AGREEMENT AND PLAN OF REORGANIZATION

Exhibit 10.1

 

AGREEMENT AND PLAN OF REORGANIZATION

BY AND AMONG

INFERX CORPORATION

IRUS ACQUISITION CORP.

AND

THE IRUS GROUP, INC.

Dated as of March 16, 2009

TABLE OF CONTENTS

 

INDEX OF EXHIBITS

 

CONFIDENTIAL

 

RECITALS

ARTICLE I

THE MERGER

1.1   The Merger .  At the Effective Time and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the Delaware General Corporation Law (“ Delaware Law ”), Merger Sub shall be merged with and into the Company (the “ Merger ”), the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation.   The Company as the surviving corporation after the Merger is sometimes referred to hereinafter as the “ Surviving Corporation .”

 

1.2   Effective Time .  Unless this Agreement is earlier terminated pursuant to Section  7.1 hereof, the closing of the Merger (the “ Closing ”) will take place as promptly as practicable, and in any event no more than three (3) Business Days, after the conditions set forth in Article V hereof have been satisfied or waived, at the offices of Seyfarth Shaw LLP, 975 F Street, N.W., Washington, D.C. 20004 unless another time or place is mutually agreed upon in writing by Parent and the Company. The date upon which the Closing actually occurs shall be referred to herein as the “ Closing Date .”  On the Closing Date, the parties hereto shall cause the Merger to be consummated by filing or causing to be filed with the Secretary of State of the State of Delaware a certificate of merger in substantially the form attached hereto as Exhibit C (the “ Certificate of Merger ”) in accordance with the applicable provisions of Delaware Law, the time of filing of the Certificate of Merger by the Secretary of State of the State of Delaware shall be referred to herein as the “ Effective Time .”

 

1.3   Effect of the Merger .  The effect of the Merger shall be as set forth in this Agreement and as provided in the applicable provisions of Delaware Law.  Without limiting the generality of the foregoing, and subject thereto, upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, except as otherwise agreed to pursuant to the terms of this Agreement, all of the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company, and Merger shall become the debts, liabilities and duties of the Surviving Corporation.

 

(b)   Unless otherwise determined by Parent prior to the Effective Time, the bylaws of the Merger Sub shall be the bylaws of the Surviving Corporation.

(a)   Directors of Surviving Corporation .  Unless otherwise determined by Parent prior to the Effective Time, the directors of the Surviving Corporation shall be Vijay Suri and B.K. Gogia immediately after the Effective Time, each to hold the office of a director of the Surviving Corporation in accordance with the provisions of Delaware Law, the certificate of incorporation and bylaws of the Surviving Corporation until their successors are duly elected and qualified, or until their earlier resignation or removal.

(b)   Officers of Surviving Corporation .  Unless otherwise determined by Parent prior to the Effective Time, the officers of the Surviving Corporation shall be Vijay Suri as President and CEO, B.K. Gogia, President of the Technology Division, Jerzy Bala, CTO, and Raymundo Piluso, Vice President of Operations and Business Development immediately after the Effective Time, each to hold office in accordance with the provisions of the bylaws of the Surviving Corporation.

 

(a)   Definitions .  For all purposes of this Agreement, the following terms shall have the following respective meanings:

 

(i)   “ Business Day ” shall mean each day that is not a Saturday, Sunday or other day on which Parent is closed for business or banking institutions located in New York, NY are authorized or obligated by law or executive order to close.

 

(ii)   “ Company Capital Stock ” shall mean the Company Common Stock and all other shares of capital stock, if any, of the Company, taken together.

 

(iii)   “ Company Common Stock ” shall mean shares of common stock, $.00001 par value per share, of the Company.

 

(iv)   “ Continuing Employee ” shall mean each employee of the Company who is an employee of Parent or any of its Subsidiaries immediately following the Effective Time.

 

(v)   “ Court ” shall mean any court or arbitration tribunal of the United States, any domestic state, or any foreign country, and any political subdivision or agency thereof.

 

(vi)   “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

 

(vii)   “ FASB ” shall mean the Financial Accounting Standards Board.

 

(viii)   “ GAAP ” shall mean United States generally accepted accounting principles consistently applied.

 

(ix)   “ HSR Act ” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

 

(x)   “ Key Employees ” shall mean the employees of Company identified on Schedule  1.6(a) (x) hereto.

 

(xi)   “ Knowledge ” or “ Known ” shall mean, with respect to the Company, the actual knowledge of Vijay Suri.

(xii)   “ Law ” shall mean any law (statutory, common or otherwise), constitution, treaty, convention, ordinance, equitable principle, code, rule, regulation, executive order, or other similar authority enacted, adopted, promulgated, or applied by any Governmental Entity, each as amended and now in effect.

