Exhibit 10.1
MERGER AGREEMENT
This MERGER AGREEMENT (this "Agreement") is entered into as of December___,
2001, by and among DataMEG Corp., a New York corporation ("DataMEG"); DataMEG
Acquisition Corp. 1, a North Carolina corporation and a wholly-owned subsidiary
of DataMEG (the "DataMEG Merger Sub", and together with DataMEG, the "DataMEG
Companies"); North Electric Company, Inc, a North Carolina corporation (the
"NEC") and Xxx Xxxxxx ("Xxxxxx"), a resident of the State of North Carolina who
has the authority to execute this Agreement on behalf of all of the
shareholders of NEC (the "Shareholders"). Certain other capitalized terms used
herein are defined in Article X and throughout this Agreement.
RECITALS
The Boards of Directors of DataMEG and NEC have determined that it is in the
best interests of their respective shareholders for DataMEG, through DataMEG
Merger Sub, its wholly owned subsidiary, to acquire all of the issued and
outstanding shares of the common stock of NEC upon the terms and subject to the
conditions set forth in this Agreement. In order to effectuate the transaction,
DataMEG has organized the DataMEG Merger Sub as a wholly-owned subsidiary of
DataMEG, and the parties have agreed, subject to the terms and conditions set
forth in this Agreement, to merge the DataMEG Merger Sub with and into NEC so
that NEC continues as the surviving corporation. As a result of the Merger, NEC
will become a wholly owned subsidiary of DataMEG, and the Shareholders will be
issued certain shares of common stock of DataMEG as well as other consideration
as more fully described in Article I of this Agreement.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto, intending to be legally bound
hereby, agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger.
Subject to the terms and conditions of this Agreement and in accordance
with the North Carolina Business Corporation Act, as amended (the
"Corporation Code"), at the Merger Closing Date (as defined in Section
1.6 below), the DataMEG Merger Sub will be merged with and into NEC
(the "Merger") pursuant to the Plan of Merger annexed hereto as Exhibit
A (the "Plan of Merger"). The terms and conditions of the Plan of
Merger are incorporated herein by reference as if fully set forth
herein. As a result of the Merger, the separate corporate existence of
the DataMEG Merger Sub shall cease and NEC shall continue as the
surviving corporation (the "Surviving Corporation") and as a wholly
owned subsidiary of DataMEG.
1.2 Consummation of Merger.
Subject to the terms and conditions of this Agreement, the consummation
of the Merger shall take place not later than the Merger Closing Date,
subject to satisfaction or waiver of the conditions set forth in
Articles VI and VII, at the offices of DataMEG, in Charlotte, North
Carolina, or such other time and place as the parties may otherwise
agree. The parties agree that, notwithstanding this closing, the Stock
Consideration (as defined below) and all shares of stock in NEC as well
as the NEC Intellectual Property shall be held in escrow with Xxxxx X.
Xxxxxxx XX, PA, beginning on the Merger Document Execution Date who
shall be compensated as escrow agent, and that such shares shall not be
exchanged until such time as all requirements s of the Merger Closing
Date have been met and that such Intellectual Property shall not be
exchanged until the Final Capitalization Date (as defined in Section
1.9 (a)).
1.3 Directors and Officers.
On or after the Merger Closing Date, as determined by Xxxxxx the Board
of Directors of DataMEG will be expanded to two directors who will at
that time become Co-Chairmen, one of whom shall be Xxxxxx Xxxxxx with
the second being Xxx Xxxxxx. Within a reasonable time after the Merger
Closing Date, the DataMEG board of directors shall be expanded to a
total of five directors with the three additional seats to be held by
outside, independent directors. The initial Board of Directors of the
Surviving Corporation will consist of two Directors. Xxx Xxxxxx and
Xxxxxx Xxxxxx will serve as the Directors. The Executive Officers of
the Surviving Corporation will be as follows:
Xxx Xxxxxx: Chief Executive Officer
Xxx Xxxxxxx: President
These Officers will hold office until their successors shall have been
duly elected or appointed and qualified. Notwithstanding the above,
until such time as Directors and Officers insurance is available, the
consent of the Board of Directors of both DataMEG and NEC will be
required for all decisions affecting the day to day business operations
of DataMEG.
1.4 Aggregate Consideration; Exchange of Securities.
(a) Aggregate Consideration. For purposes of this Agreement
"Aggregate Consideration" means the consideration that shall be issued
provided and/or paid to the Shareholders by DataMEG, as consideration
for their agreement to consummate the Merger identified in this
Agreement:
The issuance to the Shareholders of 15,000,000 shares of common
stock, par value $.01 per share, of DataMEG (the "DataMEG
Common Stock) (the "Stock Consideration") on a pro rata basis
according to their ownership interest in NEC; and $ 400,000.00
in cash which shall be paid entirely to Xxxxxx within 60 days
of the Merger Closing Date.
The execution of an Employment Agreement between the Surviving
Corporation and each of the Shareholders that shall provide for
remuneration for services rendered by the Shareholders.
DataMEG hereby warrants and represents that the shares received
by the Shareholders will form part of the SB2 registration
statement to be filed with the Securities Exchange Commission
immediately following the execution of the Merger Agreement.
(b) Exchange of Securities. On the Merger Closing Date, all
outstanding shares of stock of DataMEG Merger Sub, issued and
outstanding on such date, shall be exchanged for all shares of stock of
NEC (the "NEC Shares"). On the Merger Document Execution Date, the NEC
Shares and the Stock Consideration will be delivered to Xxxxx X.
Xxxxxxx XX, PA who shall hold such shares as escrow agent pending
satisfaction of all terms of this Agreement.
(c) Non-dilution of Shares. DataMEG agrees that Shareholders shall
receive additional shares of DataMEG common stock so that on the date
the Final Capitalization Date is achieved as defined in Section 1.9,
Shareholders will have the same percentage ownership of outstanding
DataMEG common stock as Shareholders held on the date the SB2
registration statement is filed with the Securities and Exchange
Commission. The Shareholders agree that this non-dilution clause may be
waived at any time by the NEC Board of Directors.
1.5 Manner of Payment of Aggregate Consideration.
At the Merger Document Execution Date:
(a) The Shareholders shall deliver to DataMEG the certificates
representing all issued and outstanding shares of NEC Common
Stock for cancellation. The shares of DataMEG Common Stock
issued by DataMEG to the Shareholders in the Merger, in
accordance with Article I of this Agreement, are sometimes
referred to herein as the "DataMEG Shares";
(b) DataMEG shall deliver to the Shareholders the Stock
Consideration, issued in the name of the Shareholder, in
accordance with Section 1.4(a);
and at the Merger Closing Date:
(c) DataMEG and the Shareholders shall execute and deliver to the
other party copies of the Employment Agreements, referred to in
Section 1.4(a);
1.6 SB2 Registration Statement and Filing of Articles of Merger.
On the Merger Document Execution Date, DataMEG will file the SB2
registration statement necessary to register the Stock Consideration
with the Securities and Exchange Commission.
The "Merger Closing Date" shall be deemed to occur on the first date on
which both of the following conditions have been met: (a) the
Securities and Exchange Commission declares effective the SB2
Registration Statement registering the Stock Consideration and (b)
DataMEG shall have funding available in the amount of two million five
hundred thousand dollars ($2,500,000) as required under Section 1.9. On
the Merger Closing Date, the parties shall cause the Merger to be
consummated by filing duly executed Articles of Merger (with the
completed Plan of Merger annexed thereto) with the Secretary of State
of North Carolina, in such form as DataMEG and NEC reasonably determine
is required by, and is in accordance with, the relevant provisions of
the Corporation Code. On the Merger Closing Date the Escrow Agent shall
consummate the exchange of the NEC Shares and the DataMEG Shares.
1.7 Accounting and Tax Treatment. The parties hereto acknowledge and agree
that the transactions contemplated hereby are intended to be treated
for tax purposes as a reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"), and for accounting
purposes as a purchase.
1.8 Opinion of Counsel. On the Merger Document Execution Date, NEC shall
deliver to DataMEG from Xxxxxxxxx X. Xxxxx, counsel to NEC and the
Shareholders, an opinion dated as of such date, in substantially the
form attached as Exhibit B hereto. On the Merger Document Execution
Date, the DataMEG Companies shall deliver to NEC from Xxxxx X. Xxxxxxx
XX, PA counsel to the DataMEG Companies, an opinion dated as of such
date, in substantially the form attached as Exhibit C hereto.
1.9 Capitalization of NEC by DataMEG.
Funding of NEC Post Merger Beginning on the date the Securities and
Exchange Commission declares the SB2 registration statement effective,
two million five hundred thousand dollars ($2,500,000) shall be made
available to NEC in monthly increments of four hundred thousand
($400,000). Thereafter, DataMEG shall make available another seven
million five hundred thousand ($7,500,000) in increments of four
hundred thousand dollars ($400,000), each increment of which will be
made available within thirty (30) days of receipt of a written request
of NEC's Board of Directors. Requests will be made no more than once
every thirty (30) days. For purposes of this Agreement, the total ten
million dollars ($10,000,000) will include any advances to the
Surviving Corporation, additional investments from third parties in the
form of stock or cash and earned revenues for the period noted and must
be made available within a 24 month period of the date the Securities
and Exchange Commission declares the SB2 effective (achieving this
total ten million dollar ($10,000,000) capitalization commitment shall
be referred to as the Final Capitalization Date).
Funding of NEC Pending the Merger. DataMEG covenants and agrees that,
between the date of the signing of the original Term Sheet and the
Merger Closing Date it will provide NEC with $125,000 per month to fund
NEC's operations.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE DataMEG COMPANIES
As a material inducement to the Shareholders to enter into this
Agreement and to consummate the transactions contemplated hereby, each
of the DataMEG Companies makes the following representations and
warranties to the Shareholder:
2.1 Corporate Status.
Each of the DataMEG Companies is a corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation and has the requisite power and authority to own or lease
its properties and carry on its business as now being conducted.
DataMEG Merger Sub is a wholly owned subsidiary of DataMEG.
