AGREEMENT OF MERGER AND PLAN OF REORGANIZATION BY AND AMONG ADEX MEDIA, INC. and ADEX MEDIA ACQUISITION, INC. and ABUNDANTAD, INC. Dated as of April 30, 2008
Exhibit 2.1
______________________________________
AGREEMENT
OF MERGER AND
PLAN
OF REORGANIZATION
______________________________________
BY AND
AMONG
and
ADEX
MEDIA ACQUISITION, INC.
and
ABUNDANTAD,
INC.
Dated as
of April 30, 2008
AGREEMENT
OF MERGER AND PLAN OF REORGANIZATION
THIS
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this “Agreement”) is made
and entered into on April 30, 2008, by and among ADEX MEDIA, INC., a Delaware
corporation (“Parent”), ADEX MEDIA
ACQUISITION, INC., a Delaware corporation (“Acquisition Corp.”),
which is a wholly-owned subsidiary of Parent, and ABUNDANTAD, INC., a Nevada
corporation (the “Company”).
WITNESSETH:
WHEREAS,
the Board of Directors of each of Acquisition Corp., Parent and the Company have
each determined that it is fair to and in the best interests of their respective
corporations and stockholders for Acquisition Corp. to be merged with and into
the Company (the “Merger”) upon the
terms and subject to the conditions set forth herein; and
WHEREAS,
the Board of Directors of each of Parent, Acquisition Corp. and the Company have
approved the Merger in accordance with the General Corporation Law of the State
of Delaware (the “DGCL”) and the
Revised Statues of the State of Nevada (the “RS”), and upon the
terms and subject to the conditions set forth herein, in the Delaware
Certificate of Merger attached as Exhibit A hereto (the
“DE-Certificate of
Merger”) and the Nevada Articles of Merger attached as Exhibit B hereto (the
“NV-Articles of
Merger”); and
WHEREAS,
the requisite stockholders of the Company (the “Stockholders”) have
approved by written consent pursuant to Section 615 of the RS this Agreement,
the DE-Certificate of Merger, the NV-Articles of Merger and the transactions
contemplated and described hereby and thereby, including, without limitation,
the Merger, and Parent, as the sole stockholder of Acquisition Corp., has
approved by written consent pursuant to Section 228 of the DGCL this Agreement,
the DE-Certificate of Merger, the NV-Articles of Merger and the transactions
contemplated and described hereby and thereby, including, without limitation,
the Merger; and
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WHEREAS,
the parties hereto intend that the Merger contemplated herein shall qualify as a
reorganization within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the “Code”), by reason of
Section 368(a)(2)(E) of the Code.
NOW,
THEREFORE, in consideration of the mutual agreements and covenants hereinafter
set forth, the parties hereto agree as follows:
ARTICLE
I.
THE
MERGER
Section 1.01 Merger. Subject to the terms and conditions
of this Agreement, the DE-Certificate of Merger and the NV-Articles of Merger,
Acquisition Corp. shall be merged with and into the Company in accordance with
Section 252 of the DGCL and Section 901 of the RS. At the Effective Time (as
defined below), the separate legal existence of Acquisition Corp. shall cease,
and the Company shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the “Surviving
Corporation”) and shall
continue its corporate existence under the laws of the State of Nevada under the
name “Abundantad, Inc.”
Section 1.02 Effective
Time. The Merger shall
become effective upon the filing of (a) the DE-Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with Section 252 of
the DGCL and (b) the NV-Articles of Merger with the Department of State of the
State of Nevada. The time at which the Merger shall become effective as
aforesaid is referred to hereinafter as the “Effective
Time.”
Section 1.03 Closing. The closing of the Merger (the
“Closing”) shall occur concurrently with the
Effective Time (the “Closing
Date”). The Closing shall
occur at the offices of ▇▇▇▇▇▇ + ▇▇▇▇▇▇, LLP referred to in Section 10.01
hereof. At the Closing, all of the documents, certificates, agreements, opinions
and instruments referenced in Article VII will be executed and delivered as
described therein. At the Effective Time, all actions to be taken at the Closing
shall be deemed to be taken simultaneously.
Section 1.04 Certificate
of Incorporation, By-laws, Directors and Officers.
(a) The Certificate of Incorporation of the
Company, as in effect immediately prior to the Effective Time, attached as
Exhibit
C hereto, as amended by
the NV-Articles of Merger, shall be the Certificate of Incorporation of the
Surviving Corporation from and after the Effective Time until amended in
accordance with applicable law and such Certificate of
Incorporation.
(b) The By-laws of the Company, as in
effect immediately prior to the Effective Time, attached as Exhibit
D hereto, shall be the
By-laws of the Surviving Corporation from and after the Effective Time until
amended in accordance with applicable law, the Certificate of Incorporation of
the Surviving Corporation and such By-laws.
(c) The directors and officers listed in
Exhibit
E hereto shall be the
directors and officers of the Surviving Corporation and Parent, and each shall
hold his respective office or offices from and after the Effective Time until
his successor shall have been elected and shall have qualified in accordance
with applicable law, or as otherwise provided in the Articles of Incorporation
or By-laws of the Surviving Corporation or the Certificate of Incorporation or
By-laws of Parent, as the case may be.
Section 1.05 Assets and
Liabilities. At the
Effective Time, the Surviving Corporation shall possess all the rights,
privileges, powers and franchises of a public as well as of a private nature,
and be subject to all the restrictions, disabilities and duties of each of
Acquisition Corp. and the Company
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Continued-
(collectively, the “Constituent
Corporations”); and all
the rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, and all debts due to
any of the Constituent Corporations on whatever account, as well as all other
things in action or belonging to each of the Constituent Corporations, shall be
vested in the Surviving Corporation; and all property, rights, privileges,
powers and franchises, and all and every other interest shall be thereafter as
effectively the property of the Surviving Corporation as they were of the
several and respective Constituent Corporations, and the title to any real
estate vested by deed or otherwise in either of such Constituent Corporations
shall not revert or be in any way impaired by the Merger; but all rights of
creditors and all liens upon any property of any of the Constituent Corporations
shall be preserved unimpaired, and all debts, liabilities and duties of the
Constituent Corporations shall thenceforth attach to the Surviving Corporation,
and may be enforced against it to the same extent as if said debts, liabilities
and duties had been incurred or contracted by it.
Section 1.06 Manner and
Basis of Converting Shares.
(a) At the Effective
Time:
(i) each share of common stock, par value
$0.0001 per share, of Acquisition Corp. that shall be outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted pro rata into 100 shares
of common stock, par value $0.0001 per share, of the Surviving Corporation, so
that at the Effective Time, Parent shall be the holder of all of the issued and
outstanding shares of the Surviving Corporation;
(ii) the shares of common stock, par value
$0.0001 per share, of the Company (the “Company
Common Stock”)
beneficially owned by the Stockholders listed on Schedule
1.06A (other than shares
of Company Common Stock as to which appraisal rights are perfected pursuant to
the applicable provisions of the RS and not withdrawn or otherwise forfeited and
shares of Company Common Stock set forth in Section 1.06(a)(iii) hereof), shall,
by virtue of the Merger and without any action on the part of the holders
thereof, be converted into the right to receive the number of shares of common
stock, par value $0.0001 per share of Parent (the “Parent
Common Stock”) specified
in Schedule
1.06A for each of the
Stockholders, which shall be equal to one (1) share of Parent Common Stock for
each share of Company Common Stock with fractional shares of Parent Common Stock
rounded to the nearest whole share; and
(iii) the
warrants and options to purchase shares of Company Common Stock (the “Company Warrants”)
beneficially owned by the Stockholders listed on Schedule 1.06B shall,
by virtue of the Merger and without any action on the part of the holders
thereof, be converted into the right to receive the number of shares of Parent
Common Stock specified in Schedule 1.06B for
each of such Stockholders, which, depending on the terms of the Company Warrant
in question, shall be approximately equal to one (1) share of Parent Common
Stock for each share of Company Common Stock issuable upon exercise of such
Company Warrant or option, with any fractional shares of Parent Common Stock
rounded to the nearest whole share; and
(iv) each share of Company Common Stock held
in the treasury of the Company immediately prior to the Effective Time shall be
cancelled in the Merger and cease to exist.
(b) After the Effective Time, there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock that were
outstanding immediately prior to the Effective Time.
Section 1.07 Surrender
and Exchange of Certificates. Promptly after the Effective Time and
upon (a) surrender of a certificate or certificates representing shares of
Company Common Stock that were outstanding immediately prior to the Effective
Time or an affidavit and indemnification in form reasonably
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Continued-
acceptable to counsel for Parent
stating that such Stockholder has lost its certificate or certificates or that
such have been destroyed and (b) delivery of a Letter of Transmittal (as
described in Article IV hereof), Parent shall issue to each record holder of
Company Common Stock surrendering such certificate, certificates or affidavit
and Letter of Transmittal, a certificate or certificates registered in the name
of such Stockholder representing the number of shares of Parent Common Stock
that such Stockholder shall be entitled to receive as set forth in Section
1.06(a)(ii) hereof. Until the certificate, certificates or affidavit is or are
surrendered together with the Letter of Transmittal as contemplated by this
Section 1.07 and Article IV hereof, each certificate or affidavit that
immediately prior to the Effective Time represented any outstanding shares of
Company Common Stock shall be deemed at and after the Effective Time to
represent only the right to receive upon surrender as aforesaid the Parent
Common Stock specified in Schedule
1.06 hereof for the holder
thereof or to perfect any rights of appraisal that such holder may have pursuant
to the applicable provisions of the RS .
Section 1.08 Parent
Common Stock. Parent
agrees that it will cause the Parent Common Stock into which the Company Common
Stock is converted at the Effective Time pursuant to Section 1.06(a)(ii) to be
available for such purposes. Parent further covenants that immediately following
the Effective Time, Parent will effect cancellations of its outstanding shares
of Parent Common Stock in accordance with the attached Schedule 1.08 and that
there will be no more than 12,604,950 shares of Parent Common Stock issued and
outstanding, and that no other common or preferred stock or equity securities or
any options, warrants, rights or other agreements or instruments convertible,
exchangeable or exercisable into common or preferred stock or other equity
securities shall be issued or outstanding, except as described
herein.
Section 1.09 Operation
of Surviving Corporation.
The Company acknowledges that upon the effectiveness of the Merger, and the
material compliance by Parent and Acquisition Corp. with their respective duties
and obligations hereunder, Parent shall have the absolute and unqualified right
to deal with the assets and business of the Surviving Corporation as its own
property without limitation on the disposition or use of such assets or the
conduct of such business.
Section 1.10 Further
Assurances. From time to
time, from and after the Effective Time, as and when reasonably requested by
Parent, the proper officers and directors of the Company as of the Effective
Time shall, for and on behalf and in the name of the Company or otherwise,
execute and deliver all such deeds, bills of sale, assignments and other
instruments and shall take or cause to be taken such further actions as Parent,
Acquisition Corp. or their respective successors or assigns reasonably may deem
necessary or desirable in order to confirm or record or otherwise transfer to
the Surviving Corporation title to and possession of all of the properties,
rights, privileges, powers, franchises and immunities of the Company or
otherwise to carry out fully the provisions and purposes of this Agreement, the
DE-Certificate of Merger and the NV-Articles of Merger.
ARTICLE
II.
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company hereby represents and warrants to Parent and Acquisition Corp. as
follows. Notwithstanding anything to the contrary contained herein, disclosure
of items in the draft Current Report on Form 8-K of Parent with respect to the
Merger and the Private Placement, and all exhibits thereto, a copy of which is
attached hereto as Exhibit F
(collectively, the “Disclosures”) shall
be deemed to be disclosure of such items for all purposes under this Agreement,
including, without limitation, for all applicable representations and warranties
of the Company:
Section 2.01 Organization,
Standing, Subsidiaries, Etc.