(xiii)   “ Lien ” shall mean any lien, pledge, charge, claim, mortgage, security interest or other encumbrance of any sort.

 

(xiv)   “ Merger Consideration ” shall mean that number of shares constituting 70% of Parent Common Stock.

 

(xv)   “ Order ” shall mean any order, ruling, decision, verdict, decree, writ, subpoena, mandate, precept, command, directive, approval, award, judgment, injunction, or other similar determination or finding issued, granted or made by any Governmental Entity or Court.

 

(xvi)   “ Parent Common Stock ” shall mean shares of the common stock, par value $.0001 per share, of Parent.

 

(xvii)   “ Per Share Merger Consideration ” shall mean that amount obtained by dividing (A) the Merger Consideration, by (B) the Total Outstanding Shares.

 

(xviii)   “ Person ” shall mean an individual or entity, including a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a Governmental Entity (or any department, agency, or political subdivision thereof).

 

(xix)   “ Principal Stockholders ” shall mean Vijay Suri.

 

(xx)   “ Pro Rata Portion ” shall mean, with respect to each Stockholder, an amount equal to the quotient obtained by dividing (A) the number of shares of Company Common Stock owned by such Stockholder as of immediately prior to the Effective Time by (B) the total number of shares of Company Common Stock issued and outstanding as of immediately prior to the Effective Time .

 

(xxi)   “ Related Agreements ” shall mean the Certificate of Merger, the Employment Agreements by and between Parent and the Key Employees, and all other agreements and certificates entered into by Parent or the Company in connection with the transactions contemplated herein.

 

(xxii)   “ Requisite Stockholder Vote ” shall mean the affirmative vote of the holders of at least 90% of the outstanding Company Capital Stock.

 

(xxiii)   “ SEC ” shall mean the United States Securities and Exchange Commission.

 

(xxiv)   “ Securities Act ” shall mean the Securities Act of 1933, as amended.

 

(xxv)   “ Stockholder ” shall mean any holder of any Company Capital Stock immediately prior to the Effective Time and as listed on Schedule A to this Agreement.

(xxvi)   “ Subsidiary ” shall have the meaning set forth in Section 2.3(b) of this Agreement.

 

 

CONFIDENTIAL

 

(xxvii)   “ Total Outstanding Shares ” shall mean the aggregate number of shares of Company Capital Stock issued and outstanding immediately prior to the Effective Time.

 

(b)   Effect on Capital Stock .  At the Effective Time, by virtue of the Merger and without any action on the part of Merger Sub, the Company or the holders of shares of Company Capital Stock, each share of Company Capital Stock issued and outstanding immediately prior to the Effective Time, upon the terms and subject to the conditions set forth in this Section  1.6 and throughout this Agreement will be cancelled and extinguished and will be converted automatically into the right to receive upon surrender of the certificate representing such shares of Company Capital Stock in the manner provided in Section  1.7 hereof, such portion of the Merger Consideration as set forth below:

 

(i)   each outstanding share of Company Common Stock will be converted automatically into the right to receive the Per Share Merger Consideration;  and

 

(ii)   for purposes of calculating the number of shares of Parent Common Stock issuable to each Stockholder pursuant to this Section  1.6(b) , all shares of the Company Capital Stock held by each Stockholder shall be aggregated on a certificate-by-certificate basis.  The aggregate number of shares of Parent Common Stock issuable to each Stockholder for each share certificate shall be rounded down to the nearest whole number of shares of Parent Common Stock; provided, however , that the maximum number of shares of Parent Common Stock shall be issuable to Stockholders.

 

(c)   Necessary Actions .  Prior to the Effective Time, and subject to the review and approval of Parent, the Company shall take all actions necessary to effect the transactions anticipated by this Section  1.6 under all agreements related to Company Common Stock and any other plan or arrangement of the Company (whether written or oral, formal or informal), including delivering all required notices or obtaining any required consents.

 

(d)   Cancellation of Company Owned Stock .  Each share of Company Capital Stock held by the Company or any direct or indirect Subsidiary of the Company immediately prior to the Effective Time shall be cancelled and extinguished as of the Effective Time.

 

(e)   Adjustments to Parent Common Stock .  If, after the date of this Agreement and prior to the Effective Time, the outstanding shares of Parent Common Stock shall have been changed into or exchanged for a different number of shares or kind of shares and/or other securities of Parent or another corporation or entity by reason of any reclassification, split-up, stock dividend or stock combination or any arrangement, amalgamation or similar statutory procedure (an “ Adjustment Event ”), then the number of shares of Parent Common Stock to be delivered as consideration hereunder shall be appropriately adjusted so that each holder of Company Stock Certificates shall be entitled to receive at the Effective Time, in lieu of the number of shares of Parent Common Stock provided for in this Section  1.6 , such number and kind of shares and/or other securities as such holder would have received if the record date and payment date for such Adjustment Event had been immediately after the Effective Time.

