EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
among
CELERITY SYSTEMS, INC.,
FUTURETRAK MERGER CORP.
and
FUTURETRAK INTERNATIONAL, INC.
--------
August 10, 1999
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Table of Contents
Page
1. The Merger.................................................................................................2
1.1 The Merger........................................................................................2
1.2 Closing...........................................................................................2
1.3 Effective Time....................................................................................2
1.4 Treatment of Securities...........................................................................3
1.5 Adjustment of Exchange Ratio......................................................................4
1.6 Closing of the Company Transfer Books.............................................................4
1.7 Exchange of Securities............................................................................5
1.8 No Fractional Shares..............................................................................7
1.9 Stockholders'and Shareholders'Approval............................................................8
1.10 Dissenting Shares.................................................................................8
1.11 Tax Consequences..................................................................................9
1.12 Further Action....................................................................................9
2. Certain Matters Relating to the Surviving Corporation and the Parent.......................................9
2.1 Certificate of Incorporation of the Surviving Corporation........................................10
2.2 By-laws of the Surviving Corporation.............................................................10
2.3 Directors and Officers of the Surviving Corporation..............................................10
2.4 Certificate of Incorporation of the Parent.......................................................10
2.5 By-laws of the Parent............................................................................11
2.6 Directors and Officers of the Parent.............................................................11
3. Representations and Warranties of the Company.............................................................11
3.1 Due Incorporation and Qualification..............................................................11
3.2 Corporate Power of the Company...................................................................12
3.3 Authority to Execute and Perform Agreements......................................................12
3.4 Outstanding Capital Stock; Affiliates............................................................13
3.5 Other Securities.................................................................................14
3.6 Articles of Incorporation and By-laws............................................................15
3.7 Financial Statements.............................................................................15
3.8 Absence of Certain Changes.......................................................................16
3.9 Material Contracts...............................................................................18
3.10 No Defaults Under Agreements.....................................................................19
3.11 Company Third Party Consents.....................................................................20
3.12 Patents, Trademarks, Trade Names, Etc............................................................20
3.13 Employee Matters.................................................................................21
3.14 Litigation; Compliance with Laws.................................................................23
3.15 Tax Matters......................................................................................23
3.16 Insurance........................................................................................26
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PAGE
3.17 Lease............................................................................................27
3.18 Equipment and Machinery..........................................................................27
3.19 Licenses and Permits.............................................................................28
3.20 Inventories......................................................................................29
3.21 Compensation.....................................................................................29
3.22 Customers, Suppliers and Distributors............................................................30
3.23 Labor............................................................................................30
3.24 Environmental Matters............................................................................32
3.25 Full Disclosure..................................................................................34
3.26 Brokers..........................................................................................34
3.27 Banking Relationships and Investments............................................................34
3.28 Accounts Receivable..............................................................................35
3.29 Title to Assets..................................................................................35
3.30 Continuity of Business Enterprise................................................................36
3.31 Continuity of Interest...........................................................................36
3.32 No Spin-off by Company...........................................................................37
4. Representations and Warranties of the Parent and Merger Sub...............................................37
4.1 Due Incorporation................................................................................37
4.2 Corporate Power of the Parent....................................................................37
4.3 Parent Shares....................................................................................37
4.4 Securities Laws Filings..........................................................................37
4.5 Brokers..........................................................................................38
4.6 Interim Operations of Merger Sub.................................................................38
4.7 Absence of Certain Changes.......................................................................38
4.8 Parent Third Party Consents......................................................................41
4.9 Litigation; Compliance with Laws.................................................................41
4.10 Adverse Change...................................................................................42
5. Covenants and Further Agreements of the Parties...........................................................42
5.1 Prohibited Actions Pending Closing...............................................................42
5.2 Exceptions to Prohibitions Affecting the Parties.................................................44
5.3 Litigation.......................................................................................44
5.4 Reasonable Efforts...............................................................................44
5.5 Expenses.........................................................................................44
5.6 Corporate Examinations and Investigations........................................................45
5.7 Consents.........................................................................................45
5.8 Employment Agreements............................................................................45
5.9 Confidentiality..................................................................................46
5.10 Public Statements................................................................................47
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PAGE
5.11 Consents Without Any Condition...................................................................47
5.12 Further Assurances...............................................................................47
5.13 Cooperation to Obtain Financing..................................................................47
5.14 Comfort Letters. Each of the Company and the Parent shall ......................................48
6. Conditions Precedent to the Obligations of the Parent and Merger Sub to Effect the Merger.................49
6.1 Company Representations and Covenants............................................................49
6.2 Company Shareholder Representations and Covenants................................................49
6.3 Officer's Certificates...........................................................................50
6.4 Opinion of Counsel to the Company................................................................50
6.5 Litigation.......................................................................................50
6.6 Third Party Consents.............................................................................50
6.7 Stockholder and Board Approvals..................................................................50
6.9 No Material Adverse Change.......................................................................51
6.10 Tax Matters......................................................................................51
6.11 Securities Law Requirements......................................................................52
6.12 Comfort Letter. .................................................................................52
7. Conditions Precedent to the Obligations of the Company to Effect the Merger...............................52
7.1 Parent and Merger Sub Representations and Covenants..............................................53
7.2 Officer's Certificate............................................................................53
7.3 Opinion of Counsel to the Parent.................................................................53
7.4 Stockholder and Board Approvals..................................................................53
7.5 Litigation.......................................................................................54
7.6 No Material Adverse Change.......................................................................54
7.7 Listing..........................................................................................54
7.8 Securities Law Requirements......................................................................54
7.9 Comfort Letter. .................................................................................55
8. Documents to be Delivered at the Closing..................................................................55
8.1 Documents to be Delivered by the Company to the Parent...........................................55
8.2 Documents to be Delivered by the Parent and Merger Sub to the Company............................56
9. Termination...............................................................................................57
9.1 Termination......................................................................................57
9.2 Effect of Termination............................................................................60
10. Miscellaneous.............................................................................................60
10.1 Notices..........................................................................................60
10.2 Entire Agreement.................................................................................61
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10.3 Waiver; Amendments; Separability.................................................................61
10.4 Survival.........................................................................................62
10.5 Governing Law....................................................................................62
10.6 No Assignment....................................................................................62
10.7 Counterparts.....................................................................................63
10.8 Schedules........................................................................................63
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of August 10, 1999, among
CELERITY SYSTEMS, INC., a Delaware corporation with its principal office located
at 0000 Xxxxxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000 (the "Parent"),
FUTURETRAK MERGER CORP., a Delaware corporation and wholly-owned subsidiary of
the Parent ("Merger Sub"), and FUTURETRAK INTERNATIONAL, INC., a Florida
corporation with its principal office located at 0000 Xxxx Xxxxxxx Xxxx. Xxxxx,
Xxxxxxx Xxxxx, Xxxxxxx 00000 (the "Company").
W I T N E S S E T H:
WHEREAS, the parties wish to provide for the terms and conditions upon
which Merger Sub will be merged with and into the Company; and
WHEREAS, it is the intention of the parties to this Agreement that for
federal income tax purposes, the merger provided for herein shall qualify as a
"reorganization" within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
agree as follows:
A0 THE MERGER.
1.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.3 of this
Agreement), Merger Sub shall be merged with and into the Company in
accordance with the laws of the State of Delaware, the laws of the State of
Florida and the terms of this Agreement (the "Merger"), whereupon the
separate corporate existence of Merger Sub shall cease, and the Company shall
continue as the surviving corporation of the Merger (the Company, in such
capacity, hereinafter sometimes referred to as the "Surviving Corporation").
The name of the Company as the Surviving Corporation, shall be "FutureTrak
International, Inc."
1.2 CLOSING. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (a) at
the offices of Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000 within ten (10) business days following the
satisfaction or waiver of the conditions precedent to Closing set forth in
Sections 6 and 7 of this Agreement; or (b) at such other place, time, and/or
date upon which the parties hereto may otherwise agree. The date upon which
the Closing shall occur is referred to herein as the "Closing Date."
1.3 EFFECTIVE TIME. Upon the Closing, the parties hereto shall
cause a Certificate of Merger ("Certificate of Merger") with respect to the
Merger to be properly executed and filed in accordance with the provisions of
the Delaware General Corporation Law (the "DGCL") and Articles of Merger
("Articles of Merger") with respect to the Merger to be properly executed and
filed in accordance with the provisions of the Florida Business Corporation
Act (the "FBCA"). The parties hereto shall also take such further actions as
may be required under the DGCL, the FBCA and the laws of each state in which
the Company is
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authorized to conduct business in connection with the consummation of the
Merger. The Merger shall become effective at such time as the Certificate of
Merger (substantially in the form of Schedule 1.3-A hereto) is duly filed
with the Secretary of State of the State of Delaware in accordance with the
provisions of Section 252 of the DGCL and the Articles of Merger
(substantially in the form of Schedule 1.3-B hereto) are duly filed with the
Florida Department of State in accordance with the provisions of Section
607.1105 of the FBCA) or at such later time as is specified in the
Certificate of Merger and the Articles of Merger (the "Effective Time"). From
and after the Effective Time, the Surviving Corporation shall possess all the
rights, privileges, powers and franchises and be subject to all of the
restrictions, disabilities, liabilities and duties of the Company and Merger
Sub, all as provided under applicable law.
1.4 TREATMENT OF SECURITIES.
(a) CONVERSION OF MERGER SUB COMMON STOCK. At the Effective
Time, each then outstanding share of Common Stock, par value $0.001 per
share, of Merger Sub shall be converted into one share of Common Stock of the
Surviving Corporation.
(b) CONVERSION OF COMPANY COMMON STOCK. Subject to Section
1.5, at the Effective Time, each then outstanding share of Common Stock, par
value $0.001 per share, of the Company (the "Company Common Stock"), shall be
converted into and represent the right to receive one validly issued, fully
paid and non-assessable share of Common Stock, par value $0.001 per share, of
the Parent (the "Parent Common Stock") (such one to one ratio (I.E. such
factor of 1.0) as adjusted as contemplated pursuant to Section 1.5, being
referred to herein as the "Exchange Ratio"). All shares of the Company Common
Stock shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a valid certificate
representing any such shares (each, a "Company Shareholder") shall
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cease to have any rights with respect thereto, except the right to receive
the shares of the Parent Common Stock to be issued pursuant to this Section
1.4 with respect thereto (each, a "Parent Share") upon the surrender of such
certificate in accordance with Section 1.7.
(c) COMPANY STOCK OWNED BY THE COMPANY. All shares of the
Company Common Stock which immediately prior to the Effective Time are held
directly by the Company in its treasury (if any), shall be canceled and
retired and shall cease to exist, and no Parent Shares (as hereinafter
defined) or other consideration shall be delivered with respect thereto.
1.5 ADJUSTMENT OF EXCHANGE RATIO. In the event that, subsequent
to the date of this Agreement, but prior to the Effective Time, the
outstanding shares of the Parent Common Stock or the Company Common Stock,
respectively, shall have been changed into a different number or a different
class of shares as a result of a stock split, reverse stock split, stock
dividend, subdivision, reclassification, split, combination, exchange,
recapitalization or other similar transaction, the Exchange Ratio shall be
appropriately adjusted.
1.6 CLOSING OF THE COMPANY TRANSFER BOOKS. From and after the
Effective Time, the share transfer books of the Company shall be closed with
respect to shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time and no further transfer of such shares shall
thereafter be made on such share transfer books.
