SHARE EXCHANGE AGREEMENT
by and
among
GALAXY
GAMING, INC.
and
SECURED
DIVERSIFIED INVESTMENT, LTD.
ARTICLE
I DEFINITIONS
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||
Section
1.1
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Definitions
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1
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ARTICLE
II THE EXCHANGE
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1
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Section
2.1
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Share Exchange
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6
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Section
2.2
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Effective Time
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6
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Section
2.3
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Articles of Incorporation,
etc.
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6
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Section
2.4
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Effects of Exchange
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6
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Section
2.5
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Closing
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7
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Section
2.6
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Tax-Free Exchange
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7
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ARTICLE
III EXCHANGE CONSIDERATION; CONVERSION AND
EXCHANGE OF SECURITIES
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7
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Section
3.1
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Manner and Basis of Converting and Exchanging
Capital Stock
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7
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Section
3.2
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Surrender and Exchange of
Certificates
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7
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Section
3.3
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Options, Warrants
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8
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Section
3.4
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Galaxy Common Stock
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10
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ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
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10
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Section
4.1
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Organization
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10
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Section
4.2
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Authorization; Validity of
Agreement
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11
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Section
4.3
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Confirmation of Company Chapter 11 Plan
Required
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11
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Section
4.4
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Consents and Approvals; No
Violations
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11
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Section
4.5
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Financial Statements
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11
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Section
4.6
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No Undisclosed Liabilities
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12
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Section
4.7
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Changes
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12
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Section
4.8
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Litigation
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12
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Section
4.9
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No Default; Compliance with Applicable
Laws
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13
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Section
4.10
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Broker’s and Finder’s Fees
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13
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Section
4.11
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Contracts
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13
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Section
4.12
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Tax Returns and Audits
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13
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Section
4.13
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Patents and Other Intangible
Assets
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14
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Section
4.14
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Employee Benefit Plans;
ERISA
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14
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Section
4.15
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Title to Property and
Encumbrances
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15
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Section
4.16
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Condition of Properties
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15
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Section
4.17
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Insurance Coverage
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16
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Section
4.18
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Environmental Matters
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16
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Section
4.19
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Disclosure
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16
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Section
4.20
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Validity of Shares
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17
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Section
4.21
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SEC Reporting and
Compliance
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17
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Section
4.22
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No General Solicitation
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17
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ii
ARTICLE
V REPRESENTATIONS AND WARRANTIES OF
GALAXY
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18
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Section
5.1
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Organization
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|
Section
5.2
|
Authorization; Validity of
Agreement
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18
|
Section
5.3
|
Consents and Approvals; No
Violations
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18
|
Section
5.5
|
No Default; Compliance with Applicable
Laws
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19
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Section
5.6
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Broker’s and Finder’s Fees; Broker/Dealer
Ownership
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19
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Section
5.7
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Capitalization of Galaxy
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19
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Section
5.8
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Financial Statements
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19
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Section
5.9
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No Undisclosed Liabilities
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20
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Section
5.10
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Tax Returns and Audits
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21
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Section
5.11
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Employee Benefit Plans;
ERISA
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21
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Section
5.12
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Interested Party
Transactions
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21
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Section
5.13
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Questionable Payments
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21
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Section
5.14
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Obligations to or by
Stockholders
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22
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Section
5.15
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Schedule of Assets and
Contracts
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22
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Section
5.16
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Environmental Matters
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22
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Section
5.17
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Employees
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23
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Section
5.18
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Title to Property and
Encumbrances
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23
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Section
5.19
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Condition of Properties
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23
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Section
5.20
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Insurance Coverage
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24
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Section
5.21
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Disclosure
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24
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24
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||
ARTICLE
VI CONDUCT OF BUSINESSES PENDING THE
EXCHANGE
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Section
6.1
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Conduct of Business by the Company Pending the
Exchange
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24
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Section
6.2
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Conduct of Business by Galaxy Pending the Exchange
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24
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ARTICLE
VII ADDITIONAL
AGREEMENTS
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25
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Section
7.1
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Access and Information
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26
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Section
7.2
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Additional Agreements
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26
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Section
7.3
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Publicity
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26
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Section
7.4
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Appointment of Directors
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27
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ARTICLE
VIII CONDITIONS OF PARTIES’
OBLIGATIONS
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27
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|
Section
8.1
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Company Obligations
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27
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Section
8.2
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Galaxy Obligations
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27
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ARTICLE
IX INDEMNIFICATION AND RELATED
MATTERS
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28
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Section
9.1
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Indemnification by Galaxy
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29
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Section
9.2
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Survival
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29
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Section
9.3
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Time Limitations
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30
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Section
9.4
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Limitation on Liability
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30
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Section
9.5
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Notice of Claims
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30
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ARTICLE
X TERMINATION PRIOR TO
CLOSING
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30
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Section
10.1
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Termination of Agreement
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31
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Section
10.2
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Termination of Obligations
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31
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iii
ARTICLE XI MISCELLANEOUS 31 | ||
Section
11.1
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Amendments.
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31
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Section
11.2
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Notices.
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32
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Section
11.3
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Entire Agreement.
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32
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Section
11.4
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Expenses.
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32
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Section
11.5
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Severability.
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32
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Section
11.6
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Successors and Assigns;
Assignment.
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33
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Section
11.7
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No Third Party
Beneficiaries.
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33
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Section
11.8
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Counterparts; Delivery by
Facsimile.
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33
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Section
11.9
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Waiver.
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33
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Section
11.10
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No Constructive Waivers.
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33
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Section
11.11
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Further Assurances.
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34
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Section
11.12
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Recitals.
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34
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Section
11.13
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Headings.
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34
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Section
11.14
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Governing Law.
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34
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Section
11.15
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Dispute Resolution.
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34
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Section
11.16
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Interpretation.
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34
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LIST
OF EXHIBITS
Exhibit
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Description
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Exhibit A
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Articles
of Incorporation of the Company
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Exhibit B
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By-laws
of Company
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Exhibit C
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Officers
and Directors of the Company Pre-Effective Time and Post-Effective
Time
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iv
This
SHARE EXCHANGE AGREEMENT is entered into by and among GALAXY GAMING, INC., a
Nevada corporation (“Galaxy”), and SECURED
DIVERSIFIED INVESTMENT, LTD., a Nevada corporation (the “Company”).
W I T N E S S E T
H:
WHEREAS,
the respective Boards of Directors of Galaxy and the Company have approved, and
deem it advisable and in the best interests of their respective stockholders to
consummate, the acquisition of Galaxy by the Company, which acquisition is to be
effected by the acquisition by the Company of all of equitable and other legal
rights, title and interests in and to the share capital of Galaxy pursuant to a
voluntary share exchange transaction (the “Exchange”), upon the
terms and subject to the conditions set forth in this Agreement (as defined
herein);
WHEREAS,
the parties hereto intend that the Exchange shall qualify as a reorganization
within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended (the “Code”);
and
NOW,
THEREFORE, in consideration of the mutual agreements and covenants hereinafter
set forth, the parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.1 Definitions. Capitalized
terms used in this Agreement shall have the following meanings:
“Acquisition Proposal”
shall have the meaning given to such term in Section 6.2
hereof.
“Action” shall mean
any claim, action, suit, proceeding, investigation or order.
“Affiliate” shall
mean, with respect to any Person, any Person directly or indirectly controlling,
controlled by or under common control with, such Person. For the
purposes of this definition, “control” (including,
with correlative meaning, the terms “controlling,” “controlled by” and
“under common control
with”) means the possession, directly or indirectly, of the power to
direct or cause the direction of management and policies of such Person through
the ownership of voting securities, by contract or otherwise.
“Agreement” shall mean
this Share Exchange Agreement, including the exhibits attached hereto
or referred to herein, as the same may be amended or modified from time to time
in accordance with the provisions hereof.
“Articles of Incorporation”
shall have the meaning given to such term in Section 2.3(a)
hereof.
“Balance Sheet” shall
have the meaning given to such term in Section 4.6
hereof.
“Balance Sheet Date”
shall have the meaning given to such term in Section 4.6
hereof.
“By-laws” shall have
the meaning given to such term in Section 2.3(b)
hereof.
“Closing” shall have
the meaning given to such term in Section 2.5
hereof.
“Closing Date” shall
have the meaning given to such term in Section 2.5
hereof.
“Code” shall have the
meaning given to such term in the second recital to this Agreement.
“Commission” shall
mean the United States Securities and Exchange Commission.
“Company” shall have
the meaning given to such term in the preamble to this Agreement.
“Company Capital
Stock” shall mean, collectively, the Company Common Stock and the Company
Preferred Stock, if any.
“Company Chapter 11
Plan” shall mean the Plan of Reorganization proposed by the Company in
its pending case under chapter 11 of the United States Bankruptcy
Code.
“Company Common Stock”
shall mean the common stock, par value $0.001, of the Company.
“Company Financial
Statements” have the meaning given to such term in Section 4.5
hereof.
“Company Material Adverse
Effect” shall mean any change, effect or circumstance that is materially
adverse or is reasonably likely to be materially adverse to the business,
assets, liabilities, condition (financial or otherwise) or operations of the
Company and its subsidiaries, taken as a whole, other than any such change,
effect or circumstance relating to general economic, regulatory or political
conditions, except to the extent such change, effect or circumstance
disproportionately affects the Company and its subsidiaries, taken as a
whole.
“Company Preferred
Stock” shall mean, collectively, all Preferred Stock, if any, issued or
issuable by the Company.
“Company Options” shall have
the meaning given to such term in Section 3.3(a)
hereof.
“Company SEC Documents” shall
have the meaning assigned to such term in Section 4.21
hereof.
“Contract” shall have
the meaning given to such term in Section 4.4
hereof.
“Consents” shall mean
any permits, filings, notices, licenses, consents, authorizations,
accreditation, waivers, approvals and the like of, to, with or by any
Person.
“Dissenting Shares”
shall have the meaning given to such term in Section 3.2(d)
hereof.
2
“Effective Time” shall
have the meaning given to such term in Section 2.2
hereof.
“Employee Benefit
Plans” shall have the meaning assigned to it in Section 4.13
hereof.
“Environmental Law”
shall mean the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. §§ 9601 et seq.; the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Resource Conservation
and Recovery Act, 42 U.S.C. §§ 6901 et seq.; the Toxic Substances Control Act,
15 U.S.C. §§ 2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide
Act, 7 U.S.C. §§ 136 et seq. and comparable state statutes dealing with the
registration, labeling and use of pesticides and herbicides; the Clean Air Act,
42 U.S.C. §§ 7401 et seq.; the Clean Water Act (Federal Water Pollution Control
Act), 33 U.S.C. §§ 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f
et seq.; and the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1801 et
seq., as any of the above referenced statutes have been amended as of the date
hereof, all rules, regulations and policies promulgated pursuant to any of the
above referenced statutes, and any other foreign, federal, state or local law,
statute, ordinance, rule, regulation or policy governing environmental matters,
as the same have been amended as of the date hereof.
“ERISA” shall mean the
Employee Retirement Income Securities Act of 1974, as amended, and the
regulations issued thereunder.
“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations issued thereunder.
“Fair Market Value”
shall mean, with respect to a share of Galaxy Common Stock, the average of the
daily closing prices for the 10 consecutive business days prior to the date on
which value is to be determined. The closing price for each day shall
be the last sales price or in case no sale takes place on such day, the average
of the closing high bid and low asked prices, in either case (a) as officially
quoted on the OTC Bulletin Board, the NASDAQ Stock Market or such other market
on which the Common Stock is then listed for trading or quoted, or (b) if, in
the reasonable judgment of the Board of Directors of Galaxy, the OTC Bulletin
Board or the NASDAQ Stock Market is no longer the principal United States market
for the Galaxy Common Stock, then as quoted on the principal United States
market for the Common Stock as determined by the Board of Directors of Galaxy,
or (c) if, in the reasonable judgment of the Board of Directors of Galaxy, there
exists no principal United States market for the Galaxy Common Stock, then as
reasonably determined in good faith by the Board of Directors of
Galaxy.
“Federal Securities
Laws” means the Securities Act, the Exchange Act and the rules and
regulations promulgated thereunder.
“GAAP” shall mean
generally accepted accounting principles as in effect from time to time in the
United States consistently applied.
