AGREEMENT AND PLAN OF MERGER BY AND BETWEEN INCUMAKER, INC., a Delaware corporation AND UBID HOLDINGS, INC., a Delaware corporation DATED AS OF October 23, 2018
Exhibit 6.5
page 1 of 36
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
INCUMAKER, INC.,
a Delaware corporation
AND
UBID HOLDINGS, INC.,
a Delaware corporation
DATED AS OF October 23, 2018
Exhibit 6.5 page 2 of 36 |
TABLE OF CONTENTS
Page No. | ||
ARTICLE I THE MERGER | 1 | |
1.1. | The Merger | 1 |
1.2. | Closing; Effective Time | 1 |
1.3. | Effects of Merger | 2 |
1.4. | Certificate of Incorporation | 2 |
1.5. | Bylaws | 2 |
1.6. | Directors and Officers | 2 |
1.7. | Assumption of Liabilities | 2 |
1.8 | Change of Fiscal Year End | 2 |
ARTICLE II EFFECT OF THE MERGER ON CAPITAL STOCK | 2 | |
2.1. | Conversion of UBID Shareholdership Interests | 2 |
2.2. | Exchange of Interests | 3 |
2.3. | Certain Adjustments | 4 |
ARTICLE III REPRESENTATIONS AND WARRANTIES OF UBid | 4 | |
3.1. | Organization and Qualification | 4 |
3.2. | Equity Investments | 4 |
3.3. | Authority to Execute and Perform Agreement | 4 |
3.4. | Binding Effect | 5 |
3.5. | Capitalization | 5 |
3.6. | Vote Required; Managers’ Approval | 5 |
3.7. | Litigation | 5 |
3.8. | Title to Properties; Absence of Liens | 5 |
3.9. | Compliance with Laws | 6 |
3.10. | Consents and Approvals | 6 |
3.11. | Non-contravention | 6 |
3.12. | Material Contracts | 6 |
3.13. | Taxes | 6 |
3.14. | Financial Statements | 7 |
3.15. | Books and Records | 8 |
3.16. | Intellectual Property | 8 |
3.17. | Environmental Matters | 8 |
3.18. | Real Property | 8 |
3.19. | Broker’s Fees | 8 |
3.20. | Labor Matters | 8 |
3.21. | Absence of Liabilities | 8 |
3.22. | Absence of Certain Changes or Events | 8 |
3.23. | Full Disclosure | 9 |
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 9 | |
4.1. | Organization and Qualification; Subsidiaries | 9 |
Exhibit 6.5 page 3 of 36 |
4.2. | Equity Investment | 9 |
4.3. | Authority to Execute and Perform Agreement | 10 |
4.4. | Binding Effect | 10 |
4.5. | Capitalization | 10 |
4.6. | Board Approval | 11 |
4.7. | SEC Reports and Financial Statements | 11 |
4.8. | No Material Adverse Change | 11 |
4.9. | Books and Records | 11 |
4.10. | Litigation | 11 |
4.11. | Absence of Liabilities | 12 |
4.12. | Title to Properties; Absence of Liens | 12 |
4.13. | Compliance with Laws | 12 |
4.14. | Intellectual Property | 12 |
4.15. | Non-Contravention | 12 |
4.16. | Consents and Approvals | 12 |
4.17. | Material Contracts | 12 |
4.18. | Taxes | 13 |
4.19. | Environmental Matters | 14 |
4.20. | Real Property | 14 |
4.21. | Broker’s Fees | 14 |
4.22. | Labor Matters | 14 |
4.23. | Articles of Incorporation, Bylaws, and Minute Books | 15 |
4.24. | Full Disclosure | 15 |
ARTICLE V ADDITIONAL AGREEMENTS OF THE PARTIES | 15 | |
5.1. | Actions Pending Closing | 15 |
5.2. | Company Stockholders’ Approval; Information Statement | 17 |
5.3. | UBID Shareholder’s Approval | 17 |
5.4. | Efforts; Consents | 17 |
5.5. | Filing of Tax Returns; Payment of Taxes | 18 |
5.6. | Access to Information | |
5.7. | Confidentiality | 18 |
5.8. | Notification of Certain Matters | 18 |
5.9. | Non-Solicitation | 19 |
5.10. | Further Assurances | 19 |
5.11. | Public Disclosure | 19 |
5.12. | Board of Directors | 20 |
ARTICLE VI CONDITIONS TO CLOSING | 20 | |
6.1. | Conditions to Each Party’s Obligations to Consummate the Transactions | 20 |
6.2. | Conditions to Obligations of the Company to Consummate the Transactions | 20 |
6.3. | Conditions to Obligations of to Consummate the Transactions | 21 |
ARTICLE VII TERMINATION | 22 | |
7.1. | Termination | 22 |
7.2. | Effect of Termination | 23 |
Exhibit 6.5 page 4 of 36 |
7.3. | Expenses; Termination Fees | 23 |
ARTICLE VIII MISCELLANEOUS | 24 | |
8.1. | Certain Definitions; Rules of Construction | 24 |
8.2. | Waivers and Amendments | 29 |
8.3. | Governing Law | 29 |
8.4. | Notices | 30 |
8.5. | Section Headings | 30 |
8.6. | Counterparts | 30 |
8.7. | Assignments | 30 |
8.8. | Entire Agreement; Enforceability | 31 |
8.9. | Severability | 31 |
Schedules
Schedule 3.5 | UBID Capitalization |
Schedule 3.7 | UBID Litigation |
Schedule 3.8 | UBID Title to Properties; Absence of Liens |
Schedule 3.10 | UBID Consents and Approvals |
Schedule 3.16 | UBID Intellectual Property |
Schedule 3.22(d) | UBID Absence of Certain Changes or Events. |
Schedule 4.11 | Company Absence of Liabilities |
Schedule 4.16 | Company Consents and Approvals |
Schedule 4.18 | Company Taxes |
Exhibit 6.5 page 5 of 36 |
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of October 23, 2018, is entered into by and between Incumaker, Inc., a Delaware corporation (the “Company”), and uBid Holdings, Inc., a Delaware corporation (“UBID”), that hereby agree as follows:
WHEREAS, the respective Boards of Directors of the Company and UBID have each approved the merger of UBID with and into the Company, with the Company surviving (the “Merger”), on the terms and conditions contained herein and in accordance with the Delaware General Corporation Law (the “DGCL”) and have determined that the Merger and the transactions contemplated herein are advisable and in the best interest of each company and their respective stockholders;
WHEREAS, the parties hereto desire to make certain representations, warranties, covenants and agreements in connection with the Merger and to prescribe various conditions to the Merger; and
WHEREAS, for U.S. federal income tax purposes, it is intended that the Merger qualify as a reorganization under the provisions of Section 368(a) and Section 351 of the Code, and that this Agreement shall constitute a “plan of reorganization” for the purposes of Section 368 and Section 351 of the Code.
NOW THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
Article I
THE MERGER
1.1. The Merger. Upon the terms and subject to the conditions of this Agreement, at the Effective Time (as defined below), UBID shall be merged with and into the Company in accordance with the applicable provisions of the DGCL and in accordance with this Agreement, and the separate existence of UBID shall cease. The Company shall be the surviving corporation in the Merger (hereinafter sometimes referred to as the “Surviving Corporation”) and shall continue under the laws of Delaware.
1.2. Closing; Effective Time. Subject to the satisfaction or waiver of all of the conditions to Closing contained in Article VI, the closing of the Merger (the “Closing”), shall take place at the offices of Xxxxxxx Xxxxxxx PLLC, 0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000, as soon as practicable (but not later than five (5) Business Days) after the satisfaction or waiver of the conditions to Closing contained in Article VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions), unless another date or place is agreed to in writing by the parties hereto. The date on which the Closing actually occurs is hereinafter referred to as the “Closing Date.” As soon as is practicable after the Closing, the parties hereto shall cause the Merger to be consummated by (i) delivering to the Secretary of State of the State of Delaware a Certificate of Merger (the “DE Certificate of Merger”), in such form as required by, and executed and acknowledged in accordance with, the relevant provisions of the DGCL. The Merger shall become effective as of the date and at such time (the “Effective Time”) as the DE Certificate of Merger is filed with the Secretary of State of the State of Delaware with respect to the Merger.
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Exhibit 6.5 page 6 of 36 |
1.3. Effects of Merger. The Merger shall have the effects set forth in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of UBID shall vest in the Surviving Corporation, and all debts, liabilities and duties of UBID shall become the debts, liabilities and duties of the Surviving Corporation.
1.4. Certificate of Incorporation. The Certificate of Incorporation of the Company in effect immediately prior to the Effective Time, as amended and restated, shall become, from and after the Effective Time, the Certificate of Incorporation of the Surviving Corporation, as amended pursuant to the terms included herein and until amended or repealed in accordance with the terms thereof and with Applicable Law.
1.5. Bylaws. The Bylaws of the Company in effect immediately prior to the Effective Time shall become, from and after the Effective Time, the Bylaws of the Surviving Corporation, until thereafter amended or repealed in accordance with the terms thereof and with Applicable Law.
1.6. Directors and Officers. The directors and officers of UBID immediately prior to the Effective Time shall become at the Effective Time, the directors and officers of the Surviving Corporation, each to hold office from the Effective Time in accordance with the Certificate of Incorporation and Bylaws of the Surviving Corporation until their respective successors are duly elected or appointed and qualify, or they resign or are removed.
1.7. Assumption of Liabilities. At the Effective Time, the Company shall have no liabilities, including those xxxxxxxxxx.xx set forth in the Company’s financial statements.
1.8. Change of Fiscal Year End. At the Effective Time, the fiscal year end of the Company shall change from May 31 to December 31, the fiscal year end of UBID.
Article II
EFFECT OF THE MERGER ON CAPITAL STOCK
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Exhibit 6.5 page 7 of 36 |
(a) The Company shall issue an aggregate of such number of shares of its common stock in exchange for the issued and outstanding common stock of UBID to ensure that at the Effective Time the shareholders of the Company shall hold 17.8% of the issued and outstanding shares of the common stock of the Surviving Corporation or 43,771,555 shares of common stock and the shareholders of UBID shall hold 82.2% of the issued and outstanding shares of common stock of the Surviving Corporation or 202,110,632 shares of its common stock. The number of shares of Company common stock issued to each shareholder in accordance with this Section 2.1(a) shall hereafter be referred to as the “Merger Shares.” Each share of UBID’s issued and outstanding common stock shall be converted into and become approximately 11 fully paid and non-assessable shares of common stock (the “Exchange Ratio”), par value $0.001 per share, of the Surviving Corporation (the “Company Common Stock”). At the Effective Time, all UBID Securities shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each UBID shareholder shall cease to have any rights with respect thereto, except the right to receive the Merger Shares.