2.2 Corporate Power and Authority.
Each of the DataMEG Companies has the corporate power and authority to
execute and deliver this Agreement, to perform its respective
obligations hereunder and to consummate the transactions contemplated
hereby. Each of the DataMEG Companies has taken all action necessary to
authorize its execution and delivery of this Agreement, the performance
of its obligations hereunder and the consummation of the transactions
contemplated hereby.
2.3 Enforceability.
This Agreement has been duly executed and delivered by each of the
DataMEG Companies and constitutes a legal, valid and binding obligation
of each of the DataMEG Companies, enforceable against each of the
DataMEG Companies in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally and general equitable principles regardless of whether
such enforceability is considered in a proceeding at law or in equity.
2.4 DataMEG Common Stock.
Upon consummation of the Merger and the issuance and delivery of
certificates representing the DataMEG Shares to the Shareholder, the
DataMEG Shares will be validly issued, fully paid and non-assessable
shares of DataMEG Common Stock.
2.5 No Commissions.
None of the DataMEG Companies has incurred any obligation for any
finder's or broker's or agent's fees or commissions or similar
compensation in connection with the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER AND OF THE COMPANY
As a material inducement to each of the DataMEG Companies to enter into
this Agreement and to consummate the transactions contemplated hereby,
each of NEC and the Shareholders jointly and severally, makes the
following representations and warranties to DataMEG, which shall be
true and correct as of the Merger Document Execution Date and the
Merger Closing Date:
3.1 Corporate Status.
NEC is a corporation duly organized, validly existing and in good
standing under the laws of the state of North Carolina and has the
requisite power and authority to own or lease its properties and to
carry on its business as now being conducted. NEC is, and has been
since inception, a "C Corporation". There is no pending or threatened
proceeding for the dissolution, liquidation, insolvency or
rehabilitation of NEC.
3.2 Power and Authority.
NEC has the corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. NEC has taken all action necessary to
authorize the execution and delivery of this Agreement, the performance
of its obligations hereunder and the consummation of the transactions
contemplated hereby. Xxxxxx represents that he is a resident of the
State of North Carolina and has the requisite competence and authority
to execute and deliver this Agreement on behalf of himself and the
Shareholders, to perform his respective obligations hereunder and to
consummate the transactions contemplated below.
3.3 Enforceability.
This Agreement has been duly executed and delivered by each of NEC,
Xxxxxx and the Shareholders, and constitutes the legal, valid and
binding obligation of each of them, enforceable against them in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally
and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
3.4 Capitalization.
As of the date hereof, NEC has (a) 1,000,000 authorized shares of NEC
Common Stock at $ .01 per share par value and no other shares of any
class of capital stock, and (b) 1,000,000 shares of NEC Common Stock
issued and outstanding, none of which is held in treasury. All of the
issued and outstanding shares of capital stock of NEC (i) have been
duly authorized and validly issued and are fully paid and non-
assessable, (ii) were issued in compliance with all applicable state
and federal securities laws, and (iii) were not issued in violation of
any preemptive rights, rights of first refusal or similar rights. No
preemptive rights, rights of first refusal or similar rights exist with
respect to the shares of capital stock of NEC and no such rights arise
by virtue of or in connection with the transactions contemplated
hereby. There are no outstanding or authorized rights, options,
warrants, convertible securities, subscription rights, conversion
rights, exchange rights or other agreements or commitments of any kind
that could require NEC to issue or sell any shares of its capital stock
(or securities convertible into or exchangeable for shares of its
capital stock). There are no outstanding stock appreciation, phantom
stock, profit participation or other similar rights with respect to
NEC. There are no proxies, voting rights or other agreements or
understandings with respect to the voting or transfer of the capital
stock of NEC. NEC, Xxxxxx and the Shareholders represent and warrant
that NEC will not issue any further shares of any class of capital
stock and that upon the Merger Closing Date the shares of NEC Common
Stock that DataMEG will acquire will represent 100% of the outstanding
capital stock of NEC.
3.5 Shareholders of NEC.
The Shareholders are the holder of all issued and outstanding shares of
capital stock of NEC, and own such shares free and clear of all Liens,
restrictions and claims of any kind whatsoever.
3.6 No Violation.
The execution and delivery of this Agreement by NEC and Xxxxxx on
behalf of himself and the Shareholders, the performance by them of
their respective obligations hereunder and the consummation by them of
the transactions contemplated by this Agreement will not (i) violate or
conflict with any provision of the articles of incorporation or bylaws
of NEC, as amended, (ii) violate or conflict with any law, statute,
ordinance, rule, regulation, decree, writ, injunction, judgment or
order of any Governmental Authority or of any arbitration award which
is either applicable to, binding upon or enforceable against any of
NEC, Xxxxxx or the Shareholders, (iii) conflict with, result in any
breach of, or constitute a default (or an event which would, with the
passage of time or the giving of notice or both, constitute a default)
under, or give rise to a right to terminate, amend, modify, abandon or
accelerate, any Contract which is applicable to, binding upon or
enforceable against each of NEC, Xxxxxx or the Shareholders, (iv)
result in or require the creation or imposition of any Lien upon or
with respect to any of the property or assets of NEC, or (v) require
the consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, any court or tribunal or
any other Person.
3.7 NEC Records.
The copies of the Articles of Incorporation and Bylaws of NEC that were
provided to DataMEG are true, accurate and complete and reflect all
amendments made through the date of this Agreement. The minute books
for NEC made available to DataMEG for review were correct and complete
in all material respects as of the date of such review, no further
entries have been made through the date of this Agreement, such minute
books contain the true signatures of the persons purporting to have
signed them, and such minute books contain an accurate record of all
corporate actions of the shareholders and directors (and any committees
thereof) of NEC taken by written consent or at a meeting since
incorporation. All material corporate actions taken by NEC have been
duly authorized or ratified. All accounts, books, ledgers and official
and other records of NEC have been fully, properly and accurately kept
and completed in all material respects, and there are no material
inaccuracies or discrepancies of any kind contained therein. The stock
ledgers of NEC, as previously made available to DataMEG, contain
accurate and complete records of all issuances, transfers and
cancellations of shares of the capital stock of NEC.
3.8 Financial Statements.
Within 30 days of the Merger Document Execution Date, NEC will deliver
to DataMEG, supporting documentation prepared by NEC which, to the best
of NEC's knowledge, adequately reflects the financial condition of NEC
as at November 30, 2001 and at the Merger Document Execution Date and
could be used as supporting schedules to produce both the balance sheet
and income statement of NEC (the "Supporting Schedules") Within 45
days of the Merger Closing Date, DataMEG and NEC will cause an audit to
be completed of NEC per the requirements of the Securities and Exchange
Commission to, among other things, produce a balance sheet and
statement of operations (the "Financial Statements"). The audited
balance sheet of NEC dated as of November 30, 2001 and at the Merger
Closing Date, included in the Financial Statements is referred to
herein as the "Current Balance Sheet." The Financial Statements will
fully and fairly present in all material respects the financial
position of NEC as at November 30, 2001 and at the Merger Closing Date
and will have been prepared in accordance with GAAP consistently
applied throughout the period indicated. The books and records of NEC
fully and fairly reflect in all material respects all of its
transactions, properties, assets and liabilities. There are no
extraordinary or material non-recurring items of income or expense
(subject to fluctuations in the ordinary course of business) during the
periods covered by the Financial Statements and the balance sheets
included in the Financial Statements do not reflect any write-up or
revaluation increasing the book value of any assets, except as
specifically disclosed in the notes thereto. The Financial Statements
reflect all adjustments necessary for a fair presentation of the
financial information contained therein, except for the Current Balance
Sheet and the accompanying income statement to the extent indicated
above.
3.9 Changes Since Incorporation.
Since incorporation, NEC has not (i) issued any capital stock or other
securities other than the shares of Common Stock being exchanged for
the Stock Consideration; (ii) made any distribution of or with respect
to its capital stock or other securities or purchased or redeemed any
of its securities; (iii) paid any bonus to or increased the rate of
compensation of any of its officers or salaried employees or amended
any other terms of employment of such persons; (iv) sold, leased or
transferred any of its properties or assets other than in the ordinary
course of business consistent with past practice; (v) made or obligated
itself to make capital expenditures out of the ordinary course of
business consistent with past practice; (vi) made any payment in
respect of its liabilities other than in the ordinary course of
business consistent with past practice; (vii) incurred any obligations
or liabilities (including any indebtedness) or entered into any
transaction or series of transactions involving in excess of $5,000 in
the aggregate out of the ordinary course of business, except for this
Agreement and the transactions contemplated hereby; (viii) suffered any
theft, damage, destruction or casualty loss, not covered by insurance
and for which a timely claim was filed, in excess of $5,000 in the
aggregate; (ix) suffered any extraordinary losses (whether or not
covered by insurance); (x) waived, canceled, compromised or released
any rights having a value in excess of $5,000 in the aggregate; (xi)
made or adopted any change in its accounting practice or policies;
(xii) made any adjustment to its books and records other than in
respect of the conduct of its business activities in the ordinary
course consistent with past practice; (xiii) entered into any
transaction with any Affiliate other than inter-company transactions in
the ordinary course of business consistent with past practice; (xiv)
entered into any employment agreement; (xv) terminated, amended or
modified in any material respect any agreement involving an amount in
excess of $10,000; (xvi) imposed any security interest or other Lien on
any of its assets other than in the ordinary course of business
consistent with past practice; (xvii) delayed paying any accounts
payable which are due and payable except to the extent being contested
in good faith; (xviii) made or pledged any charitable contribution in
excess of $5,000; (xix) entered into any other transaction or, been
subject to any event which has or may have a Material Adverse Effect on
NEC; or (xx) agreed to do or authorized any of the foregoing.
3.10 Liabilities.
NEC does not have any liabilities or obligations, whether accrued,
absolute, contingent or otherwise, except (a) to the extent reflected
or taken into account in the Current Balance Sheet and not heretofore
paid or discharged which includes among other things salary accruals
for Xxxxxx and Xxx Xxxxxxx from the date of signing the original Term
Sheet, (b) liabilities incurred in the ordinary course of business
consistent with past practice since the date of the Current Balance
Sheet (none of which relates to breach of contract, breach of warranty,
tort, infringement or violation of law, or which arose out of any
action, suit, claim, governmental investigation or arbitration
proceeding), (c) normal accruals, reclassifications, and audit
adjustments which would be reflected on an audited financial statement
and which would not be material in the aggregate, and (d) liabilities
incurred in the ordinary course of business prior to the date of the
Current Balance Sheet which, in accordance with GAAP consistently
applied, were not recorded thereon.