“Hazardous Material”
means any substance or material meeting any one or more of the following
criteria: (a) it is or contains a substance designated as or meeting
the characteristics of a hazardous waste, hazardous substance, hazardous
material, pollutant, chemical substance or mixture, contaminant or toxic
substance under any Environmental Law; (b) its presence at some quantity
requires investigation, notification or remediation under any Environmental Law;
(c) it contains, without limiting the foregoing, asbestos, polychlorinated
biphenyls, petroleum
3
hydrocarbons,
petroleum derived substances or waste, pesticides, herbicides, crude oil or any
fraction thereof, nuclear fuel, natural gas or synthetic gas; or (d)
mold.
“Indebtedness” shall
mean any obligation of the Company that under GAAP is required to be shown on
the Balance Sheet of the Company as a Liability. Any obligation secured by a
Lien on, or payable out of the proceeds of production from, property of the
Company shall be deemed to be Indebtedness even though such obligation is not
assumed by the Company.
“Indebtedness for Borrowed
Money” shall mean (a) all Indebtedness in respect of money borrowed
including, without limitation, Indebtedness which represents the unpaid amount
of the purchase price of any property and is incurred in lieu of borrowing money
or using available funds to pay such amounts and not constituting an account
payable or expense accrual incurred or assumed in the ordinary course of
business of the Company, (b) all Indebtedness evidenced by a promissory note,
bond or similar written obligation to pay money, or (c) all such Indebtedness
guaranteed by the Company or for which the Company is otherwise contingently
liable.
“Intellectual
Property” shall have the meaning given to such term in Section 4.13(b)
hereof.
“Investment Company
Act” shall mean the Investment Company Act of 1940, as
amended.
“Letter of
Transmittal” shall have the meaning assigned to it in Section 3.2
hereof.
“Liability” shall mean
any and all liability, debt, obligation, deficiency, Tax, penalty, fine, claim,
cause of action or other loss, cost or expense of any kind or nature whatsoever,
whether asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, and whether due or to become due and regardless of
when asserted.
“Lien” shall mean any
mortgage, pledge, security interest, encumbrance, lien or charge of any kind,
including, without limitation, any conditional sale or other title retention
agreement, any lease in the nature thereof and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction and including any lien or charge arising by statute or other
law.
“NRS” shall mean the
Nevada Revised Statutes, as amended.
“Galaxy” shall have
the meaning given to such term in the preamble to this Agreement.
“Galaxy Balance Sheet” shall
have the meaning assigned to such term in Section 5.9
hereof.
“Galaxy Balance Sheet Date”
shall have the meaning assigned to it in Section 5.8
hereof.
“Galaxy Capital Stock” shall
mean, collectively, the Galaxy Common Stock and the Galaxy Preferred Stock, if
any.
“Galaxy Common Stock” shall
mean the common stock, par value $0.001 per share, of Galaxy.
4
“Galaxy Employee Benefit
Plans” shall have the meaning assigned to such term in Section 5.11
hereof.
“Galaxy Financial
Statements” shall have the meaning assigned to such term in Section 5.8
hereof.
“Galaxy Material Adverse
Effect” means any change, effect or circumstance that is materially
adverse or is reasonably likely to be materially adverse to the business,
assets, liabilities, condition (financial or otherwise) or operations of Galaxy
and its subsidiaries, taken as a whole, other than any such change, effect or
circumstance relating to general economic, regulatory or political conditions,
except to the extent such change, effect or circumstance disproportionately
affects Galaxy and its subsidiaries, taken as a whole.
“Galaxy Preferred
Stock” shall mean the preferred stock, par value $0.001 per share, of
Galaxy, if any.
“Permitted Liens”
shall mean (a) Liens for taxes and assessments or governmental charges or levies
not at the time due or in respect of which the validity thereof shall currently
be contested in good faith by appropriate proceedings; (b) Liens in respect of
pledges or deposits under workmen’s compensation laws or similar legislation,
carriers’, warehousemen’s, mechanics’, laborers’ and materialmens’ and similar
Liens, if the obligations secured by such Liens are not then delinquent or are
being contested in good faith by appropriate proceedings; and (c) Liens
incidental to the conduct of the business of the Company that were not incurred
in connection with the borrowing of money or the obtaining of advances or
credits and which do not in the aggregate materially detract from the value of
its property or materially impair the use made thereof by the Company in its
business.
“Person” shall mean
any individual, corporation, limited liability company, partnership, joint
venture, trust or other entity or organization, including any government or
political subdivision or an agency or instrumentality thereof.
“Securities Act” shall
mean the Securities Act of 1933, as amended, and the rules and regulations
issued thereunder.
“Share Exchange” or the
“Exchange” shall have the meaning given to such term in the second
recital to this Agreement.
“Tax” or “Taxes” shall mean (a)
any and all taxes, assessments, customs, duties, levies, fees, tariffs, imposts,
deficiencies and other governmental charges of any kind whatsoever (including,
but not limited to, taxes on or with respect to net or gross income, franchise,
profits, gross receipts, capital, sales, use, ad valorem, value added, transfer,
real property transfer, transfer gains, transfer taxes, inventory, capital
stock, license, payroll, employment, social security, unemployment, severance,
occupation, real or personal property, estimated taxes, rent, excise, occupancy,
recordation, bulk transfer, intangibles, alternative minimum, doing business,
withholding and stamp), together with any interest thereon, penalties, fines,
damages costs, fees, additions to tax or additional amounts with respect
thereto, imposed by the United States (federal, state or local) or other
applicable jurisdiction; (b) any liability for the payment of any amounts
described in clause (a) as a result of being a member of an affiliated,
consolidated, combined, unitary or similar group or as a result of transferor or
successor liability,
5
including,
without limitation, by reason of Code Section 1.1502-6; and (c) any liability
for the payments of any amounts as a result of being a party to any Tax Sharing
Agreement or as a result of any express or implied obligation to indemnify any
other Person with respect to the payment of any amounts of the type described in
either clauses (a) or (b).
“Tax Return” shall
include all returns and reports (including elections, declarations, disclosures,
schedules, estimates and information returns (including Form 1099 and
partnership returns filed on Form 1065)) required to be supplied to a Tax
authority relating to Taxes.
“Tax Sharing
Agreements” shall have the meaning given to such term in Section 4.12
hereof.
ARTICLE
II
THE EXCHANGE
Section
2.1 Share
Exchange. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time, the parties shall cause the Share Exchange to
be consummated by taking all appropriate actions to ensure that all equitable
and legal rights, title and interests in and to the share capital of Galaxy is
assigned, delivered and transferred to the Company, in exchange for the pro-rata
issuance of an aggregate of 25,000,000 shares of new Company Common Stock to the
shareholders of Galaxy.
Section
2.2 Effective
Time. Galaxy and the Company shall cause a certificate of
exchange to be filed on the Closing Date with the Secretary of State of the
State of Nevada as provided in the NRS, and shall make all other filings or
recordings required by the NRS in connection with the Exchange. The
Exchange shall become effective at such time as the certificate of exchange is
duly filed in accordance with the NRS and the Secretary of State of Nevada or
such later time as specified in the certificate of exchange, and such time is
hereinafter referred to as the “Effective
Time.”
Section
2.3 Company Articles of
Incorporation; By-laws; Directors and Officers.
(a) Amended
and Restated Articles of Incorporation in the form attached as Exhibit A hereto
shall be the articles of incorporation of the Company (the “Articles of
Incorporation”) from and after the Effective Time until thereafter
changed or amended as provided therein or in accordance with applicable
law.
(b) Amended
and Restated By-laws in the form attached as Exhibit B hereto
shall be the by-laws of the Company (the “By-laws”) from and
after the Effective Time until thereafter changed or amended as provided therein
or in accordance with applicable law.
(c) One or
more of the directors of Galaxy immediately prior to the Effective Time shall be
the initial directors of the Company and shall hold office from the Effective
Time until their respective successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Articles of Incorporation and By-laws. The officers of
Galaxy immediately prior to the Effective Time shall become the officers of the
Company and shall hold office from the Effective Time until their respective
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Articles of
Incorporation and By-laws.
6
(d) At the
Effective Time as contemplated by Section 2.2 hereof, the officers and directors
of the Company designated on Exhibit C hereto
shall resign, to be replaced by the officers and directors designated on Exhibit C hereto, who
shall immediately take such offices or who shall take such offices upon
compliance with the Federal Securities Laws, as the case may be. The
appointment of new directors in accordance with the terms of this Section 2.3(d)
shall be accomplished through the filling of vacancies in the Board of Directors
of the Company in compliance with the applicable provisions of the NRS and the
by-laws of the Company and without the vote (by written consent or otherwise) of
the shareholders of Galaxy or the Company.
Section
2.4 Effects of the Exchange. The
Exchange shall have the effects set forth in the NRS. Without
limiting the generality of the foregoing, at the Effective Time, except as
otherwise provided herein, the Company shall become the sole shareholder of
Galaxy and shall be the owner of any and all right, title, and interest in the
equity capital of Galaxy.
Section
2.5 Closing. The
consummation of the transactions contemplated by this Agreement, including the
Exchange (the “Closing”), shall take
place at the offices of Cane Xxxxx LLP, 0000 X. Xxxx Xxxxxxx Xx., Xxx Xxxxx, XX
at 10:00 a.m. local time on the date on which all of the conditions to the
Closing set forth in Article VIII hereof
shall be fulfilled or waived in accordance with this Agreement (other than
conditions that can be satisfied only at the Closing, but subject to the
fulfillment or waiver of those conditions at the Closing) (the “Closing Date”).
Section
2.6 Tax-Free
Exchange. The parties hereto intend that the Exchange will be
treated as a tax-free reorganization under Section 368 of the Code.
ARTICLE
III
EXCHANGE CONSIDERATION; CONVERSION
AND EXCHANGE OF SECURITIES
Section
3.1 Manner and Basis of
Converting and
Exchanging
Capital Stock. At the Effective Time, by virtue of the
Exchange and without any action on the part of the Company, Galaxy or the
holders of any outstanding shares of capital stock or other securities of the
Company or Galaxy:
(a) Company Common
Stock. Each share of common stock, par value $0.001 per share,
of the Company which is: (1) authorized to be issued under the terms of the
Company Chapter 11 Plan and (2) not otherwise extinguished or cancelled under
the terms of the Company Chapter 11 Plan shall continue to constitute one
validly issued, fully paid and non-assessable share of capital stock of the
Company.
(b) Galaxy Common Stock. Each
share of Galaxy Common Stock issued and outstanding immediately prior to the
Effective Time (including all shares of Galaxy Common Stock issued upon
conversion of all Galaxy Preferred Stock immediately prior to the Effective
Time) shall be exchanged for the right to receive five new shares of Company
Common Stock (an aggregate of 25,000,000 shares) to be issued to the holders of
Galaxy Common Stock.
(c) Treasury Stock.
Notwithstanding any provision of this Agreement to the contrary, each share of
Company Capital Stock held in the treasury of the Company and each share of
Company Capital Stock, if any, owned by Galaxy or any direct or indirect
wholly-
7
owned
subsidiary of Galaxy immediately prior to the Effective Time shall be canceled
in the Exchange.
(d) No Fractional
Shares. No fractional shares of Company Common Stock shall be
issued in, or as a result of, the Exchange. Any fractional shares of
Company Common Stock that a holder of record of Galaxy Capital Stock would
otherwise be entitled to receive as a result of the Exchange shall be
aggregated. If a fractional share of Company Common Stock results
from such aggregation, the number of shares required to be issued to such record
holder shall be rounded up to the nearest whole number of shares of Company
Common Stock.
Section
3.2 Surrender and Exchange of
Certificates.
(a) Letter of
Transmittal. Promptly after the Effective Time, Galaxy shall
mail, or cause to be mailed, to each record holder of certificate(s) formerly
representing ownership of Galaxy Capital Stock that was converted into the right
to receive Company Common Stock pursuant to Section 3.1 hereof
(i) a letter of transmittal (“Letter of
Transmittal”) for delivery of such certificate(s) to the Company and (ii)
instruction for use in effecting the surrender of certificate(s), in each case
in form and substance mutually agreeable to the Company and
Galaxy. Delivery shall be effected, and risk of loss and title to the
Galaxy Common Stock shall pass, only upon delivery to the Company (or a duly
authorized agent of the Company) of certificate(s) formerly representing
ownership of Galaxy Capital Stock (or an affidavit of lost certificate and
indemnification or surety bond) and a properly completed and duly executed
Letter of Transmittal, as described in Section 3.2(b)
hereof. Notwithstanding the foregoing, Galaxy shall not be required
to mail, or cause to be mailed, a Letter of Transmittal to any record holder of
certificate(s) formerly representing ownership of Galaxy Capital Stock if such
holder has previously agreed or consented to the exchange of certificates that
are held in custody by Galaxy for the benefit of such holder.
