Exhibit 2.1
ACQUISITION AGREEMENT
This Acquisition Agreement (this "Agreement") is made and entered into as
of June 1, 2004, by and among Trey Resources, Inc., a Delaware corporation, with
offices at 000 Xxxxx 00, Xxxxxxx, XX 00000 ("Buyer"), Xxxx Xxxxxx, an individual
residing at 0 Xxxxxxxxx Xxxxxx, Xxxx Xxxxxx, XX 00000, Xxxx Xxxxxx, an
individual residing at 0 Xxxxxxxxx Xxxxxx, Xxxx Xxxxxx, XX 00000, and Xxxxxxx
Xxxx, an individual residing at 00 Xxxxxx Xxxx, Xxxxx Xxxxx, XX 00000,
(collectively, the "Sellers"), and SWK, Inc., a New Jersey corporation, with
offices at 000 Xxxxxxxxxx Xxxxxxx, Xxxxxxxxxx, XX 00000 (the "Company").
WITNESSETH:
WHEREAS, Sellers own, of record and beneficially, 139 shares (the "Company
Shares") of the common stock, no par value $0.01, of the Company, being all of
the issued and outstanding shares of the capital stock of the Company;
WHEREAS, the Company is engaged in the business of reselling software and
providing consulting services (the "Business");
WHEREAS, the parties desire that the Company be merged (the
"Reorganization") with a Delaware corporation and wholly-owned subsidiary of
Buyer ("Subsidiary") in a transaction qualifying as a tax-free merger under
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the
"Code"), on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE REORGANIZATION AND THE PURCHASE
1.1 The Reorganization. Pursuant to the terms and subject to the
conditions set forth herein, the parties agree to effectuate the Reorganization
pursuant to the Plan and Agreement of Merger and Reorganization by and among
Buyer, Subsidiary and the Company, substantially in the form of Exhibit A to
this Agreement (the "Merger Agreement).
1.2 Closing Date. The closing for the consummation of the Reorganization
(the "Closing") will take place at the offices of Xxxxxx Xxxxx Xxxxxxxx &
Xxxxxxx LLP at 9:00 a.m. local time on the date hereof, or at such other date,
time and place as is mutually agreed among the parties (such date and time of
closing being herein called the "Closing Date").
1.3 Consideration.
(a) In connection with the Reorganization and as provided in the Merger
Agreement, Buyer will deliver at Closing 2,750,000 shares (the "Buyer Shares")
of the Class A Common Stock of Buyer, par value $0.00001, (the "Common Stock").
At Closing these shares will be unregistered and subject to Rule 144
requirements. At Closing, certificates registered in Sellers' names shall be
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issued and delivered to the Sellers in accordance with the percentages set forth
in Schedule 1.3(a) hereto.
(b) In addition to the amounts specified in Section 1.3(a), on or
before March 30, 2008, Sellers shall be entitled to receive as additional
consideration for the Reorganization, additional shares of the Common Stock of
Buyer (the "Additional Buyer Shares") if so entitled in accordance with the
formula set forth below, based upon the Consolidated Subsidiary's (as defined
below) earnings before interest, taxes, depreciation and amortization ("EBITDA")
for the calendar year 2007; it being expressly understood that in calculating
EBITDA, Buyer will not allocate to Subsidiary nor shall there by any deduction
from EBITDA for any of the following or similar expenses of Buyer: compensation
of officers and directors of Buyer, Buyer's lease obligations, SEC expenses,
Buyer's investor relations or public relations expenses and/or Buyer's
professional expenses associated with legal or audit fees related to Buyer;
provided, however, that EBITDA shall be reduced by legal expenses incurred by
Consolidated Subsidiary in the ordinary course of the operation of its business.
(i) The Subsidiary together with any other subsidiary or division
of Buyer or Subsidiary included in the profit and loss
statements of the Subsidiary or which the Board of Directors
of Subsidiary shall have determined to be under the
operational control of Subsidiary (the "Consolidated
Subsidiary") shall be valued at five (5) times Ebitda (the
"Enterprise Value") of the Consolidated Subsidiary.
(ii) The Enterprise Value shall be reduced by an amount equal to
any investments or advances made by Buyer to the Consolidated
Subsidiary from and after the Closing Date until December 31,
2007 (other than any investments or advances made pursuant to
Sections 4.12, 4.16, 4.17 or 5.2(i) of this Agreement).
(iii) Those number of shares, if any, equal to, on a dollar basis,
50% of the remainder of (b)(i) minus (b)(ii) shall be issued
to Sellers as Additional Buyer Shares.
For illustration purposes only, assume that earnings before interest, taxes,
depreciation and amortization of the Consolidated Subsidiary for the year ending
December 31, 2007 is $1,000,000. The Enterprise Value of the Consolidated
Subsidiary will thus be $5,000,000. Further assume that the Buyer has issued
stock for acquisitions in the amount of $1,000,000, and has further invested
$1,000,000 cash in the Consolidated Subsidiary in the time between the date of
closing and December 31, 2007. The remainder of $5,000,000 minus $2,000,000 is
$3,000,000. Fifty percent (50%) of the remainder, or $1,500,000, worth of Class
A Common Stock of the Buyer will thus be issued to Sellers as Additional Buyer
Shares.
(iv) The price per share utilized to determine the number of
shares issued shall be equal to the average closing price of
the shares, as quoted on the NASDAQ OTC Bulletin Board, for
the five (5) trading days prior to the receipt of final
financial statements for the calendar year 2007,
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as determined by Trey's auditors, for the Consolidated
Subsidiary. Trey will use its best commercially reasonable
efforts, to have its auditors complete such financial
statements no later than 90 days from December 31, 2007.
(v) The Additional Buyer Shares will be unregistered and subject
to the Rule 144 requirements. Buyer will, however, use its
commercially reasonable best efforts to file a registration
statement with the Securities and Exchange Commission within
thirty (30) days of the date of issuance of the Additional
Buyer Shares and cause such registration statement to be
declared effective as promptly as practicable thereafter.
(vi) Each Seller shall receive one third of the aggregate amount
of Additional Buyer Shares issued pursuant to this Section
1.3.
1.4 Closing Deliveries. At the Closing,
(a) Buyer will deliver to Sellers stock certificates representing the
Buyer Shares registered in the name of Sellers as specified in Section 1.3(b)
and the Merger Agreement and bearing a restrictive legend in form and substance
satisfactory to Buyer;
(b) Sellers will deliver certificate(s) representing the Company Shares
for cancellation as provided in the Merger Agreement;
(c) Sellers will deliver to Buyer the originals or copies of all of the
books, records, ledgers, disks, proprietary information and other data and all
other written or electronic depositories of information of and relating to the
Company; and
(d) Buyer, the Company and the Sellers will execute and deliver the
documents required to be delivered by each of them pursuant to Article V.
1.5 Further Assurances. At or after the Closing, and without further
consideration, Sellers and the Company will execute and deliver to Buyer such
further instruments of conveyance and transfer as Buyer may reasonably request
in order to consummate more effectively the Reorganization and to place Buyer in
operational control of the Company, and for the purpose of aiding, assisting,
collecting and reducing to possession any of the Securities and the assets of
the Company and exercising rights with respect thereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Sellers hereby jointly and severally represent and warrant to Buyer as
follows:
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2.1 Organization.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of New Jersey and has full power to
own its properties and to conduct its business as presently conducted. The
Company is duly authorized, qualified or licensed to do business and is in good
standing in each state or other jurisdiction in which its assets are located or
in which its business or operations as presently conducted make such
qualification necessary, except where the failure to so qualify could not
reasonably be expected to have a material adverse effect upon the Company. The
Company is qualified to do business as a foreign entity in the jurisdictions set
forth on Schedule 2.1 Set forth on Schedule 2.1 is a list of all assumed names
under which the Company operates or has operated in the past 5 years and all
jurisdictions in which any of the assumed names is registered.
2.2 Authority and Capacity. Each of Sellers and the Company has all
requisite power and authority to execute, deliver and perform under this
Agreement, the Merger Agreement and the other agreements, certificates and
instruments to be executed by each of them, as applicable, in connection with or
pursuant to this Agreement (collectively, the "Seller Documents"). Each Seller
has full legal capacity to enter into and carry out his or her obligations under
this Agreement and the other Seller Documents and is not under any prohibition
or restriction, contractual, statutory or otherwise, against doing so. The
Seller Documents have been, duly executed and delivered by Sellers and the
Company, as applicable. Each of the Seller Documents is a legal, valid and
binding agreement of Sellers and the Company, as applicable, enforceable against
each of them, as applicable, in accordance with their respective terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance or similar laws affecting the enforcement of creditors'
rights generally and subject to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).
2.3 Organizational Documents. The Company has delivered to Buyer true,
correct and complete copies of the certificates of incorporation, bylaws, minute
books and equity transfer records of the Company. Such records include minutes
or consents reflecting all actions taken by the board of directors (including
any committees) and stockholders of the Company.
2.4 Capitalization.
(a) The Company Shares constitute all of the issued and outstanding
equity interests of the Company. The Company Shares were duly authorized and
validly issued in compliance with all applicable Laws (as defined in Section
2.16), and are fully paid and nonassessable and free of preemptive rights. None
of the equity interests of the Company are held in treasury or reserved for
issuance.
