EXHIBIT 2.1
AGREEMENT OF MERGER
AMONG
LION, INC.,
LION ACQ. LLC,
TUTTLE RISK MANAGEMENT SERVICES INC.,
ANTHONY BERRIS,
SERN CLEMENTSON,
AND
ANTHONY BERRIS, AS STOCKHOLDERS' REPRESENTATIVE
DATED AS OF OCTOBER 12, 2004
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CONTENTS
ARTICLE 1 -
DEFINITIONS........................................................1
ARTICLE 2 - THE
MERGER.........................................................7
2.1
THE
MERGER.......................................................7
2.2
The
Closing......................................................7
2.3
EFFECTIVE DATE AND
TIME..........................................7
2.4
Governance of the Surviving
LLC..................................8
2.5
MERGER
CONSIDERATION.............................................8
2.5.1
Conversion.......................................................8
2.5.2
EXCHANGE OF
CERTIFICATES; ISSUANCE OF MERGER SHARES AND NOTES....8
2.5.3
No Fractional
Shares.............................................9
2.6
CLOSING WORKING
CAPITAL..........................................9
2.7
Adjustment to Merger
Consideration..............................10
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND
THE
PRINCIPAL
STOCKHOLDERS............................................11
3.1
Organization....................................................11
3.2
AUTHORIZATION;
ENFORCEABILITY...................................11
3.3
Capitalization..................................................12
3.4
SUBSIDIARIES AND
AFFILIATES.....................................12
3.5
No Approvals; No
Conflicts......................................12
3.6
FINANCIAL
STATEMENTS............................................13
3.7
Absence of Certain Changes or
Events............................13
3.8
TAXES...........................................................14
3.9
Property........................................................15
3.10
CONTRACTS.......................................................16
3.10.1
Material
Contracts..............................................16
3.10.2
REQUIRED
CONSENTS...............................................17
3.11
Claims and Legal
Proceedings....................................18
3.12
LABOR AND EMPLOYMENT
MATTERS....................................18
3.13
Employee Benefit
Plans..........................................18
3.14
INTELLECTUAL
PROPERTY...........................................20
3.15
Corporate Books and
Records.....................................22
3.16
LICENSES PERMITS, AUTHORIZATIONS,
ETC...........................22
3.17
Compliance With
Laws............................................23
3.18
INSURANCE.......................................................23
3.19
Brokers or
Finders..............................................23
3.20
ABSENCE OF QUESTIONABLE
PAYMENTS................................23
3.21 Bank
Accounts...................................................24
3.22
CUSTOMERS.......................................................24
3.23
Accounts
Receivable.............................................24
3.24
CREDITORS'
LIST.................................................24
3.25
Insider
Interests...............................................24
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3.26
COMPLIANCE WITH ENVIRONMENTAL
LAWS..............................25
3.27 Full
Disclosure.................................................25
ARTICLE 3A - ADDITIONAL REPRESENTATIONS AND
WARRANTIES OF THE
PRINCIPAL
STOCKHOLDERS...........................................25
3A.1 Sophistication;
Accreditation........................................25
3A.2
OWNERSHIP............................................................25
3A.3
Information..........................................................26
3A.4 NO
REGISTRATION......................................................26
3A.5 Brokers or
Agents....................................................26
3A.6 INVESTMENT FOR OWN
ACCOUNT...........................................26
3A.7
Residency............................................................26
3A.8 LEGENDS 27
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
OF LION AND MERGER LLC.............27
4.1
ORGANIZATION....................................................27
4.2
Enforceability..................................................27
4.3
SECURITIES......................................................28
4.4
No Approvals or Notices Required; No Conflicts With
Instruments.....................................................28
4.5
SEC
DOCUMENTS...................................................28
4.6
Full
Disclosure.................................................28
ARTICLE 5 - CONDITIONS PRECEDENT TO
OBLIGATIONS OF LION
AND MERGER LLC.......29
5.1
Accuracy of Representations and
Warranties......................29
5.2
PERFORMANCE OF
AGREEMENTS.......................................29
5.3
Opinion of Counsel for
TRMS.....................................29
5.4
AUDIT...........................................................29
5.5
Material Adverse
Change.........................................29
5.6
APPROVALS AND
CONSENTS..........................................29
5.7
Proceedings and Documents; Officer's
Certificate................30
5.8
COMPLIANCE WITH
LAWS............................................30
5.9
Legal
Proceedings...............................................30
5.10
EMPLOYMENT
AGREEMENTS...........................................30
5.11
Investor
Acknowledgment.........................................30
5.12
CONSENTS TO
MERGER..............................................30
5.13
Merger
Consideration............................................31
5.14
COMPANY'S 401(K) PLAN AND BONUS
PLANS...........................31
5.15
REITCO..........................................................31
5.16
COMPANY WORKING
CAPITAL.........................................31
ARTICLE 6 - CONDITIONS PRECEDENT TO
OBLIGATIONS OF TRMS AND THE
PRINCIPAL
STOCKHOLDERS............................................31
6.1
ACCURACY OF REPRESENTATIONS AND
WARRANTIES......................31
6.2
Performance of
Agreements.......................................31
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6.3
OPINION OF COUNSEL FOR LION AND MERGER
LLC......................32
6.4
Officer's
Certificate...........................................32
6.5
EMPLOYMENT
AGREEMENTS...........................................32
6.6
Put
Agreement...................................................32
6.7
LEGAL
PROCEEDINGS...............................................32
6.8
Material Adverse
Change.........................................32
6.9
APPROVALS AND
CONSENTS..........................................32
6.10
REITCO..........................................................33
6.11
COMPLIANCE WITH
LAWS............................................33
ARTICLE 7 -
COVENANTS.........................................................33
7.1
CONDUCT OF BUSINESS BY TRMS PENDING THE
MERGER..................33
7.2
Access to Information;
Confidentiality..........................34
7.3
NO ALTERNATIVE
TRANSACTIONS.....................................35
7.4
Notification of Certain
Matters.................................35
7.5
FURTHER ACTION;
REGULATORY MATTERS..............................35
7.6
Publicity.......................................................37
7.7
EXECUTION OF ALL OPERATIVE
DOCUMENTS............................37
7.8
Limitation On Sales of Company Common
Stock.....................37
7.9
REIT ADVISORY
BUSINESS..........................................37
7.10 Tax
Covenant....................................................37
ARTICLE 8 - TERMINATION, AMENDMENT AND
WAIVER................................37
8.1
Termination.....................................................37
8.2
EFFECT OF
TERMINATION...........................................38
8.3
Amendment;
Waiver...............................................38
ARTICLE 9 - SURVIVAL AND
INDEMNIFICATION......................................38
9.1
Survival........................................................38
9.2
INDEMNIFICATION BY THE PRINCIPAL
STOCKHOLDERS...................39
9.3
Indemnification by
Lion.........................................39
9.4
PROCEDURE FOR
INDEMNIFICATION...................................39
9.5
Right of
Offