Exhibit 2.1
MERGER AGREEMENT
AND
PLAN OF MERGER
THIS MERGER AGREEMENT AND PLAN OF MERGER, (hereinafter referred to as the
"Agreement") is made and entered into this 15th day of May, 2002 by and between
TDT DEVELOPMENT, INC., a Nevada corporation (hereinafter referred to as "TDT"),
the stockholders of TDT listed on the signature page (collectively, the
"Principal Stockholders"), TDT STRONGHOLD ACQUISITION CORP., a New Jersey
corporation (hereinafter referred to as "Acquisition"), TERRE DI TOSCANA, INC.,
a Florida corporation and wholly owned subsidiary of TDT (hereafter referred to
as a "Subsidiary"), TERRES TOSCANES, INC., a Canadian corporation and wholly
owned subsidiary of TDT (also hereafter referred to as a "Subsidiary", together,
the "Subsidiaries"), Xxxxxxxxxxx X. Xxxxx (the "Stronghold Stockholder") and
STRONGHOLD TECHNOLOGIES, INC., a New Jersey corporation (hereinafter referred to
as "Stronghold").
RECITALS
WHEREAS, TDT and Stronghold desire to merge Stronghold with and into TDT's
wholly-owned subsidiary, Acquisition, whereby Acquisition shall be the surviving
entity pursuant to the terms and conditions set forth herein and whereby the
transaction shall qualify as a tax free exchange pursuant to Section 351 of the
Internal Revenue Code (the "IRC");
WHEREAS, in furtherance of such combination, the Boards of Directors of
TDT, Acquisition and Stronghold have each approved the merger of Stronghold with
and into Acquisition (the "Merger"), upon the terms and subject to the
conditions set forth herein, in accordance with the applicable provisions of the
Nevada Business Corporation Act (the "NBCA"), in the case of TDT, and the New
Jersey Business Corporation Act (the "NJBCA") in the case of Stronghold.
WHEREAS, the stockholders of Stronghold desire to exchange all of their
shares of capital stock of Stronghold for shares of TDT common stock in the
respective amounts set forth in Schedule 1.2 hereto as a tax free exchange
pursuant to Section 351 of the IRC;
WHEREAS, the parties hereto desire to reorganize, pursuant to Section
368(a)(1)(A) of the IRC, the operations of TDT and Acquisition.
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties and covenants herein contained, the parties hereby
agree as follows:
ARTICLE I
SECTION 1.1 (a) Merger and Plan of Reorganization. At the Effective Time
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(as defined in Section 1.1(b) hereof), and subject to and upon the terms and
conditions of this Agreement and the NJBCA, Stronghold shall be merged with and
into Acquisition, the separate
corporate existence of Stronghold shall cease, and Acquisition shall continue as
the surviving corporation. Acquisition after the Effective Time is sometimes
referred to herein as the "Surviving Corporation". Acquisition shall change its
name to Stronghold Technologies, Inc. and the renamed Acquisition shall remain a
wholly-owned subsidiary of TDT. As consideration for their agreement to
surrender their shares of common stock of Stronghold (the "Shares") and to
approve the Merger, the stockholders of Stronghold shall receive an aggregate of
Seven Million (7,000,000) shares of authorized but previously unissued TDT
common stock, par value $0.0001 per share (the "Merger Shares"), on a pro rata
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basis determined by multiplying the number of Shares held by each Stronghold
stockholder by 2.1875 (the "Conversion Ratio").
(b) The Effective Time. As promptly as practicable after the satisfaction
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or waiver of the conditions set forth in Articles VII, VIII and IX, the parties
hereto shall cause the merger to be consummated by filing the Certificate of
Merger as contemplated by NJBCA (the "Certificate of Merger"), together with any
required related documents, with the appropriate administrator, as indicated in
the NJBCA, in such form as required by, and executed in accordance with the
relevant provision of, the NJBCA. The Merger shall be effective at the time
indicated in such Certificate of Merger (the "Effective Time").
SECTION 1.2 Issuance of Merger Shares.
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(a) At the Closing, TDT shall cause to be issued and delivered to the
stockholders of Stronghold or their designees, stock certificates evidencing
ownership of the Merger Shares in the amounts set forth in Schedule 1.2 hereto.
(b) The Merger Shares to be issued hereunder are deemed "restricted
securities" as defined by Rule 144 promulgated by the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), and the recipients shall represent that (i) they are
acquiring the Merger Shares for investment purposes only and without the intent
to make a further distribution of the Merger Shares, (ii) they are each an
accredited investor within the meaning of Rule 501(a) under the Securities Act,
or, if not such an accredited investor, has, alone or together with a purchaser
representative within the meaning of Rule 501(h) under the Securities Act, such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in securities in general and of
an investment in TDT in particular, (iii) they are aware of the limits on resale
imposed by virtue of the nature of the transactions contemplated by this
Agreement, and (iv) they have been given the opportunity to ask questions of,
and receive answers from, the officers of TDT regarding TDT, its current and
proposed business operations and the TDT Common Stock, and the officers of TDT
have made available to such stockholder all documents and information that such
stockholder has requested relating to an investment in TDT.
(c) All Merger Shares to be issued under the terms of this Agreement shall
be issued pursuant to exemptions from the registration requirements of the
Securities Act and the rules and regulations promulgated thereunder.
Certificates representing the restricted Merger Shares shall bear the following,
or similar legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE
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SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED
EXCEPT IN COMPLIANCE WITH THE REGISTRATION PROVISIONS
OF SUCH ACT OR PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION PROVISIONS, THE AVAILABILITY OF WHICH
IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
SECTION 1.3 Stronghold Options.
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(a) As of the Closing Date (as defined below), the options to purchase
Stronghold Common Stock (as defined in Section 4.2(a)) issued pursuant to
Stronghold's 2000 Stock Option Plan (the "Option Plan") which are listed in
Schedule 4.2(a) (the "Stronghold Options"), whether vested or unvested, and the
Option Plan, insofar as it relates to the Stronghold Options outstanding under
the Option Plan as of the Closing, shall be assumed by TDT. As of the Closing,
each Stronghold Option outstanding immediately prior to the Closing shall be
automatically converted into an option to acquire, on the same terms and
conditions as were applicable under such Stronghold Option prior to the Closing,
such number of shares of TDT Common Stock (as defined in Section 2.2(a)) as is
equal to the number of Stronghold Common Stock subject to the unexercised
portion of such Stronghold Option multiplied by the Conversion Ratio (with any
fraction resulting from such multiplication to be rounded down to the nearest
whole number). The exercise price per share of each such assumed Stronghold
Option shall be equal to the exercise price of such Stronghold Option
immediately prior to the Closing, divided by the Conversion Ratio (rounded up to
the nearest whole cent). The term, exercisability, vesting schedule, and all of
the other terms of the Stronghold Options shall otherwise remain unchanged.
After the Closing, references to Stronghold in the Stronghold Options and Option
Plan shall be deemed to refer to TDT, and references to Stronghold Common Stock
in the Stronghold Options and Option Plan shall be deemed to refer to shares of
TDT Common Stock.
(b) As soon as practicable after the Closing, TDT shall deliver to the
holders of outstanding Stronghold Options immediately prior to the Merger
appropriate notices setting forth such holders' rights pursuant to their
Stronghold Options, as adjusted by this Section 1.3.
(c) TDT shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of TDT Common Stock for delivery upon exercise of
the Stronghold Options assumed in accordance with this Section 1.3.
(d) TDT shall obtain, prior to the Closing, the consent from each holder of
a Stronghold Option, to the adjustment of such Stronghold Option pursuant to
this Section 1.3 (unless such consent is not required under the terms of the
applicable agreement, instrument or plan).
SECTION 1.4 Effects of the Merger.
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(a) Certificate of Incorporation. The Certificate of Incorporation of
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Acquisition, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation and thereafter may be
amended or repealed in accordance with its terms and applicable law.
(b) By-Laws. The By-laws of Acquisition, as in effect immediately prior to
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the Effective Time shall be the By-laws of the Surviving Corporation and
thereafter may be amended or repealed in accordance with their terms or the
Certificate of Incorporation of the Surviving Corporation and as provided by
applicable law.
(c) Directors of Surviving Corporation. The directors of Stronghold
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immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
(d) Directors of TDT. As soon as practicable following the execution of
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this Agreement, TDT shall file with the Commission and transmit to all holders
of record of TDT securities who would have been entitled to vote at a meeting
for the election of directors immediately prior to the execution of this
Agreement, the information required by Rule 14f-1 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Ten days after the filing of the
information statement required by Rule 14f-1, Xxxxxxxxxxx X. Xxxxx, Xxxxxx X.
Xxxxxxx, Xxxxxx Xxx, Xxxxxxx Xxxxxxx and Xxxx Xxxxxxx shall become the directors
of TDT. The directors of TDT during such ten-day period shall be Xxxxxxxxxxx X.
Xxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx Xxx and the three directors of TDT immediately
prior to the execution of this Agreement (the latter three directors together,
the "Existing TDT Directors"). The Existing TDT Directors shall tender their
resignations as directors as a condition to closing pursuant to Section 9.5,
which resignations shall be effective as of the Closing Date or such later date
as their respective successors are duly elected and qualified.
(e) Officers. The officers of Stronghold immediately prior to the Effective
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Time shall be the officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
appointed and qualified, as the case may be.
(f) Officers of TDT. The officers of TDT after the Closing shall be as
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follows: Xxxxxxxxxxx X. Xxxxx President Xxxxxx Xxxxxx Vice President and Chief
Technology Officer Xxxxxxxxx X'Xxxxx Vice President - Development Xxxxx X.
Xxxxxxxxx Vice President - Sales and Marketing
The officers of TDT prior to the Closing shall surrender their resignations
as officers as a condition to closing pursuant to Section 9.5.
(g) Tax-Free Reorganization. The parties intend that the Merger shall be
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treated as a tax-free exchange pursuant to Section 351 of the IRC. No party
shall take any action
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or fail to take any action that would adversely affect the treatment of the
Merger as a tax-free exchange.
SECTION 1.5 Signing and Closing.
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(a) This Agreement contemplates an execution date that occurs prior in time
to the Closing Date. Upon execution, the signature pages hereto shall be held in
escrow until the Closing Date. If the Closing Date does not occur by May 20,
2002, this Merger Agreement shall have terminated, unless the parties hereto
mutually agree in writing to extend the time within which the Closing Date shall
occur.
(b) Unless this Agreement shall have been terminated pursuant to Section X,
and subject to the satisfaction or waiver, if permissible, of the conditions set
forth in Articles VII, VIII and IX, the closing of the transactions contemplated
by this Agreement (the "Closing") shall take place (i) at the offices of Xxxxxx
Gottbetter & Xxxxxxxx, LLP, as promptly as practicable (and in any event within
five business days) after satisfaction or waiver, if permissible, of the
conditions set forth in Articles VII, VIII and IX or (ii) at such other time,
date or place as Stronghold and TDT may mutually agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF
TDT, SUBSIDIARIES, ACQUISITION AND THE PRINCIPAL STOCKHOLDERS
As an inducement of Stronghold to enter into this Agreement, TDT,
Subsidiaries, Acquisition and, with respect to Sections 2.2, 2.6, 2.8 and 2.12,
each Principal Stockholder hereby makes jointly and severally, as of the date
hereof and as of the Closing Date, the following representations and warranties
to Stronghold and the Stronghold stockholders.
SECTION 2.1 Organization of TDT; Authority. TDT is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of the State of
Nevada, is duly qualified and in good standing as a foreign corporation in every
jurisdiction in which such qualification is necessary, and has the corporate
power and authority to own its properties and assets and to transact the
business in which it is engaged. Schedule 2.1 contains a complete and accurate
list for TDT and Acquisition of their respective jurisdictions of incorporation
and other jurisdictions in which they are qualified to do business. With the
exception of Acquisition and the Subsidiaries, there are no corporations or
other entities with respect to which (i) TDT owns any of the outstanding stock
or other interests, or (ii) TDT may be deemed to be in control. TDT,
Subsidiaries, Acquisition and the Principal Stockholders have all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby and thereby, and have taken all
corporate or other action necessary to consummate the transactions contemplated
hereby and thereby and to perform their respective obligations hereunder and
thereunder. This Agreement upon its execution and delivery, is the legal, valid
and binding obligation of TDT, Subsidiaries, Acquisition and Principal
Stockholders enforceable against TDT, Subsidiaries, Acquisition and Principal
Stockholders in accordance
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with its respective terms except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally.
Acquisition is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey, is duly qualified and in
good standing as a foreign corporation in every jurisdiction in which such
qualification is necessary, and has the corporate power and authority to own its
properties and assets and to transact the business in which it is engaged. There
are no corporations or other entities with respect to which (i) Acquisition owns
any of the outstanding stock or other interests, or (ii) Acquisition may be
deemed to be in control.
SECTION 2.2 Capitalization of TDT and Acquisition.
