AGREEMENT AND PLAN OF
MERGER
AGREEMENT AND
PLAN OF MERGER (“Merger Agreement”) made this 13
th day of April, 2006 by and among FILTERING ASSOCIATES,
INC., (“FAI”), a Nevada corporation, and Kevin Frost
and Edward Wiggins, individual stockholders of FAI (the “FAI
Stockholders”), on the one hand, and MATINEE MEDIA
CORPORATION, a Texas corporation (the “Company”), on
the other hand.
Recitals:
A.
The respective Boards of Directors
of FAI and the Company have determined that a merger of the Company
with and into FAI (the “Merger”), with FAI being the
surviving corporation, upon the terms and subject to the conditions
set forth in this Agreement, would be fair and in the best
interests of their respective shareholders, and such Boards of
Directors have approved such Merger, pursuant to which the shares
of the Company’s common stock, no par value (“Company
Stock”), issued and outstanding immediately prior to the
Effective Time of the Merger (as defined in Section 1.03), other
than Dissenting Shares (as defined in Section 2.01(d)), will be
converted into the number of shares of Common Stock of FAI
determined by application of the Exchange Ratio (defined
below).
B.
FAI and the Company desire to make
certain representations, warranties, covenants and agreements in
connection with the Merger and also to prescribe various conditions
to the Merger.
C.
For federal income tax purposes,
the parties intend that the Merger shall qualify as a plan of
reorganization under the provisions of Section 368 of the Internal
Revenue Code of 1986, as amended (the “Code”), and the
regulations promulgated thereunder.
NOW, THEREFORE,
in consideration of the representations, warranties, covenants and
agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
The Merger
1.01
The Merger
. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the
Nevada Revised Statutes (the “Nevada Merger Statute”)
and the Texas Business Corporation Act (the “Texas Merger
Statute”), which shall govern the merger contemplated hereby,
the Company shall be merged with and into FAI at the Effective Time
of the Merger. At the Effective Time of the Merger, the separate
existence of the Company shall cease, and FAI shall continue as the
surviving corporation (hereinafter sometimes referred to as
“Public FAI”) under the name “MATINEE MEDIA
CORPORATION”.
1.02
Closing . Unless this Merger Agreement shall have been
terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 7.01 and subject to the satisfaction
or waiver of the conditions set forth in Article VI, the closing of
the Merger (the “Closing”) will take place at 10:00
a.m. on the business day after satisfaction of the conditions set
forth in Article VI (or as soon as practicable thereafter following
satisfaction or waiver of the conditions set forth in Article VI)
(the “Closing Date”), at the offices of the Company,
Austin, Texas, unless another date, time or place is agreed to in
writing by the parties hereto.
1.03
Effective Time of
Merger . As soon as
practicable following the satisfaction or waiver of the conditions
set forth in Article VI of this Agreement, the parties shall file
with the Secretary of State of the State of Nevada articles of
merger (the “Nevada Articles of Merger”) in
substantially the form attached hereto as Exhibit A , which
shall amend the Articles of Incorporation of Public FAI to reflect
the name change to “MATINEE MEDIA CORPORATION”, and
with the Secretary of State of the State of Texas articles of
merger (the “Texas Articles of Merger”) in
substantially the form attached hereto as Exhibit B , each
executed in accordance with the relevant provisions of the Nevada
Merger Statute or the Texas Merger Statute, as the case may be, and
shall make all other filings or recordings required under the
Nevada Merger Statute and the Texas Merger Statute. The Merger
shall become effective at such time as the Nevada Articles of
Merger are duly filed with the Secretary of State of the State of
Nevada and the Texas Articles of Merger are duly filed with the
Secretary of State of the State of Texas and a certificate of
merger has been issued by each such Secretary of State, to the
extent required by the Nevada Merger Statute or the Texas Merger
Statute for the Merger to become effective, or at such later time
as FAI and the Company shall agree, which time should be specified
in the Nevada Articles of Merger (the time the Merger becomes
effective being the “Effective Time of the Merger”).
FAI and the Company shall use reasonable efforts to have the
Closing Date and the Effective Time of the Merger to be the same
day.
1.04
Effects of the
Merger . The Merger
shall have the effects set forth in the applicable provisions of
the Nevada Merger Statute and the Texas Merger Statute.
1.05
Articles of Incorporation;
Bylaws; Purposes .
(a) The Articles of Incorporation of FAI, as
amended by the Nevada Articles of Merger, shall be the Articles of
Incorporation of Public FAI until thereafter changed or amended as
provided therein or by applicable law.
(b) The Bylaws of FAI in effect at the Effective
Time of the Merger shall be the Bylaws of Public FAI until
thereafter changed or amended as provided therein or by applicable
law.
1.06
Directors
. The directors of the Company at
the Effective Time of the Merger shall be the directors of Public
FAI, until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified, as the
case may be.
1.07
Officers
. The officers of the Company at the
Effective Time of the Merger shall be the officers of Public FAI,
until the earlier of their resignation or removal or until their
respective
successors are
duly elected and qualified, as the case may be.
1.08
Stock Cancellation.
On or before the Closing, FAI shall
cause to be cancelled 1,665,272 shares of its outstanding Common
Stock held by certain of its stockholders who hold restricted
Common Stock and it shall transfer to such stockholders its
existing business and related assets and liabilities in
consideration of the cancellation of their FAI Common Stock. Such
stockholders, by their signature below, agree to the cancellation
of their stock as aforesaid and to the assumption of all
liabilities of the FAI business. After the cancellation of these
shares, the total outstanding shares of FAI as of immediately prior
to the Effective Time of the Merger shall not exceed 1,207,728
shares of Common Stock, which as of immediately after the Effective
Time of the Merger shall amount to no more than 8% of the total
shares of Public FAI Common Stock then outstanding, after giving
effect to the issuance of the Public FAI shares to the
Company’s shareholders in the Merger pursuant to this
Agreement.
ARTICLE II
Effect of the Merger
on the Capital Stock
of the Constituent
Corporations
2.01
Effect on Capital
Stock . As of the
Effective Time of the Merger, by virtue of the Merger and without
any action on the part of the holders of shares of Company Stock or
of FAI Stock:
(a) FAI Stock . Each share of FAI Stock issued and outstanding
immediately prior to the Effective Time of the Merger shall remain
one share of Public FAI Common Stock, subject to adjustment as
provided below (“FAI Exchange Ratio”). Certificates
representing shares of FAI Stock shall be exchanged for
certificates reflecting the name change to “Matinee Media
Corporation” for that number of shares of Public FAI Common
Stock held prior to the Effective Time of the Merger.
(b) Conversion of Company Stock
. Except as otherwise provided
herein, each issued and outstanding share of Company Stock shall be
converted into one share of Public FAI Common Stock, subject to
adjustment as provided below (“Company Exchange Ratio”)
so that upon such issuance the shareholders of the Company shall
own no less than 92% and the shareholders of FAI shall own no more
than 8% of the total shares of Public FAI Common Stock outstanding
immediately after the Effective Time of the Merger. Certificates
representing such number of shares of Company Stock shall be
exchanged for certificates representing an equal number of shares
of Public FAI Common Stock.
(c) Dissenting Shares . Notwithstanding anything in this Agreement to
the contrary, shares of FAI Stock issued and outstanding
immediately prior to the Effective Time of the Merger held by a
holder (if any) who has the right to demand payment for and an
appraisal of such shares in accordance with the Nevada Merger
Statute (“Dissenting Shares”) shall not be converted
into a right to receive sharers of Public FAI Common Stock unless
such holder fails to perfect or otherwise loses such holder's right
to such payment or appraisal, if any. If, after the Effective Time
of the Merger, such holder fails to perfect or loses any such right
to appraisal, each share of FAI Stock held by such holder shall be
treated as a share that had been converted as of the Effective Time
of the Merger into the right to receive Public FAI Common Stock in
accordance with this Section 2.01. FAI shall give prompt notice to
the Company of any demands received by FAI for appraisal of shares
of FAI Stock, and the Company shall have the right to participate
in all negotiations and proceedings with respect to such demands.
