EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BIOMEDICAL TECHNOLOGY SOLUTIONS, INC.
AND
CET SERVICES, INC.
AND
CET ACQUISITION CORP.
DATED AS OF May 8, 2008
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into this 8th day of May, 2008, by and among BIOMEDICAL TECHNOLOGY SOLUTIONS,
INC., a Colorado corporation ("BMTS"); CET SERVICES, INC., a California
corporation ("CET"); and CET ACQUISITION CORP., a Colorado subsidiary of CET
("CETAC"). BMTS, CET and CETAC are hereinafter sometimes individually
referred to as a "party" and collectively as the "parties".
WITNESETH:
WHEREAS, BMTS is engaged in the business of developing, marketing and
distributing infectious waste mitigation systems; and
WHEREAS, CET will be on the Effective Date, as hereinafter defined, the
owner of 100% (the "Shares") of the issued and outstanding Common Stock of
CETAC, $.0001 par value per share, representing all the issued and
outstanding shares of the capital stock of CETAC;
WHEREAS, for federal income tax purposes, the merger of CETAC with and
into BMTS is intended to qualify as a tax-free reorganization pursuant to
Section 368(a)(2)(E) of the Internal Revenue Code of 1986,a as amended (the
"Code"); and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants under which a merger of CETAC and BMTS will occur.
NOW, THEREFORE, for and in consideration of the premises, the mutual
representations, warranties and covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby covenant and agree as follows:
SECTION 1: GENERAL DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
1.1 Affiliate. "Affiliate" of any Person shall mean any Person
Controlling, Controlled by or under common Control with such Person.
1.2 Agreement. "Agreement" shall include this Agreement and any and
all documents and instruments executed in connection with the Merger (as
hereinafter defined).
1.3 Best Knowledge. "Best Knowledge" shall mean both what a Person
knew as well as what the Person should have known had the Person exercised
reasonable diligence. When used with respect to a Person other than a natural
person, the term "Best Knowledge" shall include matters that are known to the
directors and officers of the Person.
1.4 Control. "Control" and all derivations thereof shall mean the
ability to either (i) vote (or direct the vote of) 50% or more of the voting
interests in any Person or (ii) direct the affairs of another, whether
through voting power, contract or otherwise.
1.5 Exchange Act. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
1.6 Fiscal Year. "Fiscal Year" shall mean a twelve-month period
beginning January 1;
1.7 Governmental Authority. "Governmental Authority "shall mean any and
all applicable foreign, federal, state or local governments, governmental
institutions, public authorities and governmental entities of any nature
whatsoever, and any subdivisions or instrumentalities thereof, including, but
not limited to, departments, boards, bureaus, commissions, agencies, courts,
administrations and panels, and any division or instrumentalities thereof,
whether permanent or ad hoc and whether now or hereafter constituted or
existing.
1.8 Governmental Requirement. "Governmental Requirement" shall mean
any and all applicable laws (including, but not limited to, applicable common
law principles), statutes, ordinances, codes, rules regulations,
interpretations, guidelines, directions, orders, judgments, writs,
injunctions, decrees, decisions or similar items or pronouncements,
promulgated, issued, passed or set forth by any Governmental Authority.
1.9 Legal Requirements. "Legal Requirements" means applicable common
law and any applicable statute, ordinance, code or other laws, rule,
regulation, order, technical or other standard, requirement, judgment,
or procedure enacted, adopted, promulgated, applied or followed by any
Governmental Authority, including, without limitation, any order, decree,
award, verdict, findings of fact, conclusions of law, decision or judgment,
whether or not final or appealable, of any court, arbitrator, arbitration
board or administrative agency.
1.10 Net Worth. "Net Worth" shall mean the assets of a Person minus
the liabilities of the Person, as of a given date as determined in accordance
with generally accepted accounting principles, consistently applied with
prior periods.
1.11 Person. "Person" shall mean any natural person, any Governmental
Authority and any entity the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not
limited to, corporations, partnerships, joint ventures, joint stock
companies, trusts, estates, companies and associations, whether organized for
profit or otherwise.
1.12 Exhibit. Unless otherwise stated herein, the term "Exhibit" when
used in this Agreement shall refer to the Exhibits to this Agreement. The
Exhibits to this Agreement may be attached to this Agreement or may be set
forth in a separate document denoted as the Exhibits to this Agreement, or
both, and such Exhibits are incorporated herein by reference for all
purposes.
1.13 Unless otherwise stated herein, the term "Disclosure Schedule"
means the Disclosure Schedule attached hereto, dated as of the date hereof,
and forming a part of this Agreement.
1.14 Section. Unless otherwise stated herein, the term "Section" when
used in this Agreement shall refer to the Sections of this Agreement.
1.15 Securities Act. "Securities Act" shall mean the Securities Act of
1933, as amended.
1.16 Taxes. "Tax" and "Taxes" shall mean any and all income, excise,
franchise or other taxes and all other charges or fees imposed or collected
by any Governmental Authority or pursuant to any Governmental Requirement,
and shall also include any and all penalties, interest, deficiencies,
assessments and other charges with respect thereto.
SECTION 2: THE MERGER
2.1 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 2.3 herein). CETAC shall be
merged (the "Merger") with and into BMTS upon the terms and conditions set
forth herein as permitted by and in accordance with the Colorado Business
Corporation Act (the "CBCA"). Thereupon, the separate existence of CETAC
shall cease, and BMTS, as the surviving corporation in the Merger (the
"Surviving Corporation"), shall continue to exist under and be governed by
the CBCA, with all its purposes, objects, rights, privileges, immunities,
powers and franchises continuing unaffected and unimpaired by the Merger. The
name of the Surviving Corporation shall be "BioMedical Technology Solutions,
Inc."
2.2 Filing. As soon as practicable following fulfillment or waiver of
the conditions specified in Sections 8.2 and 8.3 hereof, and provided that
this Agreement has not been terminated pursuant to Section 12 hereof, CETAC
and BMTS will cause a short form Agreement and Plan of Merger, in the form
attached hereto as Exhibit 2.2, to be executed, acknowledged and filed with
the Secretary of State of Colorado as provided in applicable provisions of
the CBCA and obtain a copy of the Articles of Merger, certified by the
Secretary of State of the State of Colorado.
2.3 Effective Time of the Merger. The Merger shall become effective
immediately upon the filing of the Articles of Merger with the Secretary of
State of the State of Colorado in accordance with the CBCA.. The date and
time of the completion of such filings is herein sometimes referred to as the
"Effective Time".
2.4 Closing: Closing Date. Subject to the terms and conditions set
forth in the Agreement, the consummation of the transactions referenced above
shall take place (the "Closing") on June 30, 2008, at 10:00 a.m. Mountain
Daylight Savings Time at the offices of Xxxxxxxx X. Xxxxxx, PC; 0000 Xxxx
Xxxxxx, Xxxxxxx, XX 00000, or within five business days following the
satisfaction or waiver of all conditions precedent to such Closing, if
earlier, or at such other time, date and place as BMTS and CETAC shall
designate (the "Closing Date").
SECTION 3: APPROVALS AND REGULATORY MATTERS
3.1 CET Board of Directors Approvals. Subject to the provisions
hereof, the Board of Directors of CET shall, by written unanimous consent,
approve the Merger and the transactions provided for or contemplated by this
Agreement; provided, however, that such approvals shall be subject to their
satisfaction that the consummation of the Merger shall be and is exempt from
the registration requirements of the Securities Act, is undertaken without
violation of the anti-fraud provisions of the Securities Act and has been
consummated in conformity with all other applicable Legal Requirements.
3.2 CET Shareholder Approval. Subject to the provisions hereof, CET
shall, as promptly as practicable and in accordance with its charter
documents and applicable Legal Requirements, call and hold a special meeting
of the Shareholders of CET for the purpose of voting upon the approval of the
Merger and the following ancillary transactions ("Ancillary Transactions")
provided for or contemplated by this Agreement:
a. The Reverse Stock Split (Section 4.4);
b. The increase in authorized capital of CET (Section 4.5);
c. The Equity Incentive Plan (Section 4.4);
d. The Redomestication of CET to the State of Colorado (Section
4.6); and,
e. CET's change of corporate name to "BioMedical Technology
Solutions, Inc." (Section 4.5).
CET shall use its best efforts to obtain from its shareholders
sufficient proxies in favor of the approval of the Merger and the Ancillary
Transactions. Subject to the applicable fiduciary duties of CET's directors,
as determined by such directors in good faith after consultation with and
based upon the advice of legal counsel, CET shall take all other action
necessary or advisable to secure the vote or consent of stockholders required
by the applicable Law to obtain such approvals, including, without
limitation, if required, the inclusion of the recommendation of its Board of
Directors that its shareholders vote in favor of the approval and adoption of
this Agreement and the transactions related hereto.
CET shall exercise reasonable efforts to take all action necessary or
appropriate to prepare a Proxy Statement and other documents necessary to
effect the Merger and the Ancillary Transactions under applicable provisions
of the California Corporation Code ("CCC") and shall file a Proxy Statement
on Schedule 14A with the Securities and Exchange Commission (the
"Commission") and shall cause same to be mailed same to the CET shareholders
of record in conformity with rules and regulations governing the solicitation
of proxies under Section 14 of the Exchange Act and other applicable legal
requirements.
3.3 BMTS Board of Directors Approval. Subject to the provisions
hereof, the Board of Directors of BMTS shall, by written unanimous consent,
approve the Merger and the transactions provided for or contemplated by this
Agreement; provided, however, that such approvals shall be subject to their
satisfaction that the consummation of the Merger shall be and is exempt from
the registration requirements of the Securities Act, is undertaken without
violation of the anti-fraud provisions of the Securities Act and has been
consummated in conformity with all other applicable Legal Requirements.
3.4 BMTS Shareholder Approval. As promptly as practicable after the
date hereof, BMTS shall exercise reasonable efforts to take all action
necessary or appropriate to prepare an Information Statement and other
documents necessary to solicit and obtain the approval of the Merger and the
other transactions provided for or contemplated by this Agreement of all BMTS
shareholders (the "BMTS Shareholders").
3.5 Income Tax Considerations. It is the intention of the parties
hereto that the Merger provided for in this Agreement will qualify for
treatment as a tax-free reorganization under Section 368(a)(2)(E) of the Code
and the parties will agree to undertake all appropriate actions necessary
both before and after the Effective Date of the Merger to effect such
treatment. Notwithstanding the foregoing, neither CET nor any of its
affiliates shall have any liability whatsoever to BMTS or the BMTS
shareholders for the treatment ultimately accorded the Merger by federal or
state taxing and regulatory authorities; and BMTS shall bear all
responsibility for any tax or other assessment levied, imposed or assessed by
any regulatory or governmental authority on BMTS by virtue of the
consummation of the Merger and the other transactions provided for in this
Agreement. The BMTS shareholders shall bear all responsibility for any tax
or other assessment levied, imposed or assessed by any regulatory or
governmental authority on the BMTS Shareholders by virtue of the consummation
of the Merger or other transactions provided for in this Agreement.
3.6 Compliance with Securities Laws. The Merger provided for in this
Agreement shall be undertaken in reliance upon an exemption from the
registration requirements contained in Section 5 of the Securities Act and
set forth in Section 4(2) of the Securities Act and Regulation D thereunder.
All shares issued to the BMTS shareholders in connection with the Merger
shall be "restricted securities" within the meaning of Rule 144 under the
Securities Act.
3.7 Restrictive Legend. Certificates representing the shares of CET
common stock issued in connection with the Merger shall be "restricted
securities" under the Securities Act and shall bear the following restrictive
legend:
The shares represented by this certificate have not been registered
under the Securities Act of 1933 ("the Act") and are "restricted securities"
as that term is defined in Rule 144 under the Act. The shares may not be
offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act, or pursuant to an exemption
from registration under the Act, the availability of which is to be
established to the satisfaction of the Company.
3.8 Dissenter Rights. At all times, and as applicable, CET and BMTS
shall comply with applicable Legal Requirements including, without
limitation, the payment of cash for dissenting shares related to the Merger.
SECTION 4. ADDITIONAL AGREEMENTS
4.1 BMTS Financial Statements. As promptly as practicable after the
date hereof, BMTS shall use best efforts to cause to be prepared audited
balance sheets, income statements, statements of cash flows and stockholders'
equity as of and for the two year period ended December 31, 2007 (the "BMTS
Financial Statements"). The BMTS Financial Statements (including any related
schedules and/or notes), will show all liabilities, direct or contingent,
required at the time of preparation to be shown in accordance with U.S.
generally accepted accounting principles ("GAAP") and fairly present the
financial position and results of operations of BMTS as of the date thereof
and for the periods indicated in accordance with GAAP, consistently applied
with all prior periods. Except as otherwise disclosed in the Agreement,
including, without limitation, Section 4.1 the Disclosure Schedule hereof,
BMTS will have no material liability or obligation of any nature (whether
liquidated, unliquidated, accrued, absolute, contingent or otherwise, whether
due or to become due) except those set forth on the BMTS Financial Statements
except liabilities incurred and current liabilities (determined in accordance
with GAAP) incurred since the date of the BMTS Financial Statements in the
ordinary course of business consistent with past practice. The BMTS
Financial Statements shall conform in all respects to the requirements of
Regulation S-X under the Securities Act and shall include, at a minimum,
audited balance sheets as of December 31, 2007 and 2006, audited statements
of operation and statements of cash flow for the two year period ended
December 31, 2007 and audited statements of stockholders' equity at December
31, 2007. The Financial Statements to be prepared under this Section 4.1
shall also include pro forma financial information ("Pro Forma Financial
Information") in accordance with the requirements of Regulation S-X. All
costs and expenses incurred in connection with the preparation of the BMTS
Financial Statements and the Pro Forma Financial Information, including fees
and disbursements of the Auditor, shall be borne exclusively by BMTS.
4.2 Pre-Closing Capitalization. At or prior to Closing, the parties
shall undertake any and all actions necessary to assure that immediately
prior to Closing, the pre-Merger capitalization of each party (giving effect
to the exercise of all outstanding options and warrants and the conversion of
all outstanding convertible securities), on a fully-diluted basis, shall be
the following:
CET: 5,626,989 shares
BMTS: 10,200,000 shares
4.3 2008 Equity Incentive Plan. Subject to and prior to or
concurrently with the Closing, CET shall take, or cause to be taken, all
actions necessary to approve and adopt an Equity Incentive Plan substantially
in the form of Exhibit 4.3 hereto, and to authorize the issuance of not less
than 2.0 million shares of common stock (pre-split) to be issued pursuant to
options and other rights granted under the Plan.
4.4 Reverse Stock Split. Subject to and concurrently with the Closing,
CET shall effect a reverse split of all of its issued and outstanding shares
of common stock as well as all options, warrants, and other outstanding
securities exercisable to purchase or convertible into shares of CET common
stock in a ratio determined and approved by BMTS (the "Reverse Split").
