EXHIBIT 2.1
MERGER AGREEMENT AND PLAN OF REORGANIZATION
dated as of
JUNE 21, 1999
among
NETVALUE HOLDINGS, INC.
AND
STRATEGICUS PARTNERS INC.
AND
▇▇▇▇▇▇▇ ▇▇▇▇▇
MERGER AGREEMENT AND PLAN OF REORGANIZATION
DATED: As of June 21, 1999
AMONG: NETVALUE HOLDINGS, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("NVH")
AND: STRATEGICUS PARTNERS INC.
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Strategicus")
AND: ▇▇▇▇▇▇▇ ▇▇▇▇▇, solely with respect to Section 11 hereof.
RECITALS
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A. The respective boards of directors of NVH and Strategicus deem it
advisable and in the best interests of NVH and Strategicus and their respective
shareholders that Strategicus merge with and into NVH (the "Merger") pursuant to
this Agreement and the applicable provisions of the laws of the States of Oregon
and Delaware.
B. The respective boards of directors of NVH and Strategicus have
approved and adopted this Merger Agreement and Plan of Reorganization
("Agreement") as a plan of reorganization within the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended.
C. At the Effective Time (as defined herein) of the Merger, each of
the outstanding shares of common stock of Strategicus shall be converted into
shares of common stock and preferred stock of NVH, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions.
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The following terms shall be defined as follows:
1.1 The term "Change of Control" shall mean the occurrence of any one
of the following events: (a) any "person" as such term is used in Section
3(a)(9) and 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")(other than a subsidiary or other affiliate of NVH), becomes a
"beneficial owner," as such term is used in Rule 13d-3 promulgated under the
Exchange Act, of 50% or more of any class of NVH's issued and outstanding common
or preferred stock, which interest in such stock comprises 50% or more of all
issued and outstanding voting shares; (b) the majority of NVH's board of
directors consists of individuals other than Incumbent
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Directors, which term means the members of NVH's Board of Directors on the
Effective Time of this Agreement; provided that any person becoming a director
subsequent to such date whose election or nomination for election was supported
by one- half of the directors who then comprised the Incumbent Directors shall
be considered to be an Incumbent Director; or (c) the occurrence of any event
which would be required to be reported by NVH pursuant to Items 1 or 2 of Form
8-K under the Exchange Act, which shall be determined without regard to whether
NVH is actually required file a Form 8-K in relation to such transaction or
event.
1.2 The term "Closing" or "Closing Date" means June 21, 1999, or such
later date as the parties may mutually agree upon in writing.
1.3 The term "Code" means the Internal Revenue Code of 1986, as
amended.
1.4 The term "Consulting Agreement" means the Consulting Agreement
executed by and between NVH and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Consulting Agreement by
and between NVH and ▇▇▇▇ ▇▇▇▇.
1.5 The term "Employment Agreement" means the Employment Agreement
executed by and between NVH and ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Employment Agreement by
and between NVH and ▇▇▇▇▇ ▇▇▇▇▇▇.
1.6 The term "Series A Preferred Stock" means the Series A Preferred
Stock of NVH, with the rights and preferences set forth in the Certificate of
Designations, Preferences and Rights of Series A Preferred Stock.
1.7 The term "NVH Subsidiaries" means all corporations, limited
liability companies, partnerships or other business entities controlled by NVH
or in which fifty percent (50%) or more of the capital stock or equity interest
in the company is owned by NVH or its wholly owned subsidiaries.
1.8 The term "Strategicus Subsidiaries" means all corporations,
limited liability companies, partnerships or other business entities controlled
by Strategicus or in which fifty percent (50%) or more of the capital stock or
equity interest in the company is owned by Strategicus or its wholly owned
subsidiaries.
2. Merger.
------
2.1 The Merger.
----------
Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 2.2), Strategicus shall be merged with and
into NVH, the separate corporate existence of Strategicus shall cease, and NVH
will be the surviving corporation (sometimes referred to herein as the
"Surviving Corporation") in the Merger. The separate corporate existence of NVH
and all of its rights, privileges, immunities and franchises and all its duties
and liabilities as a
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corporation organized under Delaware law will continue unaffected by the Merger,
and it will succeed to all of Strategicus' rights, assets, liabilities and
obligations in accordance with Delaware General Corporation Law.
2.2 Effective Time.
--------------
Subject to the provisions of this Agreement, the parties shall cause
the Merger to be consummated by filing a Certificate of Merger or other
appropriate documents with the Secretary of State of the State of Delaware in
such form as required by, and executed in accordance with, the relevant
provisions of Delaware law and by filing Articles of Merger or other appropriate
documents with the Secretary of State of the State of Oregon in such form as
required by, and executed in accordance with, the relevant provisions of Oregon
law as soon as practicable on or after the Closing Date, but in no event later
than forty-five (45) days after the Closing Date, which forty-five (45) day
period may be extended by written agreement of the parties. The Merger shall
become effective upon such filing or at such time thereafter as is provided in
the Certificate of Merger and Articles of Merger (the "Effective Time").
2.3 Closing.
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The Closing shall take place at a date and time to be mutually agreed
upon by the parties, which shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Section 7 at the offices
of Farleigh, Wada & ▇▇▇▇, P.C., ▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
unless another time, date or place is agreed to in writing by the parties.
2.4 Certificate of Incorporation and Bylaws.
---------------------------------------
The Certificate of Incorporation and Bylaws of NVH in effect at the
Effective Time shall become the certificate of incorporation and bylaws of the
Surviving Corporation until amended in accordance with applicable law.
2.5 Directors.
---------
At the Effective Time, the board of directors of the Surviving
Corporation shall be comprised of ▇▇▇▇▇▇ ▇▇▇▇▇ (Chairman), ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇, each to hold office in accordance with the
terms of the Certificate of Incorporation and Bylaws of the Surviving
Corporation until such director's successor is duly elected or appointed and
qualified.
2.6 Officers.
--------
At the Effective Time, the officers of the Surviving Corporation will
be ▇▇▇▇▇▇ ▇▇▇▇▇, Chairman of the Board; ▇▇▇▇▇ ▇▇▇▇▇▇, President and Chief
Executive Officer; ▇▇▇▇▇▇▇ ▇▇▇▇▇, Chief Technology Officer; and ▇▇▇▇ ▇▇▇▇,
Executive Vice President - Business Development,
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each to hold office in accordance with the terms of the Certificate of
Incorporation and Bylaws of the Surviving Corporation until such officer's
successor is duly elected or appointed and qualified.
3. Conversion of Stock.
-------------------
3.1 Conversion of Strategicus Stock.
-------------------------------
At the Effective Time, each share of common stock of Strategicus, no
par value ("Strategicus Stock"), issued and outstanding immediately prior to the
Effective Time (each "Share" and collectively, the "Shares") shall, by virtue of
the Merger and without any action on the part of Strategicus or the holder be
converted into, and become exchangeable for 2,311,460 validly issued, fully paid
and nonassessable shares of Series A Preferred Stock, par value $ .001 per
share, of the Surviving Corporation and 7,524,628 validly issued, fully paid and
nonassessable shares of common stock, par value $ .001 per share, of the
Surviving Corporation (the common stock and Series A Preferred Stock of the
Surviving Corporation may be collectively referred to as the "NVH Stock"),
subject to the vesting provisions set forth Section 3.2 hereof (collectively,
the "Merger Consideration"). Each holder of Strategicus Stock (collectively, the
"Strategicus Stockholders" and each a "Strategicus Stockholder") shall be
required to surrender his share certificate or certificates to NVH, or its
transfer agent, on the Effective Time or as soon as practicable thereafter. NVH
shall, in exchange for the Strategicus Stock owned by each of ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇, issue and deliver to ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ the entire
Merger Consideration to which each is entitled at the Effective Time as set
forth herein, including NVH Shares which will vest over the next twenty-four
months pursuant to the vesting schedule set forth in Section 3.2. NVH shall, in
exchange for the Strategicus Stock owned by each of ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇, issue and deliver to each of ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ the portion of
the Merger Consideration as such person's interest in NVH Shares vest pursuant
to the vesting schedule set forth in Section 3.2. NVH will deposit with a
mutually satisfactory escrow agent thirty (30) stock certificates for equal
amounts of NVH Stock representing an aggregate of total shares for each of ▇▇▇▇
▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and the escrow agent shall deliver a stock certificate
to each of ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ within ten (10) days after their
ownership interest in the shares represented by such certificate has vested
pursuant to the vesting schedule set forth in Section 3.2. Each stock
certificate for any shares of NVH Stock which have not vested pursuant to the
vesting schedule in Section 3.2 shall contain appropriate restrictive legends
regarding the vesting of such NVH Stock and NVH shall instruct its transfer
agent to place a stop order on such certificate in accordance with the vesting
schedule set forth below.
