EX-2
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as
of December 9, 2002, is made by and among Synthetic Turf Corporation
of America, a Nevada corporation ("Parent"), ISC Acquisition Inc., a
Nevada corporation and a wholly-owned subsidiary of Parent ("Merger
Sub"), International Surfacing of Colorado, Inc., a Colorado
corporation (the "Company"), and the Persons (the "Company
Shareholders") identified on the signature pages of this Agreement,
who together own all of the issued and outstanding capital shares of
the Company.
RECITALS
WHEREAS, the Company Shareholders and the respective Boards of
Directors of Parent, Merger Sub and the Company have approved the
merger of the Company with and into Merger Sub (the "Merger") upon
the terms and subject to the conditions of this Agreement and in
accordance with Nevada Revised Statutes (the "NRS") and the Colorado
Business Corporation Act (the "Act");
WHEREAS, the Company Shareholders and the respective Boards of
Directors of Parent and the Company have determined that the Merger
is in furtherance of and consistent with their respective business
strategies and is in the best interest of their respective
shareholders, and Parent has approved this Agreement and the Merger
as the sole shareholder of Merger Sub;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, certain capitalized terms used herein are defined in
Section 9.3.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set
forth in this Agreement and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE 1. THE MERGER
Section 1.1 The Merger. Upon the terms and subject to
satisfaction or waiver of the conditions set forth in this Agreement,
and in accordance with the NRS and the Act, at the Effective Time,
the Company shall be merged with and into Merger Sub. As a result of
the Merger, the separate corporate existence of the Company shall
cease and Merger Sub shall continue as the surviving corporation of
the Merger (the "Surviving Corporation").
Section 1.2 Closing. The closing of the Merger (the
"Closing") shall take place on the first Business Day after the
satisfaction or waiver (subject to applicable Law) of the conditions
(excluding conditions that, by their nature, cannot be satisfied
until the Closing Date) set forth in Article 7, unless this Agreement
has been theretofore terminated pursuant to its terms or unless
another time or date is agreed to in writing by the parties hereto
(the actual date of the Closing being referred to herein as the
"Closing Date"). The Closing shall be held at the offices of Xxxx X.
Tow & Associates, 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000, unless another place is agreed to in writing by the
parties hereto. As soon as practicable after the Closing Date, the
parties hereto shall cause the Merger to be consummated by filing
articles of merger relating to the Merger (the "Articles of Merger")
with the Secretary of State of the State of Nevada and the Secretary
of State of the State of Colorado, in such form as required by, and
executed in accordance with the relevant provisions of, the NRS and
the Act (the date and time of such filing, or if another date and
time is specified in such filing, such specified date and time, being
the "Effective Time").
Section 1.3 Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as provided in the applicable
provisions of the NRS and the Act. Without limiting the generality of
the foregoing, at the Effective Time, except as otherwise provided
herein, all the property, rights, privileges, powers and franchises
of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
Section 1.4 Articles of Incorporation; Bylaws.
(a) Articles of Incorporation. At the Effective Time,
the Articles of Incorporation of the Surviving Corporation shall be
amended in their entirety to read as the Articles of Incorporation of
Merger Sub, until thereafter changed or amended as provided therein
or by applicable Law, except that Article I thereof shall be amended
to read as follows: "The name of the Corporation is International
Surfacing of Colorado, Inc."
(b) Bylaws. At the Effective Time, the Bylaws of
Merger Sub, as in effect immediately prior to the Effective Time,
shall be the Bylaws of the Surviving Corporation, until thereafter
changed or amended as provided therein or by applicable Law.
Section 1.5 Directors and Officers of the Surviving
Corporation. The directors of the Company immediately prior to the
Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation. The officers
of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation.
ARTICLE 2. CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1 Conversion of Securities. At the Effective
Time, by virtue of the Merger and without any action on the part of
Merger Sub, the Company or the holders of any of the following
securities:
(a) Conversion Generally. Each share of common stock,
par value $0.01 per share, of the Company ("Company Common Stock")
issued and outstanding immediately prior to the Effective Time shall
be converted, subject to Section 2.2(d), into the right to receive
seventy-five (75) (the "Exchange Ratio") shares of restricted common
stock, par value $0.001 per share ("Parent Common Stock"), of Parent
(the "Merger Consideration"). All such shares of Company Common Stock
shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each certificate previously
representing any such shares shall thereafter represent the right to
receive the Merger Consideration payable in respect of such shares of
Company Common Stock.
(b)) Merger Sub. Each share of common stock of Merger
Sub issued and outstanding immediately prior to the Effective Time
and held by Parent shall, after the Merger, be and remain a validly
issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
(c) Change in Shares. If, between the date of this
Agreement and the Effective Time, the outstanding shares of Parent
Common Stock or Company Common Stock shall have been changed into, or
exchanged for, a different number of shares or a different class, by
reason of any stock dividend, subdivision, reclassification,
recapitalization, split, reverse split, combination or exchange of
shares, the Exchange Ratio shall be correspondingly adjusted to
provide the holders of Company Common Stock the same economic effect
as contemplated by this Agreement prior to such event.
Section 2.2 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent
shall deposit, or shall cause to be deposited, with Atlas Stock
Transfer Corporation, Salt Lake City, Utah, or another company
designated by Parent and reasonably satisfactory to the Company (the
"Exchange Agent"), for the benefit of the Company Shareholders, for
exchange, in accordance with this Article 2, through the Exchange
Agent, sufficient certificates representing shares of Parent Common
Stock to make all deliveries pursuant to this Article 2. The Exchange
Agent shall, pursuant to Parent's instructions, deliver the Merger
Consideration contemplated to be paid for shares of Company Common
Stock pursuant to this Agreement.
(b) Exchange Procedures. At the Closing, Parent shall
cause each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding
shares of Company Common Stock (the "Certificates") to be provided
with (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates
shall pass, upon proper delivery of the Certificates to the Exchange
Agent and shall be in customary form) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for the
Merger Consideration payable in respect of the shares of Company
Common Stock represented by such Certificates. Upon surrender of a
Certificate for cancellation together with such letter of
transmittal, properly completed and duly executed, and such other
documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange
therefor the Merger Consideration payable in respect of the shares of
Company Common Stock represented by such Certificate, and the
Certificate so surrendered shall forthwith be canceled. Until
surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger
Consideration payable in respect of the shares of Company Common
Stock represented by such Certificate.
(c) Further Rights in Company Common Stock. The Merger
Consideration issued upon conversion of a share of Company Common
Stock in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such
share of Company Common Stock.
(d) Fractional Shares. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued
upon the surrender for exchange of Certificates. Instead, such
fractional share interests shall be rounded up or down to the nearest
whole number of shares of Parent Company Common Stock.
Section 2.3 Stock Transfer Books. At the Effective Time,
the stock transfer books of the Company shall be closed and
thereafter, there shall be no further registration of transfers of
shares of Company Common Stock theretofore outstanding on the records
of the Company. From and after the Effective Time, the holders of
certificates representing shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Company Common Stock except as
otherwise provided herein or by Law.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE COMPANY SHAREHOLDERS
The Company and the Company Shareholders hereby jointly and
severally represent and warrant to Parent as follows:
Section 3.1 Organization and Qualification; Subsidiaries.
The Company is a corporation duly organized and validly existing
under the Laws of the State of Colorado and has the requisite power
and authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as it is now
being conducted, except where the failure to have such power,
authority and governmental approvals would not, individually or in
the aggregate, reasonably be expected to have a Company Material
Adverse Effect. The Company is duly qualified or licensed to do
business, and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing or good
standing necessary, except for such failures to be so qualified or
licensed and in good standing that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse
Effect. The Company has no subsidiaries.
Section 3.2 Articles of Incorporation and Bylaws; Corporate
Books and Records. The copies of the Company's Articles of
Incorporation (the "Company Articles") and Bylaws (the "Company
Bylaws") that have been provided to Parent are complete and correct
copies thereof as in effect on the date hereof. The Company is not in
violation of any of the provisions of the Company Articles or the
Company Bylaws as of the date hereof and will not, as of the Closing
Date, be in violation of any of the provisions of the Company
Articles or Company Bylaws, as such Company Articles and Company
Bylaws may be amended between the date hereof and the Closing Date.
True and complete copies of all minute books of the Company since
February 22, 2002, have been made available by the Company to Parent.
Section 3.3 Capitalization.
(a) As of the date hereof, the authorized capital
stock of the Company consists of 1,000,000 shares of Company Common
Stock, no par value per share. As of the date hereof, 200,000 shares
of Company Common Stock were issued and outstanding, all of which
were validly issued and fully paid, and nonassessable. As of the
date hereof, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character to which the
Company is a party or by which the Company is bound relating to the
issued or unissued capital stock of the Company, or obligating the
Company to issue or sell any shares of its capital stock.