(b) Exchange
Procedures. The Company shall issue to each former record
holder of Galaxy Common Stock, upon delivery to the Company (or a duly
authorized agent of the Company) of (i) certificate(s) representing ownership of
Galaxy Common Stock endorsed in blank or accompanied by duly executed stock
powers (or an affidavit of lost certificate and indemnification in form and
substance reasonably acceptable to the Company stating that, among other things,
the former record holder has lost his or her certificate(s) or that such
certificate(s) have been destroyed) and (ii) a properly completed and duly
executed Letter of Transmittal in form and substance reasonably satisfactory to
the Company, a certificate or certificates registered in the name of such record
holder representing the number of shares of Company Common Stock that such
record holder is entitled to receive in accordance with Section 3.1
hereof. Subject to Section 3.2(d)
hereof, until the certificate(s) (or affidavit) is delivered together with the
Letter of Transmittal in the manner contemplated by this Section 3.2(b), each
certificate (or affidavit) representing ownership of Galaxy Common Stock shall
be deemed at and after the Effective Time to represent only the right to receive
Company Common Stock and the former record holders thereof shall cease to have
any other rights with respect to his or her Galaxy Common Stock.
(c) Termination of Exchange
Process. Any Company Common Stock that remains unclaimed by a
former record holder of Galaxy Common Stock at the first anniversary of the
Effective Time may be deemed “abandoned property” subject to applicable
abandoned
8
property,
escheat and other similar laws in the State in which the former record holder
resides. Neither the Company or Galaxy shall be liable to any
person in respect of any Company Common Stock delivered to a public official
pursuant to any applicable abandoned property, escheat or similar
law.
(d) Dissenting
Shares. Notwithstanding any provision of this Agreement to the
contrary, shares of Galaxy Common Stock issued and outstanding immediately prior
to the Effective Time and held by a stockholder who has not voted in favor of
the Exchange or consented thereto in writing and who has demanded appraisal for
such shares of Company Capital Stock in accordance with the NRS (“Dissenting Shares”)
shall not be entitled to vote for any purpose or receive dividends, shall not be
converted into the right to receive Company Common Stock in accordance with
Section 3.1
hereof, and shall only be entitled to receive such consideration as shall be
determined pursuant to the NRS; provided, however, that if,
after the Effective Time, such stockholder fails to perfect or withdraws or
loses his or her right to appraisal or otherwise fails to establish the right to
be paid the value of such stockholder’s shares of Galaxy Common Stock under the
NRS, such shares of Galaxy Capital Stock shall be treated as if they had
converted as of the Effective Time into the right to receive Company Common
Stock in accordance with Section 3.1 hereof,
and such shares of Galaxy Common Stock shall no longer be Dissenting
Shares. All negotiations with respect to payment for Dissenting
Shares shall be handled jointly by Galaxy and the Company prior to the Closing
and exclusively by the Company thereafter.
(e) Stock Transfer
Books. At the Effective Time, the stock transfer books of
Galaxy will be closed and there will be no further registration of transfers of
shares of Galaxy Common Stock thereafter on the records of the
Company. If, after the Effective Time, certificates formerly
representing Galaxy Common Stock are presented to the Company, these
certificates shall be canceled and exchanged for the number of shares of Company
Common Stock to which the former record holder may be entitled pursuant to Section 3.1
hereof.
(f) Further Rights in Galaxy Common Stock. All
shares of Company Common Stock issued upon exchange of shares of Galaxy Common
Stock in accordance with the terms hereof shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of Galaxy Common
Stock.
Section
3.3 Options,
Warrants.
(a) As of the
Effective Time, all options to purchase Galaxy Common Stock issued by
Galaxy, whether vested or unvested, (the “Old Options”) shall
be automatically converted to become options to purchase shares of Company
Common Stock (“Company Options”) without
further action by the holder thereof, all in accordance with the
applicable provisions of Galaxy’s currently effective incentive stock
option plan (the “Option Plan”). Each Company Option shall
constitute an option to acquire the same number of shares of Company Common
Stock as is equal to the number of shares of Galaxy Common Stock
subject to the unexercised portion of the Old Options (with any fraction
resulting from such multiplication to be rounded down to the nearest whole
number [share]). The exercise price per share of each Company Option
shall be the same as the current exercise price of such Old Option (with
any fraction resulting from such multiplication to be rounded up to the nearest
whole cent). Upon conversion, each Company Option shall be subject to
the same terms and conditions
9
applicable
to the corresponding Old Option immediately prior to the conversion thereof
including, without limitation, exercisability, vesting schedule, and status as
an “incentive stock option” under Section 422 of the Code, if applicable, and
the Company shall assume and adopt the Option Plan. It is the Parties
intention that any Old Options intended to be “incentive stock options” under
Section 422 of the Code shall remain incentive stock options as Company
Options. The Old Options shall be converted in accordance with the
applicable requirements of Section 409A and Section 424 of the Code and the
regulations promulgated thereunder so that the conversion will not be treated as
a new grant or modification under Section 409A of the Code, and the regulations
thereunder, and will qualify as a substitution or assumption under Section 424
of the Code, and the regulations thereunder. As soon as practicable
after the Effective Time, the Company shall deliver to the holders of Old
Options, notices describing the conversion of such Old Options, and the
agreements evidencing the Old Options shall continue in effect on the same terms
and conditions. Prior to the Effective Time, the Company shall
reserve for issuance the number of shares of Company Common Stock necessary to
satisfy the Company’s obligations hereunder.
(b) As of the
Effective Time, all warrants to purchase Galaxy Common Stock issued by Galaxy,
whether vested or unvested, (the “Old Warrant” and
together with the Old Options, the “Old Securities”)
shall be automatically converted to become warrants to purchase shares of
Company Common Stock (“Company Warrant”) without
further action by the holder thereof, all in accordance with the
applicable provisions of the Old Warrant. The Company Warrant
shall constitute a warrant to acquire the same number of shares of Company
Common Stock as is equal to the number of shares of Galaxy Common Stock
subject to the unexercised portion of the Old Warrant (with any fraction
resulting from such multiplication to be rounded down to the nearest whole
number). The strike price per share of each Company Warrant shall be
the same as the current strike price of such Old Warrant.
(c) As soon
as practicable after the Effective Time, Galaxy shall take appropriate actions
to collect the Old Securities and the agreements evidencing the Old Securities,
which shall be deemed to be canceled and shall entitle the holder to exchange
the Old Securities for Company Options and Company Warrants.
(d) The
Company shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of Company Common Stock for delivery upon exercise
of the Company Options and Company Warrants to be issued for Old Securities in
accordance with this Section 3.3.
Section
3.4 Company Common
Stock. The Company shall reserve a sufficient number of shares
of Company Common Stock to complete the conversion and exchange of Galaxy Common
Stock into Company Common Stock contemplated by Sections 3.1 and
3.2 hereof, and
the issuance of any Company Common Stock underlying options and warrants, notes
or other rights to acquire Company Common Stock in accordance with Section 3.3
hereof.
ARTICLE
IV
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The
Company hereby represents and warrants to Galaxy as follows:
10
Section
4.1 Organization. The
Company (i) is duly organized, validly existing and in good standing (or its
equivalent) under the laws of the State of Nevada, (ii) has all licenses,
permits, authorizations and other Consents necessary to own, lease and operate
its properties and assets and to carry on its business as it is now being
conducted and (iii) has all requisite corporate or other applicable power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted and presently proposed to be
conducted, except where such failure would not have, or be reasonably likely to
have, a Company Material Adverse Effect. The Company is duly
qualified or authorized to conduct business and is in good standing (or its
equivalent) as a foreign corporation or other entity in all jurisdictions in
which the ownership or use of its assets or nature of the business conducted by
it makes such qualification or authorization necessary, except where the failure
to be so duly qualified, authorized and in good standing would not have a
Company Material Adverse Effect.
Section
4.2 Authorization; Validity of
Agreement. The Company has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of the Company and no other action (except the confirmation of the
Company Chapter 11 Plan) on the part of the Company or any of its stockholders
or subsidiaries is necessary to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the
Company and (assuming due and valid authorization, execution and delivery hereof
by Galaxy) is a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as such enforcement is limited
by bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity.
Section
4.3 Confirmation of Company
Chapter 11 Plan Required. The effectiveness of this Agreement
is conditioned upon entry of a final order confirming the Company Chapter 11
Plan. In the event the Company Chapter 11 Plan is denied
confirmation, this Agreement shall become null and void and no party shall have
any further obligation hereunder.
Section
4.4 Consents and Approvals; No
Violations. Except for (a) entry of an order confirming the
Company Chapter 11 Plan, and (b) filing of the certificate of exchange with the
Secretary of State of the State of Nevada, neither the execution, delivery or
performance of this Agreement by the Company nor the consummation of the
transactions contemplated hereby will (i) violate any provision of its articles
of incorporation or by-laws; (ii) violate, conflict with or result in a breach
of any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, require the consent of
or result in the creation of any encumbrance upon any of the properties of the
Company or any of its subsidiaries under any material note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, lease, contract, agreement
or other instrument (collectively, “Contract”) to which
the Company or any its subsidiaries or any of their respective properties may be
bound; (iii) require any Consent, approval or authorization of, or notice to, or
declaration, filing or registration with, any governmental entity by or with
respect to the Company or any of its subsidiaries; or (iv) violate any order,
writ, judgment, injunction, decree, law, statute, rule or regulation applicable
to the Company or any of its subsidiaries or any of their respective properties
or assets; except, in the cases of clauses (ii), (iii) and (iv), any such
violations, conflicts, breaches, defaults or
11
encumbrances,
or any failure to receive any such Consent, approval or authorization, or to
make any such notice, declaration, filing or registration as will not result in,
or could reasonably be expected to result in, a Company Material Adverse
Effect.
Section
4.5 Financial
Statements. The balance sheets, and statements of income,
stockholders’ equity and cash flows (including any notes thereto) contained in
the Company SEC Documents (the “Company Financial
Statements”) (i) have been prepared in accordance with GAAP, (ii) are in
accordance with the books and records of the Company, and (iii) present fairly
in all material respects the financial condition of the Company at the dates
therein specified and the results of its operations and changes in financial
position for the periods therein specified.
Section
4.6 Absence of Undisclosed
Liabilities. The Company does not have any Liability at or
prior to the Closing, except (a) as disclosed in the Company SEC Documents, (b)
to the extent set forth on or reserved against in the balance sheet of the
Company as of December 31, 2008 (the “Company Balance
Sheet”) or the notes to the Company Financial Statements, (c) current
Liabilities incurred and obligations under agreements entered into in the usual
and ordinary course of business, consistent with past practice, since December
31, 2008 (the “Company
Balance Sheet Date”), none of which, individually or in the aggregate,
constitutes a Company Material Adverse Effect, (d) attorney’s fees and
accounting fees incurred by the Company since the Company Balance Sheet Date,
including those related to this Agreement and all of the transactions related
thereto and contemplated thereby, including but not limited to preparation and
filing of disclosures with the SEC, and (e) by the specific terms of any written
agreement, document or arrangement attached as an exhibit to the Company SEC
Documents.