(b) There are no outstanding options, warrants, convertible or
exchangeable securities or other rights, agreements, arrangements or commitments
obligating any of Sellers or the Company, directly or indirectly, to issue,
sell, purchase, acquire or otherwise transfer or deliver any equity interest in
the Company or, or any agreement, document, instrument or obligation convertible
or exchangeable therefore. Except as set forth on Schedule 2.4(b), there are no
agreements, arrangements or commitments of any character (contingent or
otherwise) pursuant to which any
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Person (as defined in Section 2.15) is or may be entitled to receive any payment
based on the revenues or earnings, or calculated in accordance therewith, of the
Company. There are no voting trusts, proxies or other agreements or
understandings to which Sellers or the Company is a party or by which any of
Sellers or the Company is bound with respect to the voting of any equity
interest of the Company. None of the Company Shares were issued in violation of
the Securities Act of 1933, as amended (the "Act") or applicable securities
laws.
2.5 Title to Securities. Sellers are the record and beneficial owners of
the Securities, free and clear of any obligation, lien, claim, pledge, security
interest, liability, charge or other encumbrance (a "Lien").
2.6 Subsidiaries and Other Interests. The Company has no subsidiaries and
does not own any equity or debt interest or any form of proprietary interest in
any Person, or any obligation, right or option to acquire any such interest.
2.7 Title to Assets.
(a) Set forth in Schedule 2.7 is a complete list (including the street
address, where applicable) of: (i) all real property owned or leased by the
Company or otherwise used in or associated with the Business; (ii) each vehicle
owned or leased by the Company or otherwise used in connection with the
Business; and (iii) each other asset with a value in excess of $1,000 of the
Company used in connection with the Business. No tangible or intangible asset
used in or associated with the Business is owned or leased by any Seller or any
Affiliate (as defined in Section 7.13) of any Seller (other than the Company).
(b) Except as set forth on Schedule 2.7(b), the Company has good and
marketable title to all of the assets it purports to own, and owns all of such
assets free and clear of any Liens, other than statutory Liens securing current
Taxes (as defined in Section 2.14(g)) and other obligations that are not yet due
and payable. Except as set forth in Schedule 2.7(b), the Company holds valid
ownership interest or leasehold interest in or otherwise has a valid and
enforceable right to use, all of the assets used in connection with the Business
that it does not own.
(c) The Company owns no real property and has leased certain real
property as set forth on Schedule 2.7(c) (the "Leased Property").
2.8 Condition and Sufficiency of Assets. The assets of the Company,
including any assets held under leases or licenses, include (i) all assets used
in the Business, and (ii) except for cash and cash equivalents, constitute all
assets used by the Company in the conduct of the Business.
2.9 No Violation. Except as described in Schedule 2.9, neither the
execution or delivery of the Seller Documents nor the consummation of the
transactions contemplated thereby, including, without limitation, the
Reorganization, will conflict with or result in the breach of any term or
provision of, require consent or violate or constitute a default under (or an
event that with notice or the lapse of time or both would constitute a breach or
default), or result in the creation of any Lien on the Company Shares or the
assets of the Company, pursuant to, or relieve any third party of any obligation
to the Company or give any third party the right to terminate or accelerate any
obligation
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under, any charter provision, bylaw, contract, agreement, Permit (as defined in
Section 2.17) or Law to which any Seller or the Company is a party or by which
any asset of the Company or otherwise used in the Business is in any way bound
or obligated.
2.10 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
governmental or quasi-governmental agency, authority, commission, board or other
body (collectively, a "Governmental Body") is required on the part of any of the
Sellers or the Company in connection with the consummation of the
Reorganization, and to the Knowledge of Sellers and the Company of the other
transactions contemplated by this Agreement, except the filing of the Merger
Agreement and related merger documents with the States of New Jersey and
Delaware.
2.11 Financial Statements.
(a) Attached as Schedule 2.11(a) are true and complete copies of the
unaudited balance sheets of the Company as of December 31, 2003 (the "Latest
Company Balance Sheet") and the unaudited balance sheets of the Company as of
December 31, 2002 and December 31, 2001 and the related statements of operations
for the years then ended (collectively, the "Financial Statements"). The
Financial Statements present fairly the financial condition of the Company, at
the dates specified and the results of its operations for the periods specified
and have been prepared in accordance with GAAP. The Financial Statements do not
contain any items of a special or nonrecurring nature, except as expressly
stated therein. The Financial Statements have been prepared from the books and
records of the Company, which accurately and fairly reflect the transactions of,
acquisitions and dispositions of assets by, and incurrence of Liabilities (as
defined in Section 2.10) by the Company. The auditors for the Company are Xxxxx
& Co. Sellers and Company have received assurances from such auditors that
audited balance sheets and related statements of operations will be delivered to
Buyer by no later than 60 days after the Closing Date, except that with respect
to the year ended December 31, 2001, only the balance sheet will be audited.
Neither any Seller nor the Company has any reason to believe that audited
balance sheets as of December 31, 2003, 2002 and 2001 or the related statements
of operations of the Company for the years ended December 31, 2003 and 2002 will
not be delivered to Buyer by no later than 60 days after the Closing Date.
(b) Except as set forth on Schedule 2.11(b), all accounts receivable
reflected in the Latest Company Balance Sheet or included in the assets of the
Company on the Closing Date arose in the ordinary course of business and are
fully collectible in the ordinary course of business, without resort to
litigation, at the face amount thereof and will not be subject to counterclaim,
set-off or other reduction.
2.12 Absence of Undisclosed Liabilities.
(a) The Company has no direct or indirect debts, obligations or
liabilities of any nature, whether absolute, accrued, contingent, liquidated or
otherwise, and whether due or to become due, asserted or unasserted
(collectively, "Liabilities") except for: (i) Liabilities reflected in the
Latest Company Balance Sheet; (ii) current Liabilities incurred in the ordinary
course of business and consistent with past practice after December 31, 2003;
(iii) Liabilities incurred in the ordinary
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course of business and consistent with past practice under the Material
Agreements (as defined in Section 2.19) and under other agreements entered into
by the Company in the ordinary course of business that are not included within
the definition of Material Agreements set forth in Section 2.21, which
Liabilities are not required by GAAP to be reflected in the Latest Company
Balance Sheet and (iv) liabilities which do not exceed $5,000 in the aggregate.
(b) For purposes of this Agreement, "ordinary course" Liabilities
include only liabilities and obligations incurred in the normal course of
business of the Company, consistent with past practices and amounts, and do not
include, without limitation, any Liabilities under any agreement or otherwise
that result from any breach or default (or event that with notice or lapse of
time would constitute a breach or default), tort, infringement or violation of
Law by the Company or Sellers.
2.13 Absence of Certain Changes. Since December 31, 2003, except as set
forth on Schedule 2.13, there has not been: (a) any material adverse change in
the condition (financial or otherwise), results of operations, business, assets
or Liabilities of the Company or with respect to the manner in which the Company
conducts the Business or their operations; (b) any declaration, setting aside or
payment of any dividends or distributions in respect of any equity capital of
the Company or any redemption, purchase or other acquisition by the Company of
its equity interests; (c) any payment or transfer of assets (including, without
limitation, any distribution or any repayment of indebtedness) to or for the
benefit of Sellers or their Affiliates, other than compensation and expense
reimbursements paid in the ordinary course of business, consistent with past
practice; (d) any revaluation by the Company of any of its assets, including the
writing down or writing off of notes or accounts receivable and the writing down
of the value of inventory, other than in the ordinary course of business and
consistent with past practice; (e) any entry by the Company into any commitment
or transaction material to the Company including, without limitation, incurring
or agreeing to incur capital expenditures; (f) any increase in indebtedness for
borrowed money, or any issuance or sale of any debt securities, or any
assumption, guarantee or endorsement of any Liability of any other Person, or
any loan or advance to any other Person other than in the ordinary course of
business consistent with past practices; (g) any breach or default (or event
that with notice or lapse of time would constitute a breach or default),
termination or threatened termination under any agreement binding on the Company
or to which any asset of the Company is subject other than in the ordinary
course of business consistent with past practices which could reasonably be
expected to result in a Liability in excess of $5,000; (h) any change by the
Company in its accounting methods, principles or material practices; (i) any
increase in the benefits under, or the establishment or amendment of, any bonus,
insurance, severance, deferred compensation, pension, retirement, profit sharing
or other employee benefit plan, or any increase in the compensation payable or
to become payable to directors, officers or employees of the Company (other than
as set forth in Schedule 2.13(i)) other than in the ordinary course of business
consistent with past practices; (j) any termination of employment (whether
voluntary or involuntary) of any officer or key employee of the Company or any
termination of employment (whether voluntary or involuntary) of employees of the
Company in excess of historical attrition in personnel; (k) any theft,
condemnation or eminent domain proceeding or any material damage, destruction or
casualty loss affecting any material asset used in the Business, whether or not
covered by insurance; (l) any sale, assignment or transfer of any asset used in
the Business, except sales in the ordinary course of business and consistent
with past practice (m) any waiver by the Company or any Seller of any material
rights related to the Business; (n) any action, other than in the ordinary
course of business
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and consistent with past practice, to pay, discharge, settle or satisfy any
claim or Liability; (o) any settlement or compromise of any pending or
threatened suit, action or claim relevant to the transactions contemplated by
this Agreement or the Reorganization; (p) any issuance, sale or disposition of,
or agreement to issue, sell or dispose of, any equity interest in the Company or
any instrument or other agreement convertible or exchangeable for any equity
interest in the Company; (q) any authorization, recommendation, proposal or
announcement of an intention to adopt a plan of complete or partial liquidation
or dissolution of the Company; (r) any acquisition or investment in the equity
or debt securities of any Person (including in any joint venture or similar
arrangement) by the Company; (s) any other transaction, agreement or commitment
entered into by or affecting the Business or the Company, except in the ordinary
course of business and consistent with past practice; or (t) any agreement to do
or resulting in any of the foregoing.
