AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER is
dated as of the 2 nd day of May 2005 (the “
Agreement ”), by and among IDENTITY, INC., a
Delaware corporation with its principal place of business located
at 20371 Cockerill Road, Purcellville, Virginia 20132 (“
Identity ”) and DANIEL R. NELSON, an individual
resident of the State of Georgia with an address at 1536 32
nd Street Columbus, Georgia 31904, the stockholder of
Identity (“ Seller ”), AIRBEE WIRELESS,
INC. a Delaware corporation with its principal place of business
located at 9400 Key West Avenue, Rockville, Maryland 20850 (“
Airbee ”), and AIRBEE AUTOMOTIVE GROUP, INC., a
Delaware corporation with its principal place of business located
at 9400 Key West Avenue, Rockville, Maryland 20850 (“
SUB ”), which is a direct wholly-owned
subsidiary of Airbee. Identity and SUB are hereinafter sometimes
collectively referred to as the “ Constituent
Corporations .”
RECITALS
A. The Boards of Directors of
Identity, Airbee and SUB deem it advisable and in the best
interests of each corporation and its respective stockholders that
Identity and Airbee combine in order to advance their long-term
business interests, all upon the terms and subject to the
conditions of this Agreement.
NOW, THEREFORE, in consideration of
the premises and the mutual representations, warranties, covenants,
agreements and conditions contained herein, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger
.
(a) In accordance with the
provisions of this Agreement and the Delaware General Corporate Law
(“ DGCL ”), at the Effective Time, SUB
shall be merged (the “ Merger ”) with and
into Identity, and Identity shall be the surviving corporation
(hereinafter sometimes called the “ Surviving
Corporation ”) and shall continue its corporate
existence under the laws of the State of Delaware. The name of the
Surviving Corporation shall be Airbee Automotive Group, Inc. At the
Effective Time, the separate existence of SUB shall cease.
(b) In accordance with
Section 259 of the DGCL, the Merger shall terminate the
separate existence of Identity and SUB, and the Surviving
Corporation shall have such rights and obligations as are provided
for under the DGCL.
Section 1.2. Effective
Time . The Merger shall become effective at the time of filing
of, or at such later time as specified in, a certificate of merger,
in the form required by and executed in accordance with the DGCL
and with the Secretary of State of the State of Delaware in
accordance with the provisions of Section 251 of the DGCL (the
“ Certificate of Merger ”). The date and
time when the Merger shall become effective is herein referred to
as the “ Effective Time .”
Section 1.3. Certificate of
Incorporation and Bylaws of Surviving Corporation . The
Certificate of Incorporation and Bylaws of Identity as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation until
thereafter amended in accordance with their terms and as provided
by law.
Section 1.4. Directors and
Officers of Surviving Corporation .
(a) The directors of the
Surviving Corporation at the Effective Time shall be Daniel R.
Nelson, E. Eugene Sharer and Richard P. Sommerfeld, Jr. or such
other individuals as the parties hereto shall mutually agree upon
in writing prior to the Effective Time, consistent with this
Agreement and will hold office from and after the Effective Time
until their respective successors are duly elected or appointed and
qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation or as
otherwise provided by law or until their earlier resignation or
removal.
(b) Daniel R. Nelson and
Richard P. Sommerfeld, Jr. shall be the initial officers of the
Surviving Corporation and each will hold office from and after the
Effective Time until their respective successors are duly appointed
and qualified in the manner provided in the Bylaws of the Surviving
Corporation or as otherwise provided by law or until their earlier
resignation or removal.
Section 1.5. Escrow
Agreement . At the Closing, Airbee and the Seller shall enter
into an escrow agreement, by and among Airbee, Adorno & Yoss
LLP (“the Escrow Agent”) and the Seller in the form
attached as Exhibit 1.5 (the “ Escrow
Agreement ”). At the Closing, Airbee shall deliver to
the Escrow Agent the Escrow Shares which shall be held in an escrow
account in accordance with the terms of the Escrow Agreement
hereof.
