EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AUG CORP., a Delaware corporation,
AUG ACQUISITION CORP., a Florida corporation,
SYNTHESYS SECURE TECHNOLOGIES, INC., a Florida corporation,
and
CERTAIN SHAREHOLDERS OF SYNTHESYS SECURE TECHNOLOGIES, INC.
JANUARY 4, 2002
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of January 4,
2002, by and among AUG CORP., a Delaware corporation ("AUG"), AUG ACQUISITION
CORP., a Florida corporation and wholly owned subsidiary of AUG ("Acquisition
Sub"), SYNTHESYS SECURE TECHNOLOGIES, INC., a Florida corporation ("STI") and
XXXXX XXXXXXX and XXXXXX XXXXX (each a "Seller" and collectively the "Sellers").
AUG, Acquisition Sub, and STI are sometimes hereinafter referred to collectively
as the "Companies," or individually as a "Company,"
WHEREAS, the respective Boards of Directors of the Companies deem it
advisable and in the best interests of their respective stockholders that STI be
acquired by and become a wholly owned subsidiary of AUG and, in furtherance
thereof, the Boards of Directors of the Companies have approved, as applicable,
the merger of Acquisition Sub with and into STI, upon the terms and subject to
the conditions set forth herein; and
WHEREAS, for federal income tax purposes, it is intended that the
merger shall qualify as a reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I.
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.2 hereof), Acquisition Sub shall
be merged (the "Merger") with and into STI, with STI being the surviving
corporation in the Merger (the "Surviving Corporation") and the separate
existence of Acquisition Sub shall thereupon cease. The Merger shall have the
effects set forth in the Florida Business Corporation Act (the "FBCA").
1.2 Effective Time of the Merger. The Merger shall become effective
(the "Effective Time") upon the completion of the later of the filing of
properly executed Articles of Merger with the Secretary of State of the State of
Florida, which shall be made on the Closing Date after satisfaction of the
conditions set forth in Article VIII.
ARTICLE II.
AUG AND THE SURVIVING CORPORATION
2.1 Articles of Incorporation of the Surviving Corporation. The
Articles of Incorporation of STI shall be the Articles of Incorporation of the
Surviving Corporation, except that such Articles of Incorporation shall be
amended and restated at the Effective Time to read in their entirety
substantially the same as the Articles of Incorporation of Acquisition Sub (with
the name of STI being substituted for that of Acquisition Sub).
2.2 Bylaws of the Surviving Corporation. The Bylaws of Acquisition Sub
as in effect at the Effective Time shall be the Bylaws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
2.3 Directors and Officers of the Surviving Corporation.
(a) The directors of STI at the Effective Time shall be the
initial directors of the Surviving Corporation of the Merger and shall hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the Articles of
Incorporation and Bylaws of the Surviving Corporation, or as otherwise provided
by law. The directors shall be listed on Schedule 2.3(a).
(b) The individuals named on Schedule 2.3(b) shall be the
initial officers of the Surviving Corporation of the Merger and shall hold
office from the Effective Time until removed or until their respective
successors are duly elected or appointed and qualified in the manner provided in
the Articles of Incorporation and Bylaws of the Surviving Corporation, or as
otherwise provided by law.
ARTICLE III.
CONVERSION OF SHARES
3.1 Exchange Ratio. At the Effective Time and subject to Section 7.14,
by virtue of the Merger and without any action on the part of the holder
thereof:
(a) The shares of common stock of STI ("Share") issued and
outstanding immediately prior to the Effective Time (other than the Excluded
Shares as defined in Section 3.7 below and Shares held by AUG or any subsidiary
of AUG, if any), shall be converted at the Effective Time into an aggregate of
5,350,259 shares of restricted common stock of AUG shares ("AUG Shares").
(b) At the Effective Time, all Shares of STI (other than the
Excluded Shares) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate previously
representing any such Shares or shall
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thereafter represent the AUG Shares and AUG Warrants, into which such Shares of
STI have been converted. Certificates representing Shares of STI shall be
exchanged for certificates representing whole AUG Shares.
(c) If, prior to the Effective Time, AUG should split or
combine the AUG Shares, or pay a stock dividend or other stock distribution in,
AUG Shares, then the STI Exchange Ratio shall be appropriately adjusted to
reflect such split, combination, dividend, or other distribution.
(d) Each Share of STI held in treasury (or a subsidiary, as
such term is defined in Article IV hereof) and each such Share held by AUG or
any subsidiary of AUG immediately prior to the Effective Time shall be canceled
and retired and cease to exist, and no AUG Shares shall be issued in exchange
therefor.
(e) Each share of common stock of Acquisition Sub issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and exchangeable for one share of common stock of the Surviving Corporation
of the Merger.
3.2 Exchange of Shares.
(a) As of the Effective Time, each holder of Shares (other
than Excluded Shares) shall, upon surrender of one or more certificates
representing such Shares for cancellation to AUG's transfer agent, be entitled
to receive certificates representing the number of AUG Shares into which such
Shares are converted in the Merger. The AUG Shares into which the Shares shall
be converted in the Merger shall be deemed to have been issued at the Effective
Time.
(b) As soon as reasonably practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") whose Shares were converted into AUG
Shares pursuant to Section 3.1, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as the Companies may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing AUG Shares. Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of whole AUG Shares which such holder has the right to receive in respect
of the Certificates surrendered pursuant to the provisions of this Article III.
(c) In the event that any stock certificate representing
Shares shall have been lost, stolen, or destroyed, upon the making of an
affidavit of that fact by the person
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claiming such certificate to be lost, stolen, or destroyed, AUG shall issue or
cause to be issued in exchange for such lost, stolen, or destroyed certificate
the number of AUG Shares into which such shares are converted in the Merger in
accordance with this Article III. When authorizing such issuance in exchange
therefor, the Board of Directors of AUG may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen, or destroyed certificate to give AUG a bond in such sum as it may direct
as indemnity, or such other form of indemnity as it shall direct, against any
claim that may be made against AUG with respect to the certificate alleged to
have been lost, stolen, or destroyed.
3.3 Stock Options, Warrants, Debentures and other Agreements. As of the
Effective Time, any stock options, warrants, convertible securities, or other
contractual commitments or agreements of any kind to purchase or issue Shares
that are outstanding both as of the date hereof and at the Effective Time
(whether or not contingent or otherwise requiring further shareholder approval)
shall terminate as of the Effective Time, and prior to the Effective Time, STI
shall take or cause to be taken all necessary actions to ensure that following
the Effective Time no participant in any such plan, program or arrangement shall
have any right thereunder to acquire any equity securities of STI, the Surviving
Corporation, any subsidiary thereof or AUG. The Options listed on Schedule 3.3
shall be converted into shares of AUG and 577,179 options shall be made
available to employees on a going forward basis.
3.4 Dividends; Transfer Taxes. No dividends that are declared on AUG
Shares shall be paid to persons entitled to receive certificates representing
AUG Shares until such persons surrender their certificates representing Shares.
