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AGREEMENT AND PLAN OF MERGER
by and among
BECOMING ART, INC.,
20/20 ACQUISITION, INC.
and
20/20 TECHNOLOGIES, INC.
April 19, 2005
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS........................................................................1
ARTICLE II THE MERGER........................................................................7
Section 2.1 Merger.....................................................................7
Section 2.2 Effective Time.............................................................7
Section 2.3 Certificate of Incorporation; By-laws; Directors and Officers..............7
Section 2.4 Effects of the Merger......................................................8
Section 2.5 Closing....................................................................8
ARTICLE III MERGER CONSIDERATION; CONVERSION OF SECURITIES...................................8
Section 3.1 Manner and Basis of Converting Capital Stock...............................8
Section 3.2 Surrender and Exchange of Certificates....................................10
Section 3.3 Options, Warrants, Incentive Plan and Series C Bridge Notes...............11
Section 3.4 Parent Common Stock.......................................................13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................13
Section 4.1 Organization..............................................................13
Section 4.2 Authorization; Validity of Agreement......................................14
Section 4.3 Capitalization............................................................14
Section 4.4 Consents and Approvals; No Violations.....................................15
Section 4.5 Financial Statements......................................................15
Section 4.6 No Undisclosed Liabilities................................................15
Section 4.7 Litigation................................................................15
Section 4.8 No Default; Compliance with Applicable Laws...............................16
Section 4.9 Broker's and Finder's Fees................................................16
Section 4.10 Schedule of Assets and Contracts..........................................16
Section 4.11 Tax Returns and Audits....................................................18
Section 4.12 Patents and Other Intangible Assets.......................................18
Section 4.13 Employee Benefit Plans; ERISA.............................................19
Section 4.14 Title to Property and Encumbrances........................................20
Section 4.15 Condition of Properties...................................................20
Section 4.16 Insurance Coverage........................................................20
Section 4.17 Interested Party Transactions.............................................20
Section 4.18 Environmental Matters.....................................................20
Section 4.19 Disclosure................................................................21
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION CORP.....................21
Section 5.1 Organization..............................................................22
Section 5.2 Authorization; Validity of Agreement......................................22
Section 5.3 Consents and Approvals; No Violations.....................................22
Section 5.4 Litigation................................................................23
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Section 5.5 No Default; Compliance with Applicable Laws...............................23
Section 5.6 Broker's and Finder's Fees; Broker/Dealer Ownership.......................23
Section 5.7 Capitalization of Parent..................................................23
Section 5.8 Acquisition Corp..........................................................23
Section 5.9 Validity of Shares........................................................24
Section 5.10 SEC Reporting and Compliance..............................................24
Section 5.11 Financial Statements......................................................25
Section 5.12 No General Solicitation...................................................25
Section 5.13 Absence of Undisclosed Liabilities........................................25
Section 5.14 Changes...................................................................25
Section 5.15 Tax Returns and Audits....................................................26
Section 5.16 Employee Benefit Plans; ERISA.............................................26
Section 5.17 Interested Party Transactions.............................................27
Section 5.18 Questionable Payments.....................................................27
Section 5.19 Obligations to or by Stockholders.........................................27
Section 5.20 Schedule of Assets and Contracts..........................................27
Section 5.21 Environmental Matters.....................................................28
Section 5.22 Employees.................................................................29
Section 5.23 Disclosure................................................................29
ARTICLE VI CONDUCT OF BUSINESSES PENDING THE MERGER.........................................29
Section 6.1 Conduct of Business by the Company Pending the Merger.....................29
Section 6.2 Conduct of Business by Parent and Acquisition Corp. Pending the Merger....30
ARTICLE VII ADDITIONAL AGREEMENTS...........................................................31
Section 7.1 Access and Information....................................................31
Section 7.2 Additional Agreements.....................................................32
Section 7.3 Publicity.................................................................32
Section 7.4 Appointment of Directors..................................................32
Section 7.5 Parent Name Change and Exchange Listing...................................32
Section 7.6 Meeting of Stockholders...................................................33
Section 7.7 Information Statement.....................................................34
ARTICLE VIII CONDITIONS OF PARTIES' OBLIGATIONS.............................................35
Section 8.1 Company Obligations.......................................................35
Section 8.2 Parent and Acquisition Corp. Obligations..................................36
ARTICLE IX INDEMNIFICATION AND RELATED MATTERS..............................................38
Section 9.1 Indemnification by Parent.................................................38
Section 9.2 Survival..................................................................38
Section 9.3 Time Limitations..........................................................38
Section 9.4 Limitation on Liability...................................................38
Section 9.5 Notice of Claims..........................................................39
Section 9.6 Payment of Damages........................................................39
ARTICLE X TERMINATION PRIOR TO CLOSING......................................................40
Section 10.1 Termination of Agreement..................................................40
Section 10.2 Termination of Obligations................................................40
Section 10.3 Termination Fee...........................................................41
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ARTICLE XI MISCELLANEOUS....................................................................41
Section 11.1 Amendments................................................................41
Section 11.2 Notices...................................................................41
Section 11.3 Entire Agreement..........................................................42
Section 11.4 Expenses..................................................................43
Section 11.5 Severability..............................................................43
Section 11.6 Successors and Assigns; Assignment........................................43
Section 11.7 No Third Party Beneficiaries..............................................43
Section 11.8 Counterparts; Delivery by Facsimile.......................................43
Section 11.9 Waiver....................................................................43
Section 11.10 No Constructive Waivers...................................................44
Section 11.11 Further Assurances........................................................44
Section 11.12 Recitals..................................................................44
Section 11.13 Headings..................................................................44
Section 11.14 Governing Law.............................................................44
Section 11.15 Dispute Resolution........................................................44
Section 11.16 Interpretation............................................................45
Section 11.17 Registration Rights.......................................................46
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LIST OF EXHIBITS
Exhibits
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Exhibit A Certificate of Incorporation of Surviving Corporation
Exhibit B By-laws of Surviving Corporation
Exhibit C Directors and Officers of Surviving Corporation
Exhibit D Post-Closing Directors of Parent
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is effective as of April 19, 2005 by and
among BECOMING ART, INC., a Delaware corporation ("Parent"), 20/20 ACQUISITION,
INC., a Delaware corporation and a wholly-owned subsidiary of Parent
("Acquisition Corp."), and 20/20 TECHNOLOGIES, INC., a Delaware corporation (the
"Company").
W I T N E S S E T H:
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WHEREAS, the Company is primarily engaged in the business of providing
networking solutions to clients that utilize its connectivity, consulting and
information/software products and services;
WHEREAS, the Board of Directors of each of Parent, Acquisition Corp. and
the Company has approved, and deems it advisable and in the best interests of
its stockholders to consummate, the acquisition of the Company by Parent, which
acquisition is to be effected by the merger of Acquisition Corp. with and into
the Company, with the Company being the surviving entity (the "Merger"), upon
the terms and subject to the conditions set forth in this Agreement (as defined
herein);
WHEREAS, the parties hereto intend that the Merger 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; and
WHEREAS, simultaneously with the Closing (as defined herein), Parent (as
it will exist as of the Closing Date (as defined herein)) is selling units
consisting of shares of its common stock, par value $0.001 per share (the
"Parent Common Stock"), and detachable warrants to purchase shares of Parent
Common Stock in a Private Placement (as defined herein) pursuant to the terms of
a Confidential Private Placement Memorandum, dated March 25, 2005 (as amended or
supplemented from time to time, the "Memorandum"), for the purpose of causing
the business of the Surviving Corporation (as defined herein) to include the
business of the Company following the Merger.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement shall have the following
meanings:
"Acquisition Corp." shall have the meaning given to such term in the
preamble to this Agreement.
"Acquisition Proposal" shall have the meaning given to such term in
Section 6.2 hereof.
"Action" shall mean any claim, action, suit, proceeding, investigation or
order.
"Affiliate" shall mean, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with, such Person.
For the purposes of this definition, "control" (including, with correlative
meaning, the terms "controlling," "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of management and policies of such Person through the
ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Agreement and Plan of Merger, including the
Company Disclosure Schedule, the Parent Disclosure Schedule and the exhibits
attached hereto or referred to herein, as the same may be amended or modified
from time to time in accordance with the provisions hereof.
"Balance Sheet" shall have the meaning given to such term in Section 4.5
hereof.
"Balance Sheet Date" shall have the meaning given to such term in Section
4.5 hereof.
"Blended Offering Price" shall mean the quotient obtained by dividing (i)
the gross proceeds raised in the Private Placement, calculated as of the
termination of the Private Placement, by (ii) the sum of 2,491,000 plus the
aggregate number of shares of Parent Common Stock issued through the Private
Placement, calculated as of the termination of the Private Placement; provided,
however, that in no event shall the Blended Offering Price be greater than
$2.188982.
"By-laws" shall have the meaning given to such term in Section 2.3(b)
hereof.
"Certificate of Incorporation" shall have the meaning given to such term
in Section 2.3(a) hereof.
"Closing" shall have the meaning given to such term in Section 2.5 hereof.
"Closing Date" shall have the meaning given to such term in Section 2.5
hereof.
"Code" shall have the meaning given to such term in the third recital to
this Agreement.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock Options" shall have the meaning given to such term in
Section 3.3(a) hereof.
"Company" shall have the meaning given to such term in the preamble to
this Agreement.
"Company Capital Stock" shall mean, collectively, the Company Common
Stock, the Company Series A Preferred Stock, the Company Series B Preferred
Stock and the Company Series C Preferred Stock.
"Company Common Stock" shall mean the common stock, par value $0.00001 per
share, of the Company.
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"Company Disclosure Schedule" shall have the meaning given to such term in
the introduction to Article IV hereof.
"Company Material Adverse Effect" shall mean any change, effect or
circumstance that by itself, or together with other changes, effects and
circumstances is materially adverse or is reasonably likely to be materially
adverse to the business, assets, liabilities, condition (financial or otherwise)
or operations of the Company and its subsidiaries, taken as a whole.
"Company Preferred Stock" shall mean, collectively, the authorized
preferred stock, par value of $0.00001 per share, of the Company.
"Company Series A Preferred Stock" shall mean the series A convertible
preferred stock, par value $0.00001 per share, of the Company.
"Company Series B Preferred Stock" shall mean the series B convertible
preferred stock, par value $0.00001 per share, of the Company.
"Company Series C Preferred Stock" shall mean the series C convertible
preferred stock, par value $0.00001 per share, of the Company.
"Contract" shall have the meaning given to such term in Section 4.4
hereof.
"Consents" shall mean any permits, filings, notices, licenses, consents,
authorizations, accreditation, waivers, approvals and the like of, to, with or
by any Person.
"DGCL" shall mean the General Corporation Law of the State of Delaware, as
amended.
"Dissenting Shares" shall have the meaning given to such term in Section
3.2(d) hereof.
"Effective Time" shall have the meaning given to such term in Section 2.2
hereof.
"Employee Benefit Plans" shall have the meaning assigned to it in Section
4.13 hereof.
"Environmental Law" 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.; and the
Hazardous Materials Transportation Act, 49 U.S.C. ▇▇.▇▇. 1801 et seq., as any of
the above referenced statutes have been amended as of the date hereof, all
rules, regulations and policies promulgated pursuant to any of the above
referenced 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.
"ERISA" shall mean the Employee Retirement Income Securities Act of 1974,
as amended, and the regulations issued thereunder.
3
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations issued thereunder.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States consistently applied.
"Hazardous Material" means 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, chemical substance or mixture, contaminant or
toxic substance under any Environmental Law; (b) its presence at some quantity
requires investigation, notification or remediation under any Environmental Law;
(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; or (d) mold.
"Incentive Plans" shall have the meaning given to such term in Section
3.3(d) hereof.
"Indebtedness" shall mean any obligation of the Company that under GAAP is
required to be shown on the Balance Sheet of the Company as a Liability. Any
obligation secured by a Lien on, or payable out of the proceeds of production
from, property of the Company shall be deemed to be Indebtedness even though
such obligation is not assumed by the Company.
"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.
"Information Statement" shall have the meaning given to such term in
Section 7.7 hereof.
"Intellectual Property" shall have the meaning given to such term in
Section 4.12(b) hereof.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended.
"Letter of Transmittal" shall have the meaning assigned to it in Section
3.2 hereof.
"Liability" shall mean any and all liability, debt, obligation,
deficiency, Tax, penalty, fine, claim, cause of action or other loss, cost or
expense of any kind or nature whatsoever, whether asserted or unasserted,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, and
whether due or become due and regardless of when asserted.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including, without limitation, any conditional sale
or other title retention agreement, any lease in the nature thereof and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction and including any lien or charge arising by
statute or other law.
4
"Memorandum" shall have the meaning given to such term in the fourth
recital to this Agreement.
"Merger" shall have the meaning given to such term in the second recital
to this Agreement.
"Parent" shall have the meaning given to such term in the preamble to this
Agreement.
"Parent Balance Sheet" shall have the meaning assigned to such term in
Section 5.13 hereof.
"Parent Balance Sheet Date" shall have the meaning assigned to it in
Section 5.13 hereof.
"Parent Common Stock" shall have the meaning given to such term in the
fourth recital to this Agreement.
"Parent Disclosure Schedule" shall have the meaning given to such term in
the introduction to Article V hereof.
"Parent Employee Benefit Plans" shall have the meaning assigned to such
term in Section 5.16 hereof.
"Parent Financial Statements" shall have the meaning assigned to such term
in Section 5.11 hereof.
"Parent Indemnification Agreement" shall have the meaning given to such
term in Section 8.2(g) hereof.
"Parent Indemnitors" shall have the meaning given to such term in Section
8.2(g) hereof.
"Parent Material Adverse Effect" means any change, effect or circumstance
that by itself, or together with other changes, effects and circumstances is
materially adverse or is reasonably likely to be materially adverse to the
business, assets, liabilities, condition (financial or otherwise) or operations
of Parent and its subsidiaries, taken as a whole.
"Parent SEC Documents" shall have the meaning assigned to such term in
Section 5.10(b) hereof.
"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.
5
"Person" shall mean any individual, corporation, limited liability
company, partnership, joint venture, trust or other entity or organization,
including any government or political subdivision or an agency or
instrumentality thereof.
"Placement Agent" shall mean the lead placement agent engaged to assist
Parent in the sale of units offered in the Private Placement.
"Private Placement" shall mean the private placement offering to
accredited investors of units consisting of shares of Parent Common Stock and
detachable warrants to purchase Parent Common Stock pursuant to the terms of the
Memorandum.
"Ratchet Quotient" shall mean the quotient obtained by dividing (i)
2.188982 by (ii) the Blended Offering Price.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations issued thereunder.
"Series B Initial Exchange Shares" shall have the meaning given to such
term in Section 3.1(d) hereof.
"Series B Ratchet Shares" shall have the meaning given to such term in
Section 3.1(d) hereof.
"Series B Warrants" shall have the meaning given to such term in Section
3.3(b) hereof.
"Series C Bridge Notes" shall mean the series C convertible bridge notes
issued by the Company in aggregate principal amount of $1,950,000 that, prior to
the Effective Time, are convertible into units consisting of one (1.0) share of
Series C Preferred Stock and a warrant to purchase one-quarter of one (1/4)
share of Series C Preferred Stock at a conversion price equal to $1.094491 per
share, subject to adjustment as provided in the bridge notes.
"Series C Initial Exchange Shares" shall have the meaning given to such
term in Section 3.1(e) hereof.
"Series C Ratchet Shares" shall have the meaning given to such term in
Section 3.1(e) hereof.
"Series C Warrants" shall have the meaning given to such term in Section
3.3(c) hereof.
"Stockholder" shall mean any record holder of Company Capital Stock.