 

 

CONFIDENTIAL

 

(f)   Withholding Taxes .  The Company, and on its behalf Parent and the Surviving Corporation, shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement to any Person such amounts as may be required to be deducted or withheld therefrom under any provision of federal, state, local or foreign tax law or under any applicable legal requirement.  The number of shares of Merger Consideration to be used to satisfy the amount required to be so deducted or withheld, if any, shall be determined by dividing such amount by fair market value of the Parent Common Stock at the Effective Time, rounded to the nearest whole share (with 0.5 of a share rounded up).  To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

(g)   Capital Stock of Merger Sub .  Each share of Common Stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one validly issued, fully paid and nonassessable share of Common Stock of the Surviving Corporation.  Each stock certificate of Merger Sub evidencing ownership of any such shares shall continue to evidence ownership of such shares of capital stock of the Surviving Corporation.

 

 

(a)   Exchange Agent .  Parent shall serve as the Exchange Agent for the Merger.

 

(b)   Exchange Procedures .  As soon as practicable, but in no event more than three (3) Business Days, following the Closing Date, Parent shall mail a letter of transmittal in Parent’s standard form to each Stockholder at the address set forth opposite each such Stockholder’s name on Schedule A to this Agreement.  After receipt of such letter of transmittal and any other documents that Parent may require in order to effect the exchange (the “ Exchange Documents ”), the Stockholders will surrender the certificates representing their shares of Company Capital Stock (the “ Company Stock Certificates ”) to the Exchange Agent for cancellation together with duly completed and validly executed Exchange Documents.  Upon surrender of a Company Stock Certificate for cancellation to Parent, or such agent or agents as may be appointed by Parent, together with such Exchange Documents, duly completed and validly executed in accordance with the instructions thereto, the holder of such Company Stock Certificate shall be entitled to receive from the Exchange Agent in exchange therefor, a certificate representing the number of whole shares of Parent Common Stock to which such holder is entitled pursuant to Section  1.6 hereof, and the Company Stock Certificate so surrendered shall be cancelled. Until so surrendered, each Company Stock Certificate outstanding after the Effective Time will be deemed, for all corporate purposes thereafter, to evidence only the right to receive the number of full shares of Parent Common Stock into which such shares of Company Capital Stock shall have been so converted.  No portion of the Merger Consideration will be paid to the holder of any unsurrendered Company Stock Certificate with respect to shares of Company Capital Stock formerly represented thereby until the holder of record of such Company Stock Certificate shall surrender such Company Stock Certificate and the Exchange Documents pursuant hereto.

(c)   Distributions With Respect to Unexchanged Shares .  No dividends or other distributions declared or made after the Effective Time with respect to Parent Common Stock with a record date after the Effective Time will be paid to the holder of any unsurrendered Company Stock Certificate with respect to the shares of Parent Common Stock represented thereby until the holder of record of such Company Stock Certificate shall surrender such Company Stock Certificate.  Subject to applicable law, following surrender of any such Company Stock Certificate, there shall be paid to the record holder of the certificates representing whole shares of Parent Common Stock issued in exchange therefor, without interest, at the time of such surrender, the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of Parent Common Stock.

 

 

CONFIDENTIAL

 

(d)   Transfers of Ownership .  If any certificate for shares of Parent Common Stock is to be issued in a name other than that in which the Company Stock Certificate surrendered in exchange therefor is registered it will be a condition of the issuance or delivery thereof that the certificate so surrendered will be properly endorsed and otherwise in proper form for transfer and that the person requesting such exchange will have paid to Parent or any agent designated by it any transfer or other taxes required by reason of the issuance of a certificate for shares of Parent Common Stock in any name other than that of the registered holder of the certificate surrendered, or established to the satisfaction of Parent or any agent designated by it that such tax has been paid or is not payable.

(e)   No Liability .  Notwithstanding anything to the contrary in this Section  1.7 , neither Parent, the Surviving Corporation, nor any party hereto shall be liable to a holder of shares of Company Capital Stock for any amount paid to a public official pursuant to any applicable abandoned property, escheat or similar law.

 

1.8   No Further Ownership Rights in Company Capital Stock .  The shares of Parent Common Stock issued in respect of the surrender for exchange of shares of Company Capital Stock in accordance with the terms hereof shall be deemed to be full satisfaction of all rights pertaining to such shares of Company Capital Stock, and there shall be no further registration of transfers on the records of the Surviving Corporation of shares of Company Capital Stock which were outstanding immediately prior to the Effective Time.  If, after the Effective Time, Company Stock Certificates are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Article I .

