AGREEMENT AND PLAN OF MERGER
by and among
ICOA, INC.,
ICOA PUBLIC SERVICES, INC.
and
LINKSPOT NETWORKS, INC.
Dated as of July , 2005
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is
entered into as of July , 2005 by and among (i) ICOA, Inc., a Nevada
corporation ("ICOA"), (ii) ICOA Public Services, Inc., a Nevada corporation
and a wholly-owned subsidiary of ICOA ("Merger Sub") and (iii) Linkspot
Networks, Inc., a Maryland corporation ("Linkspot").
RECITALS
A. ICOA owns all of the issued and outstanding shares of
capital stock of Merger Sub. ICOA was incorporated on August 31, 1983 under NRS.
ICOA is authorized to issue 800 million shares, 750 million of which are common
shares, $0.0001 par value and 50 million of which are preferred shares, $0.0001
par value. Merger Sub was incorporated on May 18, 2005 under NRS. Merger Sub is
authorized to issue 1,000 common shares, $0.01 par value. The registered agent
of ICOA and of Merger Sub in the State of Nevada is Budget Corp., ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇. The registered agent of Merger Sub in the State of
Maryland is CT Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
B. LinkSpot is authorized to issue 1,000,000 shares of common
stock, $0.01 par value, ("LinkSpot Common Stock") of which 127,286 shares are
issued and outstanding. LinkSpot is authorized to issue 700,000 shares of
preferred stock, $0.01 par value, designated as Series A Convertible Preferred
Stock ("LinkSpot Preferred Stock") of which 532,758 shares are issued and
outstanding.
C. ICOA, Merger Sub and LinkSpot deem it advisable and in the
best interests of their respective shareholders for Merger Sub to merge with and
into LinkSpot pursuant to the terms of this Agreement.
D. In the Merger, LinkSpot will be the surviving corporation,
the shares of LinkSpot will be converted into the right to receive consideration
in accordance with the terms hereof, and the shares of Merger Sub will be
converted into shares of Surviving Corporation (as defined).
E. It is intended that the Merger will qualify as a
reorganization under 368(a) of the Code.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which the parties hereby acknowledge, the parties
hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms As used herein, the terms below shall have the following
meanings:
"Affiliate" of a Person means any other Person which directly
or indirectly controls, is controlled by, or is under common control with, such
Person. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
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"Agreement of Merger" means the Agreement of Merger by and
between Merger Sub and LinkSpot to be filed with the Maryland and Nevada
Secretaries of State.
"Ancillary Agreements" means the Employment Agreements,
Registration Rights and Shareholder Agreement and other agreements, certificates
and documents required hereunder to consummate the Closing.
"Assets" means all of LinkSpot's right, title and interest in
and to its properties, assets and rights of any kind, whether tangible or
intangible, real or personal.
"Balance Sheet" means the balance sheet of LinkSpot as of the
Balance Sheet Date.
"Balance Sheet Date" means March 31, 2005.
"Bloomberg" means Bloomberg Financial Markets.
"Business" means the business of LinkSpot as conducted on the
date hereof.
"Closing" means the consummation of the transactions
contemplated by this Agreement on the Closing Date.
"Closing Bid Price" means the closing bid price of ICOA Common
Stock as quoted on the Principal Market (as reported by Bloomberg through its
"Volume at Price" function).
"Closing Date" means the date of this Agreement.
"Closing Place" means the offices of LinkSpot or such other
place as agreed to by the parties.
"Code" means the Internal Revenue Code of 1986.
"Consents" means any and all licenses, permits, franchises,
approvals, authorizations, consents or waivers from third parties (including
governmental authorities and parties to the Contracts) that are (i) required for
the consummation of the transactions contemplated by this Agreement or (ii)
necessary or desirable in order that ICOA and LinkSpot can conduct the Business
after the Closing Date in the same manner as before the Closing Date.
"Contracts" means all agreements, contracts, leases, purchase
orders, undertakings, covenants not to compete, employment agreements,
confidentiality agreements, licenses, instruments, obligations and commitments
to which LinkSpot is a party or by which LinkSpot or any Assets are bound,
whether written or oral, express or implied.
"Court Order" means any judgment, decision, consent decree,
injunction, ruling or order of any federal, state or local court or governmental
agency, department or authority that is binding on any Person or its property
under applicable law.
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"Default" means (a) a breach of or default under any Contract,
(b) the occurrence of an event that with the passage of time or the giving of
notice or both would constitute a breach of or default under any Contract or (c)
the occurrence of an event that with or without the passage of time or the
giving of notice or both would give rise to a right of termination,
renegotiation or acceleration under any Contract.
"Effective Time" means the time on the Closing Date when the
Merger shall become effective, which time shall be at 5:00 p.m., Eastern time,
on the Closing Date, or such other date and time as the parties may agree in
writing.
"Employment Agreement" means the Employment Agreement to be
entered into between LinkSpot and ▇▇▇▇ ▇▇▇▇▇▇, substantially in the form of
Exhibit A hereto.
"Encumbrance" means any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes any agreement to give any of the
foregoing in the future, and any contingent sale or other title retention
agreement or lease in the nature thereof.
"Escrow Agent" means ICOA, Inc.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"Financial Statements" means the Balance Sheet and related
unaudited statements of income, cash flow and shareholders' equity for LinkSpot
for the period ended on the Balance Sheet Date, together with the notes thereto,
all of which are attached as Schedule 1.1(a).
"Fixtures and Equipment" means all of the furniture, fixtures,
furnishings, office equipment, development tools and equipment, lab equipment,
database tapes, test tapes, test fixtures and equipment, computers and software
(including any source or object codes therefor or documentation relating thereto
and computer aided design equipment and software), and other tangible personal
property owned by LinkSpot, wherever located and including any such Fixtures and
Equipment in the possession of any of its respective suppliers or other vendors.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general use
by significant segments of the U.S. accounting profession, which are applicable
to the facts and circumstances on the date of determination.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976.
"ICOA Material Adverse Effect" or "ICOA Material Adverse
Change" means any effect or change which has, or is reasonably likely to have, a
material adverse effect on the condition (financial or other), business, results
of operations, assets, liabilities, prospects or operations of ICOA.
"Immediate Shares" means 18,000,000 shares of Common Stock of
ICOA, $.0001 par value per share ("ICOA Common Stock").
"Indemnifiable Amount" means those amounts for which the
Shareholders, ICOA and the other indemnified Persons identified under Article
VII hereof are entitled to indemnity.
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"Inventory" means all merchandise owned and intended for
resale and all raw materials, work in process, finished goods, wrapping, supply
and packaging items and similar items, whether or not located on the premises,
on consignment to a third party, or in transit or storage.
"Leases" means, with respect to any Person, all leases
(including subleases, licenses, any occupancy agreement and any other agreement)
of real or personal property, in each case to which such Person is a party,
whether as lessor, lessee, guarantor or otherwise, or by which any of them or
their respective properties or assets are bound, or which otherwise relate to
the operation of their respective business.
"Liabilities" means any direct or indirect liability,
indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or
endorsement of or by any Person of any type, whether accrued, absolute,
contingent, matured, unmatured, liquidated, unliquidated or otherwise, known or
unknown.
"LinkSpot Material Adverse Effect" or "LinkSpot Material
Adverse Change" means any effect or change which has, or is reasonably likely to
have, a material adverse effect on the condition (financial or other), Business,
results of operations, assets, liabilities, prospects or operations of LinkSpot
taken as a whole; provided, however, that LinkSpot incurring losses from
operating the Business in the ordinary course and consistent with past practice
at a rate per site substantially similar to the losses incurred for the year
ended December 31, 2004 shall not constitute a LinkSpot Material Adverse Effect
or LinkSpot Material Adverse Change.
"LinkSpot Options" means options to purchase LinkSpot Common
Stock granted by LinkSpot prior to the date hereof or other rights to or with
respect to options to acquire LinkSpot Common Stock granted, awarded or earned
pursuant to any agreement, arrangement or commitment entered into by LinkSpot
prior to the date hereof.
"MGCL" means Maryland General Corporation Law.
"Merger" means the merger of Merger Sub with and into LinkSpot
in accordance with this Agreement and the Agreement of Merger.
"NDA" means that certain Non-Disclosure Agreement dated
October 14, 2004 between LinkSpot and ICOA.
"Offset Escrow Agreement" means the Escrow Agreement,
substantially in the form attached as Exhibit B hereto.
"Permits" means all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, necessary for the conduct
or operation of the Business or ownership of the Assets.
"Person" means any person or entity, whether an individual,
trustee, corporation, limited liability company, general partnership, limited
partnership, trust, unincorporated organization, business association, firm,
joint venture, governmental agency or authority.
"Principal Market" means the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market, the Nasdaq SmallCap Market,
whichever is at the time the principal trading exchange or market for ICOA
Common Stock, or the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg or, if no bid or sale information is
reported for such security by Bloomberg, then the average of the bid prices of
each of the market makers for such security as reported in the "pink sheets" by
the National Quotation Bureau, Inc.
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"Proprietary Rights" means all (a) U.S. and foreign patents,
patent applications, patent disclosures and improvements thereto, including
▇▇▇▇▇ patents and utility models and applications therefor, (b) U.S. and foreign
trademarks, service marks, trade dress, logos, trade names and corporate names
and the goodwill associated therewith and registrations and applications for
registration thereof, (c) U.S. and foreign copyrights and registrations and
applications for registration thereof, (d) U.S. and foreign mask work rights and
registrations and applications for registration thereof, (e) trade secrets and
confidential business information (including ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), know-how, research and development information, software, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial, marketing and business data, pricing and cost information, business
and marketing plans and customer and supplier lists and information), (f) copies
and tangible embodiments thereof (in whatever form or medium) and (g) licenses
granting any rights with respect to any of the foregoing.
"Registration Rights and Shareholder Agreement" means the
Registration Rights and Shareholder Agreement, substantially in the form
attached as Exhibit C hereto.
"Regulations" means any laws, statutes, ordinances,
regulations, rules, notice requirements, court decisions, binding agency
guidelines, principles of law and orders of any foreign, federal, state or local
government and any other governmental department or agency, including
Environmental Laws, energy, motor vehicle safety, airport, aviation, public
utility, zoning, building and health codes, occupational safety and health and
laws respecting employment practices, employee documentation, terms and
conditions of employment and wages and hours.
"Related Party" means any Shareholder, any of the officers and
directors of LinkSpot, any Affiliate of LinkSpot or any immediate family member
of an officer or director of LinkSpot.
"Representative" means any officer, director, principal,
attorney, agent, employee or other representative of any Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933.
"Shareholders" means the holders of shares of capital stock of
LinkSpot on the Closing Date.
"Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting and
economic interests in such partnership) or (ii) at least a majority of the
securities or other interests of which having by their terms ordinary voting
power to elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
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"Tax Return" means any report, return, document, declaration
or other information or filing required to be supplied to any taxing authority
or jurisdiction (foreign or domestic) with respect to Taxes, including
information returns, any documents with respect to or accompanying requests for
the extension of time in which to file any such report, return, document,
declaration or other information.
"Taxes" mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, service, license, net worth, payroll, franchise and transfer
and recording, escheat/remittance or unclaimed property, or other tax of any
kind whatsoever imposed by the Internal Revenue Service or any taxing authority
(whether domestic or foreign, including any federal, state, county, local or
foreign government or any subdivision or taxing agency thereof (including a U.S.
possession)), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest whether paid or
received, fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to, any such taxes, charges, fees, levies or other
assessments.
"To the knowledge" or "knowledge" of a party (or similar
phrases) means to the extent of matters (i) which are actually known by such
party or (ii) which, based on facts of which such party is aware, would be known
to a reasonable Person in similar circumstances; provided, that "to the
knowledge of LinkSpot" means to the extent of matters (i) which are actually
known by ▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇ (ii) which, based on facts of which ▇▇▇▇
▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇ is aware, would be known to a reasonable Person in similar
circumstances.
1.2 Other Defined Terms. The following terms shall have the meanings
defined for such terms in the Sections set forth below:
Term Section
Action 3.17
Agreement Preamble
Benefit Arrangement 3.19(a)
Claim 7.2(c)
Damage Threshold 7.2(f)
Damages 7.2
Dissenting Shares 2.9
Employee Plans 3.19(a)
Environmental Condition 3.30(a)
Environmental Laws 3.30(a)
ERISA Affiliate 3.19(a)
Exchange Agent 2.6(a)
Expiration Date 7.1
Hazardous Substance 3.30(a)
ICOA Preamble
ICOA Disclosure Schedule Article IV
Leased Real Property 3.9(a)
Letter of Transmittal 2.6(a)
LinkSpot Common Stock Preamble
LinkSpot Disclosure Schedule Article III
LinkSpot Preferred Stock Preamble
LinkSpot Warrants 3.2(b)
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Merger Sub Preamble
Multiemployer Plan 3.19(a)
NRS 2.1
PBGC 3.19(a)
Pension Plan 3.19(a)
Personal Property 3.9(b)
Preferred Shareholders 3.2(i)
Release 3.30(a)
Shareholder Representative 3.2(i)
Stock Spreadsheet 3.2(h)
Surviving Corporation 2.2(a)
TNS 6.2
TNS Agreement 6.2
Welfare Plan 3.19(a)
1.3 Interpretation Provisions.
(a) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement, and article, section, schedule and
exhibit references are to this Agreement unless otherwise specified. The meaning
of defined terms shall be equally applicable to the singular and plural forms of
the defined terms. The term "or" is disjunctive but not necessarily exclusive.
