ARTICLE I.
THE MERGER
Section
1.01
Merger .
Subject to the terms and conditions of this Agreement and the
Certificate of Merger, Acquisition Corp. shall be merged with and
into the Company in accordance with Section 251 of the DGCL. 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 Delaware under the name “Options Acquisition Sub,
Inc.”
Section
1.02
Effective Time .
The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with Section 251 of the DGCL. 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 Cane Clark 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 B hereto,
as amended by the Certificate 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 C 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 D 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 Certificate 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 (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 $0.001 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 into the right to receive one (1) share of common
stock, par value $0.001 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)
each
share of common stock, par value $0.001 per share, of the
Company (the “
Company Common Stock ”)
shall, by virtue of the Merger and without any action on the part
of the holders thereof, be converted into the right to receive (A)
an amount in cash or evidenced by a secured promissory note or a
combination thereof, determined by dividing $4,000,000 (the
“
Cash Merger Consideration ”)
by the total number of shares of Company Common Stock issued and
outstanding at the Effective Time (the “
Company Common Stock Outstanding ”)
and (B) that number of shares of common stock, par value $0.001 of
Parent (the “
Parent Common Stock ”)
determined by dividing 12,500,000 shares of Parent Common Stock
(the “
Stock Merger Consideration ”
and together with the Cash Merger Consideration, the “
Merger Consideration ”)
by the Company Common Stock Outstanding; and
(iii)
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 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 acceptable
to counsel for Parent stating that such Company stockholder has
lost its certificate or certificates or that such have been
destroyed, Parent shall deliver to CAN, (i) a certificate or
certificates registered in the name of CAN representing that the
Stock Merger Consideration and (ii) the Cash Merger Consideration,
payable by wire transfer to an account designated by such CAN.
Until the certificate, certificates or affidavit is or are
surrendered by CAN, each certificate or affidavit held by CAN 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 a pro rata
portion of the Merger Consideration.
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 and that there will be no more than 12,250,000
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 and
the Certificate of Merger.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
CAN
Each
of the Company and CAN hereby jointly and severally 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 E (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 and
CAN:
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 Delaware 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 and the Certificate 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 3,000
shares of Company Common Stock, of which there are 1,000 shares of
Company Common Stock issued and outstanding, and, except as set
forth on
Schedule 2.03 hereto,
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 and the
Certificate of Merger (together, the “
Merger Documents ”)
have been duly authorized by the Board of Directors of the Company
and have been approved by CAN, 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 Certificate 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 Certificate 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 .
Except for fees paid to the placement agents as set forth in the
Disclosures, 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 CAN 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
audited balance sheet (the “
Balance Sheet ”)
as of December 31, 2007 (the “
Balance Sheet Date ”)
and the audited statements of operations and accumulated deficits
and cash flows for the year ended December 31, 2007. 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. 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. 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 disposal or release of a
Hazardous Material to or at a site that is contaminated by any
Hazardous Material or that, pursuant to any
