EXHIBIT 2.1
____________________________________________________
AGREEMENT AND PLAN OF MERGER
dated February 24, 2004,
among
SYNERGY 2000, INC.,
AND
MER RESORTS, INC.,
AND
MYRIAD GOLF RESORT, INC.
____________________________________________________
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AGREEMENT AND PLAN OF MERGER
This Merger Agreement (this "Agreement"), entered into on February 24,
2004, by and among Synergy 2000, Inc., a Delaware corporation ("Parent"); MER
Resorts, Inc., a Delaware corporation and a subsidiary of Parent ("Sub"); and
Myriad Golf Resort, Inc., an Alberta, Canada corporation ("Company"). Parent,
Sub and Company are referred to, collectively, as the "Parties."
RECITALS
A. Parent, Sub and the Company intend to effect a Merger of the Company
into Sub in accordance with this Agreement, the Delaware General Corporation Law
and the Business Corporations Act of the Province of Alberta, Canada. Upon
consummation of the Merger, the Company will cease to exist and Sub will
continue as a wholly-owned subsidiary of Parent.
B. This Agreement has been approved by the respective boards of
directors of Parent, Sub and the Company.
C. The parties intend that the Merger will be treated as a tax free
reorganization as described in Section 368 of the Internal Revenue Code of 1986,
as amended (the "Code").
AGREEMENT
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. DEFINITIONS
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"CERTIFICATE OF MERGER" has the meaning set forth in Section 2(c)
below.
"CL" means the Business Corporations Act of the Province of Alberta,
Canada.
"CLOSING" has the meaning set forth in Section 2(b) below.
"CLOSING DATE" has the meaning set forth in Section 2(b) below.
"COMPANY" has the meaning set forth in the preface above.
"COMPANY SHARE" means any share of the common stock, [no] par value per
share, of Company.
"COMPANY STOCKHOLDER" means any Person who or which holds any Company
Shares.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of Company and its Subsidiaries that is not already
generally available to the public.
"CONVERSION RATIO" has the meaning set forth in Section 2(d)(iv) below.
"DEFINITIVE COMPANY PROXY MATERIALS" means the definitive proxy
materials or equivalent thereof relating to the Special Company Meeting or the
execution and delivery of written consents in lieu thereof.
"DEFINITIVE PARENT PROXY MATERIALS" means the Information Statement
pursuant to Section 14(f) of the Securities Exchange Act and Rule 14f-1
thereunder relating to the Special Parent Meeting or the execution and delivery
of written consents in lieu thereof.
"DELAWARE GENERAL CORPORATION LAW" means the General Corporation Law of
the State of Delaware, as amended.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 3 below.
"DISSENTING SHARE" means any Company Share held of record by any
stockholder who or which has exercised his, her, or its appraisal rights, if
any, under the CL.
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"EFFECTIVE TIME" has the meaning set forth in Section 2(d)(i) below.
"EXCHANGE AGENT" has the meaning set forth in Section 2(e) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, consistently applied.
"IRS" means the Internal Revenue Service.
"JOINT DISCLOSURE DOCUMENT" means the disclosure document combining
the Definitive Parent Proxy Materials and the Definitive Company Proxy
Materials.
"KNOWLEDGE" means actual knowledge after reasonable investigation.
"LIEN" means any mortgage, pledge, lien, encumbrance, charge, or other
security interest OTHER THAN (a) liens for Taxes not yet due and payable or for
taxes that the taxpayer is contesting in good faith through appropriate
proceedings, (b) purchase money liens and liens securing rental payments under
capital lease arrangements, and (c) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of money.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" means any effect
or change that would be materially adverse to the business, assets, condition
(financial or otherwise), operating results, operations, or business prospects
of Company and its Subsidiaries, taken as a whole, or on the ability of Company
to consummate timely the transactions contemplated hereby.
"MERGER" has the meaning set forth in Section 2(a) below.
"MOST RECENT FISCAL QUARTER END" has the meaning set forth in Section
3(f) below.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PARENT" has the meaning set forth in the preface above.
"PARENT SHARE" means any share of the common stock, $.001 par value per
share, of Company.
"PARTY" has the meaning set forth in the preface above.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, any other business entity, or a
governmental entity (or any department, agency, or political subdivision
thereof).
"PUBLIC REPORT" has the meaning set forth in Section 3(e) below.
"REQUISITE COMPANY STOCKHOLDER APPROVAL" means the affirmative vote of
the holders of a majority of the Company Shares in favor of this Agreement and
the Merger.
"REQUISITE PARENT STOCKHOLDER APPROVAL" means the affirmative vote of
the holders of a majority of the Parent Shares in favor of this Agreement and
the Merger.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SPECIAL COMPANY MEETING" has the meaning set forth in Section 5(c)(ii)
below.
"SPECIAL PARENT MEETING" has the meaning set forth in Section 5(c)(ii)
below.
"SUB" has the meaning set forth in the preface above.
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, partnership, association, or business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers, or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof or (ii) if a limited
liability company, partnership, association, or other business entity (other
than a corporation), a majority of partnership or other similar ownership
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interest thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more Subsidiaries of that Person or a combination thereof
and for this purpose, a Person or Persons owns a majority ownership interest in
such a business entity (other than a corporation) if such Person or Persons
shall be allocated a majority of such business entity's gains or losses or shall
be or control any managing director or general partner of such business entity
(other than a corporation). The term "SUBSIDIARY" shall include all Subsidiaries
of such Subsidiary.
"SURVIVING CORPORATION" has the meaning set forth in Section 2(a)
below.
2. REORGANIZATION TRANSACTION
(a) THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Delaware General Corporation Law
and the CL, the Company shall be merged with and into Sub at the Effective Time
(as defined below). At the Effective Time, the separate existence of the Company
shall cease, and Sub shall continue as the surviving corporation (the "Surviving
Corporation") under the name MER Resorts, Inc.
(b) THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Company at Suite
1000, 00000-000 Xxxxxx, 00xx Xxxxx, Xxxxxxxx, Xxxxxxx, Xxxxxx, X0X 0X0, on the
second business day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at the Closing itself) or such other date as the parties may mutually
determine (the "Closing Date"); PROVIDED, HOWEVER, that the Closing Date shall
be no earlier than March 4, 2004.
(c) ACTIONS AT THE CLOSING. At the Closing, (i) Company will deliver to
Parent and Sub the various certificates, instruments, and documents referred to
in Section 6(a) below, (ii) Parent and Sub will deliver to Company the various
certificates, instruments, and documents referred to in Section 6(b) below,
(iii) Parent, Sub and Company will file with the Secretary of State of the State
of Delaware a Certificate of Merger in the form attached hereto as Exhibit A
(the "CERTIFICATE OF MERGER"), and (iv) Company will deliver to the Exchange
Agent in the manner provided below in this Section 2 the certificate(s)
evidencing the Parent Shares to be issued in the Merger.
