EXHIBIT 2.1
MERGER AGREEMENT AND PLAN OF REORGANIZATION
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This MERGER AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as
of June 22, 1999, by and among Conversational Systems, Inc., a California
corporation (the "Company"), Xxxx Xxxxx ("Seller"), Dead On, Inc., a Nevada
corporation ("Buyer"), Xxxx Xxxx ("Xxxx") and Xxxxxxx Xxxxx ("Xxxxx"; Xxxx and
Xxxxx are hereinafter collectively referred to as, "Buyer Principals").
RECITALS
A. WHEREAS, the Company has developed certain technology designed to
provide voice activated instructions over the internet; and
B. WHEREAS, the Company and Seller are desirous to merge the Company (the
"Merger") with and into a public company by exchanging the shares of the Company
for shares of an existing publicly traded entity in a transaction intended to
qualify as a tax-free reorganization pursuant to section 368(a)(1)(A) of the
Internal Revenue Code of 1996, as amended; and
C. WHEREAS, Buyer is a publicly traded company listed on the NASDAQ OTC
Bulletin Board that will have 2,720,000 shares of common stock issued and
outstanding immediately prior to the Effective Time and Buyer desires to acquire
the shares of the Company for an aggregate of 7,000,000 shares of Buyer's common
stock, $0.001 par value.
D. The parties hereto desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and also to prescribed
various conditions to the Merger.
Accordingly, and in consideration of the representations, warranties,
agreements and conditions herein contained, the parties hereto hereby agree as
follows:
AGREEMENT
The parties, intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article 1:
"Affiliate"--any Person that controls, is controlled by or is under common
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control with another Person. For purposes of the foregoing, the term "control"
means the power, direct or
indirect, to direct or cause the direction of the management and policies of a
Person through voting securities, contract or otherwise.
"Agreement"--shall have the meaning set forth in the first paragraph
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hereof.
"Asset Agreement"--as defined in Section 7.2(b).
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"Balance Sheet"--as defined in Section 4.4.
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"Balance Sheet Date"--the date of the Balance Sheet.
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"Buyer"--as defined in the first paragraph of this Agreement.
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"Buyer's Advisors"--as defined in Section 6.1.
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"Buyer Balance Sheet"--as defined in Section 5.4.
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"Buyer Indemnitee"--as defined in Section 11.2(b).
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"Buyer Common Stock"-as defined in Section 2.3(a).
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"Buyer's Common Shares"--as defined in Section 2.3(a).
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"Closing"--as defined in Section 2.7.
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"Closing Date"--as defined in Section 2.7.
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"Company"--as defined in the first paragraph of this Agreement.
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"Company Common Shares"--as defined in Section 2.3(a).
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"Company Disclosure Letter"--the disclosure letter delivered by the Company
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concurrently with the execution and delivery of this Agreement.
"Company's Advisors"--as defined in Section 7.1.
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"Consent"--any approval, consent, ratification, waiver, or other
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authorization (including any Governmental Authorization).
"Contract"--any written agreement, contract, lease, license, obligation,
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promise, or undertaking that is legally binding.
"Damages"--as defined in Section 11.2(d).
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"Dissenting Shares"--as defined in Section 2.5.
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"Effective Time"--as defined in Section 2.2.
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"Encumbrance"--any charge, claim, condition, equitable interest, lien,
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option, pledge, security interest, right of first refusal or first offer, or
restriction of any kind, including any restriction on use, voting, transfer,
receipt of income, or exercise of any other attribute of ownership.
"End Date"--as defined in Section 11.4(a).
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"Escrow Agent"--as defined in Section 11.7.
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"Escrow Agreement"-as defined in Section 10.3(g).
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"Escrow Amount"--as defined in Section 10.3(g).
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"Exchange Act"--shall mean the Securities Exchange Act of 1934, as amended,
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or any successor law, and regulations and rules issued pursuant thereto or any
successor law
"Exchange Agent"--as defined in Section 2.6(a).
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"GAAP"--generally accepted United States accounting principles.
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"Governmental Authorization"--any approval, consent, license, registration,
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permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body"--any court, tribunal or federal, state or local
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(domestic or foreign) government, governmental or quasi governmental agency,
authority or instrumentality.
"Indemnification"--as defined in Section 11.3(a).
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"Indemnification Obligations"--as defined in Section 11.2(c).
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"Indemnified Party"--as defined in Section 11.2(c).
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"Indemnifying Party"--as defined in Section 11.2(c).
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"IRC"--the Internal Revenue Code of 1986 or any successor law, and
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regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS"--the United States Internal Revenue Service or any successor agency,
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and, to the extent relevant, the United States Department of the Treasury.
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"Legal Requirement"--any federal, state, local, municipal, foreign,
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international, multinational, or other administrative order, constitution, law,
code, ordinance, principle of common law, regulation, statute, or treaty
existing and in effect as of the date of this Agreement.
"Maximum Indemnity Liability"--as defined in Section 11.5.
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"Merger"--as defined in the recitals hereof.
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"Merger Subsidiary's Advisors"--as defined in Section 6.1.
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"Minimum Loss"--as defined in Section 11.4(b).
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"Nevada Law"--as defined in Section 2.1.
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"Order"--any award, decision, decree, injunction, judgment, order, ruling,
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subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business"--an action taken by a Person will be deemed
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to have been taken in the "Ordinary Course of Business" if such action is
consistent with the past practices of such Person and is taken in the ordinary
course of the normal day-to-day operations of such Person.
"Organizational Documents"--(a) the articles or certificate of
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incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"Permitted Encumbrances"--shall mean Encumbrances (a) for Taxes not yet due
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and payable or being contested in good faith by appropriate proceedings; (b)
with respect to real property, easements, covenants, conditions and restrictions
of record which in the aggregate do not interfere or detract, in any material
respect, from the use or value of such real property; (c) mechanics',
materialmans', suppliers' or vendors' liens or similar Encumbrances arising by
operation of law and in the Ordinary Course of Business securing amounts which
are not delinquent; (d) arising in connection with sales of foreign receivables;
(e) on goods in transit incurred pursuant to documentary letters of credit; (f)
purchase money liens and encumbrances securing rental payments under capital
lease arrangements; and (g) arising under worker's compensation, unemployment
insurance, social security, retirement and similar legislation.
"Person"--any individual, corporation (including any non-profit
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corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
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"Proceeding"--any action, arbitration, audit, hearing, investigation,
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litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Registration Statement"--as defined in Section 8.5.
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"Representative"--with respect to a particular Person, any director,
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officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SEC"--the United States Securities and Exchange Commission.
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"Securities Act"--the Securities Act of 1933, as amended, or any successor
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law, and regulations and rules issued pursuant thereto or any successor law.
"Seller Indemnitees"--as defined in Section 11.2(a).
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"Settlement Cost"--as defined in Section 11.3(c).
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"Shareholders Agreement"--as defined in Section 10.3(e).
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"Supplemental Buyer Disclosure Letter"--as defined in Section 7.7.
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"Supplemental Company Disclosure Letter"--as defined in Section 6.7.
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"Surviving Corporation"--as defined in Section 2.1.
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"Tax"--any income, capital gains, federal, state, local, foreign, other net
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income, gross income, ad valorem, lease, service, service use, payroll,
severance, premium, windfall profits, customs, duties or other taxes, fees,
charges, interest, additions to tax, license, gross receipts, net worth, capital
stock, profits, stamp, occupation, transfer, value added, excise, franchise,
sales, use, property, employment, unemployment, disability, withholding, social
security and workers' compensation taxes and estimated income and franchise tax
payments, and interest, penalties, fines, costs and assessments.
"Tax Return"--any return (including any information return), report,
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statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment
of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any Tax.
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ARTICLE 2
THE MERGER AND RELATED MATTERS
2.1 The Merger. Subject to the terms and conditions of this Agreement,
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at the Effective Time the Company shall be merged with and into the Buyer in
accordance with the General Corporation Law of the State of Nevada (the "Nevada
Law"), whereupon the separate existence of the Company shall cease and the Buyer
shall continue as the surviving corporation (the "Surviving Corporation").
2.2 Effective Time of the Merger. Concurrent with the satisfaction or
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waiver of all of the conditions set forth in Article 10, the Company and Buyer
will file, or cause to be filed, articles of merger and make or cause to be made
all other filings or recordings required by the Nevada Law in connection with
the Merger with the Secretary of State of Nevada which articles of merger and
other filings and recordings shall be in the form required by and executed in
accordance with the applicable provisions of the Nevada Law. The Merger shall
become effective at the time the articles of merger for such Merger is duly
filed with the Secretary of State of Nevada or at such later time as is
specified in the articles of merger (the "Effective Time").
2.3 Conversion of Company Common Shares. At the Effective Time:
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(a) Each share of common stock of the Company (the "Company Common
Shares"), issued and outstanding immediately prior to the Effective Time (except
for Dissenting Shares) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into the right to receive 700
shares (the "Buyer's Common Shares") of common stock of Buyer, $0.001 par value
per share ("Buyer Common Stock").
(b) The holders of certificates representing Company Common Shares
shall cease to have any rights as stockholders of the Company, except such
rights, if any, as they may have pursuant to California law. Except as provided
above, until certificates representing Company Common Shares are surrendered for
exchange, each such certificate shall, after the Effective Time, represent for
all purposes only the right to receive the number of whole Buyer's Common Shares
into which their Company Common Shares shall have been converted by the Merger
as provided above.
