================================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 29, 1997
BETWEEN
ACADEMIC COMPUTER SYSTEMS, INC.
AND
WORLDS ACQUISITION CORP.
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................................................... 1
ARTICLE II THE MERGER.................................................................................... 7
2.1 The Merger.......................................................... 7
2.2 Conversion or Cancellation of
Capital Stock of the Company............................... 8
2.3 Issuance of Merger Consideration.................................... 9
2.4 No Fractional Shares................................................ 10
2.5 Stock Transfer Books................................................ 10
2.6 Tax-Free Reorganization............................................. 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................. 11
3.1 Corporate Organization.............................................. 11
3.2 Capitalization...................................................... 11
3.3 Subsidiaries........................................................ 12
3.4 No Commitments to Issue Capital Stock............................... 12
3.5 Authorization....................................................... 12
3.6 No Conflict; Transactions with
Certain Persons............................................ 12
3.7 Acquired Business................................................... 13
3.8 Financial Statements; Undisclosed
Liabilities; Receivables;
Supplies; Restructuring of Old
Bridge Notes............................................... 13
3.9 Taxes....................................................................... 15
3.10 Title to Properties; Absence
of Encumbrances............................................ 17
3.11 Intellectual Property....................................................... 17
3.12 Contracts and Agreements.................................................... 18
3.13 Insurance................................................................... 20
3.14 Litigation.................................................................. 20
3.15 Compliance with Law......................................................... 21
3.16 Employees................................................................... 21
3.17 Employee Benefit Plans...................................................... 22
3.18 Environmental Matters....................................................... 24
3.19 Powers of Attorney.......................................................... 26
3.20 Bank Accounts............................................................... 26
3.21 Absence of Certain Changes.................................................. 26
3.22 Books and Records........................................................... 29
3.23 Absence of Certain Business Practices....................................... 29
3.24 Customer Relationships...................................................... 29
3.25 Disclosure.................................................................. 29
3.26 Securities Laws; Lock-up Letters;
Proxies and Restrictive Legends............................ 29
3.27 Transfer or Resale.......................................................... 30
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER....................................................... 31
4.1 Organization and Existence.......................................... 31
4.2 Capitalization...................................................... 31
4.3 Authorization....................................................... 32
4.4 No Conflict......................................................... 32
4.5 Litigation.......................................................... 32
4.6 Broker or Finder.................................................... 32
4.7 Compliance.......................................................... 33
ARTICLE V COVENANTS OF THE COMPANY...................................................................... 33
5.1 Normal Course....................................................... 33
5.2 Negative Covenants.................................................. 33
5.3 Certain Filings..................................................... 34
5.4 New Financing....................................................... 34
5.5 Best Efforts to Satisfy Conditions.................................. 34
5.6 Further Assurances.................................................. 34
5.7 Restructuring of Liabilities........................................ 34
5.8 Availability of Employees........................................... 35
5.9 Company Stockholders' Approval...................................... 35
5.10 No Other Negotiations............................................... 35
5.11 Conduct of Business................................................. 35
ARTICLE VI COVENANTS OF BUYER............................................................................ 35
6.1 Cooperation......................................................... 35
6.2 Certain Filings..................................................... 36
6.3 Best Efforts to Satisfy Conditions.................................. 36
6.4 Further Assurances.................................................. 36
6.5 Mandatory Reporting Covenant.........................................36
6.6 Registration Rights................................................. 36
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.................................................. 37
7.1 Consummation of the New Financing................................... 37
7.2 Representations and Warranties...................................... 37
7.3 Compliance with Covenants........................................... 37
7.4 Lack of Adverse Change.............................................. 37
7.5 Update Certificate.................................................. 37
7.6 Opinion of Counsel.................................................. 37
7.7 Regulatory Approvals................................................ 37
7.8 Consents of Third Parties to Contracts.............................. 37
7.9 No Violation of Orders.............................................. 38
7.10 Prohibited Transactions Inquiries................................... 38
7.11 Stockholder Approval................................................ 38
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY.............................................................. 38
8.1 Consummation of the New Financing................................... 39
8.2 Representations and Warranties...................................... 39
8.3 Compliance with Covenants........................................... 39
8.4 Update Certificate.................................................. 39
8.5 Opinion of Counsel.................................................. 39
8.6 Regulatory Approvals................................................ 39
8.7 No Violation of Orders.............................................. 39
8.8 Stockholders' Approval.............................................. 39
ARTICLE IX CLOSING; CLOSING DATE......................................................................... 40
ARTICLE X TERMINATION................................................................................... 40
ARTICLE XI INDEMNIFICATION............................................................................... 41
11.1 Survival of Representations and Warranties.......................... 41
11.2 Indemnification by the Company...................................... 41
11.3 Indemnification by Buyer............................................ 41
11.4 General Limitations on Indemnification.............................. 42
ARTICLE XII MISCELLANEOUS................................................................................. 42
12.1 Expenses............................................................ 42
12.2 Entirety of Agreement............................................... 42
12.3 Notices............................................................. 43
12.4 Amendment........................................................... 43
12.5 Nonwaiver........................................................... 43
12.6 Counterparts........................................................ 43
12.7 Assignment; Binding Nature;
No Beneficiaries........................................... 44
12.8 Headings............................................................ 44
12.9 Governing Law....................................................... 44
12.10 Specific Performance................................................ 44
12.11 Construction........................................................ 44
12.12 Disclosure.......................................................... 45
12.13 Remedies Cumulative................................................. 45
12.14 Non-Recourse........................................................ 45
12.15 Consent to Jurisdiction and
Service of Process......................................... 46
Exhibit A-1 Certificate of Merger (Delaware
Exhibit A-2 Certificate of Merger (New Jersey)
Exhibit B Opinion of Counsel to the Company
Exhibit C Opinion of Counsel to Buyer
AGREEMENT AND PLAN OF
MERGER (this "Agreement"),
dated as of September 29,
1997, between ACADEMIC
COMPUTER SYSTEMS, INC., a
New Jersey corporation
("Buyer") and WORLDS
ACQUISITION CORP., a
Delaware corporation (the
"Company").
-------------------------------------------
WHEREAS, this Agreement is being entered into following the
Company's entering into that certain Agreement and Plan of Merger dated as of
June 6, 1997, as amended by that certain First Amendment to Agreement and Plan
of Merger dated September 29, 1997 (the "Original Merger Agreement") with
Worlds, Inc., a Delaware corporation (the "Original Company"), pursuant to
which, on the terms and subject to the conditions stated therein, the Original
Company shall be merged with and into the Company;
WHEREAS, the Boards of Directors of Buyer and the Company,
deeming it advisable and for the respective benefit of Buyer and the Company,
and their stockholders, have approved and adopted the merger of the Company with
and into Buyer on the terms and conditions hereinafter set forth (the "Merger"),
and have approved and adopted this Agreement and authorized the transactions
contemplated hereby; and
WHEREAS, Buyer and the Company desire to make certain
representations, warranties and agreements in connection with, and establish
various conditions precedent to, the Merger;
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties herein contained and subject to the
terms and conditions herein set forth, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
"Act" means the Securities Act of 1933, as amended.
"Affiliated Person" has the meaning set forth in Section
3.6(b).
"Agreement" has the meaning set forth in the preamble to
this Agreement.
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"Bridge Lenders" means Xxxxxxx Inc., Tandem Computers
Inc. and Xxxxxxx Xxxxx.
"Bridge Loan" means that certain convertible three year term
loan with an interest rate of 7.5% per annum in the original principal amount of
$1,685,000 due the Bridge Lenders by the Original Company as more fully
described in the Offering Memo.
"Bridge Loan Warrants" means the warrants to acquire 100,000
shares of the Original Company's Common Stock at an exercise price equal to
$5.00 per share held by the Bridge Lenders.
"Business Day" means any day that is not a Saturday or Sunday
or a legal holiday on which banks are authorized or required to be closed in New
York, New York.
"Buyer" has the meaning set forth in the preamble to this
Agreement.
"Buyer's Common Stock" means shares of common stock, par value
$.05 per share, of Buyer; provided that, immediately prior to the Merger, (i)
such shares shall have a par value of $.001 per share and (ii) the number of
authorized shares of such Common Stock shall be increased from 1,250,000 to
30,000,000 ("Increase in Authorized Common Stock").
"Closing" has the meaning set forth in Article IX.
"Closing Date" has the meaning set forth in Article IX.
"Code" has the meaning set forth in Section 2.6.
"Company" has the meaning set forth in the preamble to
this Agreement.
"Company Balance Sheet" means the balance sheet of the Company
as of June 30, 1997, a copy of which has been delivered to Buyer pursuant to
Section 3.8(a).
"Company Common Stock" means the shares of common stock, par
value $.001 per share, of the Company.
"Company Dissenting Stockholders" has the meaning set
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forth in Section 2.2(b).
"Company Merger" means the merger of the Original Company with
and into the Company on the terms and conditions set forth in the Original
Merger Agreement.
"Company Stockholders" means stockholders of the Company,
including, upon consummation of the merger contemplated by the Original Merger
Agreement, those who become stockholders as a consequence of such merger.
"Company Financial Statements" means the balance sheet and
related statements of operations and cash flows of the Company as of and for the
period commencing on the Company's date of incorporation and ending on June 30,
1997, copies of which have been delivered to Buyer pursuant to Section 3.8(a).
"Confidential Information" has the meaning set forth in
Section 12.12.
"Contracts" has the meaning set forth in Sec-
tion 3.12(b).
"DGCL" means the General Corporation Law of the State of
Delaware, as amended.
"Effective Time of the Merger" has the meaning set forth
in Section 2.1.
"Employee Benefit Plan" has the meaning set forth in
Section 3.17(a).
"Encumbrance" means any lien, pledge, mortgage, security
interest, charge, restriction, adverse claim or other encumbrance of any kind or
nature whatsoever.
"Environment" has the meaning set forth in Section
3.18(f).
"Environmental Law(s)" has the meaning set forth in
Section 3.18(f).
"Environmental Permits" has the meaning set forth in
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Section 3.18(f).
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"GAAP" means United States generally accepted accounting
principles.
"Hazardous Substance(s)" has the meaning set forth in
Section 3.18(f).
"Indemnification Obligations" means the indemnification
obligations of the Company or Buyer under Article XI.
"Intellectual Property" means all patents and patent
applications, all trademarks, trade names, service marks and copyrights, all
applications for registration of such trademarks, trade names, service marks and
copyrights, all common law trade names, and all common law or statutory trade
secrets, including know-how, inventions, designs, processes and computer
programs (including source codes).
"Loss(es)" means any loss, liability, cost, expense, judgment,
settlement or other damage, including reasonable attorneys' fees and expenses,
reasonable costs of investigating or defending any claim, action, suit or
proceeding or of avoiding the same or the imposition of any judgment or
settlement, and reasonable costs of enforcing any Indemnification Obligations.
"Material Adverse Effect" means any material adverse effect on
the business, operations, assets, condition (financial or otherwise), results of
operations or prospects of the respective parties and their Subsidiaries or the
Original Company and its Subsidiaries taken as a whole, as the case may be.
"Merger" has the meaning set forth in the recitals.
"Merger Filings" has the meaning set forth in Section
2.1.
5
"Merger Shares" has the meaning set forth in Sec-
tion 2.2(a).
"New Financing" means the Private Placement.
"New Investors" means the investors in the New Financing.
"New Certificates" has the meaning set forth in
Section 2.3(a).
"NJBA" means the Business Corporation Act of the State of
New Jersey, as amended.
"Offering Memo" means the Confidential Private Offering
Memorandum of the Company dated September 29, 1997.
"Old Bridge Investors" means the holders of the Old
Bridge Notes.
"Old Bridge Notes" means the convertible promissory notes
issued by the Original Company pursuant to a bridge loan agreement dated
December 13, 1996.
"Old Certificates" has the meaning set forth in
Section 2.3(a).
"Ordinary Course of Business" means the ordinary course of the
Original Company's or the Company's business, as the case may be, consistent
with the Original Company's or the Company's current financial condition, as the
case may be.
"Original Company" has the meaning set forth in the
recitals.
