Exhibit (c)(1)
ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION, (hereinafter
referred to as this "Agreement") is made and entered into this 26th day of March
by and between D-VINE, LTD., a Delaware corporation (hereinafter referred to as
"DVL"), the stockholders of DVL listed on the signature page (collectively, the
"Principal Stockholders"), TACONIC DATA CORP., a New York corporation
(hereinafter referred to as "TDC"), and the stockholders of TDC listed on the
signature page (collectively, the "TDC Sellers").
RECITALS
WHEREAS, DVL desires to acquire the majority of all the issued and
outstanding shares of TDL common stock, $.01 par value in exchange solely for
Six Million (6,000,000) shares of the authorized but unissued DVL common stock,
$.01 par value per share (post-split as per Section 1.3 below), pursuant to the
terms and conditions set forth herein (the "Acquisition"), and whereby the
transaction shall qualify as a tax free exchange pursuant to Section 351 of the
Internal Revenue Code ("IRC");
WHEREAS, in furtherance of such Acquisition, the Board of Directors of DVL
approved the Acquisition, upon the terms and subject to the conditions set forth
herein and in accordance with the applicable provisions of the Delaware General
Corporation Law ("DGCL").
WHEREAS, the TDC Sellers desire to exchange all of their share ownership
interest in TDC for shares of DVL common stock, in the respective amounts set
forth in Schedule 1.2 hereto, as a tax free exchange pursuant to Section 351 of
the IRC;
WHEREAS, the parties hereto desire to reorganize, pursuant to Section
368(a)(1)(B) of the IRC, the management and operations of DVL as set forth
herein (in order to more closely conform the management and operations of DVL to
the current management and operations of TDC).
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties and covenants herein contained, the parties hereby
agree as follows:
ARTICLE I
THE ACQUISITION
SECTION 1.1 (a) Acquisition and Plan of Reorganization. The parties agree
that DVL shall acquire 99.2% of the issued and outstanding shares of TDC common
stock from the TDC Sellers, in exchange for Six Million (6,000,000) shares of
authorized but previously unissued DVL common stock, par value $.01 per share
(post-split as per Section 1.3 below). It is also agreed to by the parties
hereto that by acquiring the majority of the shares of TDC common
stock, DVL will acquire all rights, titles and interest to all assets and
property presently owned by TDC. Said assets and property may be subject to
certain interests, liens and/or encumbrances. The parties hereby further agree
that at the Closing, hereinafter defined, TDC shall become a majority-owned
subsidiary of DVL. As soon as practicable after the Closing, DVL"s corporate
name will be changed from "D-Vine, Ltd." to "XxxxxxxXxxxx.xxx, Inc." As promptly
as practicable after the Closing, the necessary steps be shall be taken in order
to reflect the relocation of DVL"s principal place of business to TDC's current
principal place of business and the management and operations of DVL will be
organized to become engaged in the current business endeavors of TDC.
SECTION 1.2 Issuance of Shares.
(a) Upon the Closing of the Agreement, DVL shall cause to be issued and
delivered to the TDC Sellers or their designees, stock certificates representing
an aggregate of Six Million (6,000,000) shares (the "Acquisition Shares") of DVL
common Stock (post-split as per Section 1.3 below) in the amounts set forth in
Schedule 1.2 hereto.
(b) The Acquisition Shares to be issued hereunder are deemed "restricted
securities" as defined by Rule 144 promulgated by the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), and the recipients shall represent that they are acquiring
the Acquisition Shares for investment purposes only and without the intent to
make a further distribution of the Acquisition Shares. All Acquisition Shares to
be issued under the terms of this Agreement shall be issued pursuant to
exemptions from the registration requirements of the Securities Act and the
rules and regulations promulgated thereunder. Certificates representing the
restricted Acquisition Shares shall bear the following, or similar legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF SUCH ACT OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
PROVISIONS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
SECTION 1.3 Consent of Shareholders. In anticipation of this Agreement and
as a condition precedent to the consummation of the Acquisition, DVL (i) has,
concurrently with the execution of this Agreement, obtained the written consent
of the majority of its shareholders in accordance with the DGCL and with the
Securities Act and all other applicable federal securities laws and (ii) has
heretofore taken all necessary and requisite action to obtain the consent of its
Directors in order to transact the following business:
(i) To amend the Certificate of Incorporation of DVL to change the name of
DVL to "XxxxxxxXxxxx.xxx, Inc.", in order to more accurately describe the new
business of the Company (which amendment will be filed promptly after the
Closing); and
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(ii) To amend the Certificate of Incorporation of DVL to reorganize the
share capital of DVL whereby the then issued and outstanding shares of DVL
common stock will be reverse split on a one (1) share for one thousand shares
(1,000) share basis (which amendment will be filed promptly after the date
hereof and prior to the Closing).
In addition, immediately after the filing referred to in clause (ii)
above, DVL will accept the resignations of Xxxxxx Xxxxxx and Xxxxxxxxxxx X.
Xxxxx as directors of DVL, and will report such resignations, and the items
described in clause (ii) above, on a duly filed Form 8-K. As required pursuant
to the DGCL, DVL will also promptly (and prior to the Closing Date) notify all
shareholders of the consent to the items referred to in clauses (i) and (ii)
above given by less than unanimous consent of stockholders.
SECTION 1.4 Closing. Subject to the satisfaction or waiver, if
permissible, of the conditions set forth in Articles VII, VIII and IX, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place (i) at the offices of Xxxxxx Gottbetter & Xxxxxxxx, LLP, as promptly
as practicable (and in any event within two business days) after satisfaction or
waiver, if permissible, of the conditions set forth in Articles VII, VIII and IX
or (ii) at such other time, date or place as TDC, the TDC Sellers and DVL may
mutually agree (the date of either (i) or (ii) shall be referred to hereinafter
as the "Closing Date"). At the Closing:
(a) The TDC Sellers shall deliver to DVL all stock certificates
representing 99.2% of the issued and outstanding shares of TDC common stock, so
as to make DVL the majority holder thereof, free and clear of all claims and
encumbrances;
(b) DVL shall deliver to those persons listed in Schedule 1.2 stock
certificates representing an aggregate of 6,000,000 shares of DVL common stock,
which shall all bear the restrictive legend as set forth in Section 1.2(b)
above;
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF DVL
As an inducement for TDC and the TDC Sellers to enter into this Agreement,
DVL and each Principal Stockholder hereby makes, jointly and severally as of the
date hereof and as of the Closing Date, the following representations and
warranties:
SECTION 2.1 Organization of DVL. (a) DVL is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
is duly qualified and in good standing as a foreign corporation in every
jurisdiction in which such qualification is necessary, and has the corporate
power and authority to own its properties and assets and to transact the
business in which it is engaged. There are no corporations or other entities
with respect to which (i) DVL owns any of the outstanding stock or other
interests, or (ii) DVL may be deemed to be in control. DVL and the Principal
Stockholders have all requisite power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and thereby,
and have taken all corporate or other action necessary to
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consummate the transactions contemplated hereby and thereby and to perform their
obligations hereunder and thereunder. This Agreement upon its execution and
delivery, is the legal, valid and binding obligation of DVL and the Principal
Stockholders, enforceable against DVL and the Principal Stockholders in
accordance with its terms except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally.
