EXHIBIT 2.3
CONTRIBUTION AGREEMENT
dated as of
January 22, 2003
by and among
MORLYN FINANCIAL GROUP LLC
INTEGRATED ALARM SERVICES GROUP, INC.
XXXXXX X. FEW
XXXXXXX X. XxXXXX
and
XXXXX X. XXXXX
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT dated as of January 22, 2003 (this "Agreement"),
by and among MORLYN FINANCIAL GROUP, LLC, a New Jersey limited liability company
(the "Company"), INTEGRATED ALARM SERVICES GROUP, LLC, a Delaware corporation
("IASG"), and XXXXXX X. FEW, XXXXXXX X. XXXXXX and XXXXX X. XXXXX (collectively
referred to as the "Company Members").
WHEREAS, the Company and IASG have determined that a business
combination between IASG and the Company, to be effected by a transfer described
in Section 1.1 herein (the "Exchange") by the Company Members of all of their
respective membership interests in the Company (the "Membership Interests") to
IASG in exchange for an aggregate of 34,000 shares (the "Contribution Shares")
of common stock, par value $.001 per share, of IASG (the "Common Stock"), upon
the terms and subject to the conditions set forth herein, is advisable and in
the best interest of their respective companies, members and stockholders, and
presents an opportunity for their respective companies to achieve long-term
strategic and financial benefits;
WHEREAS, IASG (i) has determined that the Exchange is fair to,
and in the best interests of, IASG and its stockholders, (ii) has approved and
declared the advisability of entering into this Agreement, and (iii) has
recommended the approval and adoption of this Agreement by its stockholders;
WHEREAS, Xxxxxx X. Few ("Few") owns more than 50% of the
outstanding Common Stock and has consented in writing to the approval and
adoption of this Agreement and the Exchange;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, representations and warranties contained herein, the parties
hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1
The Exchange
Section 1.1 Exchange.
(a) Xxxxxxx, Savage, Kaplowitz, Wolf & Marcus LLP, counsel to IASG,
shall act as the exchange agent (the "Exchange Agent") for the purpose of
exchanging Membership Interests for the Contribution Shares. At or prior to the
Closing, IASG shall deliver to the Exchange Agent 34,000 shares of Common Stock
to be used as the Contribution Shares.
(b) At the Closing (as defined in Section 1.3 hereof), and subject to
the terms and conditions of this Agreement, the Company Members shall contribute
their respective Membership Interests, as such Membership Interests are set
forth on Schedule 1.1 hereto, to IASG in exchange for the Contribution Shares.
(c) The Contribution Shares will be distributed to the Company Members
as set forth on Schedule 1.1.
Section 1.2 IASG's Stockholders' Approval. The shareholders of IASG
have unanimously consented to the approval and adoption of this Agreement and
the Exchange. No other approval of IASG's stockholders is required in order to
consummate the Exchange.
Section 1.3 Closing. The closing of the Exchange and the other
transactions contemplated by this Agreement (the "Closing") shall take place at
11:00 a.m. on a date to be specified by the parties, which shall be the date of
satisfaction (or waiver in accordance with this Agreement) of all of the
conditions set forth in Articles 5 and 6 (the "Closing Date"), unless another
time or date is agreed to by the parties hereto. The Closing shall be held at
the offices of Xxxxxxx, Savage, Kaplowitz, Wolf & Marcus LLP, 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
ARTICLE 2
Representations and Warranties of IASG
IASG represents and warrants to the Company that:
Section 2.1 Corporate Existence and Power. IASG is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect (as defined below) on IASG. IASG is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on IASG. IASG has heretofore delivered
to the Company true and complete copies of the certificate of incorporation and
by-laws of IASG as currently in effect.
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For the purpose of this Agreement, Material Adverse Effect means any
effect or change that is or would be materially adverse to the business,
operations, assets, prospects, condition (financial or otherwise) or results of
operations of an entity and any of its subsidiaries, taken as a whole.
