AGREEMENT AND PLAN OF MERGER DATED AS OF MAY 11, 2010 BY AND AMONG HEPALIFE TECHNOLOGIES, INC., HT ACQUISITION CORP. and AQUAMED TECHNOLOGIES, INC.
AGREEMENT
AND PLAN OF MERGER
DATED
AS OF MAY 11, 2010
BY AND AMONG
HEPALIFE
TECHNOLOGIES, INC.,
HT
ACQUISITION CORP.
and
AQUAMED
TECHNOLOGIES, INC.
This AGREEMENT AND PLAN OF
MERGER, dated as of May 11, 2010 (this “Agreement”), is among HepaLife
Technologies, Inc., a Florida corporation (“Parent”), HT Acquisition
Corp., a Delaware corporation and a wholly-owned Subsidiary of Parent (“Merger Sub”), and AquaMed
Technologies, Inc., a Delaware corporation (the “Company”). Certain terms used
in this Agreement are used as defined in Section 8.1.
WHEREAS, Parent has approved,
and the respective Boards of Directors of the Company and Merger Sub have
adopted, approved and declared advisable, this Agreement and the merger of
Merger Sub with and into the Company (the “Merger”), on the terms and
subject to the conditions provided for in this Agreement;
WHEREAS, simultaneously with
the closing of the Merger, Parent intends to consummate a private placement of
approximately a minimum of $1,175,000 and a maximum of $2,500,000 of
Parent’s securities, on such terms and conditions as may be mutually agreed to
by Parent and the Company (the “Financing”).
WHEREAS, prior to the
execution and delivery of this Agreement by the parties hereto, the holders of a
sufficient number of voting securities of the Company have adopted and approved
this Agreement and the Merger as required under the General Corporation Law of the State of
Delaware (the “DGCL”) and have executed and
delivered an action by written consent adopting this Agreement (the “Company Stockholder
Consent”);
WHEREAS, Parent, Merger Sub
and the Company desire that the Merger qualify as a “reorganization” within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
“Code”).
NOW, THEREFORE, for and in
consideration of the foregoing and the representations, warranties, covenants
and agreements set forth in this Agreement, the parties to this Agreement (each
a “Party,” and collectively,
the “Parties”) agree as
follows:
ARTICLE
1
THE
MERGER
Section 1.1 The Merger. Upon the
terms and subject to the conditions set forth in this Agreement, and in
accordance with the DGCL, at the Effective Time (as defined below) Merger Sub
shall be merged with and into the Company, and the separate corporate existence
of Merger Sub shall thereupon cease, and the Company shall be the surviving
corporation in the Merger (the “Surviving
Corporation”).
Section 1.2 Closing. The
closing of the Merger (the “Closing”) shall take place at
10:00 a.m. (Eastern Time) at the offices of ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP, 1221
Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ simultaneously with
the execution of this Agreement. The date hereof is herein referred to as the
“Closing
Date.”
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Section 1.3 Effective Time of
Merger. Subject to the provisions of this Agreement, on the Closing Date,
the parties shall file a Certificate of Merger (the “Certificate of Merger”)
executed in accordance with the relevant provisions of the DGCL and shall make
all other filings or recordings required under the DGCL. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware (the time the Merger becomes
effective being hereinafter referred to as the “Effective Time”).
Section 1.4 Effects of the
Merger. The Merger shall have the effects set forth in this Agreement and
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all of the properties, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all of the debts, liabilities and duties of the Company and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.5 Certificate of
Incorporation and Bylaws of the Surviving Corporation.
(a) The certificate of incorporation of
the Company, as in effect immediately prior to the Effective Time, shall be
amended and restated as of the Effective Time as a result of the Merger so as to
read in its entirety as set forth in Exhibit
A hereto, and such certificate of incorporation, as so amended, shall be
the certificate of incorporation of the Surviving Corporation until thereafter
amended as provided therein or by Applicable Law.
(b) The bylaws of the Company, as in
effect immediately prior to the Effective Time, shall be amended and restated as
of the Effective Time as a result of the Merger so as to read in their entirety
as set forth in Exhibit
B hereto, and such bylaws, as so amended, shall be the bylaws of the
Surviving Corporation until thereafter amended as provided therein or by
Applicable Law.
Section 1.6
Directors.
(a) Surviving Corporation. Each of
the parties hereto shall take all necessary action to cause the persons listed
on Schedule
1.6(a) hereto to be the directors of the Surviving Corporation
immediately following the Effective Time, until their respective successors are
duly elected or appointed and qualified or their earlier death, resignation or
removal in accordance with Applicable Law.
(b) Parent. At the Effective
Time, the size of the board of directors of Parent shall be three members, and
each of the parties hereto shall take all necessary action to cause the persons
listed on Schedule
1.6(b) hereto to be the directors of Parent immediately following the
Effective Time, until their respective successors are duly elected or appointed
and qualified or their earlier death, resignation or removal in accordance with
Applicable Law.
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Section
1.7 Officers.
(a) Surviving Corporation. The
officers of the Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, until the earlier of their resignation or
removal or their respective successors are duly elected and qualified, as the
case may be.
(b) Parent. At the
Effective Time, the individuals listed on Schedule 1.7(b) hereto shall have the
executive officer positions with Parent set forth opposite their respective
names, and each such executive officer shall serve until such executive
officer’s successor shall be elected and qualified or such executive officer’s
earlier death, resignation, retirement, disqualification or removal. If, at or
before the Effective Time, any such Person is unable or unwilling to serve as an
executive officer of Parent in the capacity set forth on Schedule 1.7(b),
then a substitute executive officer shall be selected by Parent Board after the
Effective Time
ARTICLE 2
EFFECT
OF MERGER ON CAPITAL STOCK
Section 2.1 Effect on Capital
Stock. As of the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of capital stock of the Company,
or Merger Sub:
(a) Capital Stock of Merger
Sub. Each issued and outstanding share of capital stock of Merger Sub
shall be converted into and become one fully paid and nonassessable share of
common stock of the Surviving Corporation.
(b) Cancellation of Treasury and
Parent Owned Stock. Each share of the Company Merger Stock (i) issued and
held in the Company’s treasury or (ii) owned by Parent, Merger Sub or any other
wholly owned Subsidiary of Parent or the Company shall, at the Effective Time
and by virtue of the Merger, cease to be outstanding and shall be canceled and
retired without payment of any consideration therefor, and no consideration
shall be delivered in exchange therefor.
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(c) Conversion of the Company Common
Stock. Subject to Section 2.1(f), each issued
and outstanding share (including any dissenting shares) of the Company Common
Stock at the Effective Time shall be converted into the right to receive
25 (the “Common Exchange Ratio”)
validly issued, fully paid and non-assessable shares of Parent Common Stock
(the “Common Merger Consideration”),
rounded to the nearest whole share. No fractional shares of Parent Common Stock
will be issued. As of the Effective Time, all the Company Common Stock shall no
longer be outstanding and shall be automatically canceled and retired and shall
cease to exist, and each holder of a certificate representing any shares of the
Company Common Stock shall cease to have any rights with respect thereto, except
the right to receive the Common Merger Consideration, without interest. The
Common Exchange Ratio shall be appropriately adjusted to reflect fully the
effect of any stock split, reverse stock split, stock dividend (including any
dividend or distribution of securities convertible into Company Common Stock or
Parent Common Stock), reorganization, recapitalization, reclassification or
other like change with respect to the Company Common Stock or Parent Common
Stock having a record date on or after the date hereof and prior to the
Effective Time.
(d) Conversion of the Company Series
A Preferred Stock. Subject to Section 2.1(f), each issued
and outstanding share (including any dissenting shares) of the Company Series A
Preferred Stock at the Effective Time shall be converted into the right to
receive 100 (the “Series A Exchange Ratio”)
validly issued, fully paid and non-assessable shares of Parent Common Stock
(the “Series A Merger
Consideration”), rounded to the nearest whole share. No fractional shares
of Parent Common Stock will be issued. As of the Effective Time, all the Series
A Preferred Stock shall no longer be outstanding and shall be automatically
canceled and retired and shall cease to exist, and each holder of a certificate
representing any shares of the Series A Preferred Stock shall cease to have any
rights with respect thereto, except the right to receive the Series A Preferred
Merger Consideration, without interest. The Series A Exchange Ratio shall be
appropriately adjusted to reflect fully the effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into Company Series A Stock, Company Common Stock or
Parent Common Stock), reorganization, recapitalization, reclassification or
other like change with respect to the Company Series A Stock, Company Common
Stock or Parent Common Stock having a record date on or after the date hereof
and prior to the Effective Time.
(e) Conversion of the Company Series
B Preferred Stock. Subject to Section 2.1(f), each issued
and outstanding share (including any dissenting shares) of the Company Series B
Preferred Stock at the Effective Time shall be converted into the right to
receive 399.99994 (the “Series B Exchange Ratio”)
validly issued, fully paid and non-assessable shares of Parent Common Stock
(the “Series B Merger Consideration”
and together with the Common Merger Consideration and the Series B Merger
Consideration, the “Merger
Consideration”), rounded to the nearest whole share. No fractional shares
of Parent Common Stock will be issued. As of the Effective Time, all the Series
B Preferred Stock shall no longer be outstanding and shall be automatically
canceled and retired and shall cease to exist, and each holder of a certificate
representing any shares of the Series B Preferred Stock shall cease to have any
rights with respect thereto, except the right to receive the Series B Merger
Consideration, without interest. The Series B Exchange Ratio shall be
appropriately adjusted to reflect fully the effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into Company Series B Preferred Stock, Company Common
Stock or Parent Common Stock), reorganization, recapitalization,
reclassification or other like change with respect to the Company Series B
Preferred Stock, Company Common Stock or Parent Common Stock having a record
date on or after the date hereof and prior to the Effective Time.
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(f) Shares of Dissenting
Stockholders. Notwithstanding anything in this Agreement to the contrary,
shares of Company Merger Stock (the “Dissenting Shares”) that are
issued and outstanding immediately prior to the Effective Time and which are
held by a stockholder who did not vote in favor of the Merger (or consent
thereto in writing) and who is entitled to demand and properly demands appraisal
of such shares pursuant to, and who, in all respects, complies with
the provisions of Section 262 of the DGCL (all such stockholders, the “Dissenting Stockholders”),
shall not be converted into or be exchangeable for the right to receive the
Merger Consideration, but instead such holder shall be entitled to payment of
the fair value of such shares in accordance with the provisions of Section 262
of the DGCL (and at the Effective Time, such Dissenting Shares shall no longer
be outstanding and shall automatically be canceled and shall cease to exist, and
such holder shall cease to have any rights with respect thereto, except the
right to receive the fair value of such Dissenting Shares in accordance with the
provisions of Section 262 of the DGCL), unless and until such holder shall have
failed to perfect or shall have effectively waived, withdrawn or lost rights to
appraisal under the DGCL (or a court of competent jurisdiction shall determine
that such holder is not entitled to the relief provided by Section 262 of the
DGCL). If any Dissenting Stockholder shall have failed to perfect or shall have
effectively waived, withdrawn or lost such right (or a court of competent
jurisdiction shall determine that such holder is not entitled to the relief
provided by Section 262 of the DGCL), such holder’s shares of Company Merger
Stock shall thereupon be treated as if they had been converted into and become
exchangeable for the right to receive, as of the Effective Time, the Merger
Consideration for each such share of Company Merger Stock, as provided herein,
without any interest thereon. The Company shall give Parent (i) prompt notice of
any written demands for appraisal of any shares of Company Merger Stock,
attempted withdrawals of such demands and any other instruments served pursuant
to the DGCL and received by the Company relating to stockholders’ rights of
appraisal, and (ii) the opportunity to participate in all negotiations and
proceedings with respect to demands for appraisal under the DGCL. The Company
shall not, except with the prior written consent of Parent, voluntarily make any
payment with respect to, or settle, or offer or agree to settle, any such demand
for payment or waive any failure by a stockholder to timely comply with the
requirements of Section 262 of the DGCL to perfect or demand appraisal. Any
portion of the Merger Consideration made available to the Paying Agent pursuant
to Section 2.2 to pay
for shares of Company Merger Stock for which appraisal rights have been
perfected shall be returned to Parent upon demand. The number of
Dissenting Shares shall not exceed five percent (5%) of the Company Merger
Stock.
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(g) Anything to the contrary
notwithstanding the Merger Consideration, will not exceed 84,800,000 shares of
Parent Common Stock (the “Aggregate Merger
Consideration”).
Section
2.2 Exchange of Certificates.
(a) Paying Agent. Prior to the
Effective Time, Parent shall designate its transfer agent or another trust
company to act as agent for the holders of the shares of the Company Merger
Stock in connection with the Merger (the “Paying Agent”) to receive in
trust the Merger Consideration to which holders of the shares of the Company
Merger Stock shall become entitled hereunder. From time to time, Parent shall
make available, or cause the Surviving Corporation to make available, to the
Paying Agent certificates (or evidence of Parent Book-Entry shares of the
Parent Common Stock) representing the aggregate number of shares of Parent
Common Stock to be issued as Merger Consideration in exchange for outstanding
shares of the Company Merger Stock in amounts and at times necessary for the
prompt payment of the Merger Consideration upon surrender of Certificates
representing shares of the Company Merger Stock as provided herein.
(b) Exchange Procedure. As
soon as reasonably practicable after the Effective Time, the Paying Agent shall
mail to each holder of record of a certificate or certificates that immediately
prior to the Effective Time represented shares of the Company Merger Stock (the
“Certificates”),
(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 Paying Agent and shall be in a form as
Parent may reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by Parent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the number of shares of Parent Common Stock into
which the shares of the Company Merger Stock theretofore represented by such
Certificate shall have been converted, pursuant to Section 2.1 and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of shares of the Company Merger Stock that is not
registered in the transfer records of the Company, payment may be made to a
Person other than the Person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the Person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a Person other than
the registered holder of such Certificate or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the Merger Consideration, without interest, which
the shares of the Company Merger Stock theretofore represented by such
Certificate shall have been entitled to receive pursuant to Section 2.1.
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(c) No Further Ownership Rights;
Transfer Books. The Merger Consideration paid upon the surrender of
Certificates in accordance with the terms of this Article 2 shall be deemed to
have been paid in full satisfaction of all rights pertaining to the shares of
the Company Merger Stock theretofore represented by such Certificates. At the
Effective Time, the stock transfer books of the Company shall be closed, and
there shall be no further transfers of the shares of the Company Merger Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to Parent or the Company, the
presented Certificates shall be canceled and exchanged for shares of Parent
Common Stock or other consideration payable in respect thereof pursuant to this
Agreement in accordance with the procedures set forth herein.
