EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
by and among
XXXXXXXX TECHNOLOGIES, INC.
STR ACQUISITION CORP.
SECURITY TECHNOLOGY, INC.
SCIENCE & TECHNOLOGY RESEARCH, INC.
and
XXXXXX XXXX
September __, 2003
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of September __, 2003 (the
"Agreement Date"), among Xxxxxxxx Technologies, Inc., a Florida corporation (the
"Parent"), STR Acquisition Corp., a Maryland corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), Security Technology, Inc., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Controlled Subsidiary"),
Science & Technology Research, Inc., a Maryland corporation (the "Company") and
Xxxxxx Xxxx (the "Sole Stockholder").
RECITALS
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of its stockholders (the "Company
Stockholders") for the Company to consummate the merger transactions
contemplated by this Agreement (the "Merger Transactions"), upon the terms and
subject to the conditions set forth herein;
WHEREAS, immediately following the consummation of the Merger
Transactions, Parent will contribute the Surviving Corporation Common Stock (as
defined herein) to Controlled Subsidiary;
WHEREAS, in furtherance of the Merger Transactions, the Board has
unanimously approved the merger (the "Merger") of Merger Sub with and into the
Company in accordance with the General Corporation Law of the State of Maryland
(the "MGCL"), upon the terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of Parent has directed the issuance of
Parent Common Stock pursuant to this Agreement;
WHEREAS, Parent, Merger Sub, the Company and the Sole Stockholder
desire to make certain representations, warranties, covenants and agreements in
connection with the Merger Transactions;
WHEREAS, Parent, Merger Sub, Surviving Corporation and the Company
intend by executing this Agreement to adopt a plan of reorganization within the
meaning of Section 368 of the Code and to cause the Merger to qualify as a
reorganization under the provisions of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Code and the subsequent contribution of the Surviving Corporation's stock to
qualify under Section 368(a)(2)(C) of the Code; and
WHEREAS, certain capitalized terms have the meanings set forth in
Section 1.1 hereof
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NOW, THEREFORE, in consideration of the representations, warranties and
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.1 CERTAIN DEFINITIONS
(a) The following terms, when used in this Agreement, shall have the
respective meanings ascribed to them below:
"ACTION" means any claim, action, suit, inquiry, hearing, investigation
or other proceeding.
"AFFILIATE" means, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, Controls, is
Controlled by or is under common Control with, such Person. For purposes of this
definition "CONTROL" (including the terms "Controlled by" and "under common
Control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of stock, as trustee or executor, by Contract or credit
arrangement or otherwise.
"AGREEMENT" means this Agreement and Plan of Merger, together with all
Schedules and Exhibits attached hereto, as the same may be amended from time to
time in accordance with the terms hereof.
"AGREEMENT DATE" has the meaning set forth in Section 2.2.
"ARTICLES OF MERGER" means the articles of merger required to complete
the Merger Transactions in a form approved for filing with the Maryland
Department of Assessments and Taxation.
"BENEFIT PLAN" means any Plan established, presently or heretofore
maintained, or to which contributions have at any time been made by the Company
or any predecessor of the foregoing, under which any employee, former employee
or director of the Company or any ERISA Affiliate, or any beneficiary thereof is
covered, is eligible for coverage or has benefit rights in respect of service to
the Company or any ERISA Affiliate, or with respect to which any potential
liability is borne by the Company or any ERISA Affiliate, or any predecessor of
the foregoing.
"BOARD" has the meaning set forth in the recitals hereto.
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"BUSINESS" means the energy and environmental marketing, technical and
program management support, engineering services and support and detection
systems design and production business of the Company as currently conducted or
proposed to be conducted.
"BUSINESS DAY" means any day other than Saturday, Sunday or any day on
which banks in New York, New York are required or authorized to be closed.
"CASH" shall have the meaning set forth in Section 3.1(c)(i).
"CLAIM NOTICE" means written notification pursuant to Section 9.2(a) of
a Third Party Claim as to which indemnity under Section 9.1 is sought by an
Indemnified Party, enclosing a copy of all papers served, if any, and specifying
the nature of and basis for such Third Party Claim and for the Indemnified
Party's claim against the Indemnifying Party under Section 9.1, together with
the amount or, if not then reasonably ascertainable the estimated amount,
determined in good faith, of such Third Party Claim.
"CLOSING" has the meaning set forth in Section 2.2.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder, as the same may be in effect from
time to time.
"COMPANY" has the meaning set forth in the preamble to this Agreement.
"COMPANY COMMON STOCK" has the meaning set forth in the recitals
hereto.
"COMPANY DOMAIN NAME" has the meaning set forth in Section 4.17(a).
"COMPANY STOCKHOLDER" has the meaning set forth in the recitals hereto.
"COMPANY WEBSITES" means (1) Company Domain Names listed in Schedule
4.17(a)(i) hereto and (i) the Content embodied in all World Wide Websites and
World Wide Web pages associated with such Company Domain Names.
"CONFIDENTIALITY AGREEMENT" means any Confidentiality Agreement
previously executed in respect to the Merger Transactions between the Company
and/or the Sole Stockholder and the Parent and/or any of its Affiliates.
"CONTENT" means any text images, video, audio (including without
limitation, music used in time relation with text, images or video), data,
products, services, advertisements, promotions, links, banners, signage,
applets, pointers, technology and software.
"CONSULTING AGREEMENT" means the form of consulting agreement between
the Parent and Sole Stockholder, in the form attached to this Agreement as
Exhibit 1.
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"CONTRACT" means any agreement, Lease, debenture, note, bond, evidence
of Indebtedness, mortgage, indenture, security agreement, Option or other
contract or commitment (whether written or oral).
"DISPUTE NOTICE" means a written notice provided by any party against
which indemnification is sought under this Agreement to the effect that such
party disputes its indemnification obligation under this Agreement.
"DISPUTE PERIOD" means the period ending thirty (30) calendar days
following receipt by an Indemnifying Party of either a Claim Notice or an
Indemnity Notice.
"EMPLOYMENT AGREEMENT" means the form of employment agreement between
the Company and Sole Stockholder, in the form attached to this Agreement as
Exhibit 2.
"ENVIRONMENTAL LAW" means any and all federal, state, local, provincial
and foreign, civil and criminal laws, statutes, ordinances, orders, common law,
codes, rules, regulations, judgments, decrees, injunctions or agreements with
any governmental or regulatory authority, relating to the protection of health
and the environment, worker health and safety, and/or governing the handling,
use, generation, treatment, storage, transportation, disposal, manufacture,
distribution, formulation, packaging, labeling or Release of any Hazardous
Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder, as the same may
be in effect from time to time.
"ERISA AFFILIATE" means any Person who is or was a member of a
controlled group (within the meaning of section 412(n)(6)(B) of the Code) that
includes, or at any time included, the Company or any predecessor of any of the
foregoing.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4.6.
"GUARANTY" means the form of guaranty agreement by Parent and Merger
Sub (as succeeded in interest by the Surviving Corporation) in favor of the Sole
Stockholder substantially in the form attached hereto as Exhibit 3.
"GOVERNMENTAL ENTITY" means any government or political subdivision
thereof, whether foreign or domestic, federal, state, provincial, county, local,
municipal or regional, or any other governmental entity, any agency, authority,
department, division or instrumentality of any such government, political
subdivision or other governmental entity, any court, arbitral tribunal or
arbitrator, and any nongovernmental regulating body, to the extent that the
rules, regulations or orders of such body have the force of Law.
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"HAZARDOUS MATERIAL" means petroleum, petroleum hydrocarbons or
petroleum products, petroleum by-products, radioactive materials, asbestos or
asbestos-containing materials, gasoline, diesel fuel, pesticides, radon, urea
formaldehyde, lead or lead-containing materials, polychlorinated biphenyls and
any other chemicals, materials, substances or wastes in any amount or
concentration which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous materials," "hazardous wastes,'
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," "pollutants," "regulated substances," "solid wastes" or
"contaminants" or words of similar import under any Environmental Law.
"INDEBTEDNESS" means, as to any Person: (i) all obligations, whether or
not contingent, of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured), (ii)
all obligations of such Person evidenced by notes, bonds, debentures,
capitalized leases or similar instruments, (iii) all obligations of such Person
representing the balance of deferred purchase price of property or services,
except trade accounts payable and accrued commercial or trade liabilities
arising in the ordinary course of business, (iv) all interest rate and currency
swaps, caps, collars and similar agreements or hedging devices under which
payments are obligated to be made by such Person, whether periodically or upon
the happening of a contingency, (v) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
tender under such agreement in the event of default are limited to repossession
or sale of such property), (vi) all indebtedness secured by any Lien on any
property or asset owned or held by such Person regardless of whether the
indebtedness secured thereby shall have been assumed by such Person or is
non-recourse to the credit of such Person, and (vii) all indebtedness of any
other Person referred to in clauses (i) through (vi) above, guaranteed, directly
or indirectly, by such Person.
"INDEMNIFIED PARTY" means any Person claiming indemnification under any
provision of Article IX.
"INDEMNIFYING PARTY" means any Person against whom a claim for
indemnification is being asserted under any provision of Article IX.
"INDEMNITY NOTICE" means written notification pursuant to Section
9.2(b) of a claim for indemnity under Article IX by an Indemnified Party,
specifying the nature of and basis for such claim, together with the amount or,
if not then reasonably ascertainable, the estimated amount, determined in good
faith, of such claim.
"INTELLECTUAL PROPERTY" means: (i) United States, international, and
foreign patents, patent applications and statutory invention registrations,
including reissues, divisions, continuations, continuations in part, extensions
and reexaminations thereof, all rights therein provided by international
treaties or conventions and all improvements thereto, (ii) trademarks, service
marks, trade dress, logos, trade names, corporate names, and other source
identifiers (whether or not registered) including all common law rights, and
registrations and applications for registration thereof, all rights therein
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provided by international treaties or conventions, and all reissues, extensions
and renewals of any of the foregoing, (iii) copyrightable works, copyrights
(whether or not registered) and registrations and applications for registration
thereof, and all rights therein provided by international treaties or
conventions, computer software and mask works, (iv) confidential and proprietary
information, trade secrets, know-how whether patentable or nonpatentable and
whether or not reduced to practice, processes and techniques, research and
development information, industrial and product designs, (v) Software, (vi)
coded values, formats, data, historical or current databases, whether or not
copyrightable, (vii) data, documentation and other information related to
Company Websites, (viii) moral rights, (ix) rights of publicity, (x) other
proprietary rights relating to any of the foregoing (including without
limitation associated goodwill and remedies against infringements thereof and
rights of protection of an interest therein under the laws of all
jurisdictions), and (xi) copies and tangible embodiments thereof.
"KNOWLEDGE" means the actual or constructive knowledge of any current
officer of the entity to which "Knowledge" is applied.
"LAWS" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental Entity.
"LEASE" means all oral and written leases, subleases and other use and
occupancy agreements (and any amendments, renewals, supplements, modifications
or extensions thereto), in each case affecting or relating to real property
under which the Company is a party or to which any of its respective property is
bound.
"LIABILITY" means all Indebtedness, obligations and other liabilities
of a Person, whether absolute, accrued, contingent (or based upon any
contingency), fixed or otherwise, and whether due or to become due.
"LIEN" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind,
whether voluntary or involuntary (including any conditional sale Contract, title
retention Contract or Contract committing to grant any of the foregoing).
"LOSS" means any and all damages, fines, fees, penalties, deficiencies,
losses and expenses (including, without limitation, all interest, court costs,
fees and expenses of attorneys, accountants and other experts or other expenses
of litigation or other proceeding or of any claim, default or assessment).