"Original Company Interim Balance Sheet" means that internally
generated unaudited balance sheet of the Original Company as of June 30, 1997, a
copy of which has been delivered to Buyer pursuant to Section 3.8(a).
"Original Company Interim Financial Statements" means the
Original Company Interim Balance Sheet and those internally generated unaudited
statements of operations and cash flows of the
6
Original Company as of and for the period ended June 30, 1997, copies of which
have been delivered to Buyer pursuant to Section 3.8(a).
"Original Company's Common Stock" means the shares of common
stock, par value $.0001 per share, of the Original Company.
"Original Merger Agreement" has the meaning set forth in
the recitals.
"Original Shareholders" means the shareholders of the Company
who were shareholders prior to the New Financing.
"Permitted Encumbrances" has the meaning set forth in
Section 3.10(c).
"Person" means an individual, partnership, venture,
unincorporated association, organization, syndicate, corporation, trust and
trustee, executor, administrator or other legal or personal representative or
any government or any agency or political subdivision thereof.
"Placement Agent" means International Capital Growth,
Ltd.
"Placement Agent Warrants" means the warrants to purchase
Worlds Common Stock issued by the Company to the Placement Agent in connection
with the Private Placement.
"Pre-Closing Period" means all taxable periods ending on or
before the Closing Date and the portion ending on or before the Closing Date of
any taxable period that includes (but does not end on) the Closing Date.
"Private Placement" means the offer and sale (in units of
120,000 shares of Company Common Stock) of no less than 3,600,000 shares of
Company Common Stock for no less than $3,600,000 and no more than 6,000,000
shares of Worlds Common Stock for no more than $6,000,000 in the aggregate
pursuant to the Offering Memo (exclusive of the over-allotment option granted to
the Placement Agent).
"Private Placement Shares" means the shares of Company
7
Common Stock offered and sold by the Company pursuant to the Private Placement.
"Prohibited Transaction" has the meaning set forth in
Section 5.10.
"RCRA" has the meaning set forth in Section 3.18(f).
"Regulation S-X" means Regulation S-X, as in effect from time
to time (Code of Federal Regulations Title 17, Part 210).
"Release" has the meaning set forth in Section 3.18(f).
"Returns" has the meaning set forth in Section 3.9(a).
"Subsidiary" means, as to any Person, any corporation or other
organization whether incorporated or unincorporated of which at least a majority
of the securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by anyone or more of
its subsidiaries, or by such party and one or more of its subsidiaries.
"Surviving Corporation" has the meaning set forth in
Section 2.1(a).
"Tax(es)" means all federal, state, local, foreign and other
taxes, assessments or other governmental charges, including without limitation,
income, estimated income, gross receipts, business, occupation, franchise,
property, sales, use, transfer, excise, employment, payroll and withholding
taxes, and including interest, penalties and additions in connection therewith.
"Value" means the value of the specified items on the basis
set forth herein as determined in good faith by the Board of Directors of the
Surviving Corporation.
"Year End Financial Statements" means the Original Company's
audited balance sheets and statements of operations and cash flows as of and for
the fiscal year ended December 31, 1994, 1995 and 1996.
8
ARTICLE II
THE MERGER
2.1 THE MERGER. Subject to the terms and conditions of this
Agreement, including the fulfillment (or waiver) of all conditions to the
obligations of the parties contained herein, at the Effective Time of the Merger
and pursuant to the DGCL and the NJBA, the following shall occur:
(a) The Company shall be merged with and into Buyer, which
shall be the surviving corporation (the "Surviving Corporation"). The
separate existence of the Company and Buyer shall cease at the
Effective Time of the Merger, and thereupon the Company and Buyer shall
be a single corporation and the Surviving Corporation shall possess all
the rights, privileges, powers and franchises of a public as well as of
a private nature, subject to all the restrictions, disabilities and
duties of the Company and Buyer; and all and singular, the rights,
privileges, powers and franchises of the Company and Buyer, and all
property, real, personal and mixed, and all debts due to the Company or
Buyer on whatever account, for stock subscriptions as well as all other
things in action or belonging to each of the Company and Buyer shall be
vested in the Surviving Corporation; and all property, rights,
privileges, immunities, purposes, powers and franchises, and all and
every other interest shall be thereafter as effectually the property of
the Surviving Corporation as they were of the Company and Buyer, and
the title to any real estate vested by deed or otherwise in the Company
or Buyer shall not revert or be in any way impaired; but all rights of
creditors and all liens upon any property of the Company or Buyer shall
be preserved unimpaired, and all debts, liabili ties and duties of the
Company and Buyer shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as if
said debts, liabilities and duties had been incurred or contracted by
it. The name of the Surviving Corporation shall be "Worlds Inc." (the
"Name Change").
(b) The certificate of incorporation of Buyer at the
9
Effective Time of the Merger shall be the certificate of incorporation
of the Surviving Corporation at such time until amended as permitted by
law.
(c) The By-laws of Buyer at the Effective Time of the Merger
shall be the By-laws of the Surviving Corporation at such time until
amended as permitted by law.
As soon as practicable after the terms and conditions of this Agreement have
been satisfied, (i) a certificate of merger, substantially in the form attached
hereto as Exhibit 1-A and properly executed in accordance with the DGCL, shall
be filed with the office of the Secretary of State of the State of Delaware and
(ii) a certificate of merger, substantially in the form attached hereto as
Exhibit 1-B and properly executed in accordance with the NJBA, shall be filed
with the Office of the Secretary of State of the State of New Jersey (the
"Merger Filings"). The Merger shall become effective when the Merger Filings are
made. The date and time when the Merger is effective is referred to in this
Agreement as the "Effective Time of the Merger."
2.2 CONVERSION OR CANCELLATION OF CAPITAL STOCK OF THE
COMPANY. At the Effective Time of the Merger, by virtue of the Merger and
without any action on the part of any holder thereof:
(a) subject to the provisions of Sections 2.2(b), 2.3 and 2.4,
and subject further to appropriate adjustment for any stock splits,
dividends or combinations after the date hereof and on or prior to the
Effective Time of the Merger, all shares of the Company's capital stock
issued and outstanding immediately prior to the Effective Time of the
Merger (including but not limited to holders of (i) shares of any class
or series of capital stock of the Company, (ii) options, rights or
warrants to purchase such shares other than (x) the Bridge Loan
Warrants, (y) options granted under the Company's Stock Option Plan
referred to in the Offering Memo and (z) and the Placement Agent
Warrants, or (iii) debt convertible into equity of the Company (other
than the Bridge Loan and the Bridge Loan Warrants)) shall be converted
into the right to receive and become exchangeable for an aggregate
number of shares of Common Stock of the Surviving Corporation (the
"Merger Shares") equal to the sum of (i) 10,400,000 (subject to
proportionate reduction for such number of shares of Common
10
Stock of the Original Company and such number of shares of Common Stock
of the Company, if any, as to which dissenter's rights of appraisal are
established pursuant to Section 262 of the DGCL) and (ii) the number of
Private Placement Shares outstanding at the Effective Time of the
Merger.
(b) Shares of the Company's capital stock owned by a holder
who (i) shall not have voted in favor of the Merger, and (ii) shall
have demanded payment for his shares if the Merger is effectuated in
the manner provided in Section 262 of the DGCL (collectively, the
"Company Dissenting Stockholders"), shall not be converted as provided
above, but shall be entitled to receive such consideration as shall be
provided in Section 262 of the DGCL, except that shares of any Company
Dissenting Stockholder who shall thereafter not perfect his right to
appraisal as provided in such Section of the DGCL shall thereupon be
deemed to have been converted, as of the Effective Time of the Merger,
into shares of Common Stock of the Surviving Corporation as provided in
Section 2.2(a).
(c) subject to the provisions of Sections 2.2(d) and 2.4, and
subject further to appropriate adjustment for any stock splits,
dividends or combinations after the date hereof and on or prior to the
Effective Time of the Merger, all shares of Common Stock of Buyer
issued and outstanding immediately prior to the Effective Time of the
Merger and all rights to acquire shares of Common Stock of Buyer shall
be converted, on a share-for-share basis, into a like number of shares
of Common Stock of the Surviving Corporation, and rights to acquire
Common Stock of the Surviving Corporation.
(d) Shares of Common Stock of Buyer owned by a holder who (i)
shall not have voted in favor of the Merger, and (ii) shall have
demanded payment of the "fair value" of his shares if the Merger is
effectuated, in the manner provided in Section 14A:11-2 of the NJBA
(collectively, the "Buyer Dissenting Stockholders"), shall not be
converted as provided above, but shall be entitled to receive such
consideration as shall be provided in Section 14A:11-3 of the NJBA,
except that shares of any Buyer Dissenting Stockholder who shall
thereafter not perfect his right to appraisal as provided in Section
14A:11-2 of the NJBA shall thereupon be deemed to have
11
been converted, as of the Effective Time of the Merger, into shares of
Common Stock of the Surviving Corporation as provided in Section
2.2(c).
2.3 ISSUANCE OF MERGER CONSIDERATION. (a) Subject to the
provisions of Section 2.4 and to appropriate adjustment for any stock splits,
dividends or combinations after the date hereof and on or prior to the Effective
Time of the Merger, at or as soon as practicable after the Effective Time of the
Merger, the Surviving Corporation shall, upon surrender by the Company
Stockholders of one or more certificates ("Old Certificates") representing
shares of the Company's capital stock for cancellation, issue in the name of
such holders and deliver to the surrendering stockholder one or more
certificates ("New Certificates"), registered in the name of such holders,
representing such stockholders' shares of the Surviving Corporation's Common
Stock as set forth in Schedule 2.2(a).
(b) No dividends or other distributions declared on shares of
the Surviving Corporation's Common Stock that are to be represented by New
Certificates shall be paid to any Person other wise entitled to receive the same
until Old Certificates have been surrendered in exchange for such New
Certificates in the manner herein provided, and upon such surrender such
dividends or other distributions shall be paid to such Persons in accordance
with their terms. In no event shall the Persons entitled to receive such
dividends or other distributions be entitled to receive interest on such
dividends or other distributions.
(c) The Surviving Corporation shall pay any transfer taxes in
connection with the exchange of Old Certificates for New Certificates, except
that if any New Certificate is to be issued in a name other than that in which
the Old Certificate surrendered in exchange therefor is registered, it shall be
a condition of such exchange that the Person requesting such exchange shall pay
to the Surviving Corporation any transfer or other taxes required by reason of
the issuance of the New Certificate in a name other than the registered holder
of such Old Certificate, or shall establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable.
2.4 NO FRACTIONAL SHARES. Neither certificates nor
scrip for fractional shares of the Surviving Corporation's Common
12
Stock shall be issued in connection with the Merger, but in lieu thereof the
number of shares of the Surviving Corporation's Common Stock to be issued to
each holder of shares of Company Common Stock shall be rounded to a whole
number, based upon a method to be reasonably determined by the Surviving
Corporation. No such holder shall be entitled to dividends or interest on or
other rights in respect of any such fractional interest. If more than one Old
Cer tificate shall be surrendered at one time for the account of the same
Company Stockholder, the number of full shares of the Surviving Corporation's
Common Stock for which Old Certificates shall be exchanged pursuant to Section
2.3 shall be computed on the basis of the aggregate number of shares of Company
Common Stock represented by the Old Certificates so surrendered.
2.5 STOCK TRANSFER BOOKS. At the close of business on the day
prior to the Effective Time of the Merger, the stock transfer books of the
Company shall be closed and no transfer of Company Common Stock other than in
connection with the Private Placement and the Original Merger shall thereafter
be made on such stock transfer books.
2.6 TAX-FREE REORGANIZATION. The parties intend that the
Merger qualify as a reorganization described in Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code").
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents, warrants, covenants and agrees
to and with Buyer as follows:
3.1 CORPORATE ORGANIZATION. Each of the Company and (to the
best knowledge of the Company) the Original Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, operate and
lease its properties and assets as and where the same are owned, operated or
leased and to conduct its business as it is now being conducted. Each of the
Original Company and the Company is or will be at the Closing in good standing
and duly qualified or licensed as a foreign corporation to do business in those
jurisdictions listed on Schedule 3.1 hereto, such jurisdictions being the only
jurisdic tions in which the location of the property and assets owned, operated
or leased by the Original Company and the Company or the nature of the business
conducted by the Original Company and the Company makes such qualification or
licensing necessary.
