AGREEMENT AND PLAN OF MERGER among GCA II ACQUISITION CORP., a Delaware Corporation, SECURLINX ACQUISITION CORP., a Delaware Corporation, SECURLINX HOLDING CORP., a Delaware Corporation, and BARRY L. HODGE, an Individual Dated: August 18, 2008
AGREEMENT
AND PLAN OF MERGER
among
GCA
II
ACQUISITION CORP., a Delaware Corporation,
SECURLINX
ACQUISITION CORP., a Delaware Corporation,
SECURLINX
HOLDING CORP., a Delaware Corporation,
and
XXXXX
X.
XXXXX, an Individual
Dated:
August 18, 2008
TABLE
OF CONTENTS
Section
|
Page
|
|
ARTICLE
I - THE MERGER
|
||
1.1
The Merger
|
2
|
|
1.2
Effective Time; Closing
|
2
|
|
1.3
Effects of the Merger
|
2
|
|
1.4
Post-Merger Actions
|
3
|
|
1.5
Further Assurances
|
3
|
|
|
||
ARTICLE
II - CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
|
|
|
2.1
Conversion of Securities
|
4
|
|
2.2
Exchange of Securities and Certificates
|
5
|
|
2.3
Dissenters' Rights
|
8
|
|
2.4
Withholding
|
8
|
|
2.5
Stock Transfer Books
|
8
|
|
|
||
|
||
3.1
Authority Relative To The Operative Agreements
|
8
|
|
3.2
Execution; Enforceability
|
8
|
|
3.3
Title to Securities of the Company
|
9
|
|
3.4
No Conflicts
|
9
|
|
3.5
Governmental Approvals and Filings
|
9
|
|
3.6
Legal Proceedings
|
9
|
|
|
|
|
|
||
4.1
Organization and Qualification; Subsidiaries
|
10
|
|
4.2
Certificate of Incorporation and Bylaws
|
10
|
|
4.3
Books and Records
|
10
|
|
4.4
Capitalization
|
11
|
|
4.5
Authority Relative To This Agreement
|
11
|
|
4.6
No Conflict; Required Filings and Consents
|
12
|
|
4.7
Permits; Compliance
|
13
|
|
4.8
Financial Statements
|
13
|
|
4.9
Notes and accounts Receivable
|
13
|
|
4.10
Undisclosed Liabilities
|
14
|
|
4.11
Taxes
|
14
|
|
4.12
Title To Personal Property
|
16
|
|
4.13
Condition of Tangible Fixed Assets
|
16
|
|
4.14
Inventory
|
16
|
|
4.15
Product Warranty
|
17
|
|
4.16
Product Liability
|
17
|
|
4.17
Real Property
|
17
|
i
4.18
Intellectual Property
|
17
|
|
4.19
Material Contracts
|
21
|
|
4.20
Litigation
|
23
|
|
4.21
Employee Benefit Plans
|
23
|
|
4.22
Labor and Employment Matters
|
26
|
|
4.23
Environmental
|
26
|
|
4.24
Related Party Transactions
|
28
|
|
4.25
Insurance
|
28
|
|
4.26
Absence of Certain Changes or Events
|
29
|
|
4.27
Solvency
|
29
|
|
4.28
Brokers or Finders
|
30
|
|
4.29
No Illegal Payments
|
30
|
|
4.30
Information Supplied
|
30
|
|
4.31
Antitakeover Statutes
|
30
|
|
4.32
Compliance with Securities Laws
|
30
|
|
4.33
Change in Control
|
30
|
|
4.34
Powers of Attorney
|
30
|
|
4.35
Material Disclosures
|
30
|
|
|
|
|
ARTICLE
V - REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB
|
|
|
5.1
Corporate Organization and Qualification
|
31
|
|
5.2
Certificate of Incorporation and Bylaws
|
31
|
|
5.3
Books and Records
|
31
|
|
5.4
Capitalization
|
32
|
|
5.5
Authority Relative To This Agreement
|
32
|
|
5.6
No Conflict; Required Filings and Consents
|
33
|
|
5.7
SEC Reports; Financial Statements
|
33
|
|
5.8
Taxes
|
34
|
|
5.9
Absence of Litigation
|
36
|
|
5.10
Related Party Transactions
|
36
|
|
5.11
Ownership of Merger Sub; No Prior Activities
|
36
|
|
5.12
Absence of Certain Changes or Events
|
36
|
|
5.13
No Illegal Payments
|
37
|
|
5.14
Antitakeover Statutes
|
37
|
|
5.15
Compliance with Securities Laws
|
38
|
|
5.16
Brokers or Finders
|
38
|
|
|
||
ARTICLE
VI - COVENANTS RELATING TO CONDUCT OF BUSINESS PENDING THE
MERGER
|
||
6.1
Conduct of Business by the Company Pending the Merger
|
38
|
|
6.2
Conduct of Business by Parent Pending the Merger
|
40
|
|
6.3
Conduct
of Company Principal Stockholder Pending the Merger
|
40
|
|
|
||
ARTICLE
VII - ADDITIONAL AGREEMENTS
|
||
7.1
Voting and Lock-Up Agreement
|
40
|
ii
7.2
Certain Corporate and Securities Compliance
|
40
|
|
7.3
Regulatory Approvals
|
43
|
|
7.4
Public Announcements
|
44
|
|
7.5
Tax-Free Reorganization.
|
44
|
|
7.6
Consents
|
44
|
|
7.7
Notification of Certain Matters
|
44
|
|
7.8
Conveyance Taxes
|
44
|
|
7.9
Dissenters' Rights
|
44
|
|
7.10
Post-Closing Current Report Filing on Form 8-K
|
45
|
|
7.11
Post-Closing Establishment of Trading Market; Quotation; Listing
|
45
|
|
7.12
Certain Registration Obligations
|
45
|
|
7.13
Certain Liability & Indemnification
|
47
|
|
7.14
Further Assurances
|
48
|
|
8.1
Conditions to the Obligations of Each Party to Effect the
Merger
|
48
|
|
8.2
Conditions to the Obligations of Parent and Merger Sub to Effect
the
Merger
|
49
|
|
8.3
Conditions to the Obligations of the Company to Effect the
Merger
|
50
|
|
|
||
ARTICLE
IX - TERMINATION, AMENDMENT AND WAIVER
|
||
9.1
Termination
|
51
|
|
9.2
Amendment
|
52
|
|
9.3
Waiver
|
52
|
|
ARTICLE
X - MISCELLANEOUS
|
||
10.1
Notices
|
52
|
|
10.2
Certain Definitions
|
53
|
|
10.3
Index of Other Defined Terms
|
59
|
|
10.4
Interpretation
|
61
|
|
10.5
Survival
|
62
|
|
10.6
Severability
|
62
|
|
10.7
Assignment; Binding Effect; Benefit
|
62
|
|
10.8
Fees and Expenses
|
62
|
|
10.9
Incorporation of Schedules
|
63
|
|
10.10
Specific Performance
|
63
|
|
10.11
Governing Law
|
63
|
|
10.12
Consent to Jurisdiction;Waiver of Jury Trial
|
63
|
|
10.13
Headings
|
64
|
|
10.14
Counterparts
|
64
|
|
10.15
Entire Agreement
|
64
|
EXHIBITS
|
||
Exhibit
A
|
Form
of Voting and Lock-Up
Agreement
|
|
Exhibit
B
|
Form
of Certificate of Merger
|
|
Exhibit
C
|
Certificate
of Incorporation – Merger
Sub
|
iii
Exhibit
D
|
Bylaws –
Merger
Sub
|
SCHEDULES
|
||
Schedule
A
|
Company
Disclosure Schedule
|
|
Organization
and Qualification; Subsidiaries
|
Section
4.1
|
|
Capitalization
|
Section
4.4
|
|
No
Conflict; Required Filings and Consents
|
Section
4.6
|
|
Permits;
Compliance
|
Section
4.7
|
|
Financial
Statements
|
Section
4.8
|
|
Taxes
|
Section
4.11
|
|
Inventory
|
Section
4.14
|
|
Real
Property
|
Section
4.17
|
|
Intellectual
Property
|
Section
4.18
|
|
Material
Contracts
|
Section
4.19
|
|
Litigation
|
Section
4.20
|
|
Employee
Benefit Plans
|
Section
4.21
|
|
Environmental
|
Section
4.23
|
|
Related
Party Transactions
|
Section
4.24
|
|
Insurance
|
Section
4.25
|
|
Absence
of Certain Changes or Events
|
Section
4.26
|
|
Change
in Control
|
Section
4.33
|
|
Conduct
of Business by the Company Pending the Merger
|
Section
6.1
|
|
|
||
Schedule
B
|
Parent
Disclosure Schedule
|
|
Capitalization
|
Section
5.4
|
|
No
Conflict; Required Filings and Consents
|
Section
5.6
|
|
Taxes
|
Section
5.8
|
|
Absence
of Certain Changes or Events
|
Section
5.12
|
|
Conduct
of Business by the Parent Pending the Merger
|
Section
6.2
|
iv
This
AGREEMENT AND PLAN OF MERGER, dated as of August 18, 2008 (this “Agreement”),
among
GCA II Acquisition Corp., a Delaware corporation (“Parent”),
SecurLinx Acquisition Corp., a Delaware corporation and a direct, wholly-owned
Subsidiary of Parent (“Merger
Sub”),
SecurLinx Holding Corp., a Delaware corporation (the “Company”)
and
Xxxxx X. Xxxxx, the President, Chief Executive Officer, and a majority
shareholder of the Company (the “Company
Principal Stockholder”)
(Parent, Merger Sub, Company, and the Company Principal Stockholder may
hereinafter be referred to individually as a “Party”
or
collectively as the “Parties”).
WHEREAS,
upon the terms and subject to the conditions of this Agreement and in accordance
with the Delaware General Corporation Law (the “DGCL”),
Parent, Merger Sub, and the Company intend to enter into a certain business
combination transaction;
WHEREAS,
the board of directors of the Company (i) has determined that the Merger (as
defined in Section 1.1 below) is in the best interests of the Company and its
shareholders (ii) has approved this Agreement, the Merger, and the other
transactions contemplated hereby (collectively, the “Transactions”)
(iii)
has adopted a resolution declaring the Merger advisable, and (iv) has determined
to recommended approval of this Agreement by, and directed that this Agreement
be submitted to a vote of, the shareholders of the Company;
WHEREAS,
the board of directors of Parent (i) has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of Parent
and fair to, and in the best interests of, Parent and its stockholders, (ii)
has
approved this Agreement, the Merger and the Transactions, (iii) has adopted
a
resolution declaring the Merger advisable, and (iv) has approved the issuance
of
certain shares of the common stock of Parent, $.0001
par value per share (“Parent
Common Stock”),
pursuant
to the Merger; and
NOW,
THEREFORE, in consideration of the covenants, promises and representations
set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as
follows:
1
ARTICLE
I
THE
MERGER
1.1 The
Merger.
Upon
the terms and subject to the conditions set forth in this Agreement, and
pursuant to the certificate of merger in such form as is required by and
executed in accordance with the relevant provisions of the DGCL, a form of
which
is annexed hereto as Exhibit B (the “Certificate
of Merger”),
at
the Effective Time (as hereinafter defined), Merger Sub shall be merged with
and
into the Company and the separate corporate existence of Merger Sub shall
thereupon cease, and the Company shall continue as the surviving corporation
(the “Surviving
Corporation”)
of the
Merger (the “Merger”)
(Merger Sub and the Company are sometimes referred to herein jointly as the
“Constituent
Corporations”).
As a
result of the Merger, the outstanding shares of capital stock of the Company
and
Merger Sub shall be converted or canceled in the manner provided in Article
II
of this Agreement.
1.2 Effective
Time; Closing.
The
closing of the Merger (the “Closing”)
shall
take place at the offices of the Company at 10:00 a.m. on a date to be specified
by the Parties which shall be no later than two (2) Business Days following
the
satisfaction or waiver (as provided herein) of the conditions set forth in
Article VIII ( other than those conditions that by their nature are to be
satisfied at the Closing), unless another time, date and/or place is agreed
to
in writing by the Parties (the date upon which the Closing occurs is referred
to
hereinafter as the “Closing
Date”).
Simultaneously with, or as soon as practicable following the Closing, the
Company, as the surviving corporation, shall file the Certificate of Merger
with
the Secretary of State of the State of Delaware (the “Delaware
Secretary of State”)
as
provided in Section 252(c) of the DGCL. The Merger shall become effective at
such time as the Certificate of Merger is so filed or at such later time as
may
be specifically set forth in the Certificate of Merger, if different, which
time
is hereinafter referred to as the “Effective
Time”.
1.3 Effects
of the Merger.
At and
after the Effective Time:
(a) the
Merger shall have the effects as set forth in the applicable provisions of
the
DGCL, including without limitation Section 259(a) thereof. Without limiting
the
generality of the foregoing, and subject thereto, at the Effective Time, all
the
rights, privileges, immunities, powers and franchises (of a public as well
as of
a private nature) of the Company and Merger Sub and all property (real, personal
and mixed) of the Company and Merger Sub and all debts due to either the Company
or Merger Sub on any account, including subscriptions to shares, and all other
choses in action, and every other interest of or belonging to or due to each
of
the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, Liabilities, obligations and duties of each of the Company and Merger
Sub
shall become the debts, Liabilities, obligations and duties of the Surviving
Corporation and may be enforced against the Surviving Corporation to the same
extent as if such debts, Liabilities, obligations and duties had been incurred
or contracted by the Surviving Corporation, and all rights of creditors and
all
Liens upon any property of the Company or Merger Sub shall be preserved
unimpaired in the Surviving Corporation following the Merger;
(b) the
certificate of incorporation of the Company shall be the certificate of
incorporation of the Surviving Corporation until such time as it may thereafter
be amended in accordance with applicable Delaware Law;
(c) the
bylaws of the Company shall be the bylaws of the Surviving Corporation until
such time as they may thereafter be amended in accordance with applicable
Delaware Law;
2
(d) the
directors and officers of the Company immediately prior to the Effective Time
shall remain the directors and officers of the Surviving Corporation, each
to
hold office until their respective death, permanent disability, resignation
or
removal or until their respective successors are duly elected and qualified,
all
in accordance with the certificate of incorporation and bylaws of the Surviving
Corporation and applicable Law.
1.4 Post-Merger
Actions.
(a) Immediately
following the Effective Time:
(i) the
officers of Parent prior to the Effective Time shall resign their respective
positions as officers of Parent;
(ii) unless
otherwise agreed to in writing among Parent, the Surviving Corporation and
Xxxxxxx X. Xxxxxxxx, Xx. Xxxxxxxx, the sole director of Parent as of the date
hereof, shall resign his seat on the board of directors of Parent;
and
(b) As
soon
as practicable following the Effective Time:
(i) the
board
of directors of Parent, through appropriate action duly taken, shall amend
the
bylaws of Parent to permit a board of directors of not less than one
(1) nor more than twelve (12) directors;
(ii) the
board
of directors of Parent, through appropriate action duly taken, shall appoint
as
directors to fill some or all of such vacancies such persons as the management
of the Company shall designate, which designees shall include a majority of
“independent” directors as such term is defined under the Rules of the American
Stock Exchange; and
(iii) the
board
of directors of Parent, through appropriate action duly taken, shall elect
new
officers of Parent.
1.5 Further
Assurances.
If, at
any time after the Effective Time, the Surviving Corporation shall consider
or
be advised that any deeds, bills of sale, assignments or assurances or any
other
acts or things are necessary, desirable or proper (a) to vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation its right, title
and interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of either of the Constituent Corporations, or
(b) otherwise to carry out the purposes of this Agreement, the Surviving
Corporation and its proper officers and directors or their designees shall
be
authorized to execute and deliver, in the name and on behalf of either
Constituent Corporation, all such deeds, bills of sale, assignments and
assurances and to do, in the name and on behalf of either Constituent
Corporation, all such other acts and things as may be necessary, desirable
or
proper to vest, perfect or confirm the Surviving Corporation’s right, title and
interest in, to and under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry
out
the purposes of this Agreement.
3
ARTICLE
II
2.1 Conversion
of Securities.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
Parent, Merger Sub, the Company or any shareholders of Parent, Merger Sub or
the
Company (each stockholder of the Company being referred to individually
hereinafter as a “Company
Stockholder”):
(a) Subject
to the other provisions of this Section 2.1 and to Section 2.2:
(i) Each
share of common
stock, par value $0.001 per share, of the Company (“Company
Common Stock”)
issued
and outstanding immediately prior to the Effective Time (each, a “Cancelable
Common Share”)
shall
be automatically converted without payment of any consideration (subject to
any
required adjustment pursuant to Subsection (c) of this Section 2.1) into the
right to receive one (1) share of fully paid and nonassessable Parent Common
Stock (the “Exchange
Ratio”);
provided,
however,
that,
in the event that any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or otherwise subject to a repurchase
option, risk of forfeiture, or other condition under any applicable restricted
stock purchase or other agreement with the Company, then the shares of Parent
Common Stock to be issued in exchange for such shares of Company Common Stock
shall also be unvested and subject to the same repurchase option, risk of
forfeiture or other condition without regard, however, to any provisions
regarding the acceleration of vesting in the event of certain transactions
that
may otherwise be applicable.
At the
Effective Time, (a)
all
such shares of Company Common Stock shall be deemed no longer to be outstanding
and shall automatically be canceled and cease to exist, and each certificate
previously evidencing any such shares shall thereafter represent the right
to
receive a certificate representing the shares of Parent Common Stock into which
such shares of Company Common Stock shall have been converted in the Merger
pursuant to this Section 2.1(a)(i), (b)
the
holders of certificates previously evidencing shares of Company Common Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Company Common Stock except as otherwise
provided herein or under the DGCL, (c)
any
certificates previously evidencing shares of Company Common Stock shall be
exchanged for certificates representing whole shares of Parent Common Stock
issued in consideration therefor upon the surrender of such certificates in
accordance with the provisions of Section 2.2 of this Agreement, and
(d)
the
certificates representing any shares of Parent Common Stock which have been
exchanged for shares of Company Common Stock which, immediately prior to the
Effective Time, had been unvested or otherwise subject to a repurchase option,
risk of forfeiture, or other condition under any applicable restricted stock
purchase or other agreement with the Company, shall contain an appropriate
legend evidencing such continuing restriction.
(ii) Each
convertible note and/or debenture of the Company (“Company
Convertible Debentures”)
issued
and outstanding as of the date hereof and which remains issued and outstanding
immediately prior to the Effective Time (each, a “Cancelable
Convertible Debenture”)
shall
be automatically converted without payment of any consideration (subject to
any
required adjustment pursuant to Subsection (c) of this Section 2.1) into the
right to receive a convertible note and/or debenture of Parent convertible
into
the same number of shares (rounded down to the nearest whole number) of fully
paid and nonassessable Parent Common Stock equal to the number of shares of
Company Common Stock into which each such Cancelable Convertible Debenture
would
have been convertible as of the Effective Time adjusted to give effect to the
Exchange Ratio (each, a “Parent
Convertible Debenture”).
At
the Effective Time, (a)
all
such Cancelable Convertible Debentures shall be deemed no longer to be
outstanding and shall automatically be canceled and cease to exist, and each
note or certificate previously evidencing any such Company Convertible
Debentures shall thereafter represent the right to receive a note or certificate
representing a Parent Convertible Debenture in the same face amount as the
corresponding Cancelable Convertible Debenture,and (b)
the
holders of notes or certificates previously evidencing Cancelable Convertible
Debentures outstanding immediately prior to the Effective Time shall cease
to
have any rights with respect to such Cancelable Convertible Debentures except
as
otherwise provided herein or under the DGCL; and
4
(iii) each
share of common stock, par value $.0001 per share, of Merger Sub (“Merger
Sub Common Stock”)
issued
and outstanding immediately prior to the Effective Time shall be converted
into
one (1) validly issued, fully paid and nonassessable share of common stock
of
the Surviving Corporation at the Effective Time, and the Surviving Corporation
thereafter shall have no other equity securities.
(b) It
is
expressly understood and acknowledged that no fractional shares of Parent Common
Stock shall be issued in connection with the Merger and that no holder of
Cancelable Common Shares or Cancelable Convertible Debentures shall be entitled
to receive a cash payment in lieu of any fractional share of Parent Common
Stock.
(c) If
between the date of this Agreement and the Effective Time the outstanding shares
of Parent Common Stock shall have been changed into a different number of shares
or a different class, by reason of any stock dividend, reclassification,
recapitalization, split, division, subdivision, combination or exchange of
shares, the Exchange Ratio shall be correspondingly adjusted to reflect such
stock dividend, reclassification, recapitalization, split, division,
subdivision, combination or exchange of shares.
(a) Following
the execution hereof, and as of or before the Effective Time, Parent shall
enter
into an agreement with a qualified agent to serve as exchange agent in
connection with the Merger which agent shall be mutually agreed upon by each
of
Parent and the Company (the “Exchange
Agent”).
Upon
the Company’s receipt of Company Stockholder Approval, Parent shall deposit, or
shall cause to be deposited, with the Exchange Agent, for the benefit of the
holders of Cancelable Common Shares and Cancelable Convertible Debentures
(collectively, the “Cancelable
Securities”)
for
exchange in accordance with this Article II, through the Exchange Agent,
certificates representing (i) the whole shares of Parent Common Stock issuable
pursuant to Sections 2.1(a)(i) in exchange for Cancelable Common Shares, and
Parent Convertible Debentures issuable pursuant to Section 2.1(a)(ii) in
exchange for Cancelable Convertible Debentures (such certificates being
hereinafter referred to collectively as the “Exchange
Fund”).
The
Exchange Agent shall, pursuant to irrevocable instructions from Parent, deliver
the various certificates for securities to be issued pursuant to Section 2.1
out
of the Exchange Fund (collectively, the “Merger
Securities”).
(b) As
promptly as reasonably practicable after the Effective Time, Parent will
instruct the Exchange Agent to mail to each holder of record of a certificate
or
certificates which immediately prior to the Effective Time evidenced Cancelable
Securities (i) a letter of transmittal, and (ii) instructions for use in
effecting the surrender of such certificates for Cancelable Securities in
exchange for certificates evidencing the Merger Securities, which instructions
shall
be
in customary form and shall specify that delivery shall be effected, and risk
of
loss and title to the Merger Securities shall pass, only upon proper delivery
of
the certificates representing the Merger Securities to the Exchange Agent for
use in exchanging the Cancelable Securities for the Merger
Securities.
Upon
surrender of a certificate for cancellation to the Exchange Agent, together
with
such letter of transmittal, duly executed and completed in accordance with
the
instructions thereto, and such other documents as may be reasonably required
pursuant to such instructions, the holder of such Cancelable Securities shall
be
entitled to receive certificates evidencing the Merger Securities due to such
holder in accordance with Section 2.1(a), together with any dividends or
distribution to which such holder may otherwise be entitled, and the
certificate(s) so surrendered shall immediately be canceled. Subject to Section
2.2(g), under no circumstances will any holder of a certificate representing
Cancelable Securities be entitled to receive any of the Merger Securities or
certificates evidencing the same until such holder shall have surrendered any
and all certificates reflecting the corresponding Cancelable Securities from
which such entitlement derives.
5
(c) In
the
event of a transfer of ownership of Cancelable Securities which has not been
registered in the transfer records of the Company, the Merger Securities into
which the Cancelable Securities were converted in the Merger may be delivered
by
the Exchange Agent in accordance with this Article II to the Person other than
the Person in whose name the surrendered certificate is surrendered if (i)
the
certificate(s) evidencing such Cancelable Securities is/are presented to the
Exchange Agent, properly endorsed and accompanied by all documents required
to
evidence and effect such transfer, including without limitation an opinion
of
counsel for the Company that such transfer was effected in compliance with
all
federal and state securities Laws, and (ii) evidence is presented in form
satisfactory to Exchange Agent that any applicable Taxes have been duly paid,
or, if not paid, the Person requesting such issuance pays to the Exchange Agent
any and all Taxes required as a result of the issuance to a Person other than
the registered holder of the certificate. Until
surrendered or transferred as contemplated by this Section 2.2, each certificate
representing Cancelable Securities, other than any certificates representing
Dissenting Shares, shall represent at all times after the Effective Time solely
the right to receive, upon such surrender or transfer, in accordance with the
terms hereof, the Merger Securities, together with any amounts payable pursuant
to Section 2.2(d) of this Agreement.
(d) Notwithstanding
any other provisions of this Agreement, no dividends or other distributions
declared or made after the Effective Time with respect to the Merger Securities
with a record date after the Effective Time shall be paid to the holder of
any
unsurrendered certificate(s) evidencing Cancelable Securities until the holder
of such Cancelable Securities shall surrender such certificate(s) to the
Exchange Agent in accordance with Section 2.2(b). Subject to the effect of
applicable Laws, following surrender of any such certificate(s) reflecting
Cancelable Securities, there shall be paid to the holder of such certificate(s),
in addition to the Merger Securities to which such holder is entitled pursuant
to Section 2.1(a), without interest, the corresponding amount of dividends
or
other distributions with a record date after the Effective Time theretofore
paid
with respect to any of such Merger Securities, less the amount of any
withholding Taxes which may be required thereon. No
holder
of Cancelable Securities shall be entitled, until the surrender of any
certificate for any such Cancelable Securities, to vote any shares of Parent
Common Stock or other capital stock which such holder shall have the right
to
receive pursuant to this Article II.
(e) All
Merger Securities issued upon conversion of the Cancelable Securities in
accordance with Section 2.1(a), and any cash paid or other distributions made
pursuant to Section 2.2(d), shall be deemed to have been issued or paid,
respectively, in full satisfaction of all rights pertaining to such Cancelable
Securities. From
and
after the Effective Time, holders of Cancelable Securities shall cease to have
any rights with respect to such Cancelable Securities outstanding immediately
prior to the Effective Time, except as otherwise provided in this Agreement
or
by Law.
6
(f) Any
portion of the Exchange Fund which remains undistributed to the holders of
Cancelable Securities for thirty (30) days after the Effective Time shall
be
returned to Parent, and, subject to Section 2.2(g), any holders of Cancelable
Securities which have not theretofore complied with this Article II shall
thereafter look only to Parent for the Merger Securities and any dividends
or
other distributions to which they are entitled pursuant to Section 2.1(a).
Any
portion of the Exchange Fund remaining unclaimed by holders of Cancelable
Securities as of a date that is immediately prior to such time as such amounts
would otherwise escheat to or become property of any government entity shall,
to
the extent permitted by applicable Law, become the property of Parent free
and
clear of any claims or interest of any Person previously entitled thereto.
To
the fullest extent permitted by Law, neither Parent nor the Surviving
Corporation shall be liable to any holders of Cancelable Securities for any
Merger Securities, cash or other property delivered from the Exchange Fund
to a
public official pursuant to any applicable abandoned property, escheat or
similar Law.
(g) If
any
certificate representing Cancelable Securities shall have been lost, stolen
or
destroyed, upon the making of an affidavit of that fact by the party claiming
such certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation or the Exchange Agent, the posting by such party of a
bond, in such reasonable amount as the Surviving Corporation or the Exchange
Agent may direct, as indemnity against any claim that may be made against it
with respect to such certificate and the amount of any fee charged by the
Exchange Agent for such service, the Exchange Agent shall issue in exchange
for
such lost, stolen or destroyed certificate the Merger Securities, together
with
any unpaid dividends and distributions deliverable in respect
thereof.
(h) Notwithstanding
anything to the contrary contained herein, each Person entitled to receive
shares of Parent Common Stock under this Section 2.2 shall receive them on
the condition and subject to the requirements that:
(1)
irrespective of whether or not registered for resale or qualified under an
applicable resale exemption, (i) sixty-five percent (65%) of such shares
may not be sold (but may be transferred (A) by gift to an immediate family
member, (B) by will or intestacy or distribution, or (C) to a trust
for the benefit of the transferor or a family member) until the first
(1st)
anniversary of the Closing Date and the certificates evidencing such shares
shall have a legend reflecting such restriction, and (ii) the remaining
thirty-five percent (35%) of such sales may be freely sold or transferred at
any
time following the Closing Date, provided,
however,
that
such shares of Parent Common Stock are duly registered for resale at the federal
level through the SEC or duly qualified under an applicable resale exemption
(as
evidenced by an opinion of counsel), and that such shares are, as a class,
duly
authorized and qualified for trading at the time of any such sale on the NASDAQ
Capital Market and/or the OTCBB; and
(2)
if
sold pursuant to Rule 144, an opinion of counsel for Parent will first be
obtained stating that, in addition to all other requirements associated with
the
availability of Rule 144, Parent has filed all periodic and other reports
required by it to be filed under the Exchange Act for the preceding twelve
(12)
months as of the time of any such sale.
7
2.3 Dissenters’
Rights.
(a) Notwithstanding
anything in this Agreement to the contrary, any shares of Company Common Stock
or other Cancelable Securities which, under the DGCL entitle the holder to
appraisal rights (“Dissentable
Shares”),
and
which are held by any holder (a “Dissenting
Holder”)
who
shall have demanded and not lost or withdrawn, or who shall be eligible to
demand, appraisal rights with respect to such Dissentable Shares in the manner
provided in the DGCL (“Dissenting
Shares”)
shall
not represent the right to receive any portion of the Merger Securities (or
any
dividends or distributions associated therewith). If any holder of Dissentable
Shares shall fail to perfect or shall effectively withdraw or lose its right
to
appraisal and payment under the DGCL, as the case may be, all Dissentable Shares
held by such holder shall thereupon, in accordance with and subject to the
provisions set forth in this Article II, represent the right to receive
those Merger Securities to which it would otherwise be entitled, together with
any dividends or distributions due in connection therewith pursuant to Section
2.2(d).