"Surviving Corporation" shall have the meaning given to such term in
Section 2.1 hereof.
"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 Code 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
either clauses (a) or (b).
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"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.
"Tax Sharing Agreements" shall have the meaning given to such term in
Section 4.15 hereof.
ARTICLE II
THE MERGER
Section 2.1 Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time, the Company shall be merged with and into
Acquisition Corp. in accordance with Section 251 of the DGCL. Following the
Effective Time, the separate corporate existence of Acquisition Corp. shall
cease, and the Company shall continue as the corporation surviving the Merger
(sometimes hereinafter referred to as the "Surviving Corporation").
Section 2.2 Effective Time. The Company and Acquisition Corp. shall cause
a certificate of merger to be filed on the Closing Date (or on such other date
as the Company and Parent may agree in writing) with the Secretary of State of
Delaware as provided in Section 251 of the DGCL, and shall make all other
filings or recordings required by the DGCL in connection with the Merger. The
Merger shall become effective at such time as the certificate of merger is duly
filed in accordance with Section 251 of the DGCL with the Secretary of State of
the State of Delaware or such later time as specified in the certificate of
merger, and such time is hereinafter referred to as the "Effective Time."
Section 2.3 Certificate of Incorporation; By-laws; Directors and Officers.
(a) The certificate of incorporation of Acquisition Corp. as in effect
immediately prior to the Effective Time, a copy of which is attached as
Exhibit A hereto, shall be the certificate of incorporation of the
Surviving Corporation (the "Certificate of Incorporation") from and after
the Effective Time until thereafter changed or amended as provide therein
or in accordance with applicable law.
(b) The by-laws of Acquisition Corp. as in effect immediately prior to
the Effective Time, a copy of which is attached as Exhibit B hereto, shall
be the by-laws of the Surviving Corporation (the "By-laws") from and after
the Effective Time until thereafter changed or amended as provided therein
or in accordance with applicable law.
7
(c) The individuals identified on Exhibit C hereto under the heading
"Directors" shall, from and after the Effective Time, be the directors of
the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or
removal in accordance with the Certificate of Incorporation and By-laws.
The individuals identified on Exhibit C hereto under the heading
"Officers" shall, from and after the Effective Time, be the officers of
the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or
removal in accordance with the Certificate of Incorporation and By-laws.
Section 2.4 Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL. Without limiting the generality of the
foregoing, at the Effective Time, except as otherwise provided herein, all of
the property, rights, privileges, powers and franchises of the Company and
Acquisition Corp. shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Acquisition Corp. shall become the
debts, liabilities and duties of the Surviving Corporation. The Company
acknowledges that, upon the effectiveness of the Merger, 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 2.5 Closing. The consummation of the transactions contemplated by
this Agreement, including the Merger (the "Closing"), shall take place: (a) at
the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Ltd., ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ at 10:00 a.m. local time on the date on which all of the
conditions to the Closing set forth in Article VIII hereof shall be fulfilled or
waived in accordance with this Agreement (other than conditions that can be
satisfied only at the Closing, but subject to the fulfillment or waiver of those
conditions at the Closing); or (b) at such other place, time and date as the
Company and Parent may agree in writing (the "Closing Date").
ARTICLE III
MERGER CONSIDERATION; CONVERSION OF SECURITIES
Section 3.1 Manner and Basis of Converting Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of the Company,
Parent or Acquisition Corp. or the holders of any outstanding shares of capital
stock or other securities of the Company, Parent or Acquisition Corp.:
(a) Acquisition Corp. Stock. Each share of common stock, par value
$0.00001 per share, of Acquisition Corp. issued and outstanding immediately
prior to the Effective Time shall be converted into and become one fully
paid and nonassessable share of capital stock, par value $0.00001 per
share, of the Surviving Corporation, such that Parent shall be the holder
of all of the issued and outstanding shares of capital stock of the
Surviving Corporation following the Merger.
(b) Company Common Stock. Except as provided in Section 3.1(f) and
Section 3.2(d) hereof, each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time shall be converted into
the right to receive one-half of one (0.5) share of Parent Common Stock.
8
(c) Company Series A Preferred Stock. Except as provided in Section
3.1(f) and Section 3.2(d) hereof, each share of Company Series A Preferred
Stock issued and outstanding immediately prior to the Effective Time shall
be converted into the right to receive one-half of one (0.5) share of
Parent Common Stock.
(d) Company Series B Preferred Stock. Except as provided in Section
3.1(f) and Section 3.2(d) hereof, each share of Company Series B Preferred
Stock issued and outstanding immediately prior to the Effective Time shall
be converted into the right to receive (i) one-half of one (0.5) share of
Parent Common Stock to be issued as of the Effective Time (the "Series B
Initial Exchange Shares") plus (ii) the number of shares of Parent Common
Stock, if any, equal to the sum of (X) the aggregate number of Series B
Initial Exchange Shares multiplied by the Ratchet Quotient, minus (Y) the
aggregate number of Series B Initial Exchange Shares (the shares of Parent
Common Stock, if any, to be issued in accordance with the foregoing clause
(ii), the "Series B Ratchet Shares"). All determinations with respect to,
and any issuance of, Series B Ratchet Shares in accordance with the
foregoing clause (ii) shall be made as of the termination of the Private
Placement.
(e) Company Series C Preferred Stock. Except as provided in Section
3.1(f) and Section 3.2(d) hereof, each share of Company Series C Preferred
Stock issued and outstanding immediately prior to the Effective Time shall
be converted into the right to receive (i) one-half of one (0.5) of Parent
Common Stock to be issued as of the Effective Time (the "Series C Initial
Exchange Shares") plus (ii) the number of shares of Parent Common Stock, if
any, equal to the sum of (X) the aggregate number of Series C Initial
Exchange Shares multiplied by the Ratchet Quotient, minus (Y) the aggregate
number of Series C Initial Exchange Shares (the shares of Parent Common
Stock, if any, to be issued in accordance with the foregoing clause (ii),
the "Series C Ratchet Shares"). All determinations with respect to, and any
issuance of, Series C Ratchet Shares in accordance with the foregoing
clause (ii) shall be made as of the termination of the Private Placement.
(f) Treasury Stock. Notwithstanding any provision of this Agreement to
the contrary, each share of Company Capital Stock held in the treasury of
the Company and each share of Company Capital Stock, if any, owned by
Parent or any direct or indirect wholly-owned subsidiary of Parent
immediately prior to the Effective Time shall be canceled in the Merger and
shall not be converted into the right to receive any shares of capital
stock or other securities of Parent.
(g) No Fractional Shares. No fractional shares of Parent Common Stock
shall be issued in, or as a result of, the Merger. Any fractional share of
Parent Common Stock that a holder of record of Company Capital Stock would
otherwise be entitled to receive as a result of the Merger shall be
aggregated. If a fractional share of Parent Common Stock results from such
aggregation, the number of shares required to be issued to such record
holder shall be rounded up to the nearest whole number of shares of Parent
Common Stock.
9
Section 3.2 Surrender and Exchange of Certificates.
(a) Letter of Transmittal. Promptly after the Effective Time, Parent
shall mail, or cause to be mailed, to each record holder of certificate(s)
formerly representing ownership of Company Capital Stock that was converted
into the right to receive Parent Common Stock pursuant to Section 3.1
hereof (i) a letter of transmittal ("Letter of Transmittal") for delivery
of such certificate(s) to Parent and (ii) instruction for use in effecting
the surrender of certificate(s), in each case in form and substance
mutually agreeable to the Company and Parent. Delivery shall be effected,
and risk of loss and title to the Parent Common Stock shall pass, only upon
delivery to the Parent (or a duly authorized agent of Parent) of
certificate(s) formerly representing ownership of Company Capital Stock (or
an affidavit of lost certificate and indemnification or surety bond) and a
properly completed and duly executed Letter of Transmittal, as described in
Section 3.2(b) hereof. Notwithstanding the foregoing, Parent shall not be
required to mail, or cause to be mailed, a Letter of Transmittal to any
record holder of certificate(s) formerly representing ownership of Company
Capital Stock if such holder has previously agreed or consented to the
exchange of certificates that are held in custody by the Company for the
benefit of such holder.
(b) Exchange Procedures. Parent shall issue to each former record
holder of Company Capital Stock, upon delivery to Parent (or a duly
authorized agent of Parent) of (i) certificate(s) formerly representing
ownership of Company Capital Stock endorsed in blank or accompanied by duly
executed stock powers (or an affidavit of lost certificate and
indemnification in form and substance reasonably acceptable to Parent
stating that, among other things, the former record holder has lost his or
her certificate(s) or that such certificate(s) have been destroyed) and
(ii) a properly completed and duly executed Letter of Transmittal in form
and substance reasonably satisfactory to Parent, a certificate or
certificates registered in the name of such former record holder
representing the number of shares of Parent Common Stock that such former
record holder is entitled to receive in accordance with Section 3.1 hereof.
Subject to Section 3.2(d) hereof, until the certificate(s) (or affidavit)
is delivered together with the Letter of Transmittal in the manner
contemplated by this Section 3.2(b), each certificate (or affidavit)
previously representing ownership of Company Capital Stock shall be deemed
at and after the Effective Time to represent only the right to receive
Parent Common Stock and the former record holders thereof shall cease to
have any other rights with respect to his or her Company Capital Stock.
(c) Termination of Exchange Process. Any Parent Common Stock that
remains unclaimed by a former record holder of Company Capital Stock at the
first anniversary of the Effective Time shall be deemed "abandoned
property" and shall be subject to applicable abandoned property, escheat
and other similar laws in the State in which the former record holder
resides. None of the Company, Parent, Acquisition Corp. or the Surviving
Corporation shall be liable to any person in respect of any Parent Company
Stock delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(d) Dissenting Shares. Notwithstanding any provision of this
Agreement to the contrary, shares of Company Capital Stock issued and
outstanding immediately prior to the Effective Time and held by a
Stockholder who has not voted in favor of the Merger or consented thereto
in writing and who has demanded appraisal for such shares of Company
Capital Stock in accordance with Section 262 of the DGCL ("Dissenting
Shares") shall not be entitled to vote for any purpose or receive
dividends, shall not be converted into the right to receive Parent Common
Stock in accordance with Section 3.1 hereof, and shall only be entitled to
receive such consideration as shall be determined pursuant to Section 262
of the DGCL; provided, however, that if, after the Effective Time, such
Stockholder fails to perfect or withdraws or loses his or her right to
appraisal or otherwise fails to establish the right to be paid the value
of such Stockholder's shares of Company Capital Stock under the DGCL, such
shares of Company Capital Stock shall be treated as if they had converted
as of the Effective Time into the right to receive Parent Common Stock in
accordance with Section 3.1 hereof, and such shares of Company Capital
Stock shall no longer be Dissenting Shares. All negotiations with respect
to payment for Dissenting Shares shall be handled jointly by Parent and
the Company prior to the Closing and exclusively by Parent thereafter.
10
(e) Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company will be closed and there will be no further
registration of transfers of shares of Company Capital Stock thereafter on
the records of the Company. If, after the Effective Time, certificates
formerly representing Company Capital Stock are presented to the Surviving
Corporation, these certificates shall be canceled and exchanged for the
number of shares of Parent Common Stock to which the former record holder
may be entitled pursuant to Section 3.1 hereof.
Section 3.3 Options, Warrants, Incentive Plan and Series C Bridge Notes.
(a) Common Stock Options. The Company has issued and outstanding
warrants and options to purchase shares of Company Common Stock
(collectively, the "Common Stock Options"). At the Effective Time, by
virtue of the Merger and without any action on the part of the Company,
Parent or Acquisition Corp. or the holders of any outstanding Common Stock
Options, the right to acquire shares of Company Common Stock under each
Common Stock Option shall be converted into the right to acquire exactly
one-half (1/2) as many shares of Parent Common Stock at an exercise price
equal to two times the exercise price stated in the Common Stock Option,
subject in all respects to all other terms and conditions of the Common
Stock Option. Except for the change in security underlying the Common
Stock Options from Company Common Stock to Parent Common Stock, the ratio
of exchange and the change in exercise price, it is the intent of the
parties hereto that the Common Stock Options shall continue after the
Effective Time, and that the terms and conditions of the Common Stock
Options shall otherwise remain unchanged.
(b) Series B Warrants. The Company has issued and outstanding
warrants to purchase shares of Company Series B Preferred Stock
(collectively, the "Series B Warrants"). At the Effective Time, by virtue
of the Merger and without any action on the part of the Company, Parent or
Acquisition Corp. or the holders of any outstanding Series B Warrants, the
right to acquire shares of Company Series B Preferred Stock under the
Series B Warrants shall be converted into the right to acquire exactly
one-half (1/2) as many shares of Parent Common Stock at an exercise price
per share of Parent Common Stock equal to the Blended Offering Price,
subject in all respects to the terms and conditions of the Series B
Warrants. Except for the change in security underlying the Series B
Warrants from Company Series B Preferred Stock to Parent Common Stock, the
ratio of exchange and the change in exercise price to the Blended Offering
Price, it is the intent of the parties hereto that the Series B Warrants
shall continue after the Effective Time, and that the terms and conditions
of the Series B Warrants shall otherwise remain unchanged.
11
(c) Series C Warrants. The Company has issued and outstanding
warrants to purchase shares of Company Series C Preferred Stock
(collectively, the "Series C Warrants"). At the Effective Time, by virtue
of the Merger and without any action on the part of the Company, Parent or
Acquisition Corp. or the holders of any outstanding Series C Warrants, the
right to acquire shares of Company Series C Preferred Stock under the
Series C Warrants shall be converted into the right to acquire exactly
one-half (1/2) as many shares of Parent Common Stock at an exercise price
per share of Parent Common Stock equal to the Blended Offering Price,
subject in all respects to the terms and conditions of the Series C
Warrants. Except for the change in security underlying the Series C
Warrants from Company Series C Preferred Stock to Parent Common Stock, the
ratio of exchange and the change in exercise price to the Blended Offering
Price, it is the intent of the parties hereto that the Series C Warrants
shall continue after the Effective Time, and that the terms and conditions
of the Series C Warrants shall otherwise remain unchanged.
(d) Incentive Plans. The Company has adopted and maintains a 2004
Long-Term Incentive Plan and a 2005 Long-Term Incentive Plan
(collectively, the "Incentive Plans") and has previously granted awards
pursuant to the Incentive Plans. At the Effective Time, by virtue of the
Merger and without any action on the part of the Company, Parent or
Acquisition Corp. or the recipient of any award granted under the
Incentive Plans, the Incentive Plans shall continue as a plan of Parent
and all awards previously granted under the Incentive Plans shall be
exercisable solely for shares of Parent Common Stock at a ratio equal to
one-half of one (.5) share of Parent Common Stock for each one (1) share
of Company Common Stock. Except for the change in security underlying each
award previously granted under the Incentive Plans and the ratio of
exchange, it is the intent of the parties hereto that the terms and
conditions of the Incentive Plans shall otherwise remain unchanged. Parent
shall take all action necessary and appropriate, at or prior to the
Effective Time, to authorize and reserve a number of shares of Parent
Common Stock sufficient for issuance with respect to awards previously
granted by the Company pursuant to the Incentive Plans.
(e) Series C Bridge Notes. The Company has issued and outstanding
Series C Bridge Notes. At the Effective Time, by virtue of the Merger and
without any action on the part of the Company, Parent or Acquisition Corp.
or the holders of any outstanding Series C Bridge Notes, each Series C
Bridge Note shall be convertible solely into units consisting of (i) the
number of shares of Parent Common Stock equal to the quotient obtained by
dividing the principal amount of the Series C Bridge Note by the Blended
Offering Price, and (ii) a warrant to purchase the number of shares of
Parent Common Stock equal to (A) the quotient obtained by dividing the
principal amount of the Series C Bridge Note by the Blended Offering Price
multiplied by (B) 0.25. Except for the change in the securities into which
Series C Bridge Notes are convertible, it is the intent of the parties
hereto that the Series C Bridge Notes shall continue after the Effective
Time as obligations of the Surviving Corporation, and that the terms and
12
conditions of the Series C Bridge Notes shall otherwise remain unchanged.
