating and other data and
22
information as the Parent, through its agents, officers, employees or other
representatives, may reasonably request.
(b) From the date hereof to the Effective Time, the Parent
shall afford, and shall cause its officers, directors, employees,
representatives and agents to afford, to the Company and to the officers,
employees and agents of the Company reasonable access during normal business
hours to the Parent's officers, employees, agents, representatives, properties,
books, records and contracts, and shall furnish to the Company all financial,
operating and other data and information as the Company, through its agents,
officers, employees or other representatives, may reasonably request.
(c) No investigation pursuant to Section 7.1(a) shall affect
any representations or warranties of the Parties herein or the conditions to the
obligations of the Parties.
7.2 EXPENSES AND TAXES. Except to the extent otherwise set forth
herein, each of the Parties shall pay its respective costs incurred in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, the fees of the attorneys, accountants and
advisors.
7.3 NEWS RELEASES. Except as required by applicable law, any news
releases or other public disclosure pertaining to the transactions contemplated
by Parent shall be delivered to the Company for review and approval in writing
at least one (1) Business Day prior to the dissemination thereof.
7.4 ADDITIONAL AGREEMENTS. Subject to the terms and conditions of this
Agreement, each Party agrees to use all reasonable efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable law to consummate and make effective the
transactions contemplated by this Agreement. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
the constituent corporations, the proper officers and directors of each such
corporation shall take all such necessary or desirable action.
7.5 NOTIFICATION OF CERTAIN MATTERS.
(a) The Company shall give prompt notice to the Parent of any
material inaccuracy in any representation or warranty made by it herein, or any
material failure of the Company to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by the Company under
this Agreement; provided, however, that no such notification shall affect the
representations or warranties or covenants or agreements of the Company or the
conditions to the obligations of the Parent hereunder.
(b) The Parent shall give prompt notice to the Company of any
material inaccuracy in any representation or warranty made by it herein, or any
material failure of the Parent to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification shall affect the
23
representations or warranties or covenants or agreements of the Parent or the
conditions to the obligations of the Company hereunder.
(c) The Company and the Parent shall each promptly advise the
other orally and in writing of any change or event having, or which, insofar as
can reasonably be foreseen, in the future would have, a Material Adverse Effect
or any adverse effect on the right or ability of any Party to enter into and
complete the Merger and other transactions contemplated hereby.
7.6 CONFIDENTIALITY.
(a) Each Party shall hold, and shall cause its officers,
employees, agents and representatives, including, without limitation, attorneys,
accountants, consultants and financial advisors who obtain such information to
hold, in confidence, and not use for any purpose other than evaluating the
transactions contemplated by this Agreement, any confidential information of
another Party obtained through the investigations permitted hereunder, which for
the purposes hereof shall not include any information which (i) is or becomes
generally available to the public other than as a result of disclosure by a
Party or one of its affiliates in violation of its obligations under this
Subsection, (ii) becomes available to a Party on a non-confidential basis from a
source, other than the Party which alleges the information is confidential or
its affiliates, which has represented that such source is entitled to disclose
it, or (iii) was known to a Party on a non-confidential basis prior to its
disclosure to such Party hereunder. If this Agreement is terminated, at the
request of a Party, the other Party shall deliver, and cause its officers,
employees, agents, and representatives, including, without limitation,
attorneys, accountants, consultants and financial advisors who obtain
confidential information of the requesting Party pursuant to investigations
permitted hereunder, to deliver to the requesting Party all such confidential
information that is written (including copies or extracts thereof).
(b) If a Party or a Person to whom a Party transmits
confidential information of another Party is requested or becomes legally
compelled (by oral questions, interrogatories, requests for information or
documents, subpoena, criminal or civil investigative demand or similar process)
to disclose any of such confidential information, such Party or other Person
will provide the other Party with prompt written notice so that such Party may
seek a protective order or other appropriate remedy or waive compliance with
Section 7.6(a). If such protective order or other remedy is not obtained, or if
the applicable Party waives compliance with Section 7.6(a), the Party or Person
subject to the request will furnish only that portion of such confidential
information which is legally required and will exercise reasonable efforts to
obtain reliable assurance that confidential treatment will be accorded such
confidential information.