3.11 Litigation.
There is no action, suit, arbitration or other legal or administrative
proceeding or governmental investigation pending, or to the knowledge
of NEC, Xxxxxx or the Shareholders threatened, anticipated or
contemplated against, by or affecting NEC, or any of its properties or
assets, or Xxxxxx or the Shareholders, or which questions the validity
or enforceability of this Agreement or the transactions contemplated
hereby, and, to the knowledge of NEC, Xxxxxx and the Shareholders,
there is no basis for any of the foregoing. There are no outstanding
orders, decrees or stipulations issued by any Governmental Authority in
any proceeding to which NEC is or was a party which have not been
complied with in full or which continue to impose any material
obligations on NEC.
3.12 Environmental Matters.
NEC is and has at all times been in full compliance in all material
respects with all applicable environmental laws.
3.13 Real Property.
(a) Ownership of Real Property. NEC does not own any real estate.
(b) Leased Real Property. NEC does not have any Leased Real
Property at the time of the Merger Document Execution Date.
3.14 Good Title to and Condition of Assets.
NEC has good and marketable title to all of its assets, free and clear
of any Liens or restrictions on use.
3.15 Compliance with Laws.
(a) The business of NEC is and has been operated in compliance in
all material respects with all applicable laws and regulations.
(b) NEC is not subject to any Contract, decree or injunction in
which NEC is a party that restricts the continued operation of
any business of NEC or the expansion thereof to other
geographical areas, customers and suppliers or lines of
business. NEC has conducted its business in the ordinary course
since its incorporation and has not engaged in any conduct nor
become responsible for any obligations since that date that
would materially increase any reserves for contingent liability
that NEC must maintain.
3.16 Labor, Employment and Independent Contracting Matters.
NEC is not a party to or bound by any collective bargaining agreement
or any other agreement with a labor union. Neither NEC, Xxxxxx nor the
Shareholders are aware that any executive or key employee or group of
employees has any plans to terminate his, her or their employment or
independent contracting relationship with NEC as a result of the Merger
or otherwise. NEC has complied in all material respects with applicable
laws, rules and regulations relating to employment, civil rights and
equal employment opportunities, including but not limited to, the Civil
Rights Act of 1964, the Fair Labor Standards Act, and the Americans
with Disabilities Act, as amended.
3.17 Employee Benefit Plans.
NEC has no Employee Benefit Plans.
3.18 Tax Matters.
All Tax Returns required to be filed prior to the date hereof with
respect to NEC or any of its income, properties, franchises or
operations have been timely filed, each such Tax Return has been
prepared in compliance in all material respects with all applicable
laws and regulations, and all such Tax Returns are true and accurate in
all material respects. All Taxes due and payable by or with respect to
NEC have been paid, and all Taxes which have been incurred by NEC but
which are not yet due are accrued on the Current Balance Sheet, subject
to customary year end adjustments and accruals for current year Taxes.
Without limiting the foregoing: (i) with respect to each taxable period
of NEC, either such taxable period has been audited by the relevant
taxing authority or the time for assessing or collecting Taxes with
respect to each such taxable period has closed and such taxable period
is not subject to review by any relevant taxing authority; (ii) no
deficiency or proposed adjustment which has not been settled or
otherwise resolved for any amount of Taxes has been asserted or
assessed by any taxing authority against NEC; (iii) NEC has not
consented to extend the time in which any Taxes may be assessed or
collected by any taxing authority; (iv) NEC has not requested or been
granted an extension of the time for filing any Tax Return to a date
later than the Merger Document Execution Date; (v) there is no action,
suit, taxing authority proceeding, or audit or claim for refund now in
progress, pending or, to the knowledge of NEC, threatened against or
with respect to NEC regarding Taxes; (vi) NEC has not made an election
or filed a consent under Section 341(f) of the Code (or any
corresponding provision of state, local or foreign law) on or prior to
the Merger Closing Date; (vii) there are no Liens for Taxes (other than
for current Taxes not yet due and payable and delinquent) upon the
assets of NEC; (viii) NEC will not be required (A) as result of a
change in method of accounting for a taxable period ending on or prior
to the Merger Closing Date, to include any adjustment under Section
481(c) of the Code (or any corresponding provision of state, local or
foreign law) in taxable income for any taxable period (or portion
thereof) beginning after the Merger Closing Date or (B) as a result of
any "closing agreement", as described in Section 7121 of the Code (or
any corresponding provision of state, local or foreign law), to include
any item of income or exclude any item of deduction from any taxable
period (or portion thereof) beginning after the Merger Closing Date;
(ix) NEC has not been a member of an affiliated group (as defined in
Section 1504 of the Code) or filed or been included in a combined,
consolidated or unitary income Tax Return; (x) NEC is not a party to or
bound by any tax allocation or tax sharing agreement or has any current
or potential contractual obligation to indemnify any other Person with
respect to Taxes; (xi) there are no material additional Taxes owed by
NEC for any period for which Tax Returns have been filed in excess of
the amounts shown as due and payable thereon; (xii) NEC has not made
any payments, and will not become obligated (under any contract entered
into on or before the Merger Document Execution Date) to make any
payments, that will be non-deductible under Section 280G of the Code
(or any corresponding provision of state, local or foreign law); (xiii)
the Shareholders are not a "foreign person" within the meaning of
Section 1445 of the Code; (xiv) no claim has ever been made by a taxing
authority in a jurisdiction where NEC does not file Tax Returns that
NEC is or may be subject to Taxes assessed by such jurisdiction; (xv)
NEC does not have any permanent establishment in any foreign country,
as defined in the relevant tax treaty between the United States of
America and such foreign country; (xvi) true, correct and complete
copies of all income and sales Tax Returns filed by or with respect to
NEC for the past three years have been furnished or made available to
DataMEG; (xvii) NEC will not be subject to any Taxes for the period
ending at the Merger Document Execution Date or for any period for
which a Tax Return has not been filed and imposed pursuant to Section
1374 or Section 1375 of the Code (or any corresponding provision of
state, local or foreign law); (xviii) no State sales or use tax, State
non-recurring intangibles tax, State documentary stamp tax or other
State excise tax (or comparable tax imposed by NEC's State of
incorporation or State where NEC operates) will be payable by any of
the DataMEG Companies merely by virtue of the transactions contemplated
in this Agreement; (xix) no interest or penalties relating to Taxes
arising as a result of activities during periods ending on or before
Merger Closing Date have been or will be incurred by NEC or its
successors; and (xx) NEC has withheld all Taxes required to be withheld
by it in connection with payments to any persons and remitted such
Taxes to the appropriate governmental authorities on a timely basis in
accordance with all applicable laws.
3.19 Insurance.
At time of Merger Closing Date, NEC is not covered by any valid,
outstanding and enforceable policies of insurance. Neither NEC nor
Xxxxxx have any knowledge of any uninsured claims or losses. Further
DataMEG warrants that within a reasonable time period after the Merger
Closing Date, all Directors and Officers of both DataMEG and NEC will
be covered by Directors and Officers Insurance
3.20 Licenses and Permits.
NEC possesses all licenses and required governmental or official
approvals, permits or authorizations, including but not limited to
those required by NEC's State of incorporation or any State in which
NEC conducts business and, to the knowledge of NEC, Xxxxxx and the
Shareholders all other required governmental or official approvals,
permits or authorizations (collectively the "Licenses") for its
businesses and operations. All such Licenses are valid and in full
force and effect, and NEC is in compliance in all material respects
with the respective requirements thereof and no proceeding is pending
or threatened to revoke or amend any of them. Subject to obtaining any
required governmental consents, none of such Licenses is or will be
impaired or in any way affected in any material respect by the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
3.21 Intellectual Property.
NEC has full, unencumbered legal right, title and interest in and to
all know-how, patents, trade secrets, proprietary computer software,
data bases and compilations, licenses (including licenses for the use
of computer software programs and technical specifications), and other
intellectual property used in the conduct of its business as defined in
the NEC Business Plan dated as of the Merger Document Execution Date
and delivered to DataMEG prior to the execution of this Agreement
(collectively, the projects and products described therein are referred
to as the "Intellectual Property"). The business of NEC as presently
conducted, and the unrestricted conduct and the unrestricted use and
exploitation of the Intellectual Property, does not, to the knowledge
of NEC and Xxxxxx, infringe or misappropriate any rights held or
asserted by any Person, and, to the knowledge of NEC and Xxxxxx, no
Person is infringing on the Intellectual Property. No payments are
required for the continued use of the Intellectual Property. None of
the Intellectual Property has ever been declared invalid or
unenforceable, or is the subject of any pending or threatened action
for opposition, cancellation, declaration, infringement, or invalidity,
unenforceability or misappropriation or like claim, action or
proceeding. DataMEG and NEC agree that until the Final Capitalization
Date as defined in Section 1.9 is achieved by DataMEG or such
requirement is waived by the NEC Board of Directors, the NEC
Intellectual Property will remain in escrow. NEC does not warrant that
it has ownership of Trademarks, Copyrights, etc. in so far as they
relate to the name North Electric Company.
3.22 Contracts.
At the time of Merger Document Execution Date, NEC is not a party and
neither it nor its properties and assets are bound by any Contract
which is material to its business, assets, properties or prospects
except the various consulting and/or independent contracting agreements
which have been disclosed to DataMEG prior to the execution of this
Agreement.
3.23 [Intentionally Omitted]
3.24 Accuracy of Information Furnished by the NEC and Xxxxxx.
No representation, statement or information made or furnished by the
NEC or Xxxxxx to DataMEG or any of DataMEG representatives contained in
this Agreement and the various Schedules attached hereto contains any
untrue statement of a material fact or omits any material fact
necessary to make the information contained herein not misleading. NEC
and Xxxxxx have provided DataMEG with true, accurate and complete
copies of all documents listed or described in the various Schedules
attached hereto.