(b) There are no outstanding contractual obligations
of the Company (i) restricting the transfer of, (ii) affecting the
voting rights of, (iii) requiring the repurchase, redemption or
disposition of, or containing any right of first refusal with respect
to, (iv) requiring the registration for sale of, or (v) granting any
preemptive or antidilutive right with respect to, any Company Common
Stock.
(c) There are no outstanding contractual obligations
of the Company to make any loan to, or any equity or other investment
(in the form of a capital contribution or otherwise) in, any Person.
The Company has not adopted a shareholder rights plan.
Section 3.4 Authority.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement by
the Company and the consummation by the Company of such transactions
have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of the Company
and no further shareholder votes are necessary to authorize this
Agreement or to consummate such transactions. The Board of Directors
of the Company, by resolutions adopted by vote of at least a majority
of the Board of Directors of the Company at a meeting duly called and
held at which a quorum was present and acting throughout, has duly
(i) adopted this Agreement and the transactions contemplated hereby,
which adoption has not been rescinded or modified, (ii) resolved to
recommend this Agreement and the Merger to its shareholders for
approval, and (iii) directed that this Agreement be submitted to its
shareholders for consideration in accordance with this Agreement.
This Agreement has been duly and validly executed and delivered by
the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with
its terms.
(b) The necessary majorities of the Company
Shareholders and the Board of Directors of the Company have approved
this Agreement and the transactions contemplated hereby for purposes
of section 0-000-000 of the Act. No State of Colorado takeover
statute or similar statute or regulation is applicable to the Merger.
Section 3.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by the
Company will not, (i) conflict with or violate any provision of the
Company Articles or the Company Bylaws, (ii) conflict with or violate
any Law applicable to the Company or by which any property or asset
of the Company is bound or affected, or (iii) require any consent or
approval under, result in any breach of, any loss of any benefit
under or constitute a change of Control or default (or an event which
with notice or lapse of time or both would become a default) under,
or give to others any right of termination, vesting, amendment,
acceleration or cancellation of, or result in the creation of a Lien
or other encumbrance on any property or asset of the Company pursuant
to, any Contract or other instrument or obligation, except, with
respect to clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect or prevent or materially delay the
performance under this Agreement by the Company.
(b) The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by the
Company will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any domestic or foreign
Governmental Entity or any other Person, except (i) the filing and
recordation of the Articles of Merger as required by the Act, and
(ii) where failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications to a Person
other than a Governmental Entity, would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse
Effect or prevent or materially delay the performance of this
Agreement by the Company.
Section 3.6 Permits; Compliance With Law. The Company is in
possession of all authorizations, licenses, permits, certificates,
approvals and clearances, and has submitted notices to, all
Governmental Entities necessary for the Company to own, lease and
operate its properties or other assets and to carry on its business
in the manner being conducted as of the date hereof (the "Company
Permits"), and all such Company Permits are valid, and in full force
and effect, except where the failure to have, or the suspension or
cancellation of, or failure to be valid or in full force and effect
of, any of the Company Permits would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse
Effect. The Company is not in conflict with, or in default or
violation of, (a) any Law applicable to the Company or by which any
property or asset of the Company is bound or affected or (b) any
Company Permits, except, with respect to clauses (a) and (b), for any
such conflicts, defaults or violations that would not, individually
or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section 3.7 Financial Statements.
(a) The Company has provided representatives of Parent
with true and complete copies of its financial statements through
October 31, 2002, which were prepared in all material respects in
accordance with GAAP applied on a consistent basis throughout the
periods indicated (except as may be indicated in the notes thereto),
and each presented fairly the financial position, results of
operations and cash flows of the Company as of the respective dates
thereof and for the respective periods indicated therein (subject to
normal and recurring year-end adjustments which did not and would
not, individually or in the aggregate, reasonably be expected to have
a Company Material Adverse Effect). The books and records of the
Company have been, and are being, maintained in all material respects
in accordance with GAAP and any other applicable legal and accounting
requirements.
(b) The Company has no liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) that
would be required to be reflected on a balance sheet or in notes
thereto prepared in accordance with GAAP, except for (i) liabilities
or obligations incurred in the ordinary course of business consistent
with past practice since October 31, 2002, and (ii) liabilities and
obligations incurred in connection with this Agreement and the
transactions contemplated hereby that would not, individually or in
the aggregate, reasonably be expected to have a Company Material
Adverse Effect.
Section 3.8 Absence of Certain Changes or Events. Since
October 31, 2002, and through to the date of this Agreement, and
except as specifically contemplated by, or as disclosed in, this
Agreement, the Company has conducted its business in the ordinary
course consistent with past practice and, since such date, there has
not been (a) an event or development that would, individually or in
the aggregate, reasonably be expected to have a Company Material
Adverse Effect or (b) any event or development that would,
individually or in the aggregate, reasonably be expected to prevent
or materially delay the performance of this Agreement by the Company.
Section 3.9 Employee Benefit Plans. The Company has not
adopted, and has no pending plans to adopt, any "employee benefit
plan" as defined in Section 3(3) of ERISA or any other material plan,
policy, program, practice, agreement, understanding or arrangement
providing compensation or other benefits to any current or former
director, officer, employee or consultant (or to any dependent or
beneficiary thereof) of the Company which are now or, with respect
to any plan intended to be qualified under 401(a) of the Code, were
within the past 6 years, maintained, sponsored or contributed to by
the Company, or under which the Company has any obligation or
liability, whether actual or contingent, including, without
limitation, all material incentive, bonus, deferred compensation,
vacation, holiday, cafeteria, medical, disability, stock purchase,
stock option, stock appreciation, phantom stock, restricted stock or
other stock-based compensation plans, policies, programs, practices
or arrangements. The Company is in compliance with (a) the
requirements of the applicable health care continuation and notice
provisions of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, and the regulations (including proposed
regulations) thereunder and any similar state Law and (b) the
applicable requirements of the Health Insurance Portability and
Accountability Act of 1996, as amended, and the regulations
(including the proposed regulations) thereunder, except as would not
be reasonably expected to result in material liability to the
Company. The Company has in its books and records W-2 information for
the executive officers of the Company for the 2002 calendar year.
Section 3.10 Labor and Other Employment Matters.
(a) Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse
Effect, (i) no work stoppage or labor strike against the Company by
employees is pending or threatened, (ii) The Company is not
delinquent in payments to any of its employees for any wages,
salaries, commissions, bonuses or other direct compensation for any
services performed for it or amounts required to be reimbursed to
such employees, (iii) the Company is in compliance with all
applicable Laws respecting labor, employment, fair employment
practices, terms and conditions of employment, workers' compensation,
occupational safety, plant closings, and wage and hours, (iv) the
Company has withheld all amounts required by Law or by agreement to
be withheld from the wages, salaries, and other payments to
employees, and is not liable for any arrears of wages or any Taxes or
any penalty for failure to comply with any of the foregoing, (v) the
Company is not liable for any payment to any trust or other fund or
to any Governmental Entity, with respect to unemployment compensation
benefits, social security or other benefits or obligations for
employees (other than routine payments to be made in the ordinary
course of business consistent with past practice), (vi) there are no
material pending claims against the Company under any workers'
compensation plan or policy or for long term disability, and (vii)
there are no material controversies pending or, to the Knowledge of
the Company, threatened, between the Company and any current or
former employees, which controversies have or could reasonably be
expected to result in an action, suit, proceeding, claim, arbitration
or investigation before any Governmental Entity. As of the date
hereof, no employees of the Company are in any material respect in
violation of any term of any employment Contract, non-disclosure
agreement, noncompetition agreement, or any restrictive covenant to a
former employer relating to the right of any such employee to be
employed by the Company because of the nature of the business
conducted or presently proposed to be conducted by the Company or to
the use of trade secrets or proprietary information of others. As of
the date hereof, no employee of the Company, at the officer level or
above, has given notice to the Company that any such employee intends
to terminate his or her employment with the Company.
(b) The Company is not a party to or otherwise bound
by any collective bargaining Contract with a labor union or labor
organization, nor is any such Contract presently being negotiated.
(c) The Company has made available to Parent true and
complete copies of (i) all severance and employment agreements with
directors, officers or employees of or consultants to the Company,
(ii) all severance programs and policies of the Company with or
relating to its employees, and (iii) all plans, programs, agreements
and other arrangements of the Company with or relating to its
directors, officers, employees or consultants which contain change in
Control provisions. Neither the execution and delivery of this
Agreement or other related agreements, nor the consummation of the
transactions contemplated hereby or thereby will (either alone or in
conjunction with any other event, such as termination of employment)
result in any payment (including, without limitation, severance,
unemployment compensation, parachute or otherwise) becoming due to
any director or any employee of the Company or Affiliate from the Company.