(d) EFFECT OF MERGER.
(i) GENERAL. The Merger shall become effective at the time
(the "EFFECTIVE TIME") Sub and Company file the Certificate of Merger
with the Secretary of State of the State of Delaware. The Merger shall
have the effect set forth in the Delaware General Corporation Law. The
Surviving Corporation may, at any time after the Effective Time, take
any action (including executing and delivering any document) in the
name and on behalf of either Sub or Company in order to carry out and
effectuate the transactions contemplated by this Agreement.
(ii) CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of Sub in effect at and as of the Effective Time will
remain the Certificate of Incorporation of Surviving Corporation
without any modification or amendment in the Merger.
(iii) BY-LAWS. The By-laws of Sub in effect at and as of the
Effective Time will remain the By-laws of Surviving Corporation without
any modification or amendment in the Merger.
(iv) CONVERSION OF COMPANY SHARES. At and as of the Effective
Time, (A) each Company Share (other than any Dissenting Share) shall be
converted into the right to receive two (2) Parent Shares (the ratio of
two (2) Parent Shares to one (1) Company Share is referred to herein as
the "CONVERSION RATIO"), constituting nineteen million two hundred
sixty-eight thousand seven hundred forty-eight (19,268,748) Parent
Shares assuming the conversion of all issued and outstanding shares of
capital stock of the Company (the "Merger Consideration"), and (B) each
Dissenting Share shall be converted into the right to receive payment
from Parent with respect thereto in accordance with the provisions of
the Delaware General Corporation Law; PROVIDED, HOWEVER, that the
Conversion Ratio shall be subject to equitable adjustment in the event
of any stock split, stock dividend, reverse stock split, or other
change in the number of Company Shares outstanding. No Company Share
shall be deemed to be outstanding or to have any rights other than
those set forth above in this Section 2(d)(iv) after the Effective
Time.
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(v) Each outstanding option to acquire Company Shares shall be
converted into options to acquire Parent Shares upon the same
Conversion Ratio and terms and conditions imposed on holders of Company
Shares pursuant to the transactions contemplated hereby.
(vi) Parent Shares. Each Parent Share issued and outstanding
at and as of the Effective Time will remain issued and outstanding.
(e) CONVERSION PROCEDURES.
(i) Immediately after the Effective Time, (A) Parent and Sub
will furnish to Securities Transfer Corporation (the "EXCHANGE AGENT")
a stock certificate (issued in the name of the Exchange Agent or its
nominee) representing that number of Parent Shares equal to the product
of (i) the Conversion Ratio TIMES (ii) the number of outstanding
Company Shares (other than any Dissenting Shares) and (B) Parent will
cause the Exchange Agent to mail a letter of transmittal (with
instructions for its use) to each record holder of outstanding Company
Shares for the holder to use in surrendering the certificates which
represented his, her, or its Company Shares in exchange for a
certificate representing the number of Parent Shares to which he, she,
or it is entitled.
(ii) Parent and Sub will not pay any dividend or make any
distribution on Parent and Sub Shares (with a record date at or after
the Effective Time) to any record holder of outstanding Company Shares
until the holder surrenders for exchange his, her, or its certificates
which represented Company Shares. Parent and Sub instead will pay the
dividend or make the distribution to the Exchange Agent in trust for
the benefit of the holder pending surrender and exchange. Parent and
Sub may cause the Exchange Agent to invest any cash the Exchange Agent
receives from Parent as a dividend or distribution in such interest
bearing accounts or instruments as Parent shall deem appropriate;
PROVIDED, HOWEVER, that the terms and conditions of the investments
shall be such as to permit the Exchange Agent to make prompt payments
of cash to the holders of outstanding Company Shares as necessary.
Parent may cause the Exchange Agent to pay over to Parent any net
earnings with respect to the investments, and Parent will replace
promptly any cash which the Exchange Agent loses through investments.
In no event, however, will any holder of outstanding Company Shares be
entitled to any interest or earnings on the dividend or distribution
pending receipt.
(iii) Parent may cause the Exchange Agent to return any
Company Shares and dividends and distributions thereon remaining
unclaimed 180 days after the Effective Time, and thereafter each
remaining record holder of outstanding Company Shares shall be entitled
to look to Parent (subject to abandoned property, escheat, and other
similar laws) as a general creditor thereof with respect to the Parent
Shares and dividends and distributions thereon to which he, she, or it
is entitled upon surrender of his or its certificates.
(iv) Fractional shares shall not be issued, but cash shall be
paid by the Parent for any such fraction in an amount proportionate to
the fair value of a whole share as determined by the Board of Directors
of the Company.
(v) Parent shall pay all charges and expenses of the Exchange
Agent.
3. REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent that the statements contained
in this Section 3 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3), except as set forth in the disclosure schedule
attached as Exhibit B hereto (the "Company Disclosure Schedule"). The Company
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Section 3.
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Company is a
corporation duly incorporated, duly organized, validly existing and in good
standing under the laws of the CL. The Company owns limited liability company
interests in Myriad World Resorts of Tunica, LLC, a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Mississippi. Company and each of its Subsidiaries has all requisite
corporate power and authority to own and operate its properties and assets, to
execute and deliver this Agreement and to carry on its business as presently
conducted and as presently proposed to be conducted. Company and each of its
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Subsidiaries is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in all jurisdictions in which the nature of
its activities and of its properties (both owned and leased) makes such
qualification necessary and in which failure to so qualify would have a Material
Adverse Effect on the Company and/or such Subsidiary.
(b) CAPITALIZATION.
(i) The authorized capital stock of the Company, immediately
prior to the Closing, is an unlimited number of shares of common stock,
no par value, of which nine million six hundred thirty four thousand
three hundred seventy-four (9,634,374) (the "Company Shares") are
issued and outstanding. All of the issued and outstanding Company
Shares have been duly authorized and are validly issued, fully paid and
nonassessable, are free of any Liens, and were issued in compliance
with all applicable laws concerning the offer, sale and issuance of
securities. Except for options presently issued and outstanding to
acquire 452,218 Company Shares, there are no authorized or outstanding
subscriptions, warrants, options, contracts, rights (pre-emptive or
otherwise), puts, calls, exchangeable or convertible securities,
commitments or demands of any character relating to any authorized and
issued or unissued shares of the capital stock of the Company or other
instruments convertible into or exchangeable for such stock, or which
obligate the Company to seek authorization to issue additional shares
of any class of stock or to issue, deliver, sell, repurchase or redeem,
or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of capital stock of the Company or obligating the Company to
grant, extend, accelerate the vesting of, change the price of, or
otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement, other than created by virtue of this Agreement
or the transactions contemplated hereby. The Company Shares are not
subject to any pre-emptive rights or rights of first refusal created by
statute, the Articles of Incorporation or Bylaws of Company or any
agreement to which the Company is a party or by which it is bound.
