MERGER AND REORGANIZATION AGREEMENT
MERGER AND REORGANIZATION AGREEMENT, dated as of the 3rd day
of March, 1998, by and among:
(i) Mortgage Plus Equity and Loan Corporation
(Mortgage Plus), a corporation organized and existing under the
laws of the State of New York and having its principal office at
0000 Xxxxxxx Xxxxxxxx, Xxxxxxx Xxx Xxxx 00000 (Mortgage Plus);
VERTEX INDUSTRIES, INC. ("Vertex"), a corporation organized and
existing under the laws of the State of New Jersey and having its
principal office at 00 Xxxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxx 00000,
which owns 75,417 shares of the issued and outstanding common
stock, $.01 par value per share (the Common Stock) of Computer
Transceiver Systems, Inc. (the Company), a corporation organized
and existing under the laws of the State of New York and having
its principal office at 00 Xxxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxx
00000; the Company and CTS-Subsidiary, Inc. (the Subsidiary), a
corporation which is a wholly-owned subsidiary of the Company,
organized and existing under the laws of the State of New York.
RECITALS
Mortgage Plus and the Company intend to effect a Plan of
Reorganization within the meaning of Sections [368(a)(1)(A) and
368(a)(2)(E)] of the Internal Revenue Code of 1986, as amended by
the merger of the Subsidiary with and into Mortgage Plus (the
Merger).
In consideration of the mutual promises and covenants
contained herein and for other good and valuable consideration,
the receipt and sufficiency of which is acknowledged, it is hereby
agreed as follows:
ARTICLE
ARTICLE 1
TRANSFER OF CTSI-SUBSIDIARY SHARES
1.1 Execution, Filing, Effective Time. On the date of
the Closing, and subject to the terms and conditions hereinafter
set forth, Mortgage Plus and Subsidiary agree to cause the Merger
to be consummated by executing, delivering and filing with the
office of the New York Secretary of State a Certificate of Merger
(the Certificate of Merger) substantially in the form attached
hereto as Exhibit A, and such other documents as may be required
by the provisions of New York Law and as are necessary to cause
the Merger to become effective. The time at which the Merger
becomes effective is herein referred to as the Effective Time.
1.2 Constituent and Surviving Corporations. Mortgage
Plus and the Subsidiary shall be the constituent corporations in
the Merger (collectively, the Constituent Corporations). At the
Effective Time, the Subsidiary shall be merged into Mortgage Plus
in accordance with New York Law and Mortgage Plus shall be the
surviving corporation in the Merger (in such capacity, Mortgage
Plus is sometimes hereinafter referred to as the Surviving
Corporation). At the Effective Time, the identity and separate
existence of Subsidiary shall cease. Upon the effectiveness of
the Merger, the Surviving Corporation shall possess all of the
rights, privileges, immunities, powers, franchises and authority,
whether of a public or private nature, and be subject to all
restrictions, disabilities and duties, of each of the Constituent
Corporations, and all the rights, privileges, immunities, powers,
franchises and authority of each of the Constituent Corporations,
and all assets and properties of every description, real, personal
and mixed, and every interest therein, wherever located, and all
debts and other obligations belonging or due to either of the
Constituent Corporations on whatever account, as well as stock
subscriptions and all other things in action belonging or due to
each of the Constituent Corporations, shall be vested in the
Surviving Corporation, and all property rights, privileges,
immunities, powers, franchises and authority, and all and every
other interest, shall be thereafter as effectually the property of
the Surviving Corporation as they were of the Constituent
Corporations, and the title to any real estate or interest therein
vested in either Constituent Corporation shall not revert or be in
any way impaired by reason of the Merger but all rights of
creditors and all liens upon any property of either of the
Constituent Corporations shall be preserved unimpaired, and the
Surviving Corporation shall be liable for the debts and other
obligations of each of the Constituent Corporations, and any
claims existing or action or proceeding pending, by or against
either the Constituent Corporations may be prosecuted or judgment
with right of appeal, as if the Merger had not taken place.
1.3 Articles of Incorporation and By-Laws. At the
Effective Time: (i) the Articles of Incorporation of the Surviving
Corporation shall be substantially in the form of the Articles of
Incorporation which are appended to the Articles of Merger as
Annex I thereto; and (ii) the Bylaws of the Surviving Corporation
shall be the Bylaws.
1.4 Board of Directors. Effective immediately after
the Effective Time, and without any further action on the part of
any party, each of the members of the Board of Directors of the
Company shall submit their resignation subject to the simultaneous
appointment of the current directors of Mortgage Plus as the
directors of the Company, and from such time such persons shall
remain the directors of the Company and the Surviving Corporation,
in each case to serve in accordance with the By-Laws of the
Company and the Surviving Corporation until his successor is duly
elected and qualified.
1.5 Officers. Effective immediately after the
Effective Time, and without any further action on the part of any
party, each of the officers of the Company shall submit their
resignation, subject to the simultaneous appointment of the
current officers of Mortgage Plus as officers of the Company, and
such persons shall remain the officers of the Company and the
Surviving Corporation, in each case in accordance with the By-Laws
of the Company and the Surviving Corporation until his successor
is duly appointed.