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(a) The Company is a corporation duly
organized and existing in good standing under the laws of the State of Nevada
and has all requisite power and authority (corporate and other) to carry on its
business, to own or lease its properties and assets, to enter into this
Agreement, the DE-Certificate of Merger and the NV-Articles of Merger and to
carry out the terms hereof and thereof. Copies of the Certificate of
Incorporation and By-laws of the Company that have been delivered to Parent and
Acquisition Corp. prior to the execution of this Agreement are true and complete
and have not since been amended or repealed.
(b) The Company has no subsidiaries or
direct or indirect interest (by way of stock ownership or otherwise) in any
firm, corporation, limited liability company, partnership, association or
business.
Section 2.02 Qualification. The Company is duly qualified to
conduct business as a foreign corporation and is in good standing in each
jurisdiction wherein the nature of its activities or its properties owned or
leased makes such qualification necessary, except where the failure to be so
qualified would not have a material adverse effect on the condition (financial
or otherwise), properties, assets, liabilities, business operations, results of
operations or prospects of the Company taken as a whole (the “Condition
of the Company”).
Section 2.03 Capitalization
of the Company. The
authorized capital stock of the Company consists of 75,000,000 shares of Company
Common Stock, of which there are 29,274,653 shares of Company Common Stock
issued and outstanding, and such shares are duly authorized, validly issued,
fully paid and non-assessable, and none of such shares have been issued in
violation of the preemptive rights of any natural person, corporation, business
trust, association, limited liability company, partnership, joint venture, other
entity, government, agency or political subdivision (each, a “Person”). The offer, issuance and sale of
such shares of Company Common Stock were (a) exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended (the
“Securities
Act”), (b) registered or
qualified (or were exempt from registration or qualification) under the
registration or qualification requirements of all applicable state securities
laws and (c) accomplished in conformity with all other applicable securities
laws. None of such shares of Company Common Stock are subject to a right of
withdrawal or a right of rescission under any federal or state securities or
“Blue Sky” law. Except as otherwise set forth in this Agreement or any Schedule
hereto, the Company has no outstanding options, rights or commitments to issue
Company Common Stock or other Equity Securities (as defined below) of the
Company, and there are no outstanding securities convertible or exercisable into
or exchangeable for Company Common Stock or other Equity Securities of the
Company. For purposes of this Agreement, “Equity
Security” shall mean any
stock or similar security of an issuer or any security (whether stock or
Indebtedness for Borrowed Money (as defined below)) convertible, with or without
consideration, into any stock or other equity security, or any security (whether
stock or Indebtedness for Borrowed Money) carrying any warrant or right to
subscribe to or purchase any stock or similar security, or any such warrant or
right.
Section 2.04 Indebtedness. The Company has no Indebtedness for
Borrowed Money, except as otherwise set forth in this Agreement or disclosed on
the Balance Sheet. For purposes of this Agreement, “Indebtedness
for Borrowed Money” shall
mean (a) all Indebtedness in respect of money borrowed including, without
limitation, Indebtedness which represents the unpaid amount of the purchase
price of any property and is incurred in lieu of borrowing money or using
available funds to pay such amounts and not constituting an account payable or
expense accrual incurred or assumed in the ordinary course of business of the
Company, (b) all Indebtedness evidenced by a promissory note, bond or similar
written obligation to pay money or (c) all such Indebtedness guaranteed by the
Company or for which the Company is otherwise contingently liable. Furthermore,
for purposes of this Agreement, “Indebtedness” shall mean any obligation of the
Company which, under generally accepted accounting principles in the United
Stated (“GAAP”), is required to be shown on the
balance sheet of the Company as a liability. Any obligation secured by a
mortgage, pledge, security interest, encumbrance, lien or charge of any kind (a
“Lien”), shall be deemed to be Indebtedness,
even though such obligation is not assumed by the Company.
5
Section 2.05 Company
Stockholders. Schedule
1.06 hereto contains a
true and complete list of the names of the record owners of all of the
outstanding shares of Company Common Stock and other Equity Securities of the
Company, together with the number of securities held or to which such Person has
rights to acquire. To the knowledge of the Company, there is no voting trust,
agreement or arrangement among any of the beneficial holders of Company Common
Stock affecting the nomination or election of directors or the exercise of the
voting rights of Company Common Stock.
Section 2.06 Corporate
Acts and Proceedings. The
execution, delivery and performance of this Agreement, the DE-Certificate of
Merger and the NV-Articles of Merger (together, the “Merger
Documents”) have been duly
authorized by the Board of Directors of the Company and have been approved by
the requisite vote of the Stockholders, and all of the corporate acts and other
proceedings required for the due and valid authorization, execution, delivery
and performance of the Merger Documents and the consummation of the Merger have
been validly and appropriately taken, except for the filings referred to in
Section 1.02.
Section 2.07 Governmental
Consents. All material
consents, approvals, orders, or authorizations of, or registrations,
qualifications, designations, declarations, or filings with any federal or state
governmental authority on the part of the Company required in connection with
the consummation of the Merger shall have been obtained prior to, and be
effective as of, the Closing.
Section 2.08 Compliance
with Laws and Instruments.
The business, products and operations of the Company have been and are being
conducted in compliance in all material respects with all applicable laws, rules
and regulations, except for such violations thereof for which the penalties, in
the aggregate, would not have a material adverse effect on the Condition of the
Company. The execution, delivery and performance by the Company of the Merger
Documents and the consummation by the Company of the transactions contemplated
by this Agreement: (a) will not cause the Company to violate or contravene (i)
any provision of law, (ii) any rule or regulation of any agency or government,
(iii) any order, judgment or decree of any court, or (iv) any provision of the
Articles of Incorporation or By-laws of the Company, (b) will not violate or be
in conflict with, result in a breach of or constitute (with or without notice or
lapse of time, or both) a default under, any indenture, loan or credit
agreement, deed of trust, mortgage, security agreement or other contract,
agreement or instrument to which the Company is a party or by which the Company
or any of its properties is bound or affected, except as would not have a
material adverse effect on the Condition of the Company and (c) will not result
in the creation or imposition of any Lien upon any property or asset of the
Company. The Company is not in violation of, or (with or without notice or lapse
of time, or both) in default under, any term or provision of its Articles of
Incorporation or By-laws or of any indenture, loan or credit agreement, deed of
trust, mortgage, security agreement or, except as would not materially and
adversely affect the Condition of the Company, any other material agreement or
instrument to which the Company is a party or by which the Company or any of its
properties is bound or affected.
Section 2.09 Binding
Obligations. The Merger
Documents constitute the legal, valid and binding obligations of the Company and
are enforceable against the Company in accordance with their respective terms,
except as such enforcement is limited by bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors’ rights generally and by
general principles of equity.
Section 2.10 Broker’s
and Finder’s Fees. No
Person has, or as a result of the transactions contemplated or described herein
will have, any right or valid claim against the Company, Parent, Acquisition
Corp. or any Stockholder for any commission, fee or other compensation as a
finder or broker, or in any similar capacity.
6
Section 2.11 Financial
Statements. Parent has
previously been provided with the Company’s unaudited balance sheet (the
“Balance
Sheet”) as of
March 31, 2008 (the “Balance
Sheet Date”) and the
audited statements of operations and accumulated deficits and cash flows for the
period ended March 31, 2008. Such financial statements are
collectively referred to as the “Financial
Statements”. Such
financial statements (a) are in accordance with the books and records of the
Company, (b) present fairly in all material respects the financial condition of
the Company at the dates therein specified and the results of its operations and
changes in financial position for the periods therein specified and (c) have
been prepared in accordance with GAAP applied on a basis consistent with prior
accounting periods.
Section 2.12 Absence of
Undisclosed Liabilities.
The Company has no material obligation or liability (whether accrued, absolute,
contingent, liquidated or otherwise, whether due or to become due), arising out
of any transaction entered into at or prior to the Closing, except (a) as
disclosed in the Balance Sheet, (b) to the extent set forth on or reserved
against in the Balance Sheet or the notes to the Financial Statements, (c)
current liabilities incurred and obligations under agreements entered into in
the usual and ordinary course of business since the Balance Sheet Date, none of
which (individually or in the aggregate) has had or will have a material adverse
effect on the Condition of the Company and (d) by the specific terms of any
written agreement, document or arrangement identified in the
Disclosures.
Section 2.13 Changes. Since the Balance Sheet Date, the
Company has not (a) incurred any debts, obligations or liabilities, absolute,
accrued, contingent or otherwise, whether due or to become due, except for fees,
expenses and liabilities incurred in connection with the Merger and related
transactions and current liabilities incurred in the usual and ordinary course
of business, (b) discharged or satisfied any Liens other than those securing, or
paid any obligation or liability other than, current liabilities shown on the
Balance Sheet and current liabilities incurred since the Balance Sheet Date, in
each case in the usual and ordinary course of business, (c) mortgaged, pledged
or subjected to Lien any of its assets, tangible or intangible other than in the
usual and ordinary course of business, (d) sold, transferred or leased any of
its assets, except in the usual and ordinary course of business, (e) cancelled
or compromised any debt or claim, or waived or released any right, of material
value, (f) suffered any physical damage, destruction or loss (whether or not
covered by insurance) materially and adversely affecting the Condition of the
Company, (g) entered into any transaction other than in the usual and ordinary
course of business, (h) encountered any labor union difficulties, (i) made or
granted any wage or salary increase or made any increase in the amounts payable
under any profit sharing, bonus, deferred compensation, severance pay,
insurance, pension, retirement or other employee benefit plan, agreement or
arrangement, other than in the ordinary course of business consistent with past
practice, or entered into any employment agreement, (j) issued or sold any
shares of capital stock, bonds, notes, debentures or other securities or granted
any options (including employee stock options), warrants or other rights with
respect thereto, (k) declared or paid any dividends on or made any other
distributions with respect to, or purchased or redeemed, any of its outstanding
capital stock, (l) suffered or experienced any change in, or condition
affecting, the Condition of the Company other than changes, events or conditions
in the usual and ordinary course of its business, none of which (either by
itself or in conjunction with all such other changes, events and conditions) has
been materially adverse, (m) made any change in the accounting principles,
methods or practices followed by it or depreciation or amortization policies or
rates theretofore adopted, (n) made or permitted any amendment or termination of
any material contract, agreement or license to which it is a party, (o) suffered
any material loss not reflected in the Balance Sheet or its statement of income
for the period ended on the Balance Sheet Date, (p) paid, or made any accrual or
arrangement for payment of, bonuses or special compensation of any kind or any
severance or termination pay to any present or former officer, director,
employee, stockholder or consultant, (q) made or agreed to make any charitable
contributions or incurred any non-business expenses in excess of $50,000 in the
aggregate, or (r) entered into any agreement, or otherwise obligated itself, to
do any of the foregoing.
Section 2.14 Assets and
Contracts.
(a) Schedule
2.14(a) contains a true
and complete list of all real property leased by the Company and of all tangible
personal property owned or leased by the Company having a cost or fair market
value of greater than $250,000.
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Continued-
All the real property listed in
Schedule
2.14(a) is leased by the
Company under valid leases enforceable in accordance with their terms, and there
is not, under any such lease, any existing default or event of default or event
which with notice or lapse of time, or both, would constitute a default by the
Company, and the Company has not received any notice or claim of any such
default by the Company. The Company does not own any real
property.