Section 1.6. Further
Assurances . If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that consistent
with the terms of this Agreement any deeds, bills of sale,
assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either
of the Constituent Corporations acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out the purposes of this Agreement,
the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of
each of the Constituent Corporations or otherwise, all such deeds,
bills of sale, assignments and assurances and to take and do, in
the name and on behalf of each of the Constituent Corporations or
otherwise, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE II
CONVERSION OF
SHARES
Section 2.1. Effect on
Identity Shares . As of the Effective Time, by virtue of the
Merger and without any action on the part of the holders
thereof:
(a) The 1,500 (one thousand
five hundred) shares of Identity’s common stock, par value
nil per share (the “ Identity Shares ”),
issued and outstanding immediately prior to the Effective Time
shall be converted into the right to receive an aggregate of
7,692,808 shares of Airbee common stock, $0.00004 par value (the
“ Airbee Common Stock ”), such number of
shares based upon the 30 day average closing price of
Airbee’s common stock through April 25, 2005, 50% of the
Airbee Common Stock shall be paid at the Closing and 50% of the
Airbee Common Stock shall be deposited in an Escrow Account (the
“ Escrow Shares ”) which shall be
released on the completion by Identity and its predecessor of
audited financial statements for the period commencing
August 1, 2003 through March 31, 2005 and acceptance by
Airbee, in its sole discretion, and filed with the Securities and
Exchange Commission no later than May 31, 2005.
(b) All Identity Shares shall
be canceled and retired, and each certificate representing any such
Identity Shares shall thereafter (i) represent only the right
to receive the Airbee Common Stock, issuable in exchange for such
Identity Shares and (ii) entitle the holder thereof to vote
with respect to, and receive dividends, if declared, on, such
number of shares of Airbee Common Stock which such holder is
entitled to receive in exchange for such certificates, provided
that dividends shall be paid to such holder, without interest, only
upon surrender of Identity certificates.
(c) In the event of any change
in Airbee Common Stock by reason of any stock split, readjustment,
stock dividend, or similar event including, any such change after
the Effective Time, the amounts set forth in Section 2.1 shall
be appropriately adjusted.
Section 2.2. Effect on
Identity Options and Warrants . Every Identity option or
warrant issued and outstanding immediately prior to the Effective
Time shall be cancelled.
Section 2.3. SUB Common
Stock . Each share of common stock, $0.0001 par value, of SUB
issued and outstanding immediately prior to the Effective Time
shall remain outstanding and shall be converted into and become one
fully paid and non-assessable share of common stock, nil par value,
of the Surviving Corporation.
Section 2.4. Repurchase
Agreement . Notwithstanding anything to the contrary contained
herein, for a period of thirty (30) days immediately after the
one year anniversary of the Effective Time, Seller shall have the
option to purchase the Surviving Corporation (the
“Call”) for a Purchase Price (as defined below) on the
Payment Terms (as defined below). To exercise the Call, Seller must
give notice (the “Call Notice”) of intention to
exercise the Call during such thirty (30) day period (the
“Notice Period”). If Seller elects to exercise the
Call, the Call Notice must set forth, in writing, in reasonable
detail the reasons it believes Seller is not able to continue its
business operations with Airbee and the Surviving Corporation.
Seller and Airbee shall attempt
during the thirty (30) day period after notice of the Call to
reach agreement on all disputed items in the Call Notice.
If Airbee and Seller are unable to
resolve such disputed items during such thirty (30) day
period, then Airbee shall be permitted to purchase from Seller (a
“Put”) at a Purchase Price in cash equal to $5,750,000
(115% of the value of the Merger Consideration) less any amounts
which Seller has received from a sale of its Airbee stock prior to
the payment of the Put. Such payment shall be made within
45 days from the date that Seller and Airbee determine that
they are unable to resolve their differences as set forth in the
Call Notice. Upon delivery of such Put Purchase Price, Seller shall
execute a non-compete agreement as additional consideration for
such payment.
