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Agreement And Plan Of Merger

Agreement and Plan of Merger

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CUBIC CORP /DE/ | Abraxas Corporation | ABRX Acquisition Corp | Cubic Corporation | Teresa R Helms Family Trust

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Title: AGREEMENT AND PLAN OF MERGER
Governing Law: Virginia     Date: 2/3/2011
Industry: Aerospace and Defense     Law Firm: Greenberg Traurig;Fulbright Jaworski     Sector: Capital Goods

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Exhibit 10.6

 

EXECUTION COPY

 

 

 

 

 

 

AGREEMENT AND PLAN OF MERGER

 

 

among

 

 

CUBIC CORPORATION, a Delaware corporation,

 

ABRX ACQUISITION CORP., a Virginia corporation;

 

ABRAXAS CORPORATION, a Virginia corporation,

 

The Persons and Entities Listed as Shareholders
on the Signature Pages Hereto

 

and

 

RICHARD HELMS, in his capacity as
representative of the Shareholders

 

 

Dated as of November 15, 2010

 

 

 

 

 

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

1.

Definitions

2

 

 

 

 

 

1.1

Defined Terms

2

 

 

 

 

 

1.2

Other Definitional Provisions

2

 

 

 

 

2.

The Merger

2

 

 

 

 

 

2.1

Terms of the Merger

2

 

 

 

 

 

2.2

Conversion of Capital Stock

2

 

 

 

 

 

2.3

Options

3

 

 

 

 

 

2.4

Representations Regarding Capitalization

3

 

 

 

 

 

2.5

Exchange of Certificates; Lost Certificates

3

 

 

 

 

 

2.6

Effect of the Merger

4

 

 

 

 

 

2.7

Dissenters’ Rights

4

 

 

 

 

3.

The Closing

5

 

 

 

 

 

3.1

The Closing

5

 

 

 

 

 

3.2

The Closing Transactions

5

 

 

 

 

4.

Closing Estimates; Final Merger Consideration

6

 

 

 

 

 

4.1

Closing Estimates

6

 

 

 

 

 

4.2

Final Merger Consideration

7

 

 

 

 

 

4.3

Access to Information

7

 

 

 

 

 

4.4

Disagreements

8

 

 

 

 

 

4.5

Costs and Expenses

9

 

 

 

 

 

4.6

Adjustments

9

 

 

 

 

 

4.7

Withholding

10

 

 

 

 

5.

Representations and Warranties of the Company

10

 

 

 

 

 

5.1

Organization and Corporate Power

10

 

 

 

 

 

5.2

Subsidiaries

11

 

 

 

 

 

5.3

Authorization of Agreement

11

 

 

 

 

 

5.4

Conflicts; Consents of Third Parties

12

 

 

 

 

 

5.5

Capitalization

13

 

 

 

 

 

5.6

Financial Statements

13

 

 

 

 

 

5.7

No Undisclosed Liabilities

16

 

i



 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

 

5.8

Absence of Changes

16

 

 

 

 

 

5.9

Title to and Conditions of Assets

16

 

 

 

 

 

5.10

Intellectual Property

17

 

 

 

 

 

5.11

Contracts

19

 

 

 

 

 

5.12

Performance of Services

24

 

 

 

 

 

5.13

Compliance with Legal Requirements

24

 

 

 

 

 

5.14

Compliance with Foreign Corrupt Practices Act

24

 

 

 

 

 

5.15

Governmental Authorizations

25

 

 

 

 

 

5.16

Tax Matters

25

 

 

 

 

 

5.17

Employee Benefit Plans

28

 

 

 

 

 

5.18

Labor

30

 

 

 

 

 

5.19

Environmental Compliance and Conditions

31

 

 

 

 

 

5.20

Insurance

31

 

 

 

 

 

5.21

Legal Proceedings; Orders

32

 

 

 

 

 

5.22

Related Party Transactions

32

 

 

 

 

 

5.23

Customers and Suppliers

33

 

 

 

 

 

5.24

Restrictions on Business Activities

33

 

 

 

 

 

5.25

Broker Fees

33

 

 

 

 

 

5.26

Full Disclosure

33

 

 

 

 

6.

Representations and Warranties of the Shareholders

33

 

 

 

 

 

6.1

Authority

33

 

 

 

 

 

6.2

No Conflicts; Consents

34

 

 

 

 

 

6.3

Shares of Company Common Stock

34

 

 

 

 

7.

Representations of Buyer and Merger Sub

35

 

 

 

 

 

7.1

Organization and Corporate Power

35

 

 

 

 

 

7.2

Authorization

35

 

 

 

 

 

7.3

No Violation

35

 

 

 

 

 

7.4

Litigation

35

 

 

 

 

 

7.5

Broker Fees

36

 

 

 

 

 

7.6

Investment Representation

36

 

ii



 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

8.

Covenants of the Company and the Shareholders

36

 

 

 

 

 

8.1

Access and Investigation

36

 

 

 

 

 

8.2

Conduct of the Business

36

 

 

 

 

 

8.3

Notice of Certain Events

37

 

 

 

 

 

8.4

Consents and Approvals

37

 

 

 

 

 

8.5

Non-Negotiation; Non-Solicitation

38

 

 

 

 

 

8.6

Covenant Not to Compete

38

 

 

 

 

9.

Additional Covenants of the Parties

40

 

 

 

 

 

9.1

Further Assurances

40

 

 

 

 

 

9.2

Antitrust Notification

40

 

 

 

 

 

9.3

Confidentiality

41

 

 

 

 

 

9.4

Publicity

42

 

 

 

 

 

9.5

Use of Name

42

 

 

 

 

 

9.6

Supplementation and Amendment of Schedules

43

 

 

 

 

 

9.7

Employee Benefits

43

 

 

 

 

 

9.8

Tax Matters

43

 

 

 

 

 

9.9

Payment of Indebtedness and Transaction Expenses

46

 

 

 

 

 

9.10

Preservation of Records

47

 

 

 

 

 

9.11

Company Shareholder Approval

47

 

 

 

 

10.

Conditions to Closing

48

 

 

 

 

 

10.1

Conditions to Buyer’s and Merger Sub’s Obligations

48

 

 

 

 

 

10.2

Conditions to the Company’s Obligations

51

 

 

 

 

 

10.3

Conditions to All Parties’ Obligations

52

 

 

 

 

11.

Termination

52

 

 

 

 

 

11.1

Termination

52

 

 

 

 

 

11.2

Effect of Termination

53

 

 

 

 

12.

Indemnification

53

 

 

 

 

 

12.1

Survival

53

 

 

 

 

 

12.2

Indemnification by the Shareholders

54

 

 

 

 

 

12.3

Exclusive Remedy

55

 

iii



 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

 

12.4

Claims First Satisfied from Indemnity Holdback Account

55

 

 

 

 

 

12.5

Indemnification by Buyer

55

 

 

 

 

 

12.6

Termination of Indemnification

56

 

 

 

 

 

12.7

Procedures Relating to Indemnification

56

 

 

 

 

 

12.8

Tax Treatment of Indemnity Payments

57

 

 

 

 

 

12.9

Materiality

58

 

 

 

 

 

12.10

Additional Provisions

58

 

 

 

 

13.

Miscellaneous

59

 

 

 

 

 

13.1

Representative

59

 

 

 

 

 

13.2

Governing Law

60

 

 

 

 

 

13.3

Arbitration

60

 

 

 

 

 

13.4

Waiver of Jury Trial

61

 

 

 

 

 

13.5

Amendment

61

 

 

 

 

 

13.6

Waiver

61

 

 

 

 

 

13.7

Entire Agreement

61

 

 

 

 

 

13.8

Expenses

61

 

 

 

 

 

13.9

Assignment

62

 

 

 

 

 

13.10

Notices

62

 

 

 

 

 

13.11

Cooperation

63

 

 

 

 

 

13.12

Severability

63

 

 

 

 

 

13.13

Construction

63

 

 

 

 

 

13.14

Counterparts

63

 

iv



 

AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) is made and entered into as of November 15, 2010, by and among Cubic Corporation, a Delaware corporation (“ Buyer ”), ABRX Acquisition Corp., a Virginia corporation (“ Merger Sub ”), and Abraxas Corporation, a Virginia corporation (the “ Company ”), the persons and entities listed Shareholders on the signature pages hereto (each a “ Shareholder ” and collectively the “ Shareholders ”), and Richard Helms, in his capacity as representative of the Shareholders in accordance with Section 13.1 hereof (the “ Representative ”).

 

R E C I T A L S:

 

WHEREAS, the Company is engaged in the business of providing technical solutions and tradecraft support services to the intelligence community and the national security community in the United States;

 

WHEREAS, the sole director of the Company and the respective boards of directors of Buyer and Merger Sub have authorized, adopted and approved this Agreement and such boards determined that this Agreement and the Merger are desirable and in the best interests of their respective stockholders and the board of directors of the Company and Merger Sub have recommended that their respective shareholders approve this Agreement and the Merger;

 

WHEREAS, the Shareholders, holders of all the outstanding capital stock of the Company, have adopted and approved this Agreement and the Merger based on the recommendation of the board of directors of the Company that this Agreement and the Merger are desirable and in the best interests of its shareholders;

 

WHEREAS, it is intended by the parties that, prior to the consummation of the transactions contemplated by this Agreement, (i) certain assets owned by the Company will be conveyed by the Company to Ntrepid Corp. (“ Ntrepid ”), a Florida corporation and wholly owned subsidiary of the Company, as described on Exhibit A-1 (together, the “Property Contribution” ), (ii) all outstanding capital stock of Ntrepid will be distributed to the Shareholders listed on Exhibit A-2 (the “ Spinoff Distribution ”), and (iii) the Company will distribute to one of the Shareholders a note receivable in the anticipated principal amount as of the Closing Date of approximately $16.7 million from Abraxas Applications, Inc., a Virginia corporation and an Affiliate (as defined below) of the Company, which is payable to the Company (the “ Note Distributions ” and, together with the Property Contribution and the Spinoff Distribution, the “ Related Transactions ”).

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 



 

A G R E E M E N T:

 

1.              Definitions.

 

1.1            Defined Terms.   Capitalized terms used but not otherwise defined in this Agreement shall have the meanings set forth in Exhibit 1.1.

 

1.2            Other Definitional Provisions.

 

(a)            Accounting terms which are not otherwise defined in this Agreement have the meanings given to them under GAAP. To the extent that the definition of an accounting term defined in this Agreement is inconsistent with the meaning of such term under GAAP, the definition set forth in this Agreement will control.

 

(b)            The terms “hereof,” “herein” and “hereunder” and terms of similar import are references to this Agreement as a whole and not to any particular provision of this Agreement. Section, clause, schedule and exhibit references contained in this Agreement are references to sections, clauses, schedules and exhibits in or to this Agreement, unless otherwise specified.

 

(c)            The term “including” has the inclusive meaning frequently identified with the phrase “but not limited to.”

 

(d)            Any reference in this Agreement to gender shall include all genders and words imparting the singular number shall include the plural and vice versa.

 

2.              The Merger.

 

2.1            Terms of the Merger.

 

(a)            Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, Merger Sub shall merge with and into the Company in accordance with Virginia Law (the “ Merger ”), whereupon the separate existence of Merger Sub shall cease, and the Company shall be the surviving corporation (the “ Surviving Corporation ”).

 

(b)            At the Closing, the Company and Merger Sub shall cause the articles of merger substantially in the form Exhibit 2.1(b) (the “ Articles of Merger ”) to be executed, acknowledged and filed with the Secretary of State of the Commonwealth of Virginia and make all other filings or recordings required by Virginia Law in connection with the Merger.  The Merger shall become effective at such time as a certificate of merger is issued by the Secretary of State of the Commonwealth of Virginia with respect to the merger or at such later time as may specified in the Articles of Merger as agreed between the Company and Buyer (the “ Effective Time ”).

 

(c)            From and after the Effective Time, the Surviving Corporation shall succeed to all the assets, rights, privileges, powers and franchises and be subject to all of the liabilities, restrictions, disabilities and duties of each of the Company and Merger Sub, all as provided under Virginia Law.