SECTION 2.2 Capitalization of DVL. (a) The authorized capital stock of DVL
on the date hereof consists of Fifty Million (50,000,000) shares of common
stock, par value $.01 per share (the "Common Stock"), of which Twenty-Four
Million Six Hundred Seven Thousand Seven Hundred Thirty-one (24,607,731) shares
of Common Stock are issued and outstanding, and Ten Million (10,000,000) shares
of preferred stock, par value $.01 per share, with such rights, privileges,
preferences and other terms and conditions as shall be approved by DVL's Board
of Directors pursuant to a duly adopted resolution thereof ("Preferred Stock"),
of which no shares of Preferred Stock are issued and outstanding.
(b) All shares of Common Stock currently issued and outstanding have
been duly authorized and validly issued and are fully paid and non-assessable,
and have been issued in compliance with any and all applicable laws, contractual
requirements and other legal requirements (including federal and state
securities laws or pursuant to appropriate exemptions therefrom). There are no
options, warrants, rights, calls, commitments or agreements of any character
obligating DVL to issue any shares of its capital stock or other securities or
any security representing the right to purchase or otherwise receive any such
stock or other securities except (i) the warrant (the "Warrant") for 1,000,000
shares of Common Stock, dated August 1, 1997, issued to Ocean Strategic
Holdings, Limited, a Guernsey corporation (the "Warrant Holder") and (ii) the
warrant (the "Additional Warrant") for 500,000 shares of Common Stock, dated
March 31, 1999, issued to the Warrant Holder. The Acquisition Shares, when
issued, will be duly authorized, validly issued, fully paid and non-assessable.
(c) After giving effect to the amendment to the Certificate of
Incorporation described in Section 1.3(ii), the authorized capital stock of DVL
will consists of Fifty Million (50,000,000) shares of Common Stock and Ten
Million (10,000,000) shares of Preferred Stock, of which Twenty-Four Thousand
Six Hundred Eighty Eight (24,688) shares of Common Stock and no shares of
Preferred Stock will be issued and outstanding.
(d) Prior to the date hereof, or roughly concurrent with the
execution of this Agreement, DVL and the Warrant Holder amended the Warrant to
provide for (i) the purchase thereunder of 1,000,000 common shares of DVL for a
purchase price of $1.00 per share and (ii) the issuance of the Additional
Warrant. DVL has informed TDC that the New Warrant Holders will exercise the
Warrant and, prior to the Closing Date, DVL will receive $1,000,000 in proceeds
pursuant to such exercise (free and clear of any fees, commissions, deductions
or expenses). The exercise of the Warrant and the issuance of 1,000,000 shares
thereunder will each be made in compliance with any and all applicable laws,
contractual requirements and other legal requirements (including federal and
state securities laws or pursuant to appropriate exemptions therefrom). The
amendment and exercise of the Warrant will be duly reported by DVL on Form 8-K
prior to the Closing.
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(e) Other than the transactions contemplated by this Agreement,
there is no outstanding vote, plan, pending proposal or right of any person to
cause any redemption of Common Stock or the merger or consolidation of DVL with
or into any other entity. DVL is not under any obligation under any agreement to
register any of its securities under federal or state securities laws.
(f) There are no agreements among stockholders of DVL, or otherwise,
voting trusts, proxies or other agreements or understanding of any character,
whether written or oral, with respect to or concerning the purchase, sale,
transfer or voting of the Common Stock or any other security of DVL.
(g) None of DVL or any Principal Stockholders have any legal
obligations, absolute or contingent, to any other Person to sell any assets or
to sell any capital stock or any other security of DVL or to effect any merger,
consolidation or other reorganization of DVL or to enter into any agreement with
respect thereto, except pursuant to this Agreement.
SECTION 2.3 Charter Documents. Certified copies of the DVL Articles of
Incorporation and By-Laws, as amended to date, have been or will be delivered to
TDC prior to the Closing and are or will be true, correct and complete copies
thereof.
SECTION 2.4 Corporate Documents. The DVL shareholders' list previously
delivered to TDC and DVL's corporate minute books are complete and accurate as
of the date hereof and such corporate minute books contain the recorded minutes
of all corporate meetings or the written consents of shareholders and directors
through the date hereof.
SECTION 2.5 Financial Statements. (a) DVL's audited financial statements
(the "DVL Financial Statements") for the years ended September 31, 1997 and
1998, copies of which have been delivered to TDC, are true and complete in all
material respects, having been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis for the period
covered by such statements, and fairly present, in accordance with GAAP, the
financial condition of DVL, and results of its operations for the periods
covered thereby. DVL maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
with management"s authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management"s authorizations and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any difference. Neither DVL nor any
of its subsidiaries has engaged in any transaction, maintained any bank account
or used any corporate funds except for transactions, bank accounts or funds
which have been and are reflected in the normally maintained books and records.
Except as otherwise disclosed to TDC in writing and as set forth herein, there
has been no material adverse change in the business operations, assets,
properties, prospects or condition (financial or otherwise) of DVL taken as a
whole from that reflected in the financial statements referred to in this
Section 2.5.
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(b) SEC Documents. DVL has furnished TDC with a true and complete
copy of each report and schedule filed by DVL with the SEC since September 25,
1996 (as such documents have since the time of their filing been amended, the
"DVL SEC Documents"), and since that date DVL has filed with the SEC all
documents required to be filed pursuant to Section 15(d) of the Exchange Act of
1934, as amended (the "Exchange Act"). As of their respective dates, the DVL SEC
Documents complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such DVL SEC Documents, and none
of the DVL SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of DVL included in the DVL SEC
Documents (i) comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, (ii) are accurate, complete and in accordance with the
books and records of DVL, (iii) have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-QSB of the SEC) and (iv) fairly present (subject, in the
case of the unaudited statements, to normal, recurring audit adjustments) the
consolidated financial position of DVL as at the dates thereof and the
consolidated results of its operations and cash flows for the periods then
ended.
SECTION 2.6 Absence of Certain Changes or Events. Since the date of the
latest DVL financial statement and except as disclosed otherwise herein, DVL has
not (i) issued or sold any promissory note, stock, bond, option or other
security of which it was an issuer or other obligor, (ii) discharged or
satisfied any lien or encumbrance or paid any obligation or liability, absolute
or contingent, direct or indirect, (iii) incurred or suffered to be incurred any
liability or obligation whatsoever, (iv) caused or permitted any lien,
encumbrance or security interest to be created or arise on or in any of its
properties or assets, (v) declared or made any dividend, payment or distribution
to stockholders or purchased or redeemed or agreed to purchase or redeem any
shares of its capital stock, (vi) reclassified its shares of capital stock,
(vii) amended its Certificate of Incorporation or Bylaws, (viii) acquired any
equity interest in any other Person, or (ix) entered into any agreement or
transaction except in connection with the execution and performance of this
Agreement. DVL has not entered into any agreement to do any of the foregoing
actions described in this Section 2.6.
SECTION 2.7 Assets and Liabilities. DVL has good and marketable title to
all of its assets and property, free and clear of any and all liens, claims and
encumbrances. As of the date hereof, DVL does not have any debts, liabilities or
obligations of any nature whatsoever, whether accrued, absolute, contingent, or
otherwise, whether due or to become due.
SECTION 2.8 Tax Returns and Payments. All of DVL's tax returns (federal,
state, city, county or foreign) which are required by law to be filed on or
before the date of this Agreement, have been duly filed and are complete and
accurate in all respects. DVL has paid all taxes due on said returns, any
assessments made against DVL and all other taxes, fees and similar charges
imposed on DVL by any governmental authority (other than those, the amount or
validity of which is being contested in good faith by appropriate proceedings).