In the event that Airbee does not
exercise the Put, Seller shall exercise the Call. The Purchase
Price of such Call shall be the return of all of Airbee’s
shares of common stock issued to Seller in this Agreement. Seller
shall deliver such shares free and clear of any liens, charge,
claims or encumbrances. The Purchase Price will be reduced by the
amounts received by Seller from its Airbee stock received in this
Agreement in the event Seller shall have sold or otherwise
transferred such securities.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF IDENTITY AND SELLER
Identity and the Seller hereby
jointly and severally represent and warrant the following:
Section 3.1. Corporate
Organization; Authority .
(a) Identity is a corporation,
duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all requisite
corporate power and authority to (i) own, lease, operate or
otherwise hold its properties and assets and to carry on its
business as now being conducted and (ii) execute, deliver and
perform its obligations under this Agreement and the other
agreements and instruments to be executed and delivered by it
hereunder or in connection herewith and to carry out its respective
obligations hereunder and thereunder. The execution and delivery of
this Agreement and the other agreements and instruments to be
executed and delivered by Identity hereunder or in connection
herewith, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary
corporate and other actions of Identity pursuant to and in
accordance with the Laws governing Identity. The approval of the
Identity stockholders has been obtained to execute this Agreement
and complete the Merger. Seller is the record and beneficial owner
of all the shares of stock of Identity.
(b) Identity is duly qualified
or licensed and in good standing as a foreign corporation,
authorized to do business under the Laws of each jurisdiction where
the character of the properties owned, leased or used by it or the
nature of its activities makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed,
would not have a Material Adverse Effect on Identity.
Schedule 3.1(b) sets forth a true, complete and correct list
of all jurisdictions in which Identity is presently qualified or
licensed to do business.
(c) True, correct and complete
copies of the certificate of incorporation of Identity (the “
Identity Charter ”) and bylaws of Identity (the
“ Identity Bylaws ”) have been delivered
to Airbee. Identity is not in violation of any term of the Identity
Charter or the Identity Bylaws.
(d) This Agreement and the
other agreements and instruments to be executed and delivered by
Identity hereunder or in connection herewith have been or will be
duly executed and delivered by Identity, and constitute or will
constitute valid and binding obligations of Identity, enforceable
against Identity in accordance with their respective terms, except
as enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, or other similar
Laws now or hereafter in effect relating to creditors’ rights
generally or by general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity).
Section 3.2.
Capitalization .
(a) The authorized, issued and
outstanding capital stock of Identity consists of shares of capital
stock as set forth on Schedule 3.2(a) . All of the
capital stock has been duly authorized and validly issued, and are
fully paid and non-assessable. None of the securities have been
issued in violation of any preemptive or subscription rights, or
are subject to any preemptive or subscription rights. All of the
capital stock has been issued in compliance with all applicable
federal and state securities laws.
(b) Identity has no
subsidiaries.
(c)
Schedule 3.2(c) sets forth a true, correct and complete
list of all options, warrants or other rights, arrangements,
agreements or other commitments of any kind whatsoever to which
Identity obligating Identity to grant, issue or sell any shares of
the capital stock or equity or beneficial interest of any of
Identity by sale, lease, license or otherwise. Identity has made
available to Airbee copies of all such agreements listed on
Schedule 3.2(c) . Except as set forth on
Schedule 3.2(c) , (i) there is no obligation,
contingent or otherwise, of any of Identity to (A) repurchase,
redeem or otherwise acquire any share of the capital stock or other
equity or beneficial interests of any of Identity, or
(B) provide funds to, or make any investment in (in the form
of a loan, capital contribution or otherwise), or provide any
guarantee with respect to the obligations of Identity or any other
Person; (ii) Identity does not, directly or indirectly, own,
or has agreed to purchase or otherwise acquire, the capital stock
or other equity or beneficial interests of, or any interest
convertible into or exchangeable or exercisable for such capital
stock or such equity or beneficial interests of any corporation or
other entity; (iii) except as setforth in Schedule 3.4(f)
Identity is not a party to any arrangement, contract or other
commitment of any kind whatsoever (contingent or otherwise)
pursuant to which any Person is or may become entitled to receive
any payment from Identity based on the revenues or earnings, or
calculated in accordance therewith, of Identity; (iv) Identity
is not a party to any arrangement, contract or other commitment of
any kind whatsoever by which Identity, or any of its properties or
assets, is bound with respect to the voting of any share of capital
stock or other equity or beneficial interest of Identity; and
(v) Identity is not a party to and has not granted any
outstanding rights, subscriptions, warrants, puts, calls,
preemptive rights, options or other agreements, instruments or
undertakings of any kind relating to any capital stock or other
equity security of any of Identity, nor has it issued any security
convertible into or exchangeable for any such capital stock or
other equity or beneficial interest.