The terms "include" and "including" are not limiting and mean "including without
limitation."
(b) References to agreements and other documents shall be deemed to include
all subsequent amendments and other modifications thereto.
(c) References to statutes shall include all regulations promulgated
thereunder and references to statutes or regulations shall be construed as
including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation.
(d) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement.
(e) The language used in this Agreement shall be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against either party.
(f) The schedules and exhibits to this Agreement are a material part hereof
and shall be treated as if fully incorporated into the body of the Agreement.
ARTICLE II.
THE MERGER; CONVERSION OF SHARES
2.1 Filings. Subject to the provisions hereof, on the Closing Date, ICOA,
Merger Sub and LinkSpot shall cause the Agreement of Merger to be filed with the
Maryland Secretary of State in accordance with the Maryland General Corporation
Law (the "MGCL") and the Nevada Secretary of State in accordance with Articles
78 and 92A of the Nevada Revised Statutes ("NRS"). If either Secretary of State
requires any changes in the Agreement of Merger as a condition to filing or to
issuing its certificate to the effect that the Merger is effective, ICOA, Merger
Sub and LinkSpot will execute any necessary revisions incorporating such
changes, provided such changes are not inconsistent with and do not result in
any material change in any of the terms of this Agreement.
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2.2 Merger.
(a) At the Effective Time, subject to the terms and conditions set forth in
this Agreement and in accordance with the MGCL and NRS,
(b) the Merger shall become effective, Merger Sub shall merge with and into
LinkSpot, the separate existence of Merger Sub shall cease, and LinkSpot shall
continue as the surviving corporation ("Surviving Corporation");
(c) the Articles of Incorporation of Merger Sub as in effect immediately
prior to the Effective Time shall be the Articles of Incorporation of Surviving
Corporation until duly amended in accordance with applicable law;
(d) the Bylaws of Merger Sub as in effect immediately prior to the
Effective Time shall be the Bylaws of Surviving Corporation, until altered,
amended, or repealed; and
(e) each share of LinkSpot Common Stock and LinkSpot Preferred Stock
outstanding immediately prior to the Effective Time shall be canceled and
converted as provided herein.
2.3 Directors and Officers. At the Effective Time, the directors and
officers of Surviving Corporation shall be as set forth on Schedule 2.3 hereto,
each such director and officer to hold office from the Effective Time until
their respective successors are duly elected or appointed and qualified in the
manner provided in the Articles of Incorporation and Bylaws of Surviving
Corporation and applicable law.
2.4 Conversion of Securities.
(a) Conversion of Merger Sub Shares. At the Effective Time, each issued and
outstanding share of capital stock of Merger Sub shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into and
become one fully paid and non-assessable share of the common stock of Surviving
Corporation.
(b) Cancellation of Treasury Stock. Each share of LinkSpot Common Stock and
LinkSpot Preferred Stock that is owned by LinkSpot shall automatically be
canceled and retired and shall cease to exist, and no shares of ICOA Common
Stock (as defined herein) or other consideration shall be delivered in exchange
therefor.
(c) Conversion of LinkSpot Common Stock and LinkSpot Preferred Stock. At
the Effective Time, (i) each share of LinkSpot Preferred Stock issued and
outstanding immediately prior to the Effective Time (other than shares to be
canceled in accordance with Section 2.4(b) and Dissenting Shares (as defined
herein)) shall, by virtue of the Merger and without any action on the part of
the holder thereof, be canceled and extinguished and converted into the right to
receive a portion of the Immediate Shares determined in accordance with Section
2.5, and (ii) each share of LinkSpot Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be canceled in
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accordance with Section 2.4(b) and Dissenting Shares) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be canceled and
extinguished and no shares of ICOA Common Stock or any other consideration shall
be payable with respect thereto. As of the Effective Time, all such shares of
LinkSpot Common Stock and of LinkSpot Preferred Stock shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
each holder of a certificate representing any such shares of LinkSpot Common
Stock and LinkSpot Preferred Stock shall cease to have any rights with respect
thereto, except the right of the holders of shares of LinkSpot Preferred Stock
to receive certificates representing Immediate Shares of ICOA Common Stock
(valued at the Closing Bid Price on the Closing Date) to be issued in accordance
with the procedures in Section 2.6, without interest.
2.5 Immediate Consideration. At the Effective Time and subject to the
procedures in Section 2.6, ICOA will deliver to each holder of a certificate
which immediately prior to the Effective Time represented outstanding shares of
LinkSpot Preferred Stock, other than shares to be cancelled in accordance with
Section 2.4(b), their pro rata portion of the Immediate Shares (determined by
dividing the number of shares of LinkSpot Preferred Stock represented by such
certificate by the total number of shares of LinkSpot Preferred Stock
outstanding immediately prior to the Effective Time (other than shares to be
canceled in accordance with Section 2.4(b)), rounded to the nearest whole share.
2.6 Exchange of Certificates.
(a) Exchange Agent and Procedures. Signature Stock Transfer, Inc., as
exchange agent (the "Exchange Agent"), shall mail as promptly as practicable
after the Effective Time to each holder of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of
LinkSpot Preferred Stock, other than shares to be cancelled in accordance with
Section 2.4(b), (i) a letter of transmittal (the "Letter of Transmittal") and
(ii) instructions for effecting the surrender of the certificates in exchange
for certificates representing ICOA Common Stock. Upon surrender of a certificate
for cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by ICOA, together with such Letter of Transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange Agent or
ICOA (including a Registration Rights and Shareholder Agreement), the holder of
such certificate shall be entitled to receive in exchange therefor, no later
than five (5) business days following the surrender of such certificate, a
certificate representing that number of whole shares of ICOA Common Stock which
such holder has the right to receive pursuant to the provisions of Section
2.4(c), and the certificate so surrendered shall forthwith be cancelled;
provided, however, that forty percent (40%) of such whole shares (rounded to the
nearest whole share) shall be delivered to the Escrow Agent to be held and
distributed in accordance with the terms of the Offset Escrow Agreement, and the
balance of such whole shares shall be delivered to the holder of such
certificate. No cash will be issued in lieu of fractional shares. In the event
that any certificates representing shares of LinkSpot Preferred Stock shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the shareholder claiming such certificate to be lost, stolen or destroyed, ICOA
shall issue in exchange for such lost, stolen or destroyed certificate the
shares of ICOA Common Stock that such shareholder is entitled to receive
pursuant to Section 2.4(c) hereof; provided, however, that ICOA may in its
discretion and as a condition precedent to the issuance thereof, require such
shareholder to provide ICOA with an indemnity agreement against any claim that
may be made against ICOA with respect to the certificate alleged to have been
lost, stolen or destroyed. The shares of ICOA Common Stock that each shareholder
of LinkSpot shall be entitled to receive pursuant to the Merger shall be deemed
to have been issued at the Effective Time. If the shares of ICOA Common Stock
(or any portion thereof) are to be delivered to any person other than the person
in whose name the certificate or certificates representing shares of LinkSpot
Preferred Stock surrendered in exchange therefor is registered, it shall be a
condition to such exchange that the person requesting such exchange shall pay to
ICOA any transfer or other taxes required by reason of the payment of the shares
of ICOA Common Stock to a person other than the registered holder of the
certificate or certificates so surrendered, or shall establish to the
satisfaction of ICOA that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither ICOA nor any other party hereto shall be
liable to a holder of shares of LinkSpot Preferred Stock for any shares of ICOA
Common Stock delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.
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(b) Reserved.
(c) No Fractional Shares. No certificates or scrip representing fractional
shares of ICOA Common Stock shall be issued by virtue of the Merger, and no
dividend, stock split or other distribution with respect to ICOA Common Stock
shall relate to any such fractional interest, and any such fractional interests
shall not entitle the owner thereof to vote or to any rights of a security
holder.
2.7 Certificate Not Surrendered by Holders. Each certificate which
immediately prior to the Effective Time evidenced shares of LinkSpot Common
Stock or LinkSpot Preferred Stock shall, from and after the Effective Time until
such certificate is surrendered to Surviving Corporation or the Exchange Agent,
be deemed, for all corporate purposes, to evidence the right to receive the
consideration per share provided for by Section 2.4(c), if any. No interest
shall be payable upon any consideration to be delivered pursuant to this
Agreement.
2.8 No Transfers After the Effective Time. All shares of ICOA Common Stock
issued upon the surrender of certificates representing shares of LinkSpot
Preferred Stock in accordance with the terms of this Article II shall be deemed
to have been issued in full satisfaction of all rights pertaining to shares of
LinkSpot Preferred Stock theretofore represented by such certificates, and after
the Effective Time, there shall be no transfers of any shares of LinkSpot Common
Stock or LinkSpot Preferred Stock on the stock transfer books of Surviving
Corporation. If, after the Effective Time, certificates formerly representing
shares of LinkSpot Common Stock or LinkSpot Preferred Stock are presented to
Surviving Corporation, they shall be canceled and exchanged for the
consideration per share provided for by Section 2.4(c), if any, subject to
applicable law in the case of Dissenting Shares.
2.9 Dissenting Shareholders. Notwithstanding anything in this Agreement to
the contrary, shares of LinkSpot Common Stock or LinkSpot Preferred Stock issued
and outstanding immediately prior to the Effective Time and held by a
shareholder who has not voted in favor of the Merger or consented thereto in
writing and who has properly demanded dissenter's rights in accordance with MGCL
("Dissenting Shares"), shall not be converted into the right to receive the
consideration as provided in Section 2.4(c), unless and until such holder fails
to perfect or withdraws or otherwise loses his right to appraisal and payment
under the MGCL, but shall from and after the Effective Time represent only the
right to receive such consideration as may be determined to be due in accordance
with MGCL. If, after the appraisal, any such holder fails to perfect or
withdraws or loses his right to appraisal, then such Dissenting Shares shall
thereupon be treated as if they had been converted as of the Effective Time into
the right to receive the consideration, if any, to which such holder is
entitled. LinkSpot shall give ICOA prompt notice of any demands received by
LinkSpot for appraisal of shares and, prior to the Effective Time, ICOA shall
have the right to participate in all negotiations and proceedings with respect
to such demands. Prior to the Effective Time, LinkSpot shall not, except with
the prior written consent of ICOA, make any payments with respect to or settle
or offer to settle, any such demands. Each holder of Dissenting Shares who
becomes entitled to payment for such Dissenting Shares in accordance with MGCL
shall receive payment therefor in accordance with MGCL.
2.10 Taking of Necessary Action; Further Action. Each of ICOA, Merger Sub
and LinkSpot shall take all such reasonable lawful action as may be necessary or
appropriate in order to effect the Merger in accordance with this Agreement.
LinkSpot agrees that if, at any time after the Effective Time, Surviving
Corporation shall consider or be advised that any further deeds, assignments, or
assurances are necessary or desirable to vest, perfect, or confirm in Surviving
Corporation title to any property or rights of LinkSpot, Surviving Corporation
and its proper officers and directors may execute and deliver all such proper
deeds, assignments, and assurances and do all other things necessary or
desirable to vest, perfect or confirm title to such property or rights in
Surviving Corporation and otherwise to carry out the purpose of this Agreement,
in the name of LinkSpot or otherwise.
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2.11 LinkSpot Securities.
(a) Prior to the Effective Time, any holder of a LinkSpot Warrant may
exercise such warrant for shares of LinkSpot Common Stock pursuant to the terms
thereof, and any holder of a LinkSpot Option may exercise such warrant for
shares of LinkSpot Common Stock pursuant to the terms thereof.
(b) As of the Effective Time, all outstanding LinkSpot Warrants and
LinkSpot Options that have not been exercised prior to the Effective Time shall
be deemed to have been terminated insomuch as the shares of LinkSpot Common
Stock underlying such LinkSpot Warrants and LinkSpot Options are not entitled to
any consideration pursuant to this Agreement. Accordingly, as of the Closing, no
LinkSpot Warrants or LinkSpot Options shall be outstanding.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF LINKSPOT
Except as otherwise set forth in a disclosure schedule (the
"LinkSpot Disclosure Schedule") referring specifically to the representations
and warranties in this Agreement which identifies by section number the section
to which such disclosure relates (provided, however, that information disclosed
by reference to a particular section shall be deemed to be disclosed with
respect to all relevant sections) and which is delivered by LinkSpot to ICOA
prior to or simultaneous with the execution of this Agreement, LinkSpot makes
the following representations and warranties to ICOA and Merger Sub, which
representations and warranties are, as of the date hereof, and will be, as of
the Closing Date, true and correct and all of which representations and
warranties have been and will be relied upon by ICOA and Merger Sub in entering
into this Agreement and consummating the transactions contemplated hereby.
3.1 Organization of LinkSpot. LinkSpot is a corporation duly organized,
validly existing and duly authorized to transact business in the corporate form
under the laws of the State of Maryland. LinkSpot has full corporate power and
authority to conduct the Business as it is presently being conducted and to own
or lease, as applicable, its properties and the Assets. LinkSpot is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of its properties owned or leased or the
nature of its activities make such qualification necessary, except where the
failure to be so qualified would not, individually or in the aggregate, have a
LinkSpot Material Adverse Effect. Each jurisdiction in which LinkSpot is
qualified to do business as a foreign corporation is set forth on Section 3.1 of
the LinkSpot Disclosure Schedule.