1.6 Conversion of the Company Common Stock.
(a) Conversion of Common Stock. At the Effective
Time, each share of Mortgage Plus Common Stock issued and
outstanding immediately prior to the Effective Time (treasury
shares of Mortgage Plus Common Stock then owned by Mortgage Plus
and by any Dissenting Stockholder, as hereinafter defined), shall,
by virtue of the Merger and without any action on the part of
Mortgage Plus, the Company or the Subsidiary or the holder
thereof, be cancelled and converted into one (1) fully paid and
nonassessable share of Company Common Stock (the Per Share
Company Stock Consideration). No fractional shares of Company
Common Stock will be issued, but in lieu thereof, any holder of
the Mortgage Plus Common Stock entitled to receive a fractional
share of Company Common Stock shall be paid cash equal to the
value of such fractional share. All shares of Mortgage Plus
Common Stock held by Mortgage Plus at the Effective Time as
treasury shares or held by any of the Company's Subsidiaries
(collectively, Treasury Shares) shall cease to exist and the
certificates for such shares shall, as promptly as practicable
thereafter, be cancelled and no shares of capital stock of the
Company shall be issued in exchange therefor.
(b) Delivery of New Certificates. Promptly after
the Effective Time, the Company shall mail to each holder of
record of a certificate or certificates representing shares of
Mortgage Plus Common Stock (a Certificate and collectively the
Certificates) (i) a letter of transmittal and (ii) instructions
for effecting the surrender of the Certificates in exchange for
certificates representing shares of Company Common Stock and cash
in lieu of fractional shares. Upon surrender of a Certificate for
cancellation to the Company together with such letter of
transmittal, duly executed and completed in accordance with the
instructions thereto, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) a certificate
representing that number of whole shares of Company Common Stock
representing the amount of Per Share Company Stock Consideration,
and cash in lieu of fractional shares, if any, and unpaid
dividends and distributions, if any, which such holder has the
right to receive in respect of the Certificate surrendered
pursuant to the provisions of this Section, after giving effect to
any required withholding tax, and the Certificate so surrendered
shall forthwith be cancelled. If any certificate for shares of
Company Common Stock is to be issued in a name other than that in
which a certificate for shares of Mortgage Plus Common Stock so
surrendered is then registered, such surrender shall be
accompanied by payment of any applicable transfer taxes and
documents required for a valid transfer. From and after the
Effective Time, until so surrendered, each Certificate theretofore
representing shares of issued and outstanding Mortgage Plus Common
Stock shall be deemed for all corporate purposes (except as
provided herein with respect to fractional shares and with respect
to shares held by Dissenting Stockholders, and except as set forth
below), to evidence the number of whole shares of Company Common
Stock into which such shares of Mortgage Plus Common Stock shall
have been converted. Upon surrender of a Certificate representing
Mortgage Plus Common Stock, the holder of record thereof shall
receive certificates representing the whole shares of Company
Common Stock, and cash in lieu of fractional shares to which he
shall be entitled, and all dividends and other distributions which
shall have been paid or made to holders of record of Mortgage Plus
Common Stock after the Effective Time with respect to such shares
of Company Common Stock, without interest thereon.
(c) No Liability. None of Mortgage Plus, the
Company, the Subsidiary or any other person shall be liable to any
former holder of shares of Mortgage Plus Common Stock for any
amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
1.7 Conversion of Subsidiary Common Stock. At the
Effective Time, each outstanding share of Common Stock, par value
$.001 per share of Subsidiary (the Subsidiary Common Stock)
issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become one fully paid
and nonassessable share of Common Stock of the Surviving
Corporation. At the Effective Time, the Company, as the sole
holder of the Subsidiary Common Stock, shall surrender any and all
certificates representing such Subsidiary Common Stock to the
Surviving Corporation and shall be entitled to receive in exchange
therefor a certificate representing the number of shares of Common
Stock of the Surviving Corporation into which the Subsidiary
Common Stock theretofore represented by the certificates so
surrendered shall have been converted as provided in this Section.
From and after the Effective Time, until so surrendered, each
certificate theretofore representing shares of issues and
outstanding Subsidiary Common Stock shall be deemed for all
corporate purposes to evidence the number of shares of Common
Stock of the Surviving Corporation into which such shares of
Subsidiary Common Stock shall have been converted.
1.8 Dissenting Stockholders. All issued and
outstanding shares of Mortgage Plus Common Stock held by holders
of record who shall have neither voted in favor of the Merger nor
consented thereto in writing and shall have delivered (and then
been entitled to deliver) to the Company a written demand for
appraisal of their shares of Mortgage Plus Common Stock within the
time and in the manner provided under the New York Law
(collectively, the Dissenting Stockholders and, individually, a
Dissenting Stockholder) shall not be converted into Company
Common Stock, but shall be entitled to receive such consideration
as shall be provided in New York Law, except that each share of
Mortgage Plus Common Stock issued and outstanding immediately
prior to the Effective Time and held by a Dissenting Stockholder
who shall thereafter withdraw his demand for appraisal of his
shares of Mortgage Plus Common Stock with the Surviving
Corporation's consent or lose his right to such payment as
provided in New York Law shall be deemed converted, as of the
Effective Time, into (x) one (1) fully paid and nonassessable
share of Company Common Stock, in which event such stockholder
shall no longer be a Dissenting Stockholder. A list of all
holders of Mortgage Plus Common Stock who have filed written
demands for payment of their shares of Mortgage Plus Common Stock
by the date hereof in accordance with New York Law is attached
hereto.
1.9 Dissenting Stockholder Payment. Each Dissenting
Stockholder who becomes entitled, pursuant to New York Law, to
payment for the shares of Mortgage Plus Common Stock held by such
Dissenting Stockholder shall receive the payment therefor from the
Surviving Corporation, but only up to the amount of such payment
as shall have been agreed upon or finally determined pursuant to
New York Law, and such shares shall thereupon be cancelled.