1.7 EXCHANGE OF SECURITIES.
(a) Promptly after the Effective Time, the Parent shall,
upon surrender by any Company Shareholder, in accordance with this Section
1.7, of share certificates representing all of the issued and outstanding
shares of the Company Common Stock held by such Company Shareholder, deliver
to such Company Shareholder a certificate representing the
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Parent Shares to which such Company Shareholder is entitled or such
certifications and indemnities as are satisfactory to the Parent with respect
to lost or destroyed certificates. The number of Parent Shares to which each
Company Shareholder is entitled shall be determined by multiplying the number
of shares of the Company Common Stock held by such Company Shareholder at the
Effective Time by the Exchange Ratio. The shares of the Company Common Stock
so surrendered shall forthwith be canceled. No interest will be paid or
accrued on the unpaid dividends and distributions, if any, payable to the
holder of shares of the Company Common Stock.
(b) Promptly following the Effective Time, the Parent shall
issue and deliver to American Stock Transfer & Trust Co. or its successor
(the "Exchange Agent") the number of Parent Shares into which the outstanding
shares of Company Common Stock are to be converted in the Merger and cash
sufficient to pay for all fractional shares of Company Common Stock
eliminated pursuant to Section 1.8 hereof. The Parent shall cause the
Exchange Agent to transmit to the Company Shareholders appropriate documents
to be used by them to surrender their Company Common Stock certificates in
exchange for Parent Common Stock certificates and cash in lieu of any
fractional shares of Company Common Stock. Until so surrendered and
exchanged, each certificate for Company Common Stock shall represent solely
the right to receive shares of Parent Common Stock into which the shares of
Company Common Stock it theretofore represented shall have been converted
pursuant to Section 1.4(b) (or to perfect the right of the holders thereof to
receive payment for such shares pursuant to Section 607.1320 of the FBCA, to
the extent applicable).
(c) All shares of the Parent Common Stock issued upon
conversion of the shares of the Company Common Stock in accordance with the
terms hereof, together with any
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cash required to be delivered therewith, shall be deemed to have been issued
and delivered in full satisfaction of all rights pertaining to such shares of
the Company Common Stock.
(d) At the Effective Time, the Parent shall assume each
option, warrant or other right to purchase shares of Company Common Stock
then outstanding under the stock option plans and agreements set forth on
Schedule 1.7(d) (each an "Option Conversion Agreement"), which shall
thereafter represent an option, warrant or other right (each, a "Company
Option") to purchase, in lieu of the shares of Company Common Stock
previously subject to such Company Option, that number of shares of Parent
Common Stock equal to the product of the number of shares then subject to the
Company Option, to the extent not exercised or terminated prior to the
Effective Time, multiplied by the Exchange Ratio and rounded downward to the
nearest whole share, at an exercise price per share equal to the exercise
price per share under the Company Option, divided by the Exchange Ratio, and
rounded upward to the nearest whole cent. The term, exercisability, vesting
schedule, status as an "incentive stock option" under Section 422 of the
Code, if applicable, and all other terms of the Company Options will
otherwise be unchanged.
1.8 NO FRACTIONAL SHARES. No fractional shares of Parent Common
Stock will be issued in connection with the Merger and no certificate
therefor will be issued. In lieu of such fractional shares, any holder of
Company Common Stock who would otherwise receive a fractional share shall,
upon surrender of the certificate or certificates representing Company Common
Stock or upon supplying to the Parent certifications and indemnities
satisfactory to the Parent with respect to lost or destroyed certificates, be
paid an amount in cash (without interest) determined by multiplying such
fraction by the Market Price of Parent Common Stock on the tenth business day
prior to the Effective Time. As used herein, "Market Price" per share of
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Parent Common Stock on any date shall be deemed to be the average of the
daily closing prices for the twenty (20) consecutive trading days immediately
preceding the date in question. The closing price for each day shall be the
last reported sales price regular way or, in case no such reported sale takes
place on such day, the closing bid price regular way, in either case on the
principal United States national securities exchange (including, for purposes
hereof, the Nasdaq SmallCap Market) on which the Parent Common Stock is
listed or admitted to trading or, if the Parent Common Stock is not listed or
admitted to trading on any such national exchange, the highest reported bid
price for the Parent Common Stock as furnished by the National Association of
Securities Dealers, Inc. The Exchange Agent will, subject to any applicable
abandoned property or similar law, until three months after the Effective
Time, pay to such holders, upon surrender of their certificates representing
Company Common Stock outstanding immediately prior to the Effective Time, the
cash value of such fractions so determined, without interest. Any balance of
cash, as to which certificates representing Company Common Stock outstanding
at the Effective Time which shall not have been surrendered by the expiration
of such three month period, shall thereafter be held by the Parent for the
benefit of such holders subject to any applicable statute of limitations or
any abandoned property or similar law.
1.9 STOCKHOLDERS' AND SHAREHOLDERS' APPROVAL. The Parent and, if
required, the Company shall each call a meeting of their respective
stockholders or shareholders (as the case may be) to consider and vote upon
the approval and adoption of this Agreement and the Merger, all in accordance
with the provisions of the DGCL, the FBCA and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), to be held, in the case of the Parent,
as soon as is practicable after the Parent's registration statement on Form
S-4 relating to the Parent Shares to be issued in connection with the Merger
(the "S-4") shall have been declared
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effective by the Securities and Exchange Commission ("SEC") and the Parent's
Proxy Statement shall have been cleared by the SEC.
1.10 DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock that are issued and
outstanding immediately prior to the Effective Time and that are held by
Company Shareholders who have filed with the Company an election to dissent
to the Merger in the manner provided in Section 607.1320 of the FBCA
("Dissenting Shares") shall not be canceled and converted into shares of
Parent Company Stock in accordance with the Exchange Ratio unless and until
such Company Shareholder shall have failed to perfect, or shall have
effectively withdrawn or lost, such Company Shareholder's right to payment
under the FBCA. If such Company Shareholder shall have so failed to perfect,
or shall have effectively withdrawn or lost such right, such Company
Shareholder's shares of Company Common Stock shall thereupon be deemed to
have been canceled and converted as described in Section 1.4(b) at the
Effective Time, and each such share shall represent solely the right to
receive shares of Parent Common Stock in accordance with the Exchange Ratio
and pursuant to Section 1.7. The Company shall give the Parent prompt notice
of any notices it receives from Company Shareholders electing to dissent to
the Merger and, prior to the Effective Time, the Parent shall have the right
to participate in all negotiations and proceedings with respect to such
elections. From and after the Effective Time, no Company Shareholder who has
elected to dissent to the Merger as provided in Section 607.1302 of the FBCA
shall be entitled to vote such Company Shareholder's shares of Company Common
Stock for any purpose or to receive payment of dividends or other
distributions with respect to such Company Shareholder's shares (except
dividends and other distributions payable to Company Shareholders of record
at a date which is prior to the Effective Time).
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1.11 TAX CONSEQUENCES. For federal income tax purposes, the
Merger is intended to constitute a tax-free reorganization with the meaning
of Section 368 (a) of the Code. None of the Parent, Merger Sub or the Company
shall take a position on any tax return inconsistent with this Section.
1.12 FURTHER ACTION. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with the full right, title and
possession to all assets, property, rights, privileges, immunities, powers
and franchises of either or both of Merger Sub and the Company, the officers
and directors of the Surviving Corporation are fully authorized in the name
of either or both of the Merger Sub and the Company or otherwise to take all
such action.
2 CERTAIN MATTERS RELATING TO THE SURVIVING CORPORATION AND THE PARENT.
2.1 CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION.
The Certificate of Incorporation of the Company, as in effect at the
Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by law.
2.2 BY-LAWS OF THE SURVIVING CORPORATION. The By-laws of the
Company, as in effect at the Effective Time, shall be the By-laws of the
Surviving Corporation until thereafter amended as provided by law.
2.3 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors and officers of the Company immediately prior to the Effective Time
will be the persons identified on Schedule 2.3; PROVIDED that, except as set
forth in Section 5.8, nothing in this Agreement shall be construed as a
commitment of continued employment to the persons referred to in Schedule
2.3, whether in the same position or otherwise. The directors and officers
will hold office from the Effective Time until their respective successors
are duly elected or appointed
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and qualify in the manner provided in the Certificate of Incorporation and
By-laws of the Surviving Corporation, or as otherwise provided by applicable
law.
2.4 CERTIFICATE OF INCORPORATION OF THE PARENT. The Parent shall
file with the Delaware Secretary of State on or prior to the Effective Time
the Certificate of Incorporation substantially in the form of the draft
certificate set forth on Schedule 2.4 (which provides among other things for
the changing of the Parent's name to FutureTrak Systems, Inc.) which shall
become the Certificate of Incorporation of the Parent until thereafter
amended as provided by law.
2.5 BY-LAWS OF THE PARENT. At or before the Effective Time, the
Parent shall adopt By-laws substantially in the form of the draft By-laws set
forth on Schedule 2.5, which shall be the By-laws of the Parent until
thereafter amended as provided by law.
2.6 DIRECTORS AND OFFICERS OF THE PARENT. The directors and
officers of the Parent immediately prior to the Effective Time will be the
persons identified on Schedule 2.6; PROVIDED that, except as set forth in
Section 5.8, nothing in this Agreement shall be construed as a commitment of
continued employment to the persons referred to on Schedule 2.6, whether in
the same position or otherwise. The directors and officers will hold office
from the Effective Time until their respective successors are duly elected or
appointed and qualify in the manner provided in the Certificate of
Incorporation and By-laws of the Parent, or as otherwise provided by
applicable law.
3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as disclosed in writing by the Company to the Parent in the
FutureTrak Disclosure Schedule (as hereinafter defined), the Company
represents and warrants to the Parent, as of the FutureTrak Schedule Delivery
Date (as hereinafter defined) and the Closing
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Date, as follows:
3.1 DUE INCORPORATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Florida and has all corporate power and authority to
own, lease and operate its assets, properties and business and to carry on
its business as now conducted. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the nature of
its business or location of its properties requires such qualification and in
which the failure to so qualify would have a material adverse effect on the
business, operations or financial condition of the Company.
3.2 CORPORATE POWER OF THE COMPANY. The Company has full legal
right, power and authority and has taken all necessary corporate action
required to enter into, execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement has been duly executed and delivered
and constitutes a legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights in general and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
3.3 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. The Company has
full legal right and power and all authority and approval required to enter
into, execute and deliver this Agreement and to perform fully its obligations
hereunder. This Agreement has been duly executed and delivered and
constitutes a legal, valid and binding obligation of the Company enforceable
in accordance with its terms, except as may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors'
rights in general and subject to general
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principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law). The execution and delivery of this
Agreement by the Company and the consummation of the transactions
contemplated hereby by the Company in accordance with the terms and
conditions hereof will not, except as otherwise provided in this Agreement:
(i) require the approval or consent of any federal or state governmental or
regulatory body or the approval or consent of any other person; (ii) conflict
with or result in any breach or violation of any of the terms and conditions
of, or constitute (or with notice or lapse of time or both would constitute)
a default under the Company's Articles of Incorporation or By-laws, or any
by-law, statute, regulation, order, judgment or decree applicable to the
Company, or (iii) conflict with or result in any breach or violation of any
of the terms and conditions of, or constitute (or with notice or lapse of
time or both would constitute) a default under any instrument, contract or
other agreement to which the Company is a party or by which the Company
Common Stock is bound or subject, except for those defaults which would not,
either individually or in the aggregate, have a Material Adverse Effect on
the Company; or (iv) result in the creation of any lien or other encumbrance
on the shares of the Company Common Stock held by any Company Shareholder,
except for any such lien or encumbrance under the Shareholders Agreement
executed on the date hereof among the Parent, Merger Sub and certain of the
Company Shareholders (the "Shareholders Agreement"). Where used in this
Agreement, "Material Adverse Effect" shall mean a change or, with respect to
the Company, Merger Sub or the Parent, as the case may be, any effect which
is reasonably likely to be materially adverse to (i) the business,
operations, prospects, financial condition or results of operations of such
company, or (ii) this Agreement or the transactions contemplated hereby.