Section 3.3. Financial
Statements .
(a) Attached as
Schedule 3.3(a) are the unaudited balance sheets of
Identity and its predecessor as of December 31, 2004 (the
“ 2004 Balance Sheet ”), together with
unaudited consolidated statements of operations,
stockholders’ equity and cash flows for the period then ended
(the “ Financial Statements ”) as
certified by Daniel R. Nelson as being true and correct.
(b) The Financial Statements
have been prepared from, and are in accordance, in all material
respects, with the books and records of Identity, have been
prepared in accordance with GAAP applied on a consistent basis
during the periods involved (except for normal year-end adjustments
and the absence of footnote disclosure), and fairly present, in all
material respects, the financial position and the results of
operations, stockholders’ equity and cash flows (and changes
in financial position, if any) of Identity as of the times and for
the periods referred to therein.
Section 3.4. Directors,
Officers, Employees, Employee Benefit Plans; ERISA .
(a)
Schedule 3.4(a) contains a complete and accurate list
as of the date hereof of the name, title, current annual base
salary and bonuses paid or earned with respect to the last
completed fiscal year for each current employee, independent
contractor, director and officer of Identity.
(b) There exists no pending or
to the Knowledge of Identity or of Seller, threatened lawsuit,
administrative proceeding or investigation between Identity and any
current or former director, officer or employee of Identity,
including any claim for wrongful termination, breach of express or
implied contract of employment or for violation of equal employment
opportunity laws. There exists no pending or, to the Knowledge of
Identity or Seller, threatened lawsuit, administrative proceeding
or investigation of Identity or any employee thereof regarding
allegations of hostile work environment, sexual discrimination or
racial discrimination.
(c)
Schedule 3.4(c) sets forth a true and complete list of
each bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance or termination pay,
hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program, agreement or arrangement, and each other
employee benefit plan, program, agreement or arrangement, or any
employment, severance, consulting or similar agreement, sponsored,
maintained or contributed to or required to be contributed to, or
entered into by Identity for the benefit of any employee or former
employee, or director or former director, of Identity, whether
formal or informal (collectively, the “ Identity
Plans ”). Schedule 3.4(c) identifies each
of the Identity Plans that is an “employee benefit
plan,” as that term is defined in Section 3(3) of ERISA
(such plans being hereinafter referred to collectively as the
“ Identity ERISA Plans ”). Identity does
not have any commitment to create any additional Identity Plan or
materially increase the benefits provided under any existing
Identity Plan.
(d) No liability under Title IV
of ERISA has been incurred by Identity that has not been satisfied
in full, and, to Identity’s Knowledge and Seller, no
condition exists that presents a risk to Identity of incurring a
liability under Title IV of ERISA.
(e) Each Identity Plan has been
created, operated and administered in accordance with its terms and
in compliance with applicable Laws, including, but not limited to,
ERISA and the Code.