(d) Termination of Fund; No
Liability. At any time following six months after the Effective Time,
Parent shall be entitled to require the Paying Agent to deliver to it any funds
(including any interest received with respect thereto) and certificates for
shares of Parent Common Stock which had been made available to the Paying Agent
and which have not been disbursed to holders of Certificates, and thereafter
such holders shall be entitled to look to Parent (subject to abandoned property,
escheat or other similar laws) only as general creditors thereof with respect to
the Merger Consideration payable upon due surrender of their Certificates,
without any interest thereon. Notwithstanding the foregoing, none of Parent, the
Company or any other Person shall be liable to any former holder of shares of
the Company Merger Stock for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws. If any
Certificates shall not have been surrendered immediately prior to such date on
which any payment pursuant to this Article 2 would otherwise
escheat to or become the property of any Governmental Authority, the payment in
respect of such Certificate shall, to the extent permitted by Applicable Law,
become the property of Parent, free and clear of all claims or interests of any
Person previously entitled thereto.
(e) Lost, Stolen or Destroyed
Certificates. In the event any Certificates evidencing shares of the
Company Merger Stock shall have been lost, stolen or destroyed, the Paying Agent
shall pay to such holder the Merger Consideration required pursuant to Section 2.1, in exchange for
such lost, stolen or destroyed Certificates, upon the making of an affidavit of
that fact by the holder thereof with such assurances as the Paying Agent, in its
discretion and as a condition precedent to the payment of the Merger
Consideration, may reasonably require of the holder of such lost, stolen or
destroyed Certificates.
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(f) Withholding Taxes. Parent
shall be entitled to deduct and withhold, or cause the Paying Agent to deduct
and withhold, from the consideration otherwise payable to a holder of shares of
the Company Merger Stock pursuant to the Merger any stock transfer taxes and
such amounts as are required under the Code, or any applicable provisions of
state, local or foreign tax law. To the extent that amounts are so withheld,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of the Company Merger Stock in
respect of which such deduction and withholding were made.
ARTICLE 3
REPRESENTATIONS
AND WARRANTIES OF
PARENT
AND MERGER SUB
As an
inducement for the Company to enter into this Agreement, Parent and Merger Sub
hereby jointly and severally make the following representations and warranties
to the Company; provided,
however, that such representations and warranties shall be subject to and
qualified by: (a) the disclosure letter delivered by Parent to the Company
as of the date hereof (each section of which qualifies the correspondingly
numbered representation and warranty or covenant to the extent specified
therein) (the “Parent Disclosure Letter”) (it
being understood that (i) the disclosure of any fact or item in any section
of the Parent Disclosure Letter shall, should the existence of such fact or item
be relevant to any other section, be deemed to be disclosed with respect to that
other section to the extent that such disclosure is made in a manner that makes
its relevance to the other section reasonably apparent and (ii) the
disclosure of any matter or item in the Parent Disclosure Letter shall not be
deemed to constitute an acknowledgement that such matter or item is required to
be disclosed therein or is material to a representation or warranty set forth in
this Agreement and shall not be used as a basis for interpreting the terms “material,” “materially,” “materiality,” “Parent Material Adverse
Effect” or any
word or phrase of similar import and does not mean that such matter or item,
alone or together with any other matter or item, would constitute a Parent
Material Adverse Effect); and (b) information contained in Parent Reports
(excluding any exhibits thereto and excluding disclosures under “Risk Factors” and other forward-looking
or predictive statements) filed with the SEC prior to the date hereof (but only
to the extent that such disclosure on its face appears to constitute information
that would reasonably be deemed a qualification or exception to the following
representations and warranties).
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Section 3.1 Corporate Existence;
Good Standing; Corporate Authority.
(a) Parent is a corporation duly
incorporated, validly existing and in good standing under the Applicable Laws of
the State of Florida. Merger Sub is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. Parent is
duly qualified to conduct business and is in good standing (to the extent such
concept exists in the relevant jurisdiction) in each jurisdiction in which the
ownership, operation or lease of its property or the nature of Parent’s business
requires such qualification, except for jurisdictions in which any failures to
be so qualified or to be in good standing, individually or in the aggregate,
have not had or caused and would not reasonably be expected to have or cause a
Parent Material Adverse Effect. Parent and Merger Sub each have all requisite
corporate power and authority to own or lease and operate their respective
properties and assets and to carry on their businesses as they are currently
being conducted. Each of the Articles of Incorporation and Bylaws of Parent
(the “Parent Charter Documents”) is
in full force and effect, and except as set forth in Section 3.1 of the Parent
Disclosure Letter, has not been amended or modified and has not been terminated,
superseded or revoked. Parent is not in violation of the Parent Charter
Documents.
(b) The minute books of Parent,
which shall be exhibited to the Company between the date hereof and the Closing
Date, each contain true, correct and complete minutes and records of all
meetings, proceedings and other actions of the shareholders, Boards of Directors
and committees of such Boards of Directors of Parent, if any, except where such
would not have a Material Adverse Effect and, on the Closing Date, will, to the
best of Parent’s Knowledge contain true, correct and complete minutes and
records of any meetings, proceedings and other actions of the shareholders and
the Board of Directors and committees of such Board of Directors of
Parent.
Section 3.2
Authorization, Validity and Effect of Agreement.
(a) Authority. Each
of Parent and Merger Sub has the requisite corporate power and authority to
execute and deliver this Agreement and all other agreements, instruments,
certificates and documents contemplated hereunder (collectively, the “Related Documents”) to which
it is, or will become, a party, to perform its obligations hereunder and
thereunder and to consummate the Merger, and all other transactions contemplated
hereunder and thereunder. The execution, delivery and performance of this
Agreement and the Related Documents and the consummation of the Merger and the
other transactions contemplated hereunder and thereunder have been duly
authorized by all requisite corporate action on behalf of Parent and Merger Sub,
and no other corporate proceedings by Parent or Merger Sub, except for the
filing of the Certificate of Merger pursuant to the DGCL. The Parent Board, by
unanimous written consent dated May 7, 2010, (i) determined that this Agreement
and the Merger are advisable, fair to and in the best interests of Parent and
Parent’s shareholders and (ii) approved this Agreement and the Related Documents
to which Parent and Merger Sub will be party, the Merger and the other
transactions contemplated hereby and thereby.
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(b) Consent of
Stockholders. Parent’s shareholders owning more than 51%
of Parent’s issued and outstanding voting securities as of May 7, 2010
consented, approved ratified and adopted (i) an amendment to Parent’s
Articles of Incorporation (the “Articles of Amendment”) to (a)
increase the number of shares of common stock, $0.001 par value per share (the
“Common Stock”) which
Parent is authorized to issue from 300,000,000 shares to 500,000,000 shares; (b)
change the par value of Parent’s authorized preferred stock from $0.10 to $0.001
per share; and (c) provide for the classification of Parent’s Board of Directors
and to further provide for staggered terms of service for each class of
directors; and (ii) Parent’s Amended and Restated By-laws; all as
more fully described in the Information Statement.
(c) Binding Obligations. This
Agreement and each of the Related Documents to which each of Parent and Merger
Sub is a party have been or will be duly executed by each of Parent and Merger
Sub and, assuming the due authorization, execution and delivery hereof and
thereof by the Company to the extent a party hereof and thereof, constitute the
valid and legally binding obligations of Parent and Merger Sub, enforceable
against each of Parent and Merger Sub in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other
Applicable Laws relating to or affecting the rights and remedies of creditors
generally and to general principles of equity (regardless of whether considered
in a proceeding in equity or at law).
Section 3.3
Capitalization.
(a) Authorized and Outstanding
Shares. The authorized capital stock of Parent consists of
300,000,000 shares of Parent Common Stock and 1,000,000 shares of
Parent Preferred Stock, (the
“Parent Preferred
Stock”). As of
the close of business on the date immediately preceding the date of this
Agreement, there were 101,494,158 issued and outstanding shares of Parent Common
Stock, no shares of Parent Common Stock held by Parent in its treasury, and
no issued and outstanding shares of Parent Preferred Stock. Section 3.3(a) of the
Parent Disclosure Letter sets forth a true, correct and complete list of all
outstanding shares of Parent Common Stock subject to outstanding options,
warrants or similar rights (collectively, the “Parent Equity Rights”), held
in escrow, or reserved for future issuance. Except as set forth therein, there
are no outstanding or authorized stock appreciation, phantom stock, profit
participation or other similar rights with respect to Parent Common Stock. All
shares of Parent Common Stock are, and all shares of Parent Common Stock which
may be issued and outstanding immediately prior to the Effective Time as
permitted under this Agreement shall be when issued, duly authorized, validly
issued, fully paid and nonassessable shares of Parent Common Stock free and
clear of all liens and encumbrances and not subject to any preemptive
rights.
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(b) Other Equity
Interests. Except as otherwise provided in Section 3.3(a), Parent has no
outstanding Equity Interests, bonds, debentures, promissory notes or other
Indebtedness the holders of which have the right to vote with the stockholders
of Parent on any matter or convertible or exercisable for Equity Interests
having the right to vote. As of the date of this Agreement, Parent and the
Parent Subsidiaries have not issued, sold, granted or delivered, are not
obligated to issue, sell, grant or deliver (or to cause to be issued, sold,
granted or delivered), and are not a party to any Contract or other obligation
to issue, sell, grant or deliver, any Equity Interest (including, without
limitation, any securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind pursuant to which a Person
is entitled to acquire an Equity Interest) of any nature or any additional
shares of capital stock or any other Equity Interest in Parent or any Parent
Subsidiary.
(c) Parent Equity Rights. Section
3.3(c) of the Parent Disclosure Letter sets forth a true, correct and
complete list of all outstanding Parent Equity Rights as of the date of this
Agreement, including grantee name, exercise price (if any), vesting schedule and
other vesting conditions to the extent not fully vested and expiration date.
Since December 31, 2009, Parent has not (i) granted, conferred or awarded any
Parent Equity Rights that will not be exercised, converted or terminated by
their terms by the Effective Time, (ii) granted or issued any restricted stock
or securities, except as specifically contemplated by this Agreement, or (iii)
amended or otherwise modified any Parent Equity Rights. There are no outstanding
or authorized (i) contractual or other obligations of Parent or any Parent
Subsidiary to repurchase, redeem or otherwise acquire any Equity Interest of
Parent or any Parent Subsidiary or any such securities or agreements referred to
in the first sentence or (ii) voting trusts or similar agreements to which
Parent or any Parent Subsidiary is a party with respect to the voting of the
capital stock of Parent or any Parent Subsidiary, except repurchases,
redemptions or acquisitions that would have an immaterial effect on Parent and
its Subsidiaries, taken as a whole.
Section 3.4
Subsidiaries.
(a) Organization and
Qualification. Each Parent Subsidiary is a corporation or other legal
entity duly organized or constituted and validly existing under the Applicable
Laws of its jurisdiction of incorporation, organization or formation. Each
Parent Subsidiary has all requisite corporate, limited liability company,
partnership or other business power and authority to own or lease and operate
its properties and assets and to carry on its business as currently conducted,
except as would have an immaterial effect on Parent and any Parent Subsidiary,
taken as a whole. Each Parent Subsidiary is duly qualified to conduct business
and is in good standing in each jurisdiction in which the ownership or lease and
operation of its property or the nature of its business requires such
qualification, except for jurisdictions in which any failures to be so qualified
or to be in good standing, individually or in the aggregate, have not had or
caused and would not reasonably be expected to have or cause a Parent Material
Adverse Effect. All of the outstanding shares of capital stock of, or other
Equity Interests in, each Parent Subsidiary are duly authorized, validly issued,
fully paid and nonassessable and are owned, directly or indirectly, by Parent,
free and clear of all Liens, except for Permitted Liens.
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(b) List of Subsidiaries.
Section 3.4(b) of
the Parent Disclosure Letter sets forth all Parent Subsidiaries (other than
Merger Sub) and the ownership interest of each Parent Subsidiary held, directly
or indirectly, by Parent. The Parent Subsidiaries are not in violation of their
respective organizational documents. Except for the Parent Subsidiaries listed
in Section 3.4(b) of the
Parent Disclosure Letter, neither Parent nor any of its Subsidiaries directly or
indirectly owns any equity, partnership, membership or similar interest in, or
any interest convertible into, exercisable for the purchase of or exchangeable
for any such equity, partnership, membership or similar interest, or is under
any current or prospective obligation to form or participate in, provide funds
to, make any loan, capital contribution or other investment in, or assume any
liability or obligation of, any Person.
(c) Merger Sub. Merger Sub has
been formed solely for the purpose of engaging in the transactions contemplated
hereby and, as of the Effective Time, will not have engaged in any activities
other than in connection with the transactions contemplated by this Agreement.
Parent is, and will be at the Effective Time, the owner of all the outstanding
shares of capital stock of Merger Sub. The outstanding shares of capital stock
of Merger Sub are validly issued, fully paid, nonassessable and free of
preemptive rights.
Section 3.5 Compliance with
Laws; Permits. Except for such matters that, individually or in the
aggregate, have not had or caused and would not reasonably be expected to have
or cause a Parent Material Adverse Effect, and except for (x) matters
relating to Taxes, which are treated exclusively in Section 3.10,
(y) matters relating to Parent Benefit Plans, which are treated exclusively
under Section 3.11
and (z) matters arising under Environmental, Health and Safety Laws, which
are treated exclusively in Section 3.13:
(a) Neither Parent nor any Parent
Subsidiary is in violation of any Applicable Law relating to the ownership or
operation of any of its assets, and no Claim is pending or, to the Knowledge of
Parent, threatened with respect to any such matters;
(b) Parent and each Parent Subsidiary
hold all permits, licenses, certifications, variations, exemptions, Orders,
franchises, registrations, filings, approvals, authorizations or other required
grant of operating authority required by any Governmental Authority necessary
for the conduct of their respective businesses (the “Parent Permits”). All Parent
Permits are in full force and effect and there exists no default thereunder or
breach thereof, and Parent has no notice or Knowledge that such Parent Permits
will not be renewed in the ordinary course after the Effective Time. No
Governmental Authority has given, or to the Knowledge of Parent, threatened to
give, notice of any action to terminate, cancel or reform any Parent Permits;
and
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(c) Parent and each Parent Subsidiary
possess all Parent Permits required for the present ownership or lease, as the
case may be, of their businesses and operation of their property, and there
exists no default or breach with respect to, and no Person, including any
Governmental Authority, has taken or, to the Knowledge of Parent, threatened to
take, any action to terminate, cancel or reform any such Parent
Permit.
Section 3.6 No
Conflict; Consents.