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3.4 OUTSTANDING CAPITAL STOCK; AFFILIATES.
(a) The Company is authorized to issue 100,000,000 shares of
Common Stock, $0.001 par value, of which 9,546,193 shares will be issued and
outstanding as of the Closing Date. The shares of the Company Common Stock
held by the Company Shareholders shall constitute all of the issued and
outstanding capital stock of the Company. The shares of Company Common Stock
held by the Company Shareholders have been duly and validly authorized and
issued, and are fully paid and nonassessable, with no liability attaching to
the ownership thereof. The record owners of all of the issued and outstanding
shares of Company Common Stock and the beneficial owners of five percent (5%)
or more of the issued and outstanding shares of Company Common Stock are set
forth on the FutureTrak Disclosure Schedule.
(b) The FutureTrak Disclosure Schedule sets forth each person
or entity which the Company controls, is controlled by or is under common
control with ("Affiliates") and sets forth the percentage ownership by the
Company of each Affiliate or vice versa.
3.5 OTHER SECURITIES. There are not as of the date hereof and
there will not be at the Closing Date any shareholder agreements, voting
trusts or other agreements or understandings to which the Company is a party
or by which it is bound relating to the voting of any shares of the capital
stock of the Company which will limit in any way the solicitation of proxies
by or on behalf of the Company from, or the casting of votes by, the Company
Shareholders with respect to the Merger. Except for the issuance of the
Company Common Stock pursuant to the exercise of the Company Options under
Option Conversion Agreements or other derivative securities set forth on
Schedule 1.7(d), there are outstanding: (a) no securities of
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the Company which are convertible into, or exchangeable or exercisable for,
shares of Company Common Stock, or other voting securities of the Company;
and (b) no options, warrants, calls, rights (including preemptive rights),
commitments or agreements to which the Company is a party or by which it is
bound, in any case obligating the Company to issue, deliver, sell, purchase,
redeem or acquire, or cause to be issued, delivered, sold, purchased,
redeemed or acquired, additional shares of Company Common Stock or other
voting securities of the Company or obligating the Company to grant, extend
or enter into any such option, warrant, call, right, commitment or agreement.
Each individual who is a party to an Option Conversion Agreement is the
holder of the number of Company Options set forth opposite such individual's
name on Schedule 1.7(d).
3.6 ARTICLES OF INCORPORATION AND BY-LAWS. The copies of the
Articles of Incorporation and By-laws of the Company, and all amendments
thereto, which have been delivered to the Parent are true, correct and
complete. No amendments, other than those delivered, have been, or will be,
adopted by the Company or are contemplated except any such amendments, made
with the prior consent of the Parent, that may be required to consummate the
transactions contemplated hereby.
3.7 FINANCIAL STATEMENTS. The balance sheets of the Company as
at December 31, 1996, December 31, 1997 and December 31, 1998 and the related
statements of income, retained earnings and changes in financial position and
statements of cash flows for the years then ended, including the footnotes
thereto, certified by Xxxxx Xxxxxxxx LLP, independent certified public
accountants, and the unaudited balance sheet of the Company for the three (3)
month period ending March 31, 1999 and the related statement of income,
retained earnings and changes in financial position and statement of cash
flow for the period then ended, including the
-14-
footnotes thereto, all of which have been delivered to the Parent, fairly
present the financial position of the Company as at such dates and for the years
or period presented and the results of operations, the changes in retained
earnings, financial position and cash flows of the Company for the years or the
period then ended in accordance with generally accepted accounting principles
consistently applied. (The foregoing financial statements of the Company as at
such dates and for the years or the period then ended being sometimes herein
called the "Financials," the balance sheet included in the Financials for the
period ending March 31, 1999 being sometimes herein called the "Balance Sheet,"
and March 31, 1999 being sometimes herein called the "Balance Sheet Date").
There are no liabilities (whether absolute, accrued, contingent or otherwise)
("Liabilities") of the Company in excess of $5,000 individually or $25,000 in
the aggregate of a type that would be required to be disclosed in financial
statements prepared in accordance with generally accepted accounting principles
consistently applied other than: (i) Liabilities accrued or reserved against in
the Financials or disclosed in the notes thereto; (ii) Liabilities described on
the FutureTrak Disclosure Schedule; and (iii) Liabilities incurred in the
ordinary course of business since the Balance Sheet Date.
3.8 ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date, the
Company has not:
(a) experienced any change in its financial condition,
operating assets, liabilities, revenues, expenses or business prospects which
would have a Material Adverse Effect on the Company or change any accounting
method, policy or practice;
(b) incurred any obligation or liability (contingent or
otherwise), except normal trade or business obligations incurred in the
ordinary course of business;
(c) become subject to an encumbrance or modified or extended
any
-15-
existing encumbrance on the Company's business or its assets, other than in the
ordinary course of business which would have a Material Adverse Effect on the
Company;
(d) sold, committed to or agreed to sell, lease, hypothecate
or otherwise dispose of the Company's business or the material assets
thereof, other than in the ordinary course of business;
(e) waived or released any rights of substantial value
including cancellation of any substantial debt owed to, or accounts
receivable of, the Company, other than in the ordinary course of business;
(f) entered into any agreements with any Affiliate,
including any officer, director, stockholder, partner, employee, agent or
consultant of such Affiliate, nor granted nor agreed to grant any increase in
the compensation, rate or commission of any officer, director, employee or
agent, or caused any change in any existing, or the adoption of any new
bonus, profit sharing, pension, stock option, retirement or similar plan,
agreement or arrangement, or any accrual, arrangement for, or payment of, any
bonus, severance or termination pay to any present or future officer,
director, salaried employee, consultant, agent or Affiliate other than any
increases, changes, accruals, arrangements or payments as are scheduled as of
the date hereof or as are contemplated by existing agreements, plans or
arrangements;
(g) permitted or suffered any amendment, cancellation or
termination of any contract, agreement, lease, license or commitment to which
the Company is a party, the cancellation of which would have a Material
Adverse Effect on the Company;
(h) permitted or suffered any amendment, cancellation or
termination of any regulatory license to which the Company is a party;
(i) suffered any casualty loss or damage involving any material
-16-
properties or assets of the Company's business, whether or not the same shall
have been covered by insurance;
(j) failed to pay when due any lease obligation or obligation
for borrowed money, or default in respect of any other material contractual
obligation to which the Company is subject;
(k) borrowed or entered into any arrangement relating to the
borrowing of funds from any person or guaranteed the payment or performance with
respect to any such arrangement, other than in the ordinary course of business;
(l) loaned or advanced any funds to its officers, directors,
stockholders, partners, employees, consultants, agents or Affiliates;
(m) incurred or committed to make any capital expenditure,
except in the ordinary course of business and as is currently contemplated in
the Company's budgets;
(n) amended or restated any of the Financials;
(o) transferred any amounts in payment of the intercompany
accounts of the Company or its Affiliates other than such transfers as have
customarily been made in the ordinary course of business; or
(p) permitted or suffered any other event or condition which
would have a Material Adverse Effect on the Company.
3.9 MATERIAL CONTRACTS. The Company has made available to Parent
(a) true and complete copies of all written contracts, agreements,
commitments, arrangements, leases (including with respect to personal
property), policies and other instruments to which it is a party or by which
it or any subsidiary is bound which (i) require payments to be made in excess
of $25,000 per year, or (ii) do not by their terms expire and are not subject
to termination within
-17-
sixty (60) days from the date of the execution and delivery thereof
(collectively, "Material Contracts"), and (b) a written description of each
Material Contract of which the Company is aware that has not been reduced to
writing. Each of the Material Contracts is listed on the FutureTrak
Disclosure Schedule. The Company is not, or has not received any written
notice that any other party is, in default in any respect under any such
Material Contract, except for those defaults which would not, either
individually or in the aggregate, have a Material Adverse Effect on the
Company and, to the Company's knowledge, there has not occurred any event or
events that with the lapse of time or the giving of notice or both would
constitute such a material default, except for those defaults which would
not, either individually or in the aggregate, have a Material Adverse Effect
on the Company. The Company has not received notice of nor has knowledge of
any termination or threatened termination of a Material Contract.
3.10 NO DEFAULTS UNDER AGREEMENTS. The Company is not in default
under any contract, commitment, agreement, lease, license, order, judgment or
decree to which it is a party or by which it or its assets or properties are
bound, nor does any condition exist which, with notice or lapse of time or
both, would constitute such a default, which default would have a Material
Adverse Effect on the Company or which would give the other party a right of
termination or cancellation, and each such contract or other agreement is in
full force and effect and neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will result in any
breach or acceleration of, or constitute (or with notice or lapse of time or
both would constitute) such a default under any such contract or other
agreement. To the Company's knowledge, no other party is in default under any
contract, commitment, agreement, lease, license, order, judgment or decree to
which the Company is a party or by which it is bound, except for defaults
which would not, individually or in the
-18-
aggregate, have a Material Adverse Effect on the Company.
3.11 COMPANY THIRD PARTY CONSENTS. All consents, permits and
approvals from parties to contracts or other agreements with the Company, and
any other material consent, permit or approval, that may be required in
connection with the performance by the Company of its obligations under this
Agreement, or to assure the consummation of the transactions contemplated by
this Agreement, or the continuance of such contracts or other agreements with
the Company after the Closing, are set forth on the FutureTrak Disclosure
Schedule.
3.12 PATENTS, TRADEMARKS, TRADE NAMES, ETC. The FutureTrak
Disclosure Schedule lists, as of the date hereof: (a) all patents and patent
applications, and all trademarks, service marks, trade names and registered
copyrights, owned by the Company or in which the Company has rights, through
license or otherwise, and all licenses and other agreements relating thereto;
and (b) all agreements relating to third party technology, know-how and
processes which the Company is licensed or authorized to use (collectively,
the "Intellectual Property"). The Company holds free from contractual
restrictions and any other restriction, except those restrictions imposed by
law or governmental regulation, or any license or other agreement relating
thereto, all Intellectual Property. As of the date hereof, there are no
unresolved claims made and there has not been communicated to the Company the
threat of any claim that the holder of such Intellectual Property is in
violation of or infringing any service xxxx, patent, trademark, trade name,
trademark or trade name registration, copyright or copyright registration of
any third party. The Company is the owner of, or has a valid license to use,
the patents, patent licenses, trade names, trademarks, service marks, brand
marks, brand names, copyrights, know-how, formula and other proprietary and
trade rights necessary for the conduct of the Company's business as now
conducted, without any known conflict with the rights of others,
-19-
and the Company has not knowingly forfeited or otherwise relinquished any
such patent, patent license, trade name, trademark, service xxxx, brand xxxx,
brand name, copyright, know-how, formula or other proprietary right necessary
for the conduct of the Company's business as conducted on the date hereof. To
the knowledge of the Company, no person is infringing any of the Intellectual
Property.