Upon such surrender, there shall be paid to the person in whose name the
certificates representing such AUG Shares shall be issued any dividends which
shall have become payable with respect to such AUG Shares between the Effective
Time and the time of such surrender. In no event shall the person entitled to
receive such dividends be entitled to receive interest on such dividends. If any
certificates for any AUG Shares are to be issued in a name other than that in
which the certificate representing Shares surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the person requesting
such exchange shall pay to the Exchange Agent any transfer or other taxes
required by reason of the issuance of certificates for such AUG Shares in a name
other than that of the registered holder of the certificate surrendered, or
shall establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not applicable. Notwithstanding the foregoing, neither the Exchange
Agent nor any party hereto shall be liable to a holder of Shares for any AUG
Shares or dividends thereon or, in accordance with Section 3.4 hereof, the cash
payment for fractional interests, delivered to a public official pursuant to
applicable escheat laws.
3.5 No Fractional Securities. No certificates or scrip representing
fractional AUG Shares or AUG Warrants shall be issued upon the surrender for
exchange of certificates representing Shares pursuant to this Article III and no
dividend, stock split-up, or other change in the capital structure of AUG shall
relate to any fractional security, and
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such fractional interests shall not entitle the owner thereof to vote or to any
rights of a security holder. In lieu of any such fractional securities, each
holder of Shares who would otherwise have been entitled to a fraction of a AUG
Share upon surrender of stock certificates for exchange pursuant to this Article
III shall be adjusted to the next highest share or warrant.
3.6 Closing of Transfer Books. At the Effective Time, the stock
transfer books of STI shall be closed and no transfer of Shares shall thereafter
be made. If, after the Effective Time, certificates representing Shares are
presented to the Surviving Corporation, they shall be canceled and exchanged for
certificates representing AUG Shares in accordance with the terms hereof. At and
after the Effective Time, the holders of Shares to be exchanged for AUG Shares
pursuant to this Agreement shall cease to have any rights as stockholders of STI
except for the right to surrender such stock certificates in exchange for AUG
Shares as provided hereunder.
3.7 Dissenting Shares. If holders of Shares are entitled to dissent
from the Merger and demand appraisal of any such Shares in accordance with the
provisions of the FBCA concerning the right of such holders to dissent from the
Merger and demand appraisal of their shares ("Dissenting Holders"), any Shares
held by a Dissenting Holder as to which appraisal has been so demanded
("Excluded Shares") shall not be converted as described in Section 3.1, but
shall from and after the Effective Time represent only the right to receive such
consideration as may be determined to be due to such Dissenting Holder pursuant
to the FBCA, as the case may be; provided, however, that each Share held by a
Dissenting Holder who shall, after the Effective Time, withdraw his demand for
appraisal or lose his right of appraisal with respect to such Shares, in either
case pursuant to the FBCA, shall not be deemed Excluded Shares but shall be
deemed to be converted, as of the Effective Time, into the right to receive AUG
Shares in accordance with the STI Exchange Ratio, as applicable.
3.8 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Atlas Xxxxxxxx,
P.A., Suite 1700, 000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000,
no later than December 31, 2001, at 10:00 a.m., local time.
3.9 Supplementary Action. If at any time after the Effective Time, any
further assignments or assurances in law or any other things are necessary or
desirable to vest or to perfect or confirm of record in the Surviving
Corporation the title to any property or rights of either AUG or STI, or
otherwise to carry out the provisions of this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized and empowered on
behalf of each, in the name of and on behalf of them as appropriate, to execute
and deliver any and all things necessary or proper to vest or to perfect or
confirm title to such property or rights in the Surviving Corporation, and
otherwise to carry out the purposes and provisions of this Agreement.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF STI
As used in this Agreement, (i) the term "Material Adverse Effect"
means, with respect to AUG, Acquisition Sub, or STI, as the case may be, a
Material Adverse Effect on the business, assets, results of operations, or
financial condition of such party and its subsidiaries taken as a whole, or in
the ability of such party to perform its obligations hereunder, including, but
not limited to, any event resulting in, or that could reasonably result in, a
change of greater than 10% in any number in any of the parties' financial
statements, and (ii) the word "subsidiary" when used with respect to any party
means any corporation or other organization, whether incorporated or
unincorporated, of which such party or any other subsidiary of such party is a
general partner (excluding partnerships the general partnership interests of
which held by such party or any subsidiary of such party do not have a majority
of the voting interests in such partnership) or of which at least a majority of
the securities or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporations or other organizations is directly
or indirectly owned or controlled by such party and/or by any one or more of the
subsidiaries.
STI represents and warrants, with respect to itself and its
subsidiaries, except as disclosed to AUG in the STI Schedule of Exceptions (the
"STI Schedule"), attached hereto and incorporated herein by this reference, as
follows:
4.1 Organization. Each of STI and its subsidiaries is a corporation
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation and has the corporate power to carry on its
business as it is now being conducted or presently proposed to be conducted.
Each of STI and its subsidiaries is duly qualified as a foreign corporation to
do business, and is in good standing (to the extent the concept of good standing
exists), in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified shall not have a Material
Adverse Effect.
4.2 Capitalization. As of the date hereof, the authorized capital stock
of STI and each of its subsidiaries is as set forth in Schedule 4.2. As of the
date hereof, the number of capital stock of STI which are issued and outstanding
is as set forth in Schedule 4.2. All of the issued and outstanding shares of
capital stock of STI are validly issued, fully paid, and non-assessable and free
of preemptive rights or similar rights created by statute, the Articles of
Incorporation or Bylaws of STI or any agreement by which STI or any of its
subsidiaries is a party or by which it is bound. Except (a) as set forth above
or, (b) as disclosed in Schedule 4.2, there are not as of the date of this
Agreement any shares of capital stock of STI issued or outstanding or any
options, warrants, subscriptions, calls, rights, convertible securities, or
other agreements or commitments obligating STI to issue,
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transfer, or sell any shares of its capital stock. As of the date hereof, no
bonds, debentures, notes, or other indebtedness having the right to vote (or
convertible into or exercisable for securities having the right to vote) on any
matters on which stockholders of STI may vote ("Voting Debt") were issued and
outstanding.
4.3 Authority Relative to this Agreement. STI has the corporate power
to enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement by STI and the consummation by STI of
the transactions contemplated hereby have been duly authorized by its Board of
Directors, and, except for approval by the requisite votes cast by STI's
stockholders, no other corporate proceedings on the part of STI are necessary to
approve this agreement or the transactions contemplated hereby [meeting or
consent].