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(a) The authorized capital stock of TDT consists of 50 million (50,000,000)
shares of common stock, par value $0.0001 per share (the "TDT Common Stock"), of
which Two Million Eighty Six Thousand (2,086,000) shares are issued and
outstanding as of the Closing, and five million (5,000,000) shares of preferred
stock, par value $0.0001 per share, with such rights, privileges, preferences
and other terms and conditions as shall be approved by its Board of Directors
pursuant to a duly adopted resolution thereof, of which no shares are issued and
outstanding. All shares of TDT Common Stock currently issued and outstanding
have been duly authorized and validly issued and are fully paid and
non-assessable, and have been issued in compliance with any and all applicable
federal and state laws or pursuant to appropriate exemptions therefrom. Other
than the options listed in Schedule 2.2(a) hereto, which have been issued
pursuant to TDT's 2000 Stock Option Plan (the "Plan"), there are no options,
warrants, rights, calls, commitments or agreements of any character obligating
TDT to issue any shares of its capital stock or other securities or any security
representing the right to purchase or otherwise receive any such stock or other
securities. The Merger Shares, when issued, will be duly authorized, validly
issued, fully paid and non-assessable.
(b) TDT hereby represents that the Plan was validly approved by the board
of directors and stockholders of TDT and that all of the shares of TDT Common
Stock subject to outstanding options, if any, will be, upon issuance pursuant to
the exercise of such options, duly authorized, validly issued, fully paid and
nonassessable. TDT represents that all of the 1,000,000 shares of TDT Common
Stock authorized for issuance under the Plan remain available for issuance as of
the date hereof. TDT further represents that the Plan allows for options to be
granted that qualify as incentive stock options under Section 422 of the IRC.
TDT has provided copies of the Plan, and any amendments thereto, to Stronghold.
(c) Other than the transactions contemplated by this Agreement, there is no
outstanding vote, plan, pending proposal or right of any person to cause any
redemption of TDT Common Stock or the merger or consolidation of TDT with or
into any other entity. TDT is not under any obligation under any agreement to
register any of its securities under federal or state securities laws, except as
set forth on Schedule 2.2(c).
(d) There are no agreements among stockholders of TDT, or otherwise, voting
trusts, proxies or other agreements or understanding of any character, whether
written or
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oral, with respect to or concerning the purchase, sale, transfer or voting of
the TDT Common Stock or any other security of TDT.
(e) Except as set forth in Section 6.5, none of TDT, the Subsidiaries or
any Principal Stockholders have any legal obligations, absolute or contingent,
to any other person or entity to sell the assets or to sell any capital stock or
any other security of TDT or any of its Subsidiaries or to effect any merger,
consolidation or other reorganization of TDT or any of its Subsidiaries or to
enter into any agreement with respect thereto, except pursuant to this
Agreement.
There are One Thousand (1,000) shares of common stock, no par value per
share, (the "Acquisition Stock") of Acquisition authorized, which are all
outstanding and held by TDT. The Acquisition Stock was validly issued, fully
paid and non-assessable and not subject to any preemptive rights created by
statute, Acquisition's Certificate of Incorporation or By-laws or any contract.
There is no outstanding vote, plan, pending proposal or right of any person or
entity to cover any redemption of the Acquisition Stock as to the merger or
consolidation of Acquisition with or into any other entity, except as
contemplated hereby. Acquisition holds no assets and conducts no business,
except as contemplated hereby.
SECTION 2.3 Subsidiaries
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(a) TDT has two wholly-owned subsidiaries, Terre di Toscana, Inc. and
Terres Toscanes, Inc. Schedule 2.3 sets forth (i) the number and type of
outstanding equity securities of each Subsidiary and a list of the holders
thereof, (ii) the jurisdiction of organization of each Subsidiary, (iii) the
names of the officers and directors of each Subsidiary, and (iv) the
jurisdictions in which each Subsidiary is qualified or holds licenses to do
business as a foreign corporation or other entity. The Subsidiaries and
Acquisition are the only subsidiaries of TDT.
(b) The Subsidiaries are each a corporation duly organized, validly
existing and in good standing under the laws of the jurisdictions of their
respective incorporation. The Subsidiaries are duly qualified to conduct
business and are in good standing under the laws of each jurisdiction in which
the nature of their business or the ownership or leasing of their properties
requires such qualification. The Subsidiaries have all requisite corporate power
and corporate authority to carry on the businesses in which they are engaged and
to own and use the properties owned and used by them. TDT has delivered or made
available to Stronghold complete and accurate copies of the charter, by-laws or
other organizational documents of the Subsidiaries. The Subsidiaries are not in
default under or in violation of any provision of their respective charter,
by-laws or other organizational documents. All of the issued and outstanding
shares of capital stock of the Subsidiaries are duly authorized, validly issued,
fully paid, nonassessable and free and clear of preemptive rights. All shares of
the Subsidiaries that are held of record or owned beneficially by TDT are held
or owned free and clear of any restrictions on transfer (other than restrictions
under the Securities Act and other applicable securities laws), claims, security
interests, options, warrants, rights, calls, commitments and demands. There are
no outstanding or authorized options, warrants, rights, agreements or
commitments to which TDT or the Subsidiaries are a party or which are binding on
any of them providing for the issuance, disposition or acquisition of any
capital stock of the Subsidiaries. There are no
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outstanding stock appreciation, phantom stock or similar rights with respect to
the Subsidiaries. There are no voting trusts, proxies or other agreements with
respect to the voting of any capital stock of the Subsidiaries.
SECTION 2.4 Charter Documents. Certified copies of the Articles of
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Incorporationof TDT, as amended to date, the Certificate of Incorporation of
Acquisition and Subsidiaries, and their respective By-Laws have been delivered
to Stronghold prior to the Closing and are true, correct and complete copies
thereof.
SECTION 2.5 Corporate Documents. The TDT shareholders' list as set forth on
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Schedule 2.5 and corporate minute books are complete and accurate in all
material respects as of the date hereof and the corporate minute books contain
the recorded minutes of all corporate meetings or the written consents of
shareholders and directors.
SECTION 2.6 Financial Statements.
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(a) TDT's audited financial statements for the years ended October 31, 2000
and 2001, and unaudited financial statements for the quarter ended January 31,
2002 (the audited and unaudited financial statements together, the "TDT
Financial Statements"), copies of which have been delivered to Stronghold, are
true and complete in all material respects, having been prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a consistent
basis for the periods covered by such statements, and fairly present, in
accordance with GAAP, the consolidated financial condition of TDT and the
Subsidiaries, and results of their operations for the periods covered thereby in
all material respects. TDT and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed with management's authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in
accordance with GAAP and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's authorizations and (iv)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
difference. Neither TDT nor any of its Subsidiaries has engaged in any
transaction, maintained any back account or used any corporate funds except for
transactions, bank accounts or funds which have been and are reflected in the
normally maintained books and records.
(b) SEC DOCUMENTS. TDT has furnished Stronghold with a true and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by TDT with the SEC since February 1, 2001 (as such documents
have since the time of their filing been amended, the "TDT SEC Documents") and
since that date TDT has filed with the SEC all documents required to be filed
pursuant to Section 15(d) of the Exchange Act. As of their respective dates, the
TDT SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such TDT SEC Documents, and none
of the TDT SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of TDT included in the TDT SEC
Documents comply as to form in all material respects with
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applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, are accurate, complete and in accordance with
the books and records of TDT in all material respects, and have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-QSB of the SEC) and fairly present
(subject, in the case of the unaudited statements, to normal, recurring audit
adjustments), in all material respects, the consolidated financial position of
TDT as of the dates thereof and the consolidated results of its operations and
cash flows for the periods then ended.
SECTION 2.7 Absence of Certain Changes or Events. Except in each of the
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following instances that individually or in the aggregate would not result in a
material adverse change in TDT's or Subsidiaries' business or operations, since
the date of the latest TDT financial statement and except as disclosed on
Schedule 2.7, TDT and Subsidiaries have not (i) issued or sold any promissory
note, stock, bond, option or other security of which it was an issuer or other
obligor, (ii) discharged or satisfied any lien or encumbrance or paid any
obligation or liability, absolute or contingent, direct or indirect, (iii)
incurred or suffered to be incurred any liability or obligation whatsoever, (iv)
caused or permitted any lien, encumbrance or security interest to be created or
arise on or in any of its properties or assets, (v) declared or made any
dividend, payment or distribution to stockholders or purchased or redeemed or
agreed to purchase or redeem any shares of its capital stock, (vi) reclassified
its shares of capital stock, (vii) amended its Articles of Incorporation or
Certificate of Incorporation or By-Laws, (viii) acquired any equity interest in
any other Person, or (ix) entered into any agreement or transaction except in
connection with the execution and performance of this Agreement. None of TDT,
Subsidiaries nor Acquisition, has entered into any Agreement to do any of the
foregoing actions described in this Section 2.7.
SECTION 2.8 Assets and Liabilities. TDT and Subsidiaries have good and
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marketable title to all of their assets and property, free and clear of any and
all liens, claims and encumbrances, except as set forth in Schedule 2.8. As of
the date hereof, TDT and Subsidiaries do not have any debts, liabilities or
obligations of any nature, whether accrued, absolute, contingent, or otherwise,
whether due or to become due, that are not fully reflected in the TDT Financial
Statements.
Acquisition has no assets and no liabilities.
SECTION 2.9 Tax Returns and Payments. All tax returns of TDT and
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Subsidiaries (Federal, state, city, county or foreign) which are required by law
to be filed on or before the date of this Agreement, have been duly filed or
extended and are complete and accurate in all material respects. Schedule 2.9
sets forth a list of all extended filings which are still pending and which must
be completed after the Closing. TDT and Subsidiaries have paid all taxes due on
said returns, any assessments made against TDT and Subsidiaries and all other
taxes, fees and similar charges imposed on TDT and Subsidiaries by any
governmental authority (other than those, the amount or validity of which is
being contested in good faith by appropriate proceedings). No tax liens have
been filed and no claims are being assessed with respect to any such taxes, fees
or other similar charges. TDT, Subsidiaries and Acquisition know of (i) no other
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tax returns or reports which are required to be filed which have not been so
filed and (ii) no unpaid assessment for additional taxes for any fiscal period
or any basis thereof.
Acquisition, which was formed on May 9, 2002 has not filed, and has not
yet been required to file any tax return.
SECTION 2.10 Required Authorizations. There have been or will be timely
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filed, given, obtained or taken, all applications, notices, consents, approvals,
orders, registrations, qualifications, waivers or other actions of any kind
required by virtue of execution and delivery of this Agreement by TDT,
Subsidiaries and Acquisition or the consummation by them of the transactions
contemplated hereby. Prior to the Closing, the shareholders of Acquisition shall
have approved this Agreement as required by NJBCA and the transactions
contemplated hereunder and appropriate corporate filings shall have been made
with the State of New Jersey, as required.
SECTION 2.11 Compliance with Law and Government Regulations.
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TDT,Subsidiaries and Acquisition are, to the best of their knowledge, in
compliance in all material respects with and are not in violation of, applicable
federal, state, local or foreign statutes, laws and regulations (including
without limitation, any applicable building, zoning or other law, ordinance or
regulation) affecting TDT, Subsidiaries, Acquisition, or either of their
properties or the operation of their businesses. TDT, Subsidiaries and
Acquisition are not subject to any order, decree, judgment or other sanction of
any court, administrative agency or other tribunal. No authorization, approval
or consent of any court, governmental body, regulatory agency, self-regulatory
organization, stock exchange or market or, with respect to TDT, the
stockholders, is required to be obtained by TDT, Subsidiaries or Acquisition for
the entry into or the performance of this Agreement.
SECTION 2.12 Litigation. Except as set forth on Schedule 2.12, there is no
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litigation, arbitration, proceeding or investigation pending, or, to the
knowledge of TDT or Subsidiaries, threatened or anticipated, to which TDT,
Subsidiaries or Acquisition is a party or which may result in any material
change in the business or condition, financial or otherwise, of TDT,
Subsidiaries or Acquisition or in any of their properties or assets, or which
might result in any liability on the part of TDT, Subsidiaries or Acquisition,
or which questions the validity of this Agreement or of any action taken or to
be taken pursuant to or in connection with the provisions of this Agreement,
and, to the knowledge of TDT and Subsidiaries, there is no basis for any such
litigation, arbitration, proceeding or investigation. There are presently no
outstanding judgments, decrees or orders of any court or any governmental or
administrative agency against or affecting TDT, Subsidiaries or Acquisition or
any their assets that is not disclosed herein. Schedule 2.12 contains a complete
and accurate description of all claims, suits, litigations, proceedings,
investigations, disputes, writs, injunctions, judgments and decrees since
September 8, 2000 to which TDT and Subsidiaries have been a party.
SECTION 2.13 Trade Names and Rights.
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(a) TDT and Acquisition do not use any trade xxxx, service xxxx, trade
name, or copyright in its business, nor does it own any trade marks, trade xxxx
registrations or applications, trade names, service marks, copyrights, copyright
registrations or applications. No
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person owns any trade xxxx, trade xxxx registration or application, service
xxxx, trade name, copyright or copyright registration or application, the use of
which is necessary or contemplated in connection with the operation of the
business of TDT or Acquisition.