3.13 EMPLOYEE MATTERS.
(a) The Company is not a party to, does not contribute to,
and is not otherwise obligated under (i) any employment agreement or any
collective bargaining or other labor agreement, or (ii) any employee benefit
plan within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or any program, arrangement or
contract for incentive, profit sharing, retirement, savings, thrift, deferred
compensation, stock option, performance, vacation or holiday pay, travel or
other fringe benefits, life or other insurance (the "Benefit Plans").
(b) The FutureTrak Disclosure Schedule identifies all
Benefit Plans which are maintained by the Company with respect to its
employees.
(c) Each Benefit Plan is in material compliance with the
provisions of ERISA, the Code and any applicable law, rule or regulation of
any jurisdiction outside the United States, and a favorable determination
letter has been issued by the Internal Revenue Service with respect to each
such Benefit Plan which is an employee pension plan within the meaning of
Section 3(2) of ERISA ("Pension Plan") and any amendment thereto. Each
Benefit Plan has been administered in accordance with its terms, or is in
operational compliance with ERISA or any applicable law, rule or regulation
of any jurisdiction outside the United States.
(d) No reportable event, as defined in Section 4043 of ERISA,
for
-20-
which notice has not been waived, or accumulated funding deficiency, as
defined in Section 302 of ERISA, nor any prohibited transaction, as defined
in Section 406 of ERISA or Section 4975 of the Internal Revenue Code, has
occurred with respect to any Pension Plan.
(e) With respect to each Benefit Plan, the Company has
delivered to the Parent true and complete copies of the following documents,
where applicable: (i) the text of each Benefit Plan and of any trust
maintained in connection therewith; (ii) the most recent annual report (Form
5500 Series), together with schedules, as required, filed with the Internal
Revenue Service, and any financial statement and opinion required by Section
103(a)(3) of ERISA; (iii) the most recent determination letter issued by the
Internal Revenue Service; (iv) the most recent summary plan description and
all modifications; and (v) the most recent actuarial report.
(f) (i) The Company is in compliance in all material
respects with all applicable laws relating to the employment practices, terms
and conditions of employment and wages and hours; (ii) there are no
controversies (other than routine grievances) pending or threatened between
the Company and any of its employees or labor unions or other collective
bargaining units representing its employees; (iii) no unfair labor practice
complaints have been filed against the Company with the National Labor
Relations Board or other appropriate authority, and the Company has not
received any notice or communication reflecting an intention or a threat to
file any such complaint; (iv) there is no labor strike, dispute, slow-down or
stoppage pending against the Company; and (v) no representation petition
respecting the Company's business is pending with the National Labor
Relations Board or other appropriate authority.
3.14 LITIGATION; COMPLIANCE WITH LAWS. There are no claims, actions,
suits,
-21-
proceedings or governmental investigations pending or, to the Company's
knowledge, threatened, before any national, state or local court or
governmental or regulatory authority, domestic or foreign, or before any
arbitrator of any nature, or any order, injunction or decree outstanding,
against or relating to the Company that, if adversely determined, would have
a Material Adverse Effect on the Company. The Company is not in violation of
any applicable law, rule or regulation, ordinance, or any other requirement
of any governmental body or court, which violation would have a Material
Adverse Effect on the Company, and no notice has been received by the Company
alleging any such violation.
3.15 TAX MATTERS.
(a) "Tax(es)" shall mean all taxes, assessments and other
charges, including any interest, penalties, additions to tax or additional
amounts that may become payable in respect thereof, imposed by any foreign,
federal, state, local or other government or taxing authority, which taxes
shall include, without limitation, all income taxes, payroll and employee
withholding taxes, unemployment insurance, social security, sales and use
taxes, excise taxes, franchise taxes, gross receipts taxes, occupation taxes,
real and personal property taxes, stamp taxes, transfer taxes, workers'
compensation and other obligations of the same or of a similar nature,
including, without limitation, Taxes imposed by reason of transferee or
successor liability.
(b) The Company has timely filed with the appropriate taxing
authorities all returns, declarations and reports (including, without
limitation, information returns and other statements or information) in
respect of Taxes (collectively, "Tax Returns") required to be filed through
the date hereof and will timely file any such Tax Returns required to be
filed on or prior to the Closing Date. The Tax Returns filed are complete and
accurate in all
-22-
material respects. The Company has not requested any extension of time within
which to file any Tax Returns. The Company has delivered to the Parent
complete and accurate copies of the Company's federal, state and local Tax
Returns for the last three (3) fiscal years. No amended Tax Returns or refund
claims have been or are scheduled to be filed by or on behalf of the Company.
(c) All Taxes for which the Company is or may be liable,
whether or not shown as due on any Tax Return, in respect of periods
beginning before the Closing Date, have been timely paid, and the Company
does not have any liability for Taxes in excess of the amounts so paid. There
are no Taxes for which the Company is or may become liable that will apply in
a period or a portion thereof beginning on or after the Closing Date and that
are attributable to income earned or activities of the Company occurring
before the Closing Date. All required Tax estimates, deposits, prepayments
and similar reports or payments for current periods have been properly made.
(d) No deficiencies for Taxes, have been claimed, proposed or
assessed by any taxing or other governmental authority against the Company.
There are no pending or threatened audits, investigations or claims for or
relating to any liability in respect of Taxes, and there are no matters under
discussion with any taxing or governmental authorities with respect to Taxes
that in the reasonable judgement of the Company, or its counsel, are likely
to result in additional liability for Taxes. No notice or claim has ever been
made by any governmental authority in a jurisdiction where the Company does
not file Tax Returns that it is or may be subject to Taxes in that
jurisdiction. There have been no audits of federal, state and local returns
for Taxes by any taxing or governmental authorities and the Company has not
been notified that any taxing or governmental authority intends to audit a
return for any period. No
-23-
extension of a statute of limitations relating to Taxes is in effect with
respect to the Company. No power of attorney has been executed by the Company
with respect to any matters relating to Tax which is currently in force.
(e) There are no liens for Taxes (other than for current
Taxes not yet due and payable) on the Company's assets and no basis exists
for the imposition of any such liens.
(f) None of the Company's assets is property that is required
to be treated as being owned by any other person pursuant to the so-called
safe harbor lease provisions of former Section 168(f)(8) of the Code.
(g) None of the Company's assets directly or indirectly
secures any debt the interest on which is tax-exempt under Section 103(a) of
the Code.
(h) None of the Company's assets is "tax-exempt use property"
within the meaning of Section 168(h) of the Code.
(i) The transaction contemplated herein is not subject to the
tax withholding provisions of Section 3406 of the Code, or of Subchapter A of
Chapter 3 of the Code or of any other provision of law.
(j) All elections with respect to Taxes affecting the Company
as of the date hereof are set forth on the FutureTrak Disclosure Schedule.
The Company has not consented at any time under Section 341(f)(1) of the
Code, to have the provisions of Section 341(f)(2) of the Code apply to any
disposition of the Company's assets. The Company has not agreed to make, nor
is required to make, any adjustments under Section 481(a) of the Code by
reason of a change in the accounting method or otherwise.
(k) There are no tax sharing agreements or similar arrangements
with
-24-
respect to or involving the Company. The Company is not a party to any
contractual obligation requiring the indemnification of any person with
respect to the payment of Taxes.
(l) The Company is not a party to any joint venture,
partnership or other arrangement or contract which is treated as a
partnership for federal income tax purposes.
(m) As of the Closing Date, the Company is not a party to any
agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
3.16 INSURANCE. The Company maintains insurance coverage on its
properties and assets, and with respect to its employees and operations,
covering risks which are customarily insured against by businesses similar to
the Company's business. The FutureTrak Disclosure Schedule contains a true
and complete description of all such policies or binders of insurance held by
or on behalf of the Company or any of its properties or assets in connection
with the Company's business (specifying the type of insurance, the insurer,
the policy number, the risks insured, the amount of coverage and the
expiration date). The FutureTrak Disclosure Schedule also contains a true and
complete description of all outstanding performance bonds which have been
delivered to any person in connection with the Company's business. No notice
of cancellation or nonrenewal with respect to, or disallowance of any claim
under, any such policy, binder or performance bond has been received by the
Company.
-25-
3.17 LEASE.
(a) The Company has previously delivered to the Parent a
true and correct copy of the lease for the Company's premises located at 0000
Xxxx Xxxxxxx Xxxx. Xxxxx, Xxxxxxx Xxxxx, Xxxxxxx 00000 (the "Premises"),
including all amendments thereto through the date hereof (the "Lease").
(b) The landlord under the Lease has not given the Company
written notice of or made a claim with respect to any breach or default the
consequences of which, individually or in the aggregate, would have a
Material Adverse Effect on the Company.
(c) The Lease is not subject to any sublease, license or
other agreement granting to any person or entity any right to the use,
occupancy or enjoyment of such property or any portion thereof.
3.18 EQUIPMENT AND MACHINERY. The FutureTrak Disclosure Schedule
sets forth a complete and correct list and brief description of each item of
equipment and machinery owned or leased by the Company and used in the
Company's business having an original purchase cost or aggregate lease cost
exceeding $10,000. As of the date hereof, the Company has good title, free
and clear of all title defects and objections to or liens on the equipment
and machinery owned by it. The Company holds good and transferable leaseholds
in all of the equipment and machinery leased by it, in each case under valid
and enforceable leases. The Company is not in material default with respect
to any item of equipment and machinery leased by it, and no event has
occurred that constitutes or with due notice or lapse of time or both may
constitute a material default under any lease thereof. The equipment and
machinery owned and leased by the Company are sufficient and adequate to
carry on the Company's business as presently conducted by the Company, and
all items thereof are in good operating condition and
-26-
repair, ordinary wear and tear excepted.
3.19 LICENSES AND PERMITS. The FutureTrak Disclosure Schedule sets
forth a true and complete list of all licenses, permits, franchises,
authorizations and approvals issued or granted to the Company with respect to
the Company's business by the federal government, any state or local
government, any foreign national or local government, or any department,
agency, board, commission, bureau or instrumentality of any of the foregoing
(the "Licenses and Permits"), and all pending applications therefor. Such
list contains a summary description of each such item and, where applicable,
specifies the date issued, granted or applied for, the expiration date and
the current status thereof. Each License and Permit has been duly obtained,
is valid and in full force and effect and, to the Company's knowledge, is not
subject to any pending or threatened administrative or judicial proceeding to
revoke, cancel, suspend or declare such License or Permit invalid in any
respect. The Licenses and Permits are sufficient and adequate in all material
respects to permit the continued lawful conduct of the Company's business in
the manner now conducted by the Company, and none of the operations of the
Company's business are being conducted in a manner that violates in any
material respect any of the terms or conditions under which any License or
Permit was granted. No such License or Permit will in any way be affected by,
or terminate or lapse by reason of, the transactions contemplated by this
Agreement.
3.20 INVENTORIES. All inventories reflected on the Financials are
(a) properly valued at the lower of average cost or market value on a
first-in, first-out basis in accordance with GAAP as consistently applied in
prior annual financial statements; (b) of good and merchantable quality and
contain no material amounts that are not salable and usable for the purposes
intended in the ordinary course of the Company's business and meet the
current
-27-
standards and specifications of the Company's business; and (c) at levels
adequate and not excessive in relation to the circumstances of the Company's
business and in accordance with past inventory stocking practices. All
inventories disposed of subsequent to the Closing have been disposed of only
in the ordinary course of business and at prices and under terms that are
normal and consistent with past practice. No inventory is held by the Company
on consignment. The Company does not hold title to any inventory held by
others. There are no tooling forms, patterns or similar assets owned by the
Company in the hands of vendors. The Financials contain adequate reserves for
obsolete inventory.