3.2 CAPITALIZATION. (a) The authorized capital stock of the
Original Company consists of (i) 15,000,000 shares of common stock, (ii)
2,000,000 shares of Series A preferred stock, (iii) 2,300,000 shares of Series B
preferred stock and (iv) options to purchase 4,058,596 shares of the Original
Company's Common Stock.
(b) The authorized capital stock of the Company consists of
80,000,000 shares of common stock, par value $0.001 per share, of which
8,400,000 shares are issued and outstanding and of which an additional 500,000
shares are reserved for issuance under the Company's stock option plan, as to
which options for 163,000 shares (exercisable at $.25 per share) have been
issued.
(c) All outstanding shares of each of the Company's and (to
the best knowledge of the Company) the Original Company's capital stock are
validly issued, fully paid and nonassessable, and, except as set forth in either
the Original Company's or the Company's Certificate of Incorporation, there are
no preemptive or similar rights in respect of either the Original Company's or
the
14
Company's capital stock. All outstanding shares of the Original Company's and
the Company's capital stock were issued in compliance with all requirements of
all applicable federal and state securi ties laws.
(d) All of the outstanding shares of each of the Original
Company's (to the best knowledge of the Company) and the Company's capital stock
are owned, beneficially and of record, by the stockholders listed on Schedule
3.2.
3.3 SUBSIDIARIES. Schedule 3.3 hereto sets forth a complete
list of all Subsidiaries of each of the Original Company and the Company, and
neither the Company nor (to the best knowledge of the Company) the Original
Company, directly or indirectly, owns any voting securities or other equity
interests in any other Person.
3.4 NO COMMITMENTS TO ISSUE CAPITAL STOCK. Except as set forth
in or contemplated by the Original Merger Agreement and by the Offering Memo,
there are no outstanding options, warrants, calls, convertible securities or
other rights, agreements, commitments or other instruments pursuant to which
either the Original Company or the Company is or may become obligated to
authorize, issue or transfer any shares of its capital stock. There are no
agreements or understandings in effect between either the Original Company or
the Company and any other Person with respect to the voting, transfer or
disposition of securities of either the Original Company or the Company or their
registration under the Act, other than the Registration Rights Agreement
referred to in the Original Merger Agreement.
3.5 AUTHORIZATION. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other laws affecting the rights of creditors generally and by
general principles of equity. The execution, delivery and performance of this
Agreement has been duly authorized by all necessary corporate action on the part
of the Company, subject only to the approval by the Company Stockholders.
3.6 NO CONFLICT; TRANSACTIONS WITH CERTAIN PERSONS. (a)
15
Neither the execution and delivery by the Company of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) conflict with or
violate the Certificate of Incorporation or By-laws (or similar organizational
documents) of the Company, or (ii) conflict with, violate, result in the breach
of any term of, constitute a default under, require the consent of or any notice
to or filing with any third party (other than the consent of shareholders of the
Company referred to elsewhere herein) or governmental authority under, or create
an Encumbrance on any of the assets of the Company under, any note, mortgage,
deed of trust or other agreement or instrument to which to the best of the
Company's knowledge the Company is a party or by which its properties are bound,
or any law, order, rule, regulation, decree, writ or injunction of any
governmental body or arbitral tribunal having jurisdiction over the Company or
its properties, except for the filing of the Certificate of Merger.
(b) To the best of the Company's knowledge, except as set
forth on Schedule 3.6(b), (i) neither the Company nor the Original Company has,
directly or indirectly, purchased, leased or otherwise acquired any property or
obtained any services from, or sold, leased or otherwise disposed of any
property or furnished any services to (except with respect to remuneration for
services rendered as a director, officer or employee of the Company or the
Original Company, as the case may be), in the Ordinary Course of Business or
otherwise, any Person that, directly or indirectly, alone or together with
others, controls, is controlled by or is under common control with the Company
or the Original Company, as the case may be, or any officer, director or
stockholder of the Company or the Original Company, as the case may be (the
Persons listed in this clause (i) being referred to herein as an "Affiliated
Person"); (ii) neither the Company nor the Original Company owes any amount to
any Affiliated Person; and (iii) no Affiliated Person owes any amount to the
Company or the Original Company and no part of the property or assets of any
Affiliated Person is used by the Company or the Original Company, as the case
may be, in the conduct or operation of its business.
3.7 ACQUIRED BUSINESS. Except as set forth on Schedule 3.7,
(a) no Person other than the Company or the Original Company, as the case may
be, owns, leases or has any rights to or interests in, any properties or assets
necessary for the conduct of the Company's business or the Original Company's
business, as the case
16
may be, in the same manner as heretofore conducted or as contemplated to be
conducted, including but not limited to all technology currently used and
necessary to conduct its business as it exists today and as of the Closing Date
and (b) there are no material third party claims against any such material
assets.
3.8 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES;
RECEIVABLES; SUPPLIES; RESTRUCTURING OF OLD BRIDGE NOTES. (a) The Year End
Financial Statements and the Company Financial Statements, complete and correct
copies of which have been delivered to Buyer, fairly present, in all material
respects, the financial condition of the Original Company and the Company (as
the case may be) as at its respective dates and the results of operations and
cash flows of the Original Company and the Company, respectively, for the
periods covered thereby. The Original Company Interim Financial Statements,
complete and correct copies of which have been delivered to Buyer, fairly
present, in all material respects, the financial condition of the Original
Company as at its respective dates and the results of operations and cash flows
of the Original Company for the periods covered thereby, subject to year-end
audit adjustments, as applicable. The Year End Financial Statements, the Company
Financial Statements and the Original Company Interim Financial Statements (i)
have been prepared from the books and records of the Original Company and the
Company, as the case may be, in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby and (ii) comply with the
requirements set forth in Regulation S-X including, without limitation, Rules
1-02 and 3-05 of Regulation S-X. Except for the foregoing, all adjustments,
consisting only of normal recurring accruals, necessary for a fair presentation,
have been made in the preparation of the Original Company Interim Financial
Statements.
(b) Except as and to the extent reflected or reserved against
on the Original Company Interim Balance Sheet or the balance sheets and
footnotes thereto included in the Year End Financial Statements or the Company
Financial Statements, respectively, the Original Company and the Company had no
liabilities, debts or obligations (whether absolute, accrued, contingent or
otherwise) of any nature that would be required as of such dates to have been
included on a balance sheet prepared in accordance with GAAP. Since June 30,
1997, there has been no material adverse change in the business, operations,
assets, condition (financial or otherwise), liabilities, results of
17
operations or prospects of the Original Company and the Company, and no event
has occurred which is reasonably likely to result in a Material Adverse Effect
as to the Company or the Original Company.
(c) All receivables of the Original Company and the Company
(including accounts receivable, loans receivable and advances) which are
reflected in the Original Company Interim Balance Sheet, and all such
receivables which arise thereafter and prior to the Closing, have arisen or will
have arisen only from bona fide transactions in the Ordinary Course of Business
and such receivables (i) shall be fully collectible at the aggregate recorded
amounts thereof (except to the extent of appropriate reserves therefor
established in accordance with GAAP), and (ii) are not and will not be subject
to defense, counterclaim or offset.
(d) All items of supplies and other consumables reflected on
the Original Company Interim Balance Sheet, and all such items of supplies and
other consumables that are acquired thereafter and prior to the Closing, are or
will be useable in the Ordinary Course of Business. Each of the Original Company
and the Company has and will through the Closing maintain a sufficient but not
an excessive quantity of each type of such supplies and other consumables in
order to meet the normal requirements of its business and operations.
(e) Without limiting the generality of the foregoing
provisions of this Section 3.8, to the best of the Company's knowledge, the
total liabilities (determined in accordance with GAAP) of the Original Company
are approximately $3,700,000. The Company has no material liabilities other than
expenses incurred in connection with the Original Merger Agreement and this
Agreement and the transactions contemplated thereby.
(f) The Original Company has restructured the Old Bridge Notes
set forth in Section 3.8(e) of the Original Merger Agreement, to the
satisfaction of the Company, pursuant to the amendment attached as Exhibit F to
the Original Merger Agreement. Such amendment shall not be effective until the
Closing pursuant to the Original Merger Agreement.
3.9 TAXES. (a) Except as set forth in Schedule 3.9,
the Company and (to the best knowledge of the Company) the Original
18
Company each has timely filed with the appropriate taxing authorities all
returns and reports in respect of Taxes ("Returns") required to be filed (taking
into account any extension of time to file granted to or on behalf of the
Original Company or the Company, as the case may be); the information on such
Returns is complete and accurate; each of the Original Company and the Company
has paid on a timely basis all Taxes due and payable; and there are no liens for
Taxes (other than for current Taxes not yet due and payable) upon the assets of
either the Original Company or the Company.
(b) Except as set forth in Schedule 3.9, no unpaid (or
unreserved in accordance with GAAP) deficiencies for Taxes have been claimed,
proposed or assessed by any taxing or other governmental authority with respect
to either the Original Company or the Company for any Pre-Closing Period, and
there are no pending or threatened audits, investigations or claims for or
relating to any liability in respect of Taxes of the Original Company or the
Company; and neither the Original Company nor the Company has requested any
extension of time within which to file any currently unfiled returns in respect
of any Taxes and no extension of a statute of limitations relating to any Taxes
is in effect with respect to the Original Company or the Company.
(c) Each of the Company and (to the best knowledge of the
Company) the Original Company has made or will make provisions for all Taxes
payable by the Original Company or the Company, as the case may be, with respect
to any Pre-Closing Period which are not payable prior to the Closing Date; (ii)
the provisions for Taxes with respect to each of the Original Company and the
Company for the Pre-Closing Period (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) are
adequate to cover all Taxes with respect to such period; (iii) each of the
Original Company and the Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third party;
(iv) all material elections with respect to Taxes affecting either the Original
Company or the Company as of the date hereof are set forth in Schedule 3.9(c)
hereto; (v) neither the Original Company nor the Company is a "consenting
corporation" under Section 341(f) of the Code or any corresponding provision of
state, local or foreign law; (vi) there are no private letter rulings in respect
of
19
any Tax pending between either the Original Company or the Company and any
taxing authority; (vii) neither the Original Company nor the Company owns any
interest in real property in the State of New York; (viii) neither the Original
Company nor the Company has ever been a member of an affiliated group within the
meaning of Section 1504 of the Code, other than the affiliated group of which
either the Original Company or the Company, as the case may be, is the common
parent, or filed or been included in a combined, consolidated or unitary return
of any Person other than the Original Company or the Company, as the case may
be; (ix) neither the Original Company nor the Company is liable for Taxes of any
other Person, or is currently under any contractual obligation to indemnify any
Person with respect to Taxes, or is a party to any tax sharing agreement or any
other agreement providing for payments by the Original Company or the Company,
as the case may be, with respect to Taxes; (x) neither the Original Company nor
the Company is, or has been, a real property holding corporation (as defined in
Section 897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code; (xi) neither the Original Company nor the Company
is a Person other than a United States person within the meaning of the Code;
(xii) neither the Original Company nor the Company is a party to any joint
venture, partnership, or other arrangement or contract which could be treated as
a partnership for federal income tax purposes; (xiii) neither the Original
Company nor the Company has entered into any sale leaseback or any leveraged
lease transaction that fails to satisfy the requirements of Revenue Procedure
75-21 (or similar provisions of foreign law); (xiv) neither the Original Company
nor the Company has agreed or is required, as a result of a change in method of
accounting or otherwise, to include any adjustment under Section 481 of the Code
(or any corresponding provision of state, local or foreign law) in taxable
income; (xv) neither the Original Company nor the Company is a party to any
agreement, contract, arrangement or plan that would result (taking into account
the transactions contemplated by this Agreement), separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code; (xvi) neither the Original Company nor the Company
has ever been a Subchapter S corporation (as defined in Section 1361(a)(1) of
the Code); (xvii) Schedule 3.9 hereto contains a list of all jurisdictions to
which any Tax is properly payable by either the Original Company or the Company;
(xviii) the Original Company has filed a federal income tax return for the
taxable year immediately preceding the current taxable
20
year; and (xix) neither the Original Company nor the Company has made an
election or is required to treat any of its assets as owned by another Person
for federal income tax purposes or as tax-exempt bond financed property or
tax-exempt use property within the meaning of Section 168 of the Code (or any
corresponding provision of state, local or foreign law).