(a) No Conflict. Except as set
forth on Section 3.6(a)
of the Parent Disclosure Letter, the execution and delivery by each
of Parent and Merger Sub of this Agreement and the Related Documents, the
performance of the obligations of Parent and Merger Sub hereunder and thereunder
and the consummation by Parent and Merger Sub of the Merger and the other
transactions contemplated hereby and thereby in accordance with the terms hereof
and thereof will not (i) conflict with or result in a breach of any
provisions of their respective organizational documents, (ii) violate, conflict
with, result in a breach of any provision of, constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
impair Parent’s rights under, alter the rights or obligations of third parties
under, result in the termination of or in a right of termination or cancellation
of, give rise to a right of purchase under, or accelerate the performance
required by, any Parent Material Contract or other Contract, (iii) result in the
creation of any Lien (other than Permitted Liens) upon any of the properties or
assets of Parent or Parent Subsidiaries under any Parent Material Contract or by
which Parent or Parent Subsidiaries or any of their properties is bound or
affected, (iv) result in any Parent Material Contract being declared void,
voidable, or without further binding effect, or (vi) (assuming that the consents
and approvals referred to in Section 3.6(b) are duly
and timely made or obtained), contravene, conflict with or constitute a
violation of any provision of any Applicable Law binding upon or applicable to
Parent or any Parent Subsidiaries, other than any such violations, conflicts,
breaches, defaults, impairments, alterations, terminations, cancellations,
purchase rights, accelerations or Liens that, individually or in the aggregate,
have not had or caused and would not reasonably be expected to have or cause a
Parent Material Adverse Effect.
(b) Required Consents. Except
for the consent of its Board of Directors, neither the execution and delivery by
Parent or Merger Sub of this Agreement or any Related Document nor the
consummation by Parent or Merger Sub of the Merger and the other transactions
contemplated hereby or thereby in accordance with the terms hereof or thereof
will require any consent, approval or authorization of, notice to or filing or
registration with any Governmental Authority, other than the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware, and
appropriate documents required to be filed as a result of the Merger with the
relevant Governmental Authorities in the states and foreign jurisdictions in
which Parent is qualified to conduct business, except for any failures to obtain
any such consent, approval or authorization or to make any such filing,
notification or registration that, individually or in the aggregate, have not
had or would not reasonably be expected to have or cause a Parent Material
Adverse Effect.
13
Section 3.7 SEC
Documents. Parent has filed with the SEC all documents required to be so
filed by it since December 31, 2008 pursuant to Sections 13(a), 14(a) and
15(d) of the Exchange Act (collectively, the “Parent Reports”). As of its respective date
or, if amended by a subsequent filing prior to the date hereof, on the date of
such filing, each Parent Report or as subsequently amended complied in all
material respects with the applicable requirements of the Exchange Act, SOX and
the rules and regulations thereunder and did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The consolidated
balance sheets included in or incorporated by reference into the Parent Reports
(including the related notes and schedules) fairly presents in all material
respects the consolidated financial position of Parent and Parent Subsidiaries
as of its date, and each of the consolidated statements of operations, cash
flows and changes in shareholders’ equity included in or incorporated by
reference into the Parent Reports (including any related notes and schedules)
fairly presents in all material respects the results of operations, cash flows
or changes in shareholders’ equity, as the case may be, of Parent and Parent
Subsidiaries for the periods set forth therein (such consolidated balance sheets
and consolidated statements of operations, cash flows and changes in
shareholders’ equity, each including the notes and schedules thereto, the “Parent Financial
Statements”).
Parent Financial Statements (i) complied as to form in all material
respects with the published rules and regulations of the SEC and (ii) were
prepared in accordance with GAAP consistently applied during the periods
involved, except as may be noted in the Parent Financial Statements or as
permitted by Form 10-K, 10-Q or Form 8-K. Except as and to the extent
adequately accrued or reserved against in the audited balance sheet of Parent as
at December 31, 2009 (such balance sheet, together with all related notes and
schedules thereto, the “Parent
Balance Sheet”), Parent does not have any liability, indebtedness,
expense, claim, deficiency, guaranty or obligation of any type or nature,
whether accrued, absolute, contingent, matured, unmatured or otherwise, whether
known or unknown and whether or not required by GAAP to be reflected in a
consolidated balance sheet of Parent or disclosed in the notes thereto, except
for (i) liabilities and obligations, incurred in the ordinary course of business
consistent with past practice since the date of the Parent Balance Sheet, that
are not, individually or in the aggregate, material in amount, (ii) liabilities
for performance under Parent Material Contracts that do not exceed $25,000
individually or $50,000 in the aggregate, and (iii) liabilities described in
Section 3.7 of the
Parent Disclosure Letter.
Section 3.8 Litigation.
Except as set forth in Section
3.8 of the Parent’s Disclosure Letter there is no litigation,
arbitration, mediation, action, suit, Claim, proceeding or investigation,
whether legal or administrative, pending against Parent or any Parent Subsidiary
or, to Parent’s Knowledge, threatened against Parent or any Parent Subsidiary or
any of their respective assets, properties or operations, at Applicable Law or
in equity, before or by any Governmental Authority or any Order of any
Governmental Authority that, individually or in the aggregate, and taking into
consideration the aggregate amounts reserved for any such matters in Parent’s
consolidated balance sheet at December 31, 2009, has had or caused or would
reasonably be expected to have or cause a Parent Material Adverse
Effect.
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Section 3.9 Absence of Certain
Changes. Except as set forth in Section 3.9 of the Parent
Disclosure Letter from December 31, 2009 to the date of this Agreement, except
as described in the Parent Reports, there has not been (a) any event or
occurrence that has had or caused or would reasonably be expected to have or
cause a Parent Material Adverse Effect, (b) any material change by Parent
or any Parent Subsidiary, when taken as a whole, in any of their accounting
methods, principles or practices or any of their Tax methods, practices or
elections, (c) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of Parent or any redemption,
purchase or other acquisition of any of its capital stock or (d) except in
the ordinary course of business consistent with past practices, any increase in
or establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option, stock purchase or other
employee benefit plan.
Section 3.10 Taxes.
(a) Except for such matters that,
individually or in the aggregate, have not had or caused and would not
reasonably be expected to have or cause a Parent Material Adverse
Effect:
(i) The Parent and the Parent
Subsidiaries have timely filed, or have caused to be timely filed on their
behalf, all Tax Returns required to be filed by or on behalf of Parent and any
Parent Subsidiary in the manner prescribed by Applicable Law. All such Tax
Returns are complete and correct. Parent and the Parent Subsidiary have timely
paid all Taxes due and owing, and, in accordance with GAAP, the most recent
Parent Financial Statements contained in the Parent Reports reflect a reserve
(excluding any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) for all Taxes payable by Parent and the
Parent Subsidiaries for all Taxable periods and portions thereof through the
date of such Parent Financial Statements;
(ii) No Tax Return of Parent or any
Parent Subsidiary is under audit or examination by any Governmental Authority,
and no written or, to the Knowledge of Parent, unwritten notice of such an audit
or examination has been received by Parent or any Parent Subsidiary. There is no
assessed deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by Parent or any Parent
Subsidiary;
15
(iii) Since December 31, 2008, Parent
and the Parent Subsidiaries have not made or rescinded any election relating to
Taxes or settled or compromised any Claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to any Taxes, or,
except as may be required by Applicable Law, made any change to any of their
methods of reporting income or deductions for federal income Tax purposes from
those employed in the preparation of their most recently filed federal Tax
Returns;
(iv) There is no agreement or other
document extending, or having the effect of extending, the period of assessment
or collection of any material Taxes and no power of attorney with respect to any
such Taxes has been executed or filed with any Tax Authority by or on behalf of
Parent or any Parent Subsidiary;
(v) Except for statutory Liens for
Taxes not yet due, no Liens for Taxes exist with respect to any assets or
properties of Parent or any Parent Subsidiary;
(vi) Except for any agreements or
arrangements (A) with customers, vendors, lessors or similar Persons
entered into in the ordinary course of business or (B) among the Parent and
any Parent Subsidiary, none of Parent or any Parent Subsidiary is a party to or
bound by any Tax sharing agreement, Tax indemnity obligation or agreement or
arrangement with respect to Taxes (including any advance pricing agreement,
closing agreement or other agreement relating to Taxes with any Governmental
Authority);
(vii) Parent and the Parent
Subsidiaries have complied with all Applicable Law relating to the payment and
withholding of Taxes and have, within the time and the manner prescribed by such
Applicable Law withheld from and paid over to the proper Governmental
Authorities all amounts required to be so withheld and paid over under
Applicable Law; and
(viii) None of Parent and the Parent
Subsidiaries shall be required to include in a Taxable period ending after the
Closing Date any item of income that accrued in a prior Taxable period but was
not recognized in any prior Taxable period as a result of the installment method
of accounting, the long-term contract method of accounting, the cash method of
accounting or Section 481 of the Code or comparable provisions of any other
Applicable Law.
(b) None of Parent or any Parent
Subsidiary knows of any fact, agreement, plan, or other circumstance, or has
taken or failed to take any action, that would reasonably be expected to prevent
the Merger from qualifying as a “reorganization” within the meaning of
Section 368(a) of the Code.
16
Section 3.11 Employee
Benefit Plans.
(a) Section 3.11(a) of the
Parent Disclosure Letter contains a list of all Parent’s Benefit Plans (each a
“Parent Benefit Plan”
and collectively, the “Parent
Benefit Plans”). To the extent applicable, Parent Benefit Plans comply in
all material respects with the requirements of ERISA and the Code or with the
Applicable Laws and regulations of any applicable jurisdiction. Parent Benefit
Plans have been maintained and operated in compliance in all material respects
with their terms. To Parent’s Knowledge, there are no breaches of fiduciary duty
in connection with Parent Benefit Plans for which Parent could be liable. There
are no pending or, to Parent’s Knowledge, threatened Claims against or otherwise
involving any Parent Benefit Plan that, individually or in the aggregate, have
had or caused or would reasonably be expected to have or cause a Parent Material
Adverse Effect, and no suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of Parent Benefit Plan activities) has
been brought against or with respect to any such Parent Benefit Plan for which
Parent could be liable that, individually or in the aggregate, have had or
caused or would reasonably be expected to have or cause a Parent Material
Adverse Effect. All material contributions required to be made as of the date
hereof to Parent Benefit Plans have been made or have been properly accrued and
are reflected in the Parent Financial Statements as of the date
thereof;
(b) None of Parent or any Parent
Subsidiary contributes to, or has an obligation to contribute to, and has not
within six years prior to the Effective Time contributed to, or had an
obligation to contribute to or has any material liability, contingent or
otherwise, with respect to, (i) a “multiemployer plan” within the meaning
of Section 3(37) of ERISA, (ii) any plan that is covered by
Title IV of ERISA, (iii) any plan subject to Section 412 of the
Code or (iv) any plan funded by a “voluntary employees’ benefits
association” within the meaning of Section 501(c)(9) of the
Code;
(c) No Parent Benefit Plan maintained
by any of the Parent or any Parent Subsidiary provides medical, surgical,
hospitalization, death or similar benefits (regardless of whether insured) for
employees or former employees of Parent or any Parent Subsidiary for periods
extending beyond their retirement or other termination of service other than
coverage mandated by Applicable Law;
(d) All accrued material obligations of
Parent and any Parent Subsidiary, whether arising by operation of Applicable
Law, Contract, or past custom, for compensation and benefits, including, but not
limited to, bonuses and accrued vacation, and benefits under Parent Benefit
Plans, have been paid or adequate accruals for such obligations are reflected on
the Parent Financial Statements as of the date thereof;
17
(e) Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will (either alone or in conjunction with any other event, such as termination
of employment), result in, cause the accelerated vesting, funding or delivery
of, or increase the amount or value of, any payment or benefit to any employee,
officer or director of Parent or any of Parent Subsidiaries;
(f) Each Parent Benefit Plan which is
or reasonably could be determined to be an arrangement subject to
Section 409A of the Code has been operated in good faith compliance with
Section 409A of the Code since January 1, 2005 and has been, or may
be, timely amended with the consent of the participant, if necessary, to comply
in good faith with Section 409A of the Code and any applicable guidance,
whether proposed or final, issued by the IRS with respect thereto;
(g) No Parent Benefit Plan is a
multiple employer plan within the meaning of Section 413(c) of the
Code;
(h) Section 3.11(h) of the Parent
Disclosure Letter contains a description that is accurate and correct in all
material respects, of all amounts estimated to be paid or payable (whether in
cash, in property, or in the form of benefits, accelerated cash, property, or
benefits, or otherwise) in connection with the transactions contemplated hereby
(solely as a result thereof) that were or will be an “excess parachute payment”
within the meaning of Section 280G of the Code; and
(i) No Parent Benefit Plan that is not
subject to ERISA has any material liabilities thereunder which are not otherwise
fully funded, if applicable, or properly accrued and reflected under the Parent
Financial Statements as of the date thereof.
Section 3.12 Labor
Matters.
(a) Collective Bargaining. As
of the date of this Agreement, (i) neither Parent nor any Parent Subsidiary
is a party to, or bound by, any collective bargaining agreement or similar
Contract, agreement or understanding with a labor union or similar labor
organization and (ii) to Parent’s Knowledge, there are no organizational
efforts with respect to the formation of a collective bargaining unit presently
being made or threatened.
18
(b) Unfair Labor Practices.
Except for such matters that, individually or in the aggregate, have not had or
caused and would not reasonably be expected to have or cause a Parent Material
Adverse Effect, (i) neither Parent nor any Parent Subsidiary has received
any written complaint of any unfair labor practice or other unlawful employment
practice or any written notice of any material violation of any federal, state
or local statutes, Applicable Laws, ordinances, rules, regulations, Orders or
directives with respect to the employment of individuals by, or the employment
practices of, Parent or any Parent Subsidiary, or the work conditions, terms and
conditions of employment, wages or hours of their respective businesses,
(ii) there are no unfair labor practice charges or other employee related
complaints against Parent or any Parent Subsidiary pending or, to the Knowledge
of Parent, threatened before any Governmental Authority by or
concerning the employees working in their respective businesses, and
(iii) there is no labor dispute, strike, slowdown or work stoppage against
Parent or any Parent Subsidiary pending or, to the Knowledge of Parent or any
Parent Subsidiary, threatened against Parent or any Parent
Subsidiary.