No tax liens have
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been filed and no claims are being assessed with respect to any such taxes, fees
or other similar charges. DVL knows of (i) no other tax returns or reports which
are required to be filed which have not been so filed and (ii) no unpaid
assessment for additional taxes for any fiscal period or any basis thereof.
SECTION 2.9 Required Authorizations. There have been or will be timely
filed, given, obtained or taken, all applications, notices, consents, approvals,
orders, registrations, qualifications waivers or other actions of any kind
required by virtue of execution and delivery of this Agreement by DVL or the
consummation by it of the transactions contemplated hereby. Without limiting the
generality of the foregoing, all necessary director and shareholder actions and
consents have been obtained for the transactions described in Sections 1.3 and
2.2, and all notices to shareholders of consents given by stockholders to such
transactions described in Section 1.3 by less than unanimous consent have been
sent in accordance with the DGCL.
SECTION 2.10 Compliance with Law and Government Regulations. DVL is in
compliance with and is not in violation of applicable federal, state, local or
foreign statutes, laws or regulations (including without limitation, any
applicable building, zoning or other law, ordinance or regulation) affecting
DVL, its properties or the operation of its businesses. DVL is not subject to
any order, decree, judgment or other sanction of any court, administrative
agency or other tribunal.
SECTION 2.11 Litigation. Except as set forth on Schedule 2.11, there is no
litigation, arbitration, proceeding or investigation pending, threatened or
anticipated to which DVL is a party or which may result in any material change
in the business or condition, financial or otherwise, of DVL or in any of its
properties or assets, or which might result in any liability on the part of DVL,
or which questions the validity of this Agreement or of any action taken or to
be taken pursuant to or in connection with the provisions of this Agreement, and
to the best knowledge of DVL, there is no basis for any such litigation,
arbitration, proceeding or investigation. There are presently no outstanding
judgments, decrees or orders of any court or any governmental or administrative
agency against or affecting DVL or any of its assets that is not disclosed
herein. Schedule 2.11 contains a complete and accurate description of all
claims, suits, litigations, proceedings, investigations, disputes, writs,
injunctions, judgments and decrees since December 31, 1996 to which DVL has been
a party.
SECTION 2.12 Governmental Consent. No consent, approval, authorization or
order of, or registration, qualification, designation, declaration or filing
with, any governmental authority on the part of DVL is required in connection
with the execution and delivery of this Agreement or the carrying out of any
transactions contemplated hereby with the exception of the necessary corporate
filings with the State of Delaware relating to the transactions described in
Section 1.3 and the filings with the SEC described elsewhere herein.
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SECTION 2.13 No Disqualifying Orders. Neither DVL, the Principal
Stockholders nor any of its affiliates, directors, officers or principals is
subject to any disqualifying order under the "Bad Boy" provisions of the federal
or any state"s securities law. As used herein, "Bad Boy" provisions include Rule
262 of Regulation A, Rule 507 of Regulation D and other similar disqualifying
provisions of federal and state securities laws.
SECTION 2.14 Business. DVL (i) does not own or lease any real property or
personal property, (ii) is not a party to any contract, (iii) has no employees
or anyone who acts as an employee, (iv) has only the bank accounts listed on
Schedule 2.14 hereto and (v) is not required to have any Permits.
SECTION 2.15 Authority. The Board of Directors of DVL and the general
partner of the Principal Stockholders have approved this Agreement and duly
authorized the execution hereof. DVL and the Principal Stockholders have full
power, authority and legal right to enter into this Agreement and to consummate
the transactions contemplated hereby, and all action necessary to authorize the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby has been duly and validly taken. The execution
and delivery of this Agreement, the consummation of the transactions
contemplated hereby and compliance by DVL and the Principal Stockholders with
the provisions hereof will not (a) conflict with or result in a breach of any
provisions of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of the properties or
assets of DVL under, any of the terms, conditions or provisions of the
Certificate of Incorporation of DVL, the partnership agreement of the Principal
Stockholders, or any note, bond, mortgage, indenture, license, agreement or any
instrument or obligation to which DVL and the Principal Stockholders are a party
or by which they are bound; or (b) violate any order, writ, injunction, decree,
law, statute, rule or regulation applicable to DVL or the Principal Stockholders
or any of their properties or assets.
SECTION 2.16 Full Disclosure. None of the representations and warranties
made by DVL herein, or in any exhibit, certificate or memorandum furnished or to
be furnished by DVL on its behalf pursuant hereto, contains or will contain any
untrue statement of material fact, or omits any material fact, the omission of
which would be misleading. The information with respect to DVL and TDC which is
to be included in any notice to be sent to the shareholders of DVL will not
contain any untrue statement of material fact, or omit to state any material
fact necessary to make the statement or fact contained herein not misleading.
SECTION 2.17 Brokerage. No broker, finder or investment banker is entitled
to any brokerage, finder"s or other fee or commission in connection with the
Acquisition based upon arrangements made by or on behalf of DVL.
SECTION 2.18 Transactions with Affiliates. No director or officer of DVL
or any member of his or her immediate family, is a party to any contract or
other business arrangement or relationship of any kind with DVL, has an
ownership interest in any business, corporate or otherwise, which is a party to,
or in any property which is the subject of, business arrangements or
relationships of any kind with DVL.
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ARTICLE III
COVENANTS OF DVL AND THE PRINCIPAL STOCKHOLDERS
SECTION 3.1 Conduct Prior to the Closing. Between the date hereof and the
Closing, other than actions or transactions referred to herein:
(a) DVL will not enter into any material agreement, contract or
commitment, whether written or oral, or engage in any transaction, without the
prior written consent of TDC;
(b) DVL will not pay, incur or declare any dividends or distributions with
respect to its capital stock or amend its Articles of Incorporation or By-Laws,
without the prior written consent of TDC;
(c) DVL will not authorize, issue, sell, purchase or redeem any shares of
its capital stock or any options or other rights to acquire its capital stock,
without the prior written consent of TDC;
(d) DVL will comply with all requirements which federal or state law may
impose on it with respect to this Agreement and the transactions contemplated
hereby, and will promptly cooperate with and furnish written information to TDC
in connection with any such requirements imposed upon the parties hereto in
connection therewith and will provide TDC with the opportunity to review and
approve any mailing or proxy to be delivered to stockholders of DVL;
(e) DVL will not incur any indebtedness for money borrowed, or issue or
sell any debt securities, incur or suffer to be incurred any liability or
obligation of any nature whatsoever, or cause or permit any lien, encumbrance or
security interest to be created or arise on or in any of its properties or
assets, acquire or dispose of fixed assets change employment terms, enter into
any material or long-term contract, guarantee obligations of any third party,
settle or discharge any balance sheet receivable for less than its stated amount
or enter into any other transaction other than in the regular course of
business, except to comply with the terms of this Agreement, without the prior
written consent of TDC.
(f) DVL will not make any investment of capital nature either buy
purchased stock or securities, contribution to capital, property transfer or
otherwise, or by the purchase of any property or assets of any other Person.
(g) DVL will not enter into any contract whatsoever, including any
employment contract or any other compensation arrangement.
(h) DVL will not do any other act which would cause representation or
warranty of DVL in this Agreement to be or become untrue in any material respect
or that is not in the ordinary course of business consistent with past practice.
