AGREEMENT AND PLAN OF MERGER BECOMING ART INC. and OXFORD MEDIA ACQUISITION CORP. and OXFORD MEDIA CORP.
AGREEMENT
AND PLAN OF
MERGER
and
OXFORD
MEDIA ACQUISITION CORP.
and
OXFORD
MEDIA CORP.
____________,
2005
AGREEMENT
AND PLAN OF MERGER
I
PARTIES
THIS
AGREEMENT AND PLAN OF MERGER (the
“Agreement”) is
entered into effective as of the ____ day of ________, 2005 (the “Effective
Date”), by and between BECOMING ART INC., a Nevada corporation (“Parent”);
OXFORD MEDIA ACQUISITION CORP., a Delaware corporation and a wholly-owned
subsidiary of Parent (“Merger Sub”); and,
OXFORD
MEDIA CORP., a Delaware corporation (“Company”). Parent, Merger Sub, and Company
are sometimes referred to collectively herein as the “Parties”, and each
individually as a “Party”.
II
RECITALS
A. The
Board
of Directors of Parent has deemed it advisable, and in the best interests of
Parent and its stockholders, that Parent, Merger Sub, and Company consummate
the
business combination and other transactions provided for herein in order to
advance the long-term strategic business interests of Parent.
B. The
Board
of Directors of Merger Sub has deemed it advisable, and in the best interests
of
Merger Sub and its stockholder, that Merger Sub, Parent, and Company consummate
the business combination and other transactions provided for herein in order
to
advance the long-term strategic business interests of Merger Sub.
C. Merger
Sub is a direct, wholly-owned subsidiary of Parent, formed solely for the
purpose of effecting the Merger and will conduct no activity and incur no
liability or obligation other than as contemplated by this
Agreement.
D. The
Board
of Directors of Company has deemed it advisable, and in the best interests
of
Company and its stockholders, that Company, Parent, and Merger Sub consummate
the business combination and other transactions provided for herein in order
to
advance the long-term strategic business interests of Company.
E. The
respective Boards of Directors of Parent, Merger Sub, and Company have approved,
in accordance with applicable provisions of Nevada General Corporation Law,
Delaware General Corporation Law, and Delaware General Corporation Law,
respectively, this Agreement and the transactions contemplated hereby, including
the Merger.
F. The
Board
of Directors of Company has resolved to recommend to its stockholders
approval
and adoption of this Agreement and approval of the Merger.
G. The
Board
of Directors of Merger Sub has resolved to recommend to its stockholder
1
approval
and adoption of this Agreement and approval of the Merger.
H. The
Parties desire to make certain representations, warranties, and agreements
in
connection with the Merger and also to prescribe certain conditions to the
Merger.
I. The
Parties desire to enter into a transaction under which Merger Sub would merge
into Company. As a result of the Merger, among other things: (i) Company would
acquire and assume all of the assets, business, obligations, and liabilities
of
Merger Sub, as provided for and qualified herein; (ii) each issued and
outstanding share of common stock of Company will be converted into shares
of
common stock of Parent in accordance with the provisions of this
Agreement;
(iii)
each
issued and outstanding share of common stock of Merger Sub will be converted
into shares of common stock of Company in accordance with the provisions of
this
Agreement; (iv) Merger
Sub would
disappear and cease to be an active corporation; and (v) and, Company would
become a direct, wholly-owned subsidiary of Parent.
J. For
United States federal income tax purposes, and for purposes of state tax
reporting, the Parties intend that the Merger qualify as a reorganization under
the provisions of Section 368(a) of the Code, and the Parties further intend,
by
executing this Agreement, to adopt a plan of reorganization within the meaning
of Section 354(a) of the Code.
K. NOW,
THEREFORE,
in
consideration of the promises and the mutual covenants contained herein, and
for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Parties, intending to be legally bound, hereby agree
as
follows:
III
DEFINED
TERMS AND INTERPRETATION
3.1 Definitions.
The
following capitalized terms shall have the respective meanings specified in
this
Article III. Other terms defined elsewhere herein shall have meanings so given
them.
3.1.1. Affiliate.
“Affiliate”
shall mean a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
the
first Person.
3.1.2. Code.
“Code”
shall mean the Internal Revenue Code of 1986, as amended from time-to-time,
and
the rules and regulations thereunder.
3.1.3. Company
Common Stock.
“Company Common Stock” shall mean any share of the Common Stock, $.01 par value
per share, of Company.
3.1.4. Confidential
Information.
“Confidential Information” shall mean any information concerning the businesses
and affairs of a respective Party that is not already generally available to
the
public.
3.1.5. Control.
“Control” (including the terms “controlled by” and “under
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common
control with”) shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
3.1.6. Delaware
Law.
“Delaware Law” shall mean the General Corporation Law of the State of Delaware,
as amended.
3.1.7. Dissenting
Share.
“Dissenting Shares” shall mean the shares held by a Dissenting Stockholder.
3.1.8. Dissenting
Stockholder.
“Dissenting Stockholder” shall mean any holder of Company Common Stock
outstanding
immediately prior to the Effective Date
who
shall
have not voted in favor of the Merger and who shall have
made
and perfected a proper demand in writing for payment of the value of said shares
in accordance with all applicable dissenters’ rights statutes in accordance with
Delaware Law, and who has not effectively withdrawn or lost the right to such
payment.
3.1.9. Intellectual
Property.
“Intellectual Property” (also referred to as “Intellectual Property Assets”)
shall mean and include the following, as well as all other general intangibles
of a like nature and all (i) goodwill, and (ii) confidential data or information
relating to the below listed items, for each respective party:
(a) The
Party’s full legal name and all derivations thereof used by that Party, all
fictional business names, trading names, designs, registered and unregistered
trademarks, registered and unregistered service marks, and applications
(collectively, the “Marks”);
(b) All
patents, patent applications, and inventions and discoveries that may be
patentable (collectively, the “Patents”);
(c) All
copyrights in both published works and unpublished works (collectively, the
“Copyrights”);
(d) All
rights in mask works (collectively, the “Rights in Mask Works”);
and
(e) All
know-how, trade secrets, confidential information, customer lists, computer
software, databases, source codes, object codes, works of authorship, know-how,
technical information, data, process technology, user interfaces, proprietary
concepts, ideas, techniques, business models and methodologies, plans, drawings,
and blue prints owned, used, or licensed by Parent as licensee or licensor
(collectively, the “Trade Secrets”).
3.1.10. IRS.
“IRS”
shall mean the Internal Revenue Service.
3.1.11. Knowledge.
“Knowledge” shall mean actual
knowledge after reasonable investigation.
3
3.1.12. Material
Adverse Change.
“Material Adverse Change” shall mean a change which results in a Material
Adverse Effect.
3.1.13. Material
Adverse Effect.
“Material Adverse Effect” shall mean the following meaning:
(a) with
respect to Company, (i) a material adverse effect (whether taken individually
or
in the aggregate with all other such effects) on the financial condition,
business, results of operations or properties of Company; (ii) an effect which
would materially impair Company’s ability to timely to consummate the
transactions contemplated under this Agreement; or, (iii) any event,
circumstance or condition affecting Company which would prevent or materially
delay the consummation of the transactions contemplated under this
Agreement;
(b) with
respect to Parent, (i) a material adverse effect (whether taken individually
or
in the aggregate with all other such effects) on the financial condition,
business, results of operations or properties of Parent; (ii) an effect which
would materially impair Parent’s ability timely to consummate the transactions
contemplated under this Agreement; or, (iii) any event, circumstance or
condition affecting Parent which would prevent or materially delay the
consummation of the transactions contemplated by this Agreement;
and
(c) with
respect to the Merger Sub, (i) a material adverse effect (whether taken
individually or in the aggregate with all other such effects) on the financial
condition, business, results of operations or properties of Merger Sub; (ii)
an
effect which would materially impair Merger Sub’s ability to timely to
consummate the transactions contemplated under this Agreement; or, (iii) any
event, circumstance or condition affecting Merger Sub which would prevent or
materially delay the consummation of the transactions contemplated under this
Agreement
3.1.14. Merger
Consideration.
“Merger
Consideration” shall mean the consideration which each holder of Company Common
Stock is entitled to receive pursuant to Section 4.4, below.
3.1.15. Merger
Sub Stock.
“Merger
Sub Stock” shall mean any share of the Common Stock, $.001 par value per share,
of Merger Sub.
3.1.16. Nevada
Law.
“Nevada
General Corporation Law” shall mean the General
Corporation Law of the State of Nevada, as amended.
3.1.17. Ordinary
Course of Business.
“Ordinary Course of Business” shall mean the course of business procedures and
practices consistent with past custom and practice (including with respect
to
quantity and frequency).
3.1.18. Parent
Common Stock.
“Parent
Common Stock” shall mean any
share
of the Common Stock, $.001 par value per share, of Parent.
4
3.1.19. Person.
“Person” shall mean any individual,
corporation (including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any limited liability company or joint stock company), firm
or other enterprise, association, organization, unincorporated
organization, governmental
entity, or
any
other type of entity.
3.1.20. Requisite
Stockholder Approval.
“Requisite Stockholder Approval” shall mean the affirmative vote of the holders
of a majority of that company’s issued and outstanding shares entitled to vote
on the Merger actually voting in favor of this Agreement and the
Merger.
3.1.21. SEC.
“SEC”
shall mean the Securities and Exchange Commission.
3.1.22. SEC
Filings.
“SEC
Filings” shall mean that Person’s filings with the SEC.
3.1.23. Security
Interest.
“Security Interest” shall mean any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other
than
(a)
mechanic’s, materialmen’s, and similar liens, (b) liens for taxes not yet due
and payable or for taxes that the taxpayer is contesting in good faith through
appropriate proceedings, (c) purchase money liens and liens securing rental
payments under capital lease arrangements, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing
of
money.
3.1.24. Subsidiary.
“Subsidiary” shall mean any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of
the
directors.
3.1.25. Surviving
Corporation.
“Surviving Corporation” shall mean the corporate entity of Company as existing
immediately after the Merger.
3.1.25. Surviving
Corporation Common Stock.
“Surviving Corporation Common Stock”shall
mean any share of the Common Stock, $.01 par value per share, of the Surviving
Corporation.
3.1.26. Tax
or Taxes.
“Tax”
or “Taxes” shall mean any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.
3.1.27. Tax
Return.
“Tax
Return” shall mean any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
3.1.28. Transaction
Expenses.
“Transaction Expenses” shall mean and include all reasonable, actual, and
documented out-of-pocket expenses (including, without limitation, all
5
reasonable
fees and expenses of counsel, accountants, and investment bankers to a Party
and
its Affiliates) incurred by a Party or on its behalf in connection with or
related to (i) the authorization, preparation, negotiation, execution, and
performance of this Agreement; (ii) the preparation, printing, filing, and
mailing of any SEC Filings made or contemplated by that Party in connection
with
this Agreement and the transactions envisioned hereunder; and, (iii) all other
matters related to the consummation of the transactions contemplated under
this
Agreement.
3.2 Accounting
Terms and Determinations.
All
accounting terms used in this Agreement and not otherwise defined shall have
the
meaning accorded to them in accordance with GAAP and, except as expressly
provided herein, all accounting determinations shall be made in accordance
with
GAAP, consistently applied. When used herein, the term “financial statements”
shall include the notes and schedules attached thereto. The term “GAAP” means
generally accepted accounting principles consistently applied as in effect
from
time to time.
3.3 Interpretation.
3.3.1. Provision
Not Construed Against Party Drafting Agreement.
This
Agreement is the result of negotiations by and between the Parties, and each
Party has had the opportunity to be represented by independent legal counsel
of
its choice. This Agreement is the product of the work and efforts of all
Parties, and shall be
deemed
to have been drafted by all Parties. In the event of a dispute, no Party hereto
shall be entitled to claim that any provision should be construed against any
other Party by reason of the fact that it was drafted by one particular
Party.
3.3.2. Number
and Gender.
Wherever
from the context it appears appropriate, (i) each term stated either in the
singular or plural shall include the singular and plural; and, (iii) wherever
from the context it appears appropriate, the masculine, feminine, or neuter
gender, shall each include the others
3.3.3. Incorporation
of Exhibits and Schedules.
The
Exhibits and Schedules identified in this Agreement are incorporated herein
by
reference and made a part hereof as if set out in full herein.
3.3.4. Article
and Section Headings.
The
article and section headings used in this Agreement are inserted for convenience
and identification only and are not to be used in any manner to interpret this
Agreement.
3.3.5. Severability.
Each
and every provision of this Agreement is severable and independent of any other
term or provision of this Agreement. If any term or provision hereof is held
void or invalid for any reason by a court of competent jurisdiction, such
invalidity shall not affect the remainder of this Agreement.
3.3.6. Entire
Agreement.
This
Agreement, and all references, documents, or instruments referred to herein,
contains the entire agreement and understanding of the Parties hereto in respect
to the subject matter contained herein. The Parties have expressly not relied
upon any promises, representations, warranties, agreements, covenants, or
undertakings, other than those expressly set forth
6
or
referred to herein. This Agreement supersedes any and all prior written or
oral
agreements, understandings, and negotiations between the Parties with respect
to
the subject matter contained herein.
3.4 Additional
Definitions
and Interpretation Provisions.
For
purposes of this Agreement, (i) those words, names, or terms which are
specifically defined herein shall have the meaning specifically ascribed to
them; (ii); the words “hereof”, “herein”, “hereunder”, and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole,
and not to any particular provision of this Agreement; (iii) all references
to
designated “Articles”, “Sections”, and to other subdivisions are to the
designated Articles, Sections, and other subdivisions of this Agreement as
originally executed; (iv) all references to “Dollars” or “$” shall be construed
as being United States dollars; (v) the
term
“including” is not limiting and means “including without limitation”;
and,
(vi)
all references to all statutes, statutory provisions, regulations, or similar
administrative provisions shall be construed as a reference to such statute,
statutory provision, regulation, or similar administrative provision as in
force
at the date of this Agreement and as may be subsequently amended.
IV
THE
MERGER
4.1 Basic
Transaction.
On and
subject to the terms and conditions of this Agreement, and pursuant to Delaware
Law, Merger Sub will merge with and into Company (the “Merger”) at the Effective
Date. Immediately following the Merger, the corporate existence of Merger Sub
will cease and Company will continue as the surviving corporation of the Merger,
and is sometimes referred to herein as the Surviving Corporation. Surviving
Corporation will succeed to and assume all of the rights and obligations of
Merger Sub in accordance with Delaware Law.
4.2 Effects
of the Merger.
4.2.1. General.
The
Merger shall become legally effective at the time Company and Merger Sub file
a
Certificate of Merger in the form attached hereto as Exhibit 4.2.1. (the
“Certificate of Merger”) with the Secretary of State of the State of Delaware,
which shall be referred to herein as the “Effective Date”. The Merger shall have
the effect set forth in Delaware Law. Surviving Corporation may, at any time
after the Effective Date, take any action (including, but not limited to,
executing, delivering, filing, or recording, any document) in the name and
on
behalf of either Company or Merger Sub in order to carry out and effectuate
the
transactions contemplated by this Agreement or as required under Delaware
Law.
4.2.2. Certificate
of Incorporation.
The
Certificate of Incorporation of Company in effect at and as of the Effective
Date shall remain the
Certificate of Incorporation of Surviving Corporation after the Effective Date
without
any further modification or amendment until thereafter as may amended
as
provided therein and as permitted by Delaware Law and this Agreement (the
“Certificate”).
4.2.3. Bylaws.
The
Bylaws of Company in effect at and as of the Effective Date
7
shall
remain the Bylaws
of
the Surviving Corporation
without
any further modification or amendment until thereafter as may be amended in
accordance with Delaware Law and as provided in the Certificate and the Bylaws
of Company (the “Bylaws”).
4.2.4. Directors
and Officers of Company.
Each
and every one of the directors and officers of Company in office at and as
of
the Effective Date will retain their respective position(s) as of an on the
Effective Date, and they shall serve until their respective successors are
duly
elected or appointed and qualified.
4.2.5. Directors
and Officers of Parent.
In
accordance with the following and as reflected on Exhibit 4.2.5., attached
hereto and incorporated herein by reference:
(i) Immediately
prior to the Effective Date the directors of Parent will have taken all
necessary action to remove all officers of Parent and designate and appoint
the
individuals noted on Exhibit 4.2.5. to assume their respective officer positions
as of and at the Effective Date.
(ii) Immediately
prior to the Effective Date the directors of Parent will have taken all
necessary action to (1) appoint as directors those individuals listed on Exhibit
4.2.5.; and, (2) accept resignations from all other directors of the Company,
with said resignations and appointments to be effective as of the acceptance
of
the SEC Filings made in connection with this Section 4.2.5.
(iii) The
new
directors and officers of Parent shall retain their respective positions until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
4.3 Conversion
of Merger Sub Stock.
Subject
to the terms and conditions of this Agreement, at the Effective Date, by virtue
of the Merger and without any further action on the part of the Parties,
each
share of Merger Sub Stock issued and outstanding immediately prior to the
Effective Date shall be converted into and become one (1) validly issued, fully
paid, and nonassessable share of Surviving Corporation Common Stock.
Each
certificate evidencing ownership of shares of Merger Sub Common Stock
outstanding immediately prior to the Effective Date shall evidence ownership
of
such shares of capital stock of the Surviving Corporation,
and
such converted shares, collectively, will represent all of the issued and
outstanding Surviving Corporation Common Stock of the Surviving
Corporation.
4.4 Conversion
of Company Common Stock.
Upon
the
terms and subject to the conditions of this Agreement, at the Effective Date,
by
virtue of the Merger and without any action on the part of Merger Sub, the
Company, or the holders of any of the following securities, the following shall
occur:
4.4.1. Conversion
of Shares.
Each
share of Company Common Stock issued
and outstanding immediately prior to the Effective Date(other than any shares
of
Company Common Stock to be canceled pursuant to Section 4.4.2. or Section
4.4.3., below, and any Dissenting Shares, as defined in Section 4.6, below)
will
be canceled and extinguished and automatically converted into
8
the
right
to receive, upon surrender of the certificate(s) representing such Company
Common Stock in the manner provided in Section 5.1, below (or in the case of
a
lost, stolen or destroyed certificate, upon delivery of an affidavit, and bond,
if required, in the manner provided in Section 5.2, below), one (1) duly
authorized, validly issued, fully paid, and nonassessable shares of Parent
Common Stock. Each
Dissenting Share shall be converted into the right to receive payment from
the
Surviving Corporation with respect thereto in accordance with the provisions
of
Delaware Law. As
of the
Effective Date, all such shares of Company Common Stock will no longer be
outstanding and will automatically be cancelled and retired and will cease
to
exist, and each holder of a certificate or a certificate which immediately
prior
to the Effective Date represented outstanding shares of Company Common Stock
will cease to have any rights with respect thereto, except the right to receive
the Merger Consideration.
4.4.2. Cancellation
of Treasury and Parent-Owned Shares.
All
Company Common Stock held by the Company or owned by Merger Sub, Parent, or
any
direct or indirect wholly-owned subsidiary of the Company or of Parent
immediately prior to the Effective Date shall be canceled and extinguished
without any conversion thereof.
4.4.3. Fractional
Shares.
No
fraction of a share of Parent Common Stock will be issued by virtue of the
Merger, but in lieu thereof each holder of shares of Company Common Stock who
would otherwise be entitled to a fraction of a share of Parent Common Stock
(after aggregating all fractional shares of Parent Common Stock that otherwise
would be received by such holder) shall receive a total number of Parent Common
Stock rounded down to the closest whole number.
4.4.4. Stock
Options; Employee Stock Purchase Plans.
(i) At
the
Effective Date, by virtue of the Merger and without any action on the part
of
any holder of outstanding options to purchase Company Common Stock (the “Company
Stock Options”), each Company Stock Option, whether vested or unvested, and all
stock option plans or other equity-related plans of the Company (the “Company
Stock Plans”), insofar as they relate to Company Stock Options, shall be assumed
by Parent and the Company Stock Options shall become an option to acquire shares
of Parent Common Stock, on the same terms and conditions as were applicable
under the Company Stock Option immediately prior to the Effective Date, except
that (i) such assumed Company Stock Option shall be exercisable for that number
of whole shares of Parent Common Stock equal to the product (rounded down to
the
nearest whole number of shares of Parent Common Stock) obtained by multiplying
the number of shares of Company Common Stock issuable upon the exercise of
such
Company Stock Option immediately prior to the Effective Time by the conversion
ratio referenced in Section 4.4.1., above; and, (ii) the per share exercise
price for the shares of Parent Common Stock issuable upon exercise of such
assumed Company Stock Options shall be equal to the quotient (rounded up to
the
nearest whole cent) obtained by dividing the exercise price per share of the
Company Common Stock for which the Company Stock Option was exercisable
immediately prior to the Effective Time by the conversion ratio referenced
in
Section 4.4.1., above.
(ii) The
rights and preferences of all affected Persons under similar or related plans
or
arrangements, such as stock appreciation, phantom stock, profit participation,
or
9
other
similar rights, shall remain substantially unaffected by the Merger and shall
be
treated in a manner substantially similar to that under subparagraph (i),
above.
(iii) As
promptly as practicable after the Closing Date, Parent shall issue to each
holder of an outstanding Company Stock Option immediately prior to the Effective
Date a document evidencing the foregoing assumption of such Company Stock
Option.
4.4.5. No
Further Ownership Rights in Company Common Stock.
Payment
of the Merger Consideration shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Company Common Stock, and after
the
Effective Date, there shall be no further registration of transfers on the
records of the Surviving Corporation of the Company Common Stock which were
outstanding immediately prior to the Effective Date. If, after the Effective
Date, certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in Article V,
below.
4.5 Parent
Shares.
Each
share of Parent Common Stock issued and outstanding at and as of the Effective
Date will remain issued and outstanding.
4.6 Dissenting
Shares.
4.6.1. General.
Notwithstanding
any provision of this Agreement to the contrary, the Dissenting Shares of
each
Dissenting Stockholder shall
not
be converted into, or represent the right to receive, any shares of Parent
Common Stock under Section 4.4.1., above. Instead, Dissenting Stockholders
shall
be entitled to receive payment of the appraised value of such Dissenting Shares
held by them in accordance with the provisions of Delaware Law. However,
all
Dissenting Shares held by Dissenting Stockholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such Dissenting Shares under Delaware Law shall thereupon be deemed
to have been converted into, and to have become exchangeable for, as of the
Effective Date, the right to receive Parent Common Stock under Section 4.4.1.,
above.
4.6.2. Notice.
Company
shall give Parent (i) prompt notice of any demands for appraisal received by
Company, withdrawals of such demands, and any other instruments served pursuant
to Delaware Law and received by Company and (ii) the opportunity to direct
all
negotiations and proceedings with respect to demands for appraisal under
Delaware Law. Company shall not, except with the prior written consent of
Parent, make any payment with respect to any demands for appraisal or offer
to
settle or settle any such demands.
4.7 Taking
of Necessary Action; Further Action.