 

1.9   Lost, Stolen or Destroyed Certificates .  In the event any Company Stock Certificates shall have been lost, stolen or destroyed, Parent shall issue in exchange for such lost, stolen or destroyed certificates, upon the making of an affidavit of that fact by the holder thereof, such amount, if any, as may be required pursuant to Section  1.6 hereof; provided, however , that Parent may, in its discretion and as a condition precedent to the issuance thereof, require the Stockholder who is the owner of such lost, stolen or destroyed certificates to either (i) deliver a bond in such amount as it may direct or (ii) provide an indemnification agreement in form and substance acceptable to Parent, against any claim that may be made against Parent with respect to the certificates alleged to have been lost, stolen or destroyed.

 

1.10   Tax Consequences .  Parent, Merger Sub and Company (i) intend that the Merger shall constitute a reorganization within the meaning of Section 368(a)(1)(A) of the Code, (ii) shall report the Merger (if such Person has tax reporting obligations in respect thereof) as a single statutory merger of the Company with and into Parent qualifying as a reorganization within the meaning of Section 368(a)(1)(A) of the Code for federal income tax purposes, and (iii) by executing this Agreement, adopt a plan of tax-free reorganization within the meaning of Treasury Regulations Sections 1.368 2(g) and 1.368 3.  However, no party hereto makes any representations or warranties regarding the tax treatment of the  Merger, or any of the tax consequences relating to the Merger, this Agreement, or any of the other transactions or agreements contemplated hereby.  Each party hereto acknowledges that it is relying solely on its own tax advisors in connection with the Merger, this Agreement and the other transactions and agreements contemplated hereby.

1.11   Taking of Necessary Action; Further Action .  If at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company, Parent and the Surviving Corporation and the officers and directors of Parent and the Surviving Corporation are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Subject to such exceptions as are specifically disclosed in the disclosure schedule dated as of the date hereof (each of which disclosures, in order to be effective, shall clearly reference the appropriate section of this Article II to which it relates and each of which disclosures shall be deemed to be incorporated by reference into the representations and warranties made in this Article II ; provided, however, that any information disclosed under any section of the disclosure schedule shall be deemed disclosed and incorporated into any other section of the disclosure schedule where it is reasonably apparent that such disclosure, without reference to extrinsic documentation, is relevant to such other section)   delivered by the Company to Parent concurrently with the execution of this Agreement (the “ Disclosure Schedule ”) the Company hereby represents and warrants to Parent and Merger Sub on the date hereof and as of the Effective Time, as follows:

 

(a)   The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  The Company has the corporate power to own its properties and to carry on its business as currently conducted.  The Company is duly qualified or licensed to do business and in good standing as a foreign corporation in each jurisdiction in which the character or location of its assets or properties (whether owned, leased or licensed) or the nature of its business make such qualifications necessary, except where the failure to so qualify would not be material to the Company and its Subsidiaries, taken as a whole.  The Company has delivered a true and correct copy of its Certificate of Incorporation, as amended to date (the “ Certificate of Incorporation ”) and bylaws, as amended to date, each in full force and effect on the date hereof (collectively, the “ Charter Documents ”), to Parent.  The Board of Directors of the Company has not approved or proposed any amendment to any of the Charter Documents.

(b)   Section  2.1(b) of the Disclosure Schedule lists the directors and officers of the Company as of the date hereof, separately noting which of such directors and officers has any rights to indemnification from the Company and the scope and duration of such rights.

 

(a)   The authorized Company Capital Stock consists of 1,650,000 shares of common stock, $.00001 par value per share and there are no other shares of capital stock.  As of the date hereof, 1,500 shares of common stock of the Company were the only issued and outstanding shares of Company Capital Stock.  The Company Capital Stock is held by the Persons and in the amounts set forth in Schedule A .  All outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Charter Documents, or any agreement to which the Company is a party or by which it is bound.  All outstanding shares of Company Capital Stock have been issued or repurchased (in the case of shares that were outstanding and repurchased by the Company or any Stockholder of the Company) in compliance with all applicable federal, state, foreign, or local statutes, laws, rules, or regulations, including federal and state securities laws, and were issued, transferred and repurchased (in the case of shares that were outstanding and repurchased by the Company or any Stockholder of the Company) in accordance with any right of first refusal or similar right or limitation, including those in the Charter Documents.  There are no declared or accrued but unpaid dividends with respect to any shares of Company Capital Stock. No shares of Company Capital Stock are unvested.  For purposes of this Agreement, a share of Company Capital Stock shall be deemed “unvested” if such share is not vested or is subject to a risk of forfeiture or other condition under any applicable stock restriction agreement or other agreement with the Company. The Company has no other capital stock authorized, issued or outstanding.