 

2.2            Conversion of Capital Stock.   At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof:

 

2



 

(a)            Except as otherwise provided in Section 2.2(b) , each share of Company Common Stock issued and outstanding immediately prior to the Effective Time shall be canceled and extinguished and converted into the right to receive the Per Share Portion of the Final Merger Consideration, payable in cash.  For purposes of this Agreement, the term “ Preliminary Merger Consideration ” means (i) $124,000,000, minus (ii) the amount of Estimated Closing Indebtedness, minus (iii) Estimated Closing Transaction Expenses, minus (iv) the amount of the Expense Funds retained by Representative in accordance with Section 13.1(f) , minus (v) the amount, if any, by which the Target Net Working Capital exceeds the Estimated Closing Net Working Capital as determined in accordance with Section 4 herein, plus (vi) the amount, if any, by which the Estimated Closing Net Working Capital exceeds the Target Net Working Capital as determined in accordance with Section 4 herein.  The Preliminary Merger Consideration as finally adjusted pursuant to Section 4 is referred to herein as the “ Final Merger Consideration .”

 

(b)            Each share of Company Common Stock held immediately prior to the Effective Time by the Company as treasury stock or by Buyer or Merger Sub shall be canceled, and no payment shall be made with respect thereto.

 

(c)            Each share of Merger Sub’s common stock issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and non assessable share of common stock, $.01 par value, of the Surviving Corporation.

 

2.3            Options.   Each Option outstanding immediately prior to the Merger shall be fully vested and cancelled prior to the Merger.  As of the Effective Time, each Optionholder shall have the right to receive an amount in cash (the “ Option Amount ”) equal to (a) the product of (i) the number of shares of Company Common Stock subject to such Option immediately prior to the Merger (after giving effect to such full vesting) (the “ Option Shares ”), and (ii) such Optionholder’s Per Share Portion of the Final Merger Consideration, minus (b) the aggregate exercise price of the Option, minus (c) applicable withholding Taxes.

 

2.4            Representations Regarding Capitalization.   The Option Amounts payable to each Optionholder and the Per Share Portion of the Preliminary Merger Consideration, the Final Merger Consideration, the Adjustment Holdback Amount and the Indemnity Holdback Amount have been calculated assuming the accuracy of the representations and warranties of the Company set forth in Section 5.5 .  To the extent the outstanding shares of Company Common Stock or Options are greater than or less than the amount set forth in Section 5.5 , the Option Amounts payable to each Optionholder and the Per Share Portion of the Preliminary Merger Consideration, the Final Merger Consideration, the Adjustment Holdback Amount and the Indemnity Holdback Amount shall be appropriately adjusted.

 

2.5            Exchange of Certificates; Lost Certificates.

 

(a)            At the Effective Time, each Shareholder shall surrender to Buyer certificates of Company Common Stock, duly endorsed in blank or accompanied by duly executed stock powers, representing the number of shares of Company Common Stock held by such holder.

 

3



 

(b)            At the Closing, pursuant to the Merger each Shareholder who has surrendered his, her or its certificates of Company Common Stock, duly endorsed in blank or accompanied by duly executed stock powers, shall receive cash to which he, she or it is entitled under Section 2.2 , less (i) such Shareholder’s Allocation Percentage of the Adjustment Holdback Amount and the Indemnity Holdback Amount.  Notwithstanding anything contained herein to the contrary, each Shareholder who fails to deliver his, her or its certificate(s) of Company Common Stock at the Closing shall receive cash pursuant to this Section 2.5(b) promptly after Buyer’s receipt of such Shareholder’s certificate(s).

 

(c)            Surrendered certificates shall forthwith be canceled.  Until so surrendered and exchanged, each such certificate shall represent solely the right to receive, per share, the Per Share Portion of the Final Merger Consideration (subject to adjustment as provided herein) pursuant to Section 2.2 , and the Surviving Corporation shall not be required to pay the holder thereof the cash to which he, she or it would otherwise have been entitled.  Notwithstanding the foregoing, if any such certificate shall have been lost, stolen or destroyed, then, upon the making of an affidavit of such fact by the Person claiming such certificate to be lost, stolen or destroyed and the providing of an indemnity by such Person, in form and substance reasonably satisfactory to Buyer, against any claim that may be made against it with respect to such certificate,  Buyer shall deliver to such Person, in exchange for such lost, stolen or destroyed certificate, the Per Share Portion of the Final Merger Consideration to be paid in respect of the shares of Company Common Stock represented by such certificate, as contemplated by this Section 2.5 .

 

2.6            Effect of the Merger.

 

(a)            Articles of Incorporation .  The articles of incorporation of the Company shall be amended and restated in the Merger to read as set forth on Exhibit 2.6(a)  and shall be the articles of incorporation of the Surviving Corporation until amended in accordance with applicable Legal Requirements.

 

(b)            Bylaws .  The bylaws of Merger Sub in effect at the Effective Time shall be adopted as the bylaws of the Surviving Corporation until amended in accordance with applicable Legal Requirements.

 

(c)            Directors and Officers .  From and after the Effective Time, until successors are duly elected or appointed in accordance with applicable Legal Requirements (or their earlier resignation or removal), the directors of Merger Sub shall be the directors of the Surviving Corporation and the individuals listed on Exhibit 2.6(c) shall be the officers of the Surviving Corporation .

 

2.7            Dissenters’ Rights .  Notwithstanding any provision of this Agreement to the contrary, any shares of Company Common Stock held by a holder who has demanded and perfected such holder’s right for appraisal of such shares in accordance with Virginia Law and who, as of the Effective Time, has not effectively withdrawn or lost such right to appraisal (“ Dissenting Shares ”), if any, shall not be converted into the Preliminary Merger Consideration or the Final Merger Consideration but shall instead be converted into the right to receive such consideration as may be determined to be due with respect to such Dissenting Shares pursuant to Virginia Law.  The Company shall give Buyer prompt notice of any demand received by the Company to require the Company to purchase shares of Company Common Stock, and Buyer shall have the right to direct and participate in all negotiations and proceedings with respect to such demand.

 

4



 

The Company agrees that, except with the prior written consent of Buyer, or as required under Virginia Law, it will not voluntarily make any payment with respect to, or settle or offer to settle, any such purchase demand.  Each holder of Dissenting Shares (“ Dissenting Shareholder ”) who, pursuant to the provisions of Virginia Law, becomes entitled to payment of the fair value for shares of Company Common Stock shall receive payment therefor (but only after the value therefor shall have been agreed upon or finally determined pursuant to such provisions).  If, after the Effective Time, any Dissenting Shares shall lose their status as Dissenting Shares, Buyer shall pay such Dissenting Shareholder the portion of the Preliminary Merger Consideration or Final Merger Consideration, as applicable, to which such shareholder would otherwise be entitled under Section 2.2 (less such Shareholder’s Allocation Percentage of the Adjustment Holdback Amount and the Indemnity Holdback Amount).

 

3.              The Closing.

 

3.1            The Closing .  The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York 10103 at 10:00 a.m. New York City as soon as practicable, but no less than two Business Days, following full satisfaction or due waiver of all of the closing conditions set forth in Section 10 hereof (other than those to be satisfied at the Closing), or on such other date as is mutually agreeable to Buyer and the Company.  The date and time of the Closing are referred to herein as the “ Closing Date .”

 

3.2            The Closing Transactions.   At the Closing, the parties hereto shall consummate the following transactions (the “ Closing Transactions ”):

 

(a)            the Company and Merger Sub shall cause the Articles of Merger to be executed and filed with the Secretary of State of the Commonwealth of Virginia;

 

(b)            subject to delivery and receipt of a duly executed Letter of Transmittal as provided in clause (g) below, Buyer shall deliver to each holder of Company Common Stock such holder’s Per Share Portion of the Preliminary Merger Consideration, less such holder’s Allocation Percentage of the Adjustment Holdback Amount and the Indemnity Holdback Amount, in cash by wire transfer of immediately available funds to a single account designated by the Representative in writing at least three Business Days prior to the Closing Date;

 

(c)            subject to delivery and receipt of a duly executed Letter of Transmittal as provided in clause (g) below, Buyer shall deliver to each Optionholder the amount (after applicable withholding Taxes) due to such Optionholder for such Optionholder’s cancelled Options under Section 2.3 , less such Optionholder’s Allocation Percentage of the Adjustment Holdback Amount and the Indemnity Holdback Amount, in cash by wire transfer of immediately available funds to a single account designated by the Representative in writing at least three Business Days prior to the Closing Date;

 

(d)            subject to receipt of the payoff letters contemplated by Section 10.1 , Buyer shall repay, or cause to be repaid, on behalf of the Company, all amounts necessary to discharge fully the then-outstanding balance of all Estimated Closing Indebtedness by wire transfer of immediately available funds to the account designated by the holder of such Indebtedness;

 

5



 

(e)           Buyer, the Representative and the Company shall enter into an escrow agreement with the Escrow Agent effective as of the Closing Date which shall be substantially in the form attached hereto as Exhibit 3.2(e)  (the “ Escrow Agreement ”);

 

(f)            Buyer shall deliver the Adjustment Holdback Amount and the Indemnity Holdback Amount to the Escrow Agent which shall be held by the Escrow Agent pursuant to the Escrow Agreement;

 

(g)           the Company shall deliver to Buyer one or more certificates, duly endorsed in blank or accompanied by duly executed stock powers, together with a duly executed Letter of Transmittal substantially in the form of Exhibit 3.2(g)(i)  representing all of the outstanding shares of Company Common Stock as of immediately prior to the Effective Time or affidavits of loss and indemnities as set forth in Section 2.5(c)  in form and substance reasonably satisfactory to Buyer, and each Optionholder shall deliver a duly executed Letter of Transmittal substantially in the form of Exhibit 3.2(g)(ii)  in respect of the options to purchase Company Common Stock held by such holder as of immediately prior to the Effective Time (each such Letter of Transmittal, a “ Letter of Transmittal ”);

 

(h)           Buyer shall pay, or cause to be paid, on behalf of the Company and the Shareholders, all Estimated Closing Transaction Expenses to each Person who is owed a portion thereof;

 

(i)            the Company shall deliver to Buyer written letters of resignation, effective as of the Effective Time, of each of the directors and officers of the Company requested by Buyer prior to the Closing.

 

For the avoidance of doubt, and notwithstanding anything contained herein to the contrary, the failure of any Shareholder to satisfy any of the deliveries set forth in Section 3.2(g)  shall not affect Buyer’s obligation to deliver to any other Shareholder such portion of the Final Merger Consideration (less such Shareholder’s Allocation Percentage of the Adjustment Holdback Amount and the Indemnity Holdback Amount) to which such other Shareholder is entitled at Closing.  If any Shareholder fails to satisfy any of the deliveries set forth in Section 3.2(g) , the payment of such Shareholder’s portion of the Final Merger Consideration (less such Shareholder’s Allocation Percentage of the Adjustment Holdback Amount and the Indemnity Holdback Amount) shall be made after the Closing, promptly after Buyer’s receipt of such Shareholder’s deliveries.

 

4.                                        Closing Estimates; Final Merger Consideration.

 

4.1                                  Closing Estimates.   At least two Business Days prior to the Closing Date, the Company shall prepare and deliver to Buyer (a) the Company’s good-faith estimate of the Company’s Net Working Capital (the “ Estimated Closing Net Working Capital ”) and Indebtedness (the “ Estimated Closing Indebtedness ”), each as of the Closing Date (immediately prior to giving effect to the transactions contemplated herein), based on the Company’s books and records and other information then available and calculated on a basis consistent with this Agreement, and (b) a schedule setting forth the Transaction Expenses (the “ Estimated Closing Transaction Expenses ”).  All calculations of Net Working Capital, Indebtedness and Transaction Expenses hereunder shall be made without duplication of any asset, liability, income or expense between such calculations.