(b) No fraction of a share of Company Common Stock will be issued, but in lieu of such issuance, each UBID Shareholder who would otherwise be entitled to a fraction of a share of Company Common Stock as a result of the conversion and exchange of shares contemplated by this Article II shall receive from the Company one (1) additional share of Company Common Stock. The fractional share interest of UBID Shareholders shall be aggregated such that no UBID Shareholder shall receive more than the one (1) share of Company Common Stock with respect to any interest in fractional shares.
(a) Immediately prior to the Closing, the Company shall deposit, or shall cause to be deposited, with Island Stock Transfer (the “Exchange Agent”), for the benefit of the UBID Shareholders certificates in the names of each such UBID Shareholder evidencing the number of Merger Shares to be issued to such UBID Shareholder in accordance with this Article II. As soon as reasonably practicable after the Effective Time, the Company will instruct the Exchange Agent to deliver to each holder of UBID Share a letter of transmittal containing instructions for use in effecting the exchange of UBID Shares for certificates evidencing the relevant number of Merger Shares. No interest shall be paid on the Merger Shares. All Merger Shares issued upon exchange of the UBID Share in accordance with the terms hereof shall be deemed to have been issued or paid in full satisfaction of all rights pertaining to such shares of Company Common Stock.
(b) It is understood that the certificates evidencing the Merger Shares will bear the legends set forth below:
(i) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTIONS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS;
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Exhibit 6.5 page 8 of 36 |
(ii) Any additional legend required by Applicable Law.
The legend set forth in (i) above shall be removed from any certificate evidencing such Merger Shares upon delivery to the Company of an opinion by counsel, reasonably satisfactory to the Company, that such security can be freely transferred without such a registration statement being in effect and that such transfer will not jeopardize the exemption or exemptions from registration pursuant to which the Company issued such Merger Shares.
Article III
REPRESENTATIONS AND WARRANTIES OF UBID
Except as set forth on the disclosure schedules, UBID hereby represents and warrants to the Company as follows:
3.1. Organization and Qualification. UBID is a Delaware corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, has requisite corporate power and authority and governmental approvals to own, lease and operate its properties and to carry on its business as currently conducted. UBID is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the ownership or leasing of its property or the conduct of its business requires such qualification or licensing, except where the failure to be so qualified or licensed or in good standing would not, individually or in the aggregate, have a Material Adverse Effect on UBID.
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Exhibit 6.5 page 9 of 36 |
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Exhibit 6.5 page 10 of 36 |
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(a) UBID has delivered to the Company copies of its audited consolidated financial statements for the fiscal year ended December 31, 2016 and unaudited financial statements for the fiscal year ended December 31, 2017 (together, the “UBID Financial Statements”). The UBID Financial Statements present fairly the financial condition and results of operations of UBID at the dates and for the periods covered by the UBID Financial Statements. UBID represents and warrants that there has been no material adverse change in the financial condition of UBID from that stated in the UBID Financial Statements.
(b) The UBID Financial Statements and any notes related thereto comply as to form in all material respects with applicable accounting requirements, have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects (subject, in the case of the unaudited interim financial statements, to normal, recurring year-end adjustments none of which are or will be material in amount, individually or in the aggregate) the consolidated financial position of UBID as at the dates thereof and the consolidated results of their operations and cash flows for the periods then ended.
(c) UBID does not have any direct or indirect liabilities that were not fully and adequately reflected or reserved against on the balance sheet or described in the notes to the audited financial statements of UBID. UBID has no Knowledge of any circumstance, condition, event or arrangement that has taken place at any time that may hereafter give rise to any liabilities.
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Exhibit 6.5 page 12 of 36 |
3.22 Absence of Certain Changes or Events. Since December 31, 2017, UBID has not:
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Exhibit 6.5 page 13 of 36 |
(a) Conducted any business or engaged in any activities other than activities related to the negotiation and execution of this Agreement or activities in the ordinary course of its business;
(b) Declared or made any payment of dividends or other distributions to its shareholders or upon or in respect of any of its UBID Shares or purchased, or obligated itself to purchase, retire or redeem, any of its Common Shares or other securities;
(c) Amended its Certificate of Incorporation or Bylaws;
(d) Borrowed or agreed to borrow any funds; incurred or agreed to incur or become subject to any debts, liabilities or obligations of any kind whatsoever (other than (i) in conjunction with the negotiation and execution of this Agreement, (ii) legal, accounting, advisory and board of director fees and expenses, (iii) obligations incurred in the ordinary course of business or (iv) as set forth on Schedule 3.22(d); subjected or agreed to subject any of the assets or properties of UBID to any lien, security interest, charge, interest or other encumbrance or suffered such to be imposed; or guaranteed or agreed to guarantee the debts or obligations of others.
Article IV
REPRESENTATIONS AND WARRANTIES
Except as set forth on the disclosure schedules and the any OTC Documents, the Company hereby represents and warrants to UBID as follows:
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Exhibit 6.5 page 14 of 36 |
(a) As of the date hereof, the authorized capital stock of the Company consists of (i) 750,000,000 shares of Common Stock, par value $0.001 per share, of which 43,271,555 shares of Common Stock are issued and outstanding, all of which are validly issued, fully paid and non-assessable and (ii) 10,000,000 Preferred Shares authorized, of which none are issued or outstanding. The Company has no other authorized, issued or outstanding class of capital stock.
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Exhibit 6.5 page 15 of 36 |
4.6. Approval. The holders of a majority of the issued and outstanding voting securities of the Company and the Board of Directors of the Company, by resolutions duly adopted at a meeting duly called and held at which a quorum was present or by written consent in lieu of such a meeting have each approved this Agreement, the Merger and the Transactions pursuant to the laws of the State of Delaware.
(a) The consolidated financial statements of the Company and any notes related thereto provided to UBID have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto and fairly present in all material respects (subject, in the case of the unaudited interim financial statements, to normal, recurring year-end adjustments none of which are or will be material in amount, individually or in the aggregate) the consolidated financial position of the Company as at the dates thereof and the consolidated results of their operations and cash flows for the periods then ended.
(b) The Company does not have any direct or indirect liabilities that were not fully and adequately reflected or reserved against on the balance sheet or described in the notes to the financial statements of the Company. The Company has no Knowledge of any circumstance, condition, event or arrangement that has taken place at any time that may hereafter give rise to any liabilities.
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Exhibit 6.5 page 16 of 36 |
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Exhibit 6.5 page 17 of 36 |
4.18. Taxes. Except as set forth on Schedule 4.18:
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Exhibit 6.5 page 18 of 36 |
(f) Prior Affiliated Groups. The Company (A) has never been a UBID Shareholder of an affiliated group of corporations within the meaning of Section 1504 of the Code and (B) does not have any liability for the Taxes of any person under Treas. Reg. §1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise. The Company is not a successor to any other person by way of merger, reorganization or similar transaction.
(i) Partnerships. The Company does not own an interest in a partnership for Tax purposes.
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Exhibit 6.5 page 19 of 36 |
Article V
ADDITIONAL AGREEMENTS OF THE PARTIES
(a) except to the extent required by Applicable Law, as contemplated by this Agreement, amend or otherwise change the certificate of incorporation, Bylaws, operating agreement or other similar organizational document;
(b) issue or authorize or propose the issuance of, sell, pledge or dispose of, grant or otherwise create, or agree to issue or authorize or propose the issuance, sale, pledge, disposition, grant or creation of any additional shares of, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of, its capital stock or any debt or equity securities convertible into or exchangeable for such capital stock;
(c) purchase, redeem or otherwise acquire or retire, or offer to purchase, redeem or otherwise acquire or retire, any shares of its capital stock (including any security convertible or exchangeable into its capital stock);
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Exhibit 6.5 page 20 of 36 |
(d) enter into any Material Contract, except in the ordinary course of business;
(e) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, reclassify, recapitalize, split, combine or exchange any of its shares of capital stock;
(f) incur or become contingently liable with respect to any indebtedness for borrowed money or guarantee any such indebtedness or issue any debt securities;
(g) (i) increase the compensation payable or to become payable to, or enter into any employment agreement with, any of its directors, executive officers or employees, (ii) grant any severance or termination pay to any director, officer or employee, (iii) enter into any severance agreement with any director, officer or employee, (iv) establish, adopt, enter into, terminate, withdraw from or amend in any material respect or take action to accelerate any rights or benefits under any collective bargaining agreement, any stock option plan or any employee Benefit Plan or policy, or (v) hire any employee or consultant;
(h) take any action, other than reasonable actions in the ordinary course of business and consistent with past practice, with respect to accounting policies or procedures, except as may be required by GAAP;
(i) acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other means, any business or any corporation, partnership, association or other business entity;
(j) mortgage or otherwise encumber, subject to any Lien, or sell, transfer or otherwise dispose of, any of its properties or assets that are material, individually or in the aggregate;
(k) adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;
(l) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in its financial statements or incurred in the ordinary course of business and consistent with past practice;
(m) take, or agree in writing or otherwise to take, any of the actions described in Sections 6.1(a) through (l) above, or any action which would make any of the representations or warranties contained in this Agreement untrue or incorrect in any material respect or prevent the parties to this Agreement from performing or cause the parties to this Agreement not to perform their respective covenants under this Agreement in any material respect;
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Exhibit 6.5 page 21 of 36 |
(n) waive, release, assign, settle or compromise any material rights, claims or litigation (including any confidentiality agreement);
(o) authorize any of, or commit or agree to take any of, the foregoing actions; or
(p) make or change any Tax election, settle any audit, claim or examination of Taxes, adopt or apply to change any method of accounting or accounting practice for Tax purposes, file any amended Tax Return, enter into any closing agreement or request a Tax ruling from a Tax authority, settle any claims for Taxes, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Taxes, Tax Return or claim for Taxes, or take any action or fail to take any action that would have a material adverse effect on the Tax liability of any of the parties to this Agreement.