(b) Schedule 2.13(b) annexed hereto and by this reference is made a part
hereof, contains a complete list of all patents, assignments of patents, patent
licenses, trademarks, service marks, trade marks, service xxxx, trademark and
service xxxx registrations, applications and licenses with respect to the
forgoing owned or held by the Subsidiaries. Neither TDT nor Subsidiaries have
knowledge of any facts and nothing has come to their attention that would lead
them to believe that they have infringed or misappropriated or are infringing
upon any trademark, copyright, patent or other similar right of any person. No
claim relating thereto is pending or to the knowledge of TDT and Subsiaries is
threatened. TDT and Subsidiaries have no knowledge of any rights owned by third
parties in the patents, trademarks and other intellectual property rights listed
in Schedule 2.13(b), except as set forth in Schedule 2.13(b).
SECTION 2.14 Governmental Consent. No consent, approval, authorization or
--------------------
order of, or registration, qualification, designation, declaration or filing
with, any governmental authority on the part of TDT or Subsidiaries is required
in connection with the execution and delivery of this Agreement or the carrying
out of any transactions contemplated hereby other than filing the Agreement
together with the Certificate of Merger with the State of New Jersey.
SECTION 2.15 No Disqualifying Orders. None of TDT, Subsidiaries,
--------------------------
Acquisition, the Principal Stockholders or any of its affiliates, directors,
officers or principals is subject to any disqualifying order under the "Bad Boy"
provisions of the federal or any state's securities law. As used herein, "Bad
Boy" provisions include Rule 262 of Regulation A, Rule 507 of Regulation D and
other similar disqualifying provisions of federal and state securities laws.
SECTION 2.16 Real Property. None of TDT, Subsidiaries or Acquisition owns
-------------
any real property. Schedule 2.16 lists all real property leases (the "Leases")
to which TDT and Subsidiaries are a party and lists the term of such Lease, any
extension and expansion options, and the rent payable thereunder. TDT has
delivered to Stronghold complete and accurate copies of the Leases. With respect
to each Lease:
(a) such Lease is legal, valid, binding, enforceable and in full force and
effect;
(b) such Lease will continue to be legal, valid, binding, enforceable and
in full force and effect immediately following the Closing in accordance with
the terms thereof as in effect immediately prior to the Closing;
(c) except as set forth in Schedule 2.16, neither TDT nor any Subsidiary
nor, to the knowledge of TDT or Subsidiaries, any other party, is in breach or
violation of, or default under, any such Lease, and no event has occurred, is
pending or, to the knowledge of TDT or Subsidiaries, is threatened, which, after
the giving of notice, with lapse of time, or otherwise, would constitute a
breach or default by TDT or any Subsidiary or, to the knowledge of TDT or
Subsidiaries, any other party under such Lease;
11
(d) there are no disputes, oral agreements or forbearance programs in
effect as to such Lease;
(e) neither TDT nor any Subsidiary has assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or
subleasehold;
(f) to the knowledge of TDT and Subsidiaries, all facilities leased or
subleased thereunder are supplied with utilities and other services adequate for
the operation of said facilities; and
(g) TDT and Subsidiaries are not aware of any security interest, easement,
covenant or other restriction applicable to the real property subject to such
lease which would reasonably be expected to materially impair the current uses
or the occupancy by TDT or a Subsidiary of the property subject thereto.
SECTION 2.17 Contracts.
---------
(a) Schedule 2.17 lists the following agreements (written or oral) to which
TDT or any Subsidiary is a party as of the date of this Agreement:
(i) any agreement (or group of related agreements) for the lease of
personal property from or to third parties providing for lease payments in
excess of $10,000 per annum or having a remaining term longer than six months;
(ii) any agreement (or group of related agreements) for the purchase
or sale of products or for the furnishing or receipt of services (A) which calls
for performance over a period of more than one year, (B) which involves more
than the sum of $10,000, or (C) in which TDT or any Subsidiary has granted
manufacturing rights, "most favored nation" pricing provisions or marketing or
distribution rights relating to any products or territory or has agreed to
purchase a minimum quantity of goods or services or has agreed to purchase goods
or services exclusively from a certain party;
(iii) any agreement concerning the establishment or operation of a
partnership, joint venture or limited liability company;
(iv) any agreement (or group of related agreements) under which it has
created, incurred, assumed or guaranteed (or may create, incur, assume or
guarantee) indebtedness (including capitalized lease obligations) involving more
than $10,000 or under which it has imposed (or may impose) a security interest
on any of its assets, tangible or intangible;
(v) any agreement for the disposition of any significant portion of
the assets or business of TDT or any Subsidiary (other than sales of products in
the Ordinary Course of Business) or any agreement for the acquisition of the
assets or business of any other entity (other than purchases of inventory or
components in the Ordinary Course of Business). As used in this Agreement
"Ordinary Course of Business" shall mean ordinary course of business consistent
with past custom and practice (including with respect to frequency and amount);
12
(vi) any agreement concerning confidentiality or noncompetition;
(vii) any employment or consulting agreement;
(viii) any agreement involving any current or former officer, director
or stockholder of TDT or Subsidiaries or an affiliate thereof;
(ix) any agreement under which the consequences of a default or
termination would reasonably be expected to have a material adverse effect
on TDT or Subsidiaries;
(x) any agreement which contains any provisions requiring TDT or any
Subsidiary to indemnify any other party (excluding indemnities contained in
agreements for the purchase, sale or license of products entered into in
the Ordinary Course of Business); and
(xi) any other agreement (or group of related agreements) either
involving more than $10,000 or not entered into in the Ordinary Course of
Business.
(b) TDT has delivered to Stronghold a complete and accurate copy of each
agreement listed in Schedule 2.17. With respect to each agreement so listed: (i)
the agreement is legal, valid, binding and enforceable and in full force and
effect; (ii) the agreement will continue to be legal, valid, binding and
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the Closing;
and (iii) neither TDT nor any Subsidiary nor, to the knowledge of TDT or
Subsidiaries, any other party, is in breach or violation of, or default under,
any such agreement, and no event has occurred, is pending or, to the knowledge
of TDT or Subsidiaries, is threatened, which, after the giving of notice, with
lapse of time, or otherwise, would constitute a breach or default by TDT or any
Subsidiary or, to the knowledge of TDT or Subsidiaries, any other party under
such agreement.
SECTION 2.18 Powers of Attorney. There are no outstanding powers of
--------------------
attorney executed on behalf of TDT or any Subsidiary.
SECTION 2.19 Insurance. Schedule 2.19 lists each insurance policy
---------
(including fire, theft, casualty, comprehensive general liability, workers
compensation, business interruption, environmental, product liability and
automobile insurance policies and bond and surety arrangements) to which TDT or
any Subsidiaries are a party, all of which are in full force and effect. Such
insurance policies are of the type and in amounts customarily carried by
organizations conducting businesses or owning assets similar to those of TDT and
Subsidiaries. There is no material claim pending under any such policy as to
which coverage has been questioned, denied or disputed by the underwriter of
such policy. All premiums due and payable under all such policies have been
paid, to TDT's and Subsidiaries' knowledge, neither TDT nor any Subsidiary may
be liable for retroactive premiums or similar payments, and TDT and Subsidiaries
are otherwise in compliance in all material respects with the terms of such
policies. TDT and Subsidiaries have no knowledge of any threatened termination
of, or premium increase with respect to, any such policy. Each such policy will
continue to be enforceable and in full
13
force and effect immediately following the Closing in accordance with the terms
thereof as in effect immediately prior to the Closing.
SECTION 2.20 Employee Benefits. Except as set forth in Schedule 2.20,
------------------
neither TDT nor any Subsidiary sponsors or otherwise maintains a "pension plan"
within the meaning of Section 3(2) of ERISA or any other retirement plan [other
than the TDT Profit Sharing and 401(k) Plan and Trust that is intended to
qualify under Section 401 of the IRC], nor do any unfunded liabilities exist
with respect to any employee benefit plan, past or present. No employee benefit
plan, any trust created thereunder or any trustee or administrator thereof has
engaged in a "prohibited transaction," as defined in Section 4975 of the IRC,
which may have a material adverse effect on the condition, financial or
otherwise, on TDT or Subsidiaries.
SECTION 2.21 Labor Relations; Compliance. Since their respective
-------------------------------
inceptions, there has not been, there is not presently pending or existing, and
to the respective party's knowledge there is not threatened, (a) any strike,
slowdown, picketing, work stoppage or employee grievance process, (b) any
Proceeding against or affecting TDT or Subsidiaries relating to the alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters, including any charge or complaint filed by an employee or union with
the National Labor Relations Board, the Equal Employment Opportunity Commission,
or any comparable governmental body, organizational activity, or other labor or
employment dispute against or affecting any of TDT, the Subsidiaries or their
premises, or (c) any application for certification of a collective bargaining
agent. No event has occurred or circumstance exists that could provide the basis
for any work stoppage or other labor dispute. There is no lockout of any
employees by TDT or Subsidiaries, and no such action is contemplated by TDT or
Subsidiaries. To the respective party's knowledge, TDT and Subsidiaries have
complied in all material respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health and plant closing. Neither TDT nor
Subsidiaries have been determined liable for the payment of any compensation,
damages, taxes, fines, penalties or other amounts, however designated, for
failure to comply with any of the foregoing Legal Requirements.
SECTION 2.22 Permits. TDT and Subsidiaries have all Permits that are or
-------
will be legally required to enable it to conduct its business in all material
respects as now conducted.
SECTION 2.23 No Conflict or Violation; Consent. None of the
-----------------------------------------
execution,delivery or performance of this Agreement, the consummation of the
transactions contemplated hereby or thereby, nor compliance by TDT,
Subsidiaries, Acquisition or any Principal Stockholder with any of the
provisions hereof or thereof, will (a) violate or conflict with any provision of
the governing documents of TDT, Subsidiaries, Acquisition or any Principal
Stockholder, (b) violate, conflict with, or result in a breach of or constitute
a default (with or without notice of passage of time) under, or result in the
termination of, or accelerate the performance required by, or result in a right
to terminate, accelerate, modify or cancel under, or require a notice under, or
result in the creation of any encumbrance upon any of its respective assets
under, any contract, lease, sublease, license, sublicense, franchise, permit,
indenture,
14
agreement or mortgage for borrowed money, instrument of indebtedness, security
interest or the arrangement to which TDT, any of its Subsidiaries or any
Principal Stockholder is a party or by which TDT, Subsidiaries or any Principal
Stockholder is bound or to which any of its respective assets are subject, (c)
violate any applicable regulation or court order or (d) impose any encumbrance
on any assets except, with respect to (b) and (d) above, where such violation,
conflict, default, termination or encumbrance would not be likely to result in,
individually or in the aggregate, a material adverse effect on the business or
operations of TDT or Subsidiaries. No notices to, declaration, filing or
registration with, approvals or consents of, or assignments by, any Person
(including any federal, state or local governmental or administrative
authorities) are necessary to be made or obtained by TDT, Subsidiaries or any
Principal Stockholder in connection with the execution, delivery or performance
of this Agreement or the consummation of the transactions contemplated hereby.
SECTION 2.24 Full Disclosure. None of the representations and warranties
---------------
made by TDT, Subsidiaries, Acquisition or Principal Stockholders herein, or in
any exhibit, certificate or memorandum furnished or to be furnished by TDT,
Subsidiaries or Acquisition on its behalf pursuant hereto, contains or will
contain any untrue statement of material fact, or omits any material fact, the
omission of which would be misleading. The information with respect to TDT and
Stronghold which is to be included in any information statement or proxy
statement to be sent to the shareholders of TDT will not contain any untrue
statement of material fact, or omit to state any material fact necessary to make
the statement or fact contained therein not misleading.
SECTION 2.25 Transactions with Affiliates. Except as set forth in Schedule
----------------------------
2.25, no director or officer of TDT, Subsidiaries, Acquisition or Principal
Stockholders or any member of his or her immediate family, is a party to any
contract or other business arrangement or relationship of any kind, including
lending or borrowing arrangements, with TDT, Subsidiaries or Principal
Stockholders, or has an ownership interest in any business, corporate or
otherwise, which is a party to, or in any property which is the subject of,
business arrangements or relationships of any kind with TDT, Subsidiaries or
Principal Stockholders.
SECTION 2.26 Environmental Matters.
---------------------
(a) TDT and Subsidiaries are in material compliance with all Environmental
Laws (as defined below);
(b) TDT and Subsidiaries have no knowledge of an existing or potential
Environmental Claim (as defined below), nor has TDT, any Subsidiary or any
Principal Stockholder received any notification or knowledge of alleged, actual
or potential responsibility for, or any inquiry or investigation regarding, any
disposal, release, or threatened release at any location of any Hazardous
Substance (as defined below) stored, generated or transported by TDT or
Subsidiaries;
(c) to the knowledge of TDT and Subsidiaries, (A) no underground tank or
other underground storage receptacle for Hazardous Substance has leaked from any
underground tank or related piping at any time; and (B) there have been no
releases of Hazardous Substances by TDT or Subsidiaries on, upon or into any
properties of TDT, Subsidiaries or any of their predecessors;
15
(d) to the knowledge of TDT and Subsidiaries, there has never been any PCBs
or asbestos located at or on any owned or leased property by TDT, Subsidiaries
or any of their predecessors;
(e) No environmental lien has ever been attached to any real property owned
or leased by TDT, Subsidiaries or any of its predecessors;
(f) Definitions.