3.2 Capitalization of LinkSpot.
(a) As of the date of this Agreement, there are 1,000,000 shares of
LinkSpot Common Stock authorized under its Articles of Incorporation, 127,286 of
which are issued and outstanding.
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(b) As of the date of this Agreement, there are 700,000 shares of LinkSpot
Preferred Stock authorized under its Articles of Incorporation, 532,758 of which
are issued and outstanding. LinkSpot has no other stock authorized, issued or
outstanding.
(c) As of the date of this Agreement, LinkSpot has no outstanding warrants
to acquire shares of LinkSpot Common Stock.
(d) As of the date of this Agreement, LinkSpot Options representing the
right to purchase an aggregate of zero shares of LinkSpot Common Stock are
outstanding. Section 3.2(d) of the LinkSpot Disclosure Schedule sets forth a
complete and accurate list of all LinkSpot Options which would be outstanding
but for the consummation of the Merger, and the holder, vesting schedules and
exercise prices for such options.
(e) Except for the LinkSpot securities listed above and for this Agreement,
there are no outstanding options, warrants, convertible securities or rights of
any kind to purchase or otherwise acquire any shares of capital stock or other
securities of LinkSpot nor are there any other obligations on the part of
LinkSpot to issue any shares of capital stock or other securities.
(f) All outstanding shares of LinkSpot Common Stock and LinkSpot Preferred
Stock are, and any shares of LinkSpot Common Stock and LinkSpot Preferred Stock
issued upon exercise or conversion, as the case may be, of any LinkSpot Warrants
or LinkSpot Options will be, validly issued, fully paid and non-assessable and,
except as set forth in Section 3.2(f) of the LinkSpot Disclosure Schedule, not
subject to any preemptive rights created by statute, LinkSpot's Articles of
Incorporation or Bylaws or any Contract. The LinkSpot securities have been or
will be issued in compliance with all federal and state corporate and securities
laws.
(g) There is outstanding no vote, plan or pending proposal for any
redemption of stock of LinkSpot or merger or consolidation of LinkSpot with or
into any other entity, other than as described herein.
(h) Attached as Schedule 3.2(h) of the LinkSpot Disclosure Schedule is a
spreadsheet (the "Stock Spreadsheet") which sets forth (i) the name of each
Person who owns shares of LinkSpot Common Stock, (ii) the number of shares of
LinkSpot Common Stock held by each such Person, (iii) the name of each Person
who owns shares of LinkSpot Preferred Stock, (iv) the number of shares of
LinkSpot Preferred Stock held by each such Person. The Stock Spreadsheet will be
true and correct in all respects at and as of the Closing.
(i) Each Shareholder owning shares of the LinkSpot Preferred Stock as of
immediately prior to the Closing (collectively, the "Preferred Shareholders")
shall have irrevocably authorized and appointed ▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Shareholder
Representative"), with full power of substitution and resubstitution, as his,
her or its representative and true and lawful attorney-in-fact and agent to act
in his, her or its name, place and stead as contemplated by this Agreement,
including, but not limited to, by the provisions of Article VII hereof.
3.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. LinkSpot is its own ultimate parent entity as
defined under the HSR Act. LinkSpot is not a $10 million person as defined
thereunder.
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3.4 Authorization. LinkSpot has all necessary power and authority and has
taken all corporate action necessary to enter into this Agreement, the Agreement
of Merger and the Ancillary Agreements to which it is a party and has taken all
corporate action necessary to consummate the transactions contemplated hereby
and thereby and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement, the Agreement of Merger and the
Ancillary Agreements by LinkSpot and the performance by LinkSpot of its
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors and Shareholders of LinkSpot. This Agreement will have been duly
executed and delivered by LinkSpot and will be a legal, valid and binding
obligation of LinkSpot, enforceable against LinkSpot in accordance with its
terms, except that enforceability may be limited by the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors. Upon the execution and the filing thereof,
the Agreement of Merger will be, as of the Effective Time, duly and validly
executed by LinkSpot, and will be a legal, valid and binding obligation of
LinkSpot, enforceable against LinkSpot in accordance with its terms, except that
enforceability may be limited by the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors.
3.5 Officers and Directors. Section 3.5 of the LinkSpot Disclosure
Schedule contains a list of all the officers and directors of LinkSpot as of
immediately prior to the Closing Date.
3.6 Bank Accounts. Section 3.6 of the LinkSpot Disclosure Schedule
contains a list of all bank accounts, safe deposit boxes, and related powers of
attorney of LinkSpot, and persons authorized to draw thereon or have access
thereto. LinkSpot does not have outstanding powers of attorney except as
contemplated above.
3.7 Subsidiaries, Etc. LinkSpot does not own or hold any equity interest
of any kind in any Person.
3.8 Absence of Certain Changes or Events. To the knowledge of LinkSpot and
except as set forth on Schedule 3.8 to the LinkSpot
Disclosure Schedule, since the Balance Sheet Date there has not been any:
(a) LinkSpot Material Adverse Change;
(b) failure to operate the Business in the ordinary course or failure to
use commercially reasonable efforts to preserve the Business intact and to
preserve for ICOA the continued services of employees and independent
contractors and the goodwill of suppliers, customers, corporate accounts,
strategic partners/sponsors and others having business relations with LinkSpot
and its Representatives;
(c) resignation or termination of any officer or employee, or any increase
in the rate of compensation payable or to become payable to any officer,
employee or Representative of LinkSpot, including the making of any loan to, or
the payment, grant or accrual of any bonus, incentive compensation, service
award or other similar benefit to, any such Person, or the addition to,
modification of, or contribution to any Employee Plan (as defined herein) other
than the extension of coverage under such plan to others who became eligible
after the Balance Sheet Date;
(d) any payment, loan or advance of any amount to or in respect of, or the
sale, transfer or lease of any properties or Assets to, or entering into of any
Contract with, any Related Party, except compensation to employees at the rates
disclosed pursuant to Section 3.18(d);
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(e) sale, assignment, license, transfer of any Assets, tangible or
intangible, singly or in the aggregate, other than sales of products and
services and licenses in the ordinary course of business and consistent with
past practice;
(f) accelerations, extensions, modifications, terminations or renewals of
any Contracts (other than in the ordinary course of business);
(g) actual or threatened termination of any material corporate or
promotional/sponsorship account or group of accounts or actual or threatened
material reduction in purchases or royalties payable by any such corporate or
promotional/sponsorship account or the occurrence of any event that is likely to
result in any such termination or reduction;
(h) disposition or lapsing of any Proprietary Rights of LinkSpot, in whole
or in part or, to the knowledge of LinkSpot, any disclosure of any trade secret,
process or know-how to any Person not an employee;
(i) change in accounting methods or practices by LinkSpot;
(j) revaluation by LinkSpot of any of the Assets, including, without
limitation, writing off notes or accounts receivable other than for which
reserves have been established;
(k) damage, destruction or loss (whether or not covered by insurance) that
has or would be reasonably likely to have a LinkSpot Material Adverse Effect;
(l) declaration, setting aside or payment of dividends or distributions in
respect of any stock of LinkSpot or any redemption, purchase or other
acquisition of any equity securities of LinkSpot;
(m) issuance of, reservation for issuance by LinkSpot of, or commitment by
LinkSpot or its directors or officers to issue or reserve for issuance, any
shares of stock or other equity securities or obligations or securities
convertible into or exchangeable for shares of stock or other equity securities
(other than shares of LinkSpot Common Stock issued upon exercise or conversion,
as the case may be, of the LinkSpot Securities described in Section 3.2);
(n) increase, decrease or reclassification of the stock of LinkSpot;
(o) amendment of the Articles of Incorporation or Bylaws of LinkSpot;
(p) capital expenditure or execution of any lease or any incurring of
liability therefor by LinkSpot, involving payments in excess of $25,000 in the
aggregate;
(q) delay or failure to pay any material obligation of LinkSpot;
(r) cancellation of any indebtedness or waiver, compromise or release of
any rights of LinkSpot involving more than $5,000;
(s) indebtedness incurred by LinkSpot for borrowed money or any commitment
to borrow money entered into by LinkSpot, or any loans made or agreed to be made
by LinkSpot;
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(t) liability incurred by LinkSpot except in the ordinary course of
business and consistent with past practice, or any increase or change in any
assumptions underlying or methods of calculating any bad debt, contingency or
other reserves;
(u) payment, discharge or satisfaction of any Liabilities of LinkSpot other
than the payment, discharge or satisfaction (i) in the ordinary course of
business and consistent with past practice of Liabilities reflected or reserved
against in the Financial Statements or incurred in the ordinary course of
business and consistent with past practice since the Balance Sheet Date and (ii)
of other Liabilities of LinkSpot involving $10,000 or less in the aggregate;
(v) acquisition by LinkSpot of any equity interest in any other Person;
(w) mortgage, pledge or encumbrance of any of the Assets of LinkSpot;
(x) execution of any Contracts (or series of related Contracts) or any
incurring of any liability therefor, except in the ordinary course of business
and consistent with past practice; or
(y) agreement by LinkSpot to do any of the foregoing.
3.9 Title to Assets.
(a) LinkSpot does not own any improved or unimproved real property.
LinkSpot has validly existing and enforceable leasehold, subleasehold or
occupancy interests in all improved or unimproved real property leased by
LinkSpot (the "Leased Real Property"), free and clear of all Encumbrances.
Section 3.9(a) of the LinkSpot Disclosure Schedule sets forth, as of the date
hereof, a complete list of the Leased Real Property.
(b) LinkSpot has good and marketable title or a valid right to use all of
the all of the personal assets and personal properties that are necessary for
the conduct of the Business (the "Personal Property"), free and clear of all
Encumbrances. LinkSpot has delivered or made available to ICOA true and complete
copies of all leases, subleases, rental agreements, contracts of sale, tenancies
or licenses to which the Personal Property is subject. Section 3.9(b) of the
LinkSpot Disclosure Schedule sets forth, as of the date hereof, a complete list
of all leased Personal Property.
(c) To the knowledge of LinkSpot, there are no pending or threatened
condemnation or similar proceedings against LinkSpot or otherwise relating to
any of the Leased Real Property or Personal Property, and LinkSpot has not
received any written notice of the same.
(d) LinkSpot has in all material respects performed all obligations on its
part required to have been performed with respect to (A) all assets (other than
the Leases) leased by it or to it (whether as lessor or lessee), and (B) all
Leases. To the knowledge of LinkSpot, there exists no material default or event
which, with the giving of notice or lapse of time or both, would become a
material default on the part of LinkSpot or of any other party, under any Lease.
(e) To the knowledge of LinkSpot, (i) each of the Leases is valid, binding
and enforceable in accordance with its terms and is in full force and effect,
and (ii) assuming all consents required by the terms thereof or applicable law
have been obtained, the Leases will continue to be valid, binding and
enforceable in accordance with their respective terms and in full force and
effect immediately following the consummation of the transactions contemplated
hereby. LinkSpot has not received notice that any Lease that terminates within
two years of the date hereof and which does not provide for a renewal term will
not be renewed. There are no subleases, licenses, options, rights, concessions
or other agreements or arrangements, written or oral, granting any Person (other
than LinkSpot) the right to occupy the Leased Real Property or any portion
thereof or interest therein.
15
3.10 Sufficiency of Assets. The Assets constitute all of the assets, rights
and properties, tangible or intangible, real or personal, which are required for
the operation of the Business as it is presently conducted.
3.11 Fixtures and Equipment. Section 3.11 of the LinkSpot Disclosure
Schedule contains accurate lists and summary descriptions of all Fixtures and
Equipment as of March 31, 2005 where the book value of an individual item
exceeds $10,000 or where an aggregate of similar items exceeds $25,000. All
tangible assets and properties which are part of the Assets are in good
operating condition and repair, normal wear and tear excepted, and are usable in
the ordinary course of LinkSpot's business, other than those assets and
properties that have been written-off or devalued for partial or total
obsolescence.
3.12 Contracts.
(a) Disclosure. Section 3.12 of the LinkSpot Disclosure Schedule sets forth
a complete and accurate list of all Contracts of LinkSpot of the following
categories:
(i) Contracts not made in the ordinary course of business;
(ii) Strategic partnership/sponsor and promotional agreements;
(iii) License agreements or royalty agreements, whether LinkSpot
is the licensor or licensee thereunder, other than licenses in the nature of a
lease of real property and licenses for off-the-shelf software;
(iv) Confidentiality and non-disclosure agreements (whether
LinkSpot is the beneficiary or the obligated party thereunder) other than those
made in the ordinary course of business;
(v) Contracts under which a third-party is to make a payment to
LinkSpot after the date hereof of $10,000 or more;
(vi) Contracts involving future expenditures or Liabilities,
actual or potential, in excess of $10,000 after the date hereof or otherwise
material to the Business or the Assets;
(vii) Contracts or commitments relating to commission
arrangements with others;
(viii) Employment contracts, consulting contracts and severance
agreements, including Contracts (A) to employ or terminate executive officers or
other personnel and other contracts with present or former officers or
directors of LinkSpot or (B) that will result in the payment by, or the
creation of any Liability to pay on behalf of ICOA or LinkSpot any severance,
termination, "golden parachute," or other similar payments to any present
or former personnel following termination of employment or otherwise as a
result of the consummation of the transactions contemplated by this Agreement;
16
(ix) Agreements which primarily relate to the obligation of
LinkSpot to indemnify or hold harmless a third-party for losses or damages;
(x) Promissory notes, loans, agreements, indentures, evidences of
indebtedness, letters of credit, guarantees, or other instruments relating
to an obligation for borrowed money, whether LinkSpot shall be the borrower,
lender or guarantor thereunder;
(xi) Contracts containing covenants limiting the freedom of
LinkSpot or any officer, director, employee or Affiliate of LinkSpot, to engage
in any line of business or compete with any Person that relates directly or
indirectly to the Business;
(xii) Any Contract with the federal, state or local government or
any agency or department thereof including, but not limited to, agencies
and departments regulating airports;
(xiii) Any Contract with a Related Party;
(xiv) Leases and licenses of real or personal property; and
(xv) Any other material Contract.