Section 2.2 Authorization.
The execution, delivery and performance by IASG of this Agreement, the
performance of its obligations hereunder, and the consummation of the
transactions contemplated hereby are within IASG's corporate powers and have
been duly authorized by all necessary corporate action. The affirmative vote of
the holders of more than 50% of the outstanding shares of IASG Common Stock is
the only action of IASG necessary in connection with its execution and delivery
of this Agreement, the performance of its obligations hereunder and the
consummation of the Exchange. This Agreement has been duly and validly executed
and delivered by IASG and is a legal, valid and binding obligation of IASG,
enforceable against it in accordance with its terms, except as enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other similar laws now or hereafter in effect
relating to creditors' rights generally or by general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
IASG's Boards of Directors has unanimously (i) determined that this
Agreement and the transactions contemplated hereby, including the Exchange, are
fair to and in the best interests of its stockholders, (ii) approved and adopted
this Agreement and the transactions contemplated hereby, including the Exchange,
which approval satisfies in full any applicable requirements of Delaware Law,
and (iii) resolved to recommend, and recommended, approval and adoption of this
Agreement by the holders of the Common Stock.
Section 2.3 Governmental Authorization. The execution and delivery of
this Agreement and the performance by IASG of its obligations under this
Agreement relating to the Closing and the transactions contemplated hereby
require no action by or in respect of, or filing with, any governmental body,
agency, official or authority. other than (a) compliance with any applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
foreign or state securities laws or regulations of various states ("Blue Sky
Laws") or takeover laws, and (b) any other filings, approvals or authorizations
which, if not obtained, would not, individually or in the aggregate, have a
Material Adverse Effect on IASG, or materially impair the ability of IASG to
consummate the Exchange and the transactions contemplated by this Agreement.
Section 2.4 Non-contravention. The execution and delivery by IASG of
this Agreement and the consummation by IASG of the transactions contemplated
hereby and performance of its obligations under this Agreement do not and will
not (i) violate IASG's Certificates of Incorporation or By-Laws, (ii) violate
any applicable law, rule, regulation, judgment, injunction, order or decree, or
(iii) require any consent or other action by any Person under, constitute a
default under, result in a violation of, conflict with, or give rise to any
right of termination, cancellation or acceleration of any right or obligation of
IASG, or to a loss of any benefit to which IASG is entitled under any provision
of any agreement or other instrument binding upon IASG, or any license,
franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets or business of IASG.
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Section 2.5 Capitalization.
(a) The authorized capital stock of IASG consists of 100,000,000 shares
of Common Stock and 3,000,000 shares of preferred stock, par value $.001 per
share ("Preferred Stock"). As of the date of this Agreement, the outstanding
capitalization of IASG consists of (i) ___________shares of Common Stock, (ii)
no shares of Preferred Stock, and (iii) no options and warrants to purchase
shares of Common Stock. All outstanding shares of capital stock of IASG have
been duly authorized and validly issued and are fully paid and non-assessable.
As of the date hereof there are no outstanding options, warrants, subscriptions,
conversion or other rights, agreements or other commitments obligating IASG to
issue any shares of its capital stock or any securities convertible into,
exchangeable for or evidencing the right to subscribe for any shares of its
capital stock.
(b) The shares of Common Stock to be issued as part of the Contribution
Shares will be duly authorized for issuance and when issued and delivered in
accordance with the terms of this Agreement, will be validly issued, fully paid
and non-assessable and the issuance thereof will not be subject to any
preemptive or other similar right.
ARTICLE 3
Representations and Warranties of the Company
The Company represents and warrants to IASG that:
Section 3.1 Corporate Existence and Power. The Company is a limited
liability company duly organized and in good standing under the laws of the
State of New Jersey. The Company has all powers and governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. At the Closing, the
Company will be duly qualified to do business as a foreign corporation and will
be in good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
The Company has heretofore delivered to the Company true and complete copies of
the Articles of Formation and Operating Agreement as currently in effect.