(b) Both
the
Company and Parent, as the case may be, shall give one another prompt notice
of
any demands for appraisal received by the Company or Parent, withdrawals of
such
demands and any other communications received by the Company or Parent in
connection with any demands for appraisal. The Company may voluntarily make
any
payment with respect to any such demands. The Company shall have the right
to
control all negotiations and Proceedings with respect to demands for appraisal,
including the right to settle any such demands.
2.4 Withholding.
Each of
the Surviving Corporation, Parent and the Exchange Agent shall be entitled
to
deduct and withhold from the consideration payable pursuant to this Agreement
to
any holder of Cancelable Securities or Dissenting Shares such amounts as it
is
required to deduct and withhold with respect to the making of such payment
under
the Code or any provision of applicable state, local or foreign Tax Law. To
the
extent that amounts are so withheld by the Surviving Corporation, Parent or
the
Exchange Agent, as the case may be, such withheld amounts shall be treated
for
all purposes of this Agreement as having been paid to the holder of Cancelable
Securities or Dissenting Shares in respect of which such deduction and
withholding was made by the Surviving Corporation, Parent or the Exchange Agent,
as the case may be.
2.5 Stock
Transfer Books.
At 5:00
p.m. on the day immediately
preceding the
Effective Time, the stock transfer books of the Company shall be closed and
there shall be no further registration of transfers of Cancelable Securities
thereafter on the records of the Company. On or after the Effective Time, any
certificates reflecting Cancelable Securities presented to the Exchange Agent
or
Parent for any reason shall carry only those rights as expressly stated in
this
Article II.
ARTICLE
III
The
Company Principal Stockholder represents and warrants to Parent and Merger
Sub
that the statements contained in this Article III are true and
correct.
3.1 Authority
Relative To The Operative Agreements.
He has
all legal right, power and capacity to execute and deliver and to perform his
obligations under this Agreement and the Operative Agreements to which he is
a
party and to consummate the Transactions.
3.2 Execution;
Enforceability.
He has
duly
and
validly executed and delivered this Agreement and the other Operative Agreements
and, assuming the due authorization, execution and delivery of this Agreement
and the other Operative Agreements by Parent, Merger Sub, and the Company,
as
required, constitutes his legal, valid and binding obligations, enforceable
against him in accordance with their respective terms,
except
as the enforceability thereof may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting or
relating to creditors’ rights generally, and (ii) the availability of
injunctive relief and other equitable remedies.
8
3.3 Title
to Securities of the Company.
He is
the record and Beneficial Owner of the securities of the Company as specifically
reflected in the Company Voting & Lock-Up Agreement which he has executed
and delivered in connection and contemporaneously herewith, and immediately
prior to the Effective Time, he will own such securities free and clear of
any
Liens.
3.4 No
Conflicts.
To the
best of his knowledge, the execution and delivery by him of this Agreement
and
each of the other Operative Agreements to which he is a party does not, and
the
performance by him of his obligations under this Agreement and such other
Operative Agreements, and the consummation of the Transactions do not and will
not:
(a) subject
to obtaining the consents, approvals and actions, making the filings and
providing the notices referred to in Section 3.5 below, if any, conflict
with or result in a violation or breach of any term or provision of any Law
or
Order applicable to him or any of his assets and properties; or
(b)
(i) conflict
with or result in a violation or breach of, (ii) constitute (with or
without notice or lapse of time or both) a default under, (iii) require him
to obtain any consent, approval or action of, make any filing with or give
any
notice to any Person as a result or under the terms of, (iv) result in or
give to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, (v) result in or give to any Person any
additional rights or entitlement to increased, additional, accelerated or
guaranteed payments under, or (vi) result in the creation or imposition of
any Lien upon him or any of his assets and properties under, any Contract to
which he is a party or by which any of his assets and properties is
bound.
3.5 Governmental
Approvals and Filings.
Except
as may otherwise be set forth in this Agreement, to the best of his knowledge,
no consent, approval or action of, filing with or notice to, any Governmental
Authority on his part is required in connection with the execution, delivery
and
performance of this Agreement or any of the other Operative
Agreements.
3.6 Legal
Proceedings.
To the
best of his knowledge, there are no Proceedings pending or threatened against,
relating to or affecting either him or any of his assets and properties which
could reasonably be expected to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal any of the Transactions
or
otherwise result in a material diminution of the benefits contemplated by this
Agreement or any of the other Operative Agreements to Parent, Merger Sub, the
Company, or the Surviving Corporation.
ARTICLE
IV
Except
as
set forth in the Disclosure Schedule delivered by the Company and signed by
the
Company and Parent for identification prior to the execution and delivery of
this Agreement (the “Company
Disclosure Schedule”),
which
shall identify exceptions by specific section references, the Company hereby
represents and warrants to Parent and Merger Sub that the statements contained
in this Article IV 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 Article IV).
9
4.1 Organization
and Qualification; Subsidiaries.
The
Company is a corporation, and each Subsidiary of the Company is a corporation,
in each case duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority to own, lease and operate its properties and to carry on
its
business as it is now being conducted. The Company and each Subsidiary are
duly
qualified or licensed as a foreign corporation to do business, and are in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by them or the nature of their business makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that would not, individually or
in
the aggregate, have a Material Adverse Effect on the Company. As of the date
hereof, a true and correct list of all Subsidiaries, together with the
jurisdiction of organization of each Subsidiary and the percentage of the
outstanding capital stock or other equity interests of each Subsidiary owned
by
the Company and each other Subsidiary, is set forth in Section 4.1 of the
Company Disclosure Schedule. Except as disclosed in Section 4.1 of the Company
Disclosure Schedule, the Company does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation, partnership,
joint venture or other business association or entity.
4.2 Certificate
of Incorporation and Bylaws.
The
Company has previously furnished or made available to Parent a complete and
correct copy of the certificate of incorporation and bylaws or equivalent
organizational documents, each as amended to date, of the Company and each
of
its Subsidiaries. Neither the Company nor any such Subsidiary is in violation
of
any provision of its certificate of incorporation or bylaws.
4.3 Books
and Records.
(a) The
books
of account, minute books, stock record books, and other records of the Company
and its Subsidiaries are complete and correct and have been maintained in
accordance with sound business practices, including the maintenance of an
adequate system of internal controls. The minute books of the Company and its
Subsidiaries contain accurate and complete records of all meetings held of,
consents of, and corporate action taken by, the stockholders, the boards of
directors, and any committees of the boards of directors of each of Company
and
such Subsidiaries, and no meeting of such stockholders, boards of directors
or
committees has been held for which minutes have not been prepared and are not
contained in such minute books.
(b) None
of
the records, systems, data or information of either the Company or any of its
Subsidiaries is recorded, stored, maintained, operated or otherwise wholly
or
partly dependent on or held or accessible by any means (including, but not
limited to, an electronic, mechanical or photographic process computerized
or
not) which are not under the exclusive ownership and direct control of either
the Company or its Subsidiaries, as the case may be.
10
4.4 Capitalization.
(a) The
authorized capital stock of the Company consists of twenty million (20,000,000)
shares of Company Common Stock. As of the date of this Agreement, six million
nine hundred and twenty five thousand nine hundred forty-five (6,925,945) shares
of Company Common Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable and not subject to preemptive rights,
and
there were no other shares of capital stock issued and outstanding. Except
as
set forth in this Section 4.4(a) or as may be specified in Section 4.4(a) of
the
Company Disclosure Schedule, as of the date of this Agreement, (i) there are
no
options, warrants or other rights, agreements, arrangements or commitments
of
any character relating to the issued or unissued capital stock of, or other
equity interests in, the Company or any Subsidiary obligating the Company or
any
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, the Company or any Subsidiary, (ii) there are no outstanding
contractual obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any shares of Company Common Stock or any other capital
stock of the Company, nor any capital stock of, or any equity interest in,
any
of its Subsidiaries, (iii) there are no declared or accrued unpaid dividends
with respect to any of the Company’s outstanding securities, and (iv) the
Company does not have outstanding or authorized any stock appreciation, phantom
stock, profit participation, or similar rights. Each outstanding share of
capital stock of, or other equity interest in, each Subsidiary is duly
authorized, validly issued, fully paid and nonassessable.
(b) Except
as
may be specified in Section 4.4(b) of the Company Disclosure Schedule, as of
the
date of this Agreement, none of the Company’s outstanding equity, convertible
and/or equity-linked securities provide the holders thereof with any voting
rights of any kind.
(c) Except
as
may be specified in Section 4.4(c) of the Company Disclosure Schedule, as of
the
date of this Agreement, neither the Company nor any of its Subsidiaries have
outstanding any bonds, debentures, notes or other obligations or debt
securities, and also except as set forth in Section 4.4(c) of the Company
Disclosure Schedule, no outstanding bonds, debentures, notes or other
obligations or debt securities carry with them any voting rights of any
kind.
(d) The
holders of all Cancelable Securities qualify as “accredited investors” within
the meaning of such term under Rule 501(a) of Regulation D promulgated under
the
Securities Act.
(a) The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and the other Operative Agreements and, with respect to the
Merger, upon the approval of this Agreement and the Merger by the Company’s
shareholders in accordance with this Agreement and applicable Law, to perform
its obligations hereunder and to consummate the Transactions. The execution
and
delivery of this Agreement and the other Operative Agreements by the Company
and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Transactions, other than, with respect to the Merger, the
approval of this Agreement and the Merger by the Company’s shareholders in
accordance with applicable Law and the filing and recordation of the Certificate
of Merger with the Delaware Secretary of State in accordance with this Agreement
and applicable Law. This Agreement has been duly and validly executed and
delivered by the Company, and, assuming the due authorization, execution and
delivery of this Agreement by Parent and Merger Sub, and the Company Principal
Stockholder, constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
except
as the enforceability thereof may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting or
relating to creditors’ rights generally, and (ii) the availability of
injunctive relief and other equitable remedies.
(b) At
a
meeting duly called and held in compliance with the DGCL and the bylaws of
the
Company, or otherwise through unanimous written consent if permitted pursuant
thereto, the board of directors of the Company has duly taken action (i)
approving the Merger, based on a determination that the Merger is fair to the
holders of Company Common Stock and in the best interests of such Company
Stockholders, and (ii) approving this Agreement and the Transactions and
recommending approval of this Agreement and the Transactions by the shareholders
of the Company. As of the date hereof, such action has not been rescinded and
is
in full force and effect.
11
(c) In
accordance with the Company’s certificate of incorporation, bylaws, and the
DGCL, the affirmative vote of the combined holders of at least a majority of
the
then-outstanding shares of Company Common Stock is the only vote of the holders
of any class or series of capital stock of the Company necessary to approve
the
Merger, and such vote, in accordance with the Company’s certificate of
incorporation, bylaws, and the DGCL, may be duly obtained by written consent
in
lieu of a meeting.
(a)
The
execution and delivery of this Agreement and the other Operative Agreements
by
the Company do not, and the performance of this Agreement and the other
Operative Agreements by the Company will not (in each case, with or without
the
giving of notice or lapse of time, or both), subject to (x)
with
respect to the Merger, obtaining the requisite approval of this Agreement and
the Merger by the Company’s shareholders in accordance with this Agreement and
applicable Law, and (y)
obtaining the consents (the “Required
Company Consents”),
approvals, Authorizations and permits and making the filings described in
Section 4.6(b) and Section 4.6(b) of the Company Disclosure Schedule, (i)
conflict with or violate the certificate of incorporation, bylaws or equivalent
organizational documents of the Company or any of its Subsidiaries, (ii)
conflict with or violate any Law applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected, or (iii) except as may be specified in
Section 4.6(a)(iii) of the Company Disclosure Schedule, result in any breach
of
or constitute a default (or an event which with notice or lapse of time or
both
would become a default) under, or give to others any right of termination,
unilateral amendment, acceleration or cancellation of, or result in the creation
of a Lien or other encumbrance on any property or asset of the Company or any
of
its Subsidiaries, or require the consent of any third party pursuant to, any
note, bond, mortgage, indenture, Contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of
its
Subsidiaries is a party or by which the Company or any of its Subsidiaries
or
any property or asset of the Company or any of its Subsidiaries is bound or
affected, except for such conflicts, violations, breaches, defaults or other
occurrences, which individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Company or any of its
Subsidiaries.
(b) The
execution and delivery of this Agreement and the other Operative Agreements
by
the Company do not, and the performance of this Agreement and the other
Operative Agreements by the Company will not, require any consent, approval,
Authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, except (i) the filing and
recordation of the Certificate of Merger with the Delaware Secretary of State
as
required by the DGCL, (ii) as may be specified in Section 4.6(b) of the Company
Disclosure Schedule, and (iii) where failure to obtain any such consents,
approvals, Authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of the Merger, or otherwise prevent
the
Company from performing its obligations under this Agreement or the other
Operative Agreements.
12
4.7 Permits;
Compliance.
Except
as may be specified in Section 4.7 of the Company Disclosure Schedule, each
of
the Company and its Subsidiaries is in possession of all franchises, grants,
Authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Authority necessary
for
the Company or any such Subsidiaries to own, lease and operate its properties
or
to carry on its business as it is now being conducted, except for those which
the failure to possess would not individually or in the aggregate reasonably
be
expected to have a Material Adverse Effect on the Company (the “Company
Permits”)
and,
as of the date hereof, no suspension or cancellation of any of the Company
Permits is pending or, to the Knowledge of the Company, threatened, except
such
suspension or termination as would not reasonably be expected to have a Material
Adverse Effect on the Company. Except as disclosed in Section 4.7 of the Company
Disclosure Schedule or as would not reasonably be expected to have a Material
Adverse Effect on the Company, neither the Company nor any of its Subsidiaries
is in conflict with, or in default or violation of, or, with the giving of
notice or the passage of time, would be in conflict with, or in default or
violation of, (a) any Law applicable to the Company or any of its Subsidiaries
or by which any property or asset of the Company or any of its Subsidiaries
is
bound or affected, or (b) any of the Company Permits.
4.8 Financial
Statements.
(a) Section
4.8(a) of the Company Disclosure Schedule contains true and complete copies
of
the following consolidated financial statements: (i) unaudited consolidated
income statement for the fiscal year ended December 31, 2007 (the “Most
Recent Company Income Statement”),
(ii)
unaudited consolidated balance sheet at December 31, 2007 (the “Most
Recent Company Balance Sheet”),
(ii)
unaudited consolidated statement of stockholders’ equity for the fiscal year
ended December 31, 2007 (the “Most
Recent Company Statement of Stockholders’ Equity”),
and
(iv) unaudited consolidated cash flow statement for the fiscal year ended
December 31, 2007 (the “Most
Recent Company Cash Flow Statement”),
in
each case internally prepared by the Company (the Most Recent Company Income
Statement, the Most Recent Company Balance Sheet, the Most Recent Company
Statement of Stockholders’ Equity, and the Most Recent Company Cash Flow
Statement shall be referred to collectively as the “Most
Recent Company Financial Statements”).
Each
of the Most Recent Company Financial Statements (including, in each case, any
notes thereto) are true, complete and correct, and fairly presented in all
material respects the financial position, results of operations and changes
in
shareholders’ equity and cash flows of the Company and its Subsidiaries as at
the respective dates thereof and for the respective periods indicated therein
(subject to normal and recurring year-end adjustments which were not and are
not
expected, individually or in the aggregate, to have a Material Adverse Effect
on
the Company or any of its Subsidiaries).
(b) Except
(i) to the extent set forth on the Most Recent Company Balance Sheet, including
the notes thereto, or (ii) as may be specified in Section 4.8(b) of the Company
Disclosure Schedule, neither the Company nor any Subsidiary has any Liability
which would be required to be reflected on a balance sheet, or in the notes
thereto, prepared in accordance with GAAP, applied on a consistent basis, which
would not, individually or in the aggregate, be reasonably expected to have
a
Material Adverse Effect on the Company.
4.9 Notes
and Accounts Receivable.
All
notes
and accounts receivables of the Company and its Subsidiaries appearing on the
Most Recent Company Balance Sheet and all of the receivables which have arisen
or been acquired by the Company or its Subsidiaries since the date thereof
(collectively, the “Company Receivables”),
are
bona fide trade receivable and have arisen or were acquired in the Ordinary
Course of Business of the Company or its Subsidiaries and in a manner consistent
with their normal past credit practices. Since the date of the Most Recent
Company Balance Sheet, neither the Company nor any of its Subsidiaries has
cancelled or agreed to cancel, in whole or in part, any Company Receivables
except in the Ordinary Course of Business consistent with demonstrated past
practices. All of the Company Receivables are reflected properly on the books
and records of the Company or its Subsidiaries, are current and collectible
and
not subject to set-off or counterclaim, and will be collected in accordance
with
their terms at their recorded amounts, subject only to reserve for bad debts
or
doubtful accounts set forth on the Most Recent Company Balance Sheet (as opposed
to the notes thereto) as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of the Company and its
Subsidiaries. For purposes of the foregoing, Company Receivables shall be deemed
to be “collected in accordance with their terms at their recorded amounts” if
they are collected in full within one hundred and twenty (120) days of the
date
such receivables are billed.
13
4.10 Undisclosed
Liabilities.
None of
the Company and its Subsidiaries has any material Liability, except for (i)
Liabilities set forth on the face of the Most Recent Company Balance Sheet
(rather than in any notes thereto), and (ii) Liabilities which have arisen
since
the date of the Most Recent Company Balance Sheet in the Ordinary Course of
Business.
4.11 Taxes.
(a) Except
as
may be specified in Section 4.11(a) of the Company Disclosure Schedule, (i)
each
of the Company and its Subsidiaries has duly and timely filed all Tax Returns
required to have been filed by or with respect to the Company or such
Subsidiary, (ii) each such Tax Return correctly and completely reflects all
liability for Taxes and all other information required to be reported thereon,
(iii) all Taxes owed by the Company and each Subsidiary of the Company (whether
or not shown on any Tax Return) have been timely paid, and (iv) each of the
Company and its Subsidiaries has adequately provided for, in its books of
account and related records, all Liability for unpaid Taxes, being current
Taxes
not yet due and payable.
(b) Except
as
may be specified in Section 4.11(b) of the Company Disclosure Schedule, each
of
the Company and its Subsidiaries has withheld and timely paid all Taxes required
to have been withheld and paid by it and has complied with all information
reporting and backup withholding requirements, including maintenance of required
records with respect thereto.
(c) Except
as
may be specified in Section 4.11(c) of the Company Disclosure Schedule, neither
Company nor any of its Subsidiaries (i) is the beneficiary of any extension
of
time within which to file any Tax Return, nor has Company or any of its
Subsidiaries made (or had made on its behalf) any requests for such extensions,
or (ii) has waived (or is subject to a waiver of) any statute of limitations
in
respect of Taxes or has agreed to (or is subject to) any extension of time
with
respect to a Tax assessment or deficiency.
(d) Section
4.11(d) of the Company Disclosure Schedule indicates those Tax Returns that
have
been audited and those Tax Returns that currently are the subject of audit.
Except as set forth in Section 4.11(d) of the Company Disclosure Schedule (i)
there is no Action now pending or threatened against or with respect to the
Company or any of its Subsidiaries in respect of any Tax or any assessment
or
deficiency, and (ii) there are no liens for Taxes (other than current Taxes
not
yet due and payable) upon the assets of the Company.
(e) Section
4.11(e) of the Company Disclosure Schedule lists, as of the date of this
Agreement, all jurisdictions in which the Company or any of its Subsidiaries
currently files Tax Returns. No claim has been made by any Taxing Authority
in a
jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns that any of them is or may be subject to taxation by that jurisdiction
or that any of them must file Tax Returns.
14
(f) None
of
the assets or properties of the Company or any of its Subsidiaries constitutes
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the Code. Neither the Company nor any of its Subsidiaries
is a party to any “safe harbor lease” within the meaning of
Section 168(f)(8) of the Code, as in effect prior to amendment by the Tax
Equity and Fiscal Responsibility Act of 1982, or to any “long-term contract”
within the meaning of Section 460 of the Code. Neither the Company nor any
of its Subsidiaries has ever been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code. Company is
not a “foreign person” within the meaning of Section 1445 of the
Code.
(g) Neither
the Company nor any of its Subsidiaries has agreed to or is required to make
by
reason of a change in accounting method or otherwise, or could be required
to
make by reason of a proposed or threatened change in accounting method or
otherwise, any adjustment under Section 481(a) of the Code. Neither the Company
nor any of its Subsidiaries has been the “distributing corporation” (within the
meaning of Section 355(c)(2) of the Code) with respect to a transaction
described in Section 355 of the Code within the 5-year period ending as of
the
date of this Agreement.
(h) No
Subsidiary of the Company that is incorporated in a non-U.S. jurisdiction has,
or at any time has had, an investment in “United States property” within the
meaning of Section 956(c) of the Code. No Subsidiary of the Company is, or
at
any time has been, a passive foreign investment company within the meaning
of
Section 1297 of the Code and neither Company nor any of its Subsidiaries is
a shareholder, directly or indirectly, in a passive foreign investment company.
No Subsidiary of the Company that is incorporated in a non-U.S. jurisdiction
is,
or at any time has been, engaged in the conduct of a trade or business within
the United States, or treated as or considered to be so engaged.
(i) Neither
the Company nor any of its Subsidiaries (i) has ever been a party to any
Tax allocation or sharing agreement or Tax indemnification agreement,
(ii) has ever been a member of an affiliated, consolidated, condensed or
unitary group, or (iii) has any Liability for or obligation to pay Taxes of
any other Person under Treas. Reg. 1.1502-6 (or any similar provision of Tax
Law), or as transferee or successor, by Contract or otherwise. Neither the
Company nor any of its Subsidiaries is a party to any joint venture,
partnership, or other arrangement that is treated as a partnership for federal
income tax purposes.
(j) Neither
the Company nor any of its Subsidiaries will be required to include any item
of
income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Effective Time as a result of
any:
(i) intercompany transactions or excess loss accounts described in Treasury
regulations under Section 1502 of the Code (or any similar provision of
state, local, or foreign Tax Law), (ii) installment sale or open
transaction disposition made on or prior to the Effective Time, or
(iii) prepaid amount received on or prior to the Effective
Time.
(k) The
Company has not entered into any transaction that constitutes a “reportable
transaction” within the meaning of Treasury
Regulation Section 1.6011-4(b).
(l) Section
4.11(l) of the Company Disclosure Schedule lists each person who the Company
reasonably believes is, with respect to the Company or any Affiliate of the
Company, a “disqualified individual” within the meaning of Section 280G of
the Code and the Regulations thereunder.
15
(m) Neither
the Company nor, to the Knowledge of Company, any of its Affiliates has taken
or
agreed to take any action (other than actions contemplated by this Agreement)
that would reasonably be expected to prevent the Merger from constituting a
“reorganization” under Section 368 of the Code. The Company is not aware of
any agreement or plan to which the Company or any of its Affiliates is a party
or other circumstances relating to the Company or any of its Affiliates that
could reasonably be expected to prevent the Merger from so qualifying as a
“reorganization” under Section 368 of the Code.
(n) Except
as
may be specified in Section 4.11(l) of the Company Disclosure Schedule, the
unpaid Taxes of the Company (i) did not, as of the date of the Most Recent
Company Balance Sheet, exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the Most Recent Company Balance
Sheet (rather than in any notes thereto), and (ii) will not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company in filing its Tax
Returns. Since the date of the Most Recent Company Balance Sheet, the Company
has not incurred any liability for Taxes arising from extraordinary gains or
losses, as that term is used in GAAP, outside the Ordinary Course of Business
consistent with past custom and practice.
(a) With
respect to personal properties and assets that are purported to be owned by
the
Company and its Subsidiaries, including all properties and assets reflected
as
owned on the Most Recent Company Balance Sheet (other than inventory sold and
items of obsolete equipment disposed of in the Ordinary Course of Business
since
the date thereof), the Company or one of its Subsidiaries has good and valid
title to all of such properties and assets, free and clear of all Liens other
than Permitted Liens.
(b) With
respect to personal properties and assets that are leased, the Company or one
of
its Subsidiaries has a valid leasehold interest in such properties and assets
and all such leases are in full force and effect and constitute valid and
binding obligations of the other party(ies) thereto. Neither the Company nor
any
of its Subsidiaries nor any other party thereto is in violation of any of the
terms of any such lease.
4.13 Condition
of Tangible Fixed Assets.
All
buildings, plants, leasehold improvements, structures, facilities, equipment
and
other items of tangible property and assets which are owned, leased or used
by
the Company or any of its Subsidiaries are structurally sound, free from
material defects (patent and latent), have been maintained in accordance with
normal industry practice, are in good operating condition and repair (subject
to
normal wear and tear given the use and age of such assets), are usable in the
regular and Ordinary Course of Business and conform in all material respects
to
all Laws and Authorizations relating to their construction, use and
operation.
4.14 Inventory.
Except
as may be specified in Section 4.14 of the Company Disclosure Schedule, the
inventory of the Company and its Subsidiaries consists of raw materials and
supplies, manufactured and processed parts, work-in-process, and finished goods,
all of which is merchantable and fit for the purpose for which it was procured
or manufactured, and none of which is slow-moving, obsolete, damaged, or
defective, subject only to the reserve for inventory writedown set forth on
the
face of the Most Recent Company Balance Sheet (rather than in any notes thereto)
as adjusted for operations and transactions through the Closing Date in
accordance with the past custom and practice of the Company and its
Subsidiaries.
16
4.15 Product
Warranty.
Substantially all of the products manufactured, sold, leased, and delivered
by
the Company and its Subsidiaries have conformed in all material respects with
all applicable contractual commitments and all express and implied warranties,
and none of the Company and its Subsidiaries has any material liability (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due) for replacement or repair thereof or other
damages in connection therewith, subject only to the reserve for product
warranty claims set forth on the face of the Most Recent Company Balance Sheet
(rather than in any notes thereto) as adjusted for operations and transactions
through the Closing Date in accordance with the past custom and practice of
the
Company and its Subsidiaries. Substantially all of the products manufactured,
sold, leased, and delivered by the Company and its Subsidiaries are subject
to
standard terms and conditions of sale or lease.
4.16 Product
Liability.
None of
the Company and its Subsidiaries has any material liability (whether known
or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or
to
become due) arising out of any injury to individuals or property as a result
of
the ownership, possession, or use of any product manufactured, sold, leased,
or
delivered by any of the Company and its Subsidiaries.
4.17 Real
Property.
(a) Section
4.17(a) of the Company Disclosure Schedule contains (i) a list of all real
property and interests in real property owned in fee by the Company or any
of
its Subsidiaries (the “Company-Owned
Real Property”),
and
(ii) a list of all real property and interests in real property leased by
Company or any of its Subsidiaries with respect to each of which the annual
rental payments exceed $50,000 (the “Company-Leased
Real Property”).
(b) With
respect to each parcel of Company-Owned Real Property, the Company or one of
its
Subsidiaries has good and marketable title to each such parcel of Company-Owned
Real Property free and clear of all Liens, except (A) Permitted Liens and
(B) zoning and building restrictions, easements, covenants, rights-of-way
and other similar restrictions of record, none of which materially impairs
the
current or proposed use of such Company-Owned Real Property. There are no
outstanding options or rights of first refusal to purchase such parcel of
Company-Owned Real Property, or any portion thereof or interest
therein.
(c) Each
lease with respect to Company-Leased Real Property (each, a “Company
Lease”)
is in
full force and effect. Neither the Company nor any of its Subsidiaries is in
default under any such Company Lease and, to the Company’s Knowledge, no other
party thereto is in default under any such Company Lease.
4.18 Intellectual
Property
. Except
to the extent as would not have a Material Adverse Effect, individually or
in
the aggregate, on the Company:
(a) Section
4.18(a) of the Company Disclosure Schedule lists (by name, owner and, where
applicable, registration number and jurisdiction of registration, application,
certification or filing) all Intellectual Property that is owned by Company
and/or one or more of its Subsidiaries (whether exclusively, jointly with
another Person or otherwise) (“Company-Owned
Intellectual Property”);
provided,
however, that
Company Disclosure Schedule does not include items of Company-Owned Intellectual
Property which are both (i) immaterial to Company and its Subsidiaries and
(ii) not registered or the subject of an application for registration.
Except as described in Company Disclosure Schedule, Company or one of its
Subsidiaries owns the entire right, title and interest to all Company-Owned
Intellectual Property free and clear of all Liens.
17
(b) Section
4.18(b) of the Company Disclosure Schedule lists all licenses, sublicenses
and
other Contracts (“Company
In-Bound Licenses”)
pursuant to which a third party authorizes the Company or any of its
Subsidiaries to use, practice any rights under, or grant sublicenses with
respect to, any Intellectual Property owned by such third party, including
the
incorporation of any such Intellectual Property into the Company’s or any of its
Subsidiaries’ products and, with respect to each Company In-Bound License,
whether Company In-Bound License is exclusive or non-exclusive; provided,
however,
that
Company Disclosure Schedule is not required to list Company In-Bound Licenses
that consist solely of “shrink-wrap” and similar commercially available end-user
licenses.