1.10 All of the Company's Shares issued pursuant to this
Agreement shall be of the same class as pre-merger Company Shares.
ARTICLE 2
2.1 Assumption of Obligations and Liabilities by
Vertex. Vertex acknowledges and agrees that, except as set forth
on Exhibit __ hereto, (a) all "Liabilities" of the Company in
existence immediately prior to the Closing, shall be assumed,
satisfied and discharged by Vertex immediately prior to the
Closing, and (b) any Liabilities of the Company which accrue or
arise after the Closing relating to any act or omission occurring
prior to the Closing shall be promptly assumed, satisfied and
discharged as promptly thereafter as possible by Vertex, and (ii)
that neither the Company nor any Mortgage Plus Shareholder shall
have any liability or obligation with respect to the payment of
any such Liability by virtue of Vertex's obligation herein, or any
obligation to Vertex as a result of such payment. "Liabilities"
shall mean payments, claims, penalties, expenses, obligations (for
the payment of money or the performance of services), indebtedness
or damages, whether known or unknown, contingent or determinable,
accrued or unaccrued, asserted or unasserted or based in law or
equity in existence immediately prior to Closing.
2.2 Appointment as Attorney-In-Fact. Mortgage Plus
acknowledges and agrees that the Company has appointed Vertex, and
each officer of Vertex acting singly, as the true and lawful agent
and attorney-in-fact of the Company for purposes of paying,
settling, compromising, defending and discharging any and all of
the Liabilities, and that such appointment shall survive the
Closing until the final and irrevocable settlement and discharge
in full of the Liabilities, provided that such appointment shall
not confer any authority (a) to agree to any restriction or
limitation upon the conduct of the Company after the Closing, (b)
which imposes any lien, encumbrance, restriction or limitation on
any asset or right owned or used by the Company and provided,
further, such authority shall not be used in a situation where a
party may assert any claim against the Company which limits or
restricts the activities of the Company in any respect.
ARTICLE 3
CLOSING
3.1 Closing. The closing of the transactions
hereunder (the "Closing") will take place on March 4, 1998, or
such other date and place as the parties may agree at the offices
of Ruskin, Moscou, Xxxxx & Faltischek, P.C., 000 Xxx Xxxxxxx Xxxx,
Xxxxxxx, Xxx Xxxx 00000, upon the execution of this Agreement and
shall be effective upon the filing of the Certificate of Merger
with the Secretary of State of New York. The day on which the
Closing actually takes place is herein sometimes referred to as
the "Closing Date."
ARTICLE 4
OBLIGATIONS AT CLOSING
4.1 Obligations of Vertex at Closing. At Closing,
Vertex shall deliver, or cause the Company to deliver to Mortgage
Plus, the following:
(a) a true and complete copy of the Company's and
the Subsidiary's Articles of Incorporation (and any amendments
thereto), certified as of a recent date by the Secretary of State
of New York; a true and complete copy of the Company's and the
Subsidiary's By-Laws in effect on the Closing Date; director and
[shareholder] resolutions/consents of Vertex, the Company and the
Subsidiary authorizing and approving the transactions contemplated
hereby;
(b) the Company's and the Subsidiary's books,
records, correspondence, accounting books, ledgers, financial
information and documentation, all tax returns (and correspondence
with appropriate taxing authorities); governmental and regulatory
filings, applications, licenses, permits and official and other
records and authorizations; [bank accounts (and all cash and
securities in such accounts as of__, 1998)], investment
accounts, securities, trust funds, escrow funds (with appropriate
documentation terminating Vertex's right to access or direct
payment to or from such accounts); post office account/boxes; and
powers of attorney in effect;
(c) a certificate(s) that the representations and
warranties of Vertex and the Company contained in this Agreement
and in any statement (including financial statements),
certificates, schedules or other documents delivered pursuant
hereto or in connection with the transactions contemplated hereby
shall be true and accurate as of the date when made and shall be
deemed to be made again (and be true and accurate) at and as of
the time of the Closing;
(d) the resignations of all of the Company's and
Subsidiary's officers and directors and the appointment of the
Mortgage Plus directors and officers, as contemplated in Article
__ hereof;
(e) any and all such other documents, agreements,
certificates and instruments required to be executed and/or
delivered by Vertex, the Company and the Subsidiary to Mortgage
Plus or to the Mortgage Plus Shareholders, including all
assignment of claims and warranties.
4.2 Further Assurances. At any time and from time to
time after the Closing, at the request of any person identified
herein as a Mortgage Plus Shareholder or the Company and without
further consideration, Vertex will execute and deliver such other
instruments of sale, transfer, assignment and delivery and take
such action as any person identified herein as a Mortgage Plus
Shareholder may reasonably deem necessary or desirable in order to
more effectively transfer, assign and deliver to the it (or them)
and to confirm each Mortgage Plus Shareholder's title to the
Shares to be transferred and/or issued as contemplated herein.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF VERTEX
5.1 Representations and Warranties of Vertex. Vertex
represents and warrants to Mortgage Plus that the following
matters are true on the date hereof and will be true and correct
on the Closing Date, as if set forth independently on such date:
(a) Organization, subsistence and Qualification
of the Company and the Subsidiary. The Company and the Subsidiary
are each corporations duly organized and validly subsisting under
the laws of the State of New York and each has all requisite
corporate power and authority to own, lease and operate properties
and assets and to carry on business as it is presently
contemplated by the transactions set forth in this Agreement.