There are no contracts, commitments or agreements relating to the
voting, purchase or sale of Company Shares and, to the Knowledge of the
Company, between or among any of the Company's stockholders.
(ii) The Company owns all of the issued and outstanding
securities of each of its Subsidiaries. The Company owns a one percent
(1%) limited liability company interest in Myriad World Resorts of
Tunica, LLC.
(iii) The Merger does not constitute and will not constitute
an event under any capital stock or convertible security or any
anti-dilution or similar provision of any agreement to which the
Company is a party or by which it is bound or affected, which shall
either increase the number of shares or units of capital stock issuable
upon conversion of any securities or upon exercise of any warrant or
right to subscribe to or purchase any stock or similar security, or
decrease the consideration per share or unit of capital stock to be
received by the Company upon such conversion or exercise.
(c) AUTHORIZATION; BINDING OBLIGATIONS. The Company has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby; PROVIDED, HOWEVER, that Company cannot
consummate the Merger unless and until it receives the Requisite Company
Stockholder Approval. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company. This Agreement has
been duly executed and delivered by the Company and constitutes the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(d) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Company or any of its Subsidiaries is
subject or any provision of the charter or bylaws of Company or any of its
Subsidiaries or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
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Company or any of its Subsidiaries is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Lien upon
any of its assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Lien would not have a Material Adverse Effect. Other than in connection with
the provisions of the CL, neither Company nor any of its Subsidiaries needs to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(e) FILINGS WITH REGULATORY AUTHORITIES. Company has made all filings
in the Province of Alberta it has been required to make, if any, under the
securities laws in the Province of Alberta, Canada (collectively the "PUBLIC
Reports"). Each of the Public Reports has complied with the securities laws of
the Province of Alberta, Canada in all material respects. None of the Public
Reports, 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 made therein, in light of the circumstances under which they were
made, not misleading. Company has delivered to Parent a correct and complete
copy of each Public Report (together with all exhibits and schedules thereto and
as amended to date).
(f) FINANCIAL STATEMENTS. The Company and its Subsidiaries delivered to
Parent its consolidated unaudited Statement of Income and Balance Sheets for the
two fiscal years ended December 31, 2002 and 2001 (collectively, the "Unaudited
Financial Statements") and its consolidated unaudited Statement of Income and
Balance Sheets as of and for the nine-month period ended September 30, 2003
(collectively, the "Interim Financial Statements" and together with the
Unaudited Financial Statements, the "Company Financial Statements"). The Company
and its Subsidiaries have also delivered to Parent a schedule of receivables and
payables as of December 31, 2003 (the "Receivables and Payables Schedule"). The
Company Financial Statements and the Receivables and Payables Schedule are in
accordance with the books and records of the Company, are complete and correct
in all material respects, have been derived from the books and records of the
Company, and present fairly the financial condition and position of the Company
for the periods covered and at September 30, 2003 (the "Company Statement Date")
with respect to the Company Financial Statements, and at December 31, 2003 with
respect to the Receivables and Payables Schedule, and other dates therein
specified and the results of its operations for the periods therein specified;
provided that the Company Financial Statements and the Receivables and Payables
Schedule have not been audited or compiled by an independent accountant and are
not prepared in accordance with generally accepted accounting principles
("GAAP") (including the accrual of expenses or liabilities) and provided further
that the unaudited interim financial statements are subject to normal recurring
year-end adjustments and the Company Financial Statements do not contain all
footnotes required under GAAP. To the knowledge of the Company, no account
receivable reflected on the Receivables and Payables Schedule is uncollectible
or subject to counterclaim or offset, except reserved against thereon. All
accounts payable reflected on the Receivables and Payables Schedule are
currently within their respective terms and are neither in default nor otherwise
past due by more than ninety (90) days.
(g) NO UNDISCLOSED LIABILITIES. The Company has no obligations or
liabilities that are not disclosed or reflected in the Company Financial
Statements, except current liabilities incurred, and obligations entered into,
in the Ordinary Course of Business subsequent to the Company Statement Date.
(h) ABSENCE OF CHANGES. Since the Company Statement Date, the Company
has conducted its business in the Ordinary Course consistent with past practice
and there has not been:
(i) Any change in the assets, liabilities, financial condition
or operations of the Company from that reflected in the Company
Financial Statements, other than changes in the Ordinary Course of
Business, none of which individually or in the aggregate has had or is
reasonably expected to have a Materially Adverse Effect;
(ii) Any resignation or termination of any key officers of the
Company, and the Company, to the best of its Knowledge, does not know
of the impending resignation or termination of employment of any such
officer;
(iii) Any change in the contingent obligations of the Company
by way of guaranty, endorsement, indemnity, warranty or otherwise;
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(iv) Any cancellation, compromise or waiver by the Company of
a valuable right or of a material debt owed to it;
(v) Any direct or indirect loans made by the Company to any
stockholder, employee, officer or director of the Company;
(vi) Any change in any compensation arrangement or agreement
with any employee, officer, director or stockholder, except as
contemplated herein;
(vii) Any declaration or payment of any dividend or other
distribution of the assets of the Company or any purchase or redemption
of any of its outstanding equity interests;
(viii) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts;
(ix) Any sale, transfer or lease of the assets of the Company;
(x) Any physical damage, destruction or loss (whether or a
Materially Adverse Effect;
(xi) Any issuance or sale of any shares of the capital stock
or other securities of the Company or grant of any options with respect
thereto, or any modification of any of the capital stock of the
Company;
(xii) Any mortgage, pledge or lien incurred with respect to
any of the assets (tangible or intangible) of the Company;
(xiii) Any discharge, satisfaction or payment of any
obligation or liability other than current liabilities reflected in the
Company Financial Statements and current liabilities incurred since the
Company Statement Date, in each case in the Ordinary Course of
Business;
(xiv) Any transaction entered into by the Company other than
in the Ordinary Course of Business;
(xv) Any other event or condition of any character that,
either individually or in the aggregate, has had or is reasonably
likely to have a Materially Adverse Effect ; or
(xvi) Any agreement by the Company to do any of the things
described in the preceding clauses (i) through (xv) (other than an
agreement with Parent and its representatives regarding the
transactions contemplated by this Agreement.)
