AGREEMENT AND PLAN OF MERGER
BY AND AMONG
EUROPA TRADE AGENCY LTD.,
IRONCLAD MERGER CORPORATION
AND
IRONCLAD PERFORMANCE WEAR CORPORATION
DATED AS OF APRIL 20, 2006
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("AGREEMENT") made this 20th day of
April, 2006 is entered into by and among Europa Trade Agency Ltd., a Nevada
corporation ("EUTA"), Ironclad Merger Corporation, a California corporation and
wholly-owned subsidiary of EUTA ("MERGERCO"), and Ironclad Performance Wear
Corporation, a California corporation ("IRONCLAD"). EUTA, MergerCo and Ironclad
are sometimes referred to herein individually as a "PARTY" and collectively as
the "PARTIES."
RECITALS:
A. The Parties intend to effect the acquisition of Ironclad by EUTA
through the statutory merger of MergerCo with and into Ironclad in accordance
with this Agreement and the CGCL, upon the consummation of which MergerCo will
cease to exist as a separate entity and Ironclad will survive as a wholly-owned
subsidiary of EUTA. The Parties intend this transaction to be treated as a
reorganization under Section 386(a) of the Code.
B. The respective Boards of Directors of each of the Parties have (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger (as defined below), are advisable and in the best interests
of their respective shareholders, and (ii) adopted this Agreement and the
transactions contemplated hereby.
C. The Parties desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
AGREEMENT:
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficient of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS.
1.1 CERTAIN DEFINITIONS. The following terms used herein, as used
in this Agreement, shall have the following meanings:
"AFFILIATE" of any specified Person means any other Person
directly or indirectly Controlling or Controlled by or under direct or indirect
common Control with such specified Person.
"BENEFIT PLAN" means any collective bargaining agreement or
any bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical or
other plan, arrangement or understanding (whether or not legally binding) under
which a Party to this Agreement currently has an obligation to provide benefits
to any current or former employee, officer or director of such Party.
"CGCL" means the California General Corporation Law.
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"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTROL," when used with respect to any specified Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise.
"EFFECTIVE TIME" means the date and time the Merger becomes
effective as specified in the Certificate of Merger or as otherwise provided in
accordance with the CGCL.
"EUTA COMMON STOCK" means the Common Stock, par value $0.001
per share, of EUTA.
"EUTA REORGANIZATION" shall mean a transaction or series of
transactions pursuant to which certain shares of the outstanding capital stock
of EUTA are cancelled for adequate consideration and the remaining capital stock
is subsequently subject to a stock split, substantially on the terms outlined on
EXHIBIT B, such that the representations and warranties of EUTA contained in
SECTION 4.3.1 shall be true and correct in all material respects as of the
Closing Date.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE RATIO" means the Ironclad Common Stock Exchange
Ratio, the Ironclad Series A Preferred Stock Exchange Ratio, or Ironclad Series
B Preferred Stock Exchange Ratio, as applicable.
"FULLY-DILUTED IRONCLAD COMMON STOCK" means those shares of
Ironclad Common Stock (a) issued and outstanding at the Closing Date; (b)
issuable upon conversion of all Ironclad Series A Preferred Stock and Ironclad
Series B Preferred Stock issued and outstanding at the Closing Date, (c)
issuable upon the exercise of all options to purchase Ironclad Common Stock
issued and outstanding at the Closing Date; (d) issuable upon the exercise of
all warrants to purchase Ironclad Common Stock issued and outstanding at the
Closing Date; and (e) issuable upon the conversion of all shares of Ironclad
Series A Preferred Stock and Ironclad Series B Preferred Stock issuable upon the
exercise of warrants to purchase Ironclad Series A Preferred Stock and Ironclad
Series B Preferred Stock issued and outstanding as of the Closing Date.
"GAAP" means generally accepted accounting principles as
applied in the United States of America.
"GOVERNMENTAL ENTITY" means any national, state, municipal, or
other government or any court, administrative or regulatory agency or
organization (including without limitation, any self-regulatory organization),
or commission or other governmental authority or agency, domestic or foreign,
including without limitation, the National Association of Securities Dealers and
the NASDAQ Stock Market.
"INTELLECTUAL PROPERTY" means any and all United States and
foreign: (i) patent registrations and patent applications (including all
reissues, divisions, continuations, continuations-in-part, extensions and
reexaminations) and all rights therein and all improvements
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to the inventions disclosed in each such registration or application, (ii)
trademarks, service marks, trade dress, trade names and corporate names, whether
or not registered, including but not limited to all common law rights, and
registrations and applications for registration thereof, (iii) copyrights
(including but not limited to copyrights on designs) (registered or otherwise)
and registrations and applications for registration thereof, (iv) computer
software, including, without limitation, source code, operating systems and
specifications, data, data bases, files, documentation and other materials
related thereto, data and documentation, (v) trade secrets and confidential
technical and business information (including but not limited to formulas,
compositions, and inventions reduced to practice, whether or not patentable),
(vi) confidential technology (including know-how and show-how), manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
information, (vii) any right arising under any law providing protection to
industrial or other designs, (viii) all rights to obtain and rights to apply for
patents, and to register trademarks and copyrights, and (ix) all rights to xxx
or recover and retain damages and costs and attorneys fees for present and past
infringement of any of the foregoing.
"IRONCLAD COMMON STOCK EXCHANGE RATIO" means a number equal
to: the quotient of X divided by Y, where X is the number of shares of EUTA
Common Stock constituting the Merger Consideration, and Y is the number of
shares of Fully Diluted Ironclad Common Stock, as adjusted to reflect
appropriately the effect of any stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible into EUTA
Common Stock), reorganization, recapitalization, reclassification or other like
change with respect to EUTA Common Stock occurring on or after the date hereof
and prior to the Effective Time.
"IRONCLAD COMMON STOCK" means the Common Stock of Ironclad.
"IRONCLAD PREFERRED STOCK" means the Ironclad Series A
Preferred Stock and Ironclad Series B Preferred Stock.
"IRONCLAD SERIES A PREFERRED EXCHANGE RATIO" means a number
equal to: the quotient of X divided by Y, where X is the number of shares of
EUTA Common Stock constituting the Merger Consideration , and Y is the number of
shares of Fully Diluted Ironclad Common Stock, as adjusted to reflect
appropriately the effect of any stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible into EUTA
Common Stock), reorganization, recapitalization, reclassification or other like
change with respect to EUTA Common Stock occurring on or after the date hereof
and prior to the Effective Time.
"IRONCLAD SERIES B PREFERRED EXCHANGE RATIO" means a number
equal to: 1.031 multiplied by the quotient of X divided by Y, where X is the
number of shares of EUTA Common Stock constituting the Merger Consideration, and
Y is the number of shares of Fully Diluted Ironclad Common Stock, as adjusted to
reflect appropriately the effect of any stock split, reverse stock split, stock
dividend (including any dividend or distribution of securities convertible into
EUTA Common Stock), reorganization, recapitalization, reclassification or other
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like change with respect to EUTA Common Stock occurring on or after the date
hereof and prior to the Effective Time.
"IRONCLAD SERIES A PREFERRED STOCK" means the Series A
Preferred Stock of Ironclad.
"IRONCLAD SERIES B PREFERRED STOCK" means the Series B
Preferred Stock of Ironclad.
"IRONCLAD SHARES" means, collectively, the Ironclad Common
Stock, Ironclad Series A Preferred Stock, and Ironclad Series B Preferred Stock.
"IRONCLAD SHAREHOLDERS" means, collectively, the holders of
the Ironclad Common Stock, Ironclad Series A Preferred Stock, and Ironclad
Series B Preferred Stock.
"LICENSES" means all notifications, licenses, permits
(including, without limitation, environmental, construction and operation
permits), franchises, certificates, approvals, exemptions, classifications,
registrations and other similar documents and authorizations issued by a
Governmental Entity, and applications therefor.
"LIENS" mean all mortgages, liens, pledges, security
interests, charges, claims, restrictions and encumbrances of any nature
whatsoever.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means,
when used in respect to Ironclad or EUTA, any change or effect that either
individually or in the aggregate with all other such changes or effects is
materially adverse to the business, assets, properties, condition (financial or
otherwise) or results of operations of such Party and its Subsidiaries taken as
a whole.
"MERGER" means the merger of MergerCo with and into Ironclad
pursuant to this Agreement and the CGCL.
"MERGERCO COMMON STOCK" means the Common Stock of MergerCo.
"MERGER CONSIDERATION" means nineteen million seven hundred
six thousand three hundred fifty-three (19,706,353) shares of EUTA Common Stock
issued as of the Effective Time.
"PERSON" means any individual, corporation, partnership,
limited liability company, joint venture, trust, unincorporated organization,
government or any agency or political subdivision thereof or other entity.
"SEC" means the United States Securities and Exchange
Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBSIDIARY" of any Person means another Person, an amount of
the voting securities, other voting ownership or voting partnership interests of
another Person, which are
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sufficient to elect at least a majority of such other Person's board of
directors or other governing body (or, if there are no such voting interests,
fifty percent (50%) or more of such other Person's equity interests).
"TAXES" means all taxes, assessments, charges, duties, fees,
levies or other governmental charges (including interest, penalties or additions
associated therewith), including income, franchise, capital stock, real
property, personal property, tangible, withholding, employment, payroll, social
security, social contribution, unemployment compensation, disability, transfer,
sales, use, excise, gross receipts, value-added and all other taxes of any kind
for which a Person may have any liability imposed by any Governmental Entity,
whether disputed or not, and any charges, interest or penalties imposed by any
Governmental Entity.
"TAX RETURN" means any report, return, declaration or other
information required to be supplied to a Governmental Entity in connection with
Taxes, including estimated returns and reports of every kind with respect to
Taxes.
1.2 OTHER DEFINITIONS. The following terms are defined in the
following sections of this Agreement:
DEFINED TERM SECTION
------------ -------
14f-1 Information Statement..................................... 6.2
2005 Stock Incentive Plan....................................... 3.3
Acquisition Proposal............................................ 6.7
Agreement....................................................... Preamble
Assumed Option and Warrant...................................... 2.9.8
Cash Reserve.................................................... 4.8
Certificate of Merger........................................... 2.3
Certificates.................................................... 2.10.1
Closing......................................................... 2.2
Closing Date.................................................... 2.2
Equity Financing................................................ 7.3.8
EUTA Contracts.................................................. 4.20
EUTA Disclosure Schedule........................................ 4
EUTA SEC Documents.............................................. 4.6.1
EUTA's Accountant............................................... 6.2
Ironclad........................................................ Preamble
Ironclad Contracts.............................................. 3.14
Ironclad Disclosure Schedule.................................... 3
Ironclad Financial Statements................................... 3.6
Ironclad Intellectual Property.................................. 3.18
Ironclad Shareholders' Approval................................. 3.28
Ironclad Subsidiaries........................................... 3.2
Letter of Transmittal........................................... 2.10.1
MergerCo........................................................ Preamble
Merger Consideration Shares..................................... 2.9.1
Merger Consideration Reserved Shares............................ 2.9.1
Merger Expenses Closing Payment................................. 6.12
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Merger Share Certificate........................................ 2.10.2
NASD............................................................ 4.9
OTC BB.......................................................... 4.9
Party(ies)...................................................... Preamble
Pre-Closing Obligations......................................... 6.11
Press Release................................................... 6.3
Pro Forma Financial Statements.................................. 6.4
Resignations.................................................... 6.1
Secretary of State.............................................. 2.3
2005 Stock Incentive Plan....................................... 4.14
Surviving Corporation........................................... 2.1
Terminated EUTA Contracts....................................... 4.20
Transaction Form 8-K............................................ 6.3
2. THE MERGER.
2.1 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the CGCL, MergerCo shall be merged
with and into Ironclad at the Effective Time. At the Effective Time, the
separate existence of MergerCo shall cease, and Ironclad shall continue as the
surviving corporation following the Merger (the "SURVIVING CORPORATION"). The
corporate existence of Ironclad, with all its purposes, rights, privileges,
franchises, powers and objects, shall continue unaffected and unimpaired by the
Merger and, as the Surviving Corporation, it shall be governed by the laws of
the State of California. As a result of the Merger, the outstanding shares of
capital stock of Ironclad and MergerCo shall be converted or cancelled in the
manner provided in SECTION 2.9.
2.2 CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to SECTION
8.1 and subject to the satisfaction or waiver (where applicable) of the
conditions set forth in SECTION 7, the closing of the Merger (the "CLOSING")
will take place at 10:00 a.m. on the first business day after satisfaction of
the conditions set forth in SECTION 7 (or as soon as practicable thereafter
following satisfaction or waiver of the conditions set forth in SECTION 7) (the
"CLOSING DATE"), at the offices of Xxxxxx Xxxxxxxx & Markiles, LLP, unless
another date, time or place is agreed to in writing by the parties hereto.
2.3 ACTIONS AND DELIVERIES AT CLOSING. An agreement of merger in the
form attached hereto as EXHIBIT C (the "CERTIFICATE OF MERGER") shall be duly
prepared and executed, and shall be filed with the Secretary of State of the
State of California (the "SECRETARY OF STATE") in accordance with the CGCL on
the Closing Date. The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of State, or at such other time as is
permissible in accordance with the CGCL and as EUTA and Ironclad shall agree
should be specified in the Certificate of Merger. In addition, at the Closing,
2.3.1 Ironclad will deliver to EUTA:
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(a) An officers' certificate, substantially in
the form of EXHIBIT D, duly executed on
Ironclad's behalf, as to whether each
condition specified in SECTIONS 7.2.1
through 7.2.7, has been satisfied in all
respects.
(b) A Secretary's certificate, substantially in
the form of EXHIBIT E, duly executed on
Ironclad's behalf.
(c) A legal opinion of counsel to Ironclad,
substantially in the form of EXHIBIT F
hereto.
2.3.2 EUTA will deliver to Ironclad:
(a) An officers' certificate, substantially in
the form of EXHIBIT G, duly executed on EUTA
and MergerCo's behalf, as to whether each
condition specified in SECTIONS 7.3.1
through 7.3.6 and 7.3.12 has been satisfied
in all respects.
(b) A Secretary's certificate, substantially in
the form of EXHIBIT H, duly executed on each
of EUTA's and MergerCo's behalf.
(c) A legal opinion of counsel to EUTA, in a
form acceptable to Ironclad, in its sole
discretion.
2.4 EFFECTS OF THE MERGER. Subject to the foregoing, the effects of the
Merger shall be as provided in the applicable provisions of the CGCL. At the
Effective Time all MergerCo's property, rights, privileges, powers, and
franchises will vest in the Surviving Corporation, and all debts, liabilities,
and duties of MergerCo will become the Surviving Corporation's debts,
liabilities, and duties.
2.5 GOVERNING DOCUMENTS OF THE SURVIVING CORPORATION. As of the
Effective Time, by virtue of the Merger and without any action on the part of
the Parties:
2.5.1 ARTICLES OF INCORPORATION. The Articles of
Incorporation of the Surviving Corporation shall be
amended and restated in its entirety to read as set
forth on EXHIBIT J hereto; and
2.5.2 BYLAWS. The Bylaws of Ironclad, as in effect
immediately prior to the Effective Time, will be the
Surviving Corporation's Bylaws until thereafter
amended.
2.6 DIRECTORS OF THE SURVIVING CORPORATION. At the Effective Time, the
Board of Directors of the Surviving Corporation shall consist of R.D. Xxxxx
Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxxxxx and Vane X. Xxxxxxx, who shall serve as
the directors of the Surviving Corporation, each of such directors to hold
office, subject to the applicable provisions of the Articles of Incorporation
and Bylaws of the Surviving Corporation, in each case, until their respective
successors shall have been elected and qualified or until otherwise provided by
law. All other directors of MergerCo immediately prior to the Effective Time
shall resign, effective as of the Effective Time.
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2.7 OFFICERS OF THE SURVIVING CORPORATION. At the Effective Time
the officers of MergerCo immediately prior to the Effective Time shall resign,
effective as of the Effective Time, and shall be replaced by the following
individuals:
Xxxxxx Xxxxxx............... President and Chief Executive Officer
Xxxxxx X. Xxxxx............. Chief Financial Officer
Xxxxxx Xxxxx................ Secretary
Xxxxxx Xxxxxxxx............. Chief Operating Officer
who shall serve as officers of the Surviving Corporation subject to the
applicable provisions of the Articles of Incorporation and Bylaws of the
Surviving Corporation, in each case, until their respective successors shall
have been duly appointed or until otherwise provided by law.
2.8. EFFECT ON CAPITAL STOCK OF MERGERCO. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof,
each share of MergerCo Common Stock issued and outstanding immediately prior to
the Effective Time shall automatically be converted into and become one validly
issued, fully paid and nonassessable share of Common Stock of the Surviving
Corporation.
2.9. EFFECT ON CAPITAL STOCK OF IRONCLAD. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof:
2.9.1. AGGREGATE CONSIDERATION TO BE RECEIVED BY IRONCLAD
SHAREHOLDERS. The aggregate merger consideration,
which shall include (a) the shares to be issued at
the Effective Time to Ironclad Shareholders (the
"MERGER CONSIDERATION SHARES") plus (b) the number of
shares to be reserved for issuance by EUTA upon the
exercise of any Assumed Options and Warrants (the
"MERGER CONSIDERATION RESERVED SHARES"), will be that
number of fully paid, nonassessable shares of EUTA
Common Stock constituting the Merger Consideration.
To the extent necessary, the Parties shall make
appropriate adjustment to the Ironclad Common
Exchange Ratios, Ironclad Series A Preferred Exchange
Ratio, or Ironclad Series B Preferred Exchange Ratio,
as applicable, to ensure that the sum of the Merger
Consideration Shares and Merger Consideration
Reserved Shares shall be equal to the Merger
Consideration.
2.9.2 CONVERSION OF IRONCLAD COMMON STOCK. Each issued and
outstanding share of Ironclad Common Stock (other
than shares of Ironclad Common Stock, if any, that
are held by EUTA or MergerCo) shall be converted into
the right to receive that number of fully paid and
nonassessable shares of EUTA Common Stock equal to
the Ironclad Common Exchange Ratio, subject in all
respects to SECTION 2.9.1.
2.9.3 CONVERSION OF IRONCLAD SERIES A PREFERRED STOCK. Each
issued and outstanding share of Ironclad Series A
Preferred Stock (other than shares of Ironclad Series
A Preferred Stock, if any, that are held by EUTA or
MergerCo) shall be converted into the right to
receive that number of fully paid and nonassessable
shares of EUTA Common Stock equal to the Ironclad
Series A Preferred Exchange Ratio, subject in all
respects to SECTION 2.9.1.
2.9.4 CONVERSION OF IRONCLAD SERIES B PREFERRED STOCK. Each
issued and outstanding share of Ironclad Series B
Preferred Stock (other than shares of Ironclad Series
B
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Preferred Stock, if any, that are held by EUTA or
MergerCo) shall be converted into the right to
receive that number of fully paid and nonassessable
shares of EUTA Common Stock equal to the Ironclad
Series B Preferred Exchange Ratio, subject in all
respects to SECTION 2.9.1.
2.9.5 CANCELLATION OF TREASURY SHARES AND SHARES HELD BY
EUTA. Any and all Ironclad Shares owned by EUTA or
MergerCo or held in the treasury of Ironclad shall be
cancelled and cease to exist at the Effective Time,
and no consideration shall be paid with respect
thereto.
2.9.6 NO FRACTIONAL SHARES. No fractional shares of EUTA
Common Stock shall be issued in the Merger. If the
number of shares a holder of Ironclad Shares holds
immediately prior to the Closing multiplied by the
applicable exchange ratio would result in the
issuance of a fractional share of EUTA Common Stock,
that product will be rounded down to the nearest
whole number of shares of EUTA Common Stock if it is
less than the fraction of one-half of one (0.5) share
of EUTA Common Stock or rounded up to the nearest
whole number of shares of EUTA Common Stock if the
said product is equal to or greater than the fraction
of one-half of one (0.5) share of EUTA Common Stock.
2.9.7 CANCELLATION AND RETIREMENT OF IRONCLAD SHARES. As of
the Effective Time, all Ironclad Shares issued and
outstanding immediately prior to the Effective Time
shall no longer be outstanding and shall
automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate
representing any such Ironclad Shares shall cease to
have any rights with respect thereto, except the
right to receive the Merger Consideration per share
upon the surrender of such certificate in accordance
with SECTION 2.10, without any interest thereon,
subject to any applicable withholding tax.
2.9.8 STOCK OPTIONS AND WARRANTS. At the Effective Time,
all options to purchase shares of Ironclad Common
Stock then outstanding and all warrants to purchase
shares of Ironclad Common Stock or Ironclad Preferred
Stock then outstanding, in each case whether vested
or unvested, shall be assumed by EUTA or replaced
with EUTA options and warrants on substantially
identical terms (each an "ASSUMED OPTION" or "ASSUMED
WARRANT" and together, each an "ASSUMED OPTION AND
WARRANT") in accordance with this SECTION 2.9.8 ,
provided that warrants to purchase shares of Ironclad
Common Stock or Ironclad Preferred Stock will be
exercisable into shares of EUTA Common Stock based
Exchange Ratio applicable thereto. Each Assumed
Option and Warrant will continue to have, and be
subject to, the same terms and conditions of such
options immediately prior to the Effective Time
(including, without limitation, any repurchase rights
or vesting provisions and provisions regarding the
acceleration of vesting on certain transactions),
except that (i) each Assumed Option and Warrant will
be exercisable (or will become exercisable in
accordance with its terms) for that number of whole
shares of EUTA Common Stock equal to the product of
the number of shares of Ironclad Common Stock or
Ironclad Preferred Stock that were issuable upon
exercise of such Ironclad option or warrant
immediately prior to the Effective Time multiplied by
the Ironclad Common Exchange Ratio, Ironclad Series A
Preferred Stock Exchange Ratio, or Ironclad Series B
Preferred Stock Exchange Ratio, as applicable, and
(ii) the per share exercise price for the shares of
EUTA Common Stock issuable upon exercise of each
Assumed Option and Warrant will be equal to the
quotient determined by dividing the exercise price
per share of Ironclad Common
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Stock at which such Ironclad option or warrant was
exercisable immediately prior to the Effective Time
by the Ironclad Common Exchange Ratio.
2.10 EXCHANGE OF CERTIFICATES.
2.10.1 EXCHANGE PROCEDURES. As soon as reasonably
practicable after the Effective Time, EUTA shall
deliver to each holder of record of a certificate or
certificates which, immediately prior to the
Effective Time represented outstanding shares of
Ironclad Shares (the "CERTIFICATES") whose shares are
converted pursuant to SECTION 2.9 into the right to
receive Merger Consideration: (i) a letter of
transmittal (the "LETTER OF TRANSMITTAL") (which
shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to EUTA
or its designated agent and shall be in such form and
have such other customary provisions as EUTA may
reasonably specify), and (ii) instructions for use in
effecting the surrender of the Certificate in
exchange for the Merger Consideration allocable to
the Ironclad Shares formerly represented thereby.
2.10.2 MERGER SHARE CERTIFICATES. Upon surrender of a
Certificate for cancellation to EUTA, or to any agent
or agents as may be appointed by EUTA, together with
the Letter of Transmittal, duly completed and
executed in accordance with its terms and such other
documents as EUTA or its agent or agents, the holder
of such Certificate shall be entitled to receive in
exchange therefore, a certificate ("MERGER SHARE
CERTIFICATE") representing the number of shares of
EUTA Common Stock which such holder has the right to
receive pursuant to the provisions of SECTION 2.9 and
the Certificate so surrendered shall forthwith be
cancelled. If any certificate for such EUTA Common
Stock is to be issued in a name other than that in
which the certificate for Ironclad Shares surrendered
for exchange is registered, it shall be a condition
of such exchange that the certificate so surrendered
shall be properly endorsed, with signature
guaranteed, or otherwise in proper form for transfer
and that the Person requesting such exchange shall
pay to EUTA or its transfer agent any transfer or
other taxes or other costs required by reason of the
issuance of certificates for such EUTA Common Stock
in a name other than that of the registered holder of
the certificate surrendered, or establish to the
satisfaction of EUTA or its transfer agent that all
taxes have been paid. Until surrendered as
contemplated by this SECTION 2.10.2, each Certificate
shall be deemed at any time after the Effective Time
to represent only the right to receive upon such
surrender the Merger Consideration as contemplated by
SECTION 2.9.
2.10.3 LOST CERTIFICATES. If any Certificate has been lost,
stolen or destroyed, upon the making of an affidavit
of that fact by the Person claiming such Certificate
to be lost, stolen or destroyed and, if required by
EUTA, the posting by such Person of a bond in such
reasonable amount as EUTA may direct as indemnity
against any claim that may be made against it with
respect to such Certificate, EUTA shall issue in
exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration due to such
Person as provided in SECTION 2.9.
2.10.4 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions with respect to EUTA
Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered
Certificate for Ironclad Shares with respect to the
shares of EUTA Common Stock, the right to receive
which is represented thereby, until the surrender of
such Certificate in accordance with this SECTION
2.10.
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2.10.5 NO FURTHER OWNERSHIP RIGHTS IN IRONCLAD SHARES. All
shares of EUTA Common Stock issued upon the surrender
of the Certificates in accordance with the terms of
this SECTION 2, shall be deemed to have been issued
(and paid) in full satisfaction of all rights
pertaining to Ironclad Shares theretofore represented
by such certificates.
2.10.6 NO LIABILITY. None of the Parties shall be liable to
any Person in respect of any shares of EUTA Common
Stock (or dividends or distributions with respect
thereto) delivered to a public official pursuant to
any applicable abandoned property, escheat or similar
law. If any certificates representing Ironclad Shares
shall not have been surrendered prior to the first
(1st) anniversary of the Closing, any such shares,
dividends or distributions in respect of such
certificate shall, to the extent permitted by
applicable law, become the property of EUTA, free and
clear of all claims or interests of any Person
previously entitled thereto.
3. REPRESENTATIONS AND WARRANTIES OF IRONCLAD.
Except as set forth in the disclosure schedule delivered by Ironclad to
EUTA at the time of execution of this Agreement and attached hereto (the
"IRONCLAD DISCLOSURE SCHEDULE"), Ironclad represents and warrants to EUTA as
follows:
3.1 ORGANIZATION, STANDING AND CORPORATE POWER. Ironclad is a
corporation validly existing and in good standing under the laws of the State of
California and has the requisite corporate power and authority to carry on its
business as now being conducted and currently contemplated to be conducted.
Ironclad is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a Material Adverse Effect on
Ironclad.
3.2 SUBSIDIARIES. The only direct or indirect Subsidiaries of Ironclad
are listed in the Ironclad Disclosure Schedule (the "IRONCLAD SUBSIDIARIES").
All the outstanding shares of capital stock of each Ironclad Subsidiary which is
a corporation have been validly issued and are fully paid and nonassessable and,
except as set forth in the Ironclad Disclosure Schedule, are owned (of record
and beneficially) by Ironclad, free and clear of all Liens. Except for the
capital stock of the Ironclad Subsidiaries, which are corporations, Ironclad
does not own, directly or indirectly, any capital stock or other ownership
interest in any corporation, partnership, business association, joint venture or
other entity.