(b) Capitalization of the Company and the
Subsidiary. Subject to Article 8, the Company's and the
Subsidiary's capitalization is as set forth on Exhibit A. Vertex
is the record, legal and beneficial owner of 75,417 shares of
issued and outstanding shares of capital stock of the Company and
the other shareholders listed on Exhibit B are the record owners
of 37,047 issued and outstanding shares of capital stock of the
Company. The Company is the record, legal and beneficial owner of
all of the issued and outstanding capital stock of the Subsidiary.
Neither Vertex, the Company nor the Subsidiary has any agreement,
commitment, obligations, absolute or contingent, to any other
person to sell, transfer, assign, encumber, restrict or pledge any
capital stock of the Company or the Subsidiary, or to sell,
transfer, encumber, restrict or pledge any assets, income,
revenues, rights, claims or authorizations of the Company or the
Subsidiary, or to sell, assign, transfer or restrict any capital
stock of the Company or the Subsidiary or to effect any merger,
consolidation or other reorganization of the Company or the
Subsidiary or to enter into any agreement with respect thereto,
except as contemplated by this Agreement.
(c) Execution, Delivery and Performance of
Agreement; Authority. The execution and delivery of this
Agreement by Vertex, the Company and the Subsidiary and of each of
the other Transaction Documents to which Vertex, the Company and
the Subsidiary is a party and the consummation of the transactions
contemplated hereby and thereby by Vertex, the Company and the
Subsidiary have been duly authorized by all requisite corporate
and shareholder action of Vertex, the Company and the Subsidiary,
as the case may be. This Agreement constitutes the legal, valid
and binding obligations of Vertex, the Company, or the Subsidiary,
enforceable against it in accordance with their respective terms
(except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
which from time to time may affect creditors' rights generally and
by legal and equitable limitations as a remedy against Vertex).
Upon the Effective Time of the Merger, Mortgage Plus shareholders
will acquire good and marketable title to the Company's securities
free and clear of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or equity of any
kind whatsoever, subject to applicable Federal and State
Securities Laws restrictions.
(d) No Conflict. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby will not (i) violate or conflict with any
provision of the Certificate of Incorporation or By-Laws (or other
governing instrument) of Vertex, the Company or the Subsidiary;
(ii) will not violate, or be in conflict with, or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) under, any agreement, arrangement or
other obligations of Vertex , the Company or the Subsidiary or any
statute, law, judgment, decree, order, regulation or rule of any
court or governmental body applicable to Vertex, the Company or
the Subsidiary; (iii) result in the creation of any lien, claim,
charge, encumbrance or exception upon any of the property, assets
or rights of the Company, or the Subsidiary; or (iv) give rise to
any right of forfeiture, termination, cancellation or acceleration
with respect to any license or contract to which the Company or
the Subsidiary is a party, or any statute, law, judgment, decree,
order, regulation or rule of any court of governmental body
applicable to the Company or the Subsidiary; it being specifically
agreed that at the Closing neither the Company nor the Subsidiary
will be a party to, or have an obligation with regard to, any
bond, mortgage note or other evidence of indebtedness for borrowed
money (or any guaranty thereof).
(e) Consents and Approvals. No consent, approval
or authorization of, or declaration, filing or registration with,
any governmental body or any other person is required on behalf of
Vertex, the Company or the Subsidiary in connection with the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby other than
for such consents, approvals, authorizations, declarations,
filings or registrations that have been or shall be disclosed
and/or delivered to Mortgage Plus prior to the Closing as set
forth on Exhibit_ hereof.
(f) Litigation. There is no action, suit,
inquiry, proceeding or investigation by or before any court,
arbitrator or governmental body (i) pending or threatened against
or relating to the Company or the Subsidiary with respect to any
matter, or (ii) with respect to Vertex that involves the Company
or the Subsidiary. No action, suit, proceeding or arbitration is
pending, threatened or contemplated in which the Company or the
Subsidiary is a plaintiff or in which the Company or the
Subsidiary is a witness or interested party. There is no action,
suit, proceeding or arbitration in the case of Vertex, the Company
or the Subsidiary which may exist or be pending in connection with
or relating to the transactions contemplated by this Agreement.
There is no injunction, order or decree of a court of competent
jurisdiction against Vertex, the Company or the Subsidiary that
would prohibit or delay the consummation of the transactions
contemplated by this Agreement.
(g) No Brokers or Finders. Neither Vertex, the
Company or the Subsidiary (and no affiliate thereof) nor any of
its or their shareholders, officers, directors, employees or
agents, has employed any broker or finder or incurred any
Liability as to which the Company or the Subsidiary or any
Mortgage Plus shareholder may be liable for any brokerage or
finder's fees or commissions or similar payments in connection
with the transactions contemplated by this Agreement and the other
Transaction Documents.
(h) SEC Reports. The Company has heretofore
furnished Mortgage Plus with true and complete copies of its (i)
Annual Reports on Form 10-K for the years ended July 31, 1997 as
filed with the SEC, (ii) Quarterly Reports on Form 10-Q for each
fiscal quarter ended after October 31, 1997; (iii) Proxy
Statements relating to all meetings of its shareholders (whether
annual or special) during 1997, and (iv) all other reports filed
by the Company with the SEC during 1997. As of their respective
dates, such reports and statements complied as to form in all
material respects with the requirements applicable thereto and did
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements, in light of the circumstances under which
they were made, not misleading. The audited financial statements
and unaudited interim financial statements of the Company included
or incorporated by reference in such reports have been prepared in
accordance with GAAP applied on a consistent basis (except as may
be indicated therein or in the notes thereto) and fairly present
the assets, liabilities and financial position of the Company as
of and at the dates thereof and the results of operations and
changes in financial position for the periods then ended, subject
in the case of the unaudited interim financial statements, to
normal, recurring year-end adjustments and any other adjustments
described therein.