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Exhibit 6.5 page 22 of 36 |
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(a) No party to this Agreement, nor any of their respective officers, directors, employees, agents, affiliates, accountants, counsel, investment bankers, financial advisors or other representatives (collectively, “Representatives”), shall (i) directly or indirectly, initiate, solicit or encourage, or take any action to facilitate the making of, any Acquisition Proposal, (ii) enter into any agreement or take any other action that by its terms could reasonably be expected to adversely affect the ability of the parties hereto to consummate the Merger, or (iii) directly or indirectly engage or otherwise participate in any discussions or negotiations with, or provide any information or data to, or afford any access to their properties, books or records to, or otherwise assist, facilitate or encourage, any person (other than UBID or any affiliate or associate thereof) relating to any Acquisition Proposal.
(b) Each of the parties to this Agreement and each of their Representatives shall immediately cease and cause to be terminated all existing discussions and negotiations, if any, with any other persons conducted heretofore with respect to any Acquisition Proposal.
For purposes of this Agreement, an “Acquisition Proposal” means any inquiry, proposal or offer from any person relating to (i) any direct or indirect acquisition or purchase of a business that constitutes 50% or more of the net revenues, net income or assets of any party to this Agreement, taken as a whole, or 50% or more of the common stock or voting power (or of securities or rights convertible into or exercisable for such common stock or voting power) of the Company or UBID, (ii) any tender offer or exchange offer that if consummated would result in any person beneficially owning 50% or more of the common stock or voting power (or of securities or rights convertible into or exercisable for such common stock or voting power) of the Company or UBID, or (iii) any merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company, UBID or any of their Subsidiaries that constitutes 50% or more of the net revenues, net income or assets of the Company and its Subsidiaries or UBID and its Subsidiary, as the case may be, taken as a whole, or that results in the stockholders of the Company or the UBID Shareholders, as the case may be, immediately prior to such transaction owning less than 50% of the outstanding voting securities of the Company or UBID, as the case may be, immediately after such transaction, in each case other than the transactions contemplated by this Agreement. Each of the transactions referred to in clauses (i) - (iii) of the foregoing definition of Acquisition Proposal, other than the Merger proposed by this Agreement, is referred to herein as an “Acquisition Transaction.”
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ARTICLE VI
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Article VII
(a) by the mutual written consent of the parties to this Agreement;
(b) by either the Company or UBID, by written notice to the other if, for any reason, the Closing has not occurred prior to the close of business on or before October 31, 2018; provided, however, that (i) the right to terminate this Agreement pursuant to this Section 7.1(b) shall not be available to the Company or UBID, as applicable, if the party seeking to terminate the Agreement is responsible for the delay;
(c) by either the Company or UBID, by written notice to the other, if any court of competent jurisdiction shall have issued an order, judgment or decree (other than a temporary restraining order) restraining, enjoining or otherwise prohibiting the Merger and such order, judgment or decree shall have become final and nonappealable;
(d) at the election of the Company, if (i) UBID has materially breached any representation, warranty, covenant or agreement contained in this Agreement, which breach has not been cured on or before thirty (30) Business Days following delivery of written notice of such breach by the Company to UBID; provided, however, that the right to terminate this Agreement pursuant to this Section 7.1(d) (A) shall not be available to the Company if the Company at such time, is in material breach of any representation, warranty, covenant or agreement set forth in this Agreement, or (B) if the Company or its counsel is not satisfied with the financial, business or legal due diligence investigation of UBID or any item or issue that is discovered in the course of such investigation as determined by the Company or its counsel in its sole and absolute discretion; and
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Exhibit 6.5 page 27 of 36 |
(e) at the election of UBID, if the Company has materially breached any representation, warranty, covenant or agreement contained in this Agreement, which breach has not been cured on or before thirty (30) Business Days following delivery of written notice to the Company of such breach by UBID; provided, however, that the right to terminate this Agreement pursuant to this Section 7.1(e) shall not be available to UBID if UBID, at such time, is in material breach of any representation, warranty, covenant or agreement set forth in this Agreement.
7.3 Expenses; Termination Fees.
(a) Except as set forth in this Section 7.3, all costs and expenses incurred in connection with this Agreement and the Transaction shall be paid by the party incurring such costs and expenses, whether or not the Merger is consummated. In the event a party terminates this Agreement, other than as may be permitted in accordance with Section 7.1, such terminating party shall be required to pay the other party’s fees incurred in connection with the transactions contemplated hereunder.
(b) All payments under this Section 7.3 shall be made by wire transfer of immediately available funds to an account designated by the party to whom such payment will be made.
(c) The term “Expenses” shall mean all out-of-pocket expenses incurred by the Company and its affiliates in connection with this Agreement, any letter of intent related to this Agreement, and the transactions and due diligence contemplated hereby, including, without limitation, fees and expenses of accountants, attorneys and financial advisors.
(d) The parties acknowledge that the agreements contained in this Section 7.3 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, neither UBID nor the Company would enter into this Agreement. Accordingly, if either party fails to promptly pay any amounts owing pursuant to this Section 7.3 when due, then the party from whom such payment is due shall in addition thereto pay to the other party all costs and expenses (including fees and disbursements of counsel) incurred in collecting such amounts, together with interest on such amounts (or any unpaid portion thereof) from the date such payment was required to be made until the date such payment is received by the party entitled to such payment hereunder at the prime rate of Chase Manhattan as in effect from time to time during such period.
