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AGREEMENT AND PLAN OF MERGER
A
GREEMENT
AND PLAN OF MERGER, dated as of February 7, 2008 (the
“Agreement”), among Splinternet Holdings, Inc., a
Delaware corporation (“Splinternet”), Splinternet
Merger Sub I, Inc., a Delaware corporation and wholly owned
subsidiary of Splinternet (“Merger Sub”), and
Vidiation, Inc., a Delaware corporation (the
“Company”). Splinternet, Merger Sub and the
Company are collectively referred to herein as the
“Parties.” Splinternet and Merger Sub are
sometimes referred to herein collectively as the
“Splinternet Parties.”
RECITALS :
WHEREAS,
the respective boards of directors of each of Splinternet,
Merger Sub and the Company have approved the merger of Merger
Sub with and into the Company (the “Merger”) upon
the terms and subject to the conditions set forth in this
Agreement;
WHEREAS,
it is intended that, for federal income tax purposes, the
Merger shall qualify as a reorganization under the provisions
of Section 368(a) of the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated
thereunder (the “Code”); and
WHEREAS,
the Company, Splinternet and Merger Sub desire to make certain
representations, warranties, covenants and agreements in
connection with this Agreement.
NOW,
THEREFORE, in consideration of the premises and mutual
promises herein made, and in consideration of the
representations, warranties, covenants and agreements herein
contained, and intending to be legally bound hereby, the
Parties agree as follows:
ARTICLE
I
DEFINITIONS
1.1
Certain Definitions .
In
addition to other terms defined elsewhere herein, the following
terms shall, when used in this Agreement, have the following
meanings:
“
Acquisition”
means the acquisition by a Person of any businesses, assets or
property other than in the ordinary course, whether by way of
the purchase of assets or stock, by merger, consolidation or
otherwise.
“
Affiliate”
means, with respect to any Person: (i) any Person directly or
indirectly owning, controlling, or holding with power to vote
10% or more of the outstanding voting securities of such other
Person (other than passive or institutional investors); (ii)
any Person 10% or more of whose outstanding voting securities
are directly or indirectly owned, controlled, or held with
power to vote, by such other Person; (iii) any Person directly
or indirectly controlling, controlled by, or under common
control with such other Person; and (iv) any officer, director
or partner of such other Person. “Control” for the
foregoing purposes shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of a Person, whether through the
ownership of voting securities or voting interests, by
contract or otherwise.
“Business
Day” means any day other than Saturday, Sunday or a day
on which banking institutions in New York, New York, are
required or authorized to be closed.
“Code”
means the United States Internal Revenue Code of 1986, as
amended.
“Collateral
Documents” mean the Exhibits and any other documents,
instruments and certificates to be executed and delivered by
the Parties hereunder or thereunder.
“Commission”
means the Securities and Exchange Commission or any Regulatory
Authority that succeeds to its functions.
“Company
Assets” mean all properties, assets, privileges, powers,
rights, interests and claims of every type and description
that are owned, leased, held, used or useful in the Company
Business and in which the Company has any right, title or
interest or in which the Company acquires any right, title or
interest on or before the Closing Date, wherever located,
whether known or unknown, and whether or not now or on the
Closing Date on the books and records of the Company, but
excluding any of the foregoing, if any, transferred prior to
the Closing pursuant to this Agreement or any Collateral
Documents.
“
Company
Business” means the business conducted by the
Company.
“Company
Common Stock” means the common shares of the
Company.
“Company
Shareholders” means, as of any particular date, the
holders of Company Common Stock on that date.
“Encumbrance”
means any material mortgage, pledge, lien, encumbrance,
charge, security interest, security agreement, conditional
sale or other title retention agreement, limitation, option,
assessment, restrictive agreement, restriction, adverse
interest, restriction on transfer or exception to or material
defect in title or other ownership interest (including
restrictive covenants, leases and licenses).
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
“Exchange
Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations
thereunder.
“Legal
Requirement” means any statute, ordinance, law, rule,
regulation, code, injunction, judgment, order, decree, ruling,
or other requirement enacted, adopted or applied by any
Regulatory Authority, including judicial decisions applying
common law or interpreting any other Legal
Requirement.