(b) Except as expressly set forth in this
Agreement, the Financial Statements or the notes thereto, or as disclosed in
Schedule
2.14(b) hereto, the
Company is not a party to any written or oral agreement not made in the ordinary
course of business that is material to the Company. Except as disclosed in
Schedule
2.14(b) hereto, the
Company is not a party to any written or oral (i) agreement for the purchase of
fixed assets or for the purchase of materials, supplies or equipment in excess
of normal operating requirements, (ii) agreement for the employment of any
officer, individual employee or other Person on a full-time basis or any
agreement with any Person for consulting services, (iii) indenture, loan or
credit agreement, note agreement, deed of trust, mortgage, security agreement,
promissory note or other agreement or instrument relating to or evidencing
Indebtedness for Borrowed Money or subjecting any asset or property of the
Company to any Lien or evidencing any Indebtedness, (iv) guaranty of any
Indebtedness, (v) other than as set forth in Schedule
2.14(a) hereto, lease or
agreement under which the Company is lessee of or holds or operates any
property, real or personal, owned by any other Person under which payments to
such Person exceed $250,000 per year, (vi) agreement granting any preemptive
right, right of first refusal or similar right to any Person, (vii) agreement or
arrangement with any Affiliate or any “associate” (as such term is defined in
Rule 405 under the Securities Act) of the Company or any present or former
officer, director or stockholder of the Company, (viii) agreement obligating the
Company to pay any royalty or similar charge for the use or exploitation of any
tangible or intangible property, (ix) covenant not to compete or other material
restriction on its ability to conduct a business or engage in any other
activity, (x) agreement to register securities under the Securities Act or (xi)
collective bargaining agreement. Except as disclosed in Schedule
2.14(b), none of the
agreements, contracts, leases, instruments or other documents or arrangements
listed in Schedules
2.14(a) and 2.14(b) requires the consent of any of the
parties thereto other than the Company to permit the contract, agreement, lease,
instrument or other document or arrangement to remain effective following
consummation of the Merger and the transactions contemplated hereby. For
purposes of this Agreement, an “Affiliate” shall mean any Person that directly
or indirectly controls, is controlled by, or is under common control with, the
indicated Person.
(c) The Company has made available to
Parent and Acquisition Corp. true and complete copies of all agreements and
other documents and a description of all applicable oral agreements disclosed or
referred to in Schedules
2.14(a) and 2.14(b), as well as any additional agreements
or documents, requested by Parent or Acquisition Corp. The Company has in all
material respects performed all obligations required to be performed by it to
date and is not in default in any material respect under any of the contracts,
agreements, leases, documents, commitments or other arrangements to which it is
a party or by which it or any of its property is otherwise bound or
affected.
Section 2.15 Employees. The Company has complied in all
material respects with all laws relating to the employment of labor, and the
Company has encountered no material labor union difficulties. Other than
pursuant to ordinary arrangements of employment compensation, the Company is not
under any obligation or liability to any officer, director or employee of the
Company.
Section 2.16 Tax Returns
and Audits.
(a) All required federal, state and local
Tax Returns (as defined below) of the Company have been accurately prepared and
duly and timely filed, and all federal, state and local Taxes (as defined below)
required to be paid with respect to the periods covered by such returns have
been paid. The Company is not and has not been delinquent in the payment of any
Tax. The Company has not had a Tax deficiency proposed or assessed against it
and has not executed a waiver of any statute of limitations on the assessment or
collection of any Tax. None of the Company’s federal income tax returns has been
audited by any governmental authority; and none of the Company’s state or local
income or franchise tax returns has been audited by any governmental authority.
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Continued-
The reserves for Taxes reflected on the
Balance Sheet are and will be sufficient for the payment of all unpaid Taxes
payable by the Company as of the Balance Sheet Date. Since the Balance Sheet
Date, the Company has made adequate provisions on its books of account for all
Taxes with respect to its business, properties and operations for such period.
The Company has withheld or collected from each payment made to each of its
employees the amount of all taxes (including, but not limited to, federal, state
and local income taxes, Federal Insurance Contribution Act taxes and Federal
Unemployment Tax Act taxes) required to be withheld or collected therefrom, and
has paid the same to the proper Tax receiving officers or authorized
depositaries. There are no federal, state, local or foreign audits, actions,
suits, proceedings, investigations, claims or administrative proceedings
relating to Taxes or any Tax Returns of the Company now pending, and the Company
has not received any notice of any proposed audits, investigations, claims or
administrative proceedings relating to Taxes or any Tax Returns. The Company is
not obligated to make a payment, nor is it a party to any agreement that under
certain circumstances could obligate it to make a payment that would not be
deductible under Section 280G of the Code. The Company has not agreed, nor is it
required, to make any adjustments under Section 481(a) of the Code (or any
similar provision of state, local and foreign law), whether by reason of a
change in accounting method or otherwise, for any Tax period for which the
applicable statute of limitations has not yet expired. The Company (i) is not a
party to, nor is it bound by or obligated under, any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement, whether written or
unwritten (collectively, “Tax Sharing
Agreements”), and (ii)
does not have any potential liability or obligation to any Person as a result
of, or pursuant to, any such Tax Sharing Agreements.
(b) For purposes of this Agreement, the
following terms shall have the meanings provided below:
(i) “Tax” or “Taxes” shall mean (A) any and all taxes,
assessments, customs, duties, levies, fees, tariffs, imposts, deficiencies and
other governmental charges of any kind whatsoever (including, but not limited
to, taxes on or with respect to net or gross income, franchise, profits, gross
receipts, capital, sales, use, ad valorem, value added, transfer, real property
transfer, transfer gains, transfer taxes, inventory, capital stock, license,
payroll, employment, social security, unemployment, severance, occupation, real
or personal property, estimated taxes, rent, excise, occupancy, recordation,
bulk transfer, intangibles, alternative minimum, doing business, withholding and
stamp), together with any interest thereon, penalties, fines, damages costs,
fees, additions to tax or additional amounts with respect thereto, imposed by
the United States (Federal, state or local) or other applicable jurisdiction;
(B) any liability for the payment of any amounts described in clause (A) as a
result of being a member of an affiliated, consolidated, combined, unitary or
similar group or as a result of transferor or successor liability, including,
without limitation, by reason of Regulation section 1.1502-6; and (C) any
liability for the payments of any amounts as a result of being a party to any
Tax Sharing Agreement or as a result of any express or implied obligation to
indemnify any other Person with respect to the payment of any amounts of the
type described in clause (A) or (B).
(ii) “Tax
Return” shall include all
returns and reports (including elections, declarations, disclosures, schedules,
estimates and information returns (including Form 1099 and partnership returns
filed on Form 1065) required to be supplied to a Tax authority relating to
Taxes.
Section 2.17 Patents and
Other Intangible Assets.
(a) The Company (i) owns or has the right
to use, free and clear of all Liens, claims and restrictions, all patents,
trademarks, service marks, trade names, copyrights, licenses and rights with
respect to the foregoing used in or necessary for the conduct of its business as
now conducted or proposed to be conducted without infringing upon or otherwise
acting adversely to the right or claimed right of any Person under or with
respect to any of the foregoing and (ii) is not obligated or under any liability
to make any payments by way of royalties, fees or otherwise to any owner or
licensor of, or other claimant to, any patent, trademark, service ▇▇▇▇, trade
name, copyright or other intangible asset, with respect to the use thereof or in
connection with the conduct of its business or otherwise.
9
(b) To the knowledge of the Company, the
Company owns and has the unrestricted right to use all trade secrets, if any,
including know-how, negative know-how, formulas, patterns, programs, devices,
methods, techniques, inventions, designs, processes, computer programs and
technical data and all information that derives independent economic value,
actual or potential, from not being generally known or known by competitors
(collectively, “Intellectual
Property”) required for or
incident to the development, operation and sale of all products and services
sold by the Company, free and clear of any right, Lien or claim of others;
provided, however, that the possibility exists that
other Persons, completely independently of the Company or its employees or
agents, could have developed Intellectual Property similar or identical to that
of the Company. The Company is not aware of any such development of
substantially identical trade secrets or technical information by others. All
Intellectual Property can and will be transferred by the Company to the
Surviving Corporation as a result of the Merger and without the consent of any
Person other than the Company.
Section 2.18 Employee
Benefit Plans; ERISA.
(a) Except as disclosed on Schedule
2.18 hereto, there are no
“employee benefit plans” (within the meaning of Section 3(3) of ERISA) nor any
other employee benefit or fringe benefit arrangements, practices, contracts,
policies or programs of every type other than programs merely involving the
regular payment of wages, commissions, or bonuses established, maintained or
contributed to by the Company, whether written or unwritten and whether or not
funded. The plans listed on Schedule
2.18 hereto are
hereinafter referred to as the “Employee
Benefit Plans.”
(b) All current and prior material
documents, including all amendments thereto, with respect to each Employee
Benefit Plan have been made available to Parent and Acquisition Corp. or their
advisors.
(c) To the knowledge of the Company, all
Employee Benefit Plans are in material compliance with the applicable
requirements of ERISA, the Code and any other applicable state, federal or
foreign law.
(d) There are no pending claims or lawsuits
that have been asserted or instituted against any Employee Benefit Plan, the
assets of any of the trusts or funds under the Employee Benefit Plans, the plan
sponsor or the plan administrator of any of the Employee Benefit Plans or
against any fiduciary of an Employee Benefit Plan with respect to the operation
of such plan, nor does the Company have any knowledge of any incident,
transaction, occurrence or circumstance that might reasonably be expected to
form the basis of any such claim or lawsuit.
(e) There is no pending or, to the
knowledge of the Company, contemplated investigation, or pending or possible
enforcement action by the Pension Benefit Guaranty Corporation, the Department
of Labor, the Internal Revenue Service or any other government agency with
respect to any Employee Benefit Plan and the Company has no knowledge of any
incident, transaction, occurrence or circumstance which might reasonably be
expected to trigger such an investigation or enforcement
action.
(f) No actual or, to the knowledge of the
Company, contingent liability exists with respect to the funding of any Employee
Benefit Plan or for any other expense or obligation of any Employee Benefit
Plan, except as disclosed on the financial statements of the Company, and no
contingent liability exists under ERISA with respect to any “multi-employer
plan,” as defined in Section 3(37) or Section 4001(a)(3) of
ERISA.
10
(g) No events have occurred or are expected
to occur with respect to any Employee Benefit Plan that would cause a material
change in the costs of providing benefits under such Employee Benefit Plan or
would cause a material change in the cost of providing for other liabilities of
such Employee Benefit Plan.
Section 2.19 Title to
Property and Encumbrances.
The Company has good, valid and indefeasible marketable title to all properties
and assets used in the conduct of its business (except for property held under
valid and subsisting leases that are in full force and effect and which are not
in default) free of all Liens and other encumbrances, except Permitted Liens and
such ordinary and customary imperfections of title, restrictions and
encumbrances as do not, individually or in the aggregate, materially detract
from the value of the property or assets or materially impair the use made
thereof by the Company in its business. Without limiting the generality of the
foregoing, the Company has good and indefeasible title to all of its properties
and assets reflected in the Balance Sheet, except for property disposed of in
the usual and ordinary course of business since the Balance Sheet Date and for
property held under valid and subsisting leases that are in full force and
effect and that are not in default. For purposes of this Agreement,
“Permitted
Liens” shall mean (a)
Liens for taxes and assessments or governmental charges or levies not at the
time due or in respect of which the validity thereof shall currently be
contested in good faith by appropriate proceedings; (b) Liens in respect of
pledges or deposits under workmen’s compensation laws or similar legislation,
carriers’, warehousemen’s, mechanics’, laborers’ and materialmens’ and similar
Liens, if the obligations secured by such Liens are not then delinquent or are
being contested in good faith by appropriate proceedings and (c) Liens
incidental to the conduct of the business of the Company that were not incurred
in connection with the borrowing of money or the obtaining of advances or
credits and which do not in the aggregate materially detract from the value of
its property or materially impair the use made thereof by the Company in its
business.
Section 2.20 Condition
of Properties. All
facilities, machinery, equipment, fixtures and other properties owned, leased or
used by the Company are in reasonably good operating condition and repair,
subject to ordinary wear and tear, and are adequate and sufficient for the
Company’s business.
Section 2.21 Insurance
Coverage. There is in full
force and effect one or more policies of insurance issued by insurers of
recognized responsibility, insuring the Company and its properties, products and
business against such losses and risks, and in such amounts, as are customary
for corporations of established reputation engaged in the same or similar
business and similarly situated. The Company has not been refused any insurance
coverage sought or applied for, and the Company has no reason to believe that it
will be unable to renew its existing insurance coverage as and when the same
shall expire upon terms at least as favorable to those currently in effect,
other than possible increases in premiums that do not result from any act or
omission of the Company. No suit, proceeding or action or, to the best current
actual knowledge of the Company, threat of suit, proceeding or action has been
asserted or made against the Company within the last five years due to alleged
bodily injury, disease, medical condition, death or property damage arising out
of the function or malfunction of a product, procedure or service designed,
manufactured, sold or distributed by the Company.