3.2 Vesting Schedule.
----------------
Notwithstanding the delivery of the NVH Stock to the Strategicus
Stockholders, their ownership of the NVH Stock is subject to the following
vesting schedule:
Strategicus Stockholders Vesting Schedule
------------------------ ----------------
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▇▇▇▇▇▇▇ ▇▇▇▇▇ 30% of the NVH Stock shall vest at the
Effective Time, and the remainder of
the NVH Stock shall vest in equal
amounts beginning on the last day of
the month following the Effective Time
and continuing on the last day of each
month thereafter over a period of 24
months;
▇▇▇▇▇ ▇▇▇▇▇▇ 30% of the NVH Stock shall vest at the
Effective Time, and the remainder of
the NVH Stock shall vest in equal
amounts beginning on the last day of
the month following the Effective Time
and continuing on the last day of each
month thereafter over a period of 24
months;
▇▇▇▇ ▇▇▇▇ 15% of the NVH Stock shall vest at the
Effective Time, and the remainder of
the NVH Stock shall vest in equal
amounts beginning on the last day of
the seventh month after the Effective
Time and continuing on the last day of
each month thereafter over a period of
30 months;
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 15% of the NVH stock shall vest at the
Effective Time, and the remainder of
the NVH Stock shall vest in equal
amounts beginning on the last day of
the seventh month after the Effective
Time and continuing on the last day of
each month thereafter over a period of
30 months.
Upon vesting of each installment of the NVH Stock, each Strategicus
Stockholder's ownership of his vested NVH Stock shall be free and clear of all
rights, claims, offsets, deductions and liens of NVH.
If the employment of either of ▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇ is
terminated pursuant to Sections 6.1 (a) through 6.1 (d) of his respective
Employment Agreement with NVH, then he shall forfeit and forever lose all right,
title and interest in and to the NVH Stock which is not vested as of the date of
termination of his employment, and he shall promptly surrender to NVH all share
certificates for NVH Stock which has not vested. In the event either of ▇▇▇▇▇▇▇
▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇ terminates his employment pursuant to Sections 6.1 (e) or
6.1 (f) of his respective Employment Agreement with NVH, then all NVH Stock to
which he is entitled to receive pursuant to this Agreement shall immediately
vest as of the date of termination of his employment. If the
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consulting agreement of either of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇ is terminated
pursuant to Section 5 of his respective Consulting Agreement with NVH, then he
shall forfeit and forever lose all right, title and interest in and to the NVH
Stock which had not vested as of the date of termination of his consulting
agreement.
3.3 Registration Rights.
-------------------
In the event of a proposed Change of Control of NVH, NVH, at its
expense, shall use its best efforts to promptly register (or to cause the entity
causing the Change of Control to assume this obligation) the resale of the
vested NVH Stock owned by the Strategicus Stockholders (for purposes of this
Section 3.3 only, the term "Strategicus Stockholders" shall also include ▇▇▇▇▇▇
▇▇▇▇▇) in a public offering of such securities under the Securities Act of 1933
("Act"). NVH shall give the Strategicus Stockholders written notice (the
"Notice") of such registration at least 45 days prior to the effectiveness of
the registration statement covering the NVH Stock being offered. Upon the
written request of each of the Strategicus Stockholders given to NVH within
twenty (20) days after the mailing of such Notice by NVH, NVH shall use its best
efforts to cause to be registered under the Act all of the NVH Stock that each
Strategicus Stockholder has requested to be registered.
To effect the registration of the vested NVH Stock, NVH shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the United States Securities and Exchange
Commission ("SEC") a registration statement with respect to such NVH Stock and
use its best efforts to cause such registration statement to become effective,
and, upon the request of the Strategicus Stockholders who own a majority of the
vested NVH Stock registered thereunder, keep such registration statement
effective for such period of time until each of the Strategicus Stockholders is
permitted to sell such holder's NVH Stock pursuant to Rule 144 promulgated under
the Act without reference to the volume limitations contained therein.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to keep the registration statement
effective for the period stated in subparagraph (a) above, and to comply with
the provisions of the Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to each of the Strategicus Stockholders such numbers of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as he may reasonably request
in order to facilitate the public sale or other disposition of the NVH Stock
owned by him.
(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Strategicus Stockholders,
provided that NVH shall not be required in connection
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therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each of the Strategicus
Stockholders shall also enter into and perform his obligations under such an
agreement.
(f) Notify the Strategicus Stockholders who own vested NVH Stock covered
by such registration statement at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the Act
of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of
circumstances then existing.
(g) Promptly notify the Strategicus Stockholders of the issuance by the
SEC of any stop order suspending the effectiveness of the registration statement
(or the initiation of any formal proceeding for that purpose) or of the receipt
by NVH of any notification with respect to suspension of the qualification of
the vested NVH Stock for sale in any jurisdiction (or the initiation of any
formal proceeding for that purpose). NVH shall make reasonable efforts to obtain
the withdrawal of any order suspending the effectiveness of a registration
statement hereunder or any post-effective amendment thereto at the earliest
practicable date.
It shall be a condition precedent to the obligations of NVH to take any
action pursuant to this Section 3.3 with respect to the vested NVH Stock of any
selling Strategicus Stockholders, that such Strategicus Stockholders shall
furnish to NVH such information regarding it, the vested NVH Stock held by it,
and the intended method of disposition of such securities as shall be required
to effect the registration of such Strategicus Stockholder's vested NVH Stock
and to execute such documents in connection with such registration as NVH may
reasonably request.
4. Representations and Warranties of Strategicus.
---------------------------------------------
Except as otherwise set forth or described on Schedule 4 (the
"Strategicus Disclosure Schedule"), Strategicus represents and warrants as
follows:
4.1 Corporate Status.
----------------
Strategicus is a corporation duly organized and validly existing under
the laws of the State of Oregon, does not have any subsidiaries except for the
Strategicus Subsidiaries listed on Schedule 4, and does not own any securities
of, or have any proprietary interest in, any other entity. Strategicus, as a
result of the character and location of the assets of Strategicus and the nature
of the business conducted by it, is qualified to conduct business only in
Oregon. Strategicus has full corporate power and corporate authority to own, or
hold under lease, its business assets. Strategicus
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has delivered to NVH accurate and complete copies of the articles of
incorporation and bylaws, as currently in effect, of Strategicus.
4.2 Capitalization of Strategicus and its Subsidiaries.
--------------------------------------------------
The authorized capital stock of Strategicus consists of one million
(1,000,000) shares of common stock and two hundred fifty thousand (250,000)
shares of preferred stock, of which two hundred forty thousand (240,000) shares
of common stock are issued and outstanding. All of Strategicus' issued and
outstanding shares of capital stock have been validly issued and are fully paid
and non-assessable and are not subject to any preemptive or other similar
rights. Except as set forth in this Section 4.2, there are outstanding (a) no
shares of capital stock or other voting securities of Strategicus; (b) no
securities of Strategicus convertible into or exchangeable for shares of capital
stock or voting securities of Strategicus; and (c) no options, warrants or other
rights to acquire from Strategicus, and no obligation of Strategicus to issue,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or other voting securities of Strategicus. To
Strategicus' knowledge, there are no outstanding obligations of Strategicus to
repurchase, redeem or otherwise acquire any Strategicus Stock.
4.3 Authorization of Strategicus; No Adverse Consequences.
-----------------------------------------------------
4.3.1 This Agreement has been duly executed and delivered by
Strategicus and constitutes a valid obligation legally binding on Strategicus
and is enforceable against Strategicus in accordance with its terms, except as
enforceability may be limited or affected by applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the
rights of creditors and except as enforceability may be limited by rules of law
governing specific performance, injunctive relief or other equitable remedies.