“Losses”
shall mean all damages, awards, judgments, assessments, fines,
sanctions, penalties, charges, costs, expenses, payments,
diminutions in value and other losses, however suffered or
characterized, all interest thereon, all costs and expenses of
investigating any claim, lawsuit or arbitration and any appeal
therefrom, all actual attorneys’, accountants’
investment bankers’ and expert witness’ fees
incurred in connection therewith, whether or not such claim,
lawsuit or arbitration is ultimately defeated and, subject to
Section 9.4, all amounts paid incident
to
any compromise or settlement of any such claim, lawsuit or
arbitration.
“Liability”
means any liability or obligation (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.
“Material
Adverse Effect” means a material adverse effect on
(i) the assets, liabilities, properties or business of
the Parties, (ii) the validity, binding effect or
enforceability of this Agreement or the Collateral Documents
or (iii) the ability of any Party to perform its
obligations under this Agreement and the Collateral Documents;
provided, however, that none of the following shall constitute
a Material Adverse Effect on the Company: (a) occurrences due
to a disruption of a Party’s business as a result of the
announcement of the execution of this Agreement or changes
caused by the taking of action required by this Agreement, (b)
general economic conditions, or (c) any changes generally
affecting the industries in which a Party
operates.
“Merger
Shares” means the shares of Splinternet Common Stock
deliverable by Splinternet in exchange for Company Common
Stock pursuant to Section 2.5(a).
“Permit”
means any license, permit, consent, approval, registration,
authorization, qualification or similar right granted by a
Regulatory Authority.
“Person”
means any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability
company, Regulatory Authority or other entity.
“Regulatory
Authority” means: (i) the United States of America; (ii)
any state, commonwealth, territory or possession of the United
States of America and any political subdivision thereof
(including counties, municipalities and the like); (iii)
Canada and any other foreign (as to the United States of
America) sovereign entity and any political subdivision
thereof; or (iv) any agency, authority or instrumentality of
any of the foregoing, including any court, tribunal,
department, bureau, commission or board.
“Representative”
means any director, officer, employee, agent, consultant,
advisor or other representative of a Person, including legal
counsel, accountants and financial advisors.
“Splinternet
Common Stock” means the common shares of
Splinternet.
“Splinternet
Securities Filings” means Splinternet’s Annual
Report on Form 10-KSB and its quarterly reports on Form
10-QSB, and all other reports filed and to be filed with the
Commission prior to the Effective Time.
“Subsidiary”
of a specified Person means (a) any Person if securities
having ordinary voting power (at the time in question and
without regard to the happening of any contingency) to elect a
majority of the directors, trustees, managers or other
governing body of such Person are held or controlled by the
specified Person or a Subsidiary of the specified Person; (b)
any Person in which the specified Person and its subsidiaries
collectively hold a 50% or greater equity interest; (c) any
partnership or similar organization in which the specified
Person or subsidiary of the specified Person is a general
partner; or (d) any Person the management of which is directly
or indirectly controlled by the specified Person and its
Subsidiaries through the exercise of voting power, by contract
or otherwise.
“Tax”
means any U.S. or non U.S. federal, state, provincial, local
or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital,
franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property,
intangible property, recording, occupancy, sales, use,
transfer, registration, value added minimum, estimated or
other tax of any kind whatsoever, including any interest,
additions to tax, penalties, fees, deficiencies, assessments,
additions or other charges of any nature with respect thereto,
whether disputed or not.
“Tax
Return” means any return, declaration, report, claim for
refund or credit or information return or statement relating
to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
ARTICLE
II
THE MERGER
2.1
Merger; Surviving Corporation .
In
accordance with and subject to the provisions of this Agreement and
the General Corporation Law of the State of Delaware
(“GCL”), at the Effective Time (as defined in Section
2.4), the Merger Sub shall be merged with and into the Company (the
“Merger”), and the Company shall be the surviving
corporation in the Merger (hereinafter sometimes called the
“Surviving Corporation”) and shall continue its
corporate existence under the laws of the State of Delaware. At the
Effective Time, the separate existence of the Merger Sub shall
cease. All properties, franchises and rights belonging to the
Company and Merger Sub, by virtue of the Merger and without further
act or deed, shall be vested in the Surviving Corporation, which
shall thenceforth be responsible for all the liabilities and
obligations of each of Merger Sub and the Company.