3.21 COMPENSATION. The Company has previously delivered to the
Parent a schedule setting forth the current base salary of each of the
employees of the Company as well as the aggregate bonus paid to each such
employee in respect of the most recently completed bonus measuring period for
such employee. Except for the Benefit Plans, the Company has not, by reason
of past practices with respect to such employees, established any rights on
the part of such employees to additional compensation with respect to any
period after the Closing Date.
3.22 CUSTOMERS, SUPPLIERS AND DISTRIBUTORS. The FutureTrak
Disclosure Schedule sets forth a complete and correct list of (a) all
customers whose purchases exceeded 5% of the aggregate net sales of the
Company during the fiscal year ended December 31, 1998, setting forth with
respect to each such customer the aggregate volume of purchases made during
such period; (b) all suppliers from whom the Company purchased in excess of
5% of its raw materials and supplies during the fiscal year ended December
31, 1998 setting forth with respect to each such supplier the aggregate
dollar volume of purchases (broken down by principal categories) by the
Company from such supplier for such period; and (c) all sales agents or
representatives of the Company with respect to the Company's business. None
of such
-28-
customers, suppliers, distributors or representatives has or, to the
knowledge of the Company, intends to terminate or change significantly its
relationship with the Company's business.
3.23 LABOR. a. The Company is not a party to any labor or
collective bargaining agreement, and no employees of the Company are
represented by any labor organization; (b) within the preceding three (3)
years, there have been no representation or certification proceedings, or
petitions seeking a representation proceeding, pending or, to the knowledge
of the Company, threatened to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority, and there
have been no organizing activities involving the Company with respect to any
group of employees of the Company; b. there are no strikes, work stoppages,
slowdowns, lockouts, material arbitrations or material grievances or other
material labor disputes pending or, to the best knowledge of the Company,
threatened against or involving the Company and there are no unfair labor
practice charges or complaints pending or, to the best knowledge of the
Company, threatened by or on behalf of any employee or group of employees of
the Company; (c) there are no complaints, charges or claims against the
Company pending or, to the best knowledge of the Company, threatened to be
brought or filed, with any governmental entity or arbitrator(s) based on,
arising out of, in connection with, or otherwise relating to the employment
or termination of employment of any individual by the Company; (d) to the
best knowledge of the Company, the Company is in compliance in all material
respects with all laws, regulations and orders relating to employment and
labor, including but not limited to all such laws, regulations and orders
relating to wages and hours, collective bargaining, equal employment
opportunity, affirmative action, discrimination, civil rights, employee
benefits, plant closing and mass layoff, immigration, medical and family
leave, safety and health, workers' compensation and the collection and
-29-
payment of withholding and/or social security taxes and any similar tax; (e)
as of the Closing Date there will be no proceeding, claim, suit, action or
governmental investigation pending or, to the best knowledge of the Company,
threatened, with respect to which any current or former director, officer,
employee or agent of the Company is entitled, or has asserted he is entitled,
to claim indemnification from the Company pursuant to the Certificate of
Incorporation or By-Laws of the Company, as provided in any indemnification
agreement to which the Company is a party or pursuant to applicable law; (f)
since the enactment of the Worker Adjustment and Retraining Notification Act
(the "WARN Act"), the Company has not effectuated (i) a "plant closing" (as
defined in the WARN Act) affecting any site of employment or one or more
facilities or operating units within any site of employment or facility of
the Company, or (ii) a "mass layoff" (as defined in the WARN Act) affecting
any site of employment or facility of the Company; nor has the Company been
affected by any transaction or engaged in layoffs or employment terminations
sufficient in number to trigger application of any similar state or local
law. None of the Company's employees has suffered an "employment loss" (as
defined in the WARN Act) since six (6) months prior to the date of this
Agreement.
3.24 ENVIRONMENTAL MATTERS.
a. (i) The Company and the Company's business are in material
compliance with all Environmental Laws (as defined below); (ii) the Company has
obtained all applicable Environmental Permits (as defined below); (iii) all
Environmental Permits are in all material respects in full force and effect;
(iv) the Company and the Company's business are in material compliance with all
Environmental Permits. As used herein, "Environmental Laws" shall mean all
applicable federal, state, and local laws, ordinances, rules, regulations,
judgments, orders, or decrees relating to the protection or regulation of human
health, safety, or the
-30-
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended ("CERCLA") (42
U.S.C. Sections 9601 ET SEQ.), the Resource Conservation and Recovery Act
("RCRA") (42 U.S.C. Sections 6901 ET SEQ.), the Cleans Water Act (33 U.S.C.
Sections 1251 ET SEQ.), the Atomic Energy Act (42 U.S.C. Section 2201 et
se.), and similar state and local laws. "Environmental Permits" shall mean
all applicable licenses and permits or other approvals required under
applicable Environmental Laws in connection with the ownership, operation,
and/or use of the Company's business.
(b) The Company has not violated, done or suffered any act
which could reasonably be expected to give rise to liability that would
materially affect the operations of the Company's business under any
Environmental Law.
(c) (i) There is no pending or, to the Company's knowledge,
threatened claim, litigation, or administrative proceeding, or known prior
claim, litigation or administrative proceeding arising under any
Environmental Law involving the Company's business or any property formerly
owned, leased, operated or occupied by the Company's business; (ii) there are
no ongoing negotiations with or agreements with any governmental authority
relating to any Remedial Action (as defined in CERCLA Section 101(24), 42
U.S.C. Section 9601(24)) or other environmentally-related claim involving the
Company's business; and (iii) neither the Company nor, to the Company's
knowledge, the Company Shareholders has received any request for information
from any governmental or private entity with respect to any liability or
alleged liability under any Environmental Law related to the Company's
business.
(d) To the knowledge of the Company, the Premises (i) have
never been used for the treatment or disposal of hazardous materials,
hazardous substances or hazardous waste (as those terms are defined under any
Environmental Law) nor as a landfill or
-31-
other waste disposal site; and (ii) is not now nor ever has been subject to
investigation by any governmental authority evaluating the need to undertake
any environmental remedial action.
(e) (i) There are not, and to the best knowledge of the
Company after due inquiry, never have been any underground storage tanks
present on the Premises; (ii) there is no asbestos present on the Premises;
and (iii) there are no PCBs present on the Premises.
(f) The Company has not disposed of any hazardous wastes (as
defined under any Environmental Law) at any location which is currently
identified or proposed for inclusion on (i) the National Priorities List, 40
CFR Part 300 Xxxxxxxx X0, (xx) the Comprehensive Environmental Response,
Compensation and Liability Inventory List, or (iii) any analogous state list.
(g) The Company has provided to the Parent copies of all
environmental reports or investigations regarding the Premises in the control
or possession of the Company.
3.25 FULL DISCLOSURE. All documents and other papers delivered by
or on behalf of the Company in connection with this Agreement and the
transactions contemplated hereby and listed on the FutureTrak Disclosure
Schedule are true, complete and correct in all material respects. The
information furnished by or on behalf of the Company to the Parent in
connection with this Agreement and the transactions contemplated hereby and
listed on the FutureTrak Disclosure Schedule does not contain any untrue
statement of a material fact and does not omit to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not false
or misleading in any material respect.
3.26 BROKERS. The Company has not employed or utilized the
services of any
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broker or finder in connection with this Agreement or the transactions
contemplated hereby. The Company shall indemnify and hold harmless the Parent
from any claims to the contrary.
3.27 BANKING RELATIONSHIPS AND INVESTMENTS. The FutureTrak
Disclosure Schedule sets forth an accurate and complete list of all banks and
financial institutions with which the Company has an account, deposit,
safe-deposit box, lock box (including for the collection of receivables) or
line of credit or other loan facility or relationship, including the names of
all persons authorized to draw on those accounts or deposits, or to borrow
under such lines of credit or other loan facilities, or to obtain access to
such boxes. The FutureTrak Disclosure Schedule sets forth an accurate and
complete list of all certificates of deposit, debt or equity securities and
other investments owned, beneficially or of record, by the Company (the
"Investments"). The Company has good and marketable title to all of the
Investments. The Investments reflected on the Company's financial statements
are (a) properly valued at the lower of cost or market, (b) readily
marketable, and (c) fully paid and not subject to assessment or other claims
upon the Company thereof.
3.28 ACCOUNTS RECEIVABLE. The FutureTrak Disclosure Schedule sets
forth an accurate and complete aging of all outstanding accounts and notes
receivable as of March 31, 1999 of the Company. All outstanding accounts and
notes receivable reflected on the Financials and other financial statements
delivered to Parent are due and valid claims against account debtors for
goods or services delivered or rendered, collectible in full within sixty
(60) days of delivery and subject to no defenses, offsets or counterclaims,
except as reserved against on the financial statements in accordance with
GAAP. All receivables arose in the ordinary course of business. No
receivables are subject to prior assignment, claim, lien or security
interest. The Company has not incurred any material liabilities to customers
for rebates, discounts, returns,
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refunds, promotional allowances or otherwise, except as provided for on the
financial statements. Where receivables arose out of secured transactions,
all financing statements and other instruments required to be filed or
recorded to perfect the title or security interest of the Company have been
properly filed and recorded.
3.29 TITLE TO ASSETS. The Company is the sole and exclusive legal
and equitable owner of all right, title and interest in and has good and
marketable title to all of the owned assets of the Company. None of the
assets which the Company purports to own are subject to (a) any title defect
or objection; (b) any contract of lease, license or sale; (c) any security
interest, mortgage, pledge, lien, charge or encumbrance of any kind or
character, direct or indirect, whatsoever, whether accrued, absolute,
contingent or otherwise, ("Liens") except minor Liens which do not materially
detract from the value or interfere with the present use thereof; (d) any
royalty or commission arrangement; or (e) any claim, covenant or restriction.
The FutureTrak Disclosure Schedule sets forth an accurate and complete list
of all depreciable assets. The assets are in good operating condition and
repair (reasonable wear and tear excepted), are suitable for the purposes for
which they are presently being used, except where the failure to be in such
repair or suitable would not individually or in the aggregate have a Material
Adverse Effect on the Company and are adequate to meet all present and
reasonably anticipated future requirements of the Company as presently
conducted. The assets will furnish Parent with all of the capacity and rights
to design, manufacture, produce, develop, use, sell, market and distribute
the products and to perform the same services in the same manner as presently
conducted by the Company and to meet all reasonably anticipated future
requirements of the Company.
3.30 CONTINUITY OF BUSINESS ENTERPRISE. The Company operates at least
one
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significant historic business line, or owns at least a significant portion of
its historic business assets, in each case within the meaning of Treas. Reg.
Section 1.368-1(d).
3.31 CONTINUITY OF INTEREST. To the knowledge of the Company, none
of the Company Shareholders have a present plan or intention to sell,
exchange, or otherwise dispose of a number of shares of Parent Common Stock
received in the Merger that would cause the Merger to fail to qualify as a
reorganization under Section 368(a)(1) of the Code.
3.32 NO SPIN-OFF BY COMPANY. There has not been any distribution,
sale or spin-off of material assets of either the Company or any of its
Affiliates within the two (2) years prior to the date of this Agreement.