"MATERIAL ADVERSE EFFECT" means any event or events, or any material
change in the condition (financial or otherwise), operations, business,
prospects, assets or results of operations of the Company taken as a whole, that
(i) has materially interfered or is likely to materially interfere with the
ongoing operations of the Business, or (ii) singly or in the aggregate has
resulted in, or is reasonably likely to have a material adverse effect on the
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ongoing conduct of the Business; provided, however, that any adverse effect
arising out of or resulting from (x) an event or series of events or
circumstances affecting the United States economy generally or the economy
generally of any other country in which the Business operates or (y) the
entering into of this Agreement or the consummation of the transactions
contemplated hereby, shall be excluded in determining whether a Material Adverse
Effect has occurred.
"MERGER" has the meaning set forth in the recitals hereto.
"MERGER SUB" has the meaning set forth in the preamble to this
Agreement.
"MERGER CONSIDERATION" has the meaning set forth in Section 3.1(c).
"MERGER TRANSACTIONS" has the meaning set forth in the recitals hereto.
"MGCL" has the meaning set forth in the recitals.
"NOTE" has the meaning set forth in Section 3.1(c)(ii).
"ORDER" means any writ, judgment, decree, injunction or similar order
of any Governmental Entity (in each case whether preliminary or final).
"PARENT" has the meaning set forth in the preamble to this Agreement.
"PARENT COMMON STOCK" means shares of common stock, $0.0001 par value
per share, of Parent.
"PARENT INDEMNIFIED PARTIES" has the meaning set forth in Section
9.1(a).
"PERMITS" means all permits, licenses, franchises, exceptions,
certificates, approvals, consents or other similar authorizations affecting, or
relating in any way to, the assets or business of the Company or the Business.
"PERSON" means any individual, partnership, limited liability company,
corporation, association, joint stock company, trust, estate, joint venture,
unincorporated organization, Governmental Entity or any other entity of any
kind.
"PLAN" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, sick pay, sick leave, day or dependent care, legal services,
cafeteria, life, health, accident, disability, worker's compensation or other
insurance, severance, separation or other employee benefit plan, practice,
policy, commitment or arrangement of any kind, whether written or oral, or
whether for the benefit of a single individual or more than one individual,
including, without limitation, any "employee benefit plan" within the meaning of
Section 3(3) of ERISA (whether or not subject thereto).
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"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of a
Hazardous Material into the environment.
"REPRESENTATIVES" means, with respect to any Person, the directors,
officers, employees, agents, advisors, counsel, accountants and other authorized
representatives of such Person.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, as the same may be in effect from
time to time.
"SECURITY AGREEMENT" means the form of security agreement by Parent and
Merger Sub (as succeeded in interest by the Surviving Corporation) in favor of
the Sole Stockholder substantially in the form attached hereto as Exhibit 3.
"SHARE" means any share of Company Common Stock.
"SITE" means any real property currently or previously owned, leased or
operated by the Company or any predecessor of any of the foregoing, including
all soil, subsoil, surface water and groundwater thereat.
"SOFTWARE" means all computer software, including source code, object
code, machine-readable code, program listings, comments, user interfaces, menus,
buttons and icons, and all files, data, manuals, design notes and other items
and documentation related thereto or associated therewith.
"STOCKHOLDER APPROVAL" means the required approval and adoption by the
Company Stockholders of this Agreement, the Merger Transactions and the waiver
(or other relinquishment) of appraisal rights under applicable Laws.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, joint venture or other legal entity of which such Person (either
alone or through or together with any other Subsidiary), owns, directly or
indirectly, more than 10% of the stock or other equity interests the holders of
which are (i) generally entitled to vote for the election of the board of
directors or other governing body of such legal entity or (ii) generally
entitled to share in the profits or capital of such legal entity.
"SURVIVING CORPORATION" has the meaning set forth in Section 2.1.
"SURVIVING CORPORATION COMMON STOCK" has the meaning set forth in
Section 3.1(a).
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"TAX RETURNS" means all returns and reports (including elections,
claims, declarations. disclosures, schedules, estimates, computations and
information returns) required to be supplied to a Tax authority in any
jurisdiction relating to Taxes.
"TAXES" means all federal, state, local and foreign income, profits,
franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment, disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever together with all
interest, penalties, fines and additions to tax imposed with respect to such
amounts and any interest in respect of such penalties and additions to tax.
"THIRD PARTY CLAIM" has the meaning set forth in Section 9.2(a).
"THIRD PARTY RIGHTS" has the meaning set forth in Section 4.17(d).
(b) For purposes of this Agreement, except as otherwise expressly
provided herein or unless the context otherwise requires: (i) the terms defined
in this Agreement include the plural as well as the singular, and the use of any
gender herein shall be deemed to include the other genders, (ii) references
herein to "Articles," "Sections,' "subsections" and other subdivisions without
reference to a document are to designated Articles, Sections, subsections and
other subdivisions of this Agreement, (iii) a reference to a subsection without
further reference to a Section is a reference to such subsection as contained in
the same Section in which the reference appears, and this rule shall also apply
to paragraphs and other subdivisions: (iv) the words "herein," "hereof,"
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular provision; and (v) the terms "include," "includes" and
including" shall be deemed to be followed by the phrase "without limitation".
ARTICLE II
TRANSACTIONS
SECTION 2.1 THE MERGER. Subject to the terms and conditions of this
Agreement and in accordance with the MGCL, on the Agreement Date Merger Sub will
merge with and into the Company. The separate existence of the Merger Sub shall
cease on the Agreement Date and the Company shall be the surviving corporation
pursuant to the Merger and shall continue in existence following the Agreement
Date (the "Surviving Corporation").
SECTION 2.2 THE CLOSING. The closing (the "Closing") of the Merger
Transactions shall take place in person at the offices of Xxxxxxx, Xxxxx &
Xxxxx, LLP, Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 or by electronic
medium (e-mail and facsimile transfer) commencing at 10:00 a.m. (EDT), on the
Agreement Date.
SECTION 2.3 MERGER SUB'S AND PARENT'S CLOSING DELIVERIES. Merger Sub or
Parent, as the case may be, shall deliver to the Company or the Sole
Stockholder, as the case may be, at the Closing the following (unless expressly
waived in writing by the recipient party):
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(a) An opinion of Xxxxxxx, Xxxxx & Xxxxx, LLP, counsel to the Parent
and Merger Sub satisfactory in form and substance to the Company regarding the
Merger Transactions.
(b) A good standing certificate for Merger Sub and a copy of the
certificate of incorporation of Merger Sub, in each case issued by the Secretary
of State of the State of Delaware and dated not more than five Business Days
prior to the Agreement Date.
(c) A good standing certificate for the Parent and a copy of the
certificate of incorporation of the Parent, in each case issued by the Secretary
of State of the State of its incorporation and dated not more than ten Business
Days prior to the Agreement Date.
(d) A certificate of the Secretary or any Assistant Secretary of Merger
Sub dated as of the Agreement Date and certifying a copy of the bylaws of Merger
Sub.
(e) A certificate of the Secretary or any Assistant Secretary of the
Parent dated as of the Agreement Date and certifying a copy of the bylaws of the
Parent.
(f) Copies of resolutions of the board of directors and stockholders of
Merger Sub authorizing and approving this Agreement and the Merger Transactions,
certified by the Secretary or any Assistant Secretary of Merger Sub.
(g) A copy of the resolutions of the board of directors of the Parent
authorizing and approving this Agreement and the Merger Transactions, certified
by the Secretary or any Assistant Secretary of the Parent.
(h) The Employment Agreement to the Sole Stockholder.
(i) The Consulting Agreement to the Sole Stockholder.
(j) The Guaranty to the Sole Stockholder
(k) The Security Agreement to the Sole Stockholder.
(l) The Merger Consideration to the Sole Stockholder as set forth in
Article III.
(m) Executed Articles of Merger and Certificate of Merger.
(n) Any other certificates, documents and opinions as the Company or
the Sole Stockholder and his counsel shall reasonably require in order to
facilitate the consummation of the transactions contemplated by this Agreement.
SECTION 2.4 THE COMPANY'S AND SOLE STOCKHOLDER'S CLOSING DELIVERIES.
The Company or the Sole Stockholder, as the case may be, shall deliver to Merger
Sub or the Parent, as the case may be, at the Closing the following (unless
expressly waived in writing by the recipient party):
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(a) A copy of resolutions giving Stockholder approval of this Agreement
and the Merger Transactions duly adopted by the requisite number of Company
Stockholders and certified as of the Agreement Date by the Secretary or any
Assistant Secretary of the Company.
(b) All necessary consents and approvals. Each such consent, approval
or termination (i) shall be in form and substance satisfactory to Merger Sub in
its sole discretion, (ii) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and (iii) shall be in full force
and effect.
(c) The resignations of all directors and officers of the Company dated
effective as of the Agreement Date.
(d) An opinion regarding the Merger Transactions of Hodes, Ulman,
Xxxxxx & Xxxx, P.A., counsel to the Company, satisfactory in form and substance
to Merger Sub and the Parent.
(e) An investment representation letter from the Sole Stockholder in
the form attached hereto as Exhibit 4.
(f) A good standing certificate for the Company and a copy of the
certificate of incorporation of the Company, in each case issued by the
secretary of state of the relevant jurisdiction of incorporation and dated not
more than ten Business Days prior to the Agreement Date.
(g) A certificate of the Secretary or any Assistant Secretary of the
Company, dated as of the Agreement Date, certifying a copy of the bylaws of the
Company.
(h) The Employment Agreement executed by the Sole Stockholder.
(i) The Consulting Agreement executed by the Sole Stockholder.
(j) The Security Agreement executed by the Sole Stockholder.
(k) The Guaranty Agreement accepted and acknowledged by the Sole
Stockholder
(l) Executed Articles of Merger and Certificate of Merger.
(j) All the outstanding Shares.
(k) Any other certificates, documents and opinions as Parent, Merger
Sub and their counsel shall reasonably require in order to facilitate the
consummation of the transactions contemplated by this Agreement.
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SECTION 2.5 EFFECT OF MERGER. The Merger shall become effective at the
time the parties hereto shall cause the Articles of Merger to be filed in
accordance with the MGCL. The Articles of Merger shall be filed on the Agreement
Date. The Merger shall have the effect set forth in the MGCL. Without limiting
the generality of the foregoing, on the Agreement Date, all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall be
vested in the Surviving Corporation, and all debts, liabilities and duties of
the Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 2.6 CERTIFICATE OF INCORPORATION. On the Agreement Date, the
certificate of incorporation of the Surviving Corporation shall be the
certificate of incorporation of the Company as in effect immediately prior to
the Agreement Date.
SECTION 2.7 BYLAWS. On the Agreement Date, the bylaws of the Surviving
Corporation shall be the bylaws of the Company as in effect immediately prior to
the Agreement Date.
SECTION 2.8 DIRECTORS AND OFFICERS. On the Agreement Date, the persons
set forth on Schedule 1 attached hereto shall be the directors and officers of
the Surviving Corporation, and each such person shall hold office until his
respective successor is duly elected or appointed and qualified.
ARTICLE III
CONVERSION OF SECURITIES IN THE MERGER
SECTION 3.1 CONVERSION OF SECURITIES. On the Agreement Date, by virtue
of the Merger and without any action on the part of Merger Sub, the Company or
the holders of any of the following securities:
(a) All of the issued and outstanding shares of the common stock of
Merger Sub shall be converted into 100 shares of the common stock of the
Surviving Corporation ("Surviving Corporation Common Stock).