2.14 Taxes.
(a) The Company has filed or caused to be filed on a timely basis all
Tax returns that are or were required to be filed by them, as applicable. The
Company has timely paid all Taxes that have become due and payable as Taxes
imposed on it, pursuant to such Tax returns or otherwise, or pursuant to any
assessment received by it, except such Taxes, if any, as are being contested in
good faith and as to which adequate reserves have been provided in the Latest
Company Balance Sheet.
(b) Except as set forth on Schedule 2.14(b), the Company has not
requested or been granted an extension of time for filing any Tax return that
has not yet been filed.
(c) The charges, accruals, and reserves with respect to Taxes on the
books of the Company are accurate. To the Knowledge of Sellers and the Company,
there exists no proposed tax assessment against the Company, except as disclosed
in the Latest Company Balance Sheet. All Taxes that the Company is or was
required to withhold or collect have been duly withheld or collected and, to the
extent required, have been paid to the proper Governmental Body or provision for
such payment has been made or will be paid in the ordinary course of business.
(d) All Tax returns filed by the Company are true, correct and complete
in all material respects.
(e) There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any claim for, or the period for
the collection or assessment of, Taxes due from or with respect to the Company
for any taxable period.
(f) Except as set forth on Schedule 2.12, there is no audit,
examination or similar proceeding is pending or, to the Knowledge of Sellers or
the Company, threatened in regard to any Taxes due from or with respect to the
Company or any Tax return filed by or with respect to the Company.
(g) "Tax" or "Taxes" means any and all taxes, charges, fees, levies,
assessments, duties or other amounts payable to any federal, state, local or
foreign taxing authority or agency, including, without limitation: (i) income,
franchise, profits, gross receipts, minimum, alternative minimum, estimated, ad
valorem, value added, sales, use, service, real or personal property, capital
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stock, license, payroll, withholding, disability, employment, social security,
workers compensation, unemployment compensation, utility, severance, excise,
stamp, windfall profits, transfer and gains taxes, (ii) customs, duties,
imposts, charges, levies or other similar assessments of any kind, and (iii)
interest, penalties and additions to tax imposed with respect thereto.
2.15 Litigation. Except as described in Schedule 2.15, there are currently
no pending or, to the Knowledge of Sellers or the Company, threatened lawsuits,
administrative proceedings, arbitrations, reviews or formal complaints or
investigations ("Litigation") by any individual, corporation, partnership,
Governmental Body or other entity (each, a "Person") against the Company or any
stockholder, director, officer, employee or agent (in their capacities as such)
of the Company or to which any assets of the Company are subject, or to which
any of the Company Shares are subject or relating to the transactions
contemplated by this Agreement, the Merger Agreement or the consummation
thereof. The Company is not subject to or bound by any currently existing
judgment, order, writ, injunction or decree.
2.16 Compliance with Laws. The Company is currently complying with and
during applicable statutory periods has complied with each applicable statute,
law, ordinance, decree, order, rule or regulation of any Governmental Body,
including, without limitation, all federal, state and local laws relating to
zoning and land use, occupational health and safety, product quality, and safety
and employment and labor matters ("Laws"), in all material respects.
2.17 Permits. The Company possesses from each appropriate Governmental
Body all permits, licenses, authorizations, approvals, quality certifications,
franchises or rights (collectively, "Permits") issued by any Governmental Body
necessary to conduct the Business. Each of such Permits is described in Schedule
2.17. No loss of any such Permit is pending or, to the Knowledge of Sellers or
the Company, threatened or reasonably foreseeable, other than expiration in
accordance with the terms thereof of Permits that may be renewed in the ordinary
course of business without lapse.
2.18 Environmental Matters. To the Knowledge of Sellers and the Company,
the Leased Property is in compliance with all applicable federal, state and
local laws, regulations, orders and ordinances and any other requirement of any
governmental, regulatory or administrative agency or authority or court or other
tribunal, relating to environmental protection (including Hazardous Materials,
as hereinafter defined). To the best Knowledge of Sellers and the Company, there
exists no event, occurrence, condition or act, which, with the giving of notice,
the lapse of time, or both may give rise to any violation of any such law, rule,
regulation, order, ordinance or requirement. Sellers and the Company have not
received any written notices, demand letters or requests for information from
any Governmental Body or other Person indicating that the Company or any Leased
Property is in violation of, or liable under, any laws, codes or regulations
relating to environmental protection (including Hazardous Materials). The term
"Hazardous Materials" shall mean and refer to the following: petroleum products
and fractions thereof, asbestos, asbestos containing materials, urea
formaldehyde, polychlorinated biphenyls, radioactive materials and all other
dangerous, toxic or hazardous pollutants, contaminants, chemicals, materials,
substances and wastes listed or identified in, or regulated by, any
environmental protection, health or safety law, rule, regulation, order or
ordinance. The Sellers make no representation or warranty as to whether the
Leased Property contains any asbestos or asbestos containing materials.
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2.19 Employee Matters. Set forth on Schedule 2.19 is a complete list of
all current employees, independent contractors and consultants of the Company.
Except as set forth on Schedule 2.19, the Company has no collective bargaining,
union or labor agreements, contracts or other arrangements with any group of
employees, labor union or employee representative and, to the Knowledge of
Sellers or the Company, there is no organization effort currently being made or
threatened by or on behalf of any labor union with respect to employees of the
Company. The Company is in compliance with all provisions of each applicable
collective bargaining agreement, and no complaint alleging any violation of such
provisions has been filed or, to the Knowledge of Sellers or the Company, is
threatened to be filed with or by any Governmental Body.
2.20 Employee Benefit Plans.
(a) Set forth in Schedule 2.20 is a complete and correct list of all
"Employee Benefit Plans" of the Company. The term "Employee Benefit Plans" means
(i) any "employee benefit plan" or "plan" within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
(ii) all plans or policies providing for "fringe benefits" (including but not
limited to vacation, paid holidays, personal leave, employee discounts,
educational benefits or similar programs), and each other bonus, incentive
compensation, deferred compensation, profit sharing, stock, severance,
retirement, health, life, disability, group insurance, employment, stock option,
stock purchase, stock appreciation right, performance share, supplemental
unemployment, layoff, consulting, or any other similar plan, agreement, policy
or understanding (whether written or oral, qualified or nonqualified, currently
effective or terminated), and any trust, escrow or other agreement related
thereto, which (x) is or has been established, maintained or contributed to by
the Company or any other corporation or trade or business under common control
with the Company (an "ERISA Affiliate") as determined under Section 414(b), (c),
(m) or (o) of the Code, or with respect to which the Company has or may have any
Liability, or (y) provides benefits, or describes policies or procedures
applicable, to any director, officer, employee, former director, officer,
employee or dependent thereof of the Company, regardless of whether funded.
Employee Benefit Plan also includes any written or oral representations made to
any director, officer, employee or former director, officer or employee of the
Company promising or guaranteeing any employer payment or funding for the
continuation of medical, dental, life or disability coverage for any period of
time beyond the end of the current plan year (except to the extent of coverage
required under Code Section 4980B).
(b) Sellers and the Company have provided Buyer a true and complete
copy of each Employee Benefit Plan that is not a multiemployer plan as described
in ERISA ("Multiemployer Plan") that covers any director, officer or employee,
or former director, officer or employee or dependent of any director, officer or
employee, or former director, officer or employee of the Company (and, if
applicable, related trust agreements) and all amendments thereto and written
interpretations thereof, together with (i) the most recent favorable
determination letter, if any, with respect to each Employee Benefit Plan, (ii)
the two most recent annual reports prepared in connection with any such Employee
Benefit Plan (Form 5500, including all applicable schedules), (iii) the most
recent actuarial valuation report prepared in connection with any such Employee
Benefit Plan and (iv) the most recently disseminated summary plan description
and an explanation of any material plan modifications made after the date
thereof. With respect to any Employee Benefit Plan that is a Multiemployer Plan,
the Company and Sellers have provided to Buyer the
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most recently disseminated summary plan description and an explanation of any
material plan modifications made after the date thereof.
(c) None of the Company, Sellers nor any ERISA Affiliate has any formal
plan or commitment, whether legally binding or not, to create any additional
Employee Benefit Plan or modify or change any existing Employee Benefit Plan
that would affect any present or former director, officer or employee of the
Company or such present or former director's, officer's or employee's dependents
or beneficiaries.
(d) There is no Employee Benefit Plan that is maintained or contributed
to by the Company, Sellers or any ERISA Affiliate with respect to which the
Company has or may have any Liability that is or was subject to Part 3 of Title
I of ERISA or Title IV of ERISA and none of the Employee Benefit Plans is or was
a "multiple employer plan" or a "multi-employer plan" (as described or defined
in ERISA or the Code).