(f) Except as set forth on
Schedule 3.4(f), neither the execution and delivery of this
Agreement by Identity nor the performance by Identity of this
Agreement nor the consummation of the transactions contemplated
hereby will (i) entitle any current or former director,
officer or employee of Identity to severance pay, unemployment
compensation or any other payment from Identity, or
(ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such director, officer or
employee.
Section 3.5. Intellectual
Property .
(a) As used herein, the term
“ Intellectual Property ” means the
following items, in each case held for use in, used in, or
necessary for the businesses of Identity as currently conducted:
trademarks, service marks, trade names, Internet domain names,
designs, logos, slogans, and general intangibles of like nature,
together with all goodwill, registrations and applications related
to the foregoing (collectively, ” Trademarks
”); patents and industrial designs (including any
continuations, divisionals, continuations-in-part renewals,
reissues, and applications for any of the foregoing); copyrights
(including any registrations and applications for any of the
foregoing); Software; “mask works” (as defined under 17
U.S.C. § 901) and any registrations and applications for
“mask works”; technology, trade secrets and other
confidential information, know-how, proprietary processes,
inventions, formulae, algorithms, models, and methodologies
(collectively, “ Trade Secrets ”); and
rights of publicity and privacy relating to the use of the names,
likenesses, voices, signatures and biographical information of real
persons, As used herein, the term “ Software
” means any and all (i) computer programs (other than
“off-the-shelf” or shrinkwrap software), including, but
not limited to, any and all software implementation of algorithms,
models and methodologies, whether in source code or object code
form, (ii) computerized databases and compilations of data,
and (iii) all documentation, including, but not limited to,
user manuals and training materials, relating to any of the
foregoing.
(b)
Schedule 3.5(b) sets forth a true, complete and
accurate list of all U.S. and foreign (i) patents and patent
applications; (ii) trademark registrations, trademark
applications and Internet domain names; and (iii) copyright
and mask work registrations and copyright and mask work
applications in each case owned by Identity.
(c) Except as set forth on
Schedule 3.5(c) or in accordance with the terms of any
License Agreement described on Schedule 3.5(e) ,
(i) Identity owns or has the right to use all Material
Intellectual Property and, to Seller’s or Identity’s
Knowledge, all other Intellectual Property, free and clear of all
Liens and Asset Liens and (ii) Identity or one of the Identity
Subsidiaries is listed in the records of the appropriate United
States, state, or foreign registry as the sole current owner of
record for each application and registration listed on Schedule
3.5(b) , and (iii) any Material Intellectual Property
which is registered and owned by Identity has not been cancelled,
expired or abandoned. With respect to any assets, rights or
properties, an “ Asset Lien ” shall mean
all restrictions, rights of first refusal, conditions, covenants
and similar rights that materially impair the use of such asset,
right or property by Identity in connection with the conduct of
Identity’s business.
(d)
Schedule 3.5(d) sets forth, with respect to the
Material Intellectual Property, a true, complete and accurate list
of all Software (other than readily available,
“off-the-shelf” commercial or shrinkwrap software
programs having an acquisition price of less than $5,000) which is
owned, licensed or leased by Identity, describing which Software is
owned, licensed or leased, as the case may be. The Software owned
and not licensed by Identity was developed by (i) employees of
Identity or (ii) independent contractors who have created such
Software as “work for hire” (as such term is defined in
17 U.S.C. § 101) and/or assigned their rights in such Software
to Identity by written agreement.