3.25 Investment Intent; Accredited Investor Status: Securities Documents.
The Shareholders are acquiring the DataMEG Shares hereunder for his own
account for investment and not with a view to, or for the sale in
connection with, any distribution of any of the DataMEG Shares, except
in compliance with applicable state and federal securities laws. The
Shareholders have had the opportunity to discuss the transactions
contemplated hereby with DataMEG and has had the opportunity to obtain
such information pertaining to the DataMEG Companies as has been
requested. Each of the Shareholders is an "accredited investor" within
the meaning of Regulation D, promulgated under the Securities Act, and
has such knowledge and experience in business or financial matters that
make him capable of evaluating the merits and risks of an investment in
the DataMEG Shares. The Shareholders further represent and warrant
that they understand that the DataMEG Shares being issued hereunder to
the Shareholders will not be tradedable, as of the date of the Merger
Document Execution Date, on any public exchange, and will be deemed
"restricted" under the Securities Act and that the Shareholders will
have to bear the consequences of such Shares being illiquid.
Shareholders understand that, as such, the Shares must be held
indefinitely unless they are subsequently registered under the Act,
which is the intent of DataMEG or unless an exemption from the
registration requirements thereof is available.
3.26 Bank Accounts.
Schedule 3.26 sets forth all accounts of NEC or funds and securities
held by Xxxxxx pursuant to a consulting agreement between DataMEG and
Xxxxxx with any bank, broker or other depository institution, and the
names of all persons authorized to withdraw funds from each such
account, including existing accounts with RBC Centura Bank and
Prudential Securities.
3.27 Names; Prior Acquisitions.
At the time of the Merger Document Execution Date and the Merger
Closing Date, NEC has only conducted business as North Electric
Company, Inc. NEC has not changed its name or used any assumed or
fictitious name, or been the surviving entity in a merger, acquired any
business or changed its principal place of business or chief executive
office since its incorporation.
3.28 No Commissions.
Neither NEC nor the Shareholders has incurred any obligation for any
finder's or broker's or agent's fees or commissions or similar
compensation in connection with the transactions contemplated hereby.
If any fees or commissions become due and owing by NEC they will be
paid by the Shareholders.
3.29 Consents.
No third party consents are required in order to effectuate the
transactions contemplated herein, and the consummation of the
transactions contemplated herein will not contravene or otherwise
violate any agreement or contract to which NEC and/or the Shareholders
are a party, or to which they may be bound.
3.30 Risk of Loss.
The risk of any loss, damage, impairment, confiscation, or condemnation
of any of the assets from any cause whatsoever shall be borne by NEC at
all times prior to the Merger Closing Date. In the event of any such
loss, damage, impairment, confiscation, or condemnation, whether or not
covered by insurance, NEC shall promptly notify DataMEG of such loss,
damage, impairment, confiscation, or condemnation, which notice shall
provide an estimate of the costs to repair, restore or replace such
assets and shall state whether NEC intends to repair, restore or
replace such assets. If NEC, at its expense, repairs, replaces, or
restores such Acquired Assets to their prior condition before the
Merger Closing Date, NEC shall be entitled to all insurance proceeds
and condemnation awards, if any, by reason of such award or loss. If
NEC does not or cannot restore or replace lost, damaged, impaired,
confiscated or condemned assets, DataMEG may at its option:
(i) terminate this Agreement by notice forthwith without any further
obligation hereunder if the replacement cost of such assets exceeds
$100,000 in the aggregate; or
(ii) if less than $100,000 or if this Agreement is not terminated,
proceed to the Merger Closing Date without NEC completing the
restoration and replacement of such assets provided that NEC and the
Shareholders shall assign all rights under applicable insurance
policies and condemnation awards, if any, to DataMEG and that the Stock
Consideration shall be reduced by the repair or replacement costs of
any asset to the extent not covered by such insurance proceeds or award
and in such event, NEC shall have no further liability with respect to
the condition of the assets directly attributable to the loss, damage,
impairment, confiscation, or condemnation.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 Conduct of Business by NEC Pending the Merger. NEC and Xxxxxx covenant
and agree that, between the date of this Agreement and the Merger
Closing Date, the business of NEC shall be conducted only in, and NEC
shall not take any action except in, the ordinary course of business,
consistent in all material respects with past practice. NEC shall use
its best efforts to preserve intact its business organizations, to keep
available the services of its current officers, employees and
consultants, and to preserve its present relationships with customers,
suppliers and other persons with which it has significant business
relations. By way of illustration and not limitation, NEC shall not,
between the date of this Agreement and the Merger Closing Date,
directly or indirectly, do or propose or agree to do any of the
following without the prior written consent of DataMEG:
(a) amend or otherwise change its articles of incorporation or
bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, encumber, or, authorize the
issuance, sale, pledge, disposition, grant or encumbrance of
(i) any shares of its capital stock of any class, or any
options, warrants, convertible securities or other rights of
any kind to acquire any shares of such capital stock, or any
other ownership interest, of it or (ii) any of its assets,
tangible or intangible, except in the ordinary course of
business consistent in all material respects with past
practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital
stock;
(e) acquire (including, without limitation, for cash or shares of
stock, by merger, consolidation, or acquisition of stock or
assets) any interest in any corporation, partnership or other
business organization or division thereof or any assets, or
make any investment either by purchase of stock or securities,
contributions of capital or property transfer, or, except in
the ordinary course of business, consistent with past practice,
purchase any property or assets of any other Person; (ii) incur
any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any
Person, except endorsement of checks payable to NEC in the
ordinary course of business, or make any loans or advances; or
(iii) enter into any Contract other than in the ordinary course
of business, consistent with past practice;
(f) increase, without the consent of DataMEG, the compensation
payable or to become payable to its officers or employees, or,
except as presently bound to do, grant any severance or
termination pay to, or enter into any employment or severance
agreement with, any of its directors, officers or other
employees, or establish, adopt, enter into or amend or take any
action to accelerate any rights or benefits with any collective
bargaining, bonus, profit sharing, trust, compensation, stock
option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit
of any directors, officers or employees;
(g) take any action other than in the ordinary course of business
and in a manner consistent in all material respects with past
practice with respect to accounting policies or procedures;
(h) make any capital investments without the consent of DataMEG;
(i) make any distributions to the Shareholder, other than ordinary
and customary salaries and expense reimbursements;
(j) pay, discharge or satisfy, without the consent of DataMEG, any
existing claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course
of business and consistent in all material respects with past
practice of due and payable liabilities reflected or reserved
against in its financial statements, as appropriate, or
liabilities incurred after the date hereof in the ordinary
course of business and consistent with past practice; or
(k) agree, in writing or otherwise, to take or authorize any of the
foregoing actions or any action which would make any
representation or warranty in Article III untrue or incorrect
in any material respect.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Further Assurances.
Each party shall execute and deliver such additional customary
instruments and other documents and shall take such further actions as
may be reasonably necessary or appropriate to effectuate, carry out and
comply with all of the terms of this Agreement and the transactions
contemplated hereby.
5.2 Compliance with Covenants.
Xxxxxx shall cause NEC to comply with all of the respective covenants
of NEC under this Agreement.
5.3 Cooperation.
Each of the parties hereto agrees to cooperate with the other in the
preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant
to any law, rule or regulation in connection with the transactions
contemplated by this Agreement and to use their respective commercially
reasonably best efforts to agree jointly on a method to overcome any
objections by any Governmental Authority to any such transactions.
5.4 Other Actions.
Each of the parties hereto shall use its commercially reasonable best
efforts to take, or cause to be taken, all appropriate actions, and to
do, or cause to be done, all things reasonably necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated herein, including, without
limitation, using its commercially reasonable best efforts to obtain
all licenses, permits, consents, approvals, authorizations,
qualifications and orders of any Governmental Authority and parties to
Contracts with NEC as are necessary for the consummation of the
transactions contemplated hereby. Each of parties shall make on a
prompt and timely basis all governmental or regulatory notifications
and filings required to be made by it for the consummation of the
transactions contemplated hereby. The parties also agree to use
commercially reasonable best efforts to defend all lawsuits or other
legal proceedings challenging this Agreement or the consummation of the
transactions contemplated hereby and to lift or rescind any injunction
or restraining order or other order adversely affecting the ability of
the parties to consummate the transactions contemplated hereby.
5.5 Access to Information.
From the date hereof to the Merger Closing Date, NEC shall (and shall
cause its directors, officers, employees, auditors, counsel and agents
to) afford DataMEG and DataMEG's officers, employees, auditors, counsel
and agents reasonable access at all reasonable times to its properties,
offices, and other facilities, to its officers and employees and to all
books and records, and shall furnish such persons with all financial,
operating and other data and information as may be requested. No
information provided to or obtained by DataMEG shall affect any
representation or warranty contained in this Agreement.
5.6 Notification of Certain Matters.
NEC and the Shareholders shall give prompt notice to DataMEG of the
occurrence or non-occurrence of any event which would likely cause any
representation or warranty contained herein to be untrue or inaccurate,
or any covenant, condition, or agreement contained herein not to be
complied with or satisfied.
5.7 Confidentiality; Publicity.
Except as may be required by law or as otherwise permitted or expressly
contemplated herein, no party hereto or their respective Affiliates,
employees, agents and representatives shall disclose to any third party
this Agreement or the subject matter or terms hereof without the prior
consent of the other parties hereto. No press release or other public
announcement related to this Agreement or the transactions contemplated
hereby shall be issued by any party hereto without the prior approval
of the other parties, except that DataMEG may make such public
disclosure which it believes in good faith to be required by law or by
the terms of any listing agreement with or requirements of the
Securities and Exchange Commission or a securities exchange (in which
case DataMEG will consult with an officer of NEC prior to making such
disclosure).
5.8 No Other Discussions.
Until this Agreement is terminated in accordance with its provisions,
NECand their respective Affiliates, employees, agents and
representatives will not (i) initiate, encourage the initiation by
others of discussions or negotiations with third parties or respond to
solicitations by third persons relating to any merger, sale or other
disposition of any substantial part of the assets, business or
properties of NEC (whether by merger, consolidation, sale of stock or
otherwise) or (ii) enter into any agreement or commitment (whether or
not binding) with respect to any of the foregoing transactions. Until
this Agreement is terminated in accordance with its provisions, NEC
will immediately notify DataMEG if any third party attempts to initiate
any solicitation, discussion or negotiation with respect to any of the
foregoing transactions.