If, at
any time after the Effective Date, any further action is necessary or desirable
to carry out the purposes of this Agreement and to vest Surviving Corporation
with full right, title, and possession to all assets, property, rights,
privileges, powers, and franchises of Company and Merger Sub, the officers
and
directors of Company and Merger Sub will take all such lawful and necessary
action.
4.8 Tax-Free
Reorganization.
The
Parties intend that the Merger be treated as a tax free plan of reorganization
under Section 368(a) of the Code. The Parties shall not take a position on
10
any
Tax
Return or before any taxing authority that is inconsistent with this Section
4.8
unless otherwise required by a final and binding determination or resolution
of
a governmental body with appropriate jurisdiction, and each Party agrees to
promptly notify the other Parties of any assertion by a taxing authority of
a
position that is inconsistent with this Section 4.8. No Party represents or
warrants that the Merger will qualify as reorganization under the
Code.
V
SHARE
AND CASH ISSUANCE
5.1 Issuance
of Parent Common Stock.
At the
Closing, Parent shall issue share certificates of Parent Common Stock in a
total
amount equal to the conversion
ratio referenced in Section 4.4.1. times
the
number of outstanding shares of Company Common Stock (other than any Dissenting
Shares). The Parent Common Stock shall be issued hereunder to each record holder
of outstanding Company Common Stock, in the form of a share certificate
representing the number of shares of Parent Common Stock to which he is
entitled, in exchange for his surrender of his share certificates which
represented his shares of Company Common Stock.
5.2 Lost,
Stolen, or Destroyed Certificates.
In the
event that any certificates shall have been lost, stolen, or destroyed, Parent
shall transfer the Merger Consideration payable with respect to such lost,
stolen, or, destroyed certificates upon the making of an affidavit of that
fact
by the holder thereof. However,
Parent
may, in its sole discretion and as a condition precedent to the payment of
such
portion of the Merger Consideration, require the owner of such lost, stolen,
or
destroyed certificates to deliver a bond in such reasonable and customary amount
as it may direct as indemnity against any claim that may be made against Parent
or Surviving Corporation with respect to the certificates alleged to have been
lost, stolen or destroyed.
5.3 Cash
Payment for Dissenting Shares.
At
the
Closing, Parent shall tender all necessary cash payments for the Dissenting
Shares, as required under Section 4.6, above. In connection therewith,
Parent
and Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to
any
holder or former holder of Company Common Stock such amounts as may be required
to be deducted or withheld therefrom under the Code or under any provision
of
state, local, or foreign tax law or under any other applicable legal
requirement. To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having been
paid to the person to whom such amounts would otherwise have been
paid.
5.4 Surrender
of Merger Sub Share Certificates.
Promptly after the Effective Date, Surviving Corporation shall issue, as
appropriate, the correct number of shares of Company Common Stock to holders
of
Merger Sub Stock.
VI
REPRESENTATIONS
AND WARRANTIES BY PARENT
Parent
hereby represents and warrants to Company as follows:
11
6.1 Generally.
Parent
represents and warrants to Company that the statements contained in this Article
VI are correct and complete as of the Effective Date and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Article
VI), except as expressly set forth to the contrary herein and in Schedules
attached to this Agreement, corresponding to the lettered and numbered
paragraphs contained in this Article VI.
6.2 Organization
and Qualification.
Parent
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Nevada. Parent is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required.
6.3 Subsidiaries.
Schedule 6.3, attached hereto and incorporated herein by reference, sets forth
for each subsidiary of Parent (i) its name and jurisdiction of incorporation,
and (ii) the percentage of such Person’s issued and outstanding shares of
capital stock owned by Parent.
6.4 Authorization.
6.4.1. Operation
of Business.
Parent
has the requisite corporate power and authority and all requisite licenses,
permits and franchises necessary to own and operate its properties and to carry
on its business as now being conducted.
6.4.2 Execution
of Agreement.
Parent
has the requisite corporate power and authority and
has
obtained all approvals and consents necessary to enter
into and carry out the terms and conditions of this Agreement, as well as all
transactions contemplated hereunder. All corporate proceedings have been taken
and all corporate authorizations have been secured which are necessary to
authorize the execution, delivery and performance by Parent of this Agreement.
This Agreement has been duly and validly executed and delivered by Parent and
constitutes the valid and binding obligations of Parent, enforceable in
accordance with the respective terms.
6.5 Effect
of Agreement.
As of
the Closing, the consummation by Parent of the transactions herein contemplated,
including the execution, delivery and consummation of this Agreement, will
comply with all applicable law and will not:
(a) Violate
any judgment, statute, law,
code,
act, order,
writ, rule, ordinance, regulation, governmental
consent or governmental requirement, or
determination or decree of any arbitrator, court, or other governmental agency
or administrative body, which
now
or at any time hereafter may be applicable to and enforceable against the
relevant party, work, or activity in question or any part thereof (collectively,
“Requirement of Law”) applicable to or binding upon Parent or the Parent Common
Stock to be issued hereunder;
(b) Violate
(i)
the
terms of the Certificate of Incorporation or Bylaws of Parent; or, (ii) any
material agreement, contract, mortgage, indenture, ▇▇▇▇, ▇▇▇▇, note, or other
material instrument or writing binding upon Parent or to which Parent is
subject;
(c) Accelerate
or constitute an event entitling the holder of any indebtedness of
12
Parent
to
accelerate the maturity of such indebtedness or to increase the rate of interest
presently in effect with respect to such indebtedness; or
(d) Result
in
the breach of, constitute a default under, constitute an event which with notice
or lapse of time, or both, would become a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any part
of
the assets of Parent or
any
other assets of Parent under any agreement, commitment, contract (written or
oral) or other instrument to which Parent is a party, or by which any of its
assets (or any part thereof) is bound or affected.
6.6 Consents.
No
consents, approvals or other authorizations or notices, other than those which
have been obtained and are in full force and effect, are required by any state
or federal regulatory authority or other Person or entity in connection with
the
execution and delivery of this Agreement and the performance of any obligations
contemplated hereunder.
6.7 Legal
Proceedings.
Except
as
set forth in the SEC Filings of Parent and in Schedule 6.7, attached hereto
and
incorporated herein by reference, there
is
no
claim, legal action, suit, arbitration, investigation or hearing, notice of
claims or other legal, administrative or governmental proceedings pending or
to
the best knowledge of Parent, threatened against Parent (or in which Parent
is
plaintiff or otherwise a party thereto), and, to the best knowledge of Parent,
there are no facts existing which might result in any such claim, action, suit,
arbitration, investigation, hearing, notice of claim or other legal,
administrative or governmental proceeding. Parent has not waived any statute
of
limitations or other affirmative defense with respect to any of its liabilities.
There is no continuing order, injunction or decree of any court, arbitrator
or
governmental or administrative authority to which Parent is a party or to which
it or any of its assets are subject. Parent has not been permanently or
temporarily enjoined or barred by order, judgment or decree of any court or
other tribunal or any agency or regulatory body from engaging in or continuing
any conduct or practice.
6.8 Regulatory
Compliance.
To the
best Knowledge of Parent, it has not violated any Requirement of Law, the
violation of which would be reasonably likely to have a Material Adverse Effect.
Further, Parent and each Subsidiary have met the minimum funding requirements
of
ERISA with respect to any employee benefit plans subject to ERISA, and no event
has occurred resulting from Parent’s failure to comply with ERISA that could
result in Parent’s incurring any material liability. Parent is not an
“investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940.
6.9 Capitalization.
Parent
is authorized to issue seventy five million
(75,000,000) shares of Parent Common Stock. Two million eight hundred
eighty-four thousand five hundred fifty (2,884,550) shares of Parent Common
Stock are issued and outstanding. All of the issued and outstanding Parent
Common Stock has been duly authorized and is validly issued, fully paid, and
nonassessable. Other than as otherwise provided for herein or reflected Schedule
6.9, attached hereto and incorporated herein by reference, there are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require Parent to issue, sell, or otherwise cause to become
outstanding any of its capital stock.
6.10 Parent
Common Stock to be Issued.
The
Parent Common Stock to be issued pursuant to the provisions of this Agreement
will, upon such transfer, be duly authorized, legally and
13
validly
issued, fully paid and nonassessable, and free
and
clear of all liens, mortgages, pledges, and other encumbrances of any nature,
unless expressly provided herein to the contrary.
6.11 Employee
Benefit Plans.
Except
as set forth in the SEC Filings of Parent and in Schedule 6.11, attached hereto
and incorporated herein by reference, Parent is not a party to any written
or
oral (i) contract with any labor union, (ii) bonus, pension, profit-sharing,
retirement, deferred compensation, savings, stock purchase, stock option,
hospitalization, insurance or other plan providing employees benefits, (iii)
employment, agency, consulting or similar contract which cannot be terminated
by
it in one hundred twenty (120) days or less, without cost, or (iv) any other
plan, agreement or arrangement governed by the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”).
6.12 Permits
and Licenses.
Parent
has all licenses and permits (federal, state, and local) required by
governmental authorities to own, operate and carry on its business as now being
conducted, and such licenses and permits are in full force and effect. No
violations are or have been recorded in respect to the licenses or permits,
included but not limited to fire and health and safety law violations, and
no
proceeding is pending or threatened looking toward the revocation or limitation
of any of them.
6.13 Customers
and Suppliers.
The
books and records of Parent contain a correct and complete list of each of
the
customers and suppliers of Parent who have dealt with Parent during the last
five (5) years (the “Customers and Suppliers”). Parent has taken all
commercially reasonable steps to maintain the confidentiality of the Customers.
To Parent’s best Knowledge:
(a) None
of
the Customers or Suppliers, or any other person or entity having material
business dealings with Parent will or may cease to continue such relationship
with Parent;
(b) None
of
the Customers or Suppliers, or any other person or entity having material
business dealings with Parent will or may substantially reduce the extent of
such relations with Parent at any time from or after the Closing;
(c) There
are
no other existing or contemplated material modifications or changes in the
business relationship of any Customers or Suppliers with Parent;
(d) There
are
no existing conditions or state of facts or circumstances which have or would
have a Material Adverse Effect on the relationship of Parent with Customers
or
Suppliers after Closing, or which has prevented or will prevent such business
from being carried on after the Closing in essentially the same manner as it
is
currently carried on.
6.14 Leases
and Similar Agreements.
Except
as set forth in the SEC Filings of Parent and in Schedule 6.14, attached hereto
and incorporated herein by reference, Parent is not a party to, nor are any
of
its assets bound by or subject to, any leases or other similar agreements or
instruments, whether as lessor or lessee. With regard to all such disclosed
leases and similar agreements, Parent has delivered to Company any and all
consents or waivers of other parties necessary for the continuation of the
leases and similar agreements upon the same terms and conditions in effect
as of
the Closing.
14
6.15 Material
Agreements.
Except
as set forth in the SEC Filings of Parent and in Schedule 6.15, attached hereto
and incorporated herein by reference, Parent is not a party to, nor are any
of
its assets bound by or subject to, any of the following:
(a) license
agreement, assignment or contract (whether as licensor or licensee, assignor
or
assignee) relating to trademarks, trade names, patents or copyrights (or
applications therefore), know-how or technical assistance, or other proprietary
rights (other than trademark agreements which are entered into in the ordinary
course of Parent’s business in conjunction with sales agreements;
(b) agreement
or other arrangement for the sales of goods or services by Parent to any
government or governmental authority (other than pursuant to open purchase
orders issued by such entities);
(c) agreement
with any vendor, distributor, dealer, sales agent or representative other than
contracts or orders for the purchase or sale of goods made in the usual and
Ordinary Course of Business at an aggregate price per contract or order of
less
than $10,000 and a terms of less than ninety days under any such contract or
order;
(d) agreement
with any supplier or customer with respect to discounts (other than those
reflected on Parent’s current price lists) or allowances or extended payment
terms;
(e) joint
venture or partnership agreement with any other person;
(f) agreement
which restricts Parent from doing business anywhere in the world;
or
(g) long-term
services agreement.