(i) For purposes of this Agreement, "Environmental Laws" shall mean
all federal, state, district, local and foreign laws, all rules or regulations
promulgated thereunder, and all orders, consent orders, judgments, notices,
permits, or demand letters issued, promulgated, or entered pursuant thereto,
relating to pollution or protection of the environment (including without
limitation ambient air, surface water, ground water, land surface, or subsurface
strata), including without limitation (x) laws relating to emissions,
discharges, releases or threatened releases, or threatened releases of
pollutants, contaminants, chemicals, materials, wastes or other substances into
the environment and (y) laws relating to the identification, generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
recovery, transport or other handling of pollutants, contaminants, chemicals,
industrial materials, wastes or other substances.
(ii) For purposes of this Agreement, "Environmental Claims" shall mean
all accusations, allegations, notice of violations, liens, claims, demands,
suits or causes of action or any damage, including without limitation, personal
injury, property damage (including any depreciation of property values), lost
use of property, or consequential damages, arising directly or indirectly out of
Environmental Conditions or Environmental Laws.
(iii) For purposes of this Agreement, "Environmental Conditions" shall
mean the state of environment, including natural resources (e.g. flora and
fauna), soil, surface water, ground water, any present or potential drinking
water supply, subsurface strata, or ambient air, relating to or arising out of
the use, handling, storage, treatment, recycling, generation, transportation,
release, spilling, leaking, pumping, pouring, emptying, discharging, injection,
escaping, leaching, disposal, dumping, or threatened release of Hazardous
Substances by any Consolidated Entity or its predecessors or such predecessors
in interest, agents, representatives, employees, or independent contracts.
(iv) For purposes of this Agreement, "Hazardous Substances" shall mean
all pollutants, contaminants, chemicals, wastes, and any other carcinogenic,
ignitable, corrosive, reactive, toxic, or otherwise hazardous substances or
materials (whether solids, liquids or gases), including but not limited to any
substances, materials, or wastes subject to regulation, control, or remediation
under Environmental Laws.
ARTICLE III
COVENANTS OF TDT, SUBSIDIARIES, ACQUISITION AND
THE PRINCIPAL STOCKHOLDERS
16
SECTION 3.1 Conduct Prior to the Closing. Between the date hereof and the
-----------------------------
Closing, other than actions or transactions referred to herein:
(a) TDT, Subsidiaries and Acquisition will not enter into any material
agreement, contract or commitment, whether written or oral, or engage in any
transaction, without the prior written consent of Stronghold;
(b) TDT, Subsidiaries and Acquisition will not pay, incur or declare any
dividends or distributions with respect to its capital stock or amend its
Articles of Incorporation or Certificate of Incorporation or By-Laws, without
the prior written consent of Stronghold;
(c) TDT, Subsidiaries and Acquisition will not authorize, issue, sell,
purchase or redeem any shares of its capital stock or any options or other
rights to acquire its capital stock, without the prior written consent of
Stronghold;
(d) TDT, Subsidiaries and Acquisition will comply with all requirements
which federal or state law may impose on it with respect to this Agreement and
the transactions contemplated hereby, and will promptly cooperate with and
furnish written information to Stronghold in connection with any such
requirements imposed upon the parties hereto in connection therewith;
(e) TDT, Subsidiaries and Acquisition will not incur any indebtedness for
money borrowed, or issue or sell any debt securities, incur or suffer to be
incurred any liability or obligation of any nature whatsoever, or cause or
permit any lien, encumbrance or security interest to be created or arise on or
in any of its properties or assets, acquire or dispose of fixed assets change
employment terms, enter into any material or long-term contract, guarantee
obligations of any third party, settle or discharge any balance sheet receivable
for less than its stated amount or enter into any other transaction other than
in the regular course of business, except to comply with the terms of this
Agreement, without the prior written consent of Stronghold;
(f) TDT, Subsidiaries and Acquisition will not make any investment of
capital nature either buy purchased stock or securities, contribution to
capital, property transfer or otherwise, or by the purchase of any property or
assets of any other Person;
(g) TDT, Subsidiaries and Acquisition will not enter into any contract
whatsoever, including any employment contract or any other compensation
arrangement;
(h) TDT, Subsidiaries and Acquisition will not do any other act which would
cause any representation or warranty of TDT, Subsidiaries or Acquisition in this
Agreement to be or become untrue in any material respect or that is not in the
Ordinary Course of Business;
(i) None of TDT, Subsidiaries, Acquisition or any Principal Stockholder
shall directly or indirectly (a) solicit any inquiry or proposal or enter into
or continue any discussions, negotiation or agreements relating to (i) the sale
or exchange of TDT or Acquisition's capital stock, or (ii) the merger of TDT or
Acquisition with any Person other than
17
Stronghold, or (b) provide any assistance or any information or other otherwise
cooperate with any Person in connection with any such inquiry, proposal or
transaction;
(j) TDT, Subsidiaries and Acquisition shall grant to Stronghold and its
counsel, accountants and other representatives, full access during normal
business hours during the period to the Closing to all of its respective
properties, books, contracts, commitments and records and, during such period,
furnish promptly to Stronghold and such representatives all information relating
to TDT and Subsidiaries as Stronghold may reasonably request, and shall extend
to Stronghold the opportunity to meet with TDT's accountants and attorneys to
discuss the financial condition of TDT and Subsidiaries; and
(k) Except for the transactions contemplated by this Agreement, TDT,
Subsidiaries and Acquisition will conduct its business in the normal course, and
shall not sell, pledge or assign any of its assets without the prior written
consent of Stronghold.
SECTION 3.2 Affirmative Covenants. Prior to Closing, TDT and Subsidiaries
----------------------
will do the following:
(a) Use their best efforts to accomplish all actions necessary to
consummate this Agreement, including satisfaction of all conditions contained in
this Agreement;
(b) Promptly notify Stronghold in writing of any material adverse change in
the financial condition, business, operations or key personnel of TDT,
Subsidiaries or Acquisition, any threatened material litigation or
investigation, any breach of its representations or warranties contained herein,
and any material contract, agreement, license or other agreement which, if in
effect on the date of this Agreement, should have been included in this
Agreement or in an exhibit annexed hereto and made a part hereof;
(c) Use their best efforts to satisfy all consents of or notices to its
shareholders under federal and state securities laws and state corporate law;
and
(d) Obtain the written resignations of its existing officers and directors,
with respect to TDT, and nominate a new Board of Directors, whose nominees are
listed in Section 1.4(d), which nominations shall be effective 10 days after
complying with the requirements of Rule 14f-1 of the Exchange Act, in accordance
with Section 1.5(d).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
STRONGHOLD
Stronghold hereby represents, warrants and agrees, and, with respect to
Sections 4.2, 4.4, 4.9 and 4.10, the Stronghold Stockholder and Stronghold
together hereby jointly and severally represent, warrant and agree, as of the
date hereof and as of the Closing Date:
18
SECTION 4.1 Organization of Stronghold; Authority. Stronghold is a
-----------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of New Jersey, is duly qualified or will become duly qualified and
in good standing in every jurisdiction in which such qualification is necessary,
except as set forth in Schedule 4.1, and has the corporate power and authority
to own its properties and assets and to transact the business in which it is
engaged. Schedule 4.1 contains a complete and accurate list for Stronghold of
its jurisdiction of incorporation and other jurisdictions in which it is
qualified to do business. There are no corporations or other entities with
respect to which (i) Stronghold owns any of the outstanding stock or other
interests, or (ii) Stronghold may be deemed to be in control except as otherwise
disclosed in Schedule 4.1 annexed hereto and by this reference made a part
hereof. Stronghold and its stockholders have approved this Agreement and duly
authorized the execution hereof. Stronghold has full power, authority and legal
right to enter into this Agreement on behalf of Stronghold and its stockholders
and to consummate the transactions contemplated hereby, and all corporate action
necessary to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby has been duly and validly
taken. This Agreement upon its execution and delivery, is the legal, valid and
binding obligation of Stronghold, enforceable against Stronghold in accordance
with its respective terms except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally.
SECTION 4.2 Capitalization of Stronghold.
----------------------------
(a) The authorized capital stock of Stronghold consists of Ten Million
(10,000,000) shares of common stock, no par value per share (the "Stronghold
Common Stock"), of which Three Million Two Hundred Thousand, (3,200,000) shares
of Stronghold Common Stock are issued and outstanding. All shares of Stronghold
Common Stock currently issued and outstanding have been duly authorized and
validly issued and are fully paid and non-assessable, and have been issued in
compliance with any and all applicable federal and state laws or pursuant to
appropriate exemptions therefrom. Other than the options listed in Schedule
4.2(a) hereto, there are no outstanding options, warrants, rights, calls,
commitments or agreements of any character obligating Stronghold to issue any
shares of its capital stock or other securities or any security representing the
right to purchase or otherwise receive any such stock or other securities.
Schedule 4.2(a) sets forth the name of each holder of shares of Stronghold
Common Stock, as well as the number of shares of Stronghold Common Stock held by
each such holder as of the Closing Date.
(b) Other than the transactions contemplated by this Agreement, there is no
outstanding vote, plan, pending proposal or right of any person to cause any
redemption of Stronghold Common Stock or the merger or consolidation of
Stronghold with or into any other entity.
(c) There are no agreements among stockholders of Stronghold, or otherwise,
voting trusts, proxies or other agreements or understanding of any character,
whether written or oral, with respect to or concerning the purchase, sale,
transfer or voting of the Stronghold Common Stock or any other security of
Stronghold, except as set forth in Schedule 4.2(c).
19
(d) Stronghold does not have any legal obligations, absolute or contingent,
to any other person or entity to sell the assets or to sell any capital stock or
any other security of Stronghold or to effect any merger, consolidation or other
reorganization of Stronghold or to enter into any agreement with respect
thereto, except pursuant to this Agreement.
SECTION 4.3 Charter Documents. Complete and correct copies of the
------------------
Certificate of Incorporation and By-Laws of Stronghold have been delivered to
TDT.
SECTION 4.4 Financial Statements, Assets and Liabilities.
---------------------------------------------
(a) Stronghold's audited financial statements for the stub period from
inception through December 31, 2000, and for the year ending December 31, 2001,
have been delivered to TDT and are true and complete in all material respects,
having been prepared in accordance with GAAP applied on a consistent basis for
the periods covered by such statements, and fairly present, in accordance with
GAAP, the financial condition of Stronghold and results of its operations in all
material respects for the periods covered thereby. Stronghold maintains a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed with management's authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's
authorizations and (iv) the recorded accountability for assets if compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any difference. Stronghold has not engaged in any transaction,
maintained any back account or used any corporate funds except for transactions,
bank accounts or funds which have been and are reflected in the normally
maintained books and records.
(b) Stronghold has good and marketable title to all of its assets and
property to be delivered to TDT hereunder free and clear of any and all liens,
claims and encumbrances, except as may be otherwise set forth herein and in its
financial statements. As of the date hereof, Stronghold does not have any debts,
liabilities or obligations of any nature, whether accrued, absolute, contingent,
or otherwise, whether due or to become due, that are not fully reflected in the
Stronghold financial statements.
SECTION 4.5 Absence of Certain Changes or Events. Since the date of the
-------------------------------------
latest Stronghold financial statement and except as disclosed otherwise herein,
Stronghold has not (i) issued or sold any promissory note, unit of ownership or
membership, bond, option or other security of which it was an issuer or other
obligor, (ii) discharged or satisfied any lien or encumbrance or paid any
obligation or liability, absolute or contingent, direct or indirect, except in
the ordinary course of its business, (iii) incurred or suffered to be incurred
any liability or obligation whatsoever, except in the ordinary course of its
business, (iv) caused or permitted any lien, encumbrance or security interest to
be created or arise on or in any of its properties or assets, (v) declared or
made any dividend, payment or distribution to members or purchased or redeemed
or agreed to purchase or redeem any member's ownership rights, (vi) reclassified
its shares of capital stock, (vii) entered into any agreement or transaction
except in connection with the execution and performance of this Agreement,
(viii) amended its Articles of Incorporation or Certificate of Incorporation or
By-Laws, or (ix) acquired any equity interest in any other Person.
20
SECTION 4.6 Tax Returns and Payments. All of Stronghold's tax returns
---------------------------
(Federal, state, city, county or foreign) which are required by law to be filed
on or before the date of this Agreement, have been duly filed or extended with
the appropriate governmental authority and are complete and accurate in all
respects. Stronghold has paid all taxes to be due on said returns, any
assessments made against Stronghold and all other taxes, fees and similar
charges imposed on Stronghold by any governmental authority (other than those,
the amount or validity of which is being contested in good faith by appropriate
proceedings). No tax liens have been filed and no claims are being assessed with
respect to any such taxes, fees or other similar charges. Stronghold knows of
(i) no other tax returns or reports which are required to be filed which have
not been so filed and (ii) no unpaid assessment for additional taxes for any
fiscal period or any basis thereof.