Section
4.7 Changes. Since
the Company Balance Sheet Date, except as disclosed in the Company SEC
Documents, the Company has not (a) incurred any debts, obligations or
Liabilities, absolute, accrued or, to the Company’s knowledge, contingent,
whether due or to become due, except for current Liabilities incurred in the
usual and ordinary course of business, (b) discharged or satisfied any Liens
other than those securing, or paid any obligation or Liability other than,
current liabilities shown on the Company Balance Sheet and current Liabilities
incurred since the Company Balance Sheet Date, in each case in the usual and
ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of
its assets, tangible or intangible, other than in the usual and ordinary course
of business, (d) sold, transferred or leased any of its assets, except in the
usual and ordinary course of business, (e) cancelled or compromised any debt or
claim, or waived or released any right of material value, (f) suffered any
physical damage, destruction or loss (whether or not covered by insurance) that
could reasonably be expected to have a Company Material Adverse Effect, (g)
entered into any transaction other than in the usual and ordinary course of
business, (h) encountered any labor union difficulties, (i) made or granted any
wage or salary increase or made any increase in the amounts payable under any
profit sharing, bonus, deferred compensation, severance pay, insurance, pension,
retirement or other employee benefit plan, agreement or arrangement, other than
in the ordinary course of business consistent with past practice, or entered
into any employment agreement, (j) issued or sold any shares of capital stock,
bonds, notes, debentures or other securities or granted any options (including
employee stock options), warrants or other rights with respect thereto, (k)
declared or paid any dividends on or made any other distributions with respect
to, or purchased or redeemed, any of its outstanding capital stock, (l) suffered
or experienced any change in, or condition affecting, the financial condition of
the Company other than changes, events or conditions in the usual and ordinary
course of its business, none of which (either by itself or in
12
conjunction
with all such other changes, events and conditions) could reasonably be expected
to have a Company Material Adverse Effect, (m) made any change in the accounting
principles, methods or practices followed by it or depreciation or amortization
policies or rates theretofore adopted, (n) made or permitted any amendment or
termination of any material Contract, agreement or license to which it is a
party, (o) suffered any material loss not reflected in the Company Balance Sheet
or its statement of income for the year ended on the Company Balance Sheet Date,
(p) paid, or made any accrual or arrangement for payment of, bonuses or special
compensation of any kind or any severance or termination pay to any present or
former officer, director, employee, stockholder or consultant, (q) made or
agreed to make any charitable contributions or incurred any non-business
expenses in excess of $1,000 in the aggregate, or (r) entered into any Contract,
agreement or license, or otherwise obligated itself, to do any of the
foregoing.
Section
4.8 Litigation. There
is no Action pending or, to the knowledge of the Company, threatened, involving
the Company or its subsidiaries or affecting any of the officers, directors or
employees of the Company or its subsidiaries with respect to the Company’s or
any subsidiary’s business by or before any governmental entity or by any third
party that has had or could reasonably be expected to have a Company Material
Adverse Effect and neither the Company nor any of its subsidiaries have received
written notice that any such Action is threatened. Neither the
Company nor any of its subsidiaries is in default under any judgment, order or
decree of any governmental entity applicable to its business, which default
could reasonably be expected to have a Company Material Adverse
Effect.
Section
4.9 No Default; Compliance with
Applicable Laws. The Company is not in default or violation of
any material term, condition or provision of (i) its articles of incorporation
or by-laws or (ii) to the Company’s knowledge, any law applicable to the Company
or its property and assets, and the Company has not received written notice of
any violation of or Liability under any of the foregoing (whether material or
not).
Section
4.10 Broker’s and Finder’s
Fees. To the knowledge of the Company, no Person has, or as a
result of the transactions contemplated or described herein will have, any right
or valid claim against the Company for any commission, fee or other compensation
as a finder or broker, or in any similar capacity.
Section
4.11 Contracts.
(a) The
Company is not in violation or breach of any material contract, except such
violations that, in the aggregate, would not result in, or would not reasonably
be expected to result in, a Company Material Adverse Effect. There
does not exist any event or condition that, after notice or lapse of time or
both, would constitute an event of default or breach under any material Contract
on the part of the Company or, to the knowledge of the Company, any
other party thereto or would permit the modification, cancellation or
termination of any material Contract or result in the creation of any lien upon,
or any person acquiring any right to acquire, any assets of the
Company, other than any events or conditions that, in the aggregate would not
result in, or would not reasonably be expected to result in, a Company Material
Adverse Effect. The Company has not received in writing any claim or threat that
the Company has breached any of the terms and conditions of any material
Contract, other than any material Contracts the
13
breach of
which, in the aggregate, would not result in, or would not reasonably be
expected to result in, a Company Material Adverse Effect.
(b) The consent
of, or the delivery of notice to or filing with, any party to a material
Contract is not required for the execution and delivery by the Company of this
Agreement or the consummation of the transactions contemplated under the
Agreement. The Company has made available to Galaxy true and complete
copies of all Contracts and other documents requested by
Galaxy.
Section
4.12 Tax Returns and
Audits. All required federal, state and local Tax Returns of
the Company have been accurately prepared and duly and timely filed, and all
federal, state and local Taxes required to be paid with respect to the periods
covered by such returns have been paid. The Company is not and has
not been delinquent in the payment of any Tax. The Company has not
had a Tax deficiency proposed or assessed against it and has not executed a
waiver of any statute of limitations on the assessment or collection of any
Tax. None of the Company’s federal income Tax Returns nor any state
or local income or franchise Tax Returns has been audited by governmental
authorities. The reserves for Taxes reflected on the Balance Sheet
are and will be sufficient for the payment of all unpaid Taxes payable by the
Company as of the Balance Sheet Date. Since the Balance Sheet Date,
the Company has made adequate provisions on its books of account for all Taxes
with respect to its business, properties and operations for such
period. The Company has withheld or collected from each payment made
to each of its employees the amount of all Taxes (including, but not limited to,
federal, state and local income taxes, Federal Insurance Contribution Act taxes
and Federal Unemployment Tax Act taxes) required to be withheld or collected
therefrom, and has paid the same to the proper Tax receiving officers or
authorized depositaries. There are no federal, state, local or
foreign audits, actions, suits, proceedings, investigations, claims or
administrative proceedings relating to Taxes or any Tax Returns of the Company
now pending, and the Company has not received any notice of any proposed audits,
investigations, claims or administrative proceedings relating to Taxes or any
Tax Returns. The Company is not obligated to make a payment, nor is
it a party to any agreement that under certain circumstances could obligate it
to make a payment, that would not be deductible under Section 280G of the
Code. The Company has not agreed nor is required to make any
adjustments under Section 481(a) of the Code (or any similar provision of state,
local and foreign law) by reason of a change in accounting method or otherwise
for any Tax period for which the applicable statute of limitations has not yet
expired. The Company is not a party to, is not bound by and does not
have any obligation under, any Tax sharing agreement, Tax indemnification
agreement or similar contract or arrangement, whether written or unwritten
(collectively, “Tax
Sharing Agreements”), nor does it have any potential liability or
obligation to any Person as a result of, or pursuant to, any Tax Sharing
Agreements.
Section
4.13 Patents and Other Intangible
Assets.
(a) To the
knowledge of the Company, the Company (i) owns or has the right to use, pursuant
to a valid license, sublicense, agreement, or permission, free and clear of all
Liens, all patents, trademarks, service marks, trade names, copyrights, licenses
and rights with respect to the foregoing used in or necessary for the conduct of
its business as now conducted or proposed to be conducted without infringing
upon or otherwise acting adversely to the right or claimed right of any Person
under or with respect to any of the foregoing.
14
(b) To the
knowledge of the Company, the Company owns and has the right to use all trade
secrets, if any, including know-how, negative know-how, formulas, patterns,
programs, devices, methods, techniques, inventions, designs, processes, computer
programs and technical data and all information that derives independent
economic value, actual or potential, from not being generally known or known by
competitors (collectively, “Intellectual
Property”) required for or incident to the development, operation and
sale of all products and services sold by the Company, free and clear of any
right, Lien or claim of others.
Section
4.14 Employee Benefit Plans;
ERISA.
(a) All
“employee benefit plans” (within the meaning of Section 3(3) of the ERISA) of
the Company and other employee benefit or fringe benefit arrangements,
practices, contracts, policies or programs of every type, other than programs
merely involving the regular payment of wages, commissions, or bonuses
established, maintained or contributed to by the Company, whether written or
unwritten and whether or not funded, are in material compliance with the
applicable requirements of ERISA, the Code and any other applicable state,
federal or foreign law.
(b) There are
no pending claims or lawsuits that have been asserted or instituted against any
Employee Benefit Plan, the assets of any of the trusts or funds under the
Employee Benefit Plans, the plan sponsor or the plan administrator of any of the
Employee Benefit Plans or against any fiduciary of an Employee Benefit Plan with
respect to the operation of such plan, nor does the Company have any knowledge
of any incident, transaction, occurrence or circumstance which might reasonably
be expected to form the basis of any such claim or lawsuit.
(c) There is
no pending or, to the knowledge of the Company, threatened investigation, or
pending or possible enforcement action by the Pension Benefit Guaranty
Corporation, the Department of Labor, the Internal Revenue Service or any other
government agency with respect to any Employee Benefit Plan and the Company has
no knowledge of any incident, transaction, occurrence or circumstance which
might reasonably be expected to trigger such an investigation or enforcement
action.
(d) No actual
or, to the knowledge of the Company, contingent Liability exists with respect to
the funding of any Employee Benefit Plan or for any other expense or obligation
of any Employee Benefit Plan, except as disclosed on the Balance Sheet, and no
contingent Liability exists under ERISA with respect to any “multi-employer
plan,” as defined in Section 3(37) or Section 4001(a)(3) of ERISA.
(e) No events
have occurred or are reasonably expected to occur with respect to any Employee
Benefit Plan that would cause a material change in the costs of providing
benefits under such Employee Benefit Plan or would cause a material change in
the cost of providing such Employee Benefit Plan.
Section
4.15 Title to Property and
Encumbrances. The Company has good and valid title to all
properties and assets used in the conduct of its business (except for property
held under valid and subsisting leases which are in full force and effect and
which are not in default) free of all Liens except Permitted Liens and such
ordinary and customary imperfections of title,
15
restrictions
and encumbrances as do not in the aggregate constitute a Company Material
Adverse Effect.
Section
4.16 Condition of
Properties. All facilities, machinery, equipment, fixtures and
other properties owned, leased or used by the Company are in operating
condition, subject to ordinary wear and tear, and are adequate and sufficient
for the Company’s existing business.
Section
4.17 Insurance
Coverage. There is in full force and effect one or more
policies of insurance issued by insurers of recognized responsibility insuring
the Company and its properties, products and business against such losses and
risks, and in such amounts, as are customary for corporations of established
reputation engaged in the same or similar business and similarly
situated. The Company has not been refused any insurance coverage
sought or applied for, and the Company has no reason to believe that it will be
unable to renew its existing insurance coverage as and when the same shall
expire upon terms at least as favorable to those currently in effect, other than
possible increases in premiums that do not result from any act or omission of
the Company. No suit, proceeding or action or, to the knowledge of
the Company, threat of suit, proceeding or action has been asserted or made
against the Company due to alleged bodily injury, disease, medical condition,
death or property damage arising out of the function or malfunction of a
product, procedure or service designed, manufactured, sold or distributed by the
Company.
Section
4.18 Environmental
Matters.
(a) To the
knowledge of the Company, the Company has never generated, used, handled,
treated, released, stored or disposed of any Hazardous Materials on any real
property on which it now has or previously had any leasehold or ownership
interest, except in compliance with all applicable Environmental
Laws.
(b) To the
knowledge of the Company, the historical and present operations of the business
of the Company are in compliance with all applicable Environmental Laws, except
where any non-compliance has not had and would not reasonably be expected to
have a Company Material Adverse Effect.
(c) There are
no material pending or, to the knowledge of the Company, threatened, demands,
claims, information requests or notices of noncompliance or violation against or
to the Company relating to any Environmental Law; and, to the knowledge of the
Company, there are no conditions or occurrences on any of the real property used
by the Company in connection with its business that would reasonably be expected
to lead to any such demands, claims or notices against or to the Company, except
such as have not had, and would not reasonably be expected to have, a Company
Material Adverse Effect.
(d) To the
knowledge of the Company, (i) the Company has not, sent or disposed of,
otherwise had taken or transported, arranged for the taking or disposal of (on
behalf of itself, a customer or any other party) or in any other manner
participated or been involved in the taking of or disposal or release of a
Hazardous Material to or at a site that is contaminated by any Hazardous
Material or that, pursuant to any Environmental Law, (A) has been placed on the
“National Priorities List”, the “CERCLIS” list, or any similar state or federal
list, or (B) is subject to or the source of a claim, an administrative order or
other request to take “removal”,
16
“remedial”,
“corrective” or any other “response” action, as defined in any Environmental
Law, or to pay for the costs of any such action at the site; (ii) the Company is
not involved in (and has no basis to reasonably expect to be involved in) any
suit or proceeding and has not received (and has no basis to reasonably expect
to receive) any written notice, request for information or other communication
from any governmental authority or other third party with respect to a release
or threatened release of any Hazardous Material or a violation or alleged
violation of any Environmental Law, and has not received (and has no basis to
reasonably expect to receive) written notice of any claims from any Person
relating to property damage, natural resource damage or to personal injuries
from exposure to any Hazardous Material; and (iii) the Company has timely filed
every report required to be filed, acquired all necessary certificates,
approvals and permits, and generated and maintained all required data,
documentation and records under all Environmental Laws, in all such instances
except where the failure to do so would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.