2.2
Articles of Incorporation .
The Company’s certificate of incorporation, as in effect at
the Effective Time, shall continue in full force and effect as the
certificate of incorporation of the Surviving Corporation until
altered or amended as provided therein or by law.
2.3
By-Laws .
The
Company’s by-laws, as in effect at the Effective Time, shall
be the by-laws of the Surviving Corporation until altered, amended
or repealed as provided therein or by law.
2.4
Effective Time .
The
Merger shall become effective at the time and date that the
certificate of merger (the “Certificate of Merger”), in
form and substance acceptable to the Parties and executed in
accordance with the relevant provisions of the GCL, is accepted for
filing by the Secretary of State of the State of Delaware in
accordance with the provisions of the GCL. The date and time when
the Merger becomes effective are referred to herein as the
“Effective Time.”
2.5
Merger Shares; Conversion and Cancellation of Securities
.
(a)
C
onversion of Company Common Stock .
At
the Effective Time, all shares of Company Common Stock outstanding
immediately before the Effective Time, other than shares described
in Section 2.5(b) and other than Dissenting Shares (as defined in
Section 2.8), collectively, the “Excluded Shares”,
shall be converted, by virtue of the Merger, into 4,788,179 shares
of Splinternet Common Stock (the “Merger Shares”),
subject to the following:
(i)
the
allocation of the Merger Shares among the Company Shareholders
excluding the holders of Dissenting Shares shall be as set
forth on Exhibit 2.5 to be delivered to Splinternet at
least one business day prior to the Closing;
(ii)
if
between the date of this Agreement and the Closing Date,
Splinternet shall declare a stock split or declare a dividend
on Splinternet Common Stock payable in Splinternet Common
Stock (or set a record date with respect thereto), the number
of Merger Shares be adjusted to reflect fully the appropriate
effect of any such subdivision, combination or
dividend.
At
the Effective Time, all Company Common Stock shall no longer
be outstanding and shall be cancelled and retired and shall
cease to exist, and each certificate formerly representing any
Company Common Stock (other than Excluded Shares) shall
thereafter represent only the right to the Merger Shares and
any distribution or dividend pursuant to Section
2.6(b).
(b)
Treasury Shares, Etc .
Each
share of Company Common Stock held in the treasury of the Company
(and each share of Company Common Stock, if any, held by
Splinternet or any Subsidiary of Splinternet or of the Company
immediately before the Effective Time) shall be cancelled and
extinguished, and nothing shall be issued or paid in respect
thereof.
(c)
Fractional Shares .
No certificates or scrip evidencing fractional shares of
Splinternet Common Stock shall be issued in exchange for Company
Common Stock. All fractional share amounts shall be
rounded
up to the nearest whole share.
(d)
Capital Stock of Merger Sub .
Each share of common stock of the Merger Sub issued and outstanding
immediately before the Effective Time shall be converted into and
become, and shall represent, one fully-paid and nonassessable share
of common stock of the Surviving Corporation, and shall constitute
the only outstanding shares of capital stock of the Surviving
Corporation.
2.6
Surrender of Company Certificates .
(a)
Exchange Procedures .
Promptly after the Effective Time, Splinternet or its appointed
designee shall mail to each holder of a certificate or certificates
of Company Common Stock (“Company Certificates”) whose
shares are converted into the right to receive the Merger Shares,
(i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Company
Certificates shall pass to Splinternet, only upon delivery of the
Company Certificates to Splinternet and which shall be in such form
and have such other provisions as Splinternet may reasonably
specify) and (ii) instructions for use in effecting the surrender
of the Company Certificates in exchange for the Merger Shares and
any dividends or other distributions pursuant to
Section 2.6(b). Upon surrender of Company Certificates for
cancellation to Splinternet, together with such letter of
transmittal, duly completed and validly executed in accordance with
the instructions thereto, the holders of such Company Certificates
shall be entitled to receive the Merger Shares in exchange therefor
and any dividends or distributions payable pursuant to
Section 2.6(b), and the Company Certificates so surrendered
shall forthwith be canceled. Until so surrendered, outstanding
Company Certificates will be deemed from and after the Effective
Time, for all corporate purposes, subject to Section 2.8, to
evidence the ownership of the number of full shares of Splinternet
Common Stock into which such shares of the Company Common Stock
shall have been so converted and any dividends or distributions
payable pursuant to Section 2.6(b) .
Notwithstanding the foregoing, if any Company Certificate is lost,
stolen, destroyed or mutilated, such holder shall provide evidence
reasonably satisfactory to Splinternet as to such loss, theft,
destruction or mutilation and an affidavit in form and substance
satisfactory to Splinternet, and, thereupon, such holder shall be
entitled to receive the Merger Shares in exchange therefore and any
dividends or distributions payable pursuant to Section 2.6(b),
and the Company Certificates so surrendered shall forthwith be
canceled.
(b)
Distributions With Respect to Unexchanged Shares
.
No dividends or other distributions declared or made after the date
of this Agreement with respect to Splinternet Common Stock with a
record date after the Effective Time, will be paid to the holders
of any unsurrendered Company Certificates with respect to the
shares of Splinternet Common Stock represented thereby until the
holders of record of such Company Certificates shall surrender such
Company Certificates or, in the case of any Company Certificate
which is lost, stolen, destroyed or mutilated, an affidavit in form
and substance satisfactory to Splinternet. Subject to applicable
law, following surrender of any such Company Certificates or
delivery of such affidavit, Splinternet shall deliver to the record
holders thereof, without interest, the Merger Shares hereof and the
amount of any such dividends or other distributions with a record
date after the Effective Time payable with respect to such whole
shares of Splinternet Common Stock.
(c)
Transfers of Ownership .
If certificates for shares of Splinternet Common Stock are to be
issued in a name other than that in which the Company Certificates
surrendered in exchange therefore are registered, it will be a
condition of the issuance thereof that the Company Certificates so
surrendered will be properly endorsed and otherwise in proper form
for transfer and that the persons requesting such exchange will
have paid to Splinternet or any agent designated by it any transfer
or other taxes required by reason of the issuance of certificates
for shares of Splinternet Common Stock in any name other than that
of the registered holder of the Company Certificates surrendered,
or established to the satisfaction of Splinternet or any agent
designated by it that such tax has been paid or is not
payable.
(d)
Required Withholding .
In connection with any payment to any holder or former holder of
the Company Common Stock, each of Splinternet and the 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 the 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 laws. 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.
(e)
No Liability .
Notwithstanding anything to the contrary in this Section 2.6,
neither Splinternet, the Surviving Corporation nor any party hereto
shall be liable to any Person for any amount properly paid to a
public official pursuant to any applicable abandoned property,
escheat or similar law. If any Company Certificate shall not have
been surrendered prior to the date immediately prior to the date on
which such property would otherwise escheat to or become the
property of any Governmental or Regulatory Authority, any such
property, to the extent permitted by applicable law, shall become
the property of the Surviving Corporation, free and clear of all
claims or interest of any person previously entitled
thereto.
(f)
Termination .
Any holders of the Company Certificates who have not complied with
this ARTICLE
II shall
look only to Splinternet or the Surviving Corporation for, and
Splinternet and the Surviving Corporation shall remain liable for,
payment of their claim for Merger Shares and any dividends or
distributions with respect to Splinternet Common Stock, without
interest thereon.
2.7
Stock Transfer Books .
At
the Effective Time, the stock transfer books of the Company shall
be closed, and there shall be no further registration of transfers
of shares of Company Common Stock thereafter on the records of the
Company.
2.8
Dissenting Shares .