3.3 CAPITAL STRUCTURE. The authorized capital stock of Ironclad
consists of 100,000,000 shares, 60,000,000 shares of which are designated as
Ironclad Common Stock, with no par value, 40,000,000 shares of which are
designated as Preferred Stock, of which 23,000,000 are designated as Series A
Preferred Stock and 3,666,666 are designated Series B Preferred Stock. Of the
authorized capital stock of Ironclad, 23,486,599 shares of Ironclad Common
Stock, 13,918,743 shares of Ironclad Series A Preferred Stock, and 594,570
shares of Ironclad Series B Preferred Stock are issued and outstanding. The
Ironclad Board of Directors has reserved for issuance 7,000,000 shares of common
stock pursuant to its 2005 Stock Incentive Plan (the "2005 STOCK INCENTIVE
PLAN"). 291,344 shares of common stock have been issued upon the exercise of
options granted under the Ironclad 2005 Stock Incentive Plan and options to
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purchase an aggregate of 5,999,032 shares of Ironclad Common Stock under the
Ironclad 2005 Stock Incentive Plan are currently outstanding. Warrants to
purchase an aggregate of 1,208,393 shares of Ironclad Common Stock, 505,437
shares of Ironclad Series A Preferred Stock and 21,667 shares of Series B
Preferred Stock are currently outstanding. In addition, Ironclad has committed
to issue, or cause a merger partner to issue, warrants to purchase common stock
of Ironclad, or warrants to purchase the common stock of such merger partner,
pursuant to (a) that certain Loan Agreement, dated October 21, 2005, by and
between Ironclad and Westrec Capital Partners, Inc., and (b) those certain Stock
Purchase Agreements dated March 8, 2006 between Ironclad and those persons
electing to participate in the bridge financing which closed March 8, 2006.
Except as set forth above, no shares or other equity securities of Ironclad are
issued, reserved for issuance or outstanding. All outstanding shares of Ironclad
are duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no outstanding bonds, debentures, notes
or other indebtedness or other securities of Ironclad having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which shareholders of Ironclad may vote. The Ironclad
Disclosure Schedule sets forth the outstanding capitalization of Ironclad,
including a list of all holders of Ironclad Shares and their respective
holdings. Except as set forth on the Ironclad Disclosure Schedule, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Ironclad is a
party or by which it is bound obligating Ironclad to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares or other equity or
voting securities of Ironclad or obligating Ironclad to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. There are no outstanding contractual
obligations, commitments, understandings or arrangements of Ironclad or any
Ironclad Subsidiaries to repurchase, redeem or otherwise acquire or make any
payment in respect of any securities of Ironclad. There are no agreements or
arrangements pursuant to which Ironclad is or could be required to register
Ironclad Common Stock or other securities under the Securities Act, or other
agreements or arrangements with or among any security holders of Ironclad with
respect to securities of Ironclad.
3.4 AUTHORITY. Ironclad has the requisite corporate and other power and
authority to enter into this Agreement and, subject to obtaining the Ironclad
Shareholders' Approval, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Ironclad and the consummation by Ironclad of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
Ironclad; the Board of Directors has recommended adoption of this Agreement by
the shareholders of Ironclad; and no other corporate proceedings on the part of
Ironclad or its shareholders are necessary to authorize the execution, delivery
and performance of this Agreement by Ironclad and the consummation by Ironclad
of the transaction contemplated hereby, other than obtaining the Ironclad
Shareholders' Approval. This Agreement has been duly executed and delivered by
Ironclad and constitutes a valid and binding obligation of Ironclad, enforceable
against Ironclad in accordance with its terms, subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforceability of creditors'
rights generally, general equitable principles and the discretion of courts in
granting equitable remedies.
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3.5 NON-CONTRAVENTION. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions hereof will not, conflict with, or result in any
breach or violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of or "put" right with respect to any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
properties or assets of Ironclad under, (i) the Articles of Incorporation or
Bylaws of Ironclad, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Ironclad, its properties or assets, or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule, regulation
or arbitration award applicable to Ironclad, its properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts, breaches,
violations, defaults, rights, losses or Liens that individually or in the
aggregate would not have either a Material Adverse Effect on Ironclad or would
not prevent, hinder or delay the ability of Ironclad to consummate the
transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, or notice to, any
Governmental Entity is required by or with respect to Ironclad in connection
with the execution and delivery of this Agreement by Ironclad or the
consummation by Ironclad of the transactions contemplated hereby, except, with
respect to this Agreement, for the filing of the Certificate of Merger and other
appropriate merger documents required by the CGCL with the Secretary of State
and appropriate documents with the relevant authorities of other states in which
Ironclad is qualified to do business.
3.6 FINANCIALS STATEMENTS. Set forth on the Ironclad Disclosure
Schedule are the following financial statements (collectively the "IRONCLAD
FINANCIAL STATEMENTS"): (a) audited consolidated balance sheets and statements
of income, changes in shareholders' equity, and cash flow as of and for the
fiscal years ended December 31, 2003 and 2004 for Ironclad and (b) unaudited
consolidated balance sheets and statements of income, changes in shareholders'
equity, and cash flow as of and for the nine months ended September 30, 2005 for
Ironclad. The Ironclad Financial Statements have been prepared in accordance
with GAAP applied on a consistent basis throughout the periods covered thereby,
present fairly the financial condition of Ironclad as of such dates and the
results of operations of Ironclad for such periods, are correct and complete,
and are consistent with the books and records of Ironclad; PROVIDED, HOWEVER,
that the unaudited interim financial statements are subject to normal year-end
adjustments (which will not be material individually or in the aggregate) and
lack footnotes and other presentation items. Since September 30, 2005, Ironclad
has not effected any change in any method of accounting or accounting practice,
except for any such change required because of a concurrent change in GAAP.
3.7 NO UNDISCLOSED LIABILITIES. Ironclad does not have any liabilities
or obligations (whether absolute, contingent or otherwise), which are not
adequately reflected or provided for in the Ironclad Financial Statements,
except for liabilities and obligations (i) that have been incurred since the
date of the most recent balance sheet included in the Ironclad Financial
Statements in the ordinary course of business and are not (singly or in the
aggregate) material to Ironclad's business, and (ii) not due and payable or to
be performed or satisfied after the date hereof under Ironclad Contracts in
accordance with their terms, in each case which are not (singly or in the
aggregate) material to Ironclad's business.
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3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 2005,
Ironclad has conducted its business only in the ordinary course consistent with
past practice, and there is not and has not been: (i) any Material Adverse
Change with respect to Ironclad; (ii) any condition, event or occurrence which
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect or give rise to a Material Adverse Change with respect to
Ironclad; (iii) any event which, if it had taken place following the execution
of this Agreement, would not have been permitted by SECTION 5.1 without prior
consent of EUTA; or (iv) any condition, event or occurrence which could
reasonably be expected to prevent, hinder or materially delay the ability of
Ironclad to consummate the transactions contemplated by this Agreement.
3.9 LEGAL PROCEEDINGS. There is no suit, action, claim, arbitration,
proceeding or investigation pending or, to the knowledge of Ironclad, threatened
against, relating to or involving Ironclad, or real or personal property of
Ironclad, before any Governmental Entity or other third party. To the knowledge
of Ironclad, there is no basis for any such suit, action, proceeding or
investigation.
3.10 COMPLIANCE WITH LAW. To the knowledge of Ironclad, Ironclad is
compliance in all material respects with all applicable laws (including, without
limitation, applicable laws relating to zoning, environmental matters and the
safety and health of employees), ordinances, regulations and orders of all
Governmental Entities. Ironclad has not been charged with and, to the knowledge
of Ironclad, is not now under investigation with respect to, a violation of any
applicable law, regulation, ordinance, order or other requirement of a
Governmental Entity. Ironclad is not a party to or bound by any order, judgment,
decree or injunction of any Governmental Entity.
3.11 BENEFIT PLANS. The Ironclad Disclosure Schedule contains a true
and complete list of each Benefit Plan currently sponsored, maintained or
contributed to by Ironclad. Ironclad's records accurately reflect its employees'
employment histories, including their hours of service, and all such data is
maintained in a usable form.
3.12 CERTAIN EMPLOYEE PAYMENTS. Ironclad is not a party to any
employment agreement which could result in the payment to any current, former or
future director or employee of Ironclad of any money or other property or rights
or accelerate or provide any other rights or benefits to any such employee or
director as a result of the transactions contemplated by this Agreement, whether
or not (i) such payment, acceleration or provision would constitute a "parachute
payment" (within the meaning of Section 280G of the Code), or (ii) some other
subsequent action or event would be required to cause such payment, acceleration
or provision to be triggered.
3.13 TAX RETURNS AND TAX PAYMENTS. Ironclad is not subject to any
liabilities or claims for Taxes, including Taxes relating to prior periods,
other than those set forth or adequately reserved against in the Ironclad
Financial Statements or those incurred since the date of the most recent balance
sheet included in the Ironclad Financial Statements in the ordinary course of
business. Ironclad has duly filed when due all Tax Returns in connection with
and in respect of its business, assets and employees, and has timely paid and
discharged all amounts shown as due thereon. Ironclad has made available to EUTA
accurate and complete copies of all
15
of its Tax Returns for all periods, except those periods for which returns are
not yet due. Ironclad has not received any notice of any Tax deficiency
outstanding, proposed or assessed against or allocable to it, and has not
executed any waiver of any statute of limitations on the assessment or
collection of any Tax or executed or filed with any Governmental Entity any
contract or other agreement now in effect extending the period for assessment or
collection of any Taxes against it. There are no Liens for Taxes upon, pending
against or threatened against, any asset of Ironclad, other than Liens for Taxes
not yet due and payable. Ironclad is not subject to any Tax allocation or
sharing agreement.
3.14 CONTRACTS AND COMMITMENTS. Ironclad has made available to EUTA
true, correct and complete copies of each of the following contracts and
agreements to which Ironclad is a party or by which any of its assets or
properties are bound (together the "IRONCLAD CONTRACTS"):
3.14.1 all bonds, debentures, notes, loans, credit or loan
agreements or loan commitments, mortgages,
indentures, guarantees or other contracts relating to
the borrowing of money or binding upon any properties
or assets (real, personal or mixed, tangible or
intangible) of Ironclad;
3.14.2 all rental or use agreements, contracts, covenants or
obligations which may involve the payment by or to
Ironclad of more than $50,000;
3.14.3 any contract, agreement, commitment or obligation to
make any capital expenditures in excess of $50,000;
3.14.4 contracts, agreements, commitments or other
obligations with any Person containing any provision
or covenant limiting the ability of Ironclad to
engage in any line of business or to compete with or
to obtain products or services from any Person or
limiting the ability of any Person to compete with or
to provide products or services to, or obtain
products or services from, Ironclad, or covering
indemnification of another Person other than in the
ordinary course of business;
3.14.5 any profit-sharing or similar contract, agreement,
understanding or obligation with any Person;
3.14.6 contracts, agreements, commitments or other
obligations with respect to the purchase or sale by
or to Ironclad of any product, equipment, facility,
or similar item that by their respective terms do not
expire or terminate or are not terminable by
Ironclad, without penalty, premium or other liability
within 30 days or may involve the payment by or to
Ironclad of more than $50,000;
3.14.7 contracts, agreements, commitments or other
obligations to provide services or facilities by or
to Ironclad or to or by another Person which is not
terminable by Ironclad within 30 days without
penalty, premium or other liability or involving
payment by Ironclad or the other Person of more than
$50,000;
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3.14.8 any contract that provides for an increased payment
or benefit, or accelerated vesting, upon the
execution of this Agreement or in connection with the
transactions contemplated hereby;
3.14.9 any contract or agreement granting any Person a Lien
on all or any part of any asset of Ironclad;
3.14.10 any contract providing for the indemnification or
holding harmless by Ironclad of any of its
shareholders, officers, directors, employees or
representatives;
3.14.11 all other contracts, agreements, commitments or other
obligations whether or not made in the ordinary
course of business which may involve the expenditure
by Ironclad of funds in excess of $50,000 per
commitment (or under a group of similar commitments),
or are otherwise material to Ironclad; or
3.14.12 all other contracts, agreements, commitments, or
other obligations of any kind that involve or relate
to any Ironclad Shareholder, officer, director,
employee or consultant of Ironclad or any Affiliate
or relative thereof.
To the knowledge of Ironclad, the Ironclad Contracts are legal, valid, binding
and enforceable in accordance with their respective terms with respect to
Ironclad and each other party to such Ironclad Contracts. There are no existing
defaults or breaches of Ironclad under any Ironclad Contract (or events or
conditions which, with notice or lapse of time or both would constitute a
default or breach) and, to the knowledge of Ironclad, there are no such defaults
(or events or conditions which, with notice or lapse of time or both, would
constitute a default or breach) with respect to any third party to any Ironclad
Contract. Except as set forth on the Ironclad Disclosure Schedule, Ironclad is
not participating in any discussions or negotiations regarding modification of
or amendment to any Ironclad Contract or entry in any new material contract
applicable to Ironclad or the real or personal property of Ironclad. The
Ironclad Disclosure Schedule specifically identifies each Ironclad Contract set
forth therein that requires the consent of or notice to the other party thereto
to avoid any breach, default or violation of such contract, agreement or other
instrument in connection with the transactions contemplated by this Agreement.
3.15 RECEIVABLES. All of the receivables of Ironclad are enforceable,
represent BONA FIDE transactions, and arose in the ordinary course of business
of Ironclad, and are reflected properly in its books and records. All of
Ironclad's receivables are reasonably believed by Ironclad to be collectible in
accordance with past practice and the terms of such receivables, without set off
or counterclaims except to the extent of reserves therefor set forth in the most
recent balance sheet included in the Ironclad Financial Statements or, for
receivables arising subsequent to September 30, 2005, as reflected on the books
and records of Ironclad. To Ironclad's knowledge, no customer or supplier of
Ironclad has any reasonable basis to believe that it has or would be entitled to
any payment terms other than terms in the ordinary course of business, including
any prior course of conduct.
3.16 PERSONAL PROPERTY. Ironclad has good, clear and marketable
title to all the tangible properties and tangible assets reflected in Ironclad's
latest balance sheet as being owned
17
by Ironclad or acquired after the date thereof which are, individually or in the
aggregate, material to Ironclad's business (except properties sold or otherwise
disposed of since the date thereof in the ordinary course of business), free and
clear of all Liens. All equipment and other items of tangible personal property
and assets of Ironclad (a) are in good operating condition and in a state of
good maintenance and repair, ordinary wear and tear excepted, and (b) are usable
in the regular and ordinary course of Ironclad's business.
3.17 REAL PROPERTY. Ironclad does not own any real property. The
Ironclad Disclosure Schedule sets forth all real property leases to which
Ironclad is a party. Ironclad has a valid leasehold interest in such leased real
property, and such leases are in full force and effect. The improvements and
fixtures on such real property leased by Ironclad are in good operating
condition and in a state of good maintenance and repair, ordinary wear and tear
excepted.
3.18 INTELLECTUAL PROPERTY RIGHTS. Ironclad owns, or is licensed or
otherwise to its knowledge has the valid rights to use, all material
Intellectual Property used in the conduct of its business (the "IRONCLAD
INTELLECTUAL PROPERTY").
3.19 TRANSACTIONS WITH RELATED PARTIES. Ironclad is not a party to any
contract, lease, license, commitment or arrangement, written or oral, which,
were Ironclad a "registrant" under the Exchange Act, would be required to be
disclosed pursuant to Item 404(a) or (c) of Regulation S-B as promulgated by the
SEC, and there are no loans outstanding to or from any Person specified in Item
404(a) of Regulation S-B from or to Ironclad.
3.20 NO GUARANTIES. None of the obligations or liabilities of Ironclad
incurred in connection with the operation of its business is guaranteed by or
subject to a similar contingent obligation of any other Person. Ironclad has not
guaranteed or become subject to a similar contingent obligation in respect of
the obligations or liabilities of any other Person. There are no outstanding
letters of credit, surety bonds or similar instruments of Ironclad or any of its
Affiliates.
3.21 PRODUCT OR SERVICE DEFECTS; LIABILITY. Ironclad is not aware of
any material defects in any of its products or the design thereof, nor in any of
the services it provides. Ironclad has not received any customer complaints or
third party reports concerning alleged defects in its products, the design
thereof or its services that, if true, could have a Material Adverse Effect on
Ironclad, nor has Ironclad had any of its products returned by a purchaser
thereof other than for minor, nonrecurring warranty problems. Ironclad has no
liabilities (and, to the knowledge of Ironclad, there is no basis for any
present or future action against Ironclad giving rise to any liability) arising
out of any injury to individuals or property as a result of ownership,
possession or use of any product designed, manufactured, sold, leased or
delivered by Ironclad.
3.22 PRODUCT WARRANTY. Each product manufactured, sold, leased or
delivered by Ironclad has been manufactured, sold, leased or delivered, as the
case may be, in conformity in all material respects with all applicable law, all
contracts to which Ironclad is a party, and all express and implied warranties,
and Ironclad does not have any liability (and, to the knowledge of Ironclad,
there is no basis for any present or future actions against Ironclad giving rise
to any such liability) for replacement or repair thereof or other damages in
connection therewith, subject
18
only to the reserve for product warranty claims set forth on the face of the
Financial Statements (rather than in any notes thereto) as adjusted for the
passage of time through the Effective Time in accordance with Ironclad's
ordinary course of business, consistent with GAAP. No product designed,
manufactured, sold, leased or delivered by Ironclad is subject to any guaranty,
warranty or other indemnity or similar liability beyond the applicable standard
terms and conditions of sale or lease.
3.23 LICENSES. Ironclad owns or possesses all of the material Licenses
which are necessary to enable it to carry on its business as presently
conducted. All such Licenses are valid, binding, and in full force and effect.
The execution, delivery, and performance of this Agreement and the consummation
of the transactions contemplated hereby will not adversely affect any such
License.
3.24 RECORDS. The books of account, corporate records and minute books
of Ironclad are complete and correct in all material respects. Complete and
accurate copies of all such books of account, corporate records and minute books
and of the stock register of Ironclad have been made available to EUTA.
3.25 NO BROKERS OR FINDERS. Except as disclosed on the Ironclad
Disclosure Schedule, Ironclad has not, and its Affiliates, officers, directors
or employees have not, employed any broker or finder or incurred any liability
for any brokerage or finder's fee or commissions or similar payment in
connection with any of the transactions contemplated hereby.
3.26 BOARD RECOMMENDATION. The Board of Directors of Ironclad has
unanimously determined that the terms of the Merger are fair to and in the best
interests of the Ironclad Shareholders and recommended that the Ironclad
Shareholders approve the Merger.
3.27 DISCLOSURE. Neither this Agreement, nor any Schedule or Exhibit to
this Agreement, nor any other statements, documents or certificates made or
delivered in connection herewith or therewith contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein and therein not misleading in light of the circumstances under
which such statements were made.
3.28 REQUIRED IRONCLAD VOTE. The affirmative votes of the holders of a
majority of the shares of Ironclad Shares voting together as one class on an
as-converted basis, and the affirmative votes of the holders of not less than
two-thirds (2/3) of the Ironclad Preferred Stock are the only votes of the
holders of any class or series of Ironclad's securities necessary to approve the
Merger (the "IRONCLAD SHAREHOLDERS' APPROVAL").
4. REPRESENTATIONS AND WARRANTIES OF EUTA AND MERGERCO.
Except as set forth in the disclosure schedule delivered by EUTA to
Ironclad at the time of execution of this Agreement and attached hereto (the
"EUTA DISCLOSURE SCHEDULE"), EUTA and MergerCo, jointly and severally, represent
and warrant to Ironclad as follows:
4.1 ORGANIZATION, STANDING AND CORPORATE POWER. EUTA is validly
existing and in good standing under the laws of the State of Nevada, and has the
requisite corporate power and authority to carry on its business as now being
conducted. MergerCo is duly
19
organized, validly existing and in good standing under the laws of the State of
California, and has the requisite corporate power and authority to carry on its
business as now being conducted.
4.2 NO SUBSIDIARIES. Other than MergerCo, EUTA does not currently own,
directly or indirectly, any capital stock or other equities, securities or
interests in any other corporation or in any limited liability company,
partnership, joint venture or other association.
4.3 CAPITAL STRUCTURE.
4.3.1 The authorized capital stock of EUTA consists of
50,000,000 shares of EUTA Common Stock, $0.001 par
value, of which, 3,010,000 shares of EUTA Common
Stock are issued and outstanding as of the date of
this Agreement, and 3,489,444 shares of EUTA Common
Stock shall be issued and outstanding as of the
Closing Date. All outstanding shares of capital stock
of EUTA are, and all shares which may be issued
pursuant to this Agreement and in connection with the
Equity Financing, will be, when issued, duly
authorized, validly issued, fully paid and
nonassessable and, not subject to preemptive rights,
and issued in compliance with all applicable state
and federal laws concerning the issuance of
securities. There are no outstanding bonds,
debentures, notes or other indebtedness or other
securities of EUTA having the right to vote (or
convertible into, or exchangeable for, securities
having the right to vote) on any matters on which
holders of EUTA Common Stock may vote. Except as set
forth on the EUTA Disclosure Schedule, there are no
outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or
undertakings of any kind to which EUTA is a party or
by which any of them is bound obligating EUTA to
issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock
or other equity securities of EUTA or obligating EUTA
to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock
or other equity securities of EUTA or obligating EUTA
to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. There are no
outstanding contractual obligations, commitments,
understandings or arrangements of EUTA to repurchase,
redeem or otherwise acquire or make any payment in
respect of any shares of capital stock of EUTA. There
are no agreements or arrangements pursuant to which
EUTA is or could be required to register shares of
EUTA Common Stock or other securities under the
Securities Act or other agreements or arrangements
with or among any holder of EUTA securities with
respect to securities of EUTA. Upon the Closing, and
giving effect to the Equity Financing (assuming the
sale of 9,333,333 shares of EUTA Common Stock),
EUTA's capital structure shall be as described on
EXHIBIT K hereto.
4.3.2 The authorized capital stock of MergerCo consists of
one thousand (1000) shares of Common Stock, one
hundred (100) of which are issued and outstanding as
of the date of this Agreement and held by EUTA. All
outstanding shares of capital stock of MergerCo are
duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding bonds,
debentures, notes or other indebtedness or other
securities of MergerCo having the right to vote (or
convertible into, or exchangeable for, securities
having the right to vote) on any matters on which
holders of MergerCo Common Stock may vote. Other than
as provided in this Agreement, there are no
outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or
undertakings of any kind to which MergerCo is a party
or by which any of them is bound obligating MergerCo
to issue, deliver or sell, or cause to
20
be issued, delivered or sold, additional shares of
capital stock or other equity securities of MergerCo
or obligating MergerCo to issue, deliver or sell, or
cause to be issued, delivered or sold, additional
shares of capital stock or other equity securities of
MergerCo or obligating MergerCo to issue, grant,
extend or enter into any such security, option,
warrant, call, right, commitment, agreement,
arrangement or undertaking.
4.4 AUTHORITY. Each of EUTA and MergerCo has the requisite corporate
and other power and authority to enter into this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by each of EUTA and MergerCo and
the consummation by EUTA and MergerCo of the transactions contemplated hereby
have been duly authorized by the Board of Directors of EUTA and MergerCo and
EUTA as the sole shareholder of MergerCo; and no other corporate proceedings on
the part of EUTA or MergerCo are necessary to authorize the execution, delivery
and performance of this Agreement by EUTA and the consummation by EUTA and
MergerCo of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by each of EUTA and MergerCo and constitutes a valid and
binding obligation of each of EUTA and MergerCo, enforceable against such Party
in accordance with its terms, subject to applicable bankruptcy, insolvency and
other similar laws affecting the enforceability of creditors' rights generally,
general equitable principles and the discretion of courts in granting equitable
remedies.
4.5 NON-CONTRAVENTION. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions hereof will not, conflict with, or result in any
breach or violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of or "put" right with respect to any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
properties or assets of either EUTA or MergerCo under, (i) the Certificate or
Articles of Incorporation or Bylaws of EUTA or MergerCo, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to EUTA or
MergerCo, their respective properties or assets, or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule, regulation or
arbitration award applicable to EUTA or MergerCo, their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any such conflicts,
breaches, violations, defaults, rights, losses or Liens that individually or in
the aggregate could not have either a Material Adverse Effect on EUTA or
MergerCo or could not prevent, hinder or delay the ability of EUTA or MergerCo
to consummate the transactions contemplated by this Agreement. No consent,
approval, order or authorization of, or registration, declaration or filing
with, or notice to, any Governmental Entity is required by or with respect to
EUTA or MergerCo in connection with the execution and delivery of this Agreement
by EUTA or MergerCo or the consummation by EUTA and MergerCo of the transactions
contemplated hereby, except, with respect to this Agreement, for the filing of
the Certificate of Merger and other appropriate merger documents required by the
CGCL with the Secretary of State and appropriate documents with the relevant
authorities of other states in which EUTA is qualified to do business.
4.6 SEC DOCUMENTS; UNDISCLOSED LIABILITIES.
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4.6.1 For all periods subsequent to September 30, 2004,
EUTA has filed all reports, schedules, forms,
statements and other documents as required by the SEC
in a timely basis (or has received a valid extension
of such time of filing and has filed any such reports
or other documents prior to the expiration of any
such extension), and EUTA has delivered or made
available to Ironclad all reports, schedules, forms,
statements and other documents filed with or
furnished to the SEC during such period
(collectively, and in each case including all
exhibits and schedules thereto and documents
incorporated by reference therein, the "EUTA SEC
DOCUMENTS"). As of their respective dates (or, if
amended, supplemented or superseded by a filing prior
to the date hereof, then as of the date of such
amendment, supplement or superseding filing) the EUTA
SEC Documents complied in all material respects with
the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder
applicable to such EUTA SEC Documents, and none of
the EUTA SEC Documents (including any and all
consolidated financial statements included therein)
as of such date contained any untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary in order
to make the statements therein, in light of the
circumstances under which they were made, not
misleading. The consolidated financial statements of
EUTA included in such EUTA SEC Documents comply as to
form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto, have
been prepared in accordance with GAAP (except, in the
case of unaudited consolidated quarterly statements,
as permitted by Form 10-QSB of the SEC) applied on a
consistent basis during the periods involved (except
as may be indicated in the notes thereto), have been
reviewed by an independent accountant registered with
the Public Company Accounting Oversight Board and
fairly and accurately present the consolidated
financial position of EUTA as of the dates thereof
and the consolidated results of operations and
changes in cash flows for the periods covered thereby
(subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments as
determined by EUTA's independent accountants, which
are not expected to have a material adverse effect on
EUTA and its business). Except as set forth in the
EUTA SEC Documents, at the date of the most recent
financial statements of EUTA included in the EUTA SEC
Documents, EUTA did not have, and since such date
EUTA has not incurred, any liabilities or obligations
of any nature (whether accrued, absolute, contingent
or otherwise) except for liabilities and obligations
that have been incurred since the date of the most
recent balance sheet included in the EUTA Financial
Statements in the ordinary course of business and are
not (singly or in the aggregate) material to EUTA's
business, all of which are listed on the EUTA
Disclosure Schedule.