(e)
Schedule 3.5(e) sets forth a true, complete and
accurate list of all agreements (whether oral or written) to which
Identity is a party or otherwise bound, (i) granting or
obtaining any right to use or practice any rights under any
Material Intellectual Property (other than licenses for readily
available, “off-the-shelf” commercial or shrink-wrap
software programs having an acquisition price of less than $5,000),
or (ii) restricting Identity’s rights to use any
Material Intellectual Property or, to Identity’s or
Seller’s Knowledge, any other Intellectual Property,
including, but not limited to, license agreements, development
agreements, distribution agreements, settlement agreements, consent
to use agreements, and covenants not to sue (collectively, the
“ License Agreements ”). Except as set
forth in Schedule 3.5(e) No royalties or other fees (other
than fees of the appropriate agency or government office for
maintaining and protecting the Material Intellectual Property or
other Intellectual Property) are payable by Identity to any third
parties for the use of or right to use any Material Intellectual
Property. The License Agreements are valid and binding obligations
of Identity, enforceable in accordance with their respective terms
except as enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, or
other similar Laws now or hereafter in effect relating to
creditors’ rights generally or by general principles of
equity (regardless of whether enforceability is considered in a
proceeding at law or in equity). To Identity’s or
Seller’s Knowledge, there exists no event or condition which
will result in a material violation or breach of or constitute
(with or without due notice or lapse of time or both) a default by
Identity or, to Identity’s or Seller’s Knowledge, the
other party thereto, under any such License Agreements.
(f) Except as set forth on
Schedule 3.5(f), to Identity’s or Seller’s
Knowledge, there has been no prior use of the Trademarks by any
third party that would confer upon said third party superior rights
in such Trademarks.
(g) Except as set forth on
Schedule 3.5(g), there is no pending or, to
Identity’s or Seller’s Knowledge, threatened claim,
suit, arbitration or other adversarial proceeding before any court,
agency, arbitral tribunal, or registration authority, in any
jurisdiction, and Identity has not received notice regarding any of
the foregoing, involving the Material Intellectual Property owned
by Identity or, to Identity’s or Seller’s Knowledge,
the Material Intellectual Property licensed to Identity, including,
but not limited to, any claim, suit, arbitration or other
adversarial proceeding alleging that the activities or the conduct
of Identity’s business infringes upon, violates or
constitutes the unauthorized use of the intellectual property or
other proprietary rights of any third party or challenging
Identity’s ownership or use of any Intellectual Property, or
the validity, enforceability or registrability of any Intellectual
Property owned by Identity.
(h) To Identity’s or
Seller’s Knowledge, no third party is misappropriating,
infringing, diluting or violating any Material Intellectual
Property and no such claims, suits, arbitrations or other
adversarial proceedings have been brought or threatened against any
third party by Identity.
(i) The conduct of
Identity’s business does not misappropriate, infringe upon
(either directly or indirectly such as through contributory
infringement or inducement to infringe) or dilute any intellectual
property rights owned or controlled by any third party.
(j) Identity takes reasonable
measures to protect the confidentiality of Trade Secrets which is
material to Identity. No Trade Secret which is material to Identity
has been disclosed or authorized to be disclosed to any third party
other than pursuant to a written confidentiality and non-disclosure
agreement. No party to any non-disclosure agreement relating to its
Trade Secrets is in breach or default thereof.
(k) (i) The consummation
of the transactions contemplated by this Agreement will not result
in the loss or impairment of Identity’s rights to own, use,
or bring any action for the infringement of any of the Material
Intellectual Property, nor will such consummation require the
consent of any third party in respect of any Material Intellectual
Property and (ii) to Seller, the consummation of the
transactions contemplated by this Agreement will not result in the
loss or impairment of Identity’s rights to own, use, or bring
any action for the infringement of any of the other Intellectual
Property, nor will such consummation require the consent of any
third party in respect of any other Intellectual Property. Except
as set forth on Schedule 3.5(k) , no current or former
director, officer, employee, contractor or consultant of Identity
(or any of its predecessors in interest) will, after giving effect
to the transactions contemplated by this Agreement, own or retain
any rights to use any of the Material Intellectual Property or, to
any Intellectual Property.
Section 3.6. Assets
.