4.4 Consents and Approvals; No Violations. Except for filing and
recordation of a Certificate of Merger under the FBCA, no filing with, and no
permit, authorization, consent, or approval of, any public body or authority is
necessary for the consummation by STI of the transactions contemplated by this
Agreement. Neither the execution and delivery of this Agreement by STI, nor the
consummation by it of the transactions contemplated hereby, nor compliance by
STI with any of the provisions hereof, shall (a) result in any breach of the
Articles of Incorporation or Bylaws of STI, (b) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, or
acceleration) under, any of the terms, conditions, or provisions of any note,
bond, mortgage, indenture, license, contract, agreement, or other instrument or
obligation to which STI or any of its subsidiaries is a party or by which any of
them or any of their properties or assets may be bound or (c) violate any order,
writ, injunction, decree, statute, rule, or regulation applicable to STI, any of
its subsidiaries or any of their properties or assets, except in the case of
clauses (b) and (c) for violations, breaches, or defaults that would not have a
Material Adverse Effect.
4.5 Financial Statements. The unaudited balance sheet dated September
30, 2001 for the nine months ended (the "Interim Balance Sheet") fairly present
in all material respects the consolidated financial position of STI and its
subsidiaries as of the respective dates thereof, and the other related
statements included therein fairly represent in all material respects the
results of operations and cash flows of STI and its subsidiaries for the nine
months ended September 30, 2001.
4.6 Absence of Certain Changes or Events. Since November 30, 2001,
neither STI nor any of its subsidiaries has: (a) taken any of the actions set
forth in Sections 6.1(b), 6.1(c), or 6.1(d) hereof; (b) incurred any liability
material to STI and its subsidiaries on a consolidated basis, except in the
ordinary course of its business, consistent with past practices; (c) suffered a
change, or any event involving a prospective change, in the business, assets,
financial condition, or results of operations of STI or any of its subsidiaries
which has had, or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect; or (d) subsequent to the date hereof,
except as permitted by
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Section 6.1 hereof, conducted its business and operations other than in the
ordinary course of business and consistent with past practices.
4.7 Litigation. As of the date of this Agreement, (i) there is no
action, suit, judicial, or administrative proceeding, arbitration or
investigation pending or, to the best knowledge of STI, threatened against or
involving STI or any of its subsidiaries, or any of their properties or rights,
before any court, arbitrator, or administrative or governmental body; (ii) there
is no judgment, decree, injunction, rule, or order of any court, governmental
department, commission, agency, instrumentality, or arbitrator outstanding
against STI or any of its subsidiaries; and (iii) STI and its subsidiaries are
not in violation of any term of any judgments, decrees, injunctions, or orders
outstanding against them.
4.8 Contracts.
(a) Each of the material contracts, instruments, mortgages,
notes, security agreements, leases, agreements, or understandings, whether
written or oral, to which STI or any of its subsidiaries is a party that relates
to or affects the assets or operations of STI or any of its subsidiaries or to
which STI or any of its subsidiaries or their respective assets or operations
may be bound or subject is a valid and binding obligation of STI and in full
force and effect (with respect to STI or such subsidiary). Except to the extent
that the consummation of the transactions contemplated by this Agreement may
require the consent of third parties, as disclosed in the STI Schedule 4.8,
there are no existing defaults by STI or any of its subsidiaries thereunder or,
to the knowledge of STI, by any other party thereto, which defaults,
individually or in the aggregate, would have a Material Adverse Effect; and no
event of default has occurred, and no event, condition, or occurrence exists,
that (whether with or without notice, lapse of time, or the happening or
occurrence of any other event) would constitute a default by STI or any of its
subsidiaries thereunder which default would, individually or in the aggregate,
have a Material Adverse Effect.
(b) As of the date of this Agreement neither STI nor any of
its subsidiaries is a party to any oral or written (i) consulting agreement not
terminable on 30 days' or less notice involving the payment of more than $25,000
per annum, in the case of any such agreement with an individual; (ii) joint
venture agreement; (iii) non-competition or similar agreements that restricts
STI or its subsidiaries from engaging in a line of business; (iv) agreement with
any executive officer or other employee of STI or any subsidiary the benefits of
which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving STI of the nature contemplated by this
Agreement and which provides for the payment of in excess of $10,000; (v)
agreement with respect to any executive officer of STI or any subsidiary
providing any term of employment beyond one year or compensation guaranty in
excess of $50,000 per annum; or (vi) agreement or plan, including any stock
option plan, stock appreciation rights plan, restricted stock plan, or stock
purchase plan, any of the benefits of which shall be increased, or the vesting
of the benefits of which shall be accelerated, by the occurrence of any of the
transactions
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contemplated by this Agreement or the value of any of the benefits of which
shall be calculated on the basis of any of the transactions contemplated by this
Agreement.
4.9 Employee Benefit Plans.
(a) Disclosed in Schedule 4.9 is a true and complete list of
each written or formal employee benefit plan (including, without limitation, any
"employee benefit plan" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) policy or agreement that is
maintained (all of the foregoing, the "Benefit Plans"), or is or was contributed
to by STI or pursuant to which STI or any trade or business, whether or not
incorporated (an "ERISA Affiliate"), which together with STI would be deemed a
"single employer" within the meaning of Section 4001 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), is still potentially liable
for payments, benefits, or claims. A copy of each Benefit Plan as currently in
effect and, if applicable, the most recent Annual Report, Actuarial Report or
Valuation, Summary Plan Description, Trust Agreement, and a Determination Letter
issued by the IRS for each Benefit Plan have heretofore been delivered to AUG.
No Benefit Plan was or is subject to Title IV of ERISA or Section 412 of the
Code (including any "multi-employer plan," as defined in Section 3(37) of
ERISA).
(b) Each of the Benefit Plans that are subject to ERISA are in
compliance with ERISA; each of the Benefit Plans intended to be "qualified"
within the meaning of Section 401 (a) of the Internal Revenue Code of 1986, as
amended (the "Code") is so qualified; and no event has occurred, and to STI's
knowledge, there exists no condition or set of circumstances, in connection with
which STI or any ERISA Affiliate is or could be subject to liability (except
liability for benefit claims and funding obligations payable in the ordinary
course) under ERISA, the Code, or any other applicable law with respect to any
Benefit Plan.
(c) All contributions or other amounts payable by STI or its
subsidiaries through September 30, 2001 with respect to each Benefit Plan in
respect of current or prior plan years have been either paid or accrued on the
most recent financial statements of STI made available to AUG. Any contributions
or other amounts payable by STI or its subsidiaries for periods between
September 30, 2001 and the Effective Time with respect to each Benefit Plan in
respect of current or prior plan years have been or shall be either paid or
accrued in the normal course of business on the books and records of STI at or
prior to the Effective Time. There are no pending, or, to the best knowledge of
STI, threatened or anticipated claims (other than routine claims for benefits)
by or on behalf of or against any of the Benefit Plans or any trusts or other
funding vehicles related thereto.