Section 3.13 Environmental
Matters. Except for such matters that, individually or in the aggregate,
have not had or caused and would not reasonably be expected to have or cause a
Parent Material Adverse Effect:
(a) Parent and each Parent Subsidiary
have been and are in compliance with all applicable Environmental, Health and
Safety Laws and possess and are in compliance with any permits or licenses
required under Environmental, Health and Safety Laws. To the Knowledge of
Parent, there are no past or present facts, conditions or circumstances that
interfere with or preclude, or could interfere with or preclude if known to a
Governmental Authority, the business of Parent or any Parent Subsidiary as now
conducted or which interfere with continued compliance with applicable
Environmental, Health and Safety Laws;
(b) No proceedings or investigations of
any Governmental Authority are pending or, to the Knowledge of Parent,
threatened against Parent or any Parent Subsidiary that allege the violation of
or seek to impose liability pursuant to any Environmental, Health and Safety
Laws, and, to the Knowledge of Parent, there are no past or present facts,
conditions or circumstances at, on or arising out of, or otherwise associated
with, any current (or, to the Knowledge of Parent or any Parent Subsidiary,
former) businesses, assets or properties of Parent or any Parent Subsidiary,
which constitute a material violation of Environmental, Health and Safety Laws
or are reasonably likely to give rise to (i) costs, expenses, liabilities
or obligations for any cleanup, remediation, disposal or corrective action under
any Environmental, Health and Safety Laws, (ii) Claims arising for personal
injury, property damage or damage to natural resources or (iii) fines,
penalties or injunctive relief; and
(c) Neither Parent nor any Parent
Subsidiary has (i) received any written notice of noncompliance with,
violation of, or liability or potential liability under any Environmental,
Health and Safety Laws or (ii) entered into or become subject to any
consent decree, Order or agreement with any Governmental Authority or other
Persons pursuant to any Environmental, Health and Safety Laws or relating to the
cleanup of any Hazardous Materials.
19
Section 3.14 Intellectual
Property. Except for such matters that, individually or in the aggregate,
have not had or caused and would not reasonably be expected to have or cause a
Parent Material Adverse Effect, (a) the products, services and operations
of Parent or any Parent Subsidiary do not infringe upon, violate or
misappropriate the Intellectual Property of any Third Party, (b) Parent and
each Parent Subsidiary own or possess valid licenses or other valid rights to
use the Intellectual Property that they use, exercise or exploit in, or that may
be necessary or desirable for, their businesses as currently being conducted,
free and clear of all Liens (other than Permitted Liens), and (c) to the
Knowledge of Parent, there is no infringement of any Intellectual Property owned
by or licensed by or to any Parent Company. To Parent’s Knowledge, there is no
unauthorized use, disclosure, infringement or misappropriation of any
Intellectual Property of any Parent Company by any Person, including, without
limitation, any employee or independent contractor (present or former) of Parent
or any Parent Subsidiary, that, individually or in the aggregate, has had or
caused or could reasonably be expected to have or cause a Parent Material
Adverse Effect.
Section 3.15 Insurance. Except for such matters
that, individually or in the aggregate, have not had or caused and would not
reasonably be expected to have or cause a Material Adverse Effect:
(a) Parent and the Parent Subsidiaries
maintain and will maintain through the Closing Date insurance adequate in
character and amount with financially sound and reputable insurers. There is no
material default with respect to any provision contained in any insurance policy
or binder, and none of Parent nor any Parent Subsidiary has failed to give any
notice or present any claim under any such policy or binder in a timely fashion;
and
(b) To the Knowledge of Parent, no
event relating specifically to any of Parent or any Parent Subsidiary has
occurred that is reasonably likely, after the date of this Agreement, to result
in an upward adjustment in premiums under any insurance policies they maintain.
Neither Parent nor any Parent Subsidiary has received notice from any insurer or
agent of such insurer that substantial capital improvements or other
expenditures will have to be made in order to continue such insurance policies.
Excluding insurance policies that have expired and been replaced in the ordinary
course of business, no excess liability or protection and indemnity insurance
policy has been cancelled by the insurer within one year prior to the date
hereof, and to Parent’s Knowledge, no threat in writing has been made to cancel
(excluding cancellation upon expiration or failure to renew) any current
insurance policy of Parent or any Parent Subsidiary.
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Section 3.16 Ownership and
Condition of Assets. Except as would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect
and except as set forth in Section 3.16 of the Parent
Disclosure Letter, Parent or one of its Subsidiaries (i) has good and marketable
title to all the properties and assets (a) reflected in the Parent Financial
Statements as being owned by Parent or one of its Subsidiaries or (b) acquired
after the date thereof which are material to Parent’s business on a consolidated
basis (except properties sold or otherwise disposed of since the date thereof in
the ordinary course of business), free and clear of all Liens except Permitted
Liens, and (ii) is the lessee of all leasehold estates reflected in the Parent
Financial Statements or acquired after the date thereof which are material to
its business on a consolidated basis (except for leases that have expired by
their terms since the date thereof) and is in possession of the properties
purported to be leased thereunder, and each such lease is valid without default
thereunder by the lessee or, to Parent’s Knowledge, the lessor.
Section 3.17 Undisclosed
Liabilities. Neither Parent nor any Parent Subsidiary has any liabilities
or obligations of any nature, regardless of whether fixed, accrued, contingent
or otherwise, except (a) liabilities and obligations that are
fully reflected or reserved against in the Parent Financial Statements included
in the Parent Reports or described in the Parent Reports filed prior to the date
hereof, (b) liabilities and obligations arising under this Agreement and
the transaction contemplated by this Agreement, (c) liabilities or
obligations incurred in the ordinary course of business consistent with past
practices since December 31, 2009 and (d) liabilities and obligations that,
individually or in the aggregate, have not had or caused and would not
reasonably be expected to have or cause a Parent Material Adverse
Effect.
Section 3.18 Material
Contracts. All material contracts, commitments and similar
agreements to which Parent or any Parent Subsidiary is a party or by which they
or any of their property is bound as of the date of this Agreement (other than
this Agreement or any Related Document) (the “Parent Material Contracts”) are filed as an
exhibit to Parent Reports filed prior to the date of this Agreement. Except as
set forth in Section
3.18 of the Parent Disclosure Letter, as of the date of this Agreement
(a) each Parent Material Contract is in full force and effect and (b) except for
such matters that, individually or in the aggregate, have not had or caused and
would not reasonably be expected to have or cause a Parent Material Adverse
Effect, none of Parent and any Parent Subsidiary know of, or have
received written notice of, any breach or violation of, or default under (nor,
to the Knowledge of Parent or any Parent Subsidiary, does there exist any
condition which with the passage of time or the giving of notice or both would
result in such a violation or default under) any Parent Material Contract, or
have received written notice of the desire of the other party or parties to any
such Parent Material Contracts to exercise any rights such party has to cancel,
terminate or repudiate such Contract or exercise remedies
thereunder.
Section 3.19 No Brokers;
Investment Advisor. Except for a brokerage
commission equal to 2,000,000 shares of Parent Common Stock payable under
certain circumstances to Palladium Capital Advisors, LLC (“Palladium”), and commissions
payable to Palladium in connection with the Financing, none of the Parent and
any Parent Subsidiary has entered into any Contract with any Person that may
result in the obligation of the Company, Parent, or any Parent Subsidiary to pay
any finder’s fees, brokerage or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby.
21
Section 3.20 Improper
Payments. Except for such matters that, individually or in the aggregate,
have not had or caused and would not reasonably be expected to have or cause a
Parent Material Adverse Effect: (a) no funds, assets or properties of
Parent or its Affiliates have been used or offered for illegal purposes;
(b) no accumulation or use of any funds, assets or properties of Parent or
its Affiliates has been made without being properly accounted for in the
financial books and records of Parent or its Affiliates; (c) all payments
by or on behalf of Parent or its Affiliates have been duly and properly recorded
and accounted for in their financial books and records and such books and
records accurately and fairly reflect all transactions and dispositions of the
assets of Parent and its Affiliates; (d) Parent has devised and maintained
systems that provide reasonable assurances that transactions are and have been
executed in accordance with management’s general or specific authorization;
(e) neither Parent nor any of its Affiliates, nor any director, officer,
agent, employee or other Person associated with or acting on behalf of Parent or
its Affiliates, has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or payment of anything of value relating to
political activity, (ii) made any direct or indirect unlawful payment to
any employee, agent, officer, director, representative or stockholder of a
Governmental Authority or political party, or official or candidate thereof, or
any immediate family member of the foregoing or (iii) made any bribe,
unlawful rebate, payoff, influence payment, kickback or other unlawful payment
in connection with the conduct of Parent’s or its Affiliates’ businesses;
(f) none of Parent, any of its Affiliates or any agent of any of them has
received any bribes, kickbacks or other improper payments from vendors,
suppliers or other Persons; and (g) Parent has no Knowledge that any
payment made to a Person would be or has thereafter been offered, given or
provided to any foreign official, political party or official thereof, or to any
candidate for public office.
Section 3.21 No Ownership
of the Company Stock. Parent does not own any shares of the Company
Merger Stock or any other securities convertible into or otherwise exercisable
to acquire shares of the Company Merger Stock.
Section 3.22 No Other Representations
or Warranties. Except for the representations and warranties contained in
this Article 3,
neither Parent nor any other Person makes any other express or implied
representation or warranty on behalf of Parent or any of its Affiliates in
connection with this Agreement or the transactions contemplated
hereby.
Section 3.23 Net Cash on
Hand. On the date hereof, Parent’s cash on hand, after giving
effect to receipt of the proceeds of the Financing and excluding (i)
Indebtedness, (ii) accrued and unpaid amounts through the date hereof, payable
to any third party for services rendered or goods provided through the date
hereof, and (iii) transaction expenses incurred in connection with this
Agreement, the Financing, the Merger, and the transactions contemplated hereby
and thereby, and payable through the date hereof, is at least
$2,871,503.
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ARTICLE 4
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
As an
inducement for Parent and Merger Sub to enter into this Agreement, the Company
hereby makes the following representations and warranties to Parent and Merger
Sub; provided, however,
that such representations and warranties shall be subject to and qualified by:
(a) the disclosure letter delivered by the Company to Parent as of the date
hereof (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein)
(the “Company Disclosure Letter”)
(it being understood that (i) the disclosure of any fact or item in any
section of the Company Disclosure Letter shall, should the existence of such
fact or item be relevant to any other section, be deemed to be disclosed with
respect to that other section to the extent that such disclosure is made in a
manner that makes its relevance to the other section reasonably apparent and
(ii) the disclosure of any matter or item in the Company Disclosure Letter
shall not be deemed to constitute an acknowledgement that such matter or item is
required to be disclosed therein or is material to a representation or warranty
set forth in this Agreement and shall not be used as a basis for interpreting
the terms “material,” “materially,” “materiality,” “Company Material Adverse
Effect” or any word or phrase of similar import and does not mean that
such matter or item, alone or together with any other matter or item, would
constitute a Company Material Adverse Effect).
Section 4.1 Corporate
Existence; Good Standing; Corporate Authority.
(a) The
Company is a corporation duly incorporated, validly existing and in good
standing under the Applicable Laws of the State of Delaware. The Company is duly
qualified to conduct business and is in good standing (to the extent such
concept exists in the relevant jurisdiction) in each jurisdiction in which the
ownership, operation or lease of its property or the nature of the Company’s
business requires such qualification, except for jurisdictions in which any
failures to be so qualified or to be in good standing, individually or in the
aggregate, have not had or caused and would not reasonably be expected to have
or cause a Company Material Adverse Effect. The Company has all requisite
corporate power and authority to own or lease and operate its properties and
assets and to carry on its business as it is currently being conducted. Each of
the Certificate of Incorporation (including any and all Certificates of
Designations) as amended and Bylaws of the Company (the “Company Charter Documents”),
is in full force and effect, has not been amended or modified and has not been
terminated, superseded or revoked. The Company is not in violation of the
Company Charter Documents. The Company has delivered true and complete copies of
the Company Charter Documents to Parent, certified as applicable by Secretary of
State or other authorized official of the jurisdiction of
incorporation.
23
(b) The
minute books of the Company, which shall be exhibited to Parent between the date
hereof and the Closing Date, each contain true, correct and complete minutes and
records of all meetings, proceedings and other actions of the shareholders,
Boards of Directors and committees of such Boards of Directors of the Company,
if any, except where such would not have a Material Adverse Effect and, on the
Closing Date, will, to the best of the Company’s knowledge contain true, correct
and complete minutes and records of any meetings, proceedings and other actions
of the shareholders and the Board of Directors and committees of such Board of
Directors of the Company.
Section
4.2 Authorization, Validity and Effect of Agreements.
(a) Authority. The Company has
the requisite corporate power and authority to execute and deliver this
Agreement and Related Documents to which it is, or will become, a party, to
perform its obligations hereunder and thereunder and to consummate the Merger,
and all other transactions contemplated hereunder and thereunder, except for the
Company Stockholder Consent, which consent shall be obtained as a condition to
Closing. The execution, delivery and performance of this Agreement and the
Related Documents and the consummation of the Merger and the other transactions
contemplated hereunder and thereunder have been duly authorized by all requisite
corporate action on behalf of the Company, and no other corporate proceedings by
the Company are necessary to authorize the execution and delivery of this
Agreement or the Related Documents or to consummate the Merger and the other
transactions contemplated hereunder or under the Related Documents, except for
the approval of the Merger by the Company’s stockholders and the filing of the
Certificate of Merger pursuant to the DGCL. The Company Board, by unanimous
written consent dated May 7, 2010 (i) determined that this Agreement and
the Merger are advisable, fair to and in the best interests of the Company and
the Company Stockholders, (ii) approved this Agreement and the Related
Documents to which the Company will be party, the Merger and the other
transactions contemplated hereby and thereby, and (iii) resolved to
recommend that the Company Stockholders approve and adopt this Agreement and the
Merger and the other transactions contemplated hereby.
(b) Binding Obligations. This
Agreement and each of the Related Documents to which the Company is a party have
been or will be duly executed by the Company and, assuming the due
authorization, execution and delivery hereof and thereof by Parent and Merger
Sub to the extent a party hereof and thereof, constitute the valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other Applicable Laws relating to or affecting the
rights and remedies of creditors generally and to general principles of equity
(regardless of whether considered in a proceeding in equity or at
law).
24
Section
4.3 Capitalization.
(a) Authorized and Outstanding
Shares. The authorized capital stock of the Company consists of
10,000,000 shares of the Company Common Stock, 540,000 shares of
Company Series A Preferred Stock (the “Company Series A Preferred
Stock”) and 150,000 shares of Company Series B Preferred Stock
(the “Company Series B Preferred
Stock”). As of the close of business on the date immediately preceding
the date of this Agreement, there were 400,000 issued and outstanding shares of
Company Common Stock, 540,000 issued and outstanding shares of Company Series A
Preferred Stock, 52,000 issued and outstanding shares of Company Series B
Preferred Stock and no shares of Company Common Stock, Company Series A
Preferred Stock and Company Series B Preferred Stock held by the Company in its
treasury. Section 4.3(a) of the
Company Disclosure Letter sets forth a true,
correct and complete list of all outstanding shares of the Company Merger Stock
subject to outstanding options, warrants, conversion or similar rights
(collectively, the “Company
Equity Rights”), or reserved for future issuance. Except as set forth
therein, there are no outstanding or authorized stock appreciation, phantom
stock, profit participation or other similar rights with respect to the Company
Merger Stock. All shares of the Company Merger Stock are, and all shares of the
Company Merger Stock which may be issued and outstanding immediately prior to
the Effective Time as permitted under this Agreement shall be when issued, duly
authorized, validly issued, fully paid and nonassessable shares of the Company
Common Stock and not subject to any preemptive rights.
