AGREEMENT AND PLAN OF MERGER BY AND BETWEEN NEW WORLD BRANDS, INC., and QUALMAX, INC. Dated as of February 18, 2008
Exhibit
10.1
AGREEMENT
AND PLAN OF MERGER
BY
AND BETWEEN
NEW
WORLD BRANDS, INC.,
and
QUALMAX,
INC.
Dated
as of February 18, 2008
AGREEMENT
AND PLAN OF MERGER
This
AGREEMENT AND PLAN OF MERGER, dated as of February 18, 2008 (this “Agreement”), is by
and between New World Brands, Inc., a Delaware corporation (“the Company”), and
Qualmax, Inc., a Delaware corporation (“Qualmax”).
RECITALS
The
Company and Qualmax are parties to that certain Asset Purchase Agreement dated
as of June 22, 2006, as amended on August 28, 2006 (the “Purchase Agreement”),
pursuant to which, at a closing that took place on September 15, 2006, among
other things, the Company acquired all of the assets of Qualmax in exchange for
the assumption of Qualmax’s liabilities and the issuance to Qualmax of 100
shares of the Company’s Series A Convertible Preferred Stock, par value $0.01
per share, which shares of Preferred Stock were converted into 298,673,634
shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) on
April 24, 2007 upon the filing of a Certificate of Amendment to the Company’s
certificate of incorporation with the Secretary of State of the State of
Delaware.
The board
of directors of the Company and Qualmax have each determined that it is
advisable and in their best interests, and in the best interests of their
respective stockholders, and consistent with and in furtherance of their
respective business strategies and goals, for Qualmax to merge with and into the
Company upon the terms and subject to the conditions set forth herein (the
“Merger”) and
in accordance with the applicable provisions of the Delaware General Corporation
Law (the “DGCL”), with the
Company being the surviving corporation in the Merger.
The
Company and Qualmax intend, by approving resolutions authorizing this Agreement,
to adopt this Agreement as a plan of reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder (the “Code”) and that the
transactions contemplated by this Agreement be undertaken pursuant to such
plan.
Pursuant
to the Merger, each issued and outstanding share of common stock, par value
$0.001 per share, of Qualmax (the “Qualmax Stock”)
immediately prior to the effective time of the Merger, shall be converted into
the right to receive shares of Common Stock of the Company, upon the terms and
subject to the conditions set forth herein.
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained, and intending to be legally bound hereby, the
Company and Qualmax hereby agree as follows:
ARTICLE
I
DEFINITIONS
SECTION
1.01. Defined
Terms. For purposes of this Agreement, the following terms
shall have the following meanings:
“Adjusted Stock Right”
is defined in Section
6.07(a).
“Affiliates”, with
respect to any Person, means a Person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned Person. For the purpose of the definition
of Affiliate, the term “control” (including the terms “controlling” and
“controlled”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
“Agreement” is defined
in the Preamble.
“Certificate of
Merger” is defined in Section
2.02.
“Certificates” is
defined in Section
2.06(e).
“Code” is defined in
the Recitals.
“Company” is defined
in the Preamble.
“Company Charter
Documents” is defined in Section
4.02.
“Company Stock Rights”
is defined in Section
4.03(a).
“Company Rights
Agreements” is defined in Section
4.03(a).
“Common Stock” is
defined in the Recitals.
“DGCL” is defined in
the Recitals.
“Effective Time” is
defined in Section
2.02.
“Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the SEC thereunder.
“Exchange Agent” is
defined in Section
2.07(a).
“Exchange Ratio” is
defined in Section
2.06(a).
“Governmental
Authority” is defined in Section
3.05(b).
“knowledge” means,
with respect to any matter in question, the actual knowledge at any time of the
executive officers of Qualmax or the Company, as the case may be.
“Material Adverse
Effect” means, (i) with respect to Qualmax, any event, change, cause,
effect or circumstance which has a material adverse effect on the business,
assets (including intangible assets), financial condition or results of
operations of Qualmax, taken as whole, and (ii) with respect to the Company, any
event, change, cause, effect or circumstance which has a material adverse effect
on the business, assets (including intangible assets), financial condition or
results of operations of the Company and/or its subsidiaries, taken as whole;
provided, however, that each of
the following shall be excluded from the definition of Material Adverse Effect
and from any determination as to whether a Material Adverse Effect has occurred
or may occur: changes, effects or circumstances, that are applicable
to (A) the industry generally in which Qualmax or the Company, as the case may
be, operates, (B) the United States securities markets generally,
(C) personnel and other changes customarily attendant to transactions of
the type contemplated by this Agreement, including, without limitation, any
disruption of customer, supplier or employee relationships, and (D) general
changes in economic, regulatory or political conditions generally, in the case
of (A) and (D) above, to the extent that the relevant change does not have a
materially disproportionate impact on it as compared to other similarly situated
companies in similar industries.
“Merger” is defined in
the Recitals.
“Merger Consideration”
is defined in Section
2.07(b).
“Merger Proposals”
means proposals for: (1) the approval and authorization of this
Agreement and any related agreements, instruments or certificates; and (2) the
approval and authorization of the consummation of the transactions contemplated
by this Agreement, including, without limitation, the Merger.
“Qualmax” is defined
in the Preamble.
“Qualmax Charter
Documents” is defined in Section
3.02.
“Qualmax Preferred
Stock” is defined in Section
3.03.
“Qualmax Stock” is
defined in the Recitals.
“Qualmax Stock Rights”
is defined in Section
2.06(c).
“Qualmax Stock Right
Agreements” is defined in Section
2.06(c).
“Person” means an
individual, corporation, partnership, association, trust, unincorporated
organization, other entity or group (as defined in Section 13(d)(3) of the
Exchange Act).
“Post-Acquisition SEC
Documents” is defined in Section
4.07(b).
“SEC” means the United
States Securities and Exchange Commission.
“Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations of the SEC
thereunder.
“subsidiary” or “subsidiaries” of
Qualmax, the Company or any other Person means any corporation, partnership,
joint venture or other legal entity of which Qualmax, the Surviving Corporation,
the Company or such other Person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, more than 50%
of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
“Surviving
Corporation” is defined in Section
2.01.
“Termination Date” is
defined in Section
8.01(b).
When
reference is made in this Agreement to Qualmax or the Company, such reference
shall include their respective subsidiaries, as and to the extent the context so
requires, whether or not explicitly stated in this Agreement.
ARTICLE
II
THE
MERGER
SECTION
2.01. The
Merger. Upon the terms and subject to the conditions set forth
in this Agreement and in accordance with the DGCL, at the Effective Time,
Qualmax and the Company shall consummate the Merger pursuant to which (a)
Qualmax shall be merged with and into the Company and the separate existence of
Qualmax shall thereupon cease, (b) the Company shall continue as the surviving
corporation in the Merger (hereinafter sometimes referred to as the “Surviving
Corporation”) and shall continue to be governed by the DGCL and (iii) the
separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the
Merger
SECTION
2.02. Closing; Effective
Time.