(e) Each agreement, contract or other commitment, obligation or
arrangement relating to an Employee Benefit Plan or the assets of an Employee
Benefit Plan (or its related trust) including, but not limited to, each
administrative services agreement, insurance policy or annuity contract, may be
amended or terminated at any time without any Liability to the Employee Benefit
Plan, the Company or Buyer.
(f) Each Employee Benefit Plan has been operated in compliance with
ERISA, applicable tax qualification requirements and all other applicable Laws
in all material respects.
(g) Except as disclosed on Schedule 2.20, the Company does not provide,
nor is it obligated to provide, benefits, including without limitation death,
health, medical, or hospitalization benefits (whether or not insured), with
respect to current or former directors, officers or employees of the Company,
their dependents or beneficiaries beyond their retirement or other termination
of employment other than (i) coverage mandated by applicable Law, (ii) death
benefits or retirement benefits under any "employee pension benefit plan," as
that term is defined in Section 3(2) of ERISA, or (iii) deferred compensation
benefits accrued as liabilities on the books of the Company.
(h) Except as disclosed on Schedule 2.20, each Employee Benefit Plan
could be terminated as of the date of the Closing with no Liability to the
Company or the Buyer.
(i) No Liability under Title IV of ERISA or Section 412 of the Code has
been incurred (directly or indirectly) by the Company or an ERISA Affiliate that
has not been satisfied in full.
(j) Neither the Company nor any ERISA Affiliate maintains or has ever
participated in a multiple employer welfare arrangement as described in Section
3(40)(A) of ERISA.
(k) No Lien has been filed by any Person and no Lien exists by
operation of Law or otherwise on the assets of the Company relating to, or as a
result of, the operation or maintenance of any Employee Benefit Plan, and
Sellers and the Company have no Knowledge of the existence of facts or
circumstances that would result in the imposition of such a Lien.
11
(l) Neither the execution and delivery of this Agreement or the Merger
Agreement nor the consummation of the transactions contemplated hereby or
thereby will (i) result in any payment becoming due to any director or any
employee of the Company; (ii) increase any benefits otherwise payable under any
Employee Benefit Plan; (iii) result in any acceleration of the time of payment
or vesting of any benefits under any Employee Benefit Plan; or (iv) result,
separately or in the aggregate, in an "excess parachute payment" within the
meaning of Section 280G of the Code.
(m) No amounts payable under any Employee Benefit Plan or other
agreement or arrangement will fail to be deductible for United States federal
income Tax purposes by virtue of Section 162(m) of the Code.
(n) The Company and each ERISA Affiliate have or will have, as of
Closing, made all contributions to each Multiemployer Plan required by the terms
of such Multiemployer Plan or any collective bargaining agreement, and except as
set forth on Schedule 2.20, neither the Company nor any ERISA Affiliate would be
subject to any withdrawal Liability under Part 1 of Subtitle E of Title IV of
ERISA if, as of the Closing Date, the Company or any ERISA Affiliate were to
engage in a complete withdrawal (as defined in ERISA Section 4203) or a partial
withdrawal (as defined in ERISA Section 4205) from any Multiemployer Plan which
withdrawal liability is likely to be incurred in connection with this Agreement
and the other transactions contemplated hereby.
2.21 Material Agreements.
(a) The Company is not party to any oral agreement, and Schedule
2.21(a) lists each written agreement (and all amendments thereto) relating to
the Business or to which the Company is a party or a beneficiary or by which the
Company or any of its material assets is bound that involves the payment or
receipt of goods or services in an amount in excess of $5,000, or that is not
terminable upon notice of 30 calendar days or less without incurring any penalty
or other Liability other than payment for goods delivered or services rendered
prior to termination (collectively, the "Material Agreements"), including,
without limitation, the following: (i) agreements pursuant to which the Company
sells or distributes any products or services; (ii) real estate leases; (iii)
agreements evidencing, securing or otherwise relating to any indebtedness for
borrowed money for which the Company is liable; (iv) capital or operating leases
or conditional sales agreements relating to vehicles, equipment or other assets
of the Company; (v) agreements pursuant to which the Company is entitled or
obligated to acquire any assets from a third party; (vi) insurance policies;
(vii) employment, consulting, noncompetition, separation, collective bargaining,
union or labor agreements or arrangements; and (viii) agreements with or for the
benefit of any stockholder, director, officer or employee of the Company or any
Affiliate or immediate family member thereof.
(b) Sellers and the Company have delivered to Buyer a copy of each
written Material Agreement. Each Material Agreement is valid, binding and in
full force and effect and enforceable in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance or similar laws affecting the enforcement of creditors'
rights generally and subject to general principles of equity (regardless of
whether enforcement is sought in a proceeding of law or in equity); (ii) the
Company has performed all of its obligations under every Material Agreement to
which it is a party in all material respects, and there exists no breach or
default (or event that with notice or lapse of time would constitute a
12
breach or default) on the part of the Company or, to the Knowledge of Sellers or
the Company, on the part of any other Person under any Material Agreement; (iii)
there has been no termination or notice of default or, to the Knowledge of
Sellers or the Company, any threatened termination or notice of default under
any Material Agreement; and (iv) to the Knowledge of Seller or the Company, no
party to a Material Agreement intends to alter its relationship with the Company
as a result of or in connection with the acquisition contemplated by this
Agreement.
2.22 Customers. Set forth in Schedule 2.22 is a complete list of each
customer of the Company that accounted for more than $25,000 of revenues for the
year ended December 31, 2003 (the "Material Customers") indicating the amount of
revenues attributable to each Material Customer during the year ended December
31, 2003. Except as set forth in Schedule 2.22, none of the Material Customers
has notified the Company or Sellers in writing of any intention to, terminate
its relationship with the Company. There has been no material change in pricing
or pricing structure with any Material Customer and there has been no material
dispute with a Material Customer, in each case since December 31, 2003.
2.23 Intellectual Property Rights. Set forth in Schedule 2.23 is a
complete list of all registered and unregistered patents, trademarks, service
marks and trade names, and registered copyrights, and applications for and
licenses (from the Company) with respect to any of the foregoing, and all
computer software and software licenses (other than commercial "shrink-wrap"
software and software licenses), proprietary information, owned by the Company
or with respect to which the Company has any license or use rights
(collectively, "Intellectual Property"). Schedule 2.23 identifies all
Intellectual Property that is owned by the Company. The Company has the right to
use all Intellectual Property utilized by it in connection with the operation of
the Business without infringing on the claimed rights of any Person, and the
Company is not obligated to pay any royalty or other consideration to any Person
in connection with the use of any such Intellectual Property. To the Knowledge
of Sellers or the Company, no Person is infringing the rights of the Company in
any of its Intellectual Property.
2.24 Illegal Payments. None of Sellers, the Company, any stockholder,
director, officer, employee or agent of the Company, or any Affiliate or
immediate family member of any of the foregoing has: (a) used any Company funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity; (b) made any payment in violation of applicable
Law to any foreign or domestic government official or employee or to any foreign
or domestic political party or campaign or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (c) made any other payment in
violation of applicable Law.
2.25 Insurance. Set forth in Schedule 2.25 is a complete and accurate list
of all primary, excess and umbrella policies, bonds and other forms of insurance
currently owned or held by or on behalf of or providing insurance coverage to
the Company, the Business or the assets of the Company, or the directors,
officers, employees or agents of the Company. All such policies are in full
force and effect. The Company has not received any notice of default or written
notice of any pending or threatened termination or cancellation, coverage
limitation or reduction, or material premium increase with respect to any such
policy. Schedule 2.25 also sets forth a complete and accurate summary of all of
the self-insurance coverage provided by or for the benefit of the
13
Company. No letters of credit have been posted and no cash has been restricted
to support any reserves for insurance.
2.26 Officers, Directors and Shareholders. Set forth in Schedule 2.26 is a
complete and accurate list of all of the officers, directors, and shareholders
(indicating the numbers of shares owned) of the Company.
2.27 Foreign Persons. Neither any Seller nor the Company is a "foreign
person" as that term is defined in Section 1445 of the Code and applicable
regulations.
2.28 Intentionally Omitted.
2.29 Investment Representation:
(a) Xxxxxxx Xxxx is an "accredited investor" as such term is defined in
Rule 501(a) promulgated under the Securities Act of 1933 (the "Securities Act")
(an "Accredited Investor");
(b) Each Seller has such knowledge, skill and experience in financial,
investment and business matters to be capable of evaluating the merits and risks
of an investment in the Common Stock, to make an informed decision relating
thereto and to protect its own interests in connection with the transactions
contemplated hereby;
(c) Each Seller will acquire the Common Stock, for its own account, for
investment purposes only and not with an intent or view towards the further sale
or distribution thereof within the meaning of the Securities Act in any
transaction that would violate the registration requirements of the securities
laws of the United States or of any other jurisdiction;
(d) Each Seller is aware that the Common Stock has not been registered
under the Securities Act, and that the Common Stock is deemed to be "restricted
securities" as defined in Rule 144(a)(3) promulgated under the Securities Act
and may not be transferred, sold, assigned, hypothecated or otherwise disposed
of unless such transaction is the subject of a registration statement filed with
and declared effective by the SEC or unless an exemption from the registration
requirements under the Securities Act is available. Each Seller hereby
represents and warrants and hereby agrees that all offers and sales of the
Common Stock or any portion thereof or interest thereon shall be made only
pursuant to such registration or to an exemption from registration;
(e) Each Seller understands that the Common Stock is being offered
pursuant to this Agreement in reliance on exemptions from the registration
requirements of the Securities Act and state securities laws, and that Buyer is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Sellers set forth herein
in order to determine the applicability of such exemptions;
(f) In evaluating its investment, each Seller has consulted its own
investment, legal and tax advisors;
14
(g) The certificate(s) representing the Common Stock shall bear a
legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, NOR ANY STATE SECURITIES LAWS AND MAY
NOT BE SOLD, TRANSFERRED OR HYPOTHECATED OR OFFERED FOR SALE, TRANSFER OR
HYPOTHECATION UNLESS A REGISTRATION STATEMENT UNDER THAT ACT AND OTHER
APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES IS THEN IN EFFECT OR
SUCH REGISTRATION IS NOT REQUIRED.