7.7 CONSENTS AND FILINGS. The Parties shall, in a timely fashion, make
all required filings and submissions with respect to the Merger and the
Placement. Each Party will take all reasonable actions to obtain any other
consent, authorization, order or approval of, or any exemption by, any Person
required to be obtained or made in connection with the Merger, the Placement,
and the other transactions contemplated by this Agreement. Each Party will
cooperate with and promptly furnish information to the other Party in connection
with obtaining such consents or making any such filings and will promptly
furnish to the other Party a copy of all filings made with a governmental
authority.
24
7.8 PARENT SEC FILINGS. Between the date hereof and the Effective Date,
the Company shall cooperate with the Parent in connection with the preparation
and filing of, and provide to the Parent all required information reasonably
requested for inclusion or incorporation by reference in, any reports, filings,
schedules or registration statements (including any prospectus contained in any
such registration statement) to be filed by the Parent with the SEC (the "Parent
Filings"). Without limiting the foregoing, the Company shall take all
commercially reasonable actions requested by the Parent to enable the Parent to
include or incorporate by reference in the Parent Filings any Financial
Statement of Company, including, without limitation, and any auditors' report
thereon. The Parent agrees that (i) at least three (3) Business Days prior to
filing, the Parent shall furnish the Company copies of all proposed Parent
Filings relating to, disclosing or describing the transactions contemplated by
this Agreement or the Placement, and (ii) it shall not make any Parent Filing
described in the immediately preceding clause (i) without the prior consent of
the Company, which shall not be unreasonably withheld, conditioned or delayed.
7.9 REGISTRATION RIGHTS. The Parent shall include in the registration
statement that it anticipates filing with the SEC on Form S-1 or similar form
after the Closing Date (the "REGISTRATION STATEMENT"), that includes the shares
sold in the Private Placement that the Parent contemplates consummating after
the Closing Date, the shares of each of the stockholders set forth on Schedule
7.10 hereto (the "SHELLCO STOCKHOLDER SHARES"). If at any time following the
Closing, the Parent shall determine to prepare and file with the SEC a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities (a
"SUBSEQUENT REGISTRATION STATEMENT"), other than on Form S-4 or Form S-8 (each
as promulgated under the Securities Act), and the Shellco Stockholder Shares are
not at such time covered by an effective registration statement permitting their
resale, then the Parent shall include in the Subsequent Registration Statement
the Shellco Stockholder Shares, unless the inclusion of such Shellco Stockholder
Shares in such Subsequent Registration Statement is prohibited by a written
agreement entered into between Parent and a third party in connection with a
capital raising transaction which obligates the Parent to file such Subsequent
Registration Statement. The Parent shall use its reasonable efforts to provide
in any such third party agreement entered into in connection with a capital
raising transaction for the specific inclusion of the Shellco Stockholder Shares
in any registration statement filed in connection therewith. If the Registration
Statement is being filed pursuant to a third-party written agreement obligating
the Company to file the same, the holders of the Shellco Stockholder Shares
shall be entitled to receive all notices and documents sent by the Parent to the
third-party whose securities are being registered pursuant to such Subsequent
Registration Agreement. The provisions of this Section 7.9 shall supercede the
provisions of Sections 5.2 and 5.3 of those certain Stock Purchase Agreements
dated June 14, 2006 between the Parent and the other parties thereto.
7.10 RESTRICTION ON RECAPITALIZATION. The parties acknowledge that it
is currently contemplated that Parent will effect a reverse-split of it Common
Stock subsequent to the Closing Date. Parent and the Company covenants and
agrees with the holders of the Shellco Stockholder Shares that such
recapitalization will not exceed a 1-for-11.23 reverse split of the Parent
Common Stock.
25
ARTICLE VIII
CLOSING DELIVERIES AND CONDITIONS TO CLOSING
8.1 DOCUMENTS TO BE DELIVERED BY PARENT. At the Closing, the Parent
shall deliver to the Company the following:
(a) A certificate, executed by an officer of the Parent in
such detail as the Company shall reasonably request, certifying that all
representations, warranties and covenants of the Parent and Merger Sub herein
are true and correct as of the Effective Time. The delivery of such certificate
shall constitute a representation and warranty of the Parent as to the
statements set forth therein.