Any warrants to purchase shares of Parent Common Stock issued pursuant to
this Section 3.3(e) shall be on the same terms and conditions as the
Series C Warrants except that the exercise price per share of Parent
Common Stock underlying each such warrant shall be equal to the Blended
Offering Price.
(f) Issuance of Replacement Securities. In order to effect the
foregoing transactions referenced in this Section 3.3, on the termination
of the Private Placement, the Common Stock Options, Series B Warrants and
Series C Warrants shall be terminated and the Parent shall issue new forms
of options or warrants, as applicable, to purchase Parent Common Stock
consistent with the adjustments and changes set forth in this Section 3.3.
(g) No Fractional Shares. Notwithstanding anything to the contrary
in this Section 3.3, no fractional shares of the Parent Common Stock shall
be issued in, or as a result of, the Merger. Any fractional share of the
Parent Common Stock that a Person would otherwise be entitled to receive
as a result of the transactions referenced in this Section 3.3 shall be
rounded up to the nearest whole number of shares of Parent Common Stock.
Section 3.4 Parent Common Stock. Parent shall reserve a sufficient number
of shares of Parent Common Stock to complete the conversion and exchange of
Company Capital Stock into Parent Common Stock contemplated by Sections 3.1 and
3.2 hereof and the issuance of any Parent Common Stock in accordance with
Section 3.3 hereof and pursuant to warrants sold in the Private Placement
including warrants issuable to the Placement Agent. Parent covenants and agrees
that immediately prior to the Effective Time there will be no more than
1,500,000 shares of Parent Common Stock issued and outstanding, not including
the shares of Parent Common Stock to be issued in the Private Placement, and
that no other common or preferred stock or equity securities of the Parent, or
any options, warrants, rights or other agreements or instruments convertible,
exchangeable or exercisable into common or preferred stock or equity securities
of the Parent, shall be issued or outstanding at the Effective Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent, subject to the
exceptions as disclosed in the written disclosure statement delivered by the
Company to Parent no later than five (5) days prior to the Closing Date (the
"Company Disclosure Schedule"), as follows:
Section 4.1 Organization. The Company and each of its subsidiaries (i) is
duly organized, validly existing and in good standing (or its equivalent) under
the laws of its state, province and country of incorporation or organization,
(ii) has all licenses, permits, authorizations and other Consents necessary to
own, lease and operate its properties and assets and to carry on its business as
it is now being conducted and (iii) has all requisite corporate or other
applicable power and authority to own, lease and operate its properties and
assets and to carry on its business as it is now being conducted and presently
proposed to be conducted, in each case except where such failures would not
13
have, or be reasonably likely to have, a Company Material Adverse Effect. The
Company and each of its subsidiaries is duly qualified or authorized to conduct
business and is in good standing (or its equivalent) as a foreign corporation or
other entity in all jurisdictions in which the ownership or use of its assets or
nature of the business conducted by it makes such qualification or authorization
necessary, except where the failure to be so duly qualified, authorized and in
good standing would not have a Company Material Adverse Effect. All
jurisdictions in which the Company and its subsidiaries are incorporated,
required to be so qualified and are so qualified are set forth in all material
respects on the attached Schedule 4.1 of the Company Disclosure Schedule.
Section 4.2 Authorization; Validity of Agreement. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby, have been duly authorized by the Board of
Directors of the Company and no other action (except the approval of the
Stockholders solely with respect to consummation of the Merger) on the part of
the Company or any of its Stockholders or subsidiaries is necessary to authorize
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company (and assuming due and valid authorization, execution
and delivery hereof by Parent and Acquisition Corp.) is a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its 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 4.3 Capitalization.
(a) As of the date hereof, the authorized capital stock of the
Company consists of 75,000,000 shares of Company Common Stock and
17,000,000 shares of Company Preferred Stock. As of the date hereof, there
are 21,838,597 shares of Company Common Stock, 2,716,050 shares of Company
Series A Preferred Stock, 3,319,664 shares of Company Series B Preferred
Stock and 254,366 shares of Company Series C Preferred Stock issued and
outstanding. All the outstanding shares of Company Capital Stock are duly
authorized, validly issued, fully paid and non-assessable. All of the
outstanding shares of Company Capital Stock are held of record and, to the
knowledge of the Company, beneficially by the Persons and in the
respective amounts set forth on Schedule 4.3(a) of the Company Disclosure
Schedule, free and clear of any and all Liens created by the Company. All
options, warrants, calls, subscriptions or other rights, convertible
securities, agreements or commitments of any character obligating the
Company to issue, transfer or sell any shares of Company Capital Stock, or
other equity interest in the Company or securities convertible into or
exchangeable for such shares or equity interests, are set forth on
Schedule 4.3(a) of the Company Disclosure Schedule.
(b) The subsidiaries of the Company set forth on Schedule 4.3(b) of
the Company Disclosure Schedule are all the subsidiaries of the Company.
All of the outstanding shares of capital stock (or limited liability
company interests) of each subsidiary of the Company are owned
beneficially and of record as set forth on Schedule 4.3(b) of the Company
Disclosure Schedule, free and clear of Liens. All of the outstanding
shares of capital stock (or limited liability company interests) of each
subsidiary are duly authorized, validly issued, fully paid and
non-assessable.
14
There are no options, warrants, calls, subscriptions or other rights,
convertible securities, agreements or commitments of any character
obligating any subsidiary of the Company to issue, transfer or sell any
shares of capital stock or other equity interest in, such subsidiary or
securities convertible into or exchangeable for such shares or equity
interests.
Section 4.4 Consents and Approvals; No Violations. Except for (a) approval
of the Merger by the Stockholders and (b) filing of the certificate of merger
with the Secretary of State of the State of Delaware, neither the execution,
delivery or performance of this Agreement by the Company nor the consummation of
the transactions contemplated hereby will (i) violate any provision of its
certificate of incorporation or by-laws; (ii) violate, conflict with or result
in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, require
the consent of or result in the creation of any encumbrance upon any of the
properties of the Company or any of its subsidiaries under, any material note,
bond, mortgage, indenture, deed of trust, license, franchise, permit, lease,
contract, agreement or other instrument (collectively, "Contract") to which the
Company or any its subsidiaries or any of their respective properties may be
bound; (iii) require any Consent, approval or authorization of, or notice to, or
declaration, filing or registration with, any governmental entity by or with
respect to the Company or any of its subsidiaries; or (iv) violate any order,
writ, judgment, injunction, decree, law, statute, rule or regulation applicable
to the Company or any of its subsidiaries or any of their respective properties
or assets.
Section 4.5 Financial Statements. The Company has delivered or made
available as of the date hereof or shall, prior to the Closing Date, deliver or
make available to Parent the consolidated and consolidating balance sheets of
the Company for the fiscal year ended December 31, 2003, the related
consolidated and consolidating statements of income, stockholders' equity and
cash flows of the Company for the fiscal year ended December 31, 2003, and the
consolidated and consolidating balance sheet (the "Balance Sheet") and related
statements of income and cash flows for the nine (9) month period ended
September 30, 2004 (the "Balance Sheet Date"). The foregoing financial
statements (including any notes thereto) (i) have been prepared based upon the
books and records of the Company, (ii) have been prepared in accordance with
GAAP (except as otherwise noted therein), and (iii) present fairly, in all
material respects, the consolidated financial position, results of operations
and cash flows of the Company as at their respective dates and for the periods
then ended, subject to the qualifications set forth in Schedule 4.5 of the
Company Disclosure Schedule. To the knowledge of the Company, there is no
existing fact that has not been disclosed to Parent that has had or could
reasonably be expected to have a Company Material Adverse Effect.
Section 4.6 No Undisclosed Liabilities. Except (a) for Liabilities
reflected on the face of the Balance Sheet and (b) Liabilities of the same type,
magnitude and scope as those reflected on the Balance Sheet which have arisen
since the date of the Balance Sheet in the ordinary course of business, and
which would not, individually or in the aggregate, result in a Company Material
Adverse Effect, each of the Company and its subsidiaries does not have any
Liability.
Section 4.7 Litigation. There is no Action pending or, to the knowledge of
the Company, threatened, involving the Company or its subsidiaries or affecting
any of the officers, directors or employees of the Company or its subsidiaries
with respect to the Company's or any subsidiary's business by or before any
governmental entity or by any third party and neither the Company nor any of its
subsidiaries have received notice that any such Action is threatened.
15
Neither the Company nor any of its subsidiaries is in default under any
judgment, order or decree of any governmental entity applicable to its
business.
Section 4.8 No Default; Compliance with Applicable Laws. Neither the
Company nor any of its subsidiaries is in default or violation of any material
term, condition or provision of (i) their respective certificate of
incorporation, by-laws or similar organizational documents or (ii) any law
applicable to the Company and its subsidiaries or its property and assets and
neither the Company nor any of its subsidiaries has received notice of any
violation of or Liability under any of the foregoing (whether material or not).
Section 4.9 Broker's and Finder's Fees. Except for the Placement Agent
whose fees and expenses will be paid from the gross proceeds raised in the
Private Placement, 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.
Section 4.10 Schedule of Assets and Contracts. Attached hereto as
Schedules 4.10(a) through 4.10(e) of the Company Disclosure Schedule are various
schedules listing assets and Contracts of the Company, as described below.
(a) Schedule 4.10(a) contains a true and complete list of all real
property owned or leased by the Company, including a brief description of
each item thereof and of the nature of the Company's interest therein, and
of all tangible personal property owned or leased by the Company having a
cost or fair market value of greater than $100,000, including a brief
description of each item and of the nature of the interest of the Company
therein. All leased real property listed on Schedule 4.10(a) is leased by
the Company under valid and enforceable leases having the rental terms,
termination dates and renewal and purchase options described on Schedule
4.10(a).
(b) Except for this Agreement and the Memorandum, the Company is not
a party to any Contract not made in the ordinary course of business that
is material to the Company. Except as listed on Schedule 4.10(b), the
Company is not a party to any contract (a) with a labor union, (b) for the
purchase of fixed assets or for the purchase of materials, supplies or
equipment in excess of normal operating requirements, (c) for the
employment of any officer, individual employee or other Person on a
full-time basis or any contract with any Person for consulting services,
(d) with respect to bonus, pension, profit sharing, retirement, stock
purchase, stock option, deferred compensation, medical, hospitalization or
life insurance or similar plan, contract or understanding any or all of
the employees of the Company or any other Person, (e) relating to or
evidencing Indebtedness for Borrowed Money or subjecting any asset or
property of the Company to any Lien or evidencing any Indebtedness, (f)
guaranteeing any Indebtedness, (g) other than as set forth on Schedule
4.10(a), 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 $100,000 per year or with an unexpired term
(including any period covered by an option to renew exercisable by any
other party) of more than 60 days, (h) under which the Company is lessor
or permits any Person to hold or operate any property, real or personal,
owned or controlled by the Company, (i) granting any preemptive right,
right of first refusal or similar right to any Person, (j) with any
Affiliate of the Company or any present or former officer, director or
Stockholder of the Company, (k) obligating the Company to pay any royalty
or similar charge for the use or exploitation of any tangible or
intangible property, (1) containing a covenant not to compete or other
restriction on the Company's ability to conduct a business or engage in
any other activity, (m) with respect to any distributor, dealer,
manufacturer's representative, sales agency, franchise or advertising
contract or commitment, (n) regarding registration of securities under the
Securities Act, (o) characterized as a collective bargaining agreement, or
(p) with any Person continuing for a period of more than three months from
the Closing Date which involves an expenditure or receipt by the Company
in excess of $100,000.
16
(c) Schedule 4.10(c) contains a true and complete list and
description of all insurance policies and insurance coverage with respect
to the Company, its business, premises, properties, assets, employees and
agents including, without limitation, fire and casualty insurance,
property and liability insurance, product liability insurance, life
insurance, medical and hospital insurance and workers' compensation
insurance. Schedule 4.10(c) sets forth, with respect to each policy, (i) a
general description of the insured loss coverage, (ii) the expiration date
of coverage, (iii) the annual premium and (iv) the dollar limitations of
coverage and a general description of each deductible feature.
(d) Schedule 4.10(d) contains a true and complete list and
description of each bank account, savings account, other deposit
relationship and safety deposit box of the Company, including the name of
the bank or other depository, the account number and the names of the
individuals having signature or other withdrawal authority with respect
thereto.
(e) Schedule 4.10(e) contains a true and complete list of all
patents, patent applications, trade names, trademarks, trademark
registrations and applications, copyrights, copyright registrations and
applications, and grants of licenses, both domestic and foreign, presently
owned, possessed, used or held by the Company. Schedule 4.10(e) also
contains a true and complete list of all licenses granted to or by the
Company with respect to the foregoing. The patents, patent applications,
trade names, trademarks, trademark registrations and applications,
copyrights, copyright registrations and applications and grants of
licenses set forth on Schedule 4.10(e) (i) are not subject to any pending
or, to the Company's knowledge, threatened challenge, (ii) are not subject
to any Lien and (iii) 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. Neither the execution nor delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will give any licensor or licensee of the Company any right to
change the terms or provisions of, terminate or cancel, any license to
which the Company is a party.
(f) The Company has made available to Parent and Acquisition Corp.
true and complete copies of all Contracts and other documents disclosed or
referred to on Schedules 4.10(a) through 4.10(e) of the Company Disclosure
Schedule, as well as any additional Contracts, requested by Parent or
Acquisition Corp.
17
Section 4.11 Tax Returns and Audits. All required federal, state and local
Tax Returns of the Company have been accurately prepared 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. 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 nor any state or local income or franchise
Tax Returns has been audited by governmental authorities. 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 required to make any adjustments under Section 481(a) of the Code (or any
similar provision of state, local and foreign law) 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 is not a party to, is
not bound by and does not have any obligation under, any Tax sharing agreement,
Tax indemnification agreement or similar contract or arrangement, whether
written or unwritten (collectively, "Tax Sharing Agreements"), nor does it have
any potential liability or obligation to any Person as a result of, or pursuant
to, any Tax Sharing Agreements.
Section 4.12 Patents and Other Intangible Assets.
(a) Except as set forth on Schedule 4.10(e) of the Company
Disclosure Schedule, the Company (i) owns or has the right to use, free
and clear of all Liens, 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
obligation 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.
(b) To the best 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. 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.
18
Section 4.13 Employee Benefit Plans; ERISA. Schedule 4.13 of the Company
Disclosure Schedule lists all "employee benefit plans" (within the meaning of
Section 3(3) of the ERISA) and 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
4.13 are hereinafter referred to as the "Employee Benefit Plans."
(a) 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.
(b) 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.
(c) 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 which might reasonably be expected
to form the basis of any such claim or lawsuit.
(d) 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.
(e) 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 Balance Sheet or the Company Disclosure
Schedule, 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.
19
(f) No events have occurred or are reasonably 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 such Employee Benefit
Plan.
Section 4.14 Title to Property and Encumbrances. The Company has good and
valid title to all properties and assets used in the conduct of its business
(except for property held under valid and subsisting leases which are in full
force and effect and which are not in default) free of all Liens except
Permitted Liens and such ordinary and customary imperfections of title,
restrictions and encumbrances as do not, individually or in the aggregate
constitute a Company Material Adverse Effect.