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(i) Neither DVL nor any Principal Stockholder shall directly or indirectly
(a) solicit any inquiry or proposals or enter into or continue any discussions,
negotiation or agreements relating to (i) the sale or exchange of DVL"s capital
stock or (ii) the merger of DVL with any Person or (b) provide any assistance or
any information to other otherwise cooperate with any Person in connection with
any such inquiry, proposal or transaction.
(j) DVL shall grant to TDC and its counsel, accountants and other
representatives, full access during normal business hours during the period
prior to the Closing to all of its respective properties, books, contracts,
commitments and records and, during such period, furnish promptly to TDC and
such representatives all information relating to DVL as TDC may reasonably
request, and shall extend to TDC the opportunity to meet with DVL's accountants
and attorneys to discuss the financial condition of DVL; and
(k) Except for the transactions contemplated by this Agreement, DVL will
conduct its business in the normal course, and shall not sell, pledge or assign
any of its assets without the prior written consent of TDC.
SECTION 3.2 Affirmative Covenants. Prior to Closing, DVL will do the
following:
(a) Use its best efforts to accomplish all actions necessary to consummate
this Agreement, including satisfaction of all conditions contained in this
Agreement;
(b) Promptly notify TDC in writing of any material adverse change in the
financial condition, business, operations or key personnel of DVL, any
threatened material litigation or investigation, any breach of its
representations or warranties contained herein, and any material contract,
agreement, license or other agreement which, if in effect on the date of this
Agreement, should have been included in this Agreement or in an exhibit annexed
hereto and made a part hereof;
(c) Satisfy all consents of or notices to its shareholders under federal
and state securities laws and state corporate law.
(d) Obtain written resignations and general releases from its existing
officers and directors other than Xx Xxxxx (who will remain as a director and
the President of DVL for 10 days after the Closing) and, concurrent with the
Closing, nominate (by action of its sole remaining director) the nominees listed
in Section 9.5.
(e) Obtain financing from the exercise of all outstanding warrants as
contemplated by Section 2.2(c).
(f) Reserve, and promptly after the Closing, issue and delivered to TDC or
its designees the number of shares of DVL common stock required hereunder.
(g) Complete the share reorganization of DVL as contemplated by Section
1.3(ii).
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(h) Take all other necessary corporate actions to accomplish those items
in Section 1.3 hereof and the other items herein that are to be completed
promptly or prior to Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TDC
TDC hereby represents, warrants and agrees that:
SECTION 4.1 Organization of TDC. TDC is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York,
is duly qualified or will become duly qualified and in good standing in every
jurisdiction in which such qualification is necessary. There are no corporations
or other entities with respect to which (i) TDC owns any of the outstanding
stock or other interests, or (ii) TDC may be deemed to be in control except as
otherwise disclosed in Schedule 4.1 annexed hereto and by this reference made a
part hereof.
SECTION 4.2 Shareholders. TDC has nineteen (19) shareholders. The 18 TDC
Sellers own 3,789,981 of the 3,854,218 issued and outstanding shares of common
stock of TDC. All 3,854,218 issued and outstanding shares of common stock were
validly issued, and are fully paid and non-assessable. There are no options,
warrants, rights, calls, commitments or agreements of any character obligating
TDC to issue any additional shares of its common stock except as otherwise
disclosed in Schedule 4.2 annexed hereto and by this reference made a part
hereof.
SECTION 4.3 Charter Documents. Complete and correct copies of the
Certificate of Incorporation of TDC, and all amendments thereto, have been or
will be delivered to DVL prior to the Closing.
SECTION 4.4 Financial Statements, Assets and Liabilities. TDC's audited
financial statements (the "TDC Financial Statements") for the years ended
December 31, 1996 and 1997, copies of which have been delivered to DVL, are true
and complete in all material respects, having been prepared in accordance with
GAAP applied on a consistent basis for the period covered by such statements,
and fairly present, in accordance with GAAP, the financial condition of TDC, and
results of its operations for the periods covered thereby. TDC has good and
marketable title to all of its assets and property to be delivered to DVL
hereunder free and clear of any and all liens, claims and encumbrances, except
as may be otherwise set forth herein and in its financial statements. TDC and
each of its Subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
with management's authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's authorizations and (iv) the recorded accountability
for assets if compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any difference. Neither TDC nor any
of its Subsidiaries has engaged in any transaction, maintained any bank account
or used any corporate funds except for transactions, bank accounts or funds
which have been and are reflected in the normally maintained books and records.
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SECTION 4.5 Absence of Certain Changes or Events. Since December 31, 1998,
except as disclosed otherwise herein, TDC has not (i) issued or sold any
promissory note, unit of ownership, bond, option or other security of which it
was an issuer or other obligor, (ii) discharged or satisfied any lien or
encumbrance or paid any obligation or liability, absolute or contingent, direct
or indirect, except in the ordinary course of its business, (iii) incurred or
suffered to be incurred any liability or obligation whatsoever, except in the
ordinary course of its business, (iv) cause or permitted any lien, encumbrance
or security interest to be created or arise on or in any of its properties or
assets, (v) declared or made any dividend, payment or distribution to
stockholders or purchased or redeemed or agreed to purchase or redeem any
stockholder"s ownership rights, or (vi) reclassified its shares of capital
stock, or (vii) entered into by agreement or transaction not in the ordinary
course of business.
SECTION 4.6 Tax Returns and Payments. All of TDC's tax returns (federal,
state, city, county or foreign) which are required by law to be filed on or
before the date of this Agreement, have been duly filed or extended with the
appropriate governmental authority and are complete and accurate in all
respects. TDC has paid all taxes to be due on said returns, on any assessments
made against TDC and on all other taxes, fees and similar charges imposed on TDC
by any governmental authority (other than those, the amount or validity of which
is being contested in good faith by appropriate proceedings). No tax liens have
been filed and no claims are being assessed with respect to any such taxes, fees
or other similar charges. TDC knows of (i) no other tax returns or reports which
are required to be filed which have not been so filed and (ii) no unpaid
assessment for additional taxes for any fiscal period or any basis thereof.
SECTION 4.7 Required Authorizations. There have been or will be timely
filed, given, obtained or taken, all applications, notices, consents, approvals,
orders, registrations, qualifications waivers or other actions of any kind
required by virtue of execution and delivery of this Agreement by TDC or the
consummation by it of the transactions contemplated hereby.
SECTION 4.8 Compliance with Law and Government Regulations. TDC is, to the
best of its knowledge, in compliance with all applicable statutes, regulations,
decrees, orders, restrictions, guidelines and standard affecting its properties
and operations, imposed by the United States of America or any state to which
TDC is subject, the failure to comply with which would, either individually or
in the aggregate, have a material adverse effect on the business, finances or
prospects of TDC.
SECTION 4.9 Litigation. There is no litigation, arbitration, proceeding or
investigation pending or threatened to which TDC is a party or which may result
in any material change in the business condition, financial or otherwise, of TDC
or in any of its properties or assets, or which questions the validity of this
Agreement or of any action taken or to be taken pursuant to or in connection
with the provisions of this Agreement, and to the best knowledge of TDC, there
is no basis for any such litigation, arbitration, proceeding or investigation,
except as otherwise set forth in Schedule 4.9. There are presently no
outstanding judgments, decrees or orders of any court or any governmental or
administrative agency against or affecting TDC or any of its assets that is not
disclosed herein.