(b) A copy of the resolutions adopted by (i) the shareholders
and Board of Directors of Merger Sub, and (ii) the Board of Directors of the
Parent, approving this Agreement, the Merger and the transactions contemplated
hereby, certified by their respective Secretaries.
(c) The Certificate of Merger, duly executed by the Parent and
Merger Sub.
(d) A certificate, executed by the Parent's transfer agent,
certifying as to the stockholders of the Parent as of the Closing Date;
(e) An opinion of counsel to the Parent, dated as of the
Closing Date, in substantially the form annexed hereto as EXHIBIT D.
(f) Such other customary certificates or documents as may be
reasonably required by the Company.
8.2 DOCUMENTS TO BE DELIVERED BY THE COMPANY. At the Closing, the
Company shall deliver to the Parent the following:
(a) A certificate, executed by the President of the Company,
in such detail as the Parent shall reasonably request, certifying that all
representations, warranties and covenants of the Company herein are true and
correct as of the Effective Time. The delivery of such certificate shall
constitute a representation and warranty of the Company as to the statements set
forth therein.
(b) A copy of the resolutions adopted by the stockholders and
Board of Directors of the Company approving this Agreement, the Merger, and the
transactions contemplated hereby, certified by the Secretary of the Company.
(c) An opinion of counsel to the Company, dated as of the
Closing Date, in substantially the form annexed hereto as EXHIBIT E.
8.3 CONDITIONS TO OBLIGATIONS OF EACH PARTY. Each Party's obligations
to consummate the transactions contemplated by this Agreement is subject to the
satisfaction or waiver at or prior to the Closing, of each of the following
conditions:
26
(a) No temporary restraining order, preliminary or permanent
injunction or other order issued by any governmental authority or other material
legal restraint or prohibition issued or promulgated by a governmental authority
preventing the consummation of the transactions contemplated by this Agreement
shall be in effect or shall be threatened, and there shall not be any law or
regulation enacted or deemed applicable to the transactions contemplated by this
Agreement that makes consummation of such transactions illegal.
(b) The Certificate of Merger shall have been filed
simultaneously with the Closing.
8.4 CONDITIONS TO OBLIGATIONS OF THE PARENT AND MERGER SUB. The
obligation of Parent and Merger Sub to consummate the transactions contemplated
by this Agreement are subject to the satisfaction or waiver, at or prior to the
Closing, of each of the following conditions:
(a) Each of the representations and warranties of the Company
set forth in this Agreement (i) that are not qualified by materiality must have
been true and correct in all material respects as of the Closing Date, and (ii)
that are qualified by materiality must have been true and correct as of the
Closing Date; except, in each case, for inaccuracies that would not individually
or in the aggregate have a Material Adverse Effect on the Company.
(b) All of the obligations, covenants and agreements with
which the Company is required to comply or that the Company is required to
perform under this Agreement at or prior to the Closing shall have been complied
with and performed in all material respects.
(c) The Company shall have firm commitments for (i) the
Placement of at least 30,000 Units, at a gross price of at least $1,000.00 per
Unit, pursuant to the terms of the PPM, and (ii) the Debt Financings.
(d) The Company shall have executed agreements with respect to
the business combination transactions contemplated by the PPM.
8.5 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to consummate the transactions contemplated by this Agreement are
subject to the satisfaction or waiver, at or prior to the Closing, of each of
the following conditions:
(a) Each of the representations and warranties of the Parent
and Merger Sub set forth in this Agreement (i) that are not qualified by
materiality must have been true and correct in all material respects as of the
Closing Date, and (ii) that are qualified by materiality must have been true and
correct as of the Closing Date; except, in each case, for inaccuracies that
would not individually or in the aggregate have a Material Adverse Effect on the
Parent.
(b) All of the obligations, covenants and agreements with
which the Parent or Merger Sub is required to comply or that the Parent or
Merger Sub is required to perform under this Agreement at or prior to the
Closing shall have been complied with and performed in all material respects.
27
(c) The Company shall have firm commitments for (i) the
Placement of at least 30,000 Units, at a gross price of at least $1,000.00 per
Unit, pursuant to the terms of the PPM, and (ii) the Debt Financings.
(d) The documents required to be delivered by the Parent
pursuant to Section 8.1 hereof shall have been delivered simultaneously with the
Closing.