4.5 Increase in Authorized Stock and Name Change. Subject to and at or
prior to the Closing, CET shall take, or cause to be taken, all actions
necessary to further amend and/or restate its Amended and Restated Articles
of Incorporation to (i) increase the number of shares of common stock and
preferred stock it is authorized to issue from 20,000,000 shares to
100,000,000 shares and from 5,000,000 shares to 10,000,000 shares,
respectively, and to effect such other amendments to such Articles of
Incorporation as BMTS deems to be desirable and as permitted by applicable
law and (ii) change the corporate name of CET to "BioMedical Technology
Solutions, Inc." (with BMTS to change its name in a manner to distinguish
the two entities).
4.6 Redomestication. At or prior to the Closing, or as soon as
practicable thereafter, CET shall take, or cause to be taken, all actions
necessary to redomesticate from the State of California to the State of
Colorado.
4.7 CET Assets and Liabilities.
(a) As of the execution of this Agreement, CET's principal assets
consisted of five (5) separate parcels of real property which shall be
designated as Parcel Nos. 1, 2, 3, 4 and 5 which can be described as follows:
Parcel No. 1: 0000 X. Xxxxxx Xxxxx, Xxxxxx, XX
Parcel No. 2: Arizona Ave., LLC
Parcel No. 3: 0000 Xxxxxx Xxxx., Xxxxxxxxxxx, XX
Parcel No. 4: 0000 Xxxxx Xxxxxx, Xxxxxxxxxxx, XX
Parcel No. 5: 0000 Xxxxxx Xxxx., Xxxxxxxxxxx, XX
All of the foregoing properties are currently owned of record by
Community Builders, Inc., a wholly-owned subsidiary of CET. Prior to the
Effective Date of the Merger, CET shall form and organize a new subsidiary,
CET Sub, and all ownership of Community Builders, Inc. shall be transferred
and assigned by CET to Xxxxx Xxxxx, or his designee, so as to divest CET of
all right, title and interest in Community Builders. Community Builders
shall execute and deliver at Closing an Indemnity Agreement substantially in
the form of Exhibit 4.7(a) hereto whereby it will agree (i) to maintain its
corporate existence for a period of three years, (the "Indemnity Period")
(ii) to indemnify, defend and hold harmless CET, CET Sub and the officers and
directors of BMTS from any claims, debts or liabilities of Community Builders
or arising from the transfer of ownership of Community Builders as provided
for herein, save and except for secured obligations expressly assumed by CET
Sub as part of the Merger and (iii) for the duration of the Indemnity Period,
maintain not less than $250,000 in net assets to cover any warranty or third
party claims, should they arise. Without in any way limiting the generality
of the foregoing, Community Builders shall be solely and separately
responsible for all existing and future debts and obligations incurred in
connection with the ownership, maintenance and disposition of Parcel Nos. 3,
4 and 5, which shall include without limitation all secured debt constituting
liens or encumbrances against those properties, general contractor hold-
backs, general contractor final draws, accrued and accumulated interest and
accrued and accumulated real property taxes
(b) At the Effective Date of the Merger, the following covenants
shall apply with respect to each of the foregoing parcels:
A. Community Builders shall convey to CET Sub all of its interest
in Parcel No. 1 which shall have secured debt of not more than $472,000;
B. Community Builders shall convey to CET Sub all of its interest
in Parcel No. 2;
C. Community Builders shall pay to CET the sum of $250,000 for
Parcel No. 3;
D. Community Builders shall pay to CET the sum of $260,000 for
Parcel No. 4; and,
E. Community Builders shall pay to CET the sum of $400,000 for
Parcel No. 5.
Further, as of the Effective Date of the Merger, CET shall have cash not less
than $875,000 and shall have no accounts payable or other liabilities except
for the secured debt against Parcel No. 1.
4.8 Notification of Certain Matters. BMTS shall give prompt notice to
CET and CET shall give prompt notice to BMTS of (i) the occurrence or non-
occurrence of any event which would cause any representation or warranty made
by the respective parties in this Agreement to be materially untrue or
inaccurate when made and (ii) any failure of CET or BMTS, as the case may be,
to materially comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this section shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice
and, provided further, that the failure to give such notice shall not be
treated as a breach of covenant for the purposes of this Agreement unless the
failure to give such notice results in material prejudice to the other party.
4.9 Further Action. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall use all commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and to
otherwise satisfy or cause to be satisfied all conditions precedent to its
obligations under this Agreement.
4.10 Public Announcements. BMTS and CET shall consult with each other
before issuing any press release or other public statement with respect to
the Merger or this Agreement and shall not issue any such press release or
make any such public statement without the prior consent of the other party,
which consent shall not be unreasonably withheld, delayed or conditioned;
provided, however, that a party may, without the prior consent of the other
party, issue such press release or make such public statement as may, upon
the advice of counsel, be required by law if it has used reasonable efforts
to first consult with the other party.
4.11 Cooperation in Securities Filings. BMTS shall provide such
information regarding BMTS, its business, its officers, directors and
affiliates, as is reasonably required by CET for purposes of preparing any
notices, reports and other filings with the SEC. Moreover, following the
Closing, the current officers and directors of BMTS shall provide such
information as the post-closing management of CET shall reasonably request
for the purpose of preparing any notices, reports and other filings by CET
with the SEC, including but not limited to, in connection with the
preparation of any financial statements required to be filed under the
Exchange Act or Securities Act by CET.
4.12 Additional Documents. The parties shall deliver or cause to be
delivered such documents or certificates as may be necessary, in the
reasonable BMTSnion of counsel for either of the parties, to effectuate the
transactions provided for in this Agreement. If at any time the parties or
any of their respective successors or assigns shall determine that any
further conveyance, assignment or other document or any further action is
necessary desirable to further effectuate the transactions set forth herein
or contemplated hereby, the parties and their officers, directors and agents
shall execute and deliver, or cause to be executed and delivered, all such
documents as may be reasonably required to effectuate such transactions.
SECTION 5: CONVERSION OR CANCELLATION OF SHARES
5.1 Securities to be issued on Effective Date of Merger. On the
Effective Date of the Merger:
(a) all issued and outstanding shares of common stock of BMTS (the
"BMTS Common Stock") shall be converted into 78,994,826 shares of CET Common
Stock (the "CET Common Stock"). The Merger Exchange Ratio at which the BMTS
Common Stock will be converted into the CET Common Stock shall be 8.64276 for
one. The calculation of the Merger Exchange Ratio assumes that there are
5,626,989 shares of CET common stock and stock options and warrants to
purchase shares of CET common stock outstanding and 10,200,000 shares of BMTS
common stock and stock options and warrants to purchase shares of common
stock outstanding as of the Effective Date. Any changes in the number of
issued and outstanding shares, on a fully diluted basis, of CET common stock
or BMTS common stock will change the Merger Exchange Ratio and the number of
shares of CET Common Stock to be issued hereunder in accordance with Section
5.1(b) below.
(b) The parties acknowledge that the Reverse Split will result in
a proportional adjustment of the CET shares outstanding immediately following
the consummation of the Merger; however, it is the intent and agreement of
the parties that upon consummation of the Merger, the pre-Merger CET Common
Stock outstanding will represent 6% and the shares issuable to the BMTS
shareholders and underlying BMTS Warrants and Options will represent 94% of
the post-Merger CET Common Stock outstanding and CET Common Stock underlying
the BMTS Warrants and Options, on a fully-diluted basis. The parties agree
that all numbers will be adjusted proportionately to ensure that the pre-
Merger CET shareholders will own 6% and the BMTS shareholders and Warrant and
Option holders will own 94% of the post-Merger fully-diluted CET Common Stock
outstanding.
(c) At the Effective Time of the Merger, all issued and
outstanding options and warrants exercisable to purchase shares of BMTS
common stock will, by virtue of their terms, become exercisable to purchase
shares of CET common stock on the same terms and conditions except that the
number of shares issuable upon exercise of such option or warrant will be
multiplied by the Merger Exchange Ratio, and the exercise price shall be
reduced proportionately. CET shall assume all liability to maintain in full
force and effect all of such options and warrants in accordance with their
terms and reserve from its authorized but unissued shares of common stock a
sufficient number of shares to issue upon the due and timely exercise of such
options and warrants.
(d) Each share of CET Common Stock, issued under this section
shall be restricted securities pursuant to Rule 144 promulgated under the
Securities Act.
(e) Each share of BMTS Common Stock, if any, held in BMTS's
treasury immediately prior to the Effective Time shall be canceled and
retired and no payment shall be made in respect thereof.
(f) At the Effective Time, all outstanding shares of CETAC shall
be converted into an aggregate of 100 shares of Common Stock of BMTS. Each
share of CETAC Common Stock, if any, held in CETAC's treasury immediately
prior to the Effective Time shall be canceled and retired and no payment
shall be made in respect thereof.
5.2 Surrender and Payment. Subject to the provisions of Sections 5.5
and 5.6 below, after the Effective Time, each holder of a certificate
representing an issued and outstanding share of BMTS Common Stock shall be
entitled upon surrender of such certificate along with a fully executed
Subscription Agreement in the form of Exhibit 5.3, to CET, to receive the CET
Common Stock as set forth in Section 5.1 above. Until so surrendered, each
certificate which immediately prior to the Effective Time represented an
issued and outstanding share of BMTS Common Stock shall, upon and after the
Effective Time, be deemed for all purposes to represent and evidence only the
right to receive CET Common Stock as set forth in Section 5.1. If any
exchange for shares of BMTS Common Stock is to be made in a name other than
that in which the certificate therefor surrendered for exchange is
registered, it shall be a condition of such payment that the certificate so
surrendered be properly endorsed or otherwise in proper form for transfer and
that the person requesting such payment either pay to CET any transfer or
other similar taxes required by reason of the payment to a person other than
the registered holder of the certificate surrendered or establish to the
satisfaction of CET that such tax has been paid or is not payable.
5.3 Subscription Agreements. Each of the BMTS Shareholders receiving
CET Common Stock pursuant to the terms hereof shall have delivered a fully
executed Subscription Agreement substantially in the form of Exhibit 5.3
5.4 No Further Transfers. On and after the Effective Time, no transfer
of the shares of BMTS Common Stock issued and outstanding immediately prior
to the Effective Time shall be made on the stock transfer books of BMTS.
SECTION 6: CERTAIN EFFECTS OF MERGER
6.1 Effect of Merger. On and after the Effective Time, the separate
existence of CETAC shall cease and CETAC shall be merged with and into BMTS,
which as the Surviving Corporation (herein sometimes so called) shall,
consistently with its Articles of Incorporation succeed to, and without other
transfer, possess all the rights, privileges, immunities, powers and
franchises of public as well as private nature, and be subject to all
restrictions, disabilities and duties of CETAC; and all rights, privileges,
immunities, powers and franchises of CETAC, and all property, real, personal
and mixed, causes of action and every other asset of, and all debts due to
CETAC on whatever account as well as stock subscriptions and all other things
in action or belonging to CETAC shall vest in the Surviving Corporation; and
all property, rights, privileges, immunities, powers and franchises, and all
and every other interest shall be thereafter as effectually the property of
the Surviving Corporation as they were of CETAC, and the title to any real
estate vested by deed or otherwise in CETAC, and the title to any real estate
vested by deed or otherwise in CETAC shall not revert or be in any way
impaired but all rights of creditors and all liens upon any property of CETAC
shall be preserved unimpaired, and all debts, liabilities and duties of CETAC
shall thenceforth attach to the Surviving Corporation, and may be enforced
against it to the same extent as if such debts, liabilities and duties had
been incurred or contracted by it. Any action or proceeding pending by or
against CETAC may be prosecuted to judgment, which shall bind the Surviving
Corporation, or the Surviving Corporation may be proceeded against or
substituted in its place.
6.2 Further Assurances. If at any time after the Effective Time the
Surviving Corporation shall consider any further deeds, assignments or
assurances in law or any other action necessary, desirable or proper (a) to
vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation the title to any property or rights of CETAC acquired or to be
acquired by reason of, or as a result of, the Merger, or (b) otherwise to
carry out the intents and purposes of this Agreement, CETAC and CET agree
that it and its proper officers and directors shall and will execute and
deliver, or cause to be executed and delivered, all such property, deeds,
assignments and assurances in law and take all other action necessary,
desirable or proper to vest, perfect or confirm title to such property or
right in the Surviving Corporation and otherwise to carry out the purposes of
this Agreement.
SECTION 7: POST-MERGER GOVERNANCE
7.1 Articles of Incorporation and Bylaws. At the Effective Time, the
Articles of Incorporation and By-Laws of BMTS as in effect immediately prior
to the Effective Time, shall be and continue to be the Articles of
Incorporation and By-Laws of BMTS, as the Surviving Corporation, until duly
amended in accordance with applicable law.
7.2 Directors. Officers and Employees.
(a) Directors of CET. Concurrently with the Closing, the Board of
Directors of CET shall, in accordance with the CBCA and the Articles of
Incorporation and By-Laws of CET shall be reconstituted to consist of:
Xxxxxx X. Xxx
Gex X. Xxxxxxxxxx
Xxxx Xxxxxx
(b) Executive Officers of CET. Concurrently with the Closing, the
Board of Directors of CET shall elect the following persons to serve as
Executive Officers of CET in the capacities set forth below until the next
regular Annual Meeting of the CET Board of Directors (as hereinafter defined)
or until their successors have been duly elected and qualified in accordance
with the CBCA, the Articles of Incorporation and Bylaws of CET, or until they
have resigned:
Xxxxxx X. Xxx CEO and President
Xxx Xxxxxxxxx Chief Financial Officer
Gex X. Xxxxxxxxxx Secretary
Any persons serving as Executive Officers of CET immediately prior to the
Effective Time who will not continue in such capacity immediately after the
Effective Time shall tender their resignations in accordance with applicable
Legal Requirements.
SECTION 8: COVENANTS AND CONDITIONS OF CLOSING
8.1 Covenants Regarding the Closing. The parties hereto hereby
covenant and agree that they shall (i) use all commercially reasonable
efforts to cause all of their respective representations and warranties set
forth in this Agreement to be true on and as of the Closing Date, (ii) use
all commercially reasonable efforts to cause all of their respective
obligations that are to be fulfilled on or prior to the Closing Date to be so
fulfilled, (iii) use all commercially reasonable efforts to cause all
conditions to the Closing set forth in this Agreement to be satisfied on or
prior to the Closing Date, and (iv) deliver to each other at the Closing the
certificates, updated lists, opinion of counsel, notices, consents,
authorizations, approvals, agreements, transfer documents, receipts and
amendments contemplated by Sections 8, 9 and 11 (with such additions or
exceptions to such items as are necessary to make the statements set forth in
such items accurate, provided that if any such additions or exceptions cause
any of the conditions to the parties' obligations hereunder as set forth in
Sections 8, 9 and 11 below not to be fulfilled, such additions and exceptions
shall in no way limit the rights of the parties to terminate this Agreement
or refuse to consummate the transactions contemplated hereby.) All
indemnifications, guarantees, covenants, agreements, representations and
warranties made by the parties hereunder or pursuant hereto or in connection
with the transactions contemplated hereby shall survive the Closing
regardless of any investigation at any time made by or on behalf of the
parties.