(b) Other Equity Interests.
Except as otherwise provided in Section 4.3(a), the Company
has no outstanding Equity Interests, bonds, debentures, promissory notes or
other Indebtedness the holders of which have the right to vote with the
stockholders of the Company on any matter or convertible or exercisable for
Equity Interests having the right to vote. As of the date of this Agreement, the
Company has not issued, sold, granted or delivered, are not obligated to issue,
sell, grant or deliver (or to cause to be issued, sold, granted or delivered),
and is not a party to any Contract or other obligation to issue, sell, grant or
deliver, any Equity Interest (including, without limitation, any securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind pursuant to which a Person is entitled to acquire an
Equity Interest) of any nature or any additional shares of capital stock or any
other Equity Interest in the Company.
25
(c) Company Equity Rights. Section 4.3(c) of the Company
Disclosure Letter sets forth a true, correct and complete list of all
outstanding Company Equity Rights as of the date of this Agreement, including
grantee name, exercise price (if any), vesting schedule and other vesting
conditions to the extent not fully vested and expiration date. Since December
31, 2009, the Company has not (i) granted, conferred or awarded any Company
Equity Rights that will not be exercised, converted or terminated by their terms
by the Effective Time, (ii) granted or issued any restricted stock or
securities, except as specifically contemplated by this Agreement, or (iii)
amended or otherwise modified any Company Equity Rights. There are no
outstanding or authorized (i) contractual or other obligations of the
Company to repurchase, redeem or otherwise acquire any Equity Interest of the
Company or any such securities or agreements referred to in the first sentence
or (ii) voting trusts or similar agreements to which the Company is a party
with respect to the voting of the capital stock of the Company, except
repurchases, redemptions or acquisitions that would have an immaterial effect on
the Company. At the Effective Time, all the Company Equity Rights will be
converted or exercised in accordance with Section 2.3 or otherwise
terminated and of no further force or effect.
Section 4.4 Subsidiaries. The
Company does not have any Subsidiaries.
Section 4.5 Compliance with
Laws; Permits. Except for such matters that, individually or in the
aggregate, have not had or caused and would not reasonably be expected to have
or cause a Company Material Adverse Effect, and except for (x) matters
relating to Taxes, which are treated exclusively in Section 4.9,
(y) matters relating to the Company Benefit Plans, which are treated
exclusively under Section 4.11 and
(z) matters arising under Environmental, Health and Safety Laws, which are
treated exclusively in Section 4.13:
(a) The Company is not in violation of
any Applicable Law relating to the ownership or operation of any of its assets,
and no Claim is pending or, to the Knowledge of the Company, threatened with
respect to any such matters;
(b) the Company holds all permits,
licenses, certifications, variations, exemptions, Orders, franchises,
registrations, filings, approvals, authorizations or other required grant of
operating authority required by any Governmental Authority necessary for the
conduct of their respective businesses (the “Company Permits”). All the
Company Permits are in full force and effect and there exists no default
thereunder or breach thereof, and the Company has no notice or Knowledge that
such Company Permits will not be renewed in the ordinary course after the
Effective Time. No Governmental Authority has given, or to the Knowledge of the
Company, threatened to give, notice of any action to terminate, cancel or reform
any Company Permits; and
(c) the Company possesses all the
Company Permits required for the present ownership or lease, as the case may be,
of its business and operation of its property, and there exists no default or
breach with respect to, and no Person, including any Governmental Authority, has
taken or, to the Knowledge of the Company, threatened to take, any action to
terminate, cancel or reform any such Company Permit.
26
Section
4.6 No Conflict; Consents.
(a) No Conflict. The execution
and delivery by the Company of this Agreement and the Related Documents, the
performance of the obligations of the Company hereunder and thereunder and the
consummation by the Company of the Merger and the other transactions
contemplated hereby and thereby in accordance with the terms hereof and thereof
will not (i) conflict with or result in a breach of any provisions of its
organizational documents, (ii) violate, conflict with, result in a breach of any
provision of, constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, impair the Company’s rights
under, alter the rights or obligations of third parties under, result in the
termination of or in a right of termination or cancellation of, give rise to a
right of purchase under, or accelerate the performance required by, any Company
Material Contract or other Contract, (iii) result in the creation of any Lien
(other than Permitted Liens) upon any of the properties or assets of the Company
under any Company Material Contract or by which the Company or any of its
properties is bound or affected, (iv) result in any Company Material
Contract being declared void, voidable, or without further binding effect, or
(v) (assuming that the consents and approvals referred to in Section 4.6(b) are duly
and timely made or obtained and that the Company Stockholders Consent is
obtained), contravene, conflict with or constitute a violation of any provision
of any Applicable Law binding upon or applicable to the Company, other than any
such violations, conflicts, breaches, defaults, impairments, alterations,
terminations, cancellations, purchase rights, accelerations or Liens that,
individually or in the aggregate, have not had or caused and would not
reasonably be expected to have or cause a Company Material Adverse
Effect.
(b) Required Consents. Neither
the execution and delivery by the Company of this Agreement or any Related
Document nor the consummation by the Company of the Merger and the other
transactions contemplated hereby or thereby in accordance with the terms hereof
or thereof will require any consent, approval or authorization of, notice to or
filing or registration with any Governmental Authority, other than the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware,
and appropriate documents required to be filed as a result of the Merger with
the relevant Governmental Authorities in the states and foreign jurisdictions in
which the Company is qualified to conduct business, except for any failures to
obtain any such consent, approval or authorization or to make any such filing,
notification or registration that, individually or in the aggregate, have not
had or caused and would not reasonably be expected to have or cause a Company
Material Adverse Effect.
Section 4.7 Litigation.
Except as set forth in Section
4.7 of the Company Disclosure Letter (there is no litigation,
arbitration, mediation, action, suit, Claim, proceeding or investigation,
whether legal or administrative, pending against the Company or, to the
Company’s Knowledge, threatened against the Company or any of its assets,
properties or operations, at Applicable Law or in equity, before or by any
Governmental Authority or any Order of any Governmental Authority that,
individually or in the aggregate, and taking into consideration the aggregate
amounts reserved for any such matters in the Company Balance Sheet, has had or
caused or would reasonably be expected to have or cause a Company Material
Adverse Effect.
27
Section 4.8 Absence of Certain
Changes. Since
December 31, 2009, except as described in the Financial Statements, there has
not been (a) any event or occurrence that has had or caused or would
reasonably be expected to have or cause a Company Material Adverse Effect,
(b) any material change by the Company in any of its accounting methods,
principles or practices or any of its Tax methods, practices or elections,
(c) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Company or any redemption,
purchase or other acquisition of any of its capital stock or (d) except in
the ordinary course of business consistent with past practices, any increase in
or establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option, stock purchase or other
employee benefit plan.
Section 4.9 Taxes.
(a) Except for such matters that,
individually or in the aggregate, have not had or caused and would not
reasonably be expected to have or cause a Company Material Adverse
Effect:
(i) The Company has timely filed, or
has caused to be timely filed on its behalf, all Tax Returns required to be
filed by or on their behalf o in the manner prescribed by Applicable Law. All
such Tax Returns are complete and correct. The Company has timely paid all Taxes
due and owing, and, in accordance with GAAP, the most recent Company Financial
Statements reflect a reserve (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) for all
Taxes payable by the Company for all Taxable periods and portions thereof
through the date of the Company Financial Statements;
(ii) No Tax Return of the Company is
under audit or examination by any Governmental Authority, and no written or, to
the Knowledge of the Company, unwritten notice of such an audit or examination
has been received by the Company. There is no assessed deficiency, refund
litigation, proposed adjustment or matter in controversy with respect to any
Taxes due and owing by the Company;
(iii) Since December 31, 2008, the
Company has not made or rescinded any election relating to Taxes or settled or
compromised any Claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to any Taxes, or, except as may be
required by Applicable Law, made any change to any of their methods of reporting
income or deductions for federal income Tax purposes from those employed in the
preparation of their most recently filed federal Tax Returns;
28
(iv) There is no agreement or other
document extending, or having the effect of extending, the period of assessment
or collection of any material Taxes and no power of attorney with respect to any
such Taxes has been executed or filed with any Governmental Authority by or on
behalf of the Company;
(v) Except for statutory Liens for
Taxes not yet due, no Liens for Taxes exist with respect to any assets or
properties of the Company;
(vi) Except for any agreements or
arrangements (A) with customers, vendors, lessors or similar Persons
entered into in the ordinary course of business or (B) the Company is not
a party to or bound by any Tax sharing agreement, Tax indemnity obligation or
agreement or arrangement with respect to Taxes (including any advance pricing
agreement, closing agreement or other agreement relating to Taxes with any Tax
Authority);
(vii) The Company has complied with
all Applicable Law relating to the payment and withholding of Taxes and have,
within the time and the manner prescribed by any such Applicable Law, withheld
from and paid over to the proper Governmental Authorities all amounts required
to be so withheld and paid over under Applicable Law; and
(viii) The Company shall not be
required to include in a Taxable period ending after the Closing Date any item
of income that accrued in a prior Taxable period but was not recognized in any
prior Taxable period as a result of the installment method of accounting, the
long-term contract method of accounting, the cash method of accounting or
Section 481 of the Code or comparable provisions of any other Applicable
Law.
(b) The Company does not know of any
fact, agreement, plan, or other circumstance, or has taken or failed to take any
action, that would reasonably be expected to prevent the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of the
Code.
29
Section 4.10
Financial Statements; No Undisclosed Liabilities.
(a) True and complete copies of
the audited balance sheet of the Company as at December 31, 2009, and the
related audited statements of income, shareholders’ equity and cash flows of the
Company, together with all related notes and schedules thereto, accompanied by
the reports thereon of the Company’s independent auditors (the “Company Financial Statements”)
are attached hereto as Section
4.10(a) of the Company Disclosure Letter.
(b) Except as set forth in Section 4.10(b) of the Company
Disclosure Letter, each of the Company Financial Statements (i) are correct
and complete and have been prepared in accordance with the books and records of
the Company; (ii) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto); and (iii) fairly
present, in all material respects, the financial position, results of operations
and cash flows of the Company,, as the case may be, as at the respective dates
thereof and for the respective periods indicated therein, except as otherwise
noted therein and subject, in the case of any interim financial statements of
the Company, to normal and recurring year-end adjustments that will not,
individually or in the aggregate, be material.
(c) Except as and to the extent
adequately accrued or reserved against in the audited balance sheet of the
Company as at December 31, 2009 (such balance sheet, together with all related
notes and schedules thereto, the “Company Balance Sheet”), the
Company does not have any liability, indebtedness, expense, claim, deficiency,
guaranty or obligation of any type or nature, whether accrued, absolute,
contingent, matured, unmatured or otherwise, whether known or unknown and
whether or not required by GAAP to be reflected in a balance sheet of the
Company or disclosed in the notes thereto, except for (i) liabilities and
obligations, incurred in the ordinary course of business consistent with past
practice since the date of the Company Balance Sheet, that are not, individually
or in the aggregate, material in amount, (ii) liabilities for performance
under Company Material Contracts that do not exceed $25,000 individually or
$50,000 in the aggregate, and (iii) liabilities described in Section 4.10(c) of the Company
Disclosure Letter.
(d) The books of account and
financial records of the Company are true and correct and have been prepared and
are maintained in accordance with GAAP.
Section 4.11 Employee
Benefit Plans.
(a) Section 4.11(a) of the
Company Disclosure Letter contains a list of all the Company’s Benefit Plans
(each a “Company Benefit
Plan” and collectively, the “Company Benefit Plans”). To
the extent applicable, the Company Benefit Plans comply in all material respects
with the requirements of ERISA and the Code or with the Applicable Laws and
regulations of any applicable jurisdiction. The Company Benefit Plans have been
maintained and operated in compliance in all material respects with their terms.
To the Company’s Knowledge, there are no breaches of fiduciary duty in
connection with the Company Benefit Plans for which the Company could be liable.
There are no pending or, to the Company’s Knowledge, threatened Claims against
or otherwise involving any Company Benefit Plan that, individually or in the
aggregate, have had or caused or would reasonably be expected to have or cause a
Company Material Adverse Effect, and no suit, action or other litigation
(excluding claims for benefits incurred in the ordinary course of the Company
Benefit Plan activities) has been brought against or with respect to any such
Company Benefit Plan for which the Company could be liable that, individually or
in the aggregate, have had or caused or would reasonably be expected to have or
cause a Company Material Adverse Effect. All material contributions required to
be made as of the date hereof to the Company Benefit Plans have been made or
have been properly accrued and are reflected in the Company Financial Statements
as of the date thereof.
30
(b) The Company does not contribute to,
or has an obligation to contribute to, and has not within six years prior to the
Effective Time contributed to, or had an obligation to contribute to or has any
material liability, contingent or otherwise, with respect to, (i) a
“multiemployer plan” within the meaning of Section 3(37) of ERISA,
(ii) any plan that is covered by Title IV of ERISA, (iii) any
plan subject to Section 412 of the Code or (iv) any plan funded by a
“voluntary employees’ benefits association” within the meaning of
Section 501(c)(9) of the Code.
(c) No Company Benefit Plan maintained
by the Company provides medical, surgical, hospitalization, death or similar
benefits (regardless of whether insured) for employees or former employees of
the Company for periods extending beyond their retirement or other termination
of service other than coverage mandated by Applicable Law.
(d) All accrued material obligations of
the Company, whether arising by operation of Applicable Law, Contract, or past
custom, for compensation and benefits, including, but not limited to, bonuses
and accrued vacation, and benefits under the Company Benefit Plans, have been
paid or adequate accruals for such obligations are reflected on the Company
Financial Statements as of the date thereof.
(e) Neither the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby
will (either alone or in conjunction with any other event, such as termination
of employment), result in, cause the accelerated vesting, funding or delivery
of, or increase the amount or value of, any payment or benefit to any employee,
officer or director of the Company.
(f) Section 4.11(f) of the
Company Disclosure Letter contains a description that is accurate and correct in
all material respects, of all amounts estimated to be paid or payable (whether
in cash, in property, or in the form of benefits, accelerated cash, property, or
benefits, or otherwise) in connection with the transactions contemplated hereby
(solely as a result thereof) that were or will be an “excess parachute payment”
within the meaning of Section 280G of the Code.
31
(g) Each Company Benefit Plan which is
or reasonably could be determined to be an arrangement subject to
Section 409A of the Code has been operated in good faith compliance with
Section 409A of the Code since January 1, 2005 and has been, or may
be, timely amended with the consent of the participant, if necessary, to comply
in good faith with Section 409A of the Code and any applicable guidance,
whether proposed or final, issued by the IRS with respect thereto.