3.10 TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES. (a) To the
best of the Company's knowledge, Schedule 3.10(a) hereto contains a complete and
accurate list by address of all real property owned, leased or used by the
Company or the Original Company (as the case may be), indicating the nature of
the Company's and the Original Company's interest therein. No condemnation,
expropriation, eminent domain or similar proceedings affecting all or any
material portion of any such real property are pending or, to the best knowledge
of the Company, are threatened.
(b) Except as set forth in Schedule 3.10(b), (i) each of the
Original Company and the Company has good title to or a valid leasehold, license
or other interest as the case may be in all of the material properties and
assets, real, personal and mixed, tangible and intangible, it purports to own or
use in the operation of its respective business, including those reflected in
its books and records and in the Interim Balance Sheets (except for supplies and
other consumables utilized in the Ordinary Course of Business and accounts
receivable collected after June 30, 1997), free and clear of all Encumbrances,
except for Permitted Encumbrances; and (ii) none of such property or assets
leased or licensed by either the Original Company or the Company is subject to
any sublease, sublicense or other agreement granting to any other Person any
right to the use, occupancy or enjoyment of such property or assets or any
portion thereof.
(c) "Permitted Encumbrances" means: (i) Encumbrances listed on
Schedule 3.10(c), (ii) liens for Taxes not yet due and payable; (iii)
mechanics', materialmen's, carriers', warehouse men's, landlord's and similar
liens incurred in the Ordinary Course of Business securing obligations not yet
due and payable; and (iv) such imperfections of title, easements, encroachments
and Encumbrances on personal property incurred in the Ordinary Course of
Business as do not detract from the value or interfere with the present use of
the properties or assets subject thereto or affected thereby.
21
3.11 INTELLECTUAL PROPERTY. (a) Schedule 3.11(a) hereto
contains a complete and accurate list and brief description of all Intellectual
Property owned or used by the Company and the Original Company along with the
name of any joint owner of such Intellectual Property.
(b) To the best of the Company's knowledge, and except as set
forth on Schedule 3.11(b), all Intellectual Property used by either the Original
Company or the Company in the operation of its business is either (i) owned by
either the Original Company or the Company, as the case may be, free and clear
of all Encumbrances, other than Permitted Encumbrances, or (ii) subject to a
right of use by either the Original Company or the Company, as the case may be,
pursuant to a license or other agreement; no third party has been granted by
either the Original Company or the Company, as the case may be, the right to use
any Intellectual Property owned or used by either the Original Company or the
Company, as the case may be; no third party is infringing upon or
misappropriating any Intellectual Property used by either the Original Company
or the Company, as the case may be, in the operation of its business and no
activity in which either the Original Company or the Company, as the case may
be, is engaged or contemplates engaging violates or infringes or will violate or
infringe upon any Intellectual Property or other proprietary rights of any third
party; there is no legal action by any Person pending or threatened against
either the Original Company or the Company with respect to such matters, and no
written claim with respect to such matters has been received by either the
Original Company or the Company.
3.12 CONTRACTS AND AGREEMENTS. (a) To the best of the
Company's knowledge, set forth in Schedule 3.12 hereto is a complete and
accurate list of each of the following contracts and agreements to which either
the Original Company or the Company is a party or by which the Original Company
or the Company or their properties are bound:
(i) each agreement providing for
compensation in respect of services performed by
employees of either the Original Company or the Company;
(ii) each management, service,
consulting, retainer or other similar type of agreement
under which services are provided by any other Person to
either the
22
Original Company or the Company;
(iii) each agreement that restricts
the operation of the business of either the Original Company
or the Company as presently conducted and each agreement that
restricts the ability of either the Original Company or the
Company to solicit customers or employees;
(iv) each agreement with an
Affiliated Person;
(v) each operating lease (as lessor,
lessee, sublessor or sublessee) of any real property;
(vi)each operating lease (as lessor,
lessee, sublessor or sublessee) of any tangible personal
property (except for leases calling for payments of less than
$5,000 per year and having a term of less than one year);
(vii) each license (as licensor,
licensee, sublicensor or sublicensee) of any Intellectual
Property (other than customary, non-negotiated licenses of
computer software which are immaterial to either the Original
Company or the Company in the aggregate);
(viii) each form of agreement under
which products are provided by either the Original
Company or the Company to any customer;
(ix) each written agreement for the
purchase of supplies or products which calls for performance
by either the Original Company or the Company over a period of
more than two (2) months or with respect to which there exists
an aggregate future liability of either the Original Company
or the Company in excess of $5,000;
(x) each agreement under which any
money has been or may be borrowed or loaned or any note, bond,
indenture or other evidence of indebtedness has been issued or
assumed (other than those under which there
23
remain no ongoing obligations of either the Original Company
or the Company), and each guaranty of any evidence of
indebtedness or other obligation, or of the net worth, of any
Person (other than endorsements for the purpose of collection
in the ordinary course of business);
(xi)each mortgage agreement, deed of
trust, security agreement, purchase money agreement,
conditional sales contract or capital lease (other than any
purchase money agreement, conditional sales contract or
capital lease evidencing Encumbrances solely on tangible
personal property under which there exists an aggregate future
liability of either the Original Company or the Company not in
excess of $5,000 per agreement, contract or lease);
(xii) each agreement containing
restrictions with respect to the payment of dividends or
other distributions in respect of any of the Original
Company's or the Company's capital stock;
(xiii) each agreement to make unpaid
capital expenditures in excess of $5,000; and
(xiv) each other agreement having an
indefinite term or a term of more than one (1) year (other
than those that are terminable at will or upon not more than
thirty (30) days' notice by either the Original Company or the
Company without penalty) or requiring payments by either the
Original Company or the Company of more than $5,000 per year.
A complete and correct copy of each written agreement, lease, license, mortgage,
deed of trust, instrument, contract or other type of document required to be
disclosed pursuant to this Section 3.12(a) has been delivered to Buyer.
(b) To the best of the Company's knowledge, each agreement,
lease, license, mortgage, deed of trust, instrument, contract or other type of
document required to be delivered pursuant to Section 3.12(a) to which either
the Original Company or the Company is a party or by which either the Original
Company or
24
the Company or its respective properties is bound (collectively, the
"Contracts") is valid, binding and in full force and effect as to either the
Original Company or the Company, as the case may be, and, to the best knowledge
of the Company, each other party thereto and is enforceable by either the
Original Company or the Company, as the case may be, in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
moratorium and other similar laws affecting creditors' rights generally and by
general principles of equity; and neither the Original Company nor the Company
is (with or without the lapse of time or the giving of notice, or both) in
breach of or in default under any of the Contracts, and, to the best knowledge
of the Company, no other party to any of the Contracts is (with or without the
lapse of time or the giving of notice, or both) in breach of or in default under
any of the Contracts.
3.13 INSURANCE. To the best of the Company's knowledge, all
insurance policies currently maintained by either the Original Company or the
Company are accurately listed and described in Schedule 3.13 hereto. Each of
such insurance policies is in full force and effect (free from any presently
exercisable right of termination on the part of the insurance company issuing
such policy prior to the expiration of the term of such policy) and all premiums
due and payable in respect thereof have been paid. Neither the Original Company
nor the Company has received notice of cancellation or non-renewal of any such
policy. The transactions contemplated by this Agreement will not give rise to a
right of termination of any such policy by the insurance company issuing the
same prior to the expiration of the term of such policy.
3.14 LITIGATION. Except as set forth in Schedule 3.14 hereto,
to the best of the Company's knowledge, there is no lawsuit, governmental
investigation or legal, administrative or arbitration action or proceeding
pending or threatened against either the Original Company or the Company, or any
director, officer or employee of either the Original Company or the Company in
his or her capacity as such, (i) which questions the validity of this Agreement
or seeks to prohibit, enjoin or otherwise challenge the consummation of the
transactions contemplated hereby, or (ii) which, if decided adversely to such
Person, is reasonably likely to result in a Material Adverse Effect. Neither the
Original Company nor the Company is specifically identified as a party subject
to any restrictions or limitations under any
25
judgment, order or decree of any court, administrative agency or other
governmental authority.
3.15 COMPLIANCE WITH LAW. (a) To the best of the Company's
knowledge, (i) each of the Original Company and the Company is in compliance in
all material respects with all applicable laws, statutes, rules, ordinances,
regulations, orders and decrees governing the operation of its business, and all
of its governmental licenses and permits; (ii) neither the Original Company nor
the Company has received any written notice of any violation of any such law,
statute, rule, ordinance, regulation, order, decree, license or permit; (iii) no
written claim has been made or legal action commenced against either the
Original Company or the Company that alleges any violation of any laws,
regulations or contract provisions relating to the pricing of contracts with the
federal government or any state or local government, or any agency of any
thereof; and (iv) neither the Original Company nor the Company has engaged in
any fraudulent practices in connection with any bid or contract for services to
be performed for any governmental entity.
(b) To the best of the Company's knowledge, (i) each of the
Original Company and the Company has all governmental licenses, approvals,
authorizations, franchises and permits necessary to conduct its business as
currently conducted, such governmental licenses, approvals, authorizations,
franchises and permits are in full force and effect, and no proceedings are
pending or threatened seeking the revocation or limitation of any such
governmental licenses, approvals, authorizations, franchises or permits; and
(ii) all governmental licenses and permits possessed by each of the Original
Company and the Company are listed in Schedule 3.15 hereto.
3.16 EMPLOYEES. (a) The Company believes that it and the
Original Company has satisfactory relationships with its current employees.
(b) To the best of the Company's knowledge, each of the
Original Company and the Company is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours.
(c) Neither the Original Company nor the Company is
26
engaged in any unfair labor practice.
(d) No collective bargaining agreement with respect to the
business of either the Original Company or the Company is currently in effect or
being negotiated. Neither the Original Company nor the Company has any
obligation to negotiate any such collective bargaining agreement, and there is
no indication that the employees of either the Original Company or the Company
desire to be covered by a collective bargaining agreement.
(e) There are no strikes, slowdowns or work stoppages pending
or, to the best knowledge of the Company, threatened with respect to the
employees of either the Original Company or the Company, nor has any such
strike, slowdown or work stoppage occurred or been threatened.
(f) Except as set forth on Schedule 3.16(f), neither the
Original Company nor the Company has received any notice of the intent of any
government, body or agency responsible for the enforcement of labor or
employment laws to conduct an investigation of either the Original Company or
the Company, and no such investigation is in progress.
(g) A true and correct copy of a salary review schedule
listing, as of June 30, 1997, the annual base salary or annualized wages of each
employee of both the Original Company and the Company has been provided to Buyer
and no changes to such schedule have occurred since such date. A copy of such
schedule is attached hereto as Schedule 3.16(g).
3.17 EMPLOYEE BENEFIT PLANS. (a) Schedule 3.17 hereto sets
forth a full and complete list of all executive compensation, deferred
compensation, stock ownership, stock purchase, stock option, restricted stock,
performance share, bonus and other incentive plans, pension, profit sharing,
savings, thrift or retirement plans, employee stock ownership plans, life,
health, dental and disability plans, vacation, severance pay, sick leave,
dependent care, cafeteria and tuition reimbursement plans, and any other
"employee benefit plans" within the meaning of ERISA, whether or not in writing,
currently maintained by either the Original Company or the Company or with
respect to which either the Original Company or the Company, as the case may be,
may have any liability or obligation (direct, indirect, contingent or otherwise)
to an
27
employee, former employee, director or former director (or any dependent or
beneficiary thereof) of either the Original Company or the Company, as the case
may be (an "Employee Benefit Plan"). There have been provided to Buyer true and
complete copies of all written Employee Benefit Plans and any related trust
agreements, insurance and other contracts and other funding arrangements, the
current summary plan descriptions and current summaries of material
modifications relating to each Employee Benefit Plan, the most recent Forms 5500
which have been filed with any appropriate government agency with respect to
each Employee Benefit Plan, the most recent favorable determination letter
issued for each Employee Benefit Plan and related trust that is intended to
satisfy the qualification requirements of Sections 401(a) and 501(a) of the
Code, and all collective bargaining agreements pursuant to which an Employee
Benefit Plan is maintained or contributions to an Employee Benefit Plan are
made.