(i) TITLE TO PROPERTIES AND ASSETS; LIENS. Section 3(i) of the Company
Disclosure Schedule identifies each parcel of real property owned, leased and/
or optioned by the Company and its Subsidiaries (the "Property"). The Company
has good and valid fee simple and/or leasehold title to the Property and good
and valid title to the personal property, tangible and intangible, reflected in
the Interim Financial Statements (except properties, interests in properties and
assets sold or otherwise disposed of since the Company Statement Date in the
Ordinary Course of Business), or with respect to leased or licensed properties
and assets, valid leasehold or licensed interests in, free and clear of all
mortgages, liens, pledges, charges or encumbrances of any kind or character,
except (A) the lien of current taxes not yet due and payable, (B) such
imperfections of title, liens and easements as do not and will not materially
detract from or interfere with the use of the properties subject thereto or
affected thereby, or otherwise materially impair business operations involving
such properties, (C) those liens of the lessor under any leasehold and (D) liens
securing debt which is reflected on the Interim Financial Statements. Such
assets constitute all of the assets and properties, tangible and intangible,
reasonably necessary to conduct Company's business substantially as presently
conducted. The plants, property and equipment of Company that are used in the
operations of its businesses are in good operating condition and repair, subject
to normal wear and tear.
(j) INTELLECTUAL PROPERTY. The Company (and its Subsidiaries) owns, or
is licensed or otherwise possesses legally enforceable rights to use all
patents, trademarks, trade names, domain names, service marks, copyrights, and
any applications therefor, schematics, technology, know-how, trade secrets,
inventions, ideas, algorithms, processes, computer software programs or
applications (in source code and/or object code form), and tangible or
intangible proprietary information or material ("Intellectual Property") that
are used or proposed to be used in the business of the Company as currently
conducted or as proposed to be conducted by the Company ("Company Intellectual
Property"). Except as set forth on Section 3(j) of the Company Disclosure
Schedule, the Company has not (A) licensed, or agreed under any condition to
license or deliver, any of Company Intellectual Property in source code form to
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any party or for resale to any third-party other than a license to customers for
their own use to modify their systems, or (B) entered into any exclusive
agreements relating to its Intellectual Property with any party (except with
regard to any graphical user interface).
(i) Section 3(h)(i) of the Company Disclosure Schedule lists
(A) all patents and patent applications and all registered trademarks
(and trademarks for which an application has been filed), trade names,
domain names, and service marks, registered copyrights, included in the
Company Intellectual Property, including the jurisdictions in which
each such Intellectual Property right has been issued or registered or
in which any application for such issuance and registration has been
filed, (B) all licenses, sublicenses and other agreements as to which
the Company is a party and pursuant to which any person is authorized
to use any Intellectual Property and (C) all licenses, sublicenses and
other agreements as to which Company is a party and pursuant to which
Company is authorized to use any third party patents, trademarks or
copyrights, including software ("Third Party Intellectual Property
Rights") which are incorporated in, are, or form a part of any Company
product.
(ii) To the Company's Knowledge, there is no unauthorized use,
disclosure, infringement or misappropriation of any Company
Intellectual Property, or any Intellectual Property right of any third
party to the extent licensed by or through the Company, by any third
party, including any employee or former employee of the Company.
(k) LITIGATION. There is no action, suit, arbitration, audit or other
proceeding or investigation pending, or to the Company's knowledge, threatened
against the Company or any of its properties or any of its officers or directors
(in their capacity as such) before any agency, court or tribunal, foreign or
domestic. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, other proceeding or investigation by
the Company currently pending or which the Company intends to initiate.
(l) TAX RETURNS AND PAYMENTS.
(i) For purposes of this Agreement, "Tax" or "Taxes" shall
mean all taxes imposed by any governmental authority, including, but
not limited to, income, capital gains, license, gross receipts, net
worth, capital stock, profits, stamp, occupation, transfer, value
added, excise, franchise, sales, use, property (whether real, personal
or mixed), employment, unemployment, disability, withholding, social
security and workers' compensation taxes and estimated income and
franchise tax payments, and interest, penalties, fines costs and
assessments.
(ii) The Company has filed or caused to be filed on a timely
basis all federal, state, local, foreign and other tax returns, reports
and declarations (collectively, "Tax Returns") required to be filed by
the Company and has paid all Taxes due and payable with respect to the
periods covered by such Tax Returns (whether or not reflected thereon).
All Tax Returns filed by the Company are true, complete and correct in
all material respects. No deficiency in Taxes for any period has been
asserted by any taxing authority that remains unpaid at the date
hereof. No written inquiries or notices have been received by the
Company from a taxing authority with respect to possible claims for
Taxes which have not been resolved prior to the date hereof. There are
no liens for Taxes on any of the assets of the Company or any of the
shares of stock of the Company. No Tax Return of the Company has ever
been audited. There is no liability for any Tax to be imposed upon the
Company's properties or assets as of the date of this Agreement that is
not adequately provided for. The Company has withheld and, except for
amounts not yet due, paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee. The
Company has properly classified its service providers as independent
contractors for tax purposes.
(m) EMPLOYMENT MATTERS.
(i) To the Knowledge of the Company, the Company is in
compliance in all material respects with all currently applicable laws
and regulations respecting employment, discrimination in employment,
terms and conditions of employment, wages, hours and occupational
safety and health and employment practices, alien employment and
hiring, and is not engaged in any unfair labor practice.
(ii) The Company has no collective bargaining agreement with
any of its employees. There is no labor union organizing activity
pending or, to the Company's knowledge, threatened with respect to the
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Company. No employee has any agreement or contract, written or verbal,
regarding such employee's continued employment by the Company. As of
the Closing, the Company will not be a party to or bound by any
currently effective employment contract, deferred compensation
arrangement, bonus plan, incentive plan, profit sharing plan,
retirement agreement or other material employee compensation plan or
agreement. To the Knowledge of the Company, no employee of the Company,
nor any consultant with whom the Company has contracted, is in material
violation of any term of any employment contract, proprietary
information agreement or any other agreement relating to the right of
any such individual to be employed by, or to contract with, the Company
because of the nature of the business to be conducted by the Company;
and the continued employment by the Company of its present employees,
and the performance of the Company's contracts with its independent
contractors, will not result in any such violation. The Company has not
received any notice alleging that any such violation has occurred.
(n) REGISTRATION RIGHTS. The Company is currently not under any
obligation, and has not granted any rights, to register any of the Company's
presently outstanding securities or any of its securities that may hereafter be
issued.
(o) COMPLIANCE WITH LAWS; GOVERNMENTAL CONSENTS; PERMITS. The Company
is not in violation of any applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties, which alone or together with any other violations would have a
Material Adverse Effect. No governmental orders, permissions, consents,
approvals or authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of this Agreement and the Merger, except for (A) the filing of the
Certificates of Merger, together with the required officers' certificates; (B)
such governmental consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable state securities
laws and the securities laws of any foreign country; and (C) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would not have a Material Adverse Effect on the Company and
would not prevent, or materially alter or delay any of the transactions
contemplated by this Agreement. The Company has all material franchises,
permits, licenses and any similar authority necessary for the conduct of its
business as now being conducted by it.