Section 3.11 Tax Treatment. None of the Company nor any of
the Company's Affiliates has taken or agreed to take any action that
would prevent the Merger from qualifying as a reorganization within
the meaning of Section 368(a) of the Code. The Company is not aware
of any agreement, plan or other circumstance that would prevent the
Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
Section 3.12 Contracts. The Company is not a party to or
bound by any Contract that limits or otherwise restricts the Company
or that would, after the Effective Time, limit or restrict Parent or
any of its Subsidiaries (including the Surviving Corporation) or any
successor thereto, from engaging or competing in any line of business
or in any geographic area, which Contracts would be material to
Parent and its Subsidiaries (determined after giving effect to the
Merger). The material Contracts of the Company (each of which is
referred to herein as a "Company Material Contract") are valid and
binding on the Company and, to the Company's Knowledge, each other
party thereto, and are in full force and effect, and the Company has
performed in all material respects all obligations required to be
performed by it to the date hereof under each Company Material
Contract and, to the Company's Knowledge, each other party to each
Company Material Contract has performed in all material respects all
obligations required to be performed by it under such Company
Material Contract, except, in each case, as would not, individually
or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. The Company does not know of, or has not
received notice of, any violation or default under (or any condition
which with the passage of time or the giving of notice would cause
such a violation of or default under) any Company Material Contract
or any other Contract to which it is a party or by which it or any of
its properties or assets is bound, except for violations or defaults
that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
Section 3.13 Litigation. Except as and to the extent
disclosed in writing to Parent heretofore, or would not, individually
or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, (a) there is no suit, claim, action,
proceeding or investigation pending or, to the Knowledge of the
Company, threatened in writing against the Company or for which the
Company is obligated to indemnify a third party, and (b) the Company
is not subject to any outstanding and unsatisfied order, writ,
injunction, decree or arbitration ruling, award or other finding.
There is no suit, claim, action, proceeding or investigation pending
or, to the Knowledge of the Company, threatened in writing against
the Company that, as of the date hereof, challenges the validity or
propriety, or seeks to prevent consummation of, the Merger or any
other transaction contemplated by this Agreement.
Section 3.14 Environmental Matters. The Company is in
compliance with all, and is not subject to any liability, in each
case with respect to any, applicable Environmental Laws. The Company
has not received any written notice, demand, letter, claim or request
for information alleging that the Company may be in violation of, or
liable under, any Environmental Law.
Section 3.15 Intellectual Property.
(a) The Company owns or has the right to use, whether
through ownership, licensing or otherwise, all Company Intellectual
Property. No written claim of invalidity or conflicting ownership
rights with respect to any Company Intellectual Property has been
received by the Company from a third party, and no Company
Intellectual Property owned by the Company is the subject of any
pending or, to the Company's Knowledge, threatened action, suit,
claim, investigation, arbitration, validity or enforceability
challenge or other proceeding.
(b) To the Company's Knowledge, no Company
Intellectual Property that is not owned by the Company is the subject
of any pending or threatened action, suit, claim, investigation,
arbitration, validity or enforceability challenge or other
proceeding. No Person has given written notice to the Company that
the use of any Company Intellectual Property by the Company or any
licensee is infringing or has infringed any patent, trademark,
service xxxx, trade name, or copyright or design right or other
Intellectual Property right of any third party, or that the Company
or any licensee has misappropriated or improperly used or disclosed
any trade secret, confidential information or know-how.
(c) To the Company's knowledge after due inquiry, the
making, having made, using, selling, offering for sale, importing,
exporting, manufacturing, marketing, licensing, reproduction,
distribution or publishing by the Company of any process, machine,
manufacture or product does not, because of and to the extent that
such process, manufacture or product incorporates Company
Intellectual Property, infringe any valid claim of any patent,
trademark, service xxxx, trade name, copyright, design right, or
other intellectual property right of any third party in the
jurisdictions in which such making, using, selling, offering for
sale, importing, exporting, manufacturing, marketing, licensing,
reproduction, distribution, or publishing occurs, and does not
involve the misappropriation or improper use or disclosure of any
trade secrets, confidential information or know-how of any third party.
(d) There exists no prior act or current conduct or
use by the Company or, to the Knowledge of the Company, any third
party that would void or invalidate any Company Intellectual Property.
Section 3.16 Taxes.
(a) The Company has duly and timely filed with the
appropriate Tax authorities or other Governmental Entities all
material Tax Returns that it was required to file. All such Tax
Returns are complete and accurate in all material respects. All Taxes
shown as due on such Tax Returns have been paid, and the Company has
provided adequate reserves in accordance with GAAP in its most recent
financial statements for any material Taxes that have not been paid,
whether or not shown as being due on any Tax Returns.
(b) No claim for unpaid material Taxes has been
asserted in writing by a Tax authority or other Governmental Entity
or has become a Lien against the property of the Company. No audit or
other proceeding with respect to any Taxes due from or with respect
to the Company or any Tax Return filed by the Company is being
conducted by any Tax authority or Governmental Entity, and the
Company has not received notification in writing that any such audit
or other proceeding with respect to Taxes or any Tax Return is pending.
(c) All Taxes required to be withheld, collected or
deposited by or with respect to the Company have been timely
withheld, collected or deposited as the case may be, and to the
extent required, have been paid to the relevant Tax authority or
other Governmental Entity.
Section 3.17 Insurance. Copies of all material insurance
policies maintained by the Company, including fire and casualty,
general liability, product liability, business interruption and
professional liability policies, have been made available to Parent.
Section 3.18 Properties. The Company has good and valid
title to or a valid leasehold interest in all its properties and
assets reflected on its most recent balance sheet, except for (a)
properties and assets sold or otherwise disposed of in the ordinary
course of business since the date of such balance sheet, and (b)
properties and assets the loss of which would not, individually or in
the aggregate, reasonably be expected to have a Company Material
Adverse Effect.
Section 3.19 Regulatory Compliance.
(a) All products being manufactured, distributed, or
developed by the Company ("Company Products") that are subject to the
jurisdiction of any Governmental Entity are being manufactured,
labeled, stored, tested, distributed, and marketed in compliance with
all applicable requirements of such Governmental Entity, except for
noncompliance which would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
(b) All manufacturing operations conducted by or for
the benefit of the Company have been and are being conducted in
compliance with all applicable Laws and regulations, and no Company
Product has been recalled, suspended or discontinued as a result of
any action by any Governmental Entity or the Company or, to the
Knowledge of the Company, any licensee, distributor or marketer of
any Company Product. No Governmental Entity has commenced, or
threatened to initiate, any action to place marketing or sale
restrictions or request the recall of any Company Product, or
commenced, or threatened to initiate, any action to enjoin or place
restrictions on the production, sale or marketing of any Company Products.
(c) No officer, key employee or agent of the Company
has been convicted of any crime or engaged in any conduct that would
reasonably be expected to require disclosure, after giving effect to
the Merger, under the Securities Act, the Exchange Act, or any
similar or enabling Law or regulations.
Section 3.20. Fairness of Merger Consideration. The Board
of Directors of the Company and the Company Shareholders have
determined, after due consideration, that the Merger Consideration to
be received by the holders of the shares of Company Common Stock
pursuant to the Merger is fair to such holders from a financial point
of view.
Section 3.21 Vote Required. The affirmative vote of the
holders of a majority of the outstanding shares of Company Common
Stock is the only vote of the holders of any class or series of
capital stock or other Equity Interests of the Company necessary to
approve this Agreement, the Merger and the transactions contemplated hereby.
Section 3.22 Brokers. No broker, finder or other Person is
entitled to any finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of the
Company or any of the Company Shareholders.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company and the Company Shareholders as follows:
Section 4.1 Organization and Qualification; Subsidiaries.
Parent is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Nevada. Merger Sub is a
corporation duly organized and validly existing under the laws of the
State of Nevada. Each Significant Subsidiary of Parent (together with
Merger Sub, the "Parent Subsidiaries") has been duly organized and is
validly existing and in good standing under the Laws of the
jurisdiction of its incorporation, except where the failure to be so
organized, existing or in good standing would not, individually or in
the aggregate, reasonably be expected to have a Parent Material
Adverse Effect. Each of Parent and the Parent Subsidiaries has the
requisite power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure
have such power, authority and governmental approvals would not,
individually or in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect. Each of Parent and the Parent
Subsidiaries is duly qualified or licensed to do business, and is in
good standing (but only with respect to jurisdictions which recognize
such concepts) in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing or good standing
necessary, except for such failures to be so qualified or licensed
and in good standing that would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect.