Section 4.15 Condition of Properties. All facilities, machinery,
equipment, fixtures and other properties owned, leased or used by the Company
are in operating condition, subject to ordinary wear and tear, and are adequate
and sufficient for the Company's existing business.
Section 4.16 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 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 4.17 Interested Party Transactions. Except as disclosed on
Schedule 4.10(b) of the Company Disclosure Schedule, no officer, director or
stockholder of the Company or any Affiliate 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 to which the Company is a party or by which it may be
bound or affected.
Section 4.18 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 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.
(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 Company Material Adverse
Effect.
20
(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
Company Material Adverse Effect.
(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 Company Material
Adverse Effect.
Section 4.19 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 Company Material Adverse Effect. No representation
or warranty by the Company herein and no information disclosed in the Company
Disclosure Schedule 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 V
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION CORP.
Parent and Acquisition Corp. hereby represent and warrant to the Company,
(and the Placement Agent, as a third party beneficiary in connection with the
Private Placement) subject to the exceptions as disclosed in the written
disclosure statement delivered by Parent and Acquisition Corp. to the Company no
later than five (5) days prior to the Closing Date (the "Parent Disclosure
Schedule"), as follows:
21
Section 5.1 Organization. Each of Parent and Acquisition Corp. (i) is duly
organized, validly existing and in good standing under the laws of its State of
incorporation or organization, (ii) has all licenses, permits, authorizations
and other Consents necessary to own, lease and operate its properties and assets
and to carry on its business as it is now being conducted and (iii) has all
requisite corporate or other applicable power and authority to own, lease and
operate its properties and assets and to carry on its business as it is now
being conducted and presently proposed to be conducted, in each case except
where such failures would not have, or be reasonably likely to have, a Parent
Material Adverse Effect. Each of Parent and Acquisition Corp. is duly qualified
or authorized to conduct business and is in good standing as a foreign
corporation or other entity in all jurisdictions in which the ownership or use
of its assets or nature of the business conducted by it makes such qualification
or authorization necessary, except where the failure to be so duly qualified,
authorized and in good standing would not have an Parent Material Adverse
Effect.
Section 5.2 Authorization; Validity of Agreement. Each of Parent and
Acquisition Corp. has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by each of Parent and Acquisition Corp.
of this Agreement and all other agreements and instruments to be executed
pursuant to this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by the Board of Directors of each
of Parent and Acquisition Corp. and the stockholders of Acquisition Corp., and
no other action on the part of either of Parent and Acquisition Corp. is
necessary to authorize the execution and delivery of this Agreement and the
consummation by either of Parent or Acquisition Corp. of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Parent and Acquisition Corp. (and assuming due and valid authorization,
execution and delivery hereof by the Company) is a valid and binding obligation
of each of Parent and Acquisition Corp., enforceable against each of them in
accordance with its 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 5.3 Consents and Approvals; No Violations. Except for filing of
the certificate of merger with the Secretary of State of the State of Delaware,
neither the execution, delivery or performance of this Agreement by either of
Parent and Acquisition Corp. nor the consummation of the transactions
contemplated hereby will (i) violate any provision of the certificate of
incorporation or by-laws of Parent or Acquisition Corp.; (ii) violate, conflict
with or result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, require the consent of or result in the creation of any Lien upon any of
the properties of Parent or Acquisition Corp. under, any Contract to which
Parent or Acquisition Corp. or any of their properties may be bound; (iii)
require any Consent, approval or authorization of, or notice to, or declaration,
filing or registration with, any governmental entity by or with respect to
Parent or any subsidiary of Parent, or (iv) violate any law applicable to any of
Parent or Acquisition Corp. or any of their respective properties or assets.
22
Section 5.4 Litigation. There is no Action pending or, to the knowledge of
the Parent, threatened, involving Parent and Acquisition Corp. or any subsidiary
of Parent or affecting the officers, directors or employees of Parent and
Acquisition Corp. or any subsidiary of Parent with respect to Parent's and
Acquisition Corp.'s, or any of Parent's subsidiaries, business by or before any
governmental entity or by any third party and neither Parent or Acquisition
Corp. nor any subsidiary of Parent has received notice that any such Action is
threatened. Neither Parent or Acquisition Corp. nor any subsidiary of Parent is
in default under any judgment, order or decree of any governmental entity
applicable to its business.
Section 5.5 No Default; Compliance with Applicable Laws. Neither Parent
nor any of Parent's subsidiaries is in default or violation of any material
term, condition or provision of (i) their respective certificate of
incorporation, by-laws or similar organizational documents or (ii) any law
applicable to Parent or any of Parent's subsidiaries or its property and assets
and neither Parent nor any of Parent's subsidiaries has received notice of any
violation of or Liability under any of the foregoing (whether material or not).
Section 5.6 Broker's and Finder's Fees; Broker/Dealer Ownership. No
person, firm, corporation or other entity 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 this Agreement or with respect to the consummation of the
transactions contemplated hereby. Except for placement agent warrants to
purchase units issued in connection with the Private Placement, no broker/dealer
offering or selling shares in the Private Placement, nor any director, officer
or Affiliate of any such broker/dealer, will own, either directly or indirectly
through subsidiaries or Affiliates, shares of Parent Common Stock upon the
termination of the Private Placement.
Section 5.7 Capitalization of Parent. The authorized capital stock of
Parent consists of (a) 75,000,000 shares of Parent Common Stock, of which not
more than 1,500,000 shares will be, prior to the Effective Time, issued and
outstanding before taking into consideration the issuance of Parent Common Stock
in the Private Placement, and (b) no shares of preferred stock. Parent has no
outstanding options, rights or commitments to issue shares of Parent Common
Stock or any capital stock or other securities 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 capital stock or other
securities 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. All outstanding shares of the capital stock of Parent are
validly issued and outstanding, fully paid and nonassessable, and none of such
shares have been issued in violation of the preemptive rights of any person.
Section 5.8 Acquisition Corp. Acquisition Corp. is a Delaware corporation
and a wholly-owned 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 this Agreement. 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 the Acquisition Corp., other than the
capital stock of Acquisition Corp. owned by Parent.
23
Section 5.9 Validity of Shares. The shares of Parent Common Stock to be
issued in accordance with Article III hereof and the shares of Parent Common
Stock to be issued at one or more closings in connection with the Private
Placement, when issued and delivered in accordance with the terms hereof, shall
be duly and validly issued, fully paid and nonassessable. Based in part on the
representations of investors contained in the subscription agreement attached to
the Memorandum and assuming the accuracy thereof, the issuance of the Parent
Common Stock in connection with the Private Placement 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 5.10 SEC Reporting and Compliance.
(a) Parent filed a registration statement on Form SB-2 under the
Securities Act which became effective on [__________], 2005. Since that
date, Parent has filed with the Commission all registration statements,
proxy statements, information statements and reports required to be filed
pursuant to 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 delivered to the Company true and complete copies of
the registration statements, information statements and other reports
(collectively, the "Parent SEC Documents") filed by the 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) Parent has not filed, and nothing has occurred with respect to
which Parent would be required to file, any report on Form 8-K since
December 31, 2004. 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 since December 31, 2004 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 the 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.
(e) Shares of Parent Common Stock are quoted on the Over-the-Counter
(OTC) Bulletin Board under the symbol BEAI.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.
(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 the OTC Bulletin
Board.
24
(g) To the best knowledge of the Parent, the Parent has complied
with the Securities Act, Exchange Act and all other applicable federal and
state securities laws.
Section 5.11 Financial Statements. The balance sheets, and statements of
income, stockholders' equity and cash flows contained in the Parent SEC
Documents (the "Parent Financial Statements") (i) have been prepared in
accordance with GAAP, (ii) are in accordance with the books and records of the
Parent, and (iii) present fairly in all material respects the financial
condition of the 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 the Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2004, are as audited by, and include the related
opinions of ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Parent's independent certified
public accountants.
Section 5.12 No General Solicitation. In issuing Parent Common Stock in
the Merger hereunder, neither Parent nor anyone acting on its behalf has offered
to sell Parent Common Stock by any form of general solicitation or advertising.
Section 5.13 Absence of Undisclosed Liabilities. Neither Parent nor
Acquisition Corp. has any Liability 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 as of December 31, 2004 (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
December 31, 2004 (the "Parent Balance Sheet Date"), none of which, individually
or in the aggregate, constitutes a Parent Material Adverse Effect and (d) by the
specific terms of any written agreement, document or arrangement attached as an
exhibit to the Parent SEC Documents.
Section 5.14 Changes. Since the Parent Balance Sheet Date, except as
disclosed in the Parent SEC Documents, the Parent has not (a) incurred any
debts, obligations or Liabilities, absolute, accrued or, to the 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 Parent Material Adverse Effect, (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 financial 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 Parent
Material Adverse Effect, (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
$1,000 in the aggregate, or (r) entered into any Contract, agreement or license,
or otherwise obligated itself, to do any of the foregoing.
25
Section 5.15 Tax Returns and Audits. All required federal, state and local
Tax Returns of the 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 Parent Material
Adverse Effect. The Parent is not and has not been delinquent in the payment of
any Tax. The Parent has not had a Tax deficiency assessed against it. None of
the Parent's federal income Tax Returns nor any state or local income or
franchise Tax Returns has been audited by governmental authorities. The reserves
for Taxes reflected on the Parent Balance Sheet are sufficient for the payment
of all unpaid Taxes payable by the 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 the Parent now pending, and
the Parent has not received any notice of any proposed audits, investigations,
claims or administrative proceedings relating to Taxes or any Tax Returns.
Section 5.16 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 the 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 made available to the Company.
(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.
26
(d) There are no pending, or to the knowledge of the Parent,
threatened, claims or lawsuits that 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 the 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 Parent Financial Statements or the Parent SEC
Documents, and to the knowledge of the 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 5.17 Interested Party Transactions. Except as disclosed in the
Parent SEC Documents, no officer, director or stockholder of the Parent or any
Affiliate of any such Person or the 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 the Parent or (ii) purchases from or sells or furnishes to the Parent any
goods or services, or (b) a beneficial interest in any Contract to which the
Parent is a party or by which it may be bound or affected.
Section 5.18 Questionable Payments. Neither the Parent, Acquisition Corp.
nor to the knowledge of the Parent, any director, officer, agent, employee or
other Person associated with or acting on behalf of the Parent or Acquisition
Corp., has a used any corporate funds for (a) unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (b)
made any direct or indirect unlawful payments to government officials or
employees from corporate funds, (c) established or maintained any unlawful or
unrecorded fund of corporate monies or other assets, (d) made any false or
fictitious entries on the books of record of any such corporations, or (e) made
any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
Section 5.19 Obligations to or by Stockholders. Except as disclosed in the
Parent SEC Documents, the 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 the Parent.
Section 5.20 Schedule of Assets and Contracts. Except as expressly set
forth in this Agreement, the Parent Balance Sheet or the notes thereto, the
Parent is not a party to any Contract not made in the ordinary course of
business that is material to the Parent. Parent does not own any real property.
Parent is not a party to any Contract (a) with any labor union, (b) for the
purchase of fixed assets or for the purchase of materials, supplies or equipment
in excess of normal operating requirements, (c) for the employment of any
officer, individual employee or other Person on a full-time basis or any
contract with any Person for consulting services, (d) with respect to bonus,
pension, profit sharing, retirement, stock purchase, stock option, deferred
compensation, medical, hospitalization or life insurance or similar plan,
contract or understanding with any or all of the employees of Parent or any
other Person, (e) relating to or evidencing Indebtedness for Borrowed Money or
subjecting any asset or property of Parent to any Lien or evidencing any
Indebtedness, (f) guaranteeing of any Indebtedness, (g) under which Parent is
lessee of or holds or operates any property, real or personal, owned by any
other Person, (h) under which Parent is lessor or permits any Person to hold or
operate any property, real or personal, owned or controlled by Parent, (i)
granting any preemptive right, right of first refusal or similar right to any
Person, (j) with any Affiliate of Parent or any present or former officer,
director or stockholder of Parent, (k) obligating Parent to pay any royalty or
similar charge for the use or exploitation of any tangible or intangible
property, (1) containing a covenant not to compete or other restriction on the
parent's ability to conduct a business or engage in any other activity, (m) with
respect to any distributor, dealer, manufacturer's representative, sales agency,
franchise or advertising contract or commitment, (n) regarding the registration
of securities under the Securities Act, (o) characterized as a collective
bargaining agreement, or (p) 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. The Parent maintains no insurance policies and
insurance coverage of any kind with respect to Parent, its business, premises,
properties, assets, employees and agents. Schedule 5.20 of the Parent Disclosure
Schedule contains a true and complete list and description of each bank account,
savings account, other deposit relationship and safety deposit box of Parent,
including the name of the bank or other depository, the account number and the
names of the individuals having signature or other withdrawal authority with
respect thereto. 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. Parent has furnished to the Company true and complete
copies of all agreements and other documents disclosed or referred to in
Schedule 5.20, as well as any additional agreements or documents, requested by
the Company.
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Section 5.21 Environmental Matters.
(a) The Parent has never generated, used, handled, treated,
released, stored or disposed of any Hazardous Materials 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.
(b) The historical and present operations of the business of the
Parent compliance with all applicable Environmental Laws, except where any
non-compliance has not had and would not reasonably be expected to have a
Parent Material Adverse Effect.
(c) (i) The Parent 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 Parent 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 Parent 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 Parent Material Adverse Effect.
28
Section 5.22 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.
Section 5.23 Disclosure. There is no fact relating to Parent or
Acquisition Corp. that Parent has not disclosed to the Company in writing that
has had or is having a Parent Material Adverse Effect. No representation or
warranty by Parent or Acquisition Corp. herein and no information disclosed in
the Parent Disclosure Schedules or exhibits hereto by Parent or Acquisition
Corp. contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein
misleading.
ARTICLE VI
CONDUCT OF BUSINESSES PENDING THE MERGER
Section 6.1 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:
(i) the business of the Company shall be conducted only in the
ordinary course consistent with the past practice;
(ii) the Company shall not (A) directly or indirectly redeem,
purchase or otherwise acquire or agree to redeem, purchase or otherwise
acquire any shares Company Capital Stock; (B) amend its certificate of
incorporation or by-laws except to effectuate the transactions
contemplated in this Agreement or the Memorandum; or (C) split, combine or
reclassify the outstanding Company Capital 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;
29
(iii) the Company shall not (A) issue any additional shares of, or
options, warrants or rights of any kind to acquire any shares of, Company
Capital Stock, except to issue shares of Company Capital Stock in
connection with the exercise of Common Stock Options, Series B Warrants or
Series C Warrants or the conversion of Series C Bridge Notes and except to
issue up to $1,000,000 of additional Series C Bridge Notes (and
corresponding warrants to purchase Company Series C Preferred Stock) in
its sole discretion; (B) acquire or dispose of any fixed assets or acquire
or dispose of any other substantial assets other than in the ordinary
course of business; (C) incur additional Indebtedness or any other
Liabilities or enter into any other transaction other than in the ordinary
course of business; (D) enter into any Contract, agreement, commitment or
arrangement with respect to any of the foregoing except this Agreement; or
(E) 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;
(iv) the Company shall use its reasonable best efforts to preserve
intact the business 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; and
(v) 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 other than in the ordinary course of
business and consistent with past practice.