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SECTION 4.10 Governmental Consent. No consent, approval, authorization or
order of, or registration, qualification, designation, declaration or filing
with, any governmental authority on the part of TDC is required in connection
with the execution and delivery of this Agreement or the carrying out of any
transactions contemplated herein.
SECTION 4.11 Authority. The Board of Directors of TDC has approved this
Agreement and duly authorized the execution hereof. TDC and each of the
corporate TDC Sellers has full power, authority and legal right to enter into
this Agreement and to consummate the transactions contemplated hereby, and all
corporate action necessary to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby has been
duly and validly taken. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance by TDC with
the provisions hereof will not (a) conflict with or result in a breach of any
provisions of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of the properties or
assets of TDC under, any of the terms, conditions or provisions of the
Certificate of Incorporation of TDC, or any note, bond, mortgage, indenture,
license, agreement or any instrument or obligation to which TDC is a party or by
which it is bound; or (b) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to TDC or any of its properties or assets.
SECTION 4.12 Ownership of Shares. TDC has received representations from
the TDC Sellers that the holders of 99.2% of the TDC common stock currently
issued and outstanding (which stock is to be transferred to DVL under this
Agreement) have full power and authority transfer such shares of TDC common
stock to DVL hereunder, and that such shares are free and clear of any liens,
charges, mortgages, pledges or encumbrances and that such shares are not subject
to any claims as to the ownership thereof, or any rights, powers or interest
therein, by any third party.
SECTION 4.13. Investment Purpose. TDC has received or shall receive
representations from its stockholders that the recipients of the restricted DVL
Shares hereunder are acquiring the shares for investment purposes only and
acknowledges that the DVL Shares issued hereunder are "restricted securities"
and may not be sold, traded or otherwise transferred without registration under
the Securities Act or exemption therefrom.
SECTION 4.14 Nonexistence of Disqualifying Orders. Neither TDC nor any of
its affiliates, directors, officers or principals is subject to any
disqualifying order under the "Bad Boy" provisions of the federal or any state"s
securities law as defined in Section 2.15.
SECTION 4.15 Full Disclosure. None of the representations and warranties
made by TDC herein, or in any exhibit, certificate or memorandum furnished or to
be furnished by, on its behalf pursuant hereto, contains or will contain any
untrue statement of material fact, or omits any material fact, the omission of
which would be misleading.
SECTION 4.16 Transactions and Affiliates. No officer or director of TDC or
any member of his or her immediate family, is a party to any material contract
or other business
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arrangement or relationship of any kind with TDC or has an ownership interest in
any material business, corporate or otherwise, which is a party to, or in any
property which is the subject of, business arrangements or relationships of any
kind with TDC.
ARTICLE V
COVENANTS OF TDC
SECTION 5.1 Conduct Prior to the Closing. Between the date hereof and the
Closing:
(a) Except within the regular course of business, TDC will not enter into
any material agreement, contract or commitment, whether written or oral, without
the prior written consent of DVL;
(b) TDC will not pay, incur or declare any dividends or distributions with
respect to its stockholders or amend its Certificate of Incorporation, without
the prior written consent of DVL;
(c) TDC will not authorize, issue, sell, purchase, or redeem any shares of
its common stock or any options or other rights to acquire shares of its common
stock without the prior written consent of DVL.
(d) Except within the regular course of business and in its financing
activities previously disclosed to DVL, TDC will not incur any indebtedness for
money borrowed or issue any debt securities, or incur or suffer to be incurred
any liability or obligation of any nature whatsoever, or cause or permit any
lien, encumbrance or security interest to be created or arise on or in any of
its properties or assets, without the prior written consent of DVL;
(e) TDC will not make any investment of capital nature either buy
purchased stock or securities, contribution to capital, property transfer or
otherwise, or by the purchase of any property or assets of any other Person.
(f) TDC will not do any other act which would cause representation or
warranty of DVL in this Agreement to be or become untrue in any material respect
or that is not in the ordinary course of business consistent with past practice.
(g) TDC shall not directly or indirectly (a) solicit any inquiry or
proposals or enter into or continue any discussions, negotiation or agreements
relating to (i) the sale or exchange of TDC"s capital stock, or (ii) the
Acquisition of TDC with any Person other than DVL; or (b) provide any assistance
or any information to, or other otherwise cooperate with, any Person in
connection with any such inquiry, proposal or transaction.
(h) TDC will comply with all requirements which federal or state law may
impose on
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it with respect to this Agreement and the transactions contemplated hereby, and
will promptly cooperate with and furnish written information to DVL in
connection with any such requirements imposed upon the parties hereto in
connection therewith;
(i) TDC shall grant to DVL and its counsel, accountants and other
representatives, full access during normal business hours during the period
prior to the Closing to all its respective properties, books, contracts,
commitments and records and, during such period, furnish promptly to DVL and
such representatives all information relating to TDC as DVL may reasonably
request, and shall extend to DVL the opportunity to meet with TDC's accountants
and attorneys to discuss the financial condition of TDC.
SECTION 5.2 Affirmative Covenants. Prior to Closing, TDC will do the
following:
(a) Use its best efforts to accomplish all actions necessary to consummate
this Agreement, including satisfaction of all conditions contained in this
Agreement; and
(b) Promptly notify DVL in writing of any material adverse change in the
financial condition, business, operations or key personnel of TDC, any
threatened material litigation or investigation, any breach of its
representations or warranties contained herein, and any material contract,
agreement, license or other agreement which, if in effect on the date of this
Agreement, should have been included in this Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense, except as provided for in Section 11.1.
SECTION 6.2. Brokers and Finders. Each of the parties hereto represents,
as to itself, that no agent, broker, investment banker or firm or person is or
will be entitled to any broker's or finder's fee or any other commission or
similar fee in connection with any of the transactions contemplated by this
Agreement.
SECTION 6.3 Necessary Actions. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action, and to do or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
In the event at any time after the Closing, any further action is necessary or
desirable to carry out the purpose of this Agreement, the proper managers,
officers and/or directors of DVL or TDC, as the case may be, shall take all such
necessary action.
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SECTION 6.4 Indemnification.
(a) General.
(i) Subsequent to the Closing, DVL and the Principal
Stockholders shall, jointly and severally, indemnify TDC, the TDC Sellers, and
the TDC Officers and directors, ("TDC Indemnified Parties") against, and hold
each of the TDC Indemnified Parties harmless from any damage, claim, loss, cost,
fine, liability, obligation or expense, including without limitation, interest,
penalties, reasonable attorneys" fees and expenses of investigation, diminution
of value, response action, removal action or remedial action (collectively
"Damages") incurred by any such TDC Indemnified Party, that are incident to,
arise out of, in connection with, or related to, whether directly or indirectly,
the breach of any warranty, representation, covenant or agreement of DVL or the
Principal Stockholders contained in this Agreement or any schedule hereto or in
any certificate or instrument of conveyance (including, without limitation, any
notice to be delivered to the shareholders of DVL) delivered by or on behalf of
DVL or the Principal Stockholders pursuant to this Agreement or in connection
with the transaction contemplated hereby.