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Exhibit 6.5 page 28 of 36 |
Article VIII
8.1 Certain Definitions; Rules of Construction. Definitions shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. All references herein to Articles, Sections, Exhibits and Schedules shall be deemed to be references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. All Exhibits and Schedules attached hereto shall be deemed incorporated herein as if set forth in full herein and, unless otherwise defined therein, all terms used in any Exhibit or Schedule shall have the meaning ascribed to such term in this Agreement. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise expressly provided herein, any agreement, plan, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, plan, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. For the purposes of this Agreement, the following terms shall have the following meanings:
“Acquisition Proposal” has the meaning set forth in Section 5.9.
“Acquisition Transaction” has the meaning set forth in Section 5.9.
“Adjustment Event” has the meaning set forth in Section 2.3.
“Affiliate” shall mean, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. The term “control” means 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 voting securities, by contract or otherwise.
“Articles of Merger” has the meaning set forth in Section 1.2.
“Applicable Law” means any Federal, state or local law, regulation, code, ordinance, statute, rule, Order, judgment, decree or other requirement of a Governmental Body applicable to the business of the Company or UBID, as the context may require.
“Benefit Plan” means each deferred compensation, executive compensation, incentive compensation, stock purchase or other stock-based compensation plan, severance or termination pay, holiday, vacation or other bonus plan or practice, hospitalization or other medical, life or other insurance, supplemental unemployment benefits, profit sharing, pension, or retirement plan, program, agreement, commitment or arrangement, and each other employee Benefit Plan, program, agreement or arrangement, including, without limitation, each “employee Benefit Plan” as such term is defined under Section 3(3) of ERISA.
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Exhibit 6.5 page 29 of 36 |
“Business Day” means any day other than Saturday or Sunday or any other day on which banks in the State of New York are permitted or obligated to be closed for business.
“Claim” means any action, suit, claim, complaint, demand, litigation or similar proceeding.
“Closing” has the meaning set forth in Section 1.2.
“Closing Date” has the meaning set forth in Section 1.2.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” has the meaning set forth in the preamble.
“Company Certificates” has the meaning set forth in Section 2.2(a).
“Company Common Stock” has the meaning set forth in Section 2.1(a).
“Company Consent” has the meaning set forth in Section 5.2.
“Company Stockholder” and “Company Stockholders” have the meaning set forth in Section 2.1.
“Company Warrant” has the meaning set forth in Section 2.4(a).
“Effective Time” has the meaning set forth in Section 1.2.
“Environmental Laws” means all applicable statutes, rules, regulations, ordinances, orders, decrees, judgments, permits, licenses, consents, approvals, authorizations, and governmental requirements or directives or other obligations lawfully imposed by Governmental Body under federal, state, local or common law, indemnity agreements or other contractual obligations, in each case, pertaining to the protection of the environment, protection of public health, protection of worker health and safety, the treatment, emission and/or discharge of gaseous, particulate and/or effluent pollutants, and/or the handling of hazardous materials, including, without limitation, the Clean Air Act, 42 U.S.C. § 7401, et seq., the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), 42 U.S.C. § 9601, et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1321, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et seq. (“RCRA”), and the Toxic Substances Control Act, 15 U.S.C. § 2601, et seq.
“Exchange Act” means the Securities and Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange Agent” has the meaning set forth in Section 2.2.
“Expenses” has the meaning set forth in Section 7.3(d).
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Exhibit 6.5 page 30 of 36 |
“Certificate of Merger” has the meaning set forth in Section 1.2.
“Fully Diluted Basis” shall mean that the amount of common stock of an entity outstanding shall be determined on the basis that all outstanding options, warrants and other convertible securities shall be deemed to be fully exercised or converted (as the case may be) into common stock.
“GAAP” has the meaning set forth in Section 4.7(b).
“Governmental Body” means any court, administrative or regulatory agency or commission or other governmental authority of competent jurisdiction.
“Government Agency” means (i) the United States Government, including all departments and agencies of any branch of the United States Government, all independent agencies or instrumentalities and all non-appropriated fund activities within the United States Government and United States Government corporations, and (ii) any state or local government, including all departments, agents, agencies, branches, independent agencies or instrumentalities, activities, and non-appropriated fund activities of or within a state or local government and all state or local government corporations.
“Hazardous Substances” means any pollutants, contaminants, toxic or hazardous or extremely hazardous substances, materials, wastes, constituents, compounds, chemicals (including, without limitation, petroleum or any by-products or fractions thereof, any form of natural gas, Xxxxxx Amendment materials, lead, asbestos and asbestos-containing materials, building construction materials and debris, polychlorinated biphenyls (“PCBs”) and PCB-containing equipment, radon and other radioactive elements, ionizing radiation, electromagnetic field radiation and other non-ionizing radiation, sonic forces and other natural forces, infectious, carcinogenic, mutagenic, or etiologic agents, pesticides, defoliants, explosives, flammables, corrosives and urea formaldehyde foam insulation) that are regulated by any Environmental Laws.