2.4 Reservation of Shares. Prior to the Effective Time, the Board of
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Directors of Buyer shall reserve for issuance a sufficient number of shares of
Buyer Common Stock for the purpose of issuing the Buyer's Common Shares to the
Company's stockholders in accordance herewith.
2.5 Dissenting Shares. Any Company Common Shares held by a holder who
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dissents from the Merger and becomes entitled to obtain payment for the value of
such Company Common Shares pursuant to the applicable provisions of California
law shall be herein called "Dissenting Shares". Except as provided under
California law, any Dissenting Shares shall not, after the Effective Time, be
entitled to vote for any purpose or receive any dividends or other distributions
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and shall not be converted into Buyer's Common Shares; provided, however, that
Company Common Shares held by a dissenting stockholder who subsequently
withdraws a demand for payment, fails to comply with the requirements of
California law to the extent that such stockholder fails to establish the rights
of a dissenting stockholder, or otherwise fails to establish the right of such
stockholder to be treated as a dissenting stockholder under California law shall
be deemed to be converted into Buyer's Common Shares pursuant to the terms and
conditions referred to above.
2.6 Exchange of Company Common Shares.
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(a) At or prior to the Effective Time, Buyer shall make available for
exchange or conversion, by transferring to Xxxx Xxxxxxx, Esq., or such other
person as Buyer may appoint to act as exchange agent (the "Exchange Agent"), for
the benefit of the holders of Company Common Shares, such number of Buyer's
Common Shares as shall be issuable in connection with the Merger. At the
Effective Time each Company Common Share shall be exchanged for such number of
Buyer's Common Shares as shall be issuable in connection with the Merger
pursuant to Section 2.3(a).
(b) In the event any certificates evidencing Company Common Shares
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed certificate, upon the making of an
affidavit of that fact by the holder thereof, such Buyer's Common Shares as may
be required pursuant hereto; provided, however that Buyer may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate to agree to indemnify (without posting any
bond therefor) Buyer, the Company, the Exchange Agent or any other party against
any claim that may be made against Buyer, the Company, the Exchange Agent or any
other party with respect to the certificate alleged to have been lost, stolen or
destroyed.
2.7 Closing. Subject to the provisions of Article 10 hereof, the
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closing of the transactions contemplated by this Agreement (the "Closing") shall
take place as soon as practicable (but in no event later than three (3) business
days) after satisfaction of all of the conditions to Closing at the offices of
Xxxx, Forward, Xxxxxxxx & Scripps LLP, 000 X. Xxxxxxxx, Xxxxx 0000 Xxx Xxxxx,
Xxxxxxxxxx 00000, or such other place and time as the parties may mutually
agree. The date on which the Closing actually occurs is herein referred to as
the "Closing Date".
ARTICLE 3
THE SURVIVING CORPORATION
3.1 Articles of Incorporation. The articles of incorporation of Buyer
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in effect at the Effective Time shall be the articles of incorporation of the
Surviving Corporation until amended in accordance with applicable law, except
that the name of the Surviving Corporation shall be "XXXXXXXXX.XXX, INC.".
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3.2 Bylaws. The bylaws of Buyer in effect at the Effective Time shall
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be the bylaws of the Surviving Corporation until amended in accordance with
applicable law.
3.3 Directors and Officers. From and after the Effective Time, until
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successors are duly elected or appointed and qualified in accordance with
applicable law: (i) Xxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxxx Xxxxxx, up to one other
nominee of the Bostonia Group, Inc., and an individual mutually agreed upon
between Xxxx Xxxxx and Bostonia Group, Inc. (the "Independent Director") shall
be the directors of the Company as the Surviving Corporation, and (ii) Xxxx
Xxxxx shall be the Chairman of the Board, President and Chief Executive Officer
of the Surviving Corporation. Notwithstanding the foregoing, in the event that
a mutually acceptable Independent Director is not selected within 120 days after
the Closing Date, Xxxx Xxxxx, as Chairman of the Board of Directors shall be
entitled to select the Independent Director.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Each of the Company and Seller, represents and warrants to Buyer as of the
date hereof that, except as set forth in the Company Disclosure Letter:
4.1 Organization and Good Standing of the Company. The Company is a
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corporation duly organized, validly existing, and in good standing under the
laws of its jurisdiction of incorporation, with corporate power and corporate
authority to conduct its business as it is now being conducted and to own or use
the properties and assets that it owns or uses. The Company is duly qualified
to do business as a foreign corporation and is in good standing under the laws
of each state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification.
4.2 Authority; No Conflict.
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(a) This Agreement constitutes the legal, valid, and binding
obligation of the Company and Seller, enforceable against the Company and Seller
in accordance with its terms. Each of the Company and Seller has the absolute
and unrestricted right, power, authority, and capacity to execute and deliver
this Agreement and to perform their obligations under this Agreement.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the transactions contemplated hereby will,
directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of any
provision of the Organizational Documents of the Company;
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(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of
the transactions contemplated hereby or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which the Company
or any of the assets owned or used by the Company or its subsidiaries, may
be subject;
(iii) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by the Company or that otherwise relates to the
business of, or any of the assets owned or used by, the Company; or
(iv) to the Seller's knowledge, contravene, conflict with, or
result in a violation or breach of any provision of, or give any Person the
right to declare a default or exercise any remedy under, or to accelerate
the maturity or performance of, or to cancel, terminate, or modify, any
material Contract to which the Company or its subsidiaries are a party.
(c) To the Seller's knowledge, except for compliance with any
applicable requirements of the Securities Act, the Exchange Act and state
securities or "blue sky" laws, neither the Company nor Seller are or will be
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of the transactions contemplated hereby.
4.3 Capitalization and Ownership of the Shares.
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(a) The authorized equity securities of the Company consist of
2,000,000 shares of common stock, no par value per share, of which 10,000 shares
are issued and outstanding and constitute the Company Common Shares. There are
no other shares of capital stock of the Company of any other class or series
authorized, issued or outstanding. There are no outstanding subscriptions,
options, warrants, rights (including, without limitation, preemptive rights,
stock appreciation rights or other awards), calls, convertible securities or
other agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of the Company. There are no
agreements or other obligations (contingent or otherwise) which require the
Company to repurchase or otherwise acquire any shares of its capital stock or
other securities. The Company Common Shares have been duly authorized and
validly issued and are fully paid and nonassessable. Other than this Agreement,
the Company is not a party to any Contract relating to the issuance, sale, or
transfer of any equity securities or other securities of the Company. The
Company does not own, and has no Contract to acquire, any equity securities or
other securities of any Person or any direct or indirect equity or ownership
interest in any other business.
4.4 Financial Statements. The Company has delivered to Buyer: (a) a
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balance sheet of the Company as at December 31, 1998, and the related statements
of income for the fiscal year then ended, which have been internally prepared by
the Company. The December 31, 1998 balance sheet
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is defined in this Agreement as the "Balance Sheet." Such financial statements
and notes fairly present the financial condition and the results of operations
as at the respective dates of and for the periods referred to in such financial
statements. The financial statements referred to in this Section 4.4 reflect the
consistent application of such accounting principles throughout the periods
involved, except as disclosed in the notes to such financial statements.
4.5 Books and Records. The books of account, minute books, stock record
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books, and other records of the Company and each subsidiary of the Company, all
of which have been made available to Buyer, are complete and correct and have
been maintained in accordance with sound business practices.
4.6 Title to Properties; Encumbrances. The Company has good and
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marketable title to all the properties and assets (whether real, personal, or
mixed and whether tangible or intangible), reflected as owned in the books and
records of the Company, including all of the properties and assets reflected in
the Balance Sheet (except for assets and personal property sold since the date
of the Balance Sheet, as the case may be, in the Ordinary Course of Business).
4.7 Accounts Receivable. All accounts receivable of the Company that
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are reflected on the Balance Sheet or in the accounting records of the Company
as of the Closing Date represent or will represent valid obligations arising
from sales actually made or services actually performed in the Ordinary Course
of Business.
4.8 No Undisclosed Liabilities.
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(a) The Company has no obligation or liability of any nature
whatsoever (direct or indirect, matured or unmatured, absolute, accrued,
contingent or otherwise), whether or not required by GAAP to be provided or
reserved against on a balance sheet except for:
(i) Liabilities provided for or reserved against in the Balance
Sheet;
(ii) Liabilities which have been incurred by the Company
subsequent to December 31, 1998, in the Ordinary Course of Business;
(iii) Liabilities under the executory portion of any written
purchase order, sales order, lease, agreement or commitment of any kind by
which the Company is bound and which was entered into in the Ordinary
Course of Business;
(iv) Liabilities under the executory portion of permits,
environmental permits, licenses and governmental directives and agreements
issued to, or entered into by, the Company in the Ordinary Course of
Business; and
(v) Liabilities disclosed in this Agreement, the Exhibits
attached hereto, and in the Disclosure Letter (or the Company Supplemental
Disclosure Letter).
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4.9 Taxes.
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(a) The Company has filed or caused to be filed on a timely basis all
Tax Returns that are or were required to be filed by it pursuant to applicable
Legal Requirements. The Company has paid, or made provision for the payment of,
all Taxes that have or may have become due pursuant to those Tax Returns or
otherwise, or pursuant to any assessment received by the Company.