Section 2.22 Litigation. Except as disclosed in Schedule
2.22, there is no legal
action, suit, arbitration or other legal, administrative or other governmental
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company or its properties, assets or business, and after
reasonable investigation, the Company is not aware of any incident, transaction,
occurrence or circumstance that might reasonably be expected to result in or
form the basis for any such action, suit, arbitration or other proceeding. The
Company is not in default with respect to any order, writ, judgment, injunction,
decree, determination or award of any court or any governmental agency or
instrumentality or arbitration authority.
Section 2.23 Licenses. The Company possesses from all
appropriate governmental authorities all licenses, permits, authorizations,
approvals, franchises and rights necessary for the Company to engage in the
business currently conducted by it, all of which are in full force and
effect.
11
Section 2.24 Interested
Party Transactions. No
officer, director or stockholder of the Company or any Affiliate or “associate”
(as such term is defined in Rule 405 under the Securities Act) of any such
Person or the Company has or has had, either directly or indirectly, (a) an
interest in any Person that (i) furnishes or sells services or products that are
furnished or sold or are proposed to be furnished or sold by the Company or (ii)
purchases from or sells or furnishes to the Company any goods or services, or
(b) a beneficial interest in any contract or agreement to which the Company is a
party or by which it may be bound or affected.
Section 2.25 Environmental
Matters.
(a) To the knowledge of the Company, the
Company has never generated, used, handled, treated, released, stored or
disposed of any Hazardous Materials (as defined below) on any real property on
which it now has or previously had any leasehold or ownership interest, except
in compliance with all applicable Environmental Laws (as defined
below).
(b) To the knowledge of the Company, the
historical and present operations of the business of the Company are in
compliance with all applicable Environmental Laws, except where any
non-compliance has not had and would not reasonably be expected to have a
material adverse effect on the Condition of the Company.
(c) There are no material pending or, to
the knowledge of the Company, threatened, demands, claims, information requests
or notices of noncompliance or violation against or to the Company relating to
any Environmental Law; and, to the knowledge of the Company, there are no
conditions or occurrences on any of the real property used by the Company in
connection with its business that would reasonably be expected to lead to any
such demands, claims or notices against or to the Company, except such as have
not had, and would not reasonably be expected to have, a material adverse effect
on the Condition of the Company.
(d) To the knowledge of the Company, (i)
the Company has not sent or disposed of, otherwise had taken or transported,
arranged for the taking or disposal of (on behalf of itself, a customer or any
other party) or in any other manner participated or been involved in the taking
of or disposal or release of a Hazardous Material to or at a site that is
contaminated by any Hazardous Material or that, pursuant to any Environmental
Law, (A) has been placed on the “National Priorities List”, the “CERCLIS” list,
or any similar state or federal list, or (B) is subject to or the source of a
claim, an administrative order or other request to take “removal”, “remedial”,
“corrective” or any other “response” action, as defined in any Environmental
Law, or to pay for the costs of any such action at the site; (ii) the Company is
not involved in (and has no basis to reasonably expect to be involved in) any
suit or proceeding and has not received (and has no basis to reasonably expect
to receive) any notice, request for information or other communication from any
governmental authority or other third party with respect to a release or
threatened release of any Hazardous Material or a violation or alleged violation
of any Environmental Law, and has not received (and has no basis to reasonably
expect to receive) notice of any claims from any Person relating to property
damage, natural resource damage or to personal injuries from exposure to any
Hazardous Material; and (iii) the Company has timely filed every report required
to be filed, acquired all necessary certificates, approvals and permits, and
generated and maintained all required data, documentation and records under all
Environmental Laws, in all such instances except where the failure to do so
would not reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the Condition of the Company.
(e) For purposes of this Agreement, the
following terms shall have the meanings provided below:
12
(i) “Environmental
Laws” shall mean the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
§§ 9601, et seq.; the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. §§ 11001, et seq.; the Resource Conservation and Recovery Act,
42 U.S.C. §§ 6901, et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601
et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §§
136, et seq. and comparable state statutes dealing with the registration,
labeling and use of pesticides and herbicides; the Clean Air Act, 42 U.S.C. §§
7401 et seq.; the Clean Water Act (Federal Water Pollution Control Act), 33
U.S.C. §§ 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f, et seq.;
the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1801, et seq.; as any
of the above statutes have been amended as of the date hereof, all rules,
regulations and policies promulgated pursuant to any of the above statutes, and
any other foreign, federal, state or local law, statute, ordinance, rule,
regulation or policy governing environmental matters, as the same have been
amended as of the date hereof.
(ii) “Hazardous
Material” shall mean any
substance or material meeting any one or more of the following criteria: (a) it
is or contains a substance designated as or meeting the characteristics of a
hazardous waste, hazardous substance, hazardous material, pollutant, contaminant
or toxic substance under any Environmental Law; (b) its presence at some
quantity requires investigation, notification or remediation under any
Environmental Law; or (c) it contains, without limiting the foregoing, asbestos,
polychlorinated biphenyls, petroleum hydrocarbons, petroleum derived substances
or waste, pesticides, herbicides, crude oil or any fraction thereof, nuclear
fuel, natural gas or synthetic gas.
Section 2.26 Questionable
Payments. Neither the
Company nor any director, officer or, to the knowledge of the Company, agent,
employee or other Person associated with or acting on behalf of the Company, has
used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; made any direct or
indirect unlawful payments to government officials or employees from corporate
funds; established or maintained any unlawful or unrecorded fund of corporate
monies or other assets; made any false or fictitious entries on the books of
record of any such corporations; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
Section 2.27 Obligations
to or by Stockholders. The
Company has no liability or obligation or commitment to any Stockholder or any
Affiliate or “associate” (as such term is defined in Rule 405 under the
Securities Act) of any Stockholder, nor does any Stockholder or any such
Affiliate or associate have any liability, obligation or commitment to the
Company.
Section 2.28 Duty to
Make Inquiry. To the
extent that any of the representations or warranties in this Article II are
qualified by “knowledge” or “belief,” the Company represents and warrants that
it has made due and reasonable inquiry and investigation concerning the matters
to which such representations and warranties relate, including, but not limited
to, diligent inquiry of its directors, officers and key
personnel.
Section 2.29 Disclosure. There is no fact relating to the
Company that the Company has not disclosed to Parent and Acquisition Corp. in
writing that has had or is currently having a material and adverse effect or,
insofar as the Company can now foresee, will materially and adversely affect the
Condition of the Company. No representation or warranty by the Company herein
and no information disclosed in the schedules or exhibits hereto by the Company
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES OF PARENT AND ACQUISITION CORP.
Parent
and Acquisition Corp. represent and warrant to the Company as follows.
Notwithstanding anything to the contrary contained herein, disclosure of items
in the Parent SEC Documents (as defined below) shall be deemed to be disclosure
of such items for all purposes under this Agreement, including, without
limitation, for all applicable representations and warranties of Parent and
Acquisition Corp.:
13
Section 3.01 Organization
and Standing. Parent is a
corporation duly organized and existing in good standing under the laws of the
State of Delaware. Acquisition Corp. is a corporation duly organized and
existing in good standing under the laws of the State of Delaware. Parent and
Acquisition Corp. have heretofore delivered to the Company complete and correct
copies of their respective Certificates of Incorporation and By-laws as now in
effect. Parent and Acquisition Corp. have full corporate power and authority to
carry on their respective businesses as they are now being conducted and as now
proposed to be conducted and to own or lease their respective properties and
assets. Neither Parent nor Acquisition Corp. has any subsidiaries (except
Parent’s ownership of Acquisition Corp.) or direct or indirect interest (by way
of stock ownership or otherwise) in any firm, corporation, limited liability
company, partnership, association or business. Parent owns all of the issued and
outstanding capital stock of Acquisition Corp. free and clear of all Liens, and
Acquisition Corp. has no outstanding options, warrants or rights to purchase
capital stock or other securities of Acquisition Corp., other than the capital
stock owned by Parent. Unless the context otherwise requires, all references in
this Article III to “Parent” shall be treated as being a reference to Parent and
Acquisition Corp. taken together as one enterprise.
Section 3.02 Qualification. Parent is duly qualified to conduct
business as a foreign corporation and are in good standing in each jurisdiction
wherein the nature of its activities or its properties owned or leased makes
such qualification necessary, except where the failure to be so qualified would
not have a material adverse effect on the condition, properties, assets,
liabilities or business operations of Parent (the “Condition
of the Parent”).
Section 3.03 Corporate
Authority. Each of Parent
and/or Acquisition Corp. (as the case may be) has full corporate power and
authority to enter into the Merger Documents and the other agreements to be made
pursuant to the Merger Documents, and to carry out the transactions contemplated
hereby and thereby. All corporate acts and proceedings required for the
authorization, execution, delivery and performance of the Merger Documents and
such other agreements and documents by Parent and/or Acquisition Corp. (as the
case may be) have been duly and validly taken or will have been so taken prior
to the Closing. Each of the Merger Documents constitutes a legal, valid and
binding obligation of Parent and/or Acquisition Corp. (as the case may be), each
is enforceable against it and/or them in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting creditors’ rights generally and by general
principles of equity.
Section 3.04 Broker’s
and Finder’s Fees. No
Person is entitled by reason of any act or omission of Parent or Acquisition
Corp. to any broker’s or finder’s fees, commission or other similar compensation
with respect to the execution and delivery of the Merger Documents, or with
respect to the consummation of the transactions contemplated thereby, except as
set forth in the Disclosures.
Section 3.05 Capitalization.
(a) The authorized capital stock of Parent
consists of (i) 150,000,000 shares of Parent Common Stock, par value $0.0001 of
which _____________ shares are issued and outstanding, and (ii) 10,000,000
shares of preferred stock, par value $0.0001 per share, of which no shares have
been issued or designated as any series of preferred stock (the “Parent
Preferred Stock”). Parent
has no outstanding options, rights or commitments to issue shares of Parent
Common Stock or any other Equity Security of Parent or Acquisition Corp., and
there are no outstanding securities convertible or exercisable into or
exchangeable for shares of Parent Common Stock or any other Equity Security of
Parent or Acquisition Corp. There is no voting trust, agreement or arrangement
among any of the beneficial holders of Parent Common Stock affecting the
nomination or election of directors or the exercise of the voting rights of
Parent Common Stock.
14
(b) The authorized capital stock of
Acquisition Corp. consists of 3,000 shares of common stock, par value $.001 per
share (the “Acquisition
Corp. Common Stock”), of
which 3,000 shares are issued and outstanding. All of the outstanding
Acquisition Corp. Common Stock is owned by Parent. All outstanding shares of the
capital stock of Acquisition Corp. are validly issued and outstanding, fully
paid and non-assessable, and none of such shares have been issued in violation
of the preemptive rights of any Person. Acquisition Corp. has no outstanding
options, rights or commitments to issue shares of Acquisition Corp. Common Stock
or any other Equity Security of Acquisition Corp., and there are no outstanding
securities convertible or exercisable into or exchangeable for shares of
Acquisition Corp. Common Stock or any other Equity Security of Acquisition
Corp.
Section 3.06 Acquisition
Corp. Acquisition Corp. is
a wholly-owned Delaware subsidiary of Parent that was formed specifically for
the purpose of the Merger and that has not conducted any business or acquired
any property, and will not conduct any business or acquire any property prior to
the Closing Date, except in preparation for and otherwise in connection with the
transactions contemplated by the Merger Documents and the other agreements to be
made pursuant to or in connection with the Merger Documents.