“Intellectual Property” means all of the following as they are used in connection with the business of a Person as presently conducted and as they exist in all jurisdictions throughout the world, in each case, to the extent owned by such Person:
(a) patents, patent applications and inventions, designs and improvements described and claimed therein, patentable inventions and other patent rights (including any divisions, continuations, continuations-in-part, substitutions, or reissues thereof, whether or not patents are issued on any such applications and whether or not any such applications are modified, withdrawn, or resubmitted);
(b) trademarks, service marks, trade dress, trade names, brand names, designs, logos, or corporate names, whether registered or unregistered, and all registrations and applications for registration thereof;
(c) copyrights and mask works, including all renewals and extensions thereof, copyright registrations and applications for registration thereof;
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Exhibit 6.5 page 31 of 36 |
(d) trade secrets, confidential business information and other proprietary information, concepts, ideas, designs, research or development information, processes, procedures, techniques, technical information, specifications, operating and maintenance manuals, engineering drawings, methods, know-how, technical data and databases, discoveries, inventions, modifications, extensions, improvements, and other proprietary rights (whether or not patentable or subject to copyright, mask work, or trade secret protection);
(e) computer software programs, including, without limitation, all source code, object code, and documentation related thereto; and
(f) Internet addresses, domain names, web sites, web pages and similar rights and items.
“Investment Letter” has the meaning set forth in Section 6.1(c).
“Knowledge” with respect to any Person, means the actual knowledge of any of the officers or directors of such Person after diligent inquiry.
“Legal Proceedings” has the meaning set forth in Section 3.7.
“Lien” means any mortgage, pledge, lien, charge, easement, restrictive covenant, encumbrance, voting or transfer restriction, or security interest.
“Material Adverse Effect” means any change, effect, event or occurrence that is materially adverse to the condition (financial or otherwise), assets, properties, business or operations of a Person and its Subsidiaries, taken as a whole.
“Material Contract” means all of the following contracts, agreements, undertakings or arrangements, whether or not in writing, to which a Person is a party or by or to which any of them or any of their assets or properties are bound or subject, with respect to: (i) any current or former officer, director, stockholder, employee, consultant, agent or other representative or with an entity in which any of the foregoing is a contracting person; (ii) any labor union or association representing any employee; (iii) the purchase or sale of materials, supplies, equipment, merchandise or services that contain an escalation, renegotiation or redetermination clause calling for an aggregate purchase or sale price or payments of more than $1,000 in any one case (or in the aggregate, in the case of any related series of contracts and other agreements); (iv) the sale of any of its assets or properties other than in the ordinary course of business or for the grant to any person of any preferential rights to purchase any of its assets or properties; (v) joint ventures, strategic alliances or partnerships; (vi) an indemnity or sharing of any tax liability of any third party; (vii) the purchase or sale price or payments of more than $5,000 in any one case (or in the aggregate, in the case of any related series of contracts and other agreements) that cannot be canceled by such Person with less than ninety days’ notice without incurring liability, premium or penalty; (viii) the sharing of fees, the rebating of charges or other similar arrangements; (ix) obligations or liabilities of any kind to holders of such Person securities as such; (x) covenants of such Person not to compete in any line of business or with any person in any geographical area or covenants of any other person not to compete with the such Person in any line of business or in any geographical area; (xi) the acquisition by the such Person of any operating business, including the assets or the capital stock of any other person; (xii) options for the purchase of any asset, tangible or intangible, requiring the payment to any person of a commission or fee; (xiii) the payment of fees or other consideration on behalf of any officer or director of such Person or to any other entity in which any of the foregoing has an interest; (xiv) the borrowing of money; (xv) any purchase price or sale price or payments of more than $5,000 in any one case (or in the aggregate, in the case of any related series of contracts and other agreements) whether or not made in the ordinary course of business; (xvi) the purchase or sale of material, supplies, equipment, merchandise, intellectual property, real property, assets (whether tangible or intangible) or services where the purchase or sale price, the estimated purchase or sale price, the maximum order price, the maximum contract price, or the ceiling price (whether in one case or in the aggregate, in the case of a related series of contracts or other agreements) is more than $10,000, and a party to the contract or the known end or ultimate user, seller, or purchaser is any Government Agency; (xvii) any schedule contracts with the United States General Services Administration or any multiple award schedule contracts, basic agreements, basic ordering agreements, or blanket purchase agreements with any Government Agency; and (xviii) any other contract, agreement or arrangement that is material to the business of a Person.
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Exhibit 6.5 page 32 of 36 |
“Maximum Capitalization” has the meaning set forth in Section 4.5(a).
“Merger” has the meaning set forth in the recitals.
“Merger Shares” has the meaning set forth in Section 2.1(b).
“Orders” has the meaning set forth in Section 3.9.
“OTC Documents” shall mean all forms, reports, schedules, statements, and other documents required to be filed by the Company under the Alternative Reporting Standard of the OTC Pink Open Market.
“Permitted Liens” has the meaning set forth in Section 3.8.
“Person” means any individual, corporation, partnership, limited liability company or partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government (including any agency or political subdivision thereof).
“Recent Reports” has the meaning set forth in Section 4.8.
“Representatives” has the meaning set forth in Section 5.9.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary” of any Person means any corporation, partnership, joint venture or other legal entity of which such Person (either directly or through or together with any other Subsidiary of such Person), owns, directly or indirectly, 50% or more of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or similar governing body of such corporation, partnership, joint venture or other legal entity.