(b) Part 4.9(b) of the Company Disclosure Letter contains a complete
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and accurate list of all audits of all Tax Returns filed by the Company during
the last five (5) years. All deficiencies proposed as a result of such audits
have been paid, reserved against, settled, or, as described in Part 4.9(b) of
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the Company Disclosure Letter, are being contested in good faith by appropriate
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proceedings. The Company has not been given or been requested to give waivers
or extensions (or is or would be subject to a waiver or extension given by any
other Person) of any statute of limitations relating to the payment of Taxes of
the Company or for which the Company may be liable, for Tax years which are open
as of the date hereof.
(c) The charges, accruals, and reserves with respect to Taxes on the
books of the Company and its subsidiaries are adequate (determined in accordance
with GAAP) and are at least equal to the Company's liability for Taxes. To the
knowledge of the Company, there exists no proposed tax assessment against the
Company or its subsidiaries except as disclosed in the Balance Sheet.
(d) All Tax Returns filed by the Company and its subsidiaries are
correct and complete in all material respects. There is no tax sharing agreement
that will require any payment by the Company or its subsidiaries after the date
of this Agreement.
(e) Neither the Company nor its subsidiaries have agreed to make nor
are they required to make any adjustment under Section 481(a) of the IRC by
reason of a change in accounting method or otherwise.
(f) Neither the Company nor its subsidiaries are parties to or bound
by (nor, between the date hereof and the Closing Date, will the Company or its
subsidiaries become parties to or bound by) any tax-indemnity, tax-sharing, or
tax-allocation agreement.
(g) To the knowledge of the Company, no issues have been raised (and
are currently pending) by any taxing authority in connection with any Tax
Return. No waivers of statutes of limitation with respect to any Tax Return
have been given by or requested from the Company or its subsidiaries. All
deficiencies asserted or assessments made as a result of any examinations have
been fully paid, or are fully reflected as a liability in the financial
statements of the Company and its subsidiaries, or are being contested and an
adequate reserve therefor has been established and is fully reflected as a
liability in the financial statements of the Company and its subsidiaries.
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(h) There are no liens (other than Permitted Encumbrances) for Tax on
the assets of the Company or its subsidiaries.
4.10 Compliance With Legal Requirements; Governmental Authorizations.
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(a) The Company is, and at all times since the Balance Sheet Date,
has been, in compliance with each Legal Requirement that is or was applicable to
it or to the conduct or operation of the business operations currently conducted
by the Company and its subsidiaries or the ownership or use of any of their
respective assets.
(b) No event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) may constitute or result in a violation by
the Company of, or a failure on the part of the Company to comply with, any
Legal Requirement, or (B) may give rise to any obligation on the part of the
Company to undertake, or to bear all or any portion of the cost of, any remedial
action of any nature; and
(c) The Company has not received, at any time since the Balance Sheet
Date, any written notice from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential violation of, or
failure to comply with, any Legal Requirement, or (B) any actual, alleged,
possible, or potential obligation on the part of the Company to undertake, or to
bear all or any portion of the cost of, any remedial action of any nature.
4.11 Legal Proceedings; Orders. There is no litigation or Proceeding
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pending or, to the Company's knowledge, threatened, in law or in equity, against
the Company, Seller or the Company's directors, with respect to or affecting the
Company's business operations, products, sales practices or financial condition,
or related to the consummation of the transactions contemplated hereby.
4.12 Absence of Certain Changes and Events. Since the Balance Sheet
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Date, the Company has conducted its business operations only in the Ordinary
Course of Business and there has not, except in the Ordinary Course of Business,
been any:
(a) change in the authorized or issued capital stock of the Company;
grant of any stock option or right to purchase shares of capital stock of the
Company; issuance of any security convertible into such capital stock; grant of
any registration rights; issuance or sale of any securities of any class;
purchase, redemption, retirement, or other acquisition by the Company of any
shares of any such capital stock; or declaration or payment of any dividend or
other distribution or payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of the Company;
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(c) payment or increase not in the Ordinary Course of Business by the
Company or its subsidiaries of any bonuses, salaries, or other compensation to
any director, officer, or employee;
(d) entry into any employment, severance, or similar material
Contract with any director, officer, or employee, or the adoption of, or
increase in the payments to or benefits under, any profit sharing, bonus,
deferred compensation, savings, insurance, pension, retirement, or other
employee benefit plan for or with any employees of the Company;
(e) material change in the accounting methods or principles used by
the Company;
(f) money borrowed or bonds, debentures, notes or other corporate
securities of any class issued or sold, including without limitation, those
evidencing borrowed money, or payments prepaid or accelerated under any of the
foregoing, or payments made in respect thereof other than in accordance with
regularly scheduled payments; or
(g) agreement, whether oral or written, by the Company to do any of
the foregoing.
4.13 Disclosure. This Agreement, the Exhibits and Schedules hereto, the
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Disclosure Letter, and the certificates, schedules, and statements attached
thereto or updates thereto when read together as a single disclosure, do not
contain and will not contain any untrue statement of a material fact and they do
not omit and will not at Closing omit to state a material fact necessary in
order to make the statements contained herein and therein not misleading.
4.14 Representations Regarding the Acquisition of the Shares.
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(a) Seller understands that the shares to be received from Buyer have
not been approved or disapproved by the SEC or any state securities agencies;
(b) Seller is acquiring the Buyer's Common Shares solely for
investment for his own account and not with a view to, or for, resale in
connection with any distribution within the meaning of the Securities Act, the
Exchange Act or any other applicable state securities acts; and
(c) Seller understands the speculative nature and risks of
investments associated with the Buyer and confirm that the Buyer's Common Shares
are suitable and consistent with his investment program and that his financial
position enables him or her to bear the risks of this investment and that there
may not be any public market for the Buyer's Common Shares.
ARTICLE 5
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REPRESENTATIONS AND WARRANTIES OF BUYER
Each of Buyer and Buyer Principals, jointly and severally, hereby
represents and warrants to the Company and the Seller as of the date hereof
that, except as set forth in the Buyer Disclosure Letter:
5.1 Organization and Good Standing of the Buyer and its Subsidiaries.
----------------------------------------------------------------
Part 5.1 of the Buyer Disclosure Letter contains a complete and accurate list,
---------------------------------------
for the Buyer and each of its subsidiaries, of each entity's jurisdiction of
incorporation, other jurisdictions in which each entity is qualified to do
business, and each entity's capitalization. The Buyer and each of its
subsidiaries is a corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it owns or uses, and to
perform all its obligations under its material contracts. The Buyer and each of
its subsidiaries is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the nature
of the activities conducted by it, requires such qualification.
5.2 Authority; No Conflict.
----------------------
(a) This Agreement constitutes the legal, valid, and binding
obligation of the Buyer and Buyer Principals, enforceable against the Buyer and
Buyer Principals in accordance with its terms. Each of the Buyer and Buyer
Principals has the absolute and unrestricted right, power, authority, and
capacity to execute and deliver this Agreement and to perform their obligations
under this Agreement.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the transactions contemplated hereby will,
directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of any
provision of the Organizational Documents of the Buyer or its subsidiaries;
(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of
the transactions contemplated hereby or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which the Buyer, or
its subsidiaries, may be subject;
(iii) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by the Buyer or its subsidiaries; or
14
(iv) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any material Contract
to which the Buyer or its subsidiaries are a party.
(c) Except for compliance with any applicable requirements of the
Securities Act, the Exchange Act and state securities or "blue sky" laws,
neither the Buyer nor its subsidiaries are or will be required to give any
notice to or obtain any Consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or performance of the
transactions contemplated hereby.
5.3 Capitalization and Ownership of the Shares.
------------------------------------------
(a) The authorized equity securities of the Buyer consist of
50,000,000 shares of common stock, par value $0.001 per share, of which
12,720,000 are issued and outstanding as of the date hereof and of which
2,720,000 shares will be issued and outstanding immediately prior to the
Effective Time and 10,000,000 shares of Preferred Stock, par value $0.001 per
share of which zero (0) shares are issued and outstanding. There are no other
shares of capital stock of the Buyer of any other class or series authorized,
issued or outstanding. There are no outstanding subscriptions, options,
warrants, rights (including, without limitation, preemptive rights, stock
appreciation rights or other awards), calls, convertible securities or other
agreements or commitments of any character relating to the issued or unissued
capital stock or other securities of the Buyer. There are no agreements or
other obligations (contingent or otherwise) which require the Buyer to
repurchase or otherwise acquire any shares of its capital stock or other
securities. The issued and outstanding shares of capital stock of Buyer have
been duly authorized, validly issued and are fully paid and nonassessable, and
have been validly issued in accordance with all applicable Legal Requirements or
pursuant to lawful exemptions therefrom. Other than this Agreement, the Buyer
is not a party to any Contract relating to the issuance, sale, or transfer of
any equity securities or other securities of the Buyer. Other than pursuant to
this Agreement, the Buyer does not own, and has no Contract to acquire, any
equity securities or other securities of any Person or any direct or indirect
equity or ownership interest in any other business.
(b) The authorized capital stock of each of the subsidiaries of the
Buyer is set forth in Part 5.3(b) of the Buyer Disclosure Letter. There are no
------------------------------------------
other shares of capital stock of any of the subsidiaries of the Buyer of any
other class or series authorized, issued or outstanding. All of the issued and
outstanding shares of capital stock of each of the subsidiaries of the Buyer
have been validly issued, are fully paid and nonassessable, and are owned
beneficially and of record by the Buyer.
