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Exhibit
2.1
______________________________________
AGREEMENT OF MERGER AND
PLAN OF REORGANIZATION
______________________________________
BY AND
AMONG
ADEX MEDIA, INC.
and
ADEX MEDIA ACQUISITION, INC.
and
ABUNDANTAD, INC.
Dated
as of April 30, 2008
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
THIS
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this “
Agreement
”) is made and entered into on April 30, 2008, by and
among ADEX MEDIA, INC., a Delaware corporation (“
Parent
”), ADEX MEDIA ACQUISITION, INC., a Delaware corporation
(“ Acquisition
Corp. ”), which is a wholly-owned subsidiary of
Parent, and ABUNDANTAD, INC., a Nevada corporation (the
“ Company
”).
WITNESSETH:
WHEREAS,
the Board of Directors of each of Acquisition Corp., Parent
and the Company have each determined that it is fair to and in
the best interests of their respective corporations and
stockholders for Acquisition Corp. to be merged with and into
the Company (the “ Merger
”) upon the terms and subject to the conditions set
forth herein; and
WHEREAS,
the Board of Directors of each of Parent, Acquisition Corp.
and the Company have approved the Merger in accordance with
the General Corporation Law of the State of Delaware (the
“ DGCL
”) and the Revised Statues of the State of Nevada (the
“ RS
”), and upon the terms and subject to the conditions set
forth herein, in the Delaware Certificate of Merger attached
as Exhibit A
hereto (the “ DE-Certificate
of Merger ”) and the Nevada Articles of Merger
attached as Exhibit B
hereto (the “ NV-Articles of
Merger ”); and
WHEREAS,
the requisite stockholders of the Company (the “
Stockholders
”) have approved by written consent pursuant to Section
615 of the RS this Agreement, the DE-Certificate of Merger,
the NV-Articles of Merger and the transactions contemplated
and described hereby and thereby, including, without
limitation, the Merger, and Parent, as the sole stockholder of
Acquisition Corp., has approved by written consent pursuant to
Section 228 of the DGCL this Agreement, the DE-Certificate of
Merger, the NV-Articles of Merger and the transactions
contemplated and described hereby and thereby, including,
without limitation, the Merger; and
WHEREAS,
the parties hereto intend that the Merger contemplated herein
shall qualify as a reorganization within the meaning of
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended (the “ Code
”), by reason of Section 368(a)(2)(E) of the
Code.
NOW,
THEREFORE, in consideration of the mutual agreements and
covenants hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I.
THE MERGER
Section 1.01 Merger
. Subject to the
terms and conditions of this Agreement, the DE-Certificate of
Merger and the NV-Articles of Merger, Acquisition Corp. shall be
merged with and into the Company in accordance with Section 252 of
the DGCL and Section 901 of the RS. At the Effective Time (as
defined below), the separate legal existence of Acquisition Corp.
shall cease, and the Company shall be the surviving corporation in
the Merger (sometimes hereinafter referred to as the “
Surviving
Corporation ”) and shall continue its
corporate existence under the laws of the State of Nevada under the
name “Abundantad, Inc.”
Section 1.02 Effective
Time . The
Merger shall become effective upon the filing of (a) the
DE-Certificate of Merger with the Secretary of State of the State
of Delaware in accordance with Section 252 of the DGCL and (b) the
NV-Articles of Merger with the Department of State of the State of
Nevada. The time at which the Merger shall become effective as
aforesaid is referred to hereinafter as the “
Effective
Time .”
Section 1.03 Closing
. The closing of the
Merger (the “ Closing
”) shall occur
concurrently with the Effective Time (the “
Closing
Date ”). The Closing shall
occur at the offices of Anslow + Jaclin, LLP referred to in Section
10.01 hereof. At the Closing, all of the documents, certificates,
agreements, opinions and instruments referenced in Article VII will
be executed and delivered as described therein. At the Effective
Time, all actions to be taken at the Closing shall be deemed to be
taken simultaneously.
Section 1.04 Certificate
of Incorporation, By-laws, Directors and Officers
.
(a) The Certificate of Incorporation
of the Company, as in effect immediately prior to the Effective
Time, attached as Exhibit
C hereto, as
amended by the NV-Articles of Merger, shall be the Certificate of
Incorporation of the Surviving Corporation from and after the
Effective Time until amended in accordance with applicable law and
such Certificate of Incorporation.
(b) The By-laws of the Company, as
in effect immediately prior to the Effective Time, attached
as Exhibit
D hereto,
shall be the By-laws of the Surviving Corporation from and after
the Effective Time until amended in accordance with applicable law,
the Certificate of Incorporation of the Surviving Corporation and
such By-laws.
(c) The directors and officers
listed in Exhibit
E hereto
shall be the directors and officers of the Surviving Corporation
and Parent, and each shall hold his respective office or offices
from and after the Effective Time until his successor shall have
been elected and shall have qualified in accordance with applicable
law, or as otherwise provided in the Articles of Incorporation or
By-laws of the Surviving Corporation or the Certificate of
Incorporation or By-laws of Parent, as the case may
be.