8.2 Conditions to Obligation of CET and CETAC. The obligation of CET
and CETAC to complete the Merger on the Closing date on the terms set forth
in this Agreement is, at the option of CET and CETAC, subject to the
satisfaction or waiver by CET and CETAC of each of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties made by BMTS in this Agreement shall be
correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made
on the Closing Date.
(b) Compliance with Covenants. All covenants which BMTS is
required to perform or comply with on or before the Closing date shall have
been fully complied with or performed in all material respects.
(c) Corporate Approvals. The Board of Directors and shareholders
of BMTS shall have approved and ratified this Agreement and shall have
authorized the appropriate officers of BMTS to execute same and fully perform
its terms.
(d) Consents and Approvals. To the extent that any material
lease, mortgage, deed of trust, contract or agreement to which BMTS is a
party shall require the consent of any person to the exchange of BMTS's
shares of common stock or any other transaction provided for herein, such
consent shall have been obtained; provided, however, that BMTS shall not
make, as a condition for the obtaining of any such consent, any agreements or
undertakings not approved in writing by CET and CETAC to the extent that such
condition otherwise has an adverse effect on CET and CETAC.
(e) Review and Due Diligence. CET and CETAC, its investment
bankers, legal counsel and/or auditors shall have had the opportunity to
complete, and shall have completed, a satisfactory due diligence
investigation of BMTS together with a satisfactory review of BMTS's corporate
status and the title to BMTS's property.
(f) No Governmental Actions. No action or proceeding before any
governmental authority shall have been instituted or threatened to restrain
or prohibit the transactions contemplated by this Agreement, and the parties
shall have delivered to each other certificates dated as of the Closing Date
and executed by such parties, stating that to their Best Knowledge, no such
items exist. No governmental authority shall have taken any other action as
a result of which the management of CET or CETAC, in its sole discretion,
reasonably deems it inadvisable to proceed with the transactions contemplated
by this Agreement.
(g) No Material Adverse Change. No material adverse change in the
business, property or assets of any party hereto shall have occurred, and no
loss or damage to any of the assets, whether or not covered by insurance,
with respect to any party hereto has occurred, and the parties hereto shall
have delivered to each other certificates dated as of the Closing Date and
executed by each of the parties to all such effects.
(h) Update of Contracts. The parties hereto shall have delivered
to each other an accurate list, as of the Closing Date, showing (i) all
agreements, contracts and commitments of the type listed in Section 11.14 of
the Disclosure Schedule entered into since the date of this Agreement; and
(ii) all other agreements, contracts and commitments related to the
businesses or the assets of the respective parties entered into since the
date of this Agreement, together with true, complete and accurate copies of
all such documents (the "New Contracts"). Each party shall have had the
opportunity to review and approve the New Contracts of the other, and any of
the parties shall have the right to delay the Closing for up to ten (10) days
if it in its sole discretion deems such delay necessary to enable it to
adequately review the New Contracts.
(i) Approval of Counsel. All actions, proceedings, instruments
and documents required or incidental to carry out this Agreement, including
all schedules and exhibits thereto, and all other related legal matters shall
have been approved by Xxxxxxxx X. Xxxxxx, P.C., counsel to BMTS, and Xxxx
Xxxxx, P.C., counsel to CET and CETAC.
(j) No Adverse Information. The investigations with respect to
the parties, the assets and the respective businesses performed by each
party's respective professional advisors and other representatives shall not
have revealed any information concerning the other parties, their assets or
their business that has not been made known to the discovering party, in
writing prior to the date of this Agreement and that, in the opinion of such
party and its advisors, materially and adversely affects the business or
assets of the other party or the viability of the transaction contemplated by
this Agreement.
(k) Ordinary Course of Business. During the period from the date
of this Agreement until the Closing Date, BMTS shall have carried on its
business in the ordinary and usual course, and shall have delivered to CET
and CETAC a certificate to that effect.
(l) Liens. BMTS shall have delivered to CET a reasonably current
lien and judgment search (both state and county levels in each jurisdiction
where the party is qualified to or is doing business or owns material assets)
confirming the absence of any judicial liens, security interests, tax liens
and similar such liens affecting any of its business or assets. Each and
every lien or encumbrance of any nature, if any, relating to the assets,
business, or the shares of common stock of BMTS shall have been terminated
and released, and proof thereof delivered to CET.
(m) Other Documents. The parties shall have delivered or caused
to be delivered all other documents, agreements, resolutions, certificates or
declarations as each respective party or its attorneys may have reasonably
requested.
(n) Governmental and Regulatory Approvals. The parties shall have
obtained evidence, in form and substance satisfactory to each of them, that
there have been obtained all consents, approvals and authorizations required
by this Agreement, including, without limitation, the following:
(i) CET and BMTS Board of Directors and CET and BMTS Common
Stockholder approval of all the transactions contemplated pursuant to this
Agreement; and
(ii) All regulatory approvals necessary for BMTS to conduct
business in the ordinary course in each jurisdiction where such approval may
be required and the failure to obtain such approval would cause a material
adverse affect to the financial condition, business or operations of BMTS.
(o) Compliance with Securities Laws. CET shall have undertaken
all actions necessary or advisable to consummate the Merger in conformity
with all Governmental and Legal Requirements including, without limitation,
applicable federal and state securities laws.
(p) Appraisal Rights and/or Dissenters' Rights. At or prior to
Closing, no beneficial or record owner of any outstanding shares of BMTS
Common Stock shall have exercised or shall have given notice to CET or BMTS
of their intent to exercise any rights under applicable state law, if any, to
dissent from the Merger or obtain the payment of the fair market value of
such shares of BMTS Common Stock in lieu of participating in the Merger in
accordance with the terms and subject to the conditions set forth herein.
(q) Financial Advisory Fees. At or prior to Closing, all
obligations or commitments of CET and BMTS to their respective financial
advisors and investment bankers shall have been paid or otherwise satisfied
upon terms satisfactory to the parties, and CET and BMTS shall each have been
delivered and received such written consents, approvals, estoppel
certificates or other instruments or undertakings from its advisors or other
third parties as each may deem reasonable, necessary or advisable.
(r) Compliance with Sections 5 and 17 of the Securities Act. The
Board of Directors of CET shall be satisfied that consummation of the Merger
and the issuance of CET Common Stock to the BMTS securityholders is in
compliance with the provisions of Sections 5 and 17 of the Securities Act.
8.3 Conditions to Obligation of BMTS. The obligations of BMTS to
complete the Merger on the Closing date on the terms set forth in this
Agreement is, at the option of BMTS, subject to the satisfaction or waiver by
BMTS of each of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties made by CET and CETAC in this Agreement shall
be correct in all material respects on and as of the Closing date with the
same force and effect as though such representations and warranties had been
made on the Closing date.
(b) Compliance with Covenants. All covenants which CET and CETAC
is required to perform or comply with on or before the Closing date shall
have been fully complied with or performed in all material respects.
(c) Corporate Approvals. The Board of Directors and shareholders
of CET and CETAC shall have approved and ratified this Agreement and shall
have authorized the appropriate officers to execute same and fully perform
its terms.
(d) Consents and Approvals. To the extent that any material
lease, mortgage, deed of trust, contract or agreement to which CET and CETAC
is a party shall require the consent of any person to the exchange of CET and
CETAC's shares of common stock or any other transaction provided for herein,
such consent shall have been obtained; provided, however, that CET and CETAC
shall not make, as a condition for the obtaining of any such consent, any
agreements or undertakings not approved in writing by BMTS to the extent that
such condition otherwise has an effect on BMTS or CET and CETAC.
(e) Review and Due Diligence. BMTS and its legal counsel and/or
auditors shall have had the opportunity to complete, and shall have
completed, a satisfactory due diligence investigation of CET and CETAC,
together with a satisfactory review of CET and CETAC's corporate status, the
marketability of title to CET and CETAC's property, and compliance with all
reporting requirements imposed by or on account of any federal or state
securities laws or regulations.
(f) No Governmental Actions. No action or proceeding before any
governmental authority shall have been instituted or threatened to restrain
or prohibit the transactions contemplated by this Agreement, and the parties
hereto shall have delivered to each other certificates dated as of the
Closing Date and executed by such parties, staling that to their Best
Knowledge, no such items exist. No governmental authority shall have taken
any other action as a result of which the management of any of the parties,
in its sole discretion, reasonably deems it inadvisable to proceed with the
transactions contemplated by this Agreement.
(g) No Material Adverse Change. No material adverse change in the
business, property or assets of any party hereto shall have occurred, and no
loss or damage to any of the assets, whether or not covered by insurance,
with respect to any party hereto has occurred, and the parties shall have
delivered to each other certificates dated as of the Closing Date and
executed by each of the parties to all such effects.
(h) Update of Contracts. The parties shall have delivered to each
other an accurate list, as of the Closing Date, showing (i) all agreements,
contracts and commitments of the type listed in Section 11.14 of the
Disclosure Schedule entered into since the date of this Agreement; and (ii)
all other agreements, contracts and commitments related to the businesses or
the assets of the respective parties entered into since the date of this
Agreement, together with true, complete and accurate copies of all such
documents (the "New Contracts"). Each party shall have had the opportunity to
review the New Contracts of the other, and any of the parties shall have the
right to delay the Closing for up to ten (10) days if it in its sole
discretion deems such delay necessary to enable it to adequately review the
New Contracts.
(i) Approval of Counsel. All actions, proceedings, instruments
and documents required or incidental to carry out this Agreement, including
all schedules and exhibits thereto, and all other related legal matters shall
have been approved as to substance and form by Xxxxxxxx X. Xxxxxx, P.C.,
counsel to BMTS, and Xxxx Xxxxx, P.C., counsel to CET and CETAC.
(j) No Adverse Information. The investigations with respect to
the parties, the assets and their respective businesses performed by each
party's respective professional advisors and other representatives shall not
have revealed any information concerning the other panes, their assets or
their business that has not been made known to the discovering party, in
writing prior to the date of this Agreement and that, in the opinion of such
party and its advisors, materially and adversely affects the business or
assets of the other party or the viability of the transaction contemplated by
this Agreement.
(k) Ordinary Course of Business. During the period from the date
of this Agreement until the Closing Date, CET shall have carried on its
business in the ordinary and usual course, and shall have delivered to BMTS a
certificate to that effect.
(1) Other Documents. The parties shall have delivered or caused
to be delivered all other documents, agreements, resolutions, certificates or
declarations as each respective party or its attorneys may have reasonably
requested.
(m) Governmental and Regulatory Approvals. The parties shall have
obtained evidence, in form and substance satisfactory to each of them, that
there have been obtained all consents, approvals and authorizations required
by this Agreement, including, without limitation, the following:
(i) CET and BMTS Board of Directors and CET and BMTS Common
Stockholder approval of all the transactions contemplated pursuant to this
Agreement; and
(ii) All regulatory approvals necessary for CET and BMTS to
conduct business in the ordinary course in each jurisdiction where such
approval may be required.
(n) Compliance with Securities Laws. BMTS shall have undertaken
all actions necessary or advisable to consummate the Merger in conformity
with all Governmental and Legal Requirements including, without limitation,
applicable federal and state securities laws.
(o) Appraisal Rights and/or Dissenters' Rights. At or prior to
Closing, no beneficial or record owner of any outstanding shares of BMTS
Common Stock shall have exercised or shall have given notice to CET or BMTS
of their intent to exercise any rights under applicable state law, if any, to
dissent from the Merger or obtain the payment of the fair market value of
such shares of BMTS Common Stock in lieu of participating in the Merger in
accordance with the terms and subject to the conditions set forth herein.
(p) Financial Advisory Fees. At or prior to Closing, all
obligations or commitments of CET and BMTS to their respective financial
advisors and investment bankers shall have been paid or otherwise satisfied
upon terms satisfactory to the parties, and CET and BMTS shall each have been
delivered and received such written consents, approvals, estoppel
certificates or other instruments or undertakings from its advisors or other
third parties as each may deem reasonable, necessary or advisable.
(q) Compliance with Sections 5 and 17 of the Securities Act. The
Board of Directors of BMTS shall be satisfied that consummation of the Merger
and the issuance of CET Common Stock to the BMTS securityholders is in
compliance with the provisions of Sections 5 and 17 of the Securities Act.
(r) Reverse Stock Split. The reserve stock split shall have been
consummated in accordance with Section 4.4 hereof.
(s) CET Corporate Documents. The CET Amended and Restated
Articles of Incorporation shall have been amended to change the Company's
name to "BioMedical Technology Solutions, Inc" and to increase the authorized
common stock from 20,000,000 shares to 100,000,000 shares and to increase the
authorized preferred stock from 5,000,000 shares to 10,000,000 shares.
(t) CET Equity Incentive Plan. CET Board of Directors and
Shareholders shall have adopted and approved a new 2008 Equity Incentive Plan
in accordance with Section 4.3 hereof.
(u) CET Redomestication. The Board of Directors and Shareholders
of CET shall have ratified and approved the redomestication of CET from the
State of California to the State of Colorado.
(v) CET Financial Condition. CET assets and liabilities shall be
in accordance with the covenants set forth in Section 4.7 hereof.
(w) Idemnity Agreement. Community Builders shall have executed
and delivered an Indemnity Agreement substantially in the form of Exhibit
4.7(a) hereto.
8.4 Specific Items to be Delivered at the Closing. The parties shall
deliver the following items to the appropriate party at the Closing of the
transactions contemplated by this Agreement.
(a) To be delivered by BMTS :
(i) Copy of corporate resolutions authorizing the execution
of this Agreement, and the consummation by BMTS of the transactions
contemplated by this Agreement.
(ii) A certificate of the President of BMTS stating that the
representations and warranties of BMTS set forth in this Agreement are true
and correct. Said certificate shall further verify and affirm that all
consents or waivers, if any, which may be necessary to execute and deliver
this Agreement have been obtained and are in full force and effect.
(iii) A certificate dated the Closing Date, signed by the
Chief Executive Officer and the Chief Financial Officer of BMTS, in form and
substance reasonably satisfactory to the other party and its legal counsel,
certifying that all conditions precedent set forth in this Agreement to the
obligations of BMTS to close, have been fulfilled, and that no event of
default hereunder and no event which, with the giving of notice or passage of
time, or both, would be an event of default, has occurred as of such date.
(iv) Certificates dated the Closing Date, signed by the
Secretary of BMTS, (i) certifying resolutions duly adopted by the Board of
Directors and Shareholders of BMTS, authorizing the execution of this
Agreement and all of the other transactions to be consummated pursuant
thereto; (ii) certifying the names and incumbency of the officers of BMTS who
are empowered to execute the foregoing documents for and on behalf of such
company; (iii) certifying the authenticity of copies of the Articles of
Incorporation and Bylaws of BMTS; and (iv) certifying the authenticity of a
reasonably current Certificate of Good Standing, from all jurisdictions in
which the company is qualified to conduct business.
(v) Articles of Merger and Certificate of Merger in proper
form to be filed with the Secretary of State of Colorado in such form as may
be required to consummate the Merger as of the Effective Time.
(b) To be delivered by Shareholders of BMTS :
(i) Certificate or certificates representing 100% of the
issued and outstanding common shares of BMTS, which stock certificates shall
be endorsed in favor of CET.
(ii) Fully executed Subscription Agreements substantially in
the form of Exhibit 5.3.
(c) To be delivered by CET and CETAC:
(i) Certificate or certificates representing 78,994,826
shares of CET Common Stock, subject to adjustment provided for herein, which
certificates shall be issued in the names of each Shareholder in the numbers
set forth in Section 5.1 hereof;
(ii) Copy of corporate resolution authorizing the execution
of this Agreement and the consummation by CET and CETAC of the transactions
contemplated by this Agreement, including, but not limited to, the issuance
of CET Common Stock in the amounts and manner set forth in Section 5.1 above;
(iii) A certificate dated the Closing Date, signed by the
Chief Executive Officer and the Chief Financial Officer of CET and CETAC, in
form and substance reasonably satisfactory to the other party and its legal
counsel, certifying that all conditions precedent set forth in this Agreement
to the obligations of CET and CETAC to close, have been fulfilled, and that
no event of default hereunder and no event which, with the giving of notice
or passage of time, or both, would be an event of default, has occurred as of
such date.
(iv) Certificates dated the Closing Date, signed by the
Secretary of CET and CETAC, (i) certifying resolutions duly adopted by the
Board of Directors of CET and CETAC, authorizing the execution of this
Agreement and all of the other transactions to be consummated pursuant
thereto; (ii) certifying the names and incumbency of the officers of CET and
CETAC who are empowered to execute the foregoing documents for and on behalf
of such company; (iii) certifying the authenticity of copies of the Articles
of Incorporation and Bylaws of CET and CETAC; and (iv) certifying the
authenticity of a reasonably current Certificate of Good Standing, from
all jurisdictions in which CET and CETAC are qualified to conduct business.
(v) Articles of Merger and Certificate of Merger in proper
form to be filed with the Secretary of State of Colorado in such form as may
be required to consummate the Merger as of the Effective Time.
(vi) Indemnity Agreement of Community Builders.
SECTION 9: REPRESENTATIONS AND WARRANTIES OF BMTS
As a material inducement to CET to enter into this Agreement and with
the understanding and expectations that CET will be relying thereon in
consummating the Merger contemplated hereunder, BMTS (hereinafter BMTS shall
be referred to as the "Corporation" unless the context otherwise requires for
the purposes of this Section 9 only) hereby represents and warrants as
follows:
9.1 Organization and Standing. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the state
of its incorporation, and has all requisite corporate power and authority to
own its assets and properties and to carry on its business as it is now being
conducted.
9.2 Subsidiaries, Etc. The Corporation does not have any direct or
indirect Ownership Interest in any corporation, partnership, joint venture,
association or other business enterprise.
9.3 Qualification. The Corporation is not qualified to engage in
business as a foreign corporation in any state, and there is no other
jurisdiction wherein the character of the properties presently owned by the
Corporation or the nature of the activities presently conducted by the
Corporation makes necessary the qualification, licensing or domestication of
the Corporation as a foreign corporation.
9.4 Corporate Authority. Except as set forth on Section 9.4 of the
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby nor compliance by
the Corporation with any on the provisions hereof will:
(a) Conflict with or result in a breach of any provision of its
Articles of Incorporation or By-Laws or similar documents of any Subsidiary;
(b) Result in a default (or give rise to any right of termination,
cancellation, or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which the Corporation is a party, or by
which any of its properties or assets may be bound except for such default
(or right of termination, cancellation, or acceleration) as to which
requisite waivers or consents shall either have been obtained by the
Corporation prior to the Closing Date or the obtaining of which shall have
been waived by CET; or
(c) Violate any order, writ, injunction, decree or, to the
Corporation's Best Knowledge, any statute, rule or regulation applicable to
the Corporation or any of its properties or assets. No consent or approval
by any Governmental Authority is required in connection with the execution
and delivery by the Corporation of this Agreement or the consummation by the
Corporation of the transactions contemplated hereby, except for possible
notice under plant closing laws.
9.5 Capitalization of the Corporation. The authorized capital stock of
BMTS consists of 40,000,000 shares of Common Stock, no par value per share,
of which no more than 10,200,000 shares will issued and outstanding as of the
Effective Date, and 10,000,000 shares of preferred, no par value, of which
no shares are issued and outstanding. The names of one hundred percent
(100%) of the record owners of the issued and outstanding Common Stock are
set forth in Section 9.5 of the Disclosure Schedule. All issued and
outstanding shares of BMTS Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable, free and clear of any liens,
encumbrances, claims of any kind and nature except restrictions against
transferability without compliance with applicable federal and state
securities laws. As of the Effective Time of the Merger, BMTS will have
issued and outstanding options and warrants exercisable to purchase, in the
aggregate, not more than 1.6 million shares of common stock. There are no
other outstanding rights, options, warrants, subscriptions, calls,
convertible securities or agreement of any character or nature under which
the Corporation is or may become obligated to issue any shares of its capital
stock of any kind, other than those shares indicated in this Section as
presently outstanding. There are no voting trusts, stockholder agreements,
or other voting arrangements to which the Corporation is a party or, to the
Best Knowledge of the Corporation, to which any of the Corporation's
stockholders is a party or bound.
9.6 Taxes. Except as set forth in Section 9.6 of the Disclosure
Schedule:
(a) The Corporation has filed (or has obtained extensions for
filing) all income, excise, sales, corporate franchise, property, payroll and
other tax returns or reports required to be filed by it, as of the date
hereof by the United States of America, any state or other political
subdivision thereof or any foreign country and has paid all Taxes or
assessments relating to the time periods covered by such returns or reports;
and
(b) The Corporation has paid all tax liabilities imposed or
assessed by any governmental authority for all periods prior to the Closing
Date for which such taxes have become due and payable and has received no
notice from any such governmental authority of any deficiency or delinquency
with respect to such obligation. The Corporation is not currently undergoing
any audit conducted by any taxing authority and has received no notice of
audit covering any prior period for which taxes have been paid or are or will
be due and payable prior to the Closing Date. There are no present disputes
as to taxes of any nature payable by the Corporation.
9.7 No Actions, Proceeding, Etc. There is no action or proceeding
(whether or not purportedly on behalf of the Corporation) pending or to its
Best Knowledge threatened by or against the Corporation which might result in
any material adverse change in the condition, financial or otherwise, of the
Corporation's business or assets. No order, writ or injunction or decree has
been issued by, or requested of any court or Governmental Agency which does,
nor may result in, any material adverse change in the Corporation's assets or
properties or in the financial condition or the business of the Corporation.
Except for liabilities referred to in attached Section 9.7 of the Disclosure
Schedule, the Corporation is not liable for damages to any employee or former
employee as a result of any violation of any state, federal or foreign laws
directly or indirectly relating to such employee or former employee.
9.8 Post Balance Sheet Changes. Except as set forth on the attached
Section 9.8 of the Disclosure Schedule and as contemplated by this Agreement,
since December 31, 2007, the Corporation has not (a) issued, bought, redeemed
or entered into any agreements, commitments or obligations to sell, buy or
redeem any shares of its capital stock; (b) incurred any obligation or
liability (absolute or contingent), other than current liabilities incurred,
and obligations under contracts entered into, in the ordinary course of
business; (c) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent), other than current
liabilities incurred in the ordinary course of business; (d) mortgaged,
pledged or subjected to lien charges, or other encumbrance any of its assets,
other than the lien of current or real property taxes not yet due and
payable; (e) waived any rights of substantial value, whether or not in the
ordinary course of business; (f) suffered any damage, destruction or loss,
whether or not covered by insurance, materially and adversely affecting its
assets or its business; (g) made or suffered any amendment or termination of
any material contract or any agreement which adversely affects its business;
(h) received notice or had knowledge of any labor trouble other than routine
grievance matters, none of which is material; (i) increased the salaries or
other compensation of any of its directors, officers or employees or made any
increase in other benefits to which employees may be entitled, other than
employee salary increases made in the ordinary course of business and
reflected on an exhibit hereto; (j) sold, transferred or otherwise disposed
of any of its assets, other than in the ordinary course of business; (k)
declared or made any distribution or payments to any of its shareholders,
officers or employees, other than wages and salaries made to employees in the
ordinary course of business; (l) revalued any of its assets; or (m) entered
into any transactions not in the ordinary course of business.
9.9 No Breaches. The Corporation is not in violation of, and the
consummation of the transactions contemplated hereby do not and will not
result in any material breach of, any of the terms or conditions of any
mortgage, bond, indenture, agreement, contract, license or other instrument
or obligation to which the Corporation is a party or by which its assets are
bound; nor will the consummation of the transactions contemplated hereby
cause BMTS to violate any applicable statute, regulation, judgment, writ,
injunction or decree of any court, threatened or entered in a proceeding or
action in which the Corporation is, was or may be bound or to which any of
the Corporation's assets are subject.
9.10 Condition of the Corporation's Assets. Except as set forth in
Section 9.10 of the Disclosure Schedule, BMTS's assets are currently in good
and usable condition and there are no defects or other conditions which, in
the aggregate, materially and adversely affect the operation or values of
such assets taken as a whole. Except as disclosed in Section 9.10 of the
Disclosure Schedule, no person other than BMTS (including any officer or
employee of the Corporation) has any proprietary interest in any know-how or
other intangible assets used by the Corporation in the conduct of its
business.
9.11 Corporate Contracts and Proceedings. This Agreement has been duly
authorized by all necessary corporate action on behalf of BMTS, has been duly
executed and delivered by an authorized officer of BMTS, and is a valid and
binding Agreement on the part of BMTS that is enforceable against BMTS in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, fraudulent transfers,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and to judicial limitations on the enforcement of the remedy
of specific performance and other equitable remedies.
9.12 Registered Rights and Proprietary Information.
(a) Section 9.12 of the Disclosure Schedule contains a true and
complete list of all patents, letters patent and patent applications, service
marks, trademark and service xxxx registrations and applications, copyright,
copyright registrations and applications, grants of licenses and rights to
the Corporation with respect to the foregoing, both domestic and foreign,
claimed by the Corporation or used or proposed to be used by the Corporation
in the conduct of its business (collectively herein, "BMTS Registered
Rights"). Section 9.12 of the Disclosure Schedule also contains a true and
complete list of all and every trade secret, know-how, process, formula,
discovery, development, research, design, technique, customer and supplier
list, contracts, product development plans, product development concepts,
author contracts, marketing and purchasing strategy, invention, and any other
matter required for, incident to, or related to the conduct of its business
(hereafter collectively the "BMTS Proprietary Information"). Except as
described in Section 9.12 of the Disclosure Schedule, the Corporation is not
obligated or under any liability whatever to make any payments by way of
royalties, fees or otherwise to any owner or licensor of, or other claimant
to, any BMTS Registered Right or BMTS Proprietary Information with respect to
the use thereof in the conduct of its business or otherwise.
(b) Except as described in Section 9.12 of the Disclosure
Schedule, to the Corporation's Best Knowledge, the Corporation owns and has
the unrestricted right to use the BMTS Registered Rights and BMTS Proprietary
Information required for or incident to the design, development, manufacture,
operation, sale and use of all products and services sold or rendered or
proposed to be sold or rendered by the Corporation or relating to the conduct
or proposed conduct of its business free and clear of any right, title,
interest, equity or claim of others. As soon as practicable following the
execution of this Agreement, and except as described in Section 9.12 of the
Disclosure Schedule, the Corporation agrees to take all necessary steps
(including without limitation entering into appropriate confidentiality,
assignment of rights and non-competition agreements with all officers,
directors, employees and consultants of the Corporation and others with
access to or knowledge of the BMTS Proprietary Information) to safeguard and
maintain the secrecy and confidentiality of, and its proprietary rights in,
the BMTS Proprietary Information and all related documentation and
intellectual property rights therein necessary for the conduct or proposed
conduct of its business.
(c) Except as described in Section 9.12 of the Disclosure
Schedule, the Corporation has not sold, transferred, assigned, licensed or
subjected to any right, lien, encumbrance or claim of others, any BMTS
Proprietary Information, including without limitation any BMTS Registered
Right, or any interest therein, related to or required for the design,
development, manufacture, operation, sale or use of any product or service
currently under development or manufactured, or proposed to be developed,
sold or manufactured, by it. Section 9.12 of the Disclosure Schedule
contains a true and complete list and description of all licenses of BMTS
Proprietary Information granted to the Corporation by others or to others by
the Corporation. Except as described in Section 9.12 of the Disclosure
Schedule hereto, there are no claims or demands of any person pertaining to,
or any proceedings that are pending or threatened, which challenge the rights
of the Corporation in respect of any BMTS Proprietary Information used in the
conduct of its business.
(d) Except as described in Section 9.12 of the Disclosure
Schedule, the Corporation owns and on the Closing Date shall own, has and
shall have, holds and shall hold, exclusively all right, title and interest
in the BMTS Registered Rights, free and clear of all liens, encumbrances,
restrictions, claims and equities of any kind whatsoever, has and shall have
the exclusive right to use, sell, license or dispose of, and has and shall
have the exclusive right to bring action for the infringement of the BMTS
Registered Rights and the BMTS Proprietary Information. To the Best
Knowledge of Corporation, the marketing, promotion, distribution or sale by
the Corporation of any products or interests subject to the BMTS Registered
Rights or making use of BMTS Proprietary Information shall not constitute an
infringement of any patent, copyright, trademark, service xxxx or
misappropriation or violation of any other party's proprietary rights or a
violation of any license or agreement by the Corporation. Except as described
in Section 9.12 of the Disclosure Schedule, to the knowledge of the
Corporation after due inquiry no facts or circumstances exist that could
result in the invalidation of any of the BMTS Registered Rights.
9.13 No Liens or Encumbrances. The Corporation has good and marketable
title to all of the property and assets, tangible and intangible, employed in
the operations of its business, free of any material mortgages, security
interests, pledges, easements or encumbrances of any kind whatsoever.
9.14 Legal Proceedings and Compliance with Law. Except as set forth in
Section 9.14 of the Disclosure Schedule, BMTS has not received notice of any
legal, administrative, arbitration or other proceeding or governmental
investigation pending or threatened (including those relating to the health,
safety, employment of labor, or protection of the environment) pertaining to
BMTS which might result in the aggregate in money damages payable by BMTS in
excess of insurance coverage or which might result in a permanent injunction
against BMTS. Except as set forth in Section 9.14 of the Disclosure
Schedule, BMTS has substantially complied with, and is not in default in any
respect under any applicable laws, ordinances, requirements, regulations, or
orders applicable to the business of BMTS, the violation of which might
materially and adversely affect it. Except as set forth in Section 9.14 of
the Disclosure Schedule, BMTS is not a party to any agreement or instrument,
nor is it subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree, rule, regulation, code or
ordinance which materially and adversely affects, or might reasonably be
expected materially and adversely to affect the business, operations,
prospects, property, assets or condition, financial or otherwise, of BMTS.