(e) Parent shall have delivered to the Company evidence in
form and substance reasonably satisfactory to the Company, demonstrating the
satisfaction by the Parent of its obligation to issue shares of Parent Common
Stock pursuant to Section 1.1 of that certain Stock Purchase Agreement dated
June 14, 2006 between, INTER ALIA, the Parent and Xxxxxxx X. Xxxxxxx, BAC
Investments, Inc., Kapuha, LLC, Carmella Investments, LLC and LI Funding, LLC.
ARTICLE IX
NO SOLICITATION; TERMINATION
9.1 NO SOLICITATION. Unless and until this Agreement shall have been
terminated prior to the Closing Time pursuant to and in compliance with Section
9.2 hereof, neither the Parent nor the Company shall (whether directly or
indirectly through its respective advisors, agents or other intermediaries), nor
shall the Company or the Parent authorize or permit any of its respective
officers, directors, agents, employees, representatives or advisors to (i)
solicit, initiate, encourage (including by way of furnishing information) or
take any action to facilitate the submission of any inquiries, proposals or
offers (whether or not in writing) from any person (other than the Parent or the
Company, as the case may be, and its respective affiliates) relating to (A) any
acquisition or purchase of any of the assets of the Company or the Parent, as
the case may be, or of any class of equity securities of the Company or Parent,
as the case may be (other than the securities as contemplated in the Placement),
B) any tender offer (including a self tender offer) or exchange offer, (C) any
merger, consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company (except for Acquisitions contemplated by the PPM) or Parent, as the case
may be, or (D) any other transaction (other than transactions contemplated by
the PPM) the consummation of which would or would reasonably be expected to
impede, interfere with, prevent or materially delay the Merger or which would or
would reasonably be expected to materially dilute the benefits to the other
Party hereto of the transactions contemplated by this Agreement (collectively,
"ACQUISITION PROPOSALS"), or agree to, recommend or endorse any Acquisition
Proposals, (ii) enter into or execute any agreement with respect to any of the
foregoing or (iii) enter into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any other person any information
with respect to its business, properties or assets in connection with the
foregoing, or otherwise cooperate in any way with, or participate in or assist,
facilitate, or encourage, any effect or attempt by any other person (other than
the Company or the Parent, as the case may be, and its respective affiliates) to
do or seek any of the foregoing. If either the Parent or the Company is
contacted by a third party with respect to an Acquisition Proposal, it shall
immediately notify the other Party hereto of the identity of the third party and
the nature of the Acquisition Proposal.
28
9.2 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by mutual written consent of each of the Parties;
(b) by the Parent in the event of a material breach by the
Company of any provision of this Agreement for which written notice has been
given to the Company and which breach has not been cured prior to November 15,
2006 (the "TERMINATION DATE"); provided, however that the right to terminate
this Agreement under this Section 9.2(b) shall not be available to the Parent if
the Parent or Merger Sub has materially breached or failed to perform any
provision of this Agreement and such breach or failure remains uncured;
(c) by the Company in the event of a material breach by Parent
or Merger Sub of any provision of this Agreement which breach has not been cured
prior to the Termination Date; provided, however, that the right to terminate
this Agreement under this Section 9.2(c) shall not be available to the Company
if the Company has materially breached or failed to perform any provision of
this Agreement and such breach or failure remains uncured; or
(d) by either the Parent or the Company if the Closing shall
not have occurred by the Termination Date; provided, however, the right to
terminate this Agreement under this Section 9.2(d) shall not be available (i) to
any Party whose failure to fulfill any obligation hereunder has been the cause
of, or results in, the failure of the Closing to have occurred on or before the
Termination Date, or (ii) to the Parent if the failure of the Closing to have
occurred on or before the Termination Date is solely due to the failure by the
Parent or Merger Sub to deliver (or have available for immediately delivery) all
documents required to be delivered by Parent pursuant to Section 8.1 of this
Agreement, or (iii) to the Parent if the failure of the Closing to have occurred
on or before the Termination Date is solely due to any failure by Parent or
Merger Sub to comply with all pre-closing covenants of the Parent or Merger Sub
contained in Article VII or Section 6.1 of this Agreement.