Section 4.2 Articles of Incorporation and Bylaws; Corporate
Books and Records. The copies of the Parent Articles and Parent's
Amended and Restated Bylaws (the "Parent Bylaws") that are listed as
exhibits to Parent's Form 10-KSB for the year ended December 31, 2000
are complete and correct copies thereof as in effect on the date
hereof. The Parent is not in violation of any of the provisions of
the Parent Articles or the Parent Bylaws as of the date hereof and
will not, as of the Closing Date, be in violation of any of the
provisions of the Parent Articles or Parent Bylaws, as such Parent
Articles and Parent Bylaws may be amended between the date hereof and
the Closing Date.
Section 4.3 Capitalization.
(a) As of the date hereof, the authorized capital
stock of Parent consists of 250,000,000 shares of Parent Common
Stock. As of September 30, 2002, 100,471,561 shares of Parent Common
Stock were issued and outstanding, all of which were validly issued
and fully paid, nonassessable and free of preemptive rights. Except
for stock options and agreements or arrangements described in the
Parent SEC Filings, including the notes or exhibits thereto, filed
prior to the date of this Agreement, as of the date hereof, there are
no options, warrants or other rights, agreements, arrangements or
commitments of any character to which Parent or any Parent Subsidiary
is a party or by which Parent or any Parent Subsidiary is bound
relating to their issued or unissued capital stock or other Equity
Interests, or obligating Parent or any Parent Subsidiary to issue or
sell any shares of its capital stock or other Equity Interests. From
September 30, 2002, to the date of this Agreement, Parent has not
issued any Parent Common Stock other than 10.5 million, and (y)
Equity Interests granted or issued under existing stock-based
incentive compensation plans.
(b) The shares of Parent Common Stock to be issued in
connection with the Merger, when issued as contemplated herein, will
be duly authorized, validly issued, fully paid and non-assessable and
will not be issued in violation of any preemptive rights. Except as
disclosed in the Parent SEC Filings, including the notes and exhibits
thereto, as of the date hereof, there are no outstanding contractual
obligations of Parent or any Parent Subsidiary (a) restricting the
transfer of, or (b) requiring the repurchase, redemption or
disposition of, or containing any right of first refusal with respect
to, any Parent Common Stock.
(b) Each outstanding share of capital stock of each
Parent Subsidiary is duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights and is owned,
beneficially and of record, by Parent free and clear of all security
interests, Liens, claims, pledges, options, rights of first refusal,
agreements, limitations on Parent's or any Parent Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever.
(c) Neither Parent nor any Parent Subsidiary
beneficially owns any Equity Interest in the Company.
Section 4.4 Authority Relative to This Agreement. Each of
Parent and Merger Sub has all necessary corporate power and authority
to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated by this
Agreement. Each of (a) the execution and delivery of this Agreement
by each of Parent and Merger Sub and the consummation by Parent and
Merger Sub of such transactions and (b) the issuance of shares of
Parent Common Stock in accordance with the Merger has been duly and
validly authorized by all necessary corporate action by Parent and
Merger Sub and no other corporate proceedings on the part of Parent
and Merger Sub and no other stockholder votes are necessary to
authorize this Agreement or to consummate such transactions. The
Board of Directors of Parent, by resolutions adopted by unanimous
vote of those voting (and not subsequently rescinded or modified in
any way) at a meeting duly called and held at which a quorum was
present and acting throughout, has duly (i) determined that this
Agreement and the Merger are fair to and in the best interests of
Parent and its stockholders, and has declared the Merger to be
advisable, and (ii) approved and adopted this Agreement, the Merger
and the other transactions contemplated hereby. This Agreement has
been duly authorized and validly executed and delivered by Parent and
Merger Sub and constitutes the legal, valid and binding obligations
of each of Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with its terms.
Section 4.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by
Parent and Merger Sub do not, and the performance of this Agreement
by Parent and Merger Sub will not, (i) conflict with or violate any
provision of the articles of incorporation or bylaws of Parent or
Merger Sub, (ii) conflict with or violate any Law applicable to
Parent or any Parent Subsidiary or by which any property or asset of
Parent or any Parent Subsidiary is bound or affected, or (iii)
require any consent or approval under, result in any breach of, any
loss of any benefit under or constitute a change of Control or
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any right of termination,
vesting, amendment, acceleration or cancellation of, or result in the
creation of a Lien or other encumbrance on any property or asset of
Parent or any Parent Subsidiary pursuant to, any Contract.
(b) The execution and delivery of this Agreement by
Parent and Merger Sub do not, and the performance of this Agreement
by Parent and Merger Sub will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any
domestic or foreign Governmental Entity or any other Person, except
(i) under the Exchange Act, the Securities Act, any applicable Blue
Sky Law, the rules and regulations of Nasdaq, and (ii) the filing and
recordation of the Articles of Merger as required by the NRS and the Act.
Section 4.6 Permits; Compliance With Law. Parent and each
Parent Subsidiary is in possession of all authorizations, licenses,
permits, certificates, approvals and clearances necessary to carry on
their respective businesses in the manner described in the Parent SEC
Filings filed prior to the date hereof and as it is being conducted
as of the date hereof (the "Parent Permits"), and all such Parent
Permits are valid and in full force and effect, except where the
failure to have, or the suspension or cancellation of, or failure to
be valid or in full force and effect of, any of the Parent Permits
would not, individually or in the aggregate, reasonably be expected
to have a Parent Material Adverse Effect. Neither Parent nor any
Parent Subsidiary is in conflict with any Law applicable to Parent or
any Parent Subsidiary that would, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
Section 4.7 SEC Filings; Financial Statements.
(a) Parent has filed all registration statements,
prospectuses, forms, reports, definitive proxy statements, schedules
and documents required to be filed by it under the Securities Act or
the Exchange Act, as the case may be, since January 1, 1996
(collectively, the "Parent SEC Filings"). Each Parent SEC Filing (i)
as of its date, complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case
may be, and (ii) did not at the time it was filed contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under
which they were made, not misleading. As of the date of this
Agreement, no Subsidiary of Parent is subject to the periodic
reporting requirements of the Exchange Act.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Parent
SEC Filings was prepared in all material respects in accordance with
GAAP applied (except as may be indicated in the notes thereto and, in
the case of unaudited quarterly financial statements, as permitted by
Form 10-Q under the Exchange Act) on a consistent basis throughout
the periods indicated (except as may be indicated in the notes
thereto), and each presented fairly the consolidated financial
position, results of operations and cash flows of Parent and its
consolidated Subsidiaries as of the respective dates thereof and for
the respective periods indicated therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments
which did not and would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect). The
books and records of Parent and its Subsidiaries have been, and are
being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements.
(c) Except as and to the extent set forth on the
consolidated balance sheet of Parent and its consolidated
Subsidiaries as of December 31, 2001, included in Parent's Form 10-
KSB for the year ended December 31, 2001, including the notes thereto
(the "Parent Form 10-KSB"), neither Parent nor any of its
consolidated Subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that
would be required to be reflected on a balance sheet or in notes
thereto prepared in accordance with GAAP, except for liabilities or
obligations incurred in the ordinary course of business consistent
with past practice since December 31, 2001, and liabilities incurred
in connection with this Agreement and the transactions contemplated
hereby that would not, individually or in the aggregate, reasonably
be expected to have a Parent Material Adverse Effect.
(d) As of the date hereof, no "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC)
filed as an exhibit to the Parent Form 10-KSB has been amended or
modified, except for such amendments or modifications which have been
filed as an exhibit to a subsequently dated Parent SEC Filing or are
not required to be filed with the SEC.
Section 4.8 Absence of Certain Changes or Events. Since
December 31, 2001, except as disclosed in the Parent Form 10-KSB or
in Parent SEC Filings since December 31, 2001, through to the date of
this Agreement, including the notes thereto, and except as
specifically contemplated by, or as disclosed in, this Agreement,
Parent and its Subsidiaries have conducted their business in the
ordinary course consistent with past practice and, since such date,
there has not been (a) an event or development that would,
individually or in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect or (b) any event or development that
would, individually or in the aggregate, reasonably be expected to
prevent or materially delay the performance of this Agreement by
Parent or Merger Sub.
Section 4.9 Litigation. Except as disclosed in the Parent
SEC Filings, including the notes thereto, filed prior to the date of
this Agreement or would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect, (a)
there is no suit, claim, action, proceeding or investigation pending
or, to the Knowledge of Parent, threatened in writing against Parent
or any Parent Subsidiary or for which Parent or any Parent Subsidiary
is obligated to indemnify a third party, and (b) neither Parent nor
any Parent Subsidiary is subject to any outstanding and unsatisfied
order, writ, injunction, decree or arbitration ruling, award or other
finding. There is no suit, claim, action, proceeding or investigation
pending or, to the Knowledge of Parent, threatened in writing against
Parent or any Parent Subsidiary that, as of the date hereof,
challenges the validity or propriety, or seeks to prevent
consummation of, the Merger or any other transaction contemplated by
this Agreement.