(c) Section
4.18(c) of the Company Disclosure Schedule lists all licenses, sublicenses
and
other Contracts (“Company
Out-Bound Licenses”)
pursuant to which the Company or any of its Subsidiaries authorizes a third
party to use, practice any rights under, or grant sublicenses with respect
to,
any Company Owned Intellectual Property or pursuant to which Company or any
of
its Subsidiaries grants rights to use or practice any rights under any
Intellectual Property owned by a third party and, with respect to each Company
Out-Bound License, whether Company Out-Bound License is exclusive or
non-exclusive.
(d) Except
as
may be specified in Section 4.18(d) of the Company Disclosure Schedule, each
Company In-Bound License and each Company Out-Bound License is in full force
and
effect and valid and enforceable in accordance with its terms, and neither
the
Company nor any of its Subsidiaries has violated any provision of, or committed
or failed to perform any act which, with or without the giving of notice or
lapse of time, or both, would constitute a default in the performance,
observance or fulfillment of any obligation, covenant, condition or other term
contained in any Company In-Bound License or Company Out-Bound License, and
neither the Company nor any of its Subsidiaries has given or received notice
to
or from any Person relating to any such alleged or potential default that has
not been cured.
(e) The
Company and/or one or more of its Subsidiaries (i) exclusively own the
entire right, interest and title to all Intellectual Property that is used
in or
necessary for the businesses of Company and its Subsidiaries as they are
currently conducted free and clear of Liens (including the design, manufacture,
license and sale of all products currently under development or in production),
or (ii) otherwise rightfully use or otherwise enjoy such Intellectual
Property pursuant to the terms of a valid and enforceable Company In-Bound
License that is listed in Company Disclosure Schedule or that is a “shrink-wrap”
or similar commercially available end-user license. Company-Owned Intellectual
Property, together with Company’s and its Subsidiaries’ rights under Company
In-Bound Licenses listed in Section 4.18(b) of the Company Disclosure Schedule
or that are “shrink-wrap” and similar commercially available end-user licenses
(collectively, the “Company
Intellectual Property”),
constitutes all the Intellectual Property used in or necessary for the operation
of Company’s and its Subsidiaries’ businesses as they are currently
conducted.
(f) Except
as
may be specified in Section 4.18(f) of the Company Disclosure Schedule, (i)
all
registration, maintenance and renewal fees related to Patents, Marks, Copyrights
and any other certifications, filings or registrations that are owned by Company
or any of its Subsidiaries (collectively, “Company
Registered Intellectual Property”)
that
are currently due have been paid and all documents and certificates related
to
such Company Registered Intellectual Property have been filed with the relevant
Governmental Authority or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such Company
Registered Intellectual Property, (ii) all Company Registered Intellectual
Property is in good standing, held in compliance with all applicable legal
requirements and enforceable by Company and/or one or more of its Subsidiaries,
and (iii) all Patents that have been issued to the Company or any of its
Subsidiaries are valid.
18
(g) The
Company is not aware of any challenges (or any basis therefor) with respect
to
the validity or enforceability of any Company Intellectual Property. Neither
Company nor any of its Subsidiaries has taken any action or failed to take
any
action that would reasonably be expected to result in the abandonment,
cancellation, forfeiture, relinquishment, invalidation, waiver or
unenforceability of any Company Intellectual Property.
(h) Except
as
may be specified in Section 4.18(h) of the Company Disclosure Schedule, (i)
none
of the products or services currently or formerly developed manufactured, sold,
distributed, provided, shipped or licensed, by the Company or any of its
Subsidiaries, or which are currently under development, has infringed or
infringes upon, or otherwise unlawfully used or uses, the Intellectual Property
Rights of any third party, (ii) neither the Company nor any of its Subsidiaries,
by conducting its business as currently conducted, has infringed or infringes
upon, or otherwise unlawfully used or uses, any Intellectual Property Rights
of
a third party, (iii) neither the Company nor any of its Subsidiaries has
received any communication alleging that Company or any of its Subsidiaries
or
any of their respective products, services, activities or operations infringe
upon or otherwise unlawfully use any Intellectual Property Rights of a third
party nor, to the Company’s Knowledge, is there any basis therefor, (iv) no
Action has been instituted, or, to Company’s Knowledge, threatened, relating to
any Intellectual Property formerly or currently used by the Company or any
of
its Subsidiaries and none of Company Intellectual Property is subject to any
outstanding Order, and (v) to the Company’s Knowledge, no Person has infringed
or is infringing any Intellectual Property Rights of the Company or any of
its
Subsidiaries or has otherwise misappropriated or is otherwise misappropriating
any Company Intellectual Property.
(i) With
respect to the Company’s or any of its Subsidiaries’ Proprietary Information,
the documentation relating thereto is current, accurate and sufficient in detail
and content to identify and explain it and to allow its full and proper use
without reliance on the special knowledge or memory of others. The Company
and
its Subsidiaries have taken commercially reasonable steps to protect and
preserve the confidentiality of all Proprietary Information owned by the Company
and its Subsidiaries that is not covered by an issued Patent. Without limiting
the generality of the foregoing, the Proprietary Information of the Company
and
its Subsidiaries (other than Proprietary Information that is covered by an
issued Patent) is not part of the public knowledge and has not been used or
divulged for the benefit of any Person other than the Company and its
Subsidiaries.
(j) Except
as
specified in Section 4.18(j) of the Company Disclosure Schedule, (i) all current
and former employees, consultants and contractors of the Company and its
Subsidiaries have executed and delivered, and are in compliance with,
enforceable agreements regarding the protection of Proprietary Information
and
providing valid written assignments of all Intellectual Property conceived
or
developed by such employees, consultants or contractors in connection with
their
services for the Company and its Subsidiaries, and (ii) no current or former
employee, consultant or contractor or any other Person has any right, claim
or
interest to any of Company Intellectual Property.
(k) No
employee, consultant or contractor of the Company or any of its Subsidiaries
has
been, is or will be, by performing services for the Company or such Subsidiary,
in violation of any term of any employment, invention disclosure or assignment,
confidentiality, noncompetition agreement or other restrictive covenant or
any
Order as a result of such employee’s, consultant’s or independent contractor’s
employment by the Company or any of its Subsidiaries or any services rendered
by
such employee, consultant or independent contractor.
19
(l) The
execution and delivery of this Agreement and the other Operative Agreements
by
the Company does not, and the consummation of the Merger (in each case, with
or
without the giving of notice or lapse of time, or both) will not, directly
or
indirectly, result in the loss or impairment of, or give rise to any right
of
any third party to terminate or reprice or otherwise renegotiate any of the
Company’s or any of its Subsidiaries’ rights to own any of its Intellectual
Property or their respective rights under any Company Out-Bound License or
Company In-Bound License, nor require the consent of any Governmental Authority
or other third party in respect of any such Intellectual Property.
(m) Software.
(i) The
Software owned, or purported to be owned by the Company or any of its
Subsidiaries (collectively, the “Company-Owned
Software”
),
has
been either (A) developed by employees of the Company or one or more of its
Subsidiaries within the scope of their employment by the Company or such
Subsidiary, (B) developed by independent contractors who have assigned all
of their right, title and interest therein to the Company or one of its
Subsidiaries pursuant to written Contracts, or (C) otherwise acquired by
the Company or one of its Subsidiaries from a third party pursuant to a written
Contract in which such third party assigns all of its right, title and interest
therein. No Company-Owned Software contains any programming code, documentation
or other materials or development environments that embody Intellectual Property
Rights of any Person other than the Company and its Subsidiaries, other than
such materials obtained by the Company and its Subsidiaries from other Persons
who make such materials generally available to all interested Persons or
end-users on standard commercial terms.
(ii) Each
of
the Company’s and its Subsidiaries’ existing and currently supported and
marketed Software (including Software-embedded) products performs, in all
material respects, the functions described in any agreed specifications or
end-user documentation or other information provided to customers of the Company
or such Subsidiary on which such customers relied when licensing or otherwise
acquiring such products, subject only to routine bugs and errors that can be
corrected promptly by the Company or such Subsidiary in the course of providing
customer support without further liability to the Company or such Subsidiary,
and all of the code of such products has been developed in a manner that meets
common industry practice, including the use of regression test and release
procedures. To the Company’s Knowledge, each of the Company’s and its
Subsidiaries’ existing and currently supported and marketed Software (including
Software-embedded) products is free of all viruses, worms, trojan horses and
material known Contaminants and does not contain any bugs, errors, or problems
in each case that would substantially disrupt its operation or have a
substantial adverse impact on the operation of the Software.
(iii) The
Company and its Subsidiaries have taken all actions customary in the Software
industry to document the Company-Owned Software and its operation, such that
the
materials comprising the Company-Owned Software, including the source code
and
documentation, have been written in a clear and professional manner so that
they
may be understood, modified and maintained in an efficient manner by reasonably
competent programmers.
(iv) Neither
the Company nor any of its Subsidiaries has exported or transmitted Software
or
other material in connection with the Company’s or such Subsidiaries’ business
to any country to which such export or transmission is restricted by any
applicable Law, without first having obtained all necessary and appropriate
Authorizations.
20
(v) All
Company-Owned Software is free of any Disabling Code or Contaminants that may,
or may be used to, access, modify, delete, damage or disable any Systems or
that
may result in damage thereto. The Company and its Subsidiaries have taken
reasonable steps and implemented reasonable procedures to ensure that its and
their internal computer systems used in connection with Company’s and its
Subsidiaries’ business are free from Disabling Codes and Contaminants. The
Software licensed by the Company is free of any Disabling Codes or Contaminants
that may, or may be used to, access, modify, delete, damage or disable the
Systems of the Company or its Subsidiaries or that might result in damage
thereto. The Company and its Subsidiaries have taken all reasonable steps to
safeguard their respective Systems and restrict unauthorized access
thereto.
4.19 Material
Contracts
(a) Section
4.19 of the Company Disclosure Schedule contains a complete and accurate list
of
each Contract or series of related Contracts to which the Company or any of
its
Subsidiaries is a party or is subject, or by which any of their respective
assets are bound:
(i) for
the
purchase of materials, supplies, goods, services, equipment or other assets
and
that involves or would reasonably be expected to involve (A) annual
payments by the Company or any of its Subsidiaries of $10,000 or more, or
(B) aggregate payments by the Company or any of its Subsidiaries of $10,000
or more;
(ii) (A)
for
the sale by the Company or any of its Subsidiaries of materials, supplies,
goods, services, equipment or other assets, and that provides for (1) a
specified annual minimum dollar sales amount by the Company or any of its
Subsidiaries of $100,000 or more, or (2) aggregate payments to the Company
or any of its Subsidiaries of $100,000 or more, or (B) pursuant to which
the Company or any of its Subsidiaries received payments of more than $10,000
in
the year ended December 31, 2007, or expects to receive payments of more than
$100,000 in the year ending December 31, 2008;
(iii) that
continues over a period of more than six (6) months from the date hereof
and provides for payments to or by the Company or any of its Subsidiaries
exceeding $100,000, except for arrangements disclosed pursuant to the preceding
subparagraphs (i) and (ii);
(iv) that
is
an employment, consulting, termination or severance Contract that involves
or
would reasonably be expected to involve the payment of $50,000 or more by the
Company or any of its Subsidiaries following the date hereof, except for any
such Contract that is terminable at-will by the Company or any of its
Subsidiaries without liability to the Company or any such
Subsidiary;
(v) that
is a
distribution, dealer, representative or sales agency Contract, other than
Contracts entered into in the Ordinary Course of Business with distributors,
representatives and sales agents that are cancelable without penalty on not
more
than ninety (90) days’ notice and does not deviate in any material respect
from the Company’s standard form;
21
(vi) that
is a
(A) Company Lease, or (B) Contract for the lease of personal property,
in each case which provides for payments to or by the Company or any of its
Subsidiaries in any one case of $75,000 or more annually or $250,000 or more
over the term of such Company Lease or lease;
(vii) which
provides for the indemnification by the Company or any of its Subsidiaries
of
any Person, the undertaking by the Company or any of its Subsidiaries to be
responsible for consequential damages, or the assumption by the Company or
any
of its Subsidiaries of any Tax, environmental or other Liability;
(viii) that
is a
note, debenture, bond, equipment trust, letter of credit, loan or other Contract
for Indebtedness or lending of money (other than to employees for travel
expenses in the Ordinary Course of Business) or Contract for a line of credit
or
guarantee, pledge or undertaking of the Indebtedness of any other
Person;
(ix) for
any
capital expenditure or leasehold improvement in any one case in excess of
$10,000 or any such Contracts in the aggregate greater than
$100,000;
(x) that
restricts or purports to restrict the right of the Company or any of its
Subsidiaries to engage in any line of business, acquire any property, develop
or
distribute any product or provide any service (including geographic
restrictions) or to compete with any Person or granting any exclusive
distribution rights, in any market, field or territory;
(xi) that
is a
partnership, joint venture, joint development or similar Contract;
(xii) that
relates to the acquisition or disposition of any business (whether by merger,
sale of stock, sale of assets or otherwise);
(xiii) that
is a
collective bargaining Contract or other Contract with any labor organization,
union or association; and
(xiv) that
is a
Contract or series of Contracts, the termination or breach of which would
reasonably be expected to have a Material Adverse Effect on the Company and
not
previously disclosed pursuant to this Section 4.19.
(b) Each
Contract required to be listed in Schedule 4.19 of the Company Disclosure
Schedule (collectively, the “Company
Material Contracts”)
is in
full force and effect and valid and enforceable in accordance with its terms,
except to the extent a failure to be in full force and effect and valid or
enforceable in accordance with its terms would not have a Material Adverse
Effect on the Company.
(c) Neither
the Company nor any of its Subsidiaries is, and to the Company’s Knowledge, no
other party thereto is, in default in the performance, observance or fulfillment
of any obligation, covenant, condition or other term contained in any Company
Material Contract, and neither the Company nor any of its Subsidiaries has
given
or received notice to or from any Person relating to any such alleged or
potential default that has not been cured. No event has occurred which with
or
without the giving of notice or lapse of time, or both, may conflict with or
result in a violation or breach of, or give any Person the right to exercise
any
remedy under or accelerate the maturity or performance of, or cancel, terminate
or modify, any Company Material Contract.
22
(d) The
Company has provided accurate and complete copies of each Company Material
Contract to Parent.
(e) All
Contracts other than Company Material Contracts to which the Company or any
of
its Subsidiaries is a party or is subject, or by which any of their respective
assets are bound (collectively, the “Company
Minor Contracts”),
are
in all material respects valid and enforceable in accordance with their terms.
Neither the Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained therein, and no event has occurred which with or without the giving
of
notice or lapse of time, or both, would constitute a default thereunder by
the
Company or any of its Subsidiaries, except in either case where any such default
or defaults could not reasonably be expected have, individually or in the
aggregate, a Material Adverse Effect on Company taken as a whole.
4.20 Litigation.
Except
as may be specified in Section 4.20 of the Company Disclosure Schedule, (i)
there is no Proceeding pending or, to the Knowledge of the Company, threatened
against the Company or any if its Subsidiaries, which (a) individually or in
the
aggregate, could reasonably be expected to have a Material Adverse Effect on
the
Company, or (b) seeks to and is reasonably likely to significantly delay or
prevent the consummation of the Merger, (ii) there
is
no Proceeding against any current or, to Company’s Knowledge, former director or
employee of the Company or any of its Subsidiaries with respect to which the
Company or any of its Subsidiaries has or is reasonably likely to have an
indemnification obligation, and (iii) neither
the Company or any of its Subsidiaries, nor any property or asset of the Company
or any of its Subsidiaries is in violation of any Order having, individually
or
in the aggregate, a Material Adverse Effect on the Company.
4.21 Employee
Benefit Plans.
(a) Section
4.21(a) of the Company Disclosure Schedule sets forth a complete and accurate
list of all Benefit Plans sponsored, maintained or contributed to by the
Company, any of its Subsidiaries, or any Company ERISA Affiliate, or with
respect to which the Company, any of its Subsidiaries, or any Company ERISA
Affiliate otherwise has any present or future Liability (each, a “Company
Benefit Plan”).
A
current, accurate and complete copy of each Company Benefit Plan has been
provided to Parent. Neither the Company nor any of its Subsidiaries has any
intent or commitment to create any additional Company Benefit Plan or amend
any
Company Benefit Plan.
(b) Each
Company Benefit Plan has been and is currently administered in compliance in
all
material respects with its constituent documents and with all reporting,
disclosure and other requirements of ERISA and the Code applicable to such
Company Benefit Plan. Each Company Benefit Plan that is an Employee Pension
Benefit Plan (as defined in Section 3(2) of ERISA) and which is intended to
be qualified under Section 401(a) of the Code (a “Company
Pension Plan”),
has
been determined by the Internal Revenue Service to be so qualified and no
condition exists that would adversely affect any such determination. No Company
Benefit Plan is a “defined benefit plan” as defined in Section 3(35) of
ERISA.
23
(c) None
of
the Company, any Subsidiary of Company, any Company ERISA Affiliate or any
trustee or agent of any Company Benefit Plan has been or is currently engaged
in
any prohibited transactions as defined by Section 406 of ERISA or
Section 4975 of the Code for which an exemption is not applicable which
could subject Company, any Subsidiary of the Company, any Company ERISA
Affiliate or any trustee or agent of any Company Benefit Plan to the tax or
penalty imposed by Section 4975 of the Code or Section 502 of
ERISA.
(d) There
is
no event or condition existing which could be deemed a “reportable
event”
(within
the meaning of Section 4043 of ERISA) with respect to which the thirty
(30)-day notice requirement has not been waived. To the Company’s Knowledge, no
condition exists which could subject the Company or any of its Subsidiaries
to a
penalty under Section 4071 of ERISA.
(e) None
of
the Company, any Subsidiary of Company, nor any Company ERISA Affiliate is,
or
has been, party to any “multi-employer plan,” as that term is defined in
Section 3(37) of ERISA.
(f) True
and
correct copies of the most recent annual report on Form 5500 and any
attached schedules for each Company Benefit Plan (if any such report was
required by applicable Law) and a true and correct copy of the most recent
determination letter issued by the Internal Revenue Service for each Company
Pension Plan have been provided to Parent.
(g) With
respect to each Company Benefit Plan, there are no Proceedings (other than
routine claims for benefits in the ordinary course) pending or, to the Company’s
Knowledge, threatened against any Company Benefit Plan, the Company, any
Subsidiary of the Company, any Company ERISA Affiliate or any trustee or agent
of any Company Benefit Plan.
(h) With
respect to each Company Benefit Plan to which the Company, any Subsidiary of
the
Company or any Company ERISA Affiliate is a party which constitutes a group
health plan subject to Section 4980B of the Code, each such Company Benefit
Plan
complies, and in each case has complied, in all material respects with all
applicable requirements of Section 4980B of the Code.
(i) Full
payment has been made of all amounts which the Company, any Subsidiary of the
Company or any Company ERISA Affiliate was required to have paid as a
contribution to any Company Benefit Plan as of the last day of the most recent
fiscal year of each of the Benefit Plans ended prior to the date of this
Agreement, and no Company Benefit Plan has incurred any “accumulated funding
deficiency” (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, as of the last day of the most recent fiscal
year
of each such Company Benefit Plan ended prior to the date of this
Agreement.
(j) Each
Company Benefit Plan is, and its administration is and has been during the
six-year period preceding the date of this Agreement, in all material respects
in compliance with, and none of the Company, any Subsidiary of the Company
or
any Company ERISA Affiliate has received any claim or notice that any such
Company Benefit Plan is not in material compliance with, all applicable Laws
and
Orders and prohibited transaction exemptions, including to the extent
applicable, the requirements of ERISA.
(k) None
of
the Company, any Subsidiary of the Company and any Company ERISA Affiliate
is in
default in any material respect in performing any of its contractual obligations
under any Company Benefit Plans or any related trust agreement or insurance
contract.
24
(l) There
are
no material outstanding Liabilities of any Company Benefit Plan other than
Liabilities for benefits to be paid to participants in any Company Benefit
Plan
and their beneficiaries in accordance with the terms of such Company Benefit
Plan.
(m) Subject
to ERISA and the Code, each Company Benefit Plan may be amended, modified,
terminated or otherwise discontinued by the Company, a Subsidiary of the Company
or a Company ERISA Affiliate at any time without liability.
(n) No
Company Benefit Plan other than a Company Pension Plan, retiree medical plan
or
severance plan provides benefits to any individual after termination of
employment.
(o) The
consummation of the Merger will not (either alone or in conjunction with any
other event) (i) entitle any current or former director, employee,
contractor or consultant of the Company or any of its Subsidiaries to severance
pay, unemployment compensation or any other payment, (ii) accelerate the time
of
payment or vesting, or increase the amount of compensation due to any such
director, employee, contractor or consultant, or result in the payment of any
other benefits to any Person or the forgiveness of any Indebtedness of any
Person, (iii) result in any prohibited transaction described in
Section 406 of ERISA or Section 4975 of the Code for which an exemption is
not available, or (iv) result in the payment or series of payments by the
Company or any of its Affiliates to any person of an “excess
parachute payment”
within
the meaning of Section 280G of the Code.
(p) With
respect to each Company Benefit Plan that is funded wholly or partially through
an insurance policy, all premiums required to have been paid to date under
the
insurance policy have been paid, all premiums required to be paid under the
insurance policy through the Closing will have been paid on or before the
Closing and, as of the Closing, there will be no liability of the Company,
any
Subsidiary of the Company or any Company ERISA Affiliate under any insurance
policy or ancillary agreement with respect to such insurance policy in the
nature of a retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
occurring prior to the Closing.
(q) Each
Company Benefit Plan that constitutes a “welfare
benefit plan,”
within
the meaning of Section 3(1) of ERISA, and for which contributions are
claimed by the Company, any Subsidiary of the Company or any Company ERISA
Affiliate as deductions under any provision of the Code, is in compliance in
all
material respects with all applicable requirements pertaining to such deduction.
With respect to any welfare benefit fund (within the meaning of Section 419
of the Code) related to a welfare benefit plan, there is no disqualified benefit
(within the meaning of Section 4976(b) of the Code) that would result in the
imposition of a tax under Section 4976(a) of the Code. All welfare benefit
funds
intended to be exempt from tax under Section 501(a) of the Code have been
determined by the Internal Revenue Service to be so exempt and no event or
condition exists which would adversely affect any such
determination.
(r) Section
4.21(r) of the Company Disclosure Schedule sets forth all Company Benefit Plans
covering employees of the Company or any of its Subsidiaries outside of the
United States (the “Company
Foreign Plans”).
The
Company Foreign Plans have been operated in accordance, and are in compliance,
in all material respects with their constituent documents and all applicable
Laws. There are no material unfunded Liabilities under or in respect of any
Company Foreign Plans, and all contributions or other payments required to
be
made to or in respect of the Company Foreign Plans prior to the Closing Date
have been made or will be made prior to the Closing Date.
25
(a) Neither
the
Company
nor any of its Subsidiaries is a party or subject to any labor union or
collective bargaining Contract. There
have
not been since the
Company began operations
and
there are not pending or threatened any labor disputes, work stoppages, requests
for representation, pickets, work slow-downs due to labor disagreements or
any
actions or arbitrations which involve the labor or employment relations of
the
Company
or any of its Subsidiaries. There
is
no unfair labor practice, charge or complaint pending, unresolved or, to the
Company’s Knowledge, threatened before the National Labor Relations Board. No
event has occurred or circumstance exist that may provide the basis of any
work
stoppage or other labor dispute.
(b) Each
of
the
Company
and its Subsidiaries has complied in all material respects with each, and is
not
in violation in any material respect of any, Law relating to anti-discrimination
and equal employment opportunities and there are, and have been, no material
violations of any other Law respecting the hiring, hours, wages, occupational
safety and health, employment, promotion, termination or benefits of any
employee or other Person. Each of the Company and its Subsidiaries has filed
all
reports, information and notices required under any Law respecting the hiring,
hours, wages, occupational safety and health, employment, promotion, termination
or benefits of any employee or other Person, and will timely file prior to
Closing all such reports, information and notices required by any Law to be
given prior to Closing.
(c) Each
of
the Company and its Subsidiaries has paid or properly accrued in the Ordinary
Course of Business all wages and compensation due to employees, including all
vacations or vacation pay, holidays or holiday pay, sick days or sick pay,
and
bonuses.
(d) Neither
the Company nor any of its Subsidiaries is a party to any Contract which
restricts the Company or any of its Subsidiaries from relocating, closing or
terminating any of its operations or facilities or any portion thereof.
Neither
the
Company
nor any of its Subsidiaries have effectuated a “plant closing” (as defined in
the Worker Adjustment and Retraining Notification Act of 1988 (the “WARN
Act”))
or
(ii) a “mass lay-off” (as defined in the WARN Act), in either case
affecting any site of employment or facility of the
Company
or any of its Subsidiaries, except in accordance with the WARN Act. The
consummation of the Merger will not create Liability for any act by the Company
or any of its Subsidiaries on or prior to the Closing Date under the WARN Act
or
any other Law respecting reductions in force or the impact on employees on
plant
closings or sales of businesses.
4.23 Environmental.
(a) Each
of
the Company and its Subsidiaries has secured, and is in compliance in all
material respects with, all Environmental Permits required in connection with
its operations and the Real Property. Each Environmental Permit, together with
the name of the Governmental Authority issuing such Environmental Permit, is
set
forth in Section 4.23(a) of the Company Disclosure Schedule. All such
Environmental Permits are valid and in full force and effect and none of such
Environmental Permits will be terminated or impaired or become terminable as
a
result of the Merger. Each of the Company and its Subsidiaries has been, and
are
currently, in compliance in all material respects with all Environmental Laws.
Neither the Company nor any of its Subsidiaries has received any notice alleging
that the Company or any of its Subsidiaries is not in such compliance with
Environmental Laws.
26
(b) There
are
no past, pending or, to the Company’s Knowledge, threatened Environmental
Actions against or affecting the Company or any of its Subsidiaries, and the
Company is not aware of any facts or circumstances which could be expected
to
form the basis for any Environmental Action against the Company or any of its
Subsidiaries.
(c) Neither
the Company nor any of its Subsidiaries has entered into or agreed to any Order,
and neither the Company nor any of its Subsidiaries is subject to any Order,
relating to compliance with any Environmental Law or to investigation or cleanup
of a Hazardous Substance under any Environmental Law.
(d) No
Lien
has been attached to, or asserted against, the assets, property or rights of
the
Company or any of its Subsidiaries pursuant to any Environmental Law, and,
to
the Company’s Knowledge, no such Lien has been threatened. There are no facts,
circumstances or other conditions that could be expected to give rise to any
Liens on or affecting any Real Property.
(e) There
has
been no treatment, storage, disposal or Release of any Hazardous Substance
at,
from, into, on or under any Real Property or any other property currently or
formerly owned, operated or leased by the Company or any of its Subsidiaries.
No
Hazardous Substances are present in, on, about or migrating to or from any
Real
Property that could be expected to give rise to an Environmental Action against
the Company or any of its Subsidiaries.
(f) Neither
the Company nor any of its Subsidiaries has received a CERCLA 104(e) information
request nor has the Company or any of its Subsidiaries been named a potentially
responsible party for any National Priorities List site under CERCLA or any
site
under analogous state Law. Neither the Company nor any of its Subsidiaries
has
received an analogous notice or request from any non-U.S. Governmental
Authority.
(g) There
are
no aboveground tanks or underground storage tanks on, under or about the Real
Property. Any aboveground or underground tanks previously situated on the Real
Property or any other property currently or formerly owned, operated or leased
by the Company or any of its Subsidiaries have been removed in accordance with
all Environmental Laws and no residual contamination, if any, remains at such
sites in excess of applicable standards.
(h) There
are
no PCBs
leaking
from any article, container or equipment on, under or about the Real Property
and there are no such articles, containers or equipment containing PCBs. There
is no asbestos containing material or lead-based paint containing materials
in
at, on, under or within the Real Property.
(i) Neither
the Company nor any of its Subsidiaries has transported or arranged for the
treatment, storage, handling, disposal, or transportation of any Hazardous
Material to any off-site location which is an Environmental Clean-up
Site.
(j) None
of
the Real Property is an Environmental Clean-up Site.
(k) The
Company has provided to Parent true and complete copies of, or access to, all
written environmental assessment materials and reports that have been prepared
by or on behalf of the Company or any of its Subsidiaries.
27
4.24 Related
Party Transactions.
There
are
no Contracts of any kind, written or oral, entered into by the Company or any
of
its Subsidiaries with, or for the benefit of, any officer, director or
stockholder of the Company or, to the Knowledge of the Company, any Affiliate
of
any of them, except in each case, for (a) employment agreements,
indemnification agreements fringe benefits and other compensation paid to
directors, officers and employees consistent with previously established
policies (including normal merit increases in such compensation in the Ordinary
Course of Business) and copies of which have been provided to Parent and are
listed in Section 4.24 of the Company Disclosure Schedule, (b) reimbursements
of
ordinary and necessary expenses incurred in connection with their employment
or
service, (c) amounts paid pursuant to Company Benefit Plans of which copies
have been provided to Parent, and (d) the occupancy of certain of the
Company’s facilities which do not provide for the payment of significant amounts
of rent. To the Knowledge of the Company, none of such Persons has any material
direct or indirect ownership interest in any firm or corporation with which
the
Company or any of its Subsidiaries has a business relationship, or with any
firm
or corporation that competes with the Company or any of its Subsidiaries (other
than ownership of securities in a publicly-traded company representing less
than
one percent of the outstanding stock of such company). No officer or director
of
the Company or any of its Subsidiaries or member of his or her immediate family
or greater than 5% stockholder of the Company or, to the Knowledge of the
Company, any Affiliate of any of them or any employee of the Company or any
of
its Subsidiaries is directly or indirectly interested in any Company Material
Contract.