(h) No Company Benefit Plan is a
multiple employer plan within the meaning of Section 413(c) of the
Code.
(i) No Company Benefit Plan that is not
subject to ERISA has any material liabilities thereunder which are not otherwise
fully funded, if applicable, or properly accrued and reflected under the Company
Financial Statements as of the date thereof.
Section 4.12 Labor
Matters.
(a) As of the date of this Agreement,
(i) the Company is not a party to, or bound by, any collective bargaining
agreement or similar Contract, agreement or understanding with a labor union or
similar labor organization and (ii) to the Company’s Knowledge, there are
no organizational efforts with respect to the formation of a collective
bargaining unit presently being made or threatened.
(b) Except for such matters that,
individually or in the aggregate, have not had or caused and would not
reasonably be expected to have or cause a Company Material Adverse Effect,
(i) the Company has not received any written complaint of any unfair labor
practice or other unlawful employment practice or any written notice of any
material violation of any federal, state or local statutes, Applicable Laws,
ordinances, rules, regulations, Orders or directives with respect to the
employment of individuals by, or the employment practices of, the Company, or
the work conditions, terms and conditions of employment, wages or hours of their
respective businesses, (ii) there are no unfair labor practice charges or
other employee related complaints against the Company pending or, to the
Knowledge of the Company, threatened before any Governmental Authority by or
concerning the employees working in its businesses, and (iii) there is no
labor dispute, strike, slowdown or work stoppage against the Company pending or,
to the Knowledge of the Company, threatened against the Company.
Section 4.13 Environmental
Matters. Except for such matters that, individually or in the aggregate,
have not had or caused and would not reasonably be expected to have or cause a
Company Material Adverse Effect:
32
(a) the Company has been and
is in compliance with all applicable Environmental, Health and Safety
Laws and possess and is in compliance with any permits or licenses required
under Environmental, Health and Safety Laws. To the Knowledge of the Company,
there are no past or present facts, conditions or circumstances that interfere
with or preclude, or could interfere with or preclude if known to a Governmental
Authority, the conduct of any of their respective businesses as now conducted or
which interfere with continued compliance with applicable Environmental, Health
and Safety Laws;
(b) No proceedings or investigations of
any Governmental Authority are pending or, to the Knowledge of the Company,
threatened against the Company that allege the violation of or seek to impose
liability pursuant to any Environmental, Health and Safety Laws, and, to the
Knowledge of the Company, there are no past or present facts, conditions or
circumstances at, on or arising out of, or otherwise associated with, any
current (or, to the Knowledge of the Company, former) businesses, assets or
properties of the Company, which constitute a material violation of
Environmental, Health and Safety Laws or are reasonably likely to give rise to
(i) costs, expenses, liabilities or obligations for any cleanup,
remediation, disposal or corrective action under any Environmental, Health and
Safety Laws, (ii) Claims arising for personal injury, property damage or
damage to natural resources, or (iii) fines, penalties or injunctive
relief; and
(c) The Company has not
(i) received any written notice of noncompliance with, violation of, or
liability or potential liability under any Environmental, Health and Safety Laws
or (ii) entered into or become subject to any consent decree, Order or
agreement with any Governmental Authority or other Persons pursuant to any
Environmental, Health and Safety Laws or relating to the cleanup of any
Hazardous Materials.
Section 4.14 Intellectual
Property. Except for such matters that, individually or in the
aggregate, have not had or caused and would not reasonably be expected to have
or cause a Company Material Adverse Effect, (a) the products, services and
operations of the Company do not infringe upon, violate or misappropriate the
Intellectual Property of any Third Party, (b) the Company owns or possesses
valid licenses or other valid rights to use the Intellectual Property that they
use, exercise or exploit in, or that may be necessary or desirable for, its
businesses as currently being conducted, free and clear of all Liens (other than
Permitted Liens), and (c) to the Knowledge of the Company, there is no
infringement of any Intellectual Property owned by or licensed by or to the
Company. To the Company’s Knowledge, there is no unauthorized use, disclosure,
infringement or misappropriation of any Intellectual Property of the Company by
any Person, including, without limitation, any employee or independent
contractor (present or former) of the Company that, individually or in the
aggregate, has had or caused or could reasonably be expected to have or cause a
Company Material Adverse Effect.
Section 4.15 Insurance.
Except for such matters that, individually or in the aggregate, have not had or
caused and would not reasonably be expected to have or cause a Company Material
Adverse Effect:
33
(a) The Company maintains and will
maintain through the Closing Date insurance adequate in character and amount
with financially sound and reputable insurers. There is no material default with
respect to any provision contained in any insurance policy or binder, and the
Company has not failed to give any notice or present any claim under any such
policy or binder in a timely fashion.
(b) To the Knowledge of the Company, no
event relating specifically to any of the Company has occurred that is
reasonably likely, after the date of this Agreement, to result in an upward
adjustment in premiums under any insurance policies they maintain. The Company
has not received notice from any insurer or agent of such insurer that
substantial capital improvements or other expenditures will have to be made in
order to continue such insurance policies. Excluding insurance policies that
have expired and been replaced in the ordinary course of business, no excess
liability or protection and indemnity insurance policy has been cancelled by the
insurer within one year prior to the date hereof, and to the Company’s
Knowledge, no threat in writing has been made to cancel (excluding cancellation
upon expiration or failure to renew) any current insurance policy of the
Company.
Section 4.16 Ownership and
Condition of Assets. Except as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect and except
as set forth in Section
4.16 of the Company Disclosure Letter, the Company (i) has good and
marketable title to all the properties and assets reflected in the Company
Financial Statements as being owned by the Company or acquired after the date
thereof which are material to the Company’s business on a consolidated basis
(except properties sold or otherwise disposed of since the date thereof in the
ordinary course of business), free and clear of all Liens, except Permitted
Liens, and (ii) is the lessee of all leasehold estates reflected in the Company
Financial Statements or acquired after the date thereof which are material to
its business on a consolidated basis (except for leases that have expired by
their terms since the date thereof) and is in possession of the properties
purported to be leased thereunder, and each such lease is valid without default
thereunder by the lessee or, to Company’s Knowledge, the lessor.
Section 4.17
Intentionally Omitted.
34
Section 4.18 Material
Contracts. Section
4.18 of the Company Disclosure Letter lists all material contracts,
commitments and similar agreements to which the Company is a party or by which
they or any of their property is bound as of the date of this Agreement (other
than this Agreement or any Related Document) (the “Company Material Contracts”).
As of the date of this Agreement, each of the Company Material Contracts is, to
the Knowledge of the Company, in full force and effect. Except for such matters
that, individually or in the aggregate, have not had or caused and would not
reasonably be expected to have or cause a Company Material Adverse Effect, the
Company does not know of, or has not received written notice of, any breach or
violation of, or default under (nor, to the Knowledge of the Company, does there
exist any condition which with the passage of time or the giving of notice or
both would result in such a violation or default under), any Company Material
Contract, or has received written notice of the desire of the other party or
parties to any such Company Material Contract to exercise any rights such party
has to cancel, terminate or repudiate such Contract or exercise remedies
thereunder.
Section 4.19 No Brokers;
Investment Advisor. The Company has not
entered into any Contract with any Person that may result in the obligation of
the Company to pay any finder’s fees, brokerage or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
Section 4.20 Improper
Payments. Except for such matters that, individually or in the aggregate,
have not had or caused and would not reasonably be expected to have or cause a
Company Material Adverse Effect: (a) no funds, assets or properties of the
Company or its Affiliates have been used or offered for illegal purposes;
(b) no accumulation or use of any funds, assets or properties of the
Company or its Affiliates has been made without being properly accounted for in
the financial books and records of the Company or its Affiliates; (c) all
payments by or on behalf of the Company or its Affiliates have been duly and
properly recorded and accounted for in their financial books and records and
such books and records accurately and fairly reflect all transactions and
dispositions of the assets of the Company and its Affiliates; (d) the
Company has devised and maintained systems that provide reasonable assurances
that transactions are and have been executed in accordance with management’s
general or specific authorization; (e) neither the Company nor any of its
Affiliates, nor any director, officer, agent, employee or other Person
associated with or acting on behalf of the Company or its Affiliates, has
(i) used any corporate funds for any unlawful contribution, gift,
entertainment or payment of anything of value relating to political activity,
(ii) made any direct or indirect unlawful payment to any employee, agent,
officer, director, representative or stockholder of a Governmental Authority or
political party, or official or candidate thereof, or any immediate family
member of the foregoing or (iii) made any bribe, unlawful rebate, payoff,
influence payment, kickback or other unlawful payment in connection with the
conduct of the Company’s or its Affiliates’ businesses; (f) none of the
Company, any of its Affiliates or any agent of any of them has received any
bribes, kickbacks or other improper payments from vendors, suppliers or other
Persons; and (g) the Company has no Knowledge that any payment made to a
Person would be or has thereafter been offered, given or provided to any foreign
official, political party or official thereof, or to any candidate for public
office.
Section 4.21 State Takeover
Statutes. To the knowledge of the Company, except for Section 203 of the
DGCL (which has been rendered inapplicable), no “moratorium,” “control share,”
“fair price” or other anti-takeover law or regulation is applicable to this
Agreement, the Merger, or the other transactions contemplated
hereby.
35
Section 4.22 No Other Representations or
Warranties. Except for the representations and warranties contained in
this Article 4,
neither the Company nor any other Person makes any other express or implied
representation or warranty on behalf of the Company or any of its Affiliates in
connection with this Agreement or the transactions contemplated
hereby.
Section 4.23 Affiliate Interests
and Transactions.
(a) Except as set forth in Section 4.23(a) of the Company
Disclosure Letter, no Related Party of the Company: (i) owns or has owned,
directly or indirectly, any equity or other financial or voting interest in any
competitor, supplier, licensor, lessor, distributor, independent contractor or
customer of the Company; (ii) owns, directly or indirectly, or has any
interest in any property (real or personal, tangible or intangible) that the
Company uses in or pertaining to the business of the Company; or (iii) has
any business dealings or a financial interest in any transaction with the
Company or involving any assets or property of the Company, other than business
dealings or transactions conducted in the ordinary course of business at
prevailing market prices and on prevailing market terms.
(b) There are no outstanding notes
payable to, accounts receivable from or advances by the Company to, and the
Company is not otherwise a debtor or creditor of, or has any liability or other
obligation of any nature to, any Related Party of the Company Since
the date of the Company Balance Sheet, the Company has not incurred any
obligation or liability to, or entered into or agreed to enter into any
transaction with or for the benefit of, any Related Party of the Company, other
than the transactions contemplated by this Agreement and the Related
Agreements.
Section 4.24 Stockholders.
All of the Company’s stockholders are “accredited investors”
as that term is defined in Regulation D as promulgated by the SEC pursuant to
the Securities Act.
ARTICLE 5
COVENANTS
Section 5.1
Intentionally Omitted.
Section 5.2
Intentionally Omitted.
Section 5.3
Intentionally Omitted.
36
Section 5.4
Intentionally Omitted.
Section 5.5
Intentionally Omitted.
Section 5.6
Intentionally Omitted.
Section 5.7
Intentionally Omitted.
Section 5.8 Taking of Necessary Action; Further
Action. Subject to the terms and conditions of this Agreement, the
Parties agree to execute and deliver any additional instruments necessary to
consummate the transactions contemplated by this Agreement.
Section 5.9 Public Announcements. On the
date this Agreement is executed (or if executed after the close of business, no
later than the first to occur of the beginning of trading on the OTCBB on the
next day), the Company and Parent shall issue a joint press release with respect
to the execution hereof and the transactions contemplated hereby. Except in
respect of a public announcement as may be required by Applicable Law or any
rule of any regulatory body, the Company and Parent shall consult with each
other before issuing any press release, making any other public statement or
scheduling any press conference or conference call with investors or analysts
with respect to this Agreement or the transactions contemplated by this
Agreement.
Section 5.10 Notification of Certain
Matters. Intentionally Omitted.
Section 5.11 Payment of Expenses. Each
Party shall pay its own expenses incident to preparing for, entering into and
carrying out this Agreement and the consummation of the transactions
contemplated hereby.
37
Section 5.12 Indemnification;
Directors’ and Officers’ Insurance.
(a) From and after the Effective
Time Parent,, (i) to the maximum extent permitted under Applicable Law,
indemnify and hold harmless and provide advancement of expenses to, each person
who is now, or has been at any time prior to the date hereof or who becomes
prior to the Effective Time, an officer, director or employee of Parent or of
any Parent Subsidiary (each, a “Parent Indemnified Party”) against
all losses, claims, damages, costs, expenses, liabilities or judgments or
amounts that are paid in settlement of or in connection with any claim, action,
suit, proceeding or investigation based in whole or in part on or arising in
whole or in part out of the fact that such person is or was a director, officer
or employee of Parent, and pertaining to any matter existing or occurring, or
any acts or omissions occurring, at or prior to the Effective Time, whether
asserted or claimed prior to, or at or after, the Effective Time (including
matters, acts or omissions occurring in connection with the approval of this
Agreement and the consummation of the transactions contemplated hereby) to the
same extent such persons are indemnified or have the right to advancement of
expenses as of the date of this Agreement by Parent pursuant to Parent’s
Certificate of Incorporation, Bylaws and indemnification agreements, if any, in
existence on the date hereof with any directors, officers and employees of
Parent. In the event of any such claim, action, suit, proceeding or
investigation, (x) Parent shall pay the reasonable and documented fees and
expenses of counsel selected by the Parent Indemnified Parties, which counsel
shall be reasonably satisfactory to the Indemnifying Party, and (y) the
Parent may participate in the defense of any such matter; provided, however, that Parent shall
not be liable for any settlement effected without its prior written
consent; provided
further, that the Parent shall not be obligated pursuant to this Section 5.12 to pay the
fees and expenses of more than one counsel for all Parent Indemnified Parties in
any single Action unless a conflict of interest precludes the effective
representation of more than one Parent Indemnified Party with respect to the
applicable claim, action, suit, proceeding or investigation.
(b)
Parent shall maintain in effect for six (6) years from the Closing Date,
the directors’ and officers’ liability insurance policies maintained by Parent
as of the date hereof (the “D&O Policy,” a true,
correct and complete copy of which has been heretofore provided to the Company)
with respect to acts or omissions occurring prior to the Closing Date; provided, however, that Parent, or any
successor entity, may substitute therefor policies of an insurance company
material terms of which, including coverage and amount, are no less favorable
than the Company’s existing policies as of the date hereof or (ii) obtain
such extended reporting period coverage under its existing insurance programs
(to be effective as of the Closing Date).
(c) If Parent or any of its
successors or assigns (i) consolidates with or merges into any other person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially
all of its properties and assets to any person, then, and in each such case, to
the extent necessary, proper provision shall be made so that the successors and
assigns of Parent, as the case may be, shall assume the obligations set forth in
this Section 5.12.