Section
4.19 Disclosure. There
is no fact relating to the Company that the Company has not disclosed to Galaxy
in writing that has had or is currently having a Company Material Adverse
Effect. No representation or warranty by the Company herein and no
information disclosed in the exhibits hereto by the Company contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading.
Section
4.20 Validity of
Shares. The shares of Company Common Stock to be issued in
accordance with Article III hereof,
when issued and delivered in accordance with the terms hereof, shall be duly
authorized, validly issued, fully paid and
non-assessable.
Section
4.21 SEC Reporting and
Compliance.
(a) The
Company filed a registration statement on Form 10SB under the Exchange Act on
May 18, 2000. Since that date, the Company has timely filed with the
Commission all registration statements, proxy statements, information statements
and reports required to be filed by Company pursuant to the Exchange
Act (collectively, the “Company SEC
Documents”). The Company has not filed with the Commission a
certificate on Form 15 pursuant to the Exchange Act.
(b) None of
the Company SEC Documents, as of their respective dates, contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements contained therein not misleading. Each
of the Company SEC Documents complied, and each Company SEC Document to be filed
with the Commission prior to the Effective Date shall comply, in all material
respects, with the applicable requirements of the Securities Act and the
Securities Exchange, as the case may be. Each of the financial
statements (including, in each case, any related notes), contained in the
Company SEC Documents, including any Company SEC Documents filed after the date
of this Agreement until the Closing, complied, as of its respective filing date,
in all material respects with all applicable accounting requirements and the
published rules and regulations of the Commission with respect
thereto.
17
(c) Prior to
and until the Closing, the Company will provide to Galaxy copies of any and all
amendments or supplements to the Company SEC Documents filed with the Commission
and all subsequent registration statements and reports filed by the Company
subsequent to the filing of the Company SEC Documents with the Commission and
any and all subsequent information statements, proxy statements, reports or
notices filed by the Company with the Commission or delivered to the
stockholders of the Company.
(d) The
Company is not an “investment company” within the meaning of Section 3 of the
Investment Company Act.
(e) The
Company Common Stock is presently eligible for quotation and trading on the NASD
Over-the-Counter Bulletin Board.
(f) Between
the date hereof and the Closing Date, the Company shall continue to satisfy any
applicable filing requirements of the Exchange Act or the Securities Act, as the
case may be, and all other requirements of applicable securities
laws.
(g) To the
knowledge of the Company, it has complied with the Securities Act, Exchange Act
and all other applicable federal and state securities
laws.
Section
4.22 No General
Solicitation. In issuing Company Common Stock in the Exchange
hereunder, neither the Company nor anyone acting on its behalf has offered to
sell Company Common Stock by any form of general solicitation or
advertising.
ARTICLE
V
REPRESENTATIONS AND
WARRANTIES OF GALAXY
Galaxy
hereby represents and warrant to the Company as follows:
Section
5.1 Organization. Galaxy
(i) is duly organized, validly existing and in good standing under the laws of
its State of incorporation or organization, (ii) has all licenses, permits,
authorizations and other Consents necessary to own, lease and operate its
properties and assets and to carry on its business as it is now being conducted
and (iii) has all requisite corporate or other applicable power and authority to
own, lease and operate its properties and assets and to carry on its business as
it is now being conducted and presently proposed to be conducted, in each case
except where such failures would not have, or be reasonably likely to have, a
Galaxy Material Adverse Effect. Galaxy is duly qualified or
authorized to conduct business and is in good standing (or its equivalent) as a
foreign corporation or other entity in all jurisdictions in which the ownership
or use of its assets or nature of the business conducted by it makes such
qualification or authorization necessary, except where the failure to be so duly
qualified, authorized and in good standing would not have a Galaxy Material
Adverse Effect.
Section
5.2 Authorization; Validity of
Agreement. Galaxy has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and
performance by Galaxy of this Agreement and all other agreements and instruments
to be executed pursuant to this Agreement, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by the
Board of Directors of Galaxy and the stockholders of Galaxy, and no other action
on the part of Galaxy is necessary to authorize the execution and delivery of
this Agreement and all
18
other
agreements and instruments to be executed pursuant to this Agreement and the
consummation by Galaxy of the transactions contemplated hereby and
thereby. This Agreement has been duly executed and delivered by
Galaxy and (assuming due and valid authorization, execution and delivery hereof
by the Company and confirmation of the Company Chapter 11 Plan) is a valid and
binding obligation of Galaxy, enforceable against it in accordance with its
terms, except as such enforcement is limited by bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors’ rights generally and by
general principles of equity.
Section
5.3 Consents and Approvals; No
Violations. Except for filing of the certificate of exchange
with the Secretary of State of the State of Nevada, neither the execution,
delivery or performance of this Agreement by Galaxy nor the consummation of the
transactions contemplated hereby will (i) violate any provision of the articles
of incorporation or by-laws of Galaxy; (ii) violate, conflict with or result in
a breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, require the
consent of or result in the creation of any Lien upon any of the properties of
Galaxy under any Contract to which Galaxy or any of its properties may be bound;
(iii) require any Consent, approval or authorization of, or notice to, or
declaration, filing or registration with, any governmental entity by or with
respect to Galaxy or any subsidiary of Galaxy, or (iv) violate any order, writ,
judgment, injunction, decree, law, statute, rule or regulation applicable to any
of Galaxy or any of its properties or assets; except, in the cases of clauses
(ii), (iii) and (iv), any such violations, conflicts, breaches, defaults or
encumbrances, or any failure to receive any such Consent, approval or
authorization, or to make any such notice, declaration, filing or registration
as will not result in, or could reasonably be expected to result in, a Galaxy
Material Adverse Effect.
Section
5.4 [omitted]
Section
5.5 No Default; Compliance with
Applicable Laws. Neither Galaxy nor any of Galaxy’s
subsidiaries is in default or violation of any material term, condition or
provision of (i) their respective articles of incorporation, by-laws or similar
organizational documents or (ii) any law applicable to Galaxy or any of Galaxy’s
subsidiaries or its property and assets and neither Galaxy nor any of Galaxy’s
subsidiaries has received written notice of any violation of or Liability under
any of the foregoing (whether material or not).
Section
5.6 Broker’s and Finder’s Fees;
Broker/Dealer Ownership. No person(s), firm, corporation or
other entity is entitled by reason of any act or omission of Galaxy to any
broker’s or finder’s fees, commission or other similar compensation, nor, with
respect to the execution, delivery and performance of this Agreement or with
respect to the consummation of the transactions contemplated hereby will any
such person have any right or valid claim against the Company or Galaxy to any
such payment.
Section
5.7 Capitalization of
Galaxy. As of the date hereof, the authorized capital stock of
Galaxy consists of 65,000,000 shares of common stock, with a par value of $0.001
per share, and 10,000,000 shares of preferred stock, with a par value of $0.001
per share. As of the date hereof and immediately prior to the
Effective Time, there are 5,000,000 shares of Galaxy Common Stock, par value
$0.001, issued and outstanding and no shares of Galaxy Preferred Stock issued
and outstanding. Other than as provided in Article III of this
Agreement in connection with securities to be issued or to become issuable in
connection with or as a result of
19
the
Exchange, Galaxy has no outstanding options, warrants, rights or commitments to
issue shares of Galaxy Common Stock or any capital stock or other securities of
Galaxy, and there are no outstanding securities convertible or exercisable into
or exchangeable for shares of Galaxy Common Stock or any capital stock or other
securities of Galaxy. There is no voting trust, agreement or
arrangement among any of the beneficial holders of Galaxy Common Stock affecting
the nomination or election of directors or the exercise of the voting rights of
Galaxy Common Stock. There are no registration rights or similar
rights applicable to any shares of Galaxy Common Stock or any capital stock or
other securities of Galaxy. All outstanding shares of the capital
stock of Galaxy are validly issued and outstanding, fully paid and
non-assessable, and none of such shares have been issued in violation of the
preemptive rights of any person. All of the shares of Galaxy Common
Stock issued and outstanding immediately prior to the Effective Time have been
issued in compliance with the Securities Act and applicable state securities
laws and (i) pursuant to effective registration statements filed with the
Securities and Exchange Commission and/or (ii) in reliance on valid exemptions
from registration or qualification thereunder.
Section
5.8 Financial
Statements. Galaxy has delivered or made available as of the
date hereof or shall, prior to the Closing Date, deliver or make available to
the Company the audited balance sheets of Galaxy for the fiscal year ended
December 31, 2007 (the “Galaxy Balance Sheet
Date”) and an audited statement of operation, and cash flow analysis with
footnotes, for the fiscal year ended December 31, 2007 and the related
statements of income, stockholders’ equity and cash flows of Galaxy for the
fiscal year ended December 31, 2006. Galaxy has also delivered
or made available as of the date hereof or shall, prior to the Closing Date,
deliver or make available to the Company the unaudited statements of income,
stockholders’ equity and cash flows of Galaxy for the quarter ended September
30, 2007. The foregoing financial statements (including any notes thereto) (the
“Galaxy Financial
Statements”) (i) have been prepared based upon the books and records of
Galaxy, (ii) have been prepared in accordance with GAAP (except as otherwise
noted therein), and (iii) present fairly, in all material respects, the
financial position, results of operations and cash flows of Galaxy as at their
respective dates and for the periods then ended. To the knowledge of
Galaxy, since the Balance Sheet Date, no fact or condition exists that has not
been disclosed to Galaxy that has had or could reasonably be expected to have a
Galaxy Material Adverse Effect.
Section
5.9 No Undisclosed
Liabilities. As of the date hereof, except (a) for Liabilities
reflected on the face of the balance sheet for the six month period ended June
30, 2008 (the “Galaxy
Balance Sheet”) and (b) Liabilities of the same type, magnitude and scope
as those reflected on the Balance Sheet which have arisen since the Balance
Sheet Date in the ordinary course of business, and which would not, in the
aggregate, result in a Galaxy Material Adverse Effect, Galaxy does not have any
Liability.
Section
5.10 Tax Returns and
Audits. All required federal, state and local Tax Returns of
Galaxy have been accurately prepared in all material respects and duly and
timely filed, and all federal, state and local Taxes required to be paid with
respect to the periods covered by such returns have been paid to the extent that
the same are material and have become due, except where the failure so to file
or pay could not reasonably be expected to have a Galaxy Material Adverse
Effect. Galaxy is not and has not been delinquent in the payment of
any Tax. Galaxy has not had a Tax deficiency assessed against
it. None of Galaxy’s federal income Tax Returns nor any state or
local income or franchise Tax Returns has been audited by governmental
20
authorities. The
reserves for Taxes reflected on the Galaxy Balance Sheet are sufficient for the
payment of all unpaid Taxes payable by Galaxy with respect to the period ended
on the Galaxy Balance Sheet Date. There are no federal, state, local
or foreign audits, actions, suits, proceedings, investigations, claims or
administrative proceedings relating to Taxes or any Tax Returns of Galaxy now
pending, and Galaxy has not received any notice of any proposed audits,
investigations, claims or administrative proceedings relating to Taxes or any
Tax Returns.
Section
5.11 Employee Benefit Plans;
ERISA.
(a) Except as
disclosed in writing to the Company, there are no “employee benefit plans”
(within the meaning of Section 3(3) of ERISA) nor any other employee benefit or
fringe benefit arrangements, practices, contracts, policies or programs other
than programs merely involving the regular payment of wages, commissions, or
bonuses established, maintained or contributed to by Galaxy, whether written or
unwritten and whether or not funded. Any plans disclosed to the
Company in writing are hereinafter referred to as the “Galaxy Employee Benefit
Plans.”
(b) Any
current and prior material documents, including all amendments thereto, with
respect to each Galaxy Employee Benefit Plan have been made available to the
Company.
(c) All
Galaxy Employee Benefit Plans are in material compliance with the applicable
requirements of ERISA, the Code and any other applicable state, federal or
foreign law.
(d) There are
no pending, or to the knowledge of Galaxy, threatened, claims or lawsuits
that have been asserted or instituted against any Galaxy Employee Benefit Plan,
the assets of any of the trusts or funds under the Galaxy Employee Benefit
Plans, the plan sponsor or the plan administrator of any of the Galaxy Employee
Benefit Plans or against any fiduciary of a Galaxy Employee Benefit Plan with
respect to the operation of such plan.