5.4 Financial Statements. The Buyer has delivered to the Company: (a)
--------------------
balance sheets of the Buyer as at December 31 in each of the years 1997, 1996
and the period ended March 31, 1998, and the related statements of income for
each of the fiscal years then ended, which have been audited by Xxxxx X.
Xxxxxxxx, P.C., the Buyer's independent accountants, and (b) an unaudited,
15
unreviewed balance sheet of the Buyer as at December 31, 1998 and March 31, 1999
and the related unaudited statements of income for such periods. The December
31, 1998 balance sheet is defined in this Agreement as the "Buyer Balance
Sheet." Such financial statements and notes fairly present the financial
condition and the results of operations, changes in stockholders' equity, and
cash flow of the Buyer as at the respective dates of and for the periods
referred to in such financial statements, all in accordance with GAAP. The
financial statements referred to in this Section 5.4 reflect the consistent
application of such accounting principles throughout the periods involved,
except as disclosed in the notes to such financial statements.
5.5 Books and Records. The books of account, minute books, stock record
-----------------
books, and other records of the Buyer and each subsidiary of the Buyer, all of
which have been delivered to the Company, are complete and correct and have been
maintained in accordance with sound business practices.
5.6 No Assets; No Liabilities. Immediately prior to the Effective Time,
-------------------------
Buyer will neither own nor lease any assets of any kind or nature nor will Buyer
have any obligations or liabilities of any kind or nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due and
whether or not asserted, and whether or not known or unknown, and however
arising) (collectively, "Buyer Liabilities").
5.7 No Undisclosed Liabilities. Immediately prior to the Effective
--------------------------
Time, there will be no Buyer Liabilities.
5.8 Taxes.
-----
(a) Buyer and its subsidiaries have filed or caused to be filed on a
timely basis all Tax Returns that are or were required to be filed by them
pursuant to applicable Legal Requirements. The Buyer and its subsidiaries have
paid, or made provision for the payment of, all Taxes that have or may have
become due pursuant to those Tax Returns or otherwise, or pursuant to any
assessment received by the Buyer or its subsidiaries.
(b) Part 5.8(b) of the Buyer Disclosure Letter contains a complete and
------------------------------------------
accurate list of all audits of all Tax Returns filed by the Buyer during the
last five (5) years. All deficiencies proposed as a result of such audits have
been paid, reserved against, settled, or, as described in Part 5.8(b) of the
------------------
Buyer Disclosure Letter, are being contested in good faith by appropriate
-----------------------
proceedings. Neither the Buyer or its subsidiaries has given or been requested
to give waivers or extensions (or is or would be subject to a waiver or
extension given by any other Person) of any statute of limitations relating to
the payment of Taxes of the Buyer or its subsidiaries or for which the Buyer or
its subsidiaries may be liable, for Tax years which are open as of the date
hereof.
(c) The charges, accruals, and reserves with respect to Taxes on the
books of the Buyer and its subsidiaries are adequate (determined in accordance
with GAAP) and are at least equal
16
to the Buyer's liability for Taxes. To the knowledge of the Buyer, there exists
no proposed tax assessment against the Buyer or its subsidiaries except as
disclosed in the Balance Sheet.
(d) All Tax Returns filed by the Buyer and its subsidiaries are
correct and complete in all material respects. There is no tax sharing agreement
that will require any payment by the Buyer or its subsidiaries after the date of
this Agreement.
(e) Neither the Buyer nor its subsidiaries have agreed to make nor are
they required to make any adjustment under Section 481(a) of the IRC by reason
of a change in accounting method or otherwise.
(f) Neither the Buyer nor its subsidiaries are parties to or bound by
(nor, between the date hereof and the Closing Date, will the Buyer or its
subsidiaries become parties to or bound by) any tax-indemnity, tax-sharing, or
tax-allocation agreement.
(g) To the knowledge of the Buyer, no issues have been raised (and are
currently pending) by any taxing authority in connection with any Tax Return.
No waivers of statutes of limitation with respect to any Tax Return have been
given by or requested from the Buyer or its subsidiaries. All deficiencies
asserted or assessments made as a result of any examinations have been fully
paid, or are fully reflected as a liability in the financial statements of the
Buyer and its subsidiaries, or are being contested and an adequate reserve
therefor has been established and is fully reflected as a liability in the
financial statements of the Buyer and its subsidiaries.
(h) There are no liens (other than Permitted Encumbrances) for Tax on
the assets of the Buyer or its subsidiaries.
5.9 Compliance With Legal Requirements; Governmental Authorizations.
---------------------------------------------------------------
(a) The Buyer and each of its subsidiaries is, and at all times has
been, in compliance with each Legal Requirement that is or was applicable to it
or to the conduct or operation of the business operations conducted by the Buyer
and its subsidiaries or the ownership or use of any of their respective assets.
(b) No event has occurred or circumstance exists that (with or without
notice or lapse of time) (A) may constitute or result in a violation by the
Buyer or its subsidiaries or Buyer Principals of, or a failure on the part of
the Buyer or its subsidiaries or Buyer Principals to comply with, any Legal
Requirement, or (B) may give rise to any obligation on the part of the Buyer or
its subsidiaries or Buyer Principals to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature;
(c) Neither the Buyer nor its subsidiaries or Buyer Principals have
received any written notice from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential violation of, or
failure to comply with, any Legal Requirement, or (B) any
17
actual, alleged, possible, or potential obligation on the part of the Buyer or
its subsidiaries to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature; and
(d) None of Buyer, Buyer Principals, Bostonia Group, Inc. nor any of
their respective officers, directors, shareholders, employees, affiliates,
agents or representatives have violated any Legal Requirement or Order arising
out of or in any way related to the issuance of or trading in the capital
securities of Buyer, including, without limitation, Rule 10b-5 of the Exchange
Act.
5.10 Legal Proceedings; Orders. There is no litigation or Proceeding
-------------------------
pending or, to the Buyer's knowledge, threatened, in law or in equity, against
the Buyer, its subsidiaries, Buyer Principals, any of the other stockholders of
Buyer or the Buyer's or its subsidiaries' directors, with respect to or
affecting the Buyer's or its subsidiaries' operations or financial condition, or
related to the consummation of the transactions contemplated hereby.
5.11 Absence of Certain Changes and Events. Since the date of the Buyer
-------------------------------------
Balance Sheet, the Buyer and its subsidiaries have conducted their business
operations only in the Ordinary Course of Business and there has not, except in
the Ordinary Course of Business, been any:
(a) change in the authorized or issued capital stock of the Buyer or
its subsidiaries; grant of any stock option or right to purchase shares of
capital stock of the Buyer or its subsidiaries; issuance of any security
convertible into such capital stock; grant of any registration rights; issuance
or sale of any securities of any class; purchase, redemption, retirement, or
other acquisition by the Buyer or its subsidiaries of any shares of any such
capital stock; or declaration or payment of any dividend or other distribution
or payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of the Buyer or its
subsidiaries;
(c) payment or increase not in the Ordinary Course of Business by the
Buyer or its subsidiaries of any bonuses, salaries, or other compensation to any
director, officer, or employee;
(d) entry into any employment, severance, or similar Material Contract
with any director, officer, or employee, or the adoption of, or increase in the
payments to or benefits under, any profit sharing, bonus, deferred compensation,
savings, insurance, pension, retirement, or other employee benefit plan for or
with any employees of the Buyer or its subsidiaries;
(e) material change in the accounting methods or principles used by
the Buyer or its subsidiaries;
(f) money borrowed or bonds, debentures, notes or other corporate
securities of any class issued or sold, including without limitation, those
evidencing borrowed money, or payments prepaid or accelerated under any of the
foregoing, or payments made in respect thereof other than in accordance with
regularly scheduled payments;
18
(g) agreement, whether oral or written, by the Buyer or its
subsidiaries to do any of the foregoing.
5.12 Employees, etc. Immediately prior to the Effective Time, Buyer
--------------
will not have any employees, consultants, independent contractors or creditors.
5.13 Disclosure. This Agreement, the Exhibits and Schedules hereto, the
----------
Buyer Disclosure Letter, and the certificates, schedules, and statements
attached thereto or updates thereto when read together as a single disclosure,
do not contain and will not contain any untrue statement of a material fact and
they do not omit and will not at Closing omit to state a material fact necessary
in order to make the statements contained herein and therein not misleading.
5.14 Investment Intent. Buyer is acquiring the Company Common Shares
-----------------
under this Agreement for investment and not with a view to the sale or
distribution thereof.
5.15 Unregistered Shares and Access to Information. Buyer understands
---------------------------------------------
the offer and sale of the Company Common Shares have not been registered with
or reviewed by the SEC under the Securities Act, as amended, or with or by any
state securities law administrator, and no federal or state securities law
administrator has reviewed or approved any disclosure or other material
concerning the Company or the Company Common Shares. Buyer has been provided
with and reviewed all information concerning the Company and the Company Common
Shares as it has deemed necessary or appropriate as a prudent and knowledgeable
investor to enable it to make an informed investment decision concerning the
Company Common Shares.
5.16 SEC and Other Filings. Buyer has filed on a timely basis all reports
---------------------
required to be filed by Buyer with the SEC, NASDAQ and any other Governmental
Bodies (the "Filings"), and none of such Filings contain any untrue statement of
a material fact nor do any of such Filings omit to state a material fact
necessary in order to make the statements contained therein not misleading.