 

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4.2                                  Final Merger Consideration.  As promptly as practicable after the Closing, but in no event later than 60 days after the Closing Date, Buyer shall cause the Surviving Corporation to prepare and deliver to the Representative (on behalf of the Shareholders) a statement (the “ Closing Statement ”) as of the close of business on the Closing Date, setting forth the Surviving Corporation’s calculation of the Net Working Capital (the “ Closing Net Working Capital ”), Indebtedness (the “ Closing Indebtedness ”) and Transaction Expenses (the “ Closing Transaction Expenses ”) (immediately prior to giving effect to the transactions contemplated herein), which shall be calculated on a basis consistent with this Agreement, including, as applicable Schedule 4.2 and the accounting principles and practices referred to therein in the same way, using the same methods, principles, conventions, policies and procedures (including the methodology used by the Company with respect to accruals and reserves to prepare the estimates described in Section 4.1 ).  The Closing Statement shall contain a calculation of the Final Merger Consideration based on the foregoing amounts of Closing Net Working Capital, Closing Indebtedness and Closing Transaction Expenses.  If Buyer does not deliver the Closing Statement to the Representative by 5:00 p.m., New York City time, on the 60 th  day after the Closing Date (such date and time, the “ Closing Statement Due Date ”), the Preliminary Merger Consideration shall be conclusive and binding on Buyer, the Surviving Corporation and the Shareholders.  To the extent any actions following the Closing with respect to the accounting books and records of the Surviving Corporation on which the Closing Statement and the foregoing calculations are to be based are not consistent with the Company’s past practices, such changes shall not be taken into account in preparing the Closing Statement or calculating the Closing Net Working Capital and Closing Indebtedness.

 

4.3                                  Access to Information.  The Surviving Corporation and Buyer shall (a) permit the Representative and his representatives to have full access to the books, records and other documents (including work papers, schedules, financial statements, memoranda, etc.) and shall cooperate with the Representative in seeking to obtain work papers from the Surviving Corporation pertaining to or used in connection with the preparation of the Closing Statement and calculation of the Closing Net Working Capital, Closing Indebtedness, Closing Transaction Expenses and Final Merger Consideration and provide the Representative with copies thereof (as reasonably requested by the Representative) and (b) provide the Representative and his representatives full access to the Surviving Corporation’s employees and accountants as reasonably requested by the Representative (including making the Surviving Corporation’s chief financial officer and certified public accountants available to respond to written or oral inquiries of the Representative or his representatives).  If the Representative (on behalf of the Shareholders) disagrees with any part of the Surviving Corporation’s calculation of the Closing Net Working Capital, Closing Indebtedness, Closing Transaction Expenses or Final Merger Consideration as set forth on the Closing Statement, the Representative shall, within 30 days after the Representative’s receipt of the Closing Statement, notify Buyer in writing of such disagreement by setting forth the Representative’s calculation of the Closing Net Working Capital, Closing Indebtedness, Closing Transaction Expenses and Final Merger Consideration and describing the basis for such disagreement (an “ Objection Notice ”); provided that the amount of Closing Indebtedness and Closing Transaction Expenses set forth in the Objection Notice shall not be less than the amount of the Estimated Closing Indebtedness and Estimated

 

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Closing Transaction Expenses, respectively, paid at the Closing pursuant to Sections 2.2(a) .  If the Representative does not deliver an Objection Notice to Buyer by 5:00 p.m., New York City time, on the 30 th  day after the Representative’s receipt of the Closing Statement, or if the Representative notifies Buyer in writing prior to that time that the Representative does not disagree with any part of the Surviving Corporation’s calculation of the Closing Net Working Capital, Closing Indebtedness, Closing Transaction Expenses or Final Merger Consideration as set forth on the Closing Statement, the Closing Statement shall be conclusive and binding on Buyer, the Surviving Corporation and the Shareholders.  If the Representative timely delivers an Objection Notice objecting to some but not all of the Closing Statement, those portions of the Closing Statement to which the Representative does not object shall be conclusive and binding on Buyer, the Surviving Corporation and the Shareholders and any amounts not subject to an Objection Notice shall be distributed to the Shareholders in accordance with Section 2.2(a) .  If an Objection Notice is delivered to Buyer, then Buyer and the Representatives (on behalf of the Shareholders) shall negotiate in good faith to resolve their disagreements with respect to the computation of the Closing Net Working Capital, Closing Indebtedness, Closing Transaction Expenses and/or Final Merger Consideration.  In the event that Buyer and the Representative are unable to resolve all such disagreements within 30 days after Buyer’s receipt of such Objection Notice, Buyer or the Representative may submit such remaining disagreements to PricewaterhouseCoopers LLP, or another nationally recognized certified public accounting firm as is reasonably acceptable to Buyer and the Representative (the “ Accounting Firm ”).

 

4.4                                  Disagreements.   If such disagreements are submitted to the Accounting Firm, Buyer and the Representative shall use commercially reasonable efforts to cause the Accounting Firm to resolve all remaining disagreements with respect to the computation of the Closing Net Working Capital, Closing Indebtedness, Closing Transaction Expenses and Final Merger Consideration identified in the Objection Notice as soon as practicable, but in any event shall direct the Accounting Firm to render a determination within 45 days after its retention.  The Accounting Firm shall consider only those items and amounts in the Surviving Corporation’s and the Representative’s respective calculations of the Closing Net Working Capital, Closing Indebtedness, Closing Transaction Expenses and Final Merger Consideration that are identified as being items and amounts to which the Surviving Corporation and the Representative have been unable to agree.  In resolving any disputed item, the Accounting Firm may not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party.  The Accounting Firm’s determination of the Closing Net Working Capital, Closing Indebtedness, Closing Transaction Expenses and Final Merger Consideration shall be based solely on written materials submitted by Buyer and the Representatives ( i.e. , not on independent review) and on the definition of “Closing Net Working Capital,” “Closing Indebtedness,” “Closing Transaction Expenses” and “Final Merger Consideration” included herein and the other provisions of this Agreement, including, as applicable, Schedule 4.2 and the accounting principles and practices referred to therein.  The determination of the Accounting Firm shall be conclusive and binding upon the parties hereto and shall not be subject to appeal or further review (other than with respect to errors in arithmetic calculations).

 

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4.5                                  Costs and Expenses.  The costs and expenses of the Accounting Firm in determining the Closing Net Working Capital, Closing Indebtedness, Closing Transaction Expenses and Final Merger Consideration shall be borne by the Surviving Corporation, on the one hand, and the Representative (on behalf of the Shareholders), on the other hand, based upon the percentage which the portion of the contested amount not awarded to each party bears to the amount actually contested by such party.  For example, if the Closing Statement claims the Closing Net Working Capital is $1,000 less than the Estimated Closing Net Working Capital, and the Representative contest only $500 of the amount claimed by the Surviving Corporation, and if the Accounting Firm ultimately resolves the dispute by awarding the Surviving Corporation $300 of the $500 contested, then the costs and expenses of the Accounting Firm will be allocated 60% ( i.e. , 300 ÷ 500) to the Representative (on behalf of the Shareholders) and 40% ( i.e. , 200 ÷ 500) to the Surviving Corporation.  In connection with its determination of Closing Net Working Capital, Closing Indebtedness, Closing Lease Buyout Amounts, Closing Transaction Expenses and Final Merger Consideration the Accounting Firm shall, pursuant to the terms of this Section 4.5 , also determine the allocation of its fees and expenses between the Surviving Corporation and the Representative (on behalf of the Shareholders), which such determination shall be conclusive and binding upon the parties hereto and shall not be subject to appeal or further review (other than with respect to errors in arithmetic calculations).  Any costs and expenses payable by the Representative pursuant to the terms of this Section 4.5 shall be paid solely from the Expense Funds.

 

4.6                                  Adjustments.  Within five Business Days after the Closing Net Working Capital, Closing Indebtedness, Closing Transaction Expenses and Final Merger Consideration are finally determined pursuant to this Section 4 :

 

(a)                                   if the Final Merger Consideration as finally determined pursuant to this Section 4 exceeds the Preliminary Merger Consideration paid at Closing, Buyer shall pay, or cause the Surviving Corporation to pay, to each Shareholder and Optionholder in cash an amount equal to the product of (x) the excess of the Final Merger Consideration over the Preliminary Merger Consideration, and (y) such Shareholder’s or Optionholder’s Allocation Percentage;

 

(b)                                  if the Preliminary Merger Consideration exceeds the Final Merger Consideration, then the Representative (on behalf of the Shareholders) shall pay Buyer an amount in cash equal to such excess of Preliminary Merger Consideration over Final Merger Consideration (the “ Buyer Adjustment Amount ”), out of the Adjustment Holdback Amount and to the extent that the Adjustment Holdback Amount is insufficient to satisfy the Buyer Adjustment Amount, then the Representative shall distribute the entire Adjustment Holdback Amount to Buyer as provided above and, as provided in the Letters of Transmittal, each of the Shareholders and Optionholders, severally as to itself, himself or herself only and not jointly as to or with any other Shareholder or Optionholder, shall pay to or as directed by Buyer its, his or her pro rata portion (based on its, his or her Allocation Percentage) of the amount of such deficiency within five Business Days of being directed by Buyer to make such payment. In the event that any Shareholder or Optionholder shall fail to pay the amount of such deficiency within the period specified in the immediately preceding sentence (a “ Defaulting Shareholder ”), Buyer may deliver written notice to the Representative setting forth such amount, and Buyer and the Representative will, within three Business Days of the Representative’s receipt of such notice, direct the Escrow Agent to pay such amount to Buyer out of the Defaulting Shareholder’s portion of the Indemnity Holdback Amount; provided that, pursuant the Letters of Transmittal, the Defaulting Shareholder shall promptly restore such amount to the Indemnity Holdback Amount to the extent any funds are so paid and shall remain liable for such amount in the event such Defaulting Shareholder’s

 

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remaining portion of the Indemnity Holdback Amount is insufficient to cover such Defaulting Shareholder’s proportionate responsibility for any amounts properly payable out of the Indemnity Holdback Amount. No failure of Buyer to deliver a notice of the type specified in the immediately preceding sentence shall relieve any Shareholder or Optionholder of its obligation to pay its several portion of such deficiency to Buyer.

 

(c)                                   All payments pursuant to this Section 4.6 shall be treated by all parties for tax purposes as adjustments to the Final Merger Consideration.

 

4.7                                  Withholding.  Notwithstanding anything herein to the contrary, each of Buyer and the Surviving Corporation shall be entitled to deduct and withhold from the Preliminary Merger Consideration, Final Merger Consideration, Adjustment Holdback Amount or Indemnity Holdback Amount (as the case may be) otherwise payable pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code and the rules and regulations promulgated thereunder, or any provision of state, local or foreign Tax Legal Requirements.  To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to such Shareholder in respect of which such deduction and withholding was made by Buyer or the Surviving Corporation.  If, under the terms of this Agreement, such payment is paid to such recipients by Buyer or the Surviving Corporation and any required withholding is not made, then such recipients shall make appropriate provision (and each such recipient hereby authorizes Buyer and the Surviving Corporation to take such action as may be appropriate in connection therewith) for payment of any appropriate withholding Taxes to the Company so that such withholding Taxes may be paid to the appropriate Governmental Body, and such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the applicable recipients in respect of which such deduction and withholding was made.

 

5.                                        Representations and Warranties of the Company.

 

The Company represents and warrants to Buyer and Merger Sub that the statements in this Section 5 are correct and complete, except as set forth in the schedules accompanying this Section 5 (collectively, the “ Disclosure Schedules ”).  The Disclosure Schedules have been arranged in separately numbered sections corresponding to the sections of this Section 5 ; however, the disclosure of any item in any section of the Disclosure Schedules shall be deemed to incorporate by reference all information disclosed in any other section of the Disclosure Schedules to which the relevance of such item is reasonably apparent.  Capitalized terms used in the Disclosure Schedules and not otherwise defined therein have the meanings given to them in this Agreement.