(i) Financial Information of the Entities; No
Material Change.
(i) Vertex has delivered to Mortgage Plus the
Companys "Financial Information" listed on Exhibit __ hereof.
The Financial Information fairly presents, in all material
respects, the assets, liabilities, financial condition and results
of operations of the Company, as at the respective dates thereof
and for the periods referred to therein. Except as shown on
Exhibit __ and other than the Liabilities, the Company and the
Subsidiary each has no obligation or liability of any nature.
(ii) Except as set fort on Exhibit __, since the
date of the Financial Information, neither the Company or the
Subsidiary has (A) incurred (and will not incur) any Liability;
(B) sold or transferred any of the assets used in connection with
its business, cancelled any debts or claims or waived any rights
[except for amounts, which in the aggregate are less than
$__], or except for this Agreement, entered into any
transaction; or (C) experienced any other material adverse change
in its assets, properties, business or prospects.
(j) Taxes. All taxes (which are deemed
"Liabilities") including, without limitation, income, property,
sales, use, franchise, value added, employees' income withholding
and social security taxes, imposed by the United States or by any
state, municipality, subdivision or instrumentality of the United
States or of any foreign country, or by any other taxing
authority, which are due or payable by the Company or the
Subsidiary as of the Effective Time, and all interest and
penalties thereon, whether disputed or not, have been paid in
full, all tax returns required to be filed in connection therewith
have been accurately prepared and duly filed or applicable
extensions therefor have been obtained and all deposits required
by law to be made by the Company with respect to employees'
withholding taxes have been duly made. The Company (and the
Subsidiary) is not delinquent in the payment of any tax,
assessment or governmental charge or deposit and has no tax
deficiency or claim outstanding, proposed or assessed against it,
and there is no basis for any such deficiency or claim. Mortgage
Plus shall be responsible for the cost and filing of all tax
returns for fiscal 1998..
(k) No Subsidiaries or Investments. Other than
the Subsidiary, the Company does not own any capital shares or
other equity or ownership or proprietary interest in any
corporation, limited liability company, partnership, association,
trust, joint venture or other entity.
(l) Listing. ["Bulletin Board" symbol ____.]
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
OF MORTGAGE PLUS SHAREHOLDERS
6.1 On November 12, 1997, Mortgage Plus prepared and
filed with the Securities and Exchange Commission (the
"Commission"), a registration statement (the "Registration
Statement") on Form SB-2 (No. 333-____) under the Securities Act
of 1933, as amended (the Act"), which Registration Statement was
prepared by the Company in substantial conformity with the
requirements of the Act. The amended Registration Statement to be
filed to reflect the transactions contemplated by this Agreement
at the time of filing thereof will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein and necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
6.2 Mortgage Plus has been duly organized and is a
validly existing corporation in good standing under the laws of
the State of New York. Mortgage Plus does not own or control,
directly or indirectly, any corporation, partnership, trust, joint
venture or other business entity other than the subsidiaries
listed in Exhibit 21 of the Registration Statement. Mortgage Plus
is duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or leasing
of any properties or the character of its operations require such
qualification or licensing (except those jurisdictions in which
the failure to not qualify will not, in the aggregate, have a
material adverse effect on Mortgage Plus). Mortgage Plus has all
requisite power and authority (corporate and other), and has
obtained any and all necessary authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all
governmental or regulatory officials and bodies (including,
without limitations, those having jurisdiction over environmental
or similar matters), to own or lease its properties and conduct
its business as described in the Registration Statement; Mortgage
Plus has been doing business in compliance with all such
authorizations, approvals, orders, licenses, certificates,
franchises and permits and all federal, state, local and foreign
laws, rules and regulations; and Mortgage Plus has not received
any notice of proceedings relating to the revocation or
modification of any such authorization, approval, order, license,
certificate, franchise or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially and adversely affect the properties, or
results of operations Mortgage Plus taken as a whole.
6.3 Mortgage Plus has a duly authorized, issued and
outstanding capitalization as set forth in Exhibit ___. Mortgage
Plus is not a party to or bound by any instrument, agreement or
other arrangement providing for it to issue any capital stock,
rights, warrants, options or other securities, except as described
in the Registration Statement. Except as set forth in the
Registration Statement and on Exhibit __ hereto, the Company has
no outstanding options to purchase, or any preemptive rights or
other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options,
rights, convertible securities or obligations.
6.4 The 1997 audited financial statements of Mortgage
Plus, together with the related notes and schedules thereto,
fairly present the financial position, changes in stockholders
equity and the results of operations of Mortgage Plus at the
respective dates and for the respective periods to which they
apply and such financial statements have been prepared in
conformity with generally accepted accounting principles
consistently applied through the periods involved. There has been
no material adverse change or development involving a material
prospective change in the condition, financial or otherwise, or in
the business, affairs, operations, properties, or results of
operations of Mortgage Plus and its subsidiaries taken as a whole
whether or not arising in the ordinary course of business since
the date of said financial statements.
6.5 Mortgage Plus (a) has paid all federal, state,
local, franchise and foreign taxes for which it is liable
including, but not limited to, withholding taxes and amounts
payable under Chapters 21 through 24 of the Internal Revenue Code
of 1986, as amended (the "Code"), and has furnished all
information returns it is required to furnish pursuant to the
Code, (b) has established adequate reserves for such taxes which
are not due and payable, and (c) does not have any tax deficiency
or claims outstanding, proposed or assessed against it.