The execution, delivery and performance of this Agreement by Strategicus and the
consummation of the transactions contemplated hereby by Strategicus do not and
will not conflict with, or result in a breach, default, violation or loss of a
material benefit under any agreement, mortgage, lease, license or other
instrument or obligation of Strategicus in connection with its business
operations or any of its material assets; do not and will not require the
consent or permission of any person or governmental agency; and do not and will
not violate any law, rule or regulation of any agency or governmental body to
which Strategicus is subject and that is individually or in the aggregate
material to the transactions contemplated hereby. Other than the filing of the
Articles of Merger with the Secretary of State of the State of Oregon, no
registration, declaration or filing with any governmental or administrative
authority is required on the part of Strategicus in connection with the
execution, delivery and performance of this Agreement, other than any
registration, declaration or filing which is not reasonably anticipated to
adversely affect this Merger.
4.3.2 The Board of Directors of Strategicus has duly and
validly approved, and taken all corporate action required to be taken by the
Strategicus Board of Directors for the consummation of the Merger and resolved
to recommend that the Strategicus Stockholders approve and adopt this Agreement.
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4.4 Liabilities.
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Strategicus does not have any liabilities or obligations (absolute,
accrued, contingent or otherwise) which are material to Strategicus, except for
those which have been previously provided to NVH in due diligence or disclosed
in the Strategicus Disclosure Schedule, other than trade payables incurred in
the ordinary course of business of Strategicus consistent with past business
practices and liabilities incurred in connection with or contemplated by this
Agreement.
4.5 Changes in Business.
-------------------
Except as expressly allowed or contemplated by this Agreement or
approved by NVH, since June 1, 1999, Strategicus has conducted its business in
the ordinary course and there has not occurred:
(i) Any change, effect or occurrence that has, or is
reasonably likely to have, individually or in the aggregate, a material adverse
impact on (i) the condition (financial or otherwise) or prospects of
Strategicus, its business or its assets, or (ii) the operation of the business
before or after the Closing Date or the ownership or other use of the property
thereafter;
(ii) Any acquisition, sale or disposition of property or
assets by or of Strategicus, except in the ordinary course of business;
(iii) Any entry into, amendment of, relinquishment, termination
or non-renewal by Strategicus of any material agreements, lease transaction,
commitment or other right or obligation other than in the ordinary course of
business; or
(iv) Any agreement or arrangement made by Strategicus to take
any action after the date hereof which, if taken prior to the date hereof, would
have made any representation or warranty set forth in this Section 4.5 untrue or
incorrect as of the date hereof.
4.6 Title to Assets.
---------------
To Strategicus' knowledge, Strategicus has good and valid title to its
assets, free and clear of all liens, claims, charges or other encumbrances.
There are no agreements, arrangements or understandings restricting or otherwise
relating to the transfer of any property or assets of Strategicus.
4.7 Taxes and Tax Filings.
---------------------
Strategicus has duly and timely filed all tax reports and returns
required to have been filed on or before the Closing Date, and such returns as
filed are true and correct in all material respects. All federal, state, local
and foreign income, receipts, profits, franchise, sales, use, occupation, real
and personal property, excise, employment or other taxes (including interest and
penalties of Strategicus) required to have been paid on or before the Closing
Date, whether or not
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assessed, have been or shall be fully paid on or prior to the due date thereof,
unless an extension has been granted to Strategicus by the appropriate
government authority and Strategicus has either paid the taxes due to such
government authority or has reserved sufficient funds as of the Closing Date to
pay the taxes which will be due. There is no unpaid interest, penalty or
addition to tax due or claimed to be due from, or any unpaid tax deficiency,
determination or assessment outstanding against Strategicus or any basis
therefor known to Strategicus. There are no tax liens on, pending against or, to
the best knowledge of Strategicus, threatened against Strategicus or its
property. Strategicus has not filed a consent under Section 341(f)(1) of the
Internal Revenue Code of 1986, as amended.
4.8 Intangibles.
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Strategicus owns or possesses adequate licenses or other valid rights
to use all material patents, patent rights, trademarks, trade names, copyrights,
service marks, trade secrets and other proprietary rights and information used
or held for use in connection with the business of Strategicus as currently
conducted or as contemplated to be conducted, and Strategicus is unaware of any
assertion or claim challenging the validity of any of the foregoing. To the
best knowledge of Strategicus, the conduct of the business of Strategicus, as
heretofore and currently conducted has not and does not conflict in any way with
any material license, trademark, trade name, service ▇▇▇▇, copyright or patent
of any third party. To the best knowledge of Strategicus, there are no
infringements of any proprietary rights owned by or licensed by or to
Strategicus.
4.9 Employee Benefit Plans.
----------------------
Listed in Schedule 4 is each profit sharing plan, stock purchase plan,
pension plan, severance pay plan or policy, or other employee benefit plan as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") to which Strategicus is a party ("Employee Plan"). Each
Employee Plan which is intended to be qualified under Section 401(a) of the Code
is so qualified and has been so qualified during the period from its adoption to
date, and each trust forming a part thereof is exempt from tax pursuant to
Section 501(a) of the Code. Strategicus has furnished to NVH copies of the most
recent Internal Revenue Service determination letters, if any, with respect to
each such Employee Plan. Each Employee Plan has been maintained in substantial
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations, including but not limited to ERISA and
the Code, which are applicable to such Employee Plan. Neither Strategicus nor
any of the Strategicus Subsidiaries maintain or administer any "defined benefit
plans" for the benefit of their employees. Other than provisions of applicable
law, to the best knowledge of Strategicus, no condition exists that would
prevent Strategicus from amending or terminating any applicable Employee Plan.
Strategicus is not a party to, or in any other manner participates in, any
multi-employer pension plan.
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4.10 No Defaults.
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Strategicus is not in default, or to Strategicus' knowledge alleged to
be in default, under any material agreement, license or obligation relating to
its business or its assets, and there exists no condition or event which, after
notice or lapse of time or both, would constitute a default by Strategicus to
any such agreement, license or obligation.
4.11 License and Permits.
-------------------
Strategicus and its employees have all material governmental licenses
and permits (federal, state and local) necessary for the conduct of the business
as now carried on by Strategicus, and such licenses are in full force and
effect. To Strategicus' knowledge, no violations are or have been recorded and
Strategicus is not aware of any unrecorded violations in respect of any such
licenses or permits of Strategicus. No proceedings are pending or to
Strategicus' knowledge threatened concerning the revocation or limitation of any
such license or permit of Strategicus.
4.12 Compliance With Laws.
--------------------
Strategicus has complied with all material laws, rules, regulations
and orders applicable to the operation of the business conducted by Strategicus.
Strategicus is not in violation of any federal, state or local law governing
environmental matters, including but not limited to discharge of materials into
the environment, noise abatement and other similar matters. Strategicus does
not own, lease or otherwise have any obligations with respect to or
responsibility for any underground fuel storage tanks or facilities and has not
and does not transport or store hazardous or toxic materials. Strategicus has
not received notice nor taken any action or failed to take any action which
action or failure will or would, in any way, preclude or prevent NVH from using
the business assets of Strategicus after the Closing in the same manner as
theretofore used by Strategicus. To the best of Strategicus' knowledge, none of
the real property leased by Strategicus, or the occupation thereof, is in
violation of any material law, building code, zoning or other authority, code or
regulation applicable thereto and no notice from any governmental body has been
served upon Strategicus claiming any violation of any such law, ordinance, codes
or regulation or requiring or calling attention to the need for any work,
repair, construction, alteration or installation.
4.13 Litigation.
----------
There are no material claims, litigation, proceedings or
investigations pending or, to the knowledge of Strategicus, threatened against
Strategicus. There are no judgments, orders or decrees which have been issued
against Strategicus and which remain unpaid in whole or part or to which
Strategicus is otherwise subject. No insurance carrier, which has had any such
incident reported to it, has made a reservation of rights or denial of coverage
with respect to such incident.
4.14 Brokers.
-------
12
Strategicus has not employed any broker, finder or agent or dealt with
anyone purporting to act in such capacity or agreed to pay any brokerage fee,
finder's fee or commission in connection with the transactions contemplated by
this Agreement.
4.15 Material Contracts.
------------------
Strategicus has delivered or otherwise made available to NVH correct
and complete copies of all contracts and agreements to which Strategicus is a
party or by which any of its properties or assets are bound, that are material
to the business, properties or assets of Strategicus (collectively, the
"Contracts" and each a "Contract"). Strategicus is not aware of any facts that
would lead a reasonable person to believe that a third party intends to cancel
its Contract with Strategicus or that a third party is entitled to terminate any
such Contract. To Strategicus' knowledge, each Contract is valid and
enforceable in accordance with its terms, and there is no default under any
Contract, and no event has occurred that with the lapse of time or the giving of
notice or both would constitute a default thereunder.