(a) Unless
this Agreement shall have been terminated and the transactions herein
contemplated hereunder shall have been abandoned pursuant to Section
8.01 hereof, the consummation of the transactions contemplated
by this Agreement (the “Closing”) shall take
place remotely at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP located
at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 3:00 p.m. (NY time),
as promptly as practicable after the satisfaction or waiver of the conditions
set forth in Article
VII. The date on which the Closing actually takes place is
referred to in this Agreement as the “Closing
Date.”
(b) Immediately
prior to the Closing, Qualmax and the Company shall duly execute a certificate
of merger (the “Certificate of
Merger”) and file such Certificate of Merger with the Secretary of State
of Delaware in accordance with the DGCL. The Merger shall become
effective at 11:59 p.m. (NY time) on the date of the filing of the Certificate
of Merger with the Secretary of State of Delaware or such other date as may be
mutually agreed between Qualmax
and the
Company and included in the Certificate of Merger (the “Effective Time” and
the day that includes the Effective Time the “Effective
Date”).
SECTION
2.03. Effect of the
Merger. The Merger shall have the effect set forth in this
Agreement and in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all of the properties, rights, privileges, powers and franchises of
Qualmax and the Company shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Qualmax and the Company shall become the debts,
liabilities and duties of the Surviving Corporation, all as provided under the
DGCL
SECTION
2.04. Certificate of
Incorporation; Bylaws. At the Effective Time, the certificate
of incorporation of the Company (the “Certificate of
Incorporation”), as in effect immediately prior to the Effective Time,
shall be, upon effectiveness of the Merger, the certificate of incorporation of
the Surviving Corporation until thereafter amended as provided by applicable law
and by the terms of such Certificate of Incorporation. The by-laws of
the Company, as in effect immediately prior to the Effective Time (the “By-Laws”), shall be,
upon effectiveness of the Merger, the by-laws of the Surviving Corporation until
thereafter amended as provided by applicable law.
SECTION
2.05. Directors and
Officers. The directors of the Company immediately prior to
the Effective Time shall be the directors of the Surviving Corporation, each to
hold office in accordance with the Certificate of Incorporation and By-laws of
the Surviving Corporation, and the officers of the Company immediately prior to
the Effective Time shall be the officers of the Surviving Corporation, in each
case until their respective successors are duly elected or appointed and
qualified.
SECTION
2.06. Effect on Capital
Stock. At the Effective Time, by virtue of the Merger and
without any action on the part of the Company, Qualmax or the holders of any
securities of Qualmax:
(a) Conversion of
Securities. Each share of Qualmax Stock issued and outstanding
immediately prior to the Effective Time (excluding any shares of Qualmax Stock
to be canceled pursuant to Section 2.06(b)
hereof) shall be converted, subject to Sections 2.06(e) and
(f) hereof,
into a number of shares of Common Stock determined by dividing (x) the total
number of shares of Qualmax Stock issued and outstanding immediately prior to
the Effective Time by (y) the total number of shares of Common Stock owned by
Qualmax immediately prior to the Effective Time (such ratio, the “Exchange Ratio”), and
except as provided in Section 2.06(c)
hereof, and any other shares of capital stock or options, warrants or other
securities convertible or exercisable into shares of capital stock of Qualmax,
whether vested or unvested, shall automatically be cancelled and retired and
shall cease to exist.
(b) Cancellation. At the
Effective Time, each share of Qualmax Stock held in the treasury of Qualmax
immediately prior to the Effective Time shall cease to be outstanding, be
canceled and retired without payment of any consideration therefor, and shall
cease to exist.
(c) Stock Options and
Warrants. At the Effective Time, those options or warrants to
purchase shares of Qualmax Stock (collectively, the “Qualmax Stock
Rights”) listed on Schedule 6.07 hereto
(collectively, the “Qualmax Stock Right
Agreements”), shall be treated in accordance with Section 6.07
hereof.
(d) Adjustments to Exchange
Ratio. The Exchange Ratio, the Merger Consideration and any
other relevant amounts and terms in this Agreement shall be appropriately
adjusted to reflect fully the effect of: any stock split, reverse
split, or stock dividend (including any dividend or distribution of securities
convertible into Common Stock); or any reorganization, recapitalization,
reclassification, readjustment, split up, combination or exchange of shares, or
other like event with respect to the Common Stock, in any case occurring after
the date hereof and prior to the Effective Time.
(e) Fractional shares of Common
Stock. No certificates or scrip representing less than one (1)
share of Common Stock shall be issued in exchange for shares of Qualmax Stock
upon the surrender for exchange of a certificate which immediately prior to the
Effective Time represented issued and outstanding shares of Qualmax Stock (the
“Certificates”). In
lieu of any such fractional share, each holder of shares of Qualmax Stock issued
and outstanding immediately prior to the Effective Time who would otherwise have
been entitled to fractional shares of Common Stock upon surrender of
Certificates for exchange shall have his, her or its shares aggregated and each
fractional share resulting from such aggregation shall be rounded up to the
nearest whole share and no cash payment shall be made.
SECTION
2.07. Exchange of shares of
Qualmax Stock.
(a) Exchange
Agent. The Company shall cause to be supplied to or for such
bank or trust company as shall be designated by the Company and shall be
reasonably acceptable to Qualmax (the “Exchange Agent”), in
trust for the benefit of the holders of shares of Qualmax Stock, as needed for
exchange in accordance with this Section 2.07 through
the Exchange Agent, the shares of Common Stock deliverable pursuant to Section 2.06(a)
hereof.
(b) Exchange
Procedures.
(i) As
soon as reasonably practicable after the Effective Time, the Company will cause
the Exchange Agent to mail to each holder of record of Certificates (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as the Company may reasonably specify and as are consistent with the
terms of this Agreement), and (ii) instructions to effect the surrender of the
Certificates in exchange for the shares of Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, and such other customary documents as
may be required pursuant to such instructions, the holder of such Certificate
shall be entitled to receive, in exchange therefore, that number of whole shares
of Common Stock which such holder has the right to receive in accordance with
Section 2.06(a)
hereof in respect of the shares of Qualmax Stock formerly evidenced by such
Certificate(s) and (the Common Stock being referred to as the “Merger
Consideration”).