(e) There is
no pending, or to the knowledge of Galaxy, threatened, investigation or pending
or possible enforcement action by the Pension Benefit Guaranty Corporation, the
Department of Labor, the Internal Revenue Service or any other government agency
with respect to any Galaxy Employee Benefit Plan and Galaxy has no knowledge of
any incident, transaction, occurrence or circumstance which might reasonably be
expected to trigger such an investigation or enforcement action.
(f) No actual
or, to the knowledge of Galaxy, contingent Liability exists with respect to the
funding of any Galaxy Employee Benefit Plan or for any other expense or
obligation of any Galaxy Employee Benefit Plan, except as disclosed on the
Galaxy Financial Statements, and to the knowledge of Galaxy, no contingent
Liability exists under ERISA with respect to any “multi-employer plan,” as
defined in Section 3(37) or Section 4001(a)(3) of ERISA.
Section
5.12 Interested Party
Transactions. Except a disclosed by Galaxy, no officer,
director or stockholder of Galaxy or any Affiliate of any such Person or Galaxy
has or has had, either directly or indirectly, (a) an interest in any Person
that (i) furnishes or sells services or products that are furnished or sold or
are proposed to be furnished or sold by Galaxy or (ii)
21
purchases
from or sells or furnishes to Galaxy any goods or services, or (b) a beneficial
interest in any Contract to which Galaxy is a party or by which it may be bound
or affected.
Section
5.13 Questionable
Payments. Neither Galaxy, nor, to the knowledge of Galaxy, any
director, officer, agent, employee or other Person associated with or acting on
behalf of Galaxy, has used any corporate funds for (a) unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity,
(b) made any direct or indirect unlawful payments to government officials or
employees from corporate funds, (c) established or maintained any unlawful or
unrecorded fund of corporate monies or other assets, (d) made any false or
fictitious entries on the books of record of any such corporations, or (e) made
any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
Section
5.14 Obligations to or by
Stockholders. Galaxy has no Liability or obligation or
commitment to any stockholder of Galaxy or any Affiliate or “associate” (as such
term is defined in Rule 405 under the Securities Act) of any stockholder of
Galaxy, nor does any stockholder of Galaxy or any such Affiliate or associate
have any Liability, obligation or commitment to Galaxy.
Section
5.15 Schedule of Assets and
Contracts. Except as expressly set forth in this Agreement or
as otherwise disclosed by Galaxy, the Galaxy Balance Sheet or the notes thereto,
Galaxy is not a party to any Contract not made in the ordinary course of
business that is material to Galaxy. Galaxy does not own any real
property. Galaxy is not a party to any Contract (a) with any labor
union, (b) for the purchase of fixed assets or for the purchase of materials,
supplies or equipment in excess of normal operating requirements, (c) for the
employment of any officer, individual employee or other Person on a full-time
basis or any contract with any Person for consulting services, (d) with respect
to bonus, pension, profit sharing, retirement, stock purchase, stock option,
deferred compensation, medical, hospitalization or life insurance or similar
plan, contract or understanding with any or all of the employees of Galaxy or
any other Person, (e) relating to or evidencing Indebtedness for Borrowed Money
or subjecting any asset or property of Galaxy to any Lien or evidencing any
Indebtedness, (f) guaranteeing of any Indebtedness, (g) under which Galaxy is
lessee of or holds or operates any property, real or personal, owned by any
other Person, (h) under which Galaxy is lessor or permits any Person to hold or
operate any property, real or personal, owned or controlled by Galaxy, (i)
granting any preemptive right, right of first refusal or similar right to any
Person, (j) with any Affiliate of Galaxy or any present or former officer,
director or stockholder of Galaxy, (k) obligating Galaxy to pay any royalty or
similar charge for the use or exploitation of any tangible or intangible
property, (1) containing a covenant not to compete or other restriction on
Galaxy’s ability to conduct a business or engage in any other activity, (m) with
respect to any distributor, dealer, manufacturer’s representative, sales agency,
franchise or advertising contract or commitment, (n) regarding the registration
of securities under the Securities Act, (o) characterized as a collective
bargaining agreement, or (p) with any Person continuing for a period of more
than three months from the Closing Date that involves an expenditure or receipt
by Galaxy in excess of $1,000. Galaxy has furnished to the Company
true and complete copies of all agreements and other documents requested by the
Company.
22
Section
5.16 Environmental
Matters.
(a) Galaxy
has never generated, used, handled, treated, released, stored or disposed of any
Hazardous Materials on any real property on which it now has or previously had
any leasehold or ownership interest, except in compliance with all applicable
Environmental Laws.
(b) The
historical and present operations of the business of Galaxy comply with all
applicable Environmental Laws, except where any non-compliance has not had and
would not reasonably be expected to have a Galaxy Material Adverse
Effect.
(c) (i)
Galaxy has not, sent or disposed of, otherwise had taken or transported,
arranged for the taking or disposal of (on behalf of itself, a customer or any
other party) or in any other manner participated or been involved in the taking
of or disposal or release of a Hazardous Material to or at a site that is
contaminated by any Hazardous Material or that, pursuant to any Environmental
Law, (A) has been placed on the “National Priorities List”, the “CERCLIS” list,
or any similar state or federal list, or (B) is subject to or the source of a
claim, an administrative order or other request to take “removal”, “remedial”,
“corrective” or any other “response” action, as defined in any Environmental
Law, or to pay for the costs of any such action at the site; (ii) Galaxy is
not involved in (and has no basis to reasonably expect to be involved in) any
suit or proceeding and has not received (and has no basis to reasonably expect
to receive) any written notice, request for information or other communication
from any governmental authority or other third party with respect to a release
or threatened release of any Hazardous Material or a violation or alleged
violation of any Environmental Law, and has not received (and has no basis to
reasonably expect to receive) written notice of any claims from any Person
relating to property damage, natural resource damage or to personal injuries
from exposure to any Hazardous Material; and (iii) Galaxy has timely filed every
report required to be filed, acquired all necessary certificates, approvals and
permits, and generated and maintained all required data, documentation and
records under all Environmental Laws, in all such instances except where the
failure to do so would not reasonably be expected to have, individually or in
the aggregate, a Galaxy Material Adverse Effect.
(d) There are
no material pending or, to the knowledge of Galaxy, threatened, demands, claims,
information requests or notices of noncompliance or violation against or to
Galaxy relating to any Environmental Law; and, to the knowledge of Galaxy, there
are no conditions or occurrences on any of the real property used by Galaxy in
connection with its business that would reasonably be expected to lead to any
such demands, claims or notices against or to Galaxy, except such as have not
had, and would not reasonably be expected to have, a Galaxy Material Adverse
Effect.
Section
5.17 Employees. Other
than pursuant to ordinary arrangements of employment compensation, Galaxy is not
under any obligation or liability to any officer, director, employee or
Affiliate of Galaxy.
Section
5.18 Title to Property and
Encumbrances. Galaxy has good and valid title to all
properties and assets used in the conduct of its business (except for property
held under valid and subsisting leases which are in full force and effect and
which are not in default) free of all Liens except Permitted Liens and such
ordinary and customary imperfections of title, restrictions
23
and
encumbrances as do not, individually or in the aggregate constitute a
Galaxy Material Adverse Effect.
Section
5.19 Condition of
Properties. All facilities, machinery, equipment, fixtures and
other properties owned, leased or used by Galaxy are in operating
condition, subject to ordinary wear and tear, and are adequate and sufficient
for Galaxy’s existing business.
Section
5.20 Insurance
Coverage. There is in full force and effect one or more
policies of insurance issued by insurers of recognized responsibility insuring
Galaxy and its properties, products and business against such losses and
risks, and in such amounts, as are customary for corporations of established
reputation engaged in the same or similar business and similarly
situated. Galaxy has not been refused any insurance coverage
sought or applied for, and Galaxy has no reason to believe that it will be
unable to renew its existing insurance coverage as and when the same shall
expire upon terms at least as favorable to those currently in effect, other than
possible increases in premiums that do not result from any act or omission of
Galaxy. No suit, proceeding or action or, to the best current actual
knowledge of Galaxy, threat of suit, proceeding or action has been asserted or
made against Galaxy due to alleged bodily injury, disease, medical condition,
death or property damage arising out of the function or malfunction of a
product, procedure or service designed, manufactured, sold or distributed by
Galaxy.
Section
5.21 Disclosure. There
is no fact relating to Galaxy that Galaxy has not disclosed to the Company in
writing that has had, is having or is reasonably likely to have a Galaxy
Material Adverse Effect. No representation or warranty by Galaxy
herein and no information disclosed in the exhibits hereto by Galaxy contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not
misleading.
ARTICLE
VI
CONDUCT OF BUSINESSES
PENDING THE
EXCHANGE
Section
6.1 Conduct of Business by the
Company Pending the Exchange. Prior
to the Effective Time, unless Galaxy shall otherwise agree in writing or as
otherwise contemplated by this Agreement:
(i) the
business of the Company shall be conducted only in the ordinary course
consistent with the past practice;
(ii) except
with respect to the issuance of any securities as provided in the Company
Chapter 11 Plan, the Company shall not (A) directly or indirectly redeem,
purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire
any shares of Company Capital Stock; (B) amend its articles of incorporation or
by-laws except to effectuate the transactions contemplated in this Agreement; or
(C) split, combine or reclassify the outstanding Company Capital Stock or
declare, set aside or pay any dividend payable in cash, stock or property or
make any distribution with respect to any such stock;
(iii) except
with respect to the issuance of any securities as provided in the Company
Chapter 11 Plan, the Company shall not (A) issue any additional shares of, or
options, warrants or rights of any kind to acquire any shares of, Company
Capital Stock;
24
(B)
acquire or dispose of any fixed assets or acquire or dispose of any other
substantial assets other than in the ordinary course of business; (C) incur
additional Indebtedness or any other Liabilities or enter into any other
transaction other than in the ordinary course of business; (D) enter into any
Contract, agreement, commitment or arrangement with respect to any of the
foregoing except this Agreement; or (E) except as contemplated by this
Agreement, enter into any Contract, agreement, commitment or arrangement to
dissolve, merge, consolidate or enter into any other material business
combination; and
(iv) the
Company shall use its reasonable best efforts to preserve intact the business of
the Company, to keep available the service of its present officers and key
employees, to preserve the good will of those having business relationships with
it, and to file all required SEC Reports under the Exchange Act
Section
6.2 Conduct of Business by
Galaxy Pending the Exchange. Prior
to the Effective Time, unless the Company shall otherwise agree in writing or as
otherwise contemplated expressly permitted by this
Agreement:
(i) the
business of Galaxy shall be conducted only in the ordinary course consistent
with past practice;
(ii) Galaxy
shall not (A) directly or indirectly redeem, purchase or otherwise acquire or
agree to redeem, purchase or otherwise acquire any shares of its capital stock;
(B) amend its articles of incorporation or by-laws; or (C) split, combine or
reclassify its capital stock or declare, set aside or pay any dividend payable
in cash, stock or property or make any distribution with respect to such stock;
and
(iii) Galaxy
shall not (A) issue or agree to issue any additional shares of, or options,
warrants or rights of any kind to acquire shares of, its capital stock, except
as disclosed by Galaxy; (B) acquire or dispose of any assets other than in the
ordinary course of business; (C) incur additional Indebtedness or any other
Liabilities or enter into any other transaction except in the ordinary course of
business; (D) enter into any Contract, agreement, commitment or arrangement with
respect to any of the foregoing except this Agreement, or (E) except as
contemplated by this Agreement, enter into any Contract, agreement, commitment
or arrangement to dissolve, merge; consolidate or enter into any other material
business contract or enter into any negotiations in connection
therewith.
(iv) Galaxy
shall use its best efforts to preserve intact the business of Galaxy, to keep
available the service of its present officers and key employees, and to preserve
the good will of those having business relationships with Galaxy;
(v) Galaxy
will not, nor will it authorize any director or authorize or permit any officer
or employee or any attorney, accountant or other representative retained by them
to, make, solicit, encourage any inquiries with respect to, or engage in any
negotiations concerning, any Acquisition Proposal (as defined
below). Galaxy will promptly advise the Company in writing of any
such inquiries or Acquisition Proposal (or requests for information) and the
substance thereof. As used in this paragraph, “Acquisition Proposal”
shall mean any proposal for a merger, exchange or other business
25
combination
involving Galaxy or for the acquisition, sale, or exchange of a substantial
equity interest in it or any material assets of it other than as contemplated by
this Agreement. Galaxy will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any Person
conducted heretofore with respect to any of the foregoing;
and
(vi) Galaxy
will not enter into any new employment agreements with any of its officers or
employees or grant any increases in the compensation or benefits of its officers
and employees.