4.25 Insurance.
Section
4.25 of the Company Disclosure Schedule sets forth the following information
with respect to each material insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and bond
and
surety arrangements) with respect to which any of the Company and its
Subsidiaries is a party, a named insured, or otherwise the beneficiary of
coverage:
(i) the
name,
address, and telephone number of the agent;
(ii) the
name
of the insurer, the name of the policyholder, and the name of each covered
insured;
(iii) the
policy number and the period of coverage;
(iv) the
scope
(including an indication of whether the coverage is on a claims made,
occurrence, or other basis) and amount (including a description of how
deductibles and ceilings are calculated and operate) of coverage;
and
(v) a
description of any retroactive premium adjustments or other material
loss-sharing arrangements.
With
respect to each such insurance policy: (A) the policy is legal, valid, binding,
enforceable, and in full force and effect in all material respects; (B) neither
the Company, any of its Subsidiaries nor any other party to the policy is in
material breach or default (including with respect to the payment of premiums
or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a material breach or default, or permit
termination, modification, or acceleration, under the policy; and (C) no party
to the policy has repudiated any material provision thereof. Section 4.25 of
the
Company Disclosure Schedule describes any material self-insurance arrangements
affecting the Company and/or any of its Subsidiaries.
28
4.26 Absence
of Certain Changes or Events.
Since
December 31, 2007, except as may be contemplated by, or disclosed pursuant
to,
this Agreement, including Section 4.26 of the Company Disclosure
Schedule:
(a) there
has
not been any event or events (whether or not covered by insurance), individually
or in the aggregate, which have had a Material Adverse Effect on the Company
or
any of its Subsidiaries, including without limitation the imposition of any
security interests on any of the assets of the Company or any of its
Subsidiaries;
(b) there
have not been any amendments or other modifications to the certificate of
incorporation or bylaws of either the Company or any of its Subsidiaries;
(c) there
has
not been any entry by the Company nor any of its Subsidiaries into any
commitment or transaction material to the Company or such Subsidiaries, except
in the Ordinary Course of Business and consistent with past practice, including
without limitation any (i) borrowings or the issuance of any guaranties, (ii)
any capital expenditures in excess of $60,000, or (iii) any grant of any
increase in the base compensation payable, or any loans, to any directors,
officers or employees;
(d) there
has
not been, other than pursuant to the Plans, any increase in or establishment
of
any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option, stock purchase or other employee benefit plan,
except in the Ordinary Course of Business consistent with past
practice.
(e) there
have not been any material changes by the Company in its accounting methods,
principles or practices;
(f) neither
Company nor any of its Subsidiaries has declared, set aside or paid any dividend
or other distribution (whether in cash, stock or property) with respect to
any
of its securities;
(g) neither
Company nor any of its Subsidiaries has split, combined or reclassified any
of
its securities, or issued, or authorized for issuance, any
securities;
(h) there
has
not been any material damage, destruction or loss with respect to the property
and assets of Company or any of its Subsidiaries, whether or not covered by
insurance;
(i) there
has
not been any revaluation of Company’s or any of its Subsidiaries’ assets,
including writing down the value of inventory or writing off notes or accounts
receivable, other than in the Ordinary Course of Business consistent with past
practice; and
(j) neither
Company nor any of its Subsidiaries has agreed, whether in writing or otherwise,
to do any of the foregoing.
4.27 Solvency. No
Order
has been made, petition presented, or resolution passed for the winding up
(or
other process whereby the business is terminated and the assets of the subject
company are distributed among its creditors and/or shareholders) of either
the
Company or any of its Subsidiaries. There are no cases or Proceedings of any
kind pending
under any applicable insolvency, reorganization or similar Law in any
jurisdiction concerning the Company or any of its Subsidiaries, and no
circumstances exist which, under applicable Law, would justify any such cases
or
Proceedings. No receiver or trustee has been appointed with respect to all
or
any portion of the Company or any of its Subsidiaries business or assets.
29
4.28 Brokers
or Finders.
The
Company
shall indemnify and hold harmless Parent and the officers and directors of
Parent from any obligations or liabilities to any person or entity engaged
by or
to whom the Company or any of its Subsidiaries is liable for brokerage,
investment banking and/or finder’s fees or commissions for services rendered in
connection with the Transactions.
4.29 No
Illegal Payments.
None
of
the Company, any of its Subsidiaries or, to the Knowledge of the Company, any
Affiliate, officer, agent or employee thereof, directly or indirectly, has,
since inception, on behalf of or with respect to the Company or any of its
Subsidiaries, (a) made any unlawful domestic or foreign political
contributions, (b) made any payment or provided services which were not
legal to make or provide or which the Company, any of its Subsidiaries or any
Affiliate thereof or any such officer, employee or other Person should
reasonably have known were not legal for the payee or the recipient of such
services to receive, (c) received any payment or any services which were
not legal for the payer or the provider of such services to make or provide,
(d) had any material transactions or payments which are not recorded in its
accounting books and records, or (e) had any off-book bank or cash accounts
or “slush funds.”
4.30 Information
Supplied.
None
of
the information furnished or to be furnished by or on behalf of the Company
for
inclusion or incorporation by reference in either a Form S-4 Registration
Statement to be filed with the SEC by Parent or any Private Placement Memorandum
prepared by Parent, in either case in connection with the issuance of the Merger
Securities pursuant to the Merger, will, as of the time furnished, contain
any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading.
4.31 Antitakeover
Statutes.
The
Company
has taken all action necessary to exempt the Merger, this Agreement, the Voting
and Lock-Up Agreement, and the Transactions from Section 203 of the DGCL.
Neither
such Section nor any other anti-takeover or similar Law applies or purports
to
apply to the Transactions. No
other
“control share acquisition,” “fair price,” “moratorium” or other anti-takeover
Laws apply to this Agreement or any of the Transactions.
4.32 Compliance
with Securities Laws.
Except
to
the extent as would not have a Material Adverse Effect, individually or in
the
aggregate, on the Company or any of its Subsidiaries, the offering and issuance
by the Company and any of its Subsidiaries of all securities to date were made
and completed in substantial compliance with all applicable state, federal
and,
if applicable, foreign securities Laws.
4.33 Change
in Control.
Except
as may be set forth in Section 4.33 of the Company Disclosure Schedule, the
Company is not a party to any Contract that contains a “change in control,”
“potential change in control” or similar provision.
4.34 Powers
of Attorney.
To the
Knowledge of the Company, there are no material outstanding powers of attorney
executed on behalf of the Company or any of its Subsidiaries.
4.35 Material
Disclosures.
No
statement, representation or warranty made by the Company in this Agreement,
or
in any certificate, statement, list, schedule or other document furnished or
to
be furnished to Parent hereunder, contains, or when so furnished will contain,
any untrue statement of a material fact, or fails to state, or when so furnished
will fail to state, a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances in which they are
or
will be made, not misleading.
30
ARTICLE
V
Except
as
set forth in the Disclosure Schedule delivered by Parent to the Company and
signed by the Company and Parent for identification prior to the execution
and
delivery of this Agreement (the “Parent
Disclosure Schedule”),
which
shall identify exceptions by specific section references, Parent and Merger
Sub
hereby, jointly and severally, represent and warrant to the Company
that:
5.1 Corporate
Organization and Qualification.
Parent
and Merger Sub are corporations duly organized, validly existing and in good
standing under the Laws of the State of Delaware. Parent and each of its
Subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character
of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to
be
so qualified or licensed and in good standing as would not, individually or
in
the aggregate, have a Material Adverse Effect on either or both of Parent and/or
Merger Sub.
5.2 Certificate
of Incorporation and Bylaws.
Parent
has heretofore furnished or made available to the Company a complete and correct
copy of the certificate of incorporation and bylaws of Parent, and the
certificate of incorporation and bylaws of Merger Sub, each as amended to date.
Neither Parent nor Merger Sub is in violation of any provision of its
certificate of incorporation or bylaws.
5.3 Books
and Records.
(a) The
books
of account, minute books, stock record books, and other records of Parent and
Merger Sub, all of which have
heretofore been furnished or made available to the Company,
are
complete and correct and have been maintained in accordance with sound business
practices, including the maintenance of an adequate system of internal controls.
The minute books of Parent and Merger Sub contain accurate and complete records
of all meetings held of, consents of, and corporate action taken by, the
stockholders, the boards of directors, and any committees of the boards of
directors of each of Parent and Merger Sub, and no meeting of such stockholders,
boards of directors or committees has been held for which minutes have not
been
prepared and are not contained in such minute books.
(b) None
of
the records, systems, data or information of either Parent or Merger Sub is
recorded, stored, maintained, operated or otherwise wholly or partly dependent
on or held or accessible by any means (including, but not limited to, an
electronic, mechanical or photographic process computerized or not) which are
not under the exclusive ownership and direct control of either Parent or Merger
Sub, as the case may be.
31
5.4 Capitalization.
(a) As
of the
date of this Agreement, the authorized capital stock of Parent consists of
(i)
one hundred million (100,000,000) shares of Parent Common Stock, $.0001 par
value, and (ii) twenty million (20,000,000) shares of “blank check” preferred
stock, $.0001 par value (“Parent
Preferred Stock”).
As of
the date of this Agreement, (A) 5,000,000 shares of Parent Common Stock were
issued and outstanding, all of which were validly issued, fully paid and
nonassessable, (B) no shares of Parent Common Stock were held in the treasury
of
Parent, (C) no shares of Parent Common Stock were reserved for future issuance
pursuant to outstanding stock options or stock incentive rights granted pursuant
to any stock option plan, and (D) no shares of Parent Preferred Stock were
issued or outstanding. Except as contemplated by this Agreement and as set
forth
in Section 5.4(a) of the Parent Disclosure Schedule, as of the date of this
Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Parent obligating Parent to issue or sell any shares of capital
stock of, or other equity interests in, Parent or Merger Sub. There are no
outstanding contractual obligations of Parent to repurchase, redeem or otherwise
acquire any shares of Parent Common Stock, Parent Preferred Stock or any other
securities of Parent. The shares of Parent Common Stock to be issued pursuant
to
the Merger will be duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights created by statute, Parent’s certificate of
incorporation or bylaws, or any agreement to which Parent is a party or by
which
Parent is bound.
(b) As
of the
date of this Agreement, the authorized capital stock of Merger Sub consists
of
(i) 1,000,000 shares of Merger Sub Common stock, $.0001 par value, and (ii)
1,000,000 shares of “blank check” preferred stock, $.0001 par value
(“Merger
Sub Preferred Stock”).
As of
the date of this Agreement, (A) 1,000 shares of Merger Sub Common Stock were
issued and outstanding, each of which are held by Parent, and all of which
were
validly issued, fully paid and nonassessable, (B) no shares of Merger Sub Common
Stock were held in the treasury of Merger Sub, (C) no shares of Merger Sub
Common Stock were reserved for future issuance pursuant to outstanding stock
options or stock incentive rights granted pursuant to any stock option plan,
and
(D) no shares of Merger Sub Preferred Stock were issued or outstanding. Except
as contemplated by this Agreement and as set forth in Section 5.4(b) of the
Parent Disclosure Schedule, as of the date of this Agreement, there are no
options, warrants or other rights, agreements, arrangements or commitments
of
any character relating to the issued or unissued capital stock of Merger Sub
obligating Merger Sub to issue or sell any shares of capital stock of, or other
equity interests in, Merger Sub. There are no outstanding contractual
obligations of Merger Sub to repurchase, redeem or otherwise acquire any shares
of Merger Sub Common Stock or Merger Sub Preferred Stock.
5.5 Authority
Relative To This Agreement.
Each of
Parent and Merger Sub has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by
Parent and Merger Sub and the consummation by Parent and Merger Sub of the
Transactions have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of Parent or Merger Sub
are necessary to authorize this Agreement or to consummate the Transactions
(other than with respect to the Merger, the filing and recordation of the
Certificate of Merger with the Delaware Secretary of State, as required by
this
Agreement and applicable Law). This Agreement has been duly and validly executed
and delivered by Parent and Merger Sub and, assuming the due authorization,
execution and delivery of this Agreement by the Company and the Company
Principal Stockholder, constitutes a legal, valid and binding obligation of
each
of Parent and Merger Sub enforceable against each of Parent and Merger Sub
in
accordance with its terms, except as the enforceability thereof may be limited
by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting or relating to creditors’ rights generally, and
(ii) the availability of injunctive relief and other equitable
remedies.
32
(a) The
execution and delivery of this Agreement by Parent and Merger Sub do not, and
the performance of this Agreement by Parent and Merger Sub will not, subject
to
obtaining the consents, approvals, Authorizations and permits and making the
filings described in Section 5.6(b) of this Agreement and Section 5.6(b) of
the
Parent Disclosure Schedule, (i) conflict with or violate the certificate of
incorporation or bylaws of either Parent or Merger Sub, (ii) conflict with
or
violate any Law applicable to Parent or Merger Sub or by which any property
or
asset of any of them is bound or affected, or (iii) result in any breach of
or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a
Lien
or other encumbrance on any property or asset of Parent or Merger Sub or require
the consent of any third party pursuant to, any note, bond, mortgage, indenture,
Contract, agreement, lease, license, permit, franchise or other instrument
or
obligation to which Parent or Merger Sub is a party or by which Parent or Merger
Sub or any property or asset of any of them is bound or affected, except for
any
such conflicts, violations, breaches, defaults or other occurrences which would
not, individually or in the aggregate, have a Material Adverse Effect on Parent
or prevent Parent and Merger Sub from performing their respective obligations
under this Agreement and consummating the Transactions.
(b) The
execution and delivery of this Agreement by Parent and Merger Sub do not, and
the performance of this Agreement by Parent and Merger Sub will not, require
any
consent, approval, Authorization or permit of, or filing with or notification
to, any Governmental Authority, domestic or foreign, except (i) such
filings as may otherwise be required in accordance with federal and state
securities Law compliance in connection with the issuance of the Merger
Securities pursuant to the Merger, (ii) the filing of a Schedule 14F in
accordance with Exchange Act Section 14f, (iii) the filing and recordation
of
the Certificate of Merger with the Delaware Secretary as required by this
Agreement and applicable Law, (iv) such filings as may be required under the
Exchange Act and/or by FINRA, (v) as may be specified in Section 5.6(b) of
the
Parent Disclosure Schedule, and (vi) where failure to obtain such consents,
approvals, Authorizations or permits, or to make such filings or notifications,
would not have a Material Adverse Effect on Parent or Merger Sub and would
not
prevent or delay consummation of the Transactions, or otherwise prevent Parent
or Merger Sub from performing their respective obligations under this
Agreement.
(a) Parent
has made available to Company all forms, reports and documents required to
be
filed by it with the SEC since April 1, 2007 (collectively, the
“Parent
SEC Reports”).
Parent
SEC Reports (i) at the time they were filed complied as to form in all
material respects with the applicable requirements of the Exchange Act, and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The
consolidated financial statements (including, in each case, any related notes)
contained in Parent SEC Reports complied as to form in all material respects
with the applicable rules and regulations of the SEC with respect thereto,
were
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by the SEC)
and
fairly presented the consolidated financial position of Parent and its
Subsidiaries as at the respective dates and the consolidated results of its
operations and cash flows for the periods indicated (subject, in the case of
the
unaudited financial statements, to normal year-end recurring
adjustments).
33
(c) Parent
and its Subsidiaries have no Liabilities except (a) those which are
adequately reflected or reserved against as noted above in the Financial
Statements included in the most recently filed Parent SEC Report, and
(b) those which have been incurred in the Ordinary Course of Business and
consistent with past practice since the last balance sheet date therein or
which
are not, individually or in the aggregate, material in amount.
5.8 Taxes.
(a) Except
as
may be specified in Section 5.8(a) of the Parent Disclosure Schedule, (i) each
of the Parent and its Subsidiaries has duly and timely filed all Tax Returns
required to have been filed by or with respect to the Parent or such Subsidiary,
(ii) each such Tax Return correctly and completely reflects all liability for
Taxes and all other information required to be reported thereon, (iii) all
Taxes
owed by the Parent and each Subsidiary of the Parent (whether or not shown
on
any Tax Return) have been timely paid, and (iv) each of the Parent and its
Subsidiaries has adequately provided for, in its books of account and related
records, all Liability for unpaid Taxes, being current Taxes not yet due and
payable.
(b) Except
as
may be specified in Section 5.8(b) of the Parent Disclosure Schedule, each
of
the Parent and its Subsidiaries has withheld and timely paid all Taxes required
to have been withheld and paid by it and has complied with all information
reporting and backup withholding requirements, including maintenance of required
records with respect thereto.
(c) Except
as
may be specified in Section 5.8(c) of the Parent Disclosure Schedule, neither
Parent nor any of its Subsidiaries (i) is the beneficiary of any extension
of
time within which to file any Tax Return, nor has Parent or any of its
Subsidiaries made (or had made on its behalf) any requests for such extensions,
or (ii) has waived (or is subject to a waiver of) any statute of limitations
in
respect of Taxes or has agreed to (or is subject to) any extension of time
with
respect to a Tax assessment or deficiency.
(d) Section
5.8(d) of the Parent Disclosure Schedule indicates those Tax Returns that have
been audited and those Tax Returns that currently are the subject of audit.
Except as set forth in Section 5.8(d) of the Parent Disclosure Schedule (i)
there is no Action now pending or threatened against or with respect to the
Parent or any of its Subsidiaries in respect of any Tax or any assessment or
deficiency, and (ii) there are no liens for Taxes (other than current Taxes
not
yet due and payable) upon the assets of the Parent.
(e) Section
5.8(e) of the Parent Disclosure Schedule lists, as of the date of this
Agreement, all jurisdictions in which the Parent or any of its Subsidiaries
currently files Tax Returns. No claim has been made by any Taxing Authority
in a
jurisdiction where the Parent or any of its Subsidiaries does not file Tax
Returns that any of them is or may be subject to taxation by that jurisdiction
or that any of them must file Tax Returns.
(f) None
of
the assets or properties of the Parent or any of its Subsidiaries constitutes
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the Code. Neither the Parent nor any of its Subsidiaries
is a party to any “safe harbor lease” within the meaning of
Section 168(f)(8) of the Code, as in effect prior to amendment by the Tax
Equity and Fiscal Responsibility Act of 1982, or to any “long-term contract”
within the meaning of Section 460 of the Code. Neither the Parent nor any
of its Subsidiaries has ever been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code. Parent is
not a “foreign person” within the meaning of Section 1445 of the
Code.
34
(g) Neither
the Parent nor any of its Subsidiaries has agreed to or is required to make
by
reason of a change in accounting method or otherwise, or could be required
to
make by reason of a proposed or threatened change in accounting method or
otherwise, any adjustment under Section 481(a) of the Code. Neither the Parent
nor any of its Subsidiaries has been the “distributing corporation” (within the
meaning of Section 355(c)(2) of the Code) with respect to a transaction
described in Section 355 of the Code within the 5-year period ending as of
the
date of this Agreement.
(h) No
Subsidiary of the Parent that is incorporated in a non-U.S. jurisdiction has,
or
at any time has had, an investment in “United States property” within the
meaning of Section 956(c) of the Code. No Subsidiary of the Parent is, or at
any
time has been, a passive foreign investment company within the meaning of
Section 1297 of the Code and neither Parent nor any of its Subsidiaries is
a shareholder, directly or indirectly, in a passive foreign investment company.
No Subsidiary of the Parent that is incorporated in a non-U.S. jurisdiction
is,
or at any time has been, engaged in the conduct of a trade or business within
the United States, or treated as or considered to be so engaged.
(i) Neither
the Parent nor any of its Subsidiaries (i) has ever been a party to any Tax
allocation or sharing agreement or Tax indemnification agreement, (ii) has
ever been a member of an affiliated, consolidated, condensed or unitary group,
or (iii) has any Liability for or obligation to pay Taxes of any other
Person under Treas. Reg. 1.1502-6 (or any similar provision of Tax Law), or
as
transferee or successor, by Contract or otherwise. Neither the Parent nor any
of
its Subsidiaries is a party to any joint venture, partnership, or other
arrangement that is treated as a partnership for federal income tax
purposes.
(j) Neither
the Parent nor any of its Subsidiaries will be required to include any item
of
income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Effective Time as a result of
any:
(i) intercompany transactions or excess loss accounts described in Treasury
regulations under Section 1502 of the Code (or any similar provision of
state, local, or foreign Tax Law), (ii) installment sale or open
transaction disposition made on or prior to the Effective Time, or
(iii) prepaid amount received on or prior to the Effective
Time.
(k) The
Parent has not entered into any transaction that constitutes a “reportable
transaction” within the meaning of Treasury
Regulation Section 1.6011-4(b).
(l) Section
5.8(l) of the Parent Disclosure Schedule lists each person who the Parent
reasonably believes is, with respect to the Parent or any Affiliate of the
Parent, a “disqualified individual” within the meaning of Section 280G of
the Code and the Regulations thereunder.
(m) Neither
the Parent nor, to the Knowledge of Parent, any of its Affiliates has taken
or
agreed to take any action (other than actions contemplated by this Agreement)
that would reasonably be expected to prevent the Merger from constituting a
“reorganization” under Section 368 of the Code. The Parent is not aware of
any agreement or plan to which the Parent or any of its Affiliates is a party
or
other circumstances relating to the Parent or any of its Affiliates that could
reasonably be expected to prevent the Merger from so qualifying as a
“reorganization” under Section 368 of the Code.
35
(n) Except
as
may be specified in Section 5.8(n) of the Parent Disclosure Schedule, the unpaid
Taxes of the Parent (i) did not, as of the date of the Most Recent Parent
Balance Sheet, exceed the reserve for Tax liability (rather than any reserve
for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the face of the Most Recent Parent Balance Sheet (rather
than in any notes thereto), and (ii) will not exceed that reserve as
adjusted for the passage of time through the Closing Date in accordance with
the
past custom and practice of the Parent in filing its Tax Returns. Since the
date
of the Most Recent Parent Balance Sheet, the Parent has not incurred any
liability for Taxes arising from extraordinary gains or losses, as that term
is
used in GAAP, outside the Ordinary Course of Business consistent with past
custom and practice.
5.9 Absence
of Litigation.
There
is no claim, action, Proceeding or investigation pending or, to the Knowledge
of
Parent, threatened against Parent or any Subsidiary of Parent including Merger
Sub, before any arbitrator or Governmental Authority, which (a) individually
or
in the aggregate, would reasonably be expected to have a Material Adverse Effect
on Parent, or (b) seeks to delay or prevent the consummation of the Merger.
Neither Parent nor Merger Sub, nor any property or asset of Parent or Merger
Sub
is in violation of any Order, writ, judgment, injunction, decree, determination
or award having, individually or in the aggregate, a Material Adverse Effect.
5.10 Related
Party Transactions.
There
are
no Contracts of any kind, written or oral, entered into by the Parent or any
of
its Subsidiaries with, or for the benefit of, any officer, director or
stockholder of the Parent or, to the Knowledge of the Parent, any Affiliate
of
any of them, except in each case, for (a) reimbursements of ordinary and
necessary expenses incurred in connection with their services, (b) the
occupancy of certain of the Parent’s facilities which do not provide for the
payment of significant amounts of rent, and (c) as may have otherwise been
disclosed in the Parent SEC Reports.
(a) Merger
Sub was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement.
(b) As
of the
date hereof and the Effective Time, except for obligations or Liabilities
incurred in connection with its incorporation or organization and the
Transactions, and except for this Agreement and any other agreements or
arrangements contemplated by this Agreement, Merger Sub has not and will not
have incurred, directly or indirectly, through any Subsidiary or Affiliate,
any
obligations or Liabilities or engaged in any business activities of any type
or
kind whatsoever or entered into any agreements or arrangements with any
Person.
5.12 Absence
of Certain Changes or Events.
Since
the date of the most recently filed Parent SEC Reports that included financial
statements, and except as may be contemplated by, or disclosed pursuant to,
this
Agreement, including Section 5.12 of the Parent Disclosure
Schedule:
(a) there
has
not been any event or events (whether or not covered by insurance), individually
or in the aggregate, which have had a Material Adverse Effect on the Parent
or
any of its Subsidiaries, including without limitation the imposition of any
security interests on any of the assets of the Parent or any of its
Subsidiaries;
36
(b) there
have not been any amendments or other modifications to the certificate of
incorporation or bylaws of either the Parent or any of its Subsidiaries;
(c) there
has
not been any entry by the Parent nor any of its Subsidiaries into any commitment
or transaction material to the Parent or such Subsidiaries, except in the
Ordinary Course of Business and consistent with past practice, including without
limitation any (i) borrowings or the issuance of any guaranties, (ii) any
capital expenditures in excess of $1,000, or (iii) any grant of any increase
in
the base compensation payable, or any loans, to any directors, officers or
employees;
(d) there
has
not been, other than pursuant to the Plans, any increase in or establishment
of
any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option, stock purchase or other employee benefit plan,
except in the Ordinary Course of Business consistent with past
practice.
(e) there
have not been any material changes by the Parent in its accounting methods,
principles or practices;
(f) neither
Parent nor any of its Subsidiaries has declared, set aside or paid any dividend
or other distribution (whether in cash, stock or property) with respect to
any
of its securities;
(g) neither
Parent nor any of its Subsidiaries has split, combined or reclassified any
of
its securities, or issued, or authorized for issuance, any
securities;
(h) there
has
not been any material damage, destruction or loss with respect to the property
and assets of Parent or any of its Subsidiaries, whether or not covered by
insurance;
(i) there
has
not been any revaluation of Parent’s or any of its Subsidiaries’ assets,
including writing down the value of inventory or writing off notes or accounts
receivable, other than in the Ordinary Course of Business consistent with past
practice; and
(j) neither
Parent nor any of its Subsidiaries has agreed, whether in writing or otherwise,
to do any of the foregoing.
5.13 No
Illegal Payments.
None
of
Parent, any of its Subsidiaries or, to the Knowledge of the Parent, any
Affiliate, officer, agent or employee thereof, directly or indirectly, has,
since inception, on behalf of or with respect to the Parent or any of its
Subsidiaries, (a) made any unlawful domestic or foreign political
contributions, (b) made any payment or provided services which were not
legal to make or provide or which the Parent, any of its Subsidiaries or any
Affiliate thereof or any such officer, employee or other Person should
reasonably have known were not legal for the payee or the recipient of such
services to receive, (c) received any payment or any services which were
not legal for the payer or the provider of such services to make or provide,
(d) had any material transactions or payments which are not recorded in its
accounting books and records, or (e) had any off-book bank or cash accounts
or “slush funds.”
5.14 Antitakeover
Statutes.
Parent
has taken all action believed to be necessary to exempt the Merger, this
Agreement, the Voting and Lock-Up Agreements, and the Transactions from
Section 203 of the DGCL. Neither
such Section nor any other anti-takeover or similar Law applies or purports
to
apply to the Transactions. No
other
“control share acquisition,” “fair price,” “moratorium” or other anti-takeover
Laws apply to this Agreement or any of the Transactions.
37
5.15 Compliance
with Securities Laws.
Except
to
the extent as would not have a Material Adverse Effect, individually or in
the
aggregate, on the Parent or any of its Subsidiaries, the offering and issuance
by the Parent and any of its Subsidiaries of all securities to date were made
and completed in substantial compliance with all applicable state and federal
securities Laws.
5.16 Brokers
or Finders.
No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of Parent or Merger Sub.
ARTICLE
VI
6.1 Conduct
of Business by the Company Pending the Merger.