5.9 Resale Restrictions on DataMEG Common Stock.
The shares of DataMEG Common Stock to be issued pursuant to this
Agreement will be restricted securities (until such time as the SB2
Registration Statement to be filed by DataMEG in accordance Section 1.6
is declared effective by the Securities and Exchange Commission) which
may not be sold, transferred or otherwise disposed of except pursuant
to an effective registration statement of DataMEG filed under the
Securities Act of 1933, as amended (the "Securities Act"), or in
accordance with an opinion of counsel in form and substance reasonably
satisfactory to DataMEG that an exemption from such registration is
available
5.10 Certain Tax Matters.
The parties agree that after the Merger Closing Date, DataMEG shall
prepare, or cause to be prepared, and file, or cause to be filed, in
accordance with applicable laws and regulations, all Tax Returns
(including any necessary amendments to previously filed Tax Returns)
for NEC for any period ending on or before the Merger Closing Date
which have not, as of the Merger Closing Date, been filed by or on
behalf of NEC. DataMEG shall provide such Tax Returns to NEC and its
accountants for review at least fifteen (15) days prior to their due
date (including extensions where applicable). After the Merger Closing
Date, NEC shall provide DataMEG with such information and records and
access to such of its former officers, directors and agents as may be
reasonably requested by DataMEG in connection with the preparation of
any tax return or any audit or other proceeding relating to NEC. NEC
agrees to advise DataMEG as to the name and address of their
accountants so that such Tax Returns may be provided.
5.11 Shareholders Vote.
Xxxxxx, in executing this Agreement, on behalf of himself and the
Shareholders, consents as Shareholders of NEC to the Merger and the
transactions contemplated hereby, and waives notice of any meeting in
connection therewith, and hereby release and waives all rights with
respect to the transactions contemplated hereby under the articles of
incorporation of NEC and any agreements between any Shareholders and
NEC relating to the sale, purchase or voting of any capital stock of
NEC. At the Merger Closing Date, except as provided in this Agreement,
the Shareholders and NEC agree that any and all agreements relating to
the sale, purchase or voting of capital stock of NEC shall be
terminated.
5.12 NEC Common Stock; Stock Powers.
At the Merger Document Execution Date, the Shareholders covenant and
agree to deliver to Xxxxx X. Xxxxxxx XX, PA all certificates evidencing
shares of capital stock of NEC held by him, together with stock powers
duly executed.
5.13 Agreement not to recruit or solicit.
As a condition to Closing, and in consideration of the purchase and/or
exchange of all of the Shareholder's stock in NEC and the delivery of
Confidential Information to the Shareholder, the Shareholders hereby
agree that, during the term of their employment with the Surviving
Corporation or DataMEG and for a period of two years thereafter,
Shareholders will not (except in the course of the Shareholders
performing authorized duties as employees to DataMEG or the Surviving
Corporation, pursuant to the parties' Employment Agreement):
(a) directly or indirectly solicit or attempt to solicit any customer
or potential customer of DataMEG, Surviving Corporation or affiliates
to purchase goods or services that are competitive with or an outgrowth
of those offered by DataMEG, Surviving Corporation or affiliates
thereof from any person or entity; or
(b) recruit or solicit for employment any person who is, or within the
twelve (12) month period preceding the date of such activity was, an
employee, agent or consultant of DataMEG, Surviving Corporation or
affiliates.
5.14 Confidential Information.
NEC, and the Shareholders acknowledge that the Confidential Information
and the Trade Secrets, defined by State law, owned or possessed by NEC,
obtained or possessed by them concerning NEC will be the property of
DataMEG from and after the Final Capitalization Date unless the NEC
Board of Directors agrees in writing to transfer such ownership
earlier. Therefore, NEC agrees that it will not and the Shareholders
agree that for the term of their employment with either the Surviving
Corporation or DataMEG and for a period of two (2) years thereafter
they will not: (i) disclose to any person, other than their respective
lawyers and accountants, either directly or indirectly, any
Confidential Information, unless and solely to the extent that such
Confidential Information is required to be disclosed by law or pursuant
to a final judicial order or decree; (ii) use for their own account or
use, cause, facilitate or allow any third party to use Confidential
Information in any way; or (iii) remove any Confidential Information or
any copy, summary or compilation of any kind of any Confidential
Information from NEC's or the Surviving Corporation's premises.
This Section 5.14 does not apply to such portions of the Confidential
Information which (i) are or become generally available to the public
(other than as a result of a disclosure by Xxxxxx or the Shareholders
or Xxxxxx'x or the Shareholders' representatives), (ii) were available
to Xxxxxx or the Shareholders on a non-confidential basis prior to
their disclosure to Xxxxxx or the respective Shareholder by DataMEG,
NEC or the Surviving Corporation from a source other than DataMEG, NEC
or the Surviving Corporation or one of their representatives which is
entitled to disclose it or (iii) become available to Xxxxxx or the
Shareholders on a non-confidential basis from a source other than
DataMEG, NEC or the Surviving Corporation or their respective
representatives, provided that such source is not known by Xxxxxx or
the Shareholders or Xxxxxx'x or the Shareholders' representatives to be
bound by a confidentiality agreement with DataMEG, NEC or the Surviving
Corporation or otherwise prohibited from transmitting the information
to Xxxxxx by a contractual, fiduciary or other legal obligation.
In the event that Xxxxxx or any Shareholder or anyone to whom Xxxxxx or
such Shareholder supplies the Confidential Information becomes legally
compelled to disclose any of the Information, Xxxxxx or such
Shareholder will provide DataMEG with prompt written notice of such
event so that DataMEG and/or NEC and/or the Surviving Corporation may
seek a protective order or other appropriate remedy. In the event that
such protective order or other remedy is not obtained, Xxxxxx and the
Shareholders agree to furnish only that portion of the Confidential
Information which, in the opinion of counsel, Xxxxxx or the Shareholder
is legally compelled to disclose and upon the DataMEG's request will
exercise Xxxxxx'x and the Shareholders' best efforts to obtain reliable
assurance that confidential treatment will be accorded the Information.
Xxxxxx and the Shareholders acknowledge and agree that in the event of
any breach of this Section, DataMEG and the Surviving Corporation would
be irreparably and immediately harmed and could not be made whole by
monetary damages. It is accordingly agreed that the DataMEG and the
Surviving Corporation, in addition to any other remedy to which either
may be entitled at law or in equity, shall be entitled to an injunction
or injunctions to prevent breaches of the provisions of this Section
and/or to compel specific performance of this Section.
5.15 Equitable Relief.
NEC, Xxxxxx and the Shareholders recognize and acknowledge that any
violation of Sections 5.13 and 5.14 by NEC, Xxxxxx or a Shareholder
will cause DataMEG to suffer immediate and irreparable harm, not
compensable immediately in damages, and therefore DataMEG must be
entitled to institute and prosecute proceedings in any court of
competent jurisdiction, including temporary and permanent injunctive
relief, to enjoin NEC, Xxxxxx or the Shareholder from breaching the
provisions of Sections 5.13 and 5.14. In such action, DataMEG will not
be required to plead or prove irreparable harm or lack of an adequate
remedy at law.
5.16 Delivery of Documents.
NEC has specifically requested that it be permitted to, and hereby
agrees to accept any and all documents called for delivery under this
Agreement or any of the ancillary documents to this transaction on
behalf of itself and the Shareholders. To the extent that any
Shareholder requests to receive or review this Agreement or any of the
ancillary documents to this transaction, NEC agrees to promptly provide
such documents to the Shareholder. Xxxxxx, on behalf of himself and
the Shareholders consents to such arrangement and waives delivery of
any of the various certificates, documents or other items to himself or
the other Shareholders.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE DataMEG COMPANIES
The obligations of the DataMEG Companies to effect the Merger shall be
subject to the fulfillment at or prior to the Merger Closing Date of
the following conditions, any or all of which may be waived in whole or
in part by the DataMEG Companies:
6.1 Accuracy of Representations and Warranties and Compliance with
Obligations.
The representations and warranties of the Shareholders and NEC
contained in this Agreement shall be true and correct in all material
respects at and as of the Merger Closing Date with the same force and
effect as though made at and as of that time. The Shareholders and NEC
shall have performed and complied with in all material respects all of
their respective obligations required by this Agreement to be performed
or complied with at or prior to the Merger Closing Date. NEC and Xxxxxx
shall have delivered to the DataMEG Companies a certificate, dated as
of the Merger Closing Date, duly signed by Xxxxxx and NEC (in the case
of NEC, by its President), certifying that such representations and
warranties are true and correct and that all such obligations have been
complied with and performed.
6.2 No Material Adverse Change or Destruction of Property.
Between the date hereof and the Merger Closing Date, (i) there shall
have been no Material Adverse Change to NEC, (ii) there shall have been
no adverse federal, state or local legislative or regulatory change
affecting in any material respect the services, products or business of
NEC, and (iii) none of the properties and assets of NEC shall have been
damaged by fire, flood, casualty, act of God or the public enemy or
other cause (regardless of insurance coverage for such damage) which
damages may have a Material Adverse Effect on NEC, and there shall have
been delivered to the DataMEG Companies a certificate to that effect,
dated the Merger Closing Date and signed by or on behalf of NEC.
6.3 Consents.
Each of NEC and DataMEG shall have received consents to the
transactions contemplated hereby and waivers of rights to terminate or
modify any material rights or obligations of NEC from any Person from
whom such consent or waiver is required under any Contract, Permit or
instrument on or prior to the Merger Closing Date, or who, as a result
of the transactions contemplated hereby, would have such rights to
terminate or modify such Contract, Permits or instruments, either by
the terms thereof or as a matter of law.
6.4 Securities Laws.
DataMEG shall have received all necessary consents and otherwise
complied with any state or federal securities laws applicable to the
issuance of the DataMEG Shares, in connection with the transactions
contemplated hereby.
6.5 Capital Stock of NEC.
At the Merger Document Execution Date, the Shareholders shall have
delivered to Xxxxx X. Xxxxxxx XX, PA all certificates evidencing the
shares of capital stock of NEC issued and outstanding.