(b) No Employee Benefit Plan is, and no employee benefit plan
formerly maintained by either the Original Company or the Company was, a
"defined benefit Plan" within the meaning of Section 3(35) of ERISA to which
ERISA applies. Neither the Original Company nor the Company has ever contributed
to, or withdrawn in a complete or partial withdrawal from, any multiemployer
plan (within the meaning of Subtitle E of Title IV of ERISA) or incurred
contingent liability under Section 4204 of ERISA. No Employee Benefit Plan
provides for medical or health benefits (through insurance or otherwise) to
individuals other than current employees of either of the Original Company or
the Company (or spouses and dependents of such employees), except to the extent
necessary to comply with "Applicable Benefits Law" (including, Section 4980B of
the Code). "Applicable Benefits Law" refers to the legal requirements imposed
upon employee benefit plans by the United States or any political subdivision
thereof (including any requirements enforced by the Internal Revenue Service
with respect to employee benefit plans intended to confer tax benefits on either
the Original Company or the Company, as the case may be, or any of its
employees).
(c) Each Employee Benefit Plan (and each related trust,
insurance contract and fund) is in compliance in all material respects in form
and in operation with all applicable requirements of Applicable Benefits Law
(including ERISA and the Code), and is being administered in all material
respects in accordance with all
28
relevant plan documents to the extent consistent with Applicable Benefits Law.
There has been no prohibited transaction with respect to any Employee Benefit
Plan which would result in the imposition of any material unpaid excise tax. No
Employee Benefit Plan is under investigation or audit by the Department of Labor
or Internal Revenue Service other than as part of a routine tax audit of either
the Original Company or the Company. There are no legal actions or suits pending
or, to the best knowledge of the Company, threatened against any Employee
Benefit Plan or the assets of any Employee Benefit Plan or against any fiduciary
of any Employee Benefit Plan. There has been full compliance in all material
respects with the notice and continuation requirements of Section 4980B of the
Code applicable to any Employee Benefit Plan.
(d) No provision of any Employee Benefit Plan becomes
effective in the event of a change in control of the employer maintaining such
Employee Benefit Plan. Neither the Original Company nor the Company has agreed
to the creation of any new employee benefit plan or, with respect to any
existing Employee Benefit Plan, any increase in benefits or change in employee
coverage which would increase the expense of maintaining such Employee Benefit
Plan. No provision of any Employee Benefit Plan prohibits the employer
maintaining it from amending or terminating such Plan at any time and to the
fullest extent that law permits. The consummation of the transactions
contemplated by this Agreement, in and of itself, will not result in an increase
in the amount of compensation or benefits or accelerate the vesting or timing of
payment of any benefits or compensation payable under any Employee Benefit Plan
in respect of any employee of either the Original Company or the Company. No
employee or former employee of either the Original Company or the Company will
be entitled to any severance benefits under the terms of any Employee Benefit
Plan or otherwise by reason of the consummation of the transactions contemplated
by this Agreement.
(e) At no time since the organization of either the Original
Company or the Company has any entity (other than either the Original Company or
the Company) been an "ERISA affiliate" of either the Original Company or the
Company. "ERISA affiliate" means any trade or business, whether or not
incorporated, which together with either the Original Company or the Company is
or was at any time during such period treated as a "single employer" within the
meaning of Section 414(b) (c), (m) or (o) of the Code or
29
Section 4001 of ERISA. No leased employee (within the meaning of Section 414(n)
or (o) of the Code) performs any services for either the Original Company or the
Company.
3.18 ENVIRONMENTAL MATTERS. To the best of the
Company's knowledge:
(a) each of the Original Company and the Company has obtained
all Environmental Permits that are presently required for the lawful operation
of its business, and all Environmental Permits possessed by either the Original
Company or the Company are listed in Schedule 3.18 hereto; and each of the
Original Company and the Company (i) is in compliance with all terms and
conditions of their Environmental Permits in all respects and is in compliance
with and not in default under any applicable Environmental Law, and (ii) has not
received written notice of any violation by or claim under any Environmental
Law.
(b) There have been no Releases by either the Original Company
or the Company of any Hazardous Substances (i) into, on or under any of the
properties owned or operated (or formerly owned or operated) by either the
Original Company or the Company, or (ii) into, on or under any other properties,
including landfills in which Hazardous Substances have been Released or
properties on or under which either the Original Company or the Company has
performed services, in any case in such a way as to create any material unpaid
liability (including the costs of required remediation) of either the Original
Company or the Company under any applicable Environmental Law.
(c) No property has been used at any time by either the
Original Company or the Company as a "landfill" or as a "treatment, storage or
disposal facility" for any "hazardous waste," as such terms are defined under
RCRA.
(d) There is no damaged or friable asbestos or asbestos-
containing material contained in any of the buildings or structures owned or
leased by either the Original Company or the Company, except for asbestos or
asbestos-containing material the present form, amount and location of which does
not create any unpaid material liability (including the costs of required
remediation) of either the Original Company or the Company, as the case may be,
under any applicable Environmental Law (regardless of whether
30
subsequent occurrences could expose or change the form or location of, or cause
the Release of, such substances); and no written claims have been made, and no
suits or proceedings are pending or threatened by any employee against either
the Original Company or the Company that are premised on exposure to asbestos or
asbestos- containing material.
(e) There are no underground storage tanks, abandoned xxxxx or
landfills on any real property owned or leased by either the Original Company or
the Company.
(f) For purposes of this Agreement, the capitalized terms
defined below shall have the meanings ascribed to them below.
(i) "Environment" means all air, surface water, groundwater,
drinking water or land, including land surface or subsurface.
"Environmental Law(s)" means all federal, state or local
environmental, land use, health, chemical use, safety and sanitation
laws, statutes, ordinances, rules, regulations and codes (including
without limitation specific governmental licenses, permits,
authorizations, directives, approvals or consents, court orders,
injunctions or decrees, or agreements with governmental agencies), as
in effect on the date hereof, relating to health, safety or the
protection of the Environment or governing the discharge of pollutants
or the use, storage, treatment, generation, transportation, processing,
handling, production or disposal of Hazardous Substances, including but
not limited to RCRA, the Clean Air Act, as amended, the Comprehensive
Environmental Response, Compensating and Liability Act of 1980, as
amended, the Toxic Substances Control Act, as amended, the Occupational
Safety and Health Act of 1970, the Federal Water Pollution Control Act,
the Clean Water Act and all state and foreign statutes similar to or
based upon the foregoing.
"Environmental Permits" means all approvals, authorizations,
consents, permits, licenses, registrations and certificates required by
any applicable Environmental Law relating to: (A) pollution or the
protection of the Environment, including without limitation those
relating to the emission, Release or discharge of any Hazardous
Substances
31
into the Environment, (B) the use, treatment, storage, disposal,
generation, transport or handling of Hazardous Substances, or (C) the
cleanup or remediation of Hazardous Substances from any real property.
"Hazardous Substance(s)" means, without limitation, any
flammable explosives, radioactive materials, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products
(including but not limited to waste petroleum and petroleum products),
methane, hazardous materials, hazardous wastes, pollutants,
contaminants and hazardous or toxic substances, as defined in or
regulated under any applicable Environmental Laws.
(v) "RCRA" means the Resource Conservation and Recovery
Act of 1976, as amended.
"Release" means any past or present spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of a Hazardous Substance into the
Environment.
3.19 POWERS OF ATTORNEY. There are no outstanding powers of
attorney to act in the place and stead of either the Original Company or the
Company.
3.20 BANK ACCOUNTS. Schedule 3.20 hereto sets forth the name
of each bank in which either the Original Company or the Company has an account,
lock box or safe deposit box, the number of each such account, lock box and safe
deposit box, and the names of all Persons authorized to draw thereon or have
access thereto.
3.21 ABSENCE OF CERTAIN CHANGES. Since June 30, 1997, each of
the Original Company and the Company has operated its business in the Ordinary
Course of Business. Without limiting the generality of the immediately preceding
sentence, since June 30, 1997, neither the Original Company nor the Company has:
(i) issued or sold or authorized for issuance or sale, or
granted any options or made other agreements (other than this
Agreement) of the type referred to in Section 3.4 with respect to, any
shares of capital stock or any other of its securities, or made any
change in its outstanding shares of
32
capital stock or other ownership interests or capitalization, whether
by reason of a reclassification, recapitalization, stock split or
combination, exchange or readjustment of shares, stock dividend or
otherwise;
(ii) with the exception of liens in favor of Credit Management
Association and Amsterdam Pacific, LLC, mortgaged, pledged or granted
any security interest in any of its assets, except security interests
solely in tangible personal property granted pursuant to any purchase
money agreement, conditional sales contract or capital lease under
which there exists an aggregate future liability not in excess of
$10,000 per agreement, contract or lease (which amount was not more
than the purchase price for such personal property and which security
interest does not extend to any other item or items of personal
property);
(iii) declared, set aside, made or paid any dividend or
other distribution to any stockholder with respect to its
capital stock;
(iv) redeemed, purchased or otherwise acquired, directly
or indirectly, any of its capital stock;
(v) increased the compensation of any of its employees;
(vi) adopted or (except as otherwise required by law) amended
any Employee Benefit Plan or entered into any collective bargaining
agreement;
(vii) except as set forth on Schedule 3.21(vii), terminated or
modified any Contract, or received any written notice of termination of
any Contract, except for terminations of Contracts upon their
expiration during such period in accordance with their terms and
terminations or modifications that have not and are not reasonably
likely to result in a Material Adverse Effect;
(viii) incurred or assumed any indebtedness for borrowed
money or guaranteed any obligation or the net worth of any Person,
except for endorsements of negotiable instruments for collection in
the ordinary course of business;
(ix) discharged or satisfied any Encumbrance other than
33
those then required to be discharged or satisfied;
(x) paid any material obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, except
for any current liabilities, and the current portion of any long term
liabilities, shown on the Interim and Year End Financial Statements (or
not required as of the date thereof to be shown thereon in accordance
with GAAP) or incurred since June 30, 1997 in the Ordinary Course of
Business;
(xi) sold, transferred, leased to others or otherwise
disposed of any material property or asset except in the
Ordinary Course of Business;
(xii) canceled or compromised any material debt or claim;
(xiii) suffered any damage or destruction to or loss of any of
its tangible property or assets (whether or not covered by
insurance) which has had or is reasonably likely to result in a
Material Adverse Effect;
(xiv) lost the employment services of any key employee;
(xv) made any loan or advance to any Person other than travel
and other similar routine advances in the Ordinary Course of
Business, or acquired any capital stock or other securities of any
other corporation or any ownership interest in any other business
enterprise;
(xvi) made any capital expenditures or capital additions or
betterments in amounts which exceeded $10,000 in the aggregate, except
as contemplated in its current budgets;
(xvii) changed its method of accounting or the accounting
principles or practices utilized in the preparation of the Interim and
Year End Financial Statements, other than as required by GAAP or made
any election with respect to Taxes;
(xviii)except as listed on Schedule 3.21(xviii), instituted or
settled any litigation or any legal, administrative or arbitration
action or proceeding before any court or governmental body relating to
it or its property or assets;
34
(xix) suffered any incident or event which, individually
or in the aggregate, has had or is reasonably likely to result
in a Material Adverse Effect;
(xx) committed to provide products for an indefinite period or
a period of more than two (2) months (except pursuant to an arrangement
which can be cancelled on 30 days notice or less and which involves an
aggregate commitment by either the Original Company or the Company of
less than $10,000; or
(xxi) entered into any commitment to do any of the
foregoing.
3.22 BOOKS AND RECORDS. To the best of the Company's
knowledge, all accounts, books, ledgers and official and other records prepared
and kept by each of the Original Company and the Company have been truthfully
and properly kept and completed in all material respects, and there are no
material inaccuracies or discrepancies of any kind contained or reflected
therein.