Section 1.05 Assets
and Liabilities . At the Effective Time, the
Surviving Corporation shall possess all the rights, privileges,
powers and franchises of a public as well as of a private nature,
and be subject to all the restrictions, disabilities and duties of
each of Acquisition Corp. and the Company
Continued-
(collectively, the “ Constituent
Corporations ”); and all the rights,
privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, and all
debts due to any of the Constituent Corporations on whatever
account, as well as all other things in action or belonging to each
of the Constituent Corporations, shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as
effectively the property of the Surviving Corporation as they were
of the several and respective Constituent Corporations, and the
title to any real estate vested by deed or otherwise in either of
such Constituent Corporations shall not revert or be in any way
impaired by the Merger; but all rights of creditors and all liens
upon any property of any of the Constituent Corporations shall be
preserved unimpaired, and all debts, liabilities and duties of the
Constituent Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as
if said debts, liabilities and duties had been incurred or
contracted by it.
Section 1.06 Manner
and Basis of Converting Shares .
(a) At
the Effective Time:
(i) each share of common stock, par
value $0.0001 per share, of Acquisition Corp. that shall be
outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the
holder thereof, be converted pro rata into 100 shares of common
stock, par value $0.0001 per share, of the Surviving Corporation,
so that at the Effective Time, Parent shall be the holder of all of
the issued and outstanding shares of the Surviving
Corporation;
(ii) the shares of common stock, par
value $0.0001 per share, of the Company (the “
Company
Common Stock ”) beneficially owned by
the Stockholders listed on Schedule
1.06A (other
than shares of Company Common Stock as to which appraisal rights
are perfected pursuant to the applicable provisions of the RS and
not withdrawn or otherwise forfeited and shares of Company Common
Stock set forth in Section 1.06(a)(iii) hereof), shall, by virtue
of the Merger and without any action on the part of the holders
thereof, be converted into the right to receive the number of
shares of common stock, par value $0.0001 per share of Parent (the
“ Parent
Common Stock ”) specified in
Schedule
1.06A for
each of the Stockholders, which shall be equal to one (1) share of
Parent Common Stock for each share of Company Common Stock with
fractional shares of Parent Common Stock rounded to the nearest
whole share; and
(iii) the
warrants and options to purchase shares of Company Common
Stock (the “ Company
Warrants ”) beneficially owned by the
Stockholders listed on Schedule
1.06B shall, by virtue of the Merger and without any
action on the part of the holders thereof, be converted into
the right to receive the number of shares of Parent Common
Stock specified in Schedule
1.06B for each of such Stockholders, which, depending
on the terms of the Company Warrant in question, shall be
approximately equal to one (1) share of Parent Common Stock
for each share of Company Common Stock issuable upon exercise
of such Company Warrant or option, with any fractional shares
of Parent Common Stock rounded to the nearest whole share;
and
(iv)
each share of
Company Common Stock held in the treasury of the Company
immediately prior to the Effective Time shall be cancelled in the
Merger and cease to exist.
(b) After the Effective Time, there
shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Company Common
Stock that were outstanding immediately prior to the Effective
Time.
Section 1.07 Surrender
and Exchange of Certificates . Promptly after the Effective
Time and upon (a) surrender of a certificate or certificates
representing shares of Company Common Stock that were outstanding
immediately prior to the Effective Time or an affidavit and
indemnification in form reasonably
Continued-
acceptable to counsel for Parent stating that such Stockholder has
lost its certificate or certificates or that such have been
destroyed and (b) delivery of a Letter of Transmittal (as described
in Article IV hereof), Parent shall issue to each record holder of
Company Common Stock surrendering such certificate, certificates or
affidavit and Letter of Transmittal, a certificate or certificates
registered in the name of such Stockholder representing the number
of shares of Parent Common Stock that such Stockholder shall be
entitled to receive as set forth in Section 1.06(a)(ii) hereof.
Until the certificate, certificates or affidavit is or are
surrendered together with the Letter of Transmittal as contemplated
by this Section 1.07 and Article IV hereof, each certificate or
affidavit that immediately prior to the Effective Time represented
any outstanding shares of Company Common Stock shall be deemed at
and after the Effective Time to represent only the right to receive
upon surrender as aforesaid the Parent Common Stock specified
in Schedule
1.06 hereof
for the holder thereof or to perfect any rights of appraisal that
such holder may have pursuant to the applicable provisions of the
RS .
Section 1.08 Parent
Common Stock . Parent agrees that it will
cause the Parent Common Stock into which the Company Common Stock
is converted at the Effective Time pursuant to Section 1.06(a)(ii)
to be available for such purposes. Parent further covenants that
immediately following the Effective Time, Parent will effect
cancellations of its outstanding shares of Parent Common Stock in
accordance with the attached Schedule 1.08 and that there will be
no more than 12,604,950 shares of Parent Common Stock issued and
outstanding, and that no other common or preferred stock or equity
securities or any options, warrants, rights or other agreements or
instruments convertible, exchangeable or exercisable into common or
preferred stock or other equity securities shall be issued or
outstanding, except as described herein.