(a)
Schedule 3.6(a)(i) sets forth a true, correct and
complete list of all tangible assets, properties and rights owned,
leased or licensed by Identity. All of the buildings, improvements,
machinery and equipment currently used in connection with the
businesses of Identity are in good working condition and sufficient
repair to permit the continual operation and conduct of the
businesses of Identity as presently conducted, ordinary wear and
tear excepted. Identity has good and valid title to all assets,
properties and rights owned by Identity reflected in the Financial
Statements (except inventory and other properties disposed of in
the ordinary course of business since August 1 2003, and accounts
receivable paid since December 31, 2004), free and clear of
all Liens and Asset Liens, except for (i) statutory Liens
imposed by Law for taxes that are not yet due and payable,
(ii) landlords’, carriers’, vendors’,
warehousemen’s, mechanics’, materialmen’s,
repairmen’s or other like Liens arising by operation of Law
in the ordinary course of business, consistent with past practice,
and with respect to amounts not overdue for a period of more than
thirty (30) calendar days, (iii) pledges or deposits in
connection with workers’ compensation, unemployment insurance
and other social security Laws, (iv) zoning laws and
ordinances, easements, rights-of-way, restrictions and other
similar encumbrances which do not, individually or in the
aggregate, interfere with the use of the relevant assets as being
used on the date hereof (collectively, “ Permitted
Liens ”). Permitted Liens shall also include the
$600,000 (Six Hundred Thousand and 00/100 Dollars) promissory note
and related security agreement and pledge agreement in favor of
Airbee.
(b) All assets, properties,
interests and rights used or held for use in the conduct of the
businesses of Identity (the “ Business Assets
”) are owned, leased or licensed by Identity. The Business
Assets include all of the assets, properties, interests and rights
material to, or used for the conduct of the businesses of Identity
as presently conducted. Identity has such technology sufficient for
the operations of its business as it is presently conducted.
Identity has the right to use all of the assets, properties,
interests and rights used in the conduct of the businesses of
Identity as presently conducted (notwithstanding any Asset Liens on
such assets, properties, interests and rights) the absence of which
would result in a Material Adverse Effect on Identity.
Section 3.7. Litigation
.
(a) (i) Identity has not
received written notice of any pending or, to Identity’s or
Seller’s Knowledge, threatened Action and, there is no Action
pending, or to Identity’s or Seller’s Knowledge,
threatened, in each case, by or against Identity before any
Governmental Authority, and (ii) there is no Order outstanding
against Identity, except in each of case (i) and
(ii) such Action or Order that would not have a Material
Adverse Effect against either Identity.
(b) There is no Action pending
or, to Identity’s or Seller’s Knowledge, threatened
against Identity which (i) challenges the transactions
contemplated hereby, (ii) would prevent or materially
interfere with or delay the consummation of the transactions
contemplated hereby, or (iii) seeks damages in connection with
the transactions contemplated hereby.
Section 3.8. Title to
Properties .
(a)
Schedule 3.8(a) is a true, correct and complete list of
all leases, subleases, licenses and other agreements (collectively,
the “ Real Property Leases ”) under which
Identity use or occupy, or have the right to use or occupy, any
real property (the land, buildings and other improvements covered
by the Real Property Leases are referred to herein as the “
Leased Real Property ”), including the date,
address, lessor and lessee (or sublessor or sublessee, as the case
may be) and use of the premises under each Real Property Lease.
Identity has heretofore made available to Airbee true, correct and
complete copies of each of the Real Property Leases. Identity holds
good and valid leasehold interests to the Leased Real Property, in
each case subject to the provisions of the applicable Real Property
Lease. To Identity’s or Seller’s Knowledge, each Real
Property Lease is valid, binding and enforceable and in full force
and effect and no default or circumstance exists which, with the
giving of notice or the passage of time, or both, would constitute
a default by Identity.
(b) Identity does not own any
real property.
Section 3.9. Consents,
Notices and Approvals .
(a) Except for Consents,
notices and approvals set forth on Schedule 3.9(a) , no
consent, approval, Permit, waiver, authorization of or notice or
filing with, any Governmental Authority is required to be made or
obtained by Identity in connection with the execution, delivery and
performance by Identity of this Agreement and the other agreements
and instruments to be executed and delivered by Identity hereunder
or in connection herewith and the consummation of the transactions
contemplated hereby or thereby.