(b)   There are no options, warrants, calls, rights, convertible securities, commitments or agreements of any character, written or oral, to which the Company or any of its Subsidiaries is a party or by which the Company is bound obligating the Company to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of Company Capital Stock or obligating the Company to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such option, warrant, call, right, commitment or agreement. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to the equity of the Company or any of its Subsidiaries (whether payable in equity, cash or otherwise).  Except as contemplated hereby, there are no voting trusts, proxies, or other agreements or understandings with respect to the voting stock of the Company or any of its Subsidiaries.  There are no agreements to which the Company or any of its Subsidiaries is a party relating to the registration, sale or transfer (including agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any Company Capital Stock.  As a result of the Merger, Parent will be the sole record and beneficial holder of all issued and outstanding Company Capital Stock and all rights to acquire or receive any shares of Company Capital Stock, whether or not such shares of Company Capital Stock are outstanding.

 

(c)   There are no loans from the Company to any Stockholder.

 

(d)   The allocation of the Merger Consideration set forth in Section  1.6(b) hereof is consistent with the certificate of incorporation of the Company as amended as of immediately prior to the Effective Time.

 

(e)   The information contained in Schedule A will be complete and correct as of the Closing Date.

 

 

2.4   Authority .  The Company has all requisite power and authority to enter into this Agreement and any Related Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby.  The execution and delivery by the Company of this Agreement and any Related Agreements to which the Company is a party and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and no further action is required on the part of the Company to authorize the Agreement and any Related Agreements to which it is a party and the transactions contemplated hereby and thereby, subject only to the approval of this Agreement and the transactions contemplated hereby by the Stockholders. This Agreement and the transactions contemplated hereby have been unanimously approved by the Board of Directors of the Company.  This Agreement and each of the Related Agreements to which the Company is a party have been duly executed and delivered by the Company and assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitute the valid and binding obligations of the Company enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights generally and by general principles of equity.

2.5   No Conflict .  Except as set forth in Section 2.5 of the Disclosure Schedule, the execution and delivery by the Company of this Agreement and any Related Agreement to which the Company is a party, and the consummation of the transactions contemplated hereby and thereby, will not conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of first refusal, termination, cancellation, modification or acceleration of any obligation or loss of any benefit under (any such event, a “ Conflict ”) (i) any provision of the Charter Documents or the organizational documents of any of its Subsidiaries, as amended, (ii) any material mortgage, indenture, lease (including, without limitation, all Lease Agreements), contract, covenant, plan, insurance policy or other agreement, instrument or commitment, permit, concession, franchise or license (each a “ Contract ” and collectively the “ Contracts ”) to which the Company is a party or by which any of its properties or assets (whether tangible or intangible) are bound, or (iii) any material judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries or any of their respective properties or assets (whether tangible or intangible), except with respect to clauses (ii) and (iii) for any such Conflicts that would not individually or in the aggregate prevent or materially delay consummation of the Merger or otherwise prevent or materially delay the Company from performing its obligations under this Agreement.  The terms and conditions of the Contracts do not require the payment of any additional amounts or consideration as a result of the consummation of the Merger, other than ongoing fees, royalties or payments which the Company or any of its Subsidiaries, as the case may be, would otherwise be required to pay pursuant to the terms of such Contracts had the transactions contemplated by this Agreement not occurred.

2.6   Consents .  No consent, notice, waiver, approval, order or authorization of, or registration, declaration or filing with any court, tribunal, administrative agency or commission or other federal, state, county, local or other foreign governmental authority, instrumentality, agency or commission, or regional or international organization (each, a “ Governmental Entity ”) or any third party, including a party to any agreement with the Company or any of its Subsidiaries (so as not to trigger any Conflict), is required by, or with respect to, the Company or any of its Subsidiaries in connection with the execution and delivery by the Company of this Agreement and any Related Agreement to which the Company or any of its Subsidiaries is a party or the consummation of the transactions contemplated hereby and thereby, except for (i) such consents, notices, waivers, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable securities laws, (ii)  the filing of the Notification and Report Forms with the United States Federal Trade Commission (“ FTC ”) and the Antitrust Division of the United States Department of Justice (“ DOJ ”) required by the HSR Act and the expiration or termination of the applicable waiting period under the HSR Act and such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings as may be required under U.S. or foreign laws or regulations applicable to mergers or acquisitions involving foreign parties, (iv) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, and (v) the adoption of this Agreement and approval of the transactions contemplated by this Agreement by the Stockholders.