(d) No Benefit Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect to
current or former employees for periods extending beyond their retirement or
other termination of service (other than (i) coverage mandated by Part 6 of
Subtitle B of Title I of ERISA, Section 4980B of the Code
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or any comparable state law, (ii) death benefits or retirement benefits under
any "employee pension plan," as that term is defined in Section 3(2) of ERISA,
(iii) deferred compensation benefits accrued as liabilities on the books of STI
or the ERISA Affiliates, or (iv) benefits the full cost of which is borne by the
current or former employee or his or her beneficiary).
4.10 Taxes. For the purposes of this section, the term "tax" shall
include all taxes, charges, withholdings, fees, levies, penalties, additions,
interest, or other assessments imposed by any United States federal, state, or
local authority or any other taxing authority on STI or any of its Tax
Affiliates (as hereinafter defined) as to their respective income, profit,
franchise, gross receipts, payroll, sales, employment, worker's compensation,
use, property, withholding, excise, occupancy, environmental, and other taxes,
duties, or assessments of any nature, whatsoever. STI has filed or caused to be
filed timely all federal, state, local, and foreign tax returns required to be
filed by each of its and any member of its consolidated, combined, unitary, or
similar group (each such member a "Tax Affiliate"). Such returns, reports, and
other information are accurate and complete. STI has paid or caused to be paid
or has made adequate provision or set up an adequate accrual or reserve for the
payment of, all taxes shown to be due in respect of the periods for which
returns are due, and has established (or shall establish at least quarterly) an
adequate accrual or reserve for the payment of all taxes payable in respect of
the period subsequent to the last of said periods required to be so accrued or
reserved. Neither STI nor any of its Tax Affiliates has any liability for taxes
in excess of the amount so paid or accruals or reserves so established. Neither
STI nor any of its Tax Affiliates is delinquent in the payment of any tax in
excess of the amount reserved or provided therefor, and no deficiencies for any
tax, assessment, or governmental charge in excess of the amount reserved or
provided therefor have been threatened, claimed, proposed, or assessed. No
waiver or extension of time to assess any taxes has been given or requested. The
Internal Revenue Service or comparable state agencies have never audited STI's
federal and state income tax returns.
4.11 Compliance With Applicable Law. STI and each of its subsidiaries
holds all licenses, franchises, permits, variances, exemptions, orders,
approvals, and authorizations necessary for the lawful conduct of its business
under and pursuant to, and the business of each of STI and its subsidiaries is
not being conducted in violation of, any provision of any federal, state, local,
or foreign statute, law, ordinance, rule, regulation, judgment, decree, order,
concession, grant, franchise, permit or license, or other governmental
authorization or approval applicable to STI or any of its subsidiaries.
4.12 Subsidiaries. Schedule 4.12 lists all the subsidiaries of STI as
of the date of this Agreement and indicates for each such corporate subsidiary
as of such date the jurisdiction of incorporation or organization. All of the
outstanding shares of capital stock or other equity interests of each of the
subsidiaries are (i) held by STI or one of such wholly-owned subsidiaries; (ii)
fully paid and non-assessable; and (iii) owned by STI or one of such wholly
owned subsidiaries free and clear of any claim, lien, or encumbrance.
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4.13 Labor and Employment Matters. (a) STI and its subsidiaries are and
have been in compliance with all applicable laws respecting employment and
employment practices, terms, and conditions of employment and wages and hours,
and such laws respecting employment discrimination, equal opportunity,
affirmative action, worker's compensation, occupational safety, and health
requirements and unemployment insurance and related matters, and are not engaged
in and have not engaged in any unfair labor practice; (b) to the knowledge of
STI, no investigation or review by or before any governmental entity concerning
any violations of any such applicable laws is pending nor, to the knowledge of
STI is any such investigation threatened or has any such investigation occurred
during the last three years, and no governmental entity has provided any notice
to STI or any of its subsidiaries or otherwise asserted an intention to conduct
any such investigation; (c) there is no labor strike, dispute, slowdown, or
stoppage actually pending or threatened against STI or any of its subsidiaries;
(d) no union representation question or union organizational activity exists
respecting the employees of STI or any of its subsidiaries; (c) no collective
bargaining agreement exists which is binding on STI or any of its subsidiaries;
(f) neither STI nor any of its subsidiaries has experienced any material work
stoppage or other material labor difficulty; and (g) in the event of termination
of the employment of any of the current officers, directors, employees, or
agents of STI or any of its subsidiaries, neither STI nor any of its
subsidiaries shall pursuant to any agreement or by reason of anything done prior
to the Effective Time by STI or any of its subsidiaries be liable to any of said
officers, directors, employees, or agents for so-called "severance pay" or any
other similar payments or benefits, including, without limitation,
post-employment healthcare (other than pursuant to COBRA) or insurance benefits.
4.14 Intellectual Property.
(a) Except to the extent that the inaccuracy of any of the
following (or the circumstances giving rise to such inaccuracy) does not have or
could not reasonably be expected to have a Material Adverse Effect:
(i) STI and each of its subsidiaries owns, or is
licensed or otherwise has the legally enforceable right to use (in each case,
clear of any liens or encumbrances of any kind), all Intellectual Property (as
hereinafter defined) used in or necessary for the conduct of its business as
currently conducted. Schedule 4.14 lists all Intellectual Property owned by STI;
(ii) no claims are pending or, to the best knowledge
of STI, threatened that STI or any of its subsidiaries is infringing on or
otherwise violating the rights of any person with regard to any Intellectual
Property used by, owned by, and/or licensed to STI or any of its subsidiaries
and, to the best knowledge of STI, there are no valid grounds for any such
claims;
11
(iii) no person is infringing on or otherwise
violating any right of STI or any of its subsidiaries with respect to any
Intellectual Property owned by and/or licensed to STI or any of its
subsidiaries;
(iv) there are no valid grounds for any claim
challenging the ownership or validity of any Intellectual Property owned by STI
or any of its subsidiaries or challenging STI's or any of its subsidiaries'
license or legally enforceable right to use any Intellectual Property licensed
by it; and
(v) all patents, registered trademarks, service
marks, and copyrights held by STI and each of its subsidiaries are valid and
subsisting.
(b) For purposes of this Agreement, "Intellectual Property"
means trademarks (registered or unregistered), service marks, brand names,
certification marks, trade dress, assumed names, trade names, and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas, whether
patented, patentable, or not in any jurisdiction; trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; writings and other works of authorship, whether
copyrighted, copyrightable, or not in any jurisdiction; registration or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; any similar intellectual property or proprietary
rights and computer programs and software (including source code, object code,
and data); licenses, immunities, covenants not to xxx, and the like relating to
the foregoing; and any claims or causes of action arising out of or related to
any infringement or misappropriation of any of the foregoing.
4.15 Insurance. As of the date hereof, STI and each of its subsidiaries
are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are customary in the businesses in which
they are engaged. All material policies of insurance and fidelity or surety
bonds insuring STI or any of its subsidiaries or their respective businesses,
assets, employees, officers, and directors are in full force and effect. There
are no claims by STI or any of its subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or defending
under a reservation of rights clause. The STI Schedule lists all insurance
policies of STI and its subsidiaries.