3.23 ABSENCE OF CERTAIN BUSINESS PRACTICES. To the best of the
Company's knowledge, neither the Original Company or the Company nor any of its
officers, employees or authorized agents or any other Person acting on its
behalf has, directly or indirectly, given or agreed to give any gift or similar
benefit to any governmental employee, domestic or foreign, who is or may be in a
position to help or hinder the business of either the Original Company or the
Company (or assist it in connection with any actual or proposed transaction)
which could (i) subject either the Original Company or the Company, as the case
may be, to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, domestic or foreign, or (ii) if not continued in the
future, result in a Material Adverse Effect.
3.24 CUSTOMER RELATIONSHIPS. Schedule 3.24 hereto contains a
list of each of the Original Company's and the Company's five largest customers
during the past twelve (12) months (collectively, the "Major Customers"). The
Company has no reason to believe that either the Original Company's or the
Company's relations with their respective Major Customers will be adversely
affected by the transactions contemplated by this Agreement or
35
otherwise reduced in the future.
3.25 DISCLOSURE. No statement of or on behalf of the Company,
its officers or directors contained herein, or in any schedule, document or
agreement delivered pursuant hereto, or delivered in connection with the New
Financing (including, without limitation, the Offering Memo), will knowingly
contain any untrue statement of a material fact or intentionally omit to state
any material fact necessary in order to make such statement not misleading.
3.26 SECURITIES LAWS; LOCK-UP LETTERS; PROXIES AND RESTRICTIVE
LEGENDS. The Company, its officers and directors understand that any shares of
Buyer's Common Stock to be issued pursuant to this Agreement will not be
registered under the Act and neither such shares nor any interest therein may be
sold, assigned, transferred or otherwise disposed of unless they are registered
or are disposed of in a transaction that is exempt from such registration. The
Company, Buyer and their respective officers and directors understand that any
issuance of Buyer's Common Stock to Company Stockholders (including persons who
become such as a consequence of the consummation of the Company Merger) will be
conditioned upon compliance with Regulation D under the Act or another available
exemption from registration. The Company acknowledges that each of the Company
Stockholders will need to represent that he is acquiring shares of Buyer's
Common Stock for his own account and with no intention of distributing or
reselling such securities or any part thereof in any transaction that would be
in violation of the securities laws of the United States of America, or any
state. The Company, its officers and directors agree that, so long as required
by law, such shares shall be subject to the following restrictions and
certificates evidencing such securities and any securities issued in exchange
for or in respect thereof shall bear a legend to the following effect:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS
(AND BASED UPON AN OPINION OF
36
COUNSEL IF THE ISSUER SO REQUESTS)."
3.27 TRANSFER OR RESALE. (a) The Company understands that (1)
the Merger Shares have not been and are not being registered under the Act or
any state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (I) subsequently registered thereunder, or (ii) Company
Stockholders shall have delivered to Buyer an opinion of counsel, reasonably
satisfactory in form, scope and substance to Buyer, to the effect that the
securities to be so offered, sold, assigned or transferred may be so offered,
sold, assigned or transferred pursuant to an exemption from such registration;
(2) any sale of such securities made in reliance on Rule 144 promulgated under
the Act ("Rule 144") may be made only in accordance with the terms of Rule 144
and, if Rule 144 is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the Act) may
require compliance with some other exemption under the Act or the rules and
regulations of the SEC thereunder; and (3) neither Buyer nor any other person is
under any obligation to register such securities under the Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder.
(b) No Company Stockholder may sell, offer or
otherwise transfer the Merger Shares for a period of one year from the date such
Company Stockholder acquires such shares ("Acquisition Date"). If the Merger
Shares are exchanged for securities of another entity into which Buyer merges,
the holders of such securities may not sell, offer or otherwise transfer such
securities for a period of one year from the Acquisition Date. All stock
certificates that are issued to Company stockholders pursuant to the Merger will
bear a legend stating:
THE SHARES REPRESENTED BY THIS CERTIFICATE
CANNOT BE SOLD OR OTHERWISE TRANSFERRED FOR
A PERIOD OF ONE YEAR FROM THE DATE THIS
CERTIFICATE WAS ISSUED
(c) With a view to making available to Company
Stockholders and their affiliates the benefits of Rule 144 under the Act, Buyer
covenants and agrees that if it merges with another company, any such merger
will satisfy all applicable securities
37
laws and the surviving company will: (i) make and keep available adequate
current public information (within the meaning of Rule 144(c)) concerning
itself, until the earlier of (A) the second anniversary of the Acquisition Date
or (B) such date as all of such company's securities issued to the Company
Stockholders shall have been resold by the holders thereof or any of their
affiliates; (ii) maintain its status as a Reporting Issuer and file with the SEC
in a timely manner all reports and other documents required by applicable state
and federal securities law; and (iii) furnish to Company Stockholder upon
request, as long as such stockholder owns any Covered Securities, (A) a written
statement by that it has complied with the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), (B) a copy of the
most recent annual or quarterly report of such company, and (C) such other
information as may be reasonably requested in order to avail such stockholder
and its affiliates of Rule 144 with respect to such Covered Securities.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents, warrants, covenants and agrees to and
with the Company as follows:
4.1 ORGANIZATION AND EXISTENCE. Buyer is a corporation duly
organized and validly existing in good standing under the laws of the State of
New Jersey and has full corporate power and authority to enter into and carry
out its obligations under this Agreement.
4.2 CAPITALIZATION. As of the date of this Agreement, Buyer's
authorized capital stock consists solely of 1,250,000 shares of common stock,
par value $0.05 per share, of which 910,000 shares (inclusive of 2,300 shares
held in treasury) are issued and outstanding and as to which an additional
150,000 shares are reserved for issuance pursuant to warrants to purchase
150,000 shares at an exercise price of $.67 per share ("Outstanding Buyer
Warrants"). All of the issued and outstanding shares of Buyer's Common Stock
have been, and the shares of Common Stock of the
38
Surviving Corporation to be issued pursuant hereto upon issuance in accordance
with the terms hereof will be, duly authorized and validly issued, fully paid
and non-assessable.
4.3 AUTHORIZATION. The execution and delivery by Buyer of this
Agreement have been duly authorized by all necessary corporate action required
on the part of Buyer, subject only to the approval by shareholders of Buyer.
This Agreement has been duly executed and delivered by Buyer and constitutes a
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other laws affecting the rights of
creditors generally and by general principles of equity.
4.4 NO CONFLICT. Neither the execution and delivery by Buyer
of this Agreement, nor the consummation by Buyer of the transactions
contemplated hereby, will (i) conflict with or violate the Certificate of
Incorporation or By-laws of Buyer, or (ii) conflict with, violate, result in the
breach of any term of, constitute a default under, require the consent of or any
notice to or filing with any third party (other than the approval of
shareholders of Buyer referred to elsewhere herein) or governmental authority
under, or create an Encumbrance on any of the assets of Buyer under, any note,
mortgage, deed of trust or other agreement or instrument to which Buyer is a
party or by which Buyer's properties are bound, or any law, order, rule,
regulation, decree, writ or injunction of any governmental body or arbitral
tribunal having jurisdiction over Buyer or its properties (except where such
conflict, violation, breach or default, or the failure to obtain such consent,
give such notice or make such filing, would not impair the ability of Buyer to
consummate the transactions contemplated hereby), except for the filing of the
Certificate of Merger.
4.5 LITIGATION. No lawsuit, governmental investigation or
legal, administrative or arbitration action or proceeding is pending or, to the
knowledge of Buyer, threatened, against Buyer or any director, officer or
employee of Buyer in his or her capacity as such which questions the validity of
this Agreement or seeks to prohibit, enjoin or otherwise challenge the
consummation of the transactions contemplated hereby.
39
4.6 BROKER OR FINDER. Other than International Capital Growth,
Ltd. who shall be paid an advisory fee by Buyer at the Closing, which shall
consist of 425,000 shares of Common Stock of Buyer, no broker or finder has been
engaged by Buyer or on behalf of Buyer in connection with the transactions
contemplated by this Agreement, and no commission, finder's fees or other
similar compensation or remuneration is payable to any Person as a result of a
Buyer's actions in connection with the execution and delivery of any of this
Agreement or the consummation of the transactions contemplated hereby.
4.7 COMPLIANCE. To the best of Buyer's knowledge, the reports
that Buyer has filed with the Securities and Exchange Commission pursuant to the
Exchange Act comply with the reporting requirements applicable to Buyer and do
not contain any untrue statement of a material fact or intentionally omit to
state any material fact necessary in order to make such statement not
misleading.
ARTICLE V
COVENANTS OF THE COMPANY
The Company hereby covenants and agrees as follows:
5.1 NORMAL COURSE. From the date hereof until the Effective
Time of the Merger, the Company will, and will use its best efforts to cause the
Original Company to: (i) maintain its corporate existence in good standing
except for the Company Merger; (ii) maintain the general character of its
business; (iii) use all reasonable efforts to maintain in effect all of its
presently existing insurance coverage (or substantially equivalent insurance
coverage), preserve its business organization substantially intact, keep the
services of its present principal employees and preserve its present business
relationships with its material suppliers and customers; (iv) permit Buyer, its
accountants, its legal counsel and its other representatives full access to its
management, minute books, other books and records, contracts, agreements,
properties and operations at all reasonable times and upon reasonable notice;
and (v) in all respects conduct its business in the Ordinary Course of Business
and perform in all material respects all agreements or
40
other obligations with banks, customers, suppliers, employees and
others.
5.2 NEGATIVE COVENANTS. From the date of this Agreement until
the Effective Time of the Merger, the Company will not (without the prior
written consent of Buyer), and will use its best efforts to cause the Original
Company not to (without the prior written consent of Buyer) (a) take any action
or suffer any situation to exist that would be required to be disclosed to Buyer
pursuant to Section 3.21 had such action been taken or such situation existed
between June 30, 1997 and the date of this Agreement; (b) modify or amend the
Original Merger Agreement; or (c) seek or grant any waiver of any term,
provision, covenant, representation or warranty contained in the Original Merger
Agreement (or any breach thereof).
5.3 CERTAIN FILINGS. The Company shall make or cause to be
made, and shall use its best efforts to cause the Original Company to make or
cause to be made, all filings with regulatory authorities that are required to
be made by it, to carry out the transactions contemplated by this Agreement.
5.4 NEW FINANCING. The Company shall use its best
efforts to consummate the Private Placement.
5.5 BEST EFFORTS TO SATISFY CONDITIONS. The Company shall use
its best efforts to satisfy the conditions set forth in Articles VII and VIII
that are within the control of the Company.
5.6 FURTHER ASSURANCES. The Company shall execute and deliver
such additional documents and instruments, and perform such additional acts, as
Buyer may reasonably request to effectuate or carry out and perform all the
terms, provisions and conditions of this Agreement and to effectuate the New
Financing.
5.7 RESTRUCTURING OF LIABILITIES. (a) Prior to the Closing,
the Company shall use its best efforts to cause the Original Company to reduce
the lease obligations set forth in Section 3.8(e) above to no more than $250,000
and such amount shall be payable in thirty six (36) equal monthly installments,
commencing thirty (30) days after the Closing Date, and interest shall accrue on
the unpaid balance at a rate of eight (8%) percent per annum.
41
(b) The Company shall use its best efforts to cause the
Original Company to use its best efforts to restructure its following
liabilities set forth in Section 3.8(e) above as follows:
(i) Deferred income shall remain at $430,000; and
(ii) The long-term note payable, if it is determined
to be a bona fide claim, shall be reduced to $406,000 with monthly
payments of $7,000 per month for 58 months.
(c) Upon effectiveness of the restructuring amendments to the
Old Bridge Notes set forth in Section 3.8(f) above, the holders of the Old
Bridge Notes shall receive two-year warrants, substantially in the form included
in Exhibit F to the Original Merger Agreement, exercisable for an aggregate of
100,000 shares of the Company's Common Stock at an exercise price per share
equal to $5.00 ("Bridge Warrants").
42
5.8 AVAILABILITY OF EMPLOYEES. The Company shall use its best
efforts to make its employees and those of the Original Company available to
Buyer and shall cooperate in getting its employees and those of the Original
Company to continue developing its products in accordance with the directions of
Buyer.