Section 1.09 Operation
of Surviving Corporation . The Company acknowledges that
upon the effectiveness of the Merger, and the material compliance
by Parent and Acquisition Corp. with their respective duties and
obligations hereunder, Parent shall have the absolute and
unqualified right to deal with the assets and business of the
Surviving Corporation as its own property without limitation on the
disposition or use of such assets or the conduct of such
business.
Section 1.10 Further
Assurances .
From time to time, from and after the Effective Time, as and when
reasonably requested by Parent, the proper officers and directors
of the Company as of the Effective Time shall, for and on behalf
and in the name of the Company or otherwise, execute and deliver
all such deeds, bills of sale, assignments and other instruments
and shall take or cause to be taken such further actions as Parent,
Acquisition Corp. or their respective successors or assigns
reasonably may deem necessary or desirable in order to confirm or
record or otherwise transfer to the Surviving Corporation title to
and possession of all of the properties, rights, privileges,
powers, franchises and immunities of the Company or otherwise to
carry out fully the provisions and purposes of this Agreement, the
DE-Certificate of Merger and the NV-Articles of
Merger.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The
Company hereby represents and warrants to Parent and
Acquisition Corp. as follows. Notwithstanding anything to the
contrary contained herein, disclosure of items in the draft
Current Report on Form 8-K of Parent with respect to the
Merger and the Private Placement, and all exhibits thereto, a
copy of which is attached hereto as Exhibit F
(collectively, the “ Disclosures
”) shall be deemed to be disclosure of such items for
all purposes under this Agreement, including, without
limitation, for all applicable representations and warranties
of the Company:
Section 2.01 Organization,
Standing, Subsidiaries, Etc .
(a) The Company is a corporation
duly organized and existing in good standing under the laws of the
State of Nevada and has all requisite power and authority
(corporate and other) to carry on its business, to own or lease its
properties and assets, to enter into this Agreement, the
DE-Certificate of Merger and the NV-Articles of Merger and to carry
out the terms hereof and thereof. Copies of the Certificate of
Incorporation and By-laws of the Company that have been delivered
to Parent and Acquisition Corp. prior to the execution of this
Agreement are true and complete and have not since been amended or
repealed.
(b) The Company has no subsidiaries
or direct or indirect interest (by way of stock ownership or
otherwise) in any firm, corporation, limited liability company,
partnership, association or business.
Section 2.02 Qualification
. The Company is
duly qualified to conduct business as a foreign corporation and is
in good standing in each jurisdiction wherein the nature of its
activities or its properties owned or leased makes such
qualification necessary, except where the failure to be so
qualified would not have a material adverse effect on the condition
(financial or otherwise), properties, assets, liabilities, business
operations, results of operations or prospects of the Company taken
as a whole (the “ Condition
of the Company ”).
Section 2.03 Capitalization
of the Company . The authorized capital stock
of the Company consists of 75,000,000 shares of Company Common
Stock, of which there are 29,274,653 shares of Company Common Stock
issued and outstanding, and such shares are duly authorized,
validly issued, fully paid and non-assessable, and none of such
shares have been issued in violation of the preemptive rights of
any natural person, corporation, business trust, association,
limited liability company, partnership, joint venture, other
entity, government, agency or political subdivision (each, a
“ Person
”). The offer,
issuance and sale of such shares of Company Common Stock were (a)
exempt from the registration and prospectus delivery requirements
of the Securities Act of 1933, as amended (the “
Securities
Act ”),
(b) registered or qualified (or were exempt from registration or
qualification) under the registration or qualification requirements
of all applicable state securities laws and (c) accomplished in
conformity with all other applicable securities laws. None of such
shares of Company Common Stock are subject to a right of withdrawal
or a right of rescission under any federal or state securities or
“Blue Sky” law. Except as otherwise set forth in this
Agreement or any Schedule hereto, the Company has no outstanding
options, rights or commitments to issue Company Common Stock or
other Equity Securities (as defined below) of the Company, and
there are no outstanding securities convertible or exercisable into
or exchangeable for Company Common Stock or other Equity Securities
of the Company. For purposes of this Agreement, “
Equity
Security ” shall mean any stock or
similar security of an issuer or any security (whether stock or
Indebtedness for Borrowed Money (as defined below)) convertible,
with or without consideration, into any stock or other equity
security, or any security (whether stock or Indebtedness for
Borrowed Money) carrying any warrant or right to subscribe to or
purchase any stock or similar security, or any such warrant or
right.