9.3 EFFECT OF TERMINATION. Except for the provisions of Sections 7.2,
7.3 and 7.6 and the provisions of Article X hereof, each of which shall survive
any termination of this Agreement, in the event of termination of this Agreement
pursuant to Section 9.2, this Agreement shall forthwith become void and of no
further force and effect and the Parties shall be released from any and all
obligations hereunder.
ARTICLE X
GENERAL PROVISIONS
10.1 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the Parties.
10.2 WAIVER. At any time prior to the Effective Time, whether before or
after approval of this Agreement and the Merger by the Company's stockholders,
any Party may (i) extend the time for the performance of any of the obligations
or other acts of any other Party hereto or (ii) waive compliance with any of the
agreements of any other Party or with any conditions to its own obligations. Any
such extension or waiver shall be valid only if set forth in an instrument in
29
writing signed on behalf of the Party making the waiver or granting the
extension by a duly authorized officer. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
10.3 ASSIGNMENT AND BINDING EFFECT. Neither this Agreement nor any of
the rights or obligations hereunder may be assigned by the Company without the
prior written consent of the Parent or assigned by Parent without the prior
written consent of Company. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors, transferees and assigns, and no other Person shall have any right,
benefit or obligation hereunder.
10.4 EXPENSES. Each Party shall pay the fees and expenses incurred by
it in connection with the transactions contemplated herein.
10.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; LIMITATION OF
LIABILITY. The representations and warranties of the parties set forth in this
Agreement shall survive for a period of six (6) months following the Closing
Date. Notwithstanding the foregoing and anything to the contrary contained in
this Agreement, except as a result of a fraud perpetrated by such officer,
director or stockholder, no officer, director or stockholder of Parent, Merger
Sub or the Company, or their respective successors or affiliates, shall have any
liability hereunder from and after the Closing Date.
10.6 GOVERNING LAW. Except as to matters relating to the internal laws
of a jurisdiction, this Agreement shall be governed by, and construed in
accordance with, the law of the State of Delaware, without regard to the
conflicts of law principles thereof.
10.7 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties with respect to the subject matter hereof.
10.8 SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
10.9 TITLES. The titles, captions or headings of the Articles and
Sections herein are for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
10.10 ATTORNEYS' FEES. Should any Party institute any Action to enforce
any provision of this Agreement, including, without limitation, an Action for
declaratory relief, damages by reason of an alleged breach of any provision of
this Agreement, equitable relief or otherwise in connection with this Agreement,
or any provision hereof, the prevailing Party shall be entitled to recover from
the losing Party or Parties reasonable attorneys' fees and costs for services
rendered to the prevailing Party in such Action.
30
10.11 MULTIPLE COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
10.12 NOTICES. Unless applicable law requires a different method of
giving notice, any and all notices, demands or other communications required or
desired to be given hereunder by any Party shall be in writing. Assuming that
the contents of a notice meet the requirements of the specific Section of this
Agreement which mandates the giving of that notice, a notice shall be validly
given or made to another Party if served either personally or if deposited in
the United States mail, certified or registered, postage prepaid, or if
transmitted by telegraph, telecopy or other electronic written transmission
device or if sent by overnight courier service, and if addressed to the
applicable Party as set forth below. If such notice, demand or other
communication is served personally, service shall be conclusively deemed given
at the time of such personal service. If such notice, demand or other
communication is given by mail, service shall be conclusively deemed given two
(2) Business Days hours after the deposit thereof in the United States mail. If
such notice, demand or other communication is given by overnight courier, or
electronic transmission, service shall be conclusively deemed given at the time
of confirmation of delivery. The addresses for the Parties are as follows:
If to the Company: 000 Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxx Xxxxxxx Berlack Israels LLP
Xxxxx Xxxxx Xxxxxx
Xxx Xxxx XX 00000
Attn: Xxxxxx XxXxxxxxx, Esq.
Fax: (000) 000-0000
If to the Parent or Merger Sub: Aerobic Creations, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxxx X. Xxxx, Esq.
Morse, Zelnick, Rose & Lander, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Any Party may change such Party's address for the purpose of receiving notices,
demands and other communications as herein provided, by a written notice given
in the aforesaid manner to the other Parties.
31
10.13 JOINT DRAFTING. This Agreement shall be deemed to have been
drafted jointly by the Parties hereto, and no inference or interpretation
against a Party shall be made solely by virtue of such Party allegedly having
been the draftsperson of this Agreement.