5.9 COMPANY STOCKHOLDERS' APPROVAL. The Company shall solicit
approval of the Merger from all of its stockholders and deliver twelve-month
lock-up letters in the form traditionally used in the industry to Buyer prior to
the Closing Date. If all stockholders of the Company do not vote in favor of the
Merger, then Buyer may terminate this Agreement and shall have no further
liabilities hereunder. The Company shall make all solicitations of its
stockholders in accordance with applicable securities laws.
5.10 NO OTHER NEGOTIATIONS. From and after the date of this
Agreement until the earlier of the termination of this Agreement or the Closing,
none of the Company, its affiliates, officers, directors, employees or agents
shall directly or indirectly solicit, initiate, encourage, facilitate or
participate in any way in discussions or negotiations with, or provide any
information or assistance to, or enter into any agreement with, any Person
(other than Buyer and in respect of the Company Merger or in respect of the
development of the Company's business) concerning any transaction that would
result directly or indirectly in the transfer to any Person of the Company or
any equity interest therein, or any part of the business or assets or properties
of the Company (each a "Prohibited Transaction"). In the event a third party
makes an inquiry with respect to a Prohibited Transaction, the Company shall
respond to the inquirer with a written letter stating that it is in exclusive
negotiations with another party and therefore cannot discuss the matter with
them but that if such negotiations were to terminate, then the Company would let
them know.
5.11 CONDUCT OF BUSINESS. Consistent with Article III, the
Company shall use its best efforts to conduct its business, and to cause the
Original Company to conduct its business in a prudent and reasonable manner.
ARTICLE VI
43
COVENANTS OF BUYER
Buyer hereby covenants and agrees as follows:
6.1 COOPERATION. Buyer shall provide information as necessary
to cooperate with the Original Company and the Company in connection with the
Company's efforts to consummate the Private Placement.
6.2 CERTAIN FILINGS. Buyer shall make or cause to be made all
filings with regulatory authorities that are required to be made by Buyer or its
affiliates to carry out the transactions contemplated by this Agreement.
6.3 BEST EFFORTS TO SATISFY CONDITIONS. Buyer shall use its
best efforts to satisfy the conditions set forth in Articles VII and VIII that
are within its control.
6.4 FURTHER ASSURANCES. Buyer shall execute and deliver such
additional documents and instruments, and perform such additional acts, as the
Company may reasonably request to effectuate or carry out and perform all the
terms, provisions and conditions of this Agreement and the transactions
contemplated hereby, and to effectuate the intent and purposes hereof and
thereof.
6.5 MANDATORY REPORTING COVENANT. Within fifteen (15) days
following the Closing, Buyer, as the Surviving Corporation, shall file an
application and therewith shall use its best efforts to become and remain a
mandatory reporting company under the Exchange Act.
6.6 REGISTRATION RIGHTS. Without limiting the generality of
the Surviving Corporation's assumption of the liabilities of Buyer and the
Company set forth in Section 2.1 above, upon the effectiveness of the Merger,
Buyer as the Surviving Corporation agrees to assume the obligations of the
Company to file and thereafter use its best efforts to cause to become effective
a registration statement covering the shares of Company Common Stock acquired by
the purchasers in the Private Placement, which registration statement shall also
include all shares of Buyer's Common Stock acquired as an advisory fee from
Buyer by
44
International Capital Growth, Ltd. and all shares of Buyer's Common Stock
beneficially owned by its officers and directors and their affiliates, including
Unity Venture Capital Associates Ltd. and all shares of Buyer's Common Stock
issuable upon exercise of the outstanding Buyer Warrants (collectively, the
"Covered Shares"). With respect to the Covered Shares and the holders of the
Covered Shares, Buyer shall take such action as is contemplated by Sections 6
and 7 of the Placement Agent Agreement dated as of September 29, 1997 between
the Company and the Placement Agent, as fully and effectively as if such
provisions were set forth in full in this Agreement and the defined term
"Placement Agent Shares" were defined to include the Covered Shares and the
defined term "Registration Rights Holders" was defined to include the holders of
the Covered Shares.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the Merger shall be
subject to the satisfaction at or prior to the Closing of the following
conditions, any one or more of which may be waived by Buyer:
7.1 CONSUMMATION OF THE NEW FINANCING. The Company shall have
consummated the New Financing with aggregate gross proceeds to the Company of no
less than $3.6 million.
7.2 REPRESENTATIONS AND WARRANTIES. Subject to their terms,
each and every representation and warranty of the Company contained in this
Agreement, and in any Schedule or any certificate delivered pursuant hereto
shall be true and accurate as of the date when made and as of the time of the
Closing, as such statements relate to the relevant dates.
7.3 COMPLIANCE WITH COVENANTS. The Company shall have
performed and observed all covenants and agreements to be performed or observed
by the Company under this Agreement at or before the Closing.
7.4 LACK OF ADVERSE CHANGE. Since June 30, 1997, there
45
shall not have occurred any incident or event which, individually or in the
aggregate, has had or is reasonably likely to result in a Material Adverse
Effect on the Company or on the Original Company.
7.5 UPDATE CERTIFICATE. Buyer shall have received a favorable
certificate, dated the Closing Date, signed by the Company as to the matters set
forth in Sections 7.1, 7.2, 7.3, 7.4 and 7.12.
7.6 OPINION OF COUNSEL. Buyer shall have received the opinion
of counsel to the Company reasonably satisfactory to Buyer, dated the Closing
Date, substantially in the form attached hereto as Exhibit B.
7.7 REGULATORY APPROVALS. All material approvals and consents
of regulatory authorities required to carry out the transactions contemplated by
this Agreement shall have been received.
7.8 CONSENTS OF THIRD PARTIES TO CONTRACTS. All consents from
third parties to any Contracts shall have been obtained in writing.
7.9 NO VIOLATION OF ORDERS. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, nor any statute, rule, regulation, decree or executive order
promulgated or enacted by any governmental or regulatory authority that declares
this Agreement invalid or unenforceable in any material respect or that prevents
the consummation of the transactions contemplated by this Agreement or which
imposes restrictions on Buyer's right or ability to acquire or operate the
business of the Company shall be in effect; and no action or proceeding before
any court or regulatory authority shall have been instituted or threatened in
writing by any governmental or regulatory authority, or by any other Person
(other than Buyer or any of its affiliates), which seeks to prevent or delay the
consummation of the transactions contemplated by this Agreement or which
challenges the validity or enforceability of this Agreement or which seeks to
impose restrictions on Buyer's right or ability to acquire or operate the
business of the Company, and which in any such case has a reasonable likelihood
of success in the opinion of counsel to Buyer.
46
7.10 PROHIBITED TRANSACTIONS INQUIRIES. Buyer shall have
received from the Company a list of the names of each person who made an inquiry
relating to Prohibited Transactions and the details of such inquiry.
7.11 STOCKHOLDER APPROVAL. The holders of all of the
outstanding shares of common stock of the Company shall have approved the Merger
and this Agreement. The holders of two-thirds of the shares of Common Stock of
Buyer voted at the special meeting of shareholders of Buyer called to consider
this Agreement and the amendments to the Certificate of Incorporation of Buyer
giving effect to the Name Change and the Increase in Authorized Common Stock
(the "Amendments"), shall have cast their votes to approve and adopt this
Agreement and the Amendments.
7.12 CONSUMMATION OF THE COMPANY MERGER. The Original Company
and the Company shall have consummated the Company Merger pursuant to the
Original Merger Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the Merger shall
be subject to the satisfaction at or prior to the Closing of the following
conditions, any one or more of which may be waived by the Company:
47
8.1 CONSUMMATION OF THE NEW FINANCING. The Company shall have
consummated the New Financing with aggregate gross proceeds to the Company of no
less than $3.6 million.
8.2 REPRESENTATIONS AND WARRANTIES. Subject to their terms,
each and every representation and warranty of Buyer contained in this Agreement,
and in any Schedule or any certificate delivered pursuant hereto shall be true
and accurate as of the date when made and as of the time of the Closing, as such
statements relate to the relevant dates.
8.3 COMPLIANCE WITH COVENANTS. Buyer shall have performed and
observed all covenants and agreements to be performed or observed by Buyer under
this Agreement at or before the Closing.
8.4 UPDATE CERTIFICATE. The Company shall have received a
favorable certificate, dated the Closing Date, signed by Buyer as to the matters
set forth in Sections 8.2 and 8.3.
8.5 OPINION OF COUNSEL. The Company shall have received the
opinion of counsel to Buyer reasonably satisfactory to the Company, dated the
Closing Date, substantially in the form attached hereto as Exhibit C.
8.6 REGULATORY APPROVALS. All material approvals and consents
of regulatory authorities required to carry out the transactions contemplated by
this Agreement shall have been received.
8.7 NO VIOLATION OF ORDERS. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, nor any statute, rule, regulation, decree or executive order
promulgated or enacted by any governmental or regulatory authority, that
declares this Agreement invalid or unenforceable in any material respect or that
prevents the consummation of the transactions contemplated by this Agreement
shall be in effect.
8.8 STOCKHOLDERS' APPROVAL. The holders of all of the
outstanding common stock of the Company shall have approved the Merger and this
Agreement. The holders of two-thirds of the shares of Common Stock of Buyer
voted at the special meeting of shareholders of Buyer called to consider this
Agreement and the
48
Amendments shall have cast their votes to approve and adopt this Agreement and
the Amendments.
8.9 CONSUMMATION OF THE COMPANY MERGER. The Original Company
and the Company shall have consummated the Company Merger pursuant to the
Original Merger Agreement.
49
8.10 RESIGNATIONS. All of Buyer's executive officers and
directors shall have resigned their positions with Buyer.
ARTICLE IX
CLOSING; CLOSING DATE
Unless this Agreement shall have been terminated and the
Merger herein contemplated shall have been abandoned pursuant to Article X, a
closing (the "Closing") shall be held on the day on which the New Financing is
consummated and immediately following, at the offices of Xxxxxx, Xxxxxxxx &
Xxxx, P.C., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. At such time (the
"Closing Date") and place the documents referred to in Articles VII and VIII
shall be exchanged by the parties and, as soon as practicable thereafter, the
Certificate of Merger shall be filed with the office of the Secretary of State
of the State of Delaware; provid ed, however, that if any of the conditions
provided for in Article VII or VIII shall not have been met or waived by the
date on which the Closing is otherwise scheduled, then the party whose
obligations are subject to the satisfaction of such condition shall be entitled
to postpone the Closing by notice to the other parties until such condition or
conditions shall have been met (which such other parties shall seek to cause to
happen at the earliest practicable date) or waived.
ARTICLE X
TERMINATION
This Agreement may be terminated and the Merger may be
abandoned before the Effective Time of the Merger:
(a) by the mutual consent in writing of Buyer and the
Company; or
(b) by the Company or Buyer by notice to the other if the
Closing shall not have occurred on or prior to November 24, 1997;
provided that the party seeking termination pursuant
50
to this provision is not in breach in any material respect of
any of its representations, warranties, covenants or
agreements contained in this Agreement.
If this Agreement is terminated in accordance with this Article X, the Merger
shall be abandoned without further action by the Company or Buyer. Termination
of this Agreement pursuant to this Article X shall not relieve any party of any
obligation in respect of a breach of this Agreement.
ARTICLE XI
INDEMNIFICATION
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties contained in this Agreement, any
Schedule or any certificate delivered pursuant hereto shall survive the Closing.
Each party hereto shall be entitled to rely on any such representation or
warranty regardless of any inquiry or investigation made by or on behalf of such
party.
11.2 INDEMNIFICATION BY THE COMPANY. The Company shall
indemnify and hold harmless Buyer and its directors, officers, shareholders,
control persons, agents and attorneys from and against any Loss incurred or
suffered by such Person as a result of, arising from or in connection with:
(i) any representation or warranty made by the
Company in this Agreement, or in any Schedule or certificate delivered
pursuant hereto or in any information delivered in connection with the
New Financing which is inaccurate or misleading in any material respect
as of the date hereof, as of the Closing Date or to any such
information, as of the date of its use; and
(ii) any failure by the Company to perform or comply
in any material respect with any covenant or agreement on the part of
the Company contained herein;
provided that from and after the Closing Date recourse for such
51
indemnification obligations of the Company shall be limited to the shares held
by the Escrow Agent pursuant to the Escrow Agreement.