(h) Each Seller has read a copy of Buyer's Annual Report on Form 10-K
for the fiscal year ended December 31, 2003, as filed with the SEC and Buyer's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2004;
(i) Each Seller acknowledges that, in making the decision to acquire
the Common Stock, it has relied upon its independent investigation and has been
given access and the opportunity to examine contracts and documents relating to
Buyer and such securities and an opportunity to ask questions of, and to receive
answers from, Buyer concerning Buyer and the terms and conditions of such
securities. Each Seller and its advisors have been furnished with access to all
publicly available materials relating to the business, finances and operation of
Buyer which have been requested. Each Seller and its advisors have received
answers to all such inquiries. Except as set forth in this Agreement and, Buyer
has made no representation or warranty to such Seller on which such Seller has
relied to enter into this Agreement and to consummate the transaction
contemplated hereby; and
(j) Each Seller understands that no United States federal or state
agency has passed on or made or will pass on or make any recommendation or
endorsement of the Common Stock Shares or any finding or determination
concerning the fairness or advisability of an investment in such securities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
3.1 Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of Delaware. Set forth on Schedule 3.1 is a
list of all assumed names under with the Company operates and all jurisdictions
in which any of the assumed names is registered. Subsidiary is a Delaware
corporation, duly organized, validly existing an in good standing under the laws
of Delaware.
3.2 Organizational Documents. Buyer has delivered to Sellers true, correct
and complete copies of the certificates of incorporation and bylaws of Buyer.
15
3.3 Authority. Each of Buyer and Subsidiary has all requisite power and
authority to execute, deliver and perform under this Agreement, the Merger
Agreement and the other agreements, certificates and instruments to be executed
by Buyer or Subsidiary in connection with or pursuant to this Agreement
(collectively, the "Buyer Documents"). The execution, delivery and performance
by Buyer and Subsidiary as applicable of each Buyer Document has been duly
authorized by all necessary action on the part of Buyer and Subsidiary as
applicable. The Buyer Documents have been, duly executed and delivered by Buyer
and Subsidiary, as applicable. Each of the Buyer Documents is, a legal, valid
and binding agreement of Buyer and Subsidiary, as applicable, enforceable
against them in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting the enforcement of creditors' rights
generally and subject to general principles of equity (regardless of whether
enforcement is sought in a proceeding of law or in equity).
3.4 No Violation. The execution, delivery and performance of the Buyer
Documents by Buyer and Subsidiary, as applicable, will not conflict with or
result in the breach of any term or provision of, or violate or constitute a
default under, any charter provision or bylaw or under any material agreement,
order or Law to which Buyer or Subsidiary is a party or by which Buyer or
Subsidiary is in any way bound or obligated.
3.5 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
Governmental Body is required on the part of Buyer or Subsidiary in connection
with the transactions contemplated by this Agreement except the filing of the
Merger Agreement and related merger documents with the States of New Jersey and
Delaware.
3.6 Capitalization. As of the date hereof, Buyer has authorized capital
stock consisting of 10,000,000,000 shares of Class A Common Stock, $0.00001 par
value, of which 7,283,379 shares (including the Buyer Shares) are issued and
outstanding, 50,000,000 shares of Class B Common Stock, $0.00001 par value, of
which no shares are issued and outstanding, 20,0000,000 shares of Class C Common
Stock, of which no shares are issued and outstanding, and 1,000,000 shares of
Preferred Stock, $1.00 par value, of which no shares are issued and outstanding.
All of the issued and outstanding shares of capital stock have been duly
authorized, validly issued and are fully paid and non-assessable.
3.7 Reports. Since December 31, 2003, the Buyer has filed, all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that were and are required with the SEC including, but not
limited to, Form 10-K, Forms 10-Q, Forms 8-K and Proxy Statements (and all such
reports, registrations and statements have been made available by the Buyer to
the Sellers) and any applicable state securities authorities (all such reports
and statements are collectively referred to as the "Buyer Reports"). As of their
respective dates, the Buyer Reports complied with, at the date of filing, in all
material respects, all the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed. As of their
respective dates, the Buyer Reports do not contain any untrue statement of a
material fact or
16
omit to state a material fact required to be stated therein in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.8 Status of Buyer Shares. The Buyer Shares and the Additional Buyer
Shares will be, upon issuance, duly authorized, validly issued, fully paid and
nonassessable.
3.9 Tax Treatment. Buyer shall use its reasonable best efforts to cause
the Reorganization to qualify as a reorganization under the provisions of
Section 368(a)(1)(A) of the Code and represents that it does not presently
intend to take, and has not taken, any action before or after the Reorganization
is effected to cause the Reorganization to lose its tax-free status.
3.10 Subsidiary. (a) Since the date of its incorporation, Subsidiary has
not carried on any business or conducted any operations, other than the
execution of the Buyer Documents to which it is a party, the performance of its
obligations hereunder and thereunder and matters ancillary thereto. (b) The
authorized capital stock of Subsidiary consists of 1,000 shares of common stock,
par value $.01 per share of which 10 shares are issued and outstanding and have
been validly issued, are fully paid and non assessable.
ARTICLE IV
COVENANTS AND AGREEMENTS
4.1 Access and Information. Sellers and the Company will permit Buyer and
its representatives to have reasonable access to the Company's directors,
officers, employees, agents, assets and properties and all relevant books,
records and documents of or relating to the Business and assets of the Company
during normal business hours and will furnish to Buyer such information,
financial records and other documents relating to the Company the Business and
the assets of the Company as Buyer may reasonably request. Sellers and the
Company will permit Buyer and its representatives reasonable access to the
Company's respective accountants, auditors, customers and suppliers for
consultation or verification of any information obtained by Buyer and will use,
and use their best efforts to cause such Persons to cooperate with Buyer and its
representatives in such consultations and in verifying such information. Sellers
and the Company will have the right to participate in any contact with such
Persons.
4.2 Assistance with Permits and Filings. Sellers and the Company will
furnish Buyer with all information concerning Sellers or the Company that is
required for inclusion in any application or filing made by Buyer to any
Governmental Body in connection with the transactions contemplated by this
Agreement. Sellers and the Company will use commercially reasonable efforts to
assist Buyer in obtaining any Permits, or any consents to assignment related
thereto, that Buyer will require in connection with the continued operation of
the Company after the Closing.
4.3 Publicity. The parties hereto will cooperate with each other in the
development and distribution of any news releases and other public disclosures
relating to the transactions contemplated by this Agreement. Buyer may make any
news releases or other public disclosure
17
relating to this Agreement and the Merger Agreement if required to do so under
any Law or stock market regulations. Any release or announcement will be
consistent with applicable Law and stock market requirements.
4.4 Transaction Costs. Buyer will pay all transaction costs and expenses
(including legal, accounting and other professional fees) that it incurs or that
are incurred by Subsidiary in connection with the negotiation, execution and
performance of this Agreement and the transactions contemplated hereby. Sellers
or the Company will pay $20,000 of the legal and accounting fees that they incur
or that are incurred by the Company in connection with the negotiation,
execution and performance of this Agreement and the transactions contemplated
hereby. The Subsidiary will pay all other transaction costs incurred by the
Company or Sellers in connection with the negotiation, execution and performance
of this Agreement and the transactions contemplated hereby, including stub
period financial statements, post closing stub period tax returns and, subject
to Section 4.18(b) hereof, costs, and expenses associated with the transfer of
the Company's 401(k) Plan.
4.5 Nondisclosure. Each of the Sellers and the Company acknowledges and
agrees that all customer, prospect and marketing lists, sales data, Intellectual
Property and other confidential information of the Company (collectively,
"Confidential Information") are valuable assets constituting part of the assets
of the Company and, following the Closing, will be owned exclusively by
Subsidiary. Each Seller and the Company agrees to, and agrees to use reasonable
efforts to cause their representatives to, treat the Confidential Information,
together with any other confidential information furnished to it by Buyer, as
confidential and not to make use of such information for its own purposes or for
the benefit of any other Person (other than for the benefit of the Company prior
to the Closing or for the benefit of Buyer and Subsidiary (as defined in the
Merger Agreement) after the Closing).
4.6 Intentionally Omitted.
4.7 Employees and Employee Benefits. Notwithstanding anything in this
Agreement to the contrary, from and after the Closing Date, Subsidiary will have
sole discretion over the hiring, promotion, retention, termination and other
terms and conditions of the employment of the employees of the Company and
Subsidiary, as applicable. As of the Closing Date, the Company shall terminate
all its Employee Benefit Plans in accordance with their respective terms to the
extent such Employee Benefit Plans are not transferable or assignable to the
Subsidiary, and Buyer and Subsidiary shall not assume any liabilities in respect
of any Employee Benefit Plan that is not so transferable or assignable except as
disclosed in the Financial Statements or the Disclosure Schedule.