Section 6.2 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 expressly permitted by this
Agreement:
(i) the business of Parent and Acquisition Corp. shall be conducted
only in the ordinary course consistent with past practice;
(ii) neither Parent nor Acquisition Corp. shall (A) directly or
indirectly redeem, purchase or otherwise acquire or agree to redeem,
purchase or otherwise acquire any shares of its capital stock; (B) amend
its certificate of incorporation or by-laws; or (C) 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; and
(iii) neither Parent nor Acquisition Corp. shall (A) issue or agree
to issue any additional shares of, or options, warrants or rights of any
kind to acquire shares of, its capital stock; (B) acquire or dispose of
any assets other than in the ordinary course of business; (C) incur
additional Indebtedness or any other Liabilities or enter into any other
transaction except in the ordinary course of business; (D) enter into any
Contract, agreement, commitment or arrangement with respect to any of the
foregoing except this Agreement, or (E) 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.
30
(iv) Parent shall use its best efforts to preserve intact the
business of Parent and Acquisition Corp., to keep available the service of
its present officers and key employees, and to preserve the good will of
those having business relationships with Parent and Acquisition Corp.;
(v) 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).
Parent will promptly advise the Company in writing of any such inquiries
or Acquisition Proposal (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 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
(vi) 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 VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information. The Company, Parent and Acquisition
Corp. shall each afford to the other and to the other's accountants, counsel and
other representatives reasonable access during normal business hours throughout
the period prior to the Effective Time of 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 7.1
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 (i) 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 (ii) 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: (A) 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);
31
(B) any disclosure of such information may be made as to which the party hereto
furnishing such information has consented in writing; (C) any such information
may be disclosed pursuant to a judicial, administrative or governmental order or
request provided, 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 which 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; and (D) any information
reasonably required or necessary in the discretion of counsel to Parent or
counsel to the Company to cause the Private Placement to comply with the
requirements of Rule 10b-5 of the Exchange Act shall be permitted. 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 7.2 Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its commercially
reasonable best 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 best
efforts to satisfy the conditions precedent to the obligations of any of the
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 7.3 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; provided that in
such case Parent will use its best efforts to allow Company to review and
reasonably approve any same prior to its release.
Section 7.4 Appointment of Directors. Immediately upon the Effective Time,
Parent shall accept the resignations of the current officers and directors of
Parent as provided by Section 8.2(f)(6) hereof, and shall cause the persons
listed as directors in Exhibit D 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.
Section 7.5 Parent Name Change and Exchange Listing. At the Effective
Time, Parent shall take all required legal actions to change its corporate name
to 20/20 Technologies Global Holdings, Inc. Promptly following the Effective
Time, Parent shall take all required actions to, upon satisfaction of the
original listing requirements, list the Parent Common Stock for trading on the
American Stock Exchange or the Nasdaq SmallCap Market.
32
Section 7.6 Meeting of Stockholders.
(a) So long as the Board of Directors of the Company shall not have
withdrawn, modified or changed its recommendation in accordance with the
provisions of Section 7.6(b) hereof, the Company, acting through its Board
of Directors, shall, in accordance with the DGCL and its certificate of
incorporation and by-laws, take all actions reasonably necessary to
establish a record date for, duly call, give notice of, convene and hold a
stockholders meeting for the purpose of obtaining the requisite approval
and adoption of this Agreement and the transactions contemplated hereby by
the Stockholders as required by the DGCL and otherwise. The Company shall
cause such stockholder meeting to be held in accordance with the DGCL on
or prior to May 31, 2005. The Company shall notify each Stockholder,
whether or not entitled to vote, of the proposed Company stockholders'
meeting in accordance with the DGCL and the certificate of incorporation
and by-laws. Such meeting notice shall state that the purpose, or one of
the purposes, of the meeting is to consider the Merger and shall contain
or be accompanied by a copy or summary of this Agreement. Notwithstanding
the foregoing, the Board of Directors of the Company shall not be required
to take all actions reasonably necessary to establish a record date for,
duly call, give notice of, convene and hold a stockholders meeting for the
purpose of obtaining the requisite approval and adoption of this Agreement
and the transactions contemplated hereby by the Stockholders if the
Company Board of Directors otherwise takes all actions reasonably
necessary to approve this Agreement and the transactions contemplated
hereby by written consent in lieu of a meeting of the stockholders of the
Company to the extent permitted by the DGCL.
(b) The Board of Directors of the Company shall unanimously
recommend such approval and shall use all reasonable efforts to solicit
and obtain such approval; provided, however, that the Board of Directors
of the Company may at any time prior to approval of the Stockholders (i)
decline to make, withdraw, modify or change any recommendation or
declaration regarding this Agreement or the Merger or (ii) recommend and
declare advisable any other offer or proposal, to the extent the Board of
Directors of the Company determines in good faith, based upon advice of
legal counsel, that withdrawing, modifying, changing or declining to make
its recommendation regarding this Agreement or the Merger or recommending
and declaring advisable any other offer or proposal is necessary to comply
with its fiduciary duties under applicable law (which declinations,
withdrawal, modification or change shall not constitute a breach by the
Company of this Agreement). The Company shall provide written notice to
Parent promptly upon the Company taking any action referred to in the
foregoing proviso.
(c) Pursuant to Section 251(d) of the DGCL, at any time before the
certificate of merger is filed with the Secretary of State of the State of
Delaware, including any time after the Merger is authorized by the
Stockholders, the Merger may be abandoned and this Agreement may be
terminated in accordance with the terms hereof, without further action by
the Stockholders.
33
Section 7.7 Information Statement. Following the date of this Agreement,
the Company shall prepare an information or disclosure statement and related
materials relating to the stockholders meeting (or the requested written consent
in lieu of a meeting) and the transactions contemplated hereby relating to the
Merger and this Agreement (the "Information Statement") and furnish the
information required to be provided to the Stockholders pursuant to the DGCL and
other applicable law. The Company shall cause such Information Statement to be
mailed to the Stockholders return receipt requested in accordance with the DGCL
and the certificate of incorporation and by-laws in connection with the
Stockholders meeting (or the requested written consent in lieu of a meeting).
Parent shall promptly provide such information as the Company may reasonably
request regarding Parent and such other matters regarding Parent as the Company
shall deem reasonably necessary to include in the materials to be provided to
the Stockholders. The materials submitted to the Stockholders shall include,
without limitation, information regarding the Company and Parent, the terms and
timing of the Merger, this Agreement and the unanimous recommendation of the
Board of Directors of the Company in favor of the Merger and this Agreement. The
information supplied by the Company and Parent for inclusion in the Information
Statement shall not, at (i) the time the Information Statement (or any amendment
thereof or supplement thereto) is first mailed to the Stockholders and (ii) the
time of the stockholders' meeting (as described in Section 7.6), contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any information relating
to the Company or any its respective directors, officers or Affiliates should be
discovered by the Company that should be set forth in an amendment or supplement
to the Information Statement so that the Information Statement would not include
any misstatement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, the Company shall promptly notify Parent and an
appropriate amendment or supplement describing such information shall be
promptly, to the extent required by law, disseminated to the Stockholders. If at
any time prior to the Effective Time any information relating to Parent or any
of its directors officers or Affiliates should be discovered by Parent that
should be set forth in an amendment or supplement to the Information Statement
so that the Information Statement would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, Parent shall promptly notify the Company and an appropriate
amendment or supplement describing such information shall be promptly, to the
extent required by law, disseminated to the Stockholders. The Company shall use
all reasonable efforts to solicit from its Stockholders votes or consents in
favor of the approval and adoption of this Agreement and the Merger and to
secure the vote or consent of stockholders required by the DGCL and its
certificate of incorporation and by-laws to approve and adopt this Agreement and
the Merger. Notwithstanding the foregoing, the Company shall not be required to
take any of the actions provided for under this Section 7.7 if the Company Board
of Directors determines in good faith, based upon advice of legal counsel, that
withdrawing, modifying, changing or declining to make its recommendation and
declaration regarding this Agreement or the Merger or recommending and declaring
advisable any other offer or proposal would be necessary to comply with its
fiduciary duties under applicable law (which declinations, withdrawal,
modification or change shall not constitute a breach by the Company of this
Agreement).
34
ARTICLE VIII
CONDITIONS OF PARTIES' OBLIGATIONS
Section 8.1 Company Obligations. The obligations of Parent and Acquisition
Corp. under this Agreement 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) No Errors, etc. 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) Compliance with Agreement. 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) No Company Material Adverse Effect. Since the date hereof, there
shall not have been any event or circumstance that has resulted in a
Company Material Adverse Effect and not event has occurred or circumstance
exists that would reasonably be expected to result in a Company Material
Adverse Effect.
(d) Certificate of Officers. The Company shall have delivered to
Parent and Acquisition Corp. a certificate dated the Closing Date,
executed on its behalf by the Chief Executive Officer of the Company,
certifying the satisfaction of the conditions specified in paragraphs (a),
(b) and (c) of this Section 8.1.
(e) Consummation of Private Placement. Consummation of the Merger
shall occur simultaneously with the initial closing of the Private
Placement.
(f) No Restraining Action. 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, this Agreement or the carrying out of the transactions
contemplated by this Agreement.
(g) Supporting Documents. Parent and Acquisition Corp. shall have
received the following:
(1) Copies of resolutions of the Board of Directors and the
stockholders of the Company, certified by the Secretary of the
Company, authorizing and approving the Merger and the execution,
delivery and performance of this Agreement and all other documents
and instruments to be delivered pursuant hereto and thereto.
(2) 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 certificate 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
since the date hereof.
35
(3) Evidence as of a recent date of the good standing and
corporate existence of the Company issued by the Secretary of State
of the State of Delaware.
Section 8.2 Parent and Acquisition Corp. Obligations. The obligations of
the Company under this Agreement 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:
(a) No Errors, etc. 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) Compliance with Agreement. Parent and Acquisition Corp. 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 them on or before the Closing Date.
(c) No Parent Material Adverse Effect. Since the date hereof, there
shall not have been any event or circumstance that has resulted in a
Parent Material Adverse Effect and no event has occurred or circumstance
exists that would be reasonably expected to result in such a Parent
Material Adverse Effect.
(d) Certificate of Officers. Parent and Acquisition Corp. shall have
delivered to the Company a certificate dated the Closing Date, executed on
their behalf by their respective Presidents, certifying the satisfaction
of the conditions specified in paragraphs (a), (b), and (c) of this
Section 8.2.
(e) Supporting Documents. The Company shall have received the
following:
(1) Copies of resolutions of Parent's and Acquisition
Corp.'s respective board of directors and the sole stockholder
of Acquisition Corp., certified by their respective
Secretaries, authorizing and approving the Merger and the
execution, delivery and performance of this Agreement and all
other documents and instruments to be delivered by them
pursuant hereto.
(2) 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 paragraph
(1) above and further certifying that the certificates of
incorporation and by-laws of Parent and Acquisition Corp.
appended thereto have not been amended or modified.
(3) A certificate, dated the Closing Date, executed by
the Secretary of each of the Parent and Acquisition Corp.,
certifying that, except for the filing of the certificate of
merger with the Secretary of State of the State of Delaware:
(i) all consents, authorizations, orders and approvals of, and
filings and registrations with, any court, governmental body
or instrumentality that are required to be obtained by Parent
or Acquisition Corp. for the execution and delivery of this
Agreement and the consummation of the Merger shall have been
duly made or obtained; and (ii) no action or proceeding before
any court, governmental body or agency has been threatened,
asserted or instituted against Parent or Acquisition Corp. to
restrain or prohibit, or to obtain substantial damages in
respect of, this Agreement or the carrying out of the
transactions contemplated by this Agreement.
36
(4) A certificate of Empire Stock Transfer, Inc.,
Parent's transfer agent and registrar, certifying as of the
business day prior to the date that any shares of Parent
Common Stock are first issued in the Private Placement, 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.
(5) A letter from Empire Stock Transfer, Inc., Parent's
transfer agent and registrar, certifying that the number of
shares of Parent Common Stock issued and outstanding as of the
Closing Date, but prior to the initial closing of the Private
Placement and the Merger, is no more than 1,500,000 shares of
Parent Common Stock.
(6) (i) The executed resignations of all directors and
officers of Parent, with the director resignations to take
effect at the Effective Time, and (ii) executed releases from
each such director and officer in the form and substance
acceptable to the Company in its sole discretion.
(7) Evidence as of a recent date of the good standing
and corporate existence of each of the Parent and Acquisition
Corp. issued by the Secretary of State of their respective
states of incorporation.
(8) Such additional supporting documentation and other
information with respect to the transactions contemplated
hereby as the Company may reasonably request.
(f) Parent Indemnification Agreement. The following individuals and
entities (the "Parent Indemnitors") shall have executed an Indemnification
Agreement (the "Parent Indemnification Agreement") in form and substance
acceptable to the Company in its sole discretion, which Parent
Indemnification Agreement shall provide for the payment of Damages, if
any, to the Company Indemnified Parties in accordance with indemnification
claims pursuant to Article IX hereof: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, GRQ Consultants,
Inc. and Gotham Capital Group.
(g) Due Diligence. The Company shall have been and shall continue to
be satisfied in its sole discretion (regardless of (1) the satisfaction of
any or all of the other closing conditions, (2) any knowledge of such
matters on or prior to the Closing Date or (3) any indication previously
given by, or on behalf of, Company with respect to the satisfaction of any
such matter) with the results of its and its representatives' due
diligence investigation and evaluation of the Parent and Acquisition Corp.
and each of the transactions contemplated hereby.
37
(h) Limitation on Dissenting Shares. The holders of not more than
one percent (1.0%) of the outstanding shares of Company Capital Stock
shall have exercised and not withdrawn such holder's right to appraisal
and payment under Section 262 of the DGCL.
ARTICLE IX
INDEMNIFICATION AND RELATED MATTERS
Section 9.1 Indemnification by Parent. Parent shall indemnify and hold
harmless 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 on the Parent Financial
Statements 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 9.2 Survival. All representations, warranties, covenants and
agreements of Parent and Acquisition Corp. contained in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive until twelve (12)
months after the Closing Date. The representations and warranties of the Company
contained in this Agreement or in any instrument delivered pursuant to this
Agreement will terminate at, and have no further force and effect after, the
Effective Time.
Section 9.3 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 one-year anniversary of the
Effective Time (the "Claims Deadline"), Parent is given notice of a claim with
respect thereto, in accordance with Section 9.5, specifying the factual basis
therefore in reasonable detail to the extent then known by the Company
Indemnified Parties.
Section 9.4 Limitation on Liability. The obligations to Parent and
Acquisition Corp. to the Company Indemnified Parties set forth in Section 9.1
shall be subject to the following limitations:
38
(a) The aggregate liability of Parent and Acquisition Corp. to the
Company Indemnified Parties under this Agreement shall not exceed
$500,000.00.
(b) Other than claims based on fraud or for specific performance,
injunctive or other equitable relief, the Company Indemnified Parties sole
and exclusive remedy for any and all claims for Damages pursuant to
Section 9.1 hereof shall be the indemnification provided under the terms
and subject to the conditions of this Article IX.
Section 9.5 Notice of Claims.
(a) If, at any time on or prior to the Claims Deadline, Company
Indemnified Parties shall assert a claim for indemnification pursuant to
Section 9.1, such Company Indemnified Parties shall submit to Parent a
written claim stating: (i) that a Company Indemnified Party incurred or
reasonably believes it may incur Damages and the amount or reasonable
estimate thereof of any such Damages; and (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. If the claim
is for Damages which the Company Indemnified Parties reasonably believe
may be incurred or are otherwise unliquidated, the written claim shall be
deemed to have been asserted under this Article IX in the amount of such
estimated Damages, but no payment for indemnification 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 IX, the 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 this Article IX, 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 Parties, 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 Parties for any liability arising out of such claim or demand.
Section 9.6 Payment of Damages. In the event that the Company Indemnified
Parties shall be entitled to indemnification pursuant to this Article IX for
actual Damages incurred by them, Parent shall, within thirty (30) days after the
final determination of the amount of such Damages, cause the Parent Indemnitors
to reimburse the Company Indemnified Parties for the amount of such Damages
pursuant to the Parent Stockholder Indemnification Agreement.