ARTICLE 6
COVENANTS OF COMPANY PRIOR TO CLOSING DATE
6.1 Access and Investigation. Between the date of this Agreement and
------------------------
the Closing Date, the Company shall: (a) upon reasonable prior notice, during
normal business hours and at the sole cost and expense of Buyer, afford Buyer
and its Representatives (collectively, "Buyer's Advisors") reasonable access to
the personnel, properties, contracts, books and records, and other documents and
data of the Company, (b) use its best efforts to facilitate access to the
Company's suppliers and customers, (c) furnish Buyer with copies of all such
contracts, books and records, and other existing documents and data as Buyer may
reasonably request at Buyer's sole cost and expense, and (d) furnish Buyer's
Advisors with such additional financial, operating, and other data and
information as Buyer may reasonably request at Buyer's sole cost and expense.
19
6.2 Operation of the Company. Between the date of this Agreement and
------------------------
the Closing Date, the Company will:
(a) conduct the business operations of the Company only in the
Ordinary Course of Business;
(b) use its commercially reasonable efforts to preserve intact the
current business organization of the Company (including maintaining all of its
properties in good operating condition and repair), keep available the services
of the current officers, employees, representatives and agents of the Company,
and maintain the relations and good will with suppliers, customers, landlords,
creditors, employees, agents, and others having business relationships with the
Company; and
(c) confer with Buyer concerning operational matters of a material
nature.
6.3 Negative Covenant. Except as otherwise expressly permitted by this
-----------------
Agreement, between the date of this Agreement and the Closing Date, the Company
will not, without the prior consent of Buyer, take any affirmative action, or
fail to take any reasonable action within its or their control, as a result of
which any of the changes or events listed in Section 4.12 is likely to occur.
6.4 Required Approvals. As promptly as practicable after the date of
------------------
this Agreement, the Company will make all filings required by Legal Requirements
to be made in order to consummate the transactions contemplated hereby
(including, if applicable, all filings under the Securities Act, the Exchange
Act and applicable state securities and "blue sky" laws). Between the date of
this Agreement and the Closing Date, the Company will (a) cooperate with Buyer
with respect to all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the transactions contemplated hereby,
(including all filings under the Securities Act, the Exchange Act and State
Securities or blue sky laws) and (b) cooperate with Buyer (at no expense to the
Company) in obtaining all Consents required pursuant to Section 5.2(c).
6.5 Commercially Reasonable Efforts. Between the date of this Agreement
-------------------------------
and the Closing Date, the Company shall use its commercially reasonable efforts
to cause the conditions in Article 10 to be satisfied. The Company shall not
intentionally perform any act which, if performed, or intentionally omit to
perform any act which, if omitted to be performed, would prevent or excuse the
performance of this Agreement by any party hereto.
6.6 The Company Disclosure Letter. Concurrently with the execution of
-----------------------------
this Agreement, the Company shall deliver to Buyer the Company Disclosure Letter
and all schedules and exhibits to be attached thereto. The Company Disclosure
Letter shall: (a) contain accurate, true, correct and complete information and
data; (b) be executed by the Company and dated the date of this Agreement; (c)
be deemed to modify the representations, warranties and obligations of the
Company made pursuant to Article 4 of this Agreement, or qualifications or
exceptions thereto, as appropriate, and as expressly contemplated herein and
therein; and (d) be updated, amended and supplemented, as appropriate through
the Supplemental Company Disclosure Letter through the Closing, so that
20
the Company Disclosure Letter shall, as of the Closing, contain accurate, true
and correct information and data, and shall be re-executed by the Company and
dated the date of the Closing. Terms used and defined in this Agreement shall
have the same definition when used in the Company Disclosure Letter and the
schedules and exhibits attached thereto.
6.7 The Supplemental Company Disclosure Letter. The Company shall update
------------------------------------------
the Company Disclosure Letter and all schedules and exhibits thereto to include
all information relevant to the disclosures therein which relates to events
which have occurred between the date hereof and the date five (5) business days
prior to the Closing Date. The Company shall deliver such updated information to
Buyer and shall deliver the final updated information (the "Supplemental Company
Disclosure Letter") to Buyer on the date four (4) business days prior to the
Closing Date. The Supplemental Disclosure Letter shall contain accurate, true,
correct and complete information and data.
6.8 Corporate Approvals by the Company. The Company shall take any and all
----------------------------------
actions necessary to approve the Merger, this Agreement and the transactions
contemplated hereby and thereby in accordance with California law and to convene
a meeting (or obtain the unanimous written consent) of the shareholders of the
Company to consider and vote upon the Merger, this Agreement and the
transactions contemplated hereby and thereby.
ARTICLE 7
COVENANTS OF BUYER PRIOR TO CLOSING DATE
7.1 Access and Investigation. Between the date of this Agreement and the
------------------------
Closing Date, Buyer shall: (a) upon reasonable prior notice, during normal
business hours and at the sole cost and expense of Buyer, afford the Company and
Seller and their Representatives (collectively, "Company's Advisors") reasonable
access to the personnel, properties, contracts, books and records, and other
documents and data of the Buyer and its subsidiaries, (b) furnish Company's
Advisors with copies of all such contracts, books and records, and other
existing documents and data as the Company may reasonably request at Buyer's
sole cost and expense, and (c) furnish the Company and the Company's Advisors
with such additional financial, operating, and other data and information as the
Company may reasonably request at Buyer's sole cost and expense.
7.2 Operation of the Company. Between the date of this Agreement and the
------------------------
Closing Date, Buyer will:
(a) except as set forth in Section 7.2(b) below, conduct the business
operations of Buyer and its subsidiaries only in the Ordinary Course of
Business;
(b) use its best efforts to consummate the transactions contemplated
by that certain Asset Acquisition Agreement dated May 7, 1999, between Buyer and
Dead On Acquisition
21
Company whereupon Buyer will dispose of all of its assets and liabilities (the
"Asset Agreement"); and
(c) confer with the Company and Seller concerning operational matters
of a material nature.
7.3 Negative Covenant. Except as otherwise expressly permitted by this
-----------------
Agreement, between the date of this Agreement and the Closing Date, Buyer will
not, without the prior consent of the Company, take any affirmative action, or
fail to take any reasonable action within its or their control, as a result of
which any of the changes or events listed in Section 5.11 is likely to occur.
7.4 Required Approvals. As promptly as practicable after the date of this
------------------
Agreement, the Buyer will make all filings required by Legal Requirements to be
made in order to consummate the transactions contemplated hereby and by the
Asset Agreement (including, if not then already filed, all filings under the
Securities Act, the Exchange Act and applicable state securities and "blue sky"
laws). Between the date of this Agreement and the Closing Date, the Buyer will
(a) cooperate with the Company with respect to all filings that the Buyer elects
to make or is required by Legal Requirements to make in connection with the
transactions contemplated hereby, (including all filings under the Securities
Act, the Exchange Act and state securities or "blue sky" laws) and (b) cooperate
with the Company in obtaining all Consents required pursuant to Section 4.2(c).
7.5 Commercially Reasonable Efforts. Between the date of this Agreement
-------------------------------
and the Closing Date, Buyer shall, and shall cause its subsidiaries to, use
their commercially reasonable efforts to cause the conditions in Article 10 to
be satisfied. Buyer and its subsidiaries shall not intentionally perform any
act which, if performed, or intentionally omit to perform any act which, if
omitted to be performed, would prevent or excuse the performance of this
Agreement by any party hereto.
7.6 The Buyer Disclosure Letter. Concurrently with the execution of this
---------------------------
Agreement, Buyer and Buyer Principals shall deliver to the Company and Seller
the Buyer Disclosure Letter and all schedules and exhibits to be attached
thereto. The Buyer Disclosure Letter shall: (a) contain accurate, true, correct
and complete information and data; (b) be executed by Buyer and Buyer Principals
and dated the date of this Agreement; (c) be deemed to modify the
representations, warranties and obligations of Buyer and Buyer Principals made
pursuant to Article 5 of this Agreement, or qualifications or exceptions
thereto, as appropriate, and as expressly contemplated herein and therein; and
(d) be updated, amended and supplemented, as appropriate through the Buyer
Supplemental Buyer Disclosure Letter through the Closing, so that the Buyer
Disclosure Letter shall, as of the Closing, contain accurate, true and correct
information and data, and shall be re-executed by Buyer and Buyer Principals and
dated the date of the Closing. Terms used and defined in this Agreement shall
have the same definition when used in the Buyer Disclosure Letter and the
schedules and exhibits attached thereto.
22
7.7 The Supplemental Buyer Disclosure Letter. Buyer and Buyer Principals
----------------------------------------
shall update the Buyer Disclosure Letter and all schedules and exhibits thereto
to include all information relevant to the disclosures therein which relates to
events which have occurred between the date hereof and the date five (5)
business days prior to the Closing Date. Buyer and Buyer Principals shall
deliver a draft of such updated information to the Company and Seller and shall
deliver the final updated information (the "Supplemental Buyer Disclosure
Letter") to the Company and Seller on the date four (4) business days prior to
the Closing Date. The Supplemental Buyer Disclosure Letter shall contain
accurate, true, correct and complete information and data.