(b) All Shares that are outstanding immediately prior to the Agreement
Date shall be converted without any action on the part of the holder thereof
into and exchangeable for the Cash, Note and Parent Common Stock (the "Merger
Consideration"), which shall equal the following:
(i) Nine Hundred Thousand Dollars ($900,000.00) in cash,
certified or bank check or wire transfer (the "Cash");
(ii) a promissory note, substantially in the form attached
hereto as Exhibit 5 (the "Note"), in the principal amount of Three Hundred
Seventy-Five Thousand Dollars ($375,000.00); and
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(iii) that number of Shares of Parent Common Stock having a
fair market value of Five Million One Hundred Thousand Dollars ($5,100,000.00)
based on the average volume-weighted closing price of the Parent Common Stock on
the OTC Bulletin Board for the twenty (20) trading days prior to the day before
the Agreement Date (the "Stock Price"). Notwithstanding the foregoing if the
average volume-weighted closing price of the Parent Common Stock for the ten
(10) trading days subsequent to the Agreement Date (the "After-Merger Stock
Price") is less than the Stock Price, then the number of Shares of Parent Common
Stock shall be re-determined using the After-Merger Stock Price, and the
incremental Shares of Parent Common Stock that are determined using the
After-Merger Stock Price (over the amount determined using the Stock Price)
shall be promptly delivered to the Sole Stockholder.
SECTION 3.2 EXCHANGE OF AND PAYMENT FOR SHARES.
(a) On the Agreement Date, subject to the provisions of subsection (b)
below, Parent shall cause to be distributed to the Sole Stockholder, the Merger
Consideration.
(b) If any of the Cash, the Note or certificates representing shares of
Parent Common Stock is to be paid to or issued in a name other than that in
which the Share surrendered in exchange therefor is registered, it shall be a
condition of the payment or issuance thereof that the certificate so surrendered
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall pay to Parent any transfer or other taxes
required by reason of the issuance of a certificate representing shares of
Parent Common Stock in any name other than that of the registered holder of the
certificate representing Shares surrendered, or otherwise required, or shall
establish to the satisfaction of Parent that such tax has been paid or is not
payable.
(c) All rights to receive the Cash, the Note and Parent Common Stock as
described above shall be deemed, when paid or issued hereunder, to have been
paid or issued, as the case may be, in full satisfaction of all rights
pertaining to the Shares.
(d) In the event any certificate representing Shares shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by a
Stockholder claiming such certificate to be lost, stolen or destroyed and, if
required by Parent or its stock transfer agent, the posting by such Stockholder
of a bond in such amount as Parent or its stock transfer agent may reasonably
direct as indemnity against any claim that may be made against it with respect
to such certificate, Parent will issue in exchange for such lost, stolen or
destroyed certificate the Parent Common Stock, Cash and Note deliverable
pursuant to this Agreement in respect thereof.
SECTION 3.3 RESTRICTIVE LEGENDS; OTHER RESTRICTIONS. The certificates
representing shares of Parent Common Stock to be issued pursuant to this
Agreement will bear restrictive legends requiring compliance with the
contractual prohibitions on transfer contained in this Agreement or elsewhere
and the legal prohibitions imposed by Rule 144 under the Securities Act in
connection with any resale of such shares.
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SECTION 3.4 WITHHOLDING RIGHTS. The Surviving Corporation or Parent
shall be entitled to deduct and withhold from the aggregate Merger Consideration
otherwise payable pursuant to this Agreement to any holder of Shares, such
amounts as the Parent or Surviving Corporation, is required to deduct and
withhold with respect to the making of such payment under the Code or any other
applicable Law. To the extent that amounts are so withheld by the Surviving
Corporation or Parent, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the Shares in respect of
which such deduction and withholding was made by the Surviving Corporation or
Parent (as applicable).
SECTION 3.5 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
Merger Consideration delivered upon the surrender of Shares in accordance with
the terms hereof shall be deemed to have been delivered in full satisfaction of
all rights pertaining to such Shares.
SECTION 3.6 CONTRIBUTION OF SURVIVING CORPORATION COMMON STOCK. On the
Agreement Date, immediately following the consummation of the Merger
Transactions, Parent shall contribute the Surviving Corporation Common Stock to
Controlled Corporation.
SECTION 3.7 TAKING OF NECESSARY ACTION, FURTHER ACTION. Each of Merger
Sub, the Company, Controlled Corporation and the Sole Stockholder will take all
such reasonable and lawful action as may be necessary or appropriate in order to
effectuate the Merger in accordance with this Agreement and/or any related
transaction with respect to the Surviving Corporation Common Stock as promptly
as possible. If, at any time after the Agreement Date, any further action is
necessary or desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of the Company and Merger
Sub, the officers and directors of the Company and Merger Sub immediately prior
to the Agreement Date are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MANAGEMENT STOCKHOLDER
As an inducement to the Parent and Merger Sub to enter into this
Agreement, the Company and the Sole Stockholder, jointly and severally,
represent and warrant to the Parent and Merger Sub that the statements contained
in this Article IV are true and correct as of the Agreement Date.
SECTION 4.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the Laws of the State of Maryland, and has full corporate
power and authority to own its properties and assets and to carry on its
business as it is now being conducted. The Company is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
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jurisdiction listed on Schedule 4.1(a), which are the only jurisdictions where
the character of the properties or assets owned, leased or operated by it or the
nature of its activities makes such qualification or licensing necessary, except
where the failure to be so qualified or licensed would not have a Material
Adverse Effect. The Company has heretofore furnished to Merger Sub complete and
correct copies of its certificate of incorporation and bylaws including all
amendments thereto. Such certificates of incorporation and bylaws are in full
force and effect and no other organizational documents are applicable to or
binding upon the Company. The Company is not in violation of any of the
provisions of its certificate of incorporation or bylaws. The Company does not
have any other name. The Company does not conduct or operate, and has not
heretofore conducted or operated, its business under any name other than
"Science & Technology Research, Inc."
(b) The Company owns, neither directly or indirectly, any interest or
investment (whether equity or debt) in any Person (other than investments in
short-term investment securities).
SECTION 4.2 CAPITALIZATION.
(a) As of the Agreement Date, 100,000 Shares are authorized, of which
12,000 Shares are issued and outstanding. The Sole Stockholder owns all right,
title and interest in and to all the issued and outstanding Shares. All of such
issued and outstanding Shares are duly authorized, fully paid and nonassessable
and have been validly issued in compliance with all applicable federal and state
securities laws. There are no Shares held as treasury stock. Other than as set
forth in the first sentence of this Section 4.2(a), no shares of capital stock
of the Company have been issued or are outstanding. There are no outstanding
options or agreements, arrangements or understandings to issue options with
respect to the Company. The Company is not a party to or bound by any Contract
to issue or sell any capital stock or any other securities of the Company, nor
is there outstanding any other security exercisable or exchangeable for or
convertible into any capital stock or any other security of the Company. There
are no preemptive rights or agreements, arrangements or understandings to issue
preemptive rights with respect to the issuance or sale of shares of capital
stock or other equity interests in the Company. On Agreement Date hereof, the
Company has delivered to Merger Sub, in writing, a true and complete description
of the nature, holder, exercise price and other material terms of each
outstanding option of the Company, in each case as of the date hereof. Neither
the execution or delivery by the Company or the Sole Stockholder of this
Agreement, the performance of each of its obligations hereunder nor the
consummation of the Merger Transactions will give rise to or result in (with or
without notice, lapse of time or both) any anti-dilution adjustment,
acceleration of vesting or other change under or to any option. Neither the
Company nor the Sole Stockholder is a party or subject to any agreement or
understanding and, to the Knowledge of the Company and the Sole Stockholder,
there is no agreement or understanding between or among Persons which relates to
the voting of capital stock of the Company, the giving of written consents or
the nomination of directors of the Company or with respect to any of its
securities. None of the outstanding Shares is subject to a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code.
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(b) Except as provided on Schedule 4.2(b), there are no voting trusts,
registration rights agreements, shareholder agreements or similar agreements or
understandings to which the Company or the Sole Stockholder is a party or is
subject with respect to the voting of the capital stock of the Company, the
giving of written consents or the nomination of directors of the Company or with
respect to the granting of registration rights for the capital stock of the
Company.
(c) Other than as set forth on Schedule 4.2(c), (i) there are no
obligations, contingent or otherwise, of the Company to repurchase, redeem or
otherwise acquire any shares of capital stock or membership interests of, or
other equity interests in, the Company or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other Person and (ii) there are no other rights plans affecting the Company.
(d) The Sole Stockholder owns his Shares free and clear of any Liens,
and such Shares are not bound by or subject to any proxy, agreement, voting
trust or other restriction regarding the voting thereof.
SECTION 4.3 SUBSIDIARIES. The Company neither owns nor has owned within
the five (5) year period previous to the Agreement Date any shares of capital
stock or other securities of, or any other interest in, and the Company neither
controls nor has controlled, directly or indirectly, any other corporation,
association, joint venture partnership or other business organization or any
Person.
SECTION 4.4 AUTHORIZATION OF MERGER TRANSACTIONS. The Company has full
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder, and the Sole Stockholder has full power, authority, and
capacity to do the same. The execution, delivery and performance by the Company
of this Agreement and the consummation of the Merger Transactions have been duly
authorized by the Company's board of directors and no other action, other than
Stockholder Approval, is required on the part of the Company or its stockholders
in connection with the execution, delivery or performance of this Agreement or
the consummation of the Merger Transactions. This Agreement has been duly
executed and delivered by the Company and the Sole Stockholder and, assuming the
due authorization, execution and delivery hereof by the other parties hereto,
constitutes the valid and legally binding obligation of the Company and the Sole
Stockholder enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar Laws relating to creditors' rights generally and by
general principles of equity. No stockholder of the Company has the right to
assert or claim any appraisal or dissenter's rights with respect to the Merger
Transactions.
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SECTION 4.5 NONCONTRAVENTION.
(a) Neither the execution, delivery or performance of this Agreement
nor the consummation of the Merger Transactions by the Company or the Sole
Stockholder will, with or without the giving of notice or the lapse of time or
both, (i) violate any provision of the certificate of incorporation or bylaws of
the Company, (ii) violate any Law or Order or other restriction of any
Governmental Entity or court to which the Company or the Sole Stockholder may be
subject, (iii) violate, conflict with or result in the failure to comply with
the applicable provisions of ERISA or Sections 401(a) and 501(a) of the Code, or
result in any non-exempt "prohibited transaction" under Section 406 of ERISA or
Section 4975 of the Code, or (iv) except as set forth on Schedule 4.5, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of any right or obligation under, create in any party the right to
accelerate, terminate, modify, cancel, require any notice under or result in the
creation of a Lien on any of the properties or assets of the Company under, any
Contract to which the Company or the Sole Stockholder is a party or by which
either of them is bound or to which any properties or assets of the Company is
subject.
(b) The execution and delivery of this Agreement by the Company and the
Sole Stockholder does not, and the performance of this Agreement by the Company
and the Sole Stockholder and the consummation of the Merger Transactions will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Entity, except for the filing and
recordation of appropriate merger or other documents as required by, the MGCL or
by relevant authorities of other states in which the Company is qualified to do
business.
SECTION 4.6 FINANCIAL STATEMENTS.
(a) The Company has delivered to Merger Sub (i) the balance sheets of
the Company for the fiscal years ended as of December 31, 2001 and December 31,
2002 and related statements of operations for the fiscal years ended as of such
dates, and (ii) the balance sheet and statement of operations of the Company for
the period ending July 31, 2003 (collectively. the "Financial Statements").