Section 2.04 Indebtedness
. The Company has no
Indebtedness for Borrowed Money, except as otherwise set forth in
this Agreement or disclosed on the Balance Sheet. For purposes of
this Agreement, “ Indebtedness
for Borrowed Money ” shall mean (a) all
Indebtedness in respect of money borrowed including, without
limitation, Indebtedness which represents the unpaid amount of the
purchase price of any property and is incurred in lieu of borrowing
money or using available funds to pay such amounts and not
constituting an account payable or expense accrual incurred or
assumed in the ordinary course of business of the Company, (b) all
Indebtedness evidenced by a promissory note, bond or similar
written obligation to pay money or (c) all such Indebtedness
guaranteed by the Company or for which the Company is otherwise
contingently liable. Furthermore, for purposes of this Agreement,
“ Indebtedness
” shall mean
any obligation of the Company which, under generally accepted
accounting principles in the United Stated (“
GAAP
”), is
required to be shown on the balance sheet of the Company as a
liability. Any obligation secured by a mortgage, pledge, security
interest, encumbrance, lien or charge of any kind (a “
Lien
”), shall be
deemed to be Indebtedness, even though such obligation is not
assumed by the Company.
Section 2.05 Company
Stockholders . Schedule
1.06 hereto
contains a true and complete list of the names of the record owners
of all of the outstanding shares of Company Common Stock and other
Equity Securities of the Company, together with the number of
securities held or to which such Person has rights to acquire. To
the knowledge of the Company, there is no voting trust, agreement
or arrangement among any of the beneficial holders of Company
Common Stock affecting the nomination or election of directors or
the exercise of the voting rights of Company Common
Stock.
Section 2.06 Corporate
Acts and Proceedings . The execution, delivery and
performance of this Agreement, the DE-Certificate of Merger and the
NV-Articles of Merger (together, the “ Merger
Documents ”) have been duly
authorized by the Board of Directors of the Company and have been
approved by the requisite vote of the Stockholders, and all of the
corporate acts and other proceedings required for the due and valid
authorization, execution, delivery and performance of the Merger
Documents and the consummation of the Merger have been validly and
appropriately taken, except for the filings referred to in Section
1.02.
Section 2.07 Governmental
Consents .
All material consents, approvals, orders, or authorizations of, or
registrations, qualifications, designations, declarations, or
filings with any federal or state governmental authority on the
part of the Company required in connection with the consummation of
the Merger shall have been obtained prior to, and be effective as
of, the Closing.
Section 2.08 Compliance
with Laws and Instruments . The business, products and
operations of the Company have been and are being conducted in
compliance in all material respects with all applicable laws, rules
and regulations, except for such violations thereof for which the
penalties, in the aggregate, would not have a material adverse
effect on the Condition of the Company. The execution, delivery and
performance by the Company of the Merger Documents and the
consummation by the Company of the transactions contemplated by
this Agreement: (a) will not cause the Company to violate or
contravene (i) any provision of law, (ii) any rule or regulation of
any agency or government, (iii) any order, judgment or decree of
any court, or (iv) any provision of the Articles of Incorporation
or By-laws of the Company, (b) will not violate or be in conflict
with, result in a breach of or constitute (with or without notice
or lapse of time, or both) a default under, any indenture, loan or
credit agreement, deed of trust, mortgage, security agreement or
other contract, agreement or instrument to which the Company is a
party or by which the Company or any of its properties is bound or
affected, except as would not have a material adverse effect on the
Condition of the Company and (c) will not result in the creation or
imposition of any Lien upon any property or asset of the Company.
The Company is not in violation of, or (with or without notice or
lapse of time, or both) in default under, any term or provision of
its Articles of Incorporation or By-laws or of any indenture, loan
or credit agreement, deed of trust, mortgage, security agreement
or, except as would not materially and adversely affect the
Condition of the Company, any other material agreement or
instrument to which the Company is a party or by which the Company
or any of its properties is bound or affected.
Section 2.09 Binding
Obligations .
The Merger Documents constitute the legal, valid and binding
obligations of the Company and are enforceable against the Company
in accordance with their respective terms, except as such
enforcement is limited by bankruptcy, insolvency and other similar
laws affecting the enforcement of creditors’ rights generally
and by general principles of equity.
Section 2.10 Broker’s
and Finder’s Fees . No Person has, or as a result
of the transactions contemplated or described herein will have, any
right or valid claim against the Company, Parent, Acquisition Corp.
or any Stockholder for any commission, fee or other compensation as
a finder or broker, or in any similar capacity.
Section 2.11 Financial
Statements .
Parent has previously been provided with the Company’s
unaudited balance sheet (the “ Balance
Sheet ”) as of
March 31, 2008 (the “ Balance
Sheet Date ”) and the audited
statements of operations and accumulated deficits and cash flows
for the period ended March 31, 2008. Such
financial statements are collectively referred to as the
“ Financial
Statements ”. Such financial
statements (a) are in accordance with the books and records of the
Company, (b) present fairly in all material respects the financial
condition of the Company at the dates therein specified and the
results of its operations and changes in financial position for the
periods therein specified and (c) have been prepared in accordance
with GAAP applied on a basis consistent with prior accounting
periods.