4.6.2 The EUTA SEC Documents include all certifications and
statements required of it, if any, by (i) Rule 13a-14
or 15d-14 under the Exchange Act, and (ii) 18 U.S.C.
Section 1350 (Section 906 of the Xxxxxxxx-Xxxxx Act
of 2002), and each of such certifications and
statements contain no qualifications or exceptions to
the matters certified therein other than a knowledge
qualification, permitted under such provision, and
have not been modified or withdrawn and neither EUTA
nor any of its officers has received any notice from
the SEC or any other Governmental Entity questioning
or challenging the accuracy, completeness, form or
manner of filing or submission of such certifications
or statements.
4.6.3 EUTA is in compliance in all material respects with
all of the provisions of the Xxxxxxxx-Xxxxx Act of
2002, and the provisions of the Exchange Act and the
22
Securities Act relating thereto which under the terms
of such provisions (including the dates by which such
compliance is required) have become applicable to
EUTA.
4.7 INTERESTED PARTY TRANSACTIONS Except as set forth in the EUTA
Disclosure Schedule or in EUTA's SEC Documents, no employee, officer, director
or stockholder of EUTA or a member of his or her immediate family is indebted to
EUTA, nor is EUTA indebted (or committed to make loans or extend or guarantee
credit) to any of them, other than (i) for payment of salary for services
rendered, (ii) reimbursement for reasonable expenses incurred on behalf of EUTA,
and (iii) for other employee benefits made generally available to all employees.
To EUTA's knowledge, none of such individuals has any direct or indirect
ownership interest in any Person with whom EUTA is affiliated or with whom EUTA
has a material contractual relationship, or any Person that competes with EUTA.
To EUTA's knowledge, no officer, director or stockholder or any member of their
immediate families is, directly or indirectly, interested in any material
contract with EUTA (other than such contracts as relate to any such individual
ownership of capital stock or other securities of EUTA).
4.8 INDEBTEDNESS; EUTA ASSETS. EUTA has no indebtedness for borrowed
money. Immediately prior to the Closing, EUTA will have no assets, except for
cash reserves earmarked for the payment of certain accounts payable and accrued
expenses of EUTA with respect to the period prior to Closing which remain
unpaid, which EUTA shall be responsible for payment following the Closing
pursuant to SECTION 6.12 hereof ("CASH RESERVE").
4.9 OVER-THE-COUNTER BULLETIN BOARD QUOTATION. EUTA Common Stock is
quoted on the Over-the-Counter Bulletin Board ("OTC BB"). There is no action or
proceeding pending or, to EUTA's knowledge, threatened against EUTA by NASDAQ or
NASD, Inc. ("NASD") with respect to any intention by such entities to prohibit
or terminate the quotation of EUTA Common Stock on the OTC BB.
4.10 COMPLIANCE WITH LAW. To the knowledge of EUTA, EUTA is compliance
in all material respects with all applicable laws (including, without
limitation, applicable laws relating to zoning, environmental matters and the
safety and health of employees), ordinances, regulations and orders of all
Governmental Entities. EUTA has not been charged with and, to the knowledge of
EUTA, is not now under investigation with respect to, a violation of any
applicable law, regulation, ordinance, order or other requirement of a
Governmental Entity. EUTA is not a party to or bound by any order, judgment,
decree or injunction of any Governmental Entity.
4.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
EUTA SEC Documents, since the date of the most recent financial statements
included in the EUTA SEC Documents, EUTA has conducted its business only in the
ordinary course consistent with past practice in light of its current business
circumstances, and there is not and has not been: (i) any Material Adverse
Change with respect to EUTA; (ii) any condition, event or occurrence which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or give rise to a Material Adverse Change with respect
to EUTA; (iii) any event which, if it had taken place following the execution of
this Agreement, would not have been permitted by SECTION 5.1 without the prior
consent of Ironclad; or (iv) any condition, event or occurrence
23
which could reasonably be expected to prevent, hinder or materially delay the
ability of EUTA to consummate the transactions contemplated by this Agreement.
4.12 INFORMATION SUPPLIED. None of the information included or
incorporated by reference in any documents to be filed by EUTA with the SEC or
any other Governmental Entity in connection with the Merger and the other
transactions contemplated hereby will, on the date of its filing or, in the case
of any information to be mailed to the Shareholders of EUTA, at the date it is
mailed to Shareholders of EUTA, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading or necessary to correct any statement in any
earlier communication which shall have become false or misleading, except that
no representation is made by EUTA with respect to information supplied in
writing by or on behalf of Ironclad for inclusion therein. The 14f-1 Information
Statement filed by EUTA with the SEC under the Exchange Act relating to the
transactions contemplated hereby, and any other documents to be filed with the
SEC in connection with the Merger, will comply as to form in all material
respects with the Exchange Act.
4.13 CERTAIN EMPLOYEE PAYMENTS. EUTA is not a party to any employment
agreement which could result in the payment to any current, former or future
director or employee of EUTA of any money or other property or rights or
accelerate or provide any other rights or benefits to any such employee or
director as a result of the transactions contemplated by this Agreement, whether
or not (i) such payment, acceleration or provision would constitute a "parachute
payment" (within the meaning of Section 280G of the Code), or (ii) some other
subsequent action or event would be required to cause such payment, acceleration
or provision to be triggered.
4.14 TAX RETURNS AND TAX PAYMENTS. EUTA is not subject to any
liabilities or claims for Taxes, including Taxes relating to prior periods,
other than those set forth or adequately reserved against in the financial
statements included in the EUTA SEC Documents or those incurred since the date
of the most recent balance sheet included in the EUTA SEC Documents in the
ordinary course of business. EUTA has duly filed when due all Tax Returns in
connection with and in respect of its business, assets and employees, and has
timely paid and discharged all amounts shown as due thereon. EUTA has made
available to Ironclad accurate and complete copies of all of its Tax Returns for
all periods, except those periods for which returns are not yet due. EUTA has
not received any notice of any Tax deficiency outstanding, proposed or assessed
against or allocable to it, and has not executed any waiver of any statute of
limitations on the assessment or collection of any Tax or executed or filed with
any Governmental Entity any contract or other agreement now in effect extending
the period for assessment or collection of any Taxes against it. There are no
Liens for Taxes upon, pending against or threatened against, any asset of EUTA.
EUTA is not subject to any Tax allocation or sharing agreement.
4.15 RECORDS. The books of accounts, corporate records and minute books
of EUTA and MergerCo are complete and correct in all material respects. Complete
and accurate copies of all such books of account, corporate records and minute
books of EUTA and MergerCo have been provided to Ironclad.
24
4.16 MERGERCO. MergerCo has been formed for the sole purpose of
effecting the Merger and, except as contemplated by this Agreement, MergerCo has
not conducted any business activities and does not have any material
liabilities.
4.17 NO BROKERS OR FINDERS. Neither EUTA, MergerCo, nor their
respective Affiliates, officers, directors or employees have, employed any
broker or finder or incurred any liability for any brokerage or finder's fee or
commissions or similar payment in connection with any of the transactions
contemplated hereby.
4.18 BOARD RECOMMENDATION. The Board of Directors of EUTA has
unanimously determined that the terms of the Merger are fair to and in the best
interests of the Shareholders of EUTA and no vote of the holders of shares of
EUTA Common Stock or any other EUTA security holder is necessary to approve the
Merger. In addition, the Board of Directors of EUTA has unanimously determined
that the terms of the Equity Financing are fair to and in the best interests of
the Shareholders of EUTA and no vote of the holders of shares of EUTA Common
Stock or any other EUTA security holder is necessary to approve the Equity
Financing.
4.19 LEGAL PROCEEDINGS. There is no suit, action, claim, arbitration,
proceeding or investigation pending or, to the knowledge of EUTA, threatened
against, relating to or involving EUTA, or real or personal property of EUTA,
before any Governmental Entity or other third party. To the knowledge of EUTA,
there is no basis for any such suit, action, proceeding or investigation.
4.20 CONTRACTS AND COMMITMENTS. EUTA Disclosure Schedule contains a
true, complete and accurate list of each of the following written, and to EUTA's
knowledge, oral, contracts, agreements, understandings or other obligations to
which EUTA is a party or by which any of its assets or properties are bound
(together the "EUTA CONTRACTS"):
4.20.1 all bonds, debentures, notes, loans, credit or loan
agreements or loan commitments, mortgages,
indentures, guarantees or other contracts relating to
the borrowing of money or binding upon any properties
or assets (real, personal or mixed, tangible or
intangible) of EUTA;
4.20.2 all rental or use agreements, contracts, covenants or
obligations which may involve the payment by or to
EUTA;
4.20.3 any contract, agreement, commitment or obligation to
make any capital expenditures;
4.20.4 contracts, agreements, commitments or other
obligations with any Person containing any provision
or covenant limiting the ability of EUTA to engage in
any line of business or to compete with or to obtain
products or services from any Person or limiting the
ability of any Person to compete with or to provide
products or services to, or obtain products or
services from, EUTA, or covering indemnification of
another Person other than in the ordinary course of
business;
25
4.20.5 any profit-sharing or similar contract, agreement,
understanding or obligation with any Person;
4.20.6 contracts, agreements, commitments or other
obligations with respect to the purchase or sale by
or to EUTA of any product, equipment, facility, or
similar item that by their respective terms do not
expire or terminate or are not terminable by EUTA,
without penalty, premium or other liability within 30
days or may involve the payment by or to EUTA of any
amount;
4.20.7 contracts, agreements, commitments or other
obligations to provide services or facilities by or
to EUTA or to or by another Person which is not
terminable by EUTA within 30 days without penalty,
premium or other liability or involving payment by
EUTA or the other Person of any money;
4.20.8 any contract that provides for an increased payment
or benefit, or accelerated vesting, upon the
execution of this Agreement or in connection with the
transactions contemplated hereby;
4.20.9 any contract or agreement granting any Person a Lien
on all or any part of any asset of EUTA;
4.20.10 any contract providing for the indemnification or
holding harmless by EUTA of any of its shareholders,
officers, directors, employees or representatives;
4.20.11 all other contracts, agreements, commitments or other
obligations whether or not made in the ordinary
course of business which may involve the expenditure
by EUTA of any amount (or under a group of similar
commitments), or are otherwise material to EUTA; or
4.20.12 all other contracts, agreements, commitments, or
other obligations of any kind that involve or relate
to any holder of EUTA Common Stock, officer,
director, employee or consultant of EUTA or any
Affiliate or relative thereof.
True, correct and complete copies of all EUTA Contracts have been made available
to Ironclad. To the knowledge of EUTA, the EUTA Contracts are legal, valid,
binding and enforceable in accordance with their respective terms with respect
to EUTA and each other party to such EUTA Contracts. There are no existing
defaults or breaches of EUTA under any EUTA Contract (or events or conditions
which, with notice or lapse of time or both would constitute a default or
breach) and, to the knowledge of EUTA, there are no such defaults (or events or
conditions which, with notice or lapse of time or both, would constitute a
default or breach) with respect to any third party to any EUTA Contract. Except
as set forth on the EUTA Disclosure Schedule, EUTA is not participating in any
discussions or negotiations regarding modification of or amendment to any EUTA
Contract or entry in any new material contract applicable to EUTA or the real or
personal property of EUTA. The EUTA Disclosure Schedule specifically identifies
each EUTA Contract set forth therein that requires the consent of or notice to
the other party thereto to avoid any breach, default or violation of such
contract, agreement or other instrument in connection with the transactions
contemplated by this Agreement.
26
The EUTA Disclosure Schedule contains a true, complete and accurate
list of each written contract, agreement, understanding or other obligation to
which EUTA was a party or by which any of its assets or properties was bound
that was terminated by EUTA since January 1, 2005 (together the "TERMINATED EUTA
Contracts"). True, correct and complete copies of all Terminated EUTA Contracts
have been made available to Ironclad. Each of the Terminated EUTA Contracts was
terminated in full compliance with its terms or with the written consent of the
other party to such Terminated EUTA Contract, in each case without any liability
to EUTA.
4.21 PERSONAL PROPERTY. EUTA has good, clear and marketable title to
all the tangible properties and tangible assets reflected in EUTA's latest
balance sheet as being owned by EUTA or acquired after the date thereof which
are, individually or in the aggregate, material to EUTA's business (except
properties sold or otherwise disposed of since the date thereof in the ordinary
course of business), free and clear of all Liens. All equipment and other items
of tangible personal property and assets of EUTA (a) are in good operating
condition and in a state of good maintenance and repair, ordinary wear and tear
excepted, and (b) are usable in the regular and ordinary course of EUTA's
business.
4.22 REAL PROPERTY. EUTA does not own any real property. The EUTA
Disclosure Schedule sets forth all real property leases to which Ironclad is a
party. EUTA has a valid leasehold interest in such leased real property, and
such leases are in full force and effect. The improvements and fixtures on such
real property leased by EUTA are in good operating condition and in a state of
good maintenance and repair, ordinary wear and tear excepted.
4.23 INTELLECTUAL PROPERTY RIGHTS. EUTA owns, or is licensed or
otherwise to its knowledge has the valid rights to use, all material
Intellectual Property used in the conduct of its business.
4.24 INSURANCE. The EUTA Disclosure Schedule contains a complete and
correct list of all insurance policies carried by or for the benefit of EUTA,
specifying the insurer, amount of and nature of coverage, the risk insured
against, the deductible amount (if any) and the date through which coverage will
continue by virtue of premiums already paid.
4.25 PRODUCT OR SERVICE DEFECTS; LIABILITY. EUTA is not aware of any
material defects in any of its products (including products developed and sold
prior to completion of the transactions under the ABI Agreements) or the design
thereof, nor in any of the services it provides. EUTA has not received any
customer complaints or third party reports concerning alleged defects in its
products, the design thereof or its services that, if true, could have a
Material Adverse Effect on EUTA, nor has EUTA had any of its products returned
by a purchaser thereof other than for minor, nonrecurring warranty problems.
EUTA has no liabilities (and, to the knowledge of EUTA, there is no basis for
any present or future action against EUTA giving rise to any liability) arising
out of any injury to individuals or property as a result of ownership,
possession or use of any product designed, manufactured, sold, leased or
delivered by EUTA.
4.26 PRODUCT WARRANTY. Each product manufactured, sold, leased or
delivered by EUTA has been manufactured, sold, leased or delivered, as the case
may be, in conformity in all material respects with all applicable law, all
contracts to which EUTA is a party, and all
27
express and implied warranties, and EUTA does not have any liability (and, to
the knowledge of EUTA, there is no basis for any present or future actions
against EUTA giving rise to any such liability) for replacement or repair
thereof or other damages in connection therewith, subject only to the reserve
for product warranty claims set forth on the face of the financial statements
included in the EUTA SEC Documents (rather than in any notes thereto) as
adjusted for the passage of time through the Effective Time in accordance EUTA's
ordinary course of business, consistent with GAAP. No product designed,
manufactured, sold, leased or delivered by EUTA is subject to any guaranty,
warranty or other indemnity or similar liability beyond the applicable standard
terms and conditions of sale or lease.
4.27 BENEFIT PLANS. The EUTA Disclosure Schedule contains a true and
complete list of each Benefit Plan currently sponsored, maintained or
contributed to by EUTA as well as any "employee benefit plan" as defined in
Section 3(3) of ERISA of EUTA. Any special tax status enjoyed by such plan is
noted on such schedule. With respect to each Benefit Plan and "employee benefit
plan" identified on the EUTA Disclosure Schedule, EUTA has heretofore delivered
or made available to Ironclad true and complete copies of the plan documents and
any amendments thereto (or, if the plan is not written, a written description
thereof). EUTA has performed in all material respects all obligations required
to be performed by it under each Benefit Plan and "employee benefit plan"
identified on the EUTA Disclosure Schedule, and each such Benefit Plan has been
established and maintained in all material respects in accordance with its terms
and in compliance with all applicable laws, statutes, orders, rules and
regulations, including but not limited to ERISA or the Code. EUTA's records
accurately reflect its employees' employment histories, including their hours of
service, and all such data is maintained in a usable form. EUTA has taken all
actions required to terminate the EUTA, Inc. 401(k) Plan.
4.28 DISCLOSURE. None of the information supplied by EUTA in connection
with the solicitation by Ironclad of the Ironclad Shareholders' Approval
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
5. COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER.
5.1 CONDUCT OF IRONCLAD, EUTA AND MERGERCO. Except as expressly
permitted by this Agreement, between the date of this Agreement and the
Effective Time, each of EUTA and Ironclad shall conduct its business only in the
ordinary course in substantially the same manner as heretofore conducted, and
use all its reasonable efforts to preserve intact its present business
organization and employees and to preserve the goodwill of Persons with which it
has business relations. Without limiting the generality of the foregoing, except
as otherwise expressly provided in this Agreement, between the date of this
Agreement and the Effective Time, (i) each of EUTA and Ironclad shall pay
accounts payable and pay and perform other obligations of its business when they
become due and payable in the ordinary course of business consistent with past
practice, or when required to be performed, as the case may be, and (ii) each of
EUTA, MergerCo and Ironclad shall (unless otherwise mutually agreed to in
writing):
28
5.1.1 not amend or alter its certificate or articles of
incorporation, bylaws, or similar charter documents,
except as required by the EUTA Reorganization (and in
accordance with the terms outlined on EXHIBIT B-1);
5.1.2 not engage in any transaction, except in the normal
and ordinary course of business except for (a) those
transactions contemplated by the Equity Financing, or
(b) the EUTA Reorganization, or create or suffer to
exist any Lien or other encumbrance upon any of its
assets or which will not be discharged in full prior
to the Effective Time;
5.1.3 not sell, exchange, lease, assign or otherwise
transfer any of its assets, or cancel or compromise
any debts or claims relating to their assets, other
than for fair value, in the ordinary course of
business, and consistent with past practice;
5.1.4 not (i) declare, set aside or pay any dividends on or
make other distributions in respect of any of its
capital shares, (ii) split, combine, reclassify or
take similar action with respect to any of its
capital shares or issue or authorize or propose the
issuance of any other securities in respect of, in
lieu of or in substitution for its capital shares,
(iii) adopt a plan of complete or partial liquidation
or resolutions providing for or authorizing such
liquidation or a dissolution, merger, consolidation,
restructuring, recapitalization or other
reorganization, or (iv) directly or indirectly
redeem, repurchase or otherwise acquire any capital
shares or any option with respect thereto, except for
repurchases in connection with an existing option
plan that result from a participant's use of such
Party's Common Stock to exercise options or pay
withholding taxes in connection with such exercise;
5.1.5 not sell, issue, grant or authorize the issuance or
grant of any capital stock, other security (including
the sale, transfer or grant of any treasury shares)
or any obligation convertible or exchangeable for
capital stock or any other security, except that (i)
EUTA may contract for the issuance of up to 9,333,333
shares of EUTA Common Stock pursuant to the terms of
the Equity Financing, provided shares may not be
issued except in connection with subscriptions
accepted by Ironclad, (ii) Ironclad may issue
Ironclad Common Stock upon the valid exercise of
stock options and warrants outstanding as of the date
of this Agreement and (iii) Ironclad may grant
options to purchase shares of Ironclad Common Stock
at fair market value in the ordinary course of
business consistent with past practice to its
employees, officers, directors and consultants.
5.1.6 not fail to use reasonable efforts to preserve intact
its present business organizations, keep available
the services of its employees (except as expressly
provided herein) and preserve its material
relationships with customers, suppliers, licensors,
licensees, distributors and others, to the end that
its good will and on-going business not be impaired
prior to the Effective Time;
5.1.7 not organize any subsidiary or acquire any capital
stock or other equity securities of any Person or any
equity or ownership interest in any business;
5.1.8 with respect to Ironclad, not enter into any
instrument which would constitute an Ironclad
Contract, as applicable, or enter into any material
amendment, supplement or waiver in respect of any
Ironclad Contract, in each case except in the
ordinary course of
29
business consistent with past practice and except for
contracts, agreements and instruments entered into or
executed in connection with the Equity Financing;
5.1.9 with respect to EUTA, not enter into any instrument
which would constitute an EUTA Contract, as
applicable, or enter into any material amendment,
supplement or waiver in respect of any EUTA Contract,
in each case except in the ordinary course of
business consistent with past practice and except for
contracts, agreements and instruments entered into or
executed in connection with the Equity Financing or
in connection with the EUTA Reorganization (but only
if they are described on EXHIBIT B hereto);
5.1.10 not incur any severance pay obligation by reason of
this Agreement or the transactions contemplated
hereby;
5.1.11 not grant or extend any power of attorney other than
in the ordinary course of business which does not
affect a material part of its business;
5.1.12 keep in full force and effect insurance comparable in
amount and scope of coverage to insurance now carried
by it;
5.1.13 not make any material change with respect to their
business in accounting or bookkeeping methods,
principles or practices, except as required by GAAP;
5.1.14 promptly advise the other Party in writing of any
Material Adverse Effect with respect to it;
5.1.15 not agree or otherwise commit, whether in writing or
otherwise, to do, or take any action or omit to take
any action that would result in, any of the
foregoing;
5.1.16 not acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest
in or a portion of the assets of, by licensing or by
any other manner, any business or any corporation,
partnership, association or other business
organization or division thereof, or otherwise
acquire or agree to acquire any assets of any other
Person, except for the purchase of assets from
suppliers or vendors in the ordinary course of
business; or
5.1.17 not make any expenditure or enter into any commitment
or transaction exceeding $30,000 other than purchases
in the ordinary course of business consistent with
past practices.
5.2 ADVICE OF CHANGES. Each Party shall promptly advise the other Party
in writing of (a) any event occurring subsequent to the date of this Agreement
that would render any representation or warranty of Ironclad contained in
SECTION 3 or EUTA or MergerCo contained in SECTION 4 untrue or inaccurate such
that the conditions set forth in SECTIONS 7.2 or 7.3 would not be satisfied, (b)
any breach of any covenant or obligation of Ironclad or EUTA or MergerCo
pursuant to this Agreement such that the condition set forth in SECTIONS 7.2 and
7.3 would not be satisfied, (c) any Material Adverse Change or Effect in
Ironclad or EUTA, or (d) any change, event, circumstance, condition or effect
that would reasonably be expected to result in a Material Adverse Change or
Effect on Ironclad or EUTA or cause any of the conditions set forth in SECTIONS
7.2 or 7.3 not to be satisfied, PROVIDED, HOWEVER, that the delivery of any
notice
30
pursuant to this SECTION 5.2 shall not be deemed to amend or supplement the
Ironclad or EUTA Disclosure Schedule.
5.3 SEC REPORTS. EUTA shall (a) cause the forms, reports, schedules,
statements and other documents required to be filed with the SEC by EUTA between
the date of this Agreement and the Effective Time to be filed in a timely
manner, (b) submit to Ironclad all such forms, reports, schedules, statements
and other documents at least two (2) days prior to filing for its review, and
(c) remain a "reporting person" for the purposes of the Exchange Act. Except for
forms, reports, schedules, statements and other documents required to be filed
with the SEC by EUTA between the date of this Agreement and the Effective Time,
EUTA shall not file or cause to be filed with, or furnish or cause to be
furnished to, the SEC any forms, reports, schedules, statement or any other
documents, without the prior express written approval of Ironclad.
5.4 POST EFFECTIVE AMENDMENT. EUTA shall cause each and all holders of
shares named as selling stockholders in the Post Effective Amendment No. 1 to
Registration Statement on Form SB-2 (File No. 333-118808) filed by EUTA on
January 18, 2006 (the "Post Effective Amendment"), to refrain from offering or
selling any shares under the Post Effective Amendment between the date of this
Agreement and the Effective Time, and EUTA shall take all such actions as may be
appropriate or necessary to ensure that no shares are offered or sold under the
Post Effective Amendment between the date of this Agreement and the Effective
Time. Without limiting the generality of the foregoing, EUTA shall promptly
advise in writing all holders of shares named as selling stockholders in the
Post Effective Amendment that such selling stockholders may not offer or sell
any shares under the Post Effective Amendment.
5.5 144 OPINIONS AND RELATED MATTERS. Ironclad shall at its cost cause
its counsel to issue all opinions requested by holders of shares of EUTA Common
Stock held by the individuals listed on EXHIBIT B-4 hereto (after completion of
the share cancellation and purchase transactions described on EXHIBIT B-1) in
connection with any sale of such shares under Rule 144 of the Securities Act,
provided that, in each case (i) Ironclad's counsel determines there is a
reasonable basis for accomplishing a sale of such shares under Rule 144 (on the
basis of which the requested opinion(s) may be issued) and (ii) the parties (or
party) requesting such opinion(s) deliver(s) to Ironclad's counsel all documents
necessary in connection with the issuance of such opinion(s) (as requested by
Ironclad's counsel).
5.6 MUTUAL ACKNOWLEDGMENTS. EUTA acknowledges that, as of the date
hereof, it has no reason to believe that persons holding outstanding shares of
EUTA Common Stock will not be able to resell such shares pursuant to Rule 144 of
the Securities Act (assuming full compliance with the provisions of such rule)
after the Closing. Based solely on its review of the EUTA SEC Documents and the
representations and warranties made by EUTA herein, and assuming the truth,
accuracy and completeness thereof, Ironclad acknowledges that, as of the date
hereof, it has no reason to believe that persons holding outstanding shares of
EUTA Common Stock will not be able to resell such shares pursuant to Rule 144 of
the Securities Act (assuming full compliance with the provisions of such rule)
after the Closing.
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6. ADDITIONAL AGREEMENTS.
6.1 BOARD OF DIRECTORS OF EUTA. At Closing, the current board of
directors of EUTA shall deliver duly adopted resolutions to: (a) set the size of
EUTA's board of directors to four (4) members effective as of the Closing; and
(b) appoint the following persons to EUTA's board of directors effective as of
the Closing: (i) R.D. Xxxxx Xxxxxxx; (ii) Xxxxxx Xxxxxx, (iii) Xxxxx Xxxxxxxx,
and (iv) Vane X. Xxxxxxx; and (c) accepting the resignations of the current
officers of EUTA and the directors of EUTA effective as of the Closing. At
Closing, the current officers of EUTA and the directors of EUTA shall deliver
their resignations, as appropriate, as officers and directors of EUTA to be
effective upon the Closing (the "RESIGNATIONS").
6.2 SCHEDULE 14F-1 INFORMATION STATEMENT. EUTA shall prepare the
information statement required by Rule 14f-1 promulgated under the Exchange Act
("14F-1 INFORMATION STATEMENT") in connection with the change of control to be
effectuated by the appointment of new officers and directors at Closing, and, at
least ten (10) days prior to Closing, EUTA shall file the 14f-1 Information
Statement with the SEC and mail the same to each of EUTA's Shareholders.