(b) The Financial Statements are complete and correct in all material
respects and present fairly the financial condition of the Company as of the
indicated dates and the results of operations and cash flows of the Company for
the indicated periods.
(c) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that, to the Knowledge of the
Company and the Sole Stockholder: (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions are
recorded as necessary to prepare the financial statements in conformity with the
accounting principles utilized by the Company on a consistent basis and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability of assets is compared with the existing assets at
reasonable intervals and appropriate actions taken with respect to any
differences.
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SECTION 4.7 EVENTS SUBSEQUENT TO JULY 31, 2003. Since July 31, 2003,
there has not occurred any event, occurrence or development that caused or could
reasonably be expected to cause a Material Adverse Effect.
SECTION 4.8 NO UNDISCLOSED LIABILITIES. Except (a) for Liabilities
incurred in connection with the Merger Transactions pursuant to the provisions
of this Agreement, (b) Liabilities incurred in the ordinary course of business
of the Company consistent with past practice and (c) as and to the extent
disclosed in the Financial Statements or as set forth on Schedule 4.8, since
July 31, 2003, the Company has not incurred any Liabilities of any nature which
could reasonably be expected to be required to be reflected in or reserved
against on a balance sheet.
SECTION 4.9 BROKERS' FEES. Except as disclosed in Schedule 4.9, no
agent, broker, finder, investment banker, financial advisor or other similar
Person will be entitled to any fee, commission or other compensation in
connection with any of the transactions contemplated by this Agreement on the
basis of any act or statement made or alleged to have been made by the Company
or the Sole Stockholder, or any investment banker, financial advisor, attorney,
accountant or other Person retained by or acting for or on behalf of the Company
or the Sole Stockholder.
SECTION 4.10 ABSENCE OF CERTAIN CHANGES. Except as disclosed on
Schedule 4.10, since July 31, 2003, the Company has conducted the Business in
the ordinary course consistent with past practice and there has not been:
(a) any amendment or other modification of the certificate of
incorporation or bylaws of the Company.
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company of any outstanding
shares of capital stock or other securities of, or other ownership interests in,
the Company;
(c) any amendment or other modification of any material term of any
outstanding equity security of the Company,
(d) (i) any incurrence or assumption by the Company of any Indebtedness
except for the utilization of the existing working capital lines made in the
ordinary course of business, or (ii) any loan made by the Company to any Person
other than in the ordinary course of business in amounts and on terms consistent
with past practice,
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(e) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the Business or assets of the Company which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect;
(f) any revaluation in any material respect of any significant portion
of the assets of the Company, including, without limitation, the write-off of
notes or accounts receivable in any material amount;
(g) any material change in any method of accounting or accounting
practice by the Company thereof;
(h) any (i) grant of, or agreement to grant under certain
circumstances, any severance or termination pay to any director, officer or
employee of the Company, (ii) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any director, officer or employee of the Company, (iii) increase
in benefits payable under any existing severance or termination pay policies or
employment agreements, except for increases in the ordinary course of business
pursuant to and under the Company's existing Benefit Plans or (iv) increase in
compensation, bonus or other benefits payable to directors, officers or
employees of the Company, except for increases made, including bonuses granted,
in the ordinary course of business consistent with past practice;
(i) any cancellation, modification, termination or grant of a waiver of
any provision of any Permit or Contract to which the Company is a party, or any
written or oral notification to the Company that any party to any such
arrangement intends to cancel or not renew such arrangement beyond its
expiration date as in effect on the date hereof, which cancellation,
modification, termination or grant of waiver, individually or in the aggregate
with others, could reasonably be expected to have a Material Adverse Effect,
(j) any failure to pay or satisfy when due any material obligation of
the Company,
(k) any material change in any Tax practice, the making of any election
with respect to Taxes or the settling or compromising of any Tax Liability of
the Company;
(l) any acquisition or disposition of any business or any material
asset or property from or to any Person (whether by merger, consolidation or
otherwise) by the Company,
(m) any incurrence of any Lien on any material assets and properties of
the Company,
(n) any sale, assignment or transfer of any trademarks, tradenames,
logos, copyrights, formulae or other intangible assets;
(o) any termination or waiver of any rights of material value to the
Business;
(p) any change in accounting methods, practices or principles;
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(q) the entering into any agreement or commitment to do any of the
foregoing; or
(r) any amendments to the Benefit Plans or changes in the manner in
which the Benefit Plans have been operated and administered, or any transactions
involving the Benefit Plans, except as amended in the ordinary course of
business or as contemplated by Section 6.12(b) hereof.
SECTION 4.11 LITIGATION. Except as set forth on Schedule 4.11, there is
no pending or, to the Knowledge of the Company and the Sole Stockholder,
threatened Action against or affecting the Company or any of its respective
properties or assets before any Governmental Entity (a) in which the amount
sought from the Company, individually or in the aggregate with other such
Actions exceeds $25,000, (b) which, individually or in the aggregate with other
such Actions, could reasonably be expected to have a Material Adverse Effect, or
(c) which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the Merger Transactions. Neither the Company, nor any of its
assets or properties is subject to any Order restraining, enjoining or otherwise
prohibiting or making illegal this Agreement or the Merger Transactions. As of
the date hereof, no officer or director of the Company is a defendant in any
Action commenced by any stockholder of the Company with respect to the
performance of his or her duties as an officer or a director of the Company
under any applicable Law.
SECTION 4.12 TAXES.
(a) The Company has duly and timely filed all Tax Returns required to
be filed by it and each such Tax Return is complete and correct in all respects.
All Taxes owed by the Company (whether or not shown on any Tax Return) have been
paid. All monies required to be withheld by the Company from employees,
independent contractors, creditors or other third parties for Taxes have been
collected or withheld, and either duly and timely paid to the appropriate Tax
authority or (if not yet due for payment) set aside in accounts for such
purposes. The provision specifically made for current Taxes (as opposed to any
reserve for deferred Taxes) on the Financial Statements under the heading
"Taxes" for the year ended December 31, 2002 is sufficient for the payment of
all accrued and unpaid Taxes not yet due and payable as of such date and,
adjusted for the passage of time and transactions in the ordinary course of
business consistent with past practice, will be sufficient for the payment of
all accrued and unpaid Taxes not yet due and payable as of the Agreement Date.
Schedule 4.12 sets forth the amount of the net operating loss carryforwards of
the Company available for federal and state income tax purposes, and any
restrictions on the use thereon, as of December 31, 2002.
(b) There are no pending or, to the Knowledge of the Company and the
Sole Stockholder, threatened audits, examinations, investigations or other
proceedings in respect of Taxes relating to the Company. No Tax authority has
asserted or is now asserting, or threatening to assert against the Company any
deficiency or claim for Taxes, and there is no reasonable basis for any such
assertion of which the Company is or reasonably should be aware. There are no
Liens for Taxes upon the assets of the Company. Schedule 4.12 lists all Tax
Returns filed by the Company for all taxable periods ending on or after December
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31, 2000, indicates those Tax Returns, if any, that have been audited and
indicates those Tax Returns that currently are the subject of audit. The Company
has delivered to Merger Sub complete and correct copies of all Tax Returns filed
by, and all Tax examination reports and statements of deficiencies assessed
against or agreed to by, the Company since December 31, 2000. No claim or
inquiry has ever been made by any jurisdiction in which any of the Company does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no proposed reassessments of any property owned by the
Company or other proposals that could increase the amount of any Tax to which
the Company would be subject. The Company is not a party to any agreement
extending, or having the effect of extending, the time within which to file any
Tax Return or the period of assessment or collection of any Taxes.
(c) The Company (i) is not a party to or is bound by any obligations
under any tax sharing, tax indemnity or similar agreement or arrangement, (ii)
has not made and is not subject to any election under Section 341(f) of the
Code, (iii) has not agreed to and is not required to make, and reasonably
expects that it will not have to make, any material adjustment under Section 481
of the Code (or any comparable provision of state, local or foreign law) by
reason of a change in accounting method or otherwise, (iv) has not made or is
not subject to an election under Section 475 of the Code (or any similar
provision of state, local or foreign law), has not entered into any agreement or
arrangement (including this Agreement) that could result separately or in the
aggregate in the payment of any "parachute payments" within the meaning of
Section 280G of the Code, (vi) is not a party to any joint venture, partnership
or other arrangement that is treated as a partnership for federal income Tax
purposes, (vii) has not been a member of any affiliated, consolidated, combined,
unitary or similar group for any Tax purpose, or (viii) has no liability for
Taxes of any Person other than the Company by reason of Section 1.1502-6 of the
Treasury Regulations (or any similar provision of state, local or foreign law),
as a transferee or successor, by Contract or otherwise.
(d) The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c) of the Code.
(e) The Company has not issued or assumed (i) any obligations described
in Section 279(b) of the Code, (ii) any applicable high yield discount
obligations, as defined in Section 1633(i) of the Code, or (iii) any
registration-required obligations, within the meaning of Section 163(f)(2) of
the Code, that are not in registered form.
(f) The Company has disclosed (in accordance with Section
6662(d)(2)(B)(ii) of the Code or applicable predecessor provisions) on its
federal income Tax Returns all positions taken therein that could reasonably be
expected to give rise to a substantial understatement of federal income Tax
within the meaning of Section 6662(d) of the Code (or applicable predecessor
provisions).
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(g) No Tax authority has proposed Tax adjustments with respect to the
Company directly or indirectly in respect of an intercompany transaction or
arrangement, including, without limitation (i) any Tax arising from an
adjustment in respect of such transaction or arrangement under Section 482 of
the Code or any similar provision of state, local or foreign law and (ii) any
Tax arising from a failure to fully comply with applicable documentation, record
keeping and filing requirements in respect of such transaction or arrangement.
(h) The Company has not participated in or cooperated with an
international boycott within the meaning of Section 999 of the Code.
SECTION 4.13 COMPLIANCE WITH LAW. Except as set forth on Schedule 4.13,
to the Knowledge of the Company and the Sole Stockholder, the Company is not in
violation of, has not violated and is not under investigation with respect to
any possible violation of, and has not been threatened to be charged with any
violation of, any applicable Order or Law.
SECTION 4.14 TAKEOVER STATUTES NOT APPLICABLE. No "fair price,"
"moratorium," "control share," "interested stockholder" or other similar
anti-takeover Law is applicable to the execution, delivery and performance of
this Agreement or the consummation of any of the Merger Transactions.
SECTION 4.15 PERMIT. Except as set forth on Schedule 4.15, (a) each
Permit held by the Company is valid and in full force and effect, (b) the
Company is not in default thereunder, and no condition exists that with notice
or lapse of time or both would constitute a default under, any such Permit, (c)
the Company has not received any written notice of violation in respect of any
such Permit and no proceeding is threatened to revoke or limit any such Permit,
and (d) no such Permit will be suspended, terminated, impaired, adversely
modified or become terminable. in whole or in part, as a result of the Merger
Transactions. The Company has all Permits necessary to conduct the Business as
currently conducted and as proposed to be conducted.
SECTION 4.16 CONTRACT.