6.16 Employment
Agreements.
Except
as set forth in the SEC Filings of Parent and in Schedule 6.16, attached hereto
and incorporated herein by reference, and except as otherwise provided for
herein, Parent is not a party to any employment agreement, independent
contractor agreement, or similar arrangement or agreement, whether it be reduced
to written form or an oral promise.
6.17 Restrictive
Covenant Agreements.
Schedule 6.17, attached hereto and incorporated herein by reference, represents
a list of all restrictive covenant agreements and arrangements held by Parent
with regard to its business. Copies of all such contracts are also attached
hereto as part of Schedule 6.17.
6.18 Accounts
Receivable.
All
accounts receivable of Parent arose from valid sales transactions in the
Ordinary Course of Business and represent valid obligations due Parent, and
represent valid obligations due Parent, and are collectible in the Ordinary
Course of Business in the aggregate recorded amounts thereof in accordance
with
their terms.
6.19 Insurance
Policies.
All
insurance policies maintained by Parent on its assets, business, officers and
personnel provide adequate and sufficient liability and property damage coverage
commensurate with the business practices of Parent. Parent does not conduct
any
business which would result in the cancellation of, or a material increase
in
the premiums, for any of its insurance policies.
15
6.20 Environmental
Matters.
To the
best Knowledge of Parent, with regard to matters of environmental
compliance:
(a) Parent
has conducted and is conducting its business, and has used and is using its
properties, whether currently owned, operated or leased or owned, operated
or
leased by Parent at any time in the past; and at the time of acquisition of
any
security interest, all properties in which Parent has a security interest had
always been used, in compliance with all applicable federal, and state and
local
environmental laws and regulations, except where the failure to comply with
such
laws and regulations, in the aggregate, has not had and could not have a
material adverse effect on the condition (financial or otherwise), business
or
properties of Parent.
(b) Neither
Parent nor any property currently owned, operated or leased or which has been
owned, operated or leased by Parent, is subject to any existing, pending or
threatened investigation, action or proceeding, including any notice of
violation, by any governmental authority regarding contamination of any part
of
such property or infractions of any law, statute, ordinance or regulation or
any
license or permit issued by any government agency pertaining to health,
industrial hygiene or environmental safety or environmental conditions on,
under
or about such property, except where such investigations, actions, proceedings,
notifications or infractions, in the aggregate, have not had and could not
have
a material adverse effect on the condition (financial or otherwise), business
or
properties of Parent.
(c) Except
as
set forth in Schedule 6.20,
attached hereto and incorporated herein by reference, there are no underground
storage tanks or toxic or hazardous wastes, substances, or materials, or
pollutants or contaminants, including asbestos, presently located on or under
any property which is currently or has been owned, operated or leased by Parent;
there were no underground storage tanks or toxic or hazardous wastes,
substances, or materials, or pollutants or contaminants, including asbestos,
located on or under any property in which Parent or Parent has or had an
interest. As used herein, the terms toxic or hazardous wastes, substances or
materials, pollutants and contaminants mean any material which is or becomes
during the term of this Agreement regulated or controlled as a hazardous or
toxic waste or environmental pollutant under any federal, state or local law,
ordinance, order, decree or regulation currently in effect and applicable to
Parent or any property owned, operated or leased by Parent.
6.21 Other
Arrangements.
Parent
is not a party to any contract, commitment or agreement, nor are any of its
assets subject to, or bound or affected by, any order, judgment, decree, law,
statute, ordinance, rule, regulation or other restriction of any kind or
character which is not applicable to Parent generally, which would, individually
or in the aggregate, cause a Material Adverse Effect on Parent. Parent is also
not a party or subject to any agreement, contract or other obligation which
would require the making of any payment, other than payments contemplated by
this Agreement, to any other person as a result of the consummation of the
transactions contemplated herein.
6.22 Undisclosed
Liabilities.
Parent
does not have any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes, except for (i) liabilities set forth in the Parent
Financial Statements, and (ii) liabilities which have arisen after the date
of
the Parent Financial Statements in the Ordinary Course of
16
Business
(none of which results from, arises out of, relates to, is in the nature of,
or
was caused by any breach of contract, breach of warranty, tort, infringement,
or
violation of law).
6.23 Material
Defaults.
Parent
is not in material default, or alleged to be in default, under any material
agreement, contract, lease, mortgage, commitment, instrument or obligation,
and
no other party to any agreement, contract, lease, mortgage, commitment,
instrument or obligation to which Parent is a party is in default thereunder,
which default would materially and adversely affect the properties, assets,
business or prospects of Parent.
6.24 Tax
Returns and Disputes.
Parent
has filed all Tax Returns (federal, state and local) required to be filed by
it,
and
all
such Tax Returns filed are complete and accurate in all material respects.
Parent has paid
all
Taxes shown to be due and payable on the returns or any assessments or penalties
received by it and all other Taxes (federal, state and local) due and payable
by
it. Parent
has collected and withheld all Taxes which it has been required to collect
or
withhold and has timely submitted all such collected and withheld amounts to
the
appropriate authorities. Parent is in compliance with the back-up withholding
and information reporting requirements under the Code and any state, local
or
foreign laws, and the rules and regulations thereunder.
6.25 Title
to Assets.
Parent
has good and marketable title to all of its assets, free and clear of all liens,
mortgages, conditional sale and other title retention agreements, pledges,
assessments, tax liens and other encumbrances of any nature, except as expressly
disclosed on Schedule 6.25, attached hereto and incorporated herein by
reference.
6.26 Condition
of Assets.
The
assets of Parent are in good operating condition and repair, subject to
reasonable wear and tear, constitute all of the assets used in the conduct
of
the business, and are sufficient for the proper operation of the Ordinary Course
of Business.
6.27 Intellectual
Property Assets.
The
Intellectual Property Assets are all those necessary for the operation of the
business of Parent as it is currently conducted, and are listed on Schedule
6.27, attached hereto and incorporated herein by reference. Parent is the owner
of all right, title, and interest in and to each of the Intellectual Property
Assets, free and clear of all liens, security interests, charges, encumbrances,
equities, and other adverse claims, and has the right to use without payment
to
a third party all of the Intellectual Property Assets. To the extent that any
employee or former employee of Parent has developed or invented or otherwise
produced any of the Intellectual Property Assets, all such former and current
employees of Parent have executed written contracts that assign to Parent all
rights to any inventions, improvements, discoveries, or information relating
to
the Intellectual Property Assets. No such employee or former employee has
entered into any contract that restricts or limits in any way the scope or
type
of work in which the employee may be engaged or requires the employee to
transfer, assign, or disclose information concerning his work to anyone other
than Parent. With regard to different aspects of the Intellectual Property
Assets:
6.27.1. Patents.
(i) All
of
the issued Patents are currently in compliance with formal legal requirements
(including payment of filing, examination, and maintenance fees and proofs
of
working or use), are valid and enforceable, and are not subject to any
maintenance fees or Taxes or
17
actions
falling due within ninety (90) days after the Closing Date.
(ii) No
Patent
has been or is now involved in any interference, reissue, reexamination, or
opposition proceeding. To Parent’s Knowledge, there is no potentially
interfering patent or patent application of any third party.
(iii) No
Patent
is infringed or, to Parent’s Knowledge, has been challenged or threatened in any
way. None of the products manufactured and sold, nor any process or know-how
used, by Parent infringes or is alleged to infringe any patent or other
proprietary right of any other Person.
(iv) All
products made, used, or sold under the Patents have been marked with the proper
patent notice.
6.27.2. Trademarks.
(i) All
Marks
that have been registered with the United States Patent and Trademark Office
are
currently in compliance with all formal legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject to any maintenance
fees or Taxes or actions falling due within ninety days after the Closing
Date.
(ii) No
▇▇▇▇
has been or is now involved in any opposition, invalidation, or cancellation
and, to Parent’s Knowledge, no such action is Threatened with the respect to any
of the Marks.
(iii) To
Parent’s Knowledge, there is no potentially interfering trademark or trademark
application of any third party.
(iv) No
▇▇▇▇
is infringed or, to Parent’s Knowledge, has been challenged or threatened in any
way. None of the Marks used by Parent infringes or is alleged to infringe any
trade name, trademark, or service ▇▇▇▇ of any third party.
(v) All
products and materials containing a ▇▇▇▇ ▇▇▇▇ the proper federal registration
notice where permitted by law.
6.27.3. Copyrights.
(i) All
the
Copyrights have been registered and are currently in compliance with formal
legal requirements, are valid and enforceable, and are not subject to any
maintenance fees or Taxes or actions falling due within ninety days after the
date of Closing.
(ii) No
Copyright is infringed or, to Parent’s Knowledge, has been challenged or
threatened in any way. None of the subject matter of any of the Copyrights
infringes or is alleged to infringe any copyright of any third party or is
a
derivative work based on the work of a
18
third
party.
(iii) All
works
encompassed by the Copyrights have been marked with the proper copyright
notice.
6.27.4. Trade
Secrets.
(i) With
respect to each Trade Secret, the documentation relating to such Trade Secret
is
current, accurate, and sufficient in detail and content to identify and explain
it and to allow its full and proper use without reliance on the Knowledge or
memory of any individual.
(ii) Parent
has taken all reasonable precautions to protect the secrecy, confidentiality,
and value of the Trade Secrets.
(iii) Parent
has good title and an absolute (but not necessarily exclusive) right to use
the
Trade Secrets. The Trade Secrets are not part of the public Knowledge or
literature, and, to Parent’s Knowledge, have not been used, divulged, or
appropriated either for the benefit of any Person or to the detriment of Parent.
No Trade Secret is subject to any adverse claim or has been challenged or
threatened in any way.
6.28 Financial
Condition.
The
financial statements of Parent as reflected in the most recently filed Parent’s
SEC Filings requiring to contain financial statements (collectively, the “Parent
Financial Statements”) present fairly the financial position, results of
operations, and cash flows of Parent at the dates and for the fiscal periods
then ended, in accordance with GAAP. There has been no Material Adverse Change
in the Parent Financial Statements.
6.29 No
Other Material Adverse Change.
Since
01 January 2005 there has been no Material Adverse Change in the business,
financial condition, results of operations, assets, or liabilities of Parent,
including but not limited to the following:
(a) Any
damage, destruction or loss (whether or not covered by insurance) materially
and
adversely affecting the properties, assets, business or prospects of
Parent;
(b) Any
change in the accounting methods or practices followed by Parent or any change
in the depreciation or amortization policies or rates adopted by Parent (whether
or not presently outstanding), except liabilities incurred, and obligations
under agreements entered into, in the ordinary course of business;
or
(c) Any
sale,
lease, abandonment or other disposition by Parent, other than in the ordinary
course of business, of any machinery, equipment or other operating properties
directly or indirectly related to Parent.
6.30 Other
Matters.
Parent
has not taken and has not agreed to take any action, and has no Knowledge of
any
fact or circumstances that would materially impede or delay the consummation
of
the transactions contemplated hereby.
6.31 Disclosure.
The
representations and warranties of Parent contained in this Agreement
19
and
in
the SEC Filings of Parent and in any agreement, certificate, affidavit,
statutory declaration or other document delivered or given pursuant to this
Agreement are true and correct and do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained in such representations and warranties not misleading to the
Stockholders.
6.32 Advice
of Changes.