6.3 TRANSACTION FORM 8-K. At least five (5) days prior to Closing, the
Parties shall prepare the Form 8-K announcing the Closing, which shall include
all information required by such form, including the information required by
Form 10-SB with respect to the Parties, any other information required in
connection with EUTA ceasing to be a shell company as a result of the
Transactions, the Ironclad Financial Statements and the Pro Forma Financial
Statements (as defined below) ("TRANSACTION FORM 8-K"), which shall be in a form
reasonably acceptable to EUTA and in a format acceptable for XXXXX filing. Prior
to Closing, the Parties shall prepare the press release announcing the
consummation of the Transaction hereunder ("PRESS RELEASE"). At the Closing,
EUTA shall file the Transaction Form 8-K with the SEC and distribute the Press
Release. Prior to Closing, EUTA shall prepare the information required by the
Transaction Form 8-K to announce the change in EUTA's certifying accountants
from Xxxxxx & Company ("EUTA'S ACCOUNTANT") to Singer Lewak Xxxxxxxxx and
Xxxxxxxxx, LLP, effective as of the Closing, in a form acceptable to Ironclad.
At Closing, EUTA's Accountant shall have issued its resignation letter to EUTA
resigning from the engagement and consenting to the use of its name and the
disclosure of its resignation in the Transaction Form 8-K ("RESIGNATION
LETTER").
6.4 ISSUANCE OF BRIDGE FINANCING WARRANTS. EUTA and Ironclad each agree
that as soon as practicable after the Closing, EUTA will issue:
6.4.1 to Westrec Capital Partners, Inc. ("Westrec"),
warrants to purchase that number of shares of EUTA
Common Stock required to be issued pursuant to the
terms of that certain Loan Agreement, dated October
21, 2005, by and between Ironclad and Westrec; and
6.4.2 to shareholders participating in that certain bridge
financing which closed on March 8, 2006, each of whom
is party to a Stock Purchase Agreement dated March 8,
2006 between Ironclad and such shareholder, warrants
to purchase that number of shares required to be
issued pursuant to the terms of such Stock Purchase
Agreement.
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6.5 PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS. At least ten (10) days
prior to the Closing, the Parties shall deliver to EUTA pro forma consolidated
financial statements for the Parties, and pro forma consolidated financial
statements for the Parties and EUTA giving effect to the Transaction, for such
periods as required by the SEC to be included in the Transaction Form 8-K or any
other report or form required to be filed with the SEC at or after Closing with
respect to the Transaction, all prepared in all material respects with the
published rules and regulations of the SEC and in accordance with U.S. GAAP
applied on a consistent basis throughout the periods involved (the "PRO FORMA
FINANCIAL STATEMENTS"). The Pro Forma Financial Statements shall have been
reviewed by, the Accountant and shall be in a format acceptable for inclusion on
the Transaction 8-K.
6.6 REQUIRED INFORMATION. In connection with the preparation of the
Transaction Form 8-K, 14c Information Statement, 14f-1 Information Statement,
and Press Release, and for such other reasonable purposes, each Party shall,
upon request by the other, furnish the other with all information concerning
themselves, their respective subsidiaries, directors, officers, managers,
managing members, shareholders and members (including the directors of EUTA to
be elected effective as of the Closing pursuant to SECTION 6.1 hereof any
officers appointed by such directors thereafter) and such other matters as may
be reasonably necessary or advisable in connection with the Transaction, or any
other statement, filing, notice or application made by or on behalf of each
Party and EUTA to any third party and/or any Governmental Entity in connection
with the Transaction and the other transactions contemplated hereby. Each party
warrants and represents to the other party that all such information shall be
true and correct in all material respects and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading.
6.7 CONFIDENTIALITY; ACCESS TO INFORMATION.
6.7.1 CONFIDENTIALITY.
Any confidentiality agreement or letter of intent
previously executed by the parties shall be superseded in its
entirety by the provisions of this Agreement. Each party
agrees to maintain in confidence any non-public information
received from the other party, and to use such non-public
information only for purposes of consummating the transactions
contemplated by this Agreement. Such confidentiality
obligations will not apply to (i) information which was known
to the one party or their respective agents prior to receipt
from the other party; (ii) information which is or becomes
generally known; (iii) information acquired by a party or
their respective agents from a third party who was not bound
to an obligation of confidentiality; and (iv) disclosure
required by law. In the event this Agreement is terminated as
provided in SECTION 9 hereof, each party will return or cause
to be returned to the other all documents and other material
obtained from the other in connection with the Transaction
contemplated hereby.
33
6.7.2 ACCESS TO INFORMATION.
(a) Ironclad will afford EUTA and its financial
advisors, accountants, counsel and other
representatives reasonable access during
normal business hours, upon reasonable
notice, to the properties, books, records
and personnel of Ironclad during the period
prior to the Closing to obtain all
information concerning the business,
including the status of product development
efforts, properties, results of operations
and personnel of Ironclad, as EUTA may
reasonably request. No information or
knowledge obtained by EUTA in any
investigation pursuant to this SECTION 6.7.2
will affect or be deemed to modify any
representation or warranty contained herein
or the conditions to the obligations of the
Parties to consummate the Transaction.
(b) EUTA will afford Ironclad and its financial
advisors, underwriters, accountants, counsel
and other representatives reasonable access
during normal business hours, upon
reasonable notice, to the properties, books,
records and personnel of EUTA during the
period prior to the Closing to obtain all
information concerning the business,
including the status of product development
efforts, properties, results of operations
and personnel of EUTA, as Ironclad may
reasonably request. No information or
knowledge obtained by Ironclad in any
investigation pursuant to this SECTION 6.9
will affect or be deemed to modify any
representation or warranty contained herein
or the conditions to the obligations of the
Parties to consummate the Transaction.
6.8 NO SOLICITATION. Other than with respect to the Transaction, each
Party agrees that neither of them nor any of their officers, directors,
managers, or managing members shall, and that they shall direct and use their
reasonable best efforts to cause their agents and other representatives
(including any investment banker, attorney or accountant retained by it) not to,
directly or indirectly, initiate, solicit, encourage or otherwise facilitate any
inquiries or the making of any proposal or offer with respect to (i) a merger,
reorganization, share exchange, consolidation or similar transaction involving
them, (ii) any sale, lease, exchange, mortgage, pledge, transfer or purchase of
all or substantially all of the assets or equity securities of them, taken as a
whole, in a single transaction or series of related transactions or (iii) any
tender offer or exchange offer for 20% or more of the outstanding shares of EUTA
Common Stock (any such proposal or offer being hereinafter referred to as an
"ACQUISITION PROPOSAL"). Each Party further agrees that neither of them nor any
of their officers, directors, managers, or managing members shall, and that they
shall direct and use their reasonable best efforts to cause their agents and
representatives not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal.
Each Party agrees that they will immediately cease and cause to be terminated
any existing discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Proposal. Each Party agrees that they will take
the necessary steps to
34
promptly inform the individuals or entities referred to in the first sentence
hereof of the obligations undertaken in this SECTION 6.8.
6.9 PUBLIC DISCLOSURE. Except to the extent previously disclosed or to
the extent the parties believe that they are required by applicable law or
regulation to make disclosure, prior to Closing, no party shall issue any
statement or communication to the public regarding the Transaction without the
consent of the other party, which consent shall not be unreasonably withheld. To
the extent a party hereto believes it is required by law or regulation to make
disclosure regarding the Transaction, it shall, if possible, immediately notify
the other party prior to such disclosure. Notwithstanding the foregoing, the
parties hereto agree that EUTA will prepare and file the Transaction Form 8-K
pursuant to the Exchange Act reasonably acceptable to each Party to report the
execution of this Agreement and that any party hereto may file any reports as
required by the Exchange Act including, without limitation, any reports on
Schedule 13D.
6.10 REASONABLE EFFORTS; NOTIFICATION.
6.10.1 Upon the terms and subject to the conditions set
forth in this Agreement, each of the Parties agrees
to use its commercially reasonable efforts to take,
or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary,
proper or advisable to consummate and make effective,
in the most expeditious manner practicable, the
Transaction and the other transactions contemplated
by this Agreement, including using commercially
reasonable efforts to accomplish the following: (i)
the taking of all reasonable acts necessary to cause
the conditions precedent set forth in SECTION 7 to be
satisfied, (ii) the obtaining of all necessary
actions or nonactions, waivers, consents, approvals,
orders and authorizations from Governmental Entities
and the making of all necessary registrations,
declarations, notices and filings (including
registrations, declarations, notices and filings with
Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to avoid any
suit, claim, action, investigation or proceeding by
any Governmental Entity, (iii) the obtaining of all
consents, approvals or waivers from third parties
required as a result of the transactions contemplated
in this Agreement, (iv) the defending of any suits,
claims, actions, investigations or proceedings,
whether judicial or administrative, challenging this
Agreement or the consummation of the transactions
contemplated hereby, including seeking to have any
stay or temporary restraining order entered by any
court or other Governmental Entity vacated or
reversed, and (v) the execution or delivery of any
additional instruments reasonably necessary to
consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing,
Each Party, and
35
its respective board of directors and each Party and
its managers, members, directors, officers and
Shareholders shall, if any state takeover statute or
similar statute or regulation is or becomes
applicable to the Transaction, this Agreement or any
of the transactions contemplated by this Agreement,
use their commercially reasonable efforts to enable
the Transaction and the other transactions
contemplated by this Agreement to be consummated as
promptly as practicable on the terms contemplated by
this Agreement. Notwithstanding anything herein to
the contrary, nothing in this Agreement shall be
deemed to require any of the Parties to agree to any
divestiture by itself or any of its affiliates of
shares of capital stock, membership interests or
ownership interest or of any business, assets or
property, or the imposition of any material
limitation on the ability of any of them to conduct
their business or to own or exercise control of such
assets, properties and stock.
6.10.2 Ironclad shall give prompt notice to EUTA upon
becoming aware that any representation or warranty
made by them contained in this Agreement has become
untrue or inaccurate, or of any failure of Ironclad
to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with
or satisfied by them under this Agreement, in each
case, such that the conditions set forth in SECTION 7
would not be satisfied; provided, however, that no
such notification shall affect the representations,
warranties, covenants or agreements of the parties or
the conditions to the obligations of the parties
under this Agreement.
6.10.3 EUTA shall give prompt notice to Ironclad upon
becoming aware that any representation or warranty
made by it contained in this Agreement has become
untrue or inaccurate, or of any failure of EUTA to
comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with
or satisfied by it under this Agreement, in each
case, such that the conditions set forth in SECTION 7
would not be satisfied; provided, however, that no
such notification shall affect the representations,
warranties, covenants or agreements of the parties or
the conditions to the obligations of the parties
under this Agreement.
6.11 TREATMENT AS A REORGANIZATION. Consistent with the intent of the
parties hereto, each of Ironclad and EUTA shall treat, and cause its Affiliates
to so treat, the Merger as a reorganization under Section 368(a) of the Code
with respect to all Tax Returns, to the extent consistent with law.
6.12 ABSENCE OF MATERIAL LIABILITIES. Immediately prior to Closing,
EUTA shall have no liabilities or obligations requiring the payment of monies,
other than obligations under or with respect to: (i) any agreement with the
Transfer Agent, (ii) EUTA Contracts disclosed under SECTION 4.20 hereto, and
(iii) accounts payable and accrued expenses of EUTA
36
with respect to the period between the date hereof and the Closing. EUTA will
establish the Cash Reserve provided for in SECTION 4.8 in an amount equal to the
monetary obligations of EUTA prior to (and through) the Closing due to the
Transfer Agent, obligations pursuant to EUTA Contracts disclosed under SECTION
4.20 and obligations in respect of all unpaid accounts payable and accrued
expenses of EUTA as of and through the Closing (collectively, the "PRE-CLOSING
CASH OBLIGATIONS"). Upon the Closing, to the extent not satisfied by EUTA prior
to the Closing, the Pre-Closing Cash Obligations will be paid in full from the
Cash Reserve. Immediately prior to the Closing, EUTA shall cause all EUTA
Contracts (other than the agreement with the Transfer Agent) to be terminated.
Following the Closing, the Parties shall pay and satisfy EUTA's obligations
under the agreement with the Transfer Agent.
6.13 MERGER EXPENSES. Each of the Parties shall be responsible for such
Party's legal fees and all other expenses incurred with in connection with the
Merger and the transactions contemplated hereby.
6.14 BUSINESS RECORDS. At Closing, EUTA shall cause to be delivered to
the Parties all records and documents relating to EUTA, which EUTA possesses,
including, without limitation, books, records, government filings, Returns,
Charter Documents, Corporate Records, Stock Records, consent decrees, orders,
and correspondence, director and Shareholder minutes and resolutions, stock
ownership records, financial information and records, electronic files
containing any financial information and records, and other documents used in or
associated with EUTA.
6.15 IRONCLAD SHAREHOLDER APPROVAL. Ironclad shall, as promptly as
practicable, duly submit this Agreement and the transactions contemplated by
this Agreement to the Ironclad Shareholders for approval and adoption. In
connection with the Merger, this Agreement and the other transactions
contemplated hereby, the Board of Directors of Ironclad shall (i) recommend to
the Ironclad Shareholders that they consent to, and use all commercially
reasonable efforts to obtain the approvals by the Ironclad Shareholders, of the
Merger, this Agreement and the other transactions contemplated hereby, and (ii)
otherwise comply with all requirements of applicable law and Ironclad's Articles
of Incorporation and Bylaws in connection with obtaining the Ironclad
Shareholders' Approval. Ironclad shall prepare and distribute to the Ironclad
Shareholders a consent solicitation disclosure statement in connection with the
solicitation of consents to obtain the Ironclad Shareholders' Approval, and
shall provide EUTA a reasonable period of time to review the disclosure
statement prepared in connection with such consent solicitation prior to the
delivery of such disclosure statement to the Ironclad Shareholders.
6.16 AMENDING SCHEDULES. From time to time prior to the Closing, the
Parties shall promptly supplement or amend Ironclad Disclosure Schedules or EUTA
Disclosure Schedules, as applicable, hereto with respect to any matter arising
after the date of this Agreement which, if existing or occurring at the date of
this Agreement, would have been required to have been set forth in Ironclad
Disclosure Schedules or EUTA Disclosure Schedules, as applicable. Such
supplement or amendment shall have the effect of curing any related
misrepresentation or breach of warranty made in connection with the transactions
contemplated by this Agreement; PROVIDED, HOWEVER, each Party shall have a five
(5) business days following receipt of any supplemented or amended Ironclad
Disclosure Schedules or EUTA Disclosure Schedules, as applicable, which
supplement or amend the Ironclad Disclosure Schedules or
37
EUTA Disclosure Schedules, as applicable, in a material respect to elect (a) to
terminate this Agreement without any further liability to any other Party
hereunder, or (b) in such non-amending Party's sole discretion, to elect to
waive such breach and consummate the transactions contemplated by this
Agreement.
7. CONDITIONS PRECEDENT.
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each Party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
7.1.1 NO INJUNCTIONS OR RESTRAINTS. No temporary
restraining order, preliminary or permanent
injunction or other order issued by any court of
competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger
shall be in effect.
7.2 CONDITIONS TO OBLIGATIONS OF EUTA. The obligations of EUTA to
effect the Merger are further subject to the following conditions:
7.2.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Ironclad set forth in this
Agreement shall be true and correct in all material
respects, in each case as of the date of this
Agreement and as of the Closing Date as though made
on and as of the Closing Date, unless made as of
another date, in which case they shall be true and
correct in all material respects as of such date.
7.2.2 PERFORMANCE OF OBLIGATIONS OF IRONCLAD. Ironclad
shall have performed in all material respects all
obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
7.2.3 NO MATERIAL ADVERSE CHANGE. Since the date hereof
there must have been no event, series of events or
the lack of occurrence thereof which, singularly or
in the aggregate, could reasonably be expected to
have a Material Adverse Effect on Ironclad.
7.2.4 CONSENTS, ETC. EUTA shall have received evidence, in
form and substance reasonably satisfactory to it,
that such licenses, permits, consents, approvals,
authorizations, qualifications and orders of
Governmental Entities and other third parties as
necessary in connection with the transactions
contemplated hereby have been obtained.
7.2.5 SHAREHOLDER APPROVAL. The Ironclad Shareholders'
Approval shall have been obtained by a vote of
holders at least 90% of the issued and outstanding
Ironclad Shares.
7.2.6 NO DISSENTERS. No Ironclad Shareholders shall have
dissented to the Merger or be entitled to exercise
dissenters' rights in connection with the Merger.
7.2.7 NO LITIGATION. There shall not be pending or
threatened by any Governmental Entity any suit,
action or proceeding (or by any other Person any
suit, action or proceeding which has a reasonable
likelihood of success) challenging or seeking to
restrain or prohibit the consummation of the Merger.
38
7.2.8 REGISTRATION RIGHTS AGREEMENTS. Ironclad shall have
executed a Registration Rights Agreement providing
registration rights with respect to all shares of
EUTA Common Stock held by the individuals listed on
EXHIBIT B-4 hereto (after completion of the share
cancellation and purchase transactions described on
such EXHIBIT B-1) (the "REGISTRABLE EUTA SHARES"), in
substantially the form specified in SECTION 7.3.10
hereof (covering shares of EUTA Common Stock into
which the Ironclad Series A Preferred Stock and
Series B Preferred Stock will be converted upon
Closing), which shall provide for registration rights
that are consistent with and no more favorable than
those set forth in the Subscription Agreement but
which shall not include or provide for any penalties
or damages for the failure to timely file any
registration statement or cause any such registration
statement to go effective by a time or date specified
in such form of Registration Rights Agreement.
Ironclad shall have executed a second Registration
Rights Agreement providing demand registration rights
with respect to the Registrable EUTA Shares, under
which holders of the Registrable EUTA Shares would be
entitled to one demand registration with respect to
the Registrable EUTA Shares at any time after 180
days following the Effective Time, provided that (i)
all Registrable EUTA Shares are excluded from the
registration statement covering the sale of shares
sold in the Equity Financing (pursuant to the terms
of the Subscription Agreements) (as such terms are
defined below), and (ii) Ironclad determines that
sale of the Registrable EUTA Shares cannot be
accomplished under Rule 144 of the Securities Act.
7.2.9 LEGAL OPINION. EUTA shall have received the legal
opinion of counsel to Ironclad, in substantially the
form of EXHIBIT F hereto.
7.2.10 OFFICER'S CERTIFICATE. EUTA shall have received an
officer's certificate, substantially in the form of
EXHIBIT D, duly executed on Ironclad's behalf.
7.2.11 SECRETARY'S CERTIFICATE. EUTA shall have received a
Secretary's certificate, substantially in the form of
EXHIBIT E, duly executed on Ironclad's behalf.
7.3 CONDITIONS TO OBLIGATION OF IRONCLAD. The obligation of
Ironclad to effect the Merger is further subject to the following conditions:
7.3.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of EUTA set forth in this Agreement
shall be true and correct in all material respects,
in each case as of the date of this Agreement and as
of the Closing Date as though made on and as of the
Closing Date, unless made as of another date, in
which case they shall be true and correct in all
material respects as of such date.
7.3.2 DUE DILIGENCE ITEMS. EUTA shall have provided to
Ironclad copies of all agreements and documents
requested by Ironclad before the Closing, including,
without limitation, copies of material agreements
previously filed as exhibits to reports and documents
filed with, or furnished to, the SEC and satisfactory
evidence of termination of all such material
agreements filed with, or furnished to, the SEC.
39
7.3.3 PERFORMANCE OF OBLIGATIONS OF EUTA. EUTA shall have
performed in all material respects all obligations
required to be performed by it under this Agreement
at or prior to the Closing Date.
7.3.4 NO MATERIAL ADVERSE CHANGE. Since the date hereof
there must have been no event, series of events or
the lack of occurrence thereof which, singularly or
in the aggregate, could reasonably be expected to
have a Material Adverse Effect on EUTA.
7.3.5 CONSENTS, ETC. Ironclad shall have received evidence,
in form and substance reasonably satisfactory to it,
that such licenses, permits, consents, approvals,
authorizations, qualifications and orders of
Governmental Entities and other third parties as
necessary in connection with the transactions
contemplated hereby have been obtained.
7.3.6 NO LITIGATION. There shall not be pending or
threatened by any Governmental Entity any suit,
action or proceeding (or by any other Person any
suit, action or proceeding which has a reasonable
likelihood of success) challenging or seeking to
restrain or prohibit the consummation of the Merger.
7.3.7 RESIGNATIONS. EUTA shall deliver to Ironclad the
Resignations, as required by SECTION 6.1.
7.3.8 AUDITED FINANCIAL STATEMENTS. Ironclad shall have
received final approval of its financial statements
for its fiscal year ending December 31, 2005 from its
auditors.
7.3.9 EQUITY FINANCING. Signed subscriptions shall have
been received to purchase 7,333,333 shares of EUTA
Common Stock and warrants to purchase 5,500,000
shares of EUTA Common Stock at $1.00 per share, in a
private placement offering exempt from registration
under the Securities Act pursuant to Regulation D
promulgated thereunder and otherwise pursuant to the
terms outlined on EXHIBIT A-1 ("EQUITY FINANCING"),
which subscriptions shall represent gross proceeds of
not less than $5,500,000, with such gross proceeds
having been fully funded into an escrow account
established for the Equity Financing the release of
which to EUTA is conditioned only upon the Closing of
the Merger, and EUTA's acceptance of such
subscriptions simultaneous to or after the Closing.
The subscription agreements executed and delivered in
connection with the Equity Financing shall be in the
form attached hereto as EXHIBIT A-2 (the
"SUBSCRIPTION AGREEMENTS"), and all other agreements,
documents and instruments contemplated by the
Subscription Agreements shall have been executed and
delivered, as provided therein. Ironclad shall be
satisfied that the offer and sale of the shares in
the Equity Financing were made in compliance with the
requirements under the Securities Act.
7.3.10 REGISTRATION RIGHTS AGREEMENT. EUTA shall have
executed a Registration Rights Agreement providing
registration rights with respect to all shares of
EUTA Common Stock into which the Ironclad Series A
Preferred Stock and Series B Preferred Stock will be
converted upon Closing, and all shares of EUTA Common
Stock underlying the warrants to be issued by EUTA in
exchange for warrants to purchase Ironclad Series A
Preferred Stock and Ironclad Series B Preferred
Stock, in a form acceptable to Ironclad, which shall
provide for
40
registration rights that are consistent with and no
more favorable than those set forth in the
Subscription Agreement but which shall not include or
provide for any penalties or damages for the failure
to timely file any registration statement or to cause
any such registration statement to go effective by a
time or date specified in such Registration Rights
Agreement.
7.3.11 PREFERRED STOCK LOCK-UP AGREEMENT. Each of the
holders of Ironclad Series A Preferred Stock and
Series B Preferred Stock, and each of the holders of
warrants to purchase Series A Preferred Stock and
Series B Preferred Stock, shall have executed a
Lock-up Agreement in a form acceptable to Ironclad,
with respect to all shares of EUTA Common Stock to be
acquired in exchange for the Ironclad Series A
Preferred Stock and Series B Preferred Stock and all
shares of EUTA Common Stock underlying EUTA warrants
issued in exchange for warrants to purchase Ironclad
Series A Preferred Stock and Series B Preferred
Stock.
7.3.12 EUTA LOCK-UP AGREEMENT. The holders of at least
2,039,444 shares of EUTA Common Stock to be issued
and outstanding upon completion of, and in connection
with, the EUTA Reorganization (the "EUTA LOCK-UP
SHARES") shall have executed Lock-up Agreements in a
form acceptable to Ironclad (each such holder of EUTA
Lock-Up Shares signing a Lock-up Agreement, a
"LOCKED-UP EUTA SHAREHOLDER"), pursuant to which each
Locked-Up EUTA Shareholder shall agree that, for a
period of twelve (12) months following the Closing,
such shareholder will not, directly or indirectly,
(i) offer, sell, assign, transfer, pledge or
otherwise dispose of any of such shareholder's EUTA
Lock-Up Shares (including without limitation, EUTA
Lock-Up Shares beneficially owned by such
shareholder), or (ii) enter into any hedging, swap,
short sale or other similar transactions with respect
to any shares of EUTA Common Stock, except as
follows: (a) up to ten percent (10.0%) of such
shareholder's EUTA Lock-Up Shares then remaining
subject to such Lock-Up Agreement will be released
from the offer and sale limitations under such
Lock-Up Agreement during each twenty (20) trading
days immediately following the 90-Day Effectiveness
Period (each such twenty (20) trading-day period, a
"DESIGNATED TRADING PERIOD"), but only if (A) the per
share closing price of EUTA Common Stock on the
Nasdaq Over-the-Counter Bulletin Board has exceeded
$3.00 (as adjusted for any stock splits,
combinations, stock dividends, reclassifications or
other similar events) on at least twenty (20) of
thirty (30) trading days during the Applicable
Look-Back Period (defined below), and (B) an average
daily trading volume of at least 100,000 shares (as
adjusted for any stock splits, combinations, stock
dividends, reclassifications or other similar events)
is maintained for the EUTA Common Stock during any
twenty (20) of thirty (30) trading days during the
Applicable Look-Back Period, provided that (for the
avoidance of doubt) (1) in no event shall any EUTA
Lock-Up Shares be released (pursuant to this clause
(a) of this SECTION 7.3.12) from any of the
obligations under such Lock-Up Agreement at any time
before the first trading day immediately following
expiration of the 90-Date Effectiveness Period and
(2) in no event shall more than ten percent (10.0%)
of such shareholder's EUTA Lock-Up Shares be released
(pursuant to this clause (a) of this SECTION 7.3.12)
from any of the obligations under such Lock-Up
Agreement during any Designated Trading Period; (b)
if (after the Closing) EUTA completes a Subsequent
Equity Financing Transaction (defined below), all of
such shareholder's EUTA Lock-Up Shares will be
released from the obligations under such Lock-Up
Agreement on the initial closing of such Subsequent
Equity Financing Transaction; and (c) up to twelve
and one half percent (12.5%) of such shareholder's
EUTA Lock-Up Shares then remaining subject to such
Lock-Up Agreement may be offered and sold during each
of the first eight calendar months following
expiration of the 90-Day Effectiveness Period).
41
For the purposes hereof, the following terms have the meanings
ascribed to them below: (i) "APPLICABLE LOOK-BACK PERIOD" means, with respect to
any determination date (which shall not be on any date or at any time before the
first trading day after expiration of the 90-Day Effectiveness Period), the
thirty (30) trading days immediately preceding (not inclusive of) such
determination date; (ii) "90-DAY EFFECTIVENESS PERIOD" means the period of
ninety (90) days after the date on which the registration statement covering the
resale of shares sold in the Equity Financing (pursuant to the terms of the
Subscription Agreement) shall have been declared effective by the SEC; (iii)
"CONVERTIBLE DEBT SECURITIES" means notes or debentures issued by the Company
that include terms entitling the holder of such notes or debentures to convert
amounts owed under them into common stock or preferred stock of the Company;
(iv) "NON-CONVERTIBLE DEBT TRANSACTION" means any financing transaction in which
the Company issues debt securities (including, without limitation, notes or
debentures) other than Convertible Debt Securities, whether or not warrants,
options or other similar derivative securities are also issued in such financing
transaction (and whether or not the holders of such warrants, options or other
derivative securities are entitled to registration rights); and (vi) "SUBSEQUENT
EQUITY FINANCING TRANSACTION" means the closing of any financing transaction
that is completed after the Closing and yields gross proceeds to the Company of
at least Three Million Dollars ($3,000,000) from the sale of the Company's
common stock, preferred stock or Convertible Debt Securities (for the avoidance
of doubt and without limiting the generality of the foregoing, Subsequent Equity
Financing Transaction shall not include the Equity Financing, any other
transactions relating to or consummated in connection with the Merger or any
Non-Convertible Debt Transaction).