6.6 No transfer tax, stamp duty or other similar tax
is payable by or on behalf of the Company in connection with the
consummation by Mortgage Plus of any of their obligations under
this Agreement.
6.7 There is no action, suit, proceeding, inquiry,
arbitration, mediation, investigation, litigation or governmental
proceeding (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or
foreign, pending or threatened against (or circumstances that may
give rise to the same), or involving the properties or businesses
of, Mortgage Plus which (a) questions the validity of the capital
stock of Mortgage Plus, this Agreement, or of any action taken or
to be taken by the Mortgage Plus Shareholders to authorize this
Agreement or the transactions contemplated hereby, (b) is required
to be disclosed in the Registration Statement which will not be so
disclosed, or (c) might materially and adversely affect the
condition, financial or otherwise, or the business, affairs,
position, stockholders' equity, operation, properties, or results
of operations of Mortgage Plus.
6.8 Mortgage Plus has the power and authority to enter
into this Agreement and to consummate the transactions provided
for in this Agreement; and this Agreement has been duly and
property authorized, executed and delivered by the Mortgage Plus
shareholders. This Agreement constitutes a legal, valid and
binding obligation of Mortgage Plus enforceable against Mortgage
Plus in accordance with its respective terms (except as the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors'
rights and the application of equitable principles in any action,
legal or equitable, and except as rights to indemnity or
contribution may be limited by applicable law), The consummation
by Mortgage Plus of the transactions contemplated herein does not
conflict with or will not conflict with or result or will result
in, any breach or violation of any of the terms or provisions of,
or constitutes or will constitute a default under, or result in
the creation or imposition of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or
assets (tangible or intangible) of Mortgage Plus pursuant to the
terms of (a) the articles of incorporation or by-laws of Mortgage
Plus, as amended and restated, (b) any license, contract,
indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any
other agreement or instrument to which Mortgage Plus is a party or
by which it is or may be bound or to which its properties or
assets (tangible or intangible) is or may be subject, or any
indebtedness, or (c) any statute, judgment, decree, order, rule or
regulation applicable to Mortgage Plus of any arbitrator, court,
regulatory body or administrative agency or other governmental
agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or
foreign, having jurisdiction over Mortgage Plus or any of their
activities or profits.
6.9 No consent, approval, authorization or order of,
and no filing with, any court, regulatory body, government agency
or other body, domestic or foreign, is required for Mortgage Plus
to consummate the transactions contemplated by this Agreement,
including, without limitation, any waiver of any preemptive, first
refusal or other rights that any entity or person may have for the
issue and/or sale of any Mortgage Plus Shares.
6.10 All executed agreements, contracts, or other documents
or copies of executed agreements, contracts or other documents
filed as exhibits to the Registration Statement to which Mortgage
Plus is a party or by which it may be bound or to which its
assets, properties or businesses may be subject have been duly and
validly authorized, executed and delivered by Mortgage Plus and
constitute the legal, valid and binding agreements of Mortgage
Plus enforceable against Mortgage Plus in accordance with their
respective terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting
enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as rights
to indemnity or contribution may be limited by applicable law).
6.11 Mortgage Plus has sufficient trademarks, trade names,
patent rights, copyrights, licenses, approvals and governmental
authorizations to conduct its business as now conducted; the
expiration of any trademarks, trade names, patent rights,
copyrights, licenses, approvals or governmental authorizations
would not have a material adverse effect on the condition
(financial or otherwise), business, results of operations or
prospects of Mortgage Plus; Mortgage Plus has no knowledge of any
infringement by it or its subsidiaries of trademark, trade name
rights, patent rights, copyrights, licenses, trade secret or other
similar rights of others; and there is no claim being made against
Mortgage Plus regarding trademark, trade name, patent, copyright,
license, trade secret or other infringement which could have a
material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of Mortgage Plus.
6.12 No default exists in the due performance and observance
of any term, covenant or condition of any license, contract,
indenture, mortgage, installment sale agreement, lease, deed of
trust, voting trust agreement, stockholders agreement, note, loan
or credit agreement, or any other material agreement or instrument
evidencing an obligation for borrowed money, or any other material
agreement or instrument to which Mortgage Plus is a party or by
which Mortgage Plus may be bound or to which the property or
assets (tangible or intangible ) of Mortgage Plus is subject or
affected.
6.13 To Mortgage Plus's knowledge, there are no pending
investigations involving Mortgage Plus by the U.S. Department of
Labor, or any other governmental agency responsible for the
enforcement of such federal, state, local or foreign laws and
regulations. There is no unfair labor practice charge or
complaint against Mortgage Plus pending before the National Labor
Relations Board or any strike, picketing, boycott, dispute,
slowdown or stoppage pending or to its knowledge threatened
against or involving Mortgage Plus. No representation question
exists respecting the employees of Mortgage Plus. No collective
bargaining agreement or modification thereof is currently being
negotiated by Mortgage Plus. No grievance or arbitration
proceeding is pending under any expired or existing collective
bargaining agreements of Mortgage Plus. No labor dispute with the
employees of Mortgage Plus exists or to its knowledge is imminent.