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Section 3.2 Authorization. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby are within the powers of the Company, and have
been duly authorized by all necessary action. This Agreement, assuming the due
authorization, execution and delivery thereof by IASG, is a legal, valid and
binding obligation of the Company, enforceable against it in accordance with its
terms, except as enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, or other similar
laws now or hereafter in effect relating to creditors= rights generally or by
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).
Section 3.3 Governmental Authorization. The execution and delivery of
this Agreement and the performance by the Company of its obligations under this
Agreement relating to the Exchange, the Closing and the transactions
contemplated hereby require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) compliance with
any applicable requirements of the Securities Act, Blue Sky Laws or takeover
laws, and (b) any other filings, approvals or authorizations which, if not
obtained, would not, individually or in the aggregate, have a Material Adverse
Effect on the Company or materially impair the ability of the Company to
consummate the Exchange and the transactions contemplated by this Agreement.
Section 3.4 Non-contravention. The execution and delivery by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby and performance of its obligations under this
Agreement do not and will not (i) violate the Company=s Certificate of Formation
or Operating Agreement, (ii) violate any applicable law, rule, regulation,
judgment, injunction, order or decree, (iii) require any consent or other action
by any Person under, constitute a default under, result in a violation of,
conflict with, or give rise to any right of termination, cancellation or
acceleration of any right or obligation of the Company, or to a loss of any
benefit to which the Company, is entitled under any provision of any agreement
or other instrument binding upon the Company, or any license, franchise, permit,
certificate, approval or other similar authorization affecting, or relating in
any way to, the assets or business of the Company.
ARTICLE 4
Covenants of the Parties
The parties hereto agree that:
Section 4.1 Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each party will use its reasonable 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.
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Section 4.2 Filings; Other Action. Subject to the terms and conditions
herein provided, the Company and IASG shall promptly use reasonable best efforts
to cooperate with one another in (i) determining whether any filings are
required to be made with, or consents, permits, authorizations or approvals are
required to be obtained from, any third party, the United States government or
any agencies, departments or instrumentalities thereof or other governmental or
regulatory bodies or authorities of federal, state, local and foreign
jurisdictions in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and (ii) timely
making all such filings and timely seeking all such consents, permits,
authorizations or approvals, and (iii) taking or causing to be taken, all other
actions and do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective the transactions contemplated hereby.
ARTICLE 5
Conditions Precedent
Section 5.1 Conditions of Obligations of the Company Members. The
obligations of the Company Members to effect the Exchange are subject to the
satisfaction of the following conditions, any or all of which may be waived in
whole or in part by the Company Members:
(a) Representations and Warranties. Each of the representations and
warranties of IASG forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except where the
failure to be so true and correct would not have a Material Adverse Effect on
IASG.
(b) Performance of Obligations of IASG. IASG shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing.
(c) Stockholders' Vote. IASG shall have delivered to the Company
evidence satisfactory to the Company that a majority of the stockholders of IASG
approved the transactions contemplated hereby in accordance with applicable
state law.
Section 5.2 Conditions of Obligations of IASG. The obligations of IASG
to effect the Exchange are subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by IASG:
(a) Representations and Warranties. Each of the representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date, except where the
failure to be so true and correct would not have a Material Adverse Effect on
the Company.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date.
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(c) Member approval. The Company Members shall have delivered to IASG
evidence satisfactory to IASG that the Members have approved the transactions
contemplated hereby in accordance with applicable state law.