SECTION 4.7 Required Authorizations. There have been or will be timely
------------------------
filed, given, obtained or taken, all applications, notices, consents, approvals,
orders, registrations, qualifications, waivers or other actions of any kind
required by virtue of execution and delivery of this Agreement by Stronghold or
the consummation by it of the transactions contemplated hereby and appropriate
corporate filings shall have been made in the State of New Jersey, as required.
SECTION 4.8 Compliance with Law and Government Regulations. Stronghold is,
----------------------------------------------
to the best of its knowledge, in compliance in all material respects with all
applicable statutes, regulations (including without limitation, any applicable
building, zoning or other law, ordinance or regulation), decrees, orders,
restrictions, guidelines and standards affecting its properties and operations,
imposed by the United States of America or any state to which Stronghold is
subject, the failure to comply with which would, either individually or in the
aggregate, have a material adverse effect on the business, finances or prospects
of Stronghold. Stronghold is not subject to any order, decree, judgment or other
sanction of any court, administrative agency or other tribunal.
SECTION 4.9 Litigation. There is no litigation, arbitration, proceeding or
----------
investigation pending, or, to the knowledge of Stronghold, threatened or
anticipated, to which Stronghold is a party or which may result in any material
change in the business condition, financial or otherwise, of Stronghold or in
any of its properties or assets, or which might result in any liability on the
part of Stronghold, or which questions the validity of this Agreement or of any
action taken or to be taken pursuant to or in connection with the provisions of
this Agreement, and to the best knowledge of Stronghold, there is no basis for
any such litigation, arbitration, proceeding or investigation except as
otherwise set forth in Schedule 4.9. There are presently no outstanding
judgments, decrees or orders of any court or any governmental or administrative
agency against or affecting Stronghold or any of either of their assets that is
not disclosed herein. Schedule 4.9 contains a complete and accurate description
of all claims, suits, litigations, proceedings, investigations, disputes, writs,
injunctions, judgments and decrees since July 31, 2000 to which Stronghold has
been a party.
SECTION 4.10 Patents and Other Proprietary Rights. Stronghold has
----------------------------------------
sufficient title and ownership of, or right to use, all patents, trademarks,
service marks, trade names, copyrights, trade secrets, information, proprietary
rights and processes necessary for the conduct of its
21
business (collectively, the "Stronghold Intellectual Property Assets") as now
conducted and as proposed to be conducted free and clear of all liens, security
interests, charges, encumbrances and other adverse claims. To the knowledge of
Stronghold, such business does not and would not conflict with or constitute an
infringement on the rights of others, or to the knowledge of Stronghold, is
being infringed by others. Schedule 4.10 sets forth the Stronghold Intellectual
Property Assets.
SECTION 4.11 Governmental Consent. No consent, approval, authorization or
--------------------
order of, or registration, qualification, designation, declaration or filing
with, any governmental authority on the part of Stronghold is required in
connection with the execution and delivery of this Agreement or the carrying out
of any transactions contemplated hereby other than filing the Agreement together
with Certificate of Merger with the State of New Jersey.
SECTION 4.12 Investment Purpose. Stronghold has received or shall receive
-------------------
by the Closing representations from its stockholders that the recipients of the
restricted Merger Shares hereunder are acquiring the shares for investment
purposes only and acknowledgments that the Merger Shares issued hereunder are
"restricted securities" and may not be sold, traded or otherwise transferred
without registration under the Securities Act or exemption therefrom.
SECTION 4.13 No Disqualifying Orders. Neither Stronghold nor any of its
-------------------------
affiliates, directors, officers or principals is subject to any disqualifying
order under the "Bad Boy" provisions of the federal or any state's securities
law which are defined in Section 2.15.
SECTION 4.14 Real Property. Stronghold does not own any real property.
--------------
Schedule 4.14 lists all real property leases (the "Stronghold Leases") and lists
the term of such Stronghold Lease, any extension and expansion options, and the
rent payable thereunder. Stronghold has delivered to TDT complete and accurate
copies of the Stronghold Leases. With respect to each Stronghold Lease:
(a) such Stronghold Lease is legal, valid, binding, enforceable and in full
force and effect;
(b) such Stronghold Lease will continue to be legal, valid, binding,
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the Closing;
(c) Neither Stronghold, nor, to the knowledge of Stronghold, any other
party, is in breach or violation of, or default under, any such Stronghold
Lease, and no event has occurred, is pending or, to the knowledge of the
Stronghold, is threatened, which, after the giving of notice, with lapse of
time, or otherwise, would constitute a breach or default by Stronghold or, to
the knowledge of Stronghold, any other party under such Stronghold Lease;
(d) there are no disputes, oral agreements or forbearance programs in
effect as to such Stronghold Lease;
(e) Stronghold has not assigned, transferred, conveyed, mortgaged, deeded
in trust or encumbered any interest in the leasehold or subleasehold;
22
(f) to the knowledge of Stronghold, all facilities leased or subleased
thereunder are supplied with utilities and other services adequate for the
operation of said facilities; and
(g) Stronghold is not aware of any security interest, easement, covenant or
other restriction applicable to the real property subject to such lease which
would reasonably be expected to materially impair the current uses or the
occupancy by Stronghold of the property subject thereto.
SECTION 4.15 Contracts.
---------
(a) Schedule 4.15 lists the following agreements (written or oral) to which
Stronghold is a party as of the date of this Agreement:
(i) any agreement (or group of related agreements) for the lease of
personal property from or to third parties providing for lease payments in
excess of $50,000 per annum or having a remaining term longer than six
months;
(ii) any agreement (or group of related agreements) for the purchase
or sale of products or for the furnishing or receipt of services (A) which
calls for performance over a period of more than one year, (B) which
involves more than the sum of $50,000 or (C) in which Stronghold has
granted manufacturing rights, "most favored nation" pricing provisions or
marketing or distribution rights relating to any products or territory or
has agreed to purchase a minimum quantity of goods or services or has
agreed to purchase goods or services exclusively from a certain party;
(iii) any agreement concerning the establishment or operation of a
partnership, joint venture or limited liability company;
(iv) any agreement (or group of related agreements) under which it has
created, incurred, assumed or guaranteed (or may create, incur, assume or
guarantee) indebtedness (including capitalized lease obligations) involving
more than $50,000 or under which it has imposed (or may impose) a security
interest on any of its assets, tangible or intangible;
(v) any agreement for the disposition of any significant portion of
the assets or business of Stronghold (other than sales of products in the
Ordinary Course of Business) or any agreement for the acquisition of the
assets or business of any other entity (other than purchases of inventory
or components in the Ordinary Course of Business);
(vi) any agreement concerning confidentiality or noncompetition;
(vii) any employment or consulting agreement;
(viii) any agreement involving any current or former officer, director
or stockholder of Stronghold or an affiliate thereof;
23
(ix) any agreement under which the consequences of a default or
termination would reasonably be expected to have a material adverse effect
on Stronghold;
(x) any agreement which contains any provisions requiring Stronghold
to indemnify any other party (excluding indemnities contained in agreements
for the purchase, sale or license of products entered into in the Ordinary
Course of Business); and
(xi) any other agreement (or group of related agreements) either
involving more than $50,000 or not entered into in the Ordinary Course of
Business.
(b) Stronghold has delivered to TDT a complete and accurate copy of each
agreement listed in Schedule 4.16. With respect to each agreement so listed: (i)
the agreement is legal, valid, binding and enforceable and in full force and
effect; (ii) the agreement will continue to be legal, valid, binding and
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the Closing;
and (iii) neither Stronghold nor, to the knowledge of Stronghold, any other
party, is in breach or violation of, or default under, any such agreement, and
no event has occurred, is pending or, to the knowledge of Stronghold, is
threatened, which, after the giving of notice, with lapse of time, or otherwise,
would constitute a breach or default by Stronghold or, to the knowledge of
Stronghold, any other party under such agreement.
SECTION 4.16 Powers of Attorney. There are no outstanding powers of
--------------------
attorney executed on behalf of Stronghold.
SECTION 4.17 Insurance. Schedule 4.17 lists each insurance policy
---------
(including fire, theft, casualty, comprehensive general liability, workers
compensation, business interruption, environmental, product liability and
automobile insurance policies and bond and surety arrangements) to which
Stronghold is a party, all of which are in full force and effect. Such insurance
policies are of the type and in amounts customarily carried by organizations
conducting businesses or owning assets similar to those of Stronghold. There is
no material claim pending under any such policy as to which coverage has been
questioned, denied or disputed by the underwriter of such policy. All premiums
due and payable under all such policies have been paid, to Stronghold's
knowledge, Stronghold is not liable for retroactive premiums or similar
payments, and Stronghold is otherwise in compliance in all material respects
with the terms of such policies. Stronghold has no knowledge of any threatened
termination of, or premium increase with respect to, any such policy. Each such
policy will continue to be enforceable and in full force and effect immediately
following the Closing in accordance with the terms thereof as in effect
immediately prior to the Closing.
SECTION 4.18 Employee Benefits. Except as set forth in Schedule
-------------------
4.18,Stronghold does not sponsor or otherwise maintain a "pension plan" within
the meaning of Section 3(2) of ERISA or any other retirement plan, nor do any
unfunded liabilities exist with respect to any employee benefit plan, past or
present. No employee benefit plan, any trust created thereunder or any trustee
or administrator thereof has engaged in a "prohibited transaction," as defined
in Section 4975 of the IRC, which may have a material adverse effect on the
condition, financial or otherwise, of Stronghold.
24
SECTION 4.19 Labor Relations; Compliance. Since Stronghold's inception,
----------------------------
there has not been, there is not presently pending or existing, and to
Stronghold's knowledge there is not threatened, (a) any strike, slowdown,
picketing, work stoppage or employee grievance process, (b) any Proceeding
against or affecting Stronghold relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any comparable
governmental body, organizational activity, or other labor or employment dispute
against or affecting any of Stronghold or its premises or (c) any application
for certification of a collective bargaining agent. No event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any employees by Stronghold, and no such
action is contemplated by Stronghold. To Stronghold's knowledge, Stronghold has
complied in all material respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health and plant closing. Stronghold has
not been determined liable for the payment of any compensation, damages, taxes,
fines, penalties or other amounts, however designated, for failure to comply
with any of the foregoing Legal Requirements.
SECTION 4.20 Permits. Stronghold has all Permits that are or will be
--------
legally required to enable it to conduct its business in all material respects
as now conducted.
SECTION 4.21 No Conflict or Violation; Consent. None of the
-----------------------------------------
execution,delivery or performance of this Agreement, the consummation of the
transactions contemplated hereby or thereby, nor compliance by Stronghold with
any of the provisions hereof or thereof, will (a) violate or conflict with any
provision of the governing documents of Stronghold, (b) violate, conflict with,
or result in a breach of or constitute a default (with or without notice of
passage of time) under, or result in the termination of, or accelerate the
performance required by, or result in a right to terminate, accelerate, modify
or cancel under, or require a notice under, or result in the creation of any
encumbrance upon any of its respective assets under, any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, security interest or
the arrangement to which Stronghold is a party or by which Stronghold is bound
or to which any of its respective assets are subject, (c) violate any applicable
regulation or court order or (d) impose any encumbrance on any assets. No
notices to, declaration, filing or registration with, approvals or consents of,
or assignments by, any Person (including any federal, state or local
governmental or administrative authorities) are necessary to be made or obtained
by Stronghold in connection with the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby.
SECTION 4.22 Full Disclosure. None of the representations and warranties
---------------
made by Stronghold herein, or in any exhibit, certificate or memorandum
furnished or to be furnished by, on its behalf pursuant hereto, contains or will
contain any untrue statement of material fact, or omits any material fact, the
omission of which would be misleading. All information with respect to
Stronghold which is to be included in any information or proxy statement to be
sent to the shareholders of TDT and which has been provided by Stronghold to TDT
or its counsel or
25
other advisors shall not contain any untrue statement of material fact, or omit
to state any material fact necessary to make the statement or fact contained
therein not misleading.
SECTION 4.23 Transactions and Affiliates. No director, officer or
-----------------------------
stockholder of Stronghold or any member of each of their respective immediate
families, is a party to any contract or other business arrangement or
relationship of any kind with Stronghold, or has an ownership interest in any
business, corporate or otherwise, which is a party to, or in any property which
is the subject of, business arrangements or relationships of any kind with
Stronghold, except as set forth in Schedule 4.23.
SECTION 4.24 Environmental Matters.