FAI shall not, except with the prior written consent of the
Company, make any payment with respect to, or settle or offer to
settle, any such demands.
(d) Cancellation and Retirement of Stock
. As of the Effective Time of the
Merger, all shares of Company Stock issued and outstanding
immediately prior to the Effective Time of the Merger, shall no
longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Stock shall cease to have
any rights with respect thereto, except the right to receive
certificates representing shares of Public FAI Common Stock to be
issued in consideration therefore upon surrender of such
certificates in accordance with Section 2.04.
2.02
Intentionally
Deleted
2.03
Company Securities
.
(a) Assumption of Company Warrants.
At the Effective Time of the Merger,
each outstanding warrant or option to purchase Company Stock (each
a “Company Warrant”), shall by virtue of the Merger be
assumed by Public FAI and each employee stock incentive plan of the
Company under which any Company Warrant may be granted (the
“Company Plans”) shall by virtue of the Merger be
assumed by Public FAI. Each Company Warrant so assumed by Public
FAI will continue to have, and be subject to, the same terms and
conditions of such Company Warrant immediately prior to the
Effective Time of the Merger and will be exercisable for that
number of shares of Public FAI Common Stock equal to the number of
Company Stock that were issuable upon exercise of such Company
Warrant immediately prior to the Effective Time of the Merger and
(ii) the per share exercise price for the shares of Public FAI
Common Stock issuable upon exercise of such assumed Company Warrant
will be equal to the exercise price that would have been paid prior
to the Effective Time of the Merger if the Company Warrant were
exercised in full prior to the Effective Time of the Merger. Public
FAI shall comply with the terms of all such Company Warrants and
Company Plans. Public FAI shall take all corporate actions
necessary to reserve for issuance a sufficient number of shares of
Public FAI Common Stock for delivery upon exercise of all Company
Warrants outstanding at the Effective Time of the Merger on the
terms set forth in this Section 2.03 and all other shares of
Public FAI Common Stock issuable under the Company
Plans.
(b) Pre-Merger Increase in Issued and Outstanding
Shares of Company Stock FAI acknowledges that the Company has entered
into a securities purchase agreement pursuant to which, prior to
the Effective Time of the Merger, the Company issued and sold to
certain institutional and individual accredited investors shares of
Company Stock and issued Company Warrants to purchase one share of
Company Stock for every two shares of Company Stock issued to such
investors, with an exercise price of $3.50 per share (the
“Company Funding”). Upon the closing of the Company
Funding, up to $2,500,000 in principal amount of the
Company’s convertible promissory notes (the “Bridge
Notes”), plus accrued and unpaid interest thereon,
automatically converted into shares of Company Stock at a
conversion price of $1.707 per share, and Company Warrants to
purchase one share of Company Stock for every two shares of Company
Stock issued to the holders of the Bridge Notes, with an exercise
price of $3.50 per share.
(c) Adjustment to Exchange Ratios.
The Company Exchange Ratio set forth
above in Section 2.01(b) is based on the assumption that the
shareholders of FAI will own 8% of the outstanding Common Stock of
Public FAI as of immediately after the Effective Time of the
Merger. If necessary to maintain this percentage ownership
immediately after the Effective Time of the Merger, the Company
Exchange Ratio set forth in Section 2.01(b) or the FAI Exchange
Ratio set forth in Section 2.01(a) shall be proportionately
adjusted so as to achieve this 8% target for the FAI shareholders
in the Merger.
ARTICLE III
Representations and
Warranties
3.01
Representations and Warranties
of the Company . Except
as set forth in the disclosure schedule delivered to FAI by the
Company at the time of the execution of this Agreement (the
“Company Disclosure Schedule”), the Company represents
and warrants to FAI as follows:
(a) Organization, Standing and Corporate
Power . The Company is
duly organized, validly existing and in good standing under the
laws of the State of Texas and has the requisite corporate power
and authority to carry on its business as now being conducted. The
Company is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material
adverse effect (as defined in Section 9.02) with respect to the
Company. Attached as Schedule 3.01(a) of the Company
Disclosure Schedule are complete and correct copies of the Articles
of Incorporation and Bylaws of the Company, each as amended through
the date of this Agreement.