Section 3.07 Validity of
Shares. The shares of
Parent Common Stock to be issued at the Closing pursuant to Section 1.06(a)(ii)
hereof, when issued and delivered in accordance with the terms of the Merger
Documents, shall be duly and validly issued, fully paid and non-assessable.
Based in part on the representations and warranties of the Stockholders as
contemplated by Article IV hereof and assuming the accuracy thereof, the
issuance of the Parent Common Stock upon consummation of the Merger pursuant to
Section 1.06(a)(ii) will be exempt from the registration and prospectus delivery
requirements of the Securities Act and from the qualification or registration
requirements of any applicable state “Blue Sky” or securities
laws.
Section 3.08 SEC
Reporting and Compliance.
(a) Parent filed a registration statement
on Form SB-2 under the Securities Act, which became effective on or about June
11, 2007. Since that date, Parent has timely filed with the U.S. Securities and
Exchange Commission (the “Commission”) all registration statements, proxy
statements, information statements and reports required to be filed pursuant to
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Parent has not
filed with the Commission a certificate on Form 15 pursuant to Rule 12h-3 of the
Exchange Act.
(b) Parent has made available to the
Company true and complete copies of the registration statements, information
statements and other reports (collectively, the “Parent SEC
Documents”) filed by
Parent with the Commission. None of the Parent SEC Documents, as of their
respective dates, contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements contained
therein not misleading.
(c) Prior to and until the Closing, Parent
will provide to the Company copies of any and all amendments or supplements to
the Parent SEC Documents filed with the Commission and all subsequent
registration statements and reports filed by Parent subsequent to the filing of
the Parent SEC Documents with the Commission and any and all subsequent
information statements, proxy statements, reports or notices filed by Parent
with the Commission or delivered to the stockholders of
Parent.
(d) Parent is not an investment company
within the meaning of Section 3 of the Investment Company Act of 1940, as
amended.
(e) The shares of Parent Common Stock are
quoted on the Over-the-Counter (OTC) Bulletin Board under the symbol “SSIN.OB”
and Parent is in compliance in all material respects with all rules and
regulations of the OTC Bulletin Board applicable to it and the Parent Common
Stock.
15
(f) Between the date hereof and the Closing
Date, Parent shall continue to satisfy the filing requirements of the Exchange
Act and all other requirements of applicable securities laws and of the OTC
Bulletin Board.
(g) The Parent SEC Documents include all
certifications and statements required of it, if any, by (i) Rule 13a-14 or
15d-14 under the Exchange Act, and (ii) 18 U.S.C. Section 1350 (Section 906 of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002), and each of such certifications and statements
contain no qualifications or exceptions to the matters certified therein other
than a knowledge qualification, permitted under such provision, and have not
been modified or withdrawn and neither Parent nor any of its officers has
received any notice from the Commission questioning or challenging the accuracy,
completeness, form or manner of filing or submission of such certifications or
statements.
(h) Parent has otherwise complied with the
Securities Act, Exchange Act and all other applicable federal and state
securities laws.
Section 3.09 Financial
Statements. The balance
sheets and statements of operations, stockholders’ equity and cash flows
contained in the Parent SEC Documents (the “Parent
Financial Statements”) (a)
have been prepared in accordance with GAAP applied on a basis consistent with
prior periods (and, in the case of unaudited financial information, on a basis
consistent with year-end audits), (b) are in accordance with the books and
records of Parent and (c) present fairly in all material respects the financial
condition of Parent at the dates therein specified and the results of its
operations and changes in financial position for the periods therein specified.
The financial statements included in Parent’s SB-2 were audited by ▇▇▇▇ &
Company, P.A., Parent’s independent registered public accounting
firm
Section 3.10 Governmental
Consents. All material
consents, approvals, orders, or authorizations of, or registrations,
qualifications, designations, declarations, or filings with any federal or state
governmental authority on the part of Parent or Acquisition Corp. required in
connection with the consummation of the Merger shall have been obtained prior
to, and be effective as of, the Closing.
Section 3.11 Compliance
with Laws and Other Instruments. The execution, delivery and
performance by Parent and/or Acquisition Corp. of the Merger Documents and the
other agreements to be made by Parent or Acquisition Corp. pursuant to or in
connection with the Merger Documents and the consummation by Parent and/or
Acquisition Corp. of the transactions contemplated by the Merger Documents will
not cause Parent and/or Acquisition Corp. to violate or contravene (a) any
provision of law, (b) any rule or regulation of any agency or government, (c)
any order, judgment or decree of any court or (d) any provision of their
respective charters or By-laws as amended and in effect on and as of the Closing
Date and will not violate or be in conflict with, result in a breach of or
constitute (with or without notice or lapse of time, or both) a default under
any material indenture, loan or credit agreement, deed of trust, mortgage,
security agreement or other agreement or contract to which Parent or Acquisition
Corp. is a party or by which Parent and/or Acquisition Corp. or any of their
respective properties is bound.
Section 3.12 No General
Solicitation. In issuing
Parent Common Stock in the Merger hereunder, neither Parent nor anyone acting on
its behalf has offered to sell the Parent Common Stock by any form of general
solicitation or advertising.
Section 3.13 Binding
Obligations. The Merger
Documents constitute the legal, valid and binding obligations of Parent and
Acquisition Corp., and are enforceable against Parent and Acquisition Corp., in
accordance with their respective terms, except as such enforcement is limited by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors’ rights generally and by general principles of
equity.
16
Section 3.14 Absence of
Undisclosed Liabilities.
Neither Parent nor Acquisition Corp. has any material obligation or liability
(whether accrued, absolute, contingent, liquidated or otherwise, whether due or
to become due), arising out of any transaction entered into at or prior to the
Closing, except (a) as disclosed in the Parent SEC Documents, (b) to the extent
set forth on or reserved against in the balance sheet of Parent in the most
recent Parent SEC Document filed by Parent (the “Parent
Balance Sheet”) or the
notes to the Parent Financial Statements, (c) current liabilities incurred and
obligations under agreements entered into in the usual and ordinary course of
business since the date of the Parent Balance Sheet (the “Parent
Balance Sheet Date”), none
of which (individually or in the aggregate) materially and adversely affects the
Condition of Parent and (d) by the specific terms of any written agreement,
document or arrangement attached as an exhibit to the Parent SEC
Documents.
Section 3.15 Changes. Since the Parent Balance Sheet Date,
except as disclosed in the Parent SEC Documents, Parent has not (a) incurred any
debts, obligations or liabilities, absolute, accrued or, to Parent’s knowledge,
contingent, whether due or to become due, except for current liabilities
incurred in the usual and ordinary course of business, (b) discharged or
satisfied any Liens other than those securing, or paid any obligation or
liability other than, current liabilities shown on the Parent Balance Sheet and
current liabilities incurred since the Parent Balance Sheet Date, in each case
in the usual and ordinary course of business, (c) mortgaged, pledged or
subjected to Lien any of its assets, tangible or intangible, other than in the
usual and ordinary course of business, (d) sold, transferred or leased any of
its assets, except in the usual and ordinary course of business, (e) cancelled
or compromised any debt or claim, or waived or released any right of material
value, (f) suffered any physical damage, destruction or loss (whether or not
covered by insurance) that could reasonably be expected to have a material
adverse effect on the Condition of the Parent, (g) entered into any transaction
other than in the usual and ordinary course of business, (h) encountered any
labor union difficulties, (i) made or granted any wage or salary increase or
made any increase in the amounts payable under any profit sharing, bonus,
deferred compensation, severance pay, insurance, pension, retirement or other
employee benefit plan, agreement or arrangement, other than in the ordinary
course of business consistent with past practice, or entered into any employment
agreement, (j) issued or sold any shares of capital stock, bonds, notes,
debentures or other securities or granted any options (including employee stock
options), warrants or other rights with respect thereto, (k) declared or paid
any dividends on or made any other distributions with respect to, or purchased
or redeemed, any of its outstanding capital stock, (l) suffered or experienced
any change in, or condition affecting, the Condition of the Parent other than
changes, events or conditions in the usual and ordinary course of its business,
none of which (either by itself or in conjunction with all such other changes,
events and conditions) could reasonably be expected to have a material adverse
effect on the Condition of the Parent, (m) made any change in the accounting
principles, methods or practices followed by it or depreciation or amortization
policies or rates theretofore adopted, (n) made or permitted any amendment or
termination of any material contract, agreement or license to which it is a
party, (o) suffered any material loss not reflected in the Parent Balance Sheet
or its statement of income for the year ended on the Parent Balance Sheet Date,
(p) paid, or made any accrual or arrangement for payment of, bonuses or special
compensation of any kind or any severance or termination pay to any present or
former officer, director, employee, stockholder or consultant, (q) made or
agreed to make any charitable contributions or incurred any non-business
expenses in excess of $5,000 in the aggregate or (r) entered into any agreement,
or otherwise obligated itself, to do any of the foregoing.
Section 3.16 Tax Returns
and Audits. All required
federal, state and local Tax Returns of Parent have been accurately prepared in
all material respects and duly and timely filed, and all federal, state and
local Taxes required to be paid with respect to the periods covered by such
returns have been paid to the extent that the same are material and have become
due, except where the failure so to file or pay could not reasonably be expected
to have a material adverse effect upon the Condition of the Parent. Parent is
not and has not been delinquent in the payment of any Tax. Parent has not had a
Tax deficiency assessed against it. None of Parent’s federal income, state and
local income and franchise tax returns has been audited by any governmental
authority. The reserves for Taxes reflected on the Parent Balance Sheet are
sufficient for the payment of all unpaid Taxes payable by Parent with respect to
the period ended on the Parent Balance Sheet Date. There are no federal, state,
local or foreign audits, actions, suits, proceedings, investigations, claims or
administrative proceedings relating to Taxes or any Tax Returns of Parent now
pending, and Parent has not received any notice of any proposed audits,
investigations, claims or administrative proceedings relating to Taxes or any
Tax Returns.
17
Section 3.17 Employee
Benefit Plans; ERISA.
(a) Except as disclosed in the Parent SEC
Documents, there are no “employee benefit plans” (within the meaning of Section
3(3) of ERISA) nor any other employee benefit or fringe benefit arrangements,
practices, contracts, policies or programs other than programs merely involving
the regular payment of wages, commissions, or bonuses established, maintained or
contributed to by Parent. Any plans listed in the Parent SEC Documents are
hereinafter referred to as the “Parent
Employee Benefit Plans.”
(b) Any current and prior material
documents, including all amendments thereto, with respect to each Parent
Employee Benefit Plan have been given to the Company or its
advisors.
(c) All Parent Employee Benefit Plans are
in material compliance with the applicable requirements of ERISA, the Code and
any other applicable state, federal or foreign law.
(d) There are no pending, or to the
knowledge of Parent, threatened, claims or lawsuits which have been asserted or
instituted against any Parent Employee Benefit Plan, the assets of any of the
trusts or funds under the Parent Employee Benefit Plans, the plan sponsor or the
plan administrator of any of the Parent Employee Benefit Plans or against any
fiduciary of a Parent Employee Benefit Plan with respect to the operation of
such plan.
(e) There is no pending, or to the
knowledge of Parent, threatened, investigation or pending or possible
enforcement action by the Pension Benefit Guaranty Corporation, the Department
of Labor, the Internal Revenue Service or any other government agency with
respect to any Parent Employee Benefit Plan.
(f) No actual or, to the knowledge of
Parent, contingent liability exists with respect to the funding of any Parent
Employee Benefit Plan or for any other expense or obligation of any Parent
Employee Benefit Plan, except as disclosed on the financial statements of Parent
or the Parent SEC Documents, and to the knowledge of Parent, no contingent
liability exists under ERISA with respect to any “multi-employer plan,” as
defined in Section 3(37) or Section 4001(a)(3) of ERISA.
Section 3.18 Litigation. There is no legal action, suit,
arbitration or other legal, administrative or other governmental proceeding
pending or, to the knowledge of Parent, threatened against or affecting Parent
or Acquisition Corp. or any of their respective properties, assets or
businesses. To the knowledge of Parent, neither Parent nor Acquisition Corp. is
in default with respect to any order, writ, judgment, injunction, decree,
determination or award of any court or any governmental agency or
instrumentality or arbitration authority.