(a) Schedule 4.16 sets forth a list of all material Contracts to which
the Company is a party or by or to which it assets are bound or subject,
including without limitation:
(i) Contracts relating to or evidencing any Indebtedness of
the Company;
(ii) Contracts with current or former officer or director of
the Company;
(iii) all contracts relating to company branding of websites
and syndication of Content to drive traffic to Company Websites;
(iv) joint venture agreements involving the Company;
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(v) any Contract providing for payments to or from the Company
of $15,000 or more per year, other than purchase orders entered into in the
ordinary course of business consistent with past practice;
(vi) any license agreement, distribution agreement, franchise
agreement or agreement in respect of similar rights granted to or held by the
Company;
(vii) any Contract that limits the freedom of the Company to
compete in any line of business or with any Person or in any geographical area
or which could so limit the freedom of the Company so to compete after the
Agreement Date;
(viii) any Tax sharing agreement or other arrangement;
(ix) any Contract which permits the other party(ies) thereto
to terminate such Contract upon a change of control of the Company or which
requires the Company to give the other party(ies) notice of a change of control
of the Company;
(x) any stockholders', investors' or similar agreement, with
past practice;
(xi) any Contract relating to the disposition or acquisition
of any assets or properties, other than dispositions or acquisitions in the
ordinary course of business consistent with past practice; and
(xii) any other Contract not made in the ordinary course of
business consistent with past practice.
The Company has heretofore made available to Merger Sub true and
complete copies of each of the Contracts set forth on Schedule 4.16, including
all amendments, waivers and modifications thereto.
(b) All Contracts disclosed on Schedule 4.16 are valid and binding
Contracts of the Company, are in full force and effect in accordance with their
respective terms (except for those that have terminated or will terminate by
their own terms), and except as set forth on Schedule 4.16(b), neither the
Company, nor, to the Knowledge of the Company and the Sole Stockholder, any
other party thereto, is (or with notice or lapse of time, or both, would be) in
violation or breach of, or in default under, the terms of any such Contract in
any material respect. The Company, to the Knowledge of the Company and the Sole
Stockholder, is not in breach of any confidentiality or non-disclosure
obligations under any Contract and will not be in breach of any confidentiality
or non-disclosure agreement pursuant to any Contract as a result of entering
into this Agreement or consummating the transactions contemplated by this
Agreement.
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SECTION 4.17 INTELLECTUAL PROPERTY.
(a) RIGHT TO DOMAIN NAME AND CONTENT.
(i) Schedule 4.17(a)(i) sets forth a complete list of all
domain names registered by the Company with any administrative bodies (the
"Company Domain Names"). The Company, has duly registered with Network Solutions
or other ICANN accredited registrar all of the Company Domain Names, and is the
sole and exclusive owner of and possesses all rights necessary to use such
Company Domain Names. All such Company Domain Name registrations are set forth
on Schedule 4.17(a)(i) attached hereto and are current, active and fully paid.
Listed on Schedule 4.17(a)(i) is the expiration date of each such Company Domain
Name registration. Except as disclosed in Schedule 4.17(a)(i), the Company has
the sole and exclusive right to operate Company Websites and to reproduce, use,
perform, operate, market, develop, sell, license, display, distribute, publish,
transmit and create derivative works of all information, Content, Software and
other materials available at Company Websites.
25
(ii) To the Knowledge of the Company and the Sole Stockholder,
the websites associated with the domain names listed in Schedule 4.17(a)(i) and
the information, Content or other materials available at such websites does not
infringe upon, violate or constitute a misappropriation of any Intellectual
Property or other right of any other Person or of any applicable Law. No other
person has any interest in, or right or claim to, such websites or any part
thereof.
(b) RIGHT AND TITLE TO COMPANY SOFTWARE, PERFORMANCE.
(i) The software of the Company consists of the Software
listed on Schedule 4.17(b) (the "Company Software"), which constitutes all
Software used by the Company or Company Websites, other than Third Party Rights.
Without limiting any other provisions of this Agreement, the Company has sole
and exclusive right to develop, perform, use, create derivative works of,
operate, reproduce, market, sell, license, display, distribute, publish and
transmit Company Software and Company Websites and, to the Knowledge of the
Company and the Sole Stockholder, the operation of Company Software and Company
Websites does not infringe upon, violate or constitute a misappropriation of any
copyrights, patents, trademarks, trade secrets or any other intellectual
property or other right of any other Person or of any applicable Law. The
Company has all right, title and interest to Company Software and Company
Websites and no other Person has any interest in, or right or claim to, Company
Software or Company Websites or any part thereof. Upon the Closing, the
Surviving Corporation and each of its Subsidiaries will have sole and exclusive
right, title and interest in Company Software and Company Websites, such that
the Parent shall thereafter have sole and exclusive rights to perform,
reproduce, create derivative works of, develop, use, operate, market, sell,
license, display, publish, transmit and distribute Company Software and Company
Websites, free of all encumbrances or claims of infringement of the rights of
any Person. To the Knowledge of the Company and the Sole Stockholder, Company
Software is capable of operating Company Websites, servers and related equipment
at the levels of operational performance and capability currently realized by
the Company.
(ii) With regard to the Third Party Rights, the Company has
all necessary rights and licenses to use such Software and rights as they are
currently used by the Company, and except as otherwise disclosed herein and
other than generally commercially available software that costs less than $5,000
in the aggregate, have all necessary rights to transfer such rights and licenses
to Surviving Corporation hereunder for use on Company Websites and on Surviving
Corporation's websites, subject to any restrictions explicitly noted herein
which limit the use of any of Company Software to specified machines at
specified locations.
(c) WEBSITE CONTENT. Schedule 4.17 sets forth a comprehensive list of
third party Content included on Company Websites, and the sources of such
Content including the party providing the Content and any license or other
agreement relating to the use by the Company of such Content. Upon the Closing,
the Surviving Corporation and its Subsidiaries will have all rights that the
Company now holds to use such Content. Furthermore, the Company currently has
all necessary rights and licenses to continue the business of the Company as it
has been conducted since formation on substantially the same terms. Upon the
Closing, the Surviving Corporation and its Subsidiaries will own all such rights
so that Surviving Corporation can continue the business of the Company as now
conducted.
(d) INTELLECTUAL PROPERTY RIGHTS. Schedule 4.17(d) identifies each
material item of Intellectual Property that any third party owns and that the
Company uses pursuant to license, sublicense, agreement, or permission. The
Company has delivered to Merger Sub correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to date). With
respect to each item of Intellectual Property required to be identified in
Schedule 4.17(d):
(i) The license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and effect in
all material respects;
(ii) No party to the license, sublicense, agreement, or
permission is in material breach or default, and no event has occurred which
with notice or lapse of time would constitute a material breach or default or
permit termination, modification, or acceleration thereunder;
(iii) No party to the license, sublicense, agreement, or
permission has repudiated any material provision thereof; and
(iv) The Company has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or permission.
SECTION 4.18 BOARD RECOMMENDATION. The Board, at a meeting duly called
and held, unanimously (a) determined that this Agreement and the Merger
Transactions are fair to, and in the best interests of, the Company
Stockholders, (b) approved this Agreement and the Merger Transactions, and (c)
resolved to recommend approval and adoption of this Agreement and the Merger
Transactions by the Company Stockholders.
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SECTION 4.19 REQUIRED COMPANY VOTE. The affirmative vote of a majority
of the outstanding Shares is the only vote of the holders of any class or series
of the Company's securities necessary to approve this Agreement and the Merger
Transactions.
SECTION 4.20 ERISA. All Benefit Plans are listed on Schedule 4.20, and
copies of all documentation relating to such Benefit Plans have been delivered
to Merger Sub (including copies of written Benefit Plans, written descriptions
of oral Benefit Plans, summary plan descriptions. trust agreements (or other
funding arrangements), the three most recent annual returns. employee
communications, the most recently prepared financial statements, all contracts
and agreements relating to such Benefit Plans (including, without limitation,
service provider agreements. investment management agreements, and record
keeping agreements), and IRS determination letters). Except as disclosed on
Schedule 4.20:
(a) each Benefit Plan has at all times been maintained and administered
in all respects in accordance with its terms and with the requirements of all
applicable law, including, without limitation. ERISA and the Code, and each
Benefit Plan intended to qualify under Section 401(a) of the Code has at all
times so qualified and has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code (and nothing has occurred since the
date of such determination which would adversely affect the ability of the
Company to rely upon such determination);
(b) no Benefit Plan (1) is a "defined benefit plan" within the meaning
of Section 3(35) of ERISA, (ii) is described in Section 401(a)(1) of ERISA or
(iii) provides post-retirement health or death benefit coverage (other than as
required under Part 6 of Subtitle B of Title I of ERISA),
(c) no direct, contingent or secondary Liability has been incurred or
is expected to be incurred by the Company under Title IV of ERISA or under
Chapter 43 of the Code or Section 502(i) or 502(l) of ERISA with respect to any
Benefit Plan.
(d) no benefit under any Benefit Plan, including, without limitation,
any severance or parachute payment plan or agreement, will be established or
become accelerated, vested or payable by reason of any of the Merger
Transactions or by reason of the Merger Transactions coupled with subsequent
events (e.g. termination of employment);
(e) no Tax has been incurred under Section 511 of the Code with respect
to any Benefit Plan (or trust or other funding vehicle pursuant thereto); and
(f) no Action (excluding claims for benefits incurred in the ordinary
course of Plan activities) has been brought or, to the Knowledge of the Company
and the Sole Stockholder, threatened against or with respect to any Benefit Plan
and there are no facts or circumstances known to the Company that could
reasonably be expected to give rise to any such Action.
27
SECTION 4.21 LABOR AND EMPLOYMENT MATTERS.
(a) Except as set forth on Schedule 4.21: (i) no employee of the
Company is represented by a labor union, no labor union has been certified or
recognized as a representative of any such employee, the Company does not have
any obligation under any collective bargaining agreement or other Contract with
any labor union or any obligation to recognize or deal with any labor union, and
there is no such Contract pertaining to or which determines the terms or
conditions of employment of any employee of the Company, (ii) there are, to the
Knowledge of the Company and the Sole Stockholder, no pending or threatened
representation campaigns, elections or proceedings, (iii) to the Knowledge of
the Company and the Sole Stockholder, there is not any strike, slowdown or work
stoppage of any kind affecting the Company , or threat thereof, and no such
activity has occurred since December 31, 2002, and (iv) the Company, to the
Knowledge of the Company and the Sole Stockholder, has not engaged in, admitted
committing or been held to have committed any unfair labor practice.
(b) Schedule 4.21 sets forth all Contracts under which the Company has
any obligation to provide compensation or remuneration of any kind (other than
obligations to make current wage or salary payments that are terminable at
without notice) to or on behalf of any employee or consultant.
(c) Except as set forth on Schedule 4.21, the Company has at all times
complied in all material respects with, and is in material compliance with, to
the Knowledge of the Company and the Sole Stockholder, all applicable Laws
respecting employment, wages, hours, compensation, benefits and payment and
withholding of Taxes in connection with employment.
(d) Except as could not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, to the Knowledge of the Company and
the Sole Stockholder, the Company has at all times complied with all applicable
Laws respecting occupational health and safety, whether now existing or
subsequently amended or enacted, including the Occupational Safety & Health Act
of 1970, 29 U.S.C. Section 651 et seq. and the state analogies thereto, all as
amended or superseded from time to time.
SECTION 4.22 REAL ESTATE.
(a) Schedule 4.22 sets forth and briefly describes all real property
leased by the Company. The Company does not own any real property.
(b) The Company has provided Merger Sub with a true and complete copy
of each Lease with respect to the real property set forth in Schedule 4.22,
including any amendments thereto and renewal letters in respect thereof. The
Company has with respect to each such parcel of leased real property a valid and
subsisting leasehold estate in and the right to quiet enjoyment of such real
28
property for the full term of the lease thereof. Each such Lease is a legal,
valid and binding agreement, enforceable in accordance with its terms, of the
Company and of each other Person that is a party thereto. The Company is in
compliance with all of the terms of each Lease to which it is a party, and there
is no, and the Company has not received notice of any, default (or any condition
or event which, after notice or lapse of time or both, would constitute a
default) thereunder. The Company does not owe any brokerage commissions or
finders fees with respect to any such leased space.