ARTICLE
VII
ADDITIONAL
AGREEMENTS
Section
7.1 Access and
Information. The Company and Galaxy shall each afford to the
other and to the other’s accountants, counsel and other representatives
reasonable access during normal business hours throughout the period prior to
the Effective Time of all of their properties, books, contracts, commitments and
records (including but not limited to Tax Returns) and during such period, each
shall furnish promptly to the other all information concerning its business,
properties and personnel as such other party may reasonably request, provided
that no investigation pursuant to this Section 7.1 shall
affect any representations or warranties made herein. Each party
shall hold, and shall cause its employees and agents to hold, in confidence all
such information (other than such information that (i) becomes generally
available to the public other than as a result of a disclosure by such party or
its directors, officers, managers, employees, agents or advisors, or (ii)
becomes available to such party on a non-confidential basis from a source other
than a party hereto or its advisors, provided that such source is not known by
such party to be bound by a confidentiality agreement with or other obligation
of secrecy to a party hereto or another party until such time as such
information is otherwise publicly available; provided, however,
that: (A) any such information may be disclosed to such party’s
directors, officers, employees and representatives of such party’s advisors who
need to know such information for the purpose of evaluating the transactions
contemplated hereby (it being understood that such directors, officers,
employees and representatives shall be informed by such party of the
confidential nature of such information); (B) any disclosure of such information
may be made as to which the party hereto furnishing such information has
consented in writing; and (C) any such information may be disclosed pursuant to
a judicial, administrative or governmental order or request provided, that the
requested party will promptly so notify the other party so that the other party
may seek a protective order or appropriate remedy and/or waive compliance with
this Agreement and if such protective order or other remedy is not obtained or
the other party waives compliance with this provision, the requested party will
furnish only that portion of such information which is legally required and will
exercise its best efforts to obtain a protective order or other reliable
assurance that confidential treatment will be accorded the information
furnished. If this Agreement is terminated, each party will deliver
to the other all documents and other materials (including copies) obtained by
such party or on its behalf from the other party as a result of this Agreement
or in connection herewith, whether so obtained before or after the execution
hereof.
Section
7.2 Additional
Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its commercially reasonable
best efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or
26
advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its commercially
reasonable best efforts to satisfy the conditions precedent to the obligations
of any of the parties hereto to obtain all necessary waivers, and to lift any
injunction or other legal bar to the Exchange (and, in such case, to proceed
with the Exchange as expeditiously as possible). In order to obtain
any necessary governmental or regulatory action or non-action, waiver, Consent,
extension or approval, Galaxy and the Company agree to take all reasonable
actions and to enter into all reasonable agreements as may be necessary to
obtain timely governmental or regulatory approvals and to take such further
action in connection therewith as may be necessary. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and/or directors
of Galaxy and the Company shall take all such necessary action.
Section
7.3 Publicity. No
party shall issue any press release or public announcement pertaining to the
Exchange that has not been agreed upon in advance by Galaxy and the Company,
except as the Company reasonably determines to be necessary in order to comply
with the rules of the Commission; provided that in such
case the Company will use its best efforts to allow Galaxy to review and
reasonably approve any of the same prior to its release.
Section
7.4 Appointment of
Directors. Immediately upon the Effective Time, the Company
shall, in accordance with Section 2.3(d),
accept the resignations and cause the appointments of those officers and
directors identified in Exhibit C hereto,
subject to any notice and waiting period requirements of federal
law. At the first annual meeting of the Company’s stockholders and
thereafter, the election of members of the Company’s Board of Directors shall be
accomplished in accordance with the by-laws of the Company.
ARTICLE
VIII
CONDITIONS OF PARTIES’
OBLIGATIONS
Section
8.1 Company
Obligations. The obligations of Galaxy under this Agreement
are subject to the fulfillment at or prior to the Closing of the following
conditions, any of which may be waived in whole or in part by
Galaxy.
(a) No Errors, etc. The
representations and warranties of the Company under this Agreement shall be
deemed to have been made again on the Closing Date and shall then be true and
correct in all material respects.
(b) Compliance with
Agreement. The Company shall have performed and complied in
all material respects with all agreements and conditions required by this
Agreement to be performed or complied with by it on or before the Closing
Date.
(c) No Company Material Adverse
Effect. Since the date hereof, there shall not have been any
event or circumstance that has resulted in a Company Material Adverse Effect,
and no event has occurred or circumstance exists that would reasonably be
expected to result in a Company Material Adverse Effect.
(d) Certificate of
Officers. The Company shall have delivered to Galaxy a
certificate dated the Closing Date, executed on its behalf by the Chief
Executive Officer of the
27
Company,
certifying the satisfaction of the conditions specified in paragraphs (a), (b)
and (c) of this Section 8.1.
(e) No Restraining
Action. No Action or proceeding before any court, governmental
body or agency shall have been threatened, asserted or instituted to restrain or
prohibit, or to obtain substantial damages in respect of, this Agreement or the
carrying out of the transactions contemplated by this Agreement.
(f) Confirmation of the Company
Chapter 11 Plan. The Company Chapter 11 Plan as proposed by
Company before the United States Bankruptcy Court for the District of Nevada
shall have been confirmed by entry of a final order by such court.
(g) Supporting
Documents. Galaxy shall have received the
following:
(1) Copies of
resolutions of the Board of Directors and the stockholders of the Company,
certified by the President of the Company, authorizing and approving the
Exchange and the execution, delivery and performance of this Agreement and all
other documents and instruments to be delivered pursuant hereto and
thereto.
(2) A
certificate of incumbency executed by the Secretary of the Company certifying
the names, titles and signatures of the officers authorized to execute any
documents referred to in this Agreement and further certifying that the articles
of incorporation and by-laws of the Company delivered to Galaxy at the time of
the execution of this Agreement have been validly adopted and have not been
amended or modified since the date hereof.
(3) Evidence
as of a recent date of the good standing and corporate existence of the Company
issued by the Secretary of State of the State of Nevada.
Section
8.2 Galaxy
Obligations. The obligations of the Company under this
Agreement are subject to the fulfillment at or prior to the Closing of the
following conditions any of which may be waived in whole or in part by the
Company:
(a) No Errors,
etc. The representations and warranties of Galaxy under this
Agreement shall be deemed to have been made again on the Closing Date and shall
then be true and correct in all material respects.
(b) Compliance with
Agreement. Galaxy shall have performed and complied in all
material respects with all agreements and conditions required by this Agreement
to be performed or complied with by them on or before the Closing
Date.
(c) No Galaxy Material Adverse
Effect. Since the date hereof, there shall not have been any
event or circumstance that has resulted in a Galaxy Material Adverse Effect and
no event has occurred or circumstance exists that would be reasonably expected
to result in such a Galaxy Material Adverse Effect.
28
(d) Certificate of
Officers. Galaxy shall have delivered to the Company a
certificate dated the Closing Date, executed on its behalf by its respective
President, certifying the satisfaction of the conditions specified in paragraphs
(a), (b), and (c) of this Section
8.2.
(e) Supporting
Documents. The Company shall have received the
following:
(1) Copies of
resolutions of Galaxy’s board of directors, certified by its
Secretary, authorizing and approving the Exchange and the execution, delivery
and performance of this Agreement and all other documents and instruments to be
delivered by them pursuant hereto.
(2) A
certificate of incumbency executed by the Secretary of Galaxy certifying the
names, titles and signatures of the officers authorized to execute the documents
referred to in paragraph (1) above and further certifying that the certificates
of incorporation and by-laws of Galaxy appended thereto have not been amended or
modified.
(3) A
certificate, dated the Closing Date, executed by the Secretary of Galaxy,
certifying that, except for the filing of the certificate of exchange with the
Secretary of State of the State of Nevada: (i) all consents,
authorizations, orders and approvals of, and filings and registrations with, any
court, governmental body or instrumentality that are required to be obtained by
Galaxy for the execution and delivery of this Agreement and the consummation of
the Exchange shall have been duly made or obtained; and (ii) no action or
proceeding before any court, governmental body or agency has been threatened,
asserted or instituted against Galaxy to restrain or prohibit, or to obtain
substantial damages in respect of, this Agreement or the carrying out of the
transactions contemplated by this Agreement.
(4) Evidence
as of a recent date of the good standing and corporate existence of Galaxy
issued by the Secretary of State of their respective states of
incorporation.
(5) Such
additional supporting documentation and other information with respect to the
transactions contemplated hereby as the Company may reasonably
request.
ARTICLE
IX
INDEMNIFICATION AND RELATED
MATTERS
Section
9.1 Indemnification by
Galaxy. Galaxy shall indemnify and hold harmless the Company,
and shall reimburse the Company for, any loss, liability, claim, damage, expense
(including, but not limited to, costs of investigation and defense and
reasonable attorneys’ fees) or diminution of value (collectively, “Damages”) arising
from or in connection with (a) any inaccuracy, in any material respect, in any
of the representations and warranties of Galaxy in this Agreement or in any
certificate delivered by Galaxy to the Company pursuant to this Agreement, or
any actions, omissions or statements of fact inconsistent with any such
representation or warranty, (b) any failure by Galaxy to perform or comply in
any material respect with any covenant or agreement in this Agreement, (c) any
claim for brokerage or finder’s fees or commissions or similar payments based
upon any agreement or understanding alleged to have
29
been made
by any such party with Galaxy in connection with any of the transactions
contemplated by this Agreement, (d) Taxes attributable to any transaction or
event occurring on or prior to the Closing, (e) any claim relating to or arising
out of any Liabilities of Galaxy on or prior to Closing or with respect to
accounting fees arising thereafter, or (f) any litigation, action, claim,
proceeding or investigation by any third party relating to or arising out of the
business or operations of Galaxy, or the actions of Galaxy or any holder of
Galaxy capital stock prior to the Effective Time.
Section
9.2 Survival. All
representations, warranties, covenants and agreements of Galaxy contained in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive until twelve (12) months after the Effective Date. The
representations and warranties of the Company contained in this Agreement or in
any instrument delivered pursuant to this Agreement will terminate at, and have
no further force and effect after, the Effective Time.
Section
9.3 Time
Limitations. Galaxy shall not have any liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or agreement to be performed and complied with prior to the Effective
Time, unless on or before the twelve month anniversary of the Effective Time
(the “Claims
Deadline”), Galaxy is given notice of a claim with respect thereto, in
accordance with Section 9.5,
specifying the factual basis therefore in reasonable detail to the extent then
known by the Company.
Section
9.4 Limitation on
Liability. The obligations of Galaxy to the Company set forth
in Section 9.1
shall be subject to the following limitations:
(a) The
aggregate liability of Galaxy to the Company shall not exceed
$50,000.
(b) Other
than claims based on fraud or for specific performance, injunctive or other
equitable relief, the Company’s sole and exclusive remedy for any and all claims
for Damages pursuant to Section 9.1 hereof
shall be the indemnification provided under the terms and subject to the
conditions of this Article
IX.
Section
9.5 Notice of
Claims.
(a) If, at
any time on or prior to the Claims Deadline, the Company shall assert a claim
for indemnification pursuant to Section 9.1, the
Company shall submit to Galaxy a written claim stating: (i) that the
Company incurred or reasonably believes it may incur Damages and the amount or
reasonable estimate thereof of any such Damages; and (ii) in reasonable detail,
the facts alleged as the basis for such claim and the section or sections of
this Agreement alleged as the basis or bases for the claim.
(b) In the
event that any action, suit or proceeding is brought against the Company with
respect to which Galaxy may have liability under this Article
IX, Galaxy shall have the right, at its cost and expense, to defend
such action, suit or proceeding in the name and on behalf of the Company; provided, however, that the
Company shall have the right to retain its own counsel, with fees and expenses
paid by Galaxy, if representation of the Company by counsel retained by Galaxy
would be inappropriate because of actual or potential differing interests
between Galaxy and the Company. In connection with any action, suit
or proceeding
30
subject
to this Article
IX, Galaxy and the Company agree to render to each other such assistance
as may reasonably be required in order to ensure proper and adequate defense of
such action, suit or proceeding. Galaxy shall not, without the prior
written consent of the Company, which consent shall not be unreasonably withheld
or delayed, settle or compromise any claim or demand if such settlement or
compromise does not include an irrevocable and unconditional release of the
Company for any liability arising out of such claim or demand.