(b) Except as set forth on
Schedule 3.9(b) , neither the execution and delivery of
this Agreement nor the consummation of the transactions
contemplated hereby will (i) require the consent of or notice
to, any party to any Material Contract (defined below), or
(ii) violate, or conflict with, or result in a breach of any
provisions of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under,
or give rise to a right of termination, cancellation, modification
or acceleration of the performance required by or a loss of a
benefit under, any Material Contract.
Section 3.10. Contracts
.
(a) Set forth on
Schedule 3.10(a)(i)-(xvi) is a true, correct and
complete list of the following types of Contracts, to which
Identity, as the case may be, is a party or by which it or its
properties are bound, or pursuant to which it obtains benefits or
incurs obligations in the conduct of its businesses as of the date
hereof (the “ Material Contracts ”):
(i) Contracts for the purchase
of goods by, or for the furnishing of services to, Identity that
provide for, or are reasonably likely to provide for, remaining
payments by Identity in excess of $25,000 (Twenty-five thousand and
00/100 Dollars) during the term of any such Contract, including all
contracts with airlines;
(ii) Contracts between
(x) Identity and (y) any of its Affiliates, officers or
directors (or any Affiliates of any of the foregoing);
(iii) Contracts containing any
guaranties by Identity of the obligations of any third parties;
(iv) any lease agreement
between Identity and any Person for leasing equipment, which has an
aggregate rental value in excess of $25,000 (Twenty-five thousand
and 00/100 Dollars) during the term of the lease;
(v) Contracts under which
Identity provides consulting services to any Person;
(vi) any employment, severance,
non-competition, consulting or other Contracts with any current or
former stockholder, member, manager, director, officer or employee
of Identity that has remaining payments by Identity to such Person
and cannot be terminated by Identity without any remaining
payments;
(vii) joint venture,
partnership, stockholder, or other Contracts whereby Identity has
agreed with any other Person to enter into a joint business
arrangement for profit;
(viii) licenses and agreements
relating to Material Intellectual Property;
(ix) Contracts for the lease of
personal property to or from any Person requiring payments in
excess of $25,000 (Twenty-five thousand and 00/100 Dollars);
(x) Contracts requiring Identity
to indemnify or hold harmless any Person;
(xi) any Contracts
(A) relating to indebtedness for borrowed money or other
financing transactions or (B) restricting the ability of
Identity to incur indebtedness for borrowed money or make any loan
or advance or own, operate, sell, transfer, pledge or otherwise
dispose of any assets;
(xii) Contracts under which any
other Person has directly or indirectly guaranteed any
indebtedness, liability or obligation of Identity, or letter of
credit issued to guarantee any obligation of Identity, or any
vendor or customer of Identity;
(xiii) mortgages, pledges,
security agreements, deeds of trust or other documents granting a
Lien;
(xiv) Contracts
(A) providing for the payment of any bonus or commission based
on sales or earnings or (B) providing for any bonus or other
payment based on the sale of Identity or any portion thereof or any
other change of control of Identity;
(xv) Contracts that provide for
a payment, or that the terms and conditions that would otherwise
govern the relationship of the parties thereto will be altered,
upon a change of control of Identity;
(xvi) Contracts containing
covenants which restrict Identity from engaging in any business or
in any geographical area or containing any exclusivity provision
with respect to any business or geographic area.
(b) Identity has made available
to Airbee copies of all of the Material Contracts. Each of the
Material Contracts is in full force and effect and is a valid and
binding obligation of Identity, enforceable against Identity in
accordance with its terms, except as enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other similar Laws now or hereafter
in effect relating to creditors’ rights generally or by
general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity). Each of the
Material Contracts is a valid and binding obligation of the other
parties thereto, enforceable against such other parties in
accordance with its terms, except as enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other similar Laws now or hereafter
in effect relating to creditors’ rights generally or by
general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity). With respect to
the Material Contracts, no default or