(ii) The
holder of such Certificate, upon exchange for shares of Common Stock, shall also
receive any dividends or other distributions to which such holder is entitled
pursuant to Section
2.07(c). Certificates surrendered shall forthwith be canceled
following the Effective Time. In the event of a transfer of ownership
of shares of Qualmax Stock which is not registered in the transfer records of
Qualmax as of the Effective Time, the Merger Consideration, dividends and
distributions may be issued and paid in accordance with this Article II to a
transferee if the Certificate evidencing such shares of Qualmax Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer pursuant to this Section 2.07(b) and
by evidence that any applicable stock transfer taxes have been
paid. Until so surrendered, each outstanding Certificate that, prior
to the Effective Time, represented shares of Qualmax Stock will be deemed from
and after the Effective Time, for all corporate purposes other than the payment
of dividends or other distributions, to evidence the ownership of the number of
whole shares of Common Stock into which such shares of Qualmax Stock shall have
been so converted under Section 2.06
hereof.
(iii) Shares
of Qualmax Stock held at the Effective Time in book-entry form shall be
exchanged for Merger Consideration in accordance with the customary procedures
of The Depository Trust Company.
(c) Distributions with Respect
to Unexchanged shares of Qualmax Stock. No dividends or other
distributions declared or made after the Effective Time with respect to shares
of Common Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the Common Stock that
such holder is entitled to receive, unless and until the holder of such
Certificate shall surrender such Certificate in accordance with the provisions
of Section
2.07(b). Subject to applicable law, following surrender of any
such Certificate, there shall be paid to the record holder of the whole shares
of Common Stock issued in exchange therefor, without interest, (i) at the time
of such surrender, the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole shares
of Common Stock, and (ii) on the applicable payment date, the amount of
dividends or other distributions with a record date after the Effective Time not
yet paid on the date of surrender of such Certificate to be paid with respect to
such whole shares of Common Stock.
(d) Transfers of
Ownership. If any shares of Common Stock are to be delivered
in a name other than that in which the Certificate surrendered in exchange
therefor is registered, it will be a condition of the delivery thereof that the
Certificate so surrendered shall be properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange shall have paid
to the Company or any agent designated by it any transfer or other taxes
required by reason of the delivery of Common Stock in any name other than that
of the registered holder of the Certificate surrendered, or shall have
established to the satisfaction of the Company or any agent designated by it
that such tax has been paid or is not payable.
(e) Escheat. The
Company, Qualmax and their respective affiliates shall not be liable to any
holder of Common Stock for any Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
(f) Withholding
Rights. The Exchange Agent shall be entitled to deduct and
withhold from the Merger Consideration otherwise payable pursuant to this
Agreement to any holder of shares of Common Stock, and from any cash dividends
or other distributions that such holder is entitled to receive under Section 2.07(c), such
amounts as the Exchange Agent is required to deduct and withhold with respect to
the making of such payment under the Code, and the rules and regulations
promulgated thereunder, or any provision of federal, state, local or non-United
States tax law. To the extent that amounts are so withheld by the
Exchange Agent, such portion of the Merger Consideration and other such amounts
payable under Section
2.07(c) that are withheld shall be treated for all purposes of this
Agreement as having been received by the holder of the shares of Qualmax Stock
in respect of which such deduction and withholding was made by the Exchange
Agent.
(g) Undistributed Merger
Consideration. Any portion of the shares of Common Stock and
the cash or other property in respect of dividends or other distributions that
the holder is entitled to receive under Section 2.07(c)
supplied to the Exchange Agent which remains undistributed to the holders of the
Certificates one (1) year after the Effective Time shall be delivered to the
Company, upon demand, and any holders of Certificates who have not theretofore
complied with this Section 2.07 shall
thereafter look only to the Company for payment of their claim for Merger
Consideration and any dividends or distributions with respect to shares of
Common Stock.
SECTION
2.08. Stock Transfer
Books. At the Effective Time, the stock transfer books of
Qualmax shall be closed, and there shall be no further registration of transfers
of Qualmax Stock thereafter on the records of Qualmax.
SECTION
2.09. No Further Ownership Rights
in Common Stock. The Merger Consideration and distributions, if any,
pursuant to Section
2.07(c) delivered upon the surrender for exchange of shares of Qualmax
Stock in accordance with the terms hereof shall be deemed to have been issued in
full and complete satisfaction of all rights pertaining to such shares of
Qualmax Stock, and there shall be no further registration of transfers on the
records of the Surviving Corporation of shares of Qualmax Stock which were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article
II.
SECTION
2.10. Lost, Stolen or Destroyed
Certificates. In the event any Certificates shall have been
lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed Certificates, upon the making of an affidavit of that
fact by the holder thereof, such Merger Consideration and any dividends or other
distributions as may be required pursuant to this Article II; provided, however, that the
Company may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against the Company or the Exchange Agent with respect to
the Certificates alleged to have been lost, stolen or destroyed.
SECTION
2.11. Tax
Consequences. The parties hereto intend that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of the
Code. The parties hereto hereby adopt this Agreement as a “plan of
reorganization” within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
SECTION
2.12. Dissenting
Shares.
(a) Notwithstanding
any provision of this Agreement to the contrary, any shares of Qualmax Stock
held by a holder who has demanded and perfected appraisal or dissenters’ rights
for such shares in accordance with the DGLC and who, as of the Effective Time,
has not effectively withdrawn or lost such appraisal or dissenters' rights
(“Dissenting
Shares”) shall not be converted into or represent a right to receive
shares of Common Stock pursuant to Section 2.06, but the
holder thereof shall only be entitled to such rights as are granted by
DGCL.
(b) Notwithstanding
the provisions of subsection (a), if any holder of shares of Qualmax Stock who
demands appraisal of such shares under the DGCL shall effectively withdraw or
lose (through failure to perfect or otherwise) the right to appraisal, then, as
of the later of the Effective Time and the occurrence of such event, such
holder’s shares shall automatically be converted into and represent only the
right to receive the shares of Common Stock as provided in Section 2.06, without
interest thereon, upon surrender of the Certificate representing such
shares.
(c) Qualmax
shall give the Company (i) prompt notice of any written demands for appraisal of
any shares of Qualmax Stock, withdrawals of such demands, and any other
instruments served pursuant to the DGCL and received by Qualmax and (ii) Qualmax
agrees that, except with the prior written consent of the Company, or as
required under the DGCL, it will not make any payment with respect to, or settle
or offer to settle any claim, demand, or other liability with respect to any
Dissenting Shares.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF QUALMAX
Qualmax
hereby represents and warrants to the Company, as of the date hereof and as of
the Closing Date, except as set forth on the written disclosure schedules
delivered by Qualmax, as follows:
SECTION
3.01. Organization and
Qualification.
(a) Qualmax
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate or other power and
authority necessary to own, lease or operate the properties it owns, leases or
operates and to carry on its business as it is now being conducted.
(b) Qualmax
is duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business activities makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect.
(c) Other
than the shares of Common Stock, Qualmax does not own any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other Person.