The
Company covenants and agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 6.1 of the Company Disclosure
Schedule or as contemplated by any other provision of this Agreement, and unless
Parent shall otherwise agree in writing, (1) the business of the Company and
any
of its Subsidiaries shall be conducted only in, and the Company and any such
Subsidiaries shall not take any action except in, the Ordinary Course of
Business, (2) the Company shall use all reasonable efforts to preserve
substantially intact its business organization, to keep available the services
of the current officers, employees and consultants of the Company and any of
its
Subsidiaries and to preserve the current relationships of the Company and such
Subsidiaries with customers, suppliers and other persons with which the Company
and any of its Subsidiaries has significant business relations, (3) comply
with
all applicable Laws, (4) prepare and timely file all foreign, Federal, state
and
local Tax Returns as required by applicable Law, and make timely payment of
all
applicable Taxes when due, (5) use reasonable efforts to obtain, prior to the
Closing Date, all Required Company Consents, (6) take all actions to be in
substantial compliance with all Company Permits, (7) make full and timely
payment of all amounts required to be contributed under the terms of each Plan
and applicable Law or required to be paid as expenses under any such Plan,
and
(8) the Company will not, and will not permit any Subsidiary to:
(a) amend
or
otherwise change its Articles of Incorporation or Bylaws;
(b) issue,
sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale,
pledge, disposition, grant or encumbrance of, (i) any shares of capital stock
of
the Company or any Subsidiary of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
such
capital stock, or any other ownership interest (including, without limitation,
any phantom interest), of the Company (except for shares of the Company Common
Stock, if any, issuable under agreements currently in effect on the date hereof
and described in Section 4.4(a) of the Company Disclosure Schedule), or (ii)
any
of the Company’s or any Subsidiaries’ assets, except for sales in the Ordinary
Course of Business and in a manner consistent with past practice;
(c) declare,
set aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital
stock;
38
(d) reclassify,
combine, split, divide or redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock;
(e) (i)
acquire (including, without limitation, by merger, consolidation, or acquisition
of stock or assets) any interest in any Person or any division thereof or any
assets, other than the acquisition of assets in the Ordinary Course of Business
consistent with past practice; (ii) merge with any Person (other than Merger
Sub), (iii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any Person, or make any loans or
advances; (iv) enter into any Contract material to the business, results of
operations or financial condition of the Company other than in the Ordinary
Course of Business, consistent with past practice; (v) authorize any capital
expenditure, other than capital expenditures set forth in Section 4.19(a)(ix)
of
the Company Disclosure Schedule; or (vi) enter into or amend any Contract with
respect to any matter set forth in this subsection (e);
(f)
(i)
increase the compensation payable or to become payable to any director, officer
or other employee, or grant any bonus, to, or grant any severance or termination
pay to, or enter into any employment or severance agreement with any director,
officer or other employee of the Company or any Subsidiary or enter into or
amend any collective bargaining agreement, or (ii) establish, adopt, enter
into
or amend any bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation or other plan,
trust or fund for the benefit of any director, officer or class of
employees;
(g) settle
or
compromise any pending or threatened litigation which is material or which
relates to the Transactions;
(h) grant
or
convey to any Person any rights, including, but not limited to, by way of sale,
license or sub-license, in any of the Company Intellectual
Property;
(i) make
any
Tax election, change its method of Tax accounting or settle any claim relating
to Taxes;
(j) make
any
change in any of the Company’s or any of its Subsidiaries accounting methods or
in the manner of keeping each of their respective books and records or any
change in any of their respective current practices with respect to inventory,
sales, receivables, payables or accrued expenses;
(k) file
or
cause to be filed any registration statements under the Securities Act or
Exchange Act relating to any of its capital stock or other
securities;
(l) take
any
action or omit to do any act within its reasonable control which action or
omission is reasonably likely to result in any of the conditions to the Merger
not being satisfied, except as may be required by applicable Law;
(m) take
or
omit to take any action that would result in the representations and warranties
hereunder being rendered untrue in any material respect; or
(n) agree
to
do any of the foregoing.
39
6.2 Conduct
of Business by Parent Pending the Merger.
Parent
covenants and agrees that, between the date of this Agreement and the Effective
Time, except as may be set forth in Section 6.2 of the Parent Disclosure
Schedule, as contemplated by any other provision of this Agreement, or as may
not have a Material Adverse Effect on the Parent or any of its Subsidiaries,
and
unless the Company shall otherwise agree in writing (which agreement shall
not
be unreasonably withheld), (i) the businesses of the Parent and Merger Sub
shall
be conducted only in, and the Parent shall not, and shall cause Merger Sub
not
to, take any action except in, the Ordinary Course of Business consistent with
past practice, (ii) Parent shall timely file all Parent SEC Reports as may
be
required under the Exchange Act (including any extensions afforded by way of
compliance with Rule 12b-25 thereunder, if applicable), (iii) Parent shall
comply with all applicable Laws, (iv) Parent shall prepare and timely file
all
foreign, Federal, state and local Tax Returns as required by applicable Law,
and
make timely payment of all applicable Taxes when due, (v) Parent shall not
amend
any of the terms or provisions of the Parent Common Stock, (vi) Parent shall
not
take any action or omit to do any act within its reasonable control which action
or omission is reasonably likely to result in any of the conditions to the
Merger not being satisfied, except as may be required by applicable Law, and
(vii) Parent shall take or omit to take any action that would result in the
representations and warranties hereunder being rendered untrue in any material
respect.
6.3 Conduct
of Company Principal Stockholder Pending the Merger.
The
Company Principal Stockholder covenants and agrees to refrain from taking any
action, directly or indirectly, that is intended to, would, or that might
reasonably be likely to, (i) discourage Company Stockholders from approving
the
Merger and this Agreement as required under the DGCL and the bylaws of the
Company, or (ii) encourage,
or that might otherwise result in, any holder of Dissentable Shares becoming
a
Dissenting Holder.
ARTICLE
VII
7.1 Voting
and Lock-Up Agreement.
Contemporaneously with the execution of this Agreement, the Company Principal
Stockholder shall have delivered to Parent an executed Voting and Lock-Up
Agreement.
(a) The
Company hereby agrees that, as soon as practicable after the execution of this
Agreement, it shall take whatever action may be reasonably necessary to (i)
solicit and obtain, and forward to Parent, completed securityholder
questionnaires (in form satisfactory to Parent) from all Company securityholders
regarding their investor qualification, (ii) complete the independent audit
of
its financial statements by a PCAOB registered auditing firm, and immediately
make available such audited financial statements to Parent, and (iii) obtain
and
deliver to Parent an opinion of counsel, in form satisfactory to Parent, that
the Merger will qualify as a tax-free reorganization under the Code.
(b) As
soon
as practicable after the execution of this Agreement, Parent, in conjuction
with
the Company, shall prepare or cause to be prepared a private placement
memorandum ”) (including any amendments or supplements thereto, the
“Offering
Memorandum”)
suitable and appropriate for the exempt private offering associated with the
sale of the Merger Securities from Parent to all holders of Cancelable
Securities (collectively, the “Company
Securityholders”).
Parent
shall give the Company, its counsel and its independent accountants/auditors
a
reasonable opportunity to review, comment upon, and propose edits to the
Offering Memorandum prior to distributing it to Company Securityholders, and,
also prior to distributing the Offering Memorandum to Company Securityholders,
Parent shall have obtained the written authorization of the Company as to the
accuracy and completeness of the information relating to the Company and its
Subsidiaries contained therein.
40
(c) The
Company hereby agrees to cooperate, and agrees to use all reasonable efforts
to
cause its Subsidiaries and Affiliates to cooperate, with Parent’s officers,
directors, employees, accountants, counsel and/or other agents retained by
Parent (“Parent
Representatives”)
in
connection with the preparation of any and all information required, as
determined by Parent, to be disclosed pursuant to applicable securities Laws
in
the Offering Memorandum, as applicable. The Company shall furnish all
information concerning itself as may be reasonably requested by Parent or its
counsel in connection with the foregoing, including without limitation complete
financial statements as required under the Securities Act and/or the regulations
promulgated thereunder, which financial statements shall have been fully audited
by a PCAOB registered independent auditing firm. The Company shall, and shall
cause its Subsidiaries to, afford to the Parent Representatives reasonable
access to its properties, assets and records during the period prior to the
Effective Time to obtain all information concerning its business as Parent
may
reasonably request. The Company shall furnish to Parent all such documents
and
copies of documents and records and information with respect to itself and
its
Subsidiaries, and copies of any working papers relating thereto, as Parent
may
reasonably request. Anything to the contrary notwithstanding, nothing in this
Section 7.2(c) shall require the Company to provide any access, or to disclose
any information, if permitting such access or disclosing such information would
(a) violate applicable Law, (b) violate any of its obligations with
respect to confidentiality (provided,
however,
that
the Company shall, upon the request of Parent, use its reasonable best efforts
to obtain the required consent of any third party to such access or disclosure),
or (c) result in the loss of attorney-client privilege (provided,
however,
that
the Company shall use its reasonable best efforts to allow for such access
or
disclosure in a manner that does not result in a loss of attorney-client
privilege). The Company shall reasonably avail itself to the Parent regarding
its business on an as-requested basis.
(d) In
connection with the Offering Memorandum:
(i) Parent
shall use its reasonable best efforts to take any and all action required under
any applicable federal or state securities Laws in connection with the issuance
of the Merger Securities pursuant to the Merger.
(ii) As
soon
as practicable following the time at which approval of the contents of the
Offering Memorandum has been obtained from the Company by Parent, the Company,
in accordance with the requirements of its bylaws and the DGCL, as applicable,
and subject to any procedural and/or other directives as may be required in
relation to federal and/or state securities compliance in the exclusive
determination of Parent, shall:
(A) prepare,
distribute and deliver a package to all Company Stockholders entitled to vote
on
the Merger under applicable Law which package shall contain (a) a letter (in
form satisfactory to Parent) advising that the board of directors of the Company
recommends that they approve the Merger and this Agreement and soliciting their
written consent thereto, together with (b) a form of majority written
stockholders’ consent approving the Merger and this Agreement for them to
execute and return, (c) a complete copy of the Offering Memorandum, and (d)
a
form of Parent subscription agreement (provided by Parent); and
41
(B) use
its
diligent best efforts thereafter to promptly solicit and obtain the written
consents from each such Company Stockholders, together with corresponding
subscription agreements.
(iii) To
the
extent that the Company is successful in obtaining the majority written consent
of the Company Stockholders approving the Merger and this Agreement, upon the
obtaining of such consent, the Company, in accordance with the requirements
of
its bylaws and the DGCL, as applicable, and subject to any procedural and/or
other directives as may be required in relation to federal and/or state
securities compliance in the exclusive discretion of Parent, shall promptly
prepare, distribute and deliver a package to each of the Company Stockholders
entitled to vote in relation to the Merger exclusive of those from which the
majority written consent of the Company Stockholders approving the Merger and
this Agreement was previously obtained, which package shall contain a letter
(in
form satisfactory to Parent) indicating that the Company shall have previously
obtained the written consent of Company Stockholders representing a majority
of
the shares of the capital stock of the Company entitled to vote on the Merger
and this Agreement, and that approval of the Merger and this Agreement shall
have therefore been duly obtained, but that he/she/it may nonetheless elect
not
to have his/her/its Dissentable Shares exchanged in the Merger and pursue
his/her/its appraisal rights under the DGCL.
(iv) To
the
extent that the Company is unsuccessful in obtaining a majority written consent
of the Company Stockholders approving the Merger and this Agreement, and subject
to any procedural and/or other directives as may be required in relation to
federal and/or state securities compliance in the exclusive discretion of
Parent, the Company shall as promptly as practicable take all action necessary
under the DGCL and its bylaws to duly call, convene and hold a special meeting
of Company Stockholders for the purposes of considering, among other potential
proposals, a proposal to approve the Merger and this Agreement, and each of
the
Company and the Company Principal Stockholder shall use their best
efforts to solicit from the Company Stockholders proxies in favor of such
approval and
take
all other action it deems advisable to secure the vote of its stockholders
required by the DGCL to obtain such approvals. In connection with any such
special meeting of stockholders, and
subject to any procedural and/or other directives as may be required in relation
to federal and/or state securities compliance in the exclusive discretion of
Parent, the
Company agrees to provide a
proxy
statement to all Company Stockholders which includes (i) the contents of the
Offering Memorandum, and (ii) a statement advising that the board of directors
of the Company recommends that they approve the Merger and this Agreement.
(v) The
information provided by the Company for inclusion in the Offering Memorandum
shall not, (A) at the time provided, or (B) at the time the Company proxy
statement (inclusive of the Offering Memorandum) is first mailed to Company
Stockholders, contain any untrue statement of a material fact or fail to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were
made, not misleading. If, at any time prior to the Effective Time, any event
or
circumstance relating to the Company and/or its Subsidiaries, or their
respective officers or directors, should be discovered by the Company that
should be set forth in an amendment or a supplement to the Offering Memorandum
so that any of such documents will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the
statements therein, in the light of the circumstances under which they were
made, not misleading, the Company shall promptly inform Parent in writing.
(vi) Any
Merger Securities issued pursuant to the Offering Memorandum shall constitute
“restricted securities” within the meaning of the Securities Act, and, as such,
any certficates reflecting such Merger Securities shall contain a restrictive
legend.
42
(e) Upon
such
date (the “Closing
Lockdown Date”)
as (1)
the Company shall have obtained the requisite approval of its stockholders
to
the Merger and this Agreement in accordance with the DGCL and its bylaws, and
(2) each of Parent and the Company shall have agreed in writing to a specified
date for Closing, and to the extent that the Company has issued and outstanding
less than ninety five million (95,000,000) shares of common stock on a
Fully-Diluted Basis as of the Closing Lockdown Date, Parent shall be given
a
reasonable period thereafter in which to take whatever steps as may be
reasonably necessary to effect a redemption (the consideration for which shall
be the greater of par value or book value as of the Closing Lockdown Date,
plus
the incremental value to be realized in the retained shares as a result of
the
Merger) of such number of shares of Parent Common Stock from the holders thereof
on a pro-rata basis such that, collectively, the remaining shares of Parent
Common Stock issued and outstanding following such redemption would equal five
percent (5%) of the sum of (x)
the
number of shares of Parent Common Stock then outstanding, plus (y)
the
number of shares of Company Common Stock then outstanding on a Fully-Diluted
Basis (the “Parent
Common Stock Redemption”).
From
and after the Parent Common Stock Redemption, the Company shall be prohibited
from issuing any securities of any kind (the “Pre-Closing
Company Standstill Commitment”).
(f) It
is
acknowledged that each of the Parent and the Company have made a determination,
and agreed, to forego the obtaining of any fairness opinion in relation to
the
Merger.
(g) At
least
ten (10) days prior to the Closing Date, and pursuant to the Exchange Act
Section 14(f), Parent, with the fullest of cooperation and assistance of the
Company applying its reasonable best efforts, shall prepare, file with the
SEC,
and mail to its stockholders, a Schedule 14F.
7.3 Regulatory
Approvals.
(a) Each
of
the Company, Parent and Merger Sub shall promptly apply for, and take all
reasonably necessary actions to obtain or make, as applicable, all
Authorizations, Orders, declarations and filings with, and notices to, any
Governmental Authority required to be obtained or made by it for the
consummation of the Transactions. Each Party shall cooperate with and promptly
furnish information to the other Parties necessary in connection with any
requirements imposed upon such other Parties in connection with the consummation
of the Merger.
(b) Each
of
the Company and Parent shall give the other reasonable prior notice of any
communication with, and any proposed understanding or agreement with, any
Governmental Authority regarding any Authorizations, Orders, declarations and
filings with, and notices to, any Governmental Authority, and permit the other
to review and discuss in advance, and consider in good faith the views of the
other in connection with, any proposed communication, understanding or agreement
with any Governmental Authority with respect to the Merger and the Transactions.
Notwithstanding the foregoing, neither the Company nor Parent shall be required
to nor any of their respective Affiliates shall have any obligation to contest,
administratively or in court, any ruling, order or other action of any
Governmental Authority or any other Person respecting the
Transactions.
43
7.4 Public
Announcements.
If
there is an initial press release relating to this Agreement, it shall be a
joint press release the text of which shall have been agreed to in writing
in
advance by each of Parent and the Company. Thereafter, each of Parent and the
Company shall not issue any press release or otherwise make any public
statements with respect to this Agreement or any of the Transactions without
the
prior written consent of the other Party; provided,
however,
that a
Party may, without such consent (but after prior consultation to the extent
practicable under the circumstances), issue such press releases and make such
public statements and/or disclosures that it reasonably determines are required
under applicable Law, including without limitation the Exchange Act, or the
rules of the OTCBB or, if applicable, the NASDAQ Capital Market or American
Stock Exchange. Notwithstanding the foregoing, a Party may make public
statements in response to questions from the press, analysts and investors
and
make internal announcements to employees, so long as such statements and
announcements are accurate and not misleading, consistent with previous press
releases or public statements made jointly by the Company and Parent, and do
not
contain forward-looking statements of any kind.
7.5 Tax
Free Reorganization.
Each of
the Company and Parent shall use their reasonable best efforts, and shall cause
their respective Subsidiaries to use their reasonable best efforts, to take
or
cause to be taken any action necessary for the Merger to qualify as a
“reorganization” within the meaning of Section 368(a) of the Code. Neither the
Company nor Parent shall (and following the Effective Time, Parent shall cause
the Surviving Corporation not to) take any action that would cause the Merger
to
fail to qualify as a “reorganization” within the meaning of Section 368(a) of
the Code. This Agreement is intended to constitute a “plan of reorganization”
within the meaning of Section 1.368-2(g) of the income tax regulations
promulgated under the Code.
7.6 Consents.
The
Company shall, and shall cause each of its Subsidiaries to, use its reasonable
best efforts to obtain all Required Company Consents.
7.7 Notification
of Certain Matters.
Each of
the Company and Parent shall give prompt notice to the other Party of any fact,
event or circumstance known to it (a) that individually or taken together
with all other facts, events and circumstances known to it, has had or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company or Parent or a Material Adverse Effect on the
Company and its Subsidiaries or Parent and its Subsidiaries, in each case taken
as a whole, (b) that would cause or constitute a breach of any of its
representations, warranties, covenants or agreements contained herein,
(c) that would cause the failure of any condition precedent to its
obligations, (d) regarding any consent of a third party that is or may be
required in connection with the Merger, (e) relating to any notice or other
communication from any Governmental Authority in connection with the Merger,
or
(f) in respect of any Proceedings commenced relating to it or any of its
Subsidiaries that, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 4.20 or Section 5.9, as
applicable; provided,
however,
that
(i) the delivery of any notice pursuant to this Section 7.8 shall not
prevent or cure any misrepresentations, breach of warranty or breach of
covenant, and (ii) disclosure by the Company or Parent pursuant to this Section
7.8 shall not be deemed to amend or supplement either the Company Disclosure
Schedule or the Parent Disclosure Schedule, or constitute an exception to any
representation or warranty under this Agreement.
7.8 Conveyance
Taxes.
Each of
the Company and Parent shall cooperate in the preparation, execution and filing
of all returns, questionnaires, applications or other documents regarding any
Taxes which become payable in connection with the Transactions that are required
or permitted to be filed on or before the Effective Time.
7.9 Dissenter’s
Rights.
Except
as otherwise required by applicable Law, neither the Company, the Company
Principal Stockholder, nor Parent shall do anything, either directly or
indirectly, that is intended to, or would, encourage, or that might otherwise
result in, any holder of Dissentable Shares becoming a Dissenting Holder.
44
7.10 Post-Closing
Current Report Filing on Form 8-K.
Within
four Business Days of the Closing Date, Parent (following the change in control)
shall file with the SEC a current report on Form 8-K regarding consummation
of
the Merger pursuant to Items
5.01, 5.02, and/or 5.06 of such form (or such other Items as may otherwise
be
appropriate).
7.11 Post-Closing
Establishment of Trading Market; Quotation; Listing.
As soon
as practicable following the Closing Date, the Parent (following the change
in
control) shall use its reasonable best efforts to cause the Parent Common Stock,
as a class, to become authorized for quotation, and to be quoted, on the OTCBB,
and/or to the extent qualified, to become authorized for listing, and to become
listed, on the NASDAQ Capital Market, including, as applicable, the preparation,
filing and prosecution of a Form 211 with FINRA in accordance with Rule 15c-211
under the Exchange Act and/or a listing application.
(a) Within
sixty (60) days following the Closing Date, Parent (following
the change in control) shall
have prepared, and shall file, in each case at its own expense, a registration
statement covering the resale of the Registrable Securities on Form S-1 or
such
other appropriate registration form of the SEC for the Parent as of such date
as
shall permit the disposition of such Registrable Securities in accordance with
the intended method or methods of disposition specified in the registration
statement (the “Resale
Registration Statement”).
Parent (following
the change in control) shall
thereafter use its best efforts to cause the Resale Registration Statement
to be
declared effective by the SEC as soon as possible.
(b)
From
and after the date of effectiveness of the Resale Registration Statement, Parent
(following
the change in control) shall
do
each the following:
(i) prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary
to
keep such Resale Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement until such time
as
all of the securities which are the subject of such registration statement
cease
to be Registrable Securities;
(ii)
furnish to each holder of Registrable Securities covered by such Resale
Registration Statement such number of conformed copies of such Resale
Registration Statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities,
and
such other documents, as such holder of Registrable Securities may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities owned by such holder of Registrable Securities;
(iii)
use
its reasonable best efforts to register or qualify all Registrable Securities
and other securities covered by such Resale Registration Statement under such
other state securities Laws as any holder of Registrable Securities thereof
shall reasonably request, to keep such registrations or qualifications in effect
for so long as such Resale Registration Statement remains in effect, and take
any other action which may be reasonably necessary to enable such holder of
Registrable Securities to consummate the disposition in such jurisdictions
of
the Registrable Securities owned by such holder; provided,
however,
that
Parent shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not
but
for the requirements of this subdivision (iii) be obligated to be so qualified
or to consent to general service of process in any such
jurisdiction;
45
(iv) use
its
reasonable best efforts to cause all Registrable Securities covered by such
Resale Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the holders
of Registrable Securities to consummate the disposition of such Registrable
Securities;
(v) furnish
to each holder of Registrable Securities a signed counterpart, addressed to
such
holder of Registrable Securities, and the underwriters, if applicable, of an
opinion of counsel for Parent, dated the effective date of such Resale
Registration Statement (or, if such registration includes an underwritten public
offering, an opinion dated the date of the closing under the underwriting
agreement), reasonably satisfactory in form and substance to such holder of
Registrable Securities, including that the prospectus and any prospectus
supplement forming a part of the Resale Registration Statement does not contain
an untrue statement of a material fact or omit a material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading; and
(vi) notify
the holders of Registrable Securities promptly and confirm such advice in
writing promptly after Parent has Knowledge thereof:
(A) when
the
Resale Registration Statement, the prospectus or any prospectus supplement
related thereto or post-effective amendment to the Resale Registration Statement
has been filed, and, with respect to the Resale Registration Statement or any
post-effective amendment thereto, when the same has become
effective;
(B) of
any
request by the SEC for amendments or supplements to the Resale Registration
Statement or the prospectus or for additional information;
(C) of
the
issuance by the SEC of any stop order suspending the effectiveness of the Resale
Registration Statement or the initiation of any proceedings by any Person for
that purpose; and
(D) of
the
receipt by Parent of any notification with respect to the suspension of the
qualification of any Registrable Securities for sale under any federal or state
securities Laws or the initiation or threat of any Proceeding for such
purpose.
(vii) notify
each holder of Registrable Securities covered by such Resale Registration
Statement, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, upon discovery that, or upon the happening
of any event as a result of which, the prospectus included in such Resale
Registration Statement, as then in effect, includes an untrue statement of
a
material fact or omits to state any material facts required to be stated therein
or necessary to make the statements therein not misleading in the light of
the
circumstances then existing, and, at the request of any such holder of
Registrable Securities, promptly prepare and furnish to such holder of
Registrable Securities a reasonable number of copies of a supplement to or
an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
46
(viii) use
its
best efforts to obtain the withdrawal of any order suspending the effectiveness
of the Resale Registration Statement at the earliest possible
moment;
(ix)
otherwise use its reasonable best efforts to comply with all applicable rules
and regulations of the SEC, and make available to its security holders, as
soon
as reasonably practicable, an earnings statement covering the period of at
least
twelve (12) months, but not more than eighteen (18) months, beginning with
the
first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder;
(x) enter
into such agreements and take such other actions as the holders of Registrable
Securities shall reasonably request in writing in order to expedite or
facilitate the disposition of the Registrable Securities; and
(xi) use
its
reasonable best efforts to list all Registrable Securities covered by such
Resale Registration Statement on any national securities exchange on which
any
of the Registrable Securities are then listed.
(c) This
Section 7.12 is intended to be for the benefit of, and shall be enforceable
by, the holders of Registrable Securities and their heirs and personal
representatives, and shall be binding on the Parent and its successors and
assigns. In the event that Parent or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger,
or (ii) transfers all or substantially all of its properties and assets to
any Person, then, and in each case, proper provision shall be made so that
the
successors and assigns of the Parent shall be legally bound to honor the
registration obligations set forth in this Section 7.12.
(a) With
an
understanding that all material information regarding the post-merger Parent
to
be provided in the Offering Memorandum furnished to Company Stockholders in
connection with the issuance of the Merger Securities is information that,
of
necessity, shall have originated with, and been provided by, the Company, and
provided that the written authorization of the Company in relation to the
Offering Memorandum shall have been obtained by Parent pursuant to Section
7.2(b), from and after the Effective Time, the Parent and the Company Principal
Stockholder shall have full and complete direct and primary joint and several
liability for any and all amounts for which any officer or director of Parent
is
otherwise found to be liable in connection with any actions arising, directly
or
indirectly, out of the offering by Parent of the Merger Securities.
(b) From
and
after the Effective Time, the Parent and the Company Principal Stockholder,
shall, jointly and severally and to the fullest extent permitted by applicable
Law, indemnify, defend and hold harmless, and provide advancement of expenses
to, each Person who is now, or has been at any time prior to the date hereof
or
who becomes prior to the Effective Time, an officer, director or employee of
Parent (the “Indemnified
Parties”)
against all Damages, Liabilities or Orders or amounts that are paid in
settlement of or in connection with any claim or Proceeding that is based in
whole or in part on, or arises in whole or in part out of, the fact that such
Person is or was a director, officer or employee of Parent, and pertaining
to
any matter existing or occurring, or any acts or omissions occurring, at or
prior to the Effective Time, whether asserted or claimed prior to, or at or
after, the Effective Time (including without limitation any matters, acts or
omissions occurring in connection with the Parent Common Stock Redemption,
the
approval of this Agreement and the consummation of the Transactions, as well
as
matters arising out of any failures of disclosure in relation to the Offering
Memorandum) to the same extent such Persons are entitled to be indemnified
or
have the right to advancement of expenses as of the date of this Agreement
by
Parent pursuant to its certificate of incorporation, bylaws, and/or any
indemnification agreements in effect as of the date hereof.
47
(c) This
Section 7.13 is intended to be for the benefit of, and shall be enforceable
by, the Indemnified Parties and their heirs and personal representatives, and
shall be binding on the Parent, the Company Principal Stockholder, and their
respective successors and assigns. In the event that Parent or the Company
Principal Stockholder, or any of their respective successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger,
or (ii) transfers all or substantially all of its properties and assets to
any Person, then, and in each case, proper provision shall be made so that
the
successors and assigns of the Parent or Company Principal Stockholder, as
applicable, shall be legally bound to honor the indemnification obligations
set
forth in this Section 7.13.
7.14 Further
Assurances.
Upon
the terms and subject to the conditions hereof, each of the Parties hereto
shall
execute such documents and other instruments and take such further actions
as
may be reasonably required from time to time to carry out the provisions hereof
and consummate the Merger and the other Transactions.
ARTICLE
VIII
8.1 Conditions
to the Obligations of Each Party to Effect the Merger.
In
addition to the other conditions set forth in this Article VIII, the obligations
of the Company, Parent and Merger Sub to consummate the Merger are subject
to
the satisfaction on or prior to the Closing Date of the following
conditions:
(a) the
Merger and this Agreement shall have been approved by the affirmative vote
(or
written consent) of a majority of the shares of Company Common Stock entitled
to
vote on the matter;
(b) all
Authorizations and Orders of, declarations and filings with, and notices to
any
Governmental Authority required to permit the consummation of the Merger shall
have been obtained or made and shall be in full force and effect;
and
(c) no
temporary restraining order, preliminary or permanent injunction or other Order
prohibiting the consummation of the Merger shall be in effect, and no Law shall
have been enacted or shall be deemed applicable to the Merger which makes the
consummation of the Merger unlawful.
48
8.2 Conditions
to the Obligations of Parent and Merger Sub to Effect the Merger.
The
obligations of Parent and Merger Sub to consummate the Merger are subject to
satisfaction (or waiver by Parent in its sole discretion) on or prior to the
Closing Date of the following conditions:
(a) Company
Principal Stockholder shall have delivered an executed Voting and Lock-Up
Agreement;
(b) each
of
the representations and warranties of the Company set forth in this Agreement
that is qualified by a Material Adverse Effect on the Company shall be true
and
correct at and as of the Closing Date as if made at and as of the Closing Date
and each of such representations and warranties that is not so qualified shall
be true and correct in all material respects at and as of the Closing Date
as if
made at and as of the Closing Date, except to the extent that such
representations and warranties refer specifically to an earlier date, in which
case such representations and warranties shall have been true and correct as
of
such earlier date;
(c) each
of
the representations and warranties of the Company Principal Stockholder set
forth in this Agreement that is qualified by a Material Adverse Effect on the
Company shall be true and correct at and as of the Closing Date as if made
at
and as of the Closing Date and each of such representations and warranties
that
is not so qualified shall be true and correct in all material respects at and
as
of the Closing Date as if made at and as of the Closing Date, except to the
extent that such representations and warranties refer specifically to an earlier
date, in which case such representations and warranties shall have been true
and
correct as of such earlier date;
(d) the
Parent, at the expense of the Company, shall have procured directors and
officers liability insurance coverage in an aggregate amount satisfactory to
Parent from a carrier rated A++XV by A.M. Best & Company (or otherwise
satisfactory to Parent), which coverage shall specifically include liability
arising out of any errors or omissions that shall have occurred in connection
with the offering and issuance of the Merger Securities;
(e) the
Company shall not have violated the Pre-Closing Company Standstill
Commitment;
(f) the
Company shall have delivered an opinion of counsel to Parent, in form
satisfactory to Parent, that the Merger will qualify as a tax-free
reorganization under the Code;
(g) the
Company shall have performed, or complied with, in all material respects all
obligations required to be performed or complied with by it under this Agreement
at or prior to the Closing Date, and the Company shall have delivered to Parent
a certificate signed by the Chief Executive Officer of the Company to such
effect;
(h) there
shall not have occurred any event, occurrence or change that has had, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company;
(i) each
of
Parent and Merger Sub shall have received a certificate signed by the Chief
Executive Officer of the Company certifying as to the satisfaction of the
conditions set forth in Sections 8.1 and 8.2 as of the Closing Date; and
49
(j) all
actions to be taken by the Company in connection with consummation of the
Transactions and all certificates, opinions, instruments, and other documents
required to effect the Transactions will be reasonably satisfactory in form
and
substance to the Parent or its counsel.