True, correct and complete copies of all of the Contracts listed or described on
Section 3.12 of the LinkSpot Disclosure Schedule, including all amendments and
supplements thereto, have been made available to ICOA.
(b) Absence of Defaults. To the knowledge of LinkSpot, all of the Contracts
are valid, binding and enforceable in accordance with their terms and, except as
listed on Section 3.12(b) of the LinkSpot Disclosure Schedule, with no existing
or threatened Default or dispute. To the knowledge of LinkSpot, LinkSpot is not
in Default of any material provision of any Contract. To the knowledge of
LinkSpot, all parties to such Contracts have complied in all material respects
with the provisions thereof, no party is in Default of any material provision
thereunder and no notice of any claim of Default has been given to LinkSpot.
LinkSpot does not have any reason to believe that the products and services
called for by any unfinished Contract cannot be supplied in accordance with the
terms of such Contract, including time specifications. Except as set forth on
Section 3.13 of the LinkSpot Disclosure Schedule (List of Consents), no consent
of any third party is required for the assignment of any Contract to ICOA.
(c) Product Warranty. To the knowledge of LinkSpot, LinkSpot has not
committed any act, there has been no omission, which may result in, and there
has been no occurrence which may give rise to, product liability or Liability
for breach of warranty (whether covered by insurance or not) on the part of
LinkSpot with respect to products designed, assembled, sold, repaired,
maintained, delivered or installed or services rendered by LinkSpot prior to or
on the Closing Date.
3.13 No Conflict or Violation; Consents. Except as disclosed in Section
3.13 of the LinkSpot Disclosure Schedule, none of the execution, delivery or
performance of this Agreement, any Ancillary Agreement to which it is a party or
the Agreement of Merger, the consummation of the transactions contemplated
hereby or thereby, nor compliance by LinkSpot with any of the provisions hereof
or thereof, will (a) violate or conflict with any provision of its respective
governing documents, (b) violate, conflict with, or result in a breach of or
constitute a Default (with or without notice or passage of time) under, or
result in the termination of, or accelerate the performance required by, or
result in a right to terminate, accelerate, modify or cancel under, or require a
notice under, or result in the creation of any Encumbrance upon any of its
respective assets under, any material contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, security interest or other arrangement to
17
which LinkSpot is a party or by which LinkSpot is bound or to which any of its
respective assets are subject, or (c) violate any applicable Regulation or Court
Order. Except for (i) the filing of the Agreement of Merger with the Secretaries
of State of the States of Maryland and Nevada, (ii) the approval of the
shareholders of LinkSpot as required by the MGCL and LinkSpot's Articles of
Incorporation, or as set forth on Section 3.13 of the LinkSpot Disclosure
Schedule, no notices to, declaration, filing or registration with, approvals or
consents of, or assignments by, any Persons (including any federal, state or
local governmental or administrative authorities, airports and parties to any
contracts) are necessary to be made or obtained by LinkSpot in connection with
the execution, delivery or performance of this Agreement or the consummation of
the Merger.
3.14 Permits. Section 3.14 of the LinkSpot Disclosure Schedule sets forth a
complete list of all Permits held by LinkSpot. LinkSpot has, and at all times
has had, to the knowledge of LinkSpot, all Permits required under any applicable
Regulation in the operation of its businesses or in its ownership of the Assets,
and owns or possesses such Permits free and clear of all Encumbrances. To the
knowledge of LinkSpot, LinkSpot is not in material default of any such Permit.
LinkSpot has not received any notice of any claim of default with respect to any
such Permit. Except as otherwise governed by law, to the knowledge of LinkSpot
all such Permits are renewable by their terms or in the ordinary course of
business without the need to comply with any special qualification procedures or
to pay any amounts other than routine filing fees and, except as set forth on
Section 3.14 of the LinkSpot Disclosure Schedule, will not be adversely affected
by the completion of the transactions contemplated by this Agreement or the
Ancillary Agreements to which LinkSpot is a party.
3.15 Financial Statements; Books and Records.
(a) The Financial Statements are complete, are in accordance with the books
and records of LinkSpot, fairly present the Assets, Liabilities and financial
condition and results of operations indicated thereby in accordance with GAAP
consistently applied throughout the periods covered thereby.
(b) LinkSpot maintains a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed with
management's authorizations, (ii) transactions are recorded as necessary to
permit preparation of LinkSpot's financial statements in accordance with GAAP
and to maintain accountability for assets, (iii) access to assets is permitted
only in accordance with management's authorization, (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences and
(v) such controls comply with applicable SEC Regulations.
(c) The books and records of LinkSpot, in reasonable detail, accurately and
fairly reflect the activities of LinkSpot and the Business and have been made
available to ICOA for its inspection.
(d) LinkSpot has not engaged in any transaction, maintained any bank
account or used any corporate funds except for transactions, bank accounts or
funds which have been and are reflected in the normally maintained books and
records of LinkSpot.
(e) The stock records and minute books of LinkSpot heretofore made
available to ICOA fully reflect all minutes of meetings, resolutions and other
actions and proceedings of the shareholders and board of directors and all
committees thereof of LinkSpot, all issuances, transfers and redemptions of the
capital stock of LinkSpot of which LinkSpot is aware and contain true, correct
and complete copies of the Articles of Incorporation and Bylaws and all
amendments thereto of LinkSpot through the date hereof.
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3.16 Liabilities. LinkSpot does not have any Liabilities or obligations
(absolute, accrued, contingent or otherwise) except (i) liabilities which are
reflected and properly reserved against in the Financial Statements, (ii)
liabilities incurred in the ordinary course of business and consistent with past
practice since the Balance Sheet Date and (iii) liabilities arising under the
Contracts (other than obligations which are required to be reflected on a
balance sheet prepared in accordance with GAAP) set forth on Section 3.12 of the
LinkSpot Disclosure Schedule.
3.17 Litigation. There is no action, order, writ, injunction, judgment or
decree outstanding or claim, suit, litigation, proceeding, investigation or
dispute (collectively, "Actions") pending or, to the knowledge of LinkSpot,
threatened or anticipated (i) against, relating to or affecting LinkSpot, any of
the Assets or any of the officers and directors of LinkSpot as such, (ii) which
seek to enjoin or obtain damages in respect of the transactions contemplated
hereby or by the Ancillary Agreements to which LinkSpot is a party or (iii) with
respect to which there is a reasonable likelihood of a determination which would
prevent LinkSpot from consummating the transactions contemplated hereby and by
the Ancillary Agreements to which it is a party. Except as specified in the
LinkSpot Disclosure Schedule, there are presently no outstanding judgments,
decrees or orders of any court or any governmental or administrative agency
against or affecting LinkSpot or its Business or any of the Assets. The LinkSpot
Disclosure Schedule contains a complete and accurate description of all Actions
since April 19, 2002 to which LinkSpot has been a party or which related to any
of the Assets or the officers or directors of LinkSpot as such, other than (y)
Actions brought by LinkSpot for collection of monies owed in the ordinary course
of business of (z) settled disputes with customers.
3.18 Labor Matters.
(a) LinkSpot is not a party to any labor agreement with respect to its
employees with any labor organization, group or association and has not
experienced any attempt by organized labor or its representatives to make
LinkSpot conform to demands of organized labor relating to its employees or to
enter into a binding agreement with organized labor that would cover the
employees of LinkSpot. There is no unfair labor practice charge or complaint
against LinkSpot pending before the National Labor Relations Board or any other
governmental agency arising out of the activities of LinkSpot; and LinkSpot has
no knowledge of any facts or information which would give rise thereto; there is
no labor strike or labor disturbance pending or, to the knowledge of LinkSpot,
threatened against LinkSpot nor is any grievance currently being asserted
against it; and LinkSpot has not experienced a work stoppage or other labor
difficulty. There are no material controversies pending or, to the knowledge of
LinkSpot, threatened between LinkSpot and any of its employees.
(b) LinkSpot is in material compliance with all applicable Regulations
respecting employment practices, terms and conditions of employment, wages and
hours, equal employment opportunity, and the payment of social security and
similar taxes, and is not engaged in any unfair labor practice. LinkSpot is not
liable for any claims for past due wages or any penalties for failure to comply
with any of the foregoing.
(c) LinkSpot has not entered into any severance or similar arrangement in
respect of any present or former employee that will result in any obligation
(absolute or contingent) of ICOA or LinkSpot to make any payment to any present
or former employee following termination of employment. Except as described in
Section 3.18(c) of the LinkSpot Disclosure Schedule, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will result in the acceleration of the vesting of exercisability of any
LinkSpot Options or in the acceleration or vesting of any other rights of any
Person to benefits under any Employee Plans.
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(d) LinkSpot has provided ICOA with a list of the names of all present
employees of LinkSpot and their current salary or hourly wages and other
compensation payable by LinkSpot. Except as provided by law, the employment of
all persons presently employed or retained by LinkSpot is terminable at will, at
any time and without advance notice.
3.19 Employee Benefit Plans.
(a) Definitions. The following terms, when used in this Section 3.19, shall
have the following meanings. Any of these terms may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference.
(i) "Benefit Arrangement" means any employment, consulting, severance or
other similar contract, arrangement or policy and each plan, arrangement
(written or oral), program, agreement or commitment providing for insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, life, health, disability or accident benefits (including
any "voluntary employees' beneficiary association" as defined in Section
501(c)(9) of the Code providing for the same or other benefits) or for deferred
compensation, profit-sharing bonuses, stock options, stock appreciation rights,
stock purchases or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (A) is not a Welfare Plan, Pension
Plan or Multiemployer Plan, (B) is entered into, maintained, contributed to or
required to be contributed to, as the case may be, by LinkSpot or an ERISA
Affiliate or under which LinkSpot or any ERISA Affiliate may incur any
liability, and (C) covers any employee or former employee of LinkSpot or any
ERISA Affiliate (with respect to their relationship with such entities).
(ii) "Employee Plans" means all Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
(iii) "ERISA Affiliate" means any entity which is (or at any relevant time
was) a member of a "controlled group of corporations" with or under "common
control" with LinkSpot, as defined in Section 414(b) or (c) of the Code.
(iv) "Multiemployer Plan" means any "multiemployer plan," as defined in
Section 4001(a)(3) of ERISA, (A) which LinkSpot, or any ERISA Affiliate
maintains, administers, contributes to or is required to contribute to, or,
after September 25, 1980, maintained, administered, contributed to or was
required to contribute to, or under which LinkSpot or any ERISA Affiliate may
incur any liability and (B) which covers any employee or former employee of
LinkSpot or any ERISA Affiliate (with respect to their relationship with such
entities).
(v) "PBGC" means the Pension Benefit Guaranty Corporation.
(vi) "Pension Plan" means any "employee pension benefit plan" as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) (A) which LinkSpot or
any ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or, within the five years prior to the Closing Date, maintained,
administered, contributed to or was required to contribute to, or under which
LinkSpot or any ERISA Affiliate may incur any liability and (B) which covers any
employee or former employee of LinkSpot or any ERISA Affiliate (with respect to
their relationship with such entities).
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(vii) "Welfare Plan" means any "employee welfare benefit plan" as defined
in Section 3(1) of ERISA, (A) which LinkSpot or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or under which
LinkSpot or any ERISA Affiliate may incur any liability and (B) which covers any
employee or former employee of LinkSpot or any ERISA Affiliate (with respect to
their relationship with such entities).
(b) Disclosure; Delivery of Copies of Relevant Documents and Other
Information. Section 3.19 of the LinkSpot Disclosure Schedule contains a
complete list of, or reference to, Employee Plans which cover or have covered
employees of LinkSpot (with respect to their relationship with LinkSpot). To the
extent applicable, true and complete copies of each of the following documents
have been delivered or made available to ICOA: (i) each Welfare Plan and Pension
Plan (and, if applicable, related trust agreements) and all amendments thereto,
all written interpretations thereof by LinkSpot and written descriptions thereof
by LinkSpot which have been distributed by LinkSpot to the employees of LinkSpot
and all annuity contracts or other funding instruments, (ii) each Benefit
Arrangement including written interpretations thereof by LinkSpot and written
descriptions thereof by LinkSpot which have been distributed by LinkSpot to
LinkSpot's employees (including descriptions of the number and level of
employees covered thereby) and a complete description of any such Benefit
Arrangement which is not in writing, (iii) the most recent determination letter
issued by the Internal Revenue Service with respect to each Pension Plan, (iv)
for the three most recent plan years, Annual Reports on Form 5500 Series
required to be filed with any governmental agency for each Pension Plan, (v) a
description of complete age, salary, service and related data as of the last day
of the last plan year for employees and former employees of LinkSpot, and (vi) a
description setting forth the amount of any liability of LinkSpot as of the
Closing Date for payments more than 30 days past due with respect to each
Welfare Plan.