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Exhibit 6.5 page 33 of 36 |
“Surviving Corporation” has the meaning set forth in Section 1.1.
“Tax” or “Taxes” means any taxes, charges, fees, imposts, levies or other assessments, including, without limitation, all net income, franchise, profits, gross receipts, capital, sales, use, ad valorem, value added, transfer, transfer gains, inventory, capital stock, license, withholding, payroll, employment, social security (or similar), unemployment, excise, severance, stamp, occupation, real or personal property, premium, windfall profits, environmental (including taxes under Section 59A of the Code), customs duties, registration, alternative or add-on minimum, and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, together with any interest and any penalties, fines, additions to tax or additional amounts thereon whether disputed or not, imposed by any taxing authority (Federal, state, local or foreign) and shall include any transferee liability in respect of Taxes.
“Tax Return” means any returns, declarations, reports, estimates, information returns or statements relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Transaction Documents” means this Agreement and each of the agreements and instruments contemplated hereby or thereby, including, without limitation, the Delaware Certificate of Merger and the Delaware Articles of Merger, the officer’s certificate to be delivered by UBID pursuant to Section 6.2(c) and the Company pursuant to Section 6.3(c), the disclosure schedules and all documents, instruments or agreements attached to or contemplated by any of the foregoing.
“Transactions” has the meaning set forth in Section 3.3.
“UBID” has the meaning set forth in the preamble.
“UBID Financial Statements” has the meaning set forth in Section 3.14.
“UBID Shareholder” and “UBID Shareholders” have the meaning set forth in Section 2.1(a).
“UBID Warrant” has the meaning set forth in Section 2.4.
8.2 Waivers and Amendments. Subject to Applicable Law, this Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the parties hereto or, in the case of a waiver, by or on behalf of the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege.
8.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS OF SUCH STATE, APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
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Exhibit 6.5 page 34 of 36 |
(g) | if to the Company: |
Incumaker, Inc.
000 Xxxxxxxxx Xxxx
Xxxxx 0000X
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx, CEO
Email: xxxxxxxxx@xxxxx.xxx
(h) | if to UBID: |
UBid Holdings, Inc.
000 X. Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxxx, CEO
Email: xxxxx.xxxxxxx@xxxx.xxx
or at such other place or places or to such other person or persons as shall be designated in writing by the parties to this Agreement in the manner herein proved.
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Exhibit 6.5 page 35 of 36 |
UBID HOLDINGS, INC. | ||
By: | /s/ Xxxxx Xxxxxxx | |
Name: Xxxxx Xxxxxxx | ||
Title: President | ||
INCUMAKER, INC. | ||
By: | /s/ Xxxxxx Xxxxxxxx | |
Name: Xxxxxx Xxxxxxxx | ||
Title: CEO |
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Exhibit 6.5 page 36 of 36 |
UBID AND INCUMAKER DISCLOSURE SCHEDULES
Schedule 3.13(a) uBID has not filed any federal or state tax returns since 2012 but is preparing those tax returns and expects to have them filed within 30 calendar days from the Closing Date.
Schedule 4.10 On December 17, 2017, a lawsuit that had been dismissed by the plaintiff on July 21, 2017, was refiled against the Company pursuant to Georgia's renewal statute (O.C.G.A. 9-2-61), titled Oelshlager v. Cryomist II, Cryomist III and Incumaker, Inc. (Xxxxxx County Georgia State Court). The lawsuit alleges that Incumaker is liable for the conduct of its subsidiary on the theory that it is the parent of these separate corporations and that the Cryomist Companies were merely the alter ego of Incumaker. The Company plans to vigorously defend itself against this lawsuit.
On May 11, 2018, a lawsuit was filed by Xxxxx Xxxxxxx claiming that the Company had failed to reimburse him rent money he paid as the Guarantor under the lease for the Cryomist III premises, located in Buford, Georgia. The Company and Xx. Xxxxxxx had entered into a joint venture whereby the Company would purchase from Xx. Xxxxxxx all of his shares and interest in Cryomist III. The joint venture included terms whereby the Company would assume the five-year lease pursuant to a Lease Assignment dated February 13, 2014. In addition, Xx. Xxxxxxx was to remain as the guarantor of the lease. Cryomist III ceased operations only three months after the execution of the joint venture with several years remaining on the lease. Xx. Xxxxxxx negotiated and paid a large settlement to the landlord of the lease for the remaining rent without ever consulting the Company as the principal under the lease. The Company has denied that it is liable for the reimbursement of such rent payments since Xx. Xxxxxxx entered into a settlement for the payment of such rent without the Company’s knowledge. The Company has also filed counterclaims against Xx. Xxxxxxx for breach of contract and set-off for monies Xx. Xxxxxxx owes the Company but refuses to pay. The Company plans to vigorously defend itself against the claims in this lawsuit and to diligently pursue its counterclaims.
Schedule 4.5 – See attached Incumaker Debt Schedule
Schedule 4.5(c) – 500,000 warrants issued to Street Capital convertible at $0.07 with an exercise termination date of November 11, 2018
Schedule 4.18 – The Company has not filed its 2017 Federal and state tax returns which will be filed following receipt by the Company’s tax preparer of the Company’s final audited financial report expected no later than October 31, 2018.
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