SECTION
3.02. Certificate of Incorporation
and By-laws. The certificate of incorporation and bylaws of Qualmax (the
“Qualmax Charter
Documents”) are in full force and effect. Except as set forth
in Schedule 3.02 or as
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, Qualmax is not in violation of any of the provisions of
the Qualmax Charter Documents.
SECTION
3.03. Capitalization. The
authorized capital stock of Qualmax consists of 40,000,000 shares of Common
Stock and 100 shares of preferred stock, par value $0.001 per share (the
“Qualmax Preferred
Stock”). As of the date hereof, (i) 21,625,392 shares of
Common Stock are issued and outstanding, all of which are validly issued, fully
paid and nonassessable (excluding treasury shares which are issued but not
outstanding, all of which are not entitled to vote), and none of which has been
issued in violation of preemptive or similar rights, and (ii) no shares of
Qualmax Preferred Stock are issued and outstanding.
SECTION
3.04. Authorization; Binding
Agreement.
(a) Qualmax
has all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, subject to the
requisite approval of Qualmax’s stockholders in accordance with the DGCL. The
execution and delivery of this Agreement by Qualmax and the consummation of the
transactions contemplated hereby by Qualmax has been duly and validly authorized
by all necessary corporate action on the part of Qualmax, and no other action on
the part of Qualmax or, the knowledge of Qualmax, any other Person (other than
the approval of Qualmax stockholders), is necessary to authorize the execution,
delivery and performance of this Agreement or to consummate the transactions
contemplated hereby by Qualmax. This Agreement has been duly and validly
executed and delivered by Qualmax. This Agreement constitutes
(assuming this Agreement has been duly authorized, executed and delivered by the
Company) a valid and binding obligation of Qualmax, enforceable against Qualmax
in accordance with its terms, except as limited by (a) applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally from time to time in effect and (b)
the availability of equitable remedies (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(b) At
a meeting duly called and held, or by written consent in lieu of meeting, the
board of directors of Qualmax unanimously (i) determined that it is advisable
and in
the best
interest of Qualmax and its stockholders for Qualmax to enter into this
Agreement and to consummate the Merger upon the terms and subject to the
conditions of this Agreement, (ii) approved this Agreement in accordance with
the applicable provisions of the DGCL, and (iii) recommended the approval of
this Agreement by holders of shares of Qualmax Stock and directed that this
Agreement be submitted for consideration and approval by the requisite vote of
the Qualmax stockholders.
SECTION
3.05. No Conflict; Required
Filings and Consents.
(a) The
execution and delivery of this Agreement by Qualmax does not, the performance of
this Agreement by Qualmax and the consummation by Qualmax of the transactions
contemplated hereunder, will not (with or without notice or lapse of time or
both), (i) conflict with or violate the Qualmax Charter Documents, (ii) assuming
compliance with the matters referred to in Section 3.05(b),
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Qualmax or by which its properties are bound, or (iii) result
in any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or impair Qualmax’s rights or
alter the rights or obligations of any third party under, or give to others any
rights of, or cause any, termination, amendment, redemption, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on
(including a right to purchase) any of the properties or assets of Qualmax
pursuant to, any note, bond, mortgage, indenture, credit facility, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Qualmax is a party or by which Qualmax’s properties is bound, except,
in the case of clause (ii) or (iii), for any such conflicts, violations,
breaches, defaults or other occurrences that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect.
(b) The
execution and delivery of this Agreement by Qualmax does not, and the
performance of this Agreement by Qualmax will not, require Qualmax to make, seek
or obtain any consent, approval, authorization or permit of, or filing with or
notification to, any governmental, administrative or regulatory authority,
agency or commission, domestic or foreign (each, a “Governmental
Authority”) or any other Person, except (i) for the filing and
recordation of appropriate merger or other documents as required by the DGCL,
(ii) any filings required to be made in connection with the issuance of the
shares of Common Stock to the stockholders of Qualmax pursuant to Section 2.06 hereof
pursuant to, or in compliance with, the Securities Act, (iii) as disclosed on
Schedule 3.05(b), (iv)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, or (v) as
to which any necessary consents, approvals, authorizations, permits, filings or
notifications have heretofore been obtained or filed, as the case may be, by
Qualmax.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company hereby represent and warrant to Qualmax, as of the date hereof and as of
the Closing Date, except as set forth in the disclosure schedules, as
follows:
SECTION
4.01. Organization and
Qualification.
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate or other
power and authority necessary to own, lease or operate the properties it owns,
leases or operates and to carry on its business as it is now being
conducted.
(b) The
Company is duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business
activities makes such qualification or licensing necessary, except where the
failure to be so duly qualified or licensed and in good standing would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
SECTION
4.02. Certificate of Incorporation
and By-laws. The Certificate of Incorporation and By-laws (the “Company Charter
Documents”) are in full force. Except as would not reasonably
be expected materially to interfere with its operations, the Company is not in
violation of any of the provisions of the Company Charter
Documents.
SECTION
4.03. Capitalization.
(a) The
authorized capital stock of the Company consists of 600,000,000 shares of Common
Stock and 1,000 shares of preferred stock, par value $0.01 per share (the “Preferred
Stock”). As of the date hereof (i) 414,979,673 shares of
Common Stock are issued and outstanding, all of which are duly authorized,
validly issued, fully paid and non-assessable, and none of which have been
issued in violation of preemptive or similar rights; (ii) no shares of the
Preferred Stock are issued and outstanding; and (iii) shares of Common Stock are
issuable upon exercise of outstanding stock options, warrants and SARs
(collectively, “Company Stock
Rights”) issued under any stock plans or other agreements of the Company
(collectively, the “Company Rights
Agreements”).
(b) The
Common Stock to be delivered as Merger Consideration will be, upon issuance in
accordance with the terms of this Agreement, duly authorized, validly issued and
fully paid and nonassessable, and the issuance thereof will not be subject to
any preemptive or other similar right.
SECTION
4.04. Authorization; Binding
Agreement.
(a) The
Company has all requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby, subject
to the requisite approval of the Company’s stockholders in accordance with the
DGCL. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby has been
duly and validly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the
part of
the Company is necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than the approval of this Agreement and the
Merger in accordance with the DGCL, the Company Charter Documents, the rules of
the NASD, and the filings and recording of appropriate merger documents as
required by the DGCL). This Agreement constitutes (assuming this
Agreement has been duly authorized, executed and delivered by Qualmax) a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as limited by (a) applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally from time to time in effect and (b)
the availability of equitable remedies (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(b) At
a meeting duly called and held, or by written consent in lieu of meeting, the
board of directors of the Company has (i) determined that it is advisable and in
the best interest of the Company and its stockholders for the Company to enter
into this Agreement and to consummate the Merger upon the terms and subject to
the conditions of this Agreement, (ii) approved this Agreement in accordance
with the applicable provisions of the DGCL, and (iii) recommended the approval
of this Agreement by the Company’s stockholders and directed that this Agreement
be submitted for consideration and approval by the requisite vote of the
Company’s stockholders.