ARTICLE
X
TERMINATION PRIOR TO
CLOSING
Section
10.1 Termination of
Agreement. This Agreement may be terminated at any time prior
to the Closing:
(a) by the
mutual written consent of the Company and Galaxy;
(b) by the
Company, if Galaxy (i) fails to perform in any material respect any of its
agreements contained herein required to be performed by it on or prior to the
Effective Time, (ii) materially breaches any of its representations, warranties
or covenants contained herein, which failure or breach is not cured within
thirty (30) days after the Company has notified Galaxy of its intent to
terminate this Agreement pursuant to this paragraph (b);
(c) by
Galaxy, if the Company (i) fails to perform in any material respect any of its
agreements contained herein required to be performed by it on or prior to the
Closing Date, (ii) materially breaches any of its representations, warranties or
covenants contained herein, which failure or breach is not cured within thirty
(30) days after Galaxy has notified the Company of its intent to terminate this
Agreement pursuant to this paragraph (c);
(d) by either
the Company, on the one hand, or Galaxy, on the other hand, if there shall be
any order, writ, injunction or decree of any court or governmental or regulatory
agency binding on Galaxy or the Company, which prohibits or materially restrains
any of them from consummating the transactions contemplated hereby; provided that the
parties hereto shall have used their best efforts to have any such order, writ,
injunction or decree lifted and the same shall not have been lifted within
ninety (90) days after entry, by any such court or governmental or regulatory
agency;
Section
10.2 Termination of
Obligations. Termination of this Agreement pursuant to Section
10.1 hereof shall terminate all obligations of the parties hereunder, except for
the obligations under Article IX, Article X, and Sections 11.4, 11.7, 11.14, 11.15 and 11.16 hereof; provided, however, that
termination pursuant to paragraphs (b) or (c) of Section 10.1 shall
not relieve the defaulting or breaching party or parties from any liability to
the other parties hereto.
ARTICLE
XI
MISCELLANEOUS
Section
11.1 Amendments. Subject
to applicable law, this Agreement may be amended or modified by the parties
hereto by written agreement executed by each party to be bound thereby and
delivered by duly authorized officers of the parties hereto at any time prior to
the Effective Time; provided, however, that after
the approval of the Exchange by the requisite
31
stockholders,
no amendment or modification of this Agreement shall be made that by law
requires further approval from any stockholders without such further
approval.
Section
11.2 Notices. Any
notice, request, instruction, other document or communications to be given
hereunder by any party hereto to any other party hereto shall be in writing and
shall be deemed to have been duly given (a) when delivered personally, (b) upon
confirmation of delivery if by electronic mail, (c) upon receipt of a
transmission confirmation (with a confirming copy delivered personally or sent
by overnight courier) if sent by facsimile or like transmission, or (d) on the
next business day when sent by Federal Express, United Parcel Service, U.S.
Express Mail or other reputable overnight courier for guaranteed next day
delivery, as follows:
If
to Galaxy, to:
Galaxy
Gaming, Inc.
0000
X’Xxxxxx Xxxxx
Xxx
Xxxxx, XX 00000
|
|
If
to the Company, to:
|
|
Secured
Diversified Investment, Ltd.
0000
Xxx Xxxx, Xxxxx X
Xxxxxxx
Xxxxx, XX 00000
|
or to
such other persons or addresses as may be designated in writing by the party to
receive such notice. Nothing in this Section 11.2 shall be
deemed to constitute consent to the manner and address for service of process in
connection with any legal proceeding (including arbitration arising in
connection with this Agreement), which service shall be effected as required by
applicable law.
Section
11.3 Entire
Agreement. This Agreement and the exhibits attached hereto or
referred to herein constitute the entire agreement of the parties hereto, and
supersede all prior agreements and undertakings, both written and oral, among
the parties hereto, with respect to the subject matter hereof and
thereof.
Section
11.4 Expenses. Except
as otherwise expressly provided herein, whether or not the Exchange occurs, all
expenses and fees incurred by Galaxy on one hand, and the Company on the other,
shall be borne solely and entirely by the party that has incurred the same;
provided, that
if the Exchange occurs, Galaxy agrees to pay, and shall cause the Company to
pay, any unpaid fees and expenses of the Company (including fees and expenses of
its counsel and other advisors) in connection with the consummation of the
transactions contemplated by this Agreement.
Section
11.5 Severability. If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement will nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other
32
provision
is invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to amend or modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
Section
11.6 Successors and Assigns;
Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
assigns. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned or delegated by any of the parties
hereto without, in the case of Galaxy, the prior written approval of the Company
and, in the case of the Company, the prior written approval of
Galaxy.
Section
11.7 No Third Party
Beneficiaries. Except as set forth in Section 11.6, nothing
herein expressed or implied shall be construed to give any person other than the
parties hereto (and their successors and assigns as permitted herein) any legal
or equitable rights hereunder.
Section
11.8 Counterparts; Delivery by
Facsimile. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed will be deemed to be an original but all of which taken
together will constitute one and the same agreement. This Agreement
and each other agreement or instrument entered into in connection herewith or
therewith or contemplated hereby or thereby, and any amendments hereto or
thereto, to the extent signed and delivered by means of a facsimile machine or
by electronic mail, shall be treated in all manner and respects as an original
agreement or instrument and shall be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in
person. At the request of any party hereto or to any such agreement
or instrument, each other party hereto or thereto shall re-execute original
forms thereof and deliver them to all other parties. No party hereto
or to any such agreement or instrument shall raise the use of a facsimile
machine or electronic mail to deliver a signature or the fact that any signature
or agreement or instrument was transmitted or communicated through the use of a
facsimile machine or electronic mail as a defense to the formation or
enforceability of a contract and each such party forever waives any such
defense.
Section
11.9 Waiver. At
any time prior to the Effective Time, any party hereto may (a) extend the time
for the performance of any of the obligations or other acts of the other party
hereto; (b) waive any inaccuracies in the representations and breaches of the
warranties of the other party contained herein or in any document delivered
pursuant hereto; and (c) waive compliance by the other party with any of the
agreements or conditions contained herein. Any such extension or
waiver will be valid only if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
Section
11.10 No Constructive
Waivers. No failure or delay on the part of any party hereto
in the exercise of any right hereunder will impair such right or be construed to
be a waiver of, or acquiescence in, any breach of any representation, warranty,
agreement or covenant herein, nor will any single or partial exercise of any
such right preclude other or further exercise thereof or of any other
right. No waiver by any party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
33
Section
11.11 Further
Assurances. The parties hereto shall use their commercially
reasonable efforts to do and perform or cause to be done and performed all such
further acts and things and shall execute and deliver all such other agreements,
certificates, instruments or documents as any other party hereto may reasonably
request in order to carry out fully the intent and purposes of this Agreement
and the consummation of the transactions contemplated hereby.
Section
11.12 Recitals. The
recitals set forth above are incorporated herein and, by this reference, are
made part of this Agreement as if fully set forth herein.
Section
11.13 Headings. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement.
Section
11.14 Governing
Law. This Agreement and the agreements, instruments and
documents contemplated hereby shall be governed by and construed and enforced in
accordance with the laws of the State of Nevada without regard to its conflicts
of law principles.
Section
11.15 Dispute
Resolution. The parties hereto shall initially attempt to
resolve all claims, disputes or controversies arising under, out of or in
connection with this Agreement by conducting good faith negotiations amongst
themselves. If the parties hereto are unable to resolve the matter
following good faith negotiations, the matter shall thereafter be resolved by
binding arbitration and each party hereto hereby waives any right it may
otherwise have to the resolution of such matter by any means other than binding
arbitration pursuant to this Section
11.15. Whenever a party shall decide to institute arbitration
proceedings, it shall provide written notice to that effect to the other parties
hereto. The party giving such notice shall, however, refrain from
instituting the arbitration proceedings for a period of sixty (60) days
following such notice. During this period, the parties shall make
good faith efforts to amicably resolve the claim, dispute or controversy without
arbitration. Any arbitration hereunder shall be conducted in the
English language under the commercial arbitration rules of the American
Arbitration Association. Any such arbitration shall be conducted in
Las Vegas, Nevada by a panel of three arbitrators: one arbitrator
shall be appointed by each of Galaxy and Company; and the third shall be
appointed by the American Arbitration Association. The panel of
arbitrators shall have the authority to grant specific
performance. Judgment upon the award so rendered may be entered in
any court having jurisdiction or application may be made to such court for
judicial acceptance of any award and an order of enforcement, as the case may
be. In no event shall a demand for arbitration be made after the date
when institution of a legal or equitable proceeding based on the claim, dispute
or controversy in question would be barred under this Agreement or by the
applicable statute of limitations. The prevailing party in any
arbitration in accordance with this Section 11.15 shall
be entitled to recover from the other party, in addition to any other remedies
specified in the award, all reasonable costs, attorneys’ fees and other expenses
incurred by such prevailing party to arbitrate the claim, dispute or
controversy.
Section
11.16 Interpretation.
(a) When a
reference is made in this Agreement to a section or article, such reference
shall be to a section or article of this Agreement unless otherwise clearly
indicated to the contrary.
34
(b) Whenever
the words “include”, “includes” or “including” are used
in this Agreement, they shall be deemed to be followed by the words “without
limitation.”
(c) The words
“hereof”,
“hereby”,
“herein” and
“herewith” and
words of similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of this Agreement,
and article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified.
(d) The words
“knowledge,” or
“known to,” or
similar terms, when used in this Agreement to qualify any representation or
warranty, refer to the knowledge or awareness of certain specific facts or
circumstances related to such representation or warranty of the persons in the
Applicable Knowledge Group (as defined herein) which a prudent business person
would have obtained after reasonable investigation or due diligence on the part
of any such person. For the purposes hereof, the “Applicable Knowledge
Group” with respect to the Company shall be Xx. Xxxxxx
Xxxxx. For the purposes hereof, the “Applicable Knowledge
Group” with respect to Galaxy shall be Xx. Xxxxxx Xxxxxxx.
(e) The word
“subsidiary”
shall mean any entity of which at least a majority of the outstanding shares or
other equity interests having ordinary voting power for the election of
directors or comparable managers of such entity is owned, directly or indirectly
by another entity or person.
(f) For
purposes of this Agreement, “ordinary course of
business” means the ordinary course of business consistent with past
custom and practice (including with respect to quantity and
frequency).
(g) The
plural of any defined term shall have a meaning correlative to such defined
term, and words denoting any gender shall include all genders. Where
a word or phrase is defined herein, each of its other grammatical forms shall
have a corresponding meaning.
(h) A
reference to any legislation or to any provision of any legislation shall
include any modification or re-enactment thereof, any legislative provision
substituted therefor and all regulations and statutory instruments issued
thereunder or pursuant thereto, unless the context requires
otherwise.
(i) The
parties hereto have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
[The remainder of this page is
intentionally left blank]
35
IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first above written by their respective officers
thereunto duly authorized.
COMPANY:
|
|||
SECURED
DIVERSIFIED INVESTMENT, LTD.
|
|||
By:
|
/s/Xxxxxx
Xxxxx
|
||
Name:
|
Xxxxxx
Xxxxx
|
||
Title:
|
President
and CEO
|
||
GALAXY:
|
|||
GALAXY
GAMING, INC.
|
|||
By:
|
/s/Xxxxxx
Xxxxxxx
|
||
Name:
|
Xxxxxx
Xxxxxxx
|
||
Title:
|
President
and CEO
|
Exhibit
A
Articles
of Incorporation of the Company
See
attached.
Exhibit
B
By-Laws
of the Company
See
attached.
Exhibit
C
Officers
and Directors of the Company
— Pre-Effective
Time and Post-Effective Time—
Pre-Effective
Time:
Name
|
Office(s)
|
Xxxxxx
Xxxxx
|
President,
CEO, Secretary, Treasurer, CFO and
Director
|
Following Notice
Filings:
The
following persons shall be appointed as Officers and Directors of
Galaxy:
Name
|
Office(s)
|
Xxxxxx
Xxxxxxx
|
President,
CEO, and Director
|
Xxxxxxx
X’Xxxx
|
Chief
Operating Officer
|