Section 4.10 Environmental Matters. Except as disclosed in
the Parent Form 10-KSB or in the Parent SEC Filings, including the
notes thereto, since December 31, 2001, through the date of this
Agreement or would not, individually or in the aggregate, reasonably
be expected to have a Parent Material Adverse Effect, Parent and the
Parent Subsidiaries (a) are in compliance with all, and are not
subject to any liability, in each case with respect to any,
applicable Environmental Laws, (b) hold or have applied for all
Environmental Permits necessary to conduct their current operations,
and (c) are in compliance with their respective Environmental Permits.
Section 4.11 Intellectual Property. Except as disclosed in
the Parent Form 10-KSB or in the Parent SEC Filings, including the
notes thereto, since December 31, 2001, through the date of this
Agreement or would not, individually or in the aggregate, reasonably
be expected to have a Parent Material Adverse Effect: (a) Parent and
its Subsidiaries own or have the right to use, whether through
ownership, licensing or otherwise, all Parent Intellectual Property,
(b) no Parent Intellectual Property is the subject of any pending or,
to Parent's Knowledge, threatened action, suit, claim, investigation,
arbitration or other proceeding, (c) there exists no prior act or
current conduct or use by Parent or any Parent Subsidiary or, to the
Knowledge of Parent, any third party that would void or invalidate
any Parent Intellectual Property, and (d) to the Knowledge of Parent,
the making, using, selling, manufacturing, marketing, licensing,
reproduction, distribution or publishing by Parent of any process,
manufacture or product does not, because of and to the extent that
such process, manufacture or product incorporates Parent Intellectual
Property, infringe any valid claim of patent, trademark, service
xxxx, trade name, copyright or other intellectual property right of
any third party in the jurisdictions in which such making, using,
selling, manufacturing, marketing, licensing, reproduction,
distribution, or publishing occurs, and does not involve the
misappropriation or improper use or disclosure of any trade secrets,
confidential information or know-how of any third party.
Section 4.12 Regulatory Compliance. To Parent's best
Knowledge, all products being manufactured, distributed or developed
by Parent and its Subsidiaries ("Parent Products") are being
manufactured, labeled, stored, tested, distributed and marketed in
compliance with the requirements of all applicable Laws and
regulations, except for noncompliance which, individually or in the
aggregate, would reasonably not be expected to have a Parent Material
Adverse Effect.
Section 4.13 Tax Treatment. Neither Parent nor any of its
Subsidiaries or Affiliates has taken or agreed to take any action
that would prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code. Parent is not aware
of any agreement, plan or other circumstance that would prevent the
Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
Section 4.14 Ownership of Merger Sub; No Prior Activities.
(a) Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement. All of
the outstanding capital stock of Merger Sub is owned directly by
Parent.
(b) Except for obligations or liabilities incurred in
connection with its incorporation or organization and the
transactions contemplated by this Agreement, Merger Sub has not and
will not have incurred, directly or indirectly, through any
Subsidiary or Affiliate, any obligations or liabilities or engaged in
any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any Person. Merger Sub has
no Subsidiaries.
Section 4.15 Fairness of Merger. The Board of Directors of
Parent has determined, after due consideration, that the Merger
Consideration is fair from a financial point of view to Parent.
Section 4.16 Vote Required. The affirmative vote of a
majority of the Board of Directors of Parent at a meeting called for
such purpose and entitled to vote thereon is the only vote necessary
to approve the Merger.
Section 4.17 Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger based upon arrangements made
by or on behalf of Parent or any of its Subsidiaries.
ARTICLE 5. COVENANTS
Section 5.1 Conduct of Business by the Company Pending the
Closing. The Company agrees that, between the date of this Agreement
and the Effective Time, except as specifically permitted by any other
provision of this Agreement, or unless Parent shall otherwise agree
in writing, the Company shall (y) maintain its existence in good
standing under applicable Law, (x) subject to the restrictions set
forth in this Section 5.1 and Section 6.5, conduct its operations
only in the ordinary and usual course of business consistent with
past practice and (z) use its reasonable best efforts to keep
available the services of the current officers, key employees and
consultants of the Company and each Company Subsidiary and to
preserve the current relationships of the Company with its customers,
suppliers and other Persons with which the Company has significant
business relations as is reasonably necessary in order to preserve
substantially intact its business organization. In addition, without
limiting the foregoing, except as specifically permitted by any other
provision of this Agreement, the Company shall not (unless required
by applicable Law), between the date of this Agreement and the
Effective Time, directly or indirectly, do, or agree to do, any of
the following without the prior written consent of Parent:
(a) amend or otherwise change its articles of
incorporation or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer,
encumber, or authorize the issuance, sale, pledge, disposition,
grant, transfer or encumbrance of any shares of capital stock of, or
other Equity Interests in, the Company of any class, or securities
convertible or exchangeable or exercisable for any shares of such
capital stock or other Equity Interests, or any options, warrants or
other rights of any kind to acquire any shares of such capital stock
or other Equity Interests or such convertible or exchangeable
securities, or any other ownership interest, of the Company;
(c) (i) sell, pledge, dispose of, transfer, lease,
license, or encumber, or authorize the sale, pledge, disposition,
transfer, lease, license, or encumbrance of, any material property or
assets of the Company, except (A) sales, pledges, dispositions,
transfers, leases, licenses or encumbrances pursuant to existing
Contracts, (B) sales, pledges, dispositions, transfers, leases,
licenses or encumbrances of property or assets by the Company in the
ordinary course of business, or (C) sales or dispositions of
inventory and other tangible current Company Products; (ii) sell,
pledge, dispose of, transfer, lease, license, abandon, fail to
maintain or encumber, or authorize the sale, pledge, disposition,
transfer, lease, license, abandonment, failure to maintain or
encumbrance of, any Company Intellectual Property, except sales,
pledges, dispositions, transfers, leases, licenses, abandonments,
failures to maintain or encumbrances in the ordinary course of
business which will not materially impair the conduct of the
Company's business; or (iii) enter into any material commitment or
transaction outside the ordinary course of business consistent with
past practice;
(d) declare, set aside, make or pay any dividend or
other distribution (whether payable in cash, stock, property or a
combination thereof) with respect to any of the capital stock of the
Company or enter into any agreement with respect to the voting of the
capital stock of the Company;
(e) (i) reclassify, combine, split or subdivide any of
its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of, or in substitution for, shares
of its capital stock, or (ii) redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock, other Equity
Interests or other securities;
(f) (i) incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations
of any Person for borrowed money, except for indebtedness for
borrowed money under the Company's existing credit facilities, (ii)
terminate, cancel, or agree to any material and adverse change in,
any Company Material Contract other than in the ordinary course of
business consistent with past practice, (iii) make or authorize any
capital expenditure materially in excess of the Company's budget as
disclosed to Parent prior to the date hereof, or (iv) make or
authorize any extension of credit to any Person outside the ordinary
course of business;
(g) except as may be required by contractual
commitments or corporate policies with respect to severance or
termination pay in existence on the date of this Agreement, (i)
increase the compensation or benefits payable or to become payable to
its directors, officers or employees (except for increases in
accordance with past practices and methodologies in salaries or wages
of officers and/or employees of the Company), (ii) grant any rights
to severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or other employee of
the Company (other than with respect to newly hired employees in
accordance with past practices of the Company, provided that any such
agreements shall not provide for the payment of any severance or
termination pay solely as a result of the execution of this Agreement
or the consummation of the transactions contemplated hereby), or
(iii) establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any director, officer,
consultant or employee;
(h) make any material change in accounting policies or
procedures, other than in the ordinary course of business consistent
with past practice or except as required by GAAP;
(i) except in the ordinary course of business
consistent with past practice, make any Tax election or settle or
compromise any liability for Taxes, change any annual Tax accounting
period, change any method of Tax accounting, file any amended Tax
Return, enter into any closing agreement relating to any Tax,
surrender any right to claim a Tax refund, or consent to any
extension or waiver of the statute of limitations period applicable
to any Tax claim or assessment;
(j) modify, amend or terminate, or waive, release or
assign any material rights or claims with respect to any
confidentiality or standstill agreement to which the Company is a
party and which relates to a business combination involving the
Company;
(k) write up, write down or write off the book value
of any assets, individually or in the aggregate, for the Company,
other than in the ordinary course of business;
(l) acquire, or agree to acquire, from any Person any
assets (including Intellectual Property), operations, business or
securities or engage in, or agree to engage in, any merger,
consolidation or other business combination with any Person except
for acquisitions of inventory and other assets in the ordinary course
of business;
(m) take any action that is intended or would
reasonably be expected to result in any of the conditions to the
Merger set forth in Article 7 not being satisfied; or
(n) authorize or enter into any agreement or otherwise
make any commitment to do any of the foregoing.