(b) Subsidiaries . The Company does not own, directly or
indirectly, any capital stock or other ownership interest in any
person.
(c) Capital Structure . The authorized capital stock of the Company
consists of 25,000,000 shares of Company Stock, of which 15,096,601
shares are issued and outstanding, including the securities issued
in the Company Funding, as described in Schedule 3.01(c) of the
Company Disclosure Schedule. Except as set forth in Schedule
3.01(c) of the Company Disclosure Schedule, as of the date hereof
no other shares of capital stock or other equity securities of the
Company are issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no outstanding bonds,
debentures, notes or other indebtedness or other securities of the
Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any
matters on which shareholders of the Company may vote. Except as
set forth in Section 3.01(c) of the Company Disclosure Schedule,
there are no outstanding securities, options, warrants, calls,
rights, commitments, phantom equity or similar rights, agreements,
arrangements or undertakings of any kind to which the Company is a
party or by which it is bound obligating the Company to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other equity or voting
securities of the Company or obligating the Company to issue,
grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking.
There are no outstanding contractual obligations, commitments,
understandings or arrangements of the Company to repurchase, redeem
or otherwise acquire or make any payment in respect of any shares
of capital stock of the Company. Schedule 3.01(c) of the
Company Disclosure Schedule sets forth the ownership of the Company
Stock. Except as set forth on Schedule 3.01(c) of the
Company Disclosure Schedule, there are no agreements or
arrangements pursuant to which the Company is or could be required
to register shares of Company Stock or other securities under the
Securities Act of 1933, as amended (the “Securities
Act”) or, to the best of the Company’s knowledge, other
agreements or arrangements with or among any security holders of
the Company with respect to equity securities of the
Company.
(d) Authority; Noncontravention
. The Company has the requisite
corporate and other power and authority to enter into this
Agreement and to consummate the Merger. Subject to obtaining the
Company Shareholder Approval (as defined in Section 3.01(o)), the
execution and delivery of this Agreement by the Company and this
Agreement, the merger and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company. This
Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless
of whether considered in a proceeding in equity or at law. The
execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and
compliance with the provisions hereof will not, conflict with, or
result in any breach or violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of or “put”
right with respect to any obligation or to loss of a material
benefit under, or result in the creation of any lien upon any of
the properties or assets of the Company under, (i) the Articles of
Incorporation or Bylaws of the Company, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license
applicable to the Company, its properties or assets, or (iii)
subject to the governmental filings and other matters referred to
in the following sentence, any judgment, order, decree, statute,
law, ordinance, rule, regulation or arbitration award applicable to
the Company, its properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, breaches, violations,
defaults, rights, losses or liens that individually or in the
aggregate could not have a material adverse effect with respect to
the Company or could not prevent, hinder or materially delay the
ability of the Company to consummate the transactions contemplated
by this Agreement. No consent, approval, order or authorization of,
or registration, declaration or filing with, or notice to, any
federal, state or local government or any court, administrative
agency or commission or other governmental authority, agency,
domestic or foreign (a “Governmental Entity”), is
required by or with respect to the Company in connection with the
execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated
hereby, except, with respect to this Agreement, for the filing of
the Texas Articles of Merger with the Secretary of State of the
State of Texas and the filing of the Nevada Articles of Merger with
the Secretary of State of the State of Nevada.
(e) Absence of Certain Changes or Events
. The Company was organized on
October 13, 2005. The Company has provided FAI with the
Company’s unaudited balance sheet as of December 31, 2005.