8.3 Conditions
to the Obligations of the Company to Effect the Merger.
The
obligation of the Company to consummate the Merger is subject to satisfaction
(or waiver by the Company in its sole discretion) on or prior to the Closing
Date of the following conditions:
(a) each
of
the representations and warranties of Parent set forth in this Agreement that
is
qualified by a Material Adverse Effect on Parent shall be true and correct
at
and as of the Closing Date as if made at and as of the Closing Date and each
of
such representations and warranties that is not so qualified shall be true
and
correct in all material respects at and as of the Closing Date as if made at
and
as of the Closing Date, except to the extent that (i) such representations
and
warranties refer specifically to an earlier date, in which case such
representations and warranties shall have been true and correct as of such
earlier date, or (ii) facts which would otherwise render any such representation
or warranty untrue and/or incorrect as of the Closing Date are the direct or
indirect result of obligations arising under, or are otherwise contemplated
by
one or more provisions of, this Agreement;
(b) the
Company shall have obtained the requisite approval of its stockholders to the
Merger and this Agreement in accordance with the DGCL and its
bylaws;
(c) To
the
extent that the Company had less than ninety-five million (95,000,000) common
shares issued and outstanding on a Fully-Diluted Basis as of the Closing
Lockdown Date, Parent shall have completed the Parent Common Stock
Redemption;
(d) the
holders of no more than twenty percent (20%) of the Dissentable Shares shall
be
in a position to perfect their appraisal rights under the DGCL as determined
immediately prior to the Effective Time;
(e) Parent
shall have performed, or complied with, in all material respects all obligations
required to be performed or complied with by it under this Agreement at or
prior
to the Closing Date, and Parent shall have delivered to the Company a
certificate signed by the Chief Executive Officer of Parent to such
effect;
(f) there
shall not have occurred any event, occurrence or change that has had, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent; provided,
however,
that
any event, occurrence, or change that has had, or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on Parent
was not the direct or indirect result of obligations arising under, or otherwise
contemplated by one or more provisions of, this Agreement;
(g) the
Company shall have received resignations of each of the officers of Parent,
effective, in each case, as of the Effective Time;
(h) the
Company shall have received a certificate signed by the Chief Executive Officer
of Parent certifying as to the satisfaction of the conditions set forth in
Sections 8.1 and 8.3 as of the Closing Date; and
50
(i) all
actions to be taken by Parent in connection with consummation of the
Transactions and all certificates, opinions, instruments, and other documents
required to effect the Transactions will be reasonably satisfactory in form
and
substance to the Company or its counsel.
ARTICLE
IX
9.1 Termination.
This
Agreement may be terminated and the Merger and the other Transactions may be
abandoned at any time prior to the Effective Time, notwithstanding any requisite
approval of this Agreement and the Transactions, as follows:
(a) by
mutual
written consent duly authorized by the boards of directors of each of Parent,
Merger Sub and the Company;
(b) by
Parent:
(i) to
the
extent that the Effective Time shall not have occurred on or before December
31,
2008; provided,
however,
that
the right to terminate this Agreement under this Section 9.1(b) shall not be
available to Parent if Parent’s failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before such date;
(ii) if
the
Parent reasonably concludes in its exclusive discretion that material
information regarding the Company and/or its Subsidiaries that it determines
to
include in the Offering Memorandum, as applicable, has been withheld by the
Company and/or its Subsidiaries;
(iii) if
the
Company unreasonably withholds its authorization as to the accuracy and
completeness of the Offering Memorandum;
(iv) if
the
Company’s independent auditors resign at any time after having been engaged
citing a disagreement with management of the Company or any of its officers
and/or directors as the reason therefor;
(v) upon
a
breach of any representation, warranty, covenant or agreement on the part of
the
Company set forth in this Agreement, or if any representation or warranty of
the
Company shall have become untrue, in either case such that the conditions set
forth in Section 8.2(a)-(j) would not be satisfied (a “Terminating
Company Breach”);
provided,
however,
that, if
such Terminating Company Breach is curable by the Company through the exercise
of its best efforts and for so long as the Company continues to exercise such
best efforts, Parent may not terminate this Agreement under this Section
9.1(b)(v); or
(c) by
the
Company:
(i) if
the
Company Stockholders shall have failed to duly approve the Merger and this
Agreement within a reasonable period following good faith compliance by the
Company with all of its obligations under Sections 7.2 and 7.9;
51
(ii) upon
breach of any representations, warranty, covenant or agreement on the part
of
Parent set forth in this Agreement, or if any representation or warranty of
Parent shall have become untrue, in either case such that the conditions set
forth in Section 8.3(a)-(h) would not be satisfied (“Terminating
Parent Breach”);
provided,
however,
that,
if such Terminating Parent Breach is curable by Parent through best efforts
and
for so long as Parent continues to exercise such best efforts, the Company
may
not terminate this Agreement under this Section 9.1(c)(ii).
9.2 Amendment.
This
Agreement may be amended by the Parties at any time prior to the Effective
Time;
provided,
however,
that,
(i) any such amendment is in writing signed by each of the Parties, and (ii)
after approval of the matters presented in connection with the Merger by the
Company Stockholders, no amendment shall be made which by Law requires further
approval by the Company Stockholders without such further approval, including
without limitation any amendment which would reduce the amount or change the
type of consideration into which each share of Company Common Stock shall be
converted upon consummation of the Merger.
9.3 Waiver.
At any
time prior to the Effective Time, any Party hereto may (a) extend the time
for
the performance of any obligation or other act of any other Party hereto, (b)
waive any inaccuracy in the representations and warranties contained herein
or
in any document delivered pursuant hereto, and (c) waive compliance with any
agreement or condition contained herein. Any such extension or waiver shall
be
valid only if set forth in an instrument in writing signed by the Party or
Parties to be bound thereby. No failure or delay by any Party in exercising
any
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. To the maximum
extent permitted by Law, (i) no waiver that may be given by a Party shall
be applicable except in the specific instance for which it was given, and
(ii) no notice to or demand on one Party shall be deemed to be a waiver of
any obligation of such Party or the right of the Party giving such notice or
demand to take further action without notice or demand.
ARTICLE
X
10.1 Notices.
Any
notice, request, demand, waiver, consent, approval or other communication which
is required or permitted hereunder shall be in writing and shall be deemed
given: (a) on the date established by the sender as having been delivered
personally; (b) on the date delivered by FedEx, UPS, USPS, or DHL as
established by the sender by evidence obtained from such courier; (c) on
the date sent by facsimile, with confirmation of transmission, if sent during
normal business hours of the recipient, if not, then on the next Business Day;
or (d) on the fifth (5th)
day
after the date mailed, by certified or registered mail, return receipt
requested, postage prepaid. Such communications, to be valid, must be addressed
as follows:
If
to
Parent or Merger Sub:
000
Xxxx
00xx
Xxxxxx,
Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Att:
Xxxxxxx X. Xxxxxxxx, CEO
Fax:
000-000-0000
52
with
a copy to:
X.X.
Xxxxxxxx, PLLC
000
Xxxx
00xx
Xxxxxx,
Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Att:
Xxxxxxx X. Xxxxxxxx
Fax:
000-000-0000
If
to
the Company:
SecurLinx
Holding Corp.
000
Xxxx
Xxxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Att:
Xxxxx X. Xxxxx, CEO
Fax:
000-000-0000
with
a copy to:
Steptoe
& Xxxxxxx, PLLC
Xxxxx
Xxxxx, Xxxxxx Xxxxx
X.X.
Xxx
0000
Xxxxxxxxxxx,
XX 00000-0000
Att:
Xxxx
Xxxxxx, Esq.
Fax:
000-000-0000
or
to
such other address or to the attention of such Person or Persons as the
recipient party has specified by prior written notice to the sending party
(or
in the case of counsel, to such other readily ascertainable business address
as
such counsel may hereafter maintain). If more than one method for sending notice
as set forth above is used, the earliest notice date established as set forth
above shall control.
10.2 Certain
Definitions.
For
purposes of this Agreement, the following terms, in their capitalized forms,
shall have the correspondingly ascribed meanings:
“Affiliate”
means,
with respect to any specified Person, any other Person who, directly or
indirectly, through one or more intermediaries, Controls, is Controlled By,
or
is Under Common Control With, such specified Person.
“Applicable
Rate”
means
the corporate base rate of interest publicly announced from time to time by
Citibank N.A. plus 2% per annum.
“Authorization”
means
any authorization, approval, consent, certificate, license, permit or franchise
of or from any Governmental Authority or pursuant to any Law.
53
“Beneficial
Owner”
with
respect to any shares means a Person who shall be deemed to be the beneficial
owner of such shares (i) which such Person or any of its Affiliates or
associates (as such term is defined in Rule 12b-2 promulgated under the Exchange
Act) beneficially owns, directly or indirectly, (ii) which such Person or any
of
its Affiliates or associates has, directly or indirectly, (A) the right to
acquire (whether such right is exercisable immediately or subject only to the
passage of time), pursuant to any agreement, arrangement or understanding or
upon the exercise of consideration rights, exchange rights, warrants or options,
or otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or
understanding, (iii) which are beneficially owned, directly or indirectly,
by
any other Persons with whom such Person or any of its Affiliates or associates
or any Person with whom such Person or any of its Affiliates or associates
has
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any such shares, or (iv) pursuant to Section
13(d) of the Exchange Act and any rules or regulations promulgated
thereunder.
“Benefit
Plan”
means
any “employee benefit plan” as defined in 3(3) of ERISA, including any
(a) nonqualified deferred compensation or retirement plan or arrangement
which is an Employee Pension Benefit Plan (as defined in ERISA
Section 3(2)), (b) qualified defined contribution retirement plan or
arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan (as defined in ERISA
Section 3(37)), (d) Employee Welfare Benefit Plan (as defined in ERISA
Section 3(1)) or material fringe benefit plan or program, or (e) stock
purchase, stock option, severance pay, employment, change-in-control, vacation
pay, company awards, salary continuation, sick leave, excess benefit, bonus
or
other incentive compensation, life insurance, or other employee benefit plan,
contract, program, policy or other arrangement, whether or not subject to
ERISA.
“Business
Day”
means
any day on which the principal offices of the SEC in Washington, D.C. are open
to accept filings, or, in the case of determining a date when any payment is
due, any day other than Saturday, Sunday or other day on which banks located
in
New York City are required or authorized by Law to close.
“CERCLA”
means
the Comprehensive Environmental Response, Compensation, and Liability Act,
42
U.S.C. Section 9601 et
seq.
“Company
ERISA Affiliate”
means
any entity which is a member of a “controlled group of corporations” with, under
“common control” with or a member of an “affiliated services group” with, the
Company or any of its Subsidiaries, as defined in Section 414(b), (c),
(m) or (o) of the Code.
“Contaminant”
means,
in relation to any Software, any virus or other intentionally created,
undocumented contaminant.
“Contract”
means
any agreement, contract, license, lease, commitment, arrangement or
understanding, written or oral, including any sales order and purchase
order.
“Control”
(including the terms “Controlled
By”
and
“Under
Common Control With”)
means
the possession, directly or indirectly or as trustee or executor, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, as trustee or executor,
by
Contract or credit arrangement or otherwise.
54
“Copyrights”
means
registered and unregistered copyrights in both published and unpublished
works.
“Damages”
means
all Proceedings, demands, claims, assessments, losses, damages, costs, expenses,
Liabilities, obligations, injunctions, judgments, Orders, decrees, rulings,
awards, fines, sanctions, penalties, charges, Taxes and amounts paid in
settlement, including, without limitation, (i) interest on cash disbursements
in
respect of any of the foregoing at the Applicable Rate, compounded quarterly,
from the date each such cash disbursement is made until the Person incurring
the
same shall have been indemnified in respect thereof, and (ii) reasonable costs,
fees and expenses of attorneys, accountants and other agents of the relevant
Person.
“Disabling
Codes”
means,
with respect to any Software, any disabling codes or related
instructions.
“Environment”
means
all air, surface water, groundwater, land, including land surface or subsurface,
including all fish, wildlife, biota and all other natural
resources.
“Environmental
Action”
means
any Proceeding brought or threatened under any Environmental Law or otherwise
asserting the incurrence of Environmental Liabilities.
“Environmental
Clean-Up Site”
means
any location which is listed on the National Priorities List, the Comprehensive
Environmental Response, Compensation and Liability Information System, or on
any
similar state or foreign list of sites requiring investigation or cleanup,
or
which is the subject of any pending or threatened Proceeding related to or
arising from any alleged violation of any Environmental Law, or at which there
has been a threatened or actual Release of a Hazardous Substance.
“Environmental
Laws”
means
any and all applicable Laws and Authorizations issued, promulgated or entered
into by any Governmental Authority relating to the Environment, worker health
and safety, preservation or reclamation of natural resources, or to the
management, handling, use, generation, treatment, storage, transportation,
disposal, manufacture, distribution, formulation, packaging, labeling, Release
or threatened Release of or exposure to Hazardous Substances, whether now
existing or subsequently amended or enacted, including but not limited to:
CERCLA; the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251
et
seq.;
the
Clean Air Act, 42 U.S.C. Section 7401 et
seq.;
the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et
seq.;
the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et
seq.;
the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
Section 11001 et
seq.;
the
Safe Drinking Water Act, 42 U.S.C. Section 300(f) et
seq.;
the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et
seq.;
the
Federal Insecticide, Fungicide and Rodenticide Act 7 U.S.C. Section 136
et
seq.;
RCRA;
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et
seq.;
the Oil
Pollution Act of 1990, 33 U.S.C. Section 2701 et
seq.;
and any
similar or implementing state or local Law, and any non-U.S. Laws and
regulations of similar import, and all amendments or regulations promulgated
thereunder; and any common law doctrine, including but not limited to,
negligence, nuisance, trespass, personal injury, or property damage related
to
or arising out of the presence, Release, or exposure to Hazardous
Substances.
“Environmental
Liabilities”
means,
with respect to any party, Liabilities arising out of (A) the ownership or
operation of the business of such party or any of its Subsidiaries, or
(B) the ownership, operation or condition of the Real Property or any other
real property currently or formerly owned, operated or leased by such party
or
any of its Subsidiaries, in each case to the extent based upon or arising out
of
(i) Environmental Law, (ii) a failure to obtain, maintain or comply
with any Environmental Permit, (iii) a Release of any Hazardous Substance,
or (iv) the use, generation, storage, transportation, treatment, sale or
other off-site disposal of Hazardous Substances.
55
“Environmental
Permit”
means
any Authorization under Environmental Law, and includes any and all Orders
issued or entered into by a Governmental Authority under Environmental
Law.
“ERISA”
means
the U.S. Employee Retirement Income Security Act of 1974, as
amended.
“Exchange
Act”
means
the U.S. Securities Exchange Act of 1934, as amended.
“FINRA”
mean
the Financial Industry Regulatory Authority.
“Fully-Diluted
Basis”
means,
with respect to any calculation of common shares for a given corporation
outstanding at a given time, that amount, exclusive of any and all shares held
in treasury, which includes (i) any and all convertible securities then
outstanding assuming the full conversion thereof as of such time, and (iii)
any
and all options and warrants then outstanding assuming the full exercise thereof
as of such time.
“GAAP”
means
U.S. Generally Accepted Accounting Principles.
“Governmental
Authority”
means
any entity or body exercising executive, legislative, judicial, regulatory
or
administrative functions of or pertaining to United States federal, state,
local, or municipal government, foreign, international, multinational or other
government, including any department, commission, board, agency, bureau,
subdivision, instrumentality, official or other regulatory, administrative
or
judicial authority thereof, and any non-governmental regulatory body to the
extent that the rules and regulations or orders of such body have the force
of
Law.
“Hazardous
Substances”
means
all explosive or regulated radioactive materials or substances, hazardous or
toxic materials, wastes or chemicals, petroleum and petroleum products
(including crude oil or any fraction thereof), asbestos or asbestos containing
materials, and all other materials, chemicals or substances which are regulated
by, form the basis of liability or are defined as hazardous, extremely
hazardous, toxic or words of similar import, under any Environmental Law,
including materials listed in 49 C.F.R. Section 172.101 and materials
defined as hazardous pursuant to Section 101(14) of CERCLA.
“Indebtedness”
means
any of the following: (a) any indebtedness for borrowed money, (b) any
obligations evidenced by bonds, debentures, notes or other similar instruments,
(c) any obligations to pay the deferred purchase price of property or
services, except trade accounts payable and other current Liabilities arising
in
the Ordinary Course of Business, (d) any obligations as lessee under
capitalized leases, (e) any indebtedness created or arising under any
conditional sale or other title retention agreement with respect to acquired
property, (f) any obligations, contingent or otherwise, under acceptance
credit, letters of credit or similar facilities, and (g) any guaranty of
any of the foregoing.
“Intellectual
Property”
means:
(i) Proprietary Information; (ii) trademarks and service marks
(whether or not registered), trade names, logos, trade dress and other
proprietary indicia and all goodwill associated therewith;
(iii) documentation, advertising copy, marketing materials, web-sites,
specifications, mask works, drawings, graphics, databases, recordings and other
works of authorship, whether or not protected by Copyright; (iv) Software;
and (v) Intellectual Property Rights, including all Patents, Copyrights,
Marks, trade secret rights, mask works, moral rights or other literary property
or authors rights, and all applications, registrations, issuances, divisions,
continuations, renewals, reissuances and extensions of the
foregoing.
56
“Intellectual
Property Rights”
means
all forms of legal rights and protections that may be obtained for, or may
pertain to, any Intellectual Property in any country of the
world.
“Knowledge”
of
a
given party (or any similar phrase) means, with respect to any fact or matter,
the actual knowledge of the directors and executive officers of such party
and
each of its Subsidiaries, together with such knowledge that such directors,
executive officers and other employees could be expected to discover after
due
investigation concerning the existence of the fact or matter in
question.
“Law”
means
any statute, law (including common law), constitution, treaty, ordinance, code,
order, decree, judgment, rule, regulation and any other binding requirement
or
determination of any Governmental Authority.
“Liability”
or
“Liabilities”
means
any liability, Indebtedness or obligation of any kind, whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, whether secured or unsecured,
whether joint or several, whether due or to become due, whether vested or
unvested, including any liability for Taxes.
“Liens”
means
any liens, claims, charges, security interests, mortgages, pledges, easements,
conditional sale or other title retention agreements, defects in title,
covenants or other restrictions of any kind, including, any restrictions on
the
use, voting, transfer or other attributes of ownership.
“Marks”
means
trademarks, service marks and other proprietary indicia (whether or not
registered).
“Material
Adverse Effect”
means,
with respect to any Person, any state of facts, development, event,
circumstance, condition, occurrence or effect that, individually or taken
collectively with all other preceding facts, developments, events,
circumstances, conditions, occurrences or effects (a) is materially adverse
to the condition (financial or otherwise), business, operations or results
of
operations of such Person, (b) impairs the ability of such Person to perform
its
obligations under this Agreement, or (c) delays the consummation of the
Merger.
“Operative
Agreements”
means,
jointly, this Agreement and the Voting and Lock-Up Agreement.
“Order”
means
any award, injunction, judgment, decree, stay, order, ruling, subpoena or
verdict, or other decision entered, issued or rendered by any Governmental
Authority.
“Ordinary
Course of Business”
means
the ordinary course of business consistent with past custom and practice
(including with respect to quantity and frequency).
“OTCBB”
means
the Over-The-Counter Bulletin Board, operated by NASDAQ.
57
“Patents”
means
letters patent, patent applications, provisional patents, design patents, PCT
filings, invention disclosures and other rights to inventions or
designs.
“PCAOB”
means
the Public Company Accounting Oversight Board.
“PCBs”
means
polychlorinated biphenyls.
“Permitted
Liens”
means,
with respect to any party, (i) Liens for current real or personal property
taxes not yet due and payable and with respect to which such party maintains
adequate reserves, (ii) workers’, carriers’ and mechanics’ or other like
Liens incurred in the Ordinary Course of Business with respect to which payment
is not due and that do not impair the conduct of such party’s or any of its
Subsidiaries’ business in any material respect or the present or proposed use of
the affected property and (iii) Liens that are immaterial in character,
amount, and extent and which do not detract from the value or interfere with
the
present or proposed use of the properties they affect.
“Person”
means
an individual, a corporation, a partnership, a limited liability company, a
trust, an unincorporated association, Governmental Authority, a person
(including, without limitation, a “person” as defined in Section 13(d)(3) of the
Exchange Act), or any political subdivision, agency or instrumentality of a
Governmental Authority, or any other entity or body.
“Proceeding”
or
“Proceedings”
means
any actions, suits, claims, hearings, arbitrations, mediations, Proceedings
(public or private) or governmental investigations that have been brought by
any
governmental authority or any other Person.
“Proprietary
Information”
means,
collectively, inventions (whether or not patentable), trade secrets, technical
data, databases, customer lists, designs, tools, methods, processes, technology,
ideas, know-how, source code, product road maps and other proprietary
information and materials.
“Public
Software”
means
any Software that contains, or is derived in any manner (in whole or in part)
from, any Software that is distributed as free Software, open source Software
or
similar licensing or distribution models, including Software licensed or
distributed under any of the following licenses or distribution models, or
licenses or distribution models similar to any of the following: (i) GNU’s
General Public License or Lesser/Library GPL; (ii) Mozilla Public License;
(iii) Netscape Public License; (iv) Sun Community Source/ Industry
Standard License; (v) BSD License; and (vi) Apache
License.
“RCRA”
means
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901
et
seq.
“Release”
means
any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing of Hazardous Substances
into the Environment.
“Registrable
Securities”
means
the shares of Parent Common Stock issued and outstanding immediately prior
to
the Effective Time; provided,
however,
that,
as to any particular Registrable Securities, such securities will cease to
be
Registrable Securities when (a) they have been effectively registered under
the
Securities Act and disposed of in accordance with the registration statement
covering them, (b) they are or may be freely traded without registration
pursuant to Rule 144 under the Securities Act (or any similar provisions that
are then in effect), or (c) they have been otherwise transferred and new
certificates for them not bearing a restrictive legend have been issued by
Parent and Parent shall not have “stop transfer” instructions imposed against
them.
58
“Securities
Act”
means
the U.S. Securities Act of 1933, as amended.
“SEC”
means
the U.S. Securities and Exchange Commission.
“Software”
means,
collectively, computer programs, including any and all software implementations
of algorithms, models and methodologies, whether in source code or object code,
design documents, flow-charts, user manuals and training materials relating
thereto and any translations thereof.
“Subsidiary”
or
“Subsidiaries”
means,
with respect to any party, any Person, of which (a) such party or any
subsidiary of such party is a general partner (excluding partnerships, the
general partnership interests of which held by such party or any Subsidiary
of
such party do not have a majority of the voting interest in such partnership)
or
(b) at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the board of directors
or others performing similar functions with respect to such Person is directly
or indirectly owned or controlled by such party and/or by any one or more of
its
subsidiaries.
“Systems”
means,
in relation to any Person, any of the hardware, software, databases or embedded
control systems thereof.
“Tax”
or
“Taxes”
means
any means any and all federal, state, local, or foreign net or gross income,
gross receipts, net proceeds, sales, use, ad
valorem,
value
added, franchise, bank shares, withholding, payroll, employment, excise,
property, deed, stamp, alternative or add-on minimum, environmental (including
taxes under Code §59A), profits, windfall
profits,
transaction, license, lease, service, service use, occupation, severance,
energy, unemployment, social security, workers’ compensation, capital, premium,
and other taxes, assessments, customs, duties, fees, levies, or other
governmental charges of any nature whatever, whether disputed or not, together
with any interest, penalties, additions to tax, or additional amounts with
respect
thereto.
“Tax
Returns”
means
any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto,
and
including any amendment thereof.
“Taxing
Authority”
means
any Governmental Authority having jurisdiction with respect to any
Tax.
“Trading
Day”
means
any day on which the NASDAQ Stock Market is open for trading.
“$”
means
United States dollars.
10.3 Index
of Other Defined Terms.
In
addition to those terms defined above, the following terms, in their capitalized
forms, shall have the respective meanings given thereto in the sections
indicated below:
59
Defined
Term
|
Section
|
|
“Agreement”
|
Preamble
|
|
“Cancelable
Common Share”
|
2.1(a)(i)
|
|
“Cancelable
Convertible Debenture”
|
2.1(a)(ii)
|
|
“Cancelable
Securities”
|
2.2(a)
|
|
“Certificate
of Merger”
|
1.1
|
|
“Closing”
|
1.2
|
|
“Closing
Date”
|
1.2
|
|
“Closing
Lockdown Date”
|
7.2(e)
|
|
“Code”
|
Recitals
|
|
“Company”
|
Preamble
|
|
“Company
Benefit Plan”
|
4.21(a)
|
|
“Company
Common Stock”
|
2.1(a)(i)
|
|
“Company
Disclosure Schedule”
|
Art.
IV Intro
|
|
“Company
Foreign Plans”
|
4.21(r)
|
|
“Company
In-Bound License”
|
4.18(b)
|
|
“Company
Intellectual Property”
|
4.18(e)
|
|
“Company
Lease”
|
4.17(c)
|
|
“Company-Leased
Real Property”
|
4.17(a)
|
|
“Company
Material Contracts”
|
4.19(b)
|
|
“Company
Minor Contracts”
|
4.19(e)
|
|
“Company
Out-Bound Licenses”
|
4.18(c)
|
|
“Company-Owned
Intellectual Property”
|
4.18(a)
|
|
“Company-Owned
Real Property”
|
4.17(a)
|
|
“Company-Owned
Software”
|
4.18(i)
|
|
“Company
Pension Plan”
|
4.21(b)
|
|
“Company
Permits”
|
4.7
|
|
“Company
Principal Stockholder”
|
Preamble
|
|
“Company
Receivables”
|
4.9
|
|
“Company
Registered Intellectual Property”
|
4.18(f)
|
|
“Company
Securityholders”
|
7.2(b)
|
|
“Company
Stockholder”
|
2.1
|
|
“Constituent
Corporations”
|
1.1
|
|
“Delaware
Secretary of State”
|
1.2
|
|
“DGCL”
|
Recitals
|
|
“Dissentable
Shares”
|
2.3(a)
|
|
“Dissenting
Holder”
|
2.3(a)
|
|
“Dissenting
Shares”
|
2.3(a)
|
|
“Effective
Time”
|
1.2
|
|
“Exchange
Agent”
|
2.2(a)
|
|
“Exchange
Fund”
|
2.2(a)
|
|
“Exchange
Ratio”
|
2.1(a)(i)
|
|
“Indemnified
Parties”
|
7.15(a)
|
|
“Merger”
|
1.1
|
60
“Merger
Securities”
|
2.2(a)
|
|
“Merger
Sub”
|
Preamble
|
|
“Merger
Sub Common Stock”
|
2.1(a)(iii)
|
|
“Merger
Sub Preferred Stock”
|
5.4(b)
|
|
“Most
Recent Company Balance Sheet”
|
4.8(a)
|
|
“Most
Recent Company Cash Flow Statement”
|
4.8(a)
|
|
“Most
Recent Company Financial Statements”
|
4.8(a)
|
|
“Most
Recent Company Income Statement”
|
4.8(a)
|
|
“Most
Recent Company Statement of Stockholders’ Equity”
|
4.8(a)
|
|
“Offering
Memorandum”
|
7.3(d)
|
|
“Parent”
|
Preamble
|
|
“Parent
Common Stock”
|
Recitals
|
|
“Parent
Common Stock Redemption”
|
7.2(e)
|
|
“Parent
Disclosure Schedule”
|
Art.
V Intro
|
|
“Parent
Preferred Stock”
|
5.4(a)
|
|
“Parent
Representatives
|
7.3(e)
|
|
“Parent
SEC Reports”
|
5.7(a)
|
|
“Parent
Stock-Split”
|
7.3(f)(i)(B)
|
|
“Party”
/ “Parties”
|
Preamble
|
|
“Pre-Closing
Company Standstill Commitment”
|
7.2(e)
|
|
“Required
Company Consents”
|
4.6(a)
|
|
“Resale
Registration Statement”
|
7.14(a)
|
|
“Surviving
Corporation”
|
1.1
|
|
“Terminating
Parent Breach”
|
9.1(c)(ii)
|
|
“Terminating
Company Breach”
|
9.1(b)(v)
|
|
“Transactions”
|
Recitals
|
|
“Voting
and Lock-Up Agreement”
|
Recitals
|
|
“WARN
Act”
|
4.22(d)
|
10.4 Interpretation.
(a) The
meaning assigned to each term defined herein shall be equally applicable to
both
the singular and the plural forms of such term and vice versa, and words
denoting either gender shall include both genders as the context requires.