2.7   Company Financial Statements .  Section  2.7 of the Disclosure Schedule sets forth the Company’s (i) Annual unaudited financials for the year ended December 31, 2007 (the “ Year-End Financials ”), and (ii) the unaudited consolidated balance sheet as of December 31, 2008 (the “ Current Balance Sheet Date ”).  The Year-End Financials (collectively referred to as the “ Financials ”) are true and correct in all material respects and have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated and consistent with each other (except that the Interim Financials do not contain footnotes and other presentation items that may be required by GAAP).  The Financials present fairly the Company’s consolidated financial condition, operating results and cash flows as of the dates and during the periods indicated therein, subject in the case of the Interim Financials to normal year-end adjustments, which are not material in amount or significance in any individual case or in the aggregate.  The Company’s unaudited consolidated balance sheet as of the Current Balance Sheet Date is referred to hereinafter as the “ Current Balance Sheet .”  The Company has not had any disagreement (as such term is defined in Item 304 of Regulation S-K promulgated under the Securities Act) with any of its auditors regarding accounting matters or policies during any of its past three full fiscal years or during the current fiscal year-to-date.  The books and records of the Company and each Subsidiary have been, and are being maintained in all material respects in accordance with applicable legal and accounting requirements and the Financials are consistent with such books and records.  Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar Contract relating to any transaction or relationship between or among the Company or any of its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose Person on the other hand, or any “off-balance sheet arrangement” (as defined in Item 303(a) of Regulation S-K of the SEC).  As of the Closing Date, the Financials (x) will be true and correct in all material respects and will have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated, and (y) will present fairly, in all material respects, the Company’s consolidated financial condition, operating results and cash flows as of the dates and during the periods indicated therein.

2.8   No Undisclosed Liabilities .  Neither the Company nor any of its Subsidiaries has any liability, indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of any type, whether accrued, absolute, contingent, matured, unmatured or other (whether or not required to be reflected in financial statements in accordance with GAAP) in excess of $10,000 individually or $50,000 in the aggregate, except for those which (i) have been reflected in the unaudited consolidated balance sheet of the Company as of the Current Balance Sheet Date, (ii) have arisen in the ordinary course of business consistent with past practices since the Current Balance Sheet Date, or (iii) are liabilities or obligations incurred in connection with the transactions contemplated hereby.

 

2.9   No Changes .  From the Current Balance Sheet Date through the date hereof, (a) the business of the Company and each of its Subsidiaries has been conducted in the ordinary course of business consistent with past practice; and (b) there has not been any event, change, development or set of circumstances that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the financial condition or results of operations of the Company.

(a)   The Company has made available to Parent a list of all accounts receivable of the Company and its Subsidiaries as of the Current Balance Sheet Date, together with an aging schedule indicating a range of days elapsed since invoice.

(b)   All of the accounts receivable of the Company and its Subsidiaries arose in the ordinary course of business, are carried at values determined in accordance with GAAP consistently applied to the Company’s Knowledge, are not subject to any valid set-off or counterclaim, do not represent obligations for goods sold on consignment, on approval or on a sale-or-return basis or subject to any other repurchase or return arrangement.  No person has any Lien on any accounts receivable of the Company and its Subsidiaries and no request or agreement for deduction or discount has been made with respect to any accounts receivable of the Company and its Subsidiaries, other than in the ordinary course of business consistent with past practices.

 

(a)   Definition of Taxes .  For the purposes of this Agreement, the term “ Tax ” or, collectively, “ Taxes ” shall mean (i) any and all U.S. federal, state, local and non-U.S. taxes, assessments and other governmental charges, duties, impositions and liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes as well as public imposts, fees and social security charges (including health, unemployment, workers’ compensation and pension insurance), together with all interest, penalties and additions imposed with respect to such amounts, (ii) any liability for the payment of any amounts of the type described in clause (i) of this Section  2.11(a) as a result of being a member of an affiliated, consolidated, combined or unitary group for any period (including any arrangement for group or consortium relief or similar arrangement), and (iii) any liability for the payment of any amounts of the type described in clauses (i) or (ii) of this Section  2.11(a) as a result of any express or implied obligation to indemnify any other person or as a result of any obligation under any agreement or arrangement with any other person with respect to such amounts and including any liability for taxes of a predecessor or transferor or otherwise by operation of law.

(b)   Tax Returns and Audits .

 

(i)   Except as set forth in Section 2.11 (b) (i) of the Disclosure Schedules, the Company and each of its Subsidiaries have (a) prepared and timely filed all required U.S. federal, state, local and non-U.S. returns, estimates, information statements and reports, including attachments and amendments thereto (“ Returns ”) relating to any and all Taxes concerning or attributable to the Company or any of its Subsidiaries or their respective operations and such Returns are true and correct and have been completed in accordance with applicable law and (b) timely paid all Taxes they are required to pay.

 

(ii)   The Company and each of its Subsidiaries have paid or withheld with respect to their respective Employees and other third parties, all U.S. federal, state and non-U.S. income Taxes and social security charges and similar fees, Federal Insurance Contribution Act amounts, Federal Unemployment Tax Act amounts and all other Taxes required to be withheld or paid, and have timely paid any such Taxes withheld over to the appropriate authorities.