Between
the Effective Date hereof and the Closing Date, Parent shall promptly advise
Company in writing of any fact which, if existing or known at the Effective
Date, would have been required to be set forth or disclosed in or pursuant
to
this Agreement or of any fact which, if existing or known at the Effective
Date,
would have made any of the representations contained herein untrue.
6.33 Lack
of Fairness
Opinion.
The
Board of Directors of Parent has made a well informed, independent, good faith
decision to not obtain any type of written opinion from a qualified professional
that the Merger is fair, from a financial point of view.
6.34 Tax-Free
Transaction.
Neither
Parent nor any of its Subsidiaries knows of any fact or has taken, or failed
to
take, any action that could prevent the Merger from qualifying as a tax-free
reorganization within the meaning of Section 368(a) of the Code.
VII
REPRESENTATIONS
AND WARRANTIES BY COMPANY
Company
hereby represents and warrants to Parent and Merger Sub as follows:
7.1 Generally.
Company
hereby represents and warrants to Parent and Merger Sub that the statements
contained in this Article VII are correct and complete as of the Effective
Date
and will be correct and complete as of the Closing Date (as though made then
and
as though the Closing Date were substituted for the date of this Agreement
throughout this Article VII), except as expressly set forth to the contrary
herein and in Schedules attached to this Agreement, corresponding to the
lettered and numbered paragraphs contained in this Article VII.
7.2 Organization
and Good Standing.
Company
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Delaware.
7.3 Subsidiaries.
Schedule 7.3, attached hereto and incorporated herein by reference, sets forth
for each subsidiary of Company (i) its name and jurisdiction of incorporation,
and (ii) the percentage of such Person’s issued and outstanding shares of
capital stock owned by Company.
7.4 Authorization.
7.4.1. Operation
of Business.
Company
has the requisite corporate power and authority and all requisite licenses,
permits and franchises necessary to own and operate its properties and to carry
on its business as now being conducted.
7.4.2 Execution
of Agreement.
Company
has the requisite corporate power and authority and
has
obtained all approvals and consents necessary to enter
into and carry out the terms
20
and
conditions of this Agreement, as well as all transactions contemplated
hereunder. All corporate proceedings have been taken and all corporate
authorizations have been secured which are necessary to authorize the execution,
delivery and performance by Company of this Agreement. This Agreement has been
duly and validly executed and delivered by Company and constitutes the valid
and
binding obligations of Company, enforceable in accordance with the respective
terms, provided,
however,
that
Company cannot consummate the Merger unless and until it receives the Requisite
Stockholder Approval.
7.5 Effect
of Agreement
As of
the Closing, the consummation by Company of the transactions herein
contemplated, including the execution, delivery and consummation of this
Agreement, will comply with all applicable law and will not:
(a) Violate
any
Requirement of Law applicable to or binding upon Company;
(b) Violate
(i)
the
terms of the Certificate of Incorporation or Bylaws of Company; or, (ii) any
material agreement, contract, mortgage, indenture, ▇▇▇▇, ▇▇▇▇, note, or other
material instrument or writing binding upon Company or to which Company is
subject;
(c) Accelerate
or constitute an event entitling the holder of any indebtedness of Company
to
accelerate the maturity of such indebtedness or to increase the rate of interest
presently in effect with respect to such indebtedness; or
(d) Result
in
the breach of, constitute a default under, constitute an event which with notice
or lapse of time, or both, would become a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of
the
assets or any other properties of Company under any agreement, commitment,
contract (written or oral) or other instrument to which Company is a party
or by
which it is bound or affected.
7.6 Consents.
No
consents, approvals or other authorizations or notices, other than those which
have been obtained and are in full force and effect, are required by any state
or federal regulatory authority or other Person or entity in connection with
the
execution and delivery of this Agreement and the performance of any obligations
contemplated hereunder.
7.7 Legal
Proceedings.
There
are no legal, administrative, arbitral or other actions, claims, suits or
proceedings or investigations instituted or pending or, to the Knowledge of
Company’s management, threatened against Company, or against any property,
asset, interest or right of Company, that might reasonably be expected to have
a
Material Adverse Effect or that might reasonably be expected to threaten or
impede the consummation of the transactions contemplated by this
Agreement.
7.8 Regulatory
Compliance.
To the
best Knowledge of Company, it has not violated any Requirement of Law, the
violation of which would be reasonably likely to have a Material Adverse Effect.
Further, Company and each Subsidiary have met the minimum funding requirements
of ERISA with respect to any employee benefit plans subject to ERISA, and no
event has occurred resulting from Company’s failure to comply with ERISA that
could result in Company’s incurring any material liability. Company is not an
“investment company” or a company “controlled” by an
21
“investment
company” within the meaning of the Investment Company Act of 1940.
7.9 Capitalization.
Company
is authorized to issue fifty million (50,000,000)
shares of Company Stock. Five million eight hundred seventy eight thousand
three
hundred thirty six (5,878,336) shares of Company Stock are issued and
outstanding. All of the issued and outstanding Company Stock has been duly
authorized and is validly issued, fully paid, and nonassessable. Other than
as
otherwise provided for herein or reflected Schedule 7.9, attached hereto and
incorporated herein by reference, there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require Company
to
issue, sell, or otherwise cause to become outstanding any of its capital stock.
7.10 Disclosure.
No
representation or warranty made by Company in this Agreement or in its SEC
Filings or in any writing furnished or to be furnished pursuant to or in
connection with this Agreement knowingly contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
required to make the statements herein or therein contained not misleading.
7.11 Material
Defaults.
Company
is not in material default, or alleged to be in default, under any material
agreement, contract, lease, mortgage, commitment, instrument or obligation,
and
no other party to any agreement, contract, lease, mortgage, commitment,
instrument or obligation to which Company is a party is in default thereunder,
which default would materially and adversely affect the properties, assets,
business or prospects of Company.
7.12 Tax
Returns and Disputes.
Company
has filed all Tax Returns (federal, state and local) required to be filed by
it,
has paid all Taxes shown to be due and payable on the returns or any assessments
or penalties received by it and all other Taxes (federal, state and local)
due
and payable by it. There are no audits pending and there are no present disputes
as to Taxes of any nature payable by Company.
7.13 Financial
Condition.
The
audited financial statements of Company for the period ended December 31, 2003
and the unaudited financial statements of Company for the nine months ended
September 30, 2004 (collectively, the “Company Financial Statements”) present
fairly the financial position, results of operations and cash flows of Company
at the dates and for the fiscal periods then ended, in accordance with GAAP
(except, with respect to the unaudited interim Company Financial Statements,
for
the absence of footnotes thereto and subject to customary year end adjustments).
7.14 No
Material Adverse Change.
Since
September 30, 2004, there has been no Material Adverse Change in the business,
financial condition, results of operations, assets, or liabilities of
Company.
7.15 Disclosure.
The
representations and warranties of Company contained in this Agreement and in
any
agreement, certificate, affidavit, statutory declaration or other document
delivered or given pursuant to this Agreement are true and correct and do not
contain any untrue statement of a material fact or omit to state a material
fact
necessary to make the statements
22
contained
in such representations and warranties not misleading to Parent.
7.16 Other
Matters.
Company
has not taken and has not agreed to take any action, and has no Knowledge of
any
fact or circumstances that would materially impede or delay the consummation
of
the transactions contemplated under this Agreement.
7.17 Advice
of Changes.
Between
the Effective Date hereof and the Closing Date, Company shall promptly advise
Parent in writing of any fact which, if existing or known at the Effective
Date,
would have been required to be set forth or disclosed in or pursuant to this
Agreement or of any fact which, if existing or known at the Effective Date,
would have made any of the representations contained herein untrue.
7.18 Lack
of Fairness
Opinion.
The
Board of Directors of Company has made a well informed, independent, good faith
decision to not obtain any type of written opinion from a qualified professional
that the Merger is fair, from a financial point of view.
7.19 Tax-Free
Transaction.
Neither
Company nor any of its Subsidiaries knows of any fact or has taken, or failed
to
take, any action that could prevent the Merger from qualifying as a tax-free
reorganization within the meaning of Section 368(a) of the Code.
VIII
REPRESENTATIONS
AND WARRANTIES BY MERGER SUB
Parent
and Merger Sub, jointly and severally, hereby represent and warrant to Company
as follows:
8.1 Generally.
Parent
and Merger Sub, jointly and severally, hereby represent and warrant to Company
that the statements contained in this Article VIII are correct and complete
as
of the Effective Date and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Article VIII), except as expressly set
forth to the contrary herein and in Schedules attached to this Agreement,
corresponding to the lettered and numbered paragraphs contained in this Article
VIII.
8.2 Organization
and Qualification.
Merger
Sub is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware. Merger Sub is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required.
8.3 Capitalization.
The
entire authorized capital stock of Merger Sub consists of one thousand (1,000)
shares of Merger Sub Stock, of which all one thousand (1,000) shares of Merger
Sub Stock are issued and outstanding. All of the issued and outstanding shares
of Merger Sub Stock have been duly authorized and are validly issued, fully
paid, and nonassessable. Other than as reflected Schedule 8.3, attached hereto
and incorporated herein by reference, there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require Merger
Sub
to issue, sell, or otherwise cause to
23
become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights
with
respect to Merger Sub, other than as reflected on Schedule 8.3.
8.4 Authorization.
8.4.1. Operation
of Business.
Merger
Sub has the requisite corporate power and authority and all requisite licenses,
permits and franchises necessary to own and operate its properties and to carry
on its business as now being conducted. Merger Sub is also duly qualified and
in
good standing as a foreign corporation authorized to do business in every
jurisdiction in which it owns or leases properties, or conducts any business,
so
as to require qualification.
8.4.2 Execution
of Agreement.
Merger
Sub has the requisite corporate power and authority to enter into and carry
out
the terms and conditions of this Agreement, as well as all transactions
contemplated hereunder. All corporate proceedings have been taken and all
corporate authorizations have been secured which are necessary to authorize
the
execution, delivery, and performance by Merger Sub of this Agreement. This
Agreement has been duly and validly executed and delivered by Merger Sub and
constitutes the valid and binding obligations of Merger Sub, enforceable in
accordance with the respective terms, provided,
however,
that
Merger Sub cannot consummate the Merger unless and until it receives the
Requisite Stockholder Approval.
8.5 Effect
of Agreement.
As of
the Closing, the consummation by Merger Sub of the transactions herein
contemplated, including the execution, delivery and consummation of this
Agreement, will comply with all applicable law and will not:
(a) Violate
any
Requirement of Law applicable to or binding upon Merger Sub;
(b) Violate
(i)
the
terms of the Certificate of Incorporation or Bylaws of
Merger
Sub;
or,
(ii) any material agreement, contract, mortgage, indenture, ▇▇▇▇, ▇▇▇▇, note,
or
other material instrument or writing binding upon Merger
Sub
or to
which Merger
Sub
is
subject;
(c) Accelerate
or constitute an event entitling the holder of any indebtedness of Merger
Sub
to
accelerate the maturity of such indebtedness or to increase the rate of interest
presently in effect with respect to such indebtedness; or
(d) Result
in
the breach of, constitute a default under, constitute an event which with notice
or lapse of time, or both, would become a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of
the
assets or any other properties of Merger
Sub
under
any agreement, commitment, contract (written or oral) or other instrument to
which Merger
Sub
is a
party or by which it is bound or affected.
8.6 Legal
Proceedings.