 

5.1                                  Organization and Corporate Power.  The Company is a corporation duly organized, validly existing and in good standing under Virginia Law.  The Company has all requisite power and authority to own, lease and operate its properties and assets and to carry on the Business as now conducted.  The Company is qualified to do business and is in good standing (or its equivalent) in every jurisdiction in which its ownership or lease of property or the conduct of the Business as now conducted requires it to qualify, all of which jurisdictions are set forth on Schedule 5.1 , except where the failure to be so qualified could not, individually or in the aggregate, reasonably be expected to (a) subject the Company to any material liability or (y)

 

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adversely affect in any material respect the Company’s ability to conduct the Business following the Closing as presently conducted.  Since January 1, 2005, the Company has not conducted the Business under any corporate, trade or fictitious name.  The Company has made available to Buyer true, correct and complete copies of the articles of incorporation and bylaws of the Company and Dauntless.  The minute books of the Company and Dauntless made available to Buyer contain a complete and accurate summary of all meetings of directors, committees of directors and shareholders or actions by written consent since the time of incorporation of the Company and Dauntless, and reflect all transactions referred to in such minutes accurately in all material respects.

 

5.2                                  Subsidiaries.  Dauntless is a corporation duly organized, validly existing and in good standing under the Legal Requirements of its jurisdiction of organization. Except as set forth on the attached Schedule 5.2 , the Company does not, directly or indirectly own, of record or beneficially, or directly or indirectly hold, the right to acquire any stock, partnership interest or joint venture interest or other equity ownership interest in any other Person. The Company owns all of the outstanding capital stock or other equity interests of the Company’s Subsidiaries free and clear of all Encumbrances other than restrictions under applicable securities Legal Requirements.

 

5.3                                  Authorization of Agreement.

 

(a)                                   The Company has the requisite power and authority to execute and deliver this Agreement and each other agreement, document, instrument or certificate contemplated by this Agreement or to be executed by the Company in connection with the consummation of the transactions contemplated hereby and thereby (the “ Seller Documents ”), and to consummate the Merger and the other transactions contemplated hereby and thereby.  All acts and other proceedings required to be taken by the Company, including acts and proceedings of the Company’s sole director and the Shareholders, to authorize the execution, delivery and performance of this Agreement and the Seller Documents by the Company and the consummation of the Merger and the other transactions contemplated hereby and thereby by Company have been duly taken.  This Agreement has been, and each Seller Document will be at or prior to the Closing, duly executed and delivered by the Company and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each Seller Document when so executed and delivered will constitute, legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Legal Requirements affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

(b)                                  The affirmative vote of the holders of at least majority of the outstanding Company Common Stock present (in person or by proxy) and voting at a meeting of the Company’s shareholders called to approve the transactions contemplated by this Agreement or acting by written consent in lieu of such a meeting is the only vote of the holders of any class or series of the Company’s capital stock necessary to approve the transactions contemplated by this Agreement under Virginia Law (the “ Required Vote ”)

 

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5.4                                  Conflicts; Consents of Third Parties.

 

(a)                                   Except as set forth on Schedule 5.4(a) , none of the execution and delivery by the Company of this Agreement or any of the Seller Documents, the consummation of the transactions contemplated hereby or thereby, or compliance by the Company with any of the provisions hereof or thereof will conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, revocation, cancellation or acceleration of any obligation or to loss of a benefit under, or give rise to any obligation of the Company to make any payment under, or to the increased, additional, accelerated or guaranteed rights or entitlements of any Person under any provision of, or result in the creation of any Encumbrance in or upon any of the properties or assets of the Company under, (i) the articles of incorporation and bylaws of the Company; (ii) any Contract (except for any Contract not required to be listed on a schedule to this Agreement that is not, individually or in the aggregate, material to the Business) or Permit (except for any Permit that is not, individually or in the aggregate, material to the  Business) to which the Company is a party or by which it or any of the properties or assets of the Company are bound; (iii) any Order applicable to the Company or any of the properties or assets of the Company; or (iv) any applicable Law.

 

(b)                                  Except as set forth on Schedule 5.4(b) , no consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of the Company (i) in connection with the execution and delivery of this Agreement or the Seller Documents or the compliance by the Company with any of the provisions hereof or thereof, the consummation of the transactions contemplated hereby or thereby or the taking of any other action contemplated hereby or thereby, or (ii) the continuing validity and effectiveness following the Closing of any Permit or Contract of the Company, except for such consents the failure of which to obtain, individually or in the aggregate, would not have and would not reasonably be expected to adversely affect in any material respect, individually or in the aggregate, the Business or prevent or materially delay the Company from consummating the transactions contemplated hereby.

 

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5.5                                  Capitalization. (a)    The authorized capital stock of the Company and the number of shares of the Company’s capital stock owned by each Shareholder is as set forth on Schedule 5.5(a) .  All the shares of Company Common Stock are issued and outstanding as of the date of this Agreement.  As of the date hereof, there are 646,887 shares of Company Common Stock issued and outstanding and no shares of Company Common Stock are held as treasury stock.  As of the Closing Date there will be 646,887 shares of Company Common Stock issued and outstanding and no shares of Company Common Stock will be held as treasury stock (subject to the issuance after the date hereof of shares of Company Common Stock upon the exercise of options outstanding as of the date hereof and listed on Schedule 5.5(b)  and the repurchase of shares of Company Common Stock upon the termination of employment of a shareholder). All of the issued and outstanding shares of Company Common Stock have been duly authorized for issuance and are validly issued, fully paid and non-assessable, and are not subject to preemptive rights or rights of first refusal created by statute, the organizational documents of the Company or any Contract to which the Company is a party or by which the Company or any of its properties or assets is bound.

 

(b)                                  Schedule 5.5(b)  lists all existing options, warrants, calls, rights, commitments or other agreements of any character to which the Company is a party requiring, and all securities of the Company outstanding which upon conversion or exchange would require, the issuance, sale or transfer of any additional shares of capital stock or other equity securities of the Company or other securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase shares of capital stock or other equity securities of the Company and, for each such option, warrant, call, right, commitment or other agreement or security, Schedule 5.5(b)  sets for the applicable exercise or conversion price.  Neither the Shareholders nor the Company are a party to any voting trust or other voting agreement with respect to any of the Company Common Stock or to any Contract relating to the issuance, sale, redemption, transfer or other disposition of the capital stock of the Company.  There are no bonds, debentures, notes or other Indebtedness of the Company or any of its Subsidiaries having the right to vote (or convertible into securities having the right to vote) on any matters on which stockholders of the Company may vote.

 

(c)                                   Except as set forth on Schedule 5.5(c) , the Shareholders are the record owners of the shares of Company Common Stock listed on Schedule 5.5(a) , free and clear of any and all Encumbrances.  Except as set forth on Schedule 5.5(c) , the Shareholders have the corporate power and authority to sell, transfer, assign and deliver such shares of Company Common Stock as provided in this Agreement.

 

5.6                                  Financial Statements.

 

(a)                                   The Company has delivered to Buyer copies of (i) the audited consolidated balance sheet of the Company as of December 31, 2009 and 2008, and the related audited consolidated statements of income, cash flows and stockholders equity of the Company for the fiscal years then ended, and (ii) the unaudited consolidated balance sheet of the Company as at September 30, 2010 and the related unaudited consolidated statement of income of the Company for the nine-month period then ended, together with the comparative statements for the corresponding nine-month period in 2009 (such statements are referred to herein as the “ Financial Statements ”).  Except as set forth on Schedule 5.6(a) , each of the Financial Statements has been prepared in accordance with GAAP consistently applied by the Company and fairly

 

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presents in all material respects the financial position, results of operations and cash flows of the Company as at the dates and for the periods indicated, subject in the case of the nine-month statements to year end adjustments (which will not be material, individually or in the aggregate).  All liabilities and obligations of the Company, whether absolute, accrued, contingent or otherwise, whether direct or indirect, and whether due or to become due, which existed at the date of such Financial Statements have been disclosed in the balance sheets included in the Financial Statements or in notes to the Financial Statements to the extent such liabilities were required, under GAAP, to be so disclosed.  Except as set forth in the notes to the Financial Statements, the liabilities on the latest balance sheet of the Company included in the Financial Statements consist solely of accrued obligations and liabilities incurred by the Company in the ordinary course of business to Persons that are not Affiliates of any of the Company.  The statements of operations included in the Financial Statements do not contain any material items of special or non-recurring income or other income not earned, or omit any material item of expense incurred, in each case in the ordinary course of business except as expressly specified on Schedule 5.6(a) .

 

(b)                                  All notes and accounts receivable of the Company are reflected properly on its books and records, are valid receivables, have arisen solely out of bona fide sales and deliveries of goods, performance of services and other business transactions in the ordinary course of business consistent with past practices, in each case with Persons other than Affiliates, are not subject to valid defenses, setoffs or counterclaims, except in the ordinary course of business consistent with past practice, are current in all material respects and are collectible in accordance with their terms at their recorded amounts (by use of the Company’s normal collection methods without resort to litigation or reference to a collection agency), subject only to the reserve for bad debts set forth on the face of the Balance Sheets (rather than in any notes thereto) as adjusted for operations and transactions through the Closing Date in accordance with GAAP.  The Company has delivered to Buyer an aging of the accounts receivable and accounts payable of the Company as of the September 30, 2010.

 

(c)                                   Schedule 5.6(c)  sets forth all (i) Indebtedness of the Company and (ii) all bank accounts of the Company, including any “lock-box” accounts.

 

(d)                                  The Company has delivered to Buyer copies of (i) the pro forma unaudited consolidated balance sheet of the Company as of December 31, 2009, and the related pro forma unaudited consolidated statements of income and stockholders equity of the Company for the fiscal year then ended, and (ii) the pro forma unaudited consolidated balance sheet of the Company as at September 30, 2010 and the related unaudited consolidated statement of income of the Company for the nine-month period then ended, together with the comparative pro forma statements for the corresponding nine-month period in 2009 (such statements are referred to herein as the “ Pro Forma Financial Statements ”).  For the purposes hereof, the unaudited pro forma balance sheet of the Company as at September 30, 2010 is referred to as the “ Balance Sheet ” and September 30, 2010 is referred to as the “ Balance Sheet Date ”.  The Pro Forma Financial Statement give pro forma effect to the consummation of the Related Transactions as if they were consummated on January 1, 2009 based on the assumptions set forth on Schedule 5.6(d) .  Except as set forth on Schedule 5.6(d) , each of the Pro Forma Financial Statements has been prepared in accordance with GAAP consistently applied by the Company and fairly presents in all material respects the financial position and results of operations of the Company (after giving

 

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such pro forma effect to the Related Transactions) relating to the Business as at the dates and for the periods indicated, subject in the case of the of the nine-month statements to year end adjustments (which will not be material, individually or in the aggregate).  All liabilities and obligations of the Company (after giving such pro forma effect to the Related Transactions) relating to the Business, whether absolute, accrued, contingent or otherwise, whether direct or indirect, and whether due or to become due, which existed at the date of such Pro Forma Financial Statements have been disclosed in the balance sheets included in the Pro Forma Financial Statements or in notes to the Pro Forma Financial Statements to the extent such liabilities were required, under GAAP, to be so disclosed.  Except as set forth in the notes to the Pro Forma Financial Statements, the liabilities on the latest balance sheet of the Company (after giving such pro forma effect to the Related Transactions) relating to the Business included in the Pro Forma Financial Statements consist solely of accrued obligations and liabilities incurred by the Company in the ordinary course of business to Persons that are not Affiliates of any of the Company.  The statements of operations included in the Pro Forma Financial Statements do not contain any material items of special or non-recurring income or other income not earned, or omit any material item of expense incurred, in each case in the ordinary course of business except as expressly specified on Schedule 5.6(d) .  The Company and the Shareholders acknowledge and agree that Buyer is relying on the accuracy and completeness of the Pro Forma Financial Statements in making its determination as to whether it must file the Pro Forma Financial Statements, or any other financial statements of the Company or any portion thereof, with the Securities and Exchange Commission.

 

(e)                                   The Company has established and maintain a system of internal accounting and other controls which are effective in providing reasonable assurance regarding the reliability of financial reporting and preparation of financial statements (including the Financial Statements) for external purposes in accordance with GAAP, consistently applied, including policies and procedures that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) access to assets is permitted only in accordance with management’s general or specific authorization; (iii) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; (iv) provide reasonable assurance that material information relating to the Company is promptly made known to the officers responsible for establishing and maintaining the system of internal controls; (v) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, consistently applied, and that receipts and expenditures of the Company are being made only in accordance with appropriate authorizations of management and the Company’s board of directors; (vi) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company and (vii) provide reasonable assurance that any significant deficiencies or material weaknesses in the design or operation of internal controls which are reasonably likely to materially and adversely affect the ability to record, process, summarize and report financial information, and any fraud, whether or not material, that involves any of the Company’s management or other employees who have a role in the preparation of financial statements or the internal controls used by the Company, are adequately and promptly disclosed to the Company’s independent auditors and the Company’s sole director.