Section 2.12 Absence
of Undisclosed Liabilities . The Company has no material
obligation or liability (whether accrued, absolute, contingent,
liquidated or otherwise, whether due or to become due), arising out
of any transaction entered into at or prior to the Closing, except
(a) as disclosed in the Balance Sheet, (b) to the extent set forth
on or reserved against in the Balance Sheet or the notes to the
Financial Statements, (c) current liabilities incurred and
obligations under agreements entered into in the usual and ordinary
course of business since the Balance Sheet Date, none of which
(individually or in the aggregate) has had or will have a material
adverse effect on the Condition of the Company and (d) by the
specific terms of any written agreement, document or arrangement
identified in the Disclosures.
Section 2.13 Changes
. Since the Balance
Sheet Date, the Company has not (a) incurred any debts, obligations
or liabilities, absolute, accrued, contingent or otherwise, whether
due or to become due, except for fees, expenses and liabilities
incurred in connection with the Merger and related transactions and
current liabilities incurred in the usual and ordinary course of
business, (b) discharged or satisfied any Liens other than those
securing, or paid any obligation or liability other than, current
liabilities shown on the Balance Sheet and current liabilities
incurred since the Balance Sheet Date, in each case in the usual
and ordinary course of business, (c) mortgaged, pledged or
subjected to Lien any of its assets, tangible or intangible other
than in the usual and ordinary course of business, (d) sold,
transferred or leased any of its assets, except in the usual and
ordinary course of business, (e) cancelled or compromised any debt
or claim, or waived or released any right, of material value, (f)
suffered any physical damage, destruction or loss (whether or not
covered by insurance) materially and adversely affecting the
Condition of the Company, (g) entered into any transaction other
than in the usual and ordinary course of business, (h) encountered
any labor union difficulties, (i) made or granted any wage or
salary increase or made any increase in the amounts payable under
any profit sharing, bonus, deferred compensation, severance pay,
insurance, pension, retirement or other employee benefit plan,
agreement or arrangement, other than in the ordinary course of
business consistent with past practice, or entered into any
employment agreement, (j) issued or sold any shares of capital
stock, bonds, notes, debentures or other securities or granted any
options (including employee stock options), warrants or other
rights with respect thereto, (k) declared or paid any dividends on
or made any other distributions with respect to, or purchased or
redeemed, any of its outstanding capital stock, (l) suffered or
experienced any change in, or condition affecting, the Condition of
the Company other than changes, events or conditions in the usual
and ordinary course of its business, none of which (either by
itself or in conjunction with all such other changes, events and
conditions) has been materially adverse, (m) made any change in the
accounting principles, methods or practices followed by it or
depreciation or amortization policies or rates theretofore adopted,
(n) made or permitted any amendment or termination of any material
contract, agreement or license to which it is a party, (o) suffered
any material loss not reflected in the Balance Sheet or its
statement of income for the period ended on the Balance Sheet Date,
(p) paid, or made any accrual or arrangement for payment of,
bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer, director,
employee, stockholder or consultant, (q) made or agreed to make any
charitable contributions or incurred any non-business expenses in
excess of $50,000 in the aggregate, or (r) entered into any
agreement, or otherwise obligated itself, to do any of the
foregoing.
Section 2.14 Assets
and Contracts .
(a) Schedule
2.14(a) contains a true and complete
list of all real property leased by the Company and of all tangible
personal property owned or leased by the Company having a cost or
fair market value of greater than $250,000.
Continued-
All the real property listed in Schedule
2.14(a) is
leased by the Company under valid leases enforceable in accordance
with their terms, and there is not, under any such lease, any
existing default or event of default or event which with notice or
lapse of time, or both, would constitute a default by the Company,
and the Company has not received any notice or claim of any such
default by the Company. The Company does not own any real
property.
(b) Except as expressly set forth in
this Agreement, the Financial Statements or the notes thereto, or
as disclosed in Schedule
2.14(b) hereto, the Company is not a
party to any written or oral agreement not made in the ordinary
course of business that is material to the Company. Except as
disclosed in Schedule
2.14(b) hereto, the Company is not a
party to any written or oral (i) agreement for the purchase of
fixed assets or for the purchase of materials, supplies or
equipment in excess of normal operating requirements, (ii)
agreement for the employment of any officer, individual employee or
other Person on a full-time basis or any agreement with any Person
for consulting services, (iii) indenture, loan or credit agreement,
note agreement, deed of trust, mortgage, security agreement,
promissory note or other agreement or instrument relating to or
evidencing Indebtedness for Borrowed Money or subjecting any asset
or property of the Company to any Lien or evidencing any
Indebtedness, (iv) guaranty of any Indebtedness, (v) other than as
set forth in Schedule
2.14(a) hereto, lease or agreement under
which the Company is lessee of or holds or operates any property,
real or personal, owned by any other Person under which payments to
such Person exceed $250,000 per year, (vi) agreement granting any
preemptive right, right of first refusal or similar right to any
Person, (vii) agreement or arrangement with any Affiliate or any
“associate” (as such term is defined in Rule 405 under
the Securities Act) of the Company or any present or former
officer, director or stockholder of the Company, (viii) agreement
obligating the Company to pay any royalty or similar charge for the
use or exploitation of any tangible or intangible property, (ix)
covenant not to compete or other material restriction on its
ability to conduct a business or engage in any other activity, (x)
agreement to register securities under the Securities Act or (xi)
collective bargaining agreement. Except as disclosed in
Schedule
2.14(b) ,
none of the agreements, contracts, leases, instruments or other
documents or arrangements listed in Schedules
2.14(a) and 2.14(b)
requires the consent
of any of the parties thereto other than the Company to permit the
contract, agreement, lease, instrument or other document or
arrangement to remain effective following consummation of the
Merger and the transactions contemplated hereby. For purposes of
this Agreement, an “ Affiliate
” shall mean
any Person that directly or indirectly controls, is controlled by,
or is under common control with, the indicated
Person.