4 REPRESENTATIONS AND WARRANTIES OF THE PARENT AND MERGER SUB. Except as
disclosed in writing by the Parent to the Company in the Celerity Disclosure
Schedule (as hereinafter defined), the Parent represents and warrants to the
Company, as of the Celerity Schedule Delivery Date and the Closing Date, as
follows:
4.1 DUE INCORPORATION. Each of the Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all corporate power and authority to own, lease
and operate its assets, properties and business and to carry on its business as
now conducted.
4.2 CORPORATE POWER OF THE PARENT. Each of the Parent and Merger Sub
has the full legal right, power and authority and has taken all necessary
corporate action required to enter into, execute and deliver this Agreement and
to perform fully its obligations hereunder. This Agreement has been duly
executed and delivered and constitutes a legal, valid and binding obligation of
each of the Parent and Merger Sub enforceable in accordance with its terms.
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4.3 PARENT SHARES. The Parent Shares, when duly and validly
authorized and issued to the Stockholders in accordance with the terms hereof,
shall be fully paid and nonassessable, with no liability attaching to the
ownership thereof, free from any liens, claims, charges, security interests and
other encumbrances of every kind and nature whatsoever.
4.4 SECURITIES LAWS FILINGS. The Parent has, and on the Closing
Date will have, made all filings required to be made by it under the
Securities Act of 1933, as amended (the "Securities Act") and the Exchange
Act, and such filings (including exhibits and financial statements; PROVIDED
that no representation or warranty is made herein as to any representation or
warranty contained in any agreement attached as an exhibit to any such
filing), at the time they were made, did 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 made therein, in light of the
circumstances under which they were made, not false or misleading in any
material respect. No event has occurred since the date of the last of such
filings as a result of which any such filings 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 made therein, in light of the
circumstances under which they were made, not false or misleading in any
material respect.
4.5 BROKERS. The Parent has not employed or utilized the services
of any broker or finder in connection with this Agreement or the transactions
contemplated hereby. The Parent shall indemnify and hold the Company harmless
from any claims to the contrary.
4.6 INTERIM OPERATIONS OF MERGER SUB. Merger Sub will be formed
solely for the purpose of engaging in the transactions contemplated hereby,
and immediately prior to the Effective Time will have engaged in no other
business activities, will have no subsidiaries, and will have conducted its
operations only as contemplated hereby.
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4.7 Absence of Certain Changes. Since March 31, 1999, the Parent has
not:
(a) experienced any change in its financial condition,
operating assets, liabilities, revenues, expenses or business prospects which
would have a Material Adverse Effect on the Parent or change any accounting
method, policy or practice;
(b) incurred any obligation or liability (contingent or
otherwise), except normal trade or business obligations incurred in the
ordinary course of business;
(c) become subject to an encumbrance or modified or extended
any existing encumbrance on the Parent's business or its assets, other than
in the ordinary course of business, which would have a Material Adverse
Effect on the Parent;
(d) sold, committed to or agreed to sell, lease, hypothecate
or otherwise dispose of the Parent's business or the material assets thereof,
other than in the ordinary course of business;
(e) waived or released any rights of substantial value
including cancellation of any substantial debt owed to, or accounts
receivable of, the Parent, other than in the ordinary course of business;
(f) entered into any agreements with any Affiliate,
including any officer, director, stockholder, partner, employee, agent or
consultant of such Affiliate, nor granted or agreed to grant any increase in
the compensation, rate or commission of any officer, director, employee or
agent, or caused any change in any existing, or the adoption of any new
bonus, profit sharing, pension, stock option, retirement or similar plan,
agreement or arrangement, or any accrual, arrangement for, or payment of, any
bonus, severance or termination pay to any present or future officer,
director, salaried employee, consultant, agent or Affiliate other than any
increases, changes, accruals, arrangements or payments as are scheduled
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as of the date hereof or as are contemplated by existing agreements, plans or
arrangements;
(g) permitted or suffered any amendment, cancellation or
termination of any contract, agreement, lease, license or commitment to which
the Parent is a party, the cancellation of which would have a Material
Adverse Effect on the Parent;
(h) permitted or suffered any amendment, cancellation or
termination of any regulatory license to which the Parent is a party;
(i) suffered any casualty loss or damage involving any
material properties or assets of the Parent's business, whether or not the
same shall have been covered by insurance;
(j) failed to pay when due any lease obligation or
obligation for borrowed money, or default in respect of any other material
contractual obligation to which the Parent is subject;
(k) borrowed or entered into any arrangement relating to the
borrowing of funds from any person or guaranteed the payment or performance
with respect to any such arrangement, other than in the ordinary course of
business;
(l) loaned or advanced any funds to its officers, directors,
stockholders, partners, employees, consultants, agents or Affiliates;
(m) incurred or committed to make any capital expenditure,
except in the ordinary course of business and as is currently contemplated in
the Parent's budgets;
(n) amended or restated any of the financial statements
filed by the Parent pursuant to the Exchange Act;
(o) transferred any amounts in payment of the intercompany
accounts of the Parent or its Affiliates other than such transfers as have
customarily been made in the
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ordinary course of business; or
(p) permitted or suffered any other event or condition which
would have a Material Adverse Effect on the Parent.
4.8 PARENT THIRD PARTY CONSENTS. All consents, permits and
approvals from parties to contracts or other agreements with the Parent, and
any other material consent, permit or approval, that may be required in
connection with the performance by the Parent of its obligations under this
Agreement, or to assure the consummation of the transactions contemplated by
this Agreement, or the continuance of such contracts or other agreements with
the Parent after the Closing, have been obtained.
4.9 LITIGATION; COMPLIANCE WITH LAWS. There are no claims,
actions, suits, proceedings or governmental investigations pending or, to the
knowledge of the Parent, threatened, before any national, state or local
court or governmental or regulatory authority, domestic or foreign, or before
any arbitrator of any nature, or any order, injunction or decree outstanding
against or relating to the Parent or Merger Sub that, if adversely
determined, would have a Material Adverse Effect on the Parent or on Merger
Sub. Neither the Parent nor Merger Sub is in violation of any applicable law,
rule or regulation, ordinance or any other requirement of any governmental
body or court, which violation would have a Material Adverse Effect on the
Parent or on Merger Sub, and no notice has been received by the Parent or
Merger Sub alleging any such violation.
4.10 ADVERSE CHANGE. Since March 31, 1999, except as disclosed in
any press release or filing with the SEC, the Parent is not aware of any
material adverse change in the business or condition of the Parent, financial
or otherwise.
5. COVENANTS AND FURTHER AGREEMENTS OF THE PARTIES.
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The parties covenant and agree as follows:
5.1 PROHIBITED ACTIONS PENDING CLOSING. Except as otherwise
provided for in this Agreement or the disclosure schedules of the respective
parties, or with the other party's approval in writing, from the date hereof
until the Closing Date, neither the Company nor the Parent shall, and the
Parent shall cause Merger Sub not to:
(a) amend or otherwise change its Articles of Incorporation,
By-laws or other governing documents;
(b) issue or sell or authorize for issuance or sale, or
grant any options or make other agreements with respect to, any shares of
their capital stock or any other of their securities;
(c) authorize or incur any additional debt for money borrowed
other than in the ordinary course of business, or incur any additional long-term
debt maturing in whole or in part, more than one year after the date of creation
thereof;
(d) mortgage, pledge or subject to lien or other encumbrance
any of its material properties or agree to do so;
(e) enter into or agree to enter into any material
agreement, contract or commitment other than in the ordinary course of
business;
(f) declare, set aside, make or pay any dividend or other
distribution to its shareholders or its stockholders (as the case may be), or
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock, or authorize or effect any split-up or any recapitalization or
make any changes in its authorized or issued capital stock;
(g) increase or agree to increase, the compensation of any
of its officers, directors or employees by means of salary increase, bonus or
otherwise other than in
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the ordinary course of business consistent with past practice;
(h) sell or otherwise dispose of, or agree to sell or
dispose of, any of the Company's material assets or properties;
(i) amend or terminate any material lease, contract,
undertaking or other commitment to which it is a party, or to take action or
fail to take any action, constituting any event of default thereunder;
(j) assume, guarantee or otherwise become responsible for
the obligations of any other party or agree to so do;
(k) invest any assets of the Company, except the
reinvestment of cash or cash equivalents in U.S. Treasury Bills and/or
Certificates of Deposit;
(l) pay any finders or investment bankers' fees in connection
with the transactions contemplated by this Agreement; or
m. take any action prior to the Closing Date which would
breach any of the representations and warranties contained in this Agreement.
5.2 EXCEPTIONS TO PROHIBITIONS AFFECTING THE PARTIES.
Notwithstanding Section 5.1, at or prior to the Closing, the Parent or the
Company may undertake one or more of the following actions without the other
party's approval:
(a) the Parent may undertake stock splits in accordance with
Section 5.15;
(b) the Parent may take the actions described on Schedule
5.2(b) hereto; and
(c) the Company may take the actions described on Schedule
5.2(c) hereto.
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5.3 LITIGATION. Each of the parties shall promptly notify the
others of any lawsuits, claims, proceedings or investigations of which it has
knowledge which after the date hereof are threatened or commenced against it
or against any of its officer, director, employee, consultant, agent,
stockholder or shareholder (as the case may be) with respect to its affairs.
5.4 REASONABLE EFFORTS. The Company and the Parent shall each use
all reasonable efforts to: (a) cause the fulfillment at the earliest
practicable date of the conditions set forth in this Agreement; and (b) cause
the representations and warranties contained in this Agreement to remain true
and correct to the extent necessary to comply with Sections 6.1 and 7.1
hereof, as the case may be.
5.5 EXPENSES. Whether or not the transactions contemplated hereby
are consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
5.6 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the
Closing Date, the Parent and the Company shall each be entitled, through its
employees and representatives and at such party's sole cost, to make such
investigation of the assets, properties, business and operations of the other
party, and such examination of the books, records and financial condition of
the other ("Due Diligence") as the investigating party may reasonably
request. Any such Due Diligence shall be conducted at reasonable times and
under reasonable circumstances and the party the subject of the Due Diligence
shall cooperate fully therein.
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5.7 CONSENTS. The Company shall use reasonable efforts to obtain
at the earliest practicable date, all consents and approvals referred to in
the FutureTrak Disclosure Schedule without being required to take any actions
that the Company reasonably believes could have a Material Adverse Effect on
the Company or which the Parent reasonably believes could have a Material
Adverse Effect on the Parent. The Parent shall use reasonable efforts to
cooperate with the Company to the extent required in obtaining such consents
and approvals. Nothing in this Agreement shall be construed as an attempt to
assign any agreement or other instrument that is by its terms nonassignable
without consent. If such consents are not obtained, the Company shall, to the
extent reasonably possible, keep the agreement in effect and shall give the
Parent the benefit of the agreement to the same extent as if it had not been
excluded, and the Parent shall perform the obligations under the agreement
relating to the benefit obtained by the Parent.
5.8 EMPLOYMENT AGREEMENTS. The Parent shall enter into an
employment agreement, effective the Closing Date, with each of Xxxxxxx X. Van
Meter, Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxxxx Xxxxxxx,
substantially in the form of the agreements set forth on Schedule 5.8 which,
in the case of each such officer other than Mr. Van Meter, shall be in the
form of his current agreement with the Company.