(p) INSURANCE. A complete and correct list of all of the insurance
policies held by the Company is listed on Section 3(p) of the Company Disclosure
Schedule. There is no material claim pending under any of such policies or bonds
as to which coverage has been questioned, denied or disputed by the underwriters
of such policies or bonds. All premiums due and payable under all such policies
and bonds have been paid and the Company is otherwise in compliance with the
terms of such policies and bonds. The Company has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
(q) ENVIRONMENTAL MATTERS.
(i) No hazardous material, hazardous substance or toxic
substance as defined in applicable environmental laws, rules and
regulations ("Hazardous Materials") (A) to the Company's Knowledge, has
been released, stored, generated, used, treated, deposited or disposed
of on or under or is located on or under any real property currently or
previously owned or leased by the Company, (B) is presently maintained,
used, generated, or permitted to remain in place by the Company in
violation of any applicable law, (C) to the Company's knowledge, is
required by applicable law to be removed, treated or mitigated by the
Company, given the nature of its present condition, location, nature,
material or maintenance, or (D) to the Company's knowledge, is of a
type, location, material, nature or condition which requires special
notification to third parties by the Company under applicable law.
(ii) The Company has maintained its properties and assets and
conducted its business in all material respects in accordance with all
federal, state and local statutes, laws, rules and regulations
pertaining to conservation and protection of the environment and the
release, treatment, discharge, use, handling, storage, production and
disposal of Hazardous Materials.
(iii) No notice, citation, summons or order has been received
by the Company and no investigation or review is pending or, to the
knowledge of the Company, threatened by any governmental or other
entity, with respect to (A) any alleged violation by the Company of any
environmental statute, ordinance, rule, regulation or order of any
governmental entity, or (B) any alleged failure by the Company to have
any environmental permit, certificate, license, approval, registration
or authorization required in connection with its business, or (C) any
13
use, possession, generation, treatment, storage, recycling,
transportation, release or disposal by or on behalf of the Company of
any Hazardous Material.
(r) BROKERS' AND FINDERS' FEES. The Company has not incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
(s) CERTAIN AGREEMENTS AFFECTED BY THE MERGER. Neither the execution
and delivery of this Agreement nor the consummation of the transaction
contemplated hereby will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to any director or employee of the Company, (ii)
materially increase any benefits otherwise payable by the Company to its
employees, agents, consultants and directors, or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
(t) MATERIAL CONTRACTS. Except for the contracts and agreements
described in Section 3(t) of the Company Disclosure Schedule (collectively, the
"Material Contracts") the Company is not a party to or bound by any Material
Contract, including without limitation:
(i) any continuing contract for the purchase of materials,
supplies, equipment or services involving in the case of any such
contact more than $1,000 over the life of the contract;
(ii) any trust indenture, mortgage, promissory note, loan
agreement or other contract for the borrowing of money, any currency
exchange, commodities or other hedging arrangement or any leasing
transaction of the type required to be capitalized in accordance with
GAAP;
(iii) any contract of capital expenditures in excess of $1,000
in the aggregate;
(iv) any contract with any person with whom the Company does
not deal at arm's length; or
(v) any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any similar commitment with respect
to, the obligations, liabilities (whether accrued, absolute, contingent
or otherwise) or indebtedness of any other Person.
The Company has performed, in all material respects, the obligations required to
be performed by it and is entitled to all benefits under, and, to the knowledge
of the Company, is not alleged to be default in respect of any Material
Contract. Each of the Material Contracts is in full force and effect, unamended
(except as disclosed in Section 3(t) to the Company Disclosure Schedule) and
there exists no default or event of default or event, occurrence, condition or
act, with respect to the Company or, to the knowledge of the Company, with
respect to the other contracting party, which, with the giving of notice, the
lapse of the time or the happening of any other event or conditions, would
default or event of default under any Material Contract. True, correct and
complete copies of all Material Contracts have been delivered to the Parent.
(u) REPRESENTATIONS FROM COMPANY SHAREHOLDERS. The Company represents
and warrants that the Company shareholders have been advised by the Company of
the following:
(i) The issuance of the Parent Shares has not been registered
under the Securities Act of 1933, as amended. The Parent Shares have
been acquired for the issuee's own account and not with a view to
distribute them to the public. The shares may not be pledged or
hypothecated and may not be sold or transferred unless they are
registered under the Securities Act of 1933, as amended, or unless, in
the opinion of counsel, which opinion and counsel are satisfactory to
Parent, such registration is not required.
(v) REPRESENTATIONS COMPLETE. None of the representations or
warranties made by the Company in the Company Disclosure Schedule, or
certificate furnished by the Company pursuant to this Agreement, when all such
documents are read together in their entirety, contains or will contain at the
Effective Time any untrue statement of a material fact, or omits or will omit at
the Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub, jointly and severally, represent and warrant
to Company that the statements contained in this Section 4 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3), except as
set forth in the disclosure schedule attached as Exhibit C hereto (the
14
"Parent/Sub Disclosure Schedule"). The Parent/Sub Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 4.
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of Parent and
Sub is a corporation duly incorporated, duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Parent and Sub
has all requisite corporate power and authority to own and operate its
properties and assets, to execute and deliver this Agreement and to carry on its
business as presently conducted and as presently proposed to be conducted. Each
of Parent and Sub is duly qualified and is authorized to do business and is in
good standing as a foreign corporation in all jurisdictions in which the nature
of its activities and of its properties (both owned and leased) makes such
qualification necessary and in which failure to so qualify might reasonably be
expected, individually, or in the aggregate, to have a Materially Adverse
Effect. Except as set forth on Section 4(a) of the Parent/Sub Disclosure
Schedule, neither Parent nor Sub own any securities of any other corporation,
limited partnership, limited liability company or other entity. Neither Parent
nor Sub is a participant in any joint venture, partnership, limited liability
company or similar arrangement.
(b) CAPITALIZATION.
(i) Set forth on Section 4(b) of the Parent/Sub Disclosure
Schedule is the capitalization of Parent immediately prior to the
Closing Date, prior to giving effect to the transactions contemplated
by this Agreement. Except as set forth in Section 4(b) of the
Parent/Sub Disclosure Schedule, there are no authorized or outstanding
subscriptions, warrants, options, contracts, rights (pre-emptive or
otherwise), puts, calls, exchangeable or convertible securities,
commitments or demands of any character relating to any authorized and
issued or unissued shares of the capital stock of the Parent or other
instruments convertible into or exchangeable for such stock, or which
obligate the Parent to seek authorization to issue additional shares of
any class of stock or to issue, deliver, sell, repurchase or redeem, or
cause to be issued, delivered, sold, repurchased or redeemed, any
shares of capital stock of the Parent or obligating the Parent to
grant, extend, accelerate the vesting of, change the price of, or
otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement, other than created by virtue of this Agreement
or the transactions contemplated hereby.