(c) Representations.
(i) Pension Plans. No Pension Plan is subject to the minimum funding
requirements of ERISA or the Code. Each Pension Plan, each related trust
agreement, annuity contract or other funding instrument that is intended to be
qualified and tax-exempt under the provisions of Code Section 401(a) (or 403(a),
as appropriate) and 501(a) has received a favorable IRS determination letter to
that effect, and to LinkSpot's knowledge, nothing has occurred since the date of
the latest IRS determination letter that would adversely affect such qualified
and tax exempt status.
(ii) Multiemployer Plans. Neither LinkSpot nor any ERISA Affiliate
contributes to, or within the past six years has been obligated to contribute
to, any Multiemployer Plan.
(iii) Welfare Plans. None of LinkSpot, any ERISA Affiliate or any Welfare
Plan has any present or future obligation to make any payment to or with respect
to any present or former employee of LinkSpot or any ERISA Affiliate pursuant to
any retiree medical benefit plan, or other retiree Welfare Plan, and no
condition exists which would prevent LinkSpot from amending or terminating any
such benefit plan or Welfare Plan.
(iv) Compliance with Law. Each Pension Plan and each related trust
agreement, annuity contract or other funding instrument is qualified and
tax-exempt under the provisions of Code Sections 401(a) (or 403(a), as
appropriate) and 501(a) and has been so qualified during the period from its
adoption to date. Each Welfare Plan which is a "group health plan," as defined
in Section 607(1) of ERISA, has been operated in material compliance with
provisions of Part 6 of Title I of ERISA and Sections 162(k) and 4980B of the
Code at all times.
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(v) Benefit Arrangements. Each Benefit Arrangement which covers or has
covered employees or former employees of LinkSpot (with respect to their
relationship with LinkSpot) has been maintained in material compliance with its
terms and with the requirements prescribed by any and all Regulations which are
applicable to such Benefit Arrangement, including the Code.
(vi) Unrelated Business Taxable Income. No Employee Plan (or trust or other
funding vehicle pursuant thereto) is subject to any Tax under Code Section 511.
(vii) Deductibility of Payments. There is no Contract covering any employee
or former employee of LinkSpot (with respect to their relationship with
LinkSpot) that, individually or collectively, provides for the payment by
LinkSpot of any amount (i) that is not deductible under Section 162(a)(1) or 404
of the Code or (ii) that is an "excess parachute payment" pursuant to Section
280G of the Code.
(viii) Fiduciary Duties and Prohibited Transactions. To the knowledge of
LinkSpot, neither LinkSpot nor any plan fiduciary of any Welfare Plan or Pension
Plan which covers or has covered employees or former employees of LinkSpot or
any ERISA Affiliate, has engaged in any transaction in violation of Sections 404
or 406 of ERISA or any "prohibited transaction," as defined in Section
4975(c)(1) of the Code, for which no exemption exists under Section 408 of ERISA
or Section 4975(c)(2) or (d) of the Code.
(ix) No Amendments. Neither LinkSpot nor any ERISA Affiliate has any
announced plan or legally binding commitment to create any additional Employee
Plans or to amend or modify any existing Employee Plan.
(x) Certain Contracts. None of the Employee Plans holds any interest in any
annuity contract, guaranteed investment contract or any other investment
contract which is issued by an insurance company which is the subject of
bankruptcy, receivership or conservatorship proceedings.
(xi) No Acceleration of Rights or Benefits. Except as described in Section
3.19(c)(xi) of the LinkSpot Disclosure Schedule, neither the execution and
delivery of this Agreement or the Ancillary Agreements to which LinkSpot is a
party nor the consummation of the transactions contemplated hereby or thereby
will result in the acceleration or creation of any rights of any person to
benefits under any of the Employee Plans, including but not limited to the
acceleration of the exercisability of any stock options, the acceleration of the
vesting of any restricted stock, the acceleration of the accrual or vesting of
any benefits under any Pension Plan or the creation of rights under any
severance, parachute or change of control agreement.
(xii) No Other Material Liability. To the knowledge of LinkSpot, no event
has occurred in connection with which LinkSpot or any ERISA Affiliate or any
Employee Plan, directly or indirectly, could be subject to any material
liability (i) under any Regulation or governmental order relating to any
Employee Plans or (ii) pursuant to any obligation of LinkSpot to indemnify any
Person against liability incurred under, any such Regulation or order as they
relate to the Employee Plans.
3.20 Transactions with Related Parties and Shareholders. Except for
compensation arrangements in the ordinary course of business and consistent with
past practice or as disclosed on Section 3.20 of the LinkSpot Disclosure
Schedule, no Related Party has (a) borrowed from or loaned to LinkSpot any money
or other property which has not been repaid or returned, (b) any contractual or
other claims, express or implied, of any kind whatsoever against LinkSpot or (c)
had any interest in any property or assets used by LinkSpot. LinkSpot does not
have any contracts or agreements with any shareholder except as set forth on
Section 3.20 of the LinkSpot Disclosure Schedule
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3.21 Compliance with Law. LinkSpot has conducted its business in material
compliance with all applicable Regulations and Court Orders. LinkSpot has not
received any notice to the effect that, or has otherwise been advised
(including, with regard to SEC Regulations, the advice of counsel) that,
LinkSpot is not in compliance with any Regulations or Court Orders, and LinkSpot
is not aware of any existing circumstances that are likely to result in any
material violation of any of the foregoing.
3.22 Intellectual Property.
(a) General. Section 3.22 of the LinkSpot Disclosure Schedule sets forth
with respect to the Proprietary Rights of LinkSpot: (i) for each patent and
patent application, including ▇▇▇▇▇ patents and utility models and applications
therefor, as applicable, the number, normal expiration date, title and priority
information for each country in which such patent has been issued, or, the
application number, date of filing, title and priority information for each
country, (ii) for each trademark, tradename or service ▇▇▇▇ claimed by LinkSpot,
whether or not registered, the date first used, the application serial number or
registration number, the class of goods covered, the nature of the goods or
services, the countries in which the names or ▇▇▇▇ is used and the expiration
date for each country in which a trademark has been registered, (iii) for each
copyright for which registration has been sought, whether or not registered, the
date of creation and first publication of the work, the number and date of
registration for each country in which a copyright application has been
registered, (iv) for each mask work, whether or not registered, the date of
first commercial exploitation and if registered, the registration number and
date of registration and (v) all licenses granting rights in or to any of such
Proprietary Rights. True and correct copies of all Proprietary Rights (including
all pending applications and application related documents and materials) owned,
controlled or used by or on behalf of LinkSpot or in which LinkSpot has any
interest whatsoever have been provided or made available to ICOA.
(b) Adequacy. To the knowledge of LinkSpot, the Proprietary Rights of
LinkSpot are all those necessary for the normal conduct of the Business as
presently conducted and as presently contemplated, except as set forth in
Section 3.22(b) of the LinkSpot Disclosure Schedule.
(c) Royalties and Licenses. LinkSpot does not have any obligation to
compensate any Person for the use of any of its Proprietary Rights, and LinkSpot
has not granted to any Person any license, option or other rights to use in any
manner any of its Proprietary Rights, whether requiring the payment of royalties
or not, except as set forth in Section 3.22(c) of the LinkSpot Disclosure
Schedule.
(d) Ownership. LinkSpot owns or has a valid right to use its Proprietary
Rights, and such Proprietary Rights will not cease to be valid rights of
LinkSpot by reason of the execution, delivery and performance of this Agreement
or the Ancillary Agreements to which it is a party or the consummation of the
transactions contemplated hereby or thereby. LinkSpot does not have any patents.
(e) Absence of Claims. Except as set forth in Section 3.22(e) of the
LinkSpot Disclosure Schedule, LinkSpot has not received any notice of (i)
alleged invalidity with respect to any of the Proprietary Rights of LinkSpot or
(ii) alleged infringement of any rights of others due to any activity by
LinkSpot. LinkSpot's use of its Proprietary Rights in its past, current and, to
the knowledge of LinkSpot, planned products do not and would not infringe upon
or otherwise violate the valid rights of any third party anywhere in the world.
Except as set forth in Section 3.22(e) of the LinkSpot Disclosure Schedule, no
other Person (i) has notified LinkSpot that it is claiming any ownership of or
right to use any of the Proprietary Rights of LinkSpot or (ii) to the knowledge
of LinkSpot, is infringing upon any such Proprietary Rights in any way.
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(f) Protection of Proprietary Rights. Except as set forth on Section
3.22(f) of the LinkSpot Disclosure Schedule, LinkSpot has taken reasonable and
prudent steps to protect its Proprietary Rights from infringement by any other
Person. Except as set forth on Section 3.22(f) of the LinkSpot Disclosure
Schedule, LinkSpot has taken all actions deemed appropriate by it to perfect or
protect its interest in its Proprietary Rights. All of the pending applications
for the Proprietary Rights of LinkSpot have been duly filed and all other
actions to protect such Proprietary Rights have been taken. Except as set forth
on Section 3.22(f) of the LinkSpot Disclosure Schedule, LinkSpot has taken all
reasonable steps necessary or appropriate (including, entering into appropriate
confidentiality and nondisclosure agreements with officers, directors,
subcontractors, independent contractors, full-time and part-time employees,
licensees and customers in connection with the Assets or the Business) to
safeguard and maintain the secrecy and confidentiality of, and the proprietary
rights in, the Proprietary Rights material to the Business.
3.23 Tax Matters.
(a) Filing of Tax Returns. LinkSpot has timely filed, or filed timely
extension requests with the appropriate taxing authorities with regard to, all
Tax Returns in respect of Taxes required to be filed. The Tax Returns filed are
complete and accurate in all material respects. Except as specified in Section
3.23 of the LinkSpot Disclosure Schedule, LinkSpot has not requested any
extension of time within which to file Tax Returns in respect of any Taxes for
which Tax Returns have not yet been filed. LinkSpot has delivered or made
available to ICOA complete and accurate copies of the federal, state and local
Tax Returns for LinkSpot for the years ended 2002, 2003 and 2004.
(b) Payment of Taxes. Except as described in Section 3.23 of the LinkSpot
Disclosure Schedule, (i) all Taxes in respect of periods beginning before the
Closing Date have been timely paid or an adequate reserve has been established
therefor, as set forth in Section 3.23 of the LinkSpot Disclosure Schedule or
the Financial Statements, and (ii) LinkSpot does not have any material Liability
for Taxes in excess of the amounts so paid or reserves so established. Except as
described in Section 3.23 of the LinkSpot Disclosure Schedule, all Taxes that
LinkSpot is required by law to withhold or collect have been duly withheld or
collected and have been timely paid over to the appropriate governmental
authorities to the extent due and payable.
(c) Audits, Investigations or Claims. No deficiencies for Taxes of LinkSpot
have been claimed, proposed or assessed in writing delivered to LinkSpot by any
taxing or other governmental authority. There are no pending or, to the
knowledge of LinkSpot, threatened audits, assessments or other Actions for or
relating to any Liability in respect of Taxes of LinkSpot, LinkSpot has not
received written notice from governmental authorities with respect to Taxes that
are likely to result in additional Liability in respect of Taxes of LinkSpot and
there are no matters under discussion with any governmental authorities with
respect to Taxes that are likely to result in an additional Liability for Taxes.
Audits of federal, state and local Tax Returns by the relevant taxing
authorities have been completed for the periods set forth on Section 3.23 of the
LinkSpot Disclosure Schedule, except as set forth in such Schedule, LinkSpot has
not been notified that any taxing authority intends to audit a Tax Return for
any other period. No extension of a statute of limitations relating to Taxes is
in effect with respect to LinkSpot.
(d) Lien. To the knowledge of LinkSpot, there are no Encumbrances for Taxes
(other than for current Taxes not yet due and payable) on the Assets.
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(e) Tax Elections. All material elections with respect to Taxes affecting
LinkSpot as of the date hereof that are required to be set forth on the latest
Tax Returns of LinkSpot are set forth on the latest Tax Returns of LinkSpot.
LinkSpot (i) has not made nor will make a deemed dividend election under Reg.
ss. 1.1502-32(f)(2) or a consent dividend election under Section 565 of the
Code; (ii) has not consented at any time under Section 341(f)(1) of the Code to
have the provisions of Section 341(f)(2) of the Code apply to any disposition of
the assets of LinkSpot; (iii) has not agreed, nor is required, to make any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise; (iv) has not made an election, nor is required, to treat
any asset of LinkSpot as owned by another Person pursuant to the provisions of
Section 168(f) of the Code or as tax-exempt bond financed property or tax-exempt
use property within the meaning of Section 168 of the Code; and (v) has not made
any of the foregoing elections or is required to apply any of the foregoing
rules under any comparable state or local Tax provision.
(f) Prior Affiliated Groups. LinkSpot has never been a member of an
affiliated group of corporations within the meaning of Section 1504 of the Code,
and LinkSpot does not have liability for the Taxes of any other entity under
Reg. ss. 1.1502-6 of the Code or any other provision of federal, state, local or
foreign law.