 

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5.7            No Undisclosed Liabilities.  The Company and Dauntless have no Indebtedness, obligations or liabilities of any kind (whether known or unknown and whether absolute, accrued, contingent or otherwise) that (i) would have been required to be reflected in, reserved against or otherwise described on the latest balance sheet included in the Pro Forma Financial Statements or in the notes thereto in accordance with GAAP which was not fully reflected in, reserved against or otherwise described in the Balance Sheet or the notes thereto or (ii) was not incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date (it being acknowledged and agreed that obligations and liabilities incurred in the ordinary course of Business do not include any liability for breach of contract, breach of warranty, tort, infringement claim or lawsuit).

 

5.8            Absence of Changes.   Since the Balance Sheet Date, the Company and Dauntless have conducted the Business in the ordinary course of business and there has not been any event, occurrence or development which, individually or in the aggregate, has had a Material Adverse Effect.  Without limiting the generality of the foregoing, since the Balance Sheet Date, the Company has not taken any action which, if taken after the date hereof, would have required the consent of Buyer pursuant to Section 8.2 of this Agreement.

 

5.9            Title to and Conditions of Assets.

 

(a)            Schedule 5.9(a)  contains a list, as of the date hereof, of all real property leased by the Company and its Subsidiaries (the “ Real Property Leases ”). Except as set forth on Schedule 5.9(a) , the Company or its Subsidiaries have a valid leasehold estate in all real property subject to Real Property Leases (the “ Leased Real Property ”), free and clear of all Encumbrances, other than Permitted Encumbrances and any such exceptions that would not, individually or in the aggregate, have or reasonably be expected to adversely affect the use of such Leased Real Property in any material respect as such property is used as of the date hereof.  Neither the Company nor any of its Subsidiaries owns any real property.  The Company has good, marketable and valid leasehold interests under the Real Property Leases, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Legal Requirements affecting creditors’ rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity), and the Company have not given or received any written notice of any default and to the Knowledge of Company, no other party is in default thereof, and no party of the Real Property Leases has exercised any termination rights with respect thereto.  The Company has delivered to Buyer true and complete copies of the Real Property Leases.

 

(b)            Schedule 5.9(b)  sets forth all leases of personal property (“ Personal Property Leases ”) involving annual payments in excess of $5,000 relating to personal property used in the Business or to which any of the Company or Dauntless is a party or by which any properties or assets of the Company or Dauntless is bound.  The Company and Dauntless have a valid leasehold interest under each of the Personal Property Leases under which they are lessees, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity), and the Company and Dauntless have not received any written notice of default under any Personal Property Lease by the Company or Dauntless or, to the Knowledge of the Company, by any other party thereto.  The Company and Dauntless have good and marketable title to all of the items of tangible personal property reflected in the Balance Sheets or acquired

 

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after the Balance Sheet Date (except as sold or disposed of subsequent to the date thereof in the ordinary course of business consistent with past practice), free and clear of any and all Encumbrances other than the Permitted Encumbrances.  All such items of tangible personal property are in good condition and in a state of good maintenance and repair in all material respects (ordinary wear and tear excepted) and are suitable in all material respects for the purposes used.  All of the items of tangible personal property used by the Company and Dauntless under the Personal Property Leases are in good condition and repair in all material respects (ordinary wear and tear excepted) and are suitable in all material respects for the purposes used.  Except as set forth on Schedule 5.9(b) , after giving effect to the Related Transactions, the Company and Dauntless shall own good title to, or hold a valid leasehold interest in, all of the personal property used in and necessary for the conduct of the Business, free and clear of all Encumbrances, except for Permitted Encumbrances and Encumbrances that will be terminated at or prior to the Closing.

 

5.10          Intellectual Property.

 

(a)            Schedule 5.10(a)  contains a complete list of all Registered Intellectual Property.

 

(b)            Schedule 5.10(b)  contains a complete list of all of the following that constitute Company Intellectual Property: (i) all United States and non-United States patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof; (ii) all copyrights and copyright registrations and applications therefor throughout the world; (iii) all industrial designs and any registrations and applications therefor throughout the world; and (iii) trade names, logos, trademarks and service marks, and trademark and service mark registrations and applications therefor throughout the world.

 

(c)            The Company (i) owns all rights, title, and interest in all Company Intellectual Property that is owned by the Company or Dauntless free and clear of any Encumbrance (other than Permitted Encumbrances), including ownership of pending and accrued causes of action for patent, trademark, or copyright infringement, misappropriation, and unfair business practice relating to the Company Intellectual Property and has the sole and exclusive right to bring actions for infringement and misappropriation of such Company Intellectual Property, and (ii) otherwise has the right to use all other Company Intellectual Property.

 

(d)            Each item of Registered Intellectual Property that is material to and necessary for conducting the Business as it has been conducted during the 12-month period before Closing is valid and subsisting to the extent that all necessary registration, maintenance or annuity, and renewal fees in connection with such item of Registered Intellectual Property have been made; all necessary documents and certificates in connection with such Registered Intellectual Property have been filed with the relevant patent, copyright, trademark or other authorities in the United States or non-United States jurisdictions, as the case may be, for the purposes of maintaining such Registered Intellectual Property; and all patent, trademark, service mark and copyright applications set forth on Schedule 5.10(a)  have been duly filed.

 

(e)            All employees, agents, consultants, contractors, or other Persons who have contributed to or participated in the creation or development of any Company Intellectual Property including Company Software:  (i) made such contribution pursuant to and within the

 

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scope of employment with the Company or its Subsidiaries as an employee or otherwise as a party to a “work-for-hire” agreement under which the Company or its Subsidiaries is deemed to be the owner and/or author, as applicable, of all right, title, and interest therein; or (ii) have executed a written assignment or other agreement to assign in favor of the Company transferring to the Company all right, title and interest in such Company Intellectual Property.

 

(f)             Schedule 5.10(f)  contains a list of the Company Software.  Except as set forth on Schedule 5.10(f) : (i) the Company has developed the Company Software through its own efforts and for its own account without the aid or use of any consultants, agents, independent contractors or Persons (other than Persons that are employees of the Company or any of its Subsidiaries or consultants and contractors that have assigned all rights in the Company Software to the Company); (ii) the Company owns or otherwise has the right to use the Company Software; (iii) no third party has any right to compensation from the Company or any of its Subsidiaries by reason of, the use, exploitation, or sale of the Company Software; (iv) none of the Company Software contains any source code or portions of source code (including any “canned program” or “free-ware”) created by any party other than the authors of the Company Software on behalf of the Company or that has otherwise been assigned to the Company; (v) the Company Software is not subject by agreement to any transfer, assignment, site, equipment, or other operational limitation; (vi) the Company has maintained and protected the Company Software with appropriate proprietary notices (including, without limitation, the notice of copyright in accordance with the requirements of 17 U.S.C. § 401), confidentiality and non-disclosure agreements and such other measures as are reasonably necessary to protect the proprietary, trade secret or confidential information contained therein; (vii) the Company Software has been registered or may be eligible for protection and registration under applicable U.S. copyright law and has not been forfeited to the public domain; (viii) the Company has copies of all current releases or separate versions of the Company Software so that the same may be subject to registration in the United States Copyright Office; (ix) the Company Software does not infringe any copyright or other Intellectual Property rights of any other Person; (x) to the extent used in the Business as it has been conducted during the six-month period before Closing, the Company Software retains the source code, system documentation, statements of principles of operation and schematics, as well as any pertinent commentary, explanation, program (including compilers), workbenches, tools, and higher level (or “proprietary”) language used for the development, maintenance, implementation and use thereof, so that a computer programmer could develop, maintain, support, compile and use all releases or separate versions of the same that are currently subject to maintenance obligations by the Company; (xi) there are no agreements or arrangements in effect with respect to the marketing, distribution, licensing or promotion of the Company Software by any other Person; (xii) the Company has no source code for the Company Software or other Company Intellectual Property held in escrow; and (xiii) to the Company’s Knowledge, the Company has not received any notice of, and the Company has no Knowledge of, any complaint, assertion, threat, or allegation that the Company Software infringes the rights of any third party.

 

(g)            No claims of any kind have been made by the Company against any third party that, and the Company has no Knowledge that, any third party infringes, or has previously infringed, misappropriates, or has previously misappropriated any Company Intellectual Property.

 

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(h)            No claims of any kind have been made or asserted, or to the Company’s Knowledge threatened, by any party against the Company claiming or alleging that the Company or any of their products (including products currently under development), services, or methods of operation infringe, have infringed, or misappropriate the Intellectual Property of any third party, or constitute unfair competition.  The Company has not infringed any Intellectual Property right of any third party.

 

5.11          Contracts.

 

(a)            Schedule 5.11(a)  identifies each Contract for which performance is ongoing that constitutes a “Material Contract” of the Company.  Each of the following ongoing contracts shall be deemed to constitute a Material Contract :

 

(i)             any Contract (A) relating to the employment of, or the performance of services by, any director, employee or consultant of the Company or any of its Subsidiaries, (B) pursuant to which the Company or any of its Subsidiaries is or may become obligated to make any severance, termination or similar payment (whether or not in cash) to any current or former employee or director, or (C) pursuant to which the Company or any of its Subsidiaries is or may become obligated to make any bonus or similar payment (other than payments constituting base salary) in excess of $25,000 individually or $100,000 in the aggregate to any current or former employee or director;

 

(ii)            any Contract relating to the acquisition, transfer, development, sharing or license by the Company of any Company Intellectual Property (except for any Contract pursuant to which (A) any Company Intellectual Property is licensed to the Company or Dauntless under any third party software license generally available to the public, or (B) any Company Intellectual Property is licensed by the Company or Dauntless to any Person on a non-exclusive basis);

 

(iii)           any Contract that provides for indemnification of any officer, director, employee or agent of the Company or any of its Subsidiaries;

 

(iv)           any Contract imposing any restriction on the right or ability of the Company or Dauntless (A) to compete with any other Person, (B) to acquire any product or other asset or any services from any other Person, (C) to solicit, hire or retain any Person as an employee, consultant or independent contractor, (D) to develop, sell, supply, distribute, offer, support or service any product or any technology or other asset to or for any other Person, (E) to perform services for any other Person, or (F) to transact business or deal in any other manner with any other Person;

 

(v)            any Contract of the Company or Dauntless (other than Contracts evidencing Options) (A) relating to the acquisition, issuance, voting, registration, sale or transfer of any securities, (B) providing any Person with any preemptive right, right of participation, right of maintenance or similar right with respect to any securities, or (C) providing the Company with any right of first refusal with respect to, or right to repurchase or redeem, any securities;

 

(vi)           any Contract of the Company or Dauntless incorporating or relating to any guaranty, any warranty or any indemnity or similar obligation, pursuant to which the potential liability associated with any such guaranty, warranty, indemnity or similar obligation could not reasonably be expected to exceed $25,000;

 

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(vii)          any Contract of the Company or any of its Subsidiaries relating to any currency hedging;

 

(viii)         any Contract of the Company or any of its Subsidiaries (A) imposing any confidentiality obligation on any Person (other then typical confidentiality obligations in Contracts entered into in the ordinary course of business) or (B) containing “standstill” or similar provisions;

 

(ix)            any Contract requiring that the Company or any of its Subsidiaries give any notice or provide any information to any Person prior to considering or accepting any proposal with respect to an Acquisition Transaction or similar transaction, or prior to entering into any discussions, agreement, arrangement or understanding relating to any Acquisition Transaction or similar transaction;

 

(x)             any Contract other than with a Governmental Body, or for routine business office support (such as copiers, telephones), that has a term of more than sixty (60) days and that may not be terminated by the Company (without penalty) within sixty (60) days after the delivery of a termination notice by the Company;

 

(xi)            any Contract that contemplates or involves the receipt, payment or delivery of cash or other consideration in an amount or having a value in excess of $100,000 in the aggregate, or contemplates or involves the performance of services for the Company or Dauntless having a value in excess of $100,000 in the aggregate;

 

(xii)           any other unclassified Contract, if a breach of such Contract could reasonably be expected to adversely affect the Company in any material respect.  The Company has made available to Buyer an accurate and complete copy of each Contract that constitutes a Material Contract, with the exception of any Contracts that are fully completed as to performance but not formally closed per government regulation, copies of which, in their current form, have been made available to Buyer;

 

(xiii)          any Contract or subcontract as to which work has been or is being performed by the Company, having a value in excess of $100,000; and

 

(xiv)         any Contract without a funding commitment by the counterparty, sometimes called a “risk sales order”.