If lock-up agreements to be executed under SECTION 7.3.11
hereof by holders of Ironclad Series A Preferred Stock or Series B Preferred
Stock (the "PREFERRED HOLDERS' LOCK-UP AGREEMENTS") provide for restrictions on
the sale and transfer of shares of EUTA Common Stock (that these holders will
receive upon consummation of the Merger, in exchange for shares of Ironclad
Series A Preferred Stock or Series B Preferred Stock) on terms that are less
restrictive than the terms contemplated under this SECTION 7.3.12 with respect
to the shares held by holders of EUTA Common Stock, holders of EUTA Common Stock
subject to the Lock-Up Agreements to be executed under this SECTION 7.3.12 shall
be entitled to transfer and sell their EUTA Lock-Up Shares on the terms of the
Preferred Holders' Lock-Up Agreements; provided, however, that in such event the
holders of EUTA Common Stock shall be subject to and bound by all terms,
conditions, obligations and arrangements contemplated by such Preferred Holders'
Lock-Up Agreements.
7.3.13 EUTA REORGANIZATION. The EUTA Reorganization shall
have been consummated pursuant to the terms outlined
on EXHIBIT B-1 hereto.
7.3.14 LEGAL OPINION. Ironclad shall have received the legal
opinion of counsel to EUTA, in substantially the form
of EXHIBIT I hereto.
7.3.15 OFFICER'S CERTIFICATE. Ironclad shall have received
an officer's certificate, substantially in the form
of EXHIBIT G, duly executed on EUTA's behalf.
42
7.3.16 SECRETARY'S CERTIFICATE. Ironclad shall have received
a Secretary's certificate, substantially in the form
of EXHIBIT H, duly executed on EUTA's behalf.
8. TERMINATION.
8.1 TERMINATION. This Agreement may be terminated and abandoned at any
time prior to the Effective Time:
8.1.1 by mutual written consent of EUTA and Ironclad;
8.1.2 by either EUTA or Ironclad if any Governmental Entity
shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining
or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become
final and nonappealable;
8.1.3 by either EUTA or Ironclad if the Merger shall not
have been consummated on or before May 1, 2006 (other
than as a result of the failure of the Party seeking
to terminate this Agreement to perform its
obligations under this Agreement required to be
performed at or prior to the Effective Time);
8.1.4 by EUTA, if a Material Adverse Change shall have
occurred relative to Ironclad;
8.1.5 by EUTA, if Ironclad materially breaches any of its
representations and warranties contained in this
Agreement or willfully fails to perform in any
material respect any of its material obligations
under this Agreement, which failure or breach is not
cured within ten (10) days after EUTA has notified
Ironclad of its or their intent to terminate this
Agreement pursuant to this SECTION 8.1.5;
8.1.6 by EUTA, if the Ironclad Shareholders do not approve
and adopt the Merger and the transactions
contemplated by this Agreement under the CGCL;
8.1.7 by Ironclad, if a Material Adverse Change shall have
occurred relative to EUTA;
8.1.8 by Ironclad, if EUTA materially breaches any of its
representations and warranties contained in this
Agreement or willfully fails to perform in any
material respect any of its material obligations
under this Agreement, in each case, which failure or
breach is not cured within ten (10) days after
Ironclad has notified EUTA of its or their intent to
terminate this Agreement pursuant to this SECTION
8.1.8;
8.1.9 by Ironclad, if the Shareholders of EUTA vote to
reject the approval and adoption of the matters
contemplated by such approval in under the Nevada
General Corporation Code;
8.1.10 by Ironclad, in its sole discretion, by giving notice
to EUTA on or before the Closing.
43
8.2 EFFECT OF TERMINATION.
8.2.1 In the event of termination of this Agreement by
either Ironclad or EUTA as provided in SECTION 8.1,
this Agreement shall forthwith become void and have
no effect, without any liability or obligation on the
part of EUTA or Ironclad, other than the provisions
of SECTION 6.8.1, SECTION 8.3, SECTION 10 and this
SECTION 8.2. Nothing contained in this Section shall
relieve any Party for any breach of the
representations, warranties, covenants or agreements
set forth in this Agreement.
8.2.2 In the event Ironclad terminates this Agreement
pursuant to SECTION 8.1.10, then Ironclad will pay
$300,000 to EUTA on the first business day following
such termination, to compensate EUTA, for, among
other things, its expenses and management time in
pursuing the transactions contemplated hereby and for
lost opportunity costs. EUTA agrees that such payment
will be its sole remedy with respect to any
termination of this Agreement by Ironclad pursuant to
SECTION 8.1.11.
8.3 RETURN OF DOCUMENTS. In the event of termination of this Agreement
for any reason, EUTA and Ironclad will return to the other Party all of the
other Party's documents, work papers, and other materials (including copies)
relating to the transactions contemplated in this Agreement, whether obtained
before or after execution of this Agreement. EUTA and Ironclad will not use any
information so obtained from the other Party for any purpose and will take all
reasonable steps to have such other Party's information kept confidential.
9. SURVIVAL.
Except as specifically set forth in provisions contained herein which
contemplate the performance of any agreement or covenant by any party hereto
after the Closing, all representations, warranties, agreements and covenants
contained in or made pursuant to this Agreement by any party hereto or contained
in any Schedule hereto shall not survive the Closing, and no claims made by
virtue of such representations, warranties, agreements and covenants shall be
made or commenced by any party hereto from and after the Closing.
10. GENERAL PROVISIONS.
10.1 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the Parties.
10.2 EXTENSION; WAIVER. The Parties may (a) extend the time for the
performance of any of the obligations or other acts of the other Parties, (b)
waive any inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement, or (c) waive
compliance with any of the agreements or conditions contained in this Agreement.
Any agreement on the part of a Party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
Party. The failure of any Party to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of such rights.
10.3 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and
shall be deemed given if delivered Personally or
44
sent by facsimile, electronic mail, or overnight courier
(providing proof of delivery) to the parties at the following
addresses (or at such other address for a Party as shall be
specified by like notice):
if to Ironclad, to:
Ironclad Performance Wear Corporation
00000 Xxxxxxxx Xx.
Xxx Xxxxxxx, XX 00000
Attn: Xx Xxxxxx, President
Fax: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxxx Xxxxxxxx & Markiles, LLP
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
if to EUTA or MergerCo, to:
Europa Trade Agency Ltd.
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
XXXXXX
Attn: Xxxxxx Xxxx
Fax: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxxx X. Xxxxx, Xx.
Suite 105
32 Executive Xxxx
Xxxxxx, XX 00000-0000
Fax:
and
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx, LLP
00000 Xxxxx Xxxxxx Xxxx., 0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Fax: (000)000-0000
10.4 INTERPRETATION. When a reference is made in this Agreement to
a Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this
45
Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
10.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement and
the other agreements referred to herein constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement. Except as
expressly provided herein, this Agreement is not intended to confer upon any
Person other than the parties any rights or remedies.
10.6 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
10.7 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
10.8 ENFORCEMENT. The parties agree that irreparable damage may occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any federal or state court located
in the State of Delaware, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of any court sitting
in the State of Delaware in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement to the extent such
courts would have subject matter jurisdiction with respect to such dispute and
(b) agrees that it will not attempt to deny or defeat such personal jurisdiction
or venue by motion or other request for leave from any such court.
10.9 SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
10.10 SCHEDULES AND EXHIBITS. The Schedules and Exhibits to this
Agreement are hereby incorporated into this Agreement and are hereby made a part
of this Agreement as if set out in full in this Agreement.
46
10.11 COUNTERPARTS. This Agreement may be executed in one or more
identical counterparts, all of which shall be considered one and the same
instrument and shall become effective when one or more such counterparts shall
have been executed by each of the parties and delivered to the other parties.
Delivery of a copy of this Agreement bearing an original signature by facsimile
transmission, by electronic mail in "portable document format" (".pdf") form, or
by any other electronic means intended to preserve the original graphic and
pictorial appearance of a document, will have the same effect as physical
delivery of the paper document bearing the original signature.
[SIGNATURE PAGE FOLLOWS.]
47
IN WITNESS WHEREOF, the undersigned have caused their duly authorized
officers to execute this Agreement as of the date first above written.
IRONCLAD PERFORMANCE WEAR CORPORATION
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
EUROPA TRADE AGENCY LTD.
By: /s/ Xxxxxx Xxxx
-------------------------------------
Name: Xxxxxx Xxxx
Title: Chief Executive Officer
IRONCLAD MERGER CORPORATION
By: /s/ Xxxxxx Xxxx
-------------------------------------
Name: Xxxxxx Xxxx
Title: Chief Executive Officer
S-1
INDEX OF SCHEDULES AND EXHIBITS
SCHEDULES:
Ironclad Disclosure Schedule
EUTA Disclosure Schedule
EXHIBITS:
Exhibit A-1: Equity Financing Terms
Exhibit A-2: Form of Subscription Agreement
Exhibit B-1: EUTA Reorganization Terms
Exhibit B-2: Form of Amended and Restated Purchase and Escrow Agreement
Exhibit B-3: Form of Amended and Restated Shares Cancellation Agreement
Exhibit B-4: EUTA Reorganization Capital Structure
Exhibit C: Form of Certificate of Merger
Exhibit D: Form of Ironclad Officer's Certificate
Exhibit E: Form of Ironclad Secretary's Certificate
Exhibit F: Form of Opinion of Ironclad Counsel
Exhibit G: Form of EUTA Officer's Certificate
Exhibit H: Form of EUTA Secretary's Certificate
Exhibit I: [Reserved]
Exhibit J: Articles of Incorporation of Surviving Corporation
Exhibit K: Post-Closing EUTA Capital Structure
EXHIBIT A-1
EQUITY FINANCING TERMS
The terms of the Equity Financing are outlined in the Confidential Private
Placement Memorandum in connection with the Merger and Reorganization of Europa
Trade Agency Ltd. and Ironclad Performance Wear Corporation, dated March 2006,
which document is incorporated herein by reference.
A1-1
EXHIBIT A-2
FORM OF SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT ("Subscription Agreement") made as of this __
day of __________________, 2006, by and among Europa Trade Agency Ltd., a Nevada
corporation (the "Company"), Ironclad Performance Wear Corporation, a California
corporation and upon the Closing Date (as defined below) a wholly owned
subsidiary of the Company ("Ironclad") and the undersigned (the "Subscriber").
WHEREAS, the Company, the Company's wholly-owned subsidiary, Ironclad
Merger Corporation, and Ironclad are parties to a certain Agreement and Plan of
Merger dated as of _________, 2006 (the "Merger Agreement"), pursuant to which a
newly organized, wholly owned subsidiary of the Company will merge with and into
Ironclad, Ironclad will become a wholly owned subsidiary of the Company, and the
existing Ironclad stockholders will obtain majority ownership and control of the
Company (the "Merger"). Immediately after the effective time of the Merger (the
"Closing Date"), the Company will change its name to Ironclad Performance Wear
Corporation and will assume, through Ironclad, its business and operations.
WHEREAS, as a condition to the closing of the Merger, the Company
intends to obtain subscriptions for the purchase and sale, in a private
placement transaction (the "Offering") pursuant to Regulation D promulgated
under the Securities Act of 1933, as amended (the "Act"), of Units (the "Units")
consisting of (i) one (1) share of the Company's common stock, par value $0.001
per share ("Common Stock"), and (ii) three-quarter (3/4) of a five (5) year
warrant to purchase one (1) share of the Company's Common Stock at an initial
exercise price of $1.00 per share (the "Warrants" and the Common Stock issuable
upon the exercise of the Warrants the "Warrant Shares"), on the terms and
conditions hereinafter set forth, and the Subscriber desires to acquire that
number of Units set forth on the signature page hereof.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
1. SUBSCRIPTION PROCEDURE
1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase from
the Company such number of Units as is set forth upon the
signature page hereof at a price of $0.75 per Unit (the
"Purchase Price"). The Company agrees to sell such Units to
the Subscriber for the Purchase Price.
1.2 The subscription period will begin as of March 8, 2006 and
will terminate (if the Closing Date has not earlier occurred)
at 5:00 PM Eastern Standard Time on April 30, 2006, unless
extended by for up to an additional 90 days (the "Termination
Date"). The Units will be offered on a "best efforts" basis as
more particularly set forth in the Confidential Private
Placement Memorandum dated March 2006 and any supplements
thereto (the "Offering Memorandum"). The minimum dollar amount
of Units that may be purchased by the Subscriber is $30,000
unless Ironclad and the Company waive the requirement. The
consummation of the Offering is subject to the satisfaction of
a number of conditions, as further described in the Offering
Memorandum, one or more of which conditions may not occur.
A2-1
1.3 Placement of Units will be made by Xxxxx Xxxxxx & Co., Inc and
GP Group, LLC, an affiliate of Gemini Partners, Inc. (the
"Placement Agents"), each of whom will receive certain
compensation therefor as provided in their Engagement
Agreements, which are more fully described in the Offering
Memorandum.
1.4 The Purchase Price will be placed in escrow pursuant to an
escrow agreement by and among the Placement Agents, the
Company and American Stock Transfer Corporation as escrow
agent (the "Escrow Agreement"), and shall be paid over to the
Company at the closing of the purchase of the Units in the
Offering (the "Closing") to occur on the Closing Date.
1.5 The certificates for the Common Stock together with the
accompanying Warrants bearing the name of the Subscriber will
be delivered by the Company no later than fifteen (15) days
following the Closing Date. The Subscriber hereby authorizes
and directs the Company to deliver the securities to be issued
to such Subscriber pursuant to this Subscription Agreement to
the residential or business address indicated in the Investor
Questionnaire.
1.6 The Purchase Price for the Units purchased hereunder shall be
paid by certified check, payable to American Stock Transfer
Corporation, as escrow agent, or by wire transfer to American
Stock Transfer Corporation pursuant to the following
instructions:
Bank Name: XX Xxxxxx Chase Bank
ABA Routing No.: 000-000-000
Account No. [________________]
Account Name: American Stock Transfer & Trust Company -
Europa Trade Agency Ltd.
Escrow Account
1.7 The Company and/or Ironclad may, in their sole discretion,
reject any subscription, in whole or in part, or terminate or
withdraw the Offering in its entirety at any time prior to a
closing in relation thereto. Neither the Company nor the
Placement Agent shall be required to allocate among investors
on a pro rata basis in the event of an over-subscription.
2. REPRESENTATIONS AND COVENANTS OF SUBSCRIBER
2.1 The Subscriber recognizes that the purchase of Units involves
a high degree of risk in that (i) the Company will need
additional capital but has no assurance of additional
necessary capital; (ii) an investment in the Company is highly
speculative and only investors who can afford the loss of
their entire investment should consider investing in the
Company and the Units; (iii) an investor may not be able to
liquidate his investment; (iv) transferability of the
securities comprising the Units is extremely limited; (v) an
investor could sustain the loss of his entire investment; and
(vi) the Company is and will be subject to numerous other
risks and uncertainties, including without limitation,
significant and material risks relating to the Company's
business and the business and operations of Ironclad, and the
industries and markets in which the
A2-2
Company will compete, as well as risks associated with the
Offering, the Merger and the other transactions contemplated
herein, in the Offering Memorandum and in the Merger
Agreement, all as more fully set forth herein and in the
Offering Memorandum. For the avoidance of doubt, all
references to the Company in this Section 2.1 include the
Company's business and operations after it acquires the
business and operations of Ironclad through the Merger.
2.2 The Subscriber represents that he is an "accredited investor"
as such term is defined in Rule 501 of Regulation D
promulgated under the Act, as indicated by his responses to
the Investor Questionnaire, the form of which is attached
hereto as EXHIBIT A, and that he or it is able to bear the
economic risk of an investment in the Units. The Subscriber
must complete the Investor Questionnaire to enable the Company
and Ironclad to access the Subscriber's eligibility for the
Offering.
2.3 The Subscriber acknowledges that he has prior investment
experience, including without limitation, investment in
non-listed and non-registered securities, or he has employed
the services of an investment advisor, attorney or accountant
to read all of the documents furnished or made available by
the Company or Ironclad both to him and to all other
prospective investors in the Units and to evaluate the merits
and risks of such an investment on his behalf, and that he
recognizes the highly speculative nature of this investment.
2.4 The Subscriber acknowledges receipt and careful review of the
Offering Memorandum, this Subscription Agreement, the Common
Stock Purchase Warrant and the attachments hereto and thereto
(collectively, the "Offering Documents") and hereby represents
that he has been furnished or given access by the Company or
Ironclad during the course of this Offering with or to all
information regarding the Company and Ironclad and their
respective financial conditions and results of operations
which he had requested or desired to know; that all documents
which could be reasonably provided have been made available
for his inspection and review; that he has been afforded the
opportunity to ask questions of and receive answers from duly
authorized representatives of the Company and Ironclad
concerning the terms and conditions of the Offering, and any
additional information which he had requested. The Subscriber
further represents and acknowledges that the Subscriber has
not seen or received any advertisement or general solicitation
with respect to the sale of any of the securities of the
Company, including, without limitation, the Units.
2.5 The Subscriber acknowledges that this Offering of Units may
involve tax consequences, and that the contents of the
Offering Documents do not contain tax advice or information.
The Subscriber acknowledges that he must retain his own
professional advisors to evaluate the tax and other
consequences of an investment in the Units.
2.6 The Subscriber acknowledges that this Offering of Units has
not been reviewed or approved by the United States Securities
and Exchange Commission ("SEC") because the Offering is
intended to be a nonpublic offering pursuant to Section 4(2)
of the Act. The Subscriber represents that the Units are being
purchased for his own account, for investment and not for
distribution or resale to others. The Subscriber agrees that
he will not sell or otherwise transfer any of the securities
comprising the Units unless they are registered under the Act
or unless an exemption from such registration is
A2-3
available and, upon the Company's request, the Company
receives an opinion of counsel reasonably satisfactory to the
Company confirming that an exemption from such registration is
available for such sale or transfer.
2.7 The Subscriber understands that the Units have not been
registered under the Act by reason of a claimed exemption
under the provisions of the Act which depends, in part, upon
his investment intention. The Subscriber realizes that, in the
view of the SEC, a purchase now with the intention to
distribute would represent a purchase with an intention
inconsistent with his representation to the Company, and the
SEC might regard such a distribution as a deferred sale to
which such exemption is not available.
2.8 The Subscriber understands that Rule 144 (the "Rule")
promulgated under the Act requires, among other conditions, a
one year holding period prior to the resale (in limited
amounts) of securities acquired in a non-public offering, such
as the Offering, without having to satisfy the registration
requirements under the Act. The Subscriber understands that
the Company makes no representation or warranty regarding its
fulfillment in the future of any reporting requirements under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or its dissemination to the public of any current
financial or other information concerning the Company, as is
required by Rule 144 as one of the conditions of its
availability. The Subscriber consents that the Company may, if
it desires, permit the transfer of the Common Stock included
in the Units or issuable upon the exercise of the Warrants out
of his name only when his request for transfer is accompanied
by an opinion of counsel reasonably satisfactory to the
Company that neither the sale nor the proposed transfer
results in a violation of the Act, any applicable state "blue
sky" laws or any applicable securities laws of any other
country, province or jurisdiction (collectively, "Securities
Laws"). The Subscriber agrees to hold the Company, Ironclad
and their respective directors, officers and controlling
persons and their respective heirs, representatives,
successors and assigns harmless and to indemnify them against
all liabilities, costs and expenses incurred by them as a
result of any misrepresentation made by him contained herein
or in the Investor Questionnaire or any sale or distribution
by the undersigned Subscriber in violation of any Securities
Laws.
2.9 The Subscriber consents to the placement of one or more
legends on any certificate or other document evidencing his
Units and the Common Stock or Warrants included in the Units
or issuable upon the exercise of the Warrants stating that
they have not been registered under the Act and are subject to
the terms of this Subscription Agreement, and setting forth or
referring to the restrictions on the transferability and sale
thereof.
2.10 The Subscriber understands that the Company and Ironclad will
review this Subscription Agreement and the Investor
Questionnaire and is hereby given authority by the undersigned
to call his bank or place of employment or otherwise review
the financial standing of the Subscriber; and it is further
agreed that the Company and Ironclad reserve the unrestricted
right to reject or limit any subscription and to close the
offer at any time.
A2-4
2.11 The Subscriber hereby represents that the address of
Subscriber furnished by him at the end of this Subscription
Agreement and in the Investor Questionnaire is the
undersigned's principal residence if he is an individual or
its principal business address if it is a corporation or other
entity.
2.12 The Subscriber acknowledges that if the Subscriber is a
Registered Representative of a National Association of
Securities Dealers, Inc. ("NASD") member firm, he must give
such firm the notice required by the NASD Conduct Rules, or
any applicable successor rules of the NASD, receipt of which
must be acknowledged by such firm on the signature page
hereof. The Subscriber shall also notify the Company if the
Subscriber or any affiliate of Subscriber is a registered
broker-dealer with the SEC, in which case the Subscriber
represents that the Subscriber is purchasing the Units in the
ordinary course of business and, at the time of purchase of
the Units, has no agreements or understandings, directly or
indirectly, with any person to distribute the Units or any
portion thereof.
2.13 The Subscriber hereby represents that, except as set forth in
the Offering Documents, no representations or warranties have
been made to the Subscriber by either the Company or Ironclad
or their agents, employees or affiliates and in entering into
this transaction, the Subscriber is not relying on any
information, other than that contained in the Offering
Documents.
2.14 The Subscriber agrees that he will purchase securities in the
Offering only if his intent at such time is to make such
purchase for investment purposes and not with a view toward
resale.
2.15 If the undersigned Subscriber is a partnership, corporation,
trust or other entity, such partnership, corporation, trust or
other entity further represents and warrants that: (i) it was
not formed for the purpose of investing in the Company; (ii)
it is authorized and otherwise duly qualified to purchase and
hold the Units; and (iii) that this Subscription Agreement has
been duly and validly authorized, executed and delivered and
constitutes the legal, binding and enforceable obligation of
the undersigned.
2.16 If the Subscriber is not a United States person, such
Subscriber hereby represents that it has satisfied itself as
to the full observance of the laws of its jurisdiction in
connection with any invitation to subscribe for the Units or
any use of this Subscription Agreement, including (i) the
legal requirements within its jurisdiction for the purchase of
the Units, (ii) any foreign exchange restrictions applicable
to such purchase, (iii) any governmental or other consents
that may need to be obtained, and (iv) the income tax and
other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale or transfer of the Units.
Such Subscriber's subscription and payment for, and his or her
continued beneficial ownership of the Units and of the shares
of Common Stock included therein or issuable upon the exercise
of the Warrants, will not violate any applicable securities or
other laws of the Subscriber's jurisdiction.
2.17 The undersigned hereby covenants and agrees that neither it
nor any of its affiliates has or will have an open position
(e.g., short sale) in the Common Stock or any Warrant Shares
prior to the Registration Statement (as defined below) being
declared effective by the SEC with the intent of covering such
open position with Common Stock or Warrant Shares being
registered in the Registration Statement. The undersigned
hereby acknowledges and understands that the SEC has taken the
position that such an open position would constitute a
violation of Section 5 of the Act.
A2-5
2.18 The Subscriber acknowledges that (i) the Offering Memorandum
contains material, non-public information concerning the
Company within the meaning of Regulation FD promulgated by the
SEC, and (ii) the Subscriber is obtaining such material,
non-public information solely for the purpose of considering
whether to purchase the Units pursuant to a private placement
that is exempt from registration under the Act. In accordance
with Regulation FD and other applicable provisions of the
Securities Laws, the Subscriber agrees to keep such
information confidential and not to disclose it to any other
person or entity except the Subscriber's legal counsel, other
advisors and other representatives who have agreed (i) to keep
such information confidential, (ii) to use such information
only for the purpose set forth above, and (iii) to comply with
applicable securities laws with respect to such information.
In addition, the Subscriber further acknowledges that the
Subscriber and such legal counsel, other advisors and other
representatives are prohibited from trading in the Company's
securities while in possession of material, non-public
information and agrees to refrain from purchasing or selling
securities of the Company until such material, non-public
information has been publicly disseminated by the Company. The
Subscriber agrees to indemnify and hold harmless the Company,
Ironclad and their respective officers, directors, employees
and affiliates and each other person, if any, who controls any
of the foregoing, against any loss, liability, claim, damage
and expense whatsoever (including, but not limited to, any and
all expenses whatsoever reasonably incurred in investigating,
preparing or defending against any litigation commenced or
threatened or any claim whatsoever) arising out of or based
upon any false representation or warranty by the Subscriber,
or the Subscriber's breach of, or failure to comply with, any
covenant or agreement made by the Subscriber herein or in any
other document furnished by the Subscriber to the Company,
Ironclad or their respective officers, directors, employees or
affiliates or each other person, if any, who controls any of
the foregoing in connection with this transaction.
2.19 The Subscriber understands and acknowledges that (i) the Units
are being offered and sold to Subscriber without registration
under the Act in a private placement that is exempt from the
registration provisions of the Act under Section 4(2) of the
Act and (ii) the availability of such exemption depends in
part on, and that the Company will rely upon the accuracy and
truthfulness of, the foregoing representations, and such
Subscriber hereby consents to such reliance.
3. REPRESENTATIONS BY THE COMPANY AND IRONCLAD
Except as set forth in the reports filed by the Company
pursuant to the Securities Exchange Act of 1934, as amended (the "SEC Reports"),
each of the Company and, as applicable, Ironclad severally represent and warrant
to the Subscriber that:
3.1 ORGANIZATION AND AUTHORITY. The Company and Ironclad, and each
of their respective subsidiaries, (i) is a corporation validly
existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) has all requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as presently
conducted, and (iii) has all requisite corporate power and
authority to execute, deliver and perform their obligations
under this Subscription Agreement and the Offering Documents
being executed and delivered by it in connection herewith, and
to consummate the transactions contemplated hereby and
thereby.
A2-6
3.2 QUALIFICATIONS. The Company and Ironclad, and each of their
respective subsidiaries, is duly qualified to do business as a
foreign corporation and is in good standing in all
jurisdictions where such qualification is necessary and where
failure so to qualify could have a material adverse effect on
the business, properties, operations, condition (financial or
other), results of operations or prospects of the Company and
its subsidiaries (after the effective time of the Merger),
taken as a whole.