4.8 Additional Issuance of Buyer's Stock. Sellers acknowledge and agree
that Buyer, and Subsidiary shall have the right, from time to time, to issue
additional shares of their capital stock, to such parties and on such terms as
may be determined by Buyer or Subsidiary prior to or from and after the Closing
Date. Each Seller further acknowledges that his or her equity interest in Buyer
may be subject to dilution from and after the Closing Date.
18
4.9 Tax Filing. Each party hereto agrees to file the Merger Agreement with
its respective federal income tax returns for the year in which the
Reorganization is effective and to comply with the reporting requirements of
Treasury Regulation 1.368-3.
4.10 Election of Xxxxxxx Xxxx as Director of Subsidiary. Effective the
Closing Date, Buyer shall cause Xxxxxxx Xxxx to be named to the Board of
Directors of Subsidiary. In addition, after the Closing Date Xxxx Xxxxxx will be
allowed to attend each meeting of the Board of Directors of the Subsidiary as an
observer.
4.11 Covenant Not To Compete. For a period of four (4) years following the
Closing Date, Sellers will not do any of the following, either directly or
indirectly, anywhere in the United States. In the event that Sellers improperly
compete with Buyer in violation of this Section, the period during which they
engage in such competition shall not be counted in determining the duration of
the four (4) year non-compete restriction:
(a) For purposes of this Section 4.11, "Competitive Activity" shall
mean any activity relating to, in respect of or in connection with, directly or
indirectly, the information technology consulting business and the business of
reselling business software;
(b) No Seller shall solicit or perform services in connection with any
Competitive Activity for any current customers of Buyer or any customer during
the past two (2) years except as otherwise permitted under the Employment
Agreement; or
(c) No Seller shall solicit for employment or employ any then current
employees employed by Buyer during the past (2) years without Buyer's consent.
(d) For a period of four (4) years following the Closing Date, Xxxxxxx
Xxxx shall not compete with the Company in any fashion work for, advise, be a
consultant to or an officer, director, agent or employee of or otherwise
associate with any person, firm, corporation or other entity which is engaged in
or plans to engage in a Competitive Activity.
4.12 Intentionally Omitted.
4.13 Stock Incentive Plan. Within 5 months following the Closing Date,
Buyer will use its best commercially reasonable efforts to establish an
Incentive Stock Option Plan ("ISO") for the benefit of the employees of the
Subsidiary.
4.14 Revolving Credit Facility. As promptly as practicable after the
Closing Date, Buyer shall set aside the sum of $50,000 which shall be made
available to the Subsidiary as a revolving credit facility to provide for the
working capital needs of the Subsidiary. Such facility shall be available to the
Subsidiary, at an interest rate per annum equal to the prime rate from time to
time announced by Citibank, N.A. Beginning in calendar year 2005, on at least
one day of each year, the Subsidiary shall pay all sums due and owing under such
facility (including principal and interest) in full. All interest that accrues
under the facility shall be a charge to the Subsidiary's profit and loss
statement for the purpose of computing the Subsidiary's operating income.
19
4.15 New Initiatives. In addition to the funding described in Section
4.16, in the event that management of the Subsidiary from time to time presents
new initiatives and expansion and acquisition opportunities ("Opportunities") to
the Board of Directors of the Subsidiary, the Board of Directors will review
such Opportunities. In the event that the Board of Directors approves any such
Opportunities, Buyer will endeavor, through the use of its equity line of credit
or other existing financing vehicles, to fund such Opportunities as promptly as
practicable.
4.16 Additional Funding By Buyer. Subject the approval of the Board of
Directors of the Subsidiary, at such times prior to June 1, 2005 as may be
agreed by Buyer and the Subsidiary, Buyer shall make available to the Subsidiary
an additional $500,000 for the purpose of research and development,
acquisitions, or such other general purposes as the Board of Directors of the
Subsidiary may determine, it being the intention of the parties that Buyer make
available to Subsidiary not less than $500,000 for growth and acquisition
initiatives and opportunities during the 12 months following the Closing Date.
4.17 Xxxxxxx Settlement. By no later than seven (7) days following the
Closing Date Subsidiary shall pay $80,000 of the amount received by it pursuant
to Sections 5.1(n) to Xxxxxxx, Buyer shall pay $32,500 to Xxxxxxx and Sellers
shall use commercially reasonable efforts to obtain from Xxxxxxx an executed
acknowledgement of full payment and release.
4.18 Liquidity Obligation. In consideration of the Sellers' obligation to
pay or otherwise cause to be removed from the balance sheet of the Company and
Subsidiary $60,000 of credit card indebtedness of the Company, Buyer agrees that
it will at its option (a) file a registration statement with the Securities and
Exchange Commission and cause such registration statement to become effective by
no later than October 1, 2004 with respect to an aggregate of the number of
shares equal to $75,000 of the Common Stock delivered at the Closing to Sellers
in accordance with the percentages set forth in Schedule 1.3 (a), (b) by no
later than October 1, 2004 exchange an aggregate of the number of shares of
Common Stock delivered to the Sellers in accordance with the percentages set
forth in Schedule 1.3 (a) at the Closing that may be otherwise be publicly
traded by Sellers and that, if sold, on the business day prior to the date of
such exchange would yield $75,000 in cash to Sellers or, (c) if Buyer determines
in its sole discretion that such registration or exchange is unduly burdensome
to Buyer, call for redemption and by no later than October 1, 2004 redeem an
aggregate of the number of shares equal to $75,000 of the Common Stock delivered
to Sellers in accordance with the percentages set forth in Schedule 1.3 (a) at
the Closing for $75,000 in cash. It is expressly understood that Buyer's
obligation to implement the registration or redemption or make the payment
referred to herein is contingent and conditioned upon (a) Sellers having paid or
otherwise caused to be removed from the balance sheet of the Company or
Subsidiary $60,000 of credit card indebtedness included on the balance sheets of
the Company prior to the Closing and (b) there being no material default by any
Seller of its obligations pursuant to Sections 4.5, 4.11, 4.12, 4.17 or 4.19 of
this Agreement.
4.19 Audit. By no later than July 30, 2004, Sellers and Subsidiary shall
deliver the audited financial statements referred to in Section 2.11 of this
Agreement.
4.20 Buyers agree that, if at any time until the Buyer Shares or
Additional Buyer Shares are no longer restricted securities (as defined in Rule
144 of the Securities Act). Buyer is not
20
subject to the reporting requirements of the Exchange Act, it will cooperate
with any Seller and use reasonable efforts to take such further reasonable
action as any Seller may reasonably request in writing to enable such Holder to
sell the Buyer Shares or Additional Buyer Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144, if
available, under the Securities Act (or any similar rule or regulation hereafter
adopted by the SEC) and customarily taken in connection with sales pursuant to
such exemptions, including, without limitation, making available adequate
current public information within the meaning of paragraph (c)(2) of Rule 144
and delivering such information, upon request. Notwithstanding the foregoing,
except as otherwise expressly provided in this Agreement, nothing in this
Section 4.20 shall be deemed to require Buyer to register any of the Buyer
Shares or Additional Buyer Shares under any section of the Exchange Act.
ARTICLE V
CLOSING CONDITIONS
5.1 Conditions to Obligations of Buyer. The obligations of Buyer under
this Agreement are subject to the satisfaction at or prior to the Closing of the
following conditions, but compliance with any of such conditions may be waived
by Buyer in writing:
(a) All representations and warranties of Sellers contained in this
Agreement are true and correct in all material respects (if not qualified by
materiality) or in all respects (if qualified by materiality) at and as of the
Closing with the same effect as though such representations and warranties were
made at and as of the Closing.
(b) Sellers and the Company have performed and complied with all the
covenants and agreements required by this Agreement to be performed or complied
with by them at or prior to the Closing, including without limitation the
delivery of all items required to be delivered by them pursuant to Section 1.4.
(c) Buyer has completed its due diligence investigation of the Company,
and the Business and operations of the Company, including legal, accounting,
environmental and engineering matters, and the results of such investigation are
satisfactory to Buyer in its sole discretion.
(d) All necessary governmental and other third party consents,
approvals, orders or authorizations set forth on Schedule 5.1(d) have been
obtained, and all necessary governmental notices set forth on Schedule 5.1(d)
have been given.
(e) Each Seller shall have entered into an Employment Agreement with
Subsidiary, substantially in the form of Exhibit C to this Agreement (the
"Employment Agreement").
(f) As of the Closing Date, there is no pending or threatened
litigation by any Person seeking to enjoin any aspect of the operation of the
Business or the consummation of the transactions contemplated by this Agreement,
the Reorganization or otherwise affecting the Company or the Securities.
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(g) As of the Closing Date, there is not any material adverse change in
the business, operations, financial condition, assets or Liabilities (contingent
or otherwise) of the Company since December 31, 2003.
(h) Sellers and the Company have obtained and provided evidence
satisfactory to Buyer that all Liens on the Company Shares or any assets of the
Company other than Liens that are acceptable to Buyer, have been released.
(i) Each Seller and Company has delivered to Buyer the Merger Agreement
and other requisite documents relating thereto.
(j) The Reorganization shall have been declared effective by the States
of New Jersey and Delaware.
(k) Sellers shall have furnished evidence satisfactory to Buyer that
Xxxxxxx Xxxx is a shareholder of Company.