(c) Except as set forth on Schedule 4.22, the Company has not assigned,
pledged, otherwise transferred or sublet (as sublessor) the premises demised by
any Lease with respect to the real property set forth in Schedule 4.22). The
Company is in possession of the premises demised by such Leases. Except as set
forth on Schedule 4.22, no tenant or landlord under any such Lease has exercised
any option or right to (i) cancel or terminate such Lease or shorten the term
thereof, (ii) lease additional premises or (iii) reduce or relocate the premises
demised by such Lease. All brokerage commissions payable by the Company thereof
with respect to any Lease have been fully paid.
SECTION 4.23 ENVIRONMENTAL MATTERS.
(a) The Company holds all Permits required under applicable
Environmental Laws and is in compliance with all terms, conditions and
provisions of all such Permits and all applicable Environmental Laws.
(b) No Releases of Hazardous Materials have occurred at, from, in, to,
on or under any property currently or formerly owned, operated or leased by the
Company and no Hazardous Materials are present in, on, about or migrating to or
from any such property which could result in any Liability to the Company.
(c) Neither the Company nor any predecessor of the Company has
transported or arranged for the treatment, storage, handling, disposal, or
transportation of any Hazardous Material to any off-Site location that could
result in any Liability to the Company.
SECTION 4.24 BOOKS AND RECORDS. The books of account, minute books,
stock record books and other similar records of the Company have been made
available to Merger Sub prior to the execution of this Agreement, are complete
and correct in all material respects.
SECTION 4.25 TANGIBLE PERSONAL PROPERTY.
(a) Except as set forth on Schedule 4.25, the Company has good and
marketable title to, or holds valid leasehold interests in, all of its material
personal properties and assets. All such material personal properties and assets
are free and clear of all Liens, other than Liens (i) set forth on Schedule 4.25
and (ii) that, individually or in the aggregate do not materially interfere with
the ability of the Company to conduct the Business and do not adversely affect
the value or use in the Business of, or the ability to sell in any material
respect, such personal properties and assets.
29
(b) The material personal properties and assets of the Company taken as
a whole are in good repair and operating condition, ordinary wear and tear
excepted, and are sufficient for the conduct of the Business.
SECTION 4.26 INSURANCE. Schedule 4.26 contains a true and complete list
of all insurance policies currently in effect that insure the Business or the
employees or directors of the Company or relate to the ownership, use or
operation of any of the assets and properties of the Company. Such insurance
policies are maintained with responsible and reputable insurance companies or
associations and provide insurance to the Company in such amounts, on such
terms, with such deductibles and covering such risks, as is customarily carried
by reasonably prudent Persons conducting businesses or owning assets similar to
those of the Company. The insurance coverage provided by the policies described
on Schedule 4.26 will not terminate or lapse by reason of the Merger
Transactions. Each policy listed on Schedule 4.26 is in full force and effect,
all premiums due thereunder have been paid when due and the Company has not
received any notice of cancellation or termination in respect of any such policy
and is not in default under any such policy. The insurance policies listed on
Schedule 4.26 are in amounts and have coverages as required by any Contract set
forth on Schedule 4.16. The Company has not received any notice that any insurer
under any insurance policy listed on Schedule 4.26 is denying liability with
respect to a claim thereunder or defending under a reservation of rights clause.
The Company has not assigned, pledged or transferred any of its rights under any
such insurance policy. Except as otherwise set forth on Schedule 4.26: (a) there
are no outstanding claims in excess of normal retentions that are not covered
under any such policies and, to the Knowledge of the Company and the Sole
Stockholder, there has not occurred any event that might reasonably form the
basis of any claim in excess of normal retentions against or relating to the
Company of and that is not covered by any of such policies, and (b) except as
set forth on Schedule 4.26, there are no performance bonds outstanding with
respect to the Company
SECTION 4.27 DISCLOSURE. All material facts regarding the Business of
the Company have been disclosed to Merger Sub in or in connection with this
Agreement. No representation or warranty on the part of the Company contained in
this Agreement, and no statement contained in any of the Schedules or in any
certificate, list or other writing furnished to Merger Sub pursuant to any
provisions of this Agreement, including pursuant to Article VII hereof, contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All material facts
about the Businesses of the Company have been disclosed to Parent and Merger Sub
in or in connection with this Agreement. All of the written information, except
for projections, forecasts or non-legal opinions disclosed or provided to Parent
and Merger Sub or their attorneys, accountants, consultants, advisers or
representatives in connection with its due diligence investigation of the
Company was true and accurate when prepared, in all material respects. To the
extent any projections concerning the Businesses of the Company were included in
the information provided by the Company to the Parent and Merger Sub or their
attorneys, accountants, consultants, advisers or representatives, such
projections were prepared in good faith on the basis of assumptions that
optimized the Business. Notwithstanding the foregoing, the parties hereto
recognize and agree that the projections are subject to uncertainties and
contingencies, and therefore, there can be no assurance that the projections
will be realized in any period, and actual results may differ from the
projections.
30
SECTION 4.28 SEVERANCE PAYMENT. Neither the execution nor delivery of
this Agreement nor consummation of the Merger Transactions, either alone or in
combination with any other events, will entitle any employee of the Company to
receive any separation, severance or similar compensation or benefits or any
other payments.
SECTION 4.29 NO OTHER OBLIGATIONS. Except as otherwise provided in this
Agreement, neither the Company nor the Sole Stockholder has any legal or
contractual obligation, absolute or contingent, to sell or otherwise dispose of
all or any part of the assets of the Company (other than in the ordinary course
of business), or any equity interest in the Company, or to effect any merger,
consolidation or reorganization of the Company or to enter into any agreement
with respect thereto.
SECTION 4.30 DISCLOSURE OF ALL MATERIAL MATTERS. No statement of fact
set forth in this Agreement (including without limitation all information in the
Financial Statements and other Schedules, Exhibits and Attachments hereto, taken
as a whole) or otherwise provided by the Sole Stockholder or the Company to
Parent or Merger Sub is false or misleading in any material respect.
ARTICLE V.A
REPRESENTATIONS AND WARRANTIES OF MERGER SUB
As an inducement to the Company to enter into this Agreement, Merger
Sub represents and warrants to the Company that the statements contained in
this Article V.A are true and correct as of the date hereof and will be true
and correct as of the Agreement Date (as though made then and as thought the
Agreement Date were substituted for the date hereof throughout such Sections).
SECTION 5.1 ORGANIZATION. Merger Sub is a corporation duly organized,
validly existing, and in good standing under the Laws of the State of Maryland.
Merger Sub is duly authorized to conduct business and is in good standing under
the laws of each jurisdiction where such qualification is required, except where
the failure to be so qualified will not have a Material Adverse Effect. Merger
Sub has full corporate power and authority to carry on the businesses in which
it is engaged and to own and use the properties owned and used by it. Merger Sub
was formed solely for the purpose of engaging in the Merger Transactions, has
engaged in no other business activities and has conducted its operations only as
contemplated hereby. Merger Sub has not engaged nor, prior to the Agreement
Date, will it engage in any business activities other than the business
activities contemplated hereby. Merger Sub has conducted and, prior to the
Agreement Date, will conduct its operations only as contemplated hereby. Merger
Sub has no Subsidiaries and, during the period commencing with the date hereof
and ending at the Agreement Date, Merger Sub will have no Subsidiaries.
31
SECTION 5.2 AUTHORIZATION OF THE MERGER TRANSACTIONS. Merger Sub has
full power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. The execution, delivery and performance by Merger Sub
of this Agreement and the consummation of the Merger Transactions have been duly
authorized by all requisite corporate action. This Agreement has been duly
executed and delivered by Merger Sub and, assuming the due authorization,
execution and delivery thereof by the other parties hereto, constitutes the
valid and legally binding obligation of Merger Sub enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar Laws relating to
creditor's rights generally and by general principles of equity.
SECTION 5.3 NONCONTRAVENTION.
(a) Neither the execution, delivery or performance of this Agreement,
nor the consummation of the Merger Transactions will, with or without the giving
of notice or the lapse of time or both, (i) violate any provision of the
certificate of incorporation or bylaws of Merger Sub or (ii) violate any Law or
Order or other restriction of any Governmental Entity or court to which Merger
Sub may be subject.
(b) The execution and delivery of this Agreement by Merger Sub does
not, and the performance of this Agreement by Merger Sub and the consummation of
the Merger Transactions will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Entity, except
for the filing and recordation of appropriate merger or other documents as
required by the MGCL, and by relevant authorities of any other states in which
Merger Sub is qualified to do business.
SECTION 5.4 BROKERS' FEES. No agent, broker, finder, investment banker,
financial advisor or other similar Person will be entitled to any fee,
commission or other compensation in connection with any of the transactions
contemplated by this Agreement on the basis of any act or statement made by
Merger Sub.
ARTICLE V.B
REPRESENTATIONS AND WARRANTIES OF THE PARENT
As an inducement to the Company to enter into this Agreement, the
Parent represents and warrants to the Company that the statements contained in
this Article V.B are true and correct as of the date hereof and will be true and
correct as of the Agreement Date (as though made then and as though the
Agreement Date were substituted for the date hereof throughout such Sections).
32
SECTION 5.5 ORGANIZATION. The Parent is a corporation duly organized,
validly existing, and in good standing under the Laws of the State of Florida.
The Parent is duly authorized to conduct business and is in good standing under
the laws of each jurisdiction where such qualification is required, except where
the failure to be so qualified will not have a Material Adverse Effect. The
Parent has full corporate power and authority to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it.
SECTION 5.6 AUTHORIZATION OF THE MERGER TRANSACTIONS. The Parent has
full power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. The execution, delivery and performance by the Parent
of this Agreement and the consummation of the Merger Transactions have been duly
authorized by all requisite corporate action. This Agreement has been duly
executed and delivered by the Parent and, assuming the due authorization,
execution and delivery thereof by the other parties hereto, constitutes the
valid and legally binding obligation of the Parent enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar Laws relating to
creditor's rights generally and by general principles of equity.
SECTION 5.7 NONCONTRAVENTION/LITIGATION.
(a) Neither the execution, delivery or performance of this Agreement,
nor the consummation of the Merger Transactions will, with or without the giving
of notice or the lapse of time or both, (1) violate any provision of the
certificate of incorporation or bylaws of the Parent or (11) violate any Law or
Order or other restriction of any Governmental Entity or court to which the
Parent may be subject.
(b) The execution and delivery of this Agreement by the Parent does
not, and the performance of this Agreement by the Parent and the consummation of
the Merger Transactions will not require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Entity, except
for the filing and recordation of appropriate merger or other documents as
required by the MGCL and by relevant authorities of any other states in which
the Parent is qualified to do business.
(c) There is no pending or, to the Knowledge of the Parent, threatened
Action against or affecting the Parent before any Governmental Entity that,
individually or in the aggregate with other such Actions, could reasonably be
expected to have a Material Adverse Effect, or that in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the Merger Transactions. The
Parent is not subject to any Order restraining, enjoining or otherwise
prohibiting or making illegal this Agreement or the Merger Transactions.
SECTION 5.8 FINANCIAL CAPACITY/FULL DISCLOSURE.
(a) Parent reasonably believes that it has the requisite financial
resources and capacity to undertake and fulfill its obligations under this
Agreement and the agreements ancillary hereto, including without limitation, the
Consulting Agreement and the Guarnaty.