9.15 Representations and Warranties. The representations and
warranties contained in this Agreement shall be true on and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date. Such representations
and warranties shall survive the Closing Date and shall remain operative in
full force and effect for the period of eighteen months from the date of
Closing regardless of any investigation at any time made by or on behalf of
CET and shall not be deemed merged in any document or instruction so executed
and/or delivered by BMTS or Shareholders.
9.16 Absence of Questionable Payments. To the Best Knowledge of BMTS,
neither BMTS, nor any director, officer, agent, employee or other person
acting on any its behalf has (i) used any corporate or other funds for
unlawful contributions, payments, gifts or entertainment, or made any
unlawful expenditures relating to political activity to government officials
or others or established or maintained any unlawful or unrecorded funds in
violation of Section 30A of the Exchange Act or any other applicable foreign,
federal or state law; or (ii) accepted or received any unlawful
contributions, payments, expenditures or gifts.
SECTION 10: COVENANTS OF BMTS
10.1 Preservation of Business. Until Closing, BMTS shall use its best
efforts to cause BMTS to:
(a) Preserve intact the present business organization of BMTS;
(b) Maintain its property and assets in its present state of
repair, order and condition, reasonable wear and tear excepted;
(c) Preserve and protect the goodwill and advantageous
relationships of BMTS with its customers and all other persons having
business dealings with BMTS;
(d) Preserve and maintain in force all licenses, permits,
registrations, franchises, patents, trademarks, tradenames, trade secrets,
service marks, copyrights, bonds and other similar rights of BMTS; and
(e) Comply with all laws applicable to the conduct of its business
10.2 Ordinary Course. Until Closing, BMTS shall conduct its business
only in the usual, regular and ordinary course, in substantially the same
manner as previously, and shall not make any substantial change to its
methods of management or operation in respect of such business or property.
Without limiting the foregoing, BMTS shall not, with respect to BMTS:
(a) Sell, mortgage, pledge or encumber or agree to sell, mortgage,
pledge or encumber, any of its property or assets, other than in the ordinary
course of business;
(b) Incur any obligation (contingent or otherwise) or purchase,
acquire, transfer, or convey, any material assets or property or enter into
any contract or commitment, except in the ordinary course of business.
10.3 Negative Covenants. Until Closing, except as contemplated by this
Agreement or as disclosed in the Disclosure Schedule to this Agreement, from
the date hereof until the Closing Date, unless and until CET otherwise
consents in writing, BMTS will not (a) change or alter the physical contents
or character of the inventories of its business, so as to materially affect
the nature of the Corporation's business or materially and adversely change
the total dollar valuation of such inventories, other than in the ordinary
course of business; (b) incur any obligations or liabilities (absolute or
contingent) other than current liabilities incurred and obligations under
contracts entered into in the ordinary course of business; (c) mortgage,
pledge or voluntarily subject to lien, charge or other encumbrance any
assets, tangible or intangible, other than the lien of current property taxes
not due and payable; (d) sell, assign or transfer any of its assets or cancel
any debts or claims, other than in the ordinary course of business; (e) waive
any right of any substantial value; (f) declare or make any payment or
distribution to Shareholders or issue, purchase or redeem any shares of its
capital stock or other equity securities or issue or sell any rights to
acquire the same or effect any stock split, recapitalization, combination, or
reclassification of its capital stock, or reorganization; (g) grant any
increase in the salary or other compensation of any of its directors,
officers, or employees or make any increase in any benefits to which such
employees might be entitled or enter into any employment agreement or
consulting agreement; (h) institute any bonus, benefit, profit sharing, stock
option, pension, retirement plan or similar arrangement, or make any changes
in any such plans or arrangements presently existing; (i) enter into any
transactions or series of transactions other than in the ordinary course of
business; (j) amend or propose to amend its Articles of Incorporation or By-
Laws; (j) make any change in accounting methods, principles or practices; (k)
authorize capital expenditures or make any acquisition of, or investment in,
assets or stock of any other Person; (l) enter into or amend any material
contract or agreement other than in the ordinary course of business; (m) make
any tax election or settle or compromise any material federal, state, local
or foreign income tax liability; (n) permit any material insurance policy to
be canceled or terminated, except in the ordinary course of business; (o)
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person or make any loans or advances;
(p) maintain its real and personal properties in as good a state of operating
condition and repair as they are on the date of this Agreement, except for
ordinary wear and tear or insured casualty in amounts less than $5,000; (q)
terminate or modify any material leases, contracts, licenses, and permits or
other authorizations or agreements affecting its business or its real and/or
personal property, or the operation thereof, or enter into any additional
lease or contract requiring expenditure by it of any amount affecting such
properties or the operation thereof; or (r) discharge, satisfy or pay any
liens, encumbrances, obligations or liabilities relating to it, whether
absolute or contingent (including litigation claims), other than liabilities
shown in Section 4.1 of the Disclosure Schedule and liabilities incurred
after the date thereof in the ordinary course of business, and no such
discharge, satisfaction or payment shall be effected other than in accordance
with the ordinary payment terms relating to the liability discharged,
satisfied or paid.
10.4 Additional Covenants.
(a) BMTS will promptly pay and discharge, or cause to be paid and
discharged, when due and payable, all lawful taxes, assessments, and
governmental charges or levies imposed upon the income, profits, property or
business of BMTS or any subsidiary; provided, however, that any such tax,
assessment, charge or levy need not be paid if the validity thereof shall
currently be contested in good faith by appropriate proceedings and if BMTS
shall have set aside on its books adequate reserves therefor; and provided,
further, that BMTS will pay all such taxes, assessments, charges or levies
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor. BMTS will promptly pay or cause to be
paid when due, or in conformance with customary trade terms, all other
indebtedness incident to the operations of BMTS;
(b) BMTS will keep its properties and those of its subsidiaries in
good repair, working order and condition, reasonable wear and tear excepted,
and from time to time make all needful and proper repairs, renewals,
replacements, additions and improvements thereto; and BMTS will at all times
comply with the provisions of all material leases to which any of them is a
party or under which any of them occupies property so as to prevent any loss
or forfeiture thereof or thereunder;
(c) BMTS will keep its assets that are of an insurable character
insured by financially sound and reputable insurers against loss or damage by
fire, extended coverage and explosion insurance in amounts customary for
companies in similar businesses similarly situated; and immediately following
the Closing, BMTS will maintain, with financially sound and reputable
insurers, insurance against other hazards, risks and liabilities to persons
and property to the extent and in the manner customary for companies in
similar businesses similarly situated;
(d) BMTS will keep true records and books of account in which
full, true and correct entries will be made of all dealings or transactions
in relation to its business and affairs in accordance with its past practices
consistently applied;
(e) BMTS will comply with the requirements of all applicable laws,
rules, regulations and orders of any governmental authority, a breach of
which could have a material adverse effect on its business or credit;
(f) BMTS shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use
patents, processes, licenses, trademarks, trade names or copyrights owned or
possessed by it or any subsidiary and deemed by BMTS to be necessary to the
conduct of its business;
(g) BMTS will, consistent with its practices in the ordinary
course of business, endeavor to retain its business relationships with its
customers and suppliers that it believes to be advantageous; and
(h) BMTS shall deliver to CET copies of its statements of
operation and financial condition and similar statements as and when prepared
(if at all) in the ordinary course of its business.
10.5 Access to Books and Records, Premises, Etc. From the date of this
Agreement through the Closing Date, BMTS will grant CET and its authorized
representatives reasonable access during normal business hours to its books
and records, premises, products, employees and customers and other parties
with whom it has contractual relations during reasonable business hours and
in a manner not to disrupt or interfere with BMTS's business relationships
for purposes of enabling CET to fully investigate the business of BMTS.
10.6 Compensation. Except as contemplated by this Agreement, BMTS
shall not enter into or agree to enter into any employment contract or
agreement for consulting, professional, or other services which will
adversely and materially affect the operation of BMTS prior to the Closing
Date, except for any extensions of said contracts or agreements on
substantially the same terms and conditions as were previously in effect.
10.7 No Solicitation.
(a) Except in connection with the transactions contemplated by
this Agreement, BMTS shall not, nor shall it permit any of its subsidiaries
to, nor shall it authorize or permit any officer, director or employee of or
any investment banker, attorney or other advisor or representative of, BMTS
or any of its subsidiaries to, (i) solicit, initiate or encourage the
submission of, any takeover proposal, (ii) enter into any agreement with
respect to any takeover proposal or (iii) participate in any discussions or
negotiations regarding, or furnish to any person any 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
takeover proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
executive officer of BMTS or any of its subsidiaries or any investment
banker, attorney or other advisor or representatives of BMTS or any of its
subsidiaries or otherwise, shall be deemed to be a breach of this Section by
BMTS. For purposes of this Agreement, "takeover proposal" means any proposal
for a merger, consolidation or reorganization or other business combination
involving BMTS or any of its subsidiaries or any proposal or offer to acquire
in any manner, directly or indirectly, an equity interest in, any voting
securities of, or options, rights, warrants or other interests convertible or
exercisable for or into such voting securities, or a substantial or material
portion of the assets or business of BMTS or any of its subsidiaries, other
than the transactions contemplated by this Agreement.
(b) Except upon a material breach of this Agreement by CET or
CETAC or following termination hereof and except for action permitted or
contemplated by this Agreement, including a party's right to terminate this
Agreement under certain circumstances, neither the Board of Directors of BMTS
nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to CET, the approval or
recommendation by such Board of Directors of any such committee of this
Agreement or the Exchange or (ii) approve or recommend, or propose to approve
or recommend, any takeover proposal.
(c) BMTS promptly shall advise CET orally and in writing of any
takeover proposal or any inquiry with respect to or which could lead to any
takeover proposal and the identity of the person making any such takeover
proposal or inquiry. BMTS will keep CET fully informed of the status and
details of any such takeover proposal or inquiry.
(d) The provisions of this Section 10.7 shall not be construed to
prevent any investment banker, attorney or other advisor or representative of
BMTS to engage in discussions with third parties in the ordinary course of
business with respect to transactions not involving the parties to this
Agreement.
SECTION 11: REPRESENTATIONS AND WARRANTIES OF CET AND CETAC
As a material inducement to BMTS to enter into this Agreement and with
the understanding and expectation that BMTS will be relying thereon in
consummating the Merger contemplated hereunder, CET and CETAC (which
hereafter may collectively be referred to in Sections 11 and 12 only as the
"Corporation") represent and warrant as follows:
11.1 Organization and Standing. CET and CETAC are corporations duly
organized, validly existing and in good standing under the laws of the States
of California and Colorado, respectively, and have all requisite corporate
power and authority to own their assets and properties and to carry on their
businesses as they are now being conducted.
11.2 Subsidiaries, etc. CETAC is a subsidiary of and is wholly owned
by CET. Other than its ownership interest in CETAC, CET has no direct or
indirect ownership interest in any corporation, partnership, joint venture,
association or other business enterprise. CETAC does not have any direct or
indirect ownership interest in any corporation, partnership, joint venture,
association or other business enterprise, and, at the Effective Time, will
have no assets and no liabilities.
11.3 Qualification. CET, and CETAC are not qualified to engage in
business as foreign corporations in any state, and there is no other
jurisdiction wherein the character of the properties presently owned by CET
and CETAC or the nature of the activities presently conducted by CET and
CETAC make necessary the qualification, licensing or domestication of CET or
CETAC as foreign corporations.
11.4 Corporate Authority. Except as set forth in Section 11.4 of the
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby nor compliance by
CET and CETAC with any on the provisions hereof will:
(a) Conflict with or result in a breach of any provision of its
Articles of Incorporation or By-Laws or similar documents of any Subsidiary;
(b) Result in a default (or give rise to any right of termination,
cancellation, or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which the Corporation is a party, or by
which any of its properties or assets may be bound except for such default
(or right of termination, cancellation, or acceleration) as to which
requisite waivers or consents shall either have been obtained by the
Corporation prior to the Closing Date or the obtaining of which shall have
been waived by BMTS; or
(c) Violate any order, writ, injunction, decree or, to the
Corporation's Best Knowledge, any statute, rule or regulation applicable to
the Corporation or any of its properties or assets. No consent or approval
by any Governmental Authority is required in connection with the execution
and delivery by the Corporation of this Agreement or the consummation by the
Corporation of the transactions contemplated hereby, except for possible
notice under plant closing laws.
11.5 SEC Documents; Financial Statements. The Common Stock of CET is
registered pursuant to Section 12(g) of the Exchange Act. BMTS has had the
opportunity to obtain on BMTS's behalf true and complete copies of the SEC
Documents (except for exhibits and incorporated documents). CET has not
provided to BMTS any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by CET but which has not been
so disclosed, other than with respect to the transactions contemplated by
this Agreement.
As of their respective dates, all of CET's reports, statements and other
filings with the Commission (the "SEC Documents") complied in all material
respects with the requirements of the Act or the Exchange Act as the case may
be and the rules and regulations of the Commission promulgated thereunder and
other federal, state and local laws, rules and regulations applicable to such
SEC Documents, and none of the SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of CET included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles applied
on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii)
in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of CET as of the
dates thereof and the results of operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments).
11.6 Capitalization of the Corporation. The authorized capital stock
of CET consists entirely of 20,000,000 shares of Common Stock, no par value,
and 5,000,000 shares of Preferred Stock, no par value. As of the Closing
Date, there will be no more than 5,626,989 shares of Common Stock and no
shares of Preferred Stock issued and outstanding. All outstanding shares of
CET's capital stock have been validly issued, are fully paid and non-
assessable, and are not subject to pre-emptive rights. The issuance of the
shares of CET Common Stock to be issued to the BMTS Shareholders on the
Closing Date in accordance with Section 5.1 hereof have been duly approved by
the Directors of CET and will, upon their issuance, have been validly issued
and will be fully paid and non-assessable, free of any liens, encumbrances
and claims of any kind and nature except restrictions against transferability
without compliance with applicable federal and state securities laws. Except
as described in CET's SEC Documents, there are no equity securities of CET
authorized, issued or outstanding, and except as set forth in Section 11.6 of
the Disclosure Schedule, there are no authorized, issued or outstanding
subscriptions, options, warrants, contracts, calls, commitments or other
purchase rights of any nature or character relating to any of CET's capital
stock, equity securities, debt or other securities convertible into stock or
equity securities of CET. As of the date of this Agreement, there are no
outstanding contractual obligations of CET to repurchase, redeem or otherwise
acquire any shares of capital stock of CET. There are no voting trusts,
stockholder agreements or other voting arrangements to which the Corporation
is a party or, to the Best Knowledge of CET, to which any of the CET Common
Stockholders is a party or bound.