(d) The provisions in this Section 5.12 are intended
to be for the benefit of, and shall be enforceable by each of the Indemnified
Parties, their heirs and representatives and are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
38
Section 5.13
Employee Matters.
(a) With respect to each Continuing
Employee, Parent shall credit, or cause its Subsidiaries to credit, the period
of employment and service recognized by the applicable employer (including its
Affiliates and their predecessors if so recognized by the employer) for such
Continuing Employee immediately prior to the Effective Time for purposes of
Parent’s corresponding benefit plans, programs, policies or similar
employment-related arrangements to have been employment and service with Parent
or its Subsidiaries for purposes of determining the Continuing Employee’s
eligibility to join (subject to satisfaction of all non-service related
eligibility criteria), vesting and benefit accrual (but not benefit accrual for
any purpose other than vacation pay, and sick leave, and vesting in employer
contributions under a 401(k)) under all employee benefit plans, programs,
policies or similar employment-related arrangements of Parent and its
Subsidiaries in which the Continuing Employee is eligible to participate. No
such period of employment and service credit shall be provided to the extent
that it will result in a duplication of credit or employment
benefits.
(b) To the extent required by
Applicable Law, if the health insurance carrier covering certain Continuing
Employees is no longer engaged, Parent will use reasonable efforts to provide
creditable coverage which will reduce any restrictions and limitations for
medical conditions existing as of the Effective Time of each Continuing Employee
and the Continuing Employee’s dependents. Additionally, Parent shall use
reasonable efforts to effect a change of carriers, if applicable, so that
Continuing Employees can plan for any loss of credit with respect to
deductibles, co-insurance and maximum out of pocket requirements. In accordance
with Applicable Law, any terminated employee shall be offered the opportunity to
continue coverage reasonably comparable to that coverage such employee had at
the time of termination of employment. If such coverage cannot been continued
with respect to a Continuing Employee, in accordance with Applicable Law, the
employee shall be offered the opportunity to continue such coverage as is
currently available.
(c) Nothing in this Agreement shall be
considered a contract between the Company, Parent or any of their respective
Subsidiaries and any Continuing Employee or consideration for, or inducement
with respect to, any such Continuing Employees’ continued employment with Parent
and, without limitation, all such Continuing Employees are and will continue to
be considered employees at will pursuant to the applicable employment at will
laws or doctrine, subject to any express written agreement to the contrary with
such Continuing Employee. For the avoidance of doubt and without limiting the
generality of Section 9.6, nothing in
this Section 5.13
is intended to make any Person a third-party beneficiary of the agreements
contained in this Section 5.13, and nothing
in this Section 5.13 shall
constitute an amendment of any Parent Benefit Plan.
Section 5.14
Intentionally Omitted.
Section 5.15 Lock Up. (a)
By adopting and approving the Merger and the terms and conditions set
forth in this Agreement, the Company’s stockholders who receive the Merger
Consideration acknowledge, understand and agree that the Merger
Consideration may not be resold by such stockholder until the first
anniversary of the Effective Time, except for (i) 11,191,115 shares of Merger
Consideration that may be transferred by GRQ Consultants, Inc. 401k, following
the Effective Time, subject only to federal and state securities
laws.
39
(b) Subject
to Section 5.15(a) the
Company’s Stockholders who receive the Merger Consideration acknowledge and
understand that the Merger Consideration has not been registered under the
Securities Act and therefore, cannot be sold without registration under the
Securities Act or pursuant to an exemption from the registration requirements of
the Securities Act, and the certificates representing the Merger Consideration
shall bear the following legend:
“THE
SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER STATE SECURITIES LAWS, AND SUCH SHARES MAY NOT BE
SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER WILL BE EFFECTED IN ACCORDANCE
WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AT THAT
TIME AMENDED, AND SUCH STATE SECURITIES LAWS, OR IN ACCORDANCE WITH AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH STATE SECURITIES LAWS,
WHICH MAY THEN BE AVAILABLE THERETO, [BUT IN NO EVENT MAY THESE SECURITIES BE
SOLD OR TRANSFERRED PRIOR TO THE FIRST YEAR ANNIVERSARY OF THE EFFECTIVE TIME AS
PROVIDED IN THE AGREEMENT OF MERGER DATED MAY 11, 2010 BY AND AMONG HEPALIFE
TECHNOLOGIES, INC., AQUAMED TECHNOLOGIES, INC. AND HT ACQUISITION
CORP].”
Provided, however, that the bracketed
language above shall not be part of the legend with respect to the Excluded
Shares.
Section 5.16 Articles of
Amendment. As soon as practicable after the Effective Time, Parent shall
file with the Secretary of State for the State of Florida the Articles of
Amendment to (i) increase the number of shares of common stock, $0.001 par value
per share which the Parent is authorized to issue from 300,000,000 shares
to 500,000,000 shares; (ii) change the par value of the Parent’s authorized
preferred stock from $0.10 to $0.001 per share; and (iii) provide for the
classification of the Parent’s Board of Directors and to further provide
for staggered terms of service for each class of directors, all as more fully
described in the Information Statement
ARTICLE 6
Intentionally
Omitted
40
ARTICLE 7
Intentionally
Omitted
ARTICLE 8
DEFINITIONS
AND USAGE
Section 8.1 Defined Terms in
Agreement. For
the purposes of this Agreement, capitalized terms used but not defined in this
Agreement shall have the meanings set forth below:
“Actions” means any actions,
suits, arbitrations, inquiries, proceedings or investigations by or before any
Governmental Authority.
“Affiliate” means, with respect
to any Person, any other Person directly or indirectly controlling, controlled
by, or under common control with such Person.
“Applicable Law” means with
respect to any Person, any international, federal, state, local or foreign
statute, code, ordinance, rule, regulation, consent, approval, judgment, Order,
writ, decree, injunction or other authorization, treaty, convention, or
governmental requirement of any Governmental Authority that is binding upon, or
applicable to, such Person.
“Benefit Plan” means any
qualified or non-qualified employee benefit plan, program, policy, practice,
agreement, Contract or other arrangement, regardless of whether written,
regardless of whether U.S.-based, including any “employee welfare benefit plan”
within the meaning of Section 3(1) of ERISA (including post-retirement
medical and life insurance), any “employee pension benefit plan” within the
meaning of Section 3(2) of ERISA (regardless of whether such plan is
subject to ERISA), including any multiemployer plan (as defined in
Section 3(37) of ERISA) or multiple employer plan (within the meaning of
Section 413(c) of the Code), any employment or severance agreement or other
arrangement, and any employee benefit, bonus, incentive, deferred compensation,
profit sharing, vacation, stock, stock purchase, stock option, severance, change
of control, fringe benefit or other plan, program, policy, practice, agreement,
Contract, or other arrangement, regardless of whether subject to ERISA and
regardless of whether funded.
“Business Day” means any day
other than a Saturday, Sunday or any day on which banks in the State of New York
are authorized or required by federal law to be closed in New York, New
York.
“Claim” means claims, demands,
charges, complaints, actions, causes of action, suits, proceedings, hearings or
administrative proceedings.
41
“Company Board” means the board of
directors of the Company.
“Company Common Stock” shall
mean all outstanding shares of common stock, $.001 par value per share, of the
Company.
“Company Material Adverse
Effect” means a material adverse effect on the business, results of
operations, or condition (financial or otherwise) of the Company.
“Company Merger Stock” means
each of the Company Common Stock, Company Series A Preferred Stock and Company
Series B Preferred Stock.
“Company Series A Preferred
Stock” shall mean all outstanding shares of Series A Preferred Stock,
$.001 par value per share, of the Company.
“Company Series B Preferred
Stock” shall mean all outstanding shares of Series B Preferred Stock,
$.001 par value per share, of the Company.
“Company Stockholders” shall
mean the owners of all the outstanding shares of the Company Merger
Stock.
“Company Stockholder Consent”
means the written consent of the holders of a majority of the outstanding voting
stock of the Company, pursuant to which the proposal to adopt this Agreement and
the Merger is approved.
“Continuing Employee” means any
employee who was employed by the Company or any of its Subsidiaries as of the
day immediately prior to the Effective Time and who is employed by Parent or any
of its Subsidiaries on and after the Effective Time.
“Contract” means any agreement,
arrangement, commitment or instrument, written or oral, including, without
limitation, any loan or credit agreement or other agreement evidencing
Indebtedness, promissory note, bond, mortgage, indenture, guarantee, permit,
lease, sublease, license, agreement to render services, or other agreement,
arrangement, commitment or instrument evidencing rights or obligations of any
kind or nature, including all amendments, modifications, supplements and options
relating thereto.
“Environmental, Health and Safety
Laws” means any present or future Applicable Laws relating to
(a) emissions, discharges, releases or threatened releases of Hazardous
Materials into the environment, including into ambient air, soil, sediments,
land surface or subsurface, buildings or facilities, surface water, groundwater,
publicly-owned treatment works, or septic systems, (b) the generation,
treatment, storage, disposal, use, handling, manufacturing, recycling,
transportation or shipment of Hazardous Materials, (c) occupational health
and safety, or (d) the pollution of the environment, solid waste handling,
treatment or disposal, reclamation or remediation activities, or protection of
environmentally sensitive areas.
42
“Equity Interests” means
(a) with respect to a corporation, any and all shares, interests,
participation, phantom stock plans or arrangements or other equivalents (however
designated) of corporate stock, including all common stock, preferred stock and
other equity and voting interests, and warrants, options, calls, subscriptions
or other convertible securities or other rights to acquire any of the foregoing,
and (b) with respect to a partnership, limited liability company or similar
Person, any and all units, membership or other interests, including rights to
purchase, warrants, options, calls, subscriptions or other equivalents of, or
other interests convertible into, any beneficial or legal ownership interest in
such Person.
“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended, and any regulations
promulgated pursuant thereto.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“GAAP” means generally accepted
accounting principles, as recognized by the U.S. Financial Accounting
Standards Board (or any generally recognized successor).
“Governmental Authority” shall
mean (a) the United States of America, (b) any state, county, municipality, or
other governmental subdivision within the U.S., (c) any court or any
governmental department, commission, board, bureau, agency, or other
instrumentality of the U.S. or of any state, county, municipality, water rights,
taxing, or zoning authority, or other governmental subdivision within the U.S.
and (d) any foreign government or agency having jurisdiction over any party to
this Agreement.
“Hazardous Material” means any
chemical, pollutant, contaminant, material, waste or substance regulated by any
Governmental Authority under Environmental, Health and Safety Law, including,
but not limited to, any hazardous waste, hazardous substance, toxic substance,
radioactive material (including any naturally occurring radioactive material),
asbestos-containing materials in any form or condition, polychlorinated
biphenyls in any form or condition, or petroleum, petroleum hydrocarbons,
petroleum products or any fraction or byproducts thereof.
43
“Indebtedness” of any Person
means and includes any obligations consisting of (a) the outstanding
principal amount of and accrued and unpaid interest on, and other payment
obligations for, borrowed money, or payment obligations issued or incurred in
substitution or exchange for payment obligations for borrowed money,
(b) amounts owing as deferred purchase price for property or services,
including “earn out” payments, (c) payment obligations evidenced by any
promissory note, bond, debenture, mortgage or other debt instrument or debt
security, (d) commitments or obligations by which such Person assures a
creditor against loss, including contingent reimbursement obligations with
respect to letters of credit, (e) payment obligations secured by a Lien,
other than a Permitted Lien, on assets or properties of such Person,
(f) obligations to repay deposits or other amounts advanced by and owing to
third parties, (g) obligations under capitalized leases,
(h) obligations under any interest rate, currency or other hedging
agreement or derivatives transaction, (i) guarantees or other contingent
liabilities with respect to any amounts of a type described in clauses (a)
through (h) above, and (j) any change of control payments or
prepayment premiums, penalties, charges or equivalents thereof with respect to
any indebtedness, obligation or liability of a type described in
clauses (a) through (i) above that are required to be paid at the time
of, or the payment of which would become due and payable solely as a result of,
the execution of this Agreement or the consummation of the transactions
contemplated by this Agreement at such time, in each case determined in
accordance with GAAP; provided, however, that Indebtedness shall not include
accounts payable to trade creditors and accrued expenses arising in the ordinary
course of business consistent with past practices and shall not include the
endorsement of negotiable instruments for collection in the ordinary course of
business.
“Information Statement” means
the Information Statement on Schedule 14C as filed with the SEC on May 7, 2010
pertaining to, among other things, the consent to, and the approval,
ratification and adoption, by Parent’s stockholders, of: (a) an amendment to the
its Articles of Incorporation to (i) increase the number of shares of common
stock, $0.001 par value per share which the Parent is authorized to issue
from 300,000,000 shares to 500,000,000 shares; (ii) change the par value of the
Parent’s authorized preferred stock from $0.10 to $0.001 per share; and (iii)
provide for the classification of the Parent’s Board of Directors and to
further provide for staggered terms of service for each class of directors, all
as more fully described in the Information Statement; and (b) the Amended and
Restated Bylaws.
“Intellectual Property” means
all U.S. and foreign (a) patents and patent applications and all reissues,
renewals, divisions, extensions, provisionals, continuations and continuations
in part thereof, (b) inventions (regardless of whether patentable),
invention disclosures, trade secrets, proprietary information, industrial
designs and registrations and applications, mask works and applications and
registrations therefor, (c) copyrights and copyright applications and
corresponding rights, (d) trade dress, trade names, logos, URLs, common law
trademarks and service marks, registered trademarks and trademark applications,
registered service marks and service ▇▇▇▇ applications, (e) domain name
rights and registrations, (f) databases, customer lists, data collections
and rights therein, and (g) confidentiality rights or other intellectual
property rights of any nature, in each case throughout the world.
“IR Escrow Agreement” means the
Investor Relations Escrow Agreement dated the date hereof by and among the
Parent, Cogito Corp. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, PLLC.
44
“IR Services Agreement” means
the Investor Relations Services Agreement dated the date hereof by and between
the Parent and Cogito Corp.
“Knowledge” when used in
relation to any Person shall mean the actual (but not constructive) knowledge of
such Person or such Person’s officers after reasonable inquiry.
“Lien” means any lien,
mortgage, security interest, indenture, deed of trust, pledge, deposit,
restriction, burden, lien, license, lease, sublease, right of first refusal,
right of first offer, charge, privilege, easement, right of way, reservation,
option, preferential purchase right, right of a vendor under any title retention
or conditional sale agreement, or other arrangement substantially equivalent
thereto, in each case regardless of whether relating to the extension of credit
or the borrowing of money.
“Milestone Escrow Agreement”
means the Milestone Escrow Agreement dated the date hereof by and among the
Parent, ▇▇▇▇
▇▇▇▇▇▇ Financial LLC and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, PLLC.