---------------------
(a) Stronghold is in material compliance with all Environmental Laws;
(b) Stronghold has no knowledge of an existing or potential Environmental
Claim, nor has Stronghold received any notification or knowledge of alleged,
actual or potential responsibility for, or any inquiry or investigation
regarding, any disposal, release, or threatened release at any location of any
Hazardous Substance stored, generated or transported by Stronghold;
(c) to the knowledge of Stronghold, (A) no underground tank or other
underground storage receptacle for Hazardous Substance has leaked from any
underground tank or related piping at any time; and (B) there have been no
releases of Hazardous Substances by Stronghold, upon or into any properties of
Stronghold or any of its predecessors;
(d) to the knowledge of Stronghold, there has never been any PCBs or
asbestos located at or on any owned or leased property by Stronghold or any of
its predecessors; and
(e) No environmental lien has ever been attached to any real property owned
or leased by Stronghold.
SECTION 4.25 Books and Records. The books of account, minute books, stock
------------------
record books, and other records of Stronghold, all of which have been made
available to TDT, are complete and correct in all material respects and have
been maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls. The minute books of
Stronghold contain accurate and complete records of all meetings held of, and
corporate action taken by, the shareholders, the board of directors, and any
committees of the board of directors of Stronghold.
SECTION 4.26 Accounts Receivable. All accounts receivable of Stronghold
--------------------
that are reflected on the balance sheet for the December 31, 2001 financial
statements of Stronghold or on any other accounting records of Stronghold as of
the Closing Date (collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. There is no contest,
claim or right of set-off, other than returns in the Ordinary Course of
Business, under any
26
contract with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable.
SECTION 4.27 No Undisclosed Liabilities. There are no material liabilities
--------------------------
of Stronghold other than:
(a) Liabilities set forth on, reserved against or reflected in the December
31, 2001 balance sheet and notes thereto;
(b) Liabilities disclosed in this Agreement, the Exhibits attached hereto,
and in the Schedules or lists furnished pursuant hereto (and for this purpose,
the disclosure of facts, circumstances, situations and conditions in the
Schedules shall be deemed disclosure of liabilities which arise from such facts,
circumstances, situations and conditions regardless of whether, when or in what
form such liabilities may arise in the future); or
(c) Liabilities incurred in the Ordinary Course of Business since the
December 31, 2001 balance sheet, none of which had a material adverse effect on
the business, financial condition or results of operations of Stronghold, and
none of which is required to be recorded under GAAP in respect of any period
prior to December 31, 2001, and none of which is in respect of a material claim
for damages, fines or other legal relief.
ARTICLE V
COVENANTS OF STRONGHOLD
SECTION 5.1 Conduct Prior to the Closing. Between the date hereof and the
-----------------------------
Closing:
(a) Stronghold will not pay, incur or declare any dividends or
distributions with respect to its shares of Stronghold Common Stock or amend its
Certificate of Incorporation or By-Laws without the prior written consent of
TDT;
(b) Stronghold will not authorize, issue, sell, purchase, or redeem any
shares of its capital stock or any options or other rights to acquire its
capital stock, without the prior written consent of TDT;
(c) Stronghold will not do any other act which would cause any
representation or warranty of Stronghold in this Agreement to be or become
untrue in any material respect or that is not in the Ordinary Course of
Business;
(d) Stronghold shall not directly or indirectly (a) solicit any inquiry or
proposal or enter into or continue any discussions, negotiation or agreements
relating to (i) the sale or exchange of Stronghold's capital stock, or (ii) the
merger of Stronghold with any Person other than TDT or (b) provide any
assistance or any information or otherwise cooperate with any Person in
connection with any such inquiry, proposal or transaction;
27
(e) Stronghold will comply with all requirements which federal or state law
may impose on it with respect to this Agreement and the transactions
contemplated hereby, and will promptly cooperate with and furnish written
information to TDT in connection with any such requirements imposed upon the
parties hereto in connection therewith;
(f) Stronghold will not make any investment of capital nature either buy
purchased stock or securities, contribution to capital, property transfer or
otherwise, or by the purchase of any property or assets of any other Person;
(g) Stronghold shall grant to TDT and its counsel, accountants and other
representatives, full access during normal business hours during the period to
the Closing to all its respective properties, books, contracts, commitments and
records and, during such period, furnish promptly to TDT and such
representatives all information relating to Stronghold as TDT may reasonably
request, and shall extend to TDT the opportunity to meet with Stronghold's
accountants and attorneys to discuss the financial condition of Stronghold; and
(h) Except for the transactions contemplated by this Agreement, Stronghold
will conduct its business in the normal course, and shall not sell, pledge or
assign any of its assets without the prior written consent of TDT.
SECTION 5.2 Affirmative Covenants. Prior to Closing, Stronghold will do the
---------------------
following: Between the date hereof and the Closing:
(a) Use its best efforts to accomplish all actions necessary to consummate
this Agreement, including satisfaction of all conditions contained in this
Agreement; and
(b) Promptly notify TDT in writing of any material adverse change in the
financial condition, business, operations or key personnel of Stronghold, any
threatened material litigation or investigation, any breach of its
representations or warranties contained herein, and any material contract,
agreement, license or other agreement which, if in effect on the date of this
Agreement, should have been included in this Agreement, or in a Schedule or
Exhibit annexed hereto and made a part hereof.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Expenses. All costs and expenses incurred in connection with
--------
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense, except that Stronghold shall pay to SVCH (as
defined in Section 12.15) reasonable out- of-pocket expenses incurred in
connection with the transactions contemplated hereby, including the SVCH
Transaction, not to exceed $35,000.
SECTION 6.2 Brokers and Finders. Except as set forth in Schedule 6.2, each
--------------------
of the parties hereto represents, as to itself, that no agent, broker,
investment banker or firm or person is or will be entitled to any broker's or
finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement.
28
SECTION 6.3 Necessary Actions. Subject to the terms and conditions herein
------------------
provided, each of the parties hereto agree to use all reasonable efforts to
take, or cause to be taken, all action, and to do or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
In the event at any time after the Closing, any further action is necessary or
desirable to carry out the purpose of this Agreement, the proper managers,
officers and/or directors of TDT or Stronghold, as the case may be, shall take
all such necessary action.
SECTION 6.4 Indemnification.
---------------
(a) General.
-------
(i) Subsequent to the Closing, TDT, Subsidiaries and the Principal
Stockholders shall, jointly and severally, indemnify Stronghold, and each
of the Stronghold stockholders ("Stronghold Indemnified Parties") against,
and hold each of the Stronghold Indemnified Parties harmless from any
damage, claim, loss, cost, liability or expense, including without
limitation, interest, penalties, reasonable attorneys' fees and expenses of
investigation, diminution of value, response action, removal action or
remedial action (collectively "Damages") incurred by any such Stronghold
Indemnified Party, that are incident to, arise out of, in connection with,
or related to, whether directly or indirectly, the breach of any warranty,
representation, covenant or agreement of TDT, Subsidiaries, Acquisition or
the Principal Stockholders contained in this Agreement or any schedule
hereto or in any certificate or instrument of conveyance delivered by or on
behalf of TDT or the Principal Stockholders pursuant to this Agreement or
in connection with the transaction contemplated hereby.
(ii) Subsequent to the Closing, Stronghold shall indemnify TDT and the
Principal Stockholders ("TDT Indemnified Parties"), against, and hold each
of the TDT Indemnified Parties harmless from, any Damages incurred by such
TDT Indemnified Party, that are incident to, arise out of, in connection
with, or related to, whether directly or indirectly, the breach of any
warranty, representation, covenant or agreement of Stronghold contained in
this Agreement, any schedule or in any certificate or instrument of
conveyance delivered by or on behalf of Stronghold pursuant to this
Agreement or in connection with the transactions contemplated hereby.
The term "Damages" as used in this Section 6.4 is not limited to
matters asserted by third parties against Stronghold Indemnified Parties or TDT
Indemnified Parties, but includes Damages incurred or sustained by such persons
in the absence of third party claims.
(b) Procedure for Claims.
--------------------
(i) If a claim for Damages (a "Claim") is to be made by a person
entitled to indemnification hereunder, the person claiming such
indemnification (the "Indemnified Party"), subject to clause (ii) below,
shall give written notice (a "Claim Notice") to the indemnifying person
(the "Indemnifying Party") as soon as practicable after the Indemnified
Party becomes aware of any fact, condition or event which may give rise to
Damages for which indemnification may be sought under this Section 6.4. The
failure of any Indemnified Party to give timely notice hereunder shall not
affect rights to indemnification hereunder, except and only
29
to the extent that, the Indemnifying Party demonstrates actual material
damage caused by such failure. In the case of a Claim involving the
assertion of a claim by a third party (whether pursuant to a lawsuit or
other legal action or otherwise, a "Third-Party Claim"), if the
Indemnifying Party shall acknowledge in writing to the Indemnified Party
under the terms of its indemnity hereunder in connection with such
Third-Party Claim, then (A) the Indemnifying Party shall be entitled and,
if it so elects, shall be obligated at its own cost, risk and expense, (1)
to take control of the defense and investigation of such Third-Party Claim
and (2) to pursue the defense thereof in good faith by appropriate actions
or proceedings promptly taken or instituted and diligently pursued,
including, without limitation, to employ and engage attorneys of its own
choice reasonably acceptable to the Indemnified Party to handle and defend
the same, and (B) the Indemnifying Party shall be entitled (but not
obligated), if it so elects, to compromise or settle such claim, which
compromise or settlement shall be made only with the written consent of the
Indemnified Party, such consent not to be unreasonably withheld. In the
event the Indemnifying Party elects to assume control of the defense and
investigation of such lawsuit or other legal action in accordance with this
Section 6.4, the Indemnified Party may, at its own cost and expense,
participate in the investigation, trial and defense of such Third-Party
Claim; provided that, if the named persons to a lawsuit or other legal
action include both the Indemnifying Party and the Indemnified Party and
the Indemnified Party has been advised in writing by counsel that there may
be one or more legal defenses available to such Indemnified Party that are
different from or additional to those available to the Indemnifying Party,
the Indemnified Party shall be entitled, at the Indemnifying Party's cost,
risk and expense, to separate counsel of its own choosing. If the
Indemnifying Party fails to assume the defense of such Third-Party Claim in
accordance with this Section 6.4 within 10 calendar days after receipt of
the Claim Notice, the Indemnified Party against which such Third-Party
Claim has been asserted shall, upon delivering notice to such effect to the
Indemnifying Party, have the right to undertake, at the Indemnifying
Party's cost, risk and expense, the defense, compromise and settlement of
such Third-Party Claim on behalf of and for the account of the Indemnifying
Party; provided that such Third-Party Claim shall not be compromised or
settled without the written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld. In the event the Indemnifying
Party assumes the defense of the claim, the Indemnifying Party shall keep
the Indemnified Party reasonably informed of the progress of any such
defense, compromise or settlement, and in the event the Indemnified Party
assumes the defense of the claim, the Indemnified Party shall keep the
Indemnifying Party reasonably informed of the progress of any such defense,
compromise or settlement. The Indemnifying Party shall be liable for any
settlement of any Third-Party Claim effected pursuant to and in accordance
with this Section 6.4 and for any final judgment (subject to any right of
appeal), and the Indemnifying Party agrees to indemnify and hold harmless
each Indemnified Party from and against any and all Damages by reason of
such settlement or judgment.
(ii) Notwithstanding clause (i) above, in the event that the
Indemnified Party is a TDT Indemnified Party, any Claim Notice, election or
other notification or correspondence required pursuant to such clause (i)
shall be valid if it is delivered to Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP (the
"Stockholder Representative"). Each Principal Stockholder hereby
irrevocably appoints the Stockholder Representative as its agent and
attorney-in-fact with respect to the matters set forth in this Section 6.4,
and hereby irrevocably grants to the Stockholder Representative the
authority to administer Claims on behalf of such Stockholder, to
30
exercise such other rights and powers as are set forth in this Agreement
and to enter into, and to bind such Stockholder with respect to, the
settlement of any such Claim. Each Stronghold Indemnified Party shall be
entitled to rely on the agreements and representations of, and notices and
other correspondence from, the Stockholder Representative as such agent and
attorney-in-fact in connection with any Claim by or against any Stockholder
pursuant to this Section 6.4.
(c) No Right of Contribution. After the Closing, Subsidiaries and Principal
------------------------
Stockholders shall not have any right of contribution against the Surviving
Corporation for any breach of any representation, warranty, covenant or
agreement of TDT. Stronghold and TDT shall be entitled to specific performance
and injunctive relief, without posting bond or other security, for the purpose
of asserting their respective rights under this Section 6.4. The remedies
described in this Section 6.4 shall be in addition to, and not in lieu of, any
other remedies at law or in equity that the parties may elect to pursue.
SECTION 6.5 Escrow of TDT Common Stock held by Principal Stockholders.