Section 3.19 Licenses. Parent possesses from all appropriate
governmental authorities all licenses, permits, authorizations, approvals,
franchises and rights necessary for the Company to engage in the business
currently conducted by it, all of which are in full force and
effect.
Section 3.20 Interested
Party Transactions. Except
as disclosed in the Parent SEC Documents, no officer, director or stockholder of
Parent or any Affiliate or “associate” (as such term is defined in Rule 405
under the Securities Act) of any such Person or of Parent has or has had, either
directly or indirectly, (a) an interest in any Person that (i) furnishes or
sells services or products that are furnished or sold or are proposed to be
furnished or sold by Parent or (ii) purchases from or sells or furnishes to
Parent any goods or services, or (b) a beneficial interest in any contract or
agreement to which Parent is a party or by which it or any of its assets may be
bound or affected.
18
Section 3.21 Questionable
Payments. Neither Parent,
Acquisition Corp. nor, to the knowledge of Parent, any director, officer, agent,
employee or other Person associated with or acting on behalf of Parent or
Acquisition Corp. has used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity;
made any direct or indirect unlawful payments to government officials or
employees from corporate funds; established or maintained any unlawful or
unrecorded fund of corporate monies or other assets; made any false or
fictitious entries on the books of record of any such corporations; or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
Section 3.22 Obligations
to or by Stockholders.
Except as disclosed in the Parent SEC Documents, Parent has no liability or
obligation or commitment to any stockholder of Parent or any Affiliate or
“associate” (as such term is defined in Rule 405 under the Securities Act) of
any stockholder of Parent, nor does any stockholder of Parent or any such
Affiliate or associate have any liability, obligation or commitment to
Parent.
Section 3.23 Assets and
Contracts. Except as
expressly set forth in this Agreement, the Parent Balance Sheet or the notes
thereto, or the Parent SEC Documents, Parent is not a party to any written or
oral agreement not made in the ordinary course of business that is material to
Parent. Parent does not own any real property. Except as expressly set forth in
this Agreement, the Parent Balance Sheet or the notes thereto, or the Parent SEC
Documents, Parent is not a party to or otherwise barred by any written or oral
(a) agreement with any labor union, (b) agreement for the purchase of fixed
assets or for the purchase of materials, supplies or equipment in excess of
normal operating requirements, (c) agreement for the employment of any officer,
individual employee or other Person on a full-time basis or any agreement with
any Person for consulting services, (d) bonus, pension, profit sharing,
retirement, stock purchase, stock option, deferred compensation, medical,
hospitalization or life insurance or similar plan, contract or understanding
with respect to any or all of the employees of Parent or any other Person, (e)
indenture, loan or credit agreement, note agreement, deed of trust, mortgage,
security agreement, promissory note or other agreement or instrument relating to
or evidencing Indebtedness for Borrowed Money or subjecting any asset or
property of Parent to any Lien or evidencing any Indebtedness, (f) guaranty of
any Indebtedness, (g) lease or agreement under which Parent is lessee of or
holds or operates any property, real or personal, owned by any other Person, (h)
lease or agreement under which Parent is lessor or permits any Person to hold or
operate any property, real or personal, owned or controlled by Parent, (i)
agreement granting any preemptive right, right of first refusal or similar right
to any Person, (j) agreement or arrangement with any Affiliate or any
“associate” (as such term is defined in Rule 405 under the Securities Act) of
Parent or any present or former officer, director or stockholder of Parent, (k)
agreement obligating Parent to pay any royalty or similar charge for the use or
exploitation of any tangible or intangible property, (1) covenant not to compete
or other restriction on its ability to conduct a business or engage in any other
activity, (m) distributor, dealer, manufacturer’s representative, sales agency,
franchise or advertising contract or commitment, (n) agreement to register
securities under the Securities Act, (o) collective bargaining agreement or (p)
agreement or other commitment or arrangement with any Person continuing for a
period of more than three months from the Closing Date that involves an
expenditure or receipt by Parent in excess of $1,000. Parent maintains no
insurance policies or insurance coverage of any kind with respect to Parent, its
business, premises, properties, assets, employees and agents. No consent of any
bank or other depository is required to maintain any bank account, other deposit
relationship or safety deposit box of Parent in effect following the
consummation of the Merger and the transactions contemplated
hereby.
Section 3.24 Employees. Other than pursuant to ordinary
arrangements of employment compensation, Parent is not under any obligation or
liability to any officer, director, employee or Affiliate of
Parent.
19
Section 3.25 Disclosure. There is no fact relating to Parent
that Parent has not disclosed to the Company in writing that materially and
adversely affects nor, insofar as Parent can now foresee, will materially and
adversely affect, the condition (financial or otherwise), properties, assets,
liabilities, business operations, results of operations or prospects of Parent.
No representation or warranty by Parent herein and no information disclosed in
the schedules or exhibits hereto by Parent contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE
IV.
ADDITIONAL
REPRESENTATIONS, WARRANTIES AND
COVENANTS
OF THE STOCKHOLDERS
Promptly
after the Effective Time, Parent shall cause to be mailed to each holder of
record of Company Common Stock that was converted pursuant to Section 1.06
hereof into the right to receive Parent Common Stock a letter of transmittal
(“Letter of
Transmittal”) that shall contain additional representations, warranties
and covenants of such Stockholder, including without limitation, that (a) such
Stockholder has full right, power and authority to deliver such Company Common
Stock and Letter of Transmittal, (b) the delivery of such Company Common Stock
will not violate or be in conflict with, result in a breach of or constitute a
default under, any indenture, loan or credit agreement, deed of trust, mortgage,
security agreement or other agreement or instrument to which such Stockholder is
bound or affected, (c) such Stockholder has good, valid and marketable title to
all shares of Company Common Stock indicated in such Letter of Transmittal and
that such Stockholder is not affected by any voting trust, agreement or
arrangement affecting the voting rights of such Company Common Stock, (d)
whether such Stockholder is an “accredited investor,” as such term is defined in
Regulation D under the Securities Act and that such Stockholder is acquiring
Parent Common Stock for investment purposes, and not with a view to selling or
otherwise distributing such Parent Common Stock in violation of the Securities
Act or the securities laws of any state and (e) such Stockholder has had an
opportunity to ask and receive answers to any questions such Stockholder may
have had concerning the terms and conditions of the Merger and the Parent Common
Stock and has obtained any additional information that such Stockholder has
requested. Delivery shall be effected, and risk of loss and title to the Company
Common Stock shall pass, only upon delivery to Parent (or an agent of Parent) of
(x) certificates evidencing ownership thereof as contemplated by Section 1.07
hereof (or affidavit of lost certificate), and (y) the Letter of Transmittal
containing the representations, warranties and covenants contemplated by this
Article IV.
ARTICLE
V.
CONDUCT
OF BUSINESSES PENDING THE MERGER.
Section 5.01 Conduct of
Business by the Company Pending the Merger. Prior to the Effective Time, unless
Parent or Acquisition Corp. shall otherwise agree in writing or as otherwise
contemplated by this Agreement:
(a) the business of the Company shall be
conducted only in the ordinary course;
(b) the Company shall not (i) directly or
indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase or
otherwise acquire any shares of its capital stock; (ii) amend its Articles of
Incorporation or By-laws except to effectuate the transactions contemplated in
the Disclosures or (iii) split, combine or reclassify the outstanding Company
Stock or declare, set aside or pay any dividend payable in cash, stock or
property or make any distribution with respect to any such
stock;
20
(c) the Company shall not (i) issue or
agree to issue any additional shares of, or options, warrants or rights of any
kind to acquire any shares of, Company Common Stock, except to issue shares of
Company Common Stock in connection with any matter relating to the Disclosures
(ii) acquire or dispose of any fixed assets or acquire or dispose of any other
substantial assets other than in the ordinary course of business; (iii) incur
additional Indebtedness or any other liabilities or enter into any other
transaction other than in the ordinary course of business; (iv) enter into any
contract, agreement, commitment or arrangement with respect to any of the
foregoing or (v) except as contemplated by this Agreement, enter into any
contract, agreement, commitment or arrangement to dissolve, merge, consolidate
or enter into any other material business combination;
(d) the Company shall use its best efforts
to preserve intact the business organization of the Company, to keep available
the service of its present officers and key employees, and to preserve the good
will of those having business relationships with it;
(e) the Company will not, nor will it
authorize any director or authorize or permit any officer or employee or any
attorney, accountant or other representative retained by it to, make, solicit,
encourage any inquiries with respect to, or engage in any negotiations
concerning, any Acquisition Proposal (as defined below for purposes of this
paragraph). The Company will promptly advise Parent orally and in writing of any
such inquiries or proposals (or requests for information) and the substance
thereof. As used in this paragraph, “Acquisition
Proposal” shall mean any
proposal for a merger or other business combination involving the Company or for
the acquisition of a substantial equity interest in it or any material assets of
it other than as contemplated by this Agreement. The Company will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Person conducted heretofore with respect to any of the
foregoing; and
(f) the Company will not enter into any new
employment agreements with any of its officers or employees or grant any
increases in the compensation or benefits of its officers and employees or amend
any employee benefit plan or arrangement.
Section 5.02 Conduct of
Business by Parent and Acquisition Corp. Pending the Merger. Prior to the
Effective Time, unless the Company shall otherwise agree in writing or as
otherwise contemplated by this Agreement:
(a) the business of Parent and Acquisition
Corp. shall be conducted only in the ordinary course; provided, however, that Parent shall take the steps
necessary to have discontinued its existing business without liability to Parent
or Acquisition Corp. immediately following the Effective
Time;
(b) neither Parent nor Acquisition Corp.
shall (i) directly or indirectly redeem, purchase or otherwise acquire or agree
to redeem, purchase or otherwise acquire any shares of its capital stock; (ii)
amend its charter or by-laws other than to effectuate the transactions
contemplated hereby; or (iii) split, combine or reclassify its capital stock or
declare, set aside or pay any dividend payable in cash, stock or property or
make any distribution with respect to such stock;
(c) neither Parent nor Acquisition Corp.
shall (i) issue or agree to issue any additional shares of, or options, warrants
or rights of any kind to acquire shares of, its capital stock; (ii) acquire or
dispose of any assets other than in the ordinary course of business (except for
dispositions in connection with Section 5.02(a) hereof); (iii) incur additional
Indebtedness or any other liabilities or enter into any other transaction except
in the ordinary course of business; (iv) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing or (v) except as
contemplated by this Agreement, enter into any contract, agreement, commitment
or arrangement to dissolve, merge, consolidate or enter into any other material
business contract or enter into any negotiations in connection
therewith;
21
(d) neither Parent nor Acquisition Corp.
will, nor will they authorize any director or authorize or permit any officer or
employee or any attorney, accountant or other representative retained by them
to, make, solicit, encourage any inquiries with respect to, or engage in any
negotiations concerning, any Acquisition Proposal (as defined below for purposes
of this paragraph). Parent will promptly advise the Company orally and in
writing of any such inquiries or proposals (or requests for information) and the
substance thereof. As used in this paragraph, “Acquisition
Proposal” shall mean any
proposal for a merger or other business combination involving Parent or
Acquisition Corp. or for the acquisition of a substantial equity interest in
either of them or any material assets of either of them other than as
contemplated by this Agreement. Parent will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any Person
conducted heretofore with respect to any of the foregoing;
and
(e) neither Parent nor Acquisition Corp.
will enter into any new employment agreements with any of their officers or
employees or grant any increases in the compensation or benefits of their
officers and employees.
ARTICLE
VI.