(g) Tax Sharing Agreements. There are no Tax-sharing agreements or similar
arrangements (including indemnity arrangements) with respect to or involving
LinkSpot, and, after the Closing Date, LinkSpot shall not be bound by any such
Tax-sharing agreements or similar arrangements (entered into prior to the
Closing) or have any Liability thereunder for amounts due in respect of periods
prior to or after the Closing Date.
(h) Partnerships. LinkSpot is not subject to any joint venture,
partnership, or other arrangement or contract which is treated as a partnership
for federal income tax purposes. LinkSpot is not a successor to any other Person
by way of merger, reorganization or similar transaction.
(i) Foreign Person. Neither the LinkSpot Common Stock nor the LinkSpot
Preferred Stock is a United States Real Property Interest as defined in Section
897(c) of the Code.
(j) No Withholding. The transaction contemplated herein is not subject to
the tax withholding provisions of Section 3406 of the Code, or of Subchapter A
of Chapter 3 of the Code or of any other provision of law.
(k) Excess Parachute Payments; Section 162(m) of the Code. LinkSpot is not
a party to any agreement, contract, arrangement or plan (other than the
Employment Agreements, any promissory note executed between the Founders and
ICOA or LinkSpot in connection with the transactions contemplated hereby and the
Non-Compete Agreements) that has resulted or could result as a result of the
transactions contemplated hereby, separately or in the aggregate, in the payment
of any "excess parachute payments" within the meaning of Section 280G of the
Code or which, without regard to (i) payments in respect of LinkSpot Options or
(ii) payments or rights which may be awarded after the Effective Date, would
result in a disallowed deduction under Section 162(m) of the Code.
(l) Other Tax Matters. None of the assets of LinkSpot directly or
indirectly secures any debt the interest on which is Tax-exempt under Section
103(a) of the Code. None of the assets of LinkSpot is "tax-exempt use property"
within the meaning of Section 168(h) of the Code. LinkSpot has not participated
in, nor is it participating in, an international boycott within the meaning of
Section 999 of the Code. LinkSpot has never had and does not have a permanent
establishment in any foreign country, as defined in any applicable Tax treaty or
convention between the United States and such foreign country.
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3.24 Insurance. Section 3.24 of the LinkSpot Disclosure Schedule contains a
complete and accurate list of all policies or binders of insurance (showing as
to each policy or binder the name and address of the carrier, policy number,
coverage limits, expiration dates, annual premiums, a general description of the
type of coverage provided and any pending claims thereunder) of which LinkSpot
is the owner, insured or beneficiary. Each of such policies and binders is in
full force and effect, provides coverage (to the knowledge of LinkSpot) as may
be required by all material Regulations to which LinkSpot is subject and insures
LinkSpot in such amounts as are sufficient to provide reasonable protection for
the businesses of LinkSpot. To the knowledge of LinkSpot, it is not in default
under any of such policies or binders, and LinkSpot has not failed to give any
notice or to present any claim under any such policy or binder in a due and
timely fashion. There are no facts known to LinkSpot upon which an insurer might
be justified in reducing or denying coverage or increasing premiums on existing
policies or binders. There are no outstanding unpaid claims under any such
policies or binders.
3.25 Accounts Receivable. The accounts and notes receivable reflected in
the Balance Sheet, and all accounts receivable arising since the Balance Sheet
Date, represent bona fide claims against debtors for sales, services performed
or other charges arising on or before the date of recording thereof, and all the
goods delivered and services performed which gave rise to said accounts were
delivered or performed in accordance with the applicable orders or Contracts. To
the knowledge of LinkSpot, and except as otherwise described on Schedule 3.25 of
the LinkSpot Disclosure Schedule, all such receivables are fully collectible in
the ordinary course of business within three months except to the extent of an
amount not in excess of the reserve for doubtful accounts reflected on the
Balance Sheet and additions to such reserves as reflected on the books and
records of LinkSpot.
3.26 Inventory. The value at which the Inventory is shown on the Balance
Sheet has been determined in accordance with the normal valuation policy of
LinkSpot, consistently applied and in accordance with GAAP. The Inventory (and
the specific items acquired subsequent to the Balance Sheet Date) consists only
of items of quality and quantity commercially usable and salable in the ordinary
course of business, except for any items of obsolete material or material below
standard quality, all of which have been written down to realizable market
value, or for which adequate reserves have been provided, and the present
quantity of all Inventory is reasonable in the present circumstances of the
Business. Section 3.26 of the LinkSpot Disclosure Schedule contains a complete
and accurate list of all Inventory as of the Balance Sheet Date and the
addresses at which the Inventory is located.
3.27 Purchase Commitments and Outstanding Bids. Except as set forth on
Schedule 3.27 of the LinkSpot Disclosure Schedule, (i) as of the date of this
Agreement, the aggregate of all accepted and unfulfilled orders for the sale of
Inventory and the performance of services entered into by LinkSpot does not
exceed $20,000, and (ii) the aggregate of all Contracts for the purchase of
supplies by LinkSpot does not exceed $20,000, all of which orders and Contracts
were made in the ordinary course of business and consistent with past practice.
There are no claims against LinkSpot to return in excess of an aggregate of
$5,000 of merchandise by reason of alleged overshipments, defective merchandise
or otherwise, or of merchandise in the hands of customers under a written
agreement that such merchandise would be returnable. Section 3.27 of the
LinkSpot Disclosure Schedule contains a complete and accurate list of all
outstanding leases which LinkSpot is currently negotiating, including the
location of the property of each such lease and the proposed rent under each
such lease. To the knowledge of LinkSpot, the terms of the leases listed on
Section 3.27 of the LinkSpot Disclosure Schedule do not contain terms and
conditions that are materially more onerous than those usual and customary in
LinkSpot's business.
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3.28 Payments. None of LinkSpot or any of the Representatives of LinkSpot
acting on the behalf of LinkSpot has, directly or indirectly, paid or delivered
any fee, commission or other sum of money or property, however characterized, to
any finder, agent, government official or other party, in the U.S. or any other
country which LinkSpot knows or has reason to believe to have been illegal under
any federal, state or local laws of the U.S. or any other country having
jurisdiction. None of LinkSpot or any of the Representatives of LinkSpot acting
on the behalf of LinkSpot has accepted or received any unlawful contributions,
payments, gifts or expenditures. LinkSpot or has not participated, directly or
indirectly, in any boycotts or other similar practices affecting any of its
actual or potential customers and has at all times done business in an open and
ethical manner.
3.29 Customers, Suppliers and Competitors. Section 3.29 of the LinkSpot
Disclosure Schedule sets forth a complete and accurate list of the names and
addresses of (i) the ten locations which generated for LinkSpot the greatest
revenues during its last fiscal year and quarter ended March 31, 2005 showing
the approximate total revenues in dollars from each such location during such
fiscal year and quarter; (ii) the ten strategic partners/sponsors who generated
for LinkSpot the greatest revenues during its last fiscal year and quarter ended
March 31, 2005, showing the approximate total revenues in dollars from each such
strategic partner/sponsor during such fiscal year and quarter; and (iii)
suppliers with sales to LinkSpot greater than $10,000 during the last fiscal
year and $2,500 during the quarter ended March 31, 2005, showing the approximate
total purchases in dollars by LinkSpot from each such supplier during such
fiscal year. Since the Balance Sheet Date, to the knowledge of LinkSpot, there
has been no adverse change in any material respect in the business relationship
of LinkSpot with any location owner, strategic partner/sponsor or supplier named
on the LinkSpot Disclosure Schedule. LinkSpot has not received any written
communication from any Person named on Section 3.29 of the LinkSpot Disclosure
Schedule of any intention to terminate or materially reduce services from or
supplies to LinkSpot.
3.30 Environmental Matters.
(a) Definitions. The following terms, when used in this Section 3.30, shall
have the following meanings:
(i) "LinkSpot" for purposes of this Section 3.30 includes (A) all
affiliates of LinkSpot, (B) all partnerships, joint ventures and other business
entities or organizations in which LinkSpot was at any time or is a partner,
joint venturer, member or participant and (C) all predecessor or former
corporations, partnerships, joint ventures, organizations, businesses or other
entities, whether in existence as of the date hereof or at any time prior to the
date hereof, the obligations of which have been assumed by LinkSpot or to which
LinkSpot has succeeded or substantially all of the assets of which have been
acquired by LinkSpot or to which LinkSpot has succeeded.
(ii) "Release" means and includes any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment or the workplace of any Hazardous Substance, and
otherwise as defined in any Environmental Law.
(iii) "Hazardous Substance" means any pollutants, contaminants, chemicals,
waste and any toxic, infectious, carcinogenic, reactive, corrosive, ignitable or
flammable chemical or chemical compound or hazardous substance, material or
waste, whether solid, liquid or gas, including any quantity of asbestos in any
form, urea formaldehyde, PCB's, radon gas, crude oil or any fraction thereof,
all forms of natural gas, petroleum products or by-products or derivatives,
radioactive substance, waste waters, sludges and slag, in each case, in such
form or in such concentrations so as to be subject to regulation or control or
required remediation under any Environmental Law.
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(iv) "Environmental Laws" mean all Regulations in effect on the date hereof
that require the protection or clean-up of the environment, or which regulate or
control the use, treatment, storage, transportation, generation, manufacture,
processing, distribution, handling or disposal of, or emission, discharge or
other Release or threatened Release of, Hazardous Substances, the preservation
or protection of waterways, groundwater, drinking water, air, wildlife, plants
or other natural resources, or the health and safety of persons, including
protection of the health and safety of employees. Environmental Laws include the
Federal Water Pollution Control Act, Resource Conservation & Recovery Act, Clean
Water Act, Safe Drinking Water Act, Atomic Energy Act, Occupational Safety and
Health Act, Toxic Substances Control Act, Clean Air Act, Comprehensive
Environmental Response, Compensation and Liability Act, Hazardous Materials
Transportation Act and all analogous federal, state or local Regulations.
(v) "Environmental Conditions" mean the Release of any Hazardous Substance
(whether or not such Release constituted at the time thereof a violation of any
Environmental Law) as a result of which LinkSpot has or may reasonably be
expected to become liable to any Person or by reason of which any of the Assets
may suffer or be subjected to any Encumbrance.
(b) Notice of Violation. LinkSpot has not received any notice of alleged,
actual or potential responsibility for, or any inquiry or investigation
regarding, (i) any Release or threatened Release by LinkSpot of any Hazardous
Substance at any location or (ii) an alleged violation of or non-compliance by
LinkSpot with the conditions of any Permit required under any Environmental Law
or the provisions of any Environmental Law. LinkSpot has not received any notice
of any other claim, demand or Action by any Person alleging any actual or
threatened injury or damage to any Person, property, natural resource or the
environment arising from or relating to any Release or threatened Release by
LinkSpot of any Hazardous Substances.
(c) Environmental Conditions. To the knowledge of LinkSpot, there are no
present or past Environmental Conditions caused by LinkSpot, or in any way
relating to the Business or the Assets.
(d) Notices, Warnings and Records. To the knowledge of LinkSpot, it has
given all notices and warnings, made all reports, and has kept and maintained
all records required by and is in material compliance with all Environmental
Laws.
3.31 Brokers; Transaction Costs. Except as set forth on Section 3.31 of the
LinkSpot Disclosure Schedule, LinkSpot has not entered into and will not enter
into any contract, agreement, arrangement or understanding with any Person which
will result in the obligation of ICOA or LinkSpot to pay any finder's fee, legal
or accounting fees, brokerage commission or similar payment in connection with
the transactions contemplated hereby. Neither LinkSpot nor ICOA shall be liable
for any costs or expenses pertaining to any finder's fees, legal or accounting
fees, brokerage commission or similar payment incurred by or on behalf of
Sellers as a result of the consummation of the transactions contemplated hereby.
3.32 No Other Agreements to Sell LinkSpot or the Assets. LinkSpot does not
have any legal obligation, absolute or contingent, to any other Person to sell
all or substantially all the Assets or to sell any capital stock of LinkSpot or
to effect any merger, share exchange, consolidation, business combination,
recapitalization, liquidation or other reorganization of LinkSpot or to enter
into any agreement with respect thereto.
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3.33 Material Misstatements or Omissions. No representations or warranties
by LinkSpot in this Agreement or any Ancillary Agreement to which it is a party
or any exhibit, certificate or schedule furnished or to be furnished to ICOA
pursuant hereto or thereto contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact necessary to
make the statements or facts contained herein or therein not misleading. There
is no event, condition or fact that has had or would reasonably be expected to
have a LinkSpot Material Adverse Effect.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF ICOA AND MERGER SUB
Except as otherwise set forth in a disclosure schedule (the
"ICOA Disclosure Schedule") referring specifically to the representations and
warranties in this Agreement which identifies by section number the section to
which such disclosure relates and which is delivered by ICOA to LinkSpot prior
to or simultaneous with the execution of this Agreement, ICOA and Merger Sub
represent and warrant to LinkSpot as follows, which representations and
warranties are, as of the date hereof, and will be, as of the Closing Date, true
and correct:
4.1 Organization.
(a) ICOA is a corporation duly organized, validly existing, in good
standing under the laws of the State of Nevada and duly authorized to transact
business in the corporate form under the laws of the State of Nevada. ICOA has
full corporate power and authority to conduct its business as presently
conducted by it and to own or lease, as applicable, its properties and assets.
ICOA is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of its properties owned or
leased or the nature of its activities make such qualification necessary, except
where the failure to be so qualified or in good standing would not have a ICOA
Material Adverse Effect.