5.9 CONFIDENTIALITY. Each of the Company and the Parent shall
insure that all confidential information which it and any of its officers,
directors, employees, counsel, agents, investment bankers, or accountants may
now possess or may hereafter create or obtain relating to the financial
condition, results of operations, business, properties, assets, liabilities,
or future prospects of the Parent or the Company, or any of their respective
Affiliates or customers or suppliers shall not be published, disclosed, or
made accessible by it or any of its Affiliates to any
-43-
other person or entity at any time or used by it or any of its Affiliates
except pending the Closing in the business and for the benefit of the Parent
or the Company (as the case may be), in each case without the prior written
consent of the other party; PROVIDED that the restrictions of this sentence
shall not apply (a) with respect to the obligations of the Parent or the
Company after the Closing Date, (b) with respect to the obligations of all
such persons and entities after this Agreement is rightfully terminated, but
only to the extent such confidential information relates to the financial
condition, results of operations, business, properties, assets, liabilities,
or future prospects of the Parent or the Company or of any Affiliate of
either or (insofar as such confidential information was obtained directly by
the Parent or the Company or any Affiliate of either from any customer or
supplier of any of them) of any such customer or supplier, (c) as may
otherwise be required by law, (d) as may be necessary or appropriate in
connection with the enforcement of this Agreement, or (e) to the extent such
information shall have otherwise become publicly available.
5.10 PUBLIC STATEMENTS. Before the Parent or the Company shall
release any information concerning this Agreement or the transactions
contemplated by this Agreement which is intended for or may result in public
dissemination thereof, it shall furnish drafts of all documents or proposed
oral statements to the other party for comments, and shall not release any
such information without the prior written consent of the other party.
Nothing contained herein shall prevent the Parent or the Company from
releasing any information to any governmental authority if required to do so
by law.
5.11 CONSENTS WITHOUT ANY CONDITION. Neither the Parent nor the
Company shall make any agreement or reach any understanding not approved in
writing by the other parties as a condition for obtaining any consent,
authorization, approval, order, license,
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certificate, or permit required for the consummation of the transactions
contemplated by this Agreement.
5.12 FURTHER ASSURANCES. At any time and from time to time after
the Closing Date, each party hereto shall, without further consideration,
execute and deliver to the others such other instruments of transfer and
assumption, and shall take such other action as any of the others may
reasonably request to carry out the transactions contemplated by this
Agreement.
5.13 COOPERATION TO OBTAIN FINANCING. Each of the Company and the
Parent shall use commercially reasonable efforts to obtain at the earliest
practicable date, on as favorable terms as possible, "bridge" financing prior
to the Effective Time, and post-Effective Time financing. The costs and
proceeds of any financing received prior to the Effective Time shall be
shared equally between the Parent and the Company.
5.14 COMFORT LETTERS. Each of the Company and the Parent shall
deliver to the other a comfort letter, dated a date not more than two
business days before the date upon which the S-4 becomes effective, from an
independent public accountant and in form and substance reasonably
satisfactory to the party receiving the comfort letter and its corporate
counsel, covering such matters as are normally covered in a comfort letter
delivered in connection with an S-4 Registration Statement covering
transactions of the type called for by this Agreement.
5.15 PARENT STOCK SPLITS. Notwithstanding any other provision in
this Agreement, prior to the Closing, the Parent may undertake a reverse
stock split in order to comply with any applicable NASDAQ maintenance
requirements.
5.16 PREPARATION AND DELIVERY OF DISCLOSURE SCHEDULES. As soon as
is practicable but, in any event, within forty-five (45) days following the
date hereof:
(a) the Company will prepare and deliver to the Parent
Schedules
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1.7(d), 5.2(c), 5.8 (to the extent that such schedule involves agreements
relating to officers other than Mr. Van Meter) and 6.4 hereto, together with
other schedules of the type customarily attached to agreements of this type,
which shall set forth the information required to be disclosed pursuant to
Article III and any exceptions to the representations and warranties set
forth in such Article (the "FutureTrak Disclosure Schedule"); the date on
which the FutureTrak Disclosure Schedule and all other schedules to be
delivered by FutureTrak hereunder are actually received by the Parent is
referred to herein as the "FutureTrak Schedule Delivery Date"; and
(b) the Parent will prepare and deliver to the Company
Schedules 1.3-A, 1.3-B, 2.3, 2.4, 2.5, 2.6, 5.2(b), 5.8 (to the extent that
such schedule involves an agreement relating to Mr. Van Meter) and 7.3
hereto, together with other schedules of the type customarily attached to
agreements of this type, which shall set forth the information required to be
disclosed pursuant to Article IV and any exceptions to the representations
and warranties set forth in such Article (the "Celerity Disclosure
Schedule"); the date on which the Celerity Disclosure Schedule and all other
schedules to be delivered by Celerity hereunder are actually received by the
Company is referred to herein as the "Celerity Schedule Delivery Date."
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARENT AND MERGER
SUB TO EFFECT THE MERGER. The obligations of the Parent and Merger Sub to
effect the Merger shall be subject to the fulfillment, on or prior to the
Closing Date, of the following conditions, any one or more of which may be
waived by them:
6.1 COMPANY REPRESENTATIONS AND COVENANTS. The representations
and warranties of the Company contained in Article III of this Agreement
shall be true and correct on and as of the Closing Date with the same force
and effect as though made on and as of the
-46-
Closing Date. The Company shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
6.2 COMPANY SHAREHOLDER REPRESENTATIONS AND COVENANTS. The
representations and warranties of certain of the Company Shareholders
contained in the Shareholders Agreement shall be true and correct on and as
of the Closing Date with the same force and effect as though made on and as
of the Closing Date. Such Company Shareholders shall have performed and
complied in all material respects with all covenants and agreements required
by the Shareholders Agreement to be performed or complied with by them on or
prior to the Closing Date.
6.3 OFFICER'S CERTIFICATES. The Parent shall have been furnished
with an officer's certificate, dated the Closing Date, executed on behalf of
the Company, certifying to the fulfillment of the conditions specified in
Section 6.1 hereof by the Company.
6.4 OPINION OF COUNSEL TO THE COMPANY. The Parent shall have been
furnished with an opinion of Atlas Xxxxxxxx Trop & Borkson, P.A., counsel to
the Company, in substantially the form of Schedule 6.4 hereto.
6.5 LITIGATION. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or instituted
or, to the Company's knowledge, threatened by any governmental or regulatory
body, seeking to restrain or prevent the consummation of the transactions
contemplated hereby or seeking damages in connection with such transactions,
or which has or would have, if successful, singly or in the aggregate, a
Material Adverse Effect on the Company.
6.6 THIRD PARTY CONSENTS. Except as set forth on the FutureTrak
Disclosure
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Schedule, all consents, permits and approvals from parties to contracts or
other agreements with the Company, and any other material consent, permit or
approval, that may be required in connection with the performance by the
Company of its obligations under this Agreement, or to assure the
consummation of the transactions contemplated by this Agreement, or the
continuance of such contracts or other agreements with the Company after the
Closing, including those set forth on the FutureTrak Disclosure Schedule,
shall have been obtained.
6.7 STOCKHOLDER AND BOARD APPROVALS. The form, terms and
conditions of this Agreement shall have been approved, and the consummation
of the transactions contemplated hereby shall have been authorized by the
shareholders or stockholders (as the case may be) and the Boards of Directors
of each of the Company, the Parent and Merger Sub and evidence of such
approvals shall have been delivered to the Parent.
6.8 SATISFACTORY COMPLETION OF DUE DILIGENCE AND DISCLOSURE. All
actions, proceedings, instruments and documents required to carry out this
Agreement or incidental thereto, and all other related legal matters, shall
be subject to the reasonable approval of Squadron, Ellenoff, Plesent &
Xxxxxxxxx, LLP, counsel to the Parent and Merger Sub, and the Company shall
have furnished such counsel all documents as such counsel may have reasonably
requested for the purpose of enabling them to pass upon such matters.
6.9 NO MATERIAL ADVERSE CHANGE. The properties or business of the
Company shall not have been and shall not be threatened to be adversely
affected in any material respect as a result of fire, explosion, earthquake,
disaster, accident, flood, drought, embargo, riot, civil disturbance,
uprising, activity of armed forces or act of God or public enemy. There shall
not be pending or threatened any strike or any action by any governmental
authority which would have a Material Adverse Effect on the Company. After
the date hereof,
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no event shall have occurred which, individually or when considered together
with all other matters, has had or could reasonably be expected to have a
Material Adverse Effect on the Company.
6.10 TAX MATTERS.
(a) No new elections with respect to Taxes, or changes in
current elections with respect to Taxes, affecting the Company shall have been
made after the date of this Agreement without the prior written consent of the
Parent.
(b) The Company shall have provided the Parent with (i) all
forms, certificates and/or other instruments required to pay the transfer and
recording taxes and charges arising from the transactions contemplated by
this Agreement, together with evidence satisfactory to the Parent that such
transfer taxes and charges have been paid, (ii) an affidavit, stating, under
penalty of perjury, the Company's United States taxpayer identification
number and that the transferor is not a foreign person, pursuant to Section
1445(b)(2) of the Code (or any similar provision of state or other tax law),
and (iii) a clearance certificate or similar document(s) which may be
required by any state taxing authority to relieve the Parent of any
obligation to withhold any portion of the payments to the Company
Shareholders pursuant to this Agreement.
6.11 SECURITIES LAW REQUIREMENTS. All permits, licenses, consents
and approvals necessary under any laws relating to the sale of securities
shall have been issued or given, and all restrictions or registration
statements filed under any laws relating to the sale of securities or the
issuance of the Parent Shares issuable pursuant to this Agreement, including
the S-4, shall have become effective, and no such permit, license, consent,
approval, registration or registration statement shall have been revoked,
canceled, terminated, suspended or made the
-49-
subject of any stop order or proceeding therefor.
6.12 COMFORT LETTER. The Parent shall have received the comfort
letter required under Section 5.14 hereof and, in addition, an updating
comfort letter, in form and substance reasonably satisfactory to the Parent
and its counsel, dated the date of Closing confirming (except to the extent
of any changes described in such updating letter) the information previously
contained in the Section 5.14 comfort letter on the basis of procedures set
forth in such updating letter carried out by them to a specified date not
more than five business days prior to the date of the Closing.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY TO EFFECT THE
MERGER.
The obligations of the Company to effect the Merger shall
be subject to the fulfillment, on or prior to the Closing Date of the
following conditions, any one or more of which may be waived by it:
7.1 PARENT AND MERGER SUB REPRESENTATIONS AND COVENANTS. The
representations and warranties of the Parent and Merger Sub contained in
Article IV of this Agreement shall be true and correct on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date. The Parent and Merger Sub shall have performed and complied in
all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by them, respectively, on or prior
to the Closing Date.
7.2 OFFICER'S CERTIFICATE. The Company shall have been furnished
with officer certificates, dated the Closing Date, executed by an officer of
each of the Parent and Merger Sub, certifying to the fulfillment of the
conditions specified in Section 7.1 hereof.
7.3 OPINION OF COUNSEL TO THE PARENT. The Company shall have been
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furnished with an opinion of Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP,
counsel to the Parent and Merger Sub, in substantially the form of Schedule 7.3
hereto.
7.4 STOCKHOLDER AND BOARD APPROVALS. The form, terms and conditions
of this Agreement shall have been approved, and the consummation of the
transactions contemplated hereby shall have been authorized by the stockholders
and the Boards of Directors of each of the Parent and Merger Sub and evidence of
such approvals shall have been delivered to the Company.