Shares
of Company Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by
persons who have properly exercised, and not withdrawn or waived,
appraisal rights with respect thereto in accordance with the GCL
(the “Dissenting Shares”), will not be converted into
the right to receive the Merger Shares, and holders of such shares
of Company Common Stock will be entitled, in lieu thereof, to
receive payment of the appraised value of such shares of Company
Common Stock in accordance with the provisions of the GCL unless
and until such holders fail to perfect or effectively withdraw or
lose their rights to appraisal and payment under the GCL. If, after
the Effective Time, any such holder fails to perfect or effectively
withdraws or loses such right, such shares of Company Common Stock
will thereupon be treated as if they had been converted at the
Effective Time into the right to receive the Merger Shares, without
any interest thereon. The Company will give Splinternet prompt
notice of any demands received by the Company for appraisal of
shares of Company Common Stock. Prior to the Effective Time, the
Company will not, except with the prior written consent of
Splinternet make any payment with respect to, or settle or offer to
settle, any such demands.
2.9
Restriction on Transfer .
The Merger Shares may not be sold, transferred, or otherwise
disposed of without registration under the Act or an exemption
therefrom, and that in the absence of an effective registration
statement covering the Merger Shares or any available exemption
from registration under the Act, the Merger Shares must be held
indefinitely. The Company Shareholders are aware that the Merger
Shares may not be sold pursuant to Rule 144 promulgated under the
Act unless all of the conditions of that Rule are met. Among the
conditions for use of Rule 144 may be the availability of current
information to the public about Splinternet.
2.10
Closing .
The
closing of the transactions contemplated by this Agreement and the
Collateral Documents (the “Closing”) shall take place
at the offices of Splinternet, or at such other location as the
parties may agree on such date which is no later
than five (5) business days following completion of the actions
described in ARTICLES V and VI below, or on such other date as
shall be mutually agreed upon by the parties hereto (the actual
time and date of closing being hereinafter referred to as the
“Closing Date”).
ARTICLE
III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to Splinternet that the
statements contained in this ARTICLE
III are
correct and complete as of the date of this Agreement and,
except as provided in Section 5.1, will be correct and
complete in all material respects 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
III ,
except in the case of representations and warranties stated to
be made as of the date of this Agreement or as of another date
and except for changes contemplated or permitted by this
Agreement).
3.1
Organization and Qualification .
The
Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization.
The Company has all requisite power and authority to own, lease and
use its assets as they are currently owned, leased and used and to
conduct its business as it is currently conducted. The Company is
duly qualified or licensed to do business in and is in good
standing in each jurisdiction in which the character of the
properties owned, leased or used by it or the nature of the
activities conducted by it make such qualification necessary,
except any such jurisdiction where the failure to be so qualified
or licensed would not have a Material Adverse Effect on the Company
or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents or the
ability of the Company to perform its obligations under this
Agreement or any of the Collateral Documents.
3.2
Capitalization .
(a)
The
authorized, issued and outstanding capital stock and other
ownership interests of the Company consists of 10,000,000
shares of common stock, of which 3,591,134 shares were
outstanding as of the date hereof. All of the outstanding
Company capital stock has been duly authorized and are validly
issued, fully paid and nonassessable.
(b)
Listed
in Item 3.2(b) to the disclosure schedule delivered by the
Company to Splinternet (the “Company Disclosure
Schedule”) are all issued and outstanding Company Common
Stock, and all outstanding or authorized options, warrants,
purchase rights, preemptive rights or other contracts or
commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding any of its capital stock
or other ownership interests (collectively
“Options”).
(c)
All
of the issued and outstanding shares of Company Common Stock
have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable and have been issued
in compliance with applicable securities laws and other
applicable Legal Requirements or transfer restrictions under
applicable securities laws.
3.3
Authority and Validity .
The Company has all requisite corporate power to execute and
deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement (subject to the
approval of the Company Shareholders as contemplated by Section
9.3). The execution and delivery by the Company of, the performance
by the Company of its obligations under, and the consummation by
the Company of the transactions contemplated by, this Agreement
have been duly authorized by all requisite action of the Company
(subject to the approval of the Company Shareholders as
contemplated by Section 9.3). This Agreement has been duly
executed and delivered by the Company and (assuming due execution
and delivery by the Splinternet Parties and approval by the Company
Shareholders) is the legal, valid, and binding obligation of the
Company, enforceable against it in accordance with its terms,
except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors’ rights
generally and (ii) general equitable principles. Upon the execution
and delivery of the Collateral Documents by each Person (other than
the Splinternet Parties) that is required by this Agreement to
execute, or that does execute, this Agreement or any of the
Collateral Documents, and assuming due execution and delivery
thereof by the Splinternet Parties, the Collateral Documents will
be the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective
terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting or relating to enforcement of creditors’
rights generally and (ii) general equitable
principles.