(b) Merger Sub is a corporation duly organized, validly existing, in good
standing under the laws of the State of Nevada and duly authorized to transact
business in the corporate form under the laws of the State of Nevada. ICOA owns
all of the outstanding capital stock of Merger Sub, free and clear of all liens,
charges, pledges and other encumbrances.
4.2 Authorization.
(a) ICOA has all requisite corporate power and authority, and has taken all
corporate action necessary, to execute and deliver this Agreement and the
Ancillary Agreements to which it is party, to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. The execution and delivery of this Agreement, the Agreement of
Merger and the Ancillary Agreements by ICOA and the performance by ICOA of is
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of ICOA. This Agreement has been duly executed and delivered by ICOA
and is, and upon execution and delivery, the Ancillary Agreements to which it is
a party each will be, legal, valid and binding obligations of ICOA, enforceable
against ICOA in accordance with their terms, except that enforceability may be
limited by the effect of bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights of creditors.
29
(b) Merger Sub has all requisite corporate power and authority, and has
taken all corporate action necessary, to execute and deliver this Agreement and
the Agreement of Merger, to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder. The execution
and delivery of this Agreement and the Agreement of Merger by Merger Sub and the
performance by Merger Sub of is obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of Merger Sub. This Agreement has been duly
executed and delivered by Merger Sub and is, and upon execution and delivery,
the Agreement of Merger will be, legal, valid and binding obligations of Merger
Sub, enforceable against Merger Sub in accordance with their terms, except that
enforceability may be limited by the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors.
4.3 No Conflict or Violation; Consents. None of the execution, delivery or
performance of this Agreement or any Ancillary Agreement, the consummation of
the transactions contemplated hereby or thereby, nor compliance by ICOA or
Merger Sub with any of the provisions hereof or thereof, will (a) violate or
conflict with any provision of its governing documents, (b) violate, conflict
with, or result in a breach of or constitute a default (with or without notice
or passage of time) under, or result in the termination of, or accelerate the
performance required by, or result in a right to terminate, accelerate, modify
or cancel under, or require a notice under, or result in the creation of any
Encumbrance upon any of ICOA's or Merger Sub's assets under, any material
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, security
interest or other arrangement to which ICOA or Merger Sub is a party or by which
it is bound or to which any of its assets are subject or (c) violate any
Regulation or Court Order. Except for applicable securities laws, as set forth
on Section 4.3 of the ICOA Disclosure Schedule, no notices to, declaration,
filing or registration with, approvals or consents of, or assignments by, any
Persons (including any federal, state of local governmental or administrative
authorities) are necessary to be made or obtained by ICOA or Merger Sub in
connection with the execution, delivery or performance of this Agreement or the
consummation of the Merger.
4.4 No Brokers. Neither ICOA or Merger Sub nor any of their officers,
directors, employees, shareholders or Affiliates has employed or made any
agreement with any broker, finder or similar agent or any Person which will
result in the obligation of any Shareholder to pay any finder's fee, brokerage
fees or commission or similar payment in connection with the transactions
contemplated hereby.
4.5 Litigation. There are no Actions pending, threatened or anticipated
against, related to, or affecting ICOA or Merger Sub seeking to delay, limit or
enjoin the transactions contemplated by this Agreement.
4.6 ICOA Common Stock. The Immediate Shares to be issued pursuant to this
Agreement have been, or will be prior to the Effective Time, validly issued,
fully paid and nonassessable shares of ICOA Common Stock, free of and not
subject to any preemptive rights or rights of first refusal created by statute
or by ICOA's Certificate of Incorporation or Bylaws.
4.7 SEC Documents. ICOA has furnished or made available to LinkSpot a true
and complete copy of each statement and report which it has filed with the SEC
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") since January 1, 2004 (the "SEC Documents"), which are all the
documents (other than preliminary materials) that ICOA has been required to file
with the SEC since that date. As of their respective filing dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
in which they were made, not misleading, except to the extent corrected by a
subsequently filed SEC Document.
30
4.8 Compliance with Law. ICOA and Merger Sub have conducted their
respective businesses in material compliance with all applicable Regulations and
Court Orders. Neither ICOA nor Merger Sub has received any notice to the effect
that, or has otherwise been advised that, ICOA or Merger Sub is not in material
compliance with any Regulations or Court Orders, and neither ICOA nor Merger Sub
are aware of any existing circumstances that are likely to result in any
material violation of any of the foregoing.
4.9 Liabilities. Except as set forth in the SEC Documents, ICOA has no
Liabilities or obligations (absolute, accrued, contingent or otherwise) that
would be required to be reflected on, or reserved against in, a consolidated
balance sheet of ICOA or in the notes thereto, prepared in accordance with GAAP
consistently applied, except for (i) liabilities or obligations that were so
reserved on, or reflected in (including the notes to), the consolidated balance
sheet of ICOA as of December 31, 2004, (ii) liabilities incurred in the ordinary
course of business and consistent with past practice since December 31, 2004 and
(iii) liabilities or obligations which would not, individually or in the
aggregate, have a ICOA Material Adverse Effect.
ARTICLE V.
[RESERVED]
ARTICLE VI.
ACTIONS BY LINKSPOT, ICOA AND
MERGER SUB AFTER CLOSING
6.1 Books and Records; Tax Matters.
(a) LinkSpot, ICOA and Merger Sub agree that so long as any books, records
and files relating to the Business, Assets or operations of LinkSpot, to the
extent that they pertain to the operations of LinkSpot prior to the Closing
Date, remain in existence and available, each party (at its expense) shall, upon
prior notice, have the right to inspect and to make copies of the same at any
time during business hours for any proper purpose.
(b) ICOA covenants and agrees that in the event it or LinkSpot receives any
notice or inquiry from the Internal Revenue Service with respect to the
characterization of any payments made under this Agreement or any Ancillary
Agreement, ICOA will give prompt written notice to the Shareholder
Representative concerning such notice or inquiry. ICOA agrees to report the
consideration delivered under this Agreement in a manner consistent with the
terms hereof.
6.2 Closing Delivery. Immediately following the Closing, ICOA shall
execute and deliver to Transaction Network Services, Inc. ("TNS"), a Delaware
corporation, a mutual release in a form to be acceptable to ICOA, LinkSpot and
TNS by which TNS releases ICOA and LinkSpot, and ICOA and LinkSpot each release
TNS, from certain obligations one may have to the other (the "TNS Agreement").
ICOA and LinkSpot covenant and agree to comply with the terms and conditions of
such mutual release.
31
ARTICLE VII.
SURVIVAL; INDEMNIFICATION
7.1 Survival of Representations. All statements contained in this
Agreement, any schedule or in any certificate or instrument of conveyance
delivered by or on behalf of the parties pursuant to this Agreement or in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the parties hereunder. The representations and
warranties of LinkSpot and ICOA and Merger Sub contained herein shall survive
the Closing Date until (and Claims based upon or arising out of such
representations and warranties may be asserted at any time before the date which
shall be) the date which is one year following the Closing Date (the "Expiration
Date"). No investigation made by any of the parties hereto shall in any way
limit the representations and warranties of the parties. On the Closing Date,
all representations and warranties contained in this Agreement and made by
LinkSpot shall expire as to LinkSpot and thereafter will be deemed to have been
made exclusively by the Preferred Shareholders. The termination of the
representations and warranties provided herein shall not affect the rights of a
party in respect of any Claim made by such party in a writing received by the
other party prior to the Expiration Date and otherwise made in accordance with
the terms of Article VII.
7.2 Indemnification.
(a) Indemnification by the Shareholders. The Preferred Shareholders shall
severally, and not jointly, indemnify, save and hold harmless ICOA and its
affiliates and its and their respective Representatives from and against any and
all costs, losses (including diminution in value), Taxes (including, but not
limited to, any Taxes or other costs or damages arising under, caused by or
related to Section 280G of the Code), liabilities, obligations, damages,
lawsuits, deficiencies, claims, demands, and expenses (whether or not arising
out of third-party claims), including interest, penalties, costs of mitigation,
losses in connection with any Environmental Law (including any clean-up or
remedial action), damages to the environment, attorneys' fees and all amounts
paid in investigation, defense or settlement of any of the foregoing, in each
case after taking into account any insurance proceeds received by the
indemnified Person and related tax benefits (herein, "Damages"), incurred in
connection with, arising out of, resulting from or incident to: (i) any breach
of any representation or warranty or the inaccuracy of any representation or
warranty made by LinkSpot in this Agreement, and (ii) any breach of any covenant
or agreement made by LinkSpot in this Agreement.
(b) Indemnification by ICOA. ICOA shall indemnify, save and hold harmless
the Preferred Shareholders and their affiliates and their respective
Representatives from and against any and all Damages incurred in connection
with, arising out of, resulting from or incident to: (i) any breach of any
representation or warranty or the inaccuracy of any representation or warranty,
made by ICOA or Merger Sub in this Agreement; and (ii) any breach of any
covenant or agreement made by ICOA or Merger Sub in this Agreement.
The term "Damages" as used in this Article VII is not limited
to matters asserted by third parties against an indemnified Person, but includes
Damages incurred or sustained by the indemnified Person in the absence of third
party claims. Payments by an indemnified Person of amounts for which it is
indemnified hereunder shall not be a condition precedent to recovery, provided
that with respect to matters asserted by third parties the payments made
pursuant to this Section 7.2 are fully applied to satisfy any such third party
claim.
32
(c) Procedure for Claims between Parties. If a claim for Damages is to be
made by a party entitled to indemnification hereunder (a "Claim"), the party
claiming such indemnification shall give written notice to the indemnifying
party as soon as practicable after the indemnified Person becomes aware of any
fact, condition or event which may give rise to Damages for which
indemnification may be sought under this Section 7.2. Any notice of a claim for
indemnification prior to the Expiration Date sought by ICOA under Section 7.2
shall be delivered to the Shareholder Representative and shall be further
subject to the requirements of Section 7.3. Any failure to submit any such
notice of claim to the indemnifying Person(s) shall not relieve such Person(s)
of any liability hereunder, except to the extent such Person(s) is actually
prejudiced by such failure.
(d) Defense of Third Party Claims. If any lawsuit or enforcement action is
filed against any indemnified Person, written notice thereof shall be given to
the indemnifying Person(s) as promptly as practicable (and in any event within
15 calendar days after the service of the citation or summons). The failure of
any indemnified Person to give timely notice hereunder shall not affect rights
to indemnification hereunder, except to the extent that the indemnifying
Person(s) demonstrate they were actually prejudiced by such failure. After such
notice, if the indemnifying Person(s) shall acknowledge in writing to the
indemnified Person that the indemnifying Person(s) shall be obligated under the
terms of its indemnity hereunder in connection with such lawsuit or action, then
the indemnifying Person(s) shall be entitled, if its so elects at its own cost,
risk and expense, (i) to take control of the defense and investigation of such
lawsuit or action, (ii) to employ and engage attorneys of their own choice to
handle and defend the same unless the named parties to such action or proceeding
include both an indemnifying Person and the indemnified Person and the
indemnified Person has been advised in writing by counsel that there may be one
or more legal defenses available to such indemnified Person that are different
from or additional to those available to the indemnifying Person(s), in which
event the indemnified Person shall be entitled, at the indemnifying Person(s)'s
cost, risk and expense, to separate counsel of its own choosing, and (iii) to
compromise or settle such claim, which compromise or settlement shall be made
only with the written consent of the indemnified Person, such consent not to be
unreasonably withheld. The indemnified Person shall cooperate in all reasonable
respects with the indemnifying Person(s) and its attorneys in the investigation,
trial and defense of such lawsuit or action and any appeal arising therefrom;
provided, however, that the indemnified Person may, at its own cost, participate
in the investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. The parties shall cooperate with each other in any
notifications to insurers. If the indemnifying Person fails to assume the
defense of such claim within 15 calendar days after receipt of the notice of
claim, the indemnified Person against which such claim has been asserted will
(upon delivering notice to such effect to the indemnifying Person) have the
right to undertake, at the indemnifying Person's cost, risk and expense, the
defense, compromise or settlement of such claim on behalf of and for the account
and risk of the indemnifying Person; provided, however, that such claim shall
not be compromised or settled without the written consent of the indemnifying
Person, which consent shall not be unreasonably withheld. If the indemnified
Person assumes the defense of the claim, the indemnified Person will keep the
indemnifying Person reasonably informed of the progress of any such defense,
compromise or settlement. The indemnifying Person shall be liable for any
settlement of any action effected pursuant to and in accordance with this
Section 7.2 and for any final judgment (subject to any right of appeal), and the
indemnifying Persons agree to indemnify and hold harmless an indemnified Person
from and against any Damages by reason of such settlement or judgment.
(e) Brokers and Finders. Pursuant to the provisions of this Section 7.2,
ICOA, on the one hand, and the Preferred Shareholders, on the other, shall
indemnify, hold harmless and defend the other from the payment of any and all
brokers' and finders' expenses, commissions, fees or other forms of compensation
which may be due or payable from or by the indemnifying party, or may have been
earned by any third party acting on behalf of the indemnifying party in
connection with the negotiation and execution hereof and the consummation of the
transactions contemplated hereby.
33
(f) Limitations.