---------------------------------------------------------
(a) Immediately prior to the Closing, certain holders of shares of TDT
common stock (the "TDT Escrow Holders"), as set forth on Schedule 6.5 hereto,
shall deposit into escrow with Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP, as escrow
agent (the "Escrow Agent"), an aggregate of One Million (1,000,000) shares of
TDT Common Stock owned by them (the "Escrowed Shares"), in the amounts set forth
on Schedule 6.5, and in accordance with an Escrow Agreement by and among the TDT
Escrow Holders, Stronghold, TDT and the Escrow Agent. The Escrowed Shares shall
be released from escrow only in accordance with the Escrow Agreement and this
Section 6.5 as follows:
(i) Upon the earlier to occur of (i) a closing (or series of closings)
of any equity financing (other than the SVCH Transaction as defined in
Section 12.15) in which TDT receives aggregate net proceeds of not less
than $4 million at an aggregate pre-money company valuation of not less
than $20 million, or (ii) the exercise of all of the SVCH Warrants (as
defined in Section 12.15) pursuant to which TDT receives total proceeds of
at least $3,750,000, TDT shall direct the Escrow Agent to release 500,000
Escrowed Shares to the TDT Escrow Holders in the proportions set forth in
Schedule 6.5.
(ii) Upon the sale by TDT of its issued and outstanding capital stock
or substantially all of its assets at a value of no less than $30 million,
TDT shall direct the Escrow Agent to release to the TDT Escrow Holders in
the proportions set forth in Schedule 6.5 (1) 1,000,000 Escrowed Shares,
provided that no Escrowed Shares were released pursuant to (i) above, or
(2) 500,000 Escrowed Shares, provided that 500,000 Escrowed Shares were
released pursuant to (i) above.
(iii) In the event that TDT becomes listed on the American Stock
Exchange or the Nasdaq Small Cap Market, TDT shall direct the Escrow Agent
to release to the TDT Escrow Holders in the proportions set forth in
Schedule 6.5 (1) 1,000,000 Escrowed Shares, or (2) the balance of Escrowed
Shares in the escrow account, provided that Escrowed Shares were released
pursuant to either (i) or (ii) above.
31
(iv) In the event that any Escrowed Shares remain in escrow on the
date that is thirty (30) months after the Closing, such remaining Escrow
Shares shall be released to TDT for cancellation.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARTIES
The obligations of the parties under this Agreement are subject to the
fulfillment and satisfaction of each of the following conditions:
SECTION 7.1 Legal Action. No preliminary or permanent injunction or other
-------------
order by any federal or state court which prevents the consummation of this
Agreement or any of the transactions contemplated by this Agreement shall have
been issued and remain in effect.
SECTION 7.2 Absence of Termination. The obligations to consummate the
-----------------------
transactions contemplated hereby shall not have been terminated pursuant to
Article X hereof.
SECTION 7.3 Required Approvals. TDT and Stronghold shall have received all
------------------
such approvals, consents, authorizations or modifications as may be required to
permit the performance by TDT and Stronghold of the respective obligations under
this Agreement, and the consummation of the transactions herein contemplated,
whether from governmental authorities or other persons, and TDT and Stronghold
shall each have received any and all permits and approvals from any regulatory
authority having jurisdiction required for the lawful consummation of this
Agreement.
SECTION 7.4 "Blue Sky" Compliance. There shall have been obtained any and
---------------------
all permits, approvals and consents of the appropriate state securities
commissions of any jurisdictions, and of any other governmental body or agency,
which counsel for TDT or Stronghold may reasonably deem necessary or appropriate
so that consummation of the transactions contemplated by this Agreement may be
in compliance with all applicable laws.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF
TDT, ACQUISITION AND THE PRINCIPAL STOCKHOLDERS
All obligations of TDT, Acquisition and the Principal Stockholders under
this Agreement are subject to the fulfillment and satisfaction by Stronghold
prior to or at the time of Closing, of each of the following conditions, any one
or more of which may be waived by TDT.
SECTION 8.1 Representations and Warranties True at Closing. All
-----------------------------------------------------
representations and warranties of Stronghold contained in this Agreement will be
true and correct at and as of the time of the Closing, and Stronghold shall have
delivered to TDT an Officer's Certificate, dated the Closing Date, to such
effect and in the form and substance satisfactory to TDT.
32
SECTION 8.2 Performance. The obligations of Stronghold to be performed on
-----------
or before the Closing pursuant to the terms of this Agreement shall be duly
performed at such time, and Stronghold shall have delivered to TDT an Officer's
Certificate, dated the Closing Date, to such effect and in form and substance
satisfactory to TDT.
SECTION 8.3 Authority. All action required to be taken by, or on the part
---------
of Stronghold to authorize the execution, delivery and performance of this
Agreement by Stronghold and the consummation of the transactions contemplated
hereby, shall have been duly and validly taken.
SECTION 8.4 Absence of Certain Changes or Events. There shall not have
------------------------------------
occurred, since the date hereof, any adverse change in the business, condition
(financial or otherwise), assets or liabilities of Stronghold or any event or
condition of any character adversely affecting Stronghold, and Stronghold shall
have delivered to TDT an Officer's Certificate, dated the Closing Date, to such
effect and in form and substance satisfactory to TDT.
SECTION 8.5 Board of Directors Approval. The Merger shall have been
-----------------------------
approved by appropriate action of the Board of Directors of Stronghold.
SECTION 8.6 Acceptance by Stronghold Stockholders. Prior to the Closing, a
-------------------------------------
majority of the Stronghold stockholders shall have approved this Agreement and
agreed to the Merger.
SECTION 8.7 Required Approval. TDT shall have taken all actions related to
-----------------
the due authorization of the Merger as may be required under the federal and
state law, including the NJBCA and federal securities laws.
SECTION 8.8 Closing Documents. Stronghold shall have delivered to TDT the
------------------
documents and other items described in Section 10.2 and such other documents and
items as TDT shall reasonably request.
SECTION 8.9 Closing of SVCH Transaction. The SVCH Transaction shall have
----------------------------
closed.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF STRONGHOLD
All obligations of Stronghold under this Agreement are subject to the
fulfillment and satisfaction by TDT, Acquisition and the Principal Stockholders
prior to or at the time of Closing, of each of the following conditions, any one
or more of which may be waived by Stronghold.
SECTION 9.1 Representations and Warranties True at Closing. All
-----------------------------------------------------
representations and warranties of TDT, Subsidiaries, Acquisition and the
Principal Stockholders contained in this Agreement will be true and correct at
and as of the time of the Closing, and TDT,
33
Subsidiaries, Acquisition and the Principal Stockholders shall have delivered to
Stronghold an Officer's Certificate (with respect to TDT, Subsidiaries and
Acquisition) and a Principal Stockholders' Certificate (with respect to the
Principal Stockholders), each dated the Closing Date, to such effect and in the
form and substance satisfactory to Stronghold.
SECTION 9.2 Performance. The obligations of TDT, Subsidiaries, Acquisition
-----------
and the Principal Stockholders to be performed on or before the Closing pursuant
to the terms of this Agreement shall have been duly performed at such time, and
TDT, Subsidiaries, Acquisition and the Principal Stockholders shall have
delivered to Stronghold an Officer's Certificate (with respect to TDT,
Subsidiaries and Acquisition) and a Principal Stockholders' Certificate (with
respect to the Principal Stockholders), each dated the Closing Date, to such
effect and in form and substance satisfactory to Stronghold.
SECTION 9.3 Authority. All action required to be taken by, or on the part
---------
of TDT and Acquisition to authorize the execution, delivery and performance of
this Agreement by TDT and Acquisition and the consummation of the transactions
contemplated hereby, shall have been duly and validly taken.
SECTION 9.4 Absence of Certain Changes or Events. There shall not have
-------------------------------------
occurred, since the date hereof, any adverse change in the business, condition
(financial or otherwise), assets or liabilities of TDT, Subsidiaries or
Acquisition or any event or condition of any character adversely affecting TDT,
Subsidiaries or Acquisition, and it shall have delivered to Stronghold,
Officer's Certificates, dated the Closing Date, to such effect and in form and
substance satisfactory to Stronghold.
SECTION 9.5 Resignations. The current directors and officers of TDT and
------------
Acquisition shall have submitted their resignations as directors and officers of
TDT effective as of the Closing of this Agreement.
SECTION 9.6 Opinion of Counsel. TDT shall have delivered to Stronghold an
-------------------
opinion of counsel stating that the transactions contemplated in this Agreement
do not violate any state or federal securities laws.
SECTION 9.7 Closing Documents. TDT and the Principal Stockholders, as the
-----------------
case may be, shall have delivered to Stronghold the documents and other items
described in Section 10.1 and such other documents and items as Stronghold may
reasonably require.
SECTION 9.8 Exemption Under Federal and State Securities Laws. The issuance
-------------------------------------------------
of shares of TDT in the Merger shall not violate any federal or state securities
laws.
SECTION 9.9 Required Approval. TDT shall have taken all actions related to
-----------------
the due authorization of the Merger as may be required under the federal and
state law, including the NBCA and federal securities laws.
SECTION 9.10 Board of Directors Approval. The Merger shall have been
-----------------------------
approved by appropriate action of the Board of Directors of TDT.
34
SECTION 9.11 TDT Common Stock.
----------------
(a) Pietro Bortolatti, the President, CEO and Chairman of the Board of TDT and
the owner of 5,000,000 shares of TDT Common Stock as of the date of execution of
this Agreement, shall have surrendered, and TDT shall have cancelled, 4,925,000
shares of TDT Common Stock, and (b) the certain holders of TDT Common Stock, as
set forth on Schedule 9.11, shall have surrendered, and TDT shall have
cancelled, an aggregate of 1,370,000 shares of TDT Common Stock.
SECTION 9.12 Closing of SVCH Transaction. The SVCH Transaction shall have
----------------------------
closed.
ARTICLE X
CLOSING
On the Closing Date:
SECTION 10.1 Deliveries by TDT. TDT shall deliver (or cause to be
-------------------
delivered) to Stronghold:
(a) any consents required to be obtained by TDT, Subsidiaries and the
Principal Stockholders;
(b) TDT, Subsidiaries and Acquisition shall deliver an Officer's
Certificate as described in Sections 9.1, 9.2 and 9.4 hereof, dated the Closing
Date, that all representations, warranties, covenants and conditions set forth
herein by TDT, Subsidiaries and Acquisition are true and correct as of, or have
been fully performed and complied with by the Closing Date and that there have
been no adverse changes in each respective entity's business;
(c) all TDT company books and records;
(d) an opinion of Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP, legal counsel to TDT
dated as of the Closing Date, in a form reasonably satisfactory to Stronghold;
(e) an opinion of Mont X. Xxxxxx, Esq., special legal counsel to TDT from
the State of Nevada, dated as of the Closing Date, in a form reasonably
satisfactory to Stronghold;
(f) the Merger Shares to be issued to the Stronghold stockholders in
accordance with Section 1.2;
(g) Evidence that this Agreement and the transactions contemplated hereby
have been approved by the board of TDT;
(h) Certificates of good standing from Nevada and any other state in which
TDT is required to be qualified to do business;
35
(i) a Secretary's Certificate of TDT, in a form and substance
satisfactory to Stronghold, attaching thereto the current Articles of
Incorporation of TDT, By-Laws of TDT and meeting minutes from all Board and
shareholder meetings since inception as well as verification that no other
director or stockholder minutes exist and no other director or stockholder
meetings took place;
(j) certificates representing 1,000,000 shares of TDT Common Stock held by
the TDT Escrow Holders to be placed in escrow pursuant to Section 6.5 and
pursuant to the terms of the Escrow Agreement;
(k) certificates representing 1,370,000 shares of TDT Common Stock held by
certain holders of TDT Common Stock, as set forth in Schedule 9.11, to be
surrendered to TDT for cancellation pursuant to Section 9.11; and
(l) such other documents and certificates duly executed as may reasonably
be requested by Stronghold prior to the Closing Date.
SECTION 10.2 Deliveries by Stronghold. Stronghold shall deliver to TDT:
------------------------
(a) any consents required to be obtained by Stronghold;
(b) an Officer's Certificate as described in Sections 8.1, 8.2 and 8.4
hereof, dated the Closing Date, that all representations, warranties, covenants
and conditions set forth herein by Stronghold are true and correct as of, or
have been fully performed and complied with by, the Closing Date;
(c) an opinion of Xxxx and Xxxx LLP, legal counsel to Stronghold dated as
of the Closing Date, in a form reasonably satisfactory to TDT;
(d) certificates representing the Shares to be surrendered by the
Stronghold stockholders;
(e) a Secretary's Certificate dated the Closing Date, listing the
Stronghold stockholders and certifying that they are the only stockholders of
Stronghold and own 100% of Stronghold;
(f) a Secretary's Certificate of Stronghold, in a form and substance
satisfactory to TDT, attaching thereto the current Certificate of Incorporation,
By-Laws and board and shareholder resolutions approving the Merger;
(g) Evidence that this Agreement and the transactions contemplated hereby
have been approved by the board of
Stronghold;
(h) Certificates of good standing from New Jersey and other states in which
Stronghold is qualified to do business; and
36
(i) such other documents and certificates duly executed as may reasonably
be requested by TDT prior to the Closing Date.