(ii) Subsequent to the Closing, TDC and the TDC Sellers shall
indemnify DVL and the Principal Stockholders ("DVL Indemnified Parties")
against, and hold each of the DVL Indemnified Parties harmless from, any Damages
incurred by such DVL Indemnified Party, that are incident to, arise out of, in
connection with, or related to, whether directly or indirectly, the breach of
any warranty, representation, covenant or agreement of TDC contained in this
Agreement, any schedule or in any certificate or instrument of conveyance
delivered by or on behalf of TDC pursuant to this Agreement or in connection
with the transactions contemplated hereby.
The term "Damages" as used in this Section 6.4 is not limited to
matters asserted by third parties against TDC Indemnified Parties or DVL
Indemnified Parties, but includes Damages incurred or sustained by such persons
in the absence of third party claims.
(b) Procedure for Claims. If a claim for Damages (a "Claim") is to
be made by a person entitled to indemnification hereunder, the person claiming
such indemnification (the "Indemnified Party"), subject to clause (ii) below,
shall give written notice (a "Claim Notice") to the indemnifying person (the
"Indemnifying Party") as soon as practicable after the Indemnified Party becomes
aware of any fact, condition or event which may give rise to Damages for which
indemnification may be sought under this Section 6.4. The failure of any
Indemnified Party to give timely notice hereunder shall not affect rights to
indemnification hereunder, except and only to the extent that, the Indemnifying
Party demonstrates actual material damage caused by such failure. Failure by the
Indemnifying Party to respond within 30 days of delivery of a Claim Notice shall
constitute acceptance by the Indemnifying Party of responsibility to make
payment pursuant thereto. In the case of a Claim involving the assertion of a
claim by a third party (whether pursuant to a lawsuit or other legal action or
otherwise, a "Third-Party Claim"), if the Indemnifying Party shall acknowledge
in writing to the Indemnified
16
Party under the terms of its indemnity hereunder in connection with such
Third-Party Claim, then (A) the Indemnifying party shall be entitled and, if it
so elects, shall be obligated at its own cost, risk and expense, (1) to take
control of the defense and investigation of such Third-Party Claim and (2) to
pursue the defense thereof in good faith by appropriate actions or proceedings
promptly taken or instituted and diligently pursued, including, without
limitation, to employ and engage attorneys of its own choice reasonably
acceptable to the Indemnified Party to handle and defend the same, and (B) the
Indemnifying Party shall be entitled (but not obligated), if it so elects, to
compromise or settle such claim, which compromise or settlement shall be made
only with the prior written consent of the Indemnified Party, such consent not
to be unreasonably withheld. In the event the Indemnifying Party elects to
assume control of the defense and investigation of such lawsuit or other legal
action in accordance with this Section 6.4, the Indemnified Party may, at its
own cost and expense, participate in the investigation, trial and defense of
such Third-Party Claim; provided that, if the named persons to a lawsuit or
other legal action include both the Indemnifying Party and the Indemnified Party
and the Indemnified Party has been advised in writing by counsel that there may
be one or more legal defenses available to such Indemnified Party that are
different from or additional to those available to the Indemnifying Party, the
Indemnified Party shall be entitled, at the Indemnifying Party"s cost, risk and
expense, to separate counsel of its own choosing. If the Indemnifying Party
fails to assume the defense of such Third-Party Claim in accordance with this
Section 6.4 within 10 calendar days after receipt of the Claim Notice, the
Indemnified Party against which such Third-Party Claim has been asserted shall
upon delivering notice to such effect to the Indemnifying Party have the right
to undertake, at the Indemnifying Party"s cost, risk and expense, the defense,
compromise and settlement of such Third-Party Claim on behalf of and for the
account of the Indemnifying Party; provided that such Third-Party Claim shall
not be compromised or settled without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld. In the
event the Indemnifying Party assumes the defense of the claim, the Indemnifying
Party shall keep the Indemnified Party reasonably informed of the progress of
any such defense, compromise or settlement, and in the event the Indemnified
Party assumes the defense of the claim, the Indemnified Party shall keep the
Indemnifying Party reasonably informed of the progress of any such defense,
compromise or settlement. The Indemnifying Party shall be liable for any
settlement of any Third-party Claim effected pursuant to and in accordance with
this Section 6.4 and for any final judgment (subject to any right of appeal),
and the Indemnifying Party agrees to indemnify and hold harmless each
Indemnified Party from and against any and all Damages by reason of such
settlement or judgment.
(c) No Right of Contribution. After the Closing, no Principal
Stockholder shall have any right of contribution or other recourse against DVL
for any breach of any representation, warranty, covenant or agreement of DVL.
TDC and DVL shall be entitled to specific performance and injunctive relief,
without posting bond or other security, for the purpose of asserting their
respective rights under this Section 6.4. The remedies described in this Section
6.4 shall be in addition to, and not in lieu of, and any other remedies at law
or in equity that the parties may elect to pursue.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
The obligations of the parties under this Agreement are subject to the
fulfillment and satisfaction of each of the following conditions:
SECTION 7.1 Legal Action. No preliminary or permanent injunction or other
order by any federal or state court which prevents the consummation of this
Agreement or any of the transactions contemplated by this Agreement shall have
been issued and remain in effect.
SECTION 7.2 Absence of Termination. The obligations to consummate the
transactions contemplated hereby shall not have been canceled pursuant to
Article X hereof.
SECTION 7.3 Required Approvals. DVL and TDC shall have received all such
approvals, consents, authorizations or modifications as may be required to
permit the performance by DVL and TDC of their respective obligations under this
Agreement and the consummation of the transactions herein contemplated, whether
from governmental authorities or other persons, and DVL and TDC shall each have
received any and all permits and approvals from any regulatory authority having
jurisdiction required for the lawful consummation of this Agreement.
SECTION 7.4 "Blue Sky" Compliance. There shall have been obtained any and
all permits, approvals and consents of the appropriate state securities
commissions of any jurisdictions, and of any other governmental body or agency,
which counsel for DVL or TDC may reasonably deem necessary or appropriate so
that consummation of the transactions contemplated by this Agreement may be in
compliance with all applicable laws.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF DVL AND THE PRINCIPAL STOCKHOLDERS
All obligations of DVL under this Agreement are subject to the fulfillment
and satisfaction by TDC prior to or at the time for Closing, of each of the
following conditions, any one or more of which may be waived by DVL.
SECTION 8.1 Representations and Warranties True at Closing. All
representations and warranties of TDC contained in this Agreement will be true
and correct at and as of the time of the Closing, TDC shall have delivered to
DVL an Officer"s Certificate dated the Closing Date, and signed by a duly
authorized officer, in each case to such effect and in form and substance
satisfactory to DVL.
18
SECTION 8.2 Performance. The obligations of TDC to be performed on or
before the Closing pursuant to the terms of this Agreement shall be duly
performed at such time.
SECTION 8.3 Absence of Certain Changes or Events. There shall not have
occurred, since the date hereof, any adverse change in the business, condition
(financial or otherwise), assets or liabilities of TDC or any event or condition
of any character adversely affecting TDC.
SECTION 8.4 Closing Documents. TDC shall have delivered to DVL the
documents and other items described in Section 10.2 and such other documents and
items as DVL shall reasonably request.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF TDC
All obligations of TDC and the TDC Sellers under this Agreement are
subject to the fulfillment and satisfaction by DVL and the Principal
Stockholders prior to or at the time of Closing, of each of the following
conditions, any one or more of which may be waived by TDC.