6.14 Except as described in the Registration Statement,
Mortgage Plus does not maintain, sponsor or contribute to any
program or arrangement that is an "employee pension benefit plan,"
an "employee welfare benefit plan," or a "multiemployer plan" as
such terms are defined in Sections 3(2), 3(1) and 3(37),
respectively, of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") ("ERISA Plans"). Mortgage Plus does
not maintain or contribute to a defined benefit plan, as defined
in Section 3(35) of ERISA. No ERISA Plan (or any trust created
thereunder) has engaged in a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code, which
could subject Mortgage Plus to any tax penalty or prohibited
transactions and which has not adequately been corrected. Each
ERISA Plan is in compliance with all material reporting,
disclosure and other requirements of the Code and ERISA as they
relate to any such ERISA Plan. Determination letters have been
received form the Internal Revenue Service with respect to each
ERISA Plan which is intended to comply with Code Section 401(a),
stating that such ERISA Plan and the attendant trust are qualified
thereunder. Mortgage Plus has never completely or partially
withdrawn forma "multiemployer plan."
6.15 Mortgage Plus has good and marketable title to, or
valid and enforceable leasehold estates in, all items of real and
personal property stated in the Registration Statement to be owned
or leased by it, free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, or other restrictions
or equities of any kind whatsoever other than those referred to in
the Registration Statement and liens for taxes not yet due and
payable.
6.16 Except as set forth in the Registration Statement, no
officer, director or stockholder of Mortgage Plus, or any
"affiliate" or "associate" (as those terms are defined in Rule 405
promulgated under the Regulations) of any of the foregoing persons
or entities has or has had, either directly or indirectly, (a) an
interest in any person or entity which (1) furnishes or sells
services or products which are furnished or sold or are proposed
to be furnished or sold by Mortgage Plus, or (2) purchases from or
sells or furnishes to Mortgage Plus any goods or services, or (b)
a beneficiary interest in any contract or agreement to which
Mortgage Plus is a party or by which it may be bound or affected.
Except as set forth in the Registration Statement, there are no
existing agreements, arrangements, understandings or transactions,
or proposed agreements, arrangements, understandings or
transactions, between or among Mortgage Plus, and any officer,
director, principal shareholder (as such term is under in the
Registration Statement) of Mortgage Plus, or any affiliate or
associate of any of the foregoing persons or entities.
6.17 Mortgage Plus is not, and does not intend to conduct
its business in a manner in which it would become an "investment
company" within the meaning of the Investment Company Act of 1940,
as amended.
6.18 Each of Mortgage Plus and its subsidiaries maintains
insurance by insurers of recognized financial responsibility of
the types and in the amounts as are prudent, customary and
adequate for the business in which it is engaged, including, but
not limited to, insurance covering real and personal property
owned or leased by Mortgage Plus and its subsidiaries against
theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full
force and effect. Mortgage Plus has no reason to believe that it
will not be able to renew existing insurance coverage with respect
to Mortgage Plus as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to
continue its business, in either cast, at a cost that would not
have a material adverse effect on the financial condition,
operations, business, assets or properties of Mortgage Plus.
Mortgage Plus has not failed to file any claims, has no material
disputes with its insurance company regarding any claims submitted
under its insurance policies, and has complied with all material
provisions contained in its insurance policies.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
7.1 Survival of Representations and Warranties. All
representations, warranties, covenants and agreements contained in
this Agreement, or in any written statement, including, without
limitation, any certificate, exhibit, schedule or other document
delivered pursuant hereto or thereto and made a part hereof or
thereof, shall survive the execution and delivery of this
Agreement and the Closing hereunder for a period of two (2) years
from the Closing Date; provided, that all representations,
warranties, covenants and agreements with respect to (a) any
liability for any foreign, federal, state, county or local taxes
and any interest and penalties thereon, and (b) any allegation of
fraud, shall survive the execution and delivery of this Agreement
and the Closing hereunder for the full period of any applicable
statute of limitations.
7.2 Indemnification.
Vertex agrees to indemnify and hold harmless from, and
shall reimburse each Mortgage Plus Shareholder and the Company
(and any officer, employee, shareholder, board member, advisor or
attorney thereof) for any and all damages (which includes any
Liability) arising from, in connection with or relating to any
inaccuracy in any of the representations and warranties of Vertex
or failure by Vertex to perform or comply with any of their
respective covenants and agreements contained in this Agreement,
the other Transaction Documents or in any certificate, exhibit,
schedule or other document delivered pursuant hereto or thereto
and made a part hereof or thereof.
7.3 Indemnification by the Company. The Company
agrees to indemnify and hold harmless from, and shall reimburse
Vertex (and any officer, employee, shareholder, board member or
attorney thereof) for, any and all damages arising from, in
connection with or relating to any inaccuracy in any of the
representations and warranties of Mortgage Plus (and any officer,
employee, shareholder, board member, advisor or attorney thereof)
or failure by Mortgage Plus to perform or comply with any of their
respective covenants and agreements contained in this Agreement or
in any certificate, exhibit, schedule or other document delivered
pursuant hereto or thereto and made a part hereof or thereof.
7.4 Direct Claims. If any indemnitee suffers a loss
or incurs an expense, loss or damage with respect to which it
intends to seek indemnification hereunder, it shall give written
notice thereof to the indemnitor describing the amount and nature
of such loss or expense. If within thirty (30) days from such
notice the indemnitor has not delivered a written objection to
such claim to such indemnitee, the indemnitor shall be deemed to
have agreed to the amount of such claim and its liability
therefor. In the event that the indemnitor objects to such claim
within such period, such indemnitee's rights to indemnification
from the indemnitor for such claim under this Article 7 shall be
determined by (i) subsequent written agreement of the indemnitor
and such indemnitee; or (ii) a final decree or judgment of a court
of competent jurisdiction.