(l) Sellers shall have delivered evidence (in the form of a pay-off
letter) satisfactory to Buyer that the Chase Small Business Financial Services
Revolving Credit Line has been terminated and discharged and that all Liens of
the lender thereunder have been released.
(m) An amount equal to $60,000 of the Company's credit card obligations
reflected on the Company's accounts payable ledger shall have been removed
therefrom and evidence thereof reasonably satisfactory to Buyer shall have been
furnished to Buyer.
(n) Sellers shall have deposited $80,000 into Subsidiary's bank account
for payment to former Company CEO Xxxxxx Xxxxxxx ("Xxxxxxx") which, together
with $32,500 to be paid to Xxxxxxx by Buyer pursuant to Section 4.17,
constitutes payment in full of all obligations.
(o) Buyer shall have received evidence satisfactory to it of the note
obligations of the Company to Xxxx Xxxxxx and Xxxx Xxxxxx.
(p) The Company shall have delivered its promissory note in favor of
Xxxxxxx Xxxx in a principal amount equal to amount paid by Sellers pursuant to
Section 5.1(n), which note shall be in form and substance satisfactory to Buyer.
(q) Sellers and the Company have executed and delivered to Buyer such
other documents and instruments as shall be reasonably requested by Buyer and
its counsel for the consummation of the transactions contemplated hereby.
5.2 Conditions to Obligations of Sellers. The obligations of Sellers and
the Company under this Agreement are subject to the satisfaction at or prior to
the Closing of the following conditions, but compliance with any of such
conditions may be waived by them in writing:
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(a) All representations and warranties of Buyer contained in this
Agreement are true and correct in all material respects (if not qualified by
materiality) or in all respects (if qualified by materiality) at and as of the
Closing with the same effect as though such representations and warranties were
made at and as of the Closing.
(b) Each of Buyer and Subsidiary has performed and complied with all
the covenants and agreements required by this Agreement and the Merger Agreement
to be performed or complied with by it at or prior to the Closing, including
without limitation the delivery of all items required to be delivered by it
pursuant to Section 1.4.
(c) Sellers have completed their due diligence investigation of the
Buyer and Subsidiary, and the business and operations of the Buyer, including
legal, accounting, environmental and engineering matters, and the results of
such investigation are satisfactory to Sellers in their sole discretion.
(d) All necessary governmental consents, approvals, orders or
authorizations have been obtained and all necessary governmental notices have
been given.
(e) The Subsidiary has entered into Employment Agreement with Sellers,
substantially in the form of Exhibit C to this Agreement.
(f) As of the Closing Date, there is no pending or threatened material
litigation by any Person seeking to enjoin any aspect of the consummation of the
transactions contemplated by this Agreement or the Reorganization.
(g) Buyer and Subsidiary have delivered to the Company the Merger
Agreement and other requisite documents relating thereto.
(h) The Reorganization shall have been declared effective by the States
of New Jersey and Delaware.
(i) Buyer shall have made available to Subsidiary the sum of $100,000
to fund the development of MAPADOC for MAS500.
(j) Buyer shall have paid $104,217.00 to Chase Manhattan Bank in full
satisfaction of all obligations due and owing by the Company pursuant to the
Company's existing credit facility.
(k) Buyer and Subsidiary have executed and delivered to Sellers such
other documents and instruments as shall be reasonably requested by Sellers, and
their counsel for the consummation of the transactions contemplated hereby.
ARTICLE VI
INDEMNIFICATION
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6.1 Indemnification.
(a) Notwithstanding any investigation by Buyer or its representatives,
Sellers will, jointly and severally, indemnify, hold Buyer, its Affiliates and
their respective directors, officers, employees and agents (collectively, the
"Buyer Parties") harmless from any and all Liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all court costs,
litigation expenses and reasonable attorneys' fees (individually a "Loss," and
collectively, "Losses"), that any Buyer Parties may suffer or incur as a result
of or relating to:
(i) the breach of any representation or warranty made by Sellers
in this Agreement, the Merger Agreement, any Seller Documents or pursuant hereto
or thereto;
(ii) the breach of any covenant or agreement made by any Seller
or the Company in this Agreement, the Merger Agreement, any Seller Documents or
pursuant hereto or thereto;
(iii) all Taxes allocable to any taxable period (or any portion
thereof) ending on or before the Closing Date to the extent not disclosed on the
Financial Statements or in the Disclosure Schedule delivered on the Closing Date
provided that such Taxes are described with specificity in such Disclosure
Schedule.;
(iv) any Claim (as defined in Section 6.3) commenced by any third
party relating to actions or omissions of Sellers (or any of their Affiliates)
that occurred prior to the Closing Date; and/or
(v) any Claim or Liability not (A) disclosed in the Financial
Statements delivered on the Closing Date (B) disclosed in the Disclosure
Statements furnished by the Sellers on the Closing Date provided that the
Disclosure Schedules describe the Claim or Liability with specificity as to
underlying facts and amount or (C) incurred in the ordinary course of business
consistent with past practice .
(b) Notwithstanding any investigation by any Seller, the Company or
their representatives, Buyer will indemnify and hold Sellers and their
Affiliates (collectively, the "Seller Parties") harmless from any and all Losses
that any Seller Parties may suffer or incur as a result of or relating to:
(i) the breach of any representation or warranty made by Buyer
or Subsidiary in this Agreement, the Merger Agreement, any Buyer Documents or
pursuant hereto or thereto;
(ii) the breach of any covenant or agreement made by Buyer or
Subsidiary in this Agreement, the Merger Agreement, any Buyer Documents or
pursuant hereto or thereto;
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(iii) all Taxes allocable to any taxable period (or any portion
thereof) beginning on the Closing Date, but excluding Taxes due as a result of
the Reorganization being deemed a taxable transaction, and any Taxes due as a
result of the purchase of the Accounts Receivable; and/or
(iv) all Liabilities (A)disclosed in the Financial Statements
delivered on the Closing Date, (B) disclosed with specificity as to both
underlying facts and amount in the Disclosure Schedule delivered by Sellers on
the Closing Date or (C) incurred in the ordinary course of business consistent
with past practice..
6.2 Survival.
(a) The representations and warranties of Sellers made in or pursuant
to this Agreement, the Merger Agreement and the Seller Documents will survive
the consummation of the transactions contemplated hereby until the expiration of
the third anniversary of the Closing Date (except that representations and
warranties made in or pursuant to this Agreement in respect of Taxes shall
survive until the expiration of the applicable statutes of limitations);
provided, that any representation or warranty the violation of which is made the
basis of a claim for indemnification pursuant to Section 6.1(a) will survive
until such claim is finally resolved if Buyer notifies Seller of such claim in
reasonable detail prior to the date on which such representation or warranty
would otherwise expire hereunder. Without limiting the foregoing, no claim for
indemnification pursuant to Section 6.1(a) based on the breach or alleged breach
of a representation or warranty may be asserted by Buyer after the date on which
such representation or warranty expires hereunder.
(b) Buyer's representations and warranties made in or pursuant to this
Agreement, the Merger Agreement and the Buyer Documents will survive the
consummation of the transactions contemplated hereby until the third anniversary
of the Closing Date (except that representations and warranties made in or
pursuant to this Agreement in respect of Taxes shall survive until the
expiration of the applicable statutes of limitations); provided, that any
representation or warranty the violation of which is made the basis of a claim
for indemnification pursuant to Section 6.1(b) will survive until such claim is
finally resolved if Sellers notify Buyer of such claim in reasonable detail
prior to the date on which such representation or warranty would otherwise
expire hereunder. Without limiting the foregoing, no claim for indemnification
pursuant to Section 6.1(b) based on the breach or alleged breach of a
representation or warranty may be asserted by Sellers or any Seller after the
date on which such representation or warranty expires hereunder.
(c) The covenants and agreements of the parties hereto made in or
pursuant to this Agreement will survive the consummation of the transactions
contemplated hereby indefinitely.
6.3 Notice.
Any party entitled to receive indemnification under this Article VI
(the "Indemnified Party") agrees to give prompt written notice to the party or
parties required to provide such indemnification (the "Indemnifying Parties")
upon the occurrence of any indemnifiable Loss or the assertion of any claim or
the commencement of any action or proceeding in respect of which such a
25
Loss may reasonably be expected to occur (a "Claim"), but the Indemnified
Party's failure to give such notice will not affect the obligations of the
Indemnifying Party under this Article VI except to the extent that the
Indemnifying Party is materially prejudiced thereby. Such written notice will
include a reference to the event or events forming the basis of such Loss or
Claim and the amount involved, unless such amount is uncertain or contingent, in
which event the Indemnified Party will give a later written notice when the
amount becomes fixed.
6.4 Defense of Claims.
(a) The Indemnifying Party may elect to assume and control the defense
of any Claim, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of expenses related thereto, if: (i) the
Indemnifying Party acknowledges its obligation to indemnify the Indemnified
Party for any Losses resulting from such Claim; (ii) the Claim does not seek to
impose any Liability on the Indemnified Party other than money damages; and
(iii) the Claim does not relate to the Indemnified Party's relationship with any
customer or employee.