Where
a word or phrase is defined herein, each of its other grammatical forms shall
have a corresponding meaning.
(b) The
terms
“hereof”, “herein” and “herewith” and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not
to
any particular provision of this Agreement.
(c) When
a
reference is made in this Agreement to an Article, Section, paragraph, Exhibit
or Schedule, such reference is to an Article, Section, paragraph, Exhibit or
Schedule to this Agreement unless otherwise specified.
(d) The
word
“include”, “includes”, and “including” when used in this Agreement shall be
deemed to be followed by the words “without limitation”, unless otherwise
specified.
61
(e) A
reference to any Party to this Agreement or any other agreement or document
shall include such Party’s predecessors, successors and permitted
assigns.
(f) Reference
to any Law means such Law as amended, modified, codified, replaced or reenacted,
and all rules and regulations promulgated thereunder.
(g) The
Parties have participated jointly in the negotiation and drafting of this
Agreement. Any rule of construction or interpretation otherwise requiring this
Agreement to be construed or interpreted against any Party by virtue of the
authorship of this Agreement shall not apply to the construction and
interpretation hereof.
(h) All
accounting terms used and not defined herein shall have the respective meanings
given to them under GAAP.
10.5 Survival.
The
representations and warranties and covenants and agreements in this Agreement
and in any certificate delivered pursuant hereto shall terminate at the
Effective Time, except that the covenants and agreements set forth in Articles
I, II, VII and this Article X, in each case as they relate to any
post-Closing matters, and including without limitation any provisions for the
benefit of third parties, shall survive the Effective Time.
10.6 Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of Law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the Transactions is not affected
in any manner materially adverse to any Party. Upon a determination that any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in a mutually acceptable manner in order that the Transactions be
consummated as originally contemplated to the fullest extent possible.
10.7 Assignment;
Binding Effect; Benefit.
Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the Parties hereto (whether by operation of Law or
otherwise) without the prior written consent of the other Parties; provided,
however,
that
Parent or Merger Sub may assign any of their respective rights and obligations
to any direct or indirect Subsidiary of Parent. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit
of
the Parties hereto and their respective executors, heirs, personal
representatives successors and assigns. Notwithstanding anything contained
in
this Agreement to the contrary, except for the provisions of Article II, and
Sections 7.12 and 7.13, which are intended to benefit and be enforceable by
third parties as specifically set forth therein, nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the Parties
or their respective successors and assigns any rights, remedies, obligations
or
Liabilities under or by reason of this Agreement.
10.8 Fees
and Expenses.
All
fees and expenses incurred in connection with the Merger, the other
Transactions, and this Agreement shall be paid by the Party incurring such
fees
or expenses, whether or not the Merger is consummated; provided,
however,
that:
(a) As
and
when requested by Parent, the Company shall pay the reasonable legal, accounting
(including internal financial and disclosure controls related compliance and
review), independent auditing, and EDGARization service fees and expenses of
Parent incurred in connection with the preparation and filing of any and all
required reports to be filed under the Exchange Act from and after the date
of
this Agreement through the earlier of (i) the Effective Time, or (ii) the time
at which this Agreement shall have been terminated, if at all, in accordance
with Article IX hereof;
62
(b) As
and
when requested by Parent, the Company shall pay any reasonable legal,
accounting, independent auditing, and EDGARization/printing service fees and
expenses of Parent incurred in connection with the Merger from and after the
date hereof including without limitation preparation and distribution of the
Offering Memorandum and all related federal and state securities Law compliance
associated with the Merger; and
(c) Parent
shall be free at all times to select the professional service firms that it
utilizes in respect of 10.8 (a) and (b) above in its exclusive discretion,
and,
without limiting the foregoing, it is acknowledged that Parent may utilize
the
services of X.X. Xxxxxxxx, PLLC as legal counsel for certain aspects of the
legal work involved in this process (at a rate of $300/hr.).
10.9 Incorporation
of Schedules.
The
Company Disclosure Schedule and the Parent Disclosure Schedule referred to
herein and signed for identification by the Parties hereto are hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
10.10 Specific
Performance.
The
Parties hereto agree that irreparable damage would occur in the event any
provision of this Agreement was not performed in accordance with the terms
hereof and that the Parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at Law or equity.
10.11 Governing
Law.
This
Agreement and the Exhibits and Schedules hereto shall be governed by and
interpreted and enforced in accordance with the Laws of the State of New York,
without giving effect to any choice of Law or conflict of Laws rules or
provisions (whether of the State of New York or any other jurisdiction) that
would cause the application of the Laws of any jurisdiction other than the
State
of New York.
10.12 Consent
to Jurisdiction; Waiver of Jury Trial.
Each
Party irrevocably submits to the exclusive jurisdiction of (a) New York
County, New York, and (b) the United States District Court for the Southern
District of New York, for the purposes of any Proceeding arising out of this
Agreement or any of the Transactions. Each Party agrees to commence any such
Proceeding either in the United States District Court for the Southern District
of New York or if such Proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court sitting in New York County
(including its Appellate Division). Each Party further agrees that service
of
any process, summons, notice or document by U.S. registered mail to such Party’s
respective address set forth above shall be effective service of process for
any
Proceeding in New York with respect to any matters to which it has submitted
to
jurisdiction in this Section 10.12. Each Party irrevocably and
unconditionally waives any objection to the laying of venue of any Proceeding
arising out of this Agreement or any of the Transactions in (i) the United
States District Court for the Southern District of New York, or (ii) the
Supreme Court sitting in New York County (including its Appellate Division),
and
hereby further irrevocably and unconditionally waives and agrees not to plead
or
claim in any such court that any such Proceeding brought in any such court
has
been brought in an inconvenient forum. EACH PARTY HEREBY IRREVOCABLY WAIVES
ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF SUCH
PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
HEREOF.
63
10.13 Headings.
The
descriptive headings contained in this Agreement are included for convenience
of
reference only and shall not affect in any way the meaning or interpretation
of
this Agreement.
10.14 Counterparts.
This
Agreement may be executed and delivered (including by facsimile transmission)
in
one or more counterparts, and by the different Parties hereto in separate
counterparts, each of which when executed and delivered shall be deemed to
be an
original but all of which taken together shall constitute one and the same
agreement.
10.15 Entire
Agreement.
This
Agreement, the Company Disclosure Schedule, the Parent Disclosure Schedule
and
any documents delivered by the Parties in connection herewith constitute the
entire agreement among the Parties with respect to the subject matter hereof
and
supersede all prior agreements and understandings among the Parties with respect
thereto. Except as otherwise provided herein, no addition to or modification
of
any provision of this Agreement shall be binding upon any Party hereto unless
made in writing and signed by all Parties hereto.
64
IN
WITNESS WHEREOF, the Parties have executed this Agreement or caused this
Agreement to be executed by the respective officers thereunto duly authorized,
in each case as of the date first written above.
“PARENT”
|
|
By:
|
|
Name:
|
Xxxxxxx
X. Xxxxxxxx
|
Title:
|
President
& Chief Executive Officer
|
“MERGER
SUB”
|
|
SECURLINX
ACQUISITION CORP.
|
|
By:
|
|
Name:
|
Xxxxxxx
X. Xxxxxxxx
|
Title:
|
President
& Chief Executive Officer
|
“COMPANY”
|
|
SECURLINX
HOLDING CORP.
|
|
By:
|
|
Name:
|
Xxxxx
X. Xxxxx
|
Title:
|
President
& Chief Executive Officer
|
Xxxxx
X. Xxxxx, personally
|
65
EXHIBITS
Exhibit
A
|
[Form
of] Voting and Lock-Up Agreement
|
Exhibit
B
|
[Form
of] Certificate of Merger
|
Exhibit
C
|
Certificate
of Incorporation – Merger Sub
|
Exhibit
D
|
Bylaws
– Merger Sub
|
EXHIBIT
A
VOTING
AND LOCK-UP AGREEMENT
This
Voting and Lock-Up Agreement (this “Agreement”) is made as of August 18, 2008,
by and between GCA II Acquisition Corp., a Delaware corporation (“Parent”) and
Xxxxx X. Xxxxx, a principal stockholder of SecurLinx Holding Corp., a Delaware
corporation (the “Company”)(the “Company Principal Stockholder”).
WHEREAS,
concurrently with the execution and delivery of this Agreement, Parent,
SecurLinx Acquisition Corp., a Delaware corporation and wholly-owned subsidiary
of Parent (“Merger Sub”) and the Company are entering into an Agreement and Plan
of Merger (the “Merger Agreement”), pursuant to which Merger Sub will be merged
with and into the Company, and the Company shall be the surviving corporation
following the merger (the “Merger”);
WHEREAS,
as of the date hereof, the Company Principal Stockholder is a Beneficial Owner
(as defined below) of the Subject Shares (as defined
below); and
WHEREAS,
in order to induce Parent to enter into the Merger Agreement, the Company
Principal Stockholder has agreed to enter into this Agreement;
NOW,
THEREFORE, in consideration of the foregoing premises and of the covenants
and
agreements set forth herein and in the Merger Agreement, and intending to be
legally bound hereby, the parties agree as follows:
1. Definitions.
(a) “Beneficially
Own” or “Beneficial Owner”
with
respect to any securities means having “beneficial ownership” as determined
pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”).
(b) “Company
Capital Stock”
means
shares of common stock, par value $0.001 per share, of the
Company.
(c) “Company
Options and Other Rights”
means
options, warrants and other rights to acquire, directly or indirectly, shares
of
Company Capital Stock.
(d) “Expiration
Date”
means
the earlier to occur of (i) the Effective Time (as defined in the Merger
Agreement) or (ii) the date on which the Merger Agreement is terminated
pursuant to its terms.
(e) “Subject
Shares”
means
(i) all shares of Company Capital Stock Beneficially Owned by the Company
Principal Stockholder as of the date of this Agreement and (ii) all
additional shares of Company Capital Stock of which the Company Principal
Stockholder acquires Beneficial Ownership during the period from the date of
this Agreement through the Expiration Date.
2. Voting
Agreement.
(a) The
Company Principal Stockholder hereby reresents that it is an “accredited
investor” as such term is defined within Rule 501 of Regulation D promulgated
under the Securities Act of 1933, as amended (the “Securities
Act”);
(b) The
Company Principal Stockholder hereby agrees that, prior to the Expiration Date,
at any meeting of the stockholders of the Company, however called, and in any
written action by consent of stockholders of the Company, unless otherwise
directed in writing by Parent, the Company Principal Stockholder shall cause
to
be counted as present thereat for purposes of establishing a quorum and, subject
only to Parent’s compliance with applicable securities laws, shall vote, or
cause to be voted, any and all Subject Shares Beneficially Owned by the
Company Principal Stockholder as of the record date of such meeting or written
consent:
(i) “FOR”
the
execution and delivery by the Company of the Merger Agreement and the adoption
and approval of the Merger Agreement and the terms thereof, in favor of each
of
the other actions contemplated by the Merger Agreement and in favor of any
action in furtherance of any of the foregoing;
(ii) “AGAINST”
any action or agreement that would result in a breach of any representation,
warranty, covenant or obligation of the Company in the Merger
Agreement; and
(iii) “AGAINST”
the following actions (other than the Merger and the transactions contemplated
by the Merger Agreement): (A) any extraordinary corporate transaction, such
as a merger, consolidation or other business combination involving the Company
or any subsidiary of the Company; (B) any sale, lease, sublease, license,
sublicense or transfer of a material portion of the rights or other assets
of
the Company or any subsidiary of the Company; (C) any reorganization,
recapitalization, dissolution or liquidation of the Company or any subsidiary
of
the Company; (D) any change in the individuals who serve as members of the
board of directors of the Company; (E) any amendment to the Company’s
certificate of incorporation or bylaws; (F) any material change in the
capitalization of the Company or the Company’s corporate structure; and
(G) any other action which is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone, discourage or adversely affect the
Merger or any of the other transactions contemplated by the Merger Agreement
or
this Agreement.
(c) No
provision contained in this Agreement shall prohibit the Company Principal
Stockholder from voting in his capacity as a director of the Company in any
manner whatsoever.
(d) Prior
to
the Expiration Date, the Company Principal Stockholder shall not enter into
any
other agreement or understanding with any Person requiring him to vote in his
capacity as a stockholder or give instructions in any manner inconsistent with
clause “(i),” clause “(ii)” or clause “(iii)” of Section 2(b).
(e) The
Company Principal Stockholder hereby waives and agrees not to exercise any
applicable “appraisal rights” under the Delaware General Corporation Law with
respect to the Subject Shares in connection with the Merger and the Merger
Agreement.
3. Lock-up
Agreement.
(a) In
consideration of the issuance of common stock of Parent in exchange for the
Subject Shares (the “Parent Shares”) to the Company Principal Stockholder
pursuant to the terms of the Merger Agreement, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and
notwithstanding any registration on the part of the Parent Shares under the
Securities Act, the Company Principal Stockholder agrees that, during the period
beginning from the Effective Time (as defined in the Merger Agreement) and
continuing until the date one (1) year thereafter (the “Release Date”), the
Company Principal Stockholder shall not (a) offer, sell, contract to sell,
pledge, grant any option to purchase, make any short sale or otherwise dispose
of any Parent Shares, or (b) engage directly or indirectly in any
transaction the likely result of which would involve a transaction prohibited
by
clause (a), except in each case as permitted by Section 3(e) below.
Following the Release date, and regardless of whether any such shares are
registered for resale or not, the Company Principal Stockholder shall restrict
all sales of Parent Shares for one (1) additional year to an amount which,
when
taken together with all sales by the Company Principal Stockholder of Parent
Shares within the then-preceding three months, shall not exceed the greater
of:
2
one
percent (1%) of the total Parent Shares then issued and outstanding
as
shown by the most recent publicly filed report or statement published
by
the Parent; or
|
(ii)
|
the
average weekly reported volume of trading in Parent Shares on all
national
securities exchanges and/or reported through the automated quotation
system of a registered securities association during the four calendar
weeks preceding the date of receipt of the order to execute the
transaction by the broker or the date of execution of the transaction
directly with a market maker.
|
(b) The
foregoing restriction is expressly agreed to preclude the Company Principal
Stockholder from engaging in any hedging or other transaction which is designed
to, or reasonably expected to lead to, or result in, a sale or disposition
of
the Parent Shares even if such shares would be disposed of by someone other
than
the Company Principal Stockholder. Such prohibited hedging or other transactions
would include without limitation any short sale or any purchase, sale or grant
of any right (including without limitation any put or call option) with respect
to any of the Parent Shares or with respect to any security that includes,
relates to, or derives any significant part of its value from the Parent
Shares.
(c) The
Company Principal Stockholder further represents and agrees that the undersigned
has not taken and will not take, directly or indirectly, any action which is
designed to or which has constituted or which might reasonably be expected
to
cause or result in stabilization or manipulation of the price of any security
of
Parent to facilitate the sale or resale of the Parent Shares, or which has
otherwise constituted or will constitute any prohibited bid for or purchase
of
the Parent Shares or any related securities.
(d) The
Company Principal Stockholder acknowledges and agrees that, pending the Release
Date, any additional Parent Shares acquired by such Stockholder upon exercise
of
replacement stock options may not be sold or otherwise transferred
notwithstanding that a registration statement on Form S-8 or Form S-4
may be effective with respect to the exercise of such options and the sale
of
Parent Shares obtained thereby.
(e) Notwithstanding
the foregoing restrictions on transfer, the Company Principal Stockholder may
transfer the Parent Shares (i) in an amount not to exceed five percent (5%)
of the total amount of Parent Shares received by the Company Principal
Stockholder pursuant to the Merger; provided
however,
that
such Parent Shares may not be transferred unless the Parent Shares are
registered under the Securities Act, or (ii) as transfers by will or
intestacy, or (iii) to any trust for the direct or indirect benefit of the
Company Principal Stockholder or his immediate family; provided
however,
that any such transfer shall not involve a disposition for value. For purposes
of this letter agreement, “immediate family” shall mean any relationship by
blood, marriage or adoption, not more remote than first cousin.
3
(f) The
Company Principal Stockholder now has, and, except as contemplated by the
preceding paragraph (e), at all times prior to the Release Date will have,
good and marketable title to the Parent Shares still owned by him, free and
clear of all liens, encumbrances, and claims whatsoever. The Company Principal
Stockholder agrees and consents to the entry of stop transfer instructions
with
the Parent’s transfer agent and registrar against the transfer of the Parent
Shares except in compliance with the foregoing restrictions in
Sections 3(a) and (e) above. The Company Principal Stockholder
understands that the restrictions with respect to the Parent Shares set forth
herein are in addition to any other restrictions upon transfer that may arise
pursuant to any other agreement to which the Company Principal Stockholder
is a
party or under applicable securities laws.
4. Representations
and Warranties of Stockholder. The
Company Principal Stockholder represents and warrants to Parent as
follows:
(a) As
of the
date of this Agreement and at all times through the Expiration
Date:
(i) He
is the
Beneficial Owner (free and clear of any encumbrances or restrictions) of the
outstanding shares of Company Capital Stock set forth under the heading “Shares
of Company Capital Stock Beneficially Owned”, on the signature page
hereof;
(ii) He
is the
Beneficial Owner (free and clear of any encumbrances or restrictions) of the
outstanding Company Options and Other Rights set forth under the heading
“Company Options and Other Rights Beneficially Owned” on the signature page
hereof; and
(iii) He
does
not directly or indirectly Beneficially Own any shares of Company Capital Stock
or Company Options or Other Rights or other securities of the Company, other
than the shares of Company Capital Stock and Company Options and Other Rights
set forth on the signature page hereof.
(b) The
Company Principal Stockholder has the legal capacity, power and authority to
enter into and perform all of its obligations under this Agreement. This
Agreement has been duly executed and delivered by the Company Principal
Stockholder, and upon its execution and delivery by Parent, will constitute
a
legal, valid and binding obligation of the Company Principal Stockholder,
enforceable against him in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors rights generally, and the
availability of injunctive relief and other equitable remedies.
(c) The
execution, delivery and performance by the Company Principal Stockholder of
this
Agreement will not (i) conflict with, require a consent, waiver or approval
under, or result in a breach of or default under, any of the terms of any
contract, commitment or other obligation (written or oral) to which such Company
Principal Stockholder is a party or by which any of his assets may be
bound.
(d) No
filing
with, and no permit, authorization, consent or approval of, any state or federal
public body or authority is necessary for the execution of this Agreement by
the
Company Principal Stockholder and the consummation by Company Principal
Stockholder of the transactions contemplated hereby.
5. Covenants
of Stockholder. The
Company Principal Stockholder covenants and agrees for the benefit of Parent
that, until the Expiration Date, he shall not:
4
(a) sell,
transfer, pledge, hypothecate, encumber, assign, tender or otherwise dispose
of,
or enter into any contract, option or other arrangement or understanding with
respect to the sale, transfer, pledge, hypothecation, encumbrance, assignment,
tender or other disposition of, (i) any Subject Shares or any interest
therein, or (ii) any Company Options and Other Rights or any interest
therein; provided,
however,
that
Stockholder may convert, exercise or exchange Company Options and Other Rights
into or for shares of Company Capital Stock in which event such shares of
Capital Stock shall become and be deemed Subject Shares subject to all the
terms
and conditions of this Agreement;
(b) acquire
any shares of the stock of Parent except pursuant to existing Company Options
and Other Rights or unless such shares shall become subject to the terms of
this
Agreement;
(c) grant
any
powers of attorney or proxies or consents in respect of any of the Subject
Shares, deposit any of such Subject Shares into a voting trust, or enter into
a
voting agreement with respect to any of such Subject Shares; or
(d) take
any
other action with respect to the Subject Shares that would in any way restrict,
limit or interfere with the performance of Company Principal Stockholder’s
obligations hereunder or the transactions contemplated hereby and the Merger
Agreement.
6. Adjustments;
Additional Shares. In
the event (a) of any stock dividend, stock split, merger, recapitalization,
reclassification, combination, exchange of shares or the like of the capital
stock of the Company on, of or affecting the Subject Shares, or (b) that
Stockholder shall become the Beneficial Owner of any additional shares of
Company Capital Stock or other securities entitling the holder thereof to vote
or give consent with respect to the matters set forth in Section 2(a), then
the terms of this Agreement shall apply to the shares of Company Capital Stock
or other instruments or documents held by Stockholder immediately following
the
effectiveness of the events described in clause (a) or Stockholder becoming
the Beneficial Owner thereof as described in clause (b), as though, in
either case, they were Subject Shares hereunder. The foregoing shall apply
(mutatis
mutandis)
to the
Subject Shares and Section 3 of this Agreement.
7. Amendments
and Waivers. Any
provision of this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and is signed, in the case of an amendment,
by
each party to this Agreement, or in the case of a waiver, by the party against
whom the waiver is to be effective. No failure or delay by any party in
exercising any right or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. To
the
maximum extent permitted by law, (a) no waiver that may be given by a party
shall be applicable except in the specific instance for which it was given
and
(b) no notice to or demand on one party shall be deemed to be a waiver of
any obligation of such party or the right of the party giving such notice or
demand to take further action without notice or demand.
8. Assignment. This
Agreement may not be assigned by any party hereto without the prior written
consent of the other parties. Subject to the foregoing, all of the terms and
provisions of this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective executors, heirs, personal
representatives, successors and assigns.
9. Entire
Agreement. This
Agreement and the documents, instruments and other agreements specifically
referred to herein or delivered pursuant hereto, set forth the entire
understanding of the parties with respect to the subject matter hereof. Any
and
all previous agreements and understandings between or among the parties
regarding the subject matter hereof, whether written or oral, are superseded
by
this Agreement.
5
10. Notices. Any
notice, request, demand, waiver, consent, approval or other communication which
is required or permitted hereunder shall be in writing and shall be deemed
given
(a) on the date established by the sender as having been delivered
personally; (b) on the date delivered by a private courier as established
by the sender by evidence obtained from the courier; (c) on the date sent
by facsimile, with confirmation of transmission, if sent during normal business
hours of the recipient, if not, then on the next business day; or (d) on
the fifth day after the date mailed, by certified or registered mail, return
receipt requested, postage prepaid. Such communications, to be valid, must
be
addressed as follows:
If
to
Parent, to:
000
Xxxx
00xx
Xxxxxx,
Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx
Facsimile:
000-000-0000
With
a
required copy to:
X.X.
Xxxxxxxx, PLLC
000
Xxxx
00xx
Xxxxxx,
Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx
Facsimile:
000-000-0000
If
to any
of the Company Principal Stockholder:
SecurLinx
Holding Corp.
000
Xxxx
Xxxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Att:
Xxxxx X. Xxxxx, CEO
Fax:
000-000-0000
With
a
required copy to:
Steptoe
& Xxxxxxx, PLLC
Xxxxx
Xxxxx, Xxxxxx Xxxxx
X.X.
Xxx
0000
Xxxxxxxxxxx,
XX 00000-0000
Att:
Xxxx
Xxxxxx, Esq.
Fax:
000-000-0000
or
to
such other address or to the attention of such person or persons as the
recipient party has specified by prior written notice to the sending party
(or
in the case of counsel, to such other readily ascertainable business address
as
such counsel may hereafter maintain). If more than one method for sending notice
as set forth above is used, the earliest notice date established as set forth
above shall control.
6
11.
Captions.
All captions contained in this Agreement are for convenience of reference only,
do not form a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
12.
Severability;
Enforcement. Any
provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any
other jurisdiction.
13.
Specific
Performance. The
Company Principal Stockholder acknowledges that the agreements contained in
this
Agreement are an integral part of the transactions contemplated by the Merger
Agreement, and that, without these agreements, Parent would not enter into
the
Merger Agreement, and acknowledges that damages would be an inadequate remedy
for any breach by the Company Principal Stockholder of the provisions of this
Agreement. Accordingly, the Company Principal Stockholder agrees that his
obligations hereunder shall be specifically enforceable and he shall not take
any action to impede the other from seeking to enforce such right of specific
performance.
14.
Consent
to Jurisdiction. Each
party irrevocably submits to the exclusive jurisdiction of (a) New York
County, New York, and (b) the United States District Court for the Southern
District of New York, for the purposes of any action, suit or proceeding arising
out of this Agreement or any transaction contemplated hereby. Each party agrees
to commence any such action, suit or proceeding either in the United States
District Court for the Southern District of New York or if such action, suit
or
proceeding may not be brought in such court for jurisdictional reasons, in
the
Supreme Court sitting in New York County (including its Appellate Division).
Each party further agrees that service of any process, summons, notice or
document by U.S. registered mail to such party’s respective address set
forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted
to
jurisdiction in this Section 15. Each party irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in
(i) the United States District Court for the Southern District of New York,
or (ii) the Supreme Court sitting in New York County (including its
Appellate Division), and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit
or
proceeding brought in any such court has been brought in an inconvenient forum.
EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT HEREOF.
15.
Governing
Law. This
Agreement shall be governed by and interpreted and enforced in accordance with
the laws of the State of New York, without giving effect to any choice of law
or
conflict of laws rules or provisions (whether of the State of New York or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York, except to the extent that the
voting of the Subject Shares is subject to the corporate law of the State of
Delaware.
7
IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
all
as of the day and year first above written.
By:
|
|
Name:
|
Xxxxxxx
X. Xxxxxxxx
|
Title:
|
President
and Chief Executive Officer
|
COMPANY
PRINCIPAL STOCKHOLDER:
Shares
of
Company Common Stock Beneficially Owned: __________________
Company
Options and Other Rights Beneficially Owned: __________________
8
EXHIBIT B
CERTIFICATE
OF MERGER
OF
SECURLINX
HOLDING CORP.
AND
SECURLINX
ACQUISITION CORP.
Pursuant
to Section 251 of the General Corporation Law of the State of Delaware (the
“DGCL”), SecurLinx Acquisition Corp., a Delaware corporation, DOES HEREBY
CERTIFY that:
1. The
name
and jurisdiction of incorporation of each of the constituent corporations
to the
merger (collectively, the “Constituent Corporations”) are as
follows:
Name
|
Jurisdiction
of Incorporation
|
|
Securlinx
Holding Corp.
|
Delaware
|
|
Securlinx
Acquisition Corp.
|
Delaware
|
2. An
Agreement and Plan of Merger, dated as of August 1, 2008 (the “Agreement
and Plan of Merger”), by and among GCA II Acquisition Corp., a Delaware
corporation, and each of the Constituent Corporations, providing for the
merger
of SecurLinx Acquisition Corp, with and into SecurLinx Holding Corp. has
been
approved, adopted, certified, executed and acknowledged by each of the
Constituent Corporations in accordance with the requirements of
Sections 228 and 251 of the DGCL.
3. The
name
of the corporation surviving the merger is SecurLinx Holding Corp., a Delaware
corporation (the “Surviving Corporation”).
4. The
Certificate of Incorporation of SecurLinx Holding Corp., as now in force
and
effect, shall continue to be the Certificate of Incorporation of the Surviving
Corporation until amended and changed pursuant to the provisions of the
DGCL.
5. The
Bylaws of SecurLinx Holding Corp., as now in full force and effect, shall
continue to be the Bylaws of the Surviving Corporation until amended and
changed
pursuant to the provisions of the DGCL.
6. The
officers and directors of SecurLinx Holding Corp. immediately prior to the
filing of this Certificate of Merger with the Secretary of State of the State
of
Delaware shall remain the officers and directors of the Surviving Corporation,
each to hold office until their respective death, permanent disability,
resignation or removal or until their respective successors are duly elected
and
qualified, all in accordance with the Certificate of Incorporation and Bylaws
of
the Surviving Corporation and the DGCL.
7. The
executed Agreement and Plan of Merger is on file at an office of the Surviving
Corporation, the address of which is as follows:
SecurLinx
Holding Corp.
000
Xxxx
Xxxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
8. A
copy of
the Agreement and Plan of Merger will be furnished by the Surviving Corporation,
on request and without cost, to any stockholder of either Constituent
Corporation.
9. This
Certificate of Merger, and the merger provided for herein, shall be effective
immediately upon its filing with the Secretary of State of the State of
Delaware.
IN
WITNESS WHEREOF, this Certificate of Merger has been duly executed on ________
__, 2008.
SECURLINX
HOLDING CORP.
|
||
By
|
||
Name: Xxxxx
X. Xxxxx
|
||
Title: President
|
EXHIBIT
C
CERTIFICATE
OF INCORPORATION
OF
SECURLINX
ACQUISITION CORP.
(Pursuant
to Section 102 of the Delaware General Corporation Law)
1.
The
name of the corporation is SecurLinx Acquisition Corp. (the
“Corporation”).
2.
The
address of its registered office in the State of Delaware is 000 Xxxxxxxxx
Xxxxx, Xxxxx 000, Xxxxx, Xxxxxxxx 00000, County of Kent. The name of its
registered agent at such address is the National Registered Agents,
Inc..
3.
The
nature of the business or purposes to be conducted or promoted is to engage
in
any lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware (the “DGCL”).
4.
The
Corporation is to have perpetual existence.
5.