7.8 Corporate Approvals by Buyer. Buyer shall take any and all actions
----------------------------
necessary to approve the Merger, this Agreement and the transactions
contemplated hereby and thereby in accordance with the Nevada Law and to convene
a meeting of the stockholders of the Buyer to consider and vote upon the Merger,
this Agreement and the transactions contemplated hereby and thereby, including
without limitation a proxy statement to be provided to each of the stockholders
of the Buyer. Such proxy statement shall not contain any untrue statement of a
material fact nor shall such proxy statement omit to state a material fact
necessary in order to make the statements contained therein not misleading.
ARTICLE 8
COVENANTS OF BUYER AND THE COMPANY
The parties hereto agree that:
8.1 Best Efforts. Subject to the terms and conditions of this Agreement,
------------
each party will use its best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement including, without limitation, obtaining all material consents,
waivers and approvals required in connection with the authorization, execution
and delivery of this Agreement by the parties and the consummation by the
parties of the Merger and the other transactions contemplated by this Agreement.
8.2 Certain Filings. The Company and Buyer shall cooperate with one
---------------
another (a) in connection with the preparation of the Registration Statement,
and (b) in determining whether any action by or in respect of, or filing with,
any governmental body, agency or official, or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (c) in seeking any such actions,
consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such actions, consents, approvals or waivers.
8.3 Public Announcements. Buyer and the Company will consult with each
--------------------
other before issuing any press release or making any public statement with
respect to this Agreement and the
23
transactions contemplated hereby and, except as may be required by applicable
law or any listing agreement with any national securities exchange or
interdealer quotation system upon the advice of counsel (in which case
reasonable efforts to consult with the other party and its counsel are still
required), will not issue any such press release or make any such public
statement without the prior consent of the other party, which consent shall not
be unreasonably withheld or delayed.
8.4 Further Assurances. At and after the Effective Time, the officers and
------------------
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company, any deeds, bills of sale,
assignments or assurances and to take and do, in the name and on behalf of the
Company, any other actions and things to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all right, title and interest in,
to and under any of the rights, properties or assets of the Company acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger.
8.5 Preparation of the Registration Statement. From and after the
-----------------------------------------
Effective Time, Buyer, Buyer Principals, each of the other parties hereto and
Bostonia Group, Inc. and its affiliates, shall use their respective best efforts
to promptly prepare (or cause to be prepared, including, without limitation,
causing the Surviving Corporation to be timely provided with all information and
documentation requested by the Surviving Corporation) and the Surviving
Corporation shall file with the SEC a Form 10-SB (the "Registration Statement")
and will use their best respective efforts to respond to the comments of the SEC
in connection therewith and to furnish all information required by the SEC to
prepare a final and effective Registration Statement no later than November
1999.
ARTICLE 9
TERMINATION
9.1 Termination Events. This Agreement may, by notice given prior to or at
------------------
the Closing, be terminated:
(a) by either the Company or Buyer if the terminating party is not
then in material breach of any provision of this Agreement and the
nonterminating party shall have committed a material breach of any provision of
this Agreement and such breach has not been (i) cured by the earlier of (A) five
(5) days after the nonterminating party receives notice of such material breach
or (B) the Closing Date or (ii) waived by the terminating party.
(b) (i) by Buyer if any of the conditions in Section 10.1 or Section
10.2 have not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Buyer or
Buyer Principals to comply with their obligations under this Agreement) and
Buyer has not waived such condition on or before the Closing Date; or (ii) by
the Company, if any of the conditions in Section 10.1 and Section 10.3 have not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than
24
through the failure of the Company or Seller to comply with their obligations
under this Agreement) and the Company has not waived such condition on or before
the Closing Date;
(c) by mutual consent of Buyer and the Company; or
(d) by either Buyer or the Company if (i) either Buyer or the Company
is not reasonably satisfied with the results of its legal, business and
accounting due diligence or (ii) the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement to comply
fully with its obligations under this Agreement) on or before July 15, 1999, or
such later date as the parties may agree upon in writing.
9.2 Effect of Termination. Each party's right of termination under Section
---------------------
9.1 is in addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be an election of
remedies. If this Agreement is terminated pursuant to Section 9.1, all further
obligations of the parties under this Agreement will terminate; provided,
however, that if this Agreement is terminated by a party because of the breach
of the Agreement by the other party or because one or more of the conditions to
the terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
ARTICLE 10
CONDITIONS TO THE MERGER
10.1 Conditions to the Obligations of Each Party. The obligations of the
-------------------------------------------
Company, Seller, Buyer and Buyer Principals to consummate the Merger are subject
to the satisfaction of the following conditions:
(a) All authorizations, consents, orders or approvals of, or
declarations or filings with, or expiration of waiting periods imposed by, any
Governmental Body or any third party necessary for the consummation of the
transactions contemplated hereby or required as a result of the transactions
contemplated hereby and any documentation pertaining thereto or required in
connection therewith shall have been filed, occurred or been obtained.
(b) No provision of any applicable Legal Requirement and no Order
shall prohibit the consummation of the Merger.
(c) This Agreement shall have been approved and adopted by the
affirmative vote of the holders of a majority of the outstanding shares of the
Company Common Shares entitled to vote thereon and a majority of the outstanding
shares of Buyer's capital stock entitled to vote thereon and the Boards of
Directors of Buyer and the Company.
25
(d) No arbitrator or Governmental Body or official shall have issued
any Order, and there shall not be any Legal Requirement, restraining or
prohibiting the consummation of the Merger or the effective operation of the
business of the Company or the Buyer and its subsidiaries after the Effective
Time, and no proceeding challenging this Agreement or the transactions
contemplated hereby or seeking to prohibit, alter, prevent or materially delay
the Merger shall have been instituted by any Person before any arbitrator,
Governmental Body or official and be pending.
(e) The Bostonia Group, Inc. shall have arranged and deposited with
the Company equity financing of at least $1,500,000 on terms and conditions
satisfactory to Buyer and the Company in their sole and absolute discretion.
(f) The officers and directors of Buyer shall have resigned any and
all of their positions as officers, directors and employees of Buyer.
(g) The closing of the transactions contemplated by the Asset
Agreement shall have occurred and Buyer shall have no assets and there shall be
no Buyer Liabilities of any kind whatsoever.
10.2 Conditions to the Obligations of Buyer and Buyer Principals. The
-----------------------------------------------------------
obligations of Buyer and Buyer Principals to consummate the Merger are subject
to the satisfaction of the following further conditions:
(a) The Company and Seller shall have performed in all material
respects all of their obligations hereunder required to be performed by them at
or prior to the Effective Time, the representations and warranties of the
Company and Seller contained in this Agreement and in any certificate delivered
by the Company and Seller pursuant hereto shall be true in all material respects
at and as of the Effective Time as if made at and as of such time and Buyer
shall have received a certificate signed by an authorized officer of the Company
and Seller to the foregoing effect.
(b) The Company shall have executed and/or delivered to the Buyer all
certificates and instruments reasonably requested by Buyer relating to the
existence of the Company, the good standing of the Company and the authority of
the Company and Seller for this Agreement, all in form and substance
satisfactory to Buyer.
10.3 Conditions to Obligations of the Company and Seller. The obligations
---------------------------------------------------
of the Company and Seller to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) Buyer and Buyer Principals shall have performed in all material
respects all of their obligations hereunder required to be performed by them at
or prior to the Effective Time, the representations and warranties of Buyer and
Buyer Principals contained in this Agreement and in any certificate delivered by
Buyer and Buyer Principals pursuant hereto shall be true in all material
respects at and as of the Effective Time as if made at and as of such time and
the Company
26
shall have received a certificate signed by an authorized officer of Buyer and
the Buyer Principals to the foregoing effect.
(b) Buyer shall have executed and delivered to the Company all
certificates and instruments reasonably requested by the Company relating to the
existence of Buyer and its subsidiaries, the good standing of Buyer and its
subsidiaries and the authority of Buyer and Buyer Principals for this Agreement,
all in form and substance satisfactory to the Company.
(c) The Company and Seller shall have completed their due diligence
review of Buyer and Buyer Principals to their satisfaction in their sole and
absolute discretion.
(d) The Surviving Corporation and each of Xxxx Xxxxx and Xxxxxx Xxxxxx
shall have entered into employment agreements mutually satisfactory to the
parties thereto.
(e) Buyer and Buyer Principals shall have provided evidence
satisfactory to the Company and its counsel that no Buyer Liabilities exist.
(f) Buyer and Buyer Principals shall be in compliance with all Legal
Requirements, including, without limitation, any and all Bulk Sales Transfer
Legal Requirements of the States of Nevada and California and shall have
delivered to the Company and Seller a certificate of the President of Buyer to
such effect.
(g) Buyer, Buyer Principals and Bostonia Group, Inc. shall have
executed and delivered an Escrow Agreement on terms and conditions mutually
satisfactory to the parties hereto (the "Escrow Agreement") whereby the sum of
$100,000 in cash and 100,000 shares of common stock, $0.001 par value per share
of the Surviving Corporation (which shares shall not be "restricted securities"
as defined in Rule 144 under the Securities Act) owned by Buyer Principals
and/or Bostonia Group, Inc. and their respective affiliates shall be held in
escrow (the "Escrow Amount") for a period of eighteen (18) months following the
Closing Date as security for the Indemnification Obligations (if any) of Buyer
and Buyer Principals hereunder.