11.7 No Actions, Proceedings, Etc. Except as listed in Section 11.7 of
the Disclosure Schedule, there is no action or proceeding (whether or not
purportedly on behalf of the Corporation) pending or to its knowledge
threatened by or against the Corporation, which might result in any material
adverse change in the condition, financial or otherwise, of the Corporation's
business or assets. No order, writ or injunction or decree has been issued
by, or requested of any court or Governmental Agency which does nor may
result in any material adverse change in the Corporation's assets or
properties or in the financial condition or the business of the Corporation.
The Corporation is not liable for damages to any employee or former employee
as a result of any violation of any state, federal or foreign laws directly
or indirectly relating to such employee or former employee.
11.8 Taxes. Except as set forth in Section 11.8 of the Disclosure
Schedule:
(a) The Corporation has filed (or has obtained extensions for
filing) all income, excise, sales, corporate franchise, property, payroll and
other tax returns or reports required to be filed by it, as of the date
hereof by the United States of America, any state or other political
subdivision thereof or any foreign country and has paid all Taxes or
assessments relating to the time periods covered by such returns or reports;
and
(b) The Corporation has paid all tax liabilities imposed or
assessed by any governmental authority for all periods prior to the Closing
Date for which such taxes have become due and payable and has received no
notice from any such governmental authority of any deficiency or delinquency
with respect to such obligation. The Corporation is not currently undergoing
any audit conducted by any taxing authority and has received no notice of
audit covering any prior period for which taxes have been paid or are or will
be due and payable prior to the Closing Date. There are no present disputes
as to taxes of any nature payable by the Corporation.
11.9 Post Balance Sheet Changes. Except as set forth in Section 11.9
of the Disclosure Schedule and as contemplated by this Agreement, since the
date of the latest financial statements, the Corporation has not (a) issued,
bought, redeemed or entered into any agreements, commitments or obligations
to sell, buy or redeem any shares of its capital stock, including but not
limited to any options or warrants to purchase any securities of the
Corporation or any securities convertible into capital stock of the
Corporation; (b) incurred any obligation or liability (absolute or
contingent), other than current liabilities incurred, and obligations under
contracts entered into, in the ordinary course of business; (c) discharged or
satisfied any lien or encumbrance or paid any obligation or liability
(absolute or contingent), other than current liabilities incurred in the
ordinary course of business; (d) mortgaged, pledged or subjected to lien
charges, or other encumbrance any of its assets, other than the lien of
current or real property taxes not yet due and payable; (e) waived any rights
of substantial value, whether or not in the ordinary course of business; (f)
suffered any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting its assets or its business; (g)
made or suffered any amendment or termination of any material contract or any
agreement which adversely affects its business; (h) received notice or had
knowledge of any labor trouble other than routine grievance matters, none of
which is material; (i) increased the salaries or other compensation of any of
its directors, officers or employees or made any increase in other benefits
to which employees may be entitled, other than employee salary increases made
in the ordinary course of business and reflected in the Disclosure Schedule ;
(j) sold, transferred or otherwise disposed of any of its assets, other than
in the ordinary course of business; (k) declared or made any distribution or
payments to any of its shareholders, officers or employees, other than wages
and salaries made to employees in the ordinary course of business; (l)
revalued any of its assets; or (m) entered into any transactions not in the
ordinary course of business.
11.10 No Breaches. Except as set forth in Section 11.10 of the
Disclosure Schedule, the Corporation is not in violation of, and the
consummation of the transactions contemplated hereby do not and will not
result in any material breach of, any of the terms or conditions of any
mortgage, bond, indenture, agreement, contract, license or other instrument
or obligation to which the Corporation is a party or by which its assets are
bound; nor will the consummation of the transactions contemplated hereby
cause CET or any Subsidiary to violate any statute, regulation, judgment,
writ, injunction or decree of any court, threatened or entered in a
proceeding or action in which the Corporation is, was or may be bound or to
which any of the Corporation's assets are subject.
11.11 Corporate Acts and Proceedings. This Agreement has been duly
authorized by all necessary corporate action on behalf of CET, has been duly
executed and delivered by authorized officers of CET, and is a valid and
binding Agreement on the part of CET that is enforceable against CET in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, fraudulent transfers,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and to judicial limitations on the enforcement of the remedy
of specific performance and other equitable remedies. All corporate action
necessary to issue and deliver to the BMTS Shareholders the CET Common Stock
(each as described in Sections 5.1 and 5.3).
11.12 No Liens or Encumbrances. Except as set forth in Section 11.12
of the Disclosure Schedule, the Corporation has good and marketable title to
all of the property and assets, tangible and intangible, employed in the
operations of its business, free of any material mortgages, security
interests, pledges, easements or encumbrances of any kind whatsoever and
except for such property and assets as may be leased by Corporation.
11.13 Employee Matters. Section 11.13 of the Disclosure Schedule
contains a true, complete and accurate list of all employees of the
Corporation and the remuneration of each (including wages, salaries and
fringe benefits). Each employee listed in Section 11.13 of the Disclosure
Schedule shall terminate his/her employment relationship with the Corporation
prior to the Closing Date, except as may be required by this Agreement, and
CET shall provide to BMTS a release, in such form as is reasonably acceptable
to BMTS, executed by each such employee releasing CET from all claims and
liabilities related to the termination of his or her employment, his or her
employment agreement, and ownership of any shares or other securities of CET.
Except as specifically described in Section 11.13 of the Disclosure Schedule,
CET has no employee benefit plans (including, but not limited to, pension
plans and health or welfare plans), arrangements or understandings, whether
formal or informal. The Corporation does not now and has never contributed
to a "multi-employer plan" as defined in Section 400(a)(3) of the ERISA. The
Corporation has complied with all applicable provisions of ERISA and all
rules and regulations promulgated thereunder, and neither the Corporation nor
any trustee, administrator, fiduciary, agent or employee thereof has at any
time been involved in a transaction that would constitute a "prohibited
transaction" within the meaning of Section 406 of ERISA as to any covered
plan of the Corporation. The Corporation is not a party to any collective
bargaining or other union agreement. The Corporation has not, within the
past five (5) years had, or been threatened with, any union activities, work
stoppages or other labor trouble with respect to its employees which had a
material adverse effect on the Corporation, its business or assets. Except
as set forth in Section 11.13 of the Disclosure Schedule, the Corporation has
not made any commitment or agreements to increase the wages or modify the
conditions or terms of employment of any of the employees of the Corporation
used in connection with its business, and between the date of this Agreement
and the Closing Date, the Corporation will not make any agreement to increase
the wages or modify the conditions or terms of employment of any of the
employees of the Corporation used in the conduct of its business, without the
prior written consent of all parties hereto.
11.14 Contract Schedules. Section 11.14 of the Disclosure Schedule is
an accurate list of the following:
(a) All contracts, leases, agreements, covenants, licenses,
instruments or commitments of CET pertaining to the business of CET calling
for the payment of Five Thousand Dollars ($5,000) or more or which is
otherwise material to the business of CET, including, without limitation, the
following:
(i) Licenses and contracts held in the ordinary course of
business;
(ii) Executory contracts for the purchase, sale or lease of
any assets;
(iii) Management or consulting contracts;
(iv) Patent, trademark and copyright applications,
registrations or licenses, and know-how, intellectual property and trade
secret agreements or other licenses;
(v) Note agreements, loan agreements, indentures and the
like, other than those entered into and executed in the ordinary course of
business;
(vi) All sales, agency, distributorship or franchise
agreements; and
(vii) Any other contracts not in the ordinary course of
business.
(b) All labor contracts, employment agreements and collective
bargaining agreements to which CET is a party.
(c) All instruments evidencing any liens or security interest
securing any indebtedness of CET covering any asset of CET.
(d) All profit sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health insurance or
other employee benefit plans, agreements, arrangements or commitments of any
nature whatsoever, whether or not legally binding, and all agreements with
any present or former officer, director or shareholder of the Corporation.
(e) Any and all documents, instruments and other writings not
listed in any other schedule hereto which is material to the business
operations of CET.
Except as set forth in Section 11.14 of the Disclosure Schedule, all of
such contracts, agreements, leases, licenses, plans, arrangements and
commitments and all other such items set forth above are valid, binding and
in full force and effect in accordance with their terms and conditions,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, fraudulent transfer, reorganization or other similar
laws affecting the enforcement of contracts generally, and there is no
existing material default thereunder or breach thereof by the Corporation, or
to CET's knowledge by any party to such contracts, or any conditions which,
with the passage of time or the giving of notice or both, might constitute
such a default by the Corporation or by any other party to the contracts.
11.15 Legal Proceedings and Compliance with Law. Except as set forth in
Section 11.15 of the Disclosure Schedule, CET has not received notice of any
legal, administrative, arbitration or other proceeding or governmental
investigation pending or threatened (including those relating to the health,
safety, employment of labor, or protection of the environment) pertaining to
CET which might result in the aggregate in money damages payable by CET in
excess of insurance coverage or which might result in a permanent injunction
against CET. Except as set forth in such Exhibit 11.15, CET has
substantially complied with, and is not in default in any respect under any
laws, ordinances, requirements, regulations, or orders applicable to the
business of CET, the violation of which might materially and adversely affect
it. Except as set forth in such Exhibit 11.15, CET is not a party to any
agreement or instrument, nor is it subject to any charter or other corporate
restriction or any judgment, order, writ, injunction, decree, rule,
regulation, code or ordinance which materially and adversely affects, or
might reasonably be expected materially and adversely to affect the business,
operations, prospects, property, assets or condition, financial or otherwise,
of CET.
11.16 Insurance. CET maintains in full force and effect insurance
coverage on its assets and business in such amounts and against such risks
and losses as set forth in Section 11.16 of the Disclosure Schedule.
11.17 Environmental. Except as disclosed in Section 11.17 of the
Disclosure Schedule, CET or its subsidiaries have never owned or operated any
real property except for leased office space:
(a) To the Best Knowledge of CET, no real property (or the
subsurface soil and the ground water thereunder) now or previously leased by
CET (the "Leased Premises") either contains any Hazardous Substance (as
hereinafter defined) or has underneath it any underground fuel or liquid
storage tanks;
(b) To the Best Knowledge of CET, there has been no generation,
transportation, storage, treatment or disposal of any Hazardous Substance on
or beneath the Leased Premises, now or in the past;
(c) CET is not aware of any pending or threatened litigation or
proceedings before any court or administrative agency in which any person
alleges, or threatens to allege, the presence, release, threat of release,
placement on or in the Leased Premises, or the generation, transportation,
storage, treatment or disposal at the Leased Premises, of any Hazardous
Substance;
(d) CET has not received any written notice and has no knowledge
that any Governmental Authority or any employee or agent thereof has
determined or alleged, or is investigating the possibility, that there is or
has been any presence, release, threat of release, placement on or in the
Leased Premises, or any generation, transportation, storage, treatment or
disposal at the Leased Premises, of any Hazardous Substance;
(e) To the Best Knowledge of CET, there have been no
communications or agreements with any Governmental Authority or agency
(federal, state, or local) or any private person or entity (including,
without limitation, any prior owner of the Leased Premises and any present or
former occupant or tenant of the Leased Premises) relating in any way to the
presence, release, threat of release, placement on or in the Leased Premises,
or any generation, transportation, storage, treatment or disposal at the
Leased Premises, of any Hazardous Substance. CET further agrees and
covenants that CET will not store or deposit on, otherwise release or bring
onto or beneath, the Leased Premises any Hazardous Substance prior to the
Closing Date; and
(f) There is no litigation, proceeding, citizen's suit or
governmental or other investigation pending, or, to CET's Best Knowledge,
threatened, against CET, and CET knows of no facts or circumstances which
might give rise to any future litigation, proceeding, citizen's suit or
governmental or other investigation, which relate to CET's compliance with
environmental laws, regulations, rules, guidelines and ordinances.
For purposes of this Section 11.17, "Hazardous Substance" shall mean and
include (i) a hazardous substance as defined in 42 U.S.C. Section 9601(14),
the Regulations at 40 C.F.R. Part 302, (2) any substance regulated under the
Emergency Planning and Community Right to Know Act (including without
limitation any extremely hazardous substances listed at 40 C.F.R. Part 355
and any toxic chemical listed at 40 C.F.R. Part 372), (iii) hazardous wastes
and hazardous substances as specified under any state or local Governmental
Requirement governing water pollution, groundwater protection, air pollution,
solid wastes, hazardous wastes, spills and other releases of toxic or
hazardous substances, transportation of hazardous substances, materials and
wastes and occupational or employee health and safety, and (iv) any other
material, gas or substance known or suspected to be toxic or hazardous
(including, without limitation, any radioactive substance, methane gas,
volatile hydrocarbon, industrial solvent, and asbestos) or which could cause
a material detriment to, or materially impair the beneficial use of, the
Leased Premises, or constitute a material health, safety or environmental
risk to any person exposed thereto or in contact therewith. For purposes of
this Section 11.17, "Hazardous Substance" shall not mean and shall not
include the following, to the extent used normally and required for everyday
uses or normal housekeeping or maintenance: (a) fuel oil and natural gas for
heating, (b) lubricating, cleaning, coolant and other compounds customarily
used in building maintenance, (c) materials routinely used in the day-to-day
operations of an office, such as toner, (d) consumer products, (e) material
reasonably necessary and customarily used in construction and repair of an
office project, and (f) fertilizers, pesticides and herbicides commonly used
for routine office landscaping.
11.18 Disclosure of Information. CET represents and warrants that all
statements, data and other written information provided by it to any party
hereto as well as their respective consultants and representatives have been
accurate copies or true originals. CET represents and warrants that, to its
Best Knowledge, (i) there exists no material information concerning CET which
has been requested but not been disclosed to or made available to the other
parties and their representatives or consultants and which would be material
to a decision to consummate the transactions provided for in this Agreement
and (ii) in the aggregate, such information does not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made in them, in light of the circumstances
under which they are made, not misleading.
11.19 Representations and Warranties. The representations and
warranties contained in this Agreement shall be true on and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date. Such representations
and warranties shall survive the Closing Date and shall remain operative in
full force and effect for a period of eighteen months from the date of
Closing regardless of any investigation at any time made by or on behalf of
BMTS and shall not be deemed merged in any document or instruction so
executed and/or delivered by CET.
11.20 Absence of Questionable Payments. To the Best Knowledge of the
Corporation, neither the Corporation, nor any director, officer, agent,
employee or other person acting on any its behalf has (i) used any corporate
or other funds for unlawful contributions, payments, gifts or entertainment,
or made any unlawful expenditures relating to political activity to
government officials or others or established or maintained any unlawful or
unrecorded funds in violation of Section 30A of the Exchange Act or any other
applicable foreign, federal or state law; or (ii) accepted or received any
unlawful contributions, payments, expenditures or gifts.