Section 5.2 Conduct of Business by Parent Pending the
Closing. Parent agrees that, between the date of this Agreement and
the Effective Time, except as specifically permitted by any other
provision of this Agreement or unless the Company shall otherwise
agree in writing, Parent shall maintain its existence in good
standing under applicable Law and Parent and its Subsidiaries shall
continue to conduct their businesses such that the primary business
of Parent and its Subsidiaries, taken as a whole, shall involve the
development, manufacture and marketing of synthetic surfacing
materials. Without limiting the foregoing, and as an extension
thereof, except as specifically permitted by any other provision of
this Agreement, Parent shall not and shall not permit any of its
Subsidiaries to (unless required by applicable Laws or the
regulations or requirements of any stock exchange or regulatory
organization applicable to Parent and its Subsidiaries), between the
date of this Agreement and the Effective Time, directly or
indirectly, do, or agree to do, any of the following, without the
prior written consent of the Company:
(a) amend or otherwise change the Parent Articles in a
manner that adversely affects the rights of holders of Parent Common
Stock (including holders of the Parent Common Stock issuable in the Merger);
(b) issue any shares of Parent Common Stock if,
following such issuance, there would be an insufficient number of
shares of Parent Common Stock to pay the Merger Consideration and to
be reserved for issuance in connection with the Earn-out Amounts and
other share issuances contemplated hereby;
(c) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or otherwise,
with respect to any of Parent's capital stock;
(d) take any action (including any acquisition or
entering into any business combination) that is intended or could
reasonably be expected to result in any of the conditions to the
Merger set forth in Article 7 not being satisfied; or
(e) authorize or enter into any agreement or otherwise
make any commitment to do any of the foregoing.
Section 5.3 Cooperation.
(a) In addition to their other obligations set forth
in this Agreement, the Company, the Company Shareholders and Parent
shall coordinate and cooperate in connection with any and all
actions, consents, approvals or waivers required to consummate or
advance the Merger.
Section 5.4 Tax-Free Reorganization Treatment.
(a) Neither the Company nor Parent shall take or cause
to be taken any action that would disqualify the Merger as a
reorganization within the meaning of Section 368(a) of the Code.
Parent and the Company shall use their reasonable best efforts to
take or cause to be taken any action that would cause the Merger to
qualify as a reorganization within the meaning of Section 368(a) of
the Code.
(b) Each of the Company and Parent shall report the
Merger as a reorganization within the meaning of Section 368 of the
Code, unless otherwise required pursuant to a "determination" within
the meaning of Section 1313(a) of the Code.
Section 5.5 Board Composition. The Board of Directors of
Parent will take all actions within its power to cause the Board of
Directors of Parent, effective upon the Effective Time, to consist of
Four(4) Persons, three(3) of whom shall have served on the Board of
Directors of Parent immediately prior to the Effective Time, and one
(1) of whom shall have served on the Board of Directors and as chief
executive officer of the Company immediately prior to the Effective Time.
Section 5.6 Control of Other Party's Business. Nothing
contained in this Agreement shall give Parent or Merger Sub, directly
or indirectly, the right to Control or direct the operations of the
Company prior to the consummation of the Merger. Prior to the
consummation of the Merger, the Company shall exercise, consistent
with the terms and conditions of this Agreement, complete Control and
supervision over its operations.
ARTICLE 6. ADDITIONAL AGREEMENTS
Section 6.1 Access to Information; Confidentiality.
(a) Except as required pursuant to any confidentiality
agreement or similar agreement or arrangement to which the Company or
Parent or any of their respective Subsidiaries is a party (which such
Person shall use reasonable best efforts to cause the counterparty to
waive) from the date of this Agreement to the Effective Time, the
Company and Parent shall, and shall cause each of its Subsidiaries
and each of their respective directors, officers, employees,
accountants, consultants, legal counsel, investment bankers,
advisors, and agents and other representatives (collectively,
"Representatives") to (i) provide to the other party and its
respective Representatives access at reasonable times upon prior
notice to the officers, employees, agents, properties, offices and
other facilities of such party and its Subsidiaries and to the books
and records thereof, and (ii) subject to applicable Laws relating to
the exchange of information, furnish promptly such information
concerning the business, properties, Contracts, assets, liabilities,
personnel and other aspects of itself and its Subsidiaries as the
other party and its Representatives may reasonably request. No
investigation conducted pursuant to this Section 6.1(a) shall affect
or be deemed to modify or limit any representation or warranty made
in this Agreement.
(b) With respect to the information disclosed pursuant
to this Section 6.1, the parties shall comply with, and shall cause
their respective Representatives to comply with, all of their
respective obligations under the confidentiality agreement, dated
October 30th, 2002, previously executed by the Company and Parent
(the "Confidentiality Agreement").
Section 6.2 No Solicitation of Transactions. The Company
agrees that it will not, and will use its reasonable best efforts to
cause its not to, directly or indirectly: (a) solicit, initiate,
encourage, knowingly facilitate or induce any inquiry with respect
to, or the making, submission or announcement of, any Acquisition
Proposal, (b) participate in any discussions or negotiations
regarding, or furnish to any Person any nonpublic information with
respect to, or take any other action to facilitate any inquiries or
the making of any proposal that constitutes or may reasonably be
expected to lead to, any Acquisition Proposal, (c) engage in
discussions with any Person with respect to any Acquisition Proposal,
except to notify such Person as to the existence of these provisions,
(d) approve, endorse or recommend any Acquisition Proposal with
respect the Company, or (e) enter into any letter of intent or
similar document or any agreement, commitment or understanding
contemplating or otherwise relating to any Acquisition Proposal or a
transaction contemplated thereby. The Company shall immediately
terminate, and shall cause its Representatives to immediately
terminate, all discussions or negotiations, if any, with any third
party with respect to, or any that could reasonably be expected to
lead to or contemplate the possibility of, an Acquisition Proposal.
Section 6.3 Appropriate Action; Consents; Filings.
(a) The Company and Parent shall use their reasonable
best efforts to (i) take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make
effective the transactions contemplated by this Agreement as promptly
as practicable, (ii) obtain from any Governmental Entities any
consents, licenses, permits, waivers, approvals, authorizations or
orders required to be obtained or made by Parent or the Company, and
(iii) make all necessary filings with respect to this Agreement and
the Merger.
(b) From the date of this Agreement until the
Effective Time, each party shall promptly notify the other party in
writing of any pending or, to the Knowledge of the Company or Parent,
as appropriate, threatened action, suit, arbitration or other
proceeding or investigation by any Governmental Entity or any other
Person (i) challenging or seeking damages in connection with the
Merger or the conversion of Company Common Stock into Parent Common
Stock pursuant to the Merger, or (ii) seeking to restrain or prohibit
the consummation of the Merger or otherwise limit the right of Parent
or its Subsidiaries to own or operate all or any portion of the
businesses or assets of the Company or its Subsidiaries.
Section 6.4 Certain Notices. From and after the date of
this Agreement until the Effective Time, each party hereto shall
promptly notify the other party hereto of (a) the occurrence, or non-
occurrence, of any event that would be likely to cause any condition
to the obligations of any party to effect the Merger and the other
transactions contemplated by this Agreement not to be satisfied, or
(b) the failure of the Company or Parent, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it pursuant to this Agreement which
would reasonably be expected to result in any condition to the
obligations of any party to effect the Merger and the other
transactions contemplated by this Agreement not to be satisfied;
provided, however, that the delivery of any notice pursuant to this
Section 6.4 shall not cure any breach of any representation or
warranty, the failure to comply with any covenant, the failure to
meet any condition or otherwise limit or affect the remedies
available hereunder to the party receiving such notice.
Section 6.5. Earn Out. If, during the two (2) year period
commencing on the first day of the month following the Effective Time
(the "Earn-Out Period"), the Surviving Corporation meets certain
sales targets as described below, Parent agrees to pay the Company
Stockholders a one-time additional consideration as set forth below
(the "Earn Out Amount"), such amount being payable in unregistered
fully-paid and non-assessable shares of Parent Common Stock valued at
the average closing price of Parent Common Stock, as reported on the
Nasdaq OTC Bulletin Board, for the five trading days ending one
trading day before the end of the Earn-Out Period. The Earn-Out
Amount shall be due and payable 30 days after the end of the Earn-Out
Period, and shall be calculated as follows:
(a) The Earn-Out Amount shall be Three Million shares
(3.millon) in the event the Surviving Corporation achieves gross
annual sales equal to or exceeding $3,000,000 with a gross margin of
Twenty-five percent (25%) or better; or
(b) The Earn-Out Amount shall be Five Million
(5.Million) in the event the Surviving Corporation achieves gross
annual sales equal to or exceeding $5,000,000 with a gross margin of
Twenty-five percent (25%) or better.