 

(b)            Each Contract that constitutes a Material Contract (and, to the Company’s Knowledge, each Contract that does not constitute a Material Contract) is valid and in full force and effect, and is enforceable in accordance with its terms, subject to (i) Legal Requirements of general application relating to bankruptcy, insolvency and the relief of debtors, and (ii) Legal Requirements governing specific performance, injunctive relief and other equitable remedies.  Except as set forth in Schedule 5.11(b) , the Company has furnished or otherwise made available to Buyer true and complete copies of all Material Contracts.

 

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(c)            Except as set forth in Schedule 5.11(c) : (i) neither the Company nor Dauntless has violated or breached, or committed any default under, any Material Contract in any material respect; and, to the Company’s Knowledge, no other Person has violated or breached, or committed any default under, any Material Contract in any material respect; (ii) to the best of the Company’s knowledge, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) could reasonably be expected to (A) result in a material violation or breach of any of the provisions of any Material Contract (or, to the Company’s Knowledge, any other Contract), (B) give any Person the right to declare a default or exercise any remedy under any Material Contract (or, to the Company’s Knowledge, any other Contract), (C) give any Person the right to receive or require a rebate, chargeback, or penalty or change in delivery schedule under any Material Contract (or, to the Company’s Knowledge, any other Contract), (D) give any Person the right to accelerate the maturity or performance of any Material Contract (or, to the Company’s Knowledge, any other Contract), (E) result in the disclosure, release or delivery of any Source Code, or (F) give any Person the right to cancel, terminate, or modify any Material Contract (or, to the Company’s Knowledge, any other Contract), other than terminations for convenience in accordance with the terms thereof; and (iii) since the end of the Company’s last fiscal year, it has not received any written or oral notice regarding any actual or possible material violation or breach of, or default under, any Material Contract (or, to the Company’s Knowledge, any other Contract).

 

(d)            Since January 1, 2004, except as set forth in Schedule 5.11(d) :

 

(i)             neither the Company nor Dauntless has undertaken any internal investigation relating directly or indirectly to any Government Contract or Government Bid;

 

(ii)            the Company and Dauntless have complied in all material respects with all applicable Legal Requirements with respect to all Government Contracts and Government Bids;

 

(iii)           neither the Company nor Dauntless has, in obtaining or performing any Government Contract, violated (A) the Truth in Negotiations Act of 1962, as amended, (B) the Service Contract Act of 1963, as amended, (C) the Contract Disputes Act of 1978, as amended, (D) the Office of Federal Procurement Policy Act, as amended, (E) any applicable provisions of the Federal Acquisition Regulation (the “ FAR ”) or any applicable agency supplement thereto, (F) the Cost Accounting Standards, (G) the National Industrial Security Program Operating Manual, (H) the Defense Industrial Security Regulation (DOD 5220.22-R) or any related security regulations, or (I) any other applicable procurement law or regulation or other applicable Legal Requirement;

 

(iv)           all facts set forth in or acknowledged by the Company or Dauntless in any certification, representation or disclosure statement submitted by it with respect to any Government Contract or Government Bid were current, accurate and complete in all material respects as of the date of submission;

 

(v)            neither the Company nor Dauntless or any of their respective employees has been disbarred or suspended from doing business with any Governmental Body, and, to the Company’s Knowledge, no circumstances exist that would warrant the institution of debarment or suspension proceedings against the Company, Dauntless or any employee of the Company or Dauntless;

 

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(vi)           no negative determinations of responsibility, as contemplated in Part 9 of the FAR (Contractor Qualifications), have been issued and received against the Company or Dauntless in connection with any Government Contract or Government Bid;

 

(vii)          no direct or indirect costs incurred by the Company or Dauntless have been disallowed as a result of a finding or determination of any kind by any Governmental Body other than as a result of audits by Governmental Bodies;

 

(viii)         no Governmental Body, and no prime contractor or high-tier subcontractor of any Governmental Body, has withheld or set off, or, to the Company’s Knowledge, has threatened to withhold or set off, any material amount due to the Company or Dauntless under any Government Contract;

 

(ix)            there are not and have not been any irregularities, misstatements or omissions relating to any Government Contract or Government Bid that have led to or could reasonably be expected to lead to, (A) any administrative, civil, criminal or other investigation, Legal Proceeding or indictment involving the Company, Dauntless or any of their respective employees, (B) the disallowance of any costs submitted for payment by the Company or Dauntless, (C) the recoupment of any payments previously made to the Company or Dauntless , (D) a finding or claim of fraud, defective pricing, mischarging or improper payments on the part of the Company or Dauntless, or (E) the assessment of any penalties or damages of any kind against the Company or Dauntless, which penalties or damages could, individually or in the aggregate, adversely affect the Company or the Business in any material respect;

 

(x)             there is no (A) outstanding claim against the Company or any of its Subsidiaries by, or dispute involving the Company or any of its Subsidiaries with, any prime contractor, subcontractor, vendor or other Person arising under or relating to the award or performance of any Government Contract, (B) fact known by the Company upon which any such claim could reasonably be expected to be based or which may give rise to any such dispute, or (C) final decision of any Government Body against the Company or any of its Subsidiaries which has been communicated to the Company;

 

(xi)            neither the Company nor Dauntless is undergoing, nor has undergone, any audit, and, there is no impending audit arising under or relating to any Government Contract (other than normal routine audits conducted in the ordinary course of business);

 

(xii)           neither the Company nor Dauntless is subject to any financing arrangement or assignment of proceeds with respect to the performance of any Government Contract;

 

(xiii)          no payment has been made by the Company or Dauntless or by a Person acting on behalf of the Company or Dauntless to any Person (other than to any bona fide employee or agent (as defined in subpart 3.4 of the FAR) of the Company or Dauntless) which is or was contingent upon the award of any Government Contract or which would otherwise be in violation of any applicable procurement law or regulation or any other Legal Requirement;

 

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(xiv)         the Company’s cost accounting system has been in material compliance with applicable regulations and other applicable Legal Requirements;

 

(xv)          the Company and Dauntless have complied in all material respects with all applicable regulations and other applicable Legal Requirements and with all applicable contractual requirements relating to the placement of legends or restrictive markings;

 

(xvi)         in each case in which the Company or Dauntless have made available any technical data, computer software or Company Intellectual Property to any Governmental Body in connection with any Government Contract, the Company or Dauntless has marked such technical data, computer software or Company Intellectual Property with all markings and legends (including any “restricted rights” legend and any “government purpose license rights” legend) necessary (under the FAR or other applicable Legal Requirements) to ensure that no Governmental Body or other Person is able to acquire any unlimited rights with respect to such technical data, computer software or Proprietary Asset, except where failure to do so has not and will not adversely affect the Company or the Business in any material respect;

 

(xvii)        neither the Company nor any of its Subsidiaries has made any written disclosure to any Governmental Body;

 

(xviii)       the Company and its Subsidiaries have reached agreement with the cognizant government representatives approving and “closing” all indirect costs charged to Government Contracts for Government fiscal years prior to 2007 (beginning January 1, 2007), and those years are closed;

 

(xix)          neither the Company nor any of its Subsidiaries is party to any Government Contract that is currently inactive but regarding which the Company and its Subsidiaries have not reached agreement with the cognizant government representatives approving and “closing” all indirect costs charged to such Government Contract and, to the Company’s Knowledge, neither the Company nor any of its Subsidiaries is the subject of any audit or investigation by any Governmental Body in connection with any such inactive Government Contract;

 

(xx)           no Government Contract period of performance has been shortened from that originally awarded as a result of a contract modification, change order, or a termination for convenience, whether in whole or in part;

 

(xxi)          there have been no overhead rate ceiling on any current Government Contract, and there has been no profit impact associated with overhead rate ceilings on prior completed Government Contracts;

 

(xxii)         there have been no Government Contracts requiring performance bonds;

 

(xxiii)        neither the Company nor any of its Subsidiaries has been a party to, or the maker of, any Government Contracts or Government Bids that include forward pricing, bidding and billing rates where such rates have not been approved by the contracting Governmental Body; and

 

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(xxiv)        except as set forth on Schedule 5.4(b) , neither the Company nor Dauntless has been or will be required to make any filings with or give notice to, or to obtain any Consent from, any Governmental Body under or in connection with any Government Contract or Government Bid as a result of or by virtue of the execution, delivery of performance of this Agreement or any of the other agreements referred to in this Agreement.

 

(e)            As of the date of this Agreement, the Company and Dauntless, on a consolidated basis, have not less than $110,000,000 of Contract backlog (including funded, unfunded and unexercised option periods) calculated on a basis consistent with the accounting policies and procedures used by the Company in the preparation of the Pro Forma Financial Statements.

 

5.12          Performance of Services.

 

(a)            All installation services, programming services, integration services, consulting services, maintenance services, support services, training services, upgrade services and other services that have been performed by the Company or any of its Subsidiaries were performed properly and in conformity with the terms and requirements of all applicable Contracts and with all applicable Legal Requirements.

 

(b)            Except as set forth in Schedule 5.12(b) , since January 1, 2008, no customer or other Person has asserted in writing or, to the Company’s Knowledge, threatened to assert any claim against the Company or any of its Subsidiaries based upon any services performed by the Company.

 

5.13          Compliance with Legal Requirements.  Except as set forth on Schedule 5.13 , the Company and its Subsidiaries are, and have at all times since January 1, 2003 been, in compliance in all material respects with all applicable Legal Requirements.  Since January 1, 2003, neither the Company nor any of its Subsidiaries has received any notice from any Governmental Body or other Person regarding any actual or possible violation of, or failure to comply with, any Legal Requirement.

 

5.14          Compliance with Foreign Corrupt Practices Act.  Neither the Company, Dauntless, the Shareholders nor, to the Knowledge of the Company, any director, officer, agent or employee of the Company has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (collectively, the “ FCPA ”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA; and the Company and Dauntless have conducted the Business in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

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5.15          Governmental Authorizations.

 

(a)            The Company and Dauntless hold all Governmental Authorizations necessary to enable them to conduct Business in the manner in which the Business is currently being conducted, except where the failure to hold such Governmental Authorizations has not had and would not reasonably be expected to adversely affect the Company or the Business in any material respect.  All such Governmental Authorizations are valid and in full force and effect.  The Company and Dauntless are, and at all times since January 1, 2003 have been, in substantial compliance with the terms and requirements of such Governmental Authorizations, except where the failure to be in compliance has not had and would not reasonably be expected to adversely affect the Company or the Business in any material respect.  Since January 1, 2003 neither the Company nor Dauntless has received any notice from any Governmental Body regarding (i) any actual or possible violation of or failure to comply with any term or requirement of any material Governmental Authorization, or (ii) any actual or possible revocation, withdrawal, suspension, cancellation, termination or modification of any material Governmental Authorization.  No Governmental Body has at any time challenged in a writing delivered to the Company or any of its Subsidiaries the right of the Company or Dauntless to design, manufacture, offer or sell any of its products or services.

 

(b)            Schedule 5.15(b)  describes the terms of each grant, incentive or subsidy provided or made available, if any, to or for the benefit of the Company or Dauntless by any U.S. or foreign Governmental Body, or otherwise.  The Company and Dauntless are in full compliance with all of the terms and requirements of each grant, incentive and subsidy required to be identified in Schedule 5.15(b) .  Neither the execution, delivery or performance of this Agreement, nor the consummation of any of the other transactions contemplated by this Agreement, will (with or without notice or lapse of time) give any Person the right to revoke, withdraw, suspend, cancel, terminate or modify any grant, incentive or subsidy required to be identified in Schedule 5.15(b) .