SECTION
4.05. No
Conflicts.
(a) The
execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company will not (with or without notice or
lapse of time or both) (i) conflict with or violate the Company Charter
Documents, (ii) assuming compliance with the matters referred to in Section 4.05(b),
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which its or any of
their respective properties is bound, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair, in any material respect, the Company’s
or any of its subsidiaries’ rights or alter the rights or obligations of any
third party under, or give to others any rights of, or cause any, termination,
amendment, redemption, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on (including a right to purchase) any of the
properties or assets of the Company or any of its subsidiaries pursuant to, any
note, bond, mortgage, indenture, credit facility, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties is bound, except,
in the case of clause (ii) or (iii), for any such conflicts, violations,
breaches, defaults or other occurrences that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect.
(b) The
execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company will not, require the Company or
any of its subsidiaries to make or seek any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority, except
(i) for applicable requirements, if any of the Securities Act, the Exchange Act,
state securities laws and the NASD and the filing and recordation of appropriate
merger or other documents as required by the DGCL, (ii) any filings
required
to be made by the Company in connection with the issuance of the shares of
Common Stock to the stockholders of Qualmax pursuant to Section 2.06 hereof
pursuant to, or in compliance with, the Securities Act, (iii) where the failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect; or (iv) as to which any
necessary consents, approvals, authorizations, permits, filings or notifications
have heretofore been obtained or filed, as the case may be, by the
Company.
ARTICLE
V
CONDUCT
OF BUSINESS PENDING THE MERGER
SECTION
5.01. Conduct of Business Pending
the Merger. Each of Qualmax and the Company covenants and
agrees that, during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time,
unless the other shall otherwise agree in writing, and except as set forth in
Schedule 5.01 or as
required by law with advance notification to the other, it shall (a) conduct its
business and shall cause the businesses of its subsidiaries to be conducted only
in, and it and its subsidiaries shall not take any action except in, the
ordinary course of business and in a manner consistent with past practice and
(b) use commercially reasonable efforts to preserve substantially intact its and
its subsidiaries’ business organization, to keep available the services of its
and its subsidiaries’ present officers, employees and consultants and to
preserve its and its subsidiaries’ present relationships with customers,
suppliers and other Persons with which it or any of its subsidiaries has
significant business relations. By way of amplification and not
limitation, except as contemplated by this Agreement, as set forth in Schedule 5.01 or as required
by law with advance notification to the other, neither Qualmax nor the Company
shall, during the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, directly
or indirectly do, or publicly propose to do, any of the following without the
consent or ratification of the other:
(a) amend or
otherwise change the Qualmax Charter Documents or the Company Charter Documents,
as applicable;
(b) sell,
pledge, dispose of or encumber any assets of Qualmax or the Company, as
applicable, or any of its subsidiaries except for (i) sales of assets in the
ordinary course of business and in a manner consistent with past practice and
(ii) dispositions of obsolete or worthless assets;
(c) (i)
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; or (ii) except as required by the
terms of any security as in effect on the date hereof, amend the terms or change
the period of exercisability of, purchase, repurchase, redeem or otherwise
acquire, or permit any subsidiary to amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire, any of its
securities or any securities of its subsidiaries, including, without limitation,
shares of Common Stock or Qualmax
Stock, as
applicable, or any option, warrant or right, directly or indirectly, to acquire
any such securities;
(d) except as
provided in an existing obligation of Qualmax or the Company, as applicable, and
in accordance with such obligations, (i) increase the compensation, benefits or
severance payable or to become payable to its directors, officers, employees or
consultants, except for increases in salary or wages of employees in accordance
with past practices, (ii) grant any severance or termination pay to, or enter
into or amend any employment or severance agreement, with any current or
prospective employee, except for new hire employees in the ordinary course of
business, (iii) enter into any contract with any director, officer or employee,
(iv) accelerate the payment of compensation or benefits to any director,
officer, employee or consultant except as required by applicable law and
agreements in effect as of the date of this Agreement, (v) grant any option or
other equity awards to any director, officer, employee or consultant except
pursuant to agreements in effect as of the date of this Agreement or (iv)
establish, adopt, enter into or amend any collective bargaining agreement,
benefit plan, including, without limitation, any plan that provides for the
payment of bonuses or incentive compensation, trust, fund, policy or arrangement
for the benefit of any current or former directors, officers, employees or
consultants or any of their beneficiaries, except, in each case, as may be
required by law or as would not result in a material increase in the cost of
maintaining such collective bargaining agreement, benefit plan, trust, fund,
policy or arrangement;
(e) purchase
any capital assets or make any capital expenditures other than those purchased
or made in the ordinary course of business and consistent with past
practice;
(f) take any
action to change accounting policies or procedures (including, without
limitation, procedures with respect to revenue recognition, payments of accounts
payable and collection of accounts receivable) except as required by a change in
GAAP occurring after the date hereof;
(g) take, or
agree in writing or otherwise to take, any of the actions described in Sections 5.01(a)
through (f)
above, or any action which would make any of the representations or warranties
of Qualmax or the Company, as the case may be, contained in this Agreement
untrue or incorrect such that the conditions in Section 7.02(a) or
7.03(a), as
applicable, would not be satisfied or prevent Qualmax or the Company, as
applicable, from performing or cause Qualmax or the Company, as applicable, not
to perform its covenants hereunder such that the condition in Section 7.02(b) or
7.03(b), as
applicable, would not be satisfied.
ARTICLE
VI
ADDITIONAL
AGREEMENTS
SECTION
6.01. Stockholders’
Actions.
(a) As
promptly as practicable after the execution of this Agreement, the Company shall
take all reasonable actions necessary to cause the approval and authorization of
(i) the Merger Proposals and (ii) such other actions as the board of directors
of the Company may determine are necessary or appropriate, by the consent of the
holders of a majority of the outstanding shares of Common Stock.
(b) As
promptly as practicable after the execution of this Agreement, Qualmax shall
take all reasonable actions necessary to cause the approval and authorization of
(i) this Agreement and any related agreements, instruments or certificates; (ii)
the consummation of the transactions contemplated by this Agreement, including,
without limitation, the Merger; and (iii) such other actions as the board of
directors of Qualmax may determine are necessary or appropriate, by the written
consent of the holders of a majority of the outstanding shares of Qualmax
Stock. Promptly upon obtaining such written consent, Qualmax shall
cause a notice to be mailed to the stockholders of Qualmax as required by
Section 228(e) of the DGCL.
SECTION
6.02. Exemption from
Registration.