ADDITIONAL
AGREEMENTS
Section 6.01 Access and
Information. The Company,
on the one hand, and Parent and Acquisition Corp., on the other hand, shall each
afford to the other and to the other’s accountants, counsel and other
representatives full access during normal business hours throughout the period
prior to the Effective Time to all of its properties, books, contracts,
commitments and records (including but not limited to tax returns) and during
such period, each shall furnish promptly to the other all information concerning
its business, properties and personnel as such other party may reasonably
request, provided that no investigation pursuant to this Section 6.01 shall
affect any representations or warranties made herein. Each party shall hold, and
shall cause its employees and agents to hold, in confidence all such information
(other than such information that (a) is already in such party’s possession or
(b) becomes generally available to the public other than as a result of a
disclosure by such party or its directors, officers, managers, employees, agents
or advisors or (c) becomes available to such party on a non-confidential basis
from a source other than a party hereto or its advisors, provided that such
source is not known by such party to be bound by a confidentiality agreement
with or other obligation of secrecy to a party hereto or another party until
such time as such information is otherwise publicly available; provided, however, that (i) any such information may be
disclosed to such party’s directors, officers, employees and representatives of
such party’s advisors who need to know such information for the purpose of
evaluating the transactions contemplated hereby (it being understood that such
directors, officers, employees and representatives shall be informed by such
party of the confidential nature of such information), (ii) any disclosure of
such information may be made as to which the party hereto furnishing such
information has consented in writing and (iii) any such information may be
disclosed pursuant to a judicial, administrative or governmental order or
request; provided, further, that the requested party will
promptly so notify the other party so that the other party may seek a protective
order or appropriate remedy and/or waive compliance with this Agreement and if
such protective order or other remedy is not obtained or the other party waives
compliance with this provision, the requested party will furnish only that
portion of such information that is legally required and will exercise its best
efforts to obtain a protective order or other reliable assurance that
confidential treatment will be accorded the information furnished. If this
Agreement is terminated, each party will deliver to the other all documents and
other materials (including copies) obtained by such party or on its behalf from
the other party as a result of this Agreement or in connection herewith, whether
so obtained before or after the execution hereof.
Section 6.02 Additional
Agreements. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
its commercially reasonable efforts to take, or cause to be taken, all action
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its commercially
reasonable efforts to satisfy the conditions precedent to the obligations of any
of the
22
Continued-
parties hereto, to obtain all necessary
waivers, and to lift any injunction or other legal bar to the Merger (and, in
such case, to proceed with the Merger as expeditiously as possible). In order to
obtain any necessary governmental or regulatory action or non-action, waiver,
consent, extension or approval, each of Parent, Acquisition Corp. and the
Company agrees to take all reasonable actions and to enter into all reasonable
agreements as may be necessary to obtain timely governmental or regulatory
approvals and to take such further action in connection therewith as may be
necessary. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and/or directors of Parent, Acquisition Corp. and the Company shall
take all such necessary action.
Section 6.03 Publicity. No party shall issue any press
release or public announcement pertaining to the Merger that has not been agreed
upon in advance by Parent and the Company, except as Parent reasonably
determines to be necessary in order to comply with the rules of the Commission
or of the principal trading exchange or market for the Parent Common Stock,
provided, that in such case Parent will use its best efforts to allow the
Company to review and reasonably approve any such press release or public
announcement prior to its release.
Section 6.04 Appointment
of Directors and Officers.
Immediately at the Effective Time, Parent shall accept the resignations of the
current officers and directors of Parent, and shall cause the persons listed as
directors in Exhibit
E hereto to be elected to
the Board of Directors of Parent. At the first annual meeting of Parent
stockholders and thereafter, the election of members of Parent’s Board of
Directors shall be accomplished in accordance with the By-laws of Parent and the
rules of the Commission.
Section 6.05 Intentionally
Omitted.
Section 6.06 Assumption
of Agreements. At the
Effective Time, Parent shall affirmatively assume any all liabilities and
obligations of the Company with respect to the Private Placement and the
Merger.
ARTICLE
VII.
CONDITIONS
TO PARTIES’ OBLIGATIONS
Section 7.01 Conditions
to Parent and Acquisition Corp. Obligations. The obligations of Parent and
Acquisition Corp. under the Merger Documents are subject to the fulfillment, at
or prior to the Closing, of the following conditions, any of which may be waived
in whole or in part by Parent.
(a) The representations and warranties of
the Company under this Agreement shall be deemed to have been made again on the
Closing Date and shall then be true and correct in all material
respects.
(b) The Company shall have performed and
complied in all material respects with all agreements and conditions required by
this Agreement to be performed or complied with by it on or before the Closing
Date.
(c) There shall not exist on the Closing
Date any Default (as defined below) or Event of Default (as defined below) or
any event or condition that, with the giving of notice or lapse of time or both,
would constitute a Default or Event of Default and, since the Balance Sheet
Date, there shall have been no material adverse change in the Condition of the
Company. For purposes of this Agreement, “Default” shall mean a default or failure in
the due observance or performance of any covenant, condition or agreement on the
part of a party to be observed or performed under the terms of the Merger
Documents, if such default or failure in performance shall remain un-remedied
for five (5) days. Furthermore, for purposes of this Agreement, “Event of
Default” shall mean (i)
the failure to pay any Indebtedness for Borrowed Money, or any interest or
premium thereon, within five (5) days after the same shall become due,
23
Continued -
whether such Indebtedness shall become
due by scheduled maturity, by required prepayment, by acceleration, by demand or
otherwise, (ii) an event of default under any agreement or instrument evidencing
or securing or relating to any such Indebtedness or (iii) the failure to perform
or observe any material term, covenant, agreement or condition on its part to be
performed or observed under any agreement or instrument evidencing or securing
or relating to any such Indebtedness when such term, covenant or agreement is
required to be performed or observed.
(d) No action or proceeding before any
court, governmental body or agency shall have been threatened, asserted or
instituted to restrain or prohibit, or to obtain substantial damages in respect
of, the Merger Documents or the carrying out of the transactions contemplated by
the Merger Documents.
(e) Parent and Acquisition Corp. shall have
received the following:
(i) copies of resolutions of the Board of
Directors and the Stockholders, certified by the Secretary of the Company,
authorizing and approving the execution, delivery and performance of the Merger
Documents and all other documents and instruments to be delivered pursuant
thereto;
(ii) a certificate of incumbency executed by
the Secretary of the Company certifying the names, titles and signatures of the
officers authorized to execute any documents referred to in this Agreement and
further certifying that the Articles of Incorporation and By-laws of the Company
delivered to Parent and Acquisition Corp. at the time of the execution of this
Agreement have been validly adopted and have not been amended or
modified;
(iii) a certificate, dated the Closing Date,
executed by the President and Chief Executive Officer of the Company certifying
that the undersigned officers have no knowledge of any plan to issue any
securities of the Company, and the Company has not entered into any agreement,
written or oral, to issue any securities of the Company except as described in
the Disclosures or this Agreement;
(iv) evidence as of a recent date of the
good standing and corporate existence of the Company issued by the Department of
State of the State of Nevada and evidence that the Company is qualified to
transact business as a foreign corporation and is in good standing in each state
of the United States and in each other jurisdiction where the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary; and
(v) such additional supporting
documentation and other information with respect to the transactions
contemplated hereby as Parent and Acquisition Corp. may reasonably
request.
(f) All corporate and other proceedings and
actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned herein
or incident to any such transactions shall be reasonably satisfactory in form
and substance to Parent and Acquisition Corp. The Company shall furnish to
Parent and Acquisition Corp. such supporting documentation and evidence of the
satisfaction of any or all of the conditions precedent specified in this Section
7.01 as Parent or its counsel may reasonably request.
Section 7.02 Conditions
to the Company’s Obligations. The obligations of the Company under
the Merger Documents are subject to the fulfillment, at or prior to the Closing,
of the following conditions, any of which may be waived in whole or in part by
the Company.
24
(a) The representations and warranties of
Parent and Acquisition Corp. under this Agreement shall be deemed to have been
made again on the Closing Date and shall then be true and correct in all
material respects.
(b) Parent and Acquisition Corp. shall have
performed and complied in all material respects with all agreements and
conditions required by the Merger Documents to be performed or complied with by
them on or before the Closing Date.
(c) There shall not exist on the Closing
Date any Default or Event of Default or any event or condition that, with the
giving of notice or lapse of time or both, would constitute a Default or Event
of Default and, since the Parent Balance Sheet Date, there shall have been no
material adverse change in the Condition of the Parent.
(d) The Company shall have received the
following:
(i) copies of resolutions of Parent’s and
Acquisition Corp.’s respective boards of directors and the sole stockholder of
Acquisition Corp., certified by their respective Secretaries, authorizing and
approving, to the extent applicable, the execution, delivery and performance of
the Merger Documents and all other documents and instruments to be delivered by
them pursuant thereto;
(ii) a certificate of incumbency executed by
the respective Secretaries of Parent and Acquisition Corp. certifying the names,
titles and signatures of the officers authorized to execute the documents
referred to in this Agreement and further certifying that the Certificates of
Incorporation and By-laws of Parent and Acquisition Corp. appended thereto have
not been amended or modified.
(iii) a certificate, dated the Closing Date,
executed by the President and Chief Financial Officer of each of the Parent and
Acquisition Corp., certifying that (A) except for the filing of the
DE-Certificate of Merger and the NV-Articles of Merger, all consents,
authorizations, orders and approvals of, and filings and registrations with, any
court, governmental body or instrumentality that are required for the execution
and delivery of the Merger Documents and the consummation of the Merger shall
have been duly made or obtained, and all material consents by third parties
required for the Merger have been obtained and (B) no action or proceeding
before any court, governmental body or agency has been threatened, asserted or
instituted to restrain or prohibit, or to obtain substantial damages in respect
of, the Merger Documents or the carrying out of the transactions contemplated by
any of the Merger Documents;
(iv) a certificate of Island Stock Transfer,
Parent’s transfer agent and registrar, certifying, as of the business day prior
to the Closing Date, a true and complete list of the names and addresses of the
record owners of all of the outstanding shares of Parent Common Stock, together
with the number of shares of Parent Common Stock held by each record owner and
the total number of shares of Parent Common Stock then
outstanding;
(v) the executed resignations of all
directors and officers of Parent, with the director resignations to take effect
at the Closing Date;
(vi) evidence as of a recent date and within
five (5) days of the Effective Date of the good standing and corporate existence
of each of Parent and Acquisition Corp. issued by the Secretary of State of the
State of Delaware and evidence that Parent and Acquisition Corp. are qualified
to transact business as foreign corporations and are in good standing in each
state of the United States and in each other jurisdiction where the character of
the property owned or leased by them or the nature of their activities makes
such qualification necessary; and
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(vii) such additional supporting
documentation and other information with respect to the transactions
contemplated hereby as the Company may reasonably request.
(e) All corporate and other proceedings and
actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned herein
or incident to any such transactions shall be satisfactory in form and substance
to the Company. Parent and Acquisition Corp. shall furnish to the Company such
supporting documentation and evidence of satisfaction of any or all of the
conditions specified in this Section 7.02 as the Company may reasonably
request.
(f) No action or proceeding before any
court, governmental body or agency shall have been threatened, asserted or
instituted to restrain or prohibit, or to obtain substantial damages in respect
of, the Merger Documents or the carrying out of the transactions contemplated by
the Merger Documents.
ARTICLE
VIII.
INDEMNIFICATION
AND RELATED MATTERS
Section 8.01 Indemnification
by Parent. Parent shall
indemnify and hold harmless the Company, the Stockholders (the “Investors” and together with the Company and the
Stockholders, the “Company
Indemnified Parties”), and
shall reimburse the Company Indemnified Parties for, any loss, liability, claim,
damage, expense (including, but not limited to, costs of investigation and
defense and reasonable attorneys’ fees) or diminution of value (collectively,
“Damages”) arising from or in connection with
(a) any inaccuracy, in any material respect, in any of the representations and
warranties of Parent and Acquisition Corp. in this Agreement or in any
certificate delivered by Parent and Acquisition Corp. to the Company pursuant to
this Agreement, or any actions, omissions or statements of fact inconsistent
with any such representation or warranty, (b) any failure by Parent or
Acquisition Corp. to perform or comply in any material respect with any covenant
or agreement in this Agreement, (c) any claim for brokerage or finder’s fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such party with Parent or Acquisition Corp. in
connection with any of the transactions contemplated by this Agreement, (d)
taxes attributable to any transaction or event occurring on or prior to the
Closing, (e) any claim relating to or arising out of any liabilities reflected
in the Parent Financial Statement or with respect to accounting fees arising
thereafter or (f) any litigation, action, claim, proceeding or investigation by
any third party relating to or arising out of the business or operations of
Parent, or the actions of Parent or any holder of Parent capital stock prior to
the Effective Time.