The Company acknowledges that each Certificate representing a
AUG Share AUG warrant and the AUG shares issuable upon exercise of the AUG
Warrants, shall contain a restrictive legend representing that the Shares have
not been registered under the Securities Act. The Shares may not be sold or
offered for sale or otherwise distributed without an effective registration
statement for the Shares under the Securities Act or an
12
opinion of counsel satisfactory to AUG that such registration is not required as
the sale offer or distribution thereof.
4.16 Shareholder Approval. Attached hereto as Schedule 4.16, is the
consent of certain STI shareholders (holding in excess of 51% of the outstanding
shares) to this Agreement and the transactions reflected hereby.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF AUG
AUG and Acquisition Sub jointly and severally represent and warrant,
with respect to themselves and their subsidiaries, except as disclosed to STI in
the AUG/Acquisition Sub Schedule of Exceptions (the "AUG/Acquisition Sub
Schedule"), attached hereto and incorporated herein by this reference, as
follows:
5.1 Organization. Each of AUG and its subsidiaries is a corporation
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation and has the corporate power to carry on its
business as it is now being conducted or presently proposed to be conducted.
Each of AUG and its subsidiaries is duly qualified as a foreign corporation to
do business, and is in good standing (to the extent the concept of good standing
exists), in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified shall not have a Material
Adverse Effect.
5.2 Capitalization. As of the date hereof, the authorized capital stock
of AUG and its subsidiaries is as set forth in Schedule 5.2 of the
AUG/Acquisition Sub Schedule. As of the date hereof, the number of AUG Shares
which are issued and outstanding is as set forth in Section 5.2 of the
AUG/Acquisition Sub Schedule. No preemptive rights or similar rights created by
statute, the Articles of Incorporation, Bylaws or any contract is binding or is
applicable to AUG or Acquisition Sub. Except (a) as set forth above or, (b) as
disclosed in Schedule 5.2 of the AUG/Acquisition Sub Schedule, there are not as
of the date of this Agreement any shares of capital stock of AUG issued or
outstanding or any options, warrants, subscriptions, calls, rights, convertible
securities, or other agreements or commitments obligating AUG to issue,
transfer, or sell any shares of its capital stock outstanding.
5.3 Authority Relative to this Agreement. AUG and Acquisition Sub have
the corporate power to enter into this Agreement and to carry out their
obligations hereunder. The execution and delivery of this Agreement by AUG and
Acquisition Sub and the consummation by AUG and Acquisition Sub of the
transactions contemplated hereby have been duly authorized by their respective
Boards of Directors, no other corporate
13
proceedings on the part of AUG or Acquisition Sub are necessary to approve this
Agreement or the transactions contemplated hereby.
5.4 Consents and Approvals; No Violations. Except if applicable, state
securities or blue sky laws, and, as applicable, filing and recordation of
Articles of Merger under the FBCA, no filing with, and no permit, authorization,
consent, or approval of, any public body or authority is necessary for the
consummation by AUG and Acquisition Sub of the transactions contemplated by this
Agreement. Neither the execution and delivery of this Agreement by AUG and
Acquisition Sub, nor the consummation by them of the transactions contemplated
hereby, nor compliance by AUG and Acquisition Sub with any of the provisions
hereof, shall (a) result in any breach of the Articles of Incorporation or
Bylaws of AUG or Acquisition Sub, (b) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any fight of termination, cancellation, or acceleration) under, any
of the terms, conditions, or provisions of any note, bond, mortgage, indenture,
license, contract, agreement, or other instrument or obligation to which AUG or
any of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (c) violate any order, writ, injunction,
decree, statute, rule, or regulation applicable to AUG, any of its subsidiaries
or any of their properties or assets, except in the case of clauses (b) and (c)
for violations, breaches, or defaults that would not have a Material Adverse
Effect.
5.5 Financial Statements. The audited balance sheet dated December 31,
2000, for the year ended, and the unaudited financial statements dated September
30, 2001, for the nine months ended (the "Interim Balance Sheet") included in
AUG's periodic reports as filed with the Securities and Exchange Commission
fairly present in all material respects the consolidated financial position of
AUG and its subsidiaries as of the date thereof, and the other related
statements included therein fairly represent in all material respects the
results of operations and cash flows of AUG and its subsidiaries for the
respective periods.
All reports filed by AUG with the Securities and Exchange Commission
since September 30, 2001, contain all material information relating to AUG and
its operations and financial condition as of their respective dates, which
information is required to be disclosed therein. Since the date of the financial
statements included in such reports, and except as modified in the AUG
Disclosure Schedule hereto, there has been no material adverse change in AUG's
business, financial condition or affairs not disclosed in such reports. The
reports do not contain any untrue statement of material fact or omit the
statement of a material fact in light of the circumstances when made, require to
be stated therein and necessary to make the statements therein not misleading.
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ARTICLE VI.
CONDUCT OF BUSINESS PENDING THE MERGER
6.1 Conduct of Business Pending the Merger. STI agrees on its own
behalf and on behalf of its subsidiaries that, during the period from the date
of this Agreement and continuing until the Effective Time:
(a) the respective businesses of STI and its subsidiaries
shall be conducted only in the ordinary and usual course of business and
consistent with past practices;
(b) STI and its subsidiaries shall not (i) sell or pledge or
agree to sell or pledge any stock owned by it in any of its subsidiaries; (ii)
amend its Articles of Incorporation or Bylaws; or (iii) split, combine, or
reclassify any shares of its outstanding capital stock or declare, set aside, or
pay any dividend or other distribution payable in cash, stock, or property in
respect of its capital stock, or directly or indirectly redeem, purchase, or
otherwise acquire any shares of its capital stock or other securities or shares
of the capital stock or other securities of any of its subsidiaries;
(c) STI and its subsidiaries shall not (i) authorize for
issuance, issue, sell, pledge, dispose of, encumber, deliver, or agree or commit
to issue, sell, pledge, or deliver any additional shares of, or rights of any
kind to acquire any shares of, its capital stock of any class or exchangeable
into shares of stock of any class or any Voting Debt (whether through the
issuance or granting of options, warrants, commitments, subscriptions, rights to
purchase, or otherwise), except that STI may issue Shares required to be issued
upon exercise of existing stock options, warrants, or similar plans, which
options, warrants, plans, or commitments have been disclosed in writing to AUG
in Schedule 6.1(c); (ii) acquire, dispose of, transfer, lease, license,
mortgage, pledge, or encumber any fixed or other substantial assets other than
in the ordinary course of business and consistent with past practices; (iii)
incur, assume, or prepay any indebtedness, liability, or obligation or any other
material liabilities or issue any debt securities other than in the ordinary
course of business and consistent with past practices; (iv) assume, guarantee,
endorse, or otherwise become liable or responsible (whether directly,
contingently, or otherwise) for the obligations any other person (other than a
subsidiary); (v) make any loans, advances, or capital contributions to, or
investments in, any other person, other than to subsidiaries, other than in the
ordinary course of business and consistent with past practices; (vi) fail to
maintain adequate insurance consistent with past practices for their businesses
and properties; or (vii) enter into any contract, agreement, commitment, or
arrangement with respect to any of the foregoing;
(d) STI shall preserve intact the business organization of STI
and its subsidiaries, to keep available the services of its and their present
officers and key employees, and to preserve the goodwill of those having
business relationships with it and
15
their respective subsidiaries; provided, however, that no breach of this
covenant shall be deemed to have occurred if a failure to comply with this
Section 6.1(d) occurs as a result of any matter arising out of the transactions
contemplated by this Agreement;
(e) STI and its subsidiaries shall not knowingly take or allow
to be taken or fail to take any action which act or omission would jeopardize
qualification of the Merger as a "reorganization" within the meaning of Section
368(a) of the Code; and
(f) STI and its subsidiaries shall use all reasonable efforts
to prevent any representation or warranty of STI herein from becoming untrue or
incorrect in any material respect.