3.4
No Breach or Violation .
Subject
to obtaining the consents, approvals, authorizations, and orders of
and making the registrations or filings with or giving notices to
Regulatory Authorities and Persons identified herein, the
execution, delivery and performance by the Company of this
Agreement and the Collateral Documents to which it is a party, and
the consummation of the transactions contemplated hereby and
thereby in accordance with the terms and conditions hereof and
thereof, do not and will not conflict with, constitute a violation
or breach of, constitute a default or give rise to any right of
termination or acceleration of any right or obligation of the
Company under, or result in the creation or imposition of any
Encumbrance upon the Company, the Company Assets, the Company
Business or the Company Common Stock by reason of the terms of (i)
the articles of incorporation, by-laws or other charter or
organizational document of the Company or any Subsidiary of the
Company, (ii) any material contract, agreement, lease, indenture or
other instrument to which the Company is a party or by or to which
the Company, or the Assets may be bound or subject and a violation
of which would result in a Material Adverse Effect on the Company,
(iii) any order, judgment, injunction, award or decree of any
arbitrator or Regulatory Authority or any statute, law, rule or
regulation applicable to the Company or (iv) any Permit of the
Company, which in the case of (ii), (iii) or (iv) above would have
a Material Adverse Effect on the Company or a material adverse
effect on the validity, binding effect or enforceability of this
Agreement or the Collateral Documents or the ability of the Company
to perform its obligations under this Agreement or any of the
Collateral Documents.
3.5
Consents and Approvals .
Except
for requirements described in Item 3.5 of the Company Disclosure
Schedule, no consent, approval, authorization or order of,
registration or filing with, or notice to, any Regulatory Authority
or any other Person is necessary to be obtained, made or given by
the Company in connection with the execution, delivery and
performance by the Company of this Agreement or any Collateral
Document or for the consummation by the Company of the transactions
contemplated hereby or thereby, except to the extent the failure to
obtain any such consent, approval, authorization or order or to
make any such registration or filing would not have a Material
Adverse Effect on the Company or a material adverse effect on the
validity, binding effect or enforceability of this Agreement or the
Collateral Documents or the ability of the Company to perform its
obligations under this Agreement or any of the Collateral
Documents.
3.6
Intellectual Property .
The
Company has good title to or the right to use all material company
intellectual property rights and all material inventions,
processes, designs, formulae, trade secrets and know-how necessary
for the operation of the Company Business without the payment of
any royalty or similar payment. Item
3.6 of the Company Disclosure Schedule lists all patents, trade
names, trademarks and service marks, all patent, trademark and
service mark registrations or applications, presently owned,
possessed, used or held by the Company and all copyrights and
copyright applications and registrations, relating to the business
of the Company, all of which are collectively referred to as the
“Proprietary Rights”. Item 3.6 of the Company
Disclosure Schedule also lists all licenses, if any granted by or
to the Company. Except as set forth in Item 3.6 of the Company
Disclosure Schedule, the Company has not granted to any person,
firm or corporation, any right, license or privilege in any of the
Proprietary Rights or the know-how used in the business of the
Company nor have such Proprietary Rights or know-how been revealed
to any persons other that its employees, customers and consultants.
No Proprietary Rights or applications or grants of licenses set
forth in Item 3.6 of the Company Disclosure Schedule are subject to
any pending or threatened challenge.
3.7
Compliance with Legal Requirements .
The
Company has operated the Company Business in compliance with all
Legal Requirements applicable to the Company except to the extent
the failure to operate in compliance with all material Legal
Requirements would not have a Material Adverse Effect on the
Company or Material Adverse Effect on the validity, binding effect
or enforceability of this Agreement or the Collateral
Documents.
3.8
Financial Statements .
At the earlie
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