Except
as set forth in Schedule 8.6, attached hereto and incorporated herein by
reference, there is no claim, legal action, suit, arbitration, investigation
or
hearing, notice of claims or other legal, administrative or governmental
proceedings pending or to the best knowledge of Merger Sub, threatened against
Merger
Sub
(or in
which Merger
Sub
is
plaintiff or otherwise a party thereto), and, to the best knowledge
of
Merger
Sub,
there
are no facts existing which might result in any such claim, action, suit,
arbitration, investigation, hearing, notice of claim or other
24
legal,
administrative or governmental proceeding. Merger
Sub
has not
waived any statute of limitations or other affirmative defense with respect
to
any of its liabilities. There is no continuing order, injunction or decree
of
any court, arbitrator or governmental or administrative authority to which
Merger
Sub
is a
party or to which it or any of its assets are subject. Merger
Sub
has not
been permanently or temporarily enjoined or barred by order, judgment or decree
of any court or other tribunal or any agency or regulatory body from engaging
in
or continuing any conduct or practice.
8.7 Material
Agreements and Arrangement.
Except
as set forth in Schedule 8.7, attached hereto and incorporated herein by
reference, Merger
Sub
is not a
party to, nor are any of its assets bound by or subject to, any contract,
commitment, agreement, order, judgment, decree, law, statute, ordinance, rule,
regulation, or other restriction of any kind or character which would,
individually or in the aggregate, result in a Material Adverse Change to
Merger
Sub.
Merger
Sub
is also
not a party or subject to any agreement, contract or other obligation which
would require the making of any payment, other than payments contemplated by
this Agreement, to any other Person as a result of the consummation of the
transactions contemplated herein.
8.8 Undisclosed
Liabilities.
Merger
Sub
does not
have any liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due), including any liability
for
taxes, except for those set forth on Schedule 8.8, attached hereto and
incorporated herein by reference.
8.9 Disclosure.
No
representation or warranty made by Merger Sub in this Agreement or in any
writing furnished or to be furnished pursuant to or in connection with this
Agreement knowingly contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact required to make the
statements herein or therein contained not misleading. Merger Sub has disclosed
to Company all material information known to it related to Merger
Sub.
8.10 Material
Defaults.
Merger
Sub is not in material default, or alleged to be in default, under any material
agreement, contract, lease, mortgage, commitment, instrument or obligation,
and
no other party to any agreement, contract, lease, mortgage, commitment,
instrument or obligation to which Merger Sub is a party is in default
thereunder, which default would materially and adversely affect the properties,
assets, business, or prospects of Merger Sub.
8.11 Other
Matters.
Merger
Sub has not taken and has not agreed to take any action, and has no Knowledge
of
any fact or circumstances that would materially impede or delay the consummation
of the transactions contemplated under this Agreement.
8.12 Advice
of Changes.
Between
the Effective Date hereof and the Closing Date, Merger Sub shall promptly advise
Company in writing of any fact which, if existing or known at the Effective
Date, would have been required to be set forth or disclosed in or pursuant
to
this Agreement or of any fact which, if existing or known at the Effective
Date,
would have made any of the representations contained herein untrue.
25
IX
CONDUCT
OF BUSINESS PRIOR TO CLOSING
9.1 Conduct
Prior to Closing.
Parent
hereby covenants and agrees that, prior to the Closing, unless the prior written
consent of Company shall have been obtained, which consent shall not be
unreasonably withheld, and except as otherwise contemplated in this Agreement,
Parent and Merger Sub shall both operate its respective business only in the
usual, regular, and Ordinary Course of Business and in accordance with its
prior
practices, and shall use its reasonable best efforts to preserve intact its
business organizations and assets and maintain its rights, franchises, and
business and customer relations necessary to run its business as currently
run.
9.2 Forbearances.
From
the
Effective Date until the Closing, Parent covenants and agrees to ensure that
neither Parent nor Merger Sub will (other than as contemplated in this
Agreement) do any of the following without the prior written consent of Company
acting in good faith:
(a) declare,
set aside, make or pay any dividend or other distribution in respect of its
capital stock or otherwise purchase or redeem, directly or indirectly, any
shares of its capital stock;
(b) issue,
sell or deliver or enter into any agreement to issue, sell or deliver any shares
of its capital stock or any options, warrants, or other rights, agreements,
commitments, arrangements or understandings of any kind, contingent or
otherwise, to purchase, sell or deliver any such shares, or any securities
convertible into or exchangeable for any such shares, or effect any stock split,
or otherwise change, combine or reclassify its authorized
capitalization;
(c) incur
any
indebtedness or issue or sell any debt securities or prepay any
debt;
(d) mortgage,
pledge or otherwise subject to any material lien or lease, any of its properties
or assets, tangible or intangible or permit or suffer any such property or
asset
to be subjected to any material lien or lease; or license or dispose of any
material assets, except in the Ordinary Course of Business consistent with
its
prior practice;
(e) forgive
or cancel any debts or claims, or waive any rights, except for fair
value;
(f) modify
or
extend the current term of any material agreement, or waive any material rights
thereunder;
(g) pay
any
bonus to any employee or agent or contractor, or grant to any employee or agent
or contractor any increase in compensation except in the Ordinary Course of
Business consistent with its prior practice, or enter into any employment,
severance, termination or similar agreement with any employee or agent or
contractor;
(h) amend
its
Certificate of Incorporation or Bylaws or any other organizational
documents;
26
(i) make
any
material changes in policies or practices relating to business practices or
other terms accounting therefore or in policies of employment;
(j) enter
into any type of business not conducted by it as of the Effective Date or create
or organize any subsidiary or enter into or participate in any joint venture
or
partnership;
(k) except
as
otherwise expressly contemplated by this Agreement, enter into any agreement
or
transactions with any Affiliates or make any amendment or modification to any
such agreement;
(l) make
or
change any election in respect of Taxes or settle any claim related to Taxes;
or
(m) enter
into any contract, commitment or arrangement to do any of the
foregoing.
9.2 Full
Access.
Each
Party will permit representatives of the other to have full access to all
premises, properties, personnel, books, records (including tax records),
contracts, and documents of or pertaining to each Party. Each Party will treat
and hold as such any Confidential Information it receives from the other in
the
course of the reviews contemplated by this Section 9.2, will not use any of
the
Confidential Information except in connection with this Agreement, and, if
this
Agreement is terminated for any reason whatsoever, agrees to return to the
other
Party all tangible embodiments (and all copies) thereof which are in its
possession.
9.3 Exclusivity.
Parent
will not solicit, initiate, or encourage the submission of any proposal or
offer
from any Person relating to all or any of the capital stock or assets of Merger
Sub or Parent (including any acquisition structured as a merger, consolidation,
or share exchange); provided,
however,
that
Merger Sub and Parent, and their respective directors and officers, will remain
free to (i) assist or participate in or facilitate any discussions or
negotiations; or, (ii) furnish any information, in regard to any attempt by
any
Person to do or seek any of the foregoing to the extent their fiduciary duties
may require. Parent shall notify Company immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the
foregoing.
9.4 Pre-Existing
Indemnification Obligations.
Company, as the Surviving Corporation in the Merger, will observe any
indemnification provisions now existing in the Certificate of Incorporation
or
Bylaws of Merger Sub for the benefit of any individual who served as a director
or officer of Merger Sub at any time prior to the Effective Date, as well as
all
written agreements providing similar protections and rights to the same
group.
9.5 SEC
Merger Filings.
9.5.1. Parent
Obligation to File.
As
promptly as practicable after the execution of this Agreement, Parent will
prepare and file with the SEC any and all additional SEC Filings which are
reasonably required as a result of the transactions envisioned hereunder
(together with any amendments thereof or supplements thereto, collectively
referred to herein as the “SEC Merger Filings”). Parent will use its reasonable
best efforts to cause the SEC Merger Filings to become
27
effective
as promptly as practicable, and, will take all or any action required under
any
applicable federal or state securities laws in connection with the Merger.
Each
of Parent and Company will furnish all information concerning it and the holders
of its capital stock as the other may reasonably request in connection with
such
actions and the preparation of the SEC Merger Filings. None of the SEC Merger
Filings will be filed with the SEC by, and no amendment or supplement to the
SEC
Merger Filings will be made by, Parent without the approval of Company, (which
approval will not be unreasonably withheld or delayed). Parent will advise
Company, promptly after it receives notice thereof, of the time when the SEC
Merger Filings become effective or any supplement or amendment has been filed,
and of all other communications from the SEC in regard to the SEC Merger
Filings.
9.5.2. Accuracy
of Information.
Parent
shall ensure that the information included in the SEC Merger Filings will not,
at (i) the time the SEC Merger Filings are declared effective; and, (ii) the
Closing Date, 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 Closing
Date
any event or circumstance relating to Parent or any of its officers or directors
should be discovered by Parent which should be set forth in an amendment or
a
supplement to the SEC Merger Filings, Parent will promptly inform Company.
The
SEC Merger Filings will comply as to form and substance in all material respects
with the applicable requirements of the Securities Act and the rules and
regulations thereunder, and the Exchange Act and the rules and regulations
thereunder.
X
CONDITIONS
PRECEDENT
10.1 Mutual
Obligations.
The
Parties agree as follows with respect to the period from and after the execution
of this Agreement up to the Closing:
10.1.1. General.
Each of
the Parties will use its best efforts to take all action and to do all things
necessary in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of
all
conditions for Closing established herein).
10.1.2. Notices
and Consents.
Each
Party will give any notices to third parties, and will use its best efforts
to
obtain any third party consents the other reasonably may request in connection
with the Merger.
10.1.3. Regulatory
Matters and Approvals.
Each of
the Parties will give any notices to, make any filings with, and use its best
efforts to obtain any authorizations, consents, and approvals of governments
and
governmental agencies in connection with the matters referred to herein.
10.1.4. Delaware
Law.
Merger
Sub will call a special meeting of its stockholders (the “Special Merger Sub
Meeting”) as soon as reasonably practicable in order that the stockholders may
consider and vote upon the adoption of this Agreement and the approval of the
Merger in accordance with Delaware Law. Company will call a special meeting
of
its stockholders (the “Special Company Meeting”) as soon as reasonably
practicable in order that the stockholders may consider and vote upon the
adoption of this Agreement and the approval of the Merger in accordance with
Delaware
28
Law.
10.1.5. Notice
of Developments.
Each
Party will give prompt written notice to the other of any material adverse
development causing a breach of any of its own representations and warranties
hereunder. No disclosure by any Party pursuant to this Section 10.1.5., however,
shall be deemed to amend or supplement the Schedules attached hereto or serve
to
prevent or cure any misrepresentation, breach of warranty, or breach of covenant
hereunder.
10.1.6. Certificate
of Merger.
The
Parties shall execute the Certificate of Merger, which shall be filed with
the
Office of the Secretary State of Delaware as part of the legal compliance with
Delaware Law.
10.2 Conditions
to Obligation of Company.
The
obligation of Company to consummate the transactions to be performed by it
in
connection with the Closing is subject to satisfaction of the following
conditions, any or all of which Company may waive if it executes a writing
so
stating at or prior to the Closing:
(a) This
Agreement and the Merger shall have received the Requisite Stockholder Approval
of Merger Sub;
(b) Parent
and Merger Sub shall have procured all necessary third party consents;
(c)
The
representations and warranties set forth in Articles VI and VIII, above, shall
be true and correct in all material respects at and as of the Closing
Date;
(d) Parent
and Merger Sub shall have performed and complied with all of its respective
covenants hereunder in all material respects through the Closing;
(e) No
action, suit, or proceeding shall be pending or threatened before any court
or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (i) prevent consummation of
any
of the transactions contemplated by this Agreement; (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation; or, (iii) affect adversely the right of the Surviving Corporation
to own the former assets, and to operate the former businesses of Merger Sub
(and no such injunction, judgment, order, decree, ruling, or charge shall be
in
effect);
(f) this
Agreement and the Merger shall have received the Requisite Stockholder Approval
of Company; and
(g) all
actions to be taken by Parent and Merger Sub in connection with consummation
of
the transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Company.