(a) The
shares of Common Stock to be issued in connection with the Merger are expected
to be issued in a transaction exempt from registration under the Securities Act
by reason of Section 3(a)(10) thereof pursuant to a fairness hearing (the “Hearing”) under
Section 441-095-0030 of
the Oregon Administrative Rules, as amended (the “Oregon Law”), and
under applicable state blue sky laws. Promptly following the
execution of this Agreement, but in no event later than fifteen (15) business
days, Qualmax and the Company shall prepare, and the Company shall file with the
Department of Consumer and Business Services, Division of Finance and Corporate
Securities (the “Department”), such
documents and instruments as are required under Oregon Law (the “Hearing Documents”)
and a request for the Hearing to be held by the Department to consider the
terms, conditions and fairness of the transactions contemplated by this
Agreement and the Merger pursuant to Section 441-095-0030 of
the Oregon Law. Qualmax and the Company will notify each other promptly of the
receipt of any comments from the Department or its staff and of any request by
the Department or any other government officials for amendments or supplements
to any of the Hearing Documents or any other filing or for additional
information and will supply each other with copies of all correspondence between
such party or any of its representatives, on the one hand, and the Department,
or its staff or any other government officials, on the other hand, with respect
to the filing. If at any time prior to the Effective Time any event
or information should be discovered by Qualmax and the Company which should be
set forth in an amendment to the Hearing Documents, such party shall promptly
inform the other. The parties shall use their respective commercially
reasonable efforts to obtain approval of the plan under Oregon Law as promptly
as practicable after the filing of the Hearing Documents and shall fully
cooperate with each other in good faith to assist in such efforts.
(b) If
despite Qualmax’s and the Company’s commercially reasonable efforts to obtain
approval of the plan under Oregon Law, the Department refuses to set a hearing
date or approve the plan under Oregon Law, then the Company shall use all
commercially reasonable efforts to effect as soon as practicable but in no event
later than 60 business days after events stated in this Section 6.02(b) a
Registration Statement (the “Registration
Statement”) on Form S-4 (or such other or successor form as shall be
appropriate) with respect to the shares of Common Stock to be issued in the
Merger which complies in form with applicable SEC requirements and shall use all
reasonable efforts to cause the Registration Statement to become effective as
soon thereafter as practicable. The Company agrees to request the immediate
acceleration of the effectiveness of the Registration Statement as soon as
practicable but no less than within three (3) business days of any notification
by the SEC of its decision not to review the Registration Statement or its
determination that it has completed its review of the Registration Statement and
has no further comments for the Company.
SECTION
6.03. Consents;
Approvals. Qualmax and the Company shall each use reasonable
best efforts to obtain and to cooperate with one another in order to obtain all
consents, waivers, approvals, authorizations or orders (including, without
limitation, all United States and non-United States governmental and regulatory
rulings and approvals), and Qualmax and the Company shall make all filings
(including, without limitation, all filings with United States and non-United
States Governmental Authorities) required in connection with the authorization,
execution and delivery of this Agreement by Qualmax and the Company and the
consummation by them of the transactions contemplated hereby. Each of
Qualmax and the Company shall furnish all information in its possession required
for any application or other filing to be made pursuant to the rules and
regulations of any United States or non-United States Governmental Authority in
connection with the transactions contemplated by this Agreement.
SECTION
6.04. Notification of Certain
Matters. Qualmax shall give prompt notice to the Company, and
the Company shall give prompt notice to Qualmax, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would
reasonably be expected to cause any representation or warranty contained in this
Agreement to be materially untrue or inaccurate, or (ii) any failure of Qualmax
or the Company, as the case may be, materially to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the
delivery of any notice pursuant to this Section 6.04 shall
not limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION
6.05. Further Action/Tax
Treatment.
(a) Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
all reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement.
(b) Notwithstanding
anything herein to the contrary, each of the Company and Qualmax shall use its
reasonable best efforts to cause the Merger to qualify, and will not (both
before and after the Effective Time) take any actions, or fail to take any
action, which could reasonably be expected to prevent the Merger from qualifying
as a reorganization under the provisions of Section 368(a) of the
Code. The Company shall report, to the extent required by the Code or
the regulations thereunder, the Merger for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code.
SECTION
6.06. Public
Announcements. The Company and Qualmax shall consult with each
other before issuing any press release or making any written public statement
with respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement without the prior consent of the other
party, which shall not be unreasonably withheld; provided, however, that either
party may, without the prior consent of the other, issue such press release or
make such public statement as may upon the advice of counsel be required by
applicable law, if it has used all reasonable efforts to consult with the other
party.
SECTION
6.07. Stock
Rights.
(a) At the
Effective Time, the Company shall, and shall cause its Affiliates to, take all
action necessary to provide that each outstanding Qualmax Stock Right shall
continue to have, and be subject to, the same terms and conditions set forth in
the relevant Qualmax Stock Right Agreement (and any related agreements not
entered into in contravention of this Agreement) immediately prior to the
Effective Time; except that (i) each Qualmax Stock Right will be
exercisable for that number of whole shares of Common Stock equal to the product
of (x) the number of shares of Common Stock that were issuable upon exercise of
such Qualmax Stock Right, immediately prior to the Effective Time, multiplied by
(y) the Exchange Ratio, rounded up to the nearest whole number of shares of
Common Stock, and (ii) the per share exercise price for the Common Stock
issuable upon exercise of such Qualmax Stock Right will be equal to the quotient
determined by dividing (x) the exercise price per share of Qualmax Stock at
which such Qualmax Stock Right was exercisable immediately prior to the
Effective Time by (y) the Exchange Ratio, rounded down to the nearest whole cent
(each such Qualmax Stock Right, as modified, an “Adjusted Stock
Right”).
(b) The
Company will take all corporate action necessary to reserve for issuance, as of
the Effective Time, a sufficient number of shares of Common Stock for delivery
upon exercise of the Adjusted Stock Rights and to deliver to holders of Adjusted
Stock Rights, upon the exercise of such options, shares of Common
Stock.
(c) Not later
than 30 days following the Effective Time, the Company (i) shall file with the
SEC a registration statement on Form S-8 of the SEC (or any successor or
other appropriate form) with respect to the shares of Common Stock issuable upon
the exercise of the Adjusted Stock Rights and shall use reasonable best efforts
thereafter to maintain the effectiveness of such registration statement and (ii)
shall deliver to holders of the Adjusted Stock Rights a prospectus or
prospectuses relating to such registration statement and thereafter maintain the
current status of such prospectus or prospectuses, until all of the Adjusted
Stock Rights have been exercised, expired or forfeited.
(d) Prior to
the Effective Time, the Company and Qualmax shall take all such reasonable steps
as may be required to cause any dispositions of shares of Common Stock
(including derivative securities with respect to Common Stock) or acquisitions
of shares of Common Stock (including derivative securities with respect to
Common Stock) resulting from the transactions contemplated by this Agreement by
each officer and director of Qualmax to be exempt under Rule 16b-3 promulgated
under the Exchange Act.