10.14 INCORPORATION BY REFERENCE. All Exhibits and Schedules attached
hereto or to be delivered in connection herewith are incorporated herein by this
reference.
[SIGNATURES CONTINUED ON NEXT PAGE]
32
IN WITNESS WHEREOF, each of Parent, Merger Sub and Company has
caused this Agreement to be executed as of the date first written above by its
officer thereunto duly authorized.
MARITIME LOGISTICS US HOLDINGS, INC.
By:
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
AEROBIC CREATIONS, INC.
By:
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
AEROBIC MERGER SUB INC.
By:
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
33
EXHIBIT A
MERGER CERTIFICATE
CERTIFICATE OF MERGER
OF
AEROBIC MERGER SUB INC.
(A DELAWARE CORPORATION)
WITH AND INTO
MARITIME LOGISTICS US HOLDINGS INC.
(A DELAWARE CORPORATION)
In accordance with Section 251(c) of the General Corporation Law of the
State of Delaware (the "DGCL"), the undersigned, Maritime Logistics US Holdings
Inc., a Delaware corporation, does hereby certify as follows:
FIRST: That the name and state of incorporation of each of the constituent
corporations to the merger herein certified (the "Merger") are as follows:
NAME OF CORPORATION STATE OF INCORPORATION
------------------- ----------------------
Aerobic Merger Sub Inc. ("MERGER SUB") Delaware
Maritime Logistics US Holdings Inc. Delaware
("Company")
SECOND: That the Agreement and Plan of Merger, dated as of November 8, 2006
(the "MERGER AGREEMENT"), by and among Aerobic Creations, Inc., a Delaware
corporation (the "Parent"), Merger Sub, and the Company, has been approved,
adopted, certified, executed and acknowledged by each of the constituent
corporations in accordance with the requirements of Sections 251 and 228 of the
DGCL.
THIRD: That the name of the surviving corporation (the "SURVIVING
CORPORATION") of the Merger shall be Maritime Logistics US Holdings Inc.
FOURTH: That the Certificate of Incorporation of the Surviving Corporation
shall be its Certificate of Incorporation.
FIFTH: That the executed Merger Agreement is on file at the principal place
of business of the Surviving Corporation located at 000 Xxxxxxxxx, Xxxxxxxxxx,
XX 00000.
SIXTH: That a copy of the Merger Agreement will be furnished by the
Surviving Corporation, upon request and without cost, to any stockholder of
either constituent corporation.
SEVENTH: That the Merger shall become effective upon the filing of this
Certificate of Merger with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the Surviving Corporation has caused this Certificate
of Merger to be executed in its corporate name by a duly authorized officer as
of this 8th day of November, 2006.
MARITIME LOGISTICS US HOLDINGS INC.
BY:
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
EXHIBIT B
COMPANY DISCLOSURE SCHEDULE
[ATTACHED]
EXHIBIT C
PARENT DISCLOSURE SCHEDULE
SCHEDULE 5.11 - CONTRACTS AND COMMITMENTS
1. Common Stock Purchase Agreement dated June 14, 2006 among Aerobic
Creations, Inc., Xxxxxx X. Xxxxx and R&R Biotech Partners, LLC.
2. Stockholder Purchase Agreement dated June 14, 2006 among Aerobic
Creations, Inc., Xxxxxx X. Xxxxx, R&R Biotech Partners, LLC., and certain
stockholders.
3. Finder's Fee Agreement between Aerobic Creations, Inc., Xxxxxx X.
Xxxxxxx and MBA Investors, Ltd. dated May 31, 2006.
SCHEDULE 7.9 - REGISTRATION RIGHTS
R&R Biotech Partners LLC
Xxxxxx X. Xxxxx
Xxxx X. Xxxxxxx
MBA Investors, Ltd.
Xxxxxx X. Xxxxxxx
Kapuha, LLC
Bac Investments, Inc.
LI Funding, LLC
Carmella Investments, LLC
EXHIBIT D
FORM OF LEGAL OPINION OF COUNSEL TO THE PARENT
[ATTACHED]
EXHIBIT E
FORM OF LEGAL OPINION OF COUNSEL TO THE COMPANY
[ATTACHED]