6.6 No Adverse Litigation.
There shall not be pending or threatened any action or proceeding by or
before any court or other governmental body which shall seek to
restrain, prohibit, invalidate or collect damages arising out of the
Merger or any other transaction contemplated hereby, and which, in the
reasonable judgment of DataMEG, makes it inadvisable to proceed with
the Merger and other transactions contemplated hereby.
6.7 Employment Agreement.
At the Merger Closing Date, the Shareholders shall have entered into an
Employment Agreement with the Surviving Corporation.
6.8 Updated Financial Statements.
Within 45 days of Merger Closing Date, NEC shall have delivered to
DataMEG audited financial statements of NEC for the period ended on the
Merger Closing Date and a representation that these financial
statements fairly present in all material respects the financial
position of NEC as of such date and the results of operations for the
period covered thereby, and have been prepared in accordance with GAAP
consistently applied throughout the periods indicated except for (i)
normal year-end audit adjustments (which will not be material,
individually or in the aggregate) and (ii) footnotes.)
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF NEC AND THE SHAREHOLDERS
The obligations of each of NEC and the Shareholders to effect the
Merger shall be subject to the fulfillment at or prior to the Merger
Closing Date of the following conditions, any or all of which may be
waived in whole or in part by each of NEC and the Shareholders:
7.1 Accuracy of Representations and Warranties and Compliance with
Obligations.
The representations and warranties of the DataMEG Companies contained
in this Agreement shall be true and correct in all material respects at
and as of the Merger Closing Date with the same force and effect as
though made at and as of that time. Each of the DataMEG Companies
shall have performed and complied with all of its obligations required
by this Agreement to be performed or complied with at or prior to the
Merger Closing Date. Each of the DataMEG Companies shall have delivered
to NEC a certificate, dated as of the Merger Closing Date, and signed
by an executive officer, certifying that such representations and
warranties are true and correct in all material respects and that all
such obligations have been complied with and performed.
7.2 DataMEG Shares.
At the Merger Document Execution Date, DataMEG shall have issued all of
the DataMEG Shares and shall have delivered to Xxxxx X. Xxxxxxx XX, PA
certificates representing the DataMEG Shares that constitute the Stock
Consideration pursuant to Section 1.4.
7.3 No Order or Injunction.
No court of competent jurisdiction or other governmental body shall
have issued or entered any order or injunction restraining or
prohibiting the transactions contemplated hereby, which remains in
effect at the time of Closing and no litigation, claim or proceeding
shall be pending or threatened which seeks to restrain, prohibit or
invalidate the Merger.
ARTICLE VIII
REGISTRATION MATTERS
8.1 Disposition of Shares.
In addition to the restrictions set forth in Section 5.9, the
Shareholders represent and warrant that the shares of DataMEG Common
Stock being acquired by them hereunder are being acquired and will be
acquired for their own respective account and will not be sold or
otherwise disposed of, except pursuant to (a) an exemption from the
registration requirements under the Securities Act, which does not
require the filing by DataMEG with the SEC of any registration
statement, offering circular or other document, in which case, the
Shareholders shall first supply to DataMEG an opinion of counsel (which
counsel and opinions shall be reasonably satisfactory to DataMEG) that
such exemption is available, or (b) an effective registration statement
filed by DataMEG with the SEC under the Securities Act.
8.2 Legend.
The certificates representing the DataMEG Shares shall bear the
following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE
WITH RESPECT THERETO, OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER THAT AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
8.3 Registration Rights and Lockup Agreement.
The parties have contemporaneously with the execution of this Agreement
entered into a registration rights agreement ("Registration Rights
Agreement"), in the form attached hereto as Exhibit F, providing that
the shares to be issued by DataMEG pursuant to this Agreement will be
registered by DataMEG on its next filed registration statement
("Registration Statement") as referenced in Section 1.6. Additionally,
and in connection therewith, the Shareholders have entered into a
lockup agreement ("Lockup Agreement"), in the form attached hereto as
Exhibit G, with DataMEG (such restricted shares shall be referred to as
the "Locked-Up Shares").
ARTICLE IX
INDEMNIFICATION
9.1 Agreement to Indemnify DataMEG.
NEC and the Shareholders, jointly and severally, agree to indemnify and
hold DataMEG harmless from and against the aggregate of all expenses,
losses, costs, deficiencies, liabilities and damages (including,
without limitation, related reasonable counsel and paralegal fees and
expenses) incurred or suffered by DataMEG arising out of or pursuant to
or resulting from (i) any breach of a representation or warranty made
by NEC or the Shareholders in this Agreement, (ii) any breach of the
covenants or agreements made by NEC or the Shareholders in this
Agreement, (iii) any inaccuracy in any certificate delivered by NEC or
the Shareholders pursuant to this Agreement, (iv) any tax liability of
NEC or Shareholders relating to any period occurring on or prior to the
Merger Closing Date, (v) any regulating and licensing obligations
arising on or prior to the Merger Closing Date, or (vi) any liability
directly arising from NEC's or any Shareholder's actions or inactions
(collectively, "Indemnifiable Damages"). Without limiting the
generality of the foregoing, with respect to the measurement of
Indemnifiable Damages, DataMEG shall have the right to be put in the
same pre-tax consolidated financial position as it would have been in
had each of the representations and warranties of the Shareholders
hereunder been true and correct and had the covenants and agreements of
NEC and the Shareholders hereunder been performed in full.
9.2 Agreement to Indemnify NEC and Shareholder.
DataMEG agrees to indemnify and hold NEC and Shareholders harmless from
and against the aggregate of all expenses, losses, costs, deficiencies,
liabilities and damages (including, without limitation, related
reasonable counsel and paralegal fees and expenses) incurred or
suffered by NEC or Shareholders arising out of or pursuant to or
resulting from (i) any breach of a representation or warranty made by
DataMEG in this Agreement, (ii) any breach of the covenants or
agreements made by DataMEG in this Agreement, (iii) any inaccuracy in
any certificate delivered by DataMEG pursuant to this Agreement, (iv)
any tax liability of DataMEG relating to any period occurring on or
prior to the Merger Closing Date, or (v) any regulating and licensing
obligations arising on or prior to the Merger Closing date,
(collectively, "Indemnifiable Damages"). Without limiting the
generality of the foregoing, with respect to the measurement of
Indemnifiable Damages, NEC and Shareholders shall have the right to be
put in the same pre-tax consolidated financial position as they would
have been in had each of the representations and warranties of the
Shareholders hereunder been true and correct and had the covenants and
agreements of NEC and the Shareholders hereunder been performed in
full. Additionally, and subject to section 9.1, DataMEG specifically
agrees to indemnify Shareholders from any liabilities incurred by
DataMEG prior to such time as Xxxxxx becomes co-chairman of DataMEG.
9.3 Survival of Representations and Warranties.
Each of the representations and warranties made by the Shareholders or
DataMEG in this Agreement or pursuant hereto shall survive for a period
of twelve months after the Merger Closing Date. Notwithstanding any
knowledge of facts determined or determinable by any party by
investigation, each party shall have the right to fully rely on the
representations, warranties, covenants and agreements of the other
parties contained in this Agreement or in any certificate delivered at
the Merger Document Execution Date pursuant to this Agreement. Each
representation, warranty, covenant and agreement of the parties
contained in this Agreement is independent of each other
representation, warranty, covenant and agreement.
9.4 Indemnification Obligation
DataMEG, NEC and the Shareholders shall each give written notice to the
others of any claim for Indemnifiable Damages or any other damages
hereunder, which notice shall set forth (i) the amount of Indemnifiable
Damages or other loss, damage, cost or expense which DataMEG claims to
have sustained by reason thereof, and (ii) the basis of such claim.
The parties agree that, in the event a claim is contested and not
resolved within fifteen (15) days of such contest, they shall attempt
to resolve the claim through non-binding mediation (for a period not to
exceed 60 days) at a mutually convenient time and place before a
certified and court-appointed mediator mutually agreed upon by the
parties.
9.5 No Bar; Waiver.
DataMEG, NEC and the Shareholders may each take any action or exercise
any remedy available to it by appropriate legal proceedings to collect
the Indemnifiable Damages. The Shareholders hereby waives any rights
to contribution or any similar rights they may have against NEC as of a
result of their agreement to indemnify DataMEG under this Article IX.
9.6 Remedies Cumulative.
The remedies provided herein shall be cumulative and shall not preclude
any party from asserting any other right, or seeking any other remedies
against the other parties.
9.7 Defense of Third Party Claims.
With respect to each third party claim for which DataMEG, NEC or the
Shareholders seeks indemnification under this Article (a "Third Party
Claim"), such party shall give prompt notice to the other parties of
the Third Party Claim, provided that failure to give such notice
promptly shall not relieve or limit the obligations of the other party
under this Section 9.7 unless the other party has been materially
prejudiced thereby (and such failure to notify the other party will not
relieve him from any other liability he may have to notifying party).
If the remedy sought in the Third Party Claim is solely money damages
or if the notifying party otherwise permits, then the other party, at
his sole cost and expense, may, upon notice to notifying party within
fifteen (15) days after they receive notice of the Third Party Claim,
assume the defense of the Third Party Claim. If the other party
assumes the defense of a Third Party Claim, then they shall select
counsel reasonably satisfactory to the notifying party to conduct the
defense. The other party shall not consent to a settlement of, or the
entry of any judgment arising from, any Third Party Claim, unless (i)
the settlement or judgment is solely for money damages and the other
party admits in writing his liability to hold the notifying party
harmless from and against any losses, damages, expenses and liabilities
arising out of such settlement or judgment or (ii) the notifying party
consents thereto, which consent shall not be unreasonably withheld.
The other party shall provide the notifying party with fifteen (15)
days prior notice before he consents to a settlement of, or the entry
of a judgment arising from, any Third Party Claim. The notifying party
shall be entitled to participate at their own expense in the defense of
any Third Party Claim, the defense of which is assumed by the other
party with their own counsel and their own expense. With respect to
Third Party Claims in which the remedy sought is not solely money
damages and the notifying party does not permit the other party to
assume the defense, the other party shall, upon notice to the notifying
party within fifteen (15) days after the other party receives notice of
the Third Party Claim, be entitled to participate in the defense with
their own counsel at their own expense. The notifying party shall not
consent to a settlement of, or the entry of any judgment arising from,
any Third Party Claim unless the indemnifying party consents thereto,
which consent shall not be unreasonably withheld. The parties shall
cooperate in the defense of any Third Party Claim and the relevant
records of each party shall be made available on a timely basis.