(b) If the conditions of Section 6.4(a) are satisfied and the
Indemnifying Party elects to assume and control the defense of a Claim, then:
(i) the Indemnifying Party will not be liable for any settlement of such Claim
effected without its consent, which consent will not be unreasonably withheld;
(ii) the Indemnifying Party may settle such Claim without the consent of the
Indemnified Party; and (iii) the Indemnified Party may employ separate counsel
and participate in the defense thereof, but the Indemnified Party will be
responsible for the fees and expenses of such counsel unless: (A) the
Indemnifying Party has failed to adequately assume and actively conduct the
defense of such Claim or to employ counsel with respect thereto; or (B) in the
reasonable opinion of the Indemnified Party, a conflict of interest exists
between the interests of the Indemnified Party and the Indemnifying Party that
requires representation by separate counsel, in which case the fees and expenses
of such separate counsel will be paid by the Indemnifying Party.
(c) If the conditions of Section 6.4(a) are not satisfied, the
Indemnified Party may assume the exclusive right to defend, compromise, or
settle such Claim, but the Indemnifying Party will not be bound by any
determination of a Claim so defended or any compromise or settlement effected
without its consent (which may not be unreasonably withheld).
6.5 Indemnification Limited; Sole Remedy.
(a) Notwithstanding the foregoing, neither party shall be entitled to
recover any Losses unless the aggregate of all such party's Losses exceeds
Twenty Five Thousand Dollars ($25,000) in which case, the recovering party shall
be entitled to the full amount of such Losses in excess of $25,000; provided,
that neither Seller Parties on the one hand or Buyer Parties on the other hand
shall be obligated to provide indemnification in an amount in excess of
$550,000.
(b) Notwithstanding any provision in this Agreement to the contrary,
the remedies provided in this Article VI shall be the sole and exclusive
remedies for any inaccuracy in, or any breach of any representation, warranty,
covenant or agreement of, or obligation or liability of the Seller contained
herein, or any document delivered pursuant to this Agreement or otherwise
relating hereto or thereto (except the Employment Agreements between Subsidiary
and Sellers);
26
provided, however, that nothing in this Agreement, including this Section, shall
be construed to limit the right of any party to seek and obtain specific
performance or injunctive relief.
ARTICLE VII
MISCELLANEOUS
7.1 Termination.
(a) This Agreement and the transactions contemplated hereby may be
terminated and abandoned: (i) at any time prior to the Closing Date by mutual
written consent of the parties hereto; or (ii) by either Buyer, on the one hand,
or Sellers and the Company, on the other hand, if a condition to performance by
the terminating party hereunder has not been satisfied or waived prior to March
31, 2005.
(b) Notwithstanding the provisions of Section 7.1(a), (i) Buyer may not
terminate this Agreement if the Closing has not occurred because of Buyer's
willful failure to perform or observe any of its covenants or agreements set
forth herein or in the Merger Agreement or if Buyer is, at such time, in
material breach of this Agreement or the Merger Agreement; and (ii) Sellers and
the Company may not terminate this Agreement if the Closing has not occurred
because of their willful failure to perform or observe any of the covenants or
agreements set forth herein or in the Merger Agreement or if any of them is, at
such time, in material breach of this Agreement or the Merger Agreement.
(c) If this Agreement is terminated pursuant to Section 7.1(a), all
further obligations of the parties under this Agreement will terminate and no
party will have any liability or obligation (for reimbursement of expenses or
otherwise) to any other party, except that Buyer, on the one hand, and Sellers
and the Company, on the other hand, will remain liable to the other for any
breach of this Agreement by such party occurring prior to such termination and
all legal remedies of the other parties in respect of any such breach will
survive such termination unimpaired.
7.2 Notices. All notices and other communications under this Agreement
must be in writing and will be deemed given (i) when delivered personally, (ii)
on the fifth (5th) business day after being mailed by certified mail, return
receipt requested, (iii) the next business day after delivery to a recognized
overnight courier or (iv) upon transmission and confirmation of receipt by a
facsimile operator if sent by facsimile, to the parties at the following
addresses or facsimile numbers (or to such other address or facsimile number as
such party may have specified by notice given to the other party pursuant to
this provision):
If to Buyer: with copies to: with copies to:
Trey Resources, Inc. Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx 00 000 Xxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx Attention: Xxxxx X. Xxxxxxxxx
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If to Sellers or the Company: with copies to:
c/o SWK Technologies, Inc. Marcus, Brody, Ford, Xxxxxxx & Xxxxxx,
000 Xxxxxxxxxx Xxxxxxx X.X.X.
Xxxxxxxxxx, XX 00000 0 Xxxxxx Xxxx Xxxx
Attn: Xxxx Xxxxxx, President Xxxxxxxx, XX 00000
or appropriate Seller Attn: Xxx X Xxxxxx, Esq.
7.3 Attorneys' Fees and Costs. If attorneys' fees or other costs are
incurred to secure performance of any obligations hereunder, or to establish
damages for the breach thereof or to obtain any other appropriate relief,
whether by way of prosecution or defense, the prevailing party will be entitled
to recover reasonable attorneys' fees and costs incurred in connection
therewith.
7.4 Brokers. Each party to this Agreement represents to the other party
that it has not incurred and will not incur any liability for brokers' or
finders' fees or agents' commissions in connection with this Agreement or the
transactions contemplated hereby.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts (including by facsimile) for the convenience of the parties hereto,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
7.6 Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and will not in any way affect the meaning or interpretation of
this Agreement.
7.7 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned or delegated by any party thereto without
the prior written consent of all the other parties and any purported assignment
or delegation in violation thereof will be null and void; except that Buyer may
assign its rights and obligations under this Agreement to any of the direct or
indirect parent entities or subsidiaries of Buyer, or any successor to its
business. This Agreement is not intended to confer any rights or benefits on any
Person other than the parties hereto, except to the extent specifically provided
in Section 4.11 and Article VI, and the Registration Rights Agreement.
7.8 Entire Agreement, Amendment. This Agreement and the related documents
contained as Exhibits and Schedules hereto or expressly contemplated hereby
contain the entire understanding of the parties relating to the subject matter
hereof and supersede all prior written or oral and all contemporaneous oral
agreements and understandings relating to the subject matter hereof. All
statements of Sellers and the Company contained in any schedule, certificate or
other writing required under this Agreement to be delivered in connection with
the transactions contemplated hereby will constitute representations and
warranties of Sellers under this Agreement. The Exhibits, Schedules and the
recitals to this Agreement are hereby incorporated by reference into and made a
part of this Agreement for all purposes. This Agreement may be amended,
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supplemented or modified, and any provision hereof may be waived, only by
written instrument making specific reference to this Agreement signed by the
party against whom enforcement is sought.
7.9 Specific Performance, Remedies Not Exclusive. The parties hereby
acknowledge and agree that the failure of any party to perform its agreements
and covenants hereunder, including its failure to take all required actions on
its part necessary to consummate the transactions contemplated hereby, will
cause irreparable injury to the other parties for which damages, even if
available, will not be an adequate remedy. Accordingly, each party hereby
consents to the issuance of injunctive relief by any court of competent
jurisdiction to compel performance of such party's obligations and to the
granting by any court of the remedy of specific performance of its obligations
hereunder. Unless otherwise expressly stated in this Agreement, no right or
remedy described or provided in this Agreement is intended to be exclusive or to
preclude a party from pursuing other rights and remedies to the extent available
under this Agreement, at law or in equity.
7.10 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE,
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
7.11 Drafting. Neither this Agreement nor any provision contained in this
Agreement will be interpreted in favor of or against any party hereto because
such party or its legal counsel drafted this Agreement or such provision.
7.12 Usage. Whenever the plural form of a word is used in this Agreement,
that word will include the singular form of that word. Whenever the singular
form of a word is used in this Agreement, that word will include the plural form
of that word. The term "or" will not be interpreted as excluding any of the
items described. The term "include" or any derivative of such term does not mean
that the items following such term are the only types of such items.
7.13 Certain Definitions. For purposes of this Agreement:
(k) the term "Affiliate" means, with respect to a specified Person, any
other Person or member of a group of Persons acting together that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by or
is under common control with, the specified Person.
(l) the term "control" (including the terms "controlling," "controlled
by" and "under common control with") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise.
(m) the terms "Knowledge" and "known" and words of similar importwith
respect to a party mean:
29
(i) with respect to Sellers, Sellers will be deemed to have
"Knowledge" of a particular matter, and the particular matter will be deemed to
be "known" by Sellers, if a Seller has actual knowledge of such matter;
(ii) with respect to the Company, the Company will be deemed to
have "Knowledge" of a particular matter, and the particular matter will be
deemed to be "known" by the Company, if Sellers, Xxxx Xxxxxx, Xxxx Xxxxxx, or
Xxxxxxx Xxxx has actual knowledge of such matter; and
(iii) with respect to Buyer, Buyer will be deemed to have
"Knowledge" of a particular matter, and the particular matter will be deemed to
be "known" by Buyer, if Xxxx Xxxxxx has actual knowledge of such matter.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
TREY RESOURCES, INC.
/s/ Xxxx Xxxxxx
----------------------
BY: Xxxx Xxxxxx
President
SWK, INC.
/s/ Xxxx Xxxxxx
-----------------------
BY: Xxxx Xxxxxx
President
/s/ Xxxx Xxxxxx
------------------------
Xxxx Xxxxxx, individually
/s/ Xxxx Xxxxxx
------------------------
Xxxx Xxxxxx, individually
/s/ Xxxxxxx Xxxx
------------------------
Xxxxxxx Xxxx, individually
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