SECTION 9.1 Representations and Warranties True at Closing. All
representations and warranties of DVL and the Principal Stockholders contained
in this Agreement will be true and correct at and as of the time of the Closing,
and DVL and the Principal Stockholders shall have delivered to TDC an Officer"s
Certificate dated the Closing Date, to such effect and in the form and substance
satisfactory to TDC.
SECTION 9.2 Performance. The obligations of DVL and the Principal
Stockholders to be performed on or before the Closing pursuant to the terms of
this Agreement shall have been duly performed at such time.
SECTION 9.3 Absence of Certain Changes or Events. There shall not have
occurred, since the date hereof, any adverse change in the business, condition
(financial or otherwise), assets or liabilities of DVL or any event or condition
of any character adversely affecting DVL.
SECTION 9.4 Resignations and Releases. Prior to the Closing of this
Agreement, the current directors and officers of DVL shall have submitted their
resignations as directors and officers of DVL, and general releases in favor of
DVL, effective as of the time set forth in Section 1.3 (except in the case of Xx
Xxxxx, whose resignation and release delivered at Closing shall be effective as
of the 10th day following the Closing Date).
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SECTION 9.5 Appointment of New Officers and Directors. At Closing, the
remaining director of DVL will appoint the following TDC designees as officers
and directors of DVL:
Xxxxxxxx Deutsch (Director), Vice President
Xxxxx Xxxxxxxxx, (Director), Secretary and Treasurer
SECTION 9.6 Opinion of Counsel. DVL shall deliver to TDC an opinion of
counsel substantially in the form previously provided to DVL's counsel.
SECTION 9.7 Closing Documents. DVL and the Principal Stockholders, as the
case may be, shall have delivered to TDC the documents and other items described
in Section 10.1 and such other documents and items as TDC may reasonably
require.
SECTION 9.8 Exemption Under Federal and State Securities Laws. The
issuance of shares of DVL in the Acquisition shall not violate any federal or
state securities laws.
SECTION 9.9 Charter Amendment. The Amendment to the Certificate of
Incorporation of DVL as described in Section 1.3 shall have occurred and the
notice to shareholders referred to in such Section shall have been duly sent in
accordance with the DGCL.
SECTION 9.10 Exercise of Warrant. The Warrant shall have been exercised
and DVL shall have received proceeds of $1,000,000 as described in Section
2.2(d).
ARTICLE X
CLOSING
On the Closing Date:
SECTION 10.1 Deliveries by DVL. DVL shall deliver (or cause to be
delivered) to TDC:
(a) any Consents required to be obtained by DVL and the Principal
Stockholders;
(b) an Officer's Certificate as described in Section 9.1 hereof,
dated the Closing Date, that confirms the satisfaction of the conditions set
forth in Sections 9.1, 9.2 and 9.3;
(c) all DVL company books and records;
(d) an opinion of legal counsel to DVL dated as of the Closing Date,
in a form reasonably satisfactory to TDC;
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(e) the Acquisition Shares to be issued to the TDC shareholders in
accordance with Section 1.2;
(f) evidence that this Agreement and the transactions contemplated
hereby have been approved by the stockholders owning a majority of the issued
and outstanding common stock of DVL;
(g) certificates of good standing from Delaware and any other state
in which DVL is required to be qualified to do business;
(h) a Secretary"s Certificate of DVL, in the form and substance
satisfactory to TDC, attaching thereto the current Certificate of Incorporation
of DVL, bylaws of DVL and meeting minutes from all Board and shareholder
meetings for the last five years as well as verifying that no other director or
stockholder minutes exist and no other director or stockholder meetings took
place;
(i) such other documents and certificates duly executed as may
reasonably be requested by TDC prior to the Closing Date;
SECTION 10.2 Delivered by TDC. TDC shall deliver to DVL:
(a) any Consents required to be obtained by TDC;
(b) TDC shall deliver a Officer"s Certificate as described in
Section 8.1 hereof, dated the Closing Date, that confirms the satisfaction of
the conditions set forth in Sections 8.1, 8.2 and 8.3;
(c) certificates of good standing from New York and any other state
in which TDC is required to be qualified to do business.
(d) such other documents and certificates duly executed as may
reasonably be requested by DVL prior to the Closing Date.
SECTION 10.3 Termination. Notwithstanding anything herein or elsewhere to
the contrary, this Agreement may be terminated:
(a) By mutual agreement of the parties hereto at any time prior to the
Closing;
(b) By DVL at any time prior to the Closing, if:
(i) a condition to performance by DVL under this Agreement or
a covenant of TDC contained herein shall not be fulfilled on or
before the date of the Closing or at such other time and date
specified in this Agreement for the
21
fulfillment of such covenant or condition; or
(ii) a material default or breach of this Agreement shall be
made by TDC;
(c) By TDC at any time prior to the Closing, if:
(i) a condition to TDC 's performance under this Agreement or
a covenant of DVL contained herein shall not be fulfilled on or
before the date of the Closing or at such other time and date
specified in this Agreement for the fulfillment of such covenant or
condition; or
(ii) a material default or breach of this Agreement shall be
made by DVL or a Principal Stockholder.
SECTION 10.4 Effect of Termination. If this Agreement is terminated, this
Agreement, except as to Section 11.1 and Section 11.2, shall no longer be of any
force or effect and there shall be no liability on the part of any party or its
respective directors, officers or stockholders; provided however, that in the
case of a termination pursuant to Section 10.1 (b)(ii) or 10.1(c)(ii) hereof
because of a prior material default under or a material breach of this Agreement
by another party, the damages which the aggrieved party or parties may recover
from the defaulting party or parties shall in no event exceed the amount of
out-of-pocket costs and expenses incurred by such aggravated party or parties in
connection with this Agreement, and no party to this Agreement shall be entitled
to any injunctive relief.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Cost and Expenses. In the event of any termination of this
Agreement pursuant to Section 10.3, subject to the provisions of Section 10.4,
DVL and TDC will each bear their own respective expenses.
SECTION 11.2 Extension of time: Waivers. At any time prior to the Closing:
(a) DVL may in its sole discretion (i) extend the time for the performance
of any of the obligations or other acts of TDC, (ii) waive any inaccuracies in
the representations and warranties of TDC contained herein or in any documents
delivered pursuant hereto by TDC and (iii) waive compliance with any of the
agreements or conditions contained herein to be performed by TDC. Any agreement
on the part of DVL to any such extension or waiver shall be valid only if set
forth in an instrument, in writing, signed on behalf of DVL and shall only be
effective in the specific instance. No waiver or any condition or provision
shall be deemed to be a subsequent waiver of such condition or provision or a
waiver of any condition or provision other than the one specifically waived.
22
(b) TDC may in its sole discretion (i) extend the time for the performance
of any of the obligations or other acts of DVL, (ii) waive any inaccuracies in
the representations and warranties of DVL contained herein or in any documents
delivered pursuant hereto by DVL and (iii) waive compliance with any of the
agreements or conditions contained herein to be performed by DVL. Any agreement
on the part of TDC to any such extension or waiver shall be valid only if set
forth in an instrument, in writing, signed on behalf of TDC and shall only be
effective in the specific instance. No waiver or any condition or provision
shall be deemed to be a subsequent waiver of such condition or provision or a
waiver of any condition or provision other than the one specifically waived.
SECTION 11.3 Notices. Any notice to any party hereto pursuant to this
Agreement shall be in writing and given by Certified or Registered Mail, Fedex
or by facsimile, addressed as follows:
TACONIC DATA CORP. D-VINE LTD.