(h) Xxxx Xxxx shall have canceled 10,000,000 shares of common stock,
$0.001 par value per share, of Buyer and provided written evidence thereof to
the Company and Seller on terms and conditions satisfactory to the Company,
Seller and their counsel.
ARTICLE 11
INDEMNIFICATION; REMEDIES
11.1 Survival of Representations and Warranties and Indemnities. All
----------------------------------------------------------
covenants, agreements, representations and warranties of the parties under this
Agreement, including the disclosure letters, the supplemental disclosure letters
and in any schedule or certificate delivered
27
pursuant hereto shall survive the Closing; provided, however, that no claim for
indemnity under this Agreement with respect to any breach of any of the
representations, warranties and covenants of the Company and Seller shall be
made after the End Date.
11.2 Indemnity.
---------
(a) Buyer and Buyer Principals shall defend, indemnify, and hold
Seller and the Company, the Company's officers, directors, employees and
stockholders and their respective officers, directors, employees, partners and
stockholders and their respective heirs, successors and permitted assigns (each
a "Seller Indemnitee" and collectively the "Seller Indemnitees") harmless from,
against and in respect of the full amount of any Damages (hereinafter defined)
which may accrue to or be sustained by a Seller Indemnitee, arising out of, as a
result of or in respect of:
(i) Any error, misstatement, omission or inaccuracy in any
representation or warranty of Buyer or Buyer Principals or the breach of
any warranty of Buyer or Buyer Principals or any omission to state or
failure by Buyer or Buyer Principals to disclose any fact or facts known to
it which are necessary in order to make any such representation or warranty
not misleading, under this Agreement, or under any schedule, exhibit,
certificate, agreement, instrument or other document delivered pursuant
thereto (even if the Company or Seller knew or had reason to know of any
error, misstatement, omission or inaccuracy at the time of Closing).
(ii) Any failure of Buyer or Buyer Principals duly to perform
or observe any term, provision, instrument, covenant or agreement to be
performed or observed by Buyer or Buyer Principals pursuant to this
Agreement, or any schedule, certificate, agreement or other document
entered or delivered pursuant hereto.
(iii) Any and all Buyer Liabilities, including, without
limitation any and all liabilities or obligations for Taxes.
(iv) Any breach or violation by Buyer, Buyer Principals or the
stockholders of Buyer of any Legal Requirement or Order arising prior to
the Effective Time, including, without limitation, Legal Requirements and
Orders related to the regulation of the issuance and trading of Buyer's
capital securities.
(b) Seller shall defend, indemnify, and hold Buyer and Buyer's
officers, directors, employees and stockholders (and their respective officers,
directors, employees, partners and stockholders) and their respective heirs,
successors and permitted assigns (each a "Buyer Indemnitee" and collectively the
"Buyer Indemnitees") harmless from, against and in respect of the full amount of
any Damages (hereinafter defined) which may accrue to or be sustained by a Buyer
Indemnitee, arising out of, as a result of or in respect of:
28
(i) Any error, misstatement, omission or inaccuracy in any
representation or warranty of the Company or Seller or the breach of any
warranty of the Company or Seller or any omission to state or failure by
the Company or Seller to disclose any fact or facts known to any of them
which are necessary in order to make any such representation or warranty
not misleading, under this Agreement, or under any schedule, exhibit,
certificates, agreement, instrument or other document delivered pursuant
thereto (even if Buyer or Buyer Principals knew or had reason to know of
any error, misstatement, omission or inaccuracy at the time of Closing).
(ii) Any failure of the Company or Seller duly to perform or
observe any term, provision, instrument, covenant or agreement to be
performed or observed by the Company or Seller pursuant to this Agreement,
or any schedule, certificate, agreement or other document entered or
delivered pursuant hereto.
(c) The indemnification and hold harmless obligations of Buyer and
Buyer Principals and of the Company and Seller hereunder are hereinafter
referred to as "Indemnification Obligations," and the party to whom such
Indemnification obligations are owed is hereinafter sometimes referred to as
"Indemnified Party," and the party obligated to perform such Indemnification
Obligations is hereinafter sometimes referred to as the "Indemnifying Party."
(d) For purposes of this Agreement, "Damages" shall be deemed to mean
and include any and all losses, liabilities, costs, expenses, judgments,
assessments, penalties, damages, fines, deficiencies, the fees and expenses of
experts, and reasonable attorneys' fees and expenses, costs of investigation and
court costs incident thereto. Damages shall be measured net of any insurance
benefits actually received by the Indemnified Party.
11.3 Procedures.
----------
(a) Promptly after receipt of notice of the commencement of any action
against any Person in respect of which indemnification ("Indemnification") may
be sought hereunder, the Person receiving such notice shall notify the
Indemnifying Party in writing of the commencement thereof and the basis
hereunder upon which a claim for Indemnification is asserted. In the event of
the commencement of any such action as to which the Indemnified Party notifies
the Indemnifying Party as aforesaid, the Indemnifying Party will be entitled to
participate therein and to assume the defense thereof at the Indemnifying
Party's expense, provided that the Indemnifying Party promptly notifies the
Indemnified Party of such election to assume the defense thereof and
acknowledges the Indemnifying Party's Indemnification Obligations pursuant to
this Agreement in writing to the Indemnified Party, and provided further that
the Indemnifying Party's interest in such action does not conflict with the
interests of the Indemnified Party, the relief sought does not exceed the
Indemnifying Party's maximum Indemnification Obligations under Section 11.5, and
that equitable relief is not being sought. Except as provided in Section 13.6,
nothing herein shall be construed to create any rights enforceable by any Person
not a party to this Agreement.
29
(b) The Indemnified Party shall be entitled to participate in the
defense of any action and to be represented at its expense by counsel of its own
selection. If, however, the Indemnifying Party's interest in such action
conflicts with the interests of the Indemnified Party, or the relief sought
exceeds the Indemnifying Party's maximum Indemnification Obligations under
Section 11.5, or if equitable relief is being sought against Merger Subsidiary
or the Stockholders, then the Indemnified Party shall assume such defense at the
Indemnifying Party's expense. If the attorneys provided for the defense of the
Indemnified Party by the Indemnifying Party withdraw from or are removed by
court order from the Indemnified Party's representation, then the cost of
counsel selected by the Indemnified Party shall be part of the Indemnified
Party's Damages, and the Indemnified Party shall have the right in all respects
to conduct its own defense. If the Indemnified Party otherwise retains its own
counsel, the cost thereof shall be for the account of the Indemnified Party.
(c) As to cases in which the Indemnifying Party has assumed and is
providing the defense for the Indemnified Party under Section 11.3(a), the
control of such defense and the right to reach settlement in such action shall
be vested in the Indemnifying Party; provided, that if the Indemnified Party
objects to a settlement which has otherwise been fully agreed to by the
Indemnifying Party, the Indemnified Party may nevertheless prohibit the
Indemnifying Party from making such settlement, in which case the Indemnifying
Party shall pay to the Indemnified Party the proposed cost to the Indemnifying
Party of such settlement (plus any other sum to satisfy the Indemnifying Party's
Indemnification Obligations to the Indemnified Party as provided by and
contemplated in this Article 11) (together, the "Settlement Cost"), in cash, and
the Indemnified Party shall thereafter be responsible for such matter and the
Indemnifying Party shall have no further Indemnification Obligations with
respect to such matter and shall be indemnified by the Indemnified Party for any
loss or liability in excess of the Settlement Cost imposed on the Indemnifying
Party by any later settlement or adjudication; provided further, that if the
Indemnified Party objects to the continuation of any such action by the
Indemnifying Party, the Indemnified Party may direct the Indemnifying Party to
settle such case, the cost of which shall be paid by the Indemnified Party, and
the Indemnifying Party shall have no further Indemnification Obligations for
such settled matter other than litigation costs and professional fees incurred
by the Indemnifying Party therein. As to any action, the party which is
controlling such action shall provide to the other party reasonable information
(including reasonable advance notice of all proceedings in respect thereto)
regarding the conduct of the action and the right to attend all proceedings and
depositions in respect thereto through its agents and attorneys, and the right
to discuss the action with counsel for the party controlling such action.
(d If within twenty (20) days after receipt by the Indemnifying
Party of notice from the Indemnified Party to the Indemnifying Party as to the
commencement of any action in respect of which Indemnification is sought
hereunder, the Indemnifying Party has not notified the Indemnified Party that
the Indemnifying Party assumes the defense of such action and has actually
assumed such defense, then the Indemnified Party shall have the right to defend
such action and to proceed immediately against the Indemnifying Party to enforce
all Indemnification Obligations of the Indemnifying Party hereunder (including
but not limited to the costs of defense, as the same may
30
be incurred). The Indemnification Obligations of the Indemnifying Party with
respect to such action shall, however, in no way be diminished by virtue of the
foregoing, and the fact that the Indemnified Party shall have defended, settled,
compromised or otherwise dealt with such action shall not, in any circumstances,
be deemed to constitute any waiver, release or exoneration of the Indemnifying
Party from their Indemnification Obligations, regardless of the outcome of such
action.
11.4 Limitations.
-----------
(a) The Company and the Seller shall not be liable to the Buyer
Indemnitees under either Section 11.2(b)(i) or (ii) unless the Buyer
Indemnitees shall have asserted a claim pursuant to either Section 11.2(b)(i)
or (ii) by giving written notice to the Company and the Seller, of the basis of
such claim not later than one year from the Closing Date (in each instance, the
"End Date").