39
ARTICLE X
TERMINATION PRIOR TO CLOSING
Section 10.1 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, (ii)
materially breaches any of its 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, (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, which 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;
(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 May 31, 2005, for any reason other than delay or
nonperformance of the party seeking such termination;
(f) by the Company, if the condition set forth in Section 8.2(h) has
not been satisfied on or prior to May 31, 2005; or
(g) by the Company if the Board of Directors of the Company
determines in good faith, based upon advice of legal counsel, that
termination pursuant to this Section 10.1(g) is necessary to comply with
its fiduciary duties under applicable law as provided in Section 7.6
hereof.
Section 10.2 Termination of Obligations. Termination of this Agreement
pursuant to Section 10.1 hereof shall terminate all obligations of the parties
hereunder, except for the obligations under Article IX, Article X, and Sections
11.4, 11.7, 11.14 and 11.15 hereof; provided, however, that termination pursuant
to paragraphs (b) or (c) of Section 10.1 shall not relieve the defaulting or
breaching party or parties from any liability to the other parties hereto.
40
Section 10.3 Termination Fee. If the Company shall terminate this
Agreement pursuant to Section 10.1(b) hereof, Parent shall pay Company a
non-refundable fee of $50,000.00, such amount to be payable by wire transfer of
same day funds immediately following the such termination to the account
designated by the Company. If the Parent or Acquisition Corp. shall terminate
this Agreement pursuant to Section 10.1(c), the Company shall pay Parent a
non-refundable fee of $5,000.00, such amount to be payable by wire transfer of
same day funds immediately following the such termination to the account
designated by Parent.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Amendments. Subject to applicable law, this Agreement may be
amended or modified by the parties hereto by written agreement executed by each
party to be bound thereby and delivered by duly authorized officers of the
parties hereto at any time prior to the Effective Time; provided, however, that
after the approval of the Merger by the Stockholders, no amendment or
modification of this Agreement shall be made that by law requires further
approval from the Stockholders without such further approval.
Section 11.2 Notices. Any notice, request, instruction, other document or
communications to be given hereunder by any party hereto to any other party
hereto shall be in writing and shall be deemed to have been duly given (a) when
delivered personally, (b) upon receipt of a transmission confirmation (with a
confirming copy delivered personally or sent by overnight courier) if sent by
facsimile or like transmission, or (c) on the next business day when sent by
Federal Express, United Parcel Service, U.S. Express Mail or other reputable
overnight courier for guaranteed next day delivery, as follows:
If to Parent or Acquisition Corp., to: Becoming Art, Inc.
c/o ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome
▇▇▇▇▇▇▇▇▇▇ & Wolosky LLP
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Park Avenue Tower
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
41
If to the Company, to: 20/20 Technologies, Inc.
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, CEO
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Ltd.
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
After May 1, 2005:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Ltd.
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
or to such other persons or addresses as may be designated in writing by the
party to receive such notice. Nothing in this Section 11.2 shall be deemed to
constitute consent to the manner and address for service of process in
connection with any legal proceeding (including arbitration arising in
connection with this Agreement), which service shall be effected as required by
applicable law.
Section 11.3 Entire Agreement. This Agreement, the Company Disclosure
Schedule, the Parent Disclosure Schedule and the exhibits attached hereto or
referred to herein constitute the entire agreement of the parties hereto, and
supersede all prior agreements and undertakings, both written and oral, among
the parties hereto, with respect to the subject matter hereof and thereof.
42
Section 11.4 Expenses. Except as otherwise expressly provided herein,
whether or not the Merger occurs, all expenses and fees incurred by Parent on
one hand, and the Company on the other, shall be borne solely and entirely by
the party that has incurred the same; provided, that if the Merger occurs,
Parent agrees to pay, and shall cause the Surviving Corporation to pay, any
unpaid fees and expenses of the Company (including fees and expenses of its
counsel and other advisors) in connection with the consummation of the
transactions contemplated by this Agreement.
Section 11.5 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
will negotiate in good faith to amend or modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
Section 11.6 Successors and Assigns; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned or delegated by any of the parties
hereto without, in the case of Parent, the prior written approval of the Company
and, in the case of the Company, the prior written approval of Parent.
Section 11.7 No Third Party Beneficiaries. Except as set forth in Section
9.1, Section 11.6, and the introductory paragraph of Article V hereof, nothing
herein expressed or implied shall be construed to give any person other than the
parties hereto (and their successors and assigns as permitted herein) any legal
or equitable rights hereunder.
Section 11.8 Counterparts; Delivery by Facsimile. This Agreement may be
executed in multiple counterparts, and by the different parties hereto in
separate counterparts, each of which when executed will be deemed to be an
original but all of which taken together will constitute one and the same
agreement. This Agreement and each other agreement or instrument entered into in
connection herewith or therewith or contemplated hereby or thereby, and any
amendments hereto or thereto, to the extent signed and delivered by means of a
facsimile machine, shall be treated in all manner and respects as an original
agreement or instrument and shall be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in person. At
the request of any party hereto or to any such agreement or instrument, each
other party hereto or thereto shall re-execute original forms thereof and
deliver them to all other parties. No party hereto or to any such agreement or
instrument shall raise the use of a facsimile machine to deliver a signature or
the fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine as a defense to the
formation or enforceability of a contract and each such party forever waives any
such defense.
Section 11.9 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto; (b) waive any inaccuracies in the
representations and breaches of the warranties of the other party contained
herein or in any document delivered pursuant hereto; and (c) waive compliance by
the other party with any of the agreements or conditions contained herein. Any
such extension or waiver will be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
43
Section 11.10 No Constructive Waivers. No failure or delay on the part of
any party hereto in the exercise of any right hereunder will impair such right
or be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty, agreement or covenant herein, nor will any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right. No waiver by any party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
Section 11.11 Further Assurances. The parties hereto shall use their
commercially reasonable efforts to do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments or documents as any other party
hereto may reasonably request in order to carry out fully the intent and
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
Section 11.12 Recitals. The recitals set forth above are incorporated
herein and, by this reference, are made part of this Agreement as if fully set
forth herein.
Section 11.13 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 11.14 Governing Law. This Agreement and the agreements,
instruments and documents contemplated hereby shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware without regard
to its conflicts of law principles.
Section 11.15 Dispute Resolution. The parties hereto shall initially
attempt to resolve all claims, disputes or controversies arising under, out of
or in connection with this Agreement by conducting good faith negotiations
amongst themselves. If the parties hereto are unable to resolve the matter
following good faith negotiations, the matter shall thereafter be resolved by
binding arbitration and each party hereto hereby waives any right it may
otherwise have to the resolution of such matter by any means other than binding
arbitration pursuant to this Section 11.15. Whenever a party shall decide to
institute arbitration proceedings, it shall provide written notice to that
effect to the other parties hereto. The party giving such notice shall, however,
refrain from instituting the arbitration proceedings for a period of sixty (60)
days following such notice. During this period, the parties shall make good
faith efforts to amicably resolve the claim, dispute or controversy without
arbitration. Any arbitration hereunder shall be conducted in the English
language under the rules of the American Arbitration Association. Any such
arbitration shall be conducted in Chicago, Illinois by a panel of three
arbitrators: one arbitrator shall be appointed by each of Parent and Company;
and the third shall be appointed by the American Arbitration Association. The
panel of arbitrators shall have the authority to grant specific performance.
Judgment upon the award so rendered may be entered in any court having
jurisdiction or application may be made to such court for judicial acceptance of
any award and an order of enforcement, as the case may be. In no event shall a
demand for arbitration be made after the date when institution of a legal or
equitable proceeding based on the claim, dispute or controversy in question
would be barred under this Agreement or by the applicable statute of
limitations. The prevailing party in any arbitration in accordance with this
Section 11.15 shall be entitled to recover from the other party, in addition to
any other remedies specified in the award, all reasonable costs, attorneys' fees
and other expenses incurred by such prevailing party to arbitrate the claim,
dispute or controversy.
44
Section 11.16 Interpretation.
(a) When a reference is made in this Agreement to a section or
article, such reference shall be to a section or article of this Agreement
unless otherwise clearly indicated to the contrary.
(b) Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words
"without limitation."
(c) The words "hereof", "hereby", "herein" and "herewith" and words
of similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, paragraph, exhibit and schedule
references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified.
(d) The words "knowledge," or "known to," or similar terms, when
used in this Agreement to qualify any representation or warranty, refers
to the knowledge or awareness of certain specific facts or circumstances
related to such representation or warranty of the persons in the
Applicable Knowledge Group (as defined herein) which a prudent business
person would have obtained after reasonable investigation or due diligence
on the part of any such person. For the purposes hereof, the "Applicable
Knowledge Group" with respect to the Company shall be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇. For the purposes
hereof, the "Applicable Knowledge Group" with respect to Parent and the
Acquisition Corp. shall be ▇▇▇▇▇ ▇▇▇▇▇▇▇, President and Treasurer of
Parent, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Secretary of Parent, and ▇▇▇▇▇ ▇▇▇▇▇, GRQ
Consultants, Inc.
(e) The word "subsidiary" shall mean any entity of which at least a
majority of the outstanding shares or other equity interests having
ordinary voting power for the election of directors or comparable managers
of such entity is owned, directly or indirectly by another entity or
person.
(f) For purposes of this Agreement, "ordinary course of business"
means the ordinary course of business consistent with past custom and
practice (including with respect to quantity and frequency).
(g) The plural of any defined term shall have a meaning correlative
to such defined term, and words denoting any gender shall include all
genders. Where a word or phrase is defined herein, each of its other
grammatical forms shall have a corresponding meaning.
45
(h) A reference to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and
statutory instruments issued thereunder or pursuant thereto, unless the
context requires otherwise.
(i) The parties hereto have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
Section 11.17 Registration Rights. No later than seventy-five (75) days
following the completion of the Private Placement, Parent shall, at its sole
cost and expense, prepare and file with the Commission a registration statement
on Form SB-2, Form S-3 (or other appropriate form) (the "Registration
Statement") to register all of the Parent Common Stock (i) issuable pursuant to
Section 3.1 hereof in exchange for Company Series A Preferred Stock, Company
Series B Preferred Stock, and Company Series C Preferred Stock, and (ii)
issuable pursuant to Section 3.3 hereof upon the exercise of the Series B
Warrants and Series C Warrants and conversion of the Series C Bridge Notes
(collectively, the shares described in (i) and (ii) hereof, the "Registrable
Shares"), to permit the public offering and sale of the Registrable Shares
through the facilities of all appropriate securities exchanges or inter-dealer
quotation systems, if any, on which the Parent Common Stock is being sold or
quoted. Parent will use commercially reasonable best efforts through its
officers, directors, auditors and counsel to cause the Registration Statement to
become effective as promptly as practicable.
[The remainder of this page intentionally blank]
46
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed as of the date first above written by their respective officers
thereunto duly authorized.
COMPANY:
20/20 TECHNOLOGIES, INC.
By:
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer
PARENT:
BECOMING ART, INC.
By:
-----------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
ACQUISITION CORP.:
20/20 ACQUISITION SUBSIDIARY, INC.
By:
-----------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
Exhibit A
Certificate of Incorporation of Surviving Corporation
A-1
CERTIFICATE OF INCORPORATION
OF
20/20 ACQUISITION, INC.
I. The name of the corporation is 20/20 Acquisition, Inc.
II. The address of its registered office in the State of Delaware is 9
East Loockerman, in the City of Dover, 19901, County of Kent. The name of its
registered agent at such address is National Registered Agents, Inc.
III. The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
IV. The total number of shares of stock which the Corporation shall have
authority to issue are:
1,000 Common Stock, par value $.00001 per share.
1,000 Preferred Stock, par value $.00001 per share.
The Preferred Stock may be issued from time to time, in one or more
series, and each series shall be known and designated by designations as may be
stated and expressed in a resolution or resolutions adopted by the Board of
Directors of the Corporation and as shall have been set forth in a certificate,
made, executed, acknowledged, filed and recorded in the manner required by the
laws of the State of Delaware in order to make the same effective. Each series
shall consist of the number of shares as shall be stated and expressed in the
resolution(s) providing for the issuance of Preferred Stock of the series
together with the additional number of shares as the Board of Directors by
resolution(s) may, from time to time, determine to issue as part of the series.
Unless otherwise provided with respect to any series, shares of any series may
be issued in fractional shares. All shares of any one series of Preferred Stock
shall be alike in every particular respect except that shares issued at
different times may accumulate dividends from different dates. The Board of
Directors shall have the power and authority to state and determine, in the
resolution(s) providing for the issue of each series of Preferred Stock, the
number of shares of each series authorized to be issued, the voting powers (if
any) and the designations, preferences and relative, participating, optional or
other rights appertaining to series, and the qualifications, limitations or
restrictions of the series (including, but not limited to, full power and
authority to determine as to the Preferred Stock of each series, the rate(s) of
dividends payable thereon, the times of payment of the dividends, the prices and
manner upon which the Preferred Stock of the series may be redeemed, the amount
or amounts payable thereon in the event of liquidation, dissolution or winding
up of the Corporation, and the right (if any) to convert the same into, and/or
to purchase, stock of any other class or series). The Board of Directors may,
from time to time, decrease the number of authorized shares of any series of
Preferred Stock (but not below the number of shares of any series of Preferred
Stock then outstanding). The foregoing provisions of this paragraph with respect
to the creation or issuance of series of Preferred Stock shall be subject to any
additional conditions with respect thereto which may be contained in any
resolutions then in effect which shall have theretofore been adopted in
accordance with the foregoing provisions of this paragraph with respect to any
then outstanding series of Preferred Stock.
A-2
V. The Corporation is to have perpetual existence.
VI. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the bylaws of the Corporation, subject to any specific limitation provided by
any bylaws adopted by the stockholders.
VII. Meetings of stockholders may be held within or outside of the State
of Delaware, as the by-laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the bylaws) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the bylaws of the Corporation. Elections of directors
need not be by written ballot unless the bylaws of the Corporation shall so
provide.
VIII. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. If the General Corporation Law of the State of
Delaware, or any other applicable law, is amended to authorize corporation
action further eliminating or limiting the personal liability of directors, then
the liability of a director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the General Corporation Law of the State of
Delaware, or any other applicable law, as so amended. Any repeal or modification
of this Article VIII by the stockholders of the Corporation shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
IX. The Corporation shall indemnify, to the full extent that it shall have
power under applicable law to do so and in a manner permitted by such law, any
person made or threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director or
officer of the Corporation against liabilities and expenses reasonably incurred
or paid by such person in connection with such action, suit or proceeding. The
Corporation may indemnify, to the full extent that it shall have power under
applicable law to do so and in a manner permitted by such law, any person made
or threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was an employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against liabilities and expenses reasonably
incurred or paid by such person in connection with such action, suit or
proceeding. The words "liabilities" and "expenses" shall include, without
limitation: liabilities, losses, damages, judgments, fines, penalties, amounts
paid in settlement, expenses, attorneys' fees and costs. The indemnification
provided by or granted pursuant to this Article IX shall not be deemed exclusive
of any other rights to which any person indemnified or being advanced expenses
may be entitled under any statute, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such person.
A-3
The Corporation may purchase and maintain insurance on behalf of any
person referred to in the preceding paragraph against any liability asserted
against and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions of this
Article IX or otherwise.