ARTICLE 8
COVENANTS OF VERTEX
8.1 Covenants of the Company (Pre-Merger).
Immediately prior to the Effective Time, the Company shall declare
and distribute a 3 for 1 stock split consisting of one (1)
registered shares and two (2) unregistered shares of the Company's
Common Stock to pre-merger Company shareholders. The unregistered
Stock shall bear such legends (and related stop transfer
instructions) as Company's pre-merger counsel shall approve.
8.2 Vertex agrees not to, directly or indirectly,
offer, offer to sell, sell, grant any option for the sale of,
transfer, assign, pledge, hypothecate or otherwise encumber or
dispose of any shares of the Company (including any shares of
Additional Stock) (either pursuant to Rule 144 of the Regulations
or otherwise) or dispose of any interest therein for a period from
the date hereof until six (6) months following the date hereof,
after which the pre-merger registered shares of the Company's
Common Stock held by Vertex shall be free of all restrictions on
their resale.
ARTICLE 9
COVENANTS OF THE COMPANY (POST-MERGER)
9.1 The Company will use its best efforts, in a
commercially reasonable manner, to promptly file an amended
Registration Statement with the Commission to effect the sale, for
the Company's account, on a self-underwritten best efforts
underwriting, of between 1,000,000 and 1,200,000 shares of the
Company's Common Stock at an anticipated purchase price between
$4.50 and $5.00 per share, but not less than $4.50 per share, and
shall use its best efforts to cause such Registration Statement to
be declared effective by the Commission.
9.2 For a period of at least twelve (12) months
following the Effective Time, the Company will not authorize or
approve any reverse stock split and prior to the release of Rule
144 restrictions for all shares issued to the Companys pre-merger
shareholders.
ARTICLE 10
NOTICES
10.1 Notices. Any and all notices and other communications
required or permitted to be given under any of the provisions of
this Agreement shall be in writing and shall be deemed to have
been duly given when delivered by hand or mailed by first class
certified or registered mail, return receipt requested, or when
sent by a nationally recognized overnight courier, addressed to
the Parties at the following addresses (or at such other address
as a Party may designate by notice to the other Parties given as
aforesaid):
If to the Mortgage Plus Shareholders:
0000 Xxxxxxx Xxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
With copies to:
Ruskin, Moscou, Xxxxx & Faltischek, P.C.
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
If to Vertex:
Xxxxxx X. Xxxx, President
Vertex Industries, Inc.
00 Xxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
With copies to:
Law Office of Xxxxxxx X. Xxxxx, Esq., P.C.
000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
If to the Company:
Computer Transceiver Systems, Inc.
00 Xxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxx Xxxxx
ARTICLE 11
MISCELLANEOUS
11.1 Publicity. Public announcements relating to the
transactions contemplated by this Agreement and the other
Transaction Documents shall be jointly planned, coordinated and
agreed to by the parties prior to Closing.
11.2 Expenses. The Parties to this Agreement shall each
bear their own expenses incurred in connection with the
preparation, execution and performance of this Agreement and the
other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby including, without
limitation, all fees and expenses of agents, representatives,
counsel and accountants. The post-merger Company shall bear the
costs and expenses in connection with the issuance of all new
stock certificates contemplated by this Agreement.
11.3 Further Assurances. Each of the Parties hereto agrees
to execute, acknowledge, deliver, file, record and publish such
further certificates, instruments, agreements and other documents,
and to take all such further actions, as may be required in
connection with the consummation of the transactions contemplated
by this Agreement and the other Transaction Documents.
11.4 Entire Agreement. This Agreement and the other
Transaction Documents and all written statements including without
limitation, all certificates, exhibits, schedules and other
documents delivered pursuant hereto or thereto and made a part
hereof or thereof, constitute the entire agreement among the
Parties with respect to the subject matter hereof and thereof,
supersede all prior written agreements (whether written or oral)
among the Parties.
11.5 Amendments; Waivers. This Agreement may not be
modified, supplemented or amended except by a written agreement
executed by all of the Parties hereto. No waiver of any breach or
default under this Agreement shall be considered valid unless in
writing and signed by the Party or Parties giving such waiver, and
no such waiver shall be deemed to be a waiver of any subsequent
breach or default of the same or similar nature.
11.6 Gender and Number. Unless the context otherwise
requires, when used herein, the singular includes the plural and
vice versa, and the masculine includes the feminine and neuter and
vice versa.
11.7 Assignment, Binding Effect. No Party to this Agreement
may assign its rights and obligations hereunder, without the prior
written consent of the other Parties hereto. This Agreement shall
be binding upon and inure to the benefit of the Parties hereto and
their respective successors.
11.8 Headings. The article and section headings contained
in this Agreement are for the purpose of convenience only and are
not intended to define or limit the contents of said articles and
sections.
11.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York,
without regard to the conflicts of law provisions thereof. Each
of the Parties to this Agreement hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts of the
State of New York.
11.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of
which, when taken together, shall constitute one and the same
instrument.
11.11 Escrow. All parties to this Agreement agree that all
documents related to this transaction shall be held in escrow by
the parties's attorneys and shall have no force or effect prior to
the consent of Xxxxxx X. Xxxxxxxxx, Esq. and Xxxxxxx X. Xxxxx,
Esq. to the release and effectiveness of said documents.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
MORTGAGE PLUS EQUITY AND LOAN
CORPORATION
By: S/Xxxxxx X. Xxxxxxx,
XXXXXX X. XXXXXXX, President and
Chief Executive Officer
VERTEX INDUSTRIES, INC.
By: S/Xxxxxx X. Xxxx
Xxxxxx X. Xxxx, President
COMPUTER TRANSCEIVER SYSTEMS, INC.
By: S/Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, President
CTS-Subsidiary
By: S/Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, President