33
(b) All material facts regarding the Parent and its financial condition
reasonably necessary for the Sole Stockholder to have material knowledge to
determine whether to enter into the Agreement have been disclosed to the Sole
Stockholder or the Company. None of such disclosures or representations on the
part of the Parent contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the disclosures or
representations, in light of the circumstances under which they were made, not
misleading.
SECTION 5.9 BROKERS' FEES. No agent, broker, finder, investment banker,
financial advisor or other similar Person will be entitled to any fee,
commission or other compensation in connection with any of the transactions
contemplated by this Agreement on the basis of any act or statement made by the
Parent.
ARTICLE VI
COVENANTS
The parties hereto hereby covenant and agree that, with respect to any
covenant or agreement which by its terms is to be performed in whole or in part
after the Closing, for the period specified herein, each party hereto shall
comply with all the covenants and provisions of Article VI that are applicable
to such party.
SECTION 6.1 TRANSFER RESTRICTIONS.
(a) In the event of an underwritten public offering of Parent Common
Stock in which Stockholders are permitted to sell shares of Parent Common Stock,
if any of the Stockholders (i) is an executive officer or director of Parent and
(ii) is required by Parent and an underwriter of Parent Common Stock or other
securities of Parent to be sold by Parent as being necessary in the
underwriter's opinion to effect an orderly distribution of the securities being
registered, such affected Stockholder (and any permitted transferee) will not
sell, or otherwise transfer, or dispose of, any shares held by him or her for
seven days prior and for a period of up to 180 days following the effective date
of a registration statement filed by Parent under the Securities Act covering
the offer and sale of Parent Common Stock or such other securities by Parent.
(b) Parent may impose stop transfer instructions with respect to shares
of Parent Common Stock subject to the foregoing restriction until the end of the
lock-up period.
SECTION 6.2 PIGGY-BACK REGISTRATION RIGHTS.
(a) If (but without any obligation to do so) the Parent proposes to
register (including for this purpose a registration effected by the Parent for
shareholders other than the Sole Stockholder) any of its stock or other
securities under the Securities Act in connection with the public offering of
such securities on any form (other than a registration statement on Form S-4 or
S-8 or any successor form for securities to be offered in a transaction of the
type referred to in Rule 145 under the Securities Act or to employees of the
Parent pursuant to any employee benefit plan, respectively) (a "Piggy-Back
Registration"), it will promptly (and in any case at least 20 days before the
34
initial filing with the SEC of such piggy-back registration statement (the
"Piggy-Back Registration Statement")) give written notice to the Sole
Stockholder, which notice shall set forth the intended method of disposition of
the securities proposed to be registered by the Parent. The notice shall offer
to include in such filing the aggregate number of shares of registrable
securities as the Sole Stockholder may request. If the Sole Stockholder desires
to have its registrable securities registered under this Section 6.2, the Sole
Stockholder shall advise the Parent in writing within 20 days after the date of
receipt of such offer from the Parent, setting forth the amount of such
registrable securities for which registration is requested. The Parent shall
thereupon include in such filing the number or amount of registrable securities
for which registration is so requested, subject to provisions of Section 6.2(c)
below, and shall use its reasonable best efforts to effect registration of such
registrable securities under the Securities Act.
(b) The Parent shall have the right to terminate or withdraw any
Piggy-Back Registration initiated by it under this Section 6.2 prior to the
effectiveness of such Piggy-Back Registration whether or not the Sole
Stockholder has elected to include securities in such Piggy-Back Registration.
The expenses of such withdrawn registration shall be borne by the Parent.
(c) If the Piggy-Back Registration relates to an underwritten public
offering and the managing underwriter of such proposed public offering advises
in writing that, in its opinion, the number of securities requested to be
included (including Sole Stockholder's registrable securities) in such offering
is greater than the total number of securities which can be sold therein without
having a material adverse effect on the marketability of such securities or
otherwise having a material adverse effect on the pricing thereof, then, in the
event that the Parent initiated the Piggy-Back Registration, the Parent shall
include in such Piggy-Back Registration first, the securities the Parent
proposes to register and second, the securities of all other selling security
holders, including the Sole Stockholder, to be included in such Piggy-Back
Registration in an amount which together with the securities the Parent proposes
to register, shall not exceed the Maximum Number of Securities, such amount to
be allocated among such selling security holders on a pro rata basis (based on
the number of securities of the Parent held by each such selling security
holder).
SECTION 6.3 NOTICES AND CONSENTS. The Company will give any notices to
any Person (other than any Governmental Entity) in connection with the Merger
Transactions that Merger Sub reasonably may request.
SECTION 6.4 NOTICE OF DEVELOPMENTS. Each party hereto will give prompt
written notice to the other party hereto of any event that could reasonably be
expected to cause a breach of any of its own representations, warranties,
covenants or other agreements contained herein. No disclosure by any party
pursuant to this Section 6.3 shall be deemed to amend or supplement any
Schedule, or to prevent or cure any misrepresentation, breach of warranty or
breach of covenant or other agreement.
35
ARTICLE VII
[Intentionally Deleted]
ARTICLE VIII
[Intentionally Deleted]
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 INDEMNIFICATION OBLIGATIONS. The Company, on the one hand,
or Merger Sub, the Surviving Corporation and Parent jointly or severally, on the
other hand, shall indemnify (subject to the limitations set forth in Section
9.3) Merger Sub, the Surviving Corporation and the Parent and their respective
Representatives and Affiliates (the "Parent Indemnified Parties") or the Company
and its respective Representatives and Affiliates (the "Company Indemnified
Parties), as the case may be, in respect of, and hold each harmless from and
against, any and all Losses suffered, incurred or sustained by any of them or to
which any of them becomes subject, resulting from, arising out of or relating to
(i) any misrepresentation or breach of representation or warranty on the part of
any party contained in this Agreement, (ii) any nonfulfillment of or failure to
perform any covenant or agreement on the part of any party contained in this
Agreement and (iii) solely with respect to the Company, any Taxes imposed upon
or relating to the Company or the Business with respect to any Tax period or
portion thereof that ends on or before the Agreement Date.
SECTION 9.2 METHOD OF ASSERTING CLAIMS. Claims for indemnification by
an Indemnified Party under Section 9.1 will be asserted and resolved as follows:
(a) THIRD PARTY CLAIMS. In the event that any claim or demand in
respect of which an Indemnified Party might seek indemnification under Section
9.1 is asserted against or sought to be collected from such Indemnified Party by
a Person other than another Indemnified Party acting pursuant to this Article IX
(a "Third Party Claim"), the Indemnified Party shall deliver a Claim Notice with
reasonable promptness to the Indemnifying Party. If the Indemnified Party fails
to provide the Claim Notice with reasonable promptness after the Indemnified
Party receives notice of such Third Party Claim, the Indemnifying Party will not
be obligated to indemnify the Indemnified Party with respect to such Third Party
Claim to the extent that the Indemnifying Party's ability to defend is actually
prejudiced by such failure of the Indemnified Party. The Indemnifying Party will
notify the Indemnified Party as soon as practicable within the Dispute Period
whether the Indemnifying Party accepts or disputes its liability to the
Indemnified Party under Section 9.1 and whether the Indemnifying Party desires,
at its sole cost and expense, to defend the Indemnified Party against such Third
Party Claim.
(i) DEFENSE BY INDEMNIFYING PARTY. If the Indemnifying Party
notifies the Indemnified Party within the Dispute Period that the Indemnifying
Party desires to defend the Indemnified Party with respect to the Third Party
Claim pursuant to this Section 9.2, then the Indemnifying Party will have the
right to defend, with counsel reasonably satisfactory to the Indemnified Party,
at the sole cost and expense of the Indemnifying Party, such Third Party Claim
by all appropriate proceedings, which proceedings will be vigorously and
36
diligently prosecuted or defended by the Indemnifying Party to a final
conclusion or will be settled at the discretion of the Indemnifying Party (but
only with the consent of the Indemnified Party in its sole discretion in the
case of any settlement that provides for any relief other than the payment of
monetary damages or that provides for the payment of monetary damages as to
which the Indemnified Party will not be indemnified in full pursuant to Section
9.1). Subject to the immediately preceding sentence, the Indemnifying Party will
have full control of such defense and proceedings, including any compromise or
settlement thereof, provided, however, that the Indemnified Party may, at the
cost and expense of the Indemnifying Party, at any time prior to the
Indemnifying Party's delivery of the notice referred to in the first sentence of
this Section 9.2(a)(i), file any motion, answer or other pleadings or take any
other action that the Indemnified Party reasonably believes to be necessary or
appropriate to protect its interests. If requested by the Indemnifying Party,
the Indemnified Party will, at the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the Indemnifying Party in contesting
any Third Party Claim that the Indemnifying Party elects to contest.
Notwithstanding anything else contained in this Section 9.2(a)(i), the Surviving
Corporation shall defend and control, pursuant to Section 9.2(a)(ii), any Third
Party Claim that relates to Taxes for which it may be the Indemnified Party.
(ii) DEFENSE BY INDEMNIFIED PARTY. If (x) the Indemnifying
Party fails to notify the Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Third Party Claim, or if the
Indemnifying Party gives such notice but any time thereafter fails to prosecute
or defend vigorously and diligently or settle the Third Party Claim or if the
Indemnifying Party fails to give any notice whatsoever within the Dispute
Period, or (y) such Third Party Claim relates to Taxes and the Surviving
Corporation may be the Indemnified Party, then, in any such case, the
Indemnified Party will have the right to defend, at the sole cost and expense of
the Indemnifying Party (including internal costs and expenses of the Surviving
Corporation, as Indemnified Party), the Third Party Claim by all appropriate
proceedings, which proceedings will be prosecuted by the Indemnified Party in
good faith or will be settled at the discretion of the Indemnified Party. The
Indemnified Party will have full control of such defense and proceedings,
including any compromise or settlement thereof, provided, however, that if
requested by the Indemnified Party, the Indemnifying Party will, at the sole
cost and expense of the Indemnifying Party, provide reasonable cooperation to
the Indemnified Party and its counsel in contesting any Third Party Claim which
the Indemnified Party is contesting. Notwithstanding the foregoing provisions of
this Section 9.2, if the Indemnifying Party has notified the Indemnified Party
within the Dispute Period that the Indemnifying Party disputes its liability
hereunder to the Indemnified Party with respect to such Third Party Claim and if
such dispute is resolved in all respects in favor of the Indemnifying Party in
the manner provided in clause (iii) below, the Indemnifying Party will not be
required to bear the costs and expenses of the Indemnified Party's defense
pursuant to this Section 9.2 or of the Indemnifying Party's participation
therein at the Indemnified Party's request. The Indemnifying Party may
participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this Section 9.2, and the Indemnifying Party will
bear its own costs and expenses with respect to such participation.
37
(iii) ACCEPTANCE BY INDEMNIFYING PARTY. If the Indemnifying
Party notifies the Indemnified Party that it accepts its indemnification
liability to the Indemnified Party with respect to the Third Party Claim under
Section 9.1 or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes its liability to the Indemnified Party
with respect to such Third Party Claim, the Loss identified in the Claim Notice,
as finally determined, will be conclusively deemed a liability of the
Indemnifying Party under Section 9.1 and the Indemnifying Party shall pay the
amount of such Loss to the Indemnified Party on demand. If the Indemnifying
Party timely disputes its liability with respect to such Third Party Claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
with the Resolution Period, such dispute shall be resolved by litigation in a
court of competent jurisdiction.