4.16 No Material Misstatements.
-------------------------
No representation or warranty by Strategicus contained in this
Agreement, or in any Exhibit or Schedule attached hereto, contains, or will
contain, any untrue statement of a material fact or omits, or will omit, to
state a material fact necessary to make the statements contained herein or
therein not misleading.
5. Representations, Warranties and Agreements of NVH.
-------------------------------------------------
Except as set forth on Schedule 5 ("NVH Disclosure Schedule"), NVH
represents and warrants as follows:
5.1 Corporate Status.
----------------
NVH is a corporation duly organized and validly existing under the
laws of the State of Delaware, does not have any subsidiaries except for the NVH
Subsidiaries listed on Schedule 5, and does not own any securities of, or have
any proprietary interest in, any other entity. NVH has delivered to Strategicus
accurate and complete copies of the articles of incorporation and bylaws, as
currently in effect, of NVH.
5.2 Capitalization of NVH and its Subsidiaries.
------------------------------------------
The authorized capital stock of NVH consists of 50,000,000 shares of
common stock and 5,000,000 shares of preferred stock, of which 3,500,000 shares
have been designated as Series A Preferred Stock. As of the Closing Date, NVH
has 9,665,225 shares of common stock which are issued and outstanding; 2,019,852
shares of Series A Preferred Stock which are issued and outstanding; and zero
shares of other preferred stock which are issued and outstanding. All of NVH's
issued and outstanding shares of stock have been validly issued, are fully paid
and
13
non-assessable and are not subject to any preemptive or other similar rights.
Except as set forth in the NVH Disclosure Schedule, there are outstanding (a) no
shares of capital stock or other voting securities of NVH; (b) no securities of
NVH convertible into or exchangeable for shares of capital stock or voting
securities of NVH; and (c) no options, warrants or other rights to acquire from
NVH, and no obligation of NVH to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or other voting
securities of NVH. To NVH's knowledge, there are no outstanding obligations of
NVH to repurchase, redeem or otherwise acquire any of its stock.
5.3 Authorization of NVH; No Adverse Consequences.
---------------------------------------------
5.3.1 This Agreement has been duly executed and delivered by
NVH and constitutes a valid obligation legally binding on NVH and is enforceable
against NVH in accordance with its terms, except as enforceability may be
limited or affected by applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the rights of
creditors and except as enforceability may be limited by rules of law governing
specific performance, injunctive relief or other equitable remedies. The
execution, delivery and performance of this Agreement by NVH and the
consummation of the transactions contemplated hereby by NVH do not and will not
conflict with, or result in a breach, default, violation or loss of a material
benefit under any agreement, mortgage, lease, license or other instrument or
obligation of NVH; do not and will not require the consent or permission of any
person or governmental agency; and do not and will not violate any law, rule or
regulation of any agency or governmental body to which NVH is subject and that
is individually or in the aggregate material to the transactions contemplated
hereby. Other than the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, no registration, declaration or filing with any
governmental or administrative authority is required on the part of NVH in
connection with the execution, delivery and performance of this Agreement, other
than any registration, declaration or filing which is not reasonably anticipated
to adversely affect this Merger.
5.3.2 The Board of Directors of NVH has duly and validly
approved, and taken all corporate action required to be taken by the NVH Board
of Directors for the consummation of the Merger and resolved to recommend that
the NVH Stockholders approve and adopt this Agreement.
5.4 Financial Statements.
--------------------
5.4.1 NVH has heretofore delivered to Strategicus the audited
consolidated balance sheet and related audited consolidated statement of income
and cash flows of NVH dated as of December 31, 1998 and the unaudited
consolidated balance sheet and related unaudited consolidated statement of
income and cash flows of NVH dated as of December 31, 1998 (all of the financial
statements described herein may be referred to as the "NVH Financial
Statements"). The NVH Financial Statements accurately present the financial
position, results of the operations and the changes in financial position of NVH
for the periods indicated; were accurately prepared from the books and records
of NVH in accordance with generally accepted accounting policies then in effect;
14
and have been prepared on a consistent basis with past periods, all subject to
year-end adjustment, which adjustment in the aggregate shall not materially
affect the results contained therein.
5.4.2 To NVH's knowledge, it does not have any liabilities or
obligations (absolute, accrued, contingent or otherwise) which are material to
NVH and which are not disclosed in the NVH Financial Statements or disclosed in
the NVH Disclosure Schedule, other than liabilities and obligations incurred
since January 1, 1999 and the date hereof in the ordinary course of business of
NVH consistent with past business practices and liabilities incurred in
connection with or contemplated by this Agreement.
5.5 Changes in Business.
-------------------
Except as expressly allowed or contemplated by this Agreement, since
the date of the NVH Financial Statements, NVH has conducted its business in the
ordinary course and there has not occurred:
(i) Any change, effect or occurrence that has, or is
reasonably likely to have, individually or in the aggregate, a material adverse
impact on (i) the condition (financial or otherwise) or prospects of NVH, its
business or its assets, or (ii) the operation of the business before or after
the Closing Date or the ownership or other use of the property thereafter;
(ii) Any acquisition, sale or disposition of any material
property or assets by or of NVH, except in the ordinary course of business;
(iii) Any entry into, amendment of, relinquishment, termination
or non-renewal by NVH of any material agreements, lease transaction, commitment
or other right or obligation other than in the ordinary course of business; or
(iv) Any agreement or arrangement made by NVH to take any
action after the date hereof which, if taken prior to the date hereof, would
have made any representation or warranty set forth in this Section 5.5 untrue or
incorrect as of the date hereof.
5.6 Title to Assets.
---------------
To NVH's knowledge, NVH has good and valid title to the assets
reflected on the NVH Financial Statements, free and clear of all liens, claims,
charges or other encumbrances.
5.7 Taxes and Tax Filings.
---------------------
Since October 1, 1998, NVH has duly and timely filed all tax reports
and returns required to have been filed on or before the Closing Date, and such
returns as filed are true and correct in all material respects. All federal,
state, local and foreign income, receipts, profits, franchise, sales, use,
occupation, real and personal property, excise, employment or other taxes
(including interest and penalties of NVH) required to have been paid on or
before the Closing Date,
15
whether or not assessed, have been or shall be fully paid on or prior to the due
date thereof, unless an extension has been granted to NVH by the appropriate
government authority and NVH has either paid the taxes due to such government
authority or has reserved sufficient funds as of the Closing Date to pay the
taxes which will be due. The accrual for taxes reflected in the most recent
balance sheet included in the NVH Financial Statements shall be in the aggregate
adequate to cover any and all federal, state, local or foreign tax liabilities
(including interest and penalties), whether or not disputed, for which NVH may
be liable for the period ended as of the Closing Date and all prior periods.
There is no unpaid interest, penalty or addition to tax due or claimed to be due
from, or any unpaid tax deficiency, determination or assessment outstanding
against NVH or any basis therefor known to NVH. There are no tax liens on,
pending against or, to the best knowledge of NVH, threatened against NVH or its
property. NVH has not filed a consent under Section 341(f)(1) of the Internal
Revenue Code of 1986, as amended.
5.8 Intangibles.
-----------
NVH owns or possesses adequate licenses or other valid rights to use
all material patents, patent rights, trademarks, trade names, copyrights,
service marks, trade secrets and other proprietary rights and information used
or held for use in connection with the business of NVH as currently conducted or
as contemplated to be conducted, and NVH is unaware of any assertion or claim
challenging the validity of any of the foregoing. To the knowledge of NVH, the
conduct of the business of NVH, as heretofore and currently conducted has not
and does not conflict in any way with any material license, trademark, trade
name, service ▇▇▇▇, copyright or patent of any third party. To the knowledge of
NVH, there are no infringements of any proprietary rights owned by or licensed
by or to NVH.
5.9 Employee Benefit Plans.
----------------------
Listed in Schedule 5 is each profit sharing plan, stock purchase plan,
pension plan, severance pay plan or policy, or other employee benefit plan as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") to which NVH is a party ("NVH Employee Plan"). Each NVH
Employee Plan which is intended to be qualified under Section 401(a) of the Code
is so qualified and has been so qualified during the period from its adoption to
date, and each trust forming a part thereof is exempt from tax pursuant to
Section 501(a) of the Code. NVH has furnished to Strategicus copies of the most
recent Internal Revenue Service determination letters, if any, with respect to
each such NVH Employee Plan. Each NVH Employee Plan has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations, including but not limited
to ERISA and the Code, which are applicable to such NVH Employee Plan.