For purposes of this Article IX, references to the "Corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or agents, so that any
person who is or was a director, officer, employee or agent of such constituent
corporation, or was serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under the
provisions of this Article IX with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
The provisions of this Article IX shall be deemed to be a contract between
the Corporation and each director or officer who serves in any such capacity at
any time while this Article IX and the relevant provisions of the General
Corporation Law of the State of Delaware or other applicable law, if any, are in
effect, and any repeal or modification of such law or of this Article IX shall
not affect any rights or obligations then existing with respect to any state of
facts then or theretofore existing or any action, suit or proceeding theretofore
or thereafter brought or threatened based in whole or in part upon any such
state of facts.
For purposes of this Article IX, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner not
opposed to the best interests of the Corporation.
X. Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of the General Corporation Law of the State of
Delaware or on the application of trustees in dissolution or of any receiver or
receivers appointed for the Corporation under the provisions of Section 279 of
the General Corporation Law of the State of Delaware, order a meeting of the
creditors or class of creditors, and/or of the stockholders of the Corporation,
as the case may be, to be summoned in such manner as the said court directs.
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If a majority in number representing three-fourths (3/4) in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of the Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all stockholders or class of stockholders, of the Corporation, as the case may
be, and also on the Corporation.
XI. The Corporation hereby expressly elects not to be governed by Section
203 of the General Corporation Law of the State of Delaware.
XII. The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by law, and all rights conferred upon the stockholders
herein are granted subject to this reservation.
XIII. The name and address of incorporator is as follows:
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, makes this Certificate of
Incorporation, hereby declaring and certifying that the facts herein stated are
true, and accordingly, has hereunto set her hand this 1st day of October, 2004.
/s/ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------
Incorporator
A-5
Exhibit B
By-laws of Surviving Corporation
B-1
BY-LAWS
OF
20/20 ACQUISITION, INC.
ARTICLE I
OFFICES
The corporation shall continuously maintain in the State of Delaware, a
registered office and a registered agent whose office is identical with such
registered office and may have other offices within or without the state. The
address of the corporation's registered office in the State of Delaware is ▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The name of the corporation's
registered agent at such address is National Registered Agents, Inc. The
corporation reserves the power to change its registered agent and registered
office at any time.
ARTICLE II
STOCKHOLDERS
Section 2.1 Annual Meeting. An annual meeting of the stockholders shall be
held not less than thirty (30) days after delivery of the annual report, but
within six (6) months after the end of each fiscal year, for the purpose of
electing directors and for the transaction of such other business, as may come
before the meeting.
Section 2.2 Special Meetings. Special meetings of the stockholders may be
called either by the chairman of the board, the president, the board of
directors, or by any stockholders who hold in the aggregate not less than ten
percent (10%) of the outstanding shares of common stock for the purpose or
purposes stated in the call of the meeting.
Section 2.3 Place of Meetings. Each meeting of the stockholders for the
election of directors shall be held at the offices of the corporation, unless
the board of directors shall by resolution, designate any other place of such
meeting. Meetings of stockholders for any other purpose may be held at such
place, within or without the State of Delaware, and at such time as shall be
determined pursuant to Section 2.2 of this Article II, and stated in the notice
of the meeting or in a duly executed waiver of notice thereof. The board of
directors may, in its sole discretion, determine that the meeting shall not be
held at any place, but may instead be held solely by means of remote
communication.
Section 2.4 Notice of Meetings. A written notice of each meeting of
stockholders, stating the place if any, date and hour of the meeting, the means
of remote communication, if any, by which stockholders and proxy holders may be
deemed to be present in person and vote at such meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be given to each stockholder entitled to vote at the meeting. Unless otherwise
provided by the General Corporation Law of Delaware ("Delaware Law"), the notice
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting, and, if mailed, shall be deposited in the United States
mail, postage prepaid, both directed to the stockholder at his address as it
appears on the records of the corporation. No notice need be given to any person
with whom communication is unlawful, nor shall there be any duty to apply for
any permit or license to give notice to any such person. Notice given by
electronic transmission and returned as undeliverable, shall not be deemed
proper notice for purposes of this section.
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Section 2.5 Waiver of Notice. Anything herein to the contrary
notwithstanding, with respect to any stockholder meeting, any stockholder who in
person or by proxy shall have waived in written notice or any waiver by
electronic transmission of the meeting, either before or after such meeting, or
who shall attend the meeting in person or by proxy, shall be deemed to have
waived notice of such meeting unless he attends for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
Section 2.6 Quorum; Manner of Acting And Order of Business. Subject to the
provisions of these by-laws, the certificate of incorporation, as amended, and
Delaware Law as to the vote that is required for a specified action, the
presence in person, by proxy, or by electronic transmission of the holders of a
majority of the outstanding shares of the corporation entitled to vote at any
meeting of stockholders shall constitute a quorum for the transaction of
business. The vote of the holders of a majority of the shares of the
corporation's stock entitled to vote, present in person, represented by proxy,
or by electronic transmission, shall be binding on all stockholders of the
corporation, unless the vote of a greater number or voting by classes is
required by law or the certificate of incorporation, as amended, or these
by-laws. The stockholders present at a duly called or held meeting at which a
quorum is present may continue to do business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum.
In the absence of a quorum, stockholders holding a majority of the shares
present in person, by proxy, or by electronic transmission are entitled to vote,
regardless of whether or not they constitute a quorum, or if no stockholders are
present, any officer entitled to preside at or act as secretary of the meeting,
may adjourn the meeting to another time and place. Any business which might have
been transacted at the original meeting may be transacted at any adjourned
meeting at which a quorum is present. No notice of an adjourned meeting need be
given if the time, place, if any, thereof, and the means of remote
communications, if any, by which stockholders and proxy holders may be deemed to
be present in person and vote at such adjourned meeting, are announced at the
meeting at which the adjournment is taken except that, if adjournment is for
more than thirty (30) days or if, after the adjournment, a new record date is
fixed for the meeting, notice of the adjourned meeting shall be given pursuant
to Section 2.4 of this Article II.
Meetings of the stockholders shall be presided over by the chairman of the
board, or in his absence by the president, or in his absence by a vice
president, or in the absence of the foregoing persons by a chairman designated
by the board of directors, or in the absence of such designation by a chairman
chosen at the meeting. The secretary shall act as secretary of the meeting, but
in his absence the chairman of the meeting may appoint any person to act as
secretary of the meeting. The order of business at all meetings of the
stockholders shall be determined by the chairman. The order of business so
determined, however, may be changed by vote of the holders of a majority of the
shares present at the meeting in person or represented by proxy.
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Section 2.7 Voting; Proxies. Each stockholder of record on the record
date, as determined pursuant to Section 6.6 of Article VI, shall be entitled to
one vote for every share registered in his name. However, all elections of
directors shall be by written ballot, unless otherwise provided in the
certificate of incorporation, as amended; if authorized by the board of
directors, such requirement of a written ballot shall be satisfied by a ballot
submitted by electronic transmission, provided that any such electronic
transmission must either set forth or be submitted with information from which
it can be determined that the electronic transmission was authorized by the
stockholder or proxy holder. Each stockholder entitled to vote at any meeting of
stockholders or to express consent to or dissent from corporate action in
writing or by electronic transmission without a meeting may authorize another
person to act for him by proxy. No proxy shall be valid after three years from
its date of execution, unless the proxy provides for a longer period.
Section 2.8 Inspectors of Election.
(a) In advance of any meeting of stockholders, the board of
directors may appoint inspectors of election to act at each meeting of
stockholders and any adjournment thereof. If inspectors of election are
not so appointed, the chairman of the meeting may, and upon the request of
any stockholder or his proxy shall, appoint inspectors of election at the
meeting. The number of inspectors shall be either one or three. If
appointed at the meeting upon the request of one or more stockholders or
proxies, the vote of the holders of a majority of shares present shall
determine whether one or three inspectors are appointed. In any case if
any person appointed as an inspector fails to appear or fails or refuses
to act, the vacancy may be filled by appointment made by the directors in
advance of the convening of the meeting or at the meeting by the person
acting as chairman.
(b) The inspectors of election shall determine the outstanding stock
of the corporation, the stock represented at the meeting and the existence
of a quorum, shall receive votes, ballots, or consents, shall count and
tabulate all votes and shall determine the result; and in connection
therewith, the inspector shall determine the authority, validity and
effect of proxies, hear and determine all challenges and questions, and do
such other ministerial acts as may be proper to conduct the election or
vote with fairness to all stockholders. If there are three inspectors of
election, the decision, act or certificate of a majority is effective in
all respects as the decision, act or certificate of all. If no inspectors
of election are appointed, the secretary shall pass upon all questions and
shall have all other duties specified in this Section.
(c) Upon request of the chairman of the meeting or any stockholder
or his proxy, the inspector(s) of election shall make a report in writing
of any challenge or question or other matter determined by him and shall
execute a certificate of any fact found in connection therewith. Any such
report or certificate shall be filed with the record of the meeting.
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Section 2.9 Action Without a Meeting. Any action required to be taken at
any annual or special meeting of stockholders, or any action which may be taken
at any annual or special meeting of stockholders may be taken without a meeting,
without prior notice and without a vote, if a consent in writing or by
electronic transmission, setting forth the action so taken, shall be signed by
the holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted and shall be
delivered to the corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
Every written consent shall bear the date of signature of each stockholder who
signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent, delivered to the corporation in the manner required by
this Section 2.9, Article II, written consents signed by a sufficient number of
stockholders to take action are delivered to the corporation in such manner.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
(a) The action to elect directors by consent can satisfy the annual
meeting requirement if either (i) the stockholder consent is unanimous or
(ii) all directorships corresponding to those to which directors could
have been elected if an annual meeting had been held are filled by the
action by consent and only if all such directorships are vacant.
Replacement of incumbent directors by less than unanimous stockholder
consent will require their removal or resignation prior to the
effectiveness of the consent action that substitutes for the election at
the annual meeting.
(b) Telegram, cablegram or other electronic transmission consenting
to an action to be taken and transmitted by a stockholder or proxy holder,
or by a person or persons authorized to act for a stockholder or proxy
holder, shall be deemed to be written, signed and dated for the purposes
of this section, provided the transmission is delivered with information
form which the corporation can determine (i) it was transmitted by the
stockholder or proxy holder or by a person authorized to act for the
holder and (ii) the date on which such stockholder or proxy holder or
person authorized to act transmitted such telegram, cablegram, or
electronic transmission. The date on which the electronic transmission is
transmitted shall be deemed to be the date on which such consent was
signed.
Section 2.10 Revocation of Consent. Any stockholder giving a written
consent, or the stockholder's proxy holders, or a transferee of the shares or a
personal representative of the stockholder or its respective proxy holder, may
revoke the consent by writing or electronic transmission or transmissions
received by the corporation prior to the time that written consents of the
number of shares required to authorize the proposed action have been filed with
the secretary of the corporation, but may not do so thereafter. Such revocation
is effective upon its receipt by the secretary of the corporation.
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Section 2.11 Electronic Notice. Any notice to stockholders given by the
corporation under the certificate of incorporation, as amended, or the bylaws
shall be effective if given by a form of electronic transmission consented to by
the stockholder to whom the notice is given. Any such consent shall be revocable
by the stockholder by written notice to the corporation. Any such consent shall
be deemed revoked if (1) the corporation is unable to deliver by electronic
transmission two consecutive notices given by the corporation in accordance with
such consent and (2) such inability becomes known to the secretary or an
assistant secretary of the corporation or to the transfer agent, or other person
responsible for the giving of notice; provided, however, the inadvertent failure
to treat such inability as a revocation shall not invalidate any meeting or
other action.
ARTICLE III
DIRECTORS
Section 3.1 Number, Tenure and Qualifications.
(a) The number of directors of the corporation shall be not less
than one (1) members and not more than seven (7) members, subject to
increase as provided in Section 3.9 below. Each director elected shall
hold office until the next annual meeting of stockholders or until his
successor shall have been duly elected and qualified or until his earlier
resignation or removal. Unless the certificate of incorporation, as
amended, fixes the number of directors, the number of directors may be
increased or decreased within the range provided for above from time to
time by resolution of the directors; but no decrease shall have the effect
of shortening the term of any incumbent director. Directors need not be
residents of the State of Delaware, or stockholders of the corporation.
(b) Any director or the entire board of directors may be removed,
with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors, unless otherwise provided
under Delaware Law or the certificate of incorporation, as amended.
Section 3.2 Resignations. Any director may resign at any time by notice
given in writing or by electronic transmission to the chairman of the board or
to the president.
Section 3.3 Meetings. Meetings of the board of directors may be called by
or at the request of the chairman of the board, the president or a majority of
the directors. The person or persons authorized to call meetings of the board of
directors may fix any place as the place for holding any meeting of the board of
directors called by them. Meetings of the board of directors may be held within
or outside the State of Delaware.
Section 3.4 Business Of Meetings. Except as otherwise expressly provided
in these by-laws, any and all business may be transacted at any meeting of the
board of directors.
Section 3.5 Notice of Meetings. Notice of any meeting shall be given at
least one (1) day previous thereto by prior written notice to each director at
his principal place of business.
B-6
Section 3.6 Attendance by Telephone. Directors may participate in meetings
of the board of directors by means of conference telephone or other
communications equipment by means of which all directors participating in the
meeting can hear one another, and such participation shall constitute presence
in person at the meeting.
Section 3.7 Quorum and Manner of Acting; Adjournment. A majority of the
directors shall constitute a quorum for the transaction of business at any
meeting of the board of directors and the act of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
board.
Section 3.8 Action Without a Meeting. Any action which could be taken at a
meeting of the board of directors may be taken without a meeting if all of the
director's consent to the action in writing or by electronic transmission and
the writing or writings are filed with the minutes of proceedings of the board.
Section 3.9 Filling of Vacancies. A vacancy or vacancies in the board of
directors shall exist when any previously authorized position of director is not
then filled by a duly elected director, whether caused by death, resignation or
removal.
Vacancies and newly created directorships resulting from an increase in
the authorized number of directors may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the certificate of incorporation, as amended, or the by-laws, or may apply to
the Court of Chancery for a decree summarily ordering an election as provided in
Section 211 of Delaware Law.
Section 3.10 Compensation of Directors. The board of directors shall have
the authority to fix the compensation of directors, unless otherwise provided in
the certificate of incorporation, as amended.
Section 3.11 Presiding Officer. The presiding officer at any meeting of
the board of directors shall be the chairman of the board, or in his absence,
any other director elected chairman by vote of a majority of the directors
present at the meeting.
Section 3.12 Committee. The board of directors, by resolution adopted by a
majority of the number of directors fixed by the by-laws or otherwise, may
designate one (1) or more committees, each committee to consist of one (1) or
more directors of the corporation, which committees, to the extent provided in
such resolution, shall have and exercise all of the authority of the board of
directors in the management of the corporation, except as otherwise required by
law. The board of directors may designate one (1) or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee.
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Section 3.13 Election. All elections of directors shall be by written
ballot, unless otherwise provided in the certificate of incorporation, as
amended; if authorized by the board of directors, such requirement of a written
ballot shall be satisfied by a ballot submitted by electronic transmission,
provided that any such electronic transmission must either set forth or be
submitted with information from which it can be determined that the electronic
transmission was authorized by the stockholder or proxy holder.
ARTICLE IV
OFFICERS
Section 4.1 Number. The officers of the corporation may consist of the
chairman of the board, the president, one or more vice presidents (the number
thereof to be determined by the board of directors), the secretary, the
treasurer and such assistant secretaries and assistant treasurers or any other
officers hereunto authorized or elected by the board of directors. Any two or
more offices may be held by the same person.
Section 4.2 Election and Term of Office. The officers of the corporation
shall be elected by the board of directors at their first meeting and thereafter
at any subsequent meeting and shall hold their offices for such term as
determined by the board of directors. Each officer shall hold office until his
successor is duly elected and qualified, or until his death or disability, or
until he resigns or is removed from his duties in the manner hereinafter
provided.