Since December 31, 2005, there is not and has not been: (i) any
material adverse change with respect to the Company; (ii) any
condition, event or occurrence which individually or in the
aggregate could reasonably be expected to have a material adverse
effect or give rise to a material adverse change with respect to
the Company; (iii) any event which, if it had taken place following
the execution of this Agreement, would not have been permitted by
Section 4.01 without prior consent of FAI; or (iv) any condition,
event or occurrence which could reasonably be expected to prevent,
hinder or materially delay the ability of the Company to consummate
the transactions contemplated by this Agreement.
(f) Litigation; Labor Matters; Compliance with
Laws .
(i) There is no suit, action or proceeding or
investigation pending or, to the best of the Company’s
knowledge, threatened against or affecting the Company that,
individually or in the aggregate, could reasonably be expected to
have a material adverse effect with respect to the Company or
prevent, hinder or materially delay the ability of the Company to
consummate the transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company
having, or which, insofar as reasonably could be foreseen by the
Company, in the future could have, any such effect.
(ii) The Company is not a party to, or bound by, any
collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is it
the subject of any proceeding asserting that it has committed an
unfair labor practice or seeking to compel it to bargain with any
labor organization as to wages or conditions of employment nor is
there any strike, work stoppage or other labor dispute involving it
pending or, to its the best of its knowledge, threatened, any of
which could have a material adverse effect with respect to the
Company.
(iii) The Company is not in violation of any statute,
law, regulation, ordinance, rule, judgment, order, decree or
arbitration award applicable to the Company or its
business.
(g) Benefit Plans . The Company is not a party to any collective
bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership,
stock purchase, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally binding) under
which the Company currently has an obligation to provide benefits
to any current or former employee, officer or director of the
Company (collectively, “Benefit Plans”).
(h) Certain Employee Payments
. The Company is not a party to any
employment agreement which could result in the payment to any
current, former or future director or employee of the Company of
any money or other property or rights or accelerate or provide any
other rights or benefits to any such employee or director as a
result of the transactions contemplated by this Agreement, whether
or not (i) such payment, acceleration or provision would constitute
a “parachute payment” (within the meaning of Section
280G of the Code), or (ii) some other subsequent action or event
would be required to cause such payment, acceleration or provision
to be triggered.
(i) Tax Returns and Tax Payments
. The Company has timely filed all
Tax Returns required to be filed by it, has paid all Taxes shown
thereon to be due and, to the best of the Company’s
knowledge, has provided adequate reserves in its financial
statements for any Taxes that have not been paid, whether or not
shown as being due on any returns. No material claim for unpaid
Taxes has been made or become a lien against the property of the
Company or is being asserted against the Company, no audit of any
Tax Return of the Company is being conducted by a tax authority,
and no extension of the statute of limitations on the assessment of
any Taxes has been granted by the Company and is currently in
effect. As used herein, “taxes” shall mean all taxes of
any kind, including, without limitation, those on or measured by or
referred to as income, gross receipts, sales, use, ad valorem,
franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium value added, property
or windfall profits taxes, customs, duties or similar fees,
assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts
imposed by any Governmental Entity, domestic or foreign. As used
herein, “Tax Return” shall mean any return, report or
statement required to be filed with any Governmental Entity with
respect to Taxes.
(j) Environmental Matters . To the best of its knowledge, the Company is
in compliance with all applicable Environmental Laws.
“Environmental Laws” means all applicable federal,
state and local statutes, rules, regulations, ordinances, orders,
decrees and common law relating in any manner to contamination,
pollution or protection of human health or the environment, and
similar state laws.
(k) Material Contract Defaults
. The Company has provided or made
available to FAI copies of all material contracts, agreements,
commitments, arrangements, leases, policies or other instruments to
which it is a party or by which it is bound (“Material
Contracts”) all of which are listed on Schedule
3.01(k) of the Company Disclosure Schedule. The Company is not,
nor has it received any notice or has any knowledge that any other
party is, in default in any respect under any Material Contract;
and, to the best of the Company’s knowledge, there has not
occurred any event that with the lapse of time or the giving of
notice or both would constitute such a material default. For
purposes of this Agreement, a Material Contract means any contract,
agreement or commitment to which the Company is a party (i) with
expected receipts or expenditures in excess of $50,000, (ii)
requiring the Company to indemnify any person, (iii) granting
exclusive rights to any party, or (iv) evidencing indebtedness for
borrowed or loaned money in excess of $50,000 or more, including
guarantees of such indebtedness. Notwithstanding the foregoing
definition, a Material Contract shall not include any contract with
a fair market valuation equal to or less than $50,000.