 

5.16          Tax Matters.

 

(a)            Except as set forth on the attached Schedule 5.16(a) , (i) each of the Company and its Subsidiaries has properly prepared and timely filed all Tax Returns that are required to be filed by it; (ii) all Taxes due and owing by each of the Company and its Subsidiaries have been paid  (whether or not shown or required to be shown on any Tax Return); (iii) all such Tax Returns are true, correct and complete in all material respects; (iv) all Taxes which the Company or any of its Subsidiaries has been obligated to withhold from amounts owing to any employee, creditor or third-party have been fully, properly and timely withheld and paid  over to the applicable Governmental Body; (v) no deficiency or proposed adjustment which has not been paid or resolved for any material amount of Tax has been asserted or assessed in writing by any taxing authority of any Governmental Body against the Company or any of its Subsidiaries; (vi) neither the Company nor any of its Subsidiaries has consented to extend the time in which any Tax may be assessed or collected by any taxing authority of any Governmental Body, which extension is still in effect; (vii) there are no ongoing or pending Tax audits by any taxing authority of any Governmental Body against the Company or any of its Subsidiaries; (viii) neither the Company nor any of its Subsidiaries is a party to or bound by, or has any obligation under, any Tax allocation, sharing or similar agreement or arrangement; (ix) neither the Company nor any of its Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income

 

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Tax Return (other than a group the common parent of which has been the Company) or (B) has any liability for the Taxes of any Person (other than the Company or its Subsidiaries) under Treas. Reg. §1.1502-6, as a transferee or successor, by contract, or otherwise; and (x) neither the Company nor any of its Subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted or would result, separately or in the aggregate, in the payment of any “excess parachute payment” within the meaning of Code section 280G (or any corresponding provision of state, local or foreign Tax law) or any amount that will not be deductible as a result of Code section 162(m) (or any corresponding provision of state, local or foreign Tax law).

 

(b)            Except as set forth on the attached Schedule 5.16(b) , no written claim has been made by a Governmental Body in a jurisdiction where the Company or any of its Subsidiaries do not file Tax Returns or is not subject to Tax that it is or may be subject to Tax by, or required to file any Tax Return in, that jurisdiction.

 

(c)            There are no Encumbrances for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company or any of its Subsidiaries.

 

(d)            The Company has delivered to Buyer correct and complete copies of all federal, state and local Tax Returns, examination reports and statements of deficiencies assessed against or agreed to by the Company or any of its Subsidiaries filed or received since December 31, 2006.

 

(e)            The unpaid Taxes of the Company and its Subsidiaries (A) did not exceed the reserves for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Balance Sheet (rather than in any notes thereto) as of the Balance Sheet Date, and (B) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with past custom and practice of the Company and its Subsidiaries in filing their Tax Returns.

 

(f)             Neither the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (1) change in method of accounting for a taxable period ending on or prior to the Closing Date; (2) “closing agreement” as described in Code section 7121 (or any corresponding or similar provision of state, local or foreign law) executed on or prior to the Closing Date; (3) intercompany transactions or any excess loss account described in Treas. Reg. §1.1502 (or any corresponding or similar provision of state, local or foreign law); (4) installment sale or open transaction disposition made on or before the Closing Date; or (5) prepaid amount received on or prior to the Closing Date.

 

(g)            Neither the Company nor any of its Subsidiaries will be required to recognize any taxable income in any taxable period as a result of the Related Transactions.

 

(h)            The Company is entitled to claim for 15 years commencing in 2007 an annual federal income Tax deduction of at least $666,000 with respect to the Code section 197 intangible assets acquired by the Company from Intrinsix Corporation in 2007.

 

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(i)                                      The Company will be entitled to federal income Tax deductions in an amount not less than $21,000,000 resulting from the payment of the Option Amounts pursuant to this Agreement (including amounts payable from the Indemnity Holdback Amount and the Adjustment Holdback Amount), interest charges arising from the prepayment of its senior indebtedness, investment banking fees and other expenses arising from the transactions contemplated hereby.  No portion of any consolidated net operating loss incurred by the Company for its 2010 Tax period or, if the Closing occurs after December 31, 2010, for the portion of any subsequent Tax period of the Company ending at the close of business on the Closing Date will be allocated to Anonymizer pursuant to Treas. Reg. §1.1502 (or other applicable Legal Requirements) as a net operating loss carryover of Anonymizer.

 

(j)                                      Except as set forth on the attached Schedule 5.16(j), neither the Company nor any of its Subsidiaries is or has been a party to any “listed transaction,” within the meaning of Code section 6707A and/or Treas. Reg. §1.6011-4(b)(2) and the corresponding provisions of any applicable state or local income Tax laws, and each of the Company and its Subsidiaries has complied with all reporting and recordkeeping requirements under Code section 6038A with respect to certain foreign-owned companies and transactions with related parties.

 

(k)                                   Neither the Company nor any of its Subsidiaries is, or has been at any time, a “United States real property holding corporation” within the meaning of Code section 897(c)(2).

 

(l)                                      Neither the Company nor any of its Subsidiaries has participated in, or cooperated with, an international boycott within the meaning of Code section 999.

 

(m)                                None of the property of the Company or any of its Subsidiaries (i) is “tax-exempt use property” within the meaning of Code section 168(h), (ii) is “tax-exempt bond financed property” within the meaning of Code section 168(g), or (iii) is subject to a tax benefit transfer lease under section 168(f)(8) of the Internal Revenue Code of 1954.

 

(n)                                  Neither the Company nor any of its Subsidiaries has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction to which Code section 355 or 361, in whole or in part, is applicable.

 

(o)                                  Neither the Company nor any of its Subsidiaries is a party to any joint venture, partnership, limited liability company or other arrangement or contract that could be treated as a partnership for federal income Tax purposes.

 

(p)                                  Neither the Company nor any of its Subsidiaries has ever elected, or had an election made with respect to it, to be treated as an “S corporation” or “qualified subchapter S subsidiary” within the meaning of Code section 1361.

 

(q)                                  Other than any employee benefit plans specifically described in and subject to Section 5.17 , neither the Company nor any of its Subsidiaries is a party to any agreement or arrangement subject to Code section 409A.

 

(r)                                     Except for the Subsidiaries listed on Schedule 5.16(r) , neither the Company nor any of its Subsidiaries owns or has any right to acquire, directly or indirectly, any outstanding capital stock of, or other equity interest in, any Person.

 

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(s)                                   None of the indebtedness of the Company or any of its Subsidiaries constitutes (i) “corporate acquisition indebtedness” (as defined in Code section 279(b)) with respect to which any interest deductions may be disallowed under Code section 279, or (ii) an “applicable high yield discount obligation” within the meaning of Code section 163(i).

 

(t)                                     Neither the Company nor any of its Subsidiaries has requested or received any ruling from any taxing authority, or signed any binding agreement with any taxing authority (including, without limitation, any advance pricing agreement), that would impact the amount of the Company’s or Buyer’s liability for Taxes after the Closing Date.

 

(u)                                  There is no power of attorney granted by the Company or any of its Subsidiaries relating to Taxes that is currently in force.

 

(v)                                  Each of the Company’s Subsidiaries has only one class of stock outstanding.

 

(w)                                All reports of Foreign Bank and Financial Accounts on Form TD F 90-22.1 (“ FBARs ”) that the Company or any of its Subsidiaries has been required to file have been properly prepared and timely filed, except for the FBARs required to be filed for calendar years 2007 and 2008 with respect to the accounts listed on Schedule 5.16(w) , which were not timely filed.  Neither the Company nor any of its Subsidiaries is or will be subject to any penalty or other liability by reason of its failure to properly prepare and timely file any FBAR that was required to be filed for any period ending on or prior to the Closing Date.

 

5.17                            Employee Benefit Plans.

 

(a)                                   Except as listed on the attached Schedule 5.17(a) , neither the Company nor any of its Subsidiaries or ERISA Affiliates maintains, contributes to or has any liability with respect to (i) any nonqualified deferred compensation or retirement plans, (ii) any qualified “defined contribution plans” (as such term is defined under section 3(34) of ERISA), (iii) any qualified “defined benefit plans” (as such term is defined under section 3(35) of ERISA) (the plans set forth in (ii) and (iii) are collectively referred to herein as the “ Pension Plans ”), (iv) any “welfare benefit plans” (as such term is defined under section 3(1) of ERISA) (the “ Welfare Plans ”) (v) bonus, pension, profit sharing, retirement or other form of deferred compensation plan; (vi) stock purchase, stock option or similar plan; or (vii) any other material employee benefit plan, program or practice. Any plans or agreements referred to in clauses (i) through (vii) are collectively referred to herein as the “ Plans .” Each Pension Plan which is intended to meet the requirements of a “qualified plan” under section 401(a) of the Code, has either received a favorable determination letter from the Internal Revenue Service that such Pension Plan is so qualified or has requested such a favorable determination letter within the remedial amendment period of section 401(b) of the Code and the Company is not aware of any facts or circumstances that would reasonably be expected to jeopardize the qualification of such Pension Plan. Each trust maintained in connection with such Pension Plan is exempt from taxation. The Plans comply in form and in operation in all material respects with their terms and the requirements of the all applicable Legal Requirements.

 

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(b)                                  With respect to each material Plan, the Company has provided (or provided access to) to Buyer true and complete copies of, as applicable: (i) all plan documents; (ii) all funding and administrative arrangement documents including, but not limited to, trust agreements, insurance contracts, custodial agreements, investment manager agreements and service agreements; (iii) the latest favorable determination letter received from the Internal Revenue Service regarding the qualification of each plan covered by section 401(a) of the Code; (iv) the most recently filed Form 5500 for each plan that is an employee pension benefit plan (as defined in section 3(2) of ERISA) and for each plan that is an employee welfare benefit plan (as defined in section 3(1) of ERISA); (v) each summary plan description and each summary of material modification regarding the terms and provisions thereof; (vi) the most recent actuarial report, if applicable, and (vii) all material communications with any Governmental Body within the past three years.

 

(c)                                   With respect to the Plans, (i) all required contributions have been timely made, (ii) there are no actions, suits or claims pending or, to the Company’s knowledge, threatened, other than routine claims for benefits, (iii) there have been no “prohibited transactions” (as that term is defined in section 406 of ERISA or section 4975 of the Code) and (iv) all material reports, returns and similar documents required to be filed with any Governmental Body or distributed to any Plan participant have been timely filed or distributed.

 

(d)                                  No “pension plan” (within the meaning of section 3(2) of ERISA) maintained by the Company or any of its Subsidiaries which is subject to section 302 of ERISA or section 412 or sections 430-432 of the Code has failed to make any minimum required contribution as defined in section 302 of ERISA and sections 412 and 430 of the Code or has otherwise failed to comply with the minimum funding standards set forth in such sections. No liability under Title IV of ERISA (other than required premium payments) has been incurred by the Company or any of its ERISA Affiliates (or may be incurred by reason of any transaction described in section 4069 of ERISA).

 

(e)                                   Neither the Company nor any of its Subsidiaries or ERISA Affiliates contributes to or has any liability (contingent or direct) with respect to any “multiemployer plan” (as defined in section 3(37) of ERISA).  Except as set forth on Schedule 5.17(e) , no individuals participate, or are eligible to participate in any Plans other than employees of the Company or Dauntless.

 

(f)                                     The execution and delivery of this Agreement and performance of the transactions contemplated hereby, will not (either alone or upon the occurrence of any additional or subsequent events) (i) constitute an event under any Plan or Contract that will result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect to any current or former employee or other service provider other than any such payment, acceleration, forgiveness, vesting, distribution, increase in benefits or obligation to fund benefits that will constitute Transaction Expenses or (ii) result in the triggering or imposition or any restrictions or limitations on the right of the Company or any Subsidiary of the Company to amend or terminate any Plan or Contract (or result in adverse consequences for so doing).