5.10 No Defaults.
-----------
NVH is not in default, or to NVH's knowledge alleged to be in default,
under any material agreement, license or obligation relating to its business or
its assets, and there exists no
16
condition or event which, after notice or lapse of time or both, would
constitute a default by NVH to any such agreement, license or obligation.
5.11 License and Permits.
-------------------
NVH and its employees have all material governmental licenses and
permits (federal, state and local) necessary for the conduct of the business as
now carried on by NVH, and such licenses are in full force and effect. To NVH's
knowledge, no violations are or have been recorded and NVH is not aware of any
unrecorded violations in respect of any such licenses or permits of NVH. No
proceedings are pending or, to NVH's knowledge, threatened concerning the
revocation or limitation of any such license or permit of NVH.
5.12 Compliance With Laws.
--------------------
NVH has complied with all material laws, rules, regulations and orders
applicable to the operation of the business conducted by NVH. NVH is not in
violation of any federal, state or local law governing environmental matters,
including but not limited to discharge of materials into the environment, noise
abatement and other similar matters. NVH does not own, lease or otherwise have
any obligations with respect to or responsibility for any underground fuel
storage tanks or facilities and has not and does not transport or store
hazardous or toxic materials. To the best of NVH's knowledge, none of the real
property leased by NVH, or the occupation thereof, is in violation of any
material law, building code, zoning or other authority, code or regulation
applicable thereto and no notice from any governmental body has been served upon
NVH claiming any violation of any such law, ordinance, codes or regulation or
requiring or calling attention to the need for any work, repair, construction,
alteration or installation.
5.13 Litigation.
----------
There are no material claims, litigation, proceedings or
investigations pending or, to the knowledge of NVH, threatened against NVH.
There are no judgments, orders or decrees which have been issued against NVH and
which remain unpaid in whole or part or to which NVH is otherwise subject. No
insurance carrier, which has had any such incident reported to it, has made a
reservation of rights or denial of coverage with respect to such incident.
5.14 Brokers.
-------
NVH has not employed any broker, finder or agent or dealt with anyone
purporting to act in such capacity or agreed to pay any brokerage fee, finder's
fee or commission in connection with the transactions contemplated by this
Agreement.
17
5.15 Material Contracts.
------------------
NVH has delivered or otherwise made available to Strategicus correct
and complete copies of all contracts and agreements to which NVH is a party or
by which any of its properties or assets are bound, that are material to the
business, properties or assets of NVH (collectively, the "NVH Contracts" and
each a "NVH Contract"). NVH is not aware of any facts that would lead a
reasonable person to believe that a third party intends to cancel its NVH
Contract with NVH or that a third party is entitled to terminate any such NVH
Contract. To NVH's knowledge, each NVH Contract is valid and enforceable in
accordance with its terms, and there is no default under any NVH Contract, and
no event has occurred that with the lapse of time or the giving of notice or
both would constitute a default thereunder.
5.16 No Material Misstatements.
-------------------------
No representation or warranty by NVH contained in this Agreement, or
in any Exhibit or Schedule attached hereto, contains, or will contain, any
untrue statement of a material fact or omits, or will omit, to state a material
fact necessary to make the statements contained herein or therein not
misleading.
6. Covenants of Strategicus and NVH.
--------------------------------
Strategicus and NVH hereby covenant and agree that:
6.1 Conduct of Strategicus and NVH. From the date hereof until the
------------------------------
Effective Time, Strategicus and NVH shall in all material respects conduct their
respective businesses in the ordinary and usual course consistent with past
practices, that Strategicus and NVH will use all reasonable efforts to maintain
and preserve their respective business organization, business prospects,
employees and advantageous business relationships. Without limiting the
generality of the foregoing, from the date hereof until the Effective Time,
without the prior written consent of the other party, each agrees that it will
not, except as otherwise contemplated in this Agreement or to the extent
necessary to carry out the terms hereof:
6.1.1 Except as set forth in Schedule 6.1.1 or in the ordinary
and usual course of business consistent with past practice, permit or allow any
material assets (whether real, personal or mixed, tangible or intangible) to be
subjected to any mortgage, pledge, lien, security interest, encumbrance,
restriction or charge of any kind, or sell, transfer or otherwise dispose of any
of its material assets;
6.1.2 Except as contemplated by this Agreement, adopt or
propose any change in its Articles of Incorporation or Bylaws;
6.1.3 Grant any increase in the base compensation or other
payment to any director, officer or employee, whether now or hereafter payable
or granted, or grant any severance or termination pay (other than for severance
pay in amounts consistent with the party's established
18
severance pay practices), or enter into or vary the terms of any compensation
plan, arrangement or agreement with any such person;
6.1.4 Except as set forth in Schedule 6.1.4, issue any
securities, or alter the terms of any outstanding securities, or declare, pay or
set aside for payment any dividend or other distribution (whether in cash, stock
or property or otherwise) in respect of any securities, or redeem, purchase or
otherwise acquire any securities, any securities convertible into or
exchangeable for any securities or, except as otherwise contemplated by this
Agreement, any options, warrants or other rights to purchase or subscribe to any
of the foregoing;
6.1.5 Sell, transfer, license, sublicense or otherwise dispose
of, nor permit to lapse any rights in, to or for the use of, any of its material
assets, including its intellectual property, and will not pay any dividend or
make any other distribution to holders of its capital stock;
6.1.6 Make any capital expenditure or commitment in excess of
$50,000 for additions to property, plant or equipment, or lease or agree to
lease any assets which, if purchased, would be reflected in the property, plant
or equipment accounts, except pursuant to existing agreements expressly
providing for such as set forth in such party's disclosure schedule; or
6.1.7 Incur any material obligation, indebtedness or
liability, including without limitation any liability for nonperformance or
termination of any contract, or in any way increase its indebtedness for
borrowed money.
6.2 Access to Information. From the date hereof until the Closing
---------------------
Date, each party will give the other party and its respective counsel, financial
advisors, auditors and other authorized representatives reasonable access during
normal business hours to its offices, properties, books and records and furnish
such financial and operating data and all other information with respect to its
business as such persons may reasonably request and will instruct its employees,
counsel and financial advisors to cooperate in the investigation of the business
of the other party and in the planning for the combination of the business of
the parties following the consummation of the Merger.
6.3 Approval of Shareholders. Each party shall take all action
------------------------
necessary in accordance with applicable law and its Certificate of Incorporation
or Articles of Incorporation and Bylaws to obtain the approval of its
shareholders for the adoption of this Agreement, and to consider and approve
such other matters as may be necessary to effectuate the transactions provided
for herein.
6.4 Advice of Changes. Each party will promptly advise the other
-----------------
party in writing (a) of any event occurring subsequent to the date of this
Agreement that would render any representation or warranty of such party
contained in this Agreement, if made on or as of the date of such event or the
Closing Date, untrue, inaccurate or misleading in any material respect (other
than an event so affecting a representation or warranty which is expressly
limited to a state of facts
19
existing at a time prior to the occurrence of such event) and (b) of any
material adverse change in the business condition of the party and its
subsidiaries, taken as a whole.
6.5 Regulatory Approvals. Each party shall execute and file, or join
--------------------
in the execution and filing of, any application or other document that may be
necessary in order to obtain the authorization, approval or consent of any
governmental body, federal, state, local or foreign, which may be reasonably
required, or that the other company may reasonably request, in connection with
the consummation of the transactions contemplated by this Agreement. Each party
shall use its reasonable best efforts to obtain all such authorizations,
approvals and consents.
6.6 Necessary Consents. Each party will use its reasonable best
------------------
efforts to obtain such written consents and take such other actions as may be
necessary or appropriate to allow the consummation of the transactions
contemplated hereby and to allow it to carry on its business after the Closing
Date.
6.7 Actions Contrary to Stated Intent. No party hereto will, either
---------------------------------
before or after the Merger, take any action that would prevent the Merger from
qualifying as a reorganization under Section 368(1)(A) of the Code.
6.8 Public Announcements. The timing and content of all
--------------------
announcements regarding any aspect of the Merger to the financial community,
government agencies, or the public generally shall be mutually agreed upon in
advance (unless NVH is advised by its counsel that any such announcement or
other disclosure not mutually agreed upon in advance following good faith effort
to secure such agreement is required to be made by law or applicable regulation
or rule).