(c) The Company has made available
to Parent and Acquisition Corp. true and complete copies of all
agreements and other documents and a description of all applicable
oral agreements disclosed or referred to in Schedules
2.14(a) and 2.14(b)
, as well as any
additional agreements or documents, requested by Parent or
Acquisition Corp. The Company has in all material respects
performed all obligations required to be performed by it to date
and is not in default in any material respect under any of the
contracts, agreements, leases, documents, commitments or other
arrangements to which it is a party or by which it or any of its
property is otherwise bound or affected.
Section 2.15 Employees
. The Company has
complied in all material respects with all laws relating to the
employment of labor, and the Company has encountered no material
labor union difficulties. Other than pursuant to ordinary
arrangements of employment compensation, the Company is not under
any obligation or liability to any officer, director or employee of
the Company.
Section 2.16 Tax
Returns and Audits .
(a) All required federal, state and
local Tax Returns (as defined below) of the Company have been
accurately prepared and duly and timely filed, and all federal,
state and local Taxes (as defined below) required to be paid with
respect to the periods covered by such returns have been paid. The
Company is not and has not been delinquent in the payment of any
Tax. The Company has not had a Tax deficiency proposed or assessed
against it and has not executed a waiver of any statute of
limitations on the assessment or collection of any Tax. None of the
Company’s federal income tax returns has been audited by any
governmental authority; and none of the Company’s state or
local income or franchise tax returns has been audited by any
governmental authority.
Continued-
The reserves for Taxes reflected on the Balance Sheet are and will
be sufficient for the payment of all unpaid Taxes payable by the
Company as of the Balance Sheet Date. Since the Balance Sheet Date,
the Company has made adequate provisions on its books of account
for all Taxes with respect to its business, properties and
operations for such period. The Company has withheld or collected
from each payment made to each of its employees the amount of all
taxes (including, but not limited to, federal, state and local
income taxes, Federal Insurance Contribution Act taxes and Federal
Unemployment Tax Act taxes) required to be withheld or collected
therefrom, and has paid the same to the proper Tax receiving
officers or authorized depositaries. There are no federal, state,
local or foreign audits, actions, suits, proceedings,
investigations, claims or administrative proceedings relating to
Taxes or any Tax Returns of the Company now pending, and the
Company has not received any notice of any proposed audits,
investigations, claims or administrative proceedings relating to
Taxes or any Tax Returns. The Company is not obligated to make a
payment, nor is it a party to any agreement that under certain
circumstances could obligate it to make a payment that would not be
deductible under Section 280G of the Code. The Company has not
agreed, nor is it required, to make any adjustments under Section
481(a) of the Code (or any similar provision of state, local and
foreign law), whether by reason of a change in accounting method or
otherwise, for any Tax period for which the applicable statute of
limitations has not yet expired. The Company (i) is not a party to,
nor is it bound by or obligated under, any Tax sharing agreement,
Tax indemnification agreement or similar contract or arrangement,
whether written or unwritten (collectively, “
Tax
Sharing Agreements ”), and (ii) does not have
any potential liability or obligation to any Person as a result of,
or pursuant to, any such Tax Sharing
Agreements.
(b) For purposes of this Agreement,
the following terms shall have the meanings provided
below:
(i) “ Tax
” or
“ Taxes
” shall mean
(A) any and all taxes, assessments, customs, duties, levies, fees,
tariffs, imposts, deficiencies and other governmental charges of
any kind whatsoever (including, but not limited to, taxes on or
with respect to net or gross income, franchise, profits, gross
receipts, capital, sales, use, ad valorem, value added, transfer,
real property transfer, transfer gains, transfer taxes, inventory,
capital stock, license, payroll, employment, social security,
unemployment, severance, occupation, real or personal property,
estimated taxes, rent, excise, occupancy, recordation, bulk
transfer, intangibles, alternative minimum, doing business,
withholding and stamp), together with any interest thereon,
penalties, fines, damages costs, fees, additions to tax or
additional amounts with respect thereto, imposed by the United
States (Federal, state or local) or other applicable jurisdiction;
(B) any liability for the payment of any amounts described in
clause (A) as a result of being a member of an affiliated,
consolidated, combined, unitary or similar group or as a result of
transferor or successor liability, including, without limitation,
by reason of Regulation section 1.1502-6; and (C) any liability for
the payments of any amounts as a result of being a party to any Tax
Sharing Agreement or as a result of any express or implied
obligation to indemnify any other Person with respect to the
payment of any amounts of the type described in clause (A) or
(B).