ARTICLE X
DEFINITIONS
10.1 Defined Terms.
As used herein, the following terms shall have the following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on
the date hereof and shall generally mean, with respect to any person,
any other person controlling, controlled by or under common control
with such person. For purposes of this definition and this Agreement,
the term "control" (and correlative terms) means the power, whether by
contract, equity ownership or otherwise, to direct the policies or
management of a person.
"Applicable Laws" means all laws, statutes, rules, regulations,
ordinances, judgments, orders, decrees, injunctions, and writs of any
Governmental Entity (the "Laws"), including the Laws of the State of
incorporation of the parties, having jurisdiction over the Acquired
Assets or the Business, as may be in effect on or prior to the Merger
Closing Date.
"Business Day" means any other day than (i) a Saturday or Sunday or
(ii) a day on which commercial banks in State are authorized or
required to be closed.
"Code" shall mean the United States Internal Revenue Code, as amended.
All references to the Code, U.S. Treasury regulations or other
governmental pronouncements shall be deemed to include references to
any applicable successor regulations or amending pronouncement.
"Confidential Information" means, with respect to any person, all
confidential information and trade secrets of such person, including
the identity, list or descriptions of any customers, referral sources
or organizations, financial statements and records, cost reports or
other financial information, contract proposals or business plans,
structures and training operations, methods and manuals, personnel
records, fee or price structures, policies or procedures and any all
information regarding the Intellectual Property.
"Consents" means all governmental consents and approvals, and all
consents and approvals of third parties, in each case that are
necessary in order to transfer record and beneficial ownership in the
Acquired Assets to Buyer and otherwise to consummate the transactions
contemplated hereby.
"Employment Agreement" means the Employment Agreement between DataMEG
and each of the Shareholders
"Contracts" means all agreements, contracts, employment agreement,
lease, license, loan agreement, note, purchase and sales order,
commitment, undertaking, obligation or other binding commitments or
arrangements, written or oral, express or implied, (including any
amendments and other modifications thereto), to which NEC is a party or
is otherwise bound.
"Debt", without duplication, means (a) all indebtedness (including the
principal amount thereof or, if applicable, the accreted amount thereof
and the amount of accrued and unpaid interest thereon) of NEC, whether
or not represented by bonds, debentures, notes or other securities, for
the repayment of money borrowed, including existing bank and/or other
loans, (b) all deferred indebtedness of NEC for the payment of the
Consideration of property or assets purchased, (c) all obligations of
NEC to pay rent or other payment amounts under a lease or a liability
on the face of a balance sheet prepared in accordance with GAAP, (d)
any outstanding reimbursement obligation of NEC with respect to letters
of credit, bankers' acceptances or similar facilities issued for the
account of NEC, (e) all indebtedness for borrowed money secured thereby
shall have been assumed, (f) all guaranties, endorsements, assumptions
and other contingent obligations of NEC in respect of, or to purchase
or to otherwise acquire, indebtedness for borrowed money of others, and
(g) all premiums, penalties and change of control payments required to
be paid or offered in respect of any of the foregoing as a result of
the consummation of the transactions contemplated by this Agreement
regardless if any of such are actually paid.
"Employee Benefit Plans" means any (i) "employee benefit plan" within
the meaning of Section 3(3) of ERISA, (ii) employment agreement, and
(iii) bonus, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, vacation,
severance, disability, death benefit, hospitalization or insurance
plan, program or arrangement, which is sponsored, maintained or
contributed to, or has been sponsored, maintained or contributed to, by
NEC or any member of NEC's ERISA Group for the benefit of NEC's
employees or former employees.
"Environmental Laws" means all Applicable Laws and rules of common law
pertaining to the environment, natural resources, and public or
employee health and safety including the Comprehensive Environmental
Response Compensation and Liability Act (42 U.S.C. Sec. et seq.)
("CERCLA"), the Emergency Planning and Community Right to Know Act and
the Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, the Hazardous and Solid Waste Amendments
Act of 1984, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Safe Drinking Water Act, the Occupational
Safety and Health Act of 1970, the Oil Pollution Act of 1990, the
Hazardous Materials Transportation Act, and any similar or analogous
statutes, regulations and decisional law of any Governmental Entity, as
each of the foregoing may be amended and in effect on or prior to the
Merger Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Group" means any corporation, trade, business, or entity under
common control within the meaning of Section 414(b), (c), (m), or (o)
of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
"Final Capitalization Date" means the consummation of the transactions
contemplated by this Agreement as defined in Section 1.9(a).
"GAAP" means generally accepted accounting principles in the in effect
in the United States of America from time to time.
"Governmental Authority" means any governmental department, commission,
board, bureau, agency, court of other instrumentality of the United
States or any state, county, parish, or municipality, jurisdiction, or
other political subdivision thereof.
"Intellectual Property" means all trademarks, know-how, copyrights,
copyright registrations and applications for registration, patents and
all other intellectual property rights (including internet domain
names), whether registered or not, licensed to or owned relating to the
Business or the Acquired Assets, including all tradenames and the
goodwill related to the foregoing as well as the projects defined in
the business plan submitted by NEC to DataMEG prior to the execution of
this Agreement defining the intellectual property to be held in escrow
from the Merger Document Execution Date until the Final Capitalization
Date.
"Know-how" means all plans, ideas, concepts and data, research records,
all promotional literature, customer and supplier lists and similar
data and information and all other confidential or proprietary
technical and business information.
"Knowledge" means, with respect to a specified party hereto, the actual
knowledge of such party (including, but not limited to, the actual
knowledge of, with respect to NEC, Xxxxxx, and with respect to Buyer,
its officers, directors, and employees), together with such additional
knowledge as would be acquired by a reasonable person upon conducting
reasonable and diligent inquiry concerning the subject matter in
question.
"Leased Real Property" means all of NEC's leasehold interests,
easements, licenses, rights to access and rights-of-way that are used
or held for use in the Business.
"Licenses" means all permits, registrations, licenses, authorizations
and the like issued or required to be issued by any Governmental Entity
to NEC relating to business or operations of NEC.
"Liens" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind whatsoever (including, but not limited to,
any conditional sale or other title retention agreement, any lease in
the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or comparable law
or any jurisdiction in connection with such mortgage, pledge, security
interest, encumbrance, lien or charge).
"Material Adverse Effect" (or Effect) means a change (or effect), in
the condition (financial or otherwise), properties, assets,
liabilities, rights, obligations, operations, business or prospects
which change (or effect) individually or in the aggregate, is
materially adverse.
"Merger Closing Date" shall mean the first date on which both of the
following conditions have been met: (a) the Securities and Exchange
Commission declares effective the SB2 Registration Statement
registering the Stock Consideration and (b) DataMEG shall have funding
available in the amount of two million five hundred thousand dollars
($2,500,000) as required under Section 1.9 hereof.
"Merger Document Execution Date" means the date on which all of the
following occur, or in the event that not all occur on the same day,
then on the date on which the last of the following occurs: (a) this
Merger Agreement is signed, (b) DataMEG files its SB2 Registration
Statement, in which 10,000,000 shares will be registered to satisfy the
conditions of the Final Capitalization Date as defined in 1.9(a), with
the Securities and Exchange Commission, (c) DataMEG and NEC
respectively place the shares of stock being exchanged under this
Merger Agreement into escrow with Xxxxx X. Xxxxxxx XX, PA, (d) and
NEC's intellectual property is placed into escrow with Xxxxx X. Xxxxxxx
XX, PA.
"Patents" means all patent and patent applications (including all
reissues, divisions, continuations, continuations-in-part, renewals,
and extensions of the foregoing) owned by NEC.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization,
business trust, joint stock company, estate, trust, unincorporated
association, joint venture, Governmental Authority or other entity, of
whatever nature.
"Personal Property" means all of the machinery, equipment, computer
programs, computer software, tools, motor vehicles, furniture,
furnishings, leasehold improvements, office equipment, Inventory,
supplies, spare parts, and other tangible or intangible personal
property which are owned or leased by NEC and which are used or held
for use in the business or operation of NEC.
"Pre-Tax Earnings" means income or loss before taxes.
"References and Titles" All references in this Agreement to Exhibits,
Schedules, Articles, Sections, Subsections, and other Subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections,
Subsections, and other Subdivisions of this Agreement unless expressly
provided otherwise. Titles appearing at the beginning of any Articles,
Sections, Subsections, or other Subdivisions of this Agreement are for
convenience only, do not constitute any part of such Articles,
Sections, Subsections or other Subdivisions, and shall be disregarded
in construing the language contained therein. The words "this
Agreement", "herein", "hereby", "hereunder", and "hereof", and words of
similar import, refer to this Agreement as a whole and not to any
particular Subdivision unless expressly so limited. The words "this
Section", "this Subsection", and words of similar import, refer only to
the Sections or Subsections hereof in which such words occur. The word
"or" is not exclusive, and the word "including" (in its various forms)
means "including without limitation." Pronouns in masculine, feminine,
or neuter genders shall be construed to state and include any other
gender and words, terms, and titles (including terms defined herein) in
the singular form shall be construed to include the plural and vice
versa, unless the context otherwise expressly requires. Unless the
context otherwise requires, all defined terms contained herein shall
include the singular and plural and the conjunctive and disjunctive
forms of such defined terms.
"Register", "registered" and "registration" refer to a registration of
the offering and sale of securities effected by preparing and filing a
registration statement in compliance with the Securities Act and the
declaration or ordering of the effectiveness of such registration
statement.
"Schedules" means the Schedules attached hereto.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"NEC" has the meaning set forth in the first paragraph of this
Agreement.
"Taxes" means all taxes, fees or other assessments, levies, interest,
penalties, additions to tax or other assessments or fees of any kind,
including, but not limited to, corporate, capital income, excise,
property, sales, use, value added and franchise, intangible,
deductions, withholding, social security, unemployment and payroll
taxes imposed by any federal, state, local or foreign governmental
agency, and any interest or penalties related thereto.