11.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold
harmless members of current management of the Company from and against any Loss
incurred or suffered by such Person as a result of, arising from or in
connection with:
(i) any representation or warranty made by Buyer in this
Agreement, or in any Schedule or certificate delivered pursuant hereto
which is inaccurate or misleading in any material respect as of the
date hereof or as of the Closing Date; and
(ii) a failure by Buyer to perform or comply in any material
respect with any covenant or agreement on the part of Buyer contained
herein.
11.4 GENERAL LIMITATIONS ON INDEMNIFICATION. Any party
entitled to indemnification under this Article XI shall notify the indemnifying
party in writing, and in reasonable detail, of any claim or demand made by any
third party against the indemnified party for which indemnification will be
sought promptly after receipt by such indemnified party of written notice of
such claim or demand; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to the extent
that the indemnifying party is actually prejudiced as a result of such failure.
The indemnifying party shall have the right to assume all aspects of the
control, defense and settlement of any third party action, suit or proceeding
which may be the subject of a claim for indemnification under this Article XI
with counsel reasonably acceptable to the indemnified party except to the extent
that counsel to such indemnified party advises such indemnified party in writing
that it is such counsel's professional judgment that such representation would
represent a conflict of interest. The indemnified party shall cooperate with the
indemnifying party in the defense of any such action, including but not limited
to promptly providing copies of all pleadings and documents to the indemnifying
party and shall not unreasonably withhold its consent to the settlement of any
claim or demand of a third party so long as such settlement obligates the
indemnifying party to pay the full amount of the liability in connection with
such claim or demand and
52
unconditionally releases all such indemnified parties in connection with such
claim or demand. Any separate counsel retained by an indemnified party in
connection with a matter which the indemnifying party is entitled and elects to
control shall be at its expense. The indemnifying party shall not be liable for
any settlement effected without its prior consent which shall not be
unreasonably withheld.
ARTICLE XII
MISCELLANEOUS
12.1 EXPENSES. Whether or not the transactions contemplated
hereby are consummated, each party hereto shall pay all costs and expenses
incurred by such party in respect of the transactions contemplated hereby.
12.2 ENTIRETY OF AGREEMENT. This Agreement (including the
Schedules and Exhibits hereto), together with the other documents and
certificates delivered hereunder, state the entire agreement of the parties,
merge all prior negotiations, agreements and understandings, if any, and state
in full all representations, warranties and agreements which have induced this
Agreement. Each party agrees that in dealing with third parties it will not make
any representations contrary to those made by it herein.
12.3 NOTICES. All notices and demands of any kind which any
party hereto may be required or desire to serve upon another party under the
terms of this Agreement shall be in writing and shall be served upon such other
party: (a) by personal service upon such other party at such other party's
address set forth on the signature pages of this Agreement; or (b) by mailing a
copy thereof by certified or registered mail, postage prepaid, with return
receipt requested, addressed to such other party at the address of such other
party set forth on the signature pages of this Agreement; or (c) by sending a
copy thereof by Federal Express or equivalent courier service, addressed to such
other party at the address of such other party set forth on the signature pages
of this Agreement; or (d) by sending a copy thereof by facsimile (with a copy
simultaneously sent by registered mail, return receipt requested) to such other
party at the facsimile number of such
53
other party set forth on the signature pages of this Agreement.
In case of service by Federal Express or equivalent courier
service or by facsimile or by personal service, such service shall be deemed
complete upon receipt. In the case of service by mail, such service shall be
deemed complete on the fifth Business Day after mailing. The addresses and
facsimile numbers to which, and persons to whose attention, notices and demands
shall be delivered or sent may be changed from time to time by notice served, as
hereinabove provided, by any party upon the other party.
12.4 AMENDMENT. This Agreement may be modified or amended only
by an instrument in writing, duly executed by all of the parties hereto.
12.5 NONWAIVER. No waiver by any party of any term, provision,
covenant, representation or warranty contained in this Agreement (or any breach
thereof) shall be effective unless it is in writing executed by the party
against which such waiver is to be enforced; no waiver shall be deemed or
construed as a further or continuing waiver of any such term, provision,
covenant, representation or warranty (or breach) on any other occasion or as a
waiver of any other term, provision, covenant, representation or warranty (or of
the breach of any other term, provision, covenant, representation or warranty)
contained in this Agreement on the same or any other occasion.
12.6 COUNTERPARTS. For the convenience of the parties, any
number of counterparts hereof may be executed, each such executed counterpart
shall be deemed an original and all such counterparts together shall constitute
one and the same instrument.
12.7 ASSIGNMENT; BINDING NATURE; NO BENEFICIARIES. This
Agreement may not be assigned by any party hereto without the written consent of
the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the parties hereto
and their respective successors and permitted assigns. Except as otherwise
expressly provided in Article XI and in Section 6.5, this Agreement shall not
confer any rights or remedies upon any Person other than the parties hereto and
their respective heirs, personal representatives, legatees, successors and
permitted assigns.
54
12.8 HEADINGS. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
12.9 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York
applicable to contracts made and to be entirely performed therein.
12.10 SPECIFIC PERFORMANCE. The Company acknowledges and
agrees that Buyer would be damaged irreparably in the event any of the covenants
or agreements contained in this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, the Company agrees
that Buyer shall be entitled to an injunction or injunctions to prevent breaches
of the covenants and agreements contained in this Agreement and to enforce
specifically this Agreement and the covenants and agreements contained herein
without the necessity of proving actual damages or posting any bond, in addition
to any other remedy to which the Buyer may be entitled at law or in equity. The
Company shall be liable for all reasonable fees and expenses of Buyer's counsel
in connection with the enforcement of the provisions herein, provided that Buyer
prevails in any such proceeding.
12.11 CONSTRUCTION. In this Agreement (i) words denot ing the
singular include the plural and vice versa, (ii) "it" or "its" or words denoting
any gender include all genders, (iii) the word "including" shall mean "including
without limitation", whether or not expressed, (iv) any reference to a statute
shall mean the statute and any regulations thereunder in force as of the date of
this Agreement or the Closing Date, as applicable, unless otherwise expressly
provided, (v) any reference herein to a Section, Article, Schedule or Exhibit
refers to a Section or Article of or a Schedule or Exhibit to this Agreement,
unless otherwise stated, (vi) when calculating the period of time within or
following which any act is to be done or steps taken, the date which is the
reference day in calculating such period shall be excluded and if the last day
of such period is not a Business Day, then the period shall end on the next day
which is a Business Day, (vii) any reference to a party's "best efforts" or
"reasonable efforts" shall not include any obligation of such party to pay, or
guarantee the payment of, money or other consideration to any third party or to
agree to the imposition on such party or its affiliates of any conditions
55
reasonably considered by such party to be materially burdensome to such party or
its affiliates, and (viii) except as otherwise expressly provided herein, all
dollar amounts are expressed in United States funds.
12.12 DISCLOSURE. Except as and to the extent required by law
and except to the extent necessary to complete the Merger, without the prior
written consent of Buyer, the Company shall not and shall use its best efforts
to cause the Original Company to not (i) make, directly or indirectly, any
public comment, statement, or communication with respect to, or otherwise to
disclose or to permit the disclosure of the existence of discussions regarding,
a possible transaction between the parties or any of the terms, conditions, or
other aspects of the transactions contemplated by this Agreement ("Confidential
Information") or (ii) disclose any Confidential Information to any person other
than their respective representatives and professional advisors who need to know
such information and who agree to be bound by the terms of this Section 12.12.
The Company shall be liable for any breaches of this Section 12.12 by its
representatives and professional advisors. If the Company or the Original
Company is required by law to disclose any Confidential Information, the Company
shall, and shall use its best efforts to cause the Original Company to, first
provide to Buyer the content of the proposed disclosure, the reasons that such
disclosure is required by law, and the time and place that the disclosure will
be made to permit Buyer to seek a protective order regarding such disclosure and
cooperate as reasonably requested by Buyer in seeking to obtain such protective
order. Notwithstanding the foregoing, Buyer may disclose Confidential
Information as necessary to comply with applicable legal requirements, in
connection with the New Financing and as it may otherwise deem necessary.
12.13 REMEDIES CUMULATIVE. The remedies provided for or
permitted by this Agreement shall be cumulative and the exercise by any party of
any remedy provided for herein shall not preclude the assertion or exercise by
such party of any other right or remedy provided for herein.
12.14 NON-RECOURSE. For the avoidance of doubt, (a) the
Company acknowledges that recourse for any obligation of Buyer under or in
connection with this Agreement and any document or instrument related hereto
shall be had only against the assets of
56
Buyer, and no officer, director, shareholder, control person, agent or attorney
of Buyer shall have any personal liability for any of the obligations of Buyer
under or in connection with this Agreement or any documents or instruments
related hereto and (b) Buyer acknowledges that recourse for any obligation of
the Company under or in connection with this Agreement and any document or
instrument related hereto shall be had only against the assets of the Company,
and no officer, director, shareholder, control person, agent or attorney of the
Company shall have any personal liability for any of the obligations of the
Company under or in connection with this Agreement or any documents or
instruments related hereto.
12.15 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Any
suit, action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby may be instituted in any Federal court situated
in the State of New York or any state court of the State of New York in each
case, in the Borough of Manhattan, City of New York, and each party agrees not
to assert, by way of motion, as a defense or otherwise, in any such suit, action
or proceeding, any claim that it is not subject personally to the jurisdiction
of any such court, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is improper
or that this Agreement or the subject matter hereof may not be enforced in or by
such court. Each party further irrevocably submits to the jurisdiction of any
such court in any such suit, action or proceeding. Any and all service of
process and any other notice in any such suit, action or proceeding shall be
effective against any party if given personally or by registered or certified
mail, return receipt requested, or by any other means of mail that requires a
signed receipt, postage fully prepaid, mailed to such party as herein provided.
Nothing herein contained shall be deemed to affect the right of any party to
serve process in any manner permitted by law or to commence legal proceedings or
otherwise proceed against any other party in any other jurisdiction. In
addition, nothing in this Section 12.15 shall be interpreted to mean that a
party has consented to such jurisdiction and service of process in connection
with any suit, action, or proceeding solely arising out of or relating to this
letter.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day and year first above written.
57
ACADEMIC COMPUTER SYSTEMS, INC.
By:
------------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: President
Address:
-------
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Xxx X. Xxxxxxx, Esq.
Xxxxxxxxx Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
WORLDS ACQUISITION CORP.
By:
--------------------------
Name: Xxxxxx Xxxxxx
Title: President
Address:
-------
Townhouse 00
Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
58
Xxxxxxx Xxxxxxxx, Esq.
Xxxxxx, Xxxxxxxx & Xxxx, P.C.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
59
DISCLOSURE SCHEDULE INDEX
Schedule 2.2(a) Breakdown of Merger Shares
Schedule 3.1 Jurisdictions
Schedule 3.2 Stockholders
Schedule 3.3 Subsidiaries
Schedule 3.6(b) Transactions with Affiliates
Schedule 3.7 Material Third Party Claims Against Assets
Schedule 3.9 Taxes (and Taxing Authorities' Jurisdictions)
Schedule 3.9(c) Material Tax Elections
Schedule 3.10(a) Real Property
Schedule 3.10(b) Interests in Material Properties and Assets
Schedule 3.10(c) Permitted Encumbrances
Schedule 3.11(a) List of Intellectual Property
Schedule 3.11(b) Encumbrances on Intellectual Property
Schedule 3.12 Contracts and Agreements
Schedule 3.13 Insurance Policies
Schedule 3.14 Status of Litigation
Schedule 3.15 Licenses and Permits
Schedule 3.16(f) Labor Investigations
Schedule 3.16(g) Salaries
Schedule 3.17 Employee Benefit Plans
Schedule 3.18 Environmental Permits
Schedule 3.20 Bank Accounts
60
Schedule 3.21 Recent Contract Settlements
Schedule 3.21 Ongoing Litigation
Schedule 3.24 Largest Customers
Schedule 4.7 Buyer's Compliance
61