(ii) The Merger does not constitute and will not constitute an
event under any capital stock or convertible security or any
anti-dilution or similar provision of any agreement to which Parent or
Sub is a party or by which it is bound or affected, which shall either
increase the number of shares or units of capital stock issuable upon
conversion of any securities or upon exercise of any warrant or right
to subscribe to or purchase any stock or similar security, or decrease
the consideration per share or unit of capital stock to be received by
Parent or by Sub upon such conversion or exercise.
(c) AUTHORIZATION; BINDING OBLIGATIONS. Each of the Parent and Sub has
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of each of
the Parent and Sub. This Agreement has been duly executed and delivered by each
of the Parent and Sub and constitutes the valid and binding obligation of each
of the Parent and Sub enforceable against the Parent and Sub in accordance with
its terms subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(d) SEC DOCUMENTS. As of the dates when filed and of the Closing, each
Annual Report, Quarterly Report and each other document filed with the
Securities and Exchange Commission ("SEC") pursuant to Sections 13 or 15(d) of
the Securities Exchange Act of 1934 (other than any document which is not deemed
to be filed under applicable SEC rules and regulations) (collectively, "SEC
Documents") does not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein, in the light of the circumstances in which they were made, not
misleading.
(e) FINANCIAL STATEMENTS. The Parent has delivered to the Shareholders,
which are included in the Parent's SEC Documents, its audited Statement of
Operations and Balance Sheets for the fiscal year ended December 31, 2002 and
unaudited statement of operations and balance sheets for the nine-month period
ended September 30, 2003 (collectively, the "Parent Financial Statements"). The
Parent Financial Statements are in accordance with the books and records of the
Parent, are complete and correct in all material respects, and present fairly
the financial condition and position of Parent for the periods covered and as of
15
December 31, 2002, (the "Parent Statement Date"), and other dates therein
specified and the results of its operations for the periods therein specified.
The Parent Financial Statements have been audited by an independent accountant
and the Parent Financial Statements are prepared in accordance with GAAP.
(f) COMPLIANCE WITH OTHER INSTRUMENTS. Parent and Sub are not in
violation or default of any term of their Certificates of Incorporation or its
By-laws, or of any provision of any mortgage, indenture, contract, agreement,
instrument or contract to which it is a party or by which it is bound or of any
statute, rule or regulation applicable to Parent or Sub. The execution and
delivery of and compliance with this Agreement pursuant hereto will not result
in any such violation, or be in conflict with or constitute a default under any
such term, or result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of conflict with, or result in any violation of, or default
under (with or without notice or lapse of time, or both), or give rise to a
right of termination, cancellation or acceleration of any obligation (including,
but not limited to, any increase in payments due to any entity or person) or
loss of any benefit under (i) any provision of the Certificate of Incorporation
or By-laws of the Parent or Sub, as amended, or (ii) any material mortgage,
indenture, lease, contract or other material agreement or instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Parent or any of its properties
or assets.
(g) OFFERING VALID. The Merger Consideration will be exempt from the
registration requirements of the Securities Act of 1933. The Merger
Consideration, as of the Effective Time, (i) will have been duly authorized and
validly issued to the Company Shareholders and (ii) will be fully paid and
nonassessable and will be free of any liens or encumbrances.
(h) SUB FORMED FOR THE PURPOSE OF THIS TRANSACTION. Sub was formed
solely for the purpose of engaging in the transaction contemplated hereby and
has not engaged in any business activities or conducted any operations other
than in connection with the transaction contemplated hereby. Any and all
outstanding Sub capital stock has been validly authorized and issued. All of the
issued and outstanding shares of capital stock of Sub are owned of record or
beneficially by Parent free and clear of any Liens.
(i) COMPLIANCE WITH LAWS; GOVERNMENTAL CONSENTS; PERMITS. Neither
Parent nor Sub is in violation of any applicable statute, rule, regulation,
order or restriction of any domestic or foreign government or any
instrumentality or agency thereof in respect of the conduct of its business or
the ownership of its properties, which alone or together with any other
violations would have a Material Adverse Effect. No governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection with
the execution and delivery of this Agreement and the Merger except for (i) the
filing of the Certificates of Merger, together with the required officers'
certificates; (ii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities laws and the securities laws of any foreign country; and (iii)
such other consents, authorizations, filings, approvals and registrations which,
if not obtained or made, would not have a Material Adverse Effect on the Parent
or Sub and would not prevent, or materially alter or delay any of the
transactions contemplated by this Agreement. Parent and Sub have all material
franchises, permits, licenses and any similar authority necessary for the
conduct of each of their businesses as now being conducted by it, and can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as presently planned to be conducted.
(j) LITIGATION. Except as set forth in Section 4(j) of the Parent/Sub
Disclosure Schedule, there is no action, suit, arbitration, audit or other
proceeding or investigation pending, or to the Company's knowledge, threatened
against the Company or any of its properties or any of its officers or directors
(in their capacity as such) before any agency, court or tribunal, foreign or
domestic. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, other proceeding or investigation by
the Company currently pending or which the Company intends to initiate.
(k) REPRESENTATIONS COMPLETE. None of the representations or warranties
made by the Parent and the Sub herein or in the Parent/Sub Disclosure Schedule,
or certificate furnished by Parent pursuant to this Agreement, when all such
documents are read together in their entirety, contains or will contain at the
Effective Time any untrue statement of a material fact, or omits or will omit at
the Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
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5. COVENANTS. The Parties agree as follows with respect to the period from
and after the execution of this Agreement.
(a) GENERAL. Each of the Parties will use its reasonable best efforts
to take all action and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 6 below).
(b) NOTICES AND CONSENTS. Company will give any notices (and will cause
each of its Subsidiaries to give any notices) to third parties, and will use its
reasonable best efforts to obtain (and will cause each of its Subsidiaries to
use its reasonable best efforts to obtain) any third party consents referred to
in Section 3 above and the items set forth in the Company Disclosure Schedule.
(c) REGULATORY MATTERS AND APPROVALS. Each of the Parties will (and
Company will cause each of its Subsidiaries to) give any notices to, make any
filings with, and use its reasonable best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in Section 3 and Section 4 above. Without limiting
the generality of the foregoing:
(i) COMPLIANCE WITH SECURITIES LAWS. Company will prepare and
file with CL preliminary proxy materials relating to the Special
Company Meeting. Parent will prepare and file with SEC preliminary
proxy materials under the Securities Exchange Act relating to the
Special Parent Meeting or a written consent adopting the actions in
lieu thereof. The filing Party in each instance will use its reasonable
best efforts to respond to the comments of the SEC or the CL regulatory
body thereon and will make any further filings (including amendments
and supplements) in connection therewith that may be necessary, proper,
or advisable. Parent will provide Company, and Company will provide
Parent, with whatever information and assistance in connection with the
foregoing filings that the filing Party reasonably may request. Parent
will take all actions that may be necessary, proper, or advisable under
state securities laws in connection with the offering and issuance of
the Parent Shares.