(l) Properties . The Company has good, clear and marketable
title to all the tangible properties and tangible assets reflected
in the latest balance sheet as being owned by the Company or
acquired after the date thereof which are, individually or in the
aggregate, material to the Company's business (except properties
sold or otherwise disposed of since the date thereof in the
ordinary course of business), free and clear of all
liens.
(m) Trademarks, Broadcast Licensees and Related
Contracts . To the best
of the Company’s knowledge:
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(i)
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As used in this
Agreement, the term “Trademarks” means trademarks,
service marks, trade names, Internet domain names, designs,
slogans, and general intangibles of like nature; the term
“Trade Secrets” means technology; trade secrets and
other confidential information, know-how, proprietary processes,
formulae, algorithms, models, and methodologies; the term
“Intellectual Property” means patents, copyrights,
Trademarks, applications for any of the foregoing, and Trade
Secrets; the term “Company License Agreements” means
any license agreements granting any right to use or practice any
rights under any Intellectual Property (except for such agreements
for shrink-wrap or click wrap software or other off-the-shelf
products that are generally available for less than $25,000), and
any written settlements relating to any Intellectual Property, to
which the Company is a party or otherwise bound; and the term
“Software” means any and all computer programs,
including any and all software implementations of algorithms,
models and methodologies, whether in source code or object
code.
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(ii)
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Schedule
3.01(m) of the Company
Disclosure Schedule sets forth, for the Intellectual Property owned
by the Company, a complete and accurate list of all U.S. and
foreign (1) patents and patent applications; (2) Trademark
registrations (including Internet domain registrations) and
applications and material unregistered Trademarks; (3) copyright
registrations and applications, indicating for each, the applicable
jurisdiction, registration number (or application number), and date
issued (or date filed) (4) Federal Communications Commission
(“FCC”) broadcast licenses, options and agreements to
acquire rights to such licenses, including terms, parties, dates,
restrictions (“Broadcast Licenses”). Schedule
3.01(m) of the Disclosure Schedule sets forth a list of all
third party Software that is incorporated in any Software sold,
licensed, leased or otherwise distributed by the Company,
indicating for each the title, owner/licensor of the Software.
Third party Software tools that are used to create the Software
sold, licensed, leased or otherwise distributed by the Company but
are not incorporated therein are specifically excluded from this
list.
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(iii)
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The
Intellectual Property owned by the Company is listed in the records
of the appropriate United States, state or foreign agency as the
sole owner of record for each application and registration listed
in Schedule 3.01(m) of the Company Disclosure
Schedule.
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(iv)
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The patents and
Broadcast Licenses owned by the Company are valid and enforceable,
in full force and effect, and have not been canceled, expired, or
abandoned. There is no pending or threatened opposition,
interference or cancellation proceeding before any court or
registration authority in any jurisdiction against any Intellectual
Property licensed to the Company or with the FCC with respect to
the Broadcast Licenses.
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(v)
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The conduct of
the Company’s business as currently conducted does not,
infringe upon any Intellectual Property rights owned or controlled
by any third party (either directly or indirectly such as through
contributory infringement or inducement to infringe). Schedule
3.01(m) of the Company Disclosure Schedule lists all U.S. and
foreign patents for which: (i) the Company has obtained written
opinion of counsel; or (ii) the Company has received written notice
of infringement or license offer outside the ordinary course of
business. There are no claims or suits pending or threatened
against the Company, and the Company has not received any notice of
a third party claim or suit against the Company (1) alleging that
its activities or the conduct of its businesses infringes upon,
violates, or constitutes the unauthorized use of the Intellectual
Property rights of any third party or (2) challenging the
ownership, use, validity or enforceability of any Intellectual
Property.