10.3 Conditions
to Obligation of Parent and Merger Sub.
The
obligation of Parent and Merger Sub to consummate the transactions to be
performed by each in connection with the Closing is
29
subject
to satisfaction of the following conditions, any or all of which Parent or
Merger Sub may waive if it executes a writing so stating at or prior to the
Closing.
(a) This
Agreement and the Merger shall have received the Requisite Stockholder Approval
of Company;
(b) the
representations and warranties set forth in Article VII above shall be true
and
correct in all material respects at and as of the Closing Date;
(c) Company
shall have performed and complied with all of its covenants hereunder in all
material respects through the Closing;
(d) No
action, suit, or proceeding shall be pending or threatened before any court
or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (i) prevent consummation of
any
of the transactions contemplated by this Agreement; (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation; or, (iii) affect adversely the right of the Surviving Corporation
to own the former assets and to operate the former businesses of Merger Sub
(and
no such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(e) this
Agreement and the Merger shall have received the Requisite Stockholder Approval
of Merger Sub; and
(f) all
actions to be taken by Company in connection with consummation of the
transactions contemplated hereby and all certificates, opinions, instruments,
and other documents required to effect the transactions contemplated hereby
will
be reasonably satisfactory in form and substance to Parent and Merger
Sub.
XI
TERMINATION
11.1 Termination
of Agreement.
Any of
the Parties may terminate this Agreement with the prior authorization of its
board of directors (whether before or after stockholder approval) as provided
below:
(a) The
Parties may terminate this Agreement by their written consent at any time prior
to the Effective Date;
(b) Company
may terminate this Agreement by giving written notice to Parent at any time
prior to the Effective Date (i) in the event Parent or Merger Sub has breached
any material representation, warranty, or covenant contained in this Agreement
in any material respect, and Company has notified Parent of the breach, and
the
breach has continued without cure for a period of ten (10) days after the notice
of breach; or, (ii) if the Closing shall not have occurred on or before the
10th
day of
July, 2005, by reason of the failure of any condition precedent under Section
10.2 hereof
30
(unless
the failure results primarily from Company breaching any representation,
warranty, or covenant contained in this Agreement);
(c) Parent
may terminate this Agreement by giving written notice to Company at any time
prior to the Effective Date (i) in the event Company has breached any material
representation, warranty, or covenant contained in this Agreement in any
material respect, and Merger Sub has notified Company of the breach, and the
breach has continued without cure for a period of ten (10) days after the notice
of breach; or, (ii) if the Closing shall not have occurred on or before the
10th
day of
July, 2005, by reason of the failure of any condition precedent under Section
10.3 hereof (unless the failure results primarily from Merger Sub breaching
any
representation, warranty, or covenant contained in this Agreement);
(d) Any
Party
may terminate this Agreement by giving written notice to the other Party at
any
time in the event this Agreement and the Merger fail to receive the Requisite
Stockholder Approval for the other Party.
11.2 Effect
of Termination.
If any
Party terminates this Agreement pursuant to this Article XI, all rights and
obligations of the Parties hereunder shall terminate without any liability
of
any Party to any other Party (except for any liability of any Party then in
breach, and except as otherwise provided for under Section 14.3, below);
provided,
however,
that
the confidentiality provisions contained herein shall survive any such
termination.
XII
CLOSING
AND CLOSING DATE
12.1 Closing.
The
closing of the transactions contemplated under this Agreement (the “Closing”)
shall have taken place on the 29th
day of
June, 2005, at such place as the Parties may agree, or at such other time as
the
Parties may agree. The date on which the Closing occurs is also referred to
herein as the “Closing Date”.
12.2 Obligations
of Parent.
At the
Closing, Parent shall deliver or cause to be delivered to Company the following:
(a) Executed
Board of Directors resolution authorizing the transactions contemplated
hereunder;
(b) All
share
certificates representing shares of Parent Common Stock to be issued as part
of
the Merger Consideration hereunder, endorsed in favor of the stockholders of
Company as required under Sections 4.4, 5.1, and 5.2, above;
(c) Proof
of
the filing of all SEC Merger Filings required to be made by Parent;
(d) Proof
that all directors and officers of Parent existing as of the Effective Date
31
have
resigned as of the Closing, and that new directors and officers have been
designated and legally elected pursuant to Section 4.2.5., as of the Closing;
(e) Any
governmental and third party consents, approvals, and assurances necessary
for
the consummation of the transactions contemplated by this
Agreement.
12.3 Obligations
of Merger Sub.
At the
Closing, Merger Sub shall deliver or cause to be delivered to Company the
following:
(a) Executed
Board of Directors and Shareholders resolution authorizing the transactions
contemplated hereunder;
(b) All
share
certificates representing ownership of all issued and outstanding shares of
Merger Sub Stock; and
(c) Any
governmental and third party consents, approvals, and assurances necessary
for
the consummation of the transactions contemplated by this
Agreement.
12.4 Obligations
of Company.
At the
Closing, Company shall deliver or cause to be delivered to Merger
Sub:
(a) Executed
Board of Directors and Shareholders resolution authorizing the transactions
contemplated hereunder;
(b) Share
certificates representing one thousand (1,000) shares of Company Common Stock
Company, endorsed pro rata in favor of Parent as the sole shareholder of Merger
Sub, subject to the terms and conditions of this Agreement;
(c) All
share
certificates representing ownership of all issued and outstanding shares of
Company Common Stock;
(d) Executed
Board of Directors and Shareholders resolution authorizing the transactions
contemplated hereunder; and
(e) Any
governmental and third party consents, approvals, and assurances necessary
for
the consummation of the transactions contemplated by this
Agreement.
XIII
REGULATORY
FILINGS
13.1 Required
Filings.
The
Parties shall coordinate and cooperate with one another and shall each use
all
reasonable efforts to comply with, and shall each refrain from taking any action
that would impede compliance with any and all applicable federal, state, local,
municipal, foreign or other law, statute, constitution, principle of common
law,
resolution, ordinance, code, order, edict, decree, rule, regulation, ruling
or
requirement issued, enacted, adopted, promulgated, implemented or
32
otherwise
put into effect by or under the authority of any governmental entity. As
promptly as practicable after the date hereof, the Parties shall make all
filings, notices, petitions, statements, registrations, submissions of
information, application or submission of other documents required by any
governmental entity in connection with the Merger and the transactions
contemplated hereby.
13.2 Exchange
Of Information.
Each of
the Parties shall promptly supply the other with any information which may
be
required in order to effectuate any filings or application pursuant to Section
13.1, above. Except where prohibited by applicable legal requirements, each
of
the Parties shall consult with the other prior to taking a position with respect
to any such filing, shall permit the other to review and discuss in advance,
and
consider in good faith the views of the other in connection with any analyses,
appearances, presentations, memoranda, briefs, white papers, arguments, opinions
and proposals before making or submitting any of the foregoing to any
governmental entity by or on behalf of any Party hereto in connection with
any
investigations or proceedings in connection with this Agreement or the
transactions contemplated hereby, coordinate with the other in preparing and
exchanging such information and promptly provide the other (and its counsel)
with copies of all filings, presentations or submissions (and a summary of
any
oral presentations) made by such Party with any governmental entity in
connection with this Agreement or the transactions contemplated hereby. However,
with respect to any such filing, presentation or submission, each of the Parties
need not supply the other (or its counsel) with copies (or in case of oral
presentations, a summary) to the extent that any law, treaty, rule or regulation
of any governmental entity applicable to such Party requires such Party to
restrict or prohibit access to any such properties or information.
13.3 Notification.
Each of
the Parties will notify the other promptly upon the receipt of: (i) any comments
from any officials of any governmental entity in connection with any filings
made pursuant hereto and (ii) any request by any officials of any governmental
entity for amendments or supplements to any filings made pursuant to, or
information provided to comply in all material respects with, any applicable
legal requirements. Whenever any event occurs that is required to be set forth
in an amendment or supplement to any filing made pursuant to Section 13.1,
above, the responsible Party will promptly inform the other of such occurrence
and cooperate in filing with the applicable governmental entity such amendment
or supplement.
XIV
ADDITIONAL
OBLIGATIONS AND AGREEMENTS
14.1 Survival
of Representations.
All of
the covenants, agreements, representations, and warranties made by each Party
in
this Agreement, or pursuant hereto or in connection with the transactions
contemplated hereby, shall survive the Closing for a period of five (5)
years.
14.2 Brokers.
Each
Party represents and warrants that if it has entered into any deal, arrangement,
or commitment with any broker or finder who has acted for it in connection
with
this Agreement or the transactions contemplated hereby, that the Party entering
into the deal, arrangement, or commitment will be solely responsible thereunder,
and that the other Party will have no obligation thereunder. Each Party agrees
to indemnify and hold harmless the other Party with respect to any claim for
any
brokerage or finder’s fee or other commission.
33
14.3 Payment
of Transaction Expenses.
Except
as otherwise provided for in this Section 14.3, all
Transaction Expenses incurred by the Parties will be borne solely and entirely
by the Party that incurred such Transaction Expenses. However,
Parent
agrees that if Parent terminates this Agreement for any reason other than a
material breach of this Agreement by Company, then Parent shall pay by wire
transfer of immediately available funds to Company the actual and documented
Transaction Expenses of Company, the payment of which will not relieve Parent
of
any liability or damages resulting from any breach by Parent of any of its
representations, warranties, covenants, or agreements set forth in this
Agreement.
14.4 Books
and Records.
Merger
Sub shall deliver to Company all books and records of Merger Sub reasonably
related to the conduct of its business.
14.5 Payment
of Taxes: Filing of Returns.
Surviving Corporation shall be liable for the filing of all tax returns and
reports and for the payment of all federal, state and local taxes of Merger
Sub
for any period ending on or prior to the Closing Date. Surviving Corporation
shall remain so liable for the payment of all taxes attributable to or relating
to said filings. All other Parties are responsible for all reporting and payment
obligations related to all Taxes.
14.6 Public
Disclosure.
Without
limiting any other provision of this Agreement, unless
otherwise required by a Requirement of Law or the requirements of any listing
agreement with any applicable stock exchange, the
Parties will use their reasonable best efforts to consult with each other before
issuing, and provide each other the opportunity to review, comment upon and
concur with, and use all reasonable efforts to agree on any press release or
public statement with respect to this Agreement and the transactions
contemplated hereby, including the Merger, and will not issue any such press
release or make any such public statement prior to such consultation and (to
the
extent practicable) agreement, except as may be required by law or any other
applicable national or regional securities exchange. The Parties have agreed
to
the text of the joint press release announcing the signing of this
Agreement.
XV
NOTICES
All
notices, requests, demands and other communications required or permitted to
be
given hereunder shall be effected pursuant to Section 16.10, below, as
follows:
If
to
Company:
With
a
copy to:
▇▇.
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇▇,
Esq.
OXFORD
MEDIA
CORP.
SPECTRUM
LAW GROUP, LLP
One
Technology
Drive
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
34
If
to
Parent or Merger Sub:
▇/▇
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇.
CANE
▇▇▇▇▇ LLP
▇▇▇▇
▇.
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
XVI
ADDITIONAL
PROVISIONS
16.1 Executed
Counterparts.
This
Agreement may be executed in any number of original, fax, electronic, or copied
counterparts, and all counterparts shall be considered together as one
agreement. A faxed, electronic, or copied counterpart shall have the same force
and effect as an original signed counterpart. Each of the Parties hereby
expressly forever waives any and all rights to raise the use of a fax machine
or
E-Mail to deliver a signature, or the fact that any signature or agreement
or
instrument was transmitted or communicated through the use of a fax machine
E-Mail, as a defense to the formation of a contract.