“Order” means any order, writ,
fine, injunction, decree, judgment, award or enforceable determination of any
Governmental Authority.
“Parent Board” means the board
of directors of Parent.
“Parent Common Stock” shall
mean Parent’s common stock, $.001 par value per share, of Parent.
“Parent Material Adverse
Effect” means a material adverse effect on the business, results of
operations, or condition (financial or otherwise) of Parent and its
Subsidiaries, taken as a whole.
“Parent Subsidiary” or “Parent Subsidiaries,” means,
individually or collectively, as the case may be, (a) any corporation of
which Parent owns, either directly or through its Subsidiaries, more than 50% of
the total combined voting power of all classes of voting securities of such
corporation, or (b) any partnership, association, joint venture, limited
liability company or other business organization, regardless of whether such
business organization constitutes a legal entity, in which Parent directly or
indirectly owns more than 50% of the total Equity Interests.
45
“Permitted Liens” means
(a) Liens for Taxes, assessments or other governmental charges or levies
that are not yet due and payable or that are being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
have been established and described in the applicable Disclosure Letter,
(b) Liens in connection with workmen’s compensation, unemployment insurance
or other social security, old age pension or public liability obligations not
yet due or which are being contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP have been established
and described in the applicable Disclosure Letter, (c) operators’,
vendors’, suppliers’, carriers’, warehousemen’s, repairmen’s, mechanics’,
workmen’s, materialmen’s, or construction Liens (during repair or upgrade
periods) or other like Liens arising by operation of Applicable Law in the
ordinary course of business or statutory landlord’s Liens, each of which is in
respect of obligations that have not been outstanding more than 90 days (so
long as no action has been taken to file or enforce such Liens within said
90-day period) or which are being contested in good faith, or (d) any other
Lien, encumbrance or other imperfection of title that does not materially affect
the value or use of the property subject thereto or has been incurred in the
ordinary course of business.
“Person” means any natural
person, corporation, company, limited or general partnership, joint stock
company, joint venture, association, limited liability company, trust, bank,
trust company, land trust, business trust or other entity or
organization.
“Related Party”
means”
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(i)
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With
respect to a particular individual:
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(a)
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each
other member of such individual's
Family;
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(b)
|
any
Person that is directly or indirectly controlled by any one or more
members of such individual's
Family;
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(c)
|
any
Person in which members of such individual's Family hold (individually or
in the aggregate) a Material Interest;
and
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(d)
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any
Person with respect to which one or more members of such individual's
Family serves as a director, officer, partner, executor or trustee (or in
a similar capacity).
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(ii)
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With
respect to a specified Person other than an
individual:
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(a)
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any
Person that directly or indirectly controls, is directly or indirectly
controlled by or is directly or indirectly under common control with such
specified Person;
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(b)
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any
Person that holds a Material Interest in such specified
Person;
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(c)
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each
Person that serves as a director, officer, partner, executor or trustee of
such specified Person (or in a similar
capacity);
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(d)
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any
Person in which such specified Person holds a Material Interest;
and
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46
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(e)
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any
Person with respect to which such specified Person serves as a general
partner or a trustee (or in a similar
capacity).
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For purposes of this definition, (a)
"control" (including
"controlling," "controlled by," and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, and shall be construed as such term is
used in the rules promulgated under the Securities Act; (b) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree and (iv) any other natural person who resides with such
individual; and (c) "Material
Interest" means direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) of voting securities or other voting
interests representing at least five percent (5%) of the outstanding voting
power of a Person or equity securities or other equity interests representing at
least five percent (5%) of the outstanding equity securities or equity interests
in a Person.
"Representative" with respect
to a particular Person, any director, officer, manager, employee, agent,
consultant, advisor, accountant, financial advisor, legal counsel or other
representative of that Person.
“Responsible Officers” means
(a) for the Company, each of the Chief Executive Officer and Executive Vice
President of the Company, if any and (b) for Parent, each of the Chief
Executive Officer and Chief Financial Officer of Parent, if any.
“SEC” means the U.S. Securities
and Exchange Commission.
“Securities Act” means the
Securities Act of 1933, as amended.
“SOX” means the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act of 2002, as amended, and the rules and regulations promulgated
thereunder.
“Subsidiary” means for any
Person at any time (a) any corporation of which such Person owns, either
directly or through its Subsidiaries, more than 50% of the total combined voting
power of all classes of voting securities of such corporation, or (b) any
partnership, association, joint venture, limited liability company or other
business organization, regardless of whether such business organization
constitutes a legal entity, in which such Person directly or indirectly owns
more than 50% of the total Equity Interests.
47
“Tax” or “Taxes” (including with
correlative meaning, “Taxable”) means (a) any
federal, foreign, state or local tax, including any income, gross income, gross
receipts, ad valorem, excise, sales, use, value added, admissions, business,
occupation, license, franchise, margin, capital, net worth, customs, premium,
real property, personal property, intangibles, capital stock, transfer, profits,
windfall profits, environmental, severance, fuel, utility, payroll, social
security, employment, withholding, disability, stamp, rent, recording,
registration, alternative minimum, add-on minimum, or other tax, assessment,
duty, fee, levy or other governmental charge of any kind whatsoever imposed by a
Governmental Authority (a “Tax
Authority”), together with and including, without limitation, any and all
interest, fines, penalties, assessments and additions to tax resulting from,
relating to, or incurred in connection with any such tax or any contest or
dispute thereof, (b) any liability for the payment of any amount of the
type described in the immediately preceding clause (a) as a result of being
a member of a consolidated, affiliated, unitary or combined group with any other
corporation or entity at any time prior to and through the Closing Date, and
(c) any liability for the payment of any amount of the type described in
the preceding clauses (a) or (b) as a result of a contractual
obligation to any other Person or of transferee, successor or secondary
liability.
“Tax Return” means any report,
return, document, declaration or other information (including any attached
schedules and any amendments to such report, return, document, declaration or
other information) required to be supplied to or filed with any Tax Authority
with respect to any Tax, including an information return and any document with
respect to or accompanying payments, deposits or estimated Taxes, or with
respect to or accompanying requests for the extension of time in which to file
any such report, return, document, declaration or other
information.
“Third Party” means a Person
other than any of Parent, the Company or any of their Subsidiaries.
“Transaction Documents” means
the IR Escrow Agreement, IR Services Agreement, the Milestone Escrow
Agreement and the Voting Agreement.
“Voting Agreement” means the
Stockholder Voting Agreement and the Irrevocable Proxy dated the date hereof by
and among the Parent and the stockholders named therein.
Section
8.2 References and Titles.
(a) All
references in this Agreement to Exhibits, Schedules, Articles, Sections,
subsections and other subdivisions refer to the corresponding Exhibits,
Schedules, Articles, Sections, subsections and other subdivisions of or to this
Agreement, unless expressly provided otherwise. Titles appearing at the
beginning of any Articles, Sections, subsections or other subdivisions of this
Agreement are for convenience only, do not constitute any part of this
Agreement, and shall be disregarded in construing the language hereof. The words
“this Agreement,” “herein,”
“hereby,” “hereunder” and “hereof,” and words of similar import, refer to
this Agreement as a whole and not to any particular Article, Section, subsection
or subdivision unless expressly so limited. The words “this Article” and “this
Section,” and words of similar import, refer only to the Article, Section or
subsection hereof in which such words occur.
48
(b) The
word “or” is not
exclusive, and the word “including” (in its various
forms) means including without limitation. Pronouns in masculine, feminine or
neuter genders shall be construed to state and include any other gender, and
words, terms and titles (including terms defined herein) in the singular form
shall be construed to include the plural and vice versa, unless the context
otherwise requires.
(c) A
reference in this Agreement to any statute shall be to such statute as amended
from time to time, and the rules and regulations promulgated
thereunder.
ARTICLE
9
MISCELLANEOUS
Section 9.1 Nonsurvival of Representations and
Warranties.
Except as otherwise provided in this Agreement and except for the agreements
contained in Section
1.6, Section 1.7,
Article 2, Section 5.11, Section 5.12, Section 5.13, Section 5.15, Section 5.16, Section 9.10 and Section 9.13, none of the
representations or warranties contained in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the consummation of the
Merger and only the covenants that by their terms survive the Effective Time
shall survive the Effective Time.
Section 9.2 Amendment. This Agreement may
be amended by the Parties at any time by mutual consent; provided, however, that, after the
Company Stockholder Consent is obtained, no amendment shall be made that by
Applicable Law requires further approval by such stockholders, without such
further approval being obtained. This Agreement may not be amended
except by a written instrument signed by an authorized representative of
each of the Parties.
Section 9.3
Notices. Any notice or other communication required or permitted
hereunder shall be in writing and, unless delivery instructions are otherwise
expressly set forth above herein, either delivered personally (effective upon
delivery), by facsimile transmission (effective on the next day after
transmission), by recognized overnight delivery service (effective on the next
day after delivery to the service), or by registered or certified mail, postage
prepaid and return receipt requested (effective on the third Business Day after
the date of mailing), at the following addresses or facsimile transmission
numbers (or at such other address(es) or facsimile transmission number(s) for a
Party as shall be specified by like notice):same day
49
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To
the Company:
AquaMed
Technologies, Inc.
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief
Executive Officer
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
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with
a copy
(which
shall not constitute notice) to:
▇▇▇▇▇▇
and ▇▇▇▇▇ LLP
1221
Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
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To
Parent or Merger Sub:
HepaLife
Technologies, Inc.
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇
▇▇▇,
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
(800)
299-4869
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with
a copy
(which
shall not constitute notice) to:
▇▇▇▇▇▇▇▇
& Company LLP
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Esq.
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
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Section 9.4 Counterparts;
Facsimile Signature. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the Parties and delivered to the other Parties, it being understood that all
Parties need not sign the same counterpart. This Agreement may be executed by
facsimile signature and a facsimile signature shall constitute an original for
all purposes.
50
Section 9.5 Severability.
Any term or provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be deemed modified to the minimum
extent necessary to make such term or provision valid and enforceable, provided that if such term
or provision is incapable of being so modified, then such term or provision
shall be deemed ineffective to the extent of such invalidity or unenforceability
without rendering invalid or unenforceable the remaining terms and provisions of
this Agreement or affecting the validity or enforceability of any of the terms
or provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 9.6 Entire Agreement; No
Third Party Beneficiaries. This Agreement (together with the Transaction
Documents and the documents and instruments delivered by the Parties in
connection with this Agreement and each of the Transaction Documents)
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the Parties with respect to the
subject matter hereof and is solely for the benefit of the Parties and their
respective successors, legal representatives and assigns and does not confer on
any Person other than the Parties any rights or remedies hereunder. The
representations and warranties in this Agreement are the product of negotiations
among the Parties and are for the sole benefit of the Parties. Any inaccuracies
in such representations and warranties are subject to waiver by the Party for
whose benefit such representation and warranty was made in accordance with Section 9.9 without
notice of liability to any other Person.
Section 9.7 Assignment.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the Parties (whether by operation of Applicable Law
or otherwise) without the prior written consent of the other Parties, and any
such attempted assignment without such consent shall be immediately null and
void. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the Parties and their respective
successors and assigns.
Section 9.8 Waivers. At
any time prior to the Effective Time, to the extent legally allowed:
(a) any Party may extend the time for the performance of any of the
obligations or other acts of the other Parties, (b) any Party for whose
benefit a representation or warranty was made may waive any inaccuracies in the
representations and warranties of the other Parties contained herein or in any
document delivered pursuant hereto, and (c) any Party may waive performance
of any of the covenants or agreements of the other Parties, or satisfaction of
any of the conditions to its obligations to effect the Merger, contained herein.
Any agreement on the part of a Party to any such extension or waiver shall be
valid only if set forth in a written instrument signed by an authorized
representative of such Party. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including any investigation by or on behalf of
any Party, shall be deemed to constitute a waiver by the Party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any Party of a breach of
any provision hereof shall not operate or be construed as a waiver of any prior
or subsequent breach of the same or any other provisions
hereof.
51
Section 9.9
Incorporation. Exhibits and Schedules referred to herein are attached to
and by this reference are incorporated herein for all purposes.
Section 9.10 No Remedy in
Certain Circumstances. Each Party agrees that should any Governmental
Authority hold any provision of this Agreement or part hereof to be null, void
or unenforceable, or order any Party to take any action inconsistent herewith or
not to take an action consistent herewith or required hereby, the validity,
legality and enforceability of the remaining provisions and obligations
contained or set forth herein shall not in any way be affected or impaired
thereby. Except as otherwise contemplated by this Agreement, to the extent that
a Party took an action inconsistent herewith or failed to take action consistent
herewith or required hereby pursuant to an Order or judgment of a court or other
competent Governmental Authority, such Party shall not incur any liability or
obligation unless such Party did not in good faith seek to resist or object to
the imposition or entering of such Order or judgment.
Section 9.11 No Strict Construction. Each
of the parties hereto acknowledges that this Agreement has been prepared jointly
by the parties hereto, and shall not be strictly construed against any party
hereto.
Section 9.12 No Liability of Officers and
Directors. The parties hereto acknowledge that the individuals
executing this Agreement on behalf of the Parent, the Company and Merger Sub, do
so on behalf of such entities and not in their individual
capacities. As such no officer, director, employee or agent of the
Parent, the Company or Merger Sub shall have any liability
hereunder.
Section 9.13 Applicable Law. Except to the
extent that the laws of the State of Delaware or Florida are mandatorily
applicable to the Merger, this Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to the
conflicts of laws provisions thereof that would apply the laws of any other
state.
52
Section 9.14 Jurisdiction;
Waiver of Jury Trial. The Parties agree that 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 shall be exclusively brought in any federal court located in the State of
New York or any New York state court, and each of the parties hereby irrevocably
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 that 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 brought in any
such court has been brought in an inconvenient forum. Process in any such suit,
action or proceeding may be served on any Party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the
foregoing, each Party agrees that service of process on such Party in the manner
provided in Section 9.3 shall be
deemed effective service of process on such Party. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
[Signature
Page follows]
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IN WITNESS WHEREOF, the
Parties have caused this Agreement to be executed by their duly authorized
representatives, on the date first written above.
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HEPALIFE TECHNOLOGIES,
INC.
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/s/
▇▇▇▇ ▇▇▇▇
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By:
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▇▇▇▇
▇▇▇▇
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Title:
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Chief
Executive Officer and
President
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HT
ACQUISITION CORP.
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/s/
▇▇▇▇ ▇▇▇▇
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By:
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▇▇▇▇
▇▇▇▇
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Title:
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Chief
Executive Officer and
President
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AQUAMED
TECHNOLOGIES, INC.
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/s/
▇▇▇▇▇▇▇▇
▇▇▇▇▇
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By:
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▇▇▇▇▇▇▇▇
▇▇▇▇▇
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Title:
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President
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54