Section 6.6 Public Announcements. Parent and the Company
will consult with each other before issuing, and provide each other
the opportunity to review and make reasonable comment upon, any press
release or making any public statement with respect to this Agreement
and the transactions contemplated hereby and, except as may be
required by applicable Law or any listing agreement with Nasdaq, will
not issue any such press release or make any such public statement
prior to such consultation; provided, however, that each of Parent
and the Company may make any public statement in response to specific
questions by the press, analysts, investors or those attending
industry conferences or financial analyst conference calls, so long
as any such statements are not inconsistent with previous press
releases, public disclosures or public statements made jointly by
Parent and the Company and do not reveal non-public information
regarding the other party.
Section 6.7 Plan of Reorganization. This Agreement is
intended to constitute a "plan of reorganization" within the meaning
of Treasury Regulation Section 1.368-2(g).
ARTICLE 7. CLOSING CONDITIONS
Section 7.1 Conditions to Obligations of Each Party Under
This Agreement. The respective obligations of each party to effect
the Merger and the other transactions contemplated herein shall be
subject to the satisfaction at or prior to the Effective Time of the
following conditions, any or all of which may be waived, in whole or
in part, to the extent permitted by applicable Law:
(a) Consents and Approvals. All consents, approvals
and authorizations of any Governmental Entity required of Parent, the
Company or any of their Subsidiaries to consummate the Merger, the
failure of which to be obtained or taken, individually or in the
aggregate, would have a Parent Material Adverse Effect (determined,
for purposes of this clause, after giving effect to the Merger),
shall have been obtained.
(b) Litigation. There shall not be instituted or
pending any action, litigation or proceeding seeking to prohibit,
restrain or otherwise interfere with the Merger or the ownership or
operation by Parent or any of its Subsidiaries of all or any portion
of the business or assets of the Company.
Section 7.2 Additional Conditions to Obligations of Parent
and Merger Sub. The obligations of Parent and Merger Sub to effect
the Merger and the other transactions contemplated herein are also
subject to the following conditions:
(a) Representations and Warranties. The
representations and warranties of the Company and the Company
Shareholders contained in this Agreement shall be true and correct
(without giving effect to any limitation as to "materiality" or
"Company Material Adverse Effect" set forth therein) at and as of the
Effective Time as if made at and as of such time. Parent shall have
received a certificate signed by an executive officer of the Company
on its behalf and from each Company Shareholder to the foregoing
effect; and
(b) Agreements and Covenants. The Company and the
Company Shareholders shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement
to be performed or complied with by them on or prior to the Effective
Time. Parent shall have received a certificate of an executive
officer of the Company and from each Company shareholder to that effect.
Section 7.3 Additional Conditions to Obligations of the
Company and the Company Shareholders. The obligation of the Company
and the Company Shareholders to effect the Merger and the other
transactions contemplated in this Agreement is also subject to the
following conditions:
(a) Representations and Warranties. The
representations and warranties of Parent contained in this Agreement
shall be true and correct at and as of the Effective Time as if made
at and as of such time. The Company shall have received a certificate
signed by an executive officer of Parent on its behalf to the
foregoing effect.
(b) Agreements and Covenants. Parent shall have
performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied
with by it on or prior to the Effective Time. The Company shall have
received a certificate of an executive officer of Parent to that effect.
ARTICLE 8. TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated
at any time prior to the Effective Time, by action taken or
authorized by the terminating party or parties, whether before or
after approval of the matters presented in connection with the Merger
by the shareholders of the Company or the Board of Directors of Parent:
(a) By mutual written consent of Parent and the
Company, which consent shall have been approved by action of their
respective Boards of Directors;
(b) By written notice of either the Company or Parent,
if the Merger shall not have been consummated prior to December 31
st, 2002 (such date, as it may be extended as provided below, shall
be referred to herein as the "Outside Date");
(c) By written notice of Parent, if there has been a
breach by the Company or any Company Shareholder of any
representation, warranty, covenant or agreement contained in this
Agreement which (i) would result in a failure of a condition set
forth in Article 7, and (ii) cannot be cured prior to the Outside
Date, provided that Parent shall have given the Company or Company
Shareholder written notice, delivered at least twenty days prior to
such termination, stating Parent's intention to terminate this
Agreement pursuant to this Section 8.1(c) and the basis for such
termination; or
(d) By written notice of the Company or a Company
Shareholder, if there has been a breach by Parent of any
representation, warranty, covenant or agreement contained in this
Agreement which (i) would result in a failure of a condition set
forth in Article 7, and (ii) cannot be cured prior to the Outside
Date, provided that the Company or Company Shareholder shall have
given Parent written notice, delivered at least twenty days prior to
such termination, stating their intention to terminate this Agreement
pursuant to this Section 8.1(d) and the basis for such termination.
Section 8.2 Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as
provided in Section 8.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent,
Merger Sub or the Company or their respective Subsidiaries, officers
or directors, except with respect to any liabilities or damages
incurred or suffered by a party as a result of the willful and
material breach by the other party of any of its representations,
warranties, covenants or other agreements set forth in this Agreement.
Section 8.3 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective
Boards of Directors at any time prior to the Effective Time;
provided, however, that, after approval of the Merger by the
shareholders of the Company, no amendment may be made without further
shareholder approval which, by Law requires further approval by such
shareholders. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
Section 8.4 Waiver. At any time prior to the Effective
Time, any party hereto may (a) extend the time for the performance of
any of the obligations or other acts of the other party hereto,(b)
waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered pursuant
hereto, and (c) waive compliance by the other party with any of the
agreements or conditions contained herein; provided, however, that
after any approval of the transactions contemplated by this Agreement
by the shareholders of the Company, there may not be, without further
approval of such shareholders, any extension or waiver of this
Agreement or any portion thereof which, by Law requires further
approval by such shareholders. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the
party or parties to be bound thereby, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
Section 8.5 Fees and Expenses. All expenses incurred by the
parties hereto shall be borne solely and entirely by the party which
has incurred the same.
ARTICLE 9. GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations and Warranties.
None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the
Effective Time. This Section 9.1 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance
after the Effective Time.
Section 9.2 Notices. Any notices or other communications
required or permitted under, or otherwise in connection with this
Agreement shall be in writing and shall be deemed to have been duly
given when delivered in person or upon confirmation of receipt when
transmitted by facsimile transmission (but only if followed by
transmittal by national overnight courier or hand for delivery on the
next Business Day) or on receipt after dispatch by registered or
certified mail, postage prepaid, addressed, or on the next Business
Day if transmitted by national overnight courier, in each case as follows:
(a) If to Parent or Merger Sub, addressed to it at:
Synthetic Turf Corporation of America
0000 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx XX 00000
Fax No. (000) 000-0000
Attn: Xxxx Xxxxxxxx, Chief Executive Officer
with a copy to: Xxxx X. Tow, Esq.
Xxxx X. Tow & Associates
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx XX 00000
Fax No: (949( 000-0000;
(b) If to the Company, addressed to it at:
International Surfacing of Colorado, Inc.
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxxx XX 00000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxxxx, Chief Executive Officer;
and
(c) If to the Company Shareholders, addressed to them at:
International Surfacing of Colorado, Inc.
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxxx XX 00000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxxxx
9.3 Certain Definitions. For purposes of this Agreement, the term:
(a) "Acquisition Proposal" means any offer or proposal
concerning any (i) merger, consolidation, business combination, or
similar transaction involving the Company pursuant to which the
shareholders of the Company immediately prior to such transaction
would own less than 80% of any class of equity securities of the
entity surviving or resulting from such transaction, (ii) sale or
other disposition directly or indirectly of assets of the Company,
(iii) issuance, sale, or other disposition of securities (or options,
rights or warrants to purchase, or securities convertible into or
exchangeable for, such securities) in each case by the Company
representing 20% or more of the voting power of the Company, or (iv)
transaction in which any Person shall acquire beneficial ownership,
or the right to acquire beneficial ownership or any group shall have
been formed which beneficially owns or has the right to acquire
beneficial ownership of, 20% or more of the outstanding voting
capital stock of the Company (other than the Merger).
(b) "Affiliate" of a specified Person means a Person
that directly or indirectly, through one or more intermediaries,
Controls, is controlled by, or is under common control with, the
Person specified.
(c) "beneficial ownership" (and related terms such as
"beneficially owned" or "beneficial owner") has the meaning set forth
in Rule 13d-3 under the Exchange Act.
(d) "Business Day" means any day on which banks are
not required or authorized to close in the City of Los Angeles,
California.
(e) "Company Intellectual Property" means all
Intellectual Property used in the business of the Company as of the
date of this Agreement or the Closing Date.
(f) "Company Material Adverse Effect" means any change
affecting, or condition having an effect on, the Company that is, or
would reasonably be expected to be, materially adverse to the
business, financial condition or results of operations of the
Company, taken as a whole, except, in each case, for any such change
or condition resulting from or arising out of (i) changes or
developments in the Company's industry generally, which changes or
developments do not disproportionately affect the Company relative to
other participants in such industry in any material respect, or (ii)
changes or developments in financial or securities markets or the
economy in general which changes do not disproportionately affect the
Company in any material respect.