SECTION 6.08. Compliance with State
Property Transfer Statutes. Qualmax agrees that it shall use
commercially reasonable efforts to comply promptly with all requirements of
applicable state property transfer laws as may be required by the relevant state
agency and shall take all action reasonably necessary to cause the transactions
contemplated hereby to be effected in compliance with applicable state property
transfer laws. Qualmax, after consultation with the Company, shall
determine which actions must be taken prior to or after the Effective Time to
comply with applicable state property transfer laws, except where the failure to
so comply will not materially affect the right to use or enjoy any applicable
property after the Effective Time. Qualmax agrees to provide the
Company with any documents required to be submitted to the relevant state agency
prior to submission. The Company shall provide to Qualmax any
assistance reasonably requested by Qualmax with respect to such
compliance.
ARTICLE
VII
CONDITIONS
TO THE MERGER
SECTION
7.01. Conditions to Obligation of
Each Party to Effect the Merger. The respective obligations of
each party to effect the Merger shall be subject to the satisfaction at or prior
to the Effective Time of the following conditions:
(a) Exemption from
Registration. Either (i) the shares of Common Stock to be
issued hereunder shall be “exempt securities” under Section 3(a)(10) of the
Securities Act or (ii) the SEC shall have declared the Registration Statement
effective, no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose, and no similar proceeding in respect of the Proxy Statement, shall have
been initiated or threatened in writing by the SEC.
(b) Stockholder
Approval. This Agreement, the Merger, and the other the Merger
Proposals shall, to the extent applicable, have been approved by the requisite
vote of the stockholders of each of Qualmax and the Company.
(c) Governmental
Actions. There shall not have been instituted and pending any
action by any Governmental Authority that is reasonably to be expected to result
in an order, nor shall there be in effect any judgment, decree or order of any
Governmental Authority, (i) preventing the consummation of the Merger or
(ii) compelling the Company or any of its subsidiaries (including the Surviving
Corporation and its subsidiaries) to dispose of or hold separate assets which
are material, in the aggregate, to the Company or its subsidiaries taken as a
whole, or to the Surviving Corporation and its subsidiaries taken as a
whole.
(d) Illegality. No
statute, rule, regulation, executive or other order, ruling or injunction shall
have been enacted, promulgated, entered, enforced or deemed applicable to the
Merger which makes the consummation of the Merger illegal or that prohibits,
restrains or enjoins consummation of the Merger.
SECTION
7.02. Additional Conditions to
Obligations of the Company. The obligations of the Company to
effect the Merger are also subject to the following conditions:
(a) Representations and
Warranties. The representations and warranties of Qualmax
contained in this Agreement shall be true and correct as of the Effective Time,
with the same force and effect as if made on and as of the Effective Time,
except for (i) changes contemplated by this Agreement, (ii) those
representations and warranties which address matters only as of a particular
date (which shall have been true and correct as of such date), or (iii) where
the failure to be so true and correct would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on
Qualmax.
(b) Agreements and
Covenants. Qualmax shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Effective
Time.
(c) Consents Obtained.
The Company shall have been provided with satisfactory evidence that all
material consents, waivers, approvals, authorizations or orders required to be
obtained, and all filings required to be made, by Qualmax for the authorization,
execution and delivery of this Agreement and the consummation by it of the
transactions contemplated hereby shall have been obtained and made by Qualmax,
except where the failure to receive such consents, waivers, approvals,
authorizations or orders or to make such filings would not reasonably be
expected, individually or in the aggregate with all other such failures, to have
a Material Adverse Effect on Qualmax or the Company.
(d) Dissenting Shares.
The number of Dissenting Shares shall not exceed the Designated Percentage (as
defined below) of the shares of Qualmax Stock outstanding immediately prior to
the Effective Time. The “Designated
Percentage” shall be 5%; provided that if (i)
any Designated Dissenting Stockholder (as defined below) and Affiliates thereof
shall hold Dissenting Shares and (ii) the aggregate Dissenting Shares held by
stockholders of Qualmax other than any Designated Dissenting Stockholder and
Affiliates thereof are less than 5% of the shares of Qualmax Stock outstanding
immediately prior to the Effective Time, then the Designated Percentage shall
equal 15%. A “Designated Dissenting
Stockholder” shall mean any stockholder of Qualmax designated by mutual
agreement of Qualmax and the Company.
(e) No Material Adverse
Changes. There shall not have occurred any material adverse change in the
condition (financial or otherwise), properties, assets (including intangible
assets), liabilities, business, operations, results of operations or prospects
of Qualmax, other than a change that is directly caused by the public
announcement of, and the response or reaction to, this Agreement, the Merger or
any of the transactions contemplated by this Agreement.
SECTION
7.03. Additional Conditions to
Obligation of Qualmax. The obligation of Qualmax to effect the
Merger is also subject to the following conditions:
(a) Representations and
Warranties. The representations and warranties of the Company
contained in this Agreement shall be true and correct as of the Effective Time,
with the same force and effect as if made on and as of the Effective time,
except for (i) changes contemplated by this Agreement, (ii) those
representations and warranties which address matters only as of a particular
date (which shall have been true and correct as of such date), or (iii) where
the failure to be so true and correct would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Company.
(b) Agreements and
Covenants. The Company shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by them on or prior to the Effective
Time.
(c) Consents Obtained.
All material consents, waivers, approvals, authorizations or orders required to
be obtained, and all filings required to be made, by the Company for the
authorization, execution and delivery of this Agreement, and the consummation by
them of the transactions contemplated hereby and thereby shall have been
obtained and made by the Company, except where the failure to receive such
consents, waivers, approvals, authorizations or orders or to make such filings
would not reasonably be expected, individually or in the aggregate with all
other such failures, to have a Material Adverse Effect on Qualmax or the
Company.
ARTICLE
VIII
TERMINATION
SECTION
8.01. Termination by Qualmax or
the Company. This Agreement may be terminated at any time
prior to the Effective Time by either the board of directors of Qualmax or the
board of directors of the Company:
(a) upon
mutual written consent duly authorized by the board of directors of each of
Qualmax and the Company; or
(b) if the
Merger shall not have been consummated by June 1, 2008 (the “Termination Date”),
provided, however, that the
right to terminate this Agreement under this Section 8.01(b) shall
not be available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Merger to be
consummated on or prior to such date; or
(c) if a
court of competent jurisdiction or a Governmental Authority shall have issued a
nonappealable final order, decree or ruling or taken any other nonappealable
final action having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger; or
(d) the
stockholders of the Company shall not have approved the Merger; provided, however, that the
Company may not terminate this Agreement pursuant to this Section 8.01(d) if
the Company has not complied with its obligations under Section 6.01;
or
(e) the
stockholders of Qualmax shall have not approved this Agreement and the Merger;
provided, however, that Qualmax
may not terminate this Agreement pursuant to this Section 8.01(e) if
Qualmax has not complied with its obligations under Section
6.01.