 

(g)                                  None of the Plans or Contracts, if administered in accordance with their terms, would result in the imposition of interest or an additional tax on any participant thereunder pursuant to section 409A.

 

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(h)                                  None of the Welfare Plans obligates the Company or its Subsidiaries to provide a current or former employee (or any dependent thereof) any life insurance or medical or health benefits after his or her termination of employment with the Company or any of its Subsidiaries, other than as required under Part 6 of Subtitle B of Title I of ERISA, section 4980B of the Code or any similar state Legal Requirement.

 

5.18                            Labor.

 

(a)                                   Except as set forth on Schedule 5.18(a) , no employees of the Company or any of its Subsidiaries are represented by any labor organization.  No labor organization or group of employees of the Company or any of its Subsidiaries has made a pending demand for recognition, and there are no representation proceedings or petitions seeking a representation proceeding presently pending or, to the Company’s Knowledge, threatened to be brought or filed, with the National Labor Relations Board or other labor relations tribunal.

 

(b)                                  Schedule 5.18(b)  sets forth a true, correct and complete list of each person employed by any of the Company or Dauntless at September 30, 2010, and with respect to each such employee the following information:  (i) the employer of such employee, (ii) the amount of salary currently being paid on a gross annualized basis, the hourly pay rate (if applicable) of such employee and the amount of compensation paid in 2009; (iii) the nature and amount of all compensation proposed to be paid during calendar year 2010, (d) the material terms of any employment or similar agreement with such employee; and (iv) the nature and amount of any material perquisites or personal benefits currently being provided to or for the account of such employee, other than the Plans described in Section 5.17(a) .  Also set forth in Schedule 5.18(b)  is a list of individuals who are (A) “leased employees” within the meaning of section 414(n) of the Code or (B) “independent contractors” within the meaning of the Code and the rules and regulations promulgated thereunder, and in each case, the amount paid by the Company or its Subsidiaries, as the case may be, during calendar year 2009 and the hourly pay rate or other compensatory arrangements with respect to each such person.

 

(c)                                   Except as set forth in Schedule 5.18(c) , (i) each of the persons listed on Schedule 5.18(b)  is employed by the Company or Dauntless, as the case may be, as of the date hereof, (ii) to the Company’s Knowledge no such persons intend to terminate their employment with their respective employer, and (iii) neither the Company nor Dauntless have a present intention to terminate the employment of any such person.  To the Knowledge of the Company, no employee is a party to any confidential information or other agreement that in any way restricts the ability of such employee to perform his or her duties for the Company or Dauntless.

 

(d)                                  There are no strikes, work stoppages, slowdowns, unfair labor practice charges, lockouts or arbitrations pending or, to the Company’s Knowledge, threatened against or involving the Company or any of its Subsidiaries.  There are no unfair labor practice charges, grievances or complaints pending or, to the Company’s Knowledge, threatened by or on behalf of any employee or group of employees of the Company or any of its Subsidiaries. The Company and its Subsidiaries are in compliance in all material respects with all currently applicable Legal Requirements respecting terms and conditions of employment including, without limitation, applicant and employee background checking, immigration laws, discrimination laws, verification of employment eligibility, employee leave laws, classification

 

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of workers as employees and independent contractors (including but not limited to, applicable federal state and Tax-related Legal Requirements), wage and hour laws (including but not limited to, the Fair Labor Standards Act), and occupational safety and health laws.  The Company and its Subsidiaries have provided all employees with all wages, benefits, relocation benefits, stock options, bonuses and incentives and all other compensation which became due and payable through the date of this Agreement.  Neither the Company nor any of its Subsidiaries have instituted any “freeze” of, or delayed or deferred the grant of, any cost-of-living or other salary adjustments for any of its employees.

 

5.19                            Environmental Compliance and Conditions .  Except as set forth on the attached Schedule 5.19 :

 

(a)                                   The Company and its Subsidiaries are in compliance in all material respects with all material Environmental Laws applicable to its operations or its occupancy of the real property listed on the Schedule 5.9(a) .

 

(b)                                  Neither the Company nor any of its Subsidiaries has during the past two years received written notice from any Governmental Body that is currently pending regarding any actual or alleged material violation of, or material liability or material investigatory, corrective or remedial obligation under any material Environmental Laws applicable or relating to its operations or the real property listed on the Schedule 5.9(a) .

 

(c)                                   Neither the Company nor any of its Subsidiaries is subject to any pending, or, to the Company’s Knowledge, threatened, claim, order, directive or complaint asserting a material obligation or liability under, or material violation of, any material Environmental Law.

 

(d)                                  The Company and its Subsidiaries have obtained and are in compliance in all material respects with all permits, licenses and authorizations required under material Environmental Laws for its operations at or its occupancy of the real property listed on the Schedule 5.9(a) .

 

(e)                                   There have been no Releases of Hazardous Substances (i) at, on, under or migrating to or from any of the real property listed on the Schedule 5.9(a) , or formerly owned, leased or operated by the Company, its Subsidiaries, or any of their respective predecessors, or (ii) resulting from or relating to the operations of the Company and its Subsidiaries, or any of their respective predecessors, in each case, that would, individually or in the aggregate, have a Material Adverse Effect.

 

(f)                                     To the Company’s Knowledge, the Company has delivered to Buyer true and complete copies of all material reports, studies, analyses, tests, or monitoring possessed by the Company or its Subsidiaries as of the date hereof pertaining to the Company’s or its Subsidiaries’ compliance with or liability under material Environmental Laws.

 

5.20                            Insurance.   The Company and Dauntless carry property, liability, workers’ compensation and such other types of insurance pursuant to the insurance policies listed and briefly described in Schedule 5.20 (collectively, the “ Insurance Policies ” and each individually, an “ Insurance Policy ”).  The Insurance Policies cover such risks and contain such policy limits, types of coverage and deductibles as are, in the Company’s judgment, adequate to insure (subject

 

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to the deductibles and retention amounts described in Schedule 5.20 ) against risks to which the Company, Dauntless and their employees, business, properties and other assets may reasonably expected to be exposed in the operation of the Business as currently conducted.  All of the Insurance Policies are valid and enforceable policies subject to (i) Legal Requirements of general application relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of Law governing specific performance, injunctive relief and other equitable remedies, all premiums due and payable under all such policies and bonds have been paid and the Company and Dauntless are otherwise in compliance in all material respects with the terms of such policies and bonds.  The Company has made available to Buyer a copy of all Insurance Policies and all material self insurance programs and arrangements relating to the Business, and the assets and operations of the Company and its Subsidiaries.  Each of such insurance policies is in full force and effect and the Company has not received any notice regarding any actual or possible (a) cancellation or invalidation of any insurance policy, (b) refusal of any coverage or rejection of any material claim under any insurance policy, or (c) material adjustment in the amount of the premiums payable with respect to any insurance policy.  Except as set forth in Schedule 5.20 , there is no pending workers’ compensation or other claim under or based upon any insurance policy or otherwise.  The Insurance Policies are sufficient for compliance in all material respects with all Legal Requirements and the terms of all Material Contracts.

 

5.21                            Legal Proceedings; Orders.   Except as set forth in Schedule 5.21 , there is no pending Legal Proceeding, and to the Company’s Knowledge no Person has threatened to commence any Legal Proceeding:  (i) that involves the Company or any of its Subsidiaries or any of their respective assets; or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the transactions contemplated by this Agreement.  To the Company’s Knowledge, no event has occurred, and no claim, dispute or other condition or circumstance exists that could reasonably be expected to give rise to or serve as a basis for the commencement of any such Legal Proceeding.  There is no order, writ, injunction, judgment or decree to which the Company or any of its Subsidiaries, or any of their respective assets, is subject.  No officer or key employee of the Company or any of its Subsidiaries is subject to any order, writ, injunction, judgment or decree that prohibits such officer or other employee from engaging in or continuing any conduct, activity or practice relating to the Business.  All Legal Proceedings have been timely reported to all applicable insurance carriers and no reservation of rights or denial of coverage has been issued by any such carrier.

 

5.22                            Related Party Transactions .  Except as set forth on Schedule 5.22 , none of the Representative nor any of his Affiliates (other than the Company and Dauntless) (a) has any interest in any property (real, personal, or mixed and whether tangible or intangible), used in or pertaining to the Business, (b) owns, of record or as a beneficial owner, a material equity interest or any other financial interest in a Person that has material business dealings with the Company or Dauntless, (c) is a party to any agreement with, or has any claim or right against, the Company or Dauntless (except for employment contracts and claims thereunder or under any Plan) or (d) is owed any money by the Company or any of its Subsidiaries, other than for services rendered or reimbursable expenses, or owes any money to the Company or any of its Subsidiaries, except for advances made in the ordinary course of business.

 

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5.23                            Customers and Suppliers.  Schedule 5.23 sets forth true, complete and correct breakdown of the revenues received by the Company or Dauntless from each of their respective customers that accounted for (i) more than ten percent (10%) of the gross revenues of the Business in the fiscal year ended December 31, 2009, or (ii) more than ten percent (10%) of the gross revenue of the Company for the calendar year 2010 through the Closing Date.  The Company has not received any notice indicating that any customer or other Person identified in Schedule 5.23 may cease dealing with the Company or any of its Subsidiaries, disallow the Company or any of its Subsidiaries from bidding on future requests for proposals or otherwise in any material respect reduce the volume of business done with the Company or any of its Subsidiaries below historical practices.

 

5.24                            Restrictions on Business Activities.  There is no Contract or order, injunction, judgment, decree, ruling, writ, assessment or arbitration award of a Governmental Body of competent jurisdiction binding upon the Company or Dauntless which have or could reasonably be expected to have the effect of prohibiting or impairing in any material respect any current or future business practice of the Company or Dauntless, any acquisition of property by the Company or Dauntless or the conduct of Business as currently conducted or as proposed to be conducted.

 

5.25                            Broker Fees.  Except for fees due to BB&T Capital Markets/Windsor Group, which shall constitute Transaction Expenses, no broker, finder or investment banker or other person is entitled to any brokerage, finder’ or other fee or commission from the Company in connection with this Agreement.

 

5.26                            Full Disclosure.  None of the representations or warranties made by Company herein or in any Schedule or Exhibit hereto, or certificate furnished by the Company pursuant to this Agreement or any written statement furnished to Buyer pursuant hereto or in connection with the transactions contemplated hereby, when all such documents are read together in their entirety, contains, or will contain at the Effective Time, any untrue statement of a material fact, or omits, or will omit at the Effective Time, to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading.

 

6.                                        Representations and Warranties of the Shareholders.

 

Each Shareholder hereby, severally, and not jointly, represents and warrants as to himself, herself or itself, as the case may be, to Buyer as follows:

 

6.1                                  Authority.   Such Shareholder has the requisite power and authority to execute and deliver this Agreement, and to consummate the transactions contemplated hereby and thereby to be performed by it.  All acts and other proceedings required to be taken by such Shareholder to authorize its execution and delivery of this Agreement, the performance of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly taken.  This Agreement has been duly authorized, executed and delivered by it and constitutes a legal, valid and binding obligation of it, enforceable against it in accordance with its terms and conditions, except as may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, or other laws affecting the enforcement of creditors’ rights in general, and except that the enforceability of this Agreement is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

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6.2                                  No Conflicts; Consents.

 

(a)                                   Except as set forth on Schedule 6.2(a) , such Shareholder’s execution and delivery of this Agreement, and the performance of its obligations hereunder will not (i) violate any Legal Requirement to which such Shareholder is subject, (ii) violate any judgment, order, injunction or decree of any Governmental Body that is applicable to such Shareholder, (iii) violate the organizational documents of such Shareholder, if applicable, or (iv) result in the breach of, or require the consent of any other party to, any contract, license, permit or other instrument or commitment to which such Shareholder is a party or bound or give any party with rights thereunder the right to terminate, cancel or accelerate the rights or obligations of such Shareholder thereunder, except in the case of clauses (i), (ii) and (iv) above as could not, individually or in the aggregate, reasonably be expected to (x) have a material adverse effect on the ability of the Shareholder to consummate, or prevent or materially delay the Shareholder from consummating, the transactions contemplated hereby, (y) subject the Company or any of its Subsidiari


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