(g) "Contracts" means any of the agreements,
contracts, leases, powers of attorney, notes, loans, evidence of
indebtedness, purchase orders, letters of credit, settlement
agreements, franchise agreements, undertakings, covenants not to
compete, employment agreements, licenses, instruments, obligations,
commitments, understandings, policies, purchase and sales orders,
quotations and other executory commitments to which any Person is a
party or to which any of the assets of the Person is subject, whether
oral or written, express or implied.
(h) "Control" (including the terms "controlled by" and
"under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause
the direction of the management or policies of a Person, whether
through the ownership of securities or as trustee or executor, by
Contract or credit arrangement or otherwise.
(i) "Environmental Law" means any federal, state,
local or foreign statute, Law, ordinance, regulation, rule, code,
treaty, writ or order and any enforceable judicial or administrative
interpretation thereof, including any judicial or administrative
order, consent decree, judgment, stipulation, injunction, permit,
authorization, policy, opinion, or agency requirement, in each case
having the force and effect of Law, relating to the pollution,
protection, investigation or restoration of the environment, health
and safety as affected by the environment or natural resources,
including, without limitation, those relating to the use, handling,
presence, transportation, treatment, storage, disposal, release,
threatened release or discharge of Hazardous Materials or noise,
odor, wetlands, pollution or contamination.
(j) "Equity Interest" means any share, capital stock,
partnership, member or similar interest in any entity, and any
option, warrant, right or security (including debt securities)
convertible, exchangeable or exercisable therefor.
(k) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and the regulations promulgated
thereunder.
(l) "Exchange Act" means the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated
thereunder.
(m) "GAAP" means generally accepted accounting
principles as applied in the United States.
(n) "Governmental Entity" means domestic or foreign
governmental, administrative, judicial or regulatory authority.
(o) "Hazardous Materials" means (i) any petroleum,
petroleum products, byproducts or breakdown products, radioactive
materials, asbestos-containing materials or polychlorinated
biphenyls, or (ii) any chemical, material or other substance defined
or regulated as toxic or hazardous or as a pollutant or contaminant
or waste under any applicable Environmental Law.
(p) "Intellectual Property" means intellectual
property or other proprietary rights of every kind, foreign or
domestic, including all patents, patent applications, inventions
(whether or not patentable), processes, products, technologies,
discoveries, copyrightable and copyrighted works, apparatus, trade
secrets, trademarks, trademark registrations and applications, domain
names, service marks, service xxxx registrations and applications,
trade names, trade secrets, know-how, trade dress, copyright
registrations, customer lists, confidential marketing and customer
information, licenses, confidential technical information, software,
and all documentation thereof.
(q) "Knowledge" and like phrases shall mean and
include (i) actual knowledge and (ii) that knowledge which a natural
person should have obtained in the management of his or her business
affairs after reasonable inquiry. In connection therewith, a Person
shall be charged with the Knowledge (both actual and constructive)
with respect to any specific matter within the actual Knowledge of
such Person's executive officers.
(r) "Law" means any foreign or domestic law, statute,
code, ordinance, rule, regulation, order, judgment, writ,
stipulation, award, injunction, decree or arbitration award or finding.
(s) "Lien" means any mortgage, pledge, lien, security
interest, conditional or installment sale agreement, encumbrance,
charge or other claims of third parties of any kind.
(t) "Nasdaq" means the NASDAQ Stock Market.
(u) "Parent Articles" means Parent's Articles of
Incorporation, as amended through the date of this Agreement.
(v) "Parent Intellectual Property" means all
Intellectual Property used in the business of Parent as of the date
of this Agreement or the Closing Date.
(w) "Parent Material Adverse Effect" means any change
affecting, or condition having an effect on, Parent, Merger Sub or
any of Parent's Subsidiaries that is, or would reasonably be expected
to be, materially adverse to the business, financial condition or
results of operations of Parent and its Subsidiaries, taken as a
whole, except, in each case, for any such change or condition
resulting from or arising out of (i) changes or developments in
Parent's industry generally, which changes or developments do not
disproportionately affect Parent relative to other participants in
such industry in any material respect, (ii) changes or developments
in financial or securities markets or the economy in general which
changes do not disproportionately affect Parent in any material
respect, (iii) any change in Parent's stock price or trading volume,
in and of itself, or (iv) the announcement of the transactions
contemplated by this Agreement.
(x) "Person" means an individual, corporation, limited
liability company, partnership, association, trust, unincorporated
organization, other entity or group.
(y) "SEC" means the United States Securities and
Exchange Commission.
(z) "Securities Act" means the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.
(aa) "Subsidiary" or "Subsidiaries" of any Person or
any other person means any corporation, partnership, joint venture or
other legal entity of which such Person, as the case may be (either
alone or through or together with any other subsidiary), owns,
directly or indirectly, a majority of the stock or other Equity
Interests the holders of which are generally entitled to vote for the
election of the Board of Directors or other governing body of such
corporation or other legal entity.
(bb) "Taxes" means all taxes of any kind, including,
without limitation, those on or measured by or referred to as income,
gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, value added, property or windfall profits taxes,
customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions
to tax or additional amounts imposed by any Governmental Entity.
(cc) "Tax Returns" means any report, return (including
information return), claim for refund, or statement relating to
Taxes, including any schedule or attachment thereto, and including
any amendments thereof.
Section 9.4 Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
Section 9.5 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by
any rule of Law or public policy, all other conditions and provisions
of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse
to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the greatest extent possible.
Section 9.6 Entire Agreement. This Agreement (together with
the Exhibits and the other documents delivered pursuant hereto) and
the Confidentiality Agreement constitute the entire agreement of the
parties and supersede all prior agreements and undertakings, both
written and oral, between the parties, or any of them, with respect
to the subject matter hereof.
Section 9.7 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto, in whole or in part (whether by operation
of Law or otherwise), without the prior written consent of the other
parties, and any attempt to make any such assignment without such
consent shall be null and void, except that Merger Sub may assign, in
its sole discretion, any or all of its rights, interests and
obligations under this Agreement to any other direct wholly-owned
Subsidiary of Parent without the consent of the Company.
Section 9.8 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and
their respective successors and assigns, 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.
Section 9.9 Mutual Drafting. Each party hereto has
participated in the drafting of this Agreement, which each party
acknowledges is the result of extensive negotiations between the parties.
Section 9.10 Governing Law; Consent to Jurisdiction; Waiver
of Trial by Jury.
(a) This Agreement and the transactions contemplated
hereby, and all disputes between the parties under or related to the
Agreement or the facts and circumstances leading to its execution,
whether in Contract, tort or otherwise, shall be governed by and
construed in accordance with the Laws of the State of California,
applicable to contracts executed in and to be performed entirely
within the State, except that the provisions of the NRS and the Act
shall govern the Merger.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the
exclusive jurisdiction of any California State court, or Federal
court of the United States of America, sitting in California, and any
appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the agreements delivered in
connection herewith or the transactions contemplated hereby or
thereby or for recognition or enforcement of any judgment relating
thereto, and each of the parties hereby irrevocably and
unconditionally (i) agrees not to commence any such action or
proceeding except in such courts, (ii) agrees that any claim in
respect of any such action or proceeding may be heard and determined
in such California State court or, to the extent permitted by Law, in
such Federal court, (iii) waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any such action or
proceeding in any such California State or Federal court, and (iv)
waives, to the fullest extent permitted by Law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in
any such California State or Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by Law. Each
party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.2. Nothing in this
Agreement shall affect the right of any party to this Agreement to
serve process in any other manner permitted by Law.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE THEY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES
THAT (1) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS,
(2) THEY UNDERSTAND AND HAVE CONSIDERED THE IMPLICATIONS OF SUCH
WAIVERS, (3) THEY MAKE SUCH WAIVERS VOLUNTARILY, AND (4) THEY HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10(c).
Section 9.11 Counterparts. This Agreement may be executed
in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to
be an original but all of which taken together shall constitute one
and the same agreement.
IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the
Company Shareholders have executed this Agreement as of the date
first written above.
"Parent" Synthetic Turf Corporation of America
By: /s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx, President
"Merger Sub" ISC Acquisition Inc.
By: /s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx, President
By: /s/ Xxxxxx XxXxxxxxxx
Xxxxxx XxXxxxxxxx, Secretary
"The Company" International Surfacing of Colorado, Inc.
By: /s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx, President
By: /s/ Xxxxxx XxXxxxxxxx
Xxxxxx XxXxxxxxxx, Secretary
Company Shareholders /s/ Xxxxxx XxXxxxxxxx
Xxxxxx XxXxxxxxxx
/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