6.2 Compensation Plans. During the period from the date of this
Agreement and continuing until the Effective Time, STI agrees as to itself and
its subsidiaries that, it shall not, without the prior written consent of AUG
(except as required by applicable law or pursuant to existing contractual
arrangements or other plans or commitments as otherwise disclosed to AUG in
writing pursuant hereto) (a) enter into, adopt, or amend any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred compensation,
employment, severance, or other employee benefit plan, agreement, trust, plan,
fund or other arrangement between STI and one or more of its officers,
directors, or employees, in each case so as to materially increase the benefits
thereunder (collectively, "Compensation Plans"), (b) grant or become obligated
to grant any increase in the compensation or fringe benefits of directors,
officers, or employees (including any such increase pursuant to any Compensation
Plan) or any increase in the compensation payable or to become payable to any
officer, except, with respect to employees other than officers, for increases in
compensation in the ordinary course of business consistent with past practice,
or enter into any contract, commitment, or arrangement to do any of the
foregoing, except for normal increases and non-stock benefit changes in the
ordinary course of business consistent with past practice, (c) institute any new
employee benefit, welfare program, or Compensation Plan, (d) make any change in
any Compensation Plan or other employee welfare or benefit arrangement or enter
into any employment or similar agreement or arrangement with any employee, or
(e) enter into or renew any contract, agreement, commitment, or arrangement
providing for the payment to any director, officer, or employee of STI of
compensation or benefits contingent, or the terms of which are materially
altered in favor of such individual, upon the occurrence of any of the
transactions contemplated by this Agreement.
6.3 Legal Conditions to Merger. Each of AUG and STI shall, and shall
cause their subsidiaries to, use all reasonable efforts (a) to take, or cause to
be taken, all actions necessary to comply promptly with all legal requirements
which may be imposed on such party or its subsidiaries with respect to the
Merger and to consummate the transactions contemplated by this Agreement, and
(b) to obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any governmental
entity and/or any other public or private third party which is required to be
16
obtained or made by such party or any of its subsidiaries in connection with the
Merger and the transactions contemplated by this Agreement.
6.4 Advice of Changes. STI shall confer on a regular and frequent basis
with AUG, report on operational matters and promptly advise AUG orally and in
writing of any change or event having, or which, insofar as can reasonably be
foreseen, could have, a Material Adverse Effect on STI or which would cause or
constitute a material breach of any of the representations, warranties, or
covenants of STI contained herein.
ARTICLE VII.
ADDITIONAL AGREEMENTS
7.1 Access and Information.
(a) STI shall afford to AUG and its financial advisors, legal
counsel, accountants, consultants, and other representatives access during
normal business hours throughout the period from the date hereof to the closing
to all of its books, records, properties, facilities, personnel commitments, and
records (including but not limited to Tax Returns) and, during such period, each
shall furnish promptly all information concerning its business, properties, and
personnel as AUG may reasonably request in order for AUG to fully investigate
the business and affairs of STI prior to the Effective Time (the "Inspection").
(b) All information furnished by any company to another
pursuant hereto shall be treated as the sole property of the party furnishing
the information until consummation of the Merger contemplated hereby. The
parties shall hold any such information that is nonpublic in confidence.
7.2 Acquisition Proposals. STI and its subsidiaries shall not, and
shall use its best efforts to cause their respective directors, officers,
employees, financial advisors, legal counsel, accountants, and other agents and
representatives (for purposes of this Section 7.2 only, being referred to as
"Affiliates") not to, initiate, solicit, or encourage, directly or indirectly,
or take any other action to facilitate any inquiries or the making of any
proposal with respect to, engage or participate in negotiations concerning,
provide any nonpublic information or data to, or have any discussions with any
person other than AUG relating to, any acquisition, merger, consolidation,
acquisition of beneficial ownership of or the right to vote securities
representing 10% or more of the total voting power of such entity or any of its
subsidiaries, dissolution, business combination, purchase of all or any
significant portion of the assets or any division of, or any equity interest in,
such entity or any subsidiary, or similar transaction other than the Merger
(such proposals, announcements, or transactions being referred to as
"Acquisition Proposals"). STI shall promptly notify AUG orally and in writing if
any such Acquisition Proposal (including the terms thereof and identity of the
persons making such proposals) is received and furnish to the other parties
17
hereto a copy of any written proposal. STI, it subsidiaries and Affiliates shall
immediately discontinue any negotiations or discussions concerning any
Acquisition Proposal.
7.3 Public Announcements. So long as this Agreement is in effect, each
Company agrees that it shall obtain the approval of the other party prior to
issuing any press release and shall use its best efforts to consult with the
others before otherwise making any public statement or responding to any press
inquiry with respect to this Agreement or the transactions contemplated hereby,
except as may be required by law or any governmental agency.
7.4 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby shall be paid by the party incurring such
expenses.
7.5 Additional Agreements.
(a) Subject to the terms and conditions herein provided,
including without limitation those set forth in Article VI, each of the parties
hereto agrees to use all reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper, or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including using all reasonable
efforts to obtain all necessary waivers, consents, and approvals, and to effect
all necessary registrations and filings. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and/or directors of the Companies shall take
all such necessary action.
(b) Subject to the terms and conditions herein provided,
including without limitation those set forth in Section 6.3 hereof, each Company
shall cooperate with the others and use all reasonable efforts to prepare all
necessary documentation to effect promptly all necessary filings and to obtain
all necessary permits, consents, approvals, orders, and authorizations of or any
exemptions by, all third parties and governmental bodies necessary to consummate
the transactions contemplated by this Agreement.
7.6 Survival of Representations and Warranties. The respective
representations and warranties of STI contained in this Agreement shall survive
the Closing Date for a period of two years (the "Survival Period"), at the end
of which Survival Period no claim may be made with respect to any such
representation or warranty unless such claim shall have been asserted in writing
to the Indemnifying Party during such period, except for the representations and
warranties contained in Sections 4.1, 4.2, 4.3, 4.8, 4.9 and 4.10, which, in
each case, shall survive indefinitely.