000 Xxxxxxx Xxxxxx 000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000 0xx Xxxxx
Xxxx.: Xxxxx Xxxxxxxxx Xxx Xxxx, XX 00000
Fax: (000) 000-0000 Attn.: Xx Xxxxx
Fax: (000) 000-0000
Any notice to any TDC Seller shall be valid if it is delivered to
TDC at the address set forth above. Each TDC Seller hereby irrevocably appoints
TDC as its agent and attorney-in-fact with respect to notices to be provided
under this Section 11.3 and all other matters and actions to be taken by the TDC
Sellers in or contemplated by this Agreement. Any notice to any Principal
Stockholder shall be valid if it is delivered to DVL at the address set forth
above. Each Principal Stockholder hereby irrevocably appoints DVL as its agent
and attorney-in-fact with respect to notices to be provided under this Section
11.3 and all other matters and actions to be taken by the Principal Stockholders
in or contemplated by this Agreement.
Additional notices are to be given as to each party, at such other address
as should be designated in writing complying as to delivery with the terms of
this Section 11.3. All such notices shall be effective when sent, addressed as
aforesaid.
SECTION 11.4 Parties in Interest. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and the respective successors
and assigns. Nothing in this Agreement is intended to confer, expressly or by
implication, upon any other person any rights or remedies under or by reason of
this Agreement.
SECTION 11.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and together shall
constitute one document. The delivery by facsimile of an executed counterpart of
this Agreement shall be deemed to be an original and shall have the full force
and effect of an original executed copy.
23
SECTION 11.6 Severability. The parties hereto agree and affirm that none
of the provisions herein is dependent upon the validity of any other provision,
and if any part of this Agreement is deemed to be unenforceable, the remainder
of the Agreement shall remain in full force and effect.
SECTION 11.7 Headings. The "Article" and "Section" headings are provided
herein for convenience of reference only and do not constitute a part of this
Agreement.
SECTION 11.8 Survival of Representations and Warranties. All terms,
conditions, representations and warranties set forth in this Agreement or in any
instrument, certificate, opinion, or other writing providing for in it, shall
survive the Closing and the delivery of the DVL Shares issued hereunder at the
Closing, for a period of one year from the Closing regardless of any
investigation made by or on behalf of any of the parties hereto.
SECTION 11.9 Assignability. This Agreement shall not be assigned by any of
the parties hereto without the prior written consent of the other parties.
SECTION 11.10 Amendment. This Agreement may be amended with the approval
of the Boards of Directors of DVL and TDC at any time before or after approval
thereof by stockholders of DVL, if required, and TDC; but after such approval by
the DVL shareholders, no amendment shall be made which substantially and
adversely changes the terms hereof. This Agreement may not be amended except by
an instrument, in writing, signed on behalf of each of the parties hereto.
SECTION 11.11 Choice of Law. This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with the laws
of the State of New York except with respect to matters of law concerning the
internal corporate affairs of any corporate entity which is a party to or the
subject of this Agreement, and as to those matters the law of the jurisdiction
under which the respective entity derives its powers shall govern.
SECTION 11.12 Publicity; Confidentiality. (a) Except as required by law or
on advice of counsel, neither party shall issue any press release or make any
public statement regarding the transactions contemplated hereby without the
prior approval of the other parties, and the parties hereto shall issue a
mutually acceptable press release as soon as practicable after the date hereof
and after the Closing Date.
(b) The parties hereto acknowledge that in the course of doing
their respective due diligence investigations or otherwise that they, or their
agents, attorneys, accountants, or other personnel may become privy to
confidential information, and the parties hereby agree that they shall keep such
information confidential unless the prior, express written consent of the other
party has been obtained.
24
SECTION 11.13 Definitions.
"Permits" means all licenses, permits, franchises, approvals,
authorizations, consents or order of, or filing with, any governmental
authority, whether foreign, federal, state or local, necessary or desirable for
the past, present or anticipated conduct or operation of the business or
ownership of the assets of such person.
"Person" means any person or entity, whether an individual, trustee,
corporation, limited liability company, general partnership, limited
partnership, trust, unincorporated organization, business association, firm,
joint venture, governmental agency or authority or any similar entity.
[ SIGNATURE PAGES FOLLOW ]
25
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement in a manner legally binding upon them as of the date first above
written.
D-VINE, LTD.
By: ____________________________
President
PRINCIPAL STOCKHOLDERS OF D-VINE, LTD.
D-VINE INVESTMENT PARTNERS
By: _______________________
Xx Xxxxx, General Partner
TACONIC DATA CORP.
By: ____________________________
President
________________________________
Xxxxx Xxxxxxx
________________________________
Xxxxxxx Xxxxxxxxxxx
________________________________
Xxxxx Deutsch
________________________________
Xxxxx Deutsch
26
________________________________
Xxxxxxxx Deutsch
________________________________
Noah Deutsch
________________________________
Xxxxx X. Xxxxxxxxx
________________________________
Xxxxx X. Xxxxxxxxx
________________________________
Xxxxx Xxxxxxxxx
________________________________
Xxxxx Xxxxxxxxx
________________________________
Xxxxx Xxxxxxxxxx
________________________________
Xxx Xxxxxxxx
________________________________
Xxxxxx X. Xxxxx
________________________________
Xxxx Xxxxx
27
XXXXXXX-XXXXXXXXXXX FOUNDATION
By: ____________________________
XXXXXX ASSOCIATES
By: ____________________________
TRUSTEES OF XXXXXXXX COLLEGE
By: ____________________________
WHAT ABOUT ME, INC.
By: ____________________________
28
SCHEDULE 1.2 ACQUISITION SHARES TO BE DELIVERED
TDC Sellers Amounts
----------- -------
Xxxxx Xxxxxxx 2,102
Xxxxxxx Xxxxxxxxxxx 2,102
Xxxxx Deutsch 23,040
Xxxxx Deutsch 23,040
Xxxxxxxx Deutsch 3,079,054
Noah Deutsch 23,040
Xxxxx X. Xxxxxxxxx 352,622
Xxxxx X. Xxxxxxxxx 283,050
Xxxxx Xxxxxxxxx 23,040
Xxxxx Xxxxxxxxx 1,315,496
Xxxxx Xxxxxxxxxx 100,000
Xxx Xxxxxxxx 160,344
Xxxxxx X. Xxxxx 4,265
Xxxx Xxxxx 11,675
Xxxxxxx-Xxxxxxxxxx
Foundation 1,557
Xxxxxx Associates 99,764
Trustees Of
Xxxxxxxx College 2,880
What About Me, Inc. 492,929
SCHEDULE 2.11 LEGAL PROCEEDINGS
None
SCHEDULE 2.14 BANK ACCOUNTS
DVL has an account at the Bank of New York under account #0000000000.
SCHEDULE 4.1 ENTITIES CONTROLLED BY TDC
None
SCHEDULE 4.2 WARRANTS, RIGHTS, CALLS, COMMITMENTS, ETC.
None
SCHEDULE 4.9 TDC LITIGATION, ETC.
TDC is a plaintiff in two separate actions against Realization
Services, Inc. arising out of a consulting arrangement between TDC and
Realization Services, Inc. One such action by TDC is being disputed in
arbitration in Westchester County, New York and seeks approximately $600,000.
The other action by TDC seeks approximately $40,000 from Realization Services,
Inc. in New York State Supreme Court.