(ii) “ Tax
Return ” shall include all
returns and reports (including elections, declarations,
disclosures, schedules, estimates and information returns
(including Form 1099 and partnership returns filed on Form 1065)
required to be supplied to a Tax authority relating to
Taxes.
Section 2.17 Patents
and Other Intangible Assets .
(a) The Company (i) owns or has the
right to use, free and clear of all Liens, claims and restrictions,
all patents, trademarks, service marks, trade names, copyrights,
licenses and rights with respect to the foregoing used in or
necessary for the conduct of its business as now conducted or
proposed to be conducted without infringing upon or otherwise
acting adversely to the right or claimed right of any Person under
or with respect to any of the foregoing and (ii) is not obligated
or under any liability to make any payments by way of royalties,
fees or otherwise to any owner or licensor of, or other claimant
to, any patent, trademark, service mark, trade name, copyright or
other intangible asset, with respect to the use thereof or in
connection with the conduct of its business or
otherwise.
(b) To
the knowledge of the Company, the Company owns and has the
unrestricted right to use all trade secrets, if any, including
know-how, negative know-how, formulas, patterns, programs, devices,
methods, techniques, inventions, designs, processes, computer
programs and technical data and all information that derives
independent economic value, actual or potential, from not being
generally known or known by competitors (collectively,
“ Intellectual
Property ”) required for or
incident to the development, operation and sale of all products and
services sold by the Company, free and clear of any right, Lien or
claim of others; provided
,
however ,
that the possibility exists that other Persons, completely
independently of the Company or its employees or agents, could have
developed Intellectual Property similar or identical to that of the
Company. The Company is not aware of any such development of
substantially identical trade secrets or technical information by
others. All Intellectual Property can and will be transferred by
the Company to the Surviving Corporation as a result of the Merger
and without the consent of any Person other than the
Company.
Section 2.18 Employee
Benefit Plans; ERISA .
(a) Except as disclosed on
Schedule
2.18 hereto,
there are no “employee benefit plans” (within the
meaning of Section 3(3) of ERISA) nor any other employee benefit or
fringe benefit arrangements, practices, contracts, policies or
programs of every type other than programs merely involving the
regular payment of wages, commissions, or bonuses established,
maintained or contributed to by the Company, whether written or
unwritten and whether or not funded. The plans listed on
Schedule
2.18 hereto
are hereinafter referred to as the “ Employee
Benefit Plans .”
(b) All current and prior material
documents, including all amendments thereto, with respect to each
Employee Benefit Plan have been made available to Parent and
Acquisition Corp. or their advisors.
(c) To
the knowledge of the Company, all Employee Benefit Plans are in
material compliance with the applicable requirements of ERISA, the
Code and any other applicable state, federal or foreign
law.
(d) There are no pending claims or
lawsuits that have been asserted or instituted against any Employee
Benefit Plan, the assets of any of the trusts or funds under the
Employee Benefit Plans, the plan sponsor or the plan administrator
of any of the Employee Benefit Plans or against any fiduciary of an
Employee Benefit Plan with respect to the operation of such plan,
nor does the Company have any knowledge of any incident,
transaction, occurrence or circumstance that might reasonably be
expected to form the basis of any such claim or
lawsuit.
(e) There is no pending or, to the
knowledge of the Company, contemplated investigation, or pending or
possible enforcement action by the Pension Benefit Guaranty
Corporation, the Department of Labor, the Internal Revenue Service
or any other government agency with respect to any Employee Benefit
Plan and the Company has no knowledge of any incident, transaction,
occurrence or circumstance which might reasonably be expected to
trigger such an investigation or enforcement
action.
(f) No
actual or, to the knowledge of the Company, contingent liability
exists with respect to the funding of any Employee Benefit Plan or
for any other expense or obligation of any Employee Benefit Plan,
except as disclosed on the financial statements of the Company, and
no contingent liability exists under ERISA with respect to any
“multi-employer plan,” as defined in Section 3(37) or
Section 4001(a)(3) of ERISA.
(g) No
events have occurred or are expected to occur with respect to any
Employee Benefit Plan that would cause a material change in the
costs of providing benefits under such Employee Benefit Plan or
would cause a material change in the cost of providing for other
liabilities of such Employee Benefit Plan.