SECTION 12: COVENANTS OF CET AND CETAC
12.1 Preservation of Business. Until Closing, except as provided for
in this Agreement, CET shall use its best efforts to:
(a) Preserve intact the present business organization of CET;
(b) Maintain its property and assets in its present state of
repair, order and condition, reasonable wear and tear excepted;
(c) Preserve and protect the goodwill and advantageous
relationships of the Corporation with its customers and all other persons
having business dealings with the Corporation;
(d) Preserve and maintain in force all licenses, permits,
registrations, franchises, patents, trademarks, tradenames, trade secrets,
service marks, copyrights, bonds and other similar rights of the Corporation;
and
(e) Comply with all laws applicable to the conduct of its
business.
12.2 Ordinary Course. Until Closing, except as provided for in this
Agreement, the Corporation shall not, without the prior written consent of
BMTS:
(a) Sell, mortgage, pledge or encumber or agree to sell, mortgage,
pledge or encumber, any of the property or assets of CET or the Subsidiaries;
and
(b) Incur any obligation (contingent or otherwise) or purchase,
acquire, transfer, or convey, any material assets or property or enter into
any contract or commitment.
12.3 Negative Covenants. Until Closing, except as contemplated by this
Agreement or as disclosed in Disclosure Schedule to this Agreement, from the
date hereof until the Closing Date, unless and until BMTS otherwise consents
in writing, the Corporation will not (a) incur any obligations or liabilities
(absolute or contingent) other than current liabilities incurred and
obligations under contracts entered into in the ordinary course of business;
(b) mortgage, pledge or voluntarily subject to lien, charge or other
encumbrance any assets, tangible or intangible, other than the lien of
current property taxes not due and payable; (c) sell, assign or transfer any
of its assets or cancel any debts or claims, other than in the ordinary
course of business; (d) waive any right of any substantial value; (e) declare
or make any payment or distribution to Shareholders or issue, purchase or
redeem any shares of its capital stock or other equity securities or issue or
sell any rights to acquire the same or effect any stock split,
recapitalization, combination, or reclassification of its capital stock, or
reorganization; (f) grant any increase in the salary or other compensation of
any of its directors, officers, or employees or make any increase in any
benefits to which such employees might be entitled or enter into any
employment agreement or consulting agreement; (g) institute any bonus,
benefit, profit sharing, stock option, pension, retirement plan or similar
arrangement, or make any changes in any such plans or arrangements presently
existing; (h) enter into any transactions or series of transactions other
than in the ordinary course of business; (i) amend or propose to amend its
Articles of Incorporation or By-Laws; (j) make any change in accounting
methods, principles or practices; (k) authorize capital expenditures or make
any acquisition of, or investment in, assets or stock of any other Person;
(l) enter into or amend any material contract or agreement other than in the
ordinary course of business; (m) make any tax election or settle or
compromise any material federal, state, local or foreign income tax
liability; (n) permit any material insurance policy to be canceled or
terminated, except in the ordinary course of business; (o) assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for, the obligations of any person or make any loans or advances; (p)
maintain its real and personal properties in as good a state of operating
condition and repair as they are on the date of this Agreement, except for
ordinary wear and tear or insured casualty in amounts less than $5,000; (q)
terminate or modify any material leases, contracts, licenses, and permits or
other authorizations or agreements affecting its business or its real and/or
personal property, or the operation thereof, or enter into any additional
lease or contract requiring expenditure by it of any amount affecting such
properties or the operation thereof; or (r) discharge, satisfy or pay any
liens, encumbrances, obligations or liabilities relating to it, whether
absolute or contingent (including litigation claims), other than liabilities
shown on CET's Financial Statements and liabilities incurred after the date
thereof in the ordinary course of business, and no such discharge,
satisfaction or payment shall be effected other than in accordance with the
ordinary payment terms relating to the liability discharged, satisfied or
paid.
12.4 Additional Covenants.
(a) CET will promptly pay and discharge, or cause to be paid and
discharged, when due and payable, all lawful taxes, assessments, and
governmental charges or levies imposed upon the income, profits, property or
business of CET or any subsidiary; provided, however, that any such tax,
assessment, charge or levy need not be paid if the validity thereof shall
currently be contested in good faith by appropriate proceedings and if CET
shall have set aside on its books adequate reserves therefor and deposited at
Closing into an escrow account an amount to cover any such tax, assessment,
charge or levy; and provided, further, that CET will pay all such taxes,
assessments, charges or levies forthwith upon the commencement of proceedings
to foreclose any lien that may have attached as security therefor. The
Corportion will promptly pay or cause to be paid when due, or in conformance
with customary trade terms, all other indebtedness incident to the operations
of the Corporation;
(b) CET will keep its properties and those of its subsidiaries in
good repair, working order and condition, reasonable wear and tear excepted,
and from time to time make all needful and proper repairs, renewals,
replacements, additions and improvements thereto; and CET will at all times
comply with the provisions of all material leases to which any of them is a
party or under which any of them occupies property so as to prevent any loss
or forfeiture thereof or thereunder;
(c) CET will keep its assets that are of an insurable character
insured by financially sound and reputable insurers against loss or damage by
fire, extended coverage and explosion insurance in amounts customary for
companies in similar businesses similarly situated; and CET will maintain,
with financially sound and reputable insurers, insurance against other
hazards, risks and liabilities to persons and property to the extent and in
the manner customary for companies in similar businesses similarly situated;
(d) CET will keep true records and books of account in which full,
true and correct entries will be made of all dealings or transactions in
relation to its business and affairs in accordance with its past practices
consistently applied;
(e) CET will comply with the requirements of all applicable laws,
rules, regulations and orders of any governmental authority, a breach of
which could have a material adverse effect on its business or credit;
(f) CET shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use
patents, processes, licenses, trademarks, trade names or copyrights owned or
possessed by it or any subsidiary and deemed by CET to be necessary to the
conduct of its business;
(g) CET will, consistent with its practices in the ordinary course
of business, endeavor to retain its business relationships with its customers
and suppliers that it believes to be advantageous; and
(h) CET shall deliver to BMTS copies of its statements of
operation and financial condition and similar statements as and when prepared
(if at all) in the ordinary course of its business.
12.5 Access to Books and Records, Premises, Etc. From the date of this
Agreement through the Closing Date, CET will grant BMTS and its authorized
representatives reasonable access during normal business hours to its and the
Subsidiaries' books and records, premises, products, employees and customers
and other parties with whom it has contractual relations during reasonable
business hours for purposes of enabling BMTS to fully investigate the
business of CET and the Subsidiaries. CET will also deliver copies of the
monthly statements of operations and financial condition for the period
subsequent to the latest financial statements to BMTS within a reasonable
time of such statements becoming available.
12.6 Compensation. Except as contemplated by this Agreement, CET shall
not enter into or agree to enter into any employment contract or agreement
for consulting, professional, or other services which will adversely and
materially affect the operation of CET prior to the Closing Date.
12.7 No Solicitation.
(a) Except in connection with the transactions contemplated by
this Agreement, CET shall not, nor shall it permit any of its subsidiaries
to, nor shall it authorize or permit any officer, director or employee of or
any investment banker, attorney or other advisor or representative of, CET or
any of its subsidiaries to, (i) solicit, initiate or encourage the submission
of, any takeover proposal, (ii) enter into any agreement with respect to any
takeover proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any 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 takeover
proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
executive officer of CET or any of its subsidiaries or any investment banker,
attorney or other advisor or representatives of CET or any of its
subsidiaries or otherwise, shall be deemed to be a breach of this Section by
CET. For purposes of this Agreement, "takeover proposal" means any proposal
for a merger, consolidation or reorganization or other business combination
involving CET or any of its subsidiaries or any proposal or offer to acquire
in any manner, directly or indirectly, an equity interest in, any voting
securities of, or options, rights, warrants or other interests convertible or
exercisable for or into such voting securities, or a substantial or material
portion of the assets or business of CET or any of its subsidiaries, other
than the transactions contemplated by this Agreement.
(b) Except upon a material breach of this Agreement by BMTS or
following termination hereof and except for action permitted or contemplated
by this Agreement, including a party's right to terminate this Agreement
under certain circumstances, neither the Board of Directors of CET nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to BMTS, the approval or recommendation by such
Board of Directors of any such committee of this Agreement or the Exchange or
(ii) approve or recommend, or propose to approve or recommend, any takeover
proposal.
(c) CET promptly shall advise BMTS orally and in writing of any
takeover proposal or any inquiry with respect to or which could lead to any
takeover proposal and the identity of the person making any such takeover
proposal or inquiry. CET will keep BMTS fully informed of the status and
details of any such takeover proposal or inquiry.
(d) The provisions of this Section 12.7 shall not be construed to
prevent any investment banker, attorney or other advisor or representative of
CET to engage in discussions with third parties in the ordinary course of
business with respect to transactions not involving the parties to this
Agreement.
12.8 Delivery of Additional Filings; Additional Access. Following the
execution of this Agreement and until the Closing Date, CET shall provide
BMTS with copies of any and all reports, filings, notices or other
information which CET may prepare and file with or receive from the
Commission or any other regulatory authority, (and shall give BMTS an
opportunity to review and comment on any such filings) as well as copies of
any pleadings, notices or other filings made in connection with any pending
litigation, arbitration, investigation or proceeding in which CET or any
Subsidiary is party or otherwise involved.
SECTION 13: TERMINATION
13.1 Termination. This Agreement may be terminated and abandoned
solely as follows:
(a) At any time until the Closing Date by the mutual agreement of
the Board of Directors of BMTS, CET and CETAC.
(b) Failure of Conditions. This Agreement may be terminated by
either party hereto, if the conditions, as set forth in this Agreement to
such terminating party's obligations under this Agreement are not fulfilled
on or prior to the Closing Date; provided that any such termination shall not
limit the remedies otherwise available to such party as a result of
misrepresentations of or breaches by the other party.
(c) Material Breach. This Agreement may be terminated by either
party if the other party is in material breach or default of its respective
covenants, agreements or other obligations hereunder, or if any of its
representations and warranties herein are not true and accurate in all
material respects when made or when otherwise required by this Agreement to
be true and accurate.
(d) By either CET, CETAC or BMTS, if for any reason the parties
have failed to close this Agreement on or before June 30, 2008, provided that
neither CET, CETAC nor BMTS is then in default hereunder.
(e) By either CET or BMTS for any reason upon written notice,
provided that if a party terminates this Agreement pursuant to this Section
13.1(e) and the other party continues to be willing and able to proceed with
the Merger, then the terminating party shall immediately pay the other party
the sum of $250,000 as a break-up fee. In the event of any termination
pursuant to this Section 13.1 (other than pursuant to subparagraph 13.1(a)),
written notice setting forth the reasons therefor shall forthwith be given by
BMTS, if it is the terminating party, to CET and CETAC, or by CET or CETAC,
if either of them is the terminating party, to BMTS.
13.2 Effect of Termination. If terminated as provided for in this
Section, this Agreement shall forthwith become wholly void and of no effect,
except for the confidentiality obligations set forth in Section 15 hereof,
without liability to any party to this Agreement except for breach of this
Agreement.
SECTION 14: INDEMNIFICATION
14.1 Indemnification Covenants of CET. Subject to the limitations set
forth in this Section 14, CET shall defend, indemnify, save and keep harmless
the BMTS and its affiliates, directors, officers, agents, attorneys,
accountants, or representatives and their respective successors and permitted
assigns (the "BMTS Indemnitees"), against and from all liability, demands,
claims, actions or causes of action, assessments, losses, fines, penalties,
costs, damages and expenses, including reasonable attorneys' fees
(collectively, the "Damages") sustained or incurred by any of the BMTS
Indemnitees as a result of or arising out of or relating to:
(a) Any inaccuracy in a representation or breach of a warranty
made by the CET or CETAC and in this Agreement or in any document or
instrument delivered to BMTS in connection with this Agreement; or
(b) The failure of the CET or CETAC to comply with, or the breach
by CET or CETAC of, any of the covenants contained in this Agreement or in
any document or instrument delivered to BMTS in connection with this
Agreement, to be performed by CET or CETAC; or
(c) Any CET or CETAC liability except to the extent that any such
liability is expressly assumed by BMTS pursuant to this Agreement
14.2 Indemnification Covenants of BMTS. Subject to the limitations set
forth in this Section 14, BMTS shall defend, indemnify, save and keep
harmless CET and its affiliates, managers, officers, members, agents,
attorneys, accountants or representatives and their respective successors and
permitted assigns (the "CET Indemnitees"), against and from all Damages
sustained or incurred by any of the CET Indemnitees as a result of or arising
out of or relating to:
(a) Any inaccuracy in a representation or breach of a warranty
made by BMTS in this Agreement or in any document or instrument delivered to
the CET in connection with this Agreement; or
(b) The failure of BMTS to comply with, or the breach by BMTS of,
any of the covenants contained in this Agreement or in any document or
instrument delivered to CET in connection with this Agreement, to be
performed by BMTS.
14.3 Limitations on Claims and Liability.
Notwithstanding any provision of this Agreement to the contrary, no
party shall have liability to indemnify the other and neither party may
assert a claim for indemnification for damages suffered by it until and
unless the party's claims for damages for which the other party is entitled
to indemnification equal or exceed, in the aggregate, the sum of $10,000 (the
"Damages Threshold"). Upon a party's cumulative claims for indemnification
equaling the Damages Threshold, a party may assert claims for indemnification
pursuant to Section 14.4 below for the full amount of such party's damages
for which it is entitled to indemnification hereunder.
14.4 Method of Asserting Claims. For purposes of this Section 14.4,
the following terms shall be defined as follows:
(a) "Claims" shall mean all claims asserted pursuant to this
Section 14, whether or not arising as a result of a Third Party Claim.
(b) "Indemnified Person" shall mean any BMTS Indemnitee, any CET
Indemnitee or any CET/BMTS Indemnitees, as the context requires.
(c) "Indemnifying Person" shall mean any person obligated to
indemnify an Indemnified Person pursuant to this Section 14, as the context
requires.
(d) "Third Party Claims" shall mean any Claim asserted by any
person not a party to this Agreement (including without limitation any
Governmental Authority), asserting that an Indemnified Person is liable for
monetary or other obligations which may constitute or result in Damages for
which such Indemnified Person may be entitled to indemnification pursuant to
this Section 14.
(e) All Claims shall be made in writing and shall set forth with
reasonable specificity the facts and circumstances of the Claim, as well as
the basis upon which indemnification pursuant to this Section 14 is sought.
Notwithstanding the foregoing, no delay or failure by any Indemnified Person
to provide notification of any Claim shall preclude any Indemnified Person
from recovering for Damages pursuant to this Section 14, except to the extent
that such delay or failure materially compromises the rights of any
Indemnifying Person under this Section 14.