(ii) COMPLIANCE WITH CL AND DELAWARE GENERAL CORPORATION LAW.
Company will call a special meeting of its stockholders (the "SPECIAL
COMPANY MEETING") as soon as reasonably practicable in order that the
stockholders may consider and vote upon the adoption of this Agreement
and the approval of the Merger in accordance with the CL, or execute
and deliver a written consent instrument in lieu thereof, if
applicable. Parent will call a special meeting of its stockholders (the
"SPECIAL PARENT MEETING") as soon as reasonably practicable in order
that the stockholders may consider and vote upon the adoption of this
Agreement and the approval of the Merger in accordance with the
Delaware General Corporation Law, or execute and deliver a written
consent instrument in lieu thereof, if applicable. The Parties will
mail the Joint Disclosure Document to their respective stockholders
simultaneously and as soon as reasonably practicable. The Joint
Disclosure Document will contain the affirmative recommendations of the
respective boards of directors of the Parties in favor of the adoption
of this Agreement and the approval of the Merger; PROVIDED, HOWEVER,
that no director or officer of either Party shall be required to
violate any fiduciary duty or other requirement imposed by law in
connection therewith.
(d) OPERATION OF BUSINESS. Company will not (and will not cause or
permit any of its Subsidiaries to) engage in any practice, take any action, or
enter into any transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing:
(i) neither Company nor any of its Subsidiaries will authorize
or effect any change in its charter or bylaws;
(ii) neither Company nor any of its Subsidiaries will grant
any options, warrants, or other rights to purchase or obtain any of its
capital stock or issue, sell, or otherwise dispose of any of its stock
(except upon the conversion or exercise of options, warrants, and other
rights currently outstanding);
(iii) neither Company nor any of its Subsidiaries will
declare, set aside, or pay any dividend or distribution with respect to
its stock (whether in cash or in kind), or redeem, repurchase, or
otherwise acquire any of its capital stock;
17
(iv) neither Company nor any of its Subsidiaries will issue
any note, bond, or other debt security or create, incur, assume, or
guarantee any indebtedness for borrowed money or capitalized lease
obligation outside the Ordinary Course of Business;
(v) neither Company nor any of its Subsidiaries will impose
any Lien upon any of its assets outside the Ordinary Course of
Business;
(vi) neither Company nor any of its Subsidiaries will make any
capital investment in, make any loan to, or acquire the securities or
assets of any other Person outside the Ordinary Course of Business;
(vii) neither Company nor any of its Subsidiaries will make
any change in employment terms for any of its directors, officers, and
employees outside the Ordinary Course of Business; and
(viii) neither Company nor any of its Subsidiaries will commit
to any of the foregoing.
(e) FULL ACCESS. Company will (and will cause each of its Subsidiaries
to) permit representatives of Parent (including legal counsel and accountants)
to have full access to all premises, properties, personnel, books, records
(including tax records), contracts, and documents of or pertaining to each of
Company and its Subsidiaries. Parent will treat and hold as such any
Confidential Information it receives from Company or any of its Subsidiaries in
the course of the reviews contemplated by this Section 5(e), will not use any of
the Confidential Information except in connection with this Agreement, and, if
this Agreement is terminated for any reason whatsoever, agrees to return to
Company all tangible embodiments (and all copies) thereof which are in its
possession.
(f) NOTICE OF DEVELOPMENTS. Each Party will give prompt written notice
to the other of any material adverse development causing a breach of any of its
own representations and warranties in Section 3 and Section 4 above. No
disclosure by any Party pursuant to this Section 5(f), however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) EXCLUSIVITY. Company will not (and will not cause or permit any of
its Subsidiaries to) solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to the acquisition of all or
substantially all of the capital stock or assets of Company, Myriad World
Resorts of Tunica, LLC, or any of its Subsidiaries (including any acquisition
structured as a merger, consolidation, or share exchange); PROVIDED, HOWEVER,
that Company, its Subsidiaries, and their directors and officers will remain
free to participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing to the extent their fiduciary duties may require. Company shall notify
Parent immediately if any Person makes any proposal, offer, inquiry, or contact
with respect to any of the foregoing.
(h) CONTINUITY OF BUSINESS ENTERPRISE. Parent will continue at least
one significant historic business line of Company, or use at least a significant
portion of Company's historic business assets in a business, in each case within
the meaning of Reg. Section1.368-1(d).
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO PARENT'S OBLIGATION. The obligation of Parent to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) this Agreement and the Merger shall have received the
Requisite Company Stockholder Approval;
(ii) Company and its Subsidiaries shall have procured all of
the third party consents specified in Section 5(b) above;
(iii) the representations and warranties set forth in Section
3 above shall be true and correct in all material respects at and as of
the Closing Date, except to the extent that such representations and
warranties are qualified by terms such as "material" and "Material
Adverse Effect," in which case such representations and warranties
shall be true and correct in all respects at and as of the Closing
Date;
(iv) Company shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing,
except to the extent that such covenants are qualified by terms such as
18
"material" and "Material Adverse Effect," in which case Sellers shall
have performed and complied with all of such covenants in all respects
through the Closing;
(v) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of Surviving Corporation
to own the former assets, to operate the former businesses, and to
control the former Subsidiaries of Company, or (D) affect adversely the
right of any of the former Subsidiaries of Company to own its assets
and to operate its businesses (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(vi) Company shall have delivered to Parent a certificate to
the effect that each of the conditions specified above in Section
6(a)(i)-(v) is satisfied in all respects;
(vii) this Agreement and the Merger shall have received the
Requisite Parent (and Sub) Stockholder Approval;
(viii) all applicable waiting periods (and any extensions
thereof) under the securities laws shall have expired or otherwise been
terminated and the Parties shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3 and Section 4 above; and
(ix) all actions to be taken by Company in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Parent.
Parent may waive any condition specified in this Section 6(a) if it executes a
writing so stating at or prior to the Closing.