ARTICLE 6
Termination
Section 6.1 Termination. This Agreement may be terminated and the
Exchange may be abandoned at any time prior to the Closing:
(a) by mutual written consent of the parties hereto;
(b) by the Company if (i) IASG shall have failed to comply in any
material respect with any of the covenants or agreements contained in this
Agreement to be complied with or performed by IASG; or (ii) any representations
and warranties of IASG contained in this Agreement shall not have been true when
made or on and as of the Closing Date as if made on and as of Closing Date
(except to the extent it relates to a particular date), except where the failure
to be so true and correct would not have a Material Adverse Effect on IASG; or
(c) by IASG if (i) the Company shall have failed to comply in any
material respect with any of the covenants or agreements contained in this
Agreement to be complied with or performed by them; or (ii) any representations
and warranties of the Company contained in this Agreement shall not have been
true when made or on and as of the Closing Date as if made on and as of the
Closing Date (except to the extent it relates to a particular date), except
where the failure to be so true and correct would not have a Material Adverse
Effect on the Company.
Section 6.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 6.1, all further obligations of the parties
under this Agreement, other than the provisions of this Section 6.2, shall
forthwith be terminated without any further liability of any party to the other
parties. Nothing contained in this Section 6.2 shall relieve any party from
liability for any breach of this Agreement.
ARTICLE 7
Miscellaneous
Section 7.1 Notices. All notices, requests and other communications to
any party hereunder shall be in writing and either delivered personally,
telecopied or sent by certified or registered mail, postage prepaid,
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if to Company, to:
Morlyn Financial Group, LLC
0 Xxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Few, Sr.
if to IASG, to:
Integrated Alarm Services Group, Inc.
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: General Counsel
or such other address or fax number as such party may hereafter specify for the
purpose by notice to the other parties hereto. All such notices, requests and
other communications shall be deemed received on the date delivered personally,
telecopied or, if mailed, five business days after the date of mailing if
received prior to 5 p.m. in the place of receipt and such day is a business day
in the place of receipt. Otherwise, any such notice, request or communication
shall be deemed not to have been received until the next succeeding business day
in the place of receipt.
Section 7.2 Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Closing.
Section 7.3 Amendments; No Waivers.
(a) Any provision of this Agreement with respect to transactions other
than the Exchange contemplated hereby may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by the Company and IASG; or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 7.4 Fees and Expenses. Except for all transfer taxes which
shall be paid by IASG, all costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense.
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Section 7.5 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, but any such transfer or
assignment will not relieve the appropriate party of its obligations hereunder.
Section 7.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
Section 7.7 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in
any federal or state court located in the City of Albany, and each of the
parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum.
Section 7.8 Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto. No provision of
this Agreement is intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
Section 7.9 Entire Agreement. This Agreement and the Schedules hereto
constitutes the entire agreement between the parties with respect to the subject
matter of this Agreement and supersedes all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter
hereof. The Company makes no representations or warranties, except as set forth
in this Agreement.
Section 7.10 Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
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Section 7.11 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any parties. Upon
such a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the following individuals has
caused this Agreement to be signed, and each party that is not an individual has
caused this Agreement to be duly executed under seal by its respective
authorized officers, all as of the day and year first above written.
MORLYN FINANCIAL GROUP, LLC
By: ________________________________
Name: Xxxxxx X. Few
Title: Member
By: ________________________________
Name: Xxxxxxx X. XxXxxx
Title: Member
By: ________________________________
Name: Xxxxx X. Xxxxx
Title: Member
INTEGRATED ALARM SERVICES GROUP, INC.
By:_________________________________
Name: Xxxxxx X. Few
Title: President
XXXXXX X. FEW
By: ________________________________
XXXXXXX X. XxXXXX
By: ________________________________
XXXXX X. XXXXX
By: ________________________________
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Schedule 1.1
MEMBERSHIP INTERESTS
Name of Member Percentage Interest
-------------- -------------------
Xxxxxx X. Few 80.0%
Xxxxxxx X. XxXxxx 10.0%
Xxxxx X. Xxxxx 10.0%
DISTRIBUTION OF CONTRIBUTION SHARES
Name of Member Percentage Interest
-------------- -------------------
Xxxxxx X. Few 27,200
Xxxxxxx X. XxXxxx 3,400
Xxxxx X. Xxxxx 3,400
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