6.9 Satisfaction of Conditions Precedent. Each party will use its
------------------------------------
reasonable best efforts to satisfy or cause to be satisfied all of the
conditions precedent that are set forth in Section 7, as applicable to each of
them, and to cause the transactions contemplated by this Agreement to be
consummated, and, without limiting the generality of the foregoing, to obtain
all consents and authorizations of third parties and to make all filings with,
and give all notices to, third parties that may be necessary or reasonably
required on its part in order to effect the transactions contemplated hereby.
6.10 No Solicitation. Unless this Agreement has been terminated
---------------
pursuant to Section 8 hereof, neither Strategicus nor NVH shall, for a period of
thirty (30) days from the date of this Agreement, directly or indirectly,
through any officer, director, employee, financial advisor, representative or
agent (i) solicit, initiate, or encourage any inquiries or proposals that
constitute, or could reasonably be expected to lead to, a proposal or offer for
a merger, consolidation, business combination, sale of substantial assets, sale
of shares of capital stock (including without limitation by way of a tender
offer) or similar transaction involving Strategicus, NVH, or any of the
Strategicus Subsidiaries or NVH Subsidiaries, other than the transactions
contemplated by this Agreement (any of the foregoing inquiries or proposals
being referred to in this Agreement as an "Acquisition Proposal"), (ii) engage
in negotiations or discussions with any third party concerning, or provide any
non-public information to any person or entity relating to, any Acquisition
Proposal, or (iii) agree
20
to or recommend any Acquisition Proposal. Strategicus and NVH each agree not to
release any third party from, or waive any proposal of, any standstill agreement
to which it is a party or any confidentiality agreement between it and another
person who has made, or who may reasonably be considered likely to make, an
Acquisition Proposal, unless their respective board of directors determines in
good faith after consultation with outside legal counsel that such action is
necessary for such board of directors to comply with its fiduciary duties to
stockholders under applicable law. The parties to this Agreement hereby agree
that each shall notify the other immediately after receipt by it (or its
advisors) of any Acquisition Proposal or for access to the properties, books or
records of their respective corporations by any person or entity that informs
them that it is considering making, or has made, an Acquisition Proposal. Such
notice shall be made orally and in writing and shall indicate in reasonable
detail the identity of the offeror and the terms and conditions or such
proposal, inquiry or contact. Strategicus and NVH shall continue to keep each
other informed, on a current basis, of the status of any such discussions or
negotiations and the terms being discussed or negotiated.
7. Conditions to the Merger.
------------------------
7.1 Conditions to Obligations of NVH. The obligations of NVH
--------------------------------
hereunder are subject to the fulfillment or satisfaction, on and as of the
Closing Date, of each of the following conditions (any one or more of which may
be waived by NVH, but only in a writing signed by NVH):
7.1.1 Accuracy of Representations and Warranties and
----------------------------------------------
Compliance with Covenants. The representations and warranties of Strategicus
-------------------------
contained in Section 4 shall be true and accurate in all material respects on
and as of the Closing Date and Strategicus shall have performed and complied
with all of its covenants contained in Section 6 in all material respects on or
before the Closing Date.
7.1.2 No Material Adverse Change. There shall have been no
--------------------------
material adverse change in the financial condition of Strategicus since June 1,
1999.
7.1.3 Consents. All written consents, assignments, waivers or
--------
authorizations that are required for the consummation of the Merger or for the
continuation in full force and effect of any material contracts or leases of
Strategicus shall have been obtained, except where the failure to obtain such
consents would not, individually or in the aggregate, have a material adverse
effect on Strategicus.
7.1.4 Employment Agreements. NVH shall have entered into
---------------------
mutually acceptable Employment Agreements to be effective as of the Effective
Time with ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇.
7.1.5 Consulting Agreements. NVH shall have entered into
---------------------
mutually acceptable Consulting Agreements to be effective as of the Effective
Time with ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
21
7.1.6 Fairness Opinion. NVH shall be satisfied, in its sole
----------------
discretion, with a fairness opinion regarding the terms of the Merger issued by
a reputable investment banking firm of its choice.
7.2 Conditions to Obligations of Strategicus. The obligations of
----------------------------------------
Strategicus hereunder are subject to the fulfillment or satisfaction, on and as
of the Closing Date, of each of the following conditions (any one or more of
which may be waived by Strategicus, but only in a writing signed by
Strategicus):
7.2.1 Accuracy of Representations and Warranties and
----------------------------------------------
Compliance with Covenants. The representations and warranties of NVH contained
-------------------------
in Section 5 shall be true and accurate in all material respects on and as of
the Closing Date and NVH shall have performed and complied with all of its
covenants contained in Section 6 in all material respects on or before the
Closing Date.
7.2.2 No Material Adverse Change. There shall have been no
--------------------------
material adverse change in the financial condition of NVH since the most recent
NVH Financial Statements.
7.2.3 Employment Agreements. NVH shall have entered into
---------------------
mutually acceptable Employment Agreements to be effective as of the Effective
Time with ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇.
7.2.4 Consulting Agreements. NVH shall have entered into
---------------------
mutually acceptable Consulting Agreements to be effective as of the Effective
Time with ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
7.2.5 Appointment of Officers. The board of directors of NVH
-----------------------
shall have appointed the officers set forth in Section 2.6, effective as of the
Effective Time.
7.2.6 Election of Directors. The shareholders or board of
---------------------
directors of NVH, as applicable, shall have elected or appointed the individuals
listed in Section 2.5 to serve on the board of directors of NVH, effective as of
the Effective Time.
7.3 Conditions to Obligations of Each Party. The respective
---------------------------------------
obligations of NVH and Strategicus hereunder are subject to the fulfillment, on
and as of the Closing Date, of each of the following conditions (any one or more
of which may be waived by such parties, but only in a writing signed by such
parties):
7.3.1 Tax-Free Reorganization. Neither party shall have
-----------------------
received from their respective tax advisors an opinion that the Merger will not
constitute a tax-free reorganization within the meaning of Section 368 of the
Code, such opinion to be in the form and substance reasonably satisfactory to
the receiving party.
22
7.3.2 Illegality or Legal Constraint. No statute, rule,
------------------------------
regulation, executive order, decree, injunction or restraining order shall have
been enacted, promulgated or enforced (and not repealed, superseded or otherwise
made inapplicable) by any court or governmental authority which prohibits the
consummation of the Merger (each party agreeing to use its reasonable best
efforts to have any such order, decree or injunction lifted).
7.3.3 Governmental Authorizations. Except for the filing of
---------------------------
the Certificate of Merger with the Secretary of State of the State of Delaware,
there shall have been obtained any and all governmental authorizations, permits,
approvals and consents of securities or "blue sky" commissions of any
jurisdiction and of any other governmental body or agency that may reasonably be
deemed necessary so that the consummation of the Merger will be in compliance
with applicable laws, except where the failure to obtain such authorizations
would not, individually or in the aggregate, result in a material adverse effect
for either party.
7.3.4 Satisfaction of Counsel. All documents executed by the
-----------------------
parties hereto shall be reasonably satisfactory to each of the parties hereto
and its counsel.
8. Termination of Agreement.
------------------------
8.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Effective Time, whether before or after approval by the shareholders of
Strategicus:
8.1.1 By mutual consent of the boards of directors of NVH and
Strategicus;
8.1.2 By NVH, if (i) there has been a material breach by
Strategicus of any of its representations and warranties hereunder, or (ii)
there has been the willful breach on the part of Strategicus of any of its
covenants or agreements contained in this Agreement such that in both case (i)
and (ii), such breach has not been cured within ten (10) business days after
notice (in reasonable detail) to Strategicus;
8.1.3 By Strategicus, if (i) there has been a material breach by
NVH of any of its representations and warranties hereunder, or (ii) there has
been the willful breach on the part of NVH of any of its covenants or agreements
contained in this Agreement such that in both case (i) and (ii), such breach has
not been promptly cured within ten (10) business days after notice (in
reasonable detail) to NVH; or
8.2 Effect of Termination. In the event of termination of this
---------------------
Agreement as provided above, this Agreement shall forthwith become void, and
there shall be no liability on the part of either NVH or Strategicus, or their
respective officers or directors hereunder, except that the agreements contained
or referred to in Section 11.12 and this Section 8.2 shall survive the
termination hereof; and except that nothing contained in this Section 8.2 shall
relieve any party from any liability for any breach of this Agreement.