7.5 LITIGATION. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or instituted
or threatened by any governmental or regulatory body, to restrain, modify or
prevent the carrying out of the transactions contemplated hereby, or to seek
damages or a discovery order in connection with such transaction.
7.6 NO MATERIAL ADVERSE CHANGE. The properties or business of the
Parent shall not have been and shall not be threatened to be adversely
affected in any material respect as a result of fire, explosion, earthquake,
disaster, accident, flood, drought, embargo, riot, civil disturbance,
uprising, activity of armed forces or act of God or public enemy. There shall
not be pending or threatened any strike or any action by any governmental
authority which would have a Material Adverse Effect on the Parent. After the
date hereof, no event shall have occurred which, individually or when
considered together with all other matters, has had or could reasonably be
expected to have a Material Adverse Effect on the Parent.
7.7 LISTING. The Nasdaq SmallCap Market, if the Parent is then
listed on the Nasdaq Smallcap Market, shall have listed or approved the
listing on official notice of issuance, of Parent Shares to be delivered to
the Company Shareholders pursuant to this Agreement.
7.8 SECURITIES LAW REQUIREMENTS. All permits, licenses, consents
and
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approvals necessary under any laws relating to the sale of securities shall
have been issued or given, and all restrictions or registration statements
filed under any laws relating to the sale of securities or the issuance of
the Parent Shares pursuant to this Agreement, including the S-4, shall have
become effective, and no such permit, license, consent, approval,
registration or registration statement shall have been revoked, canceled,
terminated, suspended or made the subject of any stop order or proceeding
therefor.
7.9 COMFORT LETTER. The Company shall have received the comfort
letter required under Section 5.14 hereof and, in addition, an updating
comfort letter, in form and substance reasonably satisfactory to the Company
and its counsel, dated the date of Closing confirming (except to the extent
of any changes described in such updating letter) the information previously
contained in the Section 5.14 comfort letter on the basis of procedures set
forth in such updating letter carried out by them to a specified date not
more than five business days prior to the date of the Closing.
8. DOCUMENTS TO BE DELIVERED AT THE CLOSING.
8.1 DOCUMENTS TO BE DELIVERED BY THE COMPANY TO THE PARENT. At
the Closing, the Company shall deliver to the Parent the following:
(a) a copy of resolutions adopted by the Board of Directors
and the Stockholders of the Company authorizing the execution, delivery and
performance of this Agreement by the Company, and a certificate of the
secretary or assistant secretary of the Company, dated the Closing Date,
stating that such resolutions were duly adopted and are in full force and
effect at such date and setting forth the incumbency of each person executing
this Agreement or any document required by this Section 8.1 on behalf of the
Company;
(b) the opinion referred to in Section 6.4 hereof;
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(c) copies of all consents, approvals and waivers required
as a condition precedent to the Closing as set forth on the FutureTrak
Disclosure Schedule;
(d) all forms, certificates and affidavits referred to in
Section 6.10(b) hereof; and
(e) the updating letter of comfort referred to in Section
6.12 hereof.
8.2 DOCUMENTS TO BE DELIVERED BY THE PARENT AND MERGER SUB TO THE
COMPANY. At the Closing, the Parent and Merger Sub shall deliver to the
Company the following:
(a) a copy of resolutions adopted by the Boards of Directors
of each of the Parent and Merger Sub, by the stockholders of the Parent and
by the sole stockholder of Merger Sub authorizing the execution, delivery and
performance of this Agreement by each of the Parent and Merger Sub, and a
certificate of the secretary or assistant secretary of each of the Parent and
Merger Sub, dated the Closing Date, stating that such resolutions were duly
adopted and are in full force and effect at such date, and setting forth the
incumbency of each person executing this Agreement, or any document required
by this Section 8.2 on behalf of each of the Parent and Merger Sub;
(b) the certificates referred to in Section 7.2 hereof;
(c) the opinion referred to in Section 7.3 hereof;
(d) share certificates representing the Parent Shares;
(e) filings with and approvals of the SEC, the National
Association of Securities Dealers, Inc. and appropriate "Blue Sky" securities
authorities with respect to the Parent Shares; and
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(f) the updating letter of comfort referred to in Section 7.9
hereof.
9. TERMINATION.
9.1 TERMINATION. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time,
whether before or after approval of the matters presented in
connection with the Merger by the shareholders of the Company
or the stockholders of the Parent:
(a) by mutual written consent of the Company and the Parent, by
mutual action of their respective Boards of Directors;
(b) by any of the Company or the Parent if any permanent
injunction or other order of a court or other competent authority preventing
the consummation of the Merger shall have become final and non-appealable;
PROVIDED that the party seeking to terminate this Agreement shall have used
its reasonable best efforts to remove or lift such injunction or other order;
(c) by any of the Company or the Parent if the Merger shall
not have been consummated by December 31, 1999; PROVIDED that the right to
terminate this Agreement under this Section 9.1(c) shall not be available to
any party whose breach of any representation or warranty or failure to
fulfill any covenant or agreement under this Agreement has been the cause of
or resulted in the failure of the Merger to occur on or before such date;
(d) by the Parent, if the approval of the Parent Stockholders
to the Merger shall have not have been obtained by reason of the failure to
obtain the required vote upon a vote held at the stockholders' meeting called
to obtain such approval, or at any adjournment thereof;
(e) by the Parent, so long as the Parent is not then in
material breach
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of its obligations hereunder, if there has been a breach of any
representation or warranty of Company (when made on or at the time of
termination as if made on such date of termination, except to the extent it
relates to a particular date) or a material breach of any other covenant or
agreement on the part of the Company set forth in this Agreement; PROVIDED
that any such breach has not been cured within ten (10) calendar days
following receipt by the Company of notice of such breach and is existing at
the time of the termination of this Agreement, unless such breach could not,
individually or in the aggregate with other breaches, be reasonably expected
to have a Material Adverse Effect on the Company;
(f) by the Company, so long as the Company is not then in
material breach of its obligations hereunder, if there has been a breach of any
representation or warranty (when made on or at the time of termination as if
made on such date of termination, except to the extent it relates to a
particular date) or a material breach of any covenant or agreement on the part
of Parent or Merger Sub set forth in this Agreement; PROVIDED that any such
breach has not been cured within ten (10) calendar days following receipt by
Parent or Merger Sub of notice of such breach and is existing at the time of the
termination of this Agreement, unless such breach could not, individually or in
the aggregate with other breaches, be reasonably expected to have a Material
Adverse Effect on the Parent or Merger Sub.
(g) by the Company or the Parent if any person has made a
bona fide proposal relating to an Acquisition Proposal, or has commenced a
tender offer or exchange offer for the Company Common Stock or the Parent
Common Stock, and the Board of Directors of the Company or the Parent (as the
case may be) determines in good faith after consultation with its financial
and legal advisors, that such transaction, if consummated would be a Superior
Proposal. For the purposes of this Agreement, an "Acquisition Proposal" shall
mean any
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inquiry, proposal or offer with regard to any of the following transactions
involving the Company or the Parent, as the case may be: (i) any merger,
consolidation, share exchange, recapitalization, business combination, or
other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of a material portion of the assets of the
Company or the Parent, in a single transaction or series of transactions;
(iii) any tender offer or exchange offer for all or any portion of the
outstanding shares of Company Common Stock or the Parent Common Stock or the
filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the
foregoing; and a "Superior Proposal" shall mean any bona fide written offer
made by a third party to acquire, directly or indirectly, for cash, all of
the Company Common Stock or the Parent Common Stock then outstanding or all
or substantially all the assets of the Company or the Parent and otherwise on
terms wherein the Board of Directors of the Company or the Parent determines
(after consultation with a financial advisor reasonably satisfactory to the
other party and with its outside legal counsel) to be economically superior
to the transactions contemplated by this Agreement;
(h) by the Parent on or prior to the tenth business day
following the FutureTrak Schedule Delivery Date, if Due Diligence conducted
by the Parent or disclosures included in the FutureTrak Disclosure Schedule
or in any other schedule to be delivered by the Company hereunder are not
satisfactory to the Parent; and
(i) by the Company on or prior to the tenth business day
following the Celerity Schedule Delivery Date, if Due Diligence conducted by
the Company or disclosures included in the Celerity Disclosure Schedule or in
any other schedule to be delivered by the Parent hereunder are not
satisfactory to the Company.
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9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by the Company or Parent as provided in Section 9.1, this Agreement
shall forthwith become void and there shall be no liability or obligation on
the part of Parent, Merger Sub or the Company or their respective affiliates,
officers, directors or shareholders except (a) with respect to this Section
9.2, and (b) that no such termination shall relieve any party from liability
for a material breach hereof.
10. MISCELLANEOUS.
10.1 NOTICES. Any notice or other communication required or which
may be given hereunder shall be in writing and shall be delivered personally,
by facsimile transmission, telegraphed or telexed, or sent by certified,
registered, or express mail, postage prepaid, and shall be deemed given when
so delivered personally, successfully faxed, telegraphed or telexed, or if
mailed, two (2) days after the date of mailing, as follows:
(i) if to the Parent or Merger Sub, to:
Celerity Systems, Inc.
0000 Xxxxxxxxxxx Xxxx.
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Van Meter
with a copy to:
Squadron, Ellenoff, Plesent
& Xxxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
(ii) if to the Company, to:
FutureTrak International, Inc.
0000 Xxxx Xxxxxxx Xxxx., Xxxxx
-00-
Xxxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxx Xxxxxx
with a copy to:
Atlas Xxxxxxxx Trop
& Borkson P.A.
New River Center
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
10.2 ENTIRE AGREEMENT. This Agreement (including the Schedules
hereto) contains the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements, written or oral,
with respect thereto.
10.3 WAIVER; AMENDMENTS; SEPARABILITY. This Agreement may be
amended, modified, superseded, canceled, renewed or extended, and the terms
and conditions hereof may be waived, only by a written instrument signed by
the parties or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part
of any party of any right, power or privilege hereunder, nor any single or
partial exercise of any right, power or privilege hereunder, preclude any
other or further exercise thereof or the exercise of any other right, power
or privilege hereunder. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies which any party
may otherwise have at law or in equity. If any provision of this Agreement is
held to be invalid or unenforceable, the
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balance of this Agreement shall remain in effect.
10.4 SURVIVAL. None of the representations and warranties of the
Company, the Parent or Merger Sub contained in this Agreement shall survive the
Closing. Except as specifically set forth in this Agreement and the agreements
and documents specifically referred to herein, there are no representations or
warranties, express or implied, made by any party in connection with the
transactions contemplated by this Agreement.
10.5 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State.
10.6 NO ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
10.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
10.8 SCHEDULES. The Schedules to this Agreement, including but not
limited to the FutureTrak Disclosure Schedule and the Celerity Disclosure
Schedule, are a part of this Agreement as if set forth in full herein.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CELERITY SYSTEMS, INC.
By: /s/ Xxxxxxx X. Van Meter
-------------------------
Name: Xxxxxxx X. Van Meter
Title: President/CEO
FUTURETRAK MERGER CORP.
By: /s/ Xxxxxxx X. Van Meter
-------------------------
Name: Xxxxxxx X. Van Meter
Title:
FUTURETRAK INTERNATIONAL, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------
Name: Xxxxx Xxxxxx
Title: CEO
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