(i) The obligation of the Preferred Shareholders to indemnify ICOA and the
other indemnified Persons under this Section 7.2 shall be ICOA's sole remedy
under this Agreement against the Preferred Shareholders in the absence of fraud
or willful misrepresentation, and the sole source for satisfaction of any and
all indemnifiable Claims asserted by ICOA against the Preferred Shareholders
shall be that portion of the Immediate Shares held by the Escrow Agent pursuant
to the terms and conditions of the Offset Escrow Agreement. For the avoidance of
doubt, (x) under no circumstances shall any Preferred Shareholder be monetarily
liable to ICOA or any other indemnified Person by virtue of this Agreement or
the transactions contemplated hereby, and (y) none of the shares of ICOA Common
Stock that TNS is to receive by virtue of the TNS Agreement (or the warrant
granted thereby) shall be a source for the satisfaction of any indemnifiable
Claim asserted by ICOA against the Preferred Shareholders.
(ii) Notwithstanding any provision hereof to the contrary, ICOA shall not
be entitled to recover for any Damages or deliver the first Offset Notice
pursuant to Section 7.3 hereof until such time as the Damages in the aggregate
reasonably claimed by ICOA exceed $40,000 (the "Damage Threshold"), at which
time ICOA shall be entitled to be indemnified against and compensated and
reimbursed only for Damages in excess of the Damage Threshold. Notwithstanding
any other provision hereof, no Preferred Shareholder shall be liable to ICOA for
indemnifiable Claims for more than his pro rata share of the Immediate Shares
held by the Escrow Agent, based on the number of Immediate Shares to which the
Preferred Shareholder is entitled as of the Effective Time, of any Damages.
(iii) In the event Immediate Shares are to be distributed to ICOA by the
Escrow Agent in satisfaction on an indemnifiable Claim asserted by ICOA against
the Preferred Shareholders, the number of Immediate Shares to be distributed to
ICOA shall be valued at the greater of $0.06 or the Closing Bid Price on the
first trading day prior to distribution.
(iv) The obligation of ICOA to indemnify the Preferred Shareholders and the
other indemnified Persons under this Section 7.2 shall be the sole remedy of the
Preferred Shareholders under this Agreement against ICOA in the absence of fraud
or willful misrepresentation.
7.3 Offset.
(a) ICOA shall have the right to make one or more Claims by delivering a
notice of such Claim (an "Offset Notice") to the Shareholder Representative and
the Escrow Agent prior to the Expiration Date. Each Offset Notice shall state
(i) sufficient facts relating to the offset so that the Shareholder
Representative may reasonably evaluate such Claim, (ii) ICOA's estimate of the
Indemnifiable Amount relating to such Claim, and (iii) a calculation of the
amount to be offset in connection with such Claim (the "Offset Amount"), taking
into account insurance, tax benefits and other relevant information.
(b) If the Shareholder Representative disputes either the validity, amount
or calculation of the Claim and the related Indemnifiable Amount and Offset
Amount, the Shareholder Representative shall give written notice of such dispute
to ICOA within 30 calendar days after delivery of the Offset Notice by ICOA to
the Shareholder Representative.
34
(c) If the Shareholder Representative fails to respond to the Offset Notice
within 30 calendar days after delivery thereof to the Shareholder
Representative, or if the Shareholder Representative notifies ICOA that there is
no dispute with respect to the Claim and the related Indemnifiable Amount and
Offset Amount, then ICOA shall send a notice stating such facts to the Escrow
Agent, with a copy sent to the Shareholder Representative, and the Escrow Agent
shall distribute such number of Immediate Shares to ICOA determined pursuant to
the terms of the Escrow Agreement.
(d) If the Shareholder Representative and ICOA reach an agreement with
respect to the proper determination of the Claim and the related Indemnifiable
Amount and Offset Amount, then ICOA and the Shareholder Representative shall
promptly send a joint notice stating such facts to the Escrow Agent, and the
Escrow Agent shall distribute such number of Immediate Shares to ICOA determined
pursuant to the terms of the Escrow Agreement.
(e) In the event that the Claim involves a third party and has not been
reduced to a liquidated amount, the Shareholder Representative and ICOA, in the
absence of an agreement with respect to the proper determination of the Claim
and the related Indemnifiable Amount and Offset Amount, may agree to defer such
determination until resolution of the Claim with the third party.
(f) Except with respect to a Claim the resolution of which is deferred
pursuant to Section 7.3(e), if the Shareholder Representative and ICOA are
unable to reach agreement with respect to the proper determination of the Claim
and the related Indemnifiable Amount and Offset Amount within 60 calendar days
after delivery by the Shareholder Representative of its response to the Offset
Notice, then either ICOA or the Shareholder Representative may seek
determination of the Indemnifiable Amount and Offset Amount pursuant to the
Escrow Agreement.
(g) Except with respect to a Claim the resolution of which is deferred
pursuant to Section 7.3(e) or (f), the Escrow Agent shall, promptly after the
Expiration Date, distribute to the Preferred Shareholders the shares held in
Escrow
7.4 No Right of Contribution. After the Closing, LinkSpot shall have no
liability to indemnify ICOA or any Preferred Shareholder on account of the
breach of any representation or warranty or the nonfulfillment of any covenant
or agreement of LinkSpot; and no Preferred Shareholder shall have any right of
contribution against LinkSpot (unless such claim for contribution relates to a
Liability of LinkSpot existing at or arising after the Closing Date and the
existence of such Liability does not breach any of LinkSpot's representations
and warranties contained herein).
ARTICLE VIII.
MISCELLANEOUS
8.1 Assignment; No Third Party Beneficiaries. Neither this Agreement nor
any of the rights or obligations hereunder may be assigned by LinkSpot without
the prior written consent of ICOA, or by ICOA or Merger Sub without the prior
written consent of LinkSpot. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Nothing herein expressed or implied shall give
or be construed to give to any Person, other than the parties hereto and such
successors and assigns and the Persons indemnified pursuant to Section 7.2
hereof, any legal or equitable rights hereunder.
8.2 Notices. All notices, requests, demands and other communications which
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by telecopy; the day after it is sent, if sent for
next day delivery to a domestic address by recognized overnight delivery service
(e.g., Federal Express); and upon receipt, if sent by certified or registered
mail, return receipt requested, as follows:
35
If to LinkSpot prior to Closing or to the Shareholder
Representative after Closing:
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Silver, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
If to ICOA, Merger Sub or, if after the Closing, to
LinkSpot:
ICOA, Inc.
Attn: CEO
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
8.3 Choice of Law. This Agreement shall be construed, interpreted and the
rights of the parties determined in accordance with the laws of the State of
Rhode Island except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party to or the subject of
this Agreement, and as to those matters the law of the jurisdiction under which
the respective entity derives its powers shall govern.
8.4 Entire Agreement; Amendments and Waivers. This Agreement, together with
all exhibits and schedules hereto, and the NDA (which the parties agree shall
terminate on the Closing Date), constitute the entire agreement among the
parties pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
8.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.6 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
36
8.7 Expenses. ICOA, LinkSpot and Merger Sub will each be liable for their
own expenses incurred in connection with the negotiation, preparation, execution
and performance of this Agreement and the transactions contemplated hereby.
Notwithstanding the foregoing, ICOA, LinkSpot and Merger Sub agree that all
expenses of LinkSpot in excess of $50,000 incurred in connection with the
negotiation, preparation, execution and performance of this Agreement and the
transactions contemplated hereby will be treated as an indemnifiable amount
under Article VII, subject to the limitations set forth in Section 7.2.
8.8 Publicity. Except as required by law or on advice of counsel, neither
party shall issue any press release or make any public statement regarding the
transactions contemplated hereby without the prior written approval of the other
party, and the parties hereto shall issue a mutually acceptable press release as
soon as practicable after the date hereof.
8.9 Legends.
(a) Each certificate representing the Immediate Shares shall be endorsed
with a legend in substantially the following form: "THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS
AND ARE "RESTRICTED SECURITIES" AS DEFINED UNDER RULE 144 PROMULGATED UNDER THE
ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED
EXCEPT (i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SHARES UNDER THE ACT, (ii) IN COMPLIANCE WITH RULE 144 OR (iii) PURSUANT TO AN
OPINION OF COUNSEL, SATISFACTORY TO ICOA, INC., THAT SUCH DISTRIBUTION OR
COMPLIANCE IS NOT REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION."
(b) ICOA, at its discretion, may cause stop transfer orders to be placed
with its transfer agent with respect to certificates representing the Immediate
Shares bearing the foregoing legend.
(c) Any legend endorsed on a certificate representing the Immediate Shares
and the stop transfer instructions with respect to such shares shall be removed,
and ICOA shall issue a certificate without such legend to the holder of such
shares if (i) such shares are sold or otherwise disposed of pursuant to an
effective registration statement under the Securities Act, (ii) the holder of
such shares has met the requirements for transfer of Rule 144(k) of the
Securities Act or (iii) the holder of such shares provides to ICOA an opinion of
counsel, which shall be satisfactory to ICOA, that such sale, offer or
distribution is otherwise exempt from registration under the Securities Act.
37
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf by its officer thereunto duly
authorized, and, as to the corporate authorization of this agreement by ICOA,
Merger Sub and LinkSpot, we so swear under penalties of perjury, as of the day
and year first above written.
ICOA, INC.,
a Nevada corporation
By: ____________________________ Attested by:______________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇., Secretary
President
ICOA PUBLIC SERVICES, INC.,
a Nevada corporation
By: ____________________________ Attested by:______________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇., Secretary
President
LINKSPOT NETWORKS, INC.,
a Maryland corporation
By: ___________________________ Attested by:______________________________
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Secretary
President
38
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS.......................................................1
1.1 Defined Terms..............................................1
1.2 Other Defined Terms........................................6
1.3 Interpretation Provisions..................................7
ARTICLE II. THE MERGER; CONVERSION OF SHARES.................................7
2.1 Filings....................................................7
2.2 Merger.....................................................8
2.3 Directors and Officers.....................................8
2.4 Conversion of Securities...................................8
2.5 Immediate Consideration....................................9
2.6 Exchange of Certificates...................................9
2.7 Certificate Not Surrendered by Holders....................10
2.8 No Transfers After the Effective Time.....................10
2.9 Dissenting Shareholders...................................10
2.10 Taking of Necessary Action; Further Action................10
2.11 LinkSpot Securities.......................................11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF LINKSPOT.....................11
3.1 Organization of LinkSpot..................................11
3.2 Capitalization of LinkSpot................................11
3.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇.........................................12
3.4 Authorization.............................................13
3.5 Officers and Directors....................................13
3.6 Bank Accounts.............................................13
3.7 Subsidiaries, Etc.........................................13
3.8 Absence of Certain Changes or Events......................13
3.9 Title to Assets...........................................15
3.10 Sufficiency of Assets.....................................16
3.11 Fixtures and Equipment....................................16
3.12 Contracts.................................................16
3.13 No Conflict or Violation; Consents........................17
3.14 Permits...................................................18
3.15 Financial Statements; Books and Records...................18
3.16 Liabilities...............................................19
3.17 Litigation................................................19
3.18 Labor Matters.............................................19
3.19 Employee Benefit Plans....................................20
3.20 Transactions with Related Parties and Shareholders........22
3.21 Compliance with Law.......................................23
3.22 Intellectual Property.....................................23
3.23 Tax Matters...............................................24
3.24 Insurance.................................................26
3.25 Accounts Receivable.......................................26
3.26 Inventory.................................................26
3.27 Purchase Commitments and Outstanding Bids.................26
3.28 Payments..................................................27
3.29 Customers, Suppliers and Competitors......................27
3.30 Environmental Matters.....................................27
3.31 Brokers; Transaction Costs................................28
3.32 No Other Agreements to Sell LinkSpot or the Assets........28
3.33 Material Misstatements or Omissions.......................29
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF ICOA AND MERGER SUB...........29
4.1 Organization..............................................29
4.2 Authorization.............................................29
4.3 No Conflict or Violation; Consents. ......................30
4.4 No Brokers................................................30
4.5 Litigation................................................30
4.6 ICOA Common Stock.........................................30
4.7 SEC Documents.............................................30
4.8 Compliance with Law.......................................31
4.9 Liabilities...............................................31
ARTICLE V. [RESERVED].......................................................31
ARTICLE VI. ACTIONS BY LINKSPOT, ICOA AND MERGER SUB AFTER CLOSING..........31
6.1 Books and Records; Tax Matters............................31
6.2 Closing Delivery..........................................31
ARTICLE VII. SURVIVAL; INDEMNIFICATION......................................32
7.1 Survival of Representations...............................32
7.2 Indemnification...........................................32
7.3 Offset....................................................34
7.4 No Right of Contribution..................................35
ARTICLE VIII. MISCELLANEOUS.................................................35
8.1 Assignment; No Third Party Beneficiaries..................35
8.2 Notices...................................................35
8.3 Choice of Law.............................................36
8.4 Entire Agreement; Amendments and Waivers..................36
8.5 Counterparts..............................................36
8.6 Expenses..................................................36
8.7 Publicity.................................................37
8.8 Legends...................................................37
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TABLE OF EXHIBITS
Exhibit A Form of Employment Agreement
Exhibit B Form of Offset Escrow Agreement
Exhibit C Form of Registration Rights and Shareholder
Agreement
SCHEDULES
1.1(a) LinkSpot Financial Statements
2.3 Directors and Officers of Surviving
Corporation
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ - President and Director
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. - Vice President and
Director
3.1 - 3.31 LinkSpot Disclosure Schedule