9. Expenses.
--------
23
Strategicus and NVH shall each pay all of their own respective
expenses incurred by or on behalf of each of them in connection with this
Agreement and the transactions contemplated hereunder, including, but not
limited to, all due diligence, legal and accounting expenses; provided, however,
that upon execution of this Agreement, NVH shall advance or reimburse and pay
the legal, accounting and other expenses incurred or to be incurred by
Strategicus or its officers in connection with this Merger, subject to a maximum
total amount of $50,000.
10. Nature of Statements and Survival of Representations, Warranties And
--------------------------------------------------------------------
Agreements.
----------
All statements of fact and only those statements of facts contained in
any written statement, certificate, exhibit, schedule or other document
delivered by or on behalf of the parties pursuant hereto or in connection with
the consummation of the transactions contemplated hereby are deemed
representations and warranties made hereunder. All covenants and agreements made
by the parties hereunder shall survive the Closing Date, the Effective Time, and
the Merger. All representations and warranties made by the parties hereunder
shall survive the Closing Date, the Effective Time, and the Merger for a period
of twelve (12) months from the Effective Time.
11. Indemnification By ▇▇▇▇▇▇▇ ▇▇▇▇▇.
--------------------------------
11.1 Indemnification. ▇▇▇▇▇▇▇ ▇▇▇▇▇ agrees to indemnify and hold
---------------
harmless NVH, from and against, and to reimburse NVH with respect to, any and
all losses, damages, liabilities, costs and expenses incurred by NVH by reason
of or arising out of any material breach or inaccuracy of any representation or
warranty made by Strategicus in this Agreement and the Strategicus Disclosure
Schedule. Any claim for indemnification by NVH pursuant to this Section 11.1
shall hereinafter be referred to as an "NVH Claim."
11.2 Survivability. In order for NVH to be entitled to
-------------
indemnification for an NVH Claim as provided for in Section 11.1, NVH shall
commence its lawsuit against ▇▇▇▇▇▇▇ ▇▇▇▇▇ for recovery of the NVH Claim within
twelve (12) months after the Effective Time or shall be barred from seeking
indemnification from ▇▇▇▇▇▇▇ ▇▇▇▇▇.
11.3 Claim Basket and Liability Limit. ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ obligations
--------------------------------
with respect to indemnity pursuant to this Section 11 shall be limited to the
extent that the aggregate of the NVH Claim(s) must first exceed One Hundred
Thousand Dollars ($100,000) ("Claim Basket") and then ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇
indemnification obligations shall be only for the amounts in excess of the Claim
Basket. In no event shall the total liability of ▇▇▇▇▇▇▇ ▇▇▇▇▇ for all NVH
Claims exceed the value of the vested NVH Stock which he receives in this Merger
("Liability Limit"). ▇▇▇▇▇▇▇ ▇▇▇▇▇ may pay his indemnification obligation by
transferring his vested shares of NVH Stock (based upon its market value on the
date of the transfer) or such portion thereof as may be necessary to satisfy the
NVH Claim on the date of transfer, and in that event, he shall have no further
liability under this Section 11 to indemnify NVH, even if NVH has obtained or
will obtain a judgment on an NVH Claim.
24
11.4 Notice; Tendering Defense to ▇▇▇▇▇▇▇ ▇▇▇▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇
------------------------------------------
obligation to indemnify and reimburse NVH hereunder is also subject to prior
written thirty (30) day notice by NVH of an NVH Claim, unless the NVH Claim
involves litigation, in which case NVH shall provide ▇▇▇▇▇▇▇ ▇▇▇▇▇ with notice
of such litigation within twenty (20) days after receipt of such complaint by
NVH; provided, however, that ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have the right to defend any
NVH Claim made by a third party and ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have the right to
control the defense, settlement or compromise of such NVH Claim and NVH shall
have the right to be kept currently informed and to reasonably participate in
all aspects of such litigation to the extent deemed necessary to protect NVH's
interest, unless the amount of damages demanded or alleged or prayed for in the
complaint (or if no damages are demanded, alleged or prayed for in the
complaint, the damages reasonably likely to result from such an NVH Claim)
exceed the Liability Limit, as such term is defined in Section 11.3, in which
case the party with the greatest economic risk shall have the right to such
control, subject to the other party's right of information and participation.
12. Miscellaneous.
-------------
12.1 Notices.
-------
Any and all notices, demands or other communications required or
desired to be given hereunder by any party shall be in writing and shall be
validly given or made to another party if served personally or sent by
facsimile, if deposited in the United States mail, certified or registered,
postage prepaid, return receipt requested or if sent by a nationally recognized
overnight courier. If such notice, demand or other communication is served
personally, or by facsimile (with verbal verification of complete receipt),
service shall be conclusively deemed made at the time of such personal service
or facsimile transmission. If such notice, demand or other communication is
given by an overnight courier service, service shall be conclusively deemed made
on the date of delivery by such courier. If such notice, demand or other
communication is given by mail, such notice shall be conclusively deemed given
seventy-two (72) hours after the deposit thereof in the United States mail
addressed to the party to whom such notice, demand or other communication is to
be given as hereinafter set forth:
If to NVH: netValue Holdings, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Klehr, Harrison, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
25
If to Strategicus: Strategicus Partners Inc.
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇. ▇▇▇▇
Farleigh, Wada & ▇▇▇▇, P.C.
▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party hereto may change its address for the purpose of receiving notices,
demands and other communications as herein provided by a written notice given in
the manner provided hereby to the other party or parties hereto.
12.2 Modifications or Amendments.
---------------------------
No amendment, change or modification of this document shall be valid
unless in writing and signed by all parties hereto.
12.3 Waiver.
------
No reliance upon or waiver of one or more provisions of this Agreement
shall constitute a waiver of any other provisions hereof. All waivers must be in
writing and signed by the party waiving compliance.
12.4 Knowledge of Parties.
--------------------
Where any representation or warranty contained in this Agreement is
expressly qualified by a reference to knowledge, information and/or belief of
the party making such representation and warranty, such party shall have made
reasonable inquiry as to the matters that are the subject of such
representations and warranties.
12.5 Successors and Assigns.
----------------------
All of the terms and provisions contained herein shall inure to the
benefit of and shall be binding upon the parties hereto and their respective
heirs, personal representatives, successors and assigns.
12.6 Separate Counterparts.
---------------------
26
This document may be executed in one or more separate counterparts,
each of which, when so executed, shall be deemed to be an original. Such
counterparts shall, together, constitute and shall be one and the same
instrument.
12.7 Further Assurances.
------------------
Each of the parties hereto shall execute and deliver any and all
additional papers, documents, and other assurances, and shall do any and all
acts and things reasonably necessary in connection with the performance of their
obligations hereunder and to carry out the intent of the parties hereto.
12.8 Applicable Law and Severability.
-------------------------------
This document shall, in all respects, be governed by and construed in
accordance with the laws of the State of Delaware. If any provisions of this
Agreement are found to be unenforceable or invalid, the remaining provisions
shall nevertheless be enforceable. If feasible, the term or provision which is
found to be unenforceable or invalid shall be deemed to be modified or limited
to the extent necessary to be valid and enforceable.
12.9 Attorneys' Fees and Costs.
-------------------------
In the event any action or arbitration proceeding is instituted by a
party hereto to enforce any of the terms or provisions hereof, the prevailing
party in such action, as determined by the court or arbitrator, shall be
entitled to such reasonable fees, costs and expenses in any arbitration
proceeding, at trial, on appeal and in connection with any review.
12.10 Captions.
--------
Any captions to the sections of this Agreement are solely for the
convenience of the parties and are not a part of this Agreement and shall not be
used for the determination of the validity of this Agreement or any provision
therefor.
12.11 Entire Agreement.
----------------
This document, together with any exhibits, schedules or documents
referenced herein, attached hereto, or delivered and initialed by the parties in
connection herewith, constitutes the entire understanding and agreement of the
parties with respect to the subject matter of this Agreement.
12.12 Confidentiality.
---------------
The parties agree that no party shall disclose the existence of and
all economic and other terms of this Agreement for any purpose, without the
prior written consent of the other parties, unless such disclosure is required
by law, court order, rule or regulation or is being made to management advisors,
any investor or lender (including their respective counsel and advisors) of
27
Strategicus or NVH, in which case, prior to such disclosure, such investor or
lender shall agree to abide by the provisions of this Section 12.12.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
NVH: NETVALUE HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Title: President
----------------------------
STRATEGICUS: STRATEGICUS PARTNERS INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Title: President
----------------------------
By signing below, ▇▇▇▇▇▇▇ ▇▇▇▇▇ agrees to be bound only by the term and
conditions set forth in Section 11 of this Agreement.