Section 8.02 Survival. All representations, warranties,
covenants and agreements of Parent and Acquisition Corp. contained in this
Agreement or in any certificate delivered pursuant to this Agreement shall
survive the Closing for the time period set forth in Section 8.03
notwithstanding any investigation conducted with respect thereto. The
representations and warranties of the Company contained in this Agreement or in
any certificate delivered pursuant to this Agreement shall not survive the
Closing.
Section 8.03 Time
Limitations. Neither
Parent nor Acquisition Corp. shall have any liability (for indemnification or
otherwise) with respect to any representation or warranty, or agreement to be
performed and complied with prior to the Effective Time, unless on or before the
two-year anniversary of the Effective Time (the “Claims
Deadline”), Parent is
given notice of a claim with respect thereto, in accordance with Section 8.05,
specifying the factual basis therefor in reasonable detail to the extent then
known by the Company Indemnified Parties.
Section 8.04 Limitation
on Liability. The
obligations of Parent and Acquisition Corp. to the Company Indemnified Parties
set forth in Section 8.01 shall be subject to the following
limitations:
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(a) The aggregate liability of Parent and
Acquisition Corp. to the Company Indemnified Parties under this Agreement shall
be payable by the issuance of additional shares of Parent Common Stock pursuant
to Section 8.06.
(b) Other than claims based on fraud or for
specific performance, injunctive or other equitable relief, the indemnity
provided in this Article VIII shall be the sole and exclusive remedy of the
Company Indemnified Parties against Parent and Acquisition Corp. at law or
equity for any matter covered by Section 8.01.
Section 8.05 Notice of
Claims.
(a) If, at any time on or prior to the
Claims Deadline, any of the Company Indemnified Parties shall assert a claim for
indemnification pursuant to Section 8.01, such Company Indemnified Party shall
submit to Parent a written claim in good faith signed by an authorized officer
of the Company or other Company Indemnified Party, as applicable, stating (i)
that a Company Indemnified Party incurred or reasonably believes it may incur
Damages and the reasonable estimate of the amount of any such Damages; (ii) in
reasonable detail, the facts alleged as the basis for such claim and the section
or sections of this Agreement alleged as the basis or bases for the claim; and
(iii) if the Damages have actually been incurred, the number of additional
shares of Parent Common Stock to which the Stockholders and Investors are
entitled to with respect to such Damages, which shall be determined as provided
in Section 8.06 below. If the claim is for Damages which the Company Indemnified
Parties reasonably believe may be incurred or are otherwise un-liquidated, the
written claim of the applicable Company Indemnified Party shall state the
reasonable estimate of such Damages, in which event a claim shall be deemed to
have been asserted under this Article VIII in the amount of such estimated
Damages, but no distribution of additional shares of Parent Common Stock to the
Stockholders and Investors pursuant to Section 8.06 below shall be made until
such Damages have actually been incurred.
(b) In the event that any action, suit or
proceeding is brought against any Company Indemnified Party with respect to
which Parent may have liability under this Article VIII, Parent shall have the
right, at its cost and expense, to defend such action, suit or proceeding in the
name and on behalf of the Company Indemnified Party; provided, however, that a Company Indemnified Party
shall have the right to retain its own counsel, with fees and expenses paid by
Parent, if representation of the Company Indemnified Party by counsel retained
by Parent would be inappropriate because of actual or potential differing
interests between Parent and the Company Indemnified Party. In connection with
any action, suit or proceeding subject to Article VIII, Parent and each Company
Indemnified Party agree to render to each other such assistance as may
reasonably be required in order to ensure proper and adequate defense of such
action, suit or proceeding. Parent shall not, without the prior written consent
of the applicable Company Indemnified Party, which consent shall not be
unreasonably withheld or delayed, settle or compromise any claim or demand if
such settlement or compromise does not include an irrevocable and unconditional
release of such Company Indemnified Party for any liability arising out of such
claim or demand.
Section 8.06 Payment of
Damages. In the event that
the Company Indemnified Parties shall be entitled to indemnification pursuant to
this Article VIII for actual Damages incurred by them, Parent shall, within
thirty (30) days after the final determination of the amount of such Damages,
issue to the Stockholders that number of additional shares of Parent Common
Stock in an aggregate amount equal to the quotient obtained by dividing (x) the
amount of such Damages by (y) the Fair Market Value per share of the Parent
Common Stock as of the date (the “Determination
Date”) of the submission
of the notice of claim to Parent pursuant to Section 8.05. Such shares of Parent
Common Stock shall be issued to the Stockholders pro rata, in proportion to the
number of shares of Parent Common Stock issued (or issuable) to the Stockholders
at the Effective Time. For purposes of this Section 8.06, “Fair Market
Value” shall mean, with
respect to a share of Parent Common Stock on any Determination Date, the average
of the daily closing prices for the 10 consecutive business days prior to such
date.
27
Continued-
The closing price for each day shall be
the last sales price or in case no sale takes place on such day, the average of
the closing high bid and low asked prices, in either case (a) as officially
quoted on the OTC Bulletin Board, the NASDAQ Stock Market or such other market
on which the Parent Common Stock is then listed for trading or quoted, or (b)
if, in the reasonable judgment of the Board of Directors of Parent, the OTC
Bulletin Board or the NASDAQ Stock Market is no longer the principal United
States market for the Parent Common Stock, then as quoted on the principal
United States market for the Parent Common Stock as determined by the Board of
Directors of Parent, or (c) if, in the reasonable judgment of the Board of
Directors of Parent, there exists no principal United States market for the
Parent Common Stock, then as reasonably determined in good faith by the Board of
Directors of Parent.
ARTICLE
IX.
TERMINATION
PRIOR TO CLOSING
Section 9.01 Termination
of Agreement. This
Agreement may be terminated at any time prior to the
Closing:
(a) by the mutual written consent of the
Company, Acquisition Corp. and Parent;
(b) by the Company, if Parent or
Acquisition Corp. (i) fails to perform in any material respect any of its
agreements contained herein required to be performed by it on or prior to the
Closing Date, or (ii) materially breach any of their representations, warranties
or covenants contained herein, which failure or breach is not cured within
thirty (30) days after the Company has notified Parent and Acquisition Corp. of
its intent to terminate this Agreement pursuant to this paragraph
(b);
(c) by Parent and Acquisition Corp. if the
Company (i) fails to perform in any material respect any of its agreements
contained herein required to be performed by it on or prior to the Closing Date
or (ii) materially breaches any of its representations, warranties or covenants
contained herein, which failure or breach is not cured within thirty (30) days
after Parent or Acquisition Corp. has notified the Company of its intent to
terminate this Agreement pursuant to this paragraph (c);
(d) by either the Company, on the one hand,
or Parent and Acquisition Corp., on the other hand, if there shall be any order,
writ, injunction or decree of any court or governmental or regulatory agency
binding on Parent, Acquisition Corp. or the Company that prohibits or materially
restrains any of them from consummating the transactions contemplated hereby,
provided that the parties hereto shall have used their best efforts to have any
such order, writ, injunction or decree lifted and the same shall not have been
lifted within ninety (90) days after entry by any such court or governmental or
regulatory agency; or
(e) by either the Company, on the one hand,
or Parent and Acquisition Corp., on the other hand, if the Closing has not
occurred on or prior to June 1, 2008 for any reason other than delay or
nonperformance of the party seeking such termination.
Section 9.02 Termination
of Obligations.
Termination of this Agreement pursuant to this Article IX shall terminate all
obligations of the parties hereunder, except for the obligations under Sections
6.1, 10.03 and 10.11; provided, however, that termination pursuant to
paragraphs (b) or (c) of Section 9.01 shall not relieve the defaulting or
breaching party or parties from any liability to the other parties
hereto.
ARTICLE
X.
MISCELLANEOUS
Section 10.01 Notices. Any notice, request or other
communication hereunder shall be given in writing and shall be served either
personally, by overnight delivery or delivered by mail, certified return receipt
and addressed to the following addresses:
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|
(a)
|
If
to Parent or Acquisition Corp.:
|
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
D. ▇▇▇▇ ▇▇▇▇▇▇▇
With a
copy to:
▇▇▇▇▇▇ +
Jaclin, LLP
▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
|
(b)
|
If
to the Company:
|
Abundantad,
Inc.
▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
▇▇ ▇▇▇▇▇▇▇
Notices
shall be deemed received at the earlier of actual receipt or three (3) business
days following mailing. Counsel for a party (or any authorized representative)
shall have authority to accept delivery of any notice on behalf of such
party.
Section 10.02 Entire
Agreement. This Agreement,
including the schedules and exhibits attached hereto and other documents
referred to herein, contains the entire understanding of the parties hereto with
respect to the subject matter hereof. This Agreement supersedes all prior
agreements and undertakings between the parties with respect to such subject
matter.
Section 10.03 Expenses. Each party shall bear and pay all of
the legal, accounting and other expenses incurred by it in connection with the
transactions contemplated by this Agreement.
Section 10.04 Time. Time is of the essence in the
performance of the parties’ respective obligations herein
contained.
Section 10.05 Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other
jurisdiction.
Section 10.06 Successors
and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns and heirs; provided, however, that
neither party shall directly or indirectly transfer or assign any of its rights
hereunder in whole or in part without the written consent of the others, which
may be withheld in its sole discretion, and any such transfer or assignment
without said consent shall be void.
29
Section 10.07 No Third
Parties Benefited. This
Agreement is made and entered into for the sole protection and benefit of the
parties hereto, their successors, assigns and heirs, and no other Person shall
have any right or action under this Agreement.
Section 10.08 Counterparts. This Agreement may be executed in one
or more counterparts, with the same effect as if all parties had signed the same
document. Each such counterpart shall be an original, but all such counterparts
together shall constitute a single agreement.
Section 10.09 Recitals,
Schedules and Exhibits.
The Recitals, Schedules and Exhibits to this Agreement are incorporated herein
and, by this reference, made a part hereof as if fully set forth
herein.
Section 10.10 Section
Headings and Gender. The
Section headings used herein are inserted for reference purposes only and shall
not in any way affect the meaning or interpretation of this Agreement. All
personal pronouns used in this Agreement shall include the other genders,
whether used in the masculine, feminine or neuter gender, and the singular shall
include the plural, and vice versa, whenever and as often as may be
appropriate.
Section 10.11 Governing
Law. This Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of Delaware without regard to principles of conflicts of
laws.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement to be binding
and effective as of the day and year first above written.
|
By:
|
/s/
D. ▇▇▇▇ ▇▇▇▇▇▇▇
|
|
Name:
D. ▇▇▇▇ ▇▇▇▇▇▇▇
|
|
|
Title:
President
|
|
|
ACQUISITION
CORP:
|
|
|
ADEX
MEDIA ACQUISITION, INC.
|
|
|
By:
|
/s/
D. ▇▇▇▇ ▇▇▇▇▇▇▇
|
|
Name:
D. ▇▇▇▇ ▇▇▇▇▇▇▇
|
|
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Title:
President
|
|
|
THE
COMPANY:
|
|
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ABUNDANTAD,
INC.
|
|
|
By:
|
/s/
▇▇
▇▇▇▇▇▇▇
|
|
Name:
▇▇ ▇▇▇▇▇▇▇
|
|
[SIGNATURE
PAGE TO AGREEMENT OF MERGER AND PLAN OF REORGANIZATION]
31