(b) The Company and the Seller shall not be liable to Buyer
Indemnitees under either Section 11.2(b)(i) or (ii) until the aggregate amount
of Damages suffered by Buyer Indemnitees shall exceed $50,000 (the "Minimum
Loss") in the aggregate, at which time the Seller shall be liable for the total
aggregate Damages in excess of such Minimum Loss.
(c) Notwithstanding anything to the contrary contained herein, Seller
may pay for any claim for any Damages by transferring an amount of Buyer's
Common Shares ("Indemnifying Shares") equal to such Damages to the applicable
Buyer Indemnitee. For purposes hereof, the value of each Indemnifying Share
shall be deemed to be equal to an amount equal to the closing price of the
common stock of the Surviving Corporation on the OTC Bulletin Board averaged
over the 30 day period immediately preceding the date of written demand pursuant
to Section 11.6 hereof.
11.5 Maximum Aggregate Liability of the Company and Seller. Under no
-----------------------------------------------------
circumstances shall the Company and the Seller have Indemnification Obligations
or liability to Buyer Indemnitees under either Section 11.2(b)(i) or (ii) in the
aggregate in excess of $250,000 (the "Maximum Indemnity Liability").
11.6 Notice of Indemnification; Legal Representation.
-----------------------------------------------
(a) Notice. In the event that an Indemnified Party believes that it
------
is entitled to indemnification by the Indemnifying Party against or in respect
of a loss under Section 11.2, notice of the claim shall be given by the
Indemnified Party as follows:
(i) Buyer Indemnitees shall assert such claim in the manner
provided herein and before the End Date,
(ii) the Seller Indemnitees shall assert such claim within the
applicable period of limitations, and
31
(iii) any such claims shall be in writing, shall set forth the
amount or estimated amount of Damages and the basis for such claim set
forth in reasonable detail.
(b) Legal Representation. Counsel to the parties hereto in
--------------------
connection with the negotiation of and consummation of the transactions under
this Agreement shall be entitled to represent their respective party (or the
Seller in the case of counsel to the Company) in any and all Proceedings arising
out of any dispute relating to this Agreement. Buyer, Buyer Principals and
Seller, respectively, waive the right and agree they shall not seek to
disqualify any such counsel in any such Proceedings for any reason, including
but not limited to the fact such counsel or any member thereof may be a witness
in any such Proceedings or possess or have learned of information of a
confidential or financial nature of the party whose interests are adverse to the
party represented by such counsel in any such Proceedings.
11.7 Indemnification Procedures Regarding Escrow Amount. The Escrow Amount
--------------------------------------------------
shall be held by the Surviving Corporation (the "Escrow Agent") as set forth in
the Escrow Agreement as security for the performance by Buyer and Buyer
Principals of their obligations pursuant to this Agreement and shall be subject
to claims for indemnification pursuant to Section 11.2(a) hereof in accordance
with the terms of this Agreement and the Escrow Agreement. Notwithstanding
anything to the contrary contained herein, the Seller Indemnitees shall have the
right (but not the obligation, and such right shall not limit or affect any
other right or remedy which they might have hereunder or otherwise), to satisfy
claims for Damages under this Article 11 or otherwise by instructing the Escrow
Agent, subject to the terms and conditions of the Escrow Agreement, to promptly
remit to the Seller Indemnitees by wire transfer of funds or distribution of
shares out of the Escrow Amount in an amount equal to such Damages; provided
that if the amount of such Damages exceeds the Escrow Amount, the Escrow Agent
shall promptly remit the entire Escrow Amount to the Seller Indemnitees in
accordance with the foregoing. The Escrow Agent shall remit to Buyer Principals
and Bostonia Group, Inc. and/or their respective affiliates, as the case may be,
the remaining balance of the Escrow Amount, if any, less amounts in respect of
which the Seller Indemnitees have delivered notice as contemplated in this
Article 11, on the date that is eighteen (18) months after the Closing Date.
11.8 Subrogation. The Indemnifying Party shall not be entitled to require
-----------
that any action be brought against any other Person before action is brought
against it hereunder by the Indemnified Party and shall not be subrogated to any
right of action until it has paid in full or successfully settled or defended
against the Third Party Claim for which indemnification is sought; provided,
however, the Indemnifying Party shall have the right to enjoin in any action any
other party from which it has a right of subrogation. After the resolution of
the matter for which indemnification was sought, the Indemnified Party shall
cooperate with and provide reasonable assistance to the Indemnifying Party in
connection with actions brought against Persons who have obligations in
connection with the indemnified matter.
32
ARTICLE 12
OTHER AGREEMENTS
12.1 Legends. The certificates representing Buyer Shares shall bear a
-------
legend in the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act") or any other
applicable federal or state securities acts; and are "restricted
securities" as defined under Rule 144 of the Act. The shares may not
be transferred, sold or otherwise disposed of unless: (i) a
registration statement with respect to the shares shall be effective
under the Act or any other federal or state securities acts and (ii)
the issuer thereof shall have received an opinion of counsel that no
violations of any federal or state securities laws will result from
any transfer."
12.2 Director and Officer Liability. Buyer shall cause the Surviving
------------------------------
Corporation (and its successors) to enter into indemnification agreements with
each of the officers and directors of the Surviving Corporation and to establish
and maintain provisions in the certificate of incorporation and by-laws of the
Surviving Corporation concerning the indemnification and exoneration of the
Company's former and present officers, directors, employees and agents to the
fullest extent permitted by the Nevada Law.
ARTICLE 13
GENERAL PROVISIONS
13.1 Expenses. Except as otherwise expressly provided in this Agreement,
--------
Buyer shall pay all of the expenses incurred in connection with the preparation,
execution, and performance of this Agreement and the transactions contemplated
hereby, including all fees and expenses of agents, representatives, counsel, and
accountants.
13.2 Notices. All notices, consents, waivers, and other communications
-------
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), or (c) when received
by the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
33
the Company or the Seller:
0000 Xxxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx
Facsimile No.: (000) 000-0000
Phone No.: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxx, Forward, Xxxxxxxx & Scripps LLP
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Phone No.: (000) 000-0000
Buyer and Buyer Principals:
c/o Xxxx Xxxx
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Phone No. (000) 000-0000 x 000
with a copy to:
Xxxx Xxxxxxx, Esq.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Phone No.: (000)000-0000
13.3 Further Assurances. The parties agree (a) to furnish upon request to
------------------
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
13.4 Waiver. The rights and remedies of the parties to this Agreement are
------
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement
34
can be discharged by one party, in whole or in part, by a waiver or renunciation
of the claim or right unless in writing signed by the other party; (b) no waiver
that may be given by a party will be applicable except in the specific instance
for which it is given; and (c) no notice to or demand on one party will be
deemed to be a waiver of any obligation of such party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
13.5 Entire Agreement and Modification. This Agreement supersedes all
---------------------------------
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
13.6 Assignments, Successors, and No Third-Party Rights. Neither party
--------------------------------------------------
may assign any of its rights under this Agreement without the prior consent of
the other parties, which will not be unreasonably withheld or delayed. Subject
to the foregoing, this Agreement will apply to, be binding in all respects upon,
and inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
13.7 Severability. If any provision of this Agreement is held invalid or
------------
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
13.8 Section Headings, Construction. The headings of Sections and
------------------------------
Articles in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Section," "Sections,"
"Article" or "Articles" refer to the corresponding Section, Sections, Article or
Articles of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
13.9 Time of Essence. With regard to all dates and time periods set forth
---------------
or referred to in this Agreement, time is of the essence.
13.10 Governing Law. This Agreement will be governed by the laws of the
-------------
State of California without regard to conflicts of laws principles.
13.11 Forum Selection. Any Proceeding brought by any of the parties hereto
---------------
against another party hereto relating to this Agreement or the transactions
contemplated hereby or the
35
subject matter hereof shall be brought in the Superior Court of the State of
California sitting in San Diego County, California or the United States District
Court sitting in San Diego County, California and each of the parties hereto
hereby generally and unconditionally submits to and accepts the jurisdiction of
such courts.
13.12 Neutral Interpretation; Independent Counsel. This Agreement shall be
-------------------------------------------
construed and enforced according to its fair meaning as if prepared by all of
the parties hereto, after extensive negotiation, and no part of this Agreement
shall be construed against any party on the ground that such party, or the
attorney for that party, drafted it. Each party acknowledges that it has been
represented by, or has been given the opportunity to be represented by,
independent counsel of its choosing.
13.13 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[Remainder of page intentionally left blank.]
36
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
COMPANY:
CONVERSATIONAL SYSTEMS, INC.
By: /s/ Xxxx Xxxxx
--------------------------------------
Xxxx Xxxxx, President
SELLER:
/s/ Xxxx Xxxxx
-----------------------------------------
Xxxx Xxxxx
BUYER:
DEAD ON, INC.
By: /s/ Xxxx Xxxx
--------------------------------------
Name: Xxxx Xxxx
------------------------------------
Title: C.O.O.
-----------------------------------
BUYER PRINCIPALS:
/s/ Xxxx Xxxx
-----------------------------------------
Xxxx Xxxx
/s/ Xxxxxxx Xxxxx
-----------------------------------------
Xxxxxxx Xxxxx
Accepted and Agreed:
BOSTONIA GROUP, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx, President
37