(f) Within ten (10) days after receipt by an Indemnifying Person
of any notification of a Claim, the Indemnifying Person may, upon written
notice thereof to the Indemnified Person, assume (at the Indemnifying
Person's expense) control of the defense of such action, suit or proceeding
with counsel reasonably satisfactory to the Indemnified Person, provided the
Indemnifying Person acknowledges in writing to the Indemnified Person that
any Damages that may be assessed against the Indemnified Person in connection
with such action, suit or proceeding constitute Damages for which the
Indemnified Person shall be entitled to indemnification pursuant to this
Section 14. If the Indemnifying Person does not so assume control of such
defense, the Indemnified Person shall control such defense, but in so doing
shall not waive or limit its right to recover under this Section 14 for any
Damages that may be assessed against the Indemnified Person in connection
with such action, suit or proceeding. The party not controlling such defense
may participate therein at its own expense; provided that if the Indemnifying
Person assumes control of such defense, and the Indemnified Person has been
advised in writing by outside legal counsel that under the applicable
standards of professional conduct, the Indemnifying Person and the
Indemnified Person may not be represented by the same counsel with respect to
such action, suit or proceeding, the reasonable fees and expenses of one law
firm for the Indemnified Person shall be paid by the Indemnifying Person.
The party controlling such defense shall keep the other party advised of the
status of such action, suit or proceeding and the defense thereof and shall
consider in good faith recommendations made by the other party with respect
thereto. The Indemnified Person shall not agree to any settlement of such
action, suit or proceeding without the prior written consent of the
Indemnifying Person, which (with respect to an action, suit or proceeding as
to which the Indemnifying Person has not elected to assume control of the
defense) shall not be unreasonably withheld, conditioned or delayed. The
Indemnifying Person shall not agree to any settlement of such action, suit or
proceeding without the prior written consent of the Indemnified Person, which
shall not be unreasonably withheld, conditioned or delayed so long as the
settlement includes a complete release of the Indemnified Person from all
liability and does not contain or contemplate any payment by, or injunctive
or other equitable relief binding upon, the Indemnified Person.
SECTION 15: NONDISCLOSURE OF CONFIDENTIAL INFORMATION
15.1 Nondisclosure of Confidential Information. Each of the parties
hereto recognizes and acknowledges that it has and will have access to
certain nonpublic information of the others which shall be deemed the
confidential information of the other party (including, but not limited to,
business plans, costs, trade secrets, licenses, research projects, profits,
markets, sales, customer lists, strategies, plans for future development,
financial information and any other information of a similar nature) that
after the consummation of the transactions contemplated hereby will be
valuable, special and unique property of the Companies. Information received
by the other party or its representatives shall not be deemed Confidential
Information and afforded the protections of this Section 15.1 if, on the
Closing Date, such information has been (i) developed by the receiving party
independently of the disclosing party, (ii) rightfully obtained without
restriction by the receiving party from a third party, provided that the
third party had full legal authority to possess and disclose such
information, (iii) publicly available other than through the fault or
negligence of the receiving party, (iv) released without restriction by the
disclosing party to anyone, including the United States government, (v)
properly and lawfully known to the receiving party at the time of its
disclosure, as evidenced by written documentation conclusively established to
have been in the possession of the receiving party on the date of such
disclosure, or (vi) in the opinion of counsel to the party, required to be
disclosed under applicable Federal or state securities laws, or the rules of
any national securities exchange, Nasdaq, or any over the counter market upon
which the securities of the party are then traded. Each of the parties
hereto agrees that it shall not disclose, and that it shall use its best
efforts to prevent disclosure by any other Person of, any such confidential
information to any Person for any purpose or reason whatsoever, except to
authorized representatives of the Companies who agree to be bound by this
confidentiality agreement. Notwithstanding, a party may use and disclose any
such confidential information to the extent that a party may become compelled
by Legal Requirements to disclose any such information; provided, however,
that such party shall use all reasonable efforts and shall have afforded the
other party the opportunity to obtain an appropriate protective order or
other satisfactory assurance of confidential treatment for any such
information compelled to be disclosed. In the event of termination of this
Agreement, each party shall use all reasonable efforts to cause to be
delivered to the other parties, and to retain no copies of, any documents,
work papers and other materials obtained by such party or on such party's
behalf during the conduct of the matters provided for in this Agreement,
whether so obtained before or after the execution hereof. Each of the
parties recognizes and agrees that violation of any of the agreements
contained in this Section 15.1 will cause irreparable damage or injury to the
parties, the exact amount of which may be impossible to ascertain, and that,
for such reason, among others, the parties shall be entitled to an
injunction, without the necessity of posting bond therefor, restraining any
further violation of such agreements. Such rights to any injunction shall be
in addition to, and not in limitation of, any other rights and remedies the
parties may have against each other. The provisions of this Section 15.1
shall survive any termination of this Agreement.
15.2 No Publicity. Until the Closing or the termination of this
Agreement in accordance with its terms, neither CET nor BMTS shall, directly
or indirectly, issue any press release, or make any public statement,
concerning the transactions contemplated by this Agreement without the prior
written consent of CET (in the case of such a release or statement by BMTS)
or of BMTS (in the case of such a release or statement by CET). This Section
15.2 shall not, however, preclude any party from making any disclosure
required by applicable law, and in the event any party, or any officer,
director, employee, agent or representative of a party, believes that any
press release, public statement or other disclosure is so required, such
party will notify and consult with the other parties with respect thereto as
promptly as is practicable under the circumstances.
SECTION 16: EXPENSES
Each of the parties will pay all costs and expenses of its performance
and compliance with this Agreement and the transactions contemplated hereby.
In no event will any party to this Agreement be liable to any other party for
incidental damages, lost profits, income tax consequences, lost savings or
any other consequential damages, even if such party has been advised of the
possibility of such damages, or for punitive damages, resulting from the
breach of any obligation under this Agreement. The provisions of this
Section 16 shall survive any termination hereof.
SECTION 17: MISCELLANEOUS
17.1 Attorney's Fees. In any action at law or in equity or in any
arbitration proceeding, for declaratory relief or to enforce any of the
provisions or rights or obligations under this Agreement, the unsuccessful
party to such proceeding, shall pay the successful party or parties all
statutorily recoverable costs, expenses and reasonable attorneys' fees
incurred by the successful party or parties including without limitation
costs, expenses, and fees on any appeals and the enforcement of any award,
judgment or settlement obtained, such costs, expenses and attorneys' fees
shall be included as part of the judgment. The successful party shall be
that party who obtained substantially the relief or remedy sought, whether by
judgment, compromise, settlement or otherwise.
17.2 No Brokers. CET represents and warrants to BMTS and BMTS
represents and warrants to CET, that, except as set forth on Section 17.2 of
the Disclosure Schedule, neither it nor any party acting on its behalf has
incurred any liability, either express or implied, to any "broker," "finder,"
financial advisor, employee or similar person in respect of any of the
transactions contemplated hereby. CET agrees to indemnify BMTS against, and
hold it harmless from, and BMTS agrees to indemnify CET against, and hold it
harmless from, any liability, cost or expense (including, but not limited to,
fees and disbursements of counsel) resulting from any agreement, arrangement
or understanding made by such party with any third party, including employees
of BMTS, for brokerage, finders' or financial advisory fees or other
commissions in connection with this Agreement or the transactions
contemplated hereby. The provisions of this Section 17.2 shall survive any
termination of this Agreement.
17.3 Survival and Incorporation of Representations. The
representations, warranties, covenants and agreements made herein or in any
certificates or documents executed in connection herewith shall survive the
execution and delivery thereof for a period of eighteen months from the
Closing, and all statements contained in any certificate or other document
delivered by any party hereunder or in connection herewith shall be deemed to
constitute representations and warranties made by that party to this
Agreement.
17.4 Incorporation by Reference. All Exhibits and the Disclosure
Schedule to this Agreement and all documents delivered pursuant to or
referred to in this Agreement are herein incorporated by reference and made a
part hereof.
17.5 Parties in Interest. Nothing in this Agreement, whether express
or implied, is intended to, or shall, confer any rights or remedies under, or
by reason of, this Agreement, on any person other than the parties hereto and
their respective and proper successors and assigns and indemnitees. Nothing
in this Agreement shall act to relieve or discharge the obligation or
liability of any third persons to any party to this Agreement.
17.6 Amendments and Waivers. This Agreement may not be amended, nor
may compliance with any term, covenant, agreement, condition or provision set
forth herein be waived (either generally or in a particular instance and
either retroactively or prospectively) unless such amendment or waiver is
agreed to in writing by all parties hereto.
17.7 Waiver. No waiver of any breach of any one of the agreements,
terms, conditions, or covenants of this Agreement by the parties shall be
deemed to imply or constitute a waiver of any other agreement, term,
condition, or covenant of this Agreement. The failure of any party to insist
on strict performance of any agreement, term, condition, or covenant, herein
set forth, shall not constitute or be construed as a waiver of the rights of
either or the other thereafter to enforce any other default of such
agreement, term, condition, or covenant; neither shall such failure to insist
upon strict performance be deemed sufficient grounds to enable either party
hereto to forego or subvert or otherwise disregard any other agreement, term,
condition, or covenants of this Agreement.
17.8 Governing Law - Construction. This Agreement, and the rights and
obligations of the respective parties, shall be governed by and construed in
accordance with the laws of the State of Colorado. Notwithstanding the
preceding sentence, it is acknowledged that each party hereto is being
represented by, or has waived the right to be represented by, independent
counsel. Accordingly, the parties expressly agree that no provision of this
Agreement shall be construed against any party on the ground that the party
or its counsel drafted the provision. Nor may any provision of this
Agreement be construed against any party on the grounds that party caused the
provision to be present.
17.9 Representations and Warranties. The representations and
warranties contained in Sections 9 and 11 of this Agreement shall survive the
Closing Date and shall remain operative in full force and effect for eighteen
months from the date of Closing regardless of any investigation at any time
made by or on behalf of either CET or BMTS and shall not be deemed merged in
any document or instrument so executed or delivered by either CET or BMTS.
17.10 Notices. Any notice, communication, offer, acceptance, request,
consent, reply, or advice (herein severally and collectively, for
convenience, called "Notice"), in this Agreement provided or permitted to be
given, served, made, or accepted by any party or person to any other party or
parties, person or persons, hereunder must be in writing, addressed to the
party to be notified at the address set forth below, or such other address as
to which one party notifies the other in writing pursuant to the terms of
this Section 17.10, and must be served by (i) telefax or other similar
electronic method, or (i) depositing the same in the United States mail,
certified, return receipt requested and postage paid to the party or parties,
person or persons to be notified or entitled to receive same, or (iii)
delivering the same in person to such party.
Notice shall be deemed to have been given immediately when sent by
telefax and confirmed received or other electronic method and seventy-two
hours after being deposited in the United States mail, or when personally
delivered in the manner herein above described. Notice provided in any
manner not specified above shall be effective only if and when received by
the party or parties, person or persons to be, or provided to be notified.
All notices, requests, demands and other communications required or
permitted under this Agreement shall be addressed as set forth below:
If CET, to: CET SERVICES, INC.
00000 X. Xxxxxx Xxxxx Xxxxxx 00
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
With copy to: Xxxx Xxxxx, P.C.
ATTN: Xxxxx X. Xxxx, Esq.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000 Xxxxx Xxxxx
Xxxxxx, XX 00000
Fax: 000-000-0000
If BMTS or
BMTS Shareholders to: BIOMEDICAL TECHNOLOGY SOLUTIONS, INC.
0000 Xx. Xxxxxxx Xxxxx # 000
Xxxxxxxxx, XX 00000
Fax (000) 000-0000
With copy to: Xxxxxxxx X. Xxxxxx, P.C.
Attn: Xxxxxxxx X. Xxxxxx, Esq.
0000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Any party receiving a facsimile transmission shall be entitled to rely
upon a facsimile transmission to the same extent as if it were an original.
Any party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this Section 17.10 for the giving of notice.
17.11 Fax/Counterparts. This Agreement may be executed by telex,
telecopy or other facsimile transmission, and such facsimile transmission
shall be valid and binding to the same extent as if it were an original.
Further, this Agreement may be signed in one or more counterparts, all of
which when taken together shall constitute the same documents. For all
evidentiary purposes, any one complete counter set of this Agreement shall be
considered an original.
17.12 Captions. The caption and heading of various sections and
paragraphs of this Agreement are for convenience only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
17.13 Severability. Wherever there is any conflict between any
provision of this Agreement and any Governmental Requirement or judicial
precedent, the latter shall prevail, but in such event the provisions of this
Agreement thus affected shall be curtailed and limited only to the extent
necessary to bring it within the requirement of the law. In the event that
any part, section, paragraph or clause of this Agreement shall be held by a
court of proper jurisdiction to be invalid or unenforceable, the entire
Agreement shall not fail on account thereof, but the balance of the Agreement
shall continue in full force and effect unless such construction would
clearly be contrary to the intention of the parties or would result in
unconscionable injustice.
17.14 Good Faith Cooperation and Additional Documents. The parties
shall use their best good faith efforts to fulfill all of the conditions set
forth in this Agreement over which it has control or influence. Each party
covenants and agrees to cooperate in good faith and to enter into and deliver
such other documents and papers as the other party reasonably shall require
in order to consummate the transactions contemplated hereby, provided in each
instance, any such document is in form and substance approved by the parties
and their respective legal counsel.
17.15 Specific Performance. The obligations of the parties under
Sections 2 and 3 are unique. If either party should default in its
obligations under said Section, the parties each acknowledge that it would be
extremely difficult and impracticable to measure the resulting damages;
accordingly, the non-defaulting party, in addition to any other available
rights and remedies, may xxx in equity for injunction (mandatory or
prohibitive) or specific performance (all without the need to post a bond or
undertaking of any nature), and the parties each expressly waive the defense
that a remedy at law in damages is adequate.
17.16 Assignment. Neither party may directly or indirectly assign or
delegate, by operation of law or otherwise, all or any portion of
its/their/his rights, obligations or liabilities under this Agreement without
the prior written consent of all other parties, which consent may be withheld
in their respective sole and absolute discretion. Any purported assignment
or delegation without such consent shall be null and void.
For purposes of this Section, the term "Agreement" shall include this
Agreement and the Exhibits, the Disclosure Schedule and other documents
attached hereto or described in this Section 17.16. This Agreement, and
other documents delivered pursuant to this Agreement, contain all of the
terms and conditions agreed upon by the parties relating to the subject
matter of this Agreement and supersede all prior and contemporaneous
agreements, letters of intent, representations, warranties, disclosures,
negotiations, correspondence, undertakings and communications of the parties,
oral or written, respecting that subject matter, including but not limited to
the Original Agreement and Plan of Reorganization and the Amendment
Agreements entered into by the parties.
17.17 Time. Time is of the essence of this Agreement and each of its
provisions.
SIGNATURE PAGE TO FOLLOW
IN WITNESS WHEREOF, the parties have signed this Agreement and Plan of
Merger the date and year first above written.
CET ACQUISITION CORP.
a Colorado corporation
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
CET SERVICES, INC.
a California corporation
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, President & CEO
BIOMEDICAL TECHNOLOGY SOLUTIONS, INC.
A Colorado corporation
/s/ Xxxxxx X. Xxx 5/8/08
Xxxxxx X. Xxx, President & CEO