The respective representations and warranties of AUG and Acquisition
Sub contained in this Agreement shall survive the Closing Date for a period of
two years (the
18
"Survival Period"), at the end of which Survival Period no claim may be made
with respect to any such representation or warranty unless such claim shall have
been asserted in writing to the Indemnifying Party during such period, except
for the representations and warranties contained in Sections 5.1, 5.2, and 5.3,
which, in each case, shall survive indefinitely.
7.7 Indemnification.
(a) STI and Sellers hereby jointly and severally agree to
indemnify and hold AUG, the Surviving Corporation and their officers, directors,
affiliates, representatives, trustees, grantors, beneficiaries and agents, and
any successors thereto (the "AUG Indemnitees"), harmless from any and all
damages, losses, costs or reasonable expenses (including, without limitation,
reasonable fees and expenses of investigation and reasonable attorneys' and
consultants' fees and expenses in connection with any action suit, or
proceeding) (collectively, "Damages") incurred or suffered as a result of or
arising out of: (i) the breach of any representation or warranty made by or on
behalf of STI pursuant to Article IV of this Agreement or any other certificate
or document delivered by STI pursuant to this Agreement, and (ii) the breach of
any covenant or agreement made or to be performed by STI pursuant to this
Agreement.
(b) AUG hereby agrees to indemnify and hold STI and its
officers, directors, affiliates, representatives, trustees, grantors,
beneficiaries and agents, and any successors thereto (the "STI Indemnitees")
harmless from Damages incurred or suffered as a result of or arising out of (i)
the breach of any representation or warranty made by AUG pursuant to Article V
of this Agreement or any other certificate or document delivered by AUG pursuant
to this Agreement; or (ii) the breach of any covenant or agreement made or to be
performed by AUG pursuant to this Agreement.
(c) Any party seeking indemnification (the "Indemnified
Party") from any other party (the "Indemnifying Party") with respect to any
claim, demand, action, proceeding or other matter (the "Claim") pursuant to this
Section 7.7 shall promptly notify the Indemnifying Party in writing of the
existence of the Claim, setting forth in reasonable detail the facts and
circumstances pertaining thereto and the basis for the Indemnified Party's right
to indemnification.
(d) In the event that any third party notifies any Indemnified
Party with respect to any matter which may give rise to a Claim for
indemnification against the Indemnifying Party under this Agreement, then the
Indemnified Party shall promptly notify the Indemnifying Party of such Claim;
provided, however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party from any
liability or obligation hereunder unless (and then solely to the extent) the
Indemnifying Party is prejudiced by such failure to give notice. The
Indemnifying Party, upon waiver of its right to contest the liability for which
indemnification is being sought and demonstration by the Indemnifying Party of
its financial ability to satisfy any resulting
19
judgment to the reasonable satisfaction of the Indemnified Party, shall have the
right to assume defense of the Claim if notice is given to the Indemnified Party
within ten (10) days after receipt of notice of such Claim. If the Indemnifying
Party assumes defense of the Claim as provided in the preceding sentence, then:
(i) The Indemnifying Party will diligently defend the
Indemnified Party against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party;
(ii) The Indemnified Party may retain separate
co-counsel at its sole cost and expense (except that the Indemnifying Party will
be responsible for the fees and expenses of the separate co-counsel (a) to the
extent the Indemnified Party concludes reasonably based upon advice of counsel
that a conflict of interest exists between the Indemnified Party and
Indemnifying Party or (b) the named parties to any such action (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party and such Indemnified Party shall have been advised by counsel that there
may be one or more legal defenses available to the Indemnified Party which are
not available to the Indemnifying Party, or available to the Indemnifying Party,
but the assertion of which would be adverse to the interest of the Indemnified
Party;
(iii) The Indemnified Party will not consent to the
entry of any judgment or enter into any settlement with respect to the matter
without the written consent of the Indemnifying Party (not to be withheld or
delayed unreasonably; it being understood and agreed that failure to consent to
a judgment or settlement that provides for relief other than monetary damages or
does not provide an unconditional release of the Indemnifying Party from
liability shall not be deemed unreasonable); and
(iv) The Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement, without the written consent
of the Indemnified Party (not to be withheld or delayed unreasonably; it being
understood and agreed that failure to consent to a judgment or settlement that
provides for relief other than monetary damages or does not provide an
unconditional release of the Indemnified Party from liability shall not be
deemed unreasonable).
(e) If no Indemnifying Party notifies the Indemnified Party
within ten (10) days after the Indemnified Party has given notice of the matter
that the Indemnifying Party is assuming the defense thereof, then the
Indemnified Party may defend against, or enter into any settlement with respect
to, the matter in any manner it reasonably may deem appropriate, without
prejudice to any of its rights hereunder.
(f) The Indemnified Party shall be entitled to reimbursement
of reasonable expenses included in Damages with respect to any Claim (including,
without limitation, the cost of defense, preparation and investigation relating
to such Claim) as such expenses are incurred by the Indemnified Party; provided,
however, that the Indemnified
20
Party shall undertake to repay any amounts arising solely from the fault of such
Indemnified Party.
(g) The rights and remedies of the STI Indemnitees under this
Section 7.7 shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by or knowledge of, any of
the STI Indemnitees or any of their respective representatives or agents.
ARTICLE VIII.
CONDITIONS TO CONSUMMATION OF THE MERGER
8.1 Conditions to the Companies' Obligation to Effect the Merger. The
respective obligations of all Companies to effect the transactions contemplated
herein shall be subject to the satisfaction at or prior to the Effective Time of
the following conditions, any one of which may be waived by a writing signed by
AUG, Acquisition Sub, and STI:
(a) This Agreement and the transactions contemplated hereby
shall have been approved and adopted by the requisite vote of the shareholders
of STI in accordance with applicable law. [See prior question]
(b) No preliminary or permanent injunction or other order by
any federal, state, or foreign court of competent jurisdiction which prohibits
the consummation of any Merger shall have been issued and remain in effect. No
statute, rule, regulation, executive order, stay, decree, or judgment shall have
been enacted, entered, issued, promulgated, or enforced by any court or
governmental authority which prohibits or restricts the consummation of the
Merger.
(c) Other than the filing of Articles of Merger with the
Secretary of State for the State of Florida. All authorizations, consents,
orders or approvals of, or declarations or filings with, and all expirations of
waiting periods imposed by, any governmental entity (all of the foregoing,
"Consents") which are necessary for the consummation of the Merger, shall have
been filed, occurred, or been obtained (all such permits, approvals, filings,
and consents and the lapse of all such waiting periods being referred to as the
"Requisite Regulatory Approvals") and all such Requisite Regulatory Approvals
shall be in full force and effect.
(d) All the third party consents set forth in Section 4.8
shall have been obtained.