Section 2.19 Title
to Property and Encumbrances . The Company has good, valid
and indefeasible marketable title to all properties and assets used
in the conduct of its business (except for property held under
valid and subsisting leases that are in full force and effect and
which are not in default) free of all Liens and other encumbrances,
except Permitted Liens and such ordinary and customary
imperfections of title, restrictions and encumbrances as do not,
individually or in the aggregate, materially detract from the value
of the property or assets or materially impair the use made thereof
by the Company in its business. Without limiting the generality of
the foregoing, the Company has good and indefeasible title to all
of its properties and assets reflected in the Balance Sheet, except
for property disposed of in the usual and ordinary course of
business since the Balance Sheet Date and for property held under
valid and subsisting leases that are in full force and effect and
that are not in default. For purposes of this Agreement,
“ Permitted
Liens ”
shall mean (a) Liens for taxes and assessments or governmental
charges or levies not at the time due or in respect of which the
validity thereof shall currently be contested in good faith by
appropriate proceedings; (b) Liens in respect of pledges or
deposits under workmen’s compensation laws or similar
legislation, carriers’, warehousemen’s,
mechanics’, laborers’ and materialmens’ and
similar Liens, if the obligations secured by such Liens are not
then delinquent or are being contested in good faith by appropriate
proceedings and (c) Liens incidental to the conduct of the business
of the Company that were not incurred in connection with the
borrowing of money or the obtaining of advances or credits and
which do not in the aggregate materially detract from the value of
its property or materially impair the use made thereof by the
Company in its business.
Section 2.20 Condition
of Properties . All facilities, machinery,
equipment, fixtures and other properties owned, leased or used by
the Company are in reasonably good operating condition and repair,
subject to ordinary wear and tear, and are adequate and sufficient
for the Company’s business.
Section 2.21 Insurance
Coverage .
There is in full force and effect one or more policies of insurance
issued by insurers of recognized responsibility, insuring the
Company and its properties, products and business against such
losses and risks, and in such amounts, as are customary for
corporations of established reputation engaged in the same or
similar business and similarly situated. The Company has not been
refused any insurance coverage sought or applied for, and the
Company has no reason to believe that it will be unable to renew
its existing insurance coverage as and when the same shall expire
upon terms at least as favorable to those currently in effect,
other than possible increases in premiums that do not result from
any act or omission of the Company. No suit, proceeding or action
or, to the best current actual knowledge of the Company, threat of
suit, proceeding or action has been asserted or made against the
Company within the last five years due to alleged bodily injury,
disease, medical condition, death or property damage arising out of
the function or malfunction of a product, procedure or service
designed, manufactured, sold or distributed by the
Company.
Section 2.22 Litigation
. Except as
disclosed in Schedule
2.22 , there
is no legal action, suit, arbitration or other legal,
administrative or other governmental proceeding pending or, to the
knowledge of the Company, threatened against or affecting the
Company or its properties, assets or business, and after reasonable
investigation, the Company is not aware of any incident,
transaction, occurrence or circumstance that might reasonably be
expected to result in or form the basis for any such action, suit,
arbitration or other proceeding. The Company is not in default with
respect to any order, writ, judgment, injunction, decree,
determination or award of any court or any governmental agency or
instrumentality or arbitration authority.
Section 2.23 Licenses
. The Company
possesses from all appropriate governmental authorities all
licenses, permits, authorizations, approvals, franchises and rights
necessary for the Company to engage in the business currently
conducted by it, all of which are in full force and
effect.
Section 2.24 Interested
Party Transactions . No officer, director or
stockholder of the Company or any Affiliate or
“associate” (as such term is defined in Rule 405 under
the Securities Act) of any such Person or the Company has or has
had, either directly or indirectly, (a) an interest in any Person
that (i) furnishes or sells services or products that are furnished
or sold or are proposed to be furnished or sold by the Company or
(ii) purchases from or sells or furnishes to the Company any goods
or services, or (b) a beneficial interest in any contract or
agreement to which the Company is a party or by which it may be
bound or affected.
Section 2.25 Environmental
Matters .
(a) To
the knowledge of the Company, the Company has never generated,
used, handled, treated, released, stored or disposed of any
Hazardous Materials (as defined below) on any real property on
which it now has or previously had any leasehold or ownership
interest, except in compliance with all applicable Environmental
Laws (as defined below).
(b) To
the knowledge of the Company, the historical and present operations
of the business of the Company are in compliance with all
applicable Environmental Laws, except where any non-compliance has
not had and would not reasonably be expected to have a material
adverse effect on the Condition of the Company.
(c) There are no material pending
or, to the knowledge of the Company, threatened, demands, claims,
information requests or notices of noncompliance or violation
against or to the Company relating to any Environmental Law; and,
to the knowledge of the Company, there are no conditions or
occurrences on any of the real property used by the Company in
connection with its business that would reasonably be expected to
lead to any such demands, claims or notices against or to the
Company, except such as have not had, and would not reasonably be
expected to have, a material adverse effect on the Condition of the
Company.
(d) To
the knowledge of the Company, (i) the Company has not sent or
disposed of, otherwise had taken or transported, arranged for the
taking or disposal of (on behalf of itself, a customer or any other
party) or in any other manner participated or been involved in the
taking of or dis
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