 

(iii)   Neither the Company nor any of its Subsidiaries is delinquent in the payment of any Tax, or has been delinquent in the payment of any material Tax, nor is there any Tax deficiency outstanding, assessed or proposed against the Company or any of its Subsidiaries, nor has the Company or any of its Subsidiaries executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.

(iv)   No audit or other examination of any Return of the Company or any of its Subsidiaries is presently in progress, nor has the Company or any of its Subsidiaries been notified of any request for such an audit or other examination.  No adjustment relating to any Return filed by the Company or any of its Subsidiaries has been proposed by any Tax authority to the Company or any of its Subsidiaries or any representative thereof.  No claim has ever been made by an authority in a jurisdiction where the Company or any of its Subsidiaries does not file Returns that the Company or any of its Subsidiaries is or may be subject to taxation by that jurisdiction.

 

(v)   Neither the Company nor any of its Subsidiaries has any liabilities for unpaid Taxes which have not been accrued or reserved on the Current Balance Sheet, whether asserted or unasserted, contingent or otherwise, and neither the Company nor any of its Subsidiaries has incurred any liability for Taxes since the Current Balance Sheet Date other than in the ordinary course of business.  The Company and each of its Subsidiaries have identified all uncertain tax positions contained in all Returns filed by the Company or its Subsidiaries and, except as set forth in Section 2.11(b)(v) of the Disclosure Schedule, have established adequate reserves and made any appropriate disclosures in the Financials in accordance with the requirements of Financial Interpretation No. 48 of FASB Statement No. 109.

 

(vi)   The Company has made available to Parent or its legal counsel, copies of all Returns for the Company and its Subsidiaries filed for all periods since inception.

 

(vii)   There are (and immediately following the Effective Time there will be) no Liens on the assets of the Company or any of its Subsidiaries relating to or attributable to Taxes other than Liens for Taxes not yet due and payable.  There is no basis for the assertion of any claim relating or attributable to Taxes which, if adversely determined, would result in any Lien on the assets of the Company or any of its Subsidiaries.

 

(viii)   Neither the Company nor any of its Subsidiaries has (a) ever been a member of an affiliated group (within the meaning of Code §1504(a)) filing a consolidated federal income Tax Return (other than a group the common parent of which was Company), (b) ever been a party to any Tax sharing, indemnification or allocation agreement, nor does the Company or any of its Subsidiaries owe any amount under any such agreement, (c) any liability for the Taxes of any Person, under Treasury Regulation §1.1502-6 (or any similar provision of state, local or foreign law, and including any arrangement for group or consortium relief or similar arrangements), as a transferee or successor, by contract or agreement, by operation of law or otherwise and (d) ever been a party to any joint venture, partnership or other arrangement that could be treated as a partnership for Tax purposes.

 

(ix)   Section  2.11(b)(ix) of the Disclosure Schedule sets forth the following information with respect to the Company and each of its Subsidiaries: (1) the basis of the Company and each of its Subsidiaries in its assets; (2) the amount of any net operating loss, net capital loss, unused investment, foreign, or other Tax credit and the amount of any limitation upon any of the foregoing; and (3) the amount of any deferred gain or loss allocable to the Company and each of its Subsidiaries arising out of any deferred intercompany transaction as defined in Treas. Reg. § 1.1502-13 or any similar provision of applicable law.

 

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

 

 

CONFIDENTIAL

 

(xi)   Neither the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code.

 

(xii)   Neither the Company nor any of its Subsidiaries has engaged in a “reportable transaction” as set forth in Treas. Reg. §1.6011-4(b), including any transaction that is the same or substantially similar to one of the types of transactions that the Internal Revenue Service has determined to be a Tax avoidance transaction and identified by notice, regulation, or other form of published guidance as a “listed transaction,” as set forth in Treasury Regulation Section 1.6011-4(b)(2).

 

(xiii)   Neither the Company nor any of its Subsidiaries is subject to Tax in any country other than its country of incorporation or formation by virtue of having a permanent establishment, place of business or source of income in that jurisdiction.

 

(xiv)   Neither the Company nor any of its Subsidiaries will be required to include any income or gain or exclude any deduction or loss from taxable income as a result of any (a) change in method of accounting under Section 481 of the Code prior to the Closing, (b) closing agreement under Section 7121 of the Code entered into prior to the Closing, (c) deferred intercompany gain or excess loss account  as of the Closing under Treasury Regulations under Section 1502 of the Code (or in each of items (a), (b), or (c), under any similar provision of applicable law), (d) installment sale or open transaction disposition prior to the Closing or (e) receipt of a prepaid amount prior to Closing.