3.3 CAPITALIZATION OF THE COMPANY. Immediately after the effective
time of the Merger (but before the closing of this Offering),
the authorized capital stock of the Company will consist of
50,000,000 shares of Common Stock, $0.001 par value per share.
Of the authorized capital stock of the Company, immediately
after the effective time of the Merger (but before the closing
of this Offering), there will be outstanding 19,853,115 shares
of Common Stock, options to purchase an aggregate of 2,592,641
shares of Common Stock, and warrants to purchase an aggregate
of 2,715,737 shares of Common Stock, including warrants to be
issued by the Company to certain Ironclad investors upon
consummation of the Merger, but excluding any warrants to be
issued to the Placement Agents as described in the Offering
Documents. Except as a result of the purchase and sale of the
Units, as contemplated in the Merger Agreement or as disclosed
in the SEC Reports or the Offering Documents, there are no
additional outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible
into or exchangeable for, or giving any person any right to
subscribe for or acquire from the Company, any shares of
Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any subsidiary is or may
become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares
of Common Stock. Except as described in the Offering
Documents, the issuance and sale of the Units will not
obligate the Company to issue shares of Common Stock or other
securities to any person (other than the Subscribers) and will
not result in a right of any holder of Company securities to
adjust the exercise, conversion, exchange or reset price under
such securities. The shares of the Company's capital stock
outstanding immediately after the effective time of the Merger
(but before the closing of the Offering) are or will be duly
authorized and validly issued and are or will be fully paid
and nonassessable. None of the outstanding shares of Common
Stock or options, warrants, or rights or other securities
entitling the holders to acquire Common Stock has been issued
in violation of the preemptive rights of any security holder
of the Company. No holder of any of the Company's securities
has any rights, "demand," "piggy-back" or otherwise, to have
such securities registered by reason of the intention to file,
filing or effectiveness of the Registration Statement (as
defined below), except as contemplated by the Merger Agreement
and as described in the Offering Documents. The Common Stock
and the Warrants to be issued to the Subscriber have been duly
authorized, and when issued and paid for in accordance with
this Subscription Agreement, the Common Stock will be duly and
validly issued, fully paid and non-assessable, and the Warrant
Shares, when issued upon exercise of the Warrants in exchange
for the payment in full of the exercise price for such Warrant
Share therein specified, will be duly and validly issued,
fully paid and non-assessable. The Common Stock is eligible
for quotation on the NASD OTC Bulletin Board, the Company and
the Common Stock meets the criteria for continued quotation
and trading on the OTC Bulletin Board, and no suspension of
trading in the Common Stock is in effect.
A2-7
3.4 CORPORATE AUTHORIZATION. The Offering Documents have been duly
and validly authorized by the Company and Ironclad. This
Subscription Agreement, assuming due execution and delivery by
the Subscriber, and the Warrants, when the Subscription
Agreement and the Warrants are executed and delivered by the
Company, will be, valid and binding obligations of the
Company, enforceable in accordance with their respective
terms, except as the enforceability hereof and thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally and general
principles of equity, regardless of whether enforcement is
considered in a proceeding in equity or at law.
3.5 NON-CONTRAVENTION. The execution and delivery of the Offering
Documents by the Company and Ironclad, the issuance of the
Units as contemplated by the Offering Documents and the
completion by the Company and Ironclad of the other
transactions contemplated by the Offering Documents do not and
will not, with or without the giving of notice or the lapse of
time, or both, (i) result in any violation of any provision of
the articles of incorporation or by-laws or similar
instruments of the Company or Ironclad or their respective
subsidiaries, (ii) conflict with or result in a breach by
Ironclad or its subsidiaries of any of the terms or provisions
of, or constitute a default under, or result in the
modification of, or result in the creation or imposition of
any lien, security interest, charge or encumbrance upon any of
the properties or assets of Ironclad or its subsidiaries,
pursuant to any agreements, instruments or documents filed as
exhibits to the SEC Reports or any indenture, mortgage, deed
of trust or other agreement or instrument to which Ironclad or
any of its subsidiaries is a party or by which Ironclad or any
of its subsidiaries or any of its properties or assets are
bound or affected, in any such case which would have a
material adverse effect on the business, properties,
operations, condition (financial or other), results of
operations or prospects of Ironclad and its subsidiaries,
taken as a whole, or the validity or enforceability of, or the
ability of Ironclad to perform their obligations under, the
Offering Documents, (iii) violate or contravene any applicable
law, rule or regulation or any applicable decree, judgment or
order of any court, United States federal or state regulatory
body, administrative agency or other governmental body having
jurisdiction over Ironclad or any of its subsidiaries or any
of its properties or assets that would have a material adverse
effect on the business, properties, operations, condition
(financial or other), results of operations or prospects of
the Ironclad and its subsidiaries (after the effective time of
the Merger), taken as a whole, or the validity or
enforceability of, or the ability of the Company or Ironclad
to perform its obligations under, the Offering Documents, or
(iv) have any material adverse effect on any permit,
certification, registration, approval, consent, license or
franchise necessary for Ironclad or its subsidiaries (after
the effective time of the Merger) to own or lease and operate
any of its properties and to conduct any of its business or
the ability of Ironclad or its subsidiaries to make use
thereof.
3.6 INFORMATION PROVIDED. The Company hereby represents and
warrants to the Subscriber that the information set forth in
the Offering Memorandum, the SEC
A2-8
Reports and any other document provided by the Company (or the
Company's authorized representatives) to the Subscriber in
connection with the transactions contemplated by this
Subscription Agreement, does not contain any untrue statement
of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not
misleading, it being understood that for purposes of this
Section 3.6, any statement contained in such information shall
be deemed to be modified or superseded for purposes of this
Section 3.6 to the extent that a statement in any document
included in such information which was prepared and furnished
to the Subscriber on a later date or filed with the SEC on a
later date modifies or replaces such statement, whether or not
such later prepared and furnished or filed statement so
states. Ironclad hereby represents and warrants to the
Subscriber that the information set forth in the Offering
Memorandum and any other document provided by Ironclad (or
Ironclad's authorized representatives) to the Subscriber in
connection with the transactions contemplated by this
Subscription Agreement, does not contain any untrue statement
of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not
misleading.
3.7 ABSENCE OF CERTAIN PROCEEDINGS. Ironclad is not aware of any
action, suit, proceeding, inquiry or investigation before or
by any court, public board or body, or governmental agency
pending or threatened against or affecting Ironclad or any of
its subsidiaries, in any such case wherein an unfavorable
decision, ruling or finding would have a material adverse
effect on the business, properties, operations, condition
(financial or other), results of operations or prospects of
the Company or Ironclad, or the transactions contemplated by
the Offering Documents or which could adversely affect the
validity or enforceability of, or the authority or ability of
the Company or Ironclad to perform its obligations under, the
Offering Documents; and to the Company's and Ironclad's
knowledge there is not pending or contemplated any, and there
has been no, investigation by the SEC involving Ironclad or
any of its current or former directors or officers.
3.8 COMPLIANCE WITH LAW. Neither Ironclad nor any of its
subsidiaries is in violation of or has any liability under any
statute, law, rule, regulation, ordinance, decision or order
of any governmental agency or body or any court, domestic or
foreign, except where such violation or liability would not
individually or in the aggregate have a material adverse
effect on the business, properties, operations, condition
(financial or other), results of operations or prospects of
Ironclad or any of its subsidiaries (after the effective time
of the Merger), taken as a whole; and to the knowledge of
Ironclad there is no pending investigation that would
reasonably be expected to lead to such a claim.
3.9 TAX MATTERS. Ironclad and its subsidiaries have filed all
federal, state and local income and franchise tax returns
required to be filed and has paid all taxes shown by such
returns to be due, and no tax deficiency has been determined
adversely to Ironclad or any of its subsidiaries which has had
(nor does Ironclad or any of its subsidiaries have any
knowledge of any tax deficiency which, if determined adversely
to Ironclad or any of its subsidiaries, might have) a material
adverse effect on the business, properties, operations,
condition (financial or other), results of operations, or
prospects of Ironclad or any of its subsidiaries (after the
effective time of the Merger), taken as a whole.
A2-9
4. REGISTRATION RIGHTS
4.1 REGISTRATION REQUIREMENT. Subject to the terms and limitations
hereof, the Company shall file a registration statement on
Form SB-2 or other appropriate registration document under the
Act (the "Registration Statement") for resale of the Common
Stock and the Warrant Shares (the "Registrable Securities")
and shall use its reasonable best efforts to maintain the
Registration Statement effective for a period of twenty-four
(24) months at the Company's expense (the "Effectiveness
Period"). The Company shall file such Registration Statement
no later than forty five (45) days after the Closing Date (the
"Registration Filing Date"), and shall use reasonable best
efforts to cause such Registration Statement to become
effective within one hundred and fifty (150) days after the
Closing Date. Subject to the conditions and limitations
hereof, including the limitations set forth in Section 4.2,
the Company's failure to satisfy the obligations specified in
the immediately preceding sentence shall require the Company
to make a cash payment, as liquidated damages, to the
Subscriber of 0.0333% of the Purchase Price of the Units sold
to the Subscriber under this Subscription Agreement for each
business day of such failure. For the avoidance of doubt, any
right to receive such cash payment shall be Subscriber's sole
and exclusive remedy for the failure of the Company to satisfy
the obligations under this Section 4.1.
4.2 LIMITATION TO REGISTRATION REQUIREMENT. Notwithstanding the
foregoing, the Company shall not be obligated to effect any
registration of the Registrable Securities or take any other
action pursuant to this Section 4: (i) in any particular
jurisdiction in which the Company would be required to execute
a general consent to service of process in effecting such
registration, qualification or compliance unless the Company
is already subject to service in such jurisdiction and except
as may be required by the Act, or (ii) during any period in
which the Company suspends the rights of a subscriber after
giving the Subscriber written notification of a Potential
Material Event (defined below) pursuant to Section 4.6 hereof.
4.3 EXPENSES OF REGISTRATION. Except as otherwise expressly set
forth, the Company shall bear all expenses incurred by the
Company in compliance with the registration obligation of the
Company, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of
counsel for the Company incurred in connection with any
registration, qualification or compliance pursuant to this
Subscription Agreement and all underwriting discounts, selling
commissions and expense allowances applicable to the sale of
any securities by the Company for its own account in any
registration. All underwriting discounts, selling commissions
and expense allowances applicable to the sale by Subscriber of
Registrable Securities and all fees and disbursements of
counsel for the Subscriber shall be borne by the Subscriber.
4.4 INDEMNIFICATION.
(a) To the extent permitted by law the Company will
indemnify each Subscriber, each of its officers,
directors, agents, employees and partners, and each
person controlling such Subscriber, with respect to
each registration, qualification or compliance
effected pursuant to this Agreement, and each
underwriter, if any, and each
A2-10
person who controls any underwriter, and their
respective counsel against all claims, losses,
damages and liabilities (or actions, proceedings or
settlements in respect thereof) arising out of or
based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any
prospectus, offering circular or other document
prepared by the Company (including any related
registration statement, notification or the like)
incident to any such registration, qualification or
compliance, or (ii) any omission (or alleged
omission) to state therein a material fact required
to be stated therein or necessary to make the
statements therein not misleading, or any violation
by the Company of the Act or any rule or regulation
thereunder applicable to the Company and relating to
action or inaction required of the Company in
connection with any such registration, qualification
or compliance, and subject to the provisions of
Section 4.4(c) below, will reimburse each such
Subscriber, each of its officers, directors, agents,
employees and partners, and each person controlling
such Subscriber, each such underwriter and each
person who controls any such underwriter, for any
legal and any other expenses as they are reasonably
incurred in connection with investigating and
defending any such claim, loss, damage, liability or
action, provided that the Company will not be liable
in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or
is based on any untrue statement (or alleged untrue
statement) or omission (or alleged omissions) based
upon written information furnished to the Company by
(or on behalf of) such Subscriber or underwriter, or
if the person asserting any such loss, claim, damage
or liability (or action or proceeding in respect
thereof did not receive a copy of an amended
preliminary prospectus or the final prospectus (or
the final prospectus as amended and supplemented) at
or before the written confirmation of the sale of
such Registrable Securities to such person because of
the failure of the Subscriber or underwriter to so
provide such amended preliminary or final prospectus
(or the final prospectus as amended and
supplemented); provided, however, that the indemnity
agreement contained in this subsection shall not
apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement
is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any
such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a
violation which occurs in reliance upon and in
conformity with written information furnished
expressly for use in connection with such
registration by the Subscriber, any such partner,
officer, director, employee, agent or controlling
person of such Subscriber, or any such underwriter or
any person who controls any such underwriter;
provided, however, that the obligations of the
Company hereunder shall be limited to an amount equal
to the portion of net proceeds represented by the
Registrable Securities pursuant to this Subscription
Agreement.
(b) To the extent permitted by law, each Subscriber whose
Registrable Securities are included in any
registration, qualification or compliance effected
pursuant to this Subscription Agreement will
indemnify the Company, and its directors, officers,
agents, employees and each underwriter, if any, of
the Company's securities covered by such a
registration statement, each person who controls the
Company or such underwriter within the meaning of the
Act and the rules and regulations thereunder, each
other such Subscriber and each of their officers,
directors, partners, agents and employees, and each
person controlling such Subscriber, and their
respective counsel against all claims, losses,
damages and liabilities (or actions in respect
thereof) arising out of or based on any
A2-11
untrue statement (or alleged untrue statement) of a
material fact contained in any such registration
statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to
state therein a material fact required to be stated
therein or necessary to make the statements therein
not misleading, and will reimburse the Company and
such Subscribers, directors, officers, partners,
persons, underwriters or control persons for any
legal or any other expenses as they are reasonably
incurred in connection with investigating or
defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made
in such registration statement, prospectus, offering
circular or other document in reliance upon and in
conformity with written information furnished to the
Company by such Subscriber; PROVIDED, HOWEVER, that
the obligations of any Subscriber hereunder shall be
limited to an amount equal to the net proceeds to
such Subscriber from Registrable Securities sold
under such registration statement, prospectus,
offering circular or other document as contemplated
herein; provided, further, that the indemnity
agreement contained in this subsection shall not
apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement
is effected without the consent of the Subscriber,
which consent shall not be unreasonably withheld or
delayed.
(a) Each party entitled to indemnification under this
Section (the "Indemnified Party") shall give notice
to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or any litigation
resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's
expense; and provided further that if any Indemnified
Party reasonably concludes that there may be one or
more legal defenses available to it that are not
available to the Indemnifying Party, or that such
claim or litigation involves or could have an effect
on matters beyond the scope of this Agreement, then
the Indemnified Party may retain its own counsel at
the expense of the Indemnifying Party; and provided
further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this
Agreement unless and only to the extent that such
failure to give notice results in material prejudice
to the Indemnifying Party. No Indemnifying Party, in
the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any
settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing
and as shall be reasonably required in connection
with defense of such claim and litigation resulting
therefrom.
(b) If the indemnification provided for in this Section
is held by a court of competent jurisdiction to be
unavailable to an Indemnified Party with respect to
any loss, liability, claim, damage or expense
referred to herein, then the Indemnifying Party, in
lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the
A2-12
amount paid or payable by such Indemnified Party as a
result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party
on the one hand and of the Indemnified Party on the
other in connection with the statements or omissions
which resulted in such loss, liability, claim, damage
or expense as well as any other relevant equitable
considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall
be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a
material fact or the omission to state a material
fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and
the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent
such statement or omission.
4.5 TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The Registrable
Securities, and any related benefits to the Subscriber
hereunder may be transferred or assigned by the Subscriber to
a permitted transferee or assignee, provided that the Company
is given written notice of such transfer or assignment,
stating the name and address of said transferee or assignee
and identifying the Registrable Securities with respect to
which such registration rights are being transferred or
assigned; provided further that the transferee or assignee of
such Registrable Securities shall be deemed to have assumed
the obligations of the Subscriber under this Subscription
Agreement by the acceptance of such assignment and shall, upon
request from the Company, evidence such assumption by delivery
to the Company of a written agreement assuming such
obligations of the Subscriber.
4.6 REGISTRATION PROCEDURES. In the case of the registration
effected by the Company pursuant to this Subscription
Agreement, the Company will keep the Subscriber advised in
writing as to the initiation of each registration and as to
the completion thereof. The Company will:
(a) Prepare and file with the SEC such amendments and
supplements to such registration statement and the
prospectus used in connection with such registration
statement as may be necessary to comply with the
provisions of the Act with respect to the disposition
of securities covered by such registration statement;
(b) Respond as promptly as reasonably practicable to any
comments received from the SEC with respect to a
registration statement or any amendment thereto.
(c) Notify the Subscriber as promptly as reasonably
practicable and (if requested by any such person)
confirm such notice in writing no later than one
trading day following the day (A) when a prospectus
or any prospectus supplement or post-effective
amendment to a registration statement is proposed to
be filed and (B) with respect to a registration
statement or any post-effective amendment, when the
same has become effective;
(d) Furnish such number of prospectuses and other
documents incident thereto, including supplements and
amendments, as the Subscriber may reasonably request;
A2-13
(e) Furnish to the Subscriber, upon request, a copy of
all documents filed with and all correspondence from
or to the SEC in connection with any such
registration statement other than non-substantive
cover letters and the like;
(f) Use its reasonable best efforts to avoid the issuance
of, or, if issued, obtain the withdrawal of (i) any
order suspending the effectiveness of a registration
statement, or (ii) any suspension of the
qualification (or exemption from qualification) of
any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment; and
(g) Use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC.
Notwithstanding the foregoing, if at any time or from time to time after the
date hereof, the Company notifies the Subscriber in writing of the existence of
an event or circumstance that is not disclosed in the Registration Statement and
that may have a material effect on the Company or its business (a "Potential
Material Event"), the Subscriber shall not offer or sell any Registrable
Securities, or engage in any other transaction involving or relating to the
Registrable Securities, from the time of the giving of notice with respect to a
Potential Material Event until the Company notifies the Subscriber that such
Potential Material Event either has been added to the Registration Statement by
amendment or supplement or no longer constitutes a Potential Material Event;
PROVIDED, that the Company may not so suspend the right of Subscriber for more
than 120 days during any 12 month period.
4.7 STATEMENT OF BENEFICIAL OWNERSHIP. The Company may require the
Subscriber to furnish to the Company a certified statement as
to the number of shares of Common Stock beneficially owned by
such Subscriber and the controlling person thereof and any
other such information regarding the Subscriber, the
Registrable Securities held by the Subscriber and the intended
method of disposition of such securities as shall be
reasonably required with respect to the registration of the
Subscriber's Registrable Securities. The Subscriber hereby
understands and agrees that the Company may, in its sole
discretion, exclude the Subscriber's shares of Common Stock
(including such shares into which the Warrants are
exercisable) from the Registration Statement in the event that
the Subscriber fails to provide such information requested by
the Company within the time period reasonably specified by the
Company or is required to do so by law or the SEC.
4.8 COMPLIANCE. Subscriber covenants and agrees that such
Subscriber will comply with the prospectus delivery
requirements of the Act as applicable to such Subscriber in
connection with sales of Registrable Securities pursuant to
the registration statement required hereunder.
4.9 PIGGY-BACK REGISTRATIONS. If at any time during the
Effectiveness Period there is not an effective registration
statement covering all of the Registrable Securities and the
Company shall determine to prepare and file with the SEC a
registration statement relating to an offering for its own
account or the account of others under the Act of any of its
Common Stock, other than an offering of securities issued
pursuant to a Strategic Issuance (as defined below) and other
than a Form S-4 or Form S-8 registration statement (each as
promulgated under the Act or their then equivalents relating
to equity
A2-14
securities to be issued solely in connection with any business
combination transaction, acquisition of any entity or business
or equity securities issuable in connection with stock option
or other employee benefit plans), then the Company shall send
to the Subscriber (together with any other holders of its
Common Stock or Warrants possessing "piggyback registration
rights" comparable to those granted to the Subscriber
hereunder ("Rightsholders")) written notice of such
determination and, if within fifteen (15) days after receipt
of such notice, the Subscriber shall so request in writing,
the Company shall include in such registration statement all
or any part of such Registrable Securities such Subscriber
requests to be registered; provided that the Company shall not
be required to register any Registrable Securities pursuant to
this Section that are eligible for resale pursuant to Rule
144(k) promulgated under the Act; and provided further that
the Company may, without the consent of the Subscriber,
withdraw such registration statement before its becoming
effective if the Company or other stockholders have elected to
abandon the proposal to register the securities proposed to be
registered thereunder. If the registration statement is being
filed for an underwritten public offering, the Subscriber must
timely execute and deliver the usual and customary agreement
among the Company, such Subscriber and the underwriters
relating to the registration; If the registration statement is
being filed for an underwritten offer and sale by the Company
of securities for its own account and the managing
underwriters advise the Company in writing that in their
opinion the offering contemplated by the registration
statement cannot be successfully completed if the Company were
to also register the Registrable Shares of the Subscriber
requested to be included in such registration statement, then
the Company will include in the registration: (i) first, any
securities the Company proposes to sell, (ii) second, any
securities of any person whose securities are being registered
as a result of the exercise of a demand registration right,
and (iii) third, that portion of the aggregate number of
shares being requested for inclusion in the registration
statement by (X) the Subscriber and (Y) all other
Rightsholders, which in the opinion of such managing
underwriters can successfully be sold, such number of shares
to be taken PRO RATA from the Rightsholders on the basis of
the total number of shares being requested for inclusion in
the registration statement by each Rightsholder. "Strategic
Issuance" shall mean an issuance of securities: (i) in
connection with a "corporate partnering" transaction or a
"strategic alliance" (as determined by the Board of Directors
of the Company in good faith); (ii) in connection with any
financing transaction in respect of which the Company is a
borrower; or (iii) to a vendor, lessor, lender, or customer of
the Company, or a research, manufacturing or other commercial
collaborator of the Company, in a transaction approved by the
Board of Directors, provided in any case, that such issuance
is not being made primarily for the purpose of avoiding
compliance with this Subscription Agreement.
5. MISCELLANEOUS
5.1 Any notice or other communication given hereunder shall be
deemed sufficient if in writing and sent by registered or
certified mail, return receipt requested, addressed to the
Company, at Ironclad Performance Wear Corporation, 0000 Xxxx
Xx Xxxxxxx Xxxx., Xx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xx
Xxxxxx, President, with a copy to (which shall not constitute
notice) Xxxxxx, Xxxxxxxx & Markiles, LLP, 00000 Xxxxxxx
Xxxxxxxxx, 00xx Xxxxx, Xxxxxxx Xxxx, Xxxxxxxxxx 00000,
Attention: Xxxxx Xxxxxxxx, Esq., and to the Subscriber at his
address indicated on the signature page of this
A2-15
Subscription Agreement. Notices shall be deemed to have been
given three (3) business days after the date of mailing,
except notices of change of address, which shall be deemed to
have been given when received.
5.2 This Subscription Agreement may be amended through a written
instrument signed by the Subscriber, Ironclad and the Company;
provided, however, that the terms of Section 4 of this
Subscription Agreement may be amended without the consent or
approval of the Subscriber so long as such amendment applies
in the same fashion to the subscription agreements of all of
the other subscribers for Units in the Offering and at least
holders of a majority of the Units sold in the Offering have
given their approval of such amendment, which approval shall
be binding on all holders of Units.
5.3 This Subscription Agreement shall be binding upon and inure to
the benefit of the parties hereto and to their respective
heirs, legal representatives, successors and assigns. This
Subscription Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter
hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among
them.
5.4 Notwithstanding the place where this Subscription Agreement
may be executed by any of the parties hereto, the parties
expressly agree that all the terms and provisions hereof shall
be construed in accordance with and governed by the laws of
the State of Delaware.
5.5 This Subscription Agreement may be executed in counterparts.
It shall not be binding upon the Company and Ironclad unless
and until it is accepted by the Company and Ironclad. Upon the
execution and delivery of this Subscription Agreement by the
Subscriber, this Subscription Agreement shall become a binding
obligation of the Subscriber with respect to the purchase of
Units as herein provided; subject, however, to the right
hereby reserved to the Company to enter into the same
agreements with other subscribers and to add and/or to delete
other persons as subscribers.
5.6 The holding of any provision of this Subscription Agreement to
be invalid or unenforceable by a court of competent
jurisdiction shall not affect any other provision of this
Subscription Agreement, which shall remain in full force and
effect.
5.7 It is agreed that a waiver by either party of a breach of any
provision of this Subscription Agreement shall not operate, or
be construed, as a waiver of any subsequent breach by that
same party.
5.8 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and
further action as may be necessary or appropriate to carry out
the purposes and intent of this Subscription Agreement.
5.9 The Company agrees not to disclose the names, addresses or any
other information about the Subscribers, except as required by
law, provided that the Company may provide information
relating to the Subscriber as required in any registration
statement under the Act that may be filed by the Company
pursuant to the requirements of this Subscription Agreement.
A2-16
5.10 The obligation of the Subscriber hereunder is several and not
joint with the obligations of any other subscribers for the
purchase of Units in the Offering (the "Other Subscribers"),
and the Subscriber shall not be responsible in any way for the
performance of the obligations of any Other Subscribers.
Nothing contained herein or in any other agreement or document
delivered at the Closing, and no action taken by the
Subscriber pursuant hereto, shall be deemed to constitute the
Subscriber and the Other Subscribers as a partnership, an
association, a joint venture or any other kind of entity, or
create a presumption that the Subscriber and the Other
Subscribers are in any way acting in concert with respect to
such obligations or the transactions contemplated by this
Subscription Agreement. The Subscriber shall be entitled to
protect and enforce the Subscriber's rights, including without
limitation the rights arising out of this Subscription
Agreement, and it shall not be necessary for any Other
Subscriber to be joined as an additional party in any
proceeding for such purpose. The language used in this
Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict
construction will be applied against any party. The Subscriber
is not acting as part of a "group" (as that term is used in
Section 13(d) of the 0000 Xxx) in negotiating and entering
into this Subscription Agreement or purchasing the Units or
acquiring, disposing of or voting any of the underlying shares
of Common Stock or the Warrant Shares. The Company hereby
confirms that it understands and agrees that the Subscriber is
not acting as part of any such group.
[SIGNATURE PAGE FOLLOWS]
A2-17
IN WITNESS WHEREOF, the parties have executed this Subscription
Agreement as of the day and year first written above.
------------------------------ ------------------------------------
Signature of Subscriber Signature of Co-Subscriber
------------------------------ ------------------------------------
Name of Subscriber Name of Co-Subscriber
[please print]
------------------------------ ------------------------------------
Address of Subscriber Address of Co-Subscriber
------------------------------ ------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Identification Number of
Subscriber Co-Subscriber
------------------------------
Number of Units Subscribed For
Subscription Agreed to and Accepted
EUROPA TRADE AGENCY LTD. IRONCLAD PERFORMANCE
WEAR CORPORATION
By: By:
-------------------------------- ---------------------------------
Name: Name:
------------------------------ -------------------------------
Title: Title:
----------------------------- ------------------------------
A2-18
EXHIBIT B-1
EUTA REORGANIZATION TERMS
The terms of the EUTA Reorganization shall be the terms outlined in the Amended
and Restated Purchase and Escrow Agreement and Amended and Restated Share
Cancellation Agreement, attached as EXHIBIT B-2 and B-3 to the Merger Agreement,
respectively, plus a forward stock split resulting in 3,489,444 shares of EUTA
common stock issued and outstanding immediately prior to the Effective Time.