(b) CONDITIONS TO COMPANY'S OBLIGATION. The obligation of Company to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) this Agreement and the Merger shall have received the
Requisite Parent (and Sub) Stockholder Approval;
(ii) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of
the Closing Date, except to the extent that such representations and
warranties are qualified by terms such as "material" and "Material
Adverse Effect," in which case such representations and warranties
shall be true and correct in all respects at and as of the Closing
Date;
(iii) Parent shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing,
except to the extent that such covenants are qualified by terms such as
"material" and "Material Adverse Effect," in which case Sellers shall
have performed and complied with all of such covenants in all respects
through the Closing;
(iv) Parent shall have delivered to Company a certificate to
the effect that each of the conditions specified above in Section
6(b)(i)-(iii) is satisfied in all respects;
(v) this Agreement and the Merger shall have received the
Requisite Company Stockholder Approval;
(vi) all applicable waiting periods (and any extensions
thereof) under the securities laws shall have expired or otherwise been
terminated and the Parties shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3 and Section 4 above;
(vii) the Restated Certificate of Incorporation of Parent, in
the form of Exhibit D attached hereto, shall have been accepted for
filing by the Secretary of State of the State of Delaware and a stamped
copy thereof shall have been provided to the Investor's counsel.
19
(viii) Resignations and Appointment of Officers and Directors.
Concurrent with the Closing hereunder, the officers and directors of
the Parent shall resign and from and after the Effective Time, the
officers and directors of the Parent shall be:
Officers:
---------
Xxxxx Hawrelechko, President, Chief Executive Officer,
Secretary and Chief Financial Officer
Directors:
----------
Xxxxx Hawrelechko
W. Xxx Xxxxxxxxx
Xx. Xxxxxx X. Xxxx
Xxxx Xxxxxx
Xxxxx Xxxxx
Xxxx Xxxxx; and
(ix) all actions to be taken by Parent in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Company.
Company may waive any condition specified in this Section 6(b)
if it executes a writing so stating at or prior to the Closing.
7. TERMINATION.
(a) TERMINATION OF AGREEMENT. Either of the Parties may terminate this
Agreement with the prior authorization of its board of directors (whether before
or after stockholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Effective Time;
(ii) Parent may terminate this Agreement by giving written
notice to Company at any time prior to the Effective Time (A) in the
event Company has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, Parent
has notified Company of the breach, and the breach has continued
without cure for a period of 10 days after the notice of breach or (B)
if the Closing shall not have occurred on or before March 24, 2004, by
reason of the failure of any condition precedent under Section 6(a)
hereof (unless the failure results primarily from Parent breaching any
representation, warranty, or covenant contained in this Agreement);
(iii) Company may terminate this Agreement by giving written
notice to Parent at any time prior to the Effective Time (A) in the
event Parent has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, Company
has notified Parent of the breach, and the breach has continued without
cure for a period of 10 days after the notice of breach or (B) if the
Closing shall not have occurred on or before March 24, 2004, by reason
of the failure of any condition precedent under Section 6(b) hereof
(unless the failure results primarily from Company breaching any
representation, warranty, or covenant contained in this Agreement); or
(vi) any Party may terminate this Agreement by giving written
notice to the other Party at any time after the Special Parent Meeting
or the Special Company Meeting in the event this Agreement and the
Merger fail to receive the Requisite Parent Stockholder Approval or the
Requisite Company Stockholder Approval respectively.
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 7(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); PROVIDED, HOWEVER, that
the confidentiality provisions contained in Section 5(e) above shall survive any
such termination.
8. GENERAL PROVISIONS.
20
(a) SURVIVAL. None of the representations, warranties, and covenants of
the Parties (other than the provisions in Section 2 above concerning issuance of
the Parent Shares) will survive the Effective Time.
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party; PROVIDED,
HOWEVER, that any Party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making the
disclosure).
(c) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; PROVIDED, HOWEVER, that the provisions in
Section 2 above concerning issuance of the Parent Shares are intended for the
benefit of Company Stockholders.
(d) ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they relate in any way to the subject
matter hereof.
(e) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
(f) COUNTERPARTS. This Agreement may be executed in one or more
counterparts (including by means of facsimile), each of which shall be deemed an
original but all of which together will constitute one and the same instrument.
(g) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given (i) when delivered
personally to the recipient, (ii) one business day after being sent to the
recipient by reputable overnight courier service (charges prepaid), (iii) one
business day after being sent to the recipient by facsimile transmission or
electronic mail, or (iv) four business days after being mailed to the recipient
by certified or registered mail, return receipt requested and postage prepaid,
and addressed to the intended recipient as set forth below:
IF TO PARENT OR SUB, TO:
Synergy 2000, Inc.
0000 Xxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxx Xxxxxx, Xx., President
Facsimile: (000) 000-0000
IF TO COMPANY TO:
Myriad Golf Resort, Inc.
Xxxxx 0000
00000-000 Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxx X0X 0X0
CANADA
Attention: Xxxxx Hawrelechko, President &
Chief Executive Officer
Facsimile: (000) 000-0000
21
WITH A COPY TO:
Fraser Xxxxxx Casgrain LLP
0000 Xxxxxxxx Xxxxx
00000-000 Xxxxxx
Xxxxxxxx, Xxxxxxx X0X 0X0
XXXXXX
Attention: Xxxxxx X. Xxxxxxxxxxxx, Q.C.
Facsimile: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Party notice in the manner herein set forth.
(i) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(j) AMENDMENTS AND WAIVERS. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; PROVIDED, HOWEVER,
that any amendment effected subsequent to stockholder approval will be subject
to the restrictions contained in the Delaware General Corporation Law and the
CL. No amendment of any provision of this Agreement shall be valid unless the
same shall be in writing and signed by both of the Parties. No waiver by any
Party of any provision of this Agreement or any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
valid unless the same shall be in writing and signed by the Party making such
waiver nor shall such waiver 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
default, misrepresentation, or breach of warranty or covenant.
(k) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) EXPENSES. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(m) CONSTRUCTION. The Parties 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 of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
(n) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(o) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR SUBJECT MATTER HEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO SUBJECT MATTER OF THIS TRANSACTION.
[SIGNATURES ON FOLLOWING PAGE]
22
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement, to be signed by their respective officers thereunto duly
authorized, all as of the date first above written.
SYNERGY 2000, INC.
By: /s/ Xxx Xxxxxx, Xx.
----------------------------
Name: Xxx Xxxxxx, Xx.
Title: President
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Executive Vice President
MER RESORTS, INC.
By: /s/ Xxx Xxxxxx, Xx.
----------------------------
Name: Xxx Xxxxxx, Xx.
Title: President
MYRIAD GOLF RESORT, INC.
By: /s/ Xxxxx Hawrelechko
----------------------------
Name: Xxxxx Hawrelechko
Title: President & CEO
23
EXHIBITS
Exhibit A Certificate of Merger
Exhibit B Disclosure Schedule of Myriad Golf Resort, Inc.
Exhibit C Disclosure Schedule of Synergy 2000, Inc. and MER Resorts, Inc.
Exhibit D Form of Restated Certificate of Incorporation of Synergy 2000, Inc.
[EXHIBITS ARE INTENTIONALLY OMITTED]
24