SECTION
8.02. Termination by the
Company. This Agreement may be terminated at any time prior to
the Effective Time by the board of directors of the Company:
(a) if any of
the representations and warranties of Qualmax contained in this Agreement shall
be or shall have become inaccurate, which inaccuracy would reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect;
or
(b) if
Qualmax has materially breached any of the covenants or agreements on the part
of Qualmax contained in this Agreement.
SECTION
8.03. Termination by
Qualmax. This Agreement may be terminated at any time prior to
the Effective Time by the board of directors of Qualmax:
(a) if any of
the representations and warranties of the Company contained in this Agreement
shall be or shall have become inaccurate, which inaccuracy would reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect;
or
(b) if the
Company has materially breached any of the covenants or agreements on the part
of the Company contained in this Agreement.
SECTION
8.04. Effect of
Termination. In the event of the termination of this Agreement pursuant
to this Article
VIII, this Agreement shall forthwith become void and there shall be no
liability on the part of any party hereto or any of its Affiliates, except that
this Section
8.04, Section
8.05, and Article IX shall
survive termination indefinitely. Notwithstanding the foregoing,
nothing herein shall relieve Qualmax or the Company from liability for any
willful breach hereof or willful misrepresentation herein (it being understood
that the provisions of Section 8.05 do not
constitute a sole or exclusive remedy for such willful breach or
misrepresentation).
SECTION
8.05. Fees and
Expenses. Each party shall be responsible for its own fees,
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby.
ARTICLE
IX
GENERAL
PROVISIONS
SECTION
9.01. Notices. All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made if and when
delivered personally or by overnight courier to the parties at the addresses set
forth on the signature pages hereto or sent by electronic transmission, with
confirmation received, to the telecopy numbers specified below (or at such other
address or telecopy number for a party as shall be specified by like
notice).
SECTION
9.02. Taking of Necessary Action;
Further Action. Each of the Company and Qualmax will take, and
will cause their Affiliates to take, all such reasonable and lawful actions as
may be necessary or appropriate in order to effectuate the Merger and the other
transactions contemplated by this Agreement in accordance with this Agreement as
promptly as possible. If, at any time after the Effective Time, any
such further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
Qualmax, the officers and directors of Qualmax immediately prior to the
Effective Time are fully authorized in the name of their respective corporations
or otherwise to take, and will take, all such lawful and necessary
action.
SECTION
9.03. Amendment. The
boards of directors of the parties hereto may cause this Agreement to be amended
at any time by execution of an instrument in writing signed on behalf of each of
the parties hereto; provided that an
amendment made subsequent to adoption of the Agreement by the stockholders of
Qualmax shall not (i) alter or change the amount or kind of consideration to be
received on conversion of the Qualmax Stock, (ii) alter or change any term of
the Certificate of Incorporation of the Surviving Corporation to be effected by
the Merger, or (iii) alter or change any of the terms and conditions of the
Agreement if such alteration or change would adversely affect the holders of
Qualmax Stock.
SECTION
9.04. Waiver. At
any time prior to the Effective Time, any party hereto may with respect to any
other party hereto (a) extend the time for the performance of any of the
obligations or other acts, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, or (c)
waive compliance with any of the agreements or conditions contained
herein. Any such extension or waiver shall be valid if set forth in
an instrument in writing signed by the party or parties to be bound
thereby.
SECTION
9.05. Headings. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement.
SECTION
9.06. Severability. If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any material manner adverse to any
party. Upon a determination that any term or other
provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent
possible.
SECTION
9.07. Entire
Agreement. This Agreement constitutes the entire agreement and
supersedes all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter
hereof.
SECTION
9.08. Assignment. This
Agreement shall not be assigned by operation of law or otherwise by any party
without the written consent of the other parties hereto.
SECTION
9.09. Parties in Interest.
This Agreement shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or implied, is intended to
or shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, including, without limitation,
by way of subrogation, other than the right of the stockholders of Qualmax to
receive the Merger Consideration if, but only if, the Merger is consummated and
not otherwise.
SECTION
9.10. Failure or
Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of any party
hereto in the exercise of any right hereunder shall impair such right or be
construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or of
any other right. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
SECTION
9.11. Governing Law;
Jurisdiction.
(a) All
questions concerning the construction, validity and interpretation of this
Agreement and the schedules hereto will be governed by the internal law, and not
the law of conflicts, of the State of Delaware.
(b) Each of
the parties to this Agreement submits to the jurisdiction of any state or
federal court sitting in Wilmington, Delaware, in any action or proceeding
arising out of or relating to this Agreement, agrees that all claims in respect
of the action or proceeding may be heard and determined in any such court, and
agrees not to bring any action or proceeding arising out of or relating to this
Agreement in any other court. Each of the parties to this Agreement
waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety or other security that might
be required of any other party with respect thereto.
SECTION
9.12. Counterparts;
Facsimile. This Agreement may be executed in two or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. Facsimile
transmission of any signed original counterpart and/or retransmission of any
signed facsimile transmission shall be deemed the same as the delivery of an
original.
SECTION
9.13. WAIVER OF JURY
TRIAL. EACH OF THE COMPANY AND QUALMAX HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION
9.14. Performance of
Obligations. Unless otherwise previously performed, the
Company shall cause the Surviving Corporation to perform all of its obligations
set forth in this Agreement.
SECTION
9.15. Enforcement. The
parties agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms. It is accordingly agreed that the parties shall be
entitled to specific performance of the terms hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
SECTION
9.16. Disclosure
Schedules. Any disclosure made with reference to one or more
Sections of the disclosure schedule, as the case may be, shall be deemed
disclosed with respect to each other section therein as to which such disclosure
is relevant provided that such relevance is reasonably apparent on the face of
such disclosure. Disclosure of any matter in the disclosure schedule
shall not be deemed an admission that such matter is material.
[Signature
page follows]
IN WITNESS WHEREOF, each of the parties
hereto has caused this Agreement to be executed as of the date first written
above by itself or its respective officers thereunto duly
authorized.
NEW WORLD BRANDS,
INC.
By:
____________________________________
Name: M. ▇▇▇▇▇
▇▇▇▇▇▇
Title: Chief Executive
Officer
Address:
_______________________________
_______________________________
_______________________________
_______________________________
QUALMAX, INC.
By:
____________________________________
Name: M. ▇▇▇▇▇
▇▇▇▇▇▇
Title: Chief Executive
Officer
Address:
_______________________________
_______________________________
_______________________________
_______________________________