▇▇▇▇▇▇▇ ▇▇▇▇▇: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
28
SCHEDULE 4
TO
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Strategicus Disclosure Schedule
-------------------------------
4.1 ▇▇▇▇▇▇▇.▇▇▇, Inc. is a subsidiary of Strategicus, which owns 92.5% of the
preferred stock of ▇▇▇▇▇▇▇.▇▇▇, Inc., taking into consideration options which
have been granted to employees.
4.2 ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ have executed agreements for payment of the
sum of $50,000 each as the balance of consideration due for purchase of their
stock in Strategicus.
4.4 Loan Agreement, Promissory Note and Security Agreement evidencing a loan
from NVH in the original principal sum of $2,000,000.
Promissory Note evidencing a loan from ▇▇▇▇▇▇▇ ▇▇▇▇▇ in the original
principal sum of $30,000.
Strategicus has signed letters of intent for investments in AsiaCD, Inc.
And ▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., which have been provided to NVH. Strategicus has also
discussed potential investments with other parties.
29
SCHEDULE 5
TO
MERGER AGREEMENT AND PLAN OF REORGANIZATION
NVH Disclosure Schedule
-----------------------
30
SCHEDULE 5.1
TO
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Corporate Status
----------------
NVH currently owns approximately 66% of the issued and outstanding common
stock and 100% of the issued and outstanding Series A Preferred Stock of
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. ("BrightStreet").
31
SCHEDULE 5.2
TO
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Capitalization
--------------
NVH currently has issued and outstanding the following convertible
securities:
1. Convertible promissory notes in the aggregate principal amount of
approximately $3,200,354 which have a conversion price of $2.00 per share.
2. Warrants to purchase an aggregate total of 272,876 shares of the Company's
common stock at an exercise price of $6.00 per share.
3. Convertible promissory notes in the aggregate principal amount of
approximately $1,642,500 which have a conversion price of $2.00 per share.
4. Warrants to purchase an aggregate total of 402,500 shares of BrightStreet
common stock which are exercisable at a price per share equal to the lesser of
(i) $4.00 or (ii) the price per share at which BrightStreet's common stock is
offered to the public in an initial public offering, if any. Based on the share
exchange ratio in the anticipated merger of NVH and BrightStreet, subsequent to
the merger the holders of these warrants will be entitled to purchase an
aggregate total of 100,625 shares of NVH's common stock at an exercise price
equal to the lesser of (i) $16.00 or (ii) four times the price per share at
which NVH's common stock is offered to the public in NVH's first public offering
of securities subsequent to the consummation of the merger of NVH and
BrightStreet, if any.
5. In connection with the formation of BrightStreet, BrightStreet issued
warrants to purchase 500,000 shares of BrightStreet common stock to APP
Investments, Inc. ("APP"). These warrants were initially exercisable at a price
of $6.00 per share. Due to the application of certain antidilution provisions of
this warrant, APP is presently entitled to purchase 1,060,222 shares of
BrightStreet common stock at an exercise price of [$1.25] per share. As of the
date of this memorandum, none of these warrants have been exercised. Based on
the share exchange ratio in the anticipated merger of NVH and BrightStreet,
subsequent to the merger APP will be entitled to purchase an aggregate total of
265,056 shares of the Company's common stock at an exercise price of [$5.00] per
share. The BrightStreet board of directors may further reduce the exercise price
of these warrants.
6. In connection with a Rule 506 offering of convertible debentures, NVH
issued convertible debentures in the aggregate principal amount of approximately
$4,415,000 which have a conversion price of $2.50 per share. Also in connection
with this offering, NVH is obligated to issue warrants to purchase 125,000
shares of common stock to Silver Capital at an exercise price of $2.50 per
share. These warrants will be exercisable for a period of three years from the
date of grant. Also in connection with this offering, NVH will issue warrants to
purchase 100,000 shares of common stock to five brokers who assisted NVH in
selling this offering. The warrants will have an exercise price of $5.00 per
share and will be exercisable for a period of three years from the date of
grant.
32
7. In connection with the issuance of a convertible promissory note in the
principal amount of $900,000 (the "Founders Note") to Founders Equity Group,
Inc. ("Founders"), NVH issued Founders a warrant to purchase 90,000 shares of
NVH's common stock at an exercise price of $2.50 per share and a warrant to
purchase 90,000 shares of NVH's common stock at an exercise price of $5.00 per
share. These warrants are exercisable at any time prior to February 28, 2002.
8. NVH has issued options to purchase 600,000 shares of NVH common stock at an
exercise price of [$1.00] per share to ▇▇▇▇▇▇ ▇▇▇▇▇, Chairman of NVH's Board of
Directors. 30% of these options vested immediately upon grant and the remaining
options will vest ratably over the next 24 months.
33
SCHEDULE 5.4.2
TO
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Other Material Liabilities
--------------------------
A portion of the convertible promissory notes described in Schedule 5.2
were issued during the second quarter of 1999. Accordingly, the related
liability is not recorded in the NVH Financial Statements.
34
SCHEDULE 5.5
TO
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Changes in Business
-------------------
NVH is contemplating a spinoff of BrightStreet whereby it proposes to sell
substantially all of its assets in BrightStreet to a newly formed corporation, a
significant majority of the common stock of which will initially be owned by NVH
with the remainder of the common stock initially owned by BrightStreet
management.
On August 31, 1998, NVH entered into a letter of intent with BrightStreet
regarding he merger of NVH and BrightStreet. NVH plans to consummate this merger
in 1999. In connection with the consummation of this merger, the BrightStreet
stockholders will have appraisal rights under Delaware law. If any BrightStreet
stockholders elect to exercise their appraisal rights, then NVH will be
obligated to pay such BrightStreet stockholders the fair value of their shares
of BrightStreet common stock as determined by the Delaware Court of Chancery.
35
SCHEDULE 5.7
TO
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Taxes and Tax Filings
---------------------
The 1998 federal and state tax returns are the first tax returns which the
current management of NVH is responsible for filing with the respective taxing
authorities. These returns will not be due on or before the Closing Date. In all
periods prior to June 1998, NVH was a dormant public shell company. NVH's
current management does not believe that tax returns were filed for 1992 through
1997. However, NVH is not aware of any taxable income earned by the corporation
that would be reportable during those periods.
36
SCHEDULE 5.10
TO
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Defaults
--------
In connection with the proposed spinoff of BrightStreet, NVH will assume
certain liabilities of BrightStreet pursuant to certain leases and contracts
which are currently in default.
37
SCHEDULE 5.15
TO
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Material Contracts
------------------
NVH is contemplating a spinoff of BrightStreet whereby it proposes to sell
substantially all of its assets in BrightStreet to a newly formed corporation, a
significant majority of the common stock of which will initially be owned by NVH
with the remainder of the common stock initially owned by BrightStreet
management. NVH contemplates entering into an agreement regarding this
transaction prior to the Effective Date.
38
SCHEDULE 6.1.1
TO
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Proposed Sale of Material Assets
--------------------------------
NVH is contemplating a spinoff of BrightStreet whereby it proposes to sell
substantially all of its assets in BrightStreet to a newly formed corporation, a
significant majority of the common stock of which will initially be owned by NVH
with the remainder of the common stock initially owned by BrightStreet
management. NVH contemplates entering into an agreement regarding this
transaction prior to the Effective Date.
39
SCHEDULE 6.1.2
TO
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Amendments to Certificate of Incorporation
------------------------------------------
NVH may amend its Certificate of Incorporation to increase its authorized
capital stock in conjunction with the Merger.
40
SCHEDULE 6.1.3
TO
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Increase in Officer's Base Compensation
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇'▇ annual compensation will be increased to $150,000 per year
in connection with this Merger.
41
SCHEDULE 6.1.4
TO
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Issuance of Securities
----------------------
NVH will continue to issue convertible promissory notes in connection with
a private placement offering which it is conducting pursuant to Rule 506
promulgated under the Securities Act of 1933, as amended.
42
SCHEDULE 6.1.7
TO
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Indebtedness
------------
NVH will continue to issue convertible promissory notes in connection with
a private placement offering which it is conducting pursuant to Rule 506
promulgated under the Securities Act of 1933, as amended.
43
SCHEDULE 6.10
-------------
Sale of Substantial Assets
--------------------------
See Schedule 5.5.
44