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(vi)
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There are no
settlements, forbearances to sue, consents, judgments, or orders or
similar obligations to which the Company is bound which (1)
restrict the Company’s rights to use any Intellectual
Property or License, (2) restrict the Company’s business in
order to accommodate a third party’s Intellectual Property or
License or (3) permit third parties to use any Intellectual
Property or License owned by the Company. There exists no event or
condition, which will result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
default by the Company or any other party under any Company License
Agreement or Broadcast License.
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(vii)
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The Company
takes reasonable measures to protect the confidentiality of Trade
Secrets, including requiring its employees and independent
contractors having access thereto to execute written non-disclosure
agreements. No Trade Secret of the Company has been disclosed or
authorized to be disclosed to any third party other than pursuant
to a non-disclosure agreement that protects the Company’s
proprietary interests in and to such Trade Secrets. Neither the
Company nor any other party to any non-disclosure agreement
relating to the Company’s Trade Secrets is in breach or
default thereof.
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(viii)
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The
consummation of the transactions contemplated hereby will not
result in the loss or impairment of the Company’s right to
own or use any of the Intellectual Property or License, nor will
require the consent of any Governmental Entity or third party in
respect of any such Intellectual Property or Broadcast
License.
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(ix)
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Schedule
3.01(m) of the Company
Disclosure Schedule lists all Software sold, licensed, leased or
otherwise distributed by the Company to any third party, and
identifies which Software is sold, licensed, leased, or otherwise
distributed as the case may be. With respect to the Software set
forth in Schedule 3.01(m) of the Company Disclosure Schedule
which the Company purports to own, such Software was either
developed (1) by employees of the Company within the scope of their
employment; or (2) by independent contractors who have assigned all
of their rights in such Software to the Company pursuant to written
agreements.
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(n) Board Recommendation . The Board of Directors of the Company has
unanimously determined that the terms of the Merger are fair to and
in the best interests of the shareholders of the Company and has
recommended that the holders of the shares of Company Stock approve
the Merger.
(o) Company Shareholder Approval.
The affirmative vote or consent of a
majority of the issued and outstanding shares of the Company Stock
is the only vote or consent of the holders of any class of the
Company’s securities required to approve the Merger (the
“Company Shareholder Approval”).
3.02
Representations and Warranties
of FAI and the FAI Shareholders . Except as set forth in the disclosure schedule
delivered to the Company by FAI and the FAI Shareholders at the
time of the execution of this Agreement (the “FAI Disclosure
Schedule”), FAI and the FAI Shareholders hereby, jointly and
severally, represent and warrant to the Company as
follows:
(a) Organization, Standing and Corporate
Power . FAI is duly
organized, validly existing and in good standing under the laws of
the State of Nevada as is applicable, and has the requisite
corporate power and authority to carry on its business as now being
conducted. FAI is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material
adverse effect with respect to FAI. FAI has delivered to the
Company complete and correct copies of its Articles of
Incorporation and Bylaws, which reflect all amendments made thereto
prior to the date of this Agreement, and such Articles of
Incorporation (or other organization documents) and Bylaws of FAI
are included in Schedule 3.02(a) of the FAI Disclosure Schedule.
The records of meetings of the stockholders and Board of Directors
of FAI furnished to the Company are complete and correct in all
material respects. The stock records of FAI furnished to the
Company are complete and correct in all material respects and
accurately reflect the record ownership and beneficial ownership of
all of the outstanding shares of FAI Stock and any other
outstanding securities issued by FAI.
(b) Subsidiaries . FAI does not own, directly or indirectly, any
capital stock or other ownership interest in any person.
(c) Capital Structure . The authorized capital stock of FAI consists
of 50,000,000 shares of Common Stock, 0.001 par value, of which
2,873,000 shares of FAI Stock are issued and outstanding, and
5,000,000 shares of