Section 4.3 Removal and Resignation. Any officer may be removed, either
with or without cause, by a majority of the directors, then in office, at any
meeting of the board of directors. Any officer may resign at any time by giving
written notice to the corporation. Any such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein.
Section 4.4 Vacancies. A vacancy in any office because of death,
resignation or removal or any other cause may be filled for the unexpired
portion of the term by the board of directors.
Section 4.5 Chairman of The Board. The chairman of the board of the
corporation shall be the chief executive officer of the corporation. The
chairman of the board shall preside at all meetings of the board of directors,
and at all stockholders' meetings, whether annual or special, at which he is
present and shall exercise such other powers and perform such other duties as
the board of directors may from time to time assign to him or as may be
prescribed by these by-laws. In the event that the chairman of the board is not
present at a directors' meeting or stockholders' meeting, the president of the
corporation shall serve in his place and stead. Except in those instances in
which the authority to execute is expressly delegated to another officer or
agent of the corporation, or a different mode of execution is expressly
prescribed by the board of directors or these by-laws, he may execute for the
corporation, certificates for its shares, and any contracts, deeds, mortgages,
bonds or other instruments which the board of directors have authorized to be
executed, and he may accomplish such execution either under or without the seal
of the corporation, or either individually with the secretary, any assistant
secretary or any other officer hereunto authorized by the board of directors,
according to the requirements of the form of the instrument.
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Section 4.6 President. The president shall be the chief operating officer
of the corporation. Subject to the direction and control of the board of
directors, the president shall be in charge of the business of the corporation;
he shall see that the resolutions and directions of the board of directors are
carried into effect, except in those instances in which that responsibility is
specifically assigned to some other person by the board of directors; and in
general, he shall discharge all duties incident to the office of president and
such other duties as may be prescribed by the board of directors from time to
time. He shall preside at all annual meetings of the stockholders. Except in
those instances in which the authority to execute is expressly delegated to
another officer or agent of the corporation, or a different mode of execution is
expressly prescribed by the board of directors or these by-laws, he may execute
for the corporation, certificates for its shares, and any contracts, deeds,
mortgages, bonds or other instruments which the board of directors have
authorized to be executed, and he may accomplish such execution either under or
without the seal of the corporation, or either individually or with the
secretary, any assistant secretary or any other officer hereunto authorized by
the board of directors, according to the requirements of the form of the
instrument. He may vote all securities which the corporation is entitled to
vote, except as and to the extent such authority shall be vested in a different
officer or agent of the corporation by the board of directors.
Section 4.7 Vice President. The vice president (or in the event there be
more than one vice president, each of the vice presidents), if one shall be
elected, shall assist the president in the discharge of his duties, as the
president may direct and shall perform such other duties as from time to time
may be assigned to him by the president or by the board of directors. In the
absence of the president or in the event of his inability or refusal to act, the
vice president (or in the event there be more than one vice president, the vice
presidents in the order designated by the board of directors, or by the
president if the board of directors have not made such a designation, or in the
absence of any designation, then in the order of seniority of tenure as vice
president) shall perform the duties of the president, and when so acting, shall
have the powers of and be subject to all the restrictions upon the president.
Except in those instances in which the authority to execute is expressly
delegated to another officer or agent of the corporation, or a different mode of
execution is expressly prescribed by the board of directors or these by-laws,
the vice president (or each of them if there are more than one) may execute for
the corporation, certificates for its shares and any contracts, deeds,
mortgages, bonds or other instruments which the board of directors have
authorized to be executed, and he may accomplish such execution either under or
without the seal of the corporation, and either individually or with the
secretary, any assistant secretary or any other officer hereunto authorized by
the board of directors, according to the requirements of the form of the
instrument.
Section 4.8 Treasurer. The treasurer, if any, shall be the principal
accounting and financial officer of the corporation. The treasurer shall: (i)
have charge of and be responsible for the maintenance of the adequate books and
records for the corporation; (ii) have charge and custody of all funds and
securities of the corporation, and be responsible therefore and for the receipt
and disbursement thereof; and (iii) perform all the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the board of directors. If required by the board
of directors, the treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the board of directors
may determine.
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Section 4.9 Secretary. The secretary shall: (i) record the minutes of the
stockholders and of the board of directors' meetings in one or more books
provided for that purpose; (ii) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by law; (iii) be
custodian of the corporate books and records and of the seal of the corporation;
(iv) keep a register of the post-office address of each stockholder which shall
be furnished to the secretary by such stockholder; (v) sign with the chairman of
the board or the president or a vice president or any other officer hereunto
authorized by the board of directors, certificates for the shares of the
corporation, the issue of which shall have been authorized by the board of
directors, and any contracts, deeds, mortgages, bonds or other instruments which
the board of directors have authorized to be executed, according to the
requirements of the form of the instrument, except when a different mode of
execution is expressly prescribed by the board of directors or these by-laws;
(vi) have general charge of the stock transfer books of the corporation; (vii)
perform all duties incident to the office of secretary and such other duties as
from time to time may be assigned to him by the president or by the board of
directors.
Section 4.10 Assistant Treasurers and Assistant Secretaries. The assistant
treasurers and assistant secretaries shall perform such duties as shall be
assigned to them by the board of directors. When the secretary is unavailable,
any assistant secretary may sign with the president, or a vice president, or any
other officer hereunto authorized by the board of directors, any contracts,
deeds, mortgages, bonds or other instruments according to the requirements of
the form of the instrument, except when a different mode of execution is
expressly prescribed by the board of directors or these by-laws. The assistant
treasurers shall, respectively, if required by the board of directors, give
bonds for the faithful discharge of their duties in such sums and with such
sureties as the board of directors shall determine.
Section 4.11 Salaries. The salaries of the officers shall be fixed from
time to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 5.1 Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation and such authority
may be general or confined to specific instances.
Section 5.2 Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name, unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
Section 5.3 Checks, Drafts, Etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued by the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the board of directors.
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Section 5.4 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the board of directors may
select.
ARTICLE VI
CERTIFICATES OF STOCK AND THEIR TRANSFER
Section 6.1 Stock Record and Certificates. Records shall be kept by or on
behalf of the corporation, which shall contain the names and addresses of
stockholders, the number of shares held by them respectively, and the number of
certificates, if any, representing the shares, and in which there shall be
recorded all transfers of shares. Every stockholder shall be entitled to a
certificate signed by the chairman of the board of directors, or the president
or a vice president, and by the treasurer or an assistant treasurer, or the
secretary or an assistant secretary of the corporation, certifying the class and
number of shares owned by him in the corporation, provided that any and all
signatures on a certificate may be a facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the corporation
with the same effect as if he or it were such officer, transfer agent or
registrar at the date of issue.
Section 6.2 Transfer Agents and Registrars. The board of directors may, in
its discretion, appoint one or more responsible banks or trust companies as the
board may deem advisable, from time to time, to act as transfer agents and
registrars of shares of the corporation; and, when such appointments shall have
been made, no certificate for shares of the corporation shall be valid until
countersigned by one of such transfer agents and registered by one of such
registrars.
Section 6.3 Stockholders' Addresses. Every stockholder or transferee shall
furnish the secretary or a transfer agent with the address to which notice of
meetings and all other notices may be served upon or mailed to such stockholder
or transferee, and in default thereof, such stockholder or transferee shall not
be entitled to service or mailing of any such notice.
Section 6.4 Lost Certificates. In case any certificate for shares of the
corporation is lost, stolen or destroyed, the board of directors, in its
discretion, or any transfer agent duly authorized by the board, may authorize
the issue of a substitute certificate in place of the certificate so lost,
stolen or destroyed. The corporation may require the owner of the lost, stolen
or destroyed certificate or his legal representative to give the corporation a
bond sufficient to indemnify the corporation against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate or uncertified shares.
Section 6.5 Distributions to Stockholders. To the extent permitted by
Delaware Law and subject to any restrictions contained in the certificate of
incorporation, as amended, the directors may declare and pay dividends upon the
shares of its capital stock in the manner and upon the terms and conditions
provided by Delaware Law and the certificate of incorporation, as amended.
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Section 6.6 Record Dates. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders, or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of shares or for the purpose of
any other lawful action, the board of directors may fix, in advance, a record
date which shall be not more than sixty (60) nor less than ten (10) days before
the date of any meeting of stockholders, and not more than sixty (60) days prior
to any other action.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
In order that the corporation may determine the stockholders entitled to
consent to corporate action in writing or by electronic transmission without a
meeting, the board of directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the board of directors, and which date shall not be more than ten (10) days
after the date upon which the resolution fixing the record date is adopted by
the board of directors. In such case, those stockholders, and only those
stockholders, who are stockholders of record on the date fixed by the board of
directors shall, notwithstanding any subsequent transfer of shares on the books
of the corporation, be entitled to notice of and to vote at such meeting of
stockholders, or any adjournment thereof, or to express consent to such
corporate action in writing without a meeting, or entitled to receive payment of
such dividend or other distribution or allotment of rights, or entitled to
exercise rights in respect of any such change, conversion or exchange of shares
or to participate in any such other lawful action.
Section 6.7 Transfers of Shares. Shares of the corporation may be
transferred by delivery of the certificates therefore, accompanied either by an
assignment in writing on the back of the certificates, or by written power of
attorney to sell, assign and transfer the same, signed by the record holder
thereof; but no transfer shall affect the right of the corporation to pay any
distribution upon the shares to the holder of record thereof, or to treat the
holder of record as the holder in fact thereof for all purposes, and no transfer
shall be valid, except between the parties thereto, until such transfer shall
have been made upon the books of the corporation.
Section 6.8 Repurchase of Shares on Open Market. The corporation may
purchase its shares on the open market and invest its assets in its own shares,
provided that in each case the consent of the board of directors shall have been
obtained.
ARTICLE VII
INDEMNIFICATION AND INSURANCE
Section 7.1 Definitions. For the purposes of this Article VII the
following definitions shall apply:
"Agent" means any person who: (i) is or was an employee or other agent of
the corporation as determined from time to time by the board of directors; or
(ii) is or was serving at the request of the corporation as an employee or agent
of another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise ("enterprise"); or (iii) was an employee or agent of a foreign
or domestic corporation which was a predecessor corporation of the corporation
or of another enterprise at the request of such predecessor corporation.
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"Director" means any such person as defined by Article III of these
by-laws.
"Officer" means any such person as defined by Article IV of these by-laws.
"Predecessor corporation" shall include any constituent corporations
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers and agents, so that any person
who is or was an officer, director or agent of such constituent corporation, or
is or was serving at the request of such constituent corporation as an officer,
director or agent of another enterprise, shall stand in the same position under
and subject to the provisions of this Article VII (including, without
limitation, the provisions of Section 5 of this Article VII) with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
"Proceeding" means any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative, or investigative and
whether internal or external to the corporation.
"Expenses" includes, without limitation, attorneys' fees and any expenses
of establishing a right to indemnification under this Article VII.
"Losses" mean the total amount which the agent becomes legally obligated
to pay in connection with any proceeding, including judgments, fines, amounts
paid in settlement and expenses.
Section 7.2 Third Party Actions. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to, or
otherwise becomes involved in, any Proceeding (other than an action by or in the
right of the corporation) by reason of the fact that he is or was an Officer or
Director of the corporation and may at the discretion of the board of directors
indemnify any person who was or is a party or is threatened to be made a party
to, or otherwise becomes involved in, any Proceeding (other than an action by or
in the right of the corporation) by reason of the fact that he is or was an
Agent of the corporation against Losses paid in settlement actually and
reasonably incurred by him in connection with such Proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal Proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any Proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in such a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal Proceeding, had reasonable cause
to believe that his conduct was unlawful.
Section 7.3 Actions By or In The Right of The Corporation. The corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to, or otherwise becomes involved in, any Proceeding by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that he
is or was an Officer or Director of the corporation and may at the discretion of
the board of directors indemnify any person who was or is a party or is
threatened to be made a party to, or otherwise becomes involved in, any
Proceeding by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was an Agent against Expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such Proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such Proceeding was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
Expenses which the Delaware Court of Chancery or such other court shall deem
proper.
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Section 7.4 Successful Defense. To the extent that an Officer or Director
of the corporation has been successful on the merits or otherwise in defense of
any Proceeding referred to in Sections 7.2 and 7.3 of this Article VII, or in
defense of any claim, issue or matter therein, he shall be indemnified against
Expenses actually and reasonably incurred by him in connection therewith. To the
extent that an Agent of the corporation has been successful on the merits or
otherwise in defense of any Proceeding referred to in Sections 7.2 and 7.3 of
this Article VII, or in defense of any claim, issue or matter therein, he may,
at the discretion of the board of directors, be indemnified against Expenses
actually and reasonably incurred by him in connection therewith.
Section 7.5 Determination of Conduct. Any indemnification under Sections
7.2 and 7.3 of this Article VII, (unless ordered by a court) shall be made by
the corporation only as authorized in the specific case upon a determination
that indemnification of the Officer, Director or Agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Sections 7.2 and 7.3 of this Article VII. Such determination shall be made by
the Board of Directors by a majority vote of directors.
Section 7.6 Payment of Expenses in Advance. Expenses incurred by an
Officer or Director in connection with a Proceeding shall be paid by the
corporation in advance of the final disposition of such Proceeding upon receipt
of an undertaking by or on behalf of such Officer or Director to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this Article VII. Expenses
incurred by an Agent in connection with a Proceeding may be paid by the
corporation in advance of the final disposition of such Proceeding upon receipt
of an undertaking by or on behalf of such Agent to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this Article VII.
Section 7.7 Indemnity Not Exclusive. The indemnification and advancement
of Expenses provided by, or granted pursuant to, the other provisions of this
Article VII shall not be deemed exclusive of any other rights to which a person
seeking indemnification or advancement of Expenses may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
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Section 7.8 Insurance Indemnification. The corporation shall have the
power to purchase and maintain insurance on behalf of any person who is or was
an Officer, Director or Agent of the corporation against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
him against such liability under the provisions of this Article VII.
Section 7.9 Heirs, Executors and Administrators. The indemnification and
advancement of Expenses provided by, or granted pursuant to, this Article VII
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be an Officer or Director and shall inure to the
benefit of the heirs, executors and administrators of such a person. The
indemnification and advancement of Expenses provided by, or granted pursuant to,
this Article VII may, at the discretion of the board of directors, continue as
to a person who has ceased to be an Agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 7.10 Further Amendment. Notwithstanding any provision in this
Article VII to the contrary, in the event the General Corporation Law of the
State of Delaware is either amended to provide, or interpreted by judicial or
other binding legal decision to provide, broader indemnification rights than
those contained herein, such broader indemnification rights shall be provided to
any and all persons entitled to be indemnified pursuant to the General
Corporation Law of the State of Delaware, the intent of this provision being to
permit the corporation to indemnify, to the full extent permitted by the General
Corporation Law of the State of Delaware, persons whom it may indemnify
thereunder.
ARTICLE VIII
AMENDMENTS
Unless otherwise provided in the certificate of incorporation, as amended,
the power to make, alter, amend or repeal the by-laws of the corporation shall
be vested in the stockholders entitled to vote. The by-laws may contain any
provisions for the regulation and management of the affairs of the corporation
not inconsistent with Delaware Law or the certificate of incorporation, as
amended.
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Exhibit C
Directors and Officers of Surviving Corporation
Directors
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇
Officers
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer
▇▇▇▇▇▇ ▇. ▇▇▇▇, President
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇, Managing Director
▇▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer and Secretary
C-1
Exhibit D
Post-Closing Directors of Parent
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇
D-1