SECTION 10.3 Termination. Notwithstanding anything herein or elsewhere to
-----------
the contrary, this Agreement may be terminated:
(a) By mutual agreement of the parties hereto at any time prior to the
Closing;
(b) By the Board of Directors of TDT at any time prior to the Closing, if:
(i) a condition to performance by TDT under this Agreement or a
covenant of Stronghold contained herein shall not be fulfilled on or before
the date of the Closing or at such other time and date specified in this
Agreement for the fulfillment for such covenant or condition; or
(ii) a material default or breach of this Agreement shall be made by
Stronghold;
(c) By Stronghold at any time prior to the Closing, if:
(i) a condition to Stronghold's performance under this Agreement or a
covenant of TDT, Subsidiaries or Acquisition contained herein shall not be
fulfilled on or before the date of the Closing or at such other time and
date specified in this Agreement for the fulfillment for such covenant or
condition; or
(ii) a material default or breach of this Agreement shall be made by
TDT, Subsidiaries, Acquisition or a Principal Stockholder; or
(d) By either party if it notifies the other that it is not satisfied with
its due diligence review.
SECTION 10.4 Effect of Termination. If this Agreement is terminated, this
---------------------
Agreement, except as to Section 12.1 and Section 12.2, shall no longer be of any
force or effect and there shall be no liability on the part of any party or its
respective directors, officers or stockholders; provided however, that in the
case of a termination pursuant to Section 10.3(b)(ii) or 10.3(c)(ii) hereof
because of a prior material default under or a material breach of this Agreement
by another party, the damages which the aggrieved party or parties may recover
from the defaulting party or parties shall in no event exceed the amount of
out-of-pocket costs and expenses incurred by such aggravated party or parties in
connection with this Agreement, and no party to this Agreement shall be entitled
to any injunctive relief.
ARTICLE XI
POST-CLOSING AGREEMENTS
37
SECTION 11.1 The parties hereto hereby agree that as promptly as
practicable after the Closing, the necessary steps shall be taken in order to
reflect the relocation of Acquisition's principal place of business to
Stronghold's facility in Hasbrouck Heights, New Jersey; and the management and
operations of Acquisition will be reorganized to become engaged in the current
business endeavors of Stronghold.
SECTION 11.2 In accordance with Section 1.4(d), as soon as practicable
following the execution of this Agreement, TDT shall file with the Commission
and transmit to all holders of record of TDT securities who would have been
entitled to vote at a meeting for the election of directors immediately prior to
the Effective Time, the information required by Rule 14f-1 of the Exchange Act
regarding the change in directors of TDT.
SECTION 11.3 Directors and Officers Insurance. As soon as practicable
-----------------------------------
following the Closing, TDT shall obtain Directors and Officers insurance on each
post-Merger director and officer to the reasonable satisfaction of such
directors and officers.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Costs and Expenses. In the event of any termination of this
-------------------
Agreement pursuant to Section 10.3, TDT and Stronghold will each bear their own
respective expenses.
SECTION 12.2 Extension of time; Waivers. At any time prior to the Closing:
---------------------------
(a) TDT may in its sole discretion (i) extend the time for the performance
of any of the obligations or other acts of Stronghold, (ii) waive any
inaccuracies in the representations and warranties of Stronghold contained
herein or in any documents delivered pursuant hereto by Stronghold, and (iii)
waive compliance with any of the agreements or conditions contained herein to be
performed by Stronghold. Any agreement on the part of TDT to any such extension
or waiver shall be valid only if set forth in an instrument, in writing, signed
on behalf of TDT and shall only be effective in such specific instance. No
waiver or any condition or provision shall be deemed to be a subsequent waiver
of such condition or provision or a waiver of any condition or provision other
than the one specifically waived.
(b) Stronghold may in its sole discretion (i) extend the time for the
performance of any of the obligations or other acts of TDT or Subsidiaries, (ii)
waive any inaccuracies in the representations and warranties of TDT,
Subsidiaries, Acquisition or Principal Stockholders contained herein or in any
documents delivered pursuant hereto by same and (iii) waive compliance with any
of the agreements or conditions contained herein to be performed by TDT,
Subsidiaries, Acquisition or Principal Stockholders. Any agreement on the part
of Stronghold to any such extension or waiver shall be valid only if set forth
in an instrument, in writing, signed on behalf of Stronghold and shall only be
effective in such specific instance. No waiver or any condition or provision
shall be deemed to be a subsequent waiver of such condition or provision or a
waiver of any condition or provision other than the one specifically waived.
38
SECTION 12.3 Notices. Any notice to any party hereto pursuant to this
-------
Agreement shall be in writing and given by Certified or Registered Mail, Fedex
or by facsimile, addressed as follows:
STRONGHOLD TECHNOLOGIES, INC.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxxx
With a Copy To:
Xxxx and Xxxx LLP
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Esq.
TDT DEVELOPMENT, INC. AND
TDT ACQUISITION CORP.
000 Xx Xxxxx X.
Xxxxxxxx, Xxxxxx
Xxxxxx
Attn: Pietro Bortolatti, President
With a Copy To:
Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Additional notices are to be given as to each party, at such other address
as should be designated in writing complying as to delivery with the terms of
this Section 12.3. All such notices shall be effective when sent, addressed as
aforesaid.
SECTION 12.4 Parties in Interest. This Agreement shall inure to the benefit
-------------------
of and be binding upon the parties hereto and the respective successors and
assigns. Nothing in this Agreement is intended to confer, expressly or by
implication, upon any other person any rights or remedies under or by reason of
this Agreement.
SECTION 12.5 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and together shall
constitute one document. The delivery by facsimile of an executed counterpart of
this Agreement shall be deemed to be an original and shall have the full force
and effect of an original executed copy.
SECTION 12.6 Severability. The parties hereto agree and affirm that none of
------------
the provisions herein is dependent upon the validity of any other provision, and
if any part of this Agreement is deemed to be unenforceable, the remainder of
the Agreement shall remain in full force and effect.
39
SECTION 12.7 Headings. The "Article" and "Section" headings are provided
--------
herein for convenience of reference only and do not constitute a part of this
Agreement.
SECTION 12.8 Survival of Representations and Warranties. All terms,
----------------------------------------------
conditions, representations and warranties set forth in this Agreement or in any
instrument, certificate, opinion, or other writing providing for in it, shall
survive the Closing and the delivery of the Merger Shares issued hereunder at
the Closing, for a period of two years from the Closing regardless of any
investigation made by or on behalf of any of the parties hereto.
SECTION 12.9 Assignability. This Agreement shall not be assigned by any of
-------------
the parties hereto without the prior written consent of the other parties.
SECTION 12.10 Amendment. This Agreement may be amended with the approval of
---------
the Boards of Directors of TDT and Stronghold at any time prior to the Effective
Time. This Agreement may not be amended except by an instrument, in writing,
signed on behalf of each of the parties hereto.
SECTION 12.11 Choice of Law. This Agreement shall be construed, interpreted
-------------
and the rights of the parties determined in accordance with the laws of the
State of New Jersey except with respect to matters of law concerning the
internal corporate affairs of any corporate entity which is a party to or the
subject of this Agreement, and as to those matters the law of the jurisdiction
under which the respective entity derives its powers shall govern.
SECTION 12.12 Submission to Jurisdiction. Each party hereto (a) submits to
---------------------------
the jurisdiction of any state or federal court sitting in the State of New
Jersey in any action or proceeding arising out of or relating to this Agreement,
(b) agrees that all claims in respect of such action or proceeding may be heard
and determined in any such court, (c) waives any claim of inconvenient forum or
other challenge to venue in such court, and (d) agrees not to bring any action
or proceeding arising out of or relating to this Agreement in any other court.
Each party agrees to accept service of any summons, complaint or other initial
pleading made in the manner provided for the giving of notices in Section 12.3,
provided that nothing in this Section 12.12 shall affect the right of any party
to serve such summons, complaint or other initial pleading in any other manner
permitted by law.
SECTION 12.13 Publicity. Except as required by law, rule or regulation
---------
(including without limitation, in the case of TDT, rules and regulations of the
SEC and applicable exchanges or trading markets) or on advice of counsel,
neither party shall issue any press release or make any public statement
regarding the transactions contemplated hereby without the prior approval of the
other parties, and the parties hereto shall issue a mutually acceptable press
release as soon as practicable after the date hereof and after the Closing Date.
SECTION 12.14 No Third Party Beneficiaries. This Agreement shall be binding
----------------------------
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation.
40
SECTION 12.15 Definitions.
-----------
"Legal Requirement" means any federal, state, local, municipal, foreign,
international, multinational or other administrative law, ordinance, principle
of common law, regulation, statute or treaty.
"Permits" means all licenses, permits, franchises, approvals,
authorizations, consents or order of, or filing with, any governmental
authority, whether foreign, federal, state or local, necessary or desirable for
the past, present or anticipated conduct or operation of the business or
ownership of the assets of such person.
"Person" means any person or entity, whether an individual, trustee,
corporation, limited liability company, general partnership, limited
partnership, trust, unincorporated organization, business association, firm,
joint venture, governmental agency or authority or any similar entity.
"Proceeding" means any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, investigative or
informal) commenced, brought, conducted or heard by or before, or otherwise
involving, any governmental body or arbitrator.
"SVCH Transaction" means that certain private equity financing pursuant to
which, simultaneously with the Closing, Stanford Venture Capital Holdings, Inc.
("SVCH") shall purchase 2,000,000 shares of Series A Convertible Preferred Stock
of TDT at a price per share equal to $1.50 and acquire warrants to purchase an
additional 2,000,000 shares of TDT Common Stock (the "SVCH Warrants") upon terms
and conditions as set forth in that certain Securities Purchase Agreement by and
among TDT, Stronghold, SVCH and certain stockholders of TDT and Stronghold.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
41
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement in a manner legally binding upon them as of the date first above
written.
TDT DEVELOPMENT, INC. Attest:
By: /s/ Pietro Bortolatti /s/ Pietro Bortolatti
------------------------------ ---------------------------------
President Secretary
TDT STRONGHOLD ACQUISITION CORP. Attest:
By: /s/ Pietro Bortolatti /s/ Pietro Bortolatti
------------------------------ ---------------------------------
President Secretary
STRONGHOLD TECHNOLOGIES, INC. Attest:
By: /s/ Xxxxxxxxxxx X. Xxxxx /s/ Xxxxxxx Constantinople
----------------------------- --------------------------------
President
TERRE DI TOSCANA, INC. Attest:
By: /s/ Xxxxxxx xx Xxxxx /s/ Pietro Bortolatti
----------------------------- ---------------------------------
President Secretary
TERRES TOSCANES, INC. Attest:
By: /s/ Xxxxxxx xx Xxxxx /s/ Pietro Bortolatti
----------------------------- ---------------------------------
President Secretary
42
PRINCIPAL STOCKHOLDERS
Attest:
/s/ Pietro Bortolatti
-------------------------------------- ---------------------------------
Name: Xxxxxx Xxxxxxxxxx
Attest:
/s/ Xxx Xxxxxxxxx
--------------------------------------- ---------------------------------
Name: Xxx Xxxxxxxxx
Attest:
/s/ Xxxxxxxx Xxxxxxxxx
-------------------------------------- ---------------------------------
Name: Francois Parenteau
Viking Investment Group II, Inc.
Attest:
/s/ Xxx Xxxxxxxxx
-------------------------------------- ----------------------------------
Name: Xxx Xxxxxxxxx
Its:
Parenteau Corporation Attest:
/s/ Xxxxxxxx Xxxxxxxxx
------------------------------------- ---------------------------------
Name: Francois Parenteau
Its:
STRONGHOLD STOCKHOLDER
/s/ Xxxxxxxxxxx X. Xxxxx Attest:
-------------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
-----------------------------------
43
SCHEDULES
Schedule 1.2 Stronghold Stockholders
Schedule 2.1 TDT and Acquisition Jurisdictions
Schedule 2.2(a) TDT Options according to plan
Schedule 2.2(c) TDT Registration Obligations
Schedule 2.3 Subsidiaries Capitalization, Jurisdictions, Officers, Directors
Schedule 2.5 TDT Stockholders
Schedule 2.7 TDT Certain Changes or Events
Schedule 2.8 TDT Assets and Liabilities
Schedule 2.9 TDT Tax Returns
Schedule 2.12 TDT and Subsidiaries Litigation Schedule
2.13(b) Subsidiaries Intellectual Property
Schedule 2.16 TDT and Subsidiaries Leases
Schedule 2.17 TDT and Subsidiaries Contracts
Schedule 2.19 TDT and Subsidiaries Insurance Policies
Schedule 2.20 TDT and Subsidiaries Pension Plans
Schedule 2.25 TDT Transactions with Affiliates
Schedule 4.1 Stronghold Jurisdictions
Schedule 4.2(a) Stronghold Options
Schedule 4.2(c) Certain Stronghold Agreements
Schedule 4.9 Stronghold Litigation
Schedule 4.10 Stronghold Intellectual Property
Schedule 4.14 Stronghold Leases
Schedule 4.15 Stronghold Contracts
Schedule 4.17 Stronghold Insurance Policies
Schedule 4.18 Stronghold Employee Benefits
Schedule 4.23 Stronghold Transactions and Affiliates
Schedule 6.2 Brokerage or Commission Arrangements
Schedule 6.5 TDT Escrow Holders - Escrow Shares
Schedule 9.11 TDT Stockholders - Cancellation Shares