The capital structure of EUTA resulting from the consummation of the EUTA
Reorganization (but not taking into account the Merger or the Equity Financing)
is reflected on EXHIBIT B-4 to the Merger Agreement.
B1-1
EXHIBIT B-2
FORM OF AMENDED AND RESTATED PURCHASE AND ESCROW AGREEMENT
This AMENDED AND RESTATED PURCHASE AND ESCROW AGREEMENT ("Agreement")
is entered into as of this 7th day of March, 2006 by and among the Holders
listed in Section 5 herein (each a "Purchaser" and together the "Purchasers"),
certain non-affiliate stockholders of Europa Trade Agency, Ltd., a Nevada
corporation ("EUTA") (each a "Stockholder," collectively, the "Stockholders"),
Xxxxxx Xxxx, principal stockholder, executive officer and director of EUTA
("Lamb Junior"), Xxxxx Xxxx, a principal stockholder of EUTA ("Lamb Senior"),
and Stone & Xxxxxx ("Escrow Agent").
RECITALS
WHEREAS, EUTA is contemplating a reverse merger transaction with
Ironclad Performance Wear, Inc., a Delaware corporation ("Ironclad") (the
reverse merger is referred to herein as the "Merger");
WHEREAS, EUTA, Ironclad and or wholly-owned subsidiary of EUTA will
enter into an Agreement and Plan of Merger (the "Merger Agreement") whereby the
Merger will be effected;
WHEREAS, the Purchasers wish to purchase an aggregate of 911,000
shares of EUTA common stock currently held by the Stockholders (the "Common
Stock") upon the closing of the Merger;
WHEREAS, the Stockholders wish to sell an aggregate of 911,000 shares
of Common Stock to the Purchasers upon the closing of the Merger;
WHEREAS, Lamb Junior and Lamb Senior wish to have an aggregate of
2,000,000 shares of EUTA common stock held by them cancelled (the "Cancellation
Shares") upon the closing of the Merger further to a Share Cancellation
Agreement to be entered into concurrently herewith by and among EUTA, Lamb
Junior, Lamb Senior and the Escrow Agent (the "Cancellation Agreement");
WHEREAS, if the Merger does not occur as described herein, the
Purchasers, excluding GCM, Inc., Gemini Partners, Inc., Martial Chaillet,
Hyperion Trust and Alacrity Trust (the "Excluded Purchasers"), have agreed to
purchase the Common Stock upon the terms and conditions set forth herein;
WHEREAS, to induce the Purchasers to buy the Common Stock, the
Stockholders have deposited stock certificates with executed stock powers and
guaranteed signatures representing their respective shares of Common Stock with
the Escrow Agent in accordance with the terms hereof (collectively, the
"Certificates");
WHEREAS, to induce the Purchasers to buy the Common Stock, Lamb Junior
and Lamb Senior have deposited stock certificates representing the Cancellation
Shares with the Escrow Agent in accordance with the terms hereof (the
"Cancellation Certificates"); and
WHEREAS, to induce the Stockholders to sell the Common Stock and Lamb
Junior and Lamb Senior to cancel the Cancellation Shares, the Purchasers have
deposited the Purchase Price (as defined below) with the Escrow Agent in
accordance with the terms hereof.
B2-1
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the parties hereto
agree as follows:
1. PURCHASE AND SALE OF COMMON STOCK TO PURCHASERS.
(a) Common Stock. On the closing date of the Merger (the "Closing
Date"), the Stockholders shall sell and transfer unto the
Purchasers, free and clear of any and all Liens (as defined in
Section 6(b)) all right, title, interest and claims in or to
the Common Stock and the Purchaser agrees to purchase from the
Stockholders the Common Stock.
(b) Cancellation. On the Closing Date, the Cancellation Shares
shall be cancelled pursuant to the Cancellation Agreement.
(c) Closing. Subject to the satisfaction (or written waiver) of
the conditions set forth in Section 8 and Section 9 below, the
date and time of the sale of the Common Stock pursuant to this
Agreement and the cancellation of the Cancellation Shares
pursuant to the Cancellation Agreement shall be concurrent
with the time of the Closing Date, or such other mutually
agreed upon time and location as may be agreed to by the
parties.
2. PURCHASE PRICE.
(a) Common Stock. The Stockholders and the Purchasers agree that
the aggregate consideration for the Common Stock is $345,587
and that such monies have been distributed by the Escrow Agent
to the Stockholders (the "Purchase Price").
(b) Cancellation. Lamb Junior, Lamb Senior and the Purchasers
agree that the consideration for the cancellation for the
Cancellation Shares provided by Lamb Junior and Lamb Senior is
an aggregate of $349,413 and that such monies have been
distributed by the Escrow Agent to Lamb Junior and Lamb
Senior.
3. APPOINTMENT. The Stockholders, Lamb Senior, Lamb Junior and the
Purchasers each hereby appoint Escrow Agent to act as escrow holder
under the terms hereof. Escrow Agent hereby accepts such appointment
and agrees to act as escrow holder in accordance with the terms hereof
and the Cancellation Agreement.
4. ESCROW ACCOUNT. The Stockholders, Lamb Senior, Lamb Junior and the
Purchasers hereby agree that the Certificates representing the Common
Stock, the Cancellation Certificates representing the Cancellation
Shares and the Purchase Price representing the consideration for said
Common Stock have been deposited in an escrow account.
(a) Certificate Deposit. The Stockholders have delivered the
Certificates to Escrow Agent with executed stock powers. The
Certificates representing the Common Stock have been duly
executed and available for transfer to the Purchaser upon the
closing of the transactions contemplated hereby.
(b) Cancellation Certificate Deposit. Lamb Senior and Lamb Junior
have been delivered the Cancellation Certificates to Escrow
Agent with stock powers upon execution of this Agreement. The
Cancellation Certificates representing the Cancellation Shares
shall be duly executed.
(c) Purchase Price. The monies referred in Section 2 herein have
been distributed as set forth in Section 2 herein.
B2-2
5. CLOSING; RELEASE FROM ESCROW.
(a) Closing: Upon written notification from Xxxxxxxxxxx & Xxxxxxxx
Xxxxxxxxx Xxxxxx LLP ("K&LNG") to Escrow Agent that the Merger
has closed:
(i) The Certificates representing the Common Stock shall
be released to the Purchasers;
(ii) the Cancellation Certificates representing the
Cancellation Shares shall be released to Pacific
Stock Transfer Company, EUTA's transfer agent,
further to the Cancellation Agreement;
(iii) $5,000 shall be delivered to Peyton, Chandler &
Xxxxxxxx ("PCS") on behalf of Stone & Xxxxxx for
services as the Purchasers' collection agent for
individual investors; and
(b) Release from Escrow. Upon written notification from K&LNG to
Escrow Agent that the Merger has closed, the Certificates
representing the Common Stock shall be released within one (1)
business day to Pacific Stock Transfer Company, EUTA's
transfer agent, and then re-registered in the following names
(the "Holders"):
Samir Financial Services 56,442
Zbear Financial, L.L.C. 56,442
DSAM 21,708
Xxxxxxxx X Xxxxxx 14,472
Xxxxxxxx X Xxxxxx 7,236
Xxxxxxxx X Xxxxxx 7,236
Xxxxxxx Xxxxxx 579
Xxxxx X. Xxxxxxx 1,448
Xxxxxx Xxxxxxx 14,472
Xxxxx X. Xxxxxxxxxx 1,447
Xxxxxx X. Xxxxxx, M.D. 1,447
Xxxxxxx X. Xxxxxx, Xx. 1,447
Xxxxx X. Xxxxxxx 1,447
Xxxx Xxxxxxx 380
Xxxxxxx Xxxxxxxx 2,533
Xxxxxx Xxxxxx 760
Xxxxxx X. Xxxxx 2,533
Xxx X. Xxxxx 1,447
Xxxx Xxxxxxxxx, Xx. Revocable Trust DTD 03/10/03 3,618
Xxxx X. Xxx MD Inc. PSP 7/1/84, Xxxx Xxx TTEE 5,789
Xxxx X. Xxx MD Inc. PSP 7/1/84, Xxxx Xxx TTEE 1,447
Xxxx X. Xxx 6,368
Xxxx Xxx 2,316
Hui Ya Xxx 2,894
Xxxx Xxxxxxx 1,447
Xxxxxx X. Xxxxx 1,447
Xxxx Xxxxxx 1,447
Xxxxxxx Xxxxxxx 724
Xxxxxx Xxxxxxx 724
Xxxxxxx X. From 4,070
B2-3
GCM, Inc. 86,833
PCS, Inc. 115,778
Gemini Partners 133,144
Martial Chaillet 28,944
Hyperion Trust 155,202
Alacrity Trust 165,332
Share numbers referenced above are to be adjusted on the Closing Date
to reflect the consummation of a 3.454895-for-1 forward stock split by EUTA that
will occur in connection with the closing of the Merger.
Further, all stock certificates issued by Pacific Stock Transfer
Company and delivered to the Holders shall bear a legend substantially as
follows:.
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF
COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 UNDER
SUCH ACT."
6. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS, LAMB JUNIOR AND
LAMB SENIOR. Each of the Stockholders, Lamb Junior and Lamb Senior
(each a "Seller") represents and warrants to the Purchasers as follows:
(a) Authorization and Binding Effect. This Agreement has been duly
executed and delivered by that Seller, and constitutes the
legal, valid and binding obligation of that Seller,
enforceable in accordance with its terms. No consent or
authorization of any party is required for that Seller to
legally and validly consummate the transactions set forth
herein. The execution, delivery and performance of this
Agreement and the sale and transfer of the Common Stock and
cancellation of the Cancellation Shares hereunder, do not and
will not:
(i) conflict with, result in the breach of, constitute a
default, with or without notice and/or lapse of time,
under, result in being declared void or avoidable any
provision of, or result in any right to terminate or
cancel any contract, lease or agreement to which that
Seller is or any of his/her/its properties are bound;
or
(ii) constitute a violation of any statute, judgment,
order, decree or regulation or rule of any court,
governmental authority or arbitrator applicable or
relating to that Seller, including, but not limited
to, state securities laws or the Securities Act of
1933, as amended (the "1933 Act"); or
(b) Title and Condition of Common Stock and Cancellation Shares.
The Seller has good and marketable title to his/her/its
respective portion of the Common Stock or the Cancellation
Shares, as applicable, free and clear of liens, encumbrances,
claims of third parties, security interests, mortgages,
pledges, requires no consent of third parties agreements,
options and rights of others of any kind whatsoever, whether
or not filed, recorded or perfected (collectively, the
"Liens").
B2-4
7. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Each of the Purchasers
hereby jointly and severally represents and warrants to each of the
Stockholders and to Lamb Junior and to Lamb Senior as follows:
(a) Authorization and Binding Effect. This Agreement has been duly
executed and delivered by the Purchaser and constitutes the
legal, valid and binding obligation of each the Purchaser,
enforceable in accordance with its terms.
(b) Investment Purpose. The Purchaser is purchasing the Common
Stock for its own account and not with a present view towards
the public sale or distribution thereof, except pursuant to
sales registered or exempted from registration under the 1933
Act; PROVIDED, HOWEVER, that by making the representations
herein, the Purchaser does not agree to hold any of the Common
Stock for any minimum or other specific term and reserves the
right to dispose of the Common Stock at any time in accordance
with or pursuant to a registration statement or an exemption
under the 1933 Act.
(c) Legal Violation. The execution, delivery and performance of
this Agreement and the sale and purchase of the Common Stock
and cancellation of the Cancellation Shares hereunder, do not
and will not constitute a violation of any statute, judgment,
order, decree or regulation or rule of any court, governmental
authority or arbitrator applicable or relating to the
Purchaser, including, but not limited to, state securities
laws or the Securities Act of 1933, as amended (the "1933
Act").
(d) Accredited Investor Status. Each of the Purchasers is an
"accredited investor" as that term is defined in Rule 501(a)
of Regulation D.
8. TERMINATION OF MERGER. Notwithstanding the foregoing, in the event
Escrow Agent receives written notification from K&LNG that the Merger
Agreement has not been signed by April 30, 2006, or that if signed,
that the Merger Agreement has been terminated in accordance with its
terms, the Cancellation Shares will be cancelled in connection with the
closing of an alternative merger transaction with another
to-be-identified private company.
9. ACKNOWLEDGEMENT OF THE STOCKHOLDERS, LAMB JUNIOR AND LAMB SENIOR. The
Stockholders, Lamb Senior and Lamb Junior acknowledge that EUTA will
acquire Ironclad pursuant to the Merger Agreement, that Ironclad is an
operating entity, and that as such the planned acquisition of Ironclad
by EUTA may increase the value of EUTA common stock. Each of the
Stockholders further acknowledge that by agreeing to sell the Common
Stock pursuant to this Agreement, and Lamb Junior and Lamb Senior
further acknowledge that by agreeing to cancel their Cancellation
Shares pursuant to this Agreement and the Cancellation Agreement, they
are foregoing the right and ability to participate in any increased
profits realized by EUTA subsequent to the Merger and/or any increases
in the value of EUTA common stock. Each of the Stockholders, Lamb
Junior and Lamb Senior represent that they understand the terms and
conditions of the Merger, including the consequences of the sale or
cancellation of their shares, as applicable.
10. RESIGNATION/REMOVAL. Escrow Agent shall have the right in its
discretion, to withdraw and resign as escrow agent by giving written
notice to each of the Stockholders and the Purchaser at least thirty
(30) days in advance of the effective date of such resignation. Escrow
Agent may be removed and replaced by another escrow agent at any time
by written agreement of the Stockholders, Lamb Junior, Lamb Senior and
the Purchasers. Upon such resignation or withdrawal, Escrow Agent shall
deliver over to the successor escrow agent the Certificates and the
Cancellation Certificates and, upon such delivery, shall thereafter be
released and relieved
B2-5
from any and all further liability and responsibility thereafter
accruing hereunder. In the event Escrow Agent resigns or is terminated,
Escrow Agent shall not be entitled to collect the Fee.
11. ARBITRATION. The resolution of any dispute and disputes between the
parties hereto shall be resolved by mandatory binding expedited
arbitration under the International Arbitration Rules of the American
Arbitration Association ("AAA") in effect as of the date the request
for arbitration is filed (the "Rules") before a single, neutral
arbitrator, selected in accordance with the Rules. Each of the parties
may initiate such an arbitration pursuant to the Rules. The arbitration
shall be held in Los Angeles, California (such site being herein
referred to as the "Forum"). The parties will abide by any decision
rendered in such arbitration, and that any court having jurisdiction
may enforce such a decision. Each of the parties hereto submits to the
non-exclusive personal jurisdiction of the courts of the Forum as an
appropriate place for compelling arbitration or giving legal
confirmation of any arbitration award, and irrevocably waives any
objection which it may now or hereafter have to the venue of any such
enforcement proceeding brought in any of said courts and any claim of
inconvenient forum. Service of process for all arbitration proceedings
may be made in accordance with the Rules and shall be deemed effective
as provided therein.
12. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California in the United
States of America. Each party, to the extent permitted by law,
knowingly voluntarily and intentionally waives its right to trial by
jury in any action or other legal proceeding arising out of or relating
to this Agreement and the transactions contemplated hereby.
13. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by facsimile, electronic
mail, or overnight courier (providing proof of delivery) to the parties
at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to the Stockholders:
to those addresses as set forth on the books of the Company as
of the date hereof.
(b) if to PCS and to any other Purchasers except the Excluded
Purchasers:
Peyton, Chandler & Xxxxxxxx, Inc.
Attn: Xxxxxxx From
000 Xxxxxxx Xxxxxx,
Xxxxx 000-X
Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: 000.000.0000
(c) if to the Excluded Purchasers:
c/o Gemini Partners, Inc.
00000 Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
B2-6
(d) if to Lamb Junior:
Xxxxxx Xxxx
Xxxxx 000, 000 Xxxx Xxxxxx
Xxxxxxxxx, XX, Xxxxxx
X0X 0X0
Tel: (000) 000-0000
Fax: (000) 000-0000
(e) if to Lamb Senior:
Xxxxx Xxxx
x/x Xxxxxx Xxxx
Xxxxx 000, 000 Xxxx Xxxxxx
Xxxxxxxxx, XX, Xxxxxx
X0X 0X0
Tel: (000) 000-0000
Fax: (000) 000-0000
(f) if to Escrow Agent:
Stone & Xxxxxx
0000 Xxxx Xxxxxx Xxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
14. FINAL AGREEMENTS. This Agreement is intended by the parities hereto to
be the final, complete, and exclusive expression of the agreement
between them. This Agreement supersedes any and all prior oral or
written agreements relating to the subject matter hereof. No
modification, rescission, waiver, release, or amendment of any
provision of this Agreement shall be made, except by a written
agreement signed by the Purchasers, Lamb Senior, Lamb Junior, Escrow
Agent and Stockholders representing a majority interest in the Common
Stock.
15. COUNTERPARTS. This Agreement may be entered into in any number of
counterparts and by the parties to it on separate counterparts, each of
which when executed and delivered shall be an original, but all the
counterparts together shall constitute one and the same document. This
agreement may be validly exchanged by fax.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
B2-7
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date herein above set forth.
LAMB JUNIOR
---------------------------
Xxxxxx Xxxx
LAMB SENIOR
---------------------------
Xxxxx Xxxx
STONE & XXXXXX
By:
-----------------------
Name: Xxxx Xxxxxx
Title: Partner
STOCKHOLDERS
By:
-----------------------
Name:
Title:
Shares Held:
PURCHASER
By:
-------------------------------
Name:
--------------------------
Title:
-----------------------------
Shares to be Purchased:
-----------
B2-8
EXHIBIT B-3
FORM OF AMENDED AND RESTATED SHARE CANCELLATION AGREEMENT
THIS AMENDED AND RESTATED SHARE CANCELLATION AGREEMENT (this
"AGREEMENt") is made and entered into as of this 7th day of March, 2006 by and
among Stone & Xxxxxx, as the escrow agent (the "ESCROW AGENT"), Europa Trade
Agency Ltd., a Nevada corporation ("EUTA"), Xxxxxx Xxxx ("LAMB JUNIOR"), a
principal stockholder, executive officer and director of EUTA, and Xxxxx Xxxx
("XXXX SENIOR," and with Lamb Junior, the "STOCKHOLDERS"), a principal
stockholder of EUTA. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Merger Agreement (as
defined hereinafter).
RECITALS
WHEREAS, all recitals set forth in that Amended and Restated Purchase
and Escrow Agreement of even date herewith by and among certain identified
purchasers, EUTA, certain non-affiliate stockholders of EUTA, Lamb Junior, Lamb
Senior and Escrow Agent are hereby incorporated herein by reference.
WHEREAS, the cancellation of the Cancellation Shares shall occur on the
Effective Date of the Merger. In consideration for canceling the Shares, the
Stockholders will receive aggregate cash consideration of $349,413 from
unaffiliated third parties. It is the responsibility of the Escrow Agent to
return the Shares to EUTA's transfer agent, i.e., Pacific Stock Transfer
Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. ESTABLISHMENT OF ESCROW
The Stockholders have delivered the Cancellation Shares to the Escrow
Agent. On the Effective Date of the Merger, the Cancellation Shares shall be
deemed automatically cancelled. The aggregate sum of $349,413 has been delivered
by the Escrow Agent to the Stockholders. The Escrow Agent shall return the
Escrowed Shares to EUTA's transfer agent, i.e., Pacific Stock Transfer Company.
If the Merger Agreement is terminated in accordance with its terms, the Escrowed
Shares shall remain in escrow pending the closing of an alternative merger
transaction between EUTA and another to-be-identified private company.
2. DUTIES; TERM; EXPIRATION; LIMITS
2.1 RIGHTS AND OBLIGATIONS OF THE PARTIES. The Escrow Agent shall
be entitled to such rights and shall perform such duties of
the escrow agent as set forth herein (collectively, the
"DUTIES"). In the event that the terms of this Agreement
conflict in any way with the provisions of the Merger
Agreement, the Merger Agreement shall control.
B3-1
2.2 TERM - GENERAL. The term of escrow for the Escrowed Shares
shall commence on the date hereof and shall terminate upon
cancellation of the Escrowed Shares upon either (i) the
closing of the Merger by and between EUTA and Ironclad, or
(ii) in the event the Merger Agreement is terminated in
accordance with its terms, upon the closing of a merger
transaction by and between EUTA and another to-be-identified
private company.
2.3 EFFECT OF FINAL DELIVERY. Notwithstanding the expiration of
the term of the escrow, this Agreement shall continue in full
force and effect until the Escrow Agent has delivered all of
the Escrowed Shares pursuant to the terms hereof.
3. DIVIDENDS; VOTING RIGHTS
3.1 CASH DIVIDENDS; VOTING RIGHTS. Neither Stockholder shall have
any rights to cash or any stock dividend with respect to the
Escrowed Shares. Each Stockholder shall retain the right to
vote the Shares when held in escrow and shall retain such
rights until the Escrowed Shares are cancelled in accordance
with the terms hereof.
3.2 STOCK SPLITS; STOCK DIVIDENDS. In the event of any stock split
or other similar transaction with respect to EUTA common stock
that becomes effective during the term of this Agreement, any
additional shares issued with respect to the Escrowed Shares
shall be added to the Escrowed Shares held in escrow and shall
be similarly cancelled.
4. THE ESCROW AGENT
4.1 RESIGNATION. The Escrow Agent shall have the right in its
discretion, to withdraw and resign as escrow agent by giving
written notice to each of the Stockholders and Ironclad at
least thirty (30) days in advance of the effective date of
such resignation. Escrow Agent may be removed and replaced by
another escrow agent at any time by written agreement of the
Stockholders and Ironclad. Upon such resignation, Escrow Agent
shall deliver the Escrowed Shares over to the successor escrow
agent, and upon such delivery, shall thereafter be released
and relieved from any and all further liability and
responsibility thereafter accruing hereunder.
5. STOCKHOLDERS' ACKNOWLEDGEMENT AND WAIVER OF CLAIMS
5.1 STOCKHOLDERS' ACKNOWLEDGMENT. Each Stockholder acknowledges
that EUTA will acquire Ironclad pursuant to the Merger
Agreement, that Ironclad is an operating entity, and that as
such the planned acquisition of Ironclad by EUTA may increase
the value of EUTA common stock. Each of the Stockholders
further acknowledge that by agreeing to cancel their shares of
EUTA common stock pursuant to this Agreement and the Purchase
and Escrow Agreement, they are foregoing the right and ability
to participate in any increased profits realized by EUTA
subsequent to the Merger and/or any increases in the value of
EUTA common stock. Each of the Stockholders represents that he
understands the terms and conditions of the Merger, including
the consequences of the cancellation of his shares.
B3-2
6. MISCELLANEOUS
6.1 TRANSFERABILITY. None of the rights and obligations of the
Stockholders hereunder shall be transferable.
6.2 NOTICES. Any notices or other communications required or
permitted under this Agreement shall be in writing and shall
be sufficiently given if sent by (i) registered or certified
mail, postage prepaid, addressed as follows, (ii) facsimile to
the facsimile numbers identified below or (iii) overnight
courier (such as UPS or FedEx), addressed as follows:
If to EUTA:
Europa Trade Agency Ltd.
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxx, X.X., Xxxxxx X0X 0X0
Attn: Xxxxxx Xxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Stockholders:
Xxxxxx Xxxx
Suite 600, 000 Xxxx Xxxxxx
Xxxxxxxxx, XX, Xxxxxx
X0X 0X0
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxx Xxxx
x/x Xxxxxx Xxxx
Xxxxx 000, 000 Xxxx Xxxxxx
Xxxxxxxxx, XX, Xxxxxx
X0X 0X0
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Escrow Agent:
Stone & Xxxxxx
0000 Xxxx Xxxxxx Xxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
or such other person or address as shall be furnished in writing by any of the
parties and any such notice or communication shall be deemed to have been given
as of the date so mailed.
6.3 CONSTRUCTION. The validity, enforcement and construction of
this Agreement shall be governed by the laws of the State of
California, regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws thereof.
B3-3
6.4 BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
heirs, legatees, assigns and transferees, as the case may be.
Escrow Agent shall not be charged with notice or knowledge of
any such ancillary document, fact or information not
specifically set forth herein. Escrow Agent shall undertake to
perform only such duties as are expressly set forth herein and
no additional or implied duties or obligations shall be read
into this Agreement against the Escrow Agent.
6.5 SEVERABILITY. If any provision or section of this Agreement is
determined to be void or otherwise unenforceable, it shall not
affect the validity or enforceability of any other provisions
of this Agreement which shall remain enforceable in accordance
with their terms.
6.6 INTERPRETATION. The headings and subheadings contained in this
Agreement are for reference only and for the benefit of the
parties and shall not be considered in the interpretation or
construction of this Agreement. This Agreement shall be
construed and interpreted without regard to any rule or
presumption requiring that it be construed or interpreted
against the party causing it to be drafted.
6.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts (including facsimile counterparts),
each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
6.8 AMENDMENTS. This Agreement may be amended from time to time
but only by written agreement signed by all of the parties
hereto.
6.9 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement of the parties relating to the
subject matter hereof and supersedes any and all prior
understandings, agreements, negotiations and discussions, both
written and oral, between the parties hereto with respect to
the subject matter hereof.
B3-4
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Share Cancellation Agreement as of the day and year first above written.
STONE & XXXXXX
By:
-------------------------
Name: Xxxx Xxxxxx
Title: Partner
EUROPA TRADE AGENCY, LTD.
By:
-------------------------
Name: Xxxxxx Xxxx
Title: Chief Executive Officer
STOCKHOLDERS:
Name:
----------------------
Xxxxxx Xxxx
Name:
----------------------
Xxxxx Xxxx
B3-5
EXHIBIT B-4
EUTA REORGANIZATION CAPITAL STRUCTURE
[OMITTED]
EXHIBIT C
FORM OF CERTIFICATE OF MERGER
This Agreement of Merger (the "AGREEMENT") is entered into by and between
Ironclad Performance Wear Corporation, a California corporation (herein after
referred to as "SURVIVOR"), and Ironclad Merger Corporation, a California
corporation (herein after referred to as "MERGECO").
1. The authorized capital stock of MergeCo consists of 1,000 shares of
stock, all of which have been designated Common Stock (the "MERGECO
COMMON STOCK").
2. There are issued and outstanding 100 shares of MergeCo Common Stock.
The authorized capital stock of Survivor consists of ________________
shares of Common Stock ("SURVIVOR COMMON STOCK"), ____________ shares
of Series A Preferred Stock ("SURVIVOR SERIES A STOCK") and
_____________ shares of Series B Preferred Stock ("SURVIVOR SERIES B
STOCK"), of which ________________ shares of Survivor Common Stock,
______________ shares of Survivor Series A Stock and ______________
shares of Survivor Series B Stock are issued and outstanding.