The
total number of shares of capital stock which the Corporation shall have
authority to issue is: two million (2,000,000). These shares shall be divided
into two classes with 1,000,000 shares designated as common stock at $.0001
par
value (the “Common Stock”) and 1,000,000 shares designated as preferred stock at
$.0001 par value (the “Preferred Stock”).
The
Preferred Stock of the Corporation shall be issued by the Board of Directors
of
the Corporation in one or more classes or one or more series within any class
and such classes or series shall have such voting powers, full or limited,
or no
voting powers, and such designations, preferences, limitations or restrictions
as the Board of Directors of the Corporation may determine, from time to
time.
Holders
of shares of Common Stock shall be entitled to cast one vote for each share
held
at all stockholders’ meetings for all purposes, including the election of
directors. The Common Stock does not have cumulative voting rights.
No
holder
of shares of stock of any class shall be entitled as a matter of right to
subscribe for or purchase or receive any part of any new or additional issue
of
shares of stock of any class, or of securities convertible into shares of stock
of any class, whether now hereafter authorized or whether issued for money,
for
consideration other than money, or by way of dividend.
6.
The Board of Directors shall have the power to adopt, amend or repeal the
by-laws of the Corporation.
7.
No director shall be personally liable to the Corporation or its stockholders
for monetary damages for any breach of fiduciary duty by such director as a
director. Notwithstanding the foregoing sentence, a director shall be liable
to
the extent provided by applicable law, (i) for breach of the director’s duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not
in good faith or which involve intentional misconduct or a knowing violation
of
law, (iii) pursuant to Section 174 of the DGCL or (iv) for any transaction
from
which the director derived an improper personal benefit. If the DGCL hereafter
is amended to authorize the further elimination or limitation of the liability
of directors, then the liability of a director of the Corporation, in addition
to the limitation on personal liability provided herein, shall be limited to
the
fullest extent permitted by the amended DGCL. No amendment to or repeal of
this
Article 7 shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts
or
omissions of such director occurring prior to such amendment.
8.
The Corporation shall indemnify, to the fullest extent permitted by Section
145
of the DGCL, as amended from time to time, each person that such section grants
the Corporation the power to indemnify.
9.
The
name and mailing address of the incorporator is Xxxxxxx X. Xxxxxxxx, c/o X.X.
Xxxxxxxx, PLLC, 115 East 57th
Street,
Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
IN
WITNESS WHEREOF, the undersigned, being the incorporator hereinbefore named,
has
executed, signed and acknowledged this certificate of incorporation this
29th
day of
July, 2008.
Xxxxxxx
X. Xxxxxxxx, Incorporator
|
2
EXHIBIT
D
BY-LAWS
OF
SECURLINX
ACQUISITION CORP.
~
A
Delaware corporation
~
ARTICLE
I
STOCKHOLDERS
Section
1.
Certificates
Representing Stock.
(a)
Certificates representing stock in the corporation shall be signed by, or in
the
name of, the corporation by the Chairman or Vice-Chairman of the Board of
Directors, if any, or by the President or a Vice-President and by the Treasurer
or an Assistant Treasurer or the Secretary or an Assistant Secretary of the
corporation. Any or all the signatures on any such certificate may be a
facsimile. In case any officer, transfer agent, or registrar who has signed
or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent, or registrar at the date of issue.
(b)
Whenever the corporation shall be authorized to issue more than one class
of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
(c)
The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the Board of Directors may require the
owner
of the lost, stolen or destroyed certificate, or his legal representative,
to
give the Corporation a bond sufficient to indemnify the corporation against
any
claim that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of any such new certificate
or uncertificated shares.
Section
2.
Uncertificated
Shares.
Subject
to any conditions imposed by the General Corporation Law, the Board of Directors
of the corporation may provide by resolution or resolutions that some or all
of
any or all classes or series of the stock of the corporation shall be
uncertificated shares. Within a reasonable time after the issuance or transfer
of any uncertificated shares, the corporation shall send to the registered
owner
thereof any written notice prescribed by the General Corporation
Law.
Section
3.
Fractional
Share Interests.
The
corporation may, but shall not be required to, issue fractions of a share.
If
the Corporation does not issue fractions of a share, it shall (1) arrange for
the disposition of fractional interests by those entitled thereto, (2) pay
in
cash the fair value of fractions of a share as of the time when those entitled
to receive such fractions are determined, or (3) issue scrip or warrants in
registered form (either represented by a certificate or uncertificated) or
bearer form (represented by a certificate) which shall entitle the holder to
receive a full share upon the surrender of such scrip or warrants aggregating
a
full share. A certificate for a fractional share or an uncertificated fractional
share shall, but scrip or warrants shall not unless otherwise provided therein,
entitle the holder to exercise voting rights, to receive dividends thereon,
and
to participate in any of the assets of the Corporation in the event of
liquidation. The Board of Directors may cause scrip or warrants to be issued
subject to the conditions that they shall become void if not exchanged for
certificates representing the full shares
or
uncertificated full shares before a specified date, or subject to the conditions
that the shares for which scrip or warrants are exchangeable may be sold by
the
corporation and the proceeds thereof distributed to the holders of scrip or
warrants, or subject to any other conditions which the Board of Directors may
impose.
Section
4.
Stock
Transfers.
Upon
compliance with provisions restricting the transfer or registration of transfer
of shares of stock, if any, transfers or registration of transfers of shares
of
stock of the corporation shall be made only on the stock ledger of the
corporation by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary
of
the corporation or with a transfer agent or a registrar, if any, and, in the
case of shares represented by certificates, on surrender of the certificate
or
certificates for such shares of stock properly endorsed and the payment of
all
taxes due thereon.
Section
5.
Record
Date For Stockholders.
In
order that the corporation may determine the stockholders entitled to notice
of
or to vote at any meeting of stockholders or any adjournment thereof, the Board
of Directors may fix a record date, which record date shall not precede the
date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than sixty nor less than
ten
days before the date of such meeting. If no record date is fixed by the Board
of
Directors, the record date for determining stockholders entitled to notice
of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived,
at
the close of business on the day next preceding the day on which the meeting
is
held. A determination of stockholders of record entitled to notice of or to
vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided,
however,
that
the Board of Directors may fix a new record date for the adjourned meeting.
In
order that the corporation may determine the stockholders entitled to consent
to
corporate action in writing without a meeting, the Board of Directors may fix
a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If
no
record date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required
by
the General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered
to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meeting of stockholders
are
recorded. Delivery made to the corporation’s registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record
date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action. In order
that
the corporation may determine the stockholders entitled to receive payment
of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action.
If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board
of
Directors adopts the resolution relating thereto.
2
Section
6.
Meaning
of Certain Terms.
As used
herein in respect of the right to notice of a meeting of stockholders or a
waiver thereof or to participate or vote thereat or to consent or dissent in
writing in lieu of meeting, as the case may be, the term “share” or “shares” or
“share of stock” or “shares of stock” or “stockholder” or “stockholders” refers
to an outstanding share or shares of stock and to a holder or holders of record
of outstanding shares of stock when the corporation is authorized to issue
only
one class of shares of stock, and said reference is also intended to include
any
outstanding share or shares of stock and any holder or holders of record of
outstanding shares of stock of any class upon which or upon whom the certificate
of incorporation confers such rights where there are two or more classes or
series of shares of stock or upon which or upon whom the General Corporation
Law
confers such rights notwithstanding that the certificate of incorporation may
provide for more than one class or series of shares of stock, one or more of
which are limited or denied such rights thereunder; provided,
however, that
no
such right shall vest in the event of an increase or a decrease in the
authorized number of shares of stock of any class or series which is otherwise
denied voting rights under the provisions of the certificate of incorporation,
except as any provision of law may otherwise require.
Section
7.
Stockholder
Meetings
.
Time.
The
annual meeting shall be held on the date and at the time fixed, from time to
time, by the directors, provided that the first annual meeting shall be held
on
a date within thirteen months after the organization of the corporation, and
each successive annual meeting shall be held on a date within thirteen months
after the date of the preceding annual meeting. A special meeting shall be
held
on the date and at the time fixed by the directors.
Place.
Annual
meetings and special meetings shall be held at such place, within or without
the
State of Delaware, as the directors may, from time to time, fix. Whenever the
directors shall fail to fix such place, the meeting shall be held at the
registered office of the corporation in the State of Delaware.
Call.
Annual
meetings and special meetings may be called by the directors or by any officer
instructed by the directors to call the meeting.
Notice
or Waiver of Notice.
Written
notice of all meetings shall be given, stating the place, date, hour of the
meeting and stating the place within the city or other municipality or community
at which the list of stockholders of the corporation may be examined. The notice
of an annual meeting shall state that the meeting is called for the election
of
directors and for the transaction of other business which may properly come
before the meeting, and shall (if any other action which could be taken at
a
special meeting is to be taken at such annual meeting) state the purpose or
purposes. The notice of a special meeting shall in all instances state the
purpose or purposes for which the meeting is called. The notice of any meeting
shall also include, or be accompanied by, any additional statements,
information, or documents prescribed by the General Corporation Law. Except
as
otherwise provided by the General Corporation Law, a copy of the notice of
any
meeting shall be given, personally or by mail, not less than ten days nor more
than sixty days before the date of the meeting, unless the lapse of the
prescribed period of time shall have been waived, and directed to each
stockholder at his record address or at such other address which he may have
furnished by request in writing to the Secretary of the corporation. Notice
by
mail shall be deemed to be given when deposited, with postage thereon prepaid,
in the United States Mail. If a meeting is adjourned to another time, not more
than thirty days hence, and/or place is made at the meeting, it shall not be
necessary to give notice of the adjourned meeting unless the directors, after
adjournment, fix a new record date for the adjourned meeting. Notice need not
be
given to any stockholder who submits a written waiver of notice signed by him
before or after the time stated therein. Attendance of a stockholder at a
meeting of stockholders shall constitute a waiver of notice of such meeting,
except when the stockholder attends the meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business
to
be transacted at, not the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
3
Stockholder
List.
The
officer who has charge of the stock ledger of the corporation shall prepare
and
make, at least ten days before every meeting of stockholders, a complete list
of
the stockholders, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
or
other municipality or community where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so specified, at
the
place where the meeting is to be held. The list shall also be produced and
kept
at the time and place of the meeting during the whole time thereof, and may
be
inspected by any stockholder who is present. The stock ledger shall be the
only
evidence as to who are the stockholders entitled to examine the stock ledger,
the list required by this section or the books of the corporation, or to vote
at
any meeting of stockholders.
Conduct
of Meeting.
Meetings of the stockholders shall be presided over by one of the following
officers in the order of seniority and if present and acting-the Chairman of
the
Board, if any, the Vice-Chairman of the Board, if any, the President, a
Vice-President, or, if none of the foregoing is in office and present and
acting, by a chairman to be chosen by the stockholders. The Secretary of the
corporation, or in his absence, an Assistant Secretary, shall act as secretary
of every meeting, but if neither the Secretary nor an Assistant Secretary is
present the Chairman of the meeting shall appoint a secretary of the
meeting.
Proxy
Representation.
Every
stockholder may authorize another person or persons to act for him by proxy
in
all matters in which a stockholder is entitled to participate, whether by
waiving notice of any meeting, voting or participating at a meeting, or
expressing consent or dissent without a meeting. Every proxy must be signed
by
the stockholder or by his attorney-in-fact. No proxy shall be voted or acted
upon after three years from its date unless such proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it states that is
irrevocable and, if, and only as long as it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is
an
interest in the stock itself or an interest in the corporation
generally.
Inspectors.
The
directors, in advance of any meeting, may, but need not, appoint one or more
inspectors of election to act at the meeting or any adjournment thereof. If
any
inspector or inspectors are not appointed, the person presiding at the meeting
may, but need not appoint one or more inspectors. In case any person who may
be
appointed as an inspector fails to appear or act, the vacancy may be filled
by
appointment made by the directors in advance of the meeting or at the meeting
by
the person presiding thereat. Each inspector, if any, before entering upon
the
discharge of his duties, shall take and sign an oath faithfully to execute
the
duties of inspectors at such meeting with strict impartiality and according
to
the best of his ability. The inspectors, if any, shall determine the number
of
shares of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots, or consents, hear and determine
all challenges and questions arising in connection with the right to vote,
count
and tabulate all votes, ballots, or consents, determine the result, and do
such
acts as are proper to conduct the election or vote with fairness to all
stockholders. Upon request of the person presiding at the meeting, the inspector
or inspectors, if any, shall make a report in writing of any challenge,
question, or matter determined by him or them and execute a certificate of
any
fact found by him or them. Except as otherwise required by subsection (e) of
Section 231 of the General Corporation Law, the provisions of that Section
shall
not apply to the corporation.
4
Quorum.
The
holders of a majority of the outstanding shares of stock shall constitute a
quorum at a meeting of stockholders for the transaction of any business. The
stockholders presents may adjourn the meeting despite the absence of a
quorum.
Voting.
Each
share of stock shall entitle the holder thereof to one vote. Directors shall
be
elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors. Any other action shall be authorized by a majority of the votes
cast
except where the General Corporation Law prescribes a different percentage
of
votes and/or a different exercise of voting power, and except as may be
otherwise prescribed by the provisions of the certificate of incorporation
and
these Bylaws. In the election of directors, and for any other action, voting
need not be by ballot.
Section
8.
Stockholder
Action Without Meetings.
Any
action required by the General Corporation Law to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting of stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having
not
less than the minimum number of votes that would be necessary to authorize
or
take such action at a meeting at which all shares entitled to vote thereon
were
present and voted. Prompt notice of the taking of the corporate action without
a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. Action taken pursuant to this
paragraph shall be subject to the provisions of Section 228 of the General
Corporation Law.
ARTICLE
II
DIRECTORS
Section
1.
Functions
and Definition.
The
business and affairs of the corporation shall be managed by or under the
direction of the Board of Directors of the corporation. The Board of Directors
shall have the authority to fix the compensation of the members thereof. The
use
of the phrase “whole board” herein refers to the total number of directors which
the corporation would have if there were no vacancies.
Section
2.
Qualifications
and Number.
A
director need not be a stockholder, a citizen of the United States, or a
resident of the State of Delaware. The initial Board of Directors shall consist
of one (1) person. Thereafter, the number of directors may be increased or
decreased from time to time by action of the stockholders or of the directors,
or, if the number is not fixed, the number shall be one (1).
Section
3.
Election
and Term.
The
first Board of Directors, unless the members thereof shall have been named
in
the certificate of incorporation, shall be elected by the incorporator or
incorporators and shall hold office until first annual meeting of stockholders
and until their successors are elected and qualified or until their earlier
resignation or removal. Any director may resign at any time upon written notice
to the corporation. Thereafter, directors who are elected at an annual meeting
of stockholders, and directors who are elected in the interim to fill vacancies
and newly created directorships, shall hold office until the next annual meeting
resignation or removal. Except as the General Corporation Law may otherwise
require, in the interim between annual meetings of stockholders or of special
meetings of stockholders called for the election of directors and/or for the
removal of one or more directors and for the filling of any vacancy in that
connection, newly created directorships and any vacancies in the Board of
Directors, including unfilled vacancies resulting from the removal of directors
for cause or without cause, may be filled by the vote of a majority of the
remaining directors then in office, although less than a quorum, or by the
sole
remaining director.
5
Section
4.
MEETINGS.
TIME.
Meetings shall be held at such time as the Board shall fix, except that the
first meeting of a newly elected Board shall be held as soon after its election
as the directors may conveniently assemble.
PLACE.
Meetings shall be held at such place within or without the State of Delaware
as
shall be fixed by the Board.
CALL.
No call
shall be required for regular meetings for which the time and place have been
fixed. Special meetings may be called by or at the direction of the Chairman
of
the Board, if any, the Vice-Chairman of the Board, if any, of the President,
or
of a majority of the directors in office.
NOTICE
OR ACTUAL OR CONSTRUCTIVE WAIVER.
No
notice shall be required for regular meetings for which the time and place
have
been fixed. Written, oral, or any other mode of notice of the time and place
shall be given for special meetings in sufficient time for the convenient
assembly of the directors thereat. Notice need not be given to any director
or
to any member of a committee of directors who submits a written waiver of notice
signed by him before or after the time stated therein. Attendance of any such
person at a meeting shall constitute a waiver of notice of such meeting, except
when he attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the
purpose of, any regular or special meeting of the directors need be specified
in
any written waiver of notice.
QUORUM
AND ACTION.
A
majority of the whole Board shall constitute a quorum except when a vacancy
or
vacancies prevents such majority, whereupon a majority of the directors in
office shall constitute a quorum, provided, that such majority shall constitute
at least one-third of the whole Board. A majority of the directors present,
whether or not a quorum is present, may adjourn a meeting to another time and
place. Except as herein otherwise provided, and except as otherwise provided
by
the General Corporation Law, the vote of the majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board. The
quorum and voting provisions herein stated shall not be construed as conflicting
with any provisions of the General Corporation Law and these Bylaws which govern
a meeting of the directors held to fill vacancies and newly created
directorships in the Board or action of disinterested directors.
Any
member or members of the Board of Directors or of any committee designated
by
the Board, may participate in a meeting of the Board, or any such committee,
as
the case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other.
CHAIRMAN
OF THE MEETING.
The
Chairman of the Board, if any and if present and acting, shall preside at all
meetings. Otherwise, the Vice-Chairman of the Board, if any and if present
and
acting, or the President, if present and acting, or any other director chosen
by
the Board, shall preside.
Section
5.
REMOVAL
OF DIRECTORS.
Except
as may otherwise be provided by the General Corporation Law, any director or
the
entire Board of Directors may be removed, with or without cause, by the holders
of a majority of the shares then entitled to vote at an election of
directors.
6
Section
6.
COMMITTEES
. The
Board of Directors may, by resolution passed by a majority of the whole Board,
designate one or more committees, each committee to consist of one or more
of
the directors of the corporation. The Board may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of any member of any such committee or committees, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any
such
absent or disqualified member. Any such committee, to the extent provided in
the
resolution of the Board, shall have and may exercise the powers and authority
of
the Board of Directors in the management of the business and affairs of the
corporation with the exception of any authority the delegation of which is
prohibited by Section 141 of the General Corporation Law, and may authorize
the
seal of the corporation to be affixed to all papers which may require
it.
Section
7.
WRITTEN
ACTION.
Any
action required or permitted to be taken at any meeting of the Board of
Directors or any committee thereof may be taken without a meeting if all members
of the Board or committee, as the case may be, consent thereto in writing,
and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
ARTICLE
III
OFFICERS
The
officers of the corporation shall consist of a President, a Secretary, a
Treasurer, and, if deemed necessary, expedient, or desirable by the Board of
Directors, a Chairman of the Board, a Vice-Chairman of the Board, an Executive
Vice-President, one or more other Vice-Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other officers with
such
title as the resolution of the Board of Directors choosing them shall designate.
Except as may otherwise be provided in the resolution of the Board of Directors
choosing him, no officer other than the Chairman or Vice-Chairman of the Board,
if any, need be a director. Any number of offices may be held by the same
person, as the directors may determine.
Unless
otherwise provided in the resolution choosing him, each officer shall be chosen
for a term which shall continue until the meeting of the Board of Directors
following the next annual meeting of stockholders and until his successor shall
have been chosen and qualified.
All
officers of the corporation shall have such authority and perform such duties
in
the management and operation of the corporation as shall be prescribed in the
resolutions of the Board of Directors designating and choosing such officers
and
prescribing their authority and duties, and shall have such additional authority
and duties as are incident to their office except to the extent that such
resolutions may be inconsistent therewith. The Secretary or an Assistant
Secretary of the corporation shall record all of the proceedings of all meetings
and actions in writing of stockholders, directors, and committees of directors,
and shall exercise such additional authority and perform such additional duties
as the Board shall assign to him. Any officer may be removed, with or without
cause, by the Board of Directors. Any vacancy in any office may be filled by
the
Board of Directors.
7
ARTICLE
IV
CORPORATE
SEAL
The
corporate seal shall be in such form as the Board of Directors shall
prescribe.
ARTICLE
V
FISCAL
YEAR
The
fiscal year of the corporation shall be fixed, and shall be subject to change,
by the Board of Directors.
ARTICLE
VI
AMENDMENT
8
SCHEDULES
Company
Disclosure Schedule
|
|
Organization
and Qualification; Subsidiaries
|
Section
4.1
|
Capitalization
|
Section
4.4
|
No
Conflict; Required Filings and Consents
|
Section
4.6
|
Permits;
Compliance
|
Section
4.7
|
Financial
Statements
|
Section
4.8
|
Taxes
|
Section
4.11
|
Inventory
|
Section
4.14
|
Real
Property
|
Section
4.17
|
Intellectual
Property
|
Section
4.18
|
Material
Contracts
|
Section
4.19
|
Litigation
|
Section
4.20
|
Employee
Benefit Plans
|
Section
4.21
|
Environmental
|
Section
4.23
|
Related
Party Transactions
|
Section
4.24
|
Insurance
|
Section
4.25
|
Absence
of Certain Changes or Events
|
Section
4.26
|
Change
in Control
|
Section
4.33
|
Conduct
of Business by the Company Pending the Merger
|
Section
6.1
|
Schedule
B
|
Parent
Disclosure Schedule
|
Capitalization
|
Section
5.4
|
No
Conflict; Required Filings and Consents
|
Section
5.6
|
Taxes
|
Section
5.8
|
Section
5.12
|
|
Conduct
of Business by the Parent Pending the Merger
|
Section
6.2
|
Company
Disclosure Schedule: Section
4.1
Organization
and Qualification; Subsidiaries
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
4.4
Equity
and Equity-Linked Capitalization
Section
4.4(a)
Shares
Issued
|
Common
Stock
Equivalents
|
||||||
Common
Stock
|
6,925,945
|
6,925,945
|
|||||
Common
Stock Warrants - Issued
|
-0-
|
N/A
|
|||||
Employee/Board
Options (None Authorized)
|
-0-
|
N/A
|
|||||
Convertible
Debt:
|
N/A
|
||||||
|
|||||||
Total
Common Stock Equivalents
|
6,925,945
|
Section
4.4b
[INTENTIONALLY
BLANK]
Section
4.4c
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
4.6
Section
4.6(a)
Requires
consent of Centra Bank regarding 405,500 shares of SecurLinx Corporation
common
stock personally owned by Xxxxx x. Xxxxx and pledged as security for $500,000
loan.
Company
Disclosure Schedule: Section
4.7
Permits;
Compliance
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
4.8
Financial
Statements
Section
4.8(a)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg01.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg03.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg04.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg05.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg06.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg07.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg08.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg09.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg10.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg11.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg12.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg13.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg14.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg15.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg16.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg17.jpg)
![](https://www.sec.gov/Archives/edgar/data/1379394/000114420408049162/fin-pg18.jpg)
Section
4.8(b)
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
4.9
Notes
and Accounts Receivable
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
4.11
Taxes
Section
4.11(a)
[INTENTIONALLY
BLANK]
Section
4.11(b)
[INTENTIONALLY
BLANK]
Section
4.11(c)
[INTENTIONALLY
BLANK]
Section
4.11(d)
[INTENTIONALLY
BLANK]
Section
4.11(e)
§
|
Federal
|
§
|
State
of West Virginia
|
Company
Disclosure Schedule: Section
4.11 (cont’d)
Section
4.11(l)
[INTENTIONALLY
BLANK]
Section
4.11(n)
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
4.14
Inventory
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
4.17
Real
Property
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
4.18
Intellectual
Property
Section
4.18(a)
Registered
patents pending or issued in the U.S. Patent and Trademark
Office:
Non-provisional
patent application:
Application
#: 12/146,442; Title: Facial Recognition Deployment Framework System; filed
June
25, 2008
Trademarks:
Federal
Trademark Registrations:
Reg.
No.
3,151,606; IdentiTrac; Registered October 3, 2006 Reg. No. 2,702,943; FaceTrac;
Registered April 1, 2003
Federal
Trademark Registration Applications:
Application
#: 78/721,593; SECURLINX INTEGRATION SOFTWARE; filed September 27, 2005
Application #: 78/364,492; XXXX; filed February 8, 2004 Application #:
78/404,239; BioLinx; filed April 19, 2004 Application #: 78/404,250; VeriTrac;
filed April 19, 2004 Application #: 77/122,448; BioTrac; filed March 5, 2007
Application #: 77/122,479; WatchTrac; filed March 5, 2007 Application #:
77/122,525; LogonTrac; filed March 5, 2007 Application #: 77/122,536;
SystemLinx; filed March 5, 2007
Company
Disclosure Schedule: Section
4.18 (cont’d).
Section
4.18(b)
[INTENTIONALLY
BLANK]
Section
4.18(c)
[INTENTIONALLY
BLANK]
Section
4.18(d)
[INTENTIONALLY
BLANK]
Section
4.18(f)
[INTENTIONALLY
BLANK]
Section
4.18(g)
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
4.18 (cont’d).
Section
4.18(h)
[INTENTIONALLY
BLANK]
Section
4.18(j)
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
4.19
§
|
Employment
Agreement between Securlinx Corporation and Xxxxx X. Xxxxx dated
October
23, 2007 but effective as of August 16, 2007.
|
Position:
Chief
Executive Officer
Term:
Five
years with automatic renewal provisions and termination for cause
Salary:
$180,000/yr.
Benefits:
Participation in company life insurance, health insurance, retirement plans
and
other programs
Stock
Option Benefits:
Options
to purchase up to 100,000 shares of common stock with exercise price at fair
market value at time of grant
Change-of-Control
Payout:
Lump
sum payment of two years salary in the event of termination without cause
prior
to or following change-of-control.
Inventions:
Deemed
work-for-hire.
§
|
Employment
Agreement between Securlinx Corporation and Xxxxxx X. Xxxxxxxx
dated
October 23, 2007 but effective as of August 16, 2007.
|
Position:
Chief
Technology Officer
Term:
Five
years with automatic renewal provisions and termination for cause
Salary:
$97,500/yr.
Benefits:
Participation in company life insurance, health insurance, retirement plans
and
other programs
Relocation
Expenses:
Reimbursement Up to $15,000
Stock
Option Benefits:
Options
to purchase up to 10,000 shares of common stock with exercise price at fair
market value at time of grant
Change-of-Control
Payout:
Lump
sum payment of two years salary in the event of termination without cause
prior
to or following change-of-control.
Inventions:
Deemed
work-for-hire.
Company
Disclosure Schedule: Section
4.20
Litigation
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
4.21
Section
4.21(a)
-
|
Medical
Insurance (Blue Cross Blue Shield Medical Plan with Vision
Supplement)
|
-
|
Dental
Insurance (MetLife)
|
-
|
SEP –
No Company Contribution
|
Xxxxx
Xxxxx is responsible for the maintenance of the benefit plans and all necessary
reporting.
Section
4.21(r)
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
4.23
Environmental
Section
4.23(a)
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
4.24
§ |
Parry
Petroplus, the owner of Waterfront Corporate Place, the lessor
under the
Company office lease dated March 8, 2004, is the record holder
of 16,250
shares of Securlinx Holding Corp. common
stock.
|
§ |
Steptoe
& Xxxxxxx, corporate legal counsel to the Company, is the record
holder of 94,070 shares of Securlinx Holding Corp. common
stock
|
Company
Disclosure Schedule: Section
4.25
Insurance
Policy
Holder:
Xxxxx
Fargo Insurance Services of West Virginia, Inc.
0000
Xxx
Xxxxxxx Xxxx
Xxxxxxxxxx,
XX 00000
Insured:
SecurLinx
Integration Software Inc.
000
Xxxx
Xxxxxx
Xxxxxxxxxx,
XX 00000
Policy
No.: Unavailable
Coverage
Period: 1-15-09
Summary:
General commercial liability of $2,000,000 with a combined single occurrence
limitation of $1,000,000. Additionally, there is a $4,000,000 umbrella excess
liability coverage in the amount of $4,000,000 per occurrence.
Company
Disclosure Schedule: Section
4.26
Absence
of Certain Changes or Events
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
4.33
Change
in Control
[INTENTIONALLY
BLANK]
Company
Disclosure Schedule: Section
6.1
Conduct
of Business by the Company Pending the Merger
[INTENTIONALLY
BLANK]
Parent
Disclosure Schedule: Section
5.4
Capitalization
[INTENTIONALLY
BLANK]
Parent
Disclosure Schedule: Section
5.6
No
Conflict; Required Filings and Consents
[INTENTIONALLY
BLANK]
Parent
Disclosure Schedule: Section
5.8
Taxes
Section
5.8(a)
Currently
on extension for all income tax returns for fiscal year ending May 31,
2008
Section
5.8(b)
[INTENTIONALLY
BLANK]
Section
5.8(c)
Currently
on extension for all income tax returns for fiscal year ending May 31,
2008
Section
5.8(d)
[INTENTIONALLY
BLANK]
Section
5.8(e)
1.
Federal (Internal Revenue Service)
2.
New
York State
3.
New
York City
Parent
Disclosure Schedule: Section
5.8(cont’d)
Section
5.8(l)
[INTENTIONALLY
BLANK]
Section
5.8(n)
[INTENTIONALLY
BLANK]
Parent
Disclosure Schedule: Section
5.12
Absence
of Certain Changes or Events
[INTENTIONALLY
BLANK]
Parent
Disclosure Schedule: Section
6.2
Conduct
of Business by the Parent and Merger Sub
[INTENTIONALLY
BLANK]