(b) NON-THIRD PARTY CLAIM. In the event any Indemnified Party should
have a claim under Section 9.1 against any Indemnifying Party that does not
Involve a Third Party Claim, the Indemnified Party shall deliver an Indemnity
Notice with reasonable promptness to the Indemnifying Party. The failure or
delay by any Indemnified Party to give the Indemnity Notice shall not impair
such party's rights hereunder except to the extent that the Indemnifying Party
is actually prejudiced by such failure or delay. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the claim described in
such Indemnity Notice or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes the claim described in
such Indemnity Notice, the Loss indemnified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnified Party under Section 9.1 and
the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed its liability
with respect to such claim, the Indemnifying Party and the Indemnified Party
will proceed in good faith to negotiate a resolution of such dispute and. if not
resolved through negotiations within the Resolution Period, such dispute shall
be resolved by litigation in a court of competent jurisdiction.
SECTION 9.3 FURTHER ITEMS RELATING TO INDEMNIFICATION. Notwithstanding
the foregoing, the right of any Indemnified Party to indemnification under this
Article IX shall be subject to the following terms:
(a) The aggregate liability of Merger Sub and the Parent for all claims
for indemnification under this Article IX shall not exceed $6,500,000.00.
(b) The aggregate liability of the Company or the Company Stockholders
for all claims for indemnification under this Article IX shall not exceed
$1,500,000 in cash (to the extent of actual cash payments made as Merger
Consideration) and the value of the Shares of Parent Common Stock received as
Merger Consideration (payable solely through the transfer of such Shares).
38
(c) Notwithstanding any other provision of this Article to the
contrary, no party hereto shall be required to indemnify, defend or hold
harmless any Person unless, until and only to the extent that such Person's
Losses exceed $50,000.00, except for Losses relating to Taxes.
(d) Any indemnity payment made under this Agreement following the
Effective Date shall be treated by the parties hereto as a purchase price
adjustment, and the parties agree to report such payments consistent therewith.
SECTION 9.4 RIGHT TO OFFSET. The Parent, the Surviving Corporation and
Merger Sub shall have the right to offset any damages suffered by any Parent
Indemnified Person as a result of any of the matters described in clauses (i),
(ii) and (iii) of Section 9.1(a) against (i) any amount outstanding under the
Note, or (ii) any payment under the Note due or to become due to the Sole
Stockholder, to the full extent that the Parent, the Surviving Corporation and
Merger Sub would be entitled to indemnification pursuant to this Article IX.
SECTION 9.5 INDEMNIFICATION ADJUSTMENTS. If as a direct result of the
facts giving rise to the right of indemnification under this Article IX there is
a Tax benefit (applied on a last-used basis after consideration of all other
deductions, credits, carryovers or carrybacks) and as a direct result of such
Tax benefit there is an actual decrease of $ 10,000 or more in the overall Taxes
paid by an Indemnified Party or an actual increase of $10,000 or more in the
overall Tax refund received by an Indemnified Party (or any combination of
actual decreases in Taxes paid or Increases in Tax refunds received that is, in
the aggregate, $10,000 or more) for any period, the Indemnified Party shall
promptly pay to the Indemnifying Party (taking into account other payments made
by the Indemnified Party to the Indemnifying Party with respect to such Tax
benefit for prior periods) the lesser of (i) the amount that will leave the
Indemnified Party in the same after-Tax position (taking into account, with
respect to Taxes, only actual Taxes paid and actual Tax refunds received) as if
such Tax benefit had not been realized and (ii) the amount of the
indemnification payment received by the Indemnified Party as a result of such
facts. If such Tax benefit is subsequently disallowed in whole or part by any
relevant taxing authority, the Indemnifying Party shall promptly pay to the
Indemnified Party, following notice of such disallowance, an amount equal to the
lesser of (i) the amount that will leave the Indemnified Party in the same
after-Tax position (taking into account, with respect to Taxes, only actual
Taxes paid and actual Tax refunds received, after giving effect to such
disallowance) as if such Tax benefit, to the extent still realized, had not been
realized, and (ii) the amount of payments previously received by the
Indemnifying Party from the Indemnified Party with respect to such tax benefit
pursuant to this Section 9.5. At the request of the Indemnifying Party, the
Indemnified Party will certify as to the amount, if any, of such Tax benefit (or
disallowance) for any period. The Indemnifying Party may also request, at its
expense, that the Indemnified Party's independent accountants provide a
certification that they have reviewed the Indemnified Party's certification and
determined it is proper, which certification shall be final and binding on the
parties hereto in the absence of manifest error; provided that if such
accountants determine that such certification should properly have stated such
Tax benefit (or disallowance) to be greater by an amount in excess of 20%, the
Indemnified Party shall be responsible for the expenses of such accountants and
the Indemnified Party shall take into account such increased Tax benefit in
calculating its payment obligation to the Indemnifying Party under this Section.
39
ARTICLE X
MISCELLANEOUS
SECTION 10.1 SURVIVAL. Notwithstanding any right of Merger Sub (whether
or not exercised) to investigate the affairs of the Company or any right of any
party (whether or not exercised) to investigate the accuracy of the
representations and warranties of the other party contained in this Agreement or
the waiver of any condition to Closing, each of the parties hereto has the right
to rely fully upon the representations, warranties, covenants and agreements of
the other contained in this Agreement. The representations, warranties,
covenants and agreements of the parties hereto contained in this Agreement and
any certificate or other document provided hereunder or thereunder will survive
the Closing (a) until the one (1) year anniversary of the Agreement Date or (b)
until the expiration of the applicable statute of limitations, with respect to
any representation, warranty, covenant or agreement relating to Section 4.20 or
Taxes and Section 4.11 (litigation), except that any representation, warranty,
covenant or agreement that would otherwise terminate in accordance with clause
(a) or (b) above will continue to survive if a Claim Notice or Indemnity (as
applicable) shall have been timely given under Article IX on or prior to such
termination date, until the related claim for indemnification has been satisfied
or otherwise resolved as provided in Article IX, but only with respect to
matters described in the Claim Notice or Indemnity Notice.
SECTION 10.2 PRESS RELEASES AND PUBLIC ANNOUNCEMENT. No party hereto
shall issue any press release or make any public announcement relating to this
Agreement or the Merger Transactions (including any announcements to employees)
without the prior approval of the other party hereto, it being understood that
this Section 10.2 shall not apply to any disclosure required by any applicable
Law or stock exchange regulation or rule.
SECTION 10.3 NO THIRD PARTY BENEFICIARIES. The terms and provisions of
this Agreement are intended solely for the benefit of the parties hereto and
their respective successors and permitted assigns, and it is not the intention
of the parties to confer third-party beneficiary rights, and this Agreement does
not confer any such rights, upon any other Person entitled to indemnity under
Article IX.
SECTION 10.4 ENTIRE AGREEMENT. This Agreement (including the Exhibits
and the Schedules hereto) and the Confidentiality Agreement constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof and thereof and supersede any prior understandings, agreements or
representations by or between the parties hereto, written or oral, with respect
to such subject matter.
SECTION 10.5 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party hereto may assign either this
Agreement or any of its rights, interests or obligations hereunder without the
prior written approval of the other parties hereto.
40
SECTION 10.6 DRAFTING. The parties have participated jointly in the
negotiation and drafting of this Agreement and, in the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.
SECTION 10.7 NOTICE. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission or
mailed (by registered or certified mail, postage prepaid, return receipt
requested) or delivered by reputable overnight courier, fee prepaid, to the
parties hereto at the following addresses or facsimile numbers:
If to the Company or Sole Stockholder, to:
[ ]
[ ]
with a copy to:
Hodes, Ulman, Xxxxxx & Xxxx, P.A.
000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to the Parent or Merger Sub, to:
Xxxxxxxx Technologies, Inc.
00 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx, CFO/President
with a copy to:
Xxxxxxx, Xxxxx & Xxxxx, LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Xxxxxx X. Xxxxxxxx, Esq.
41
Any party hereto may change the address to which notices, requests, demands,
claims and other communications hereunder are to be delivered by giving the
other parties hereto notice in the manner set forth herein.
SECTION 10.8 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Maryland, without giving
effect to any choice of law or conflict of law provision or rule that would
cause the application of the Laws of any jurisdiction other than the State of
Maryland.
SECTION 10.9 DISPUTE RESOLUTION. All disputes and controversies arising
under or in connection with this Agreement shall be resolved by arbitration held
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association (the "Arbitration Rules") as the Arbitration Rules then exist by one
or more arbitrators appointed in accordance with the Arbitration Rules. The
arbitration shall take place in Baltimore, Maryland. Any decision or award
resulting from the arbitration provided for herein shall be final and binding on
the parties hereto. Judgment upon the arbitrator's award may be entered in any
court of competent jurisdiction. The award of the arbitrator may include
compensatory damages, up to and as characterized in the indemnification
limitations set forth in Section 9.3 against any party, but under no
circumstances will the arbitrator be authorized to, nor shall he award punitive
or multiple damages against any party. In accordance with the Arbitration Rules,
any party may seek interim injunctive relief to protect the rights of any party
pending the establishment or decision of the arbitral tribunal.
SECTION 10.10 AMENDMENTS AND WAIVERS. The parties hereto may amend any
provision of this Agreement at any time prior to the Agreement Date with the
prior approval of their respective Boards of Directors; provided, however, that
any amendment effected subsequent to Stockholder Approval will be subject to the
restrictions contained in the MGCL. No amendment of any provision of this
Agreement shall be valid unless such amendment is in writing and signed by the
parties hereto. No waiver by any party hereto of any default, misrepresentation
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence. No waiver shall be valid
unless such waiver is in writing and signed by all of the parties hereto.
SECTION 10.11 SEVERABILITY. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms of such illegal,
invalid or unenforceable provision as may be possible.
42
SECTION 10.12 EXPENSES. Except as otherwise expressly set forth herein,
each of the parties hereto will bear its own costs and expenses (including legal
fees and expenses) incurred in connection with this Agreement and the Merger
Transactions.
SECTION 10.13 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
SECTION 10.14 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof in addition to any other
remedy available to them at law or equity.
SECTION 10.15 TERMINATION OF TAX SHARING AGREEMENTS. Any and all Tax
allocation or sharing agreements or other agreements or arrangements relating to
Tax matters between the Company and any other Person shall be terminated as of
the day before the Agreement Date and, from and after the Agreement Date, the
Company shall not be obligated to make any payment to any Person pursuant to any
such agreement or arrangement for any past or future period.
SECTION 10.16 HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 10.17 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
[Signature page follows.]
43
IN WITNESS WHEREOF, the parties hereto have caused a duly authorized
officer to execute this Agreement as of the date first above written.
XXXXXXXX TECHNOLOGIES, INC.
By: /s/ Xxx Xxxxx
--------------------------------
Name: Xxx Xxxxx
Title: CFO/President
STR ACQUISITION CORP.
By: /s/ Xxx Xxxxx
--------------------------------
Name: Xxx Xxxxx
Title: President
SECURITY TECHNOLOGY, INC.
By: /s/ Xxx Xxxxx
--------------------------------
Name: Xxx Xxxxx
Title: President
SCIENCE & TECHNOLOGY RESEARCH, INC.
By: /s/ Xxxxxx Xxxx
--------------------------------
Name: Xxxxxx Xxxx
Title: President
/s/ Xxxxxx Xxxx
--------------------------------
Xxxxxx Xxxx
44
INDEX OF EXHIBITS & SCHEDULES
Exhibit 1 Form of Consulting Agreement
Exhibit 2 Form of Employment Agreement
Exhibit 3 Form of Guaranty Agreement
Exhibit 4 Form of Security Agreement
Exhibit 5 Form of Investment Representation Letter
Exhibit 6 Form of Promissory Note
Schedule 1 Directors and Officers of Surviving Corporation
Representations Schedules
45