3. MergerCo, Survivor, and Europa Trade Agency Ltd., a Nevada corporation
and parent corporation of MergeCo ("PARENT"), are parties to that
certain Agreement and Plan of Merger dated as of March 24, 2006 (the
"PLAN").
4. Pursuant to Section 2 of the Plan, MergeCo shall be merged with and
into Survivor (the "MERGER") and Survivor shall be the surviving entity
in the Merger (the surviving entity is hereinafter referred to as the
"SURVIVING CORPORATION").
5. Pursuant to Section 2 of the Plan, at the closing of the transactions
contemplated by the Plan:
a. each outstanding share of Survivor Common Stock shall be
converted into ______________ shares of the Common Stock of
Parent;
b. each outstanding share of Survivor Series A Stock shall be
converted into ______________ shares of the Common Stock of
Parent;
c. each outstanding share of Survivor Series B Stock shall be
converted into ______________ shares of the Common Stock of
Parent;
d. each outstanding option to purchase Survivor Common Stock, or
warrant to purchase Survivor Common Stock or Survivor Series A
Stock or Survivor Series B Stock, in each case whether vested
or unvested, shall be assumed by Parent or replaced with
options and warrants to purchase the Common Stock of Parent on
substantially identical terms, provided that any warrants to
purchase shares of Survivor Series A Stock or Survivor Series
B Stock will be exercisable for that number of shares of
Common Stock into which the Survivor Series A Stock or
C-1
Survivor Series B Stock would be convertible upon exercise of
such warrants; and
e. all of the outstanding shares of MergeCo Common Stock shall be
converted into one (1) share of Survivor Common Stock.
6. The Articles of Incorporation attached hereto as Exhibit A shall be the
Articles of Incorporation of the Survivor.
7. MergeCo shall from time to time, as and when requested by the Survivor
or Parent, execute and deliver all such documents and instruments and
take all such action necessary or desirable to evidence or carry out
this Merger.
8. The effect of the Merger and the effective date of the Merger are as
prescribed by law.
C-2
IN WITNESS WHEREOF the parties have executed this Agreement.
IRONCLAD MERGER CORPORATION
By:__________________________
Name: Xxxxxx Xxxx
Title: President and Secretary
C-3
IN WITNESS WHEREOF the parties have executed this Agreement.
IRONCLAD PERFORMANCE WEAR CORPORATION
By:__________________________
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
IRONCLAD PERFORMANCE WEAR CORPORATION
By:__________________________
Name: Xxxxxx Xxxxx
Title: Secretary
C-4
EXHIBIT A
ARTICLES OF INCORPORATION
OF
[_______________________] CORPORATION
ARTICLE I
The name of this corporation is [_________________] Corporation (the
"CORPORATION").
ARTICLE II
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
The Corporation is authorized to issue only one class of shares of
stock, to be designated Common Stock; and the total number of shares which the
Corporation is authorized to issue is 1,000 no par value.
ARTICLE IV
(a) The liability of the directors of the Corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law.
(b) The Corporation is authorized to provide indemnification of agents
(as defined in Section 317 of the California Corporations Code) to the fullest
extent permissible under California law.
(c) Any amendment, repeal or modification of the foregoing provisions
of this Article IV by the shareholders of the corporation shall not adversely
affect any right or protection of a director or agent of the corporation
existing at the time of such amendment repeal or modification.
C-5
OFFICERS' CERTIFICATE OF
IRONCLAD MERGER CORPORATION
Xxxxxx Xxxx, President and Secretary of Ironclad Merger Corporation, a
California corporation (the "Company"), hereby certifies that:
1. The Company is duly organized and existing under the laws of the State
of California.
2. A total of 100 shares of common stock, without par value, of the
Company ("Company Common Stock") are issued and outstanding; the
Company Common Stock is the only class of the Company's issued and
outstanding stock entitled to vote on the merger to be effected by the
Agreement of Merger, attached hereto.
3. The principal terms of the Agreement of Merger were approved by a vote
of the issued and outstanding shares of Company Common Stock entitled
to vote thereon which equaled or exceeded the vote required. A majority
vote of the issued and outstanding shares of Company Common Stock is
the voting percentage required to approve the Agreement of Merger.
4. Pursuant to Section 1202(c) of the California Corporations Code, no
vote of the shareholders of the parent of the Corporation was required.
Each of the undersigned declares under the penalties of perjury under the laws
of the State of California that the statements contained in the foregoing
certificate are true of his own knowledge.
Date: , 2006
---------------------------
--------------------------------------
Xxxxxx Xxxx,
President and Secretary
C-6
OFFICERS' CERTIFICATE OF
IRONCLAD PERFORMANCE WEAR CORPORATION
Xxxxxx Xxxxxx, the Chief Executive Officer of Ironclad Performance
Wear Corporation, a California corporation (the "Company"), and Xxxxxx Xxxxx,
Secretary of the Company, hereby certify that:
1. The Company is duly organized and existing under the laws of the State
of California.
2. A total of (a) _____________________ shares of common stock, no par
value, of the Company ("Company Common Stock"); (b) _______________
shares of Series A Preferred Stock, no par value, of the Company
("Company Series A Preferred Stock"); and (c) ____________________
shares of Series B Preferred Stock, no par value, of the Company
("Company Series B Preferred Stock", together with Company Series A
Preferred Stock, "Company Preferred Stock") are issued and outstanding
and are entitled to vote on the merger to be effected by the Agreement
of Merger, attached hereto.
3. The principal terms of the Agreement of Merger were approved by a vote
of the issued and outstanding shares of each class and each series of
the Company entitled to vote thereon which equaled or exceeded the vote
required. The voting percentage required to approve the Agreement of
Merger was (a) a majority vote of the issued and outstanding shares of
Company Common Stock, Company Series A Preferred Stock and Company
Series B Preferred Stock, in each case voting separately as a single
class, and (b) the vote of a majority of the issued and outstanding
shares of Company Series A Preferred Stock and Company Series B
Preferred Stock, voting together as a single class.
Each of the undersigned declares under the penalties of perjury under the laws
of the State of California that the statements contained in the foregoing
certificate are true of his own knowledge.
Date: , 2006
---------------------------
--------------------------------------
Xxxxxx Xxxxxx, Chief Executive Officer
--------------------------------------
Xxxxxx Xxxxx, Secretary
C-7
EXHIBIT D
FORM OF IRONCLAD OFFICER'S CERTIFICATE
OFFICER'S CERTIFICATE
I certify that I am the duly elected, qualified, and acting Chief
Executive Officer of Ironclad Performance Wear Corporation ("IRONCLAD"), and
that, as such, I am familiar with the facts herein certified and are duly
authorized to certify the same and do hereby certify as follows:
1. I have carefully reviewed the Agreement and Plan of Merger dated as of
March 24, 2006, by and among Europa Trade Agency Limited, Ironclad
Merger Corporation, and Ironclad (the "MERGER AGREEMENT"), and the
Schedules and exhibits thereto. This Certificate is being delivered on
behalf of Ironclad pursuant to SECTION 2.3.1(A) of the Merger
Agreement. Undefined capitalized terms herein are defined in the Merger
Agreement.
2. Each representation and warranty set forth in SECTION 3 of the Merger
Agreement was true and complete in all material respects as of the date
of the Merger Agreement, and is true and complete in all material
respects as of the hereof, as if made on the date hereof, unless made
as of another date, in which case they are true and correct in all
material respects as of such date.
3. Ironclad has performed and complied in all material respects with all
of its obligations and covenants to be performed or complied with at or
prior to Closing (singularly and in the aggregate).
4. Holders of at least ninety percent (90%) of the issued and outstanding
shares of Ironclad Common Stock and Ironclad Preferred Stock have
approved the consummation of the Merger, and no holder of Ironclad
Common Stock or Ironclad Preferred Stock has dissented to the
consummation of the Merger or is entitled to exercise dissenters'
rights with respect thereto.
5. There is no pending or threatened by any Governmental Entity any suit,
action or proceeding (or by any other Person any suit, action or
proceeding which has a reasonable likelihood of success) challenging or
seeking to restrain or prohibit the consummation of the Merger.
6. Since the date of the Merger Agreement there has been no event, series
of events, or the lack of occurrence thereof which, singularly or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect on Ironclad.
7. As of the Closing, Ironclad has obtained all licenses, permits,
consents, approvals, authorizations, qualifications and orders of
Governmental Entities and other third parties as necessary in
connection with the transactions contemplated by the Agreement.
D-1
IN WITNESS WHEREOF, I have executed this certificate on ______________.
By:
-------------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
Ironclad Performance Wear Corporation
D-2
EXHIBIT E
FORM OF IRONCLAD SECRETARY'S CERTIFICATE
SECRETARY'S CERTIFICATE
The undersigned certifies that he is the duly appointed, qualified, and
acting Secretary of Ironclad Performance Wear Corporation, a California
corporation ("IRONCLAD") and that, as such, the undersigned is familiar with the
facts herein certified and is duly authorized to certify the same and does
hereby certify as follows:
1. This Certificate is being delivered on behalf of Ironclad pursuant to
SECTION 2.3.1(B) of the Agreement and Plan of Merger dated as of March
24, 2006, by and among Europa Trade Agency Ltd., Ironclad Merger
Corporation, and Ironclad (the "MERGER AGREEMENT"). Undefined
capitalized terms herein are defined in the Merger Agreement.
2. Attached as EXHIBIT A is a true, correct, and complete copy of
Ironclad's Articles of Incorporation, as amended, certified by the
Secretary of State of the State of California, which is in full force
and effect as of today.
3. Attached as EXHIBIT B is a true, correct, and complete copy of
Ironclad's Bylaws, which are in full force and effect as of today.
4. Attached as EXHIBIT C is a true, correct, and complete copy of the
resolutions of Ironclad's Board of Directors approving the Merger
Agreement and the transactions contemplated thereby. Such resolutions
have not been rescinded or modified in any way, and are in full force
and effect on the date hereof.
5. Attached as EXHIBIT D is a true, correct, and complete copy of a recent
certificate of existence and good standing for Ironclad, issued by the
Secretary of State of the State of California.
6. The undersigned has examined the signatures of Ironclad's respective
officers signing the Merger Agreement and the exhibits and other
documents delivered in connection therewith, and such signatures are
their true signatures. As of the date hereof (and the date of such
signatures), such officers are (were) duly elected, qualified, and
acting officers of Ironclad, as applicable, holding the office
specified beside their names.
IN WITNESS WHEREOF, I have executed this certificate on [MONTH DAY,
YEAR].
By:
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Secretary of Ironclad
E-1
EXHIBIT F
FORM OF OPINION OF IRONCLAD COUNSEL
_________, 2006
[EUTA]
RE: IRONCLAD PERFORMANCE WEAR CORPORATION
Ladies and Gentlemen:
We have acted as counsel to Ironclad Performance Wear Corporation (the
"COMPANY"), in connection with the merger of Ironclad Merger Corporation, a
California corporation ("MERGERCO") and wholly-owned subsidiary of Europa Trade
Agency Ltd., a Nevada Corporation ("EUTA"), with and into the Company, pursuant
to that Agreement and Plan of Merger dated April ___, 2006 (the "AGREEMENT"), by
and among the Company, MergerCo and EUTA. This opinion is rendered at the
request of the Company pursuant to Section 2.3.1(c) of the Agreement. All
capitalized terms used in this letter, without definition, have the meanings
assigned to them in the Agreement.
In connection with this letter, we have examined executed originals or
copies of executed originals of each of the following documents, each of which
is dated the date hereof or as of the date hereof, unless otherwise noted
(collectively, the "TRANSACTION DOCUMENTS"): (a) the Agreement, and (b) the
Agreement of Merger, executed by MergerCo and the Company, to be filed with the
California Secretary of State (the "AGREEMENT OF Merger"). In addition, we have
examined the following documents (collectively, the "DUE DILIGENCE DOCUMENTS"):
(a) the Articles of Incorporation of the Company, (b) the Bylaws of the Company,
(c) resolutions of the board of directors of the Company with respect to the
transactions contemplated under the Agreement, (d) minutes of the ______, 2006
meeting of the stockholders of the Company with respect to the transactions
contemplated under the Agreement, (e) certificates of the State agencies or
officials set forth on Schedule 1 hereto (the "GOOD STANDING CERTIFICATES"), and
(f) an officer's certificate from the Company.
We have examined originals or certified copies of such corporate
records of the Company and other certificates and documents of officials of the
Company, public officials and others, as we have deemed appropriate for purposes
of this letter, except where a statement is qualified as to knowledge or
awareness, in which case we have made limited inquiry, as specified below. As to
various questions of fact relevant to this letter, we have relied, without
independent investigation, upon the Due Diligence Documents and certificates of
public officials, certificates of officers of the Company and representations
and warranties of the Company in the Transaction Documents, all of which we
assume to be true, correct and complete. We have made no investigation or review
of any matters relating to the Company or any other Person other than as
expressly listed herein. We wish to inform you that our knowledge is necessarily
limited due to the limited scope of our review. In addition, we have made no
inquiry of the Company or any other Person (including
F-1
Europa Trade Agency Ltd.
______________, 2006
Page 2
Governmental Entities) regarding, and no review of, any judgments, orders,
decrees, franchises, licenses, certificates, permits or other public records or
agreements to which the Company is a party other than the Due Diligence
Documents, and our "knowledge" of any such matters is accordingly limited.
We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals, the conformity to authentic original
documents of all copies submitted to us as conformed, certified or reproduced
copies. We have also assumed the legal capacity of natural persons, the
corporate or other power and due authorization of each person not a natural
person other than the Company to execute and deliver the Transaction Documents
and to consummate the transactions contemplated by the Transaction Documents,
due execution and delivery of the Transaction Documents by all parties thereto
other than the Company, and that the Transaction Documents constitute the legal,
valid and binding obligations of each party thereto other than the Company,
enforceable against such party in accordance with its terms.
Based upon the foregoing and subject to the assumptions, exceptions,
qualifications and limitations set forth hereinafter, we are of the opinion
that:
1. The Company is validly existing as a corporation and is in
good standing under the laws of the State of California, the
jurisdiction of its organization. The Company has corporate
power to enter into the Transaction Documents.
2. The execution and delivery of the Transaction Documents by the
Company and the performance of its obligations thereunder have
been duly authorized by all necessary corporate actions on the
part of the Company.
3. The Transaction Documents have been duly executed and
delivered by the Company. Each Transaction Document to which
it is a party constitutes a valid and binding obligation of
the Company, enforceable against the Company in accordance
with its terms.
4. The execution and delivery of the Transaction Documents by the
Company does not, and the performance of their respective
obligations thereunder will not, result in any violation of
any order, writ, judgment or decree known to us.
5. The authorized capital stock of the Company consists of
[__________________] shares of common stock, par value $0.01
per share, of the Company, and
[_________________________________________]. As of the date
hereof, there are [_____________________] shares of common
stock issued and outstanding, and
[-------------------------------------------].
F-2
Europa Trade Agency Ltd.
______________, 2006
Page 3
6. To our actual knowledge, the Company is not a party to any
adversarial action, suit, or proceeding pending or threatened
overtly by a written communication, at law or in equity, or
before any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or
instrumentality.
The opinions and other matters in this letter are qualified in their
entirety and subject to the following:
A. We express no opinion as to the laws of any jurisdiction other
than the Included Laws. We have made no special investigation
or review of any published constitutions, treaties, laws,
rules or regulations or judicial or administrative decisions
("LAWS"), other than a review of (i) the Laws of the State of
California, and (ii) the Federal Laws of the United States of
America. For purposes of this opinion, the term "INCLUDED
LAWS" means the items described in clauses (i) and (ii) of the
preceding sentence that are, in our experience, normally
applicable to transactions of the type contemplated in the
Agreement. The term Included Laws specifically excludes (a)
Laws of any counties, cities, towns, municipalities and
special political subdivisions and any agencies thereof and
(b) Laws relating to land use, zoning and building code
issues, taxes, environmental issues, intellectual property
Laws, antitrust issues, and Federal Reserve Board margin
regulation issues.
B. When used in this letter, the phrases "KNOWN TO US", "TO OUR
ACTUAL KNOWLEDGE" and similar phrases (i) mean the conscious
awareness of facts or other information by (a) the lawyer in
our firm who signed this letter, (b) any lawyer in our firm
actively involved in handling current matters for the Company
and (c) solely as to information relevant to a particular
opinion, issue or confirmation regarding a particular factual
matter, any lawyer in our firm who is primarily responsible
for providing the response concerning that particular opinion,
issue or confirmation, and (ii) do not require or imply (a)
any examination of this firm's, such lawyer's or any other
person's or entity's files, (b) that any inquiry be made of
the client, any lawyer (other than the lawyers described
above), or any other person or entity, or (c) any review or
examination of any agreements, documents, certificates,
instruments or other papers other than the Transaction
Documents and the Due Diligence Documents.
F-3
Europa Trade Agency Ltd.
______________, 2006
Page 4
C. This letter and the matters addressed herein are as of the
date hereof or such earlier date as is specified herein, and
we undertake no, and hereby disclaim any, obligation to advise
you of any change in any matter set forth herein, whether
based on a change in the law, a change in any fact relating to
the Company or any other Person, or any other circumstance.
This opinion letter is limited to the matters expressly stated
herein and no opinions are to be inferred or may be implied
beyond the opinions expressly set forth herein.
D. For purposes of this letter, the phrase "TRANSACTIONS
CONTEMPLATED BY THE AGREEMENT" and similar phrases means
solely the merger of MergerCo with and into the Company
pursuant to the Agreement.
E. The opinions expressed in the first sentence of paragraph 1
herein are given solely on the basis of the Good Standing
Certificates and speak only as of the dates indicated therein
rather than the date hereof. The opinions are limited to the
meaning ascribed to such certificates by each applicable State
agency and applicable law.
F. The matters expressed in this letter are subject to and
qualified and limited by (i) applicable bankruptcy,
insolvency, fraudulent transfer and conveyance,
reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally; (ii) general
principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in
equity); (iii) commercial reasonableness and unconscionability
and an implied covenant of good faith and fair dealing; (iv)
the power of the courts to award damages in lieu of equitable
remedies; and (v) securities laws and public policy underlying
such laws with respect to rights to indemnification and
contribution.
G. With respect to the opinions expressed in paragraph 5 herein
with respect to the number of issued and outstanding shares of
the Company's capital stock, and derivative securities, we
have relied, without any further inquiry, upon our examination
of the Company's Certificate of Incorporation, and the
Officer's Certificate from the Company.
H. We express no opinion as to (i) the compliance of the
transactions contemplated by the Transaction Documents with
any regulations or governmental requirements applicable to any
party other than the Company and MergerCo; (ii) the financial
condition or solvency of the Company or MergerCo; (iii) the
ability (financial or otherwise) of the Company, MergerCo or
any other party to meet their respective obligations under the
Transaction Documents; (iv) the compliance of the Transaction
Documents or the transactions contemplated thereby with, or
the effect of any of the foregoing
F-4
Europa Trade Agency Ltd.
______________, 2006
Page 5
with respect to, the antifraud provisions of the Federal and
state securities laws, rules and regulations; (v) the value of
any security provided to secure the payment of obligations
contemplated by the Transaction Documents; and (vi) the
conformity of the Transaction Documents to any term sheet or
commitment letter.
I. This letter is solely for your benefit, and no other person or
entity shall be entitled to rely upon this letter. Without our
prior written consent, this letter may not be quoted in whole
or in part or otherwise referred to in any document and may
not be furnished or otherwise disclosed to or used by any
other Person, except for (i) delivery of copies hereof to
counsel for the addressees hereof, (ii) inclusion of copies
hereof in a closing file, and (iii) use hereof in any legal
proceeding arising out of the transactions contemplated by the
Agreement filed by an addressee hereof against this law firm
or in which any addressee hereof is a defendant.
J. This law firm is a registered limited liability partnership
organized under the laws of the State of California.
Very truly yours,
XXXXXX XXXXXXXX & MARKILES, LLP
Europa Trade Agency Ltd.
______________, 2006
Page 6
SCHEDULE 1
GOOD STANDING CERTIFICATES
1. Certificate of good standing from the Secretary of State of the State
of California, dated _______________, 2006.
2. Certificate of good standing from the California Franchise Tax Board
with respect to the Company, dated ___________, 2006.
F-5
EXHIBIT G
FORM OF EUTA OFFICER'S CERTIFICATE
OFFICER'S CERTIFICATE
I certify that I am the duly elected, qualified, and acting Chief
Executive Officer of Europa Trade Agency Ltd., a Nevada corporation ("EUTA"),
and the duly elected, qualified and acting President of Ironclad Merger
Corporation, a California corporation ("MERGERCO"), and that, as such, I am
familiar with the facts herein certified and are duly authorized to certify the
same and do hereby certify as follows:
1. I have carefully reviewed the Agreement and Plan of Merger dated as of
March 24, 2006, by and among EUTA, MergerCo and Ironclad Performance
Wear Corporation, a California corporation (the "MERGER AGREEMENT"),
and the Schedules and exhibits thereto. This Certificate is being
delivered on behalf of EUTA and MergerCo pursuant to SECTION 2.3.2(A)
of the Merger Agreement. Undefined capitalized terms herein are defined
in the Merger Agreement.
2. Each representation and warranty set forth in SECTION 4 of the Merger
Agreement was true and complete in all material respects as of the date
of the Merger Agreement, and is true and complete in all material
respects as of the hereof, as if made on the date hereof, unless made
as of another date, in which case they are true and correct in all
material respects as of such date.
3. Each of EUTA and MergerCo has performed and complied in all material
respects with all of its obligations and covenants to be performed or
complied with at or prior to Closing (singularly and in the aggregate).
4. There is no pending or threatened by any Governmental Entity any suit,
action or proceeding (or by any other Person any suit, action or
proceeding which has a reasonable likelihood of success) challenging or
seeking to restrain or prohibit the consummation of the Merger.
5. Since the date of the Merger Agreement there has been no event, series
of events, or the lack of occurrence thereof which, singularly or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect on EUTA.
6. As of the Closing, EUTA has obtained all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental
Entities and other third parties as necessary in connection with the
transactions contemplated by the Agreement.
7. Each holder of EUTA Common Stock issued and upon completion of the EUTA
Reorganization has executed a Lock-up Agreement pursuant to SECTION
7.3.12 of the Merger Agreement.
G-1
IN WITNESS WHEREOF, I have executed this certificate on ______________.
By:
----------------------------------------------
Name: Xxxxxx Xxxx
Title: Chief Executive Officer and Chief
Financial Officer of Europa Trade
Agency, Ltd. and President of Ironclad
Merger Corporation
G-2
EXHIBIT H
FORM OF EUTA'S AND MERGERCO'S SECRETARY'S CERTIFICATE
SECRETARY'S CERTIFICATE
We certify that we are the duly elected, qualified, and acting
Secretary of Europa Trade Agency, Ltd., a Nevada corporation ("EUTA") and
Ironclad Merger Corporation, a California corporation ("MERGERCO"),
respectively, and that, as such, we are familiar with the facts herein certified
and are duly authorized to certify the same and do hereby certify as follows:
1. This Certificate is being delivered on behalf of EUTA and MergerCo
pursuant to SECTION 2.3.2(B) of the Agreement and Plan of Merger dated
as of March 24, 2006, by and among EUTA, MergerCo and Ironclad
Performance Wear Corporation, a California corporation (the "MERGER
AGREEMENT"). Undefined capitalized terms herein are defined in the
Merger Agreement.
2. Attached as EXHIBIT A is a true, correct, and complete copy of EUTA's
Certificate of Incorporation, as amended, certified by the Secretary of
State of the State of Nevada, which is in full force and effect as of
today.
3. Attached as EXHIBIT B is a true, correct, and complete copy of EUTA's
Bylaws, which are in full force and effect as of today.
4. Attached as EXHIBIT C is a true, correct, and complete copy of the
resolutions of EUTA's Board of Directors approving the Merger Agreement
and the transactions contemplated thereby. Such resolutions have not
been rescinded or modified in any way, and are in full force and effect
on the date hereof.
5. Attached as EXHIBIT D is a true, correct, and complete copy of a recent
certificate of existence and good standing for EUTA, issued by the
Secretary of State of the State of Nevada.
6. Attached as EXHIBIT E is a true, correct, and complete copy of
MergerCo's Articles of Incorporation, certified by the Secretary of
State of the State of California, which is in full force and effect as
of today.
7. Attached as EXHIBIT F is a true, correct, and complete copy of
MergerCo's Bylaws, which are in full force and effect as of today.
8. Attached as EXHIBIT G is a true, correct, and complete copy of the
resolutions of MergerCo's Board of Directors approving the Merger
Agreement and the transactions contemplated thereby. Such resolutions
have not been rescinded or modified in any way, and are in full force
and effect on the date hereof.
9. Attached as EXHIBIT H is a true, correct, and complete copy of the
resolutions of the sole shareholder of MergerCo approving the Merger
Agreement and the transactions contemplated thereby. Such resolutions
have not been rescinded or modified in any way, and are in full force
and effect on the date hereof.
10. Attached as EXHIBIT I is a true, correct, and complete copy of a recent
certificate of existence and good standing for MergerCo, issued by the
Secretary of State of the State of California.
H-1
11. I have examined the signatures of EUTA's and MergerCo's respective
officers signing the Merger Agreement and the exhibits and other
documents delivered in connection therewith, and such signatures are
their true signatures. As of the date hereof (and the date of such
signatures), such officers are (were) duly elected, qualified, and
acting officers of EUTAor MergerCo, as applicable, holding the office
specified beside their names.
IN WITNESS WHEREOF, I have executed this certificate on [MONTH DAY,
YEAR].
By:
----------------------------------------------
Name:
--------------------------------------------
Title: Secretary of Europa Trade Agency Ltd.
By:
----------------------------------------------
Name:
--------------------------------------------
Title: Secretary of Ironclad Merger Corporation
H-2
EXHIBIT I
[RESERVED]
EXHIBIT J
ARTICLES OF INCORPORATION OF SURVIVING CORPORATION
ARTICLES OF INCORPORATION
OF
[_______________________] CORPORATION
ARTICLE I
The name of this corporation is [_________________] Corporation (the
"CORPORATION").
ARTICLE II
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
The Corporation is authorized to issue only one class of shares of
stock, to be designated Common Stock; and the total number of shares which the
Corporation is authorized to issue is 1,000 no par value.
ARTICLE IV
(a) The liability of the directors of the Corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law.
(b) The Corporation is authorized to provide indemnification of agents
(as defined in Section 317 of the California Corporations Code) to the fullest
extent permissible under California law.
(c) Any amendment, repeal or modification of the foregoing provisions
of this Article IV by the shareholders of the corporation shall not adversely
affect any right or protection of a director or agent of the corporation
existing at the time of such amendment repeal or modification.
J-1
EXHIBIT K
POST-CLOSING EUTA CAPITAL STRUCTURE
[OMITTED]