 

(xv)   The Company and its Subsidiaries are in full compliance with all terms and conditions of any Tax exemption, Tax holiday or other Tax reduction agreement or order (each, a “ Tax Incentive ”) and the consummation of the transactions contemplated by this Agreement will not have any adverse effect on the continued validity and effectiveness of any such Tax Incentive.

 

(xvi)   To the extent required, the Company and each of its Subsidiaries has properly reported and/or withheld and remitted on amounts deferred under any Company nonqualified deferred compensation plan subject to Section 409A of the Code, in good faith and pursuant to IRS Notices 2005-1, 2006-100 and 2007-89 for the years 2006, 2007 and 2008.

 

(c)   Executive Compensation Tax .  There is no contract, agreement, plan or arrangement to which the Company or any of its Subsidiaries is a party, including the provisions of this Agreement, covering any Employee of the Company or any of its Subsidiaries, which, individually or collectively, would give rise to the payment of any amount that would not be deductible pursuant to Sections 280G or 404 of the Code or that would give rise to an Employee penalty and Company reporting obligations and related penalties, if any, under Section 409A of the Code.

2.12   Restrictions on Business Activities .  Except as set forth in Section  2.12 of the Disclosure Schedule there is no agreement (non-competition or otherwise), commitment, judgment, injunction, order or decree to which the Company or any of its Subsidiaries is a party or otherwise binding upon the Company or any of its Subsidiaries which has or may reasonably be expected to have the effect of prohibiting or impairing any business practice of the Company or any of its Subsidiaries, any acquisition of property (tangible or intangible) by the Company or any of its Subsidiaries, the conduct of business by the Company or any of its Subsidiaries, or otherwise limiting the freedom of the Company or any of its Subsidiaries to engage in any line of business or to compete with any person.  Without limiting the generality of the foregoing, neither the Company nor any of its Subsidiaries has entered into any agreement under which the Company or any of its Subsidiaries is restricted from selling, licensing, manufacturing or otherwise distributing any of its technology or products or from providing services to customers or potential customers or any class of customers, in any geographic area, during any period of time, or in any segment of the market.

(a)   Neither the Company nor any of its Subsidiaries owns any real property, nor has the Company or any of its Subsidiaries ever owned any real property.   Section  2.13(a) of the Disclosure Schedule sets forth a complete and accurate list of all real property currently leased, subleased or licensed by or from the Company or any of its Subsidiaries or otherwise used or occupied by the Company or any of its Subsidiaries (the “ Leased Real Property ”), including the name of the lessor, licensor, sublessor, master lessor and/or lessee, the date and term of the lease, license, sublease or other occupancy right and each amendment thereto and, with respect to any current lease, license, sublease or other occupancy right, the square footage of the premises leased thereunder and the aggregate annual rental payable thereunder.

 

(b)   The Company has provided Parent true, correct and complete copies of all leases, lease guaranties, subleases, agreements for the leasing, use or occupancy of, or otherwise granting a right in or relating to the Leased Real Property, including all amendments, terminations and modifications thereof and all consents and waivers relating thereto (“ Lease Agreements ”); and there are no other Lease Agreements for real property affecting the Leased Real Property or to which Company or any of its Subsidiaries is bound, other than those identified in Section  2.13(a) of the Disclosure Schedule.  All such Lease Agreements are in full force and effect and valid and effective in accordance with their respective terms, and there is not, under any of such Lease Agreements, any existing default, no rentals past due, or event of default (or event which with notice or lapse of time, or both, could constitute a default).  Neither the Company nor any of its Subsidiaries has received any notice of a default, alleged failure to perform, or any offset or counterclaim with respect to any such Lease Agreement, which has not been fully remedied and withdrawn.  There are no other parties occupying, or with a right to occupy, the Leased Real Property, except as set forth in Section  2.13(a) of the Disclosure Schedule.  Neither the Company nor any of its Subsidiaries owe any brokerage commissions or finders fees with respect to any such Leased Real Property or would owe any such fees if any existing Lease Agreement were renewed pursuant to any renewal options contained in such Lease Agreements.

 

(c)   The Leased Real Property is sufficient and otherwise suitable for the conduct of the business as presently conducted.

 

(d)   The Company and its Subsidiaries have good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its material tangible properties and material assets, real, personal and mixed, used or held for use in its business, free and clear of any Liens, except (i) as reflected in the Current Balance Sheet, (ii) Liens for Taxes not yet due and payable, and (iii) such imperfections of title and encumbrances, if any, which do not detract from the value or interfere with the present use of the property subject thereto or affected thereby.  Each Lease Agreement constitutes the entire agreement of the landlord and the tenant thereunder, and no term or condition thereof has been modified, amended or waived, except as described in Sec