16.2 Successors
and Assigns.
Except
as expressly provided in this Agreement, each and all of the covenants, terms,
provisions, conditions and agreements herein contained shall be binding upon
and
shall inure to the benefit of the successors and assigns of the Parties
hereto.
16.3 Governing
Law.
This
Agreement shall be governed by the laws of the State of Delaware, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of
the
laws of any jurisdiction other than the State of Delaware. If any court action
is necessary to enforce the terms and conditions of this Agreement, the Parties
hereby agree that the Superior Court of California, County of Orange, shall
be
the sole jurisdiction and venue for the bringing of such action.
16.4 Additional
Documentation.
The
Parties hereto agree to execute, acknowledge, and cause to be filed and
recorded, if necessary, any and all documents, amendments, notices, and
certificates which may be necessary or convenient under the laws of the State
of
Delaware.
16.5 Attorney’s
Fees.
If any
legal action (including arbitration) is necessary to enforce the terms and
conditions of this Agreement, the prevailing Party shall be entitled to costs
and reasonable attorney’s fees.
16.6 Amendment.
This
Agreement may be amended or modified only by a writing signed by all
Parties.
16.7 Remedies.
16.7.1. Specific
Performance.
The
Parties hereby declare that it is impossible to measure in money the damages
which will result from a failure to perform any of the obligations under this
Agreement. Therefore, each Party waives the claim or defense that an adequate
remedy at law exists in any action or proceeding brought to enforce the
provisions hereof.
16.7.2.
Cumulative.
The
remedies of the Parties under this Agreement are cumulative
35
and
shall
not exclude any other remedies to which any person may be lawfully
entitled.
16.8 Waiver.
No
failure by any Party to insist on the strict performance of any covenant, duty,
agreement, or condition of this Agreement or to exercise any right or remedy
on
a breach shall constitute a waiver of any such breach or of any other covenant,
duty, agreement, or condition. No
course
of dealing between the Parties, nor any failure to exercise, nor any delay
in
exercising, any right, power or privilege of either Party shall operate as
a
waiver thereof, nor shall any single or partial exercise of any right, power,
or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
16.9 Assignability.
This
Agreement is not assignable by either Party without the expressed written
consent of all Parties.
16.10 Notices.
All
notices, requests and demands hereunder shall be in writing and delivered by
hand, by facsimile transmission, by E-Mail, by mail, by telegram, or by
recognized commercial over-night delivery service (such as Federal Express,
UPS,
or DHL), and shall be deemed given (a) if by hand delivery, upon such delivery;
(b) if by facsimile transmission, upon telephone confirmation of receipt of
same; (c) if by E-Mail, upon telephone confirmation of receipt of same; (d)
if
by mail, forty-eight (48) hours after deposit in the United States mail, first
class, registered or certified mail, postage prepaid; (e) if by telegram, upon
telephone confirmation of receipt of same; or, (f) if by recognized commercial
over-night delivery service, upon such delivery.
16.11 Time.
All
Parties agree that time is of the essence as to this Agreement.
16.12 Disputes.
16.12.1. Mediation.
All
disputes, claims or controversies arising out of or relating to this Agreement
with more than Five Thousand Dollars ($5,000) in controversy, including but
not
limited to any dispute, claim or controversy arising out of or relating to
this
Agreement or the breach, termination, enforcement, interpretation or validity
thereof, including the determination of the scope or applicability of this
agreement to arbitrate, shall be initially submitted to Judicial Arbitration
and
Mediation Services (“JAMS”) in Orange County, California, or its successor, for
mediation. Mediation shall be commenced by providing to JAMS and the other
Party
a written request for mediation, setting forth the subject of the dispute and
the relief requested. The Parties will cooperate with JAMS and with one another
in selecting a mediator from JAMS’ panel of neutral mediators, and in scheduling
the mediation proceedings. The Parties will participate in the mediation in
good
faith, and they will share equally in its costs. All offers, promises, conduct
and statements, whether oral or written, made in the course of the mediation
by
any of the Parties, their agents, employees, experts and attorneys, and by
the
mediator or any JAMS employees, are confidential, privileged and inadmissible
for any purpose, including impeachment, in any arbitration or other proceeding
involving the Parties, provided that evidence that is otherwise admissible
or
discoverable shall not be rendered inadmissible or non-discoverable as a result
of its use in the mediation. Either Party may initiate arbitration with respect
to the matters submitted to mediation by filing a written demand for arbitration
at any time following the initial mediation session or 45 days after the date
of
filing the written request for mediation, whichever occurs first. The mediation
may continue after the commencement of arbitration if the Parties so desire.
Unless otherwise agreed by the Parties, the mediator shall be disqualified
from
serving as arbitrator in the case. The provisions of this paragraph
36
may
be
enforced by any Court of competent jurisdiction, and the Party seeking
enforcement shall be entitled to an award of all costs, fees and expenses,
including attorney fees, to be paid by the Party against whom enforcement is
ordered.
16.12.2. Arbitration.
If the
matter is not resolved through mediation under Section 16.12.1., above, then
it
shall be submitted to JAMS in Orange County, California, or its successor,
for
final and binding arbitration before a sole arbitrator. The arbitration shall
be
administered by JAMS pursuant to its Comprehensive Arbitration Rules and
Procedures if the amount in controversy exceeds $250,000, or pursuant to its
Streamlined Arbitration Rules and Procedures if the amount in controversy is
$250,000 or less. Judgment on the Award may be entered in any court having
jurisdiction.
16.12.3. Small
Claims.
All
disputes, claims, or controversies arising out of or relating to this Agreement
with Five Thousand Dollars ($5,000) or less in controversy shall be adjudicated
in the Harbor Municipal Court District of the Superior Court of California,
County of Orange, according to California law.
16.12.4. Waiver
of Jury Trial and Related Rights.
By initialing the space below, the Parties hereby agree to have all disputes,
claims or controversies arising out of or relating to this Agreement, which
are
not resolved by mediation, decided by neutral binding arbitration as provided
in
this Agreement. Each Party is giving up any rights it might possess to have
those matters litigated in a court or jury trial. By initialing in the space
below, each Party is giving up its judicial rights to discovery and appeal
except to the extent that they are specifically provided for under this
Agreement. If either Party refuses to submit to arbitration after agreeing
to
this provision, that Party may be compelled to arbitrate under federal or state
law. The foregoing has been read and understood. Each Party agrees to submit
all
disputes, claims or controversies arising out of or relating to this Agreement,
that have not been resolved by mediation, to binding arbitration in accordance
with this Agreement.
16.13 Recitals.
The
facts recited in Article II, above, are hereby conclusively presumed to be
true
as between and affecting the Parties.
16.14 Consents,
Approvals, and Discretion.
Except
as herein expressly provided to the contrary, whenever this Agreement requires
consent or approval to be given by a Party, or a Party must or may exercise
discretion, the Parties agree that such consent or approval shall not be
unreasonably withheld, conditioned, or delayed, and such discretion shall be
reasonably exercised. Except as otherwise provided herein, if no response to
a
consent or request for approval is provided within ten (10) days from the
receipt of the request, then the consent or approval shall be presumed to have
been given.
16.15 Best
Efforts.
The
Parties shall use and exercise their best efforts, taking all reasonable,
ordinary and necessary measures to ensure an orderly and smooth relationship
under this Agreement, and further agree to work together and negotiate in good
faith to resolve any differences or problems which may arise in the
future.
37
XVII
EXECUTION
IN
WITNESS WHEREOF,
this
Agreement has been executed by the Parties, and shall be effective as of and
on
the last date set forth below.
PARENT:
MERGER
SUB:
BECOMING
ART
INC., OXFORD
MEDIA ACQUISITION CORP.,
a
Nevada
corporation
a
Delaware corporation
BY:___________________________
BY:__________________________
NAME:________________________ NAME:________________________
TITLE:_________________________
TITLE:________________________
DATED:________________________
DATED:_______________________
BY:___________________________
BY:___________________________
NAME:________________________
NAME:________________________
TITLE:________________________
TITLE:________________________
DATED:_______________________
DATED:_______________________
COMPANY:
OXFORD
MEDIA CORP.,
a
Delaware corporation
BY:___________________________
NAME:________________________
TITLE:________________________
DATED:_______________________
38
BY:___________________________
NAME:________________________
TITLE:________________________
DATED:_______________________
39
INDEX
OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit
4.2.1. Certificate
of Merger
Exhibit
4.2.5. Directors
and Officers of Parent
SCHEDULES
Schedule
6.3 Parent
Subsidiaries
Schedule
6.7 Parent
Legal Proceedings
Schedule
6.9 Parent
Capitalization
Schedule
6.11
Parent
Employee Benefits
Schedule
6.14
Parent
Leases and Similar Agreements
Schedule
6.15
Parent
Material Agreements
Schedule
6.16
Parent
Employment Agreements
Schedule
6.17
Parent
Restrictive Covenants Agreements
Schedule
6.20
Parent
Environmental Matters
Schedule
6.25
Parent
Title to Assets
Schedule
6.27
Parent
Intellectual Property Assets
Schedule
7.3 Company
Subsidiaries
Schedule
7.9 Company
Capitalization
Schedule
8.3 Merger
Sub Capitalization
Schedule
8.6 Merger
Sub Legal Proceedings
Schedule
8.7 Merger
Sub Material Agreements
Schedule
8.8 Undisclosed
Liabilities
40
EXHIBIT
4.2.1.
CERTIFICATE
OF MERGER
41
EXHIBIT
4.2.5.
DIRECTORS
AND OFFICERS OF PARENT
New
Directors: ▇▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇▇
T. ▇▇▇▇▇▇▇ ▇▇▇▇
New
Officers:
Chief
Executive
Officer:
▇▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇▇
President:
▇▇▇▇▇
▇.
▇▇▇▇▇▇
Chief
Operating
Officer:
J.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief
Financial
Officer:
▇▇▇▇▇
▇▇▇▇▇
Secretary: T.
▇▇▇▇▇▇▇ ▇▇▇▇
Chief
Technical
Officer: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
42
SCHEDULE
6.3
PARENT
SUBSIDIARIES
43
SCHEDULE
6.7
PARENT
LEGAL PROCEEDINGS
44
SCHEDULE
6.9
PARENT
CAPITALIZATION
45
SCHEDULE
6.11
PARENT
EMPLOYEE BENEFITS
46
SCHEDULE
6.14
PARENT
LEASES AND SIMILAR AGREEMENTS
47
SCHEDULE
6.15
PARENT
MATERIAL AGREEMENTS
48
SCHEDULE
6.16
PARENT
EMPLOYMENT AGREEMENTS
49
SCHEDULE
6.17
PARENT
RESTRICTIVE COVENANTS AGREEMENTS
50
SCHEDULE
6.20
PARENT
ENVIRONMENTAL MATTERS
51
SCHEDULE
6.25
PARENT
TITLE TO ASSETS
52
SCHEDULE
6.27
PARENT
INTELLECTUAL PROPERTY ASSETS
53
SCHEDULE
7.3
COMPANY
SUBSIDIARIES
54
SCHEDULE
7.9
COMPANY
CAPITALIZATION
55
SCHEDULE
8.3
MERGER
SUB CAPITALIZATION
56
SCHEDULE
8.6
MERGER
SUB LEGAL PROCEEDINGS
57
SCHEDULE
8.7
MERGER
SUB MATERIAL AGREEMENTS
58
SCHEDULE
8.8
MERGER
SUB UNDISCLOSED LIABILITIES
59