"Tax Returns" means any return, report, information return or other
document (including any related or supporting information) filed or
required to be filed with any Governmental Entity in connection with
the determination, assessment, collection or administration of any
Taxes or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"Trademarks" means (a) trademarks, service marks, trade names, trade
dress, labels, logos, and all other names and slogans associated with
any products or embodying the goodwill of the Business, whether or not
registered, and any applications or registrations therefore, and (b)
any associated goodwill incident thereto owned by NEC.
10.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other
documents made or delivered pursuant hereto or thereto, unless
the context otherwise requires.
(b) Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with this
Agreement and the transactions contemplated hereby shall be
determined in accordance with GAAP applied on a basis
consistent with prior periods, where applicable.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also
denote the neuter and feminine, where the context so permits.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated:
(a) at any time prior to the Merger Closing Date by mutual written
consent of DataMEG, NEC and Xxxxxx on behalf of the
Shareholders; or
(b) at any time prior to the Merger Closing Date by DataMEG by
written notice in the event of a material breach by NEC or the
Shareholders of any provision of this Agreement; or
(c) at any time prior to the Merger Closing Date by NEC or Xxxxxx
on behalf of the Shareholders by written notice in the event of
a material breach by DataMEG of any provision of this
Agreement.
(d) at any time after failure by DataMEG to comply with the
provisions of Section 1.9 hereof. In the event that this
Agreement is terminated pursuant to this Section 11.1(d) the
parties agree to execute any documentation required to unwind
this transaction and return each party to its legal status as
in effect immediately prior to execution of this Agreement.
Notwithstanding the foregoing sentence, in the event this
Agreement is terminated pursuant to this Section 11.1(d),
DataMEG agrees that Shareholders shall be entitled to retain
whatever amount of the Stock Consideration has become "vested"
pursuant to the Lockup Agreement entered into by the parties as
well as the NEC employees and consultants who may receive
options to purchase DataMEG common stock shall be entitled to
retain any options that have vested as of such date.
(e) at DataMEG's sole option, within ten (10) business days prior
to or after the end of any of DataMEG's fiscal quarters if
DataMEG then believes it will be unable to comply with the
provisions of Section 1.9 hereof. In the event that this
Agreement is terminated pursuant to this Section 11.1(e) the
parties agree to execute any documentation required to unwind
this transaction and return each party to its legal status as
in effect immediately prior to execution of this Agreement.
Notwithstanding the foregoing sentence, in the event this
Agreement is terminated pursuant to this Section 11.1(e),
DataMEG agrees that Shareholders shall be entitled to retain
whatever amount of the Stock Consideration has become "vested"
pursuant to the Lockup Agreement entered into by the parties as
well as the NEC employees and consultants who may receive
options to purchase DataMEG common stock shall be entitled to
retain any options that have vested as of such date. DataMEG
shall be entitled to exercise this option regardless of any
waiver by NEC of the breach of the provisions of Section 1.9
hereof.
11.2 Effect of Termination.
Except for the provisions of Article IX hereof, which shall survive any
termination of this Agreement, in the event of termination of this
Agreement pursuant to Section 11.1, this Agreement shall forthwith
become void and of no further force and effect and the parties shall be
released from any and all obligations hereunder; provided, however,
that nothing herein shall relieve any party from liability for the
breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
ARTICLE XII
GENERAL PROVISIONS
12.1 Notices.
All notices, requests, demands, claims, and other communications
hereunder shall be in writing and shall be delivered by certified or
registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed
by delivery by certified or registered mail (first class postage pre-
paid) or guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers which
such party shall designate in writing to the other party):
(a) if to any of the DataMEG Companies to:
DataMEG Corp.
00000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxx XX, PA
0000 XX 00xx Xxxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxx Xxxxxxx, Esq.
Telecopy: (000) 000-0000
(b) if to NEC to:
North Electric Company
000 Xxxx Xxx Xxxxx Xxxx, Xxxxx 000
XXX #000
Xxxxxxx, XX 00000.
Attention: Xxx Xxxxxx
Telecopy (000) 000-0000
with a copy to:
Xxxxxxxxx X. Xxxxx
Attorney At Law
0000 Xxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxx Xxxxx, Esq.
Telecopy: (000) 000-0000
If a copy to Shareholder:
Xxx Xxxxxx
000 Xxxxxx Xxxx
Xxxx Xxxxx, XX 00000
Telecopy: (000) 000 0000
With a copy to:
Xxxxxxxxx X. Xxxxx
Notice shall be deemed given on the date sent if sent by facsimile transmission
and on the date delivered (or the date of refusal of delivery) if sent by
overnight delivery or by certified or registered mail.
12.2 Entire Agreement.
This Agreement (including the Exhibits and Schedules attached hereto)
and other documents delivered at the Merger Document Execution Date
pursuant hereto, contains the entire understanding of the parties in
respect of its subject matter and supersedes all prior agreements and
understandings (oral or written) between or among the parties with
respect to such subject matter. The Exhibits and Schedules constitute a
part hereof as though set forth in full above.
12.3 Expenses.
The parties shall pay their own fees and expenses, including their own
counsel fees, incurred in connection with this Agreement or any
transaction contemplated hereby.
12.4 Amendment; Waiver.
This Agreement may not be modified, amended, supplemented or waived,
except by written instrument executed by all parties. No failure to
exercise, and no delay in exercising, any right, power or privilege
under this Agreement shall operate as a waiver, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any
breach of any provision shall be deemed to be a waiver of any preceding
or succeeding breach of the same or any other provision, nor shall any
waiver be implied from any course of dealing between the parties. No
extension of time for performance of any obligations or other acts
hereunder or under any other agreement shall be deemed to be an
extension of the time for performance of any other obligations or any
other acts. The rights and remedies of the parties under this Agreement
are in addition to all other rights and remedies, at law or equity that
they may have against each other.
12.5 Binding Effect; Assignment.
The rights and obligations of this Agreement shall bind and inure to
the benefit of the parties and their respective successors and assigns.
Nothing expressed or implied herein shall be construed to give any
other person any legal or equitable rights hereunder. This Agreement
may be assigned by DataMEG to a wholly-owned subsidiary of DataMEG,
provided that DataMEG remains liable for all of the obligations imposed
upon it in this Agreement. Except as expressly provided herein, this
Agreement may not be assigned by NEC or the Shareholders without the
prior written consent of DataMEG.
12.6 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute
one and the same instrument. This Agreement, once executed by a Party,
may be delivered to the other Parties hereto by telephone line
facsimile transmission bearing the signature of the Party so delivering
this Agreement and such copy shall be deemed and original.
12.7 Interpretation.
When a reference is made in this Agreement to an article, section,
paragraph, clause, schedule or exhibit, such reference shall be deemed
to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement or the schedules. Whenever the words "include", "includes" or
"including" is used in this Agreement, they shall be deemed to be
followed by the words "without limitation." Time shall be of the
essence in this Agreement.
12.8 Governing Law; Severability.
This Agreement shall be construed in accordance with and governed for
all purposes by the laws of the State of North Carolina applicable to
contracts executed and to be wholly performed within such State. If
any word, phrase, sentence, clause, section, subsection or provision of
this Agreement as applied to any party or to any circumstance is
adjudged by a court to be invalid or unenforceable, the same will in no
way affect any other circumstance or the validity or enforceability of
any other word, phrase, sentence, clause, section, subsection or
provision of this Agreement. If any provision of this Agreement, or any
part thereof, is held to be unenforceable because of the duration of
such provision or the area covered thereby or otherwise, the parties
agree that the court making such determination shall have the power to
reduce the duration and/or area of such provision, and/or to delete
specific words or phrases, and in its reduced form, such provision
shall then be enforceable and shall be enforced.
12.9 Arm's Length Negotiations.
Each party herein expressly represents and warrants to all other
parties hereto that (a) before executing this Agreement, said party has
fully informed itself of the terms, contents, conditions and effects of
this Agreement; (b) said party has relied solely and completely upon
its own judgment in executing this Agreement; (c) said party has had
the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of
its own free will in executing this Agreement; (e) said party is not
acting under duress, whether economic or physical, in executing this
Agreement; and (f) this Agreement is the result of arm's length
negotiations conducted by and among the parties and their respective
counsel.
12.10 Fees and Expenses.
Each of the parties hereto hereby agrees and acknowledges that each
party shall be responsible for all of its own fees and expenses
incurred in connection with the preparation, execution and consummation
of the transactions contemplated hereunder, including all legal fees,
provided, however, that the Shareholders hereby agrees that he shall be
solely responsible for all of such costs and expenses, including legal
fees, incurred by NEC.
12.11 Specific Performance.
The Shareholders and NEC recognize that in the event NEC and the
Shareholders should refuse to complete the Merger identified in this
Agreement, monetary damages alone will not be adequate. DataMEG shall
therefore be entitled, in addition to any other remedies, which may be
available, including money damages, to obtain specific performance of
the terms of this Agreement. In the event of any action to enforce this
Agreement specifically, NEC and the Shareholders hereby waive the
defense that there is an adequate remedy at law.
IN WITNESS WHEREOF, the parties hereto have caused this Merger Agreement to be
duly executed and delivered as of the day and year first above written.
DATAMEG CORP., a New York Corporation
By: __/s/__________
Name: Xxxxxx Xxxxxx
Title: President
DATAMEG ACQUISITION CORP. 1, INC., a North Carolina corporation
By: __/s/__________
Name: Xxxxxx Xxxxxx
Title: President
NORTH ELECTRIC COMPANY. a North Carolina corporation
By: __/s/__________
Name: Xxx Xxxxxx
Title: President
THE SHAREHOLDERS
By: __/s/__________
Name: Xxx Xxxxxx
Individually and on behalf of all NEC Shareholders
LIST OF EXHIBITS AND SCHEDULES
Exhibits:
Exhibit A --- Plan of Merger
Exhibit B --- Form of Legal Opinion From NEC's Counsel
Exhibit C --- Form of Legal Opinion From DataMEG's Counsel
Exhibit D --- n/a
Exhibit E --- Intentionally Omitted
Exhibit F --- Form of Registration Rights Agreement
Exhibit G --- Form of Lockup Agreement
Schedules:
Schedule 3.26 --- Bank Accounts, etc.