(e) AUG shall at Closing have invested $600,000 into the
Surviving Corporation.
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(f) AUG shall have issued 5,000,000 warrants to management of
STI in the form of Exhibit 8.1(f).
(g) One designee of STI shall have been appointed to the Board
of Directors of AUG.
8.2 Conditions to Obligations of AUG. The obligations of AUG to carry
out the transactions contemplated by this Agreement are subject, at the option
of AUG, to the satisfaction, or waiver by AUG, of the following conditions:
(a) No proceeding which STI shall be a debtor, defendant, or
party seeking an order for its own relief or reorganization shall have been
brought or be pending by or against such person under any United States or state
bankruptcy or insolvency law.
(b) Each STI stockholder shall have entered into 2 year lockup
agreements with AUG restricting the resale of the AUG Shares held by them the
form of which is attached as Exhibit 8.2(b) hereto.
(c) AUG shall have received an Officer's Affidavit from a duly
authorized officer of STI attesting that STI's representations and warranties
contained in the Agreement are true and correct as of the date of the Officer's
Affidavit and that STI has performed in all material respects all of its
obligations and agreements and complied in all material respects with all of its
covenants contained in the Agreement.
(d) There shall have not been a Material Adverse Effect on the
business, prospects, financial or other condition of STI.
(e) Such other agreements as AUG or its counsel shall
reasonably request.
8.3 Conditions to Obligations of STI. The obligations of STI to carry
out the transactions contemplated by this Agreement are subject, at the option
of STI, to the satisfaction, or waiver by STI, of the following conditions:
(a) No proceeding which AUG shall be a debtor, defendant, or
party seeking an order for its own relief or reorganization shall have been
brought or be pending by or against such person under any United States or state
bankruptcy or insolvency law.
(b) STI shall have received an Officer's Affidavit from a duly
authorized officer of AUG attesting that AUG's representations and warranties
contained in the Agreement are true and correct as of the date of the Officer's
Affidavit and that AUG has performed in all material respects all of its
obligations and agreements and complied in all material respects with all of its
covenants contained in the Agreement.
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ARTICLE IX.
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby abandoned at any time prior to the Effective Time, whether
before or after approval by the shareholders of STI:
(a) By mutual written consent of all of the Companies.
(b) By either AUG or STI if the Merger shall not have been
consummated on or before December 31, 2001.
(c) By AUG or STI if there shall have been any material breach
of a material obligation of the other hereunder and, if such breach is curable,
such default shall have not been remedied within 10 days after receipt by the
other Company, as the case may be, of notice in writing from such Company
specifying such breach and requesting that it be remedied; provided, that such
10-day period shall be extended for so long as the other Company shall be making
diligent attempts to cure such default.
(d) By either AUG or STI if any court of competent
jurisdiction in the United States or other United States governmental body shall
have issued an order, decree, or ruling or taken any other action restraining,
enjoining, or otherwise prohibiting the Merger and such order, decree, ruling,
or any other action shall have become final and non-appealable.
(e) By either AUG or STI upon written notice to the other if
any approval of the shareholders of STI required for the consummation of the
Merger submitted for their approval shall not have been obtained by reason of
the failure to obtain the required vote at a duly held meeting of shareholders
or at any adjournment thereof.
9.2 Effect of Termination. In the event of termination of this
Agreement as provided above, this Agreement shall forthwith become of no further
effect and, except for a termination resulting from a breach by a party of this
Agreement, there shall be no liability or obligation on the part of any Company
except for Section 7.4. Nothing contained in this Section 9.2 shall relieve any
party from liability for willful breach of this Agreement that results in
termination of this Agreement. Upon request therefor, each party shall redeliver
all documents, work papers, and other material of any other party relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof, to the party furnishing same.
9.3 Amendment. This Agreement may be amended by action taken at any
time before or after approval hereof by the shareholders of AUG, but, after any
such approval, no amendment shall be made which alters the Exchange Ratio or
which in any way
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materially adversely affects the rights of such shareholders, without the
further approval of such shareholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
9.4 Waiver. At any time prior to the Effective Time, the parties hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Such extensions or waivers shall be in
writing, executed by each of AUG and STI. Such waiver shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
ARTICLE X.
GENERAL PROVISIONS
10.1 Brokers. Each Company represents and warrants to the others that
except for the Xxxxxxxxx Group, no broker, finder, or financial advisor is
entitled to any brokerage, finder's, or other fee or commission in connection
with the Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of any party hereto, except as reflected in
the STI Schedule 10.1 or the AUG/Acquisition Sub Schedule 10.1.
10.2 Notices. All notices, claims, demands and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or by telex or telecopy or mailed by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to AUG, to: 0000 Xxxxxxxxx Xxxxxxxxx
Xxxxx 000X
Xxxx Xxxxx, XX 00000
(b) If to STI, to: Synthesys Secure Technologies, Inc.
Suite B-16
0000 Xx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxx, XX 00000
10.3 Descriptive Headings. The headings contained in this Agreement are
for reference Purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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10.4 Entire Agreement; Assignment. This Agreement (including the
Exhibits, Schedules, and other documents and instruments referred to herein) and
the Confidentiality Agreement (a) constitute the entire agreement and supersede
all other prior agreements and understandings, both written and oral, among the
parties or any of them, with respect to the subject matter hereof; and (b) shall
not be assigned by operation of law or otherwise.
10.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida without giving effect to the
provisions thereof relating to conflicts of law.
10.6 Parties in Interest. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefit, or remedies of any nature whatsoever or by reason of this Agreement.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
10.8 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not effect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
10.9 Jurisdiction and Venue. Each Party hereto hereby agrees that any
proceeding relating to this Agreement and the Merger shall be brought in a state
court of Florida. Each party hereto hereby consents to personal jurisdiction in
any such action brought in any such Florida court, consents to service of
process by registered mail made upon such party and such party's agent and
waives any objection to venue in any such Florida court or to any claim that
such Florida court is an inconvenient form.
10.10 Investigation. The respective representations and warranties of
each Company contained herein or in the certificates or other documents
delivered prior to the Closing shall not be deemed waived or otherwise affected
by any investigation made by any party hereto.
10.11 Consents. For purposes of any provision of this Agreement
requiring, permitting, or providing for the consent of any or Company, the
written consent of the Chief Executive Officer of a Company shall be sufficient
to constitute such consent.
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IN WITNESS WHEREOF, each Company has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
AUG CORP., SYNTHESYS SECURE TECHNOLOGIES, INC.,
a Delaware corporation a Florida corporation
By: /s/Xxxxxxxx X. Xxxxxxxx By: /s/Xxxxx Xxxxxxx
Name: Xxxxxxxx X. Xxxxxxxx Name: Xxxxx Xxxxxxx
Title: President Title: President
AUG ACQUISITION CORP.,
a Florida corporation
By: /s/ Xxxxxxxx X. Xxxxxxxx
Name: Xxxxxxxx X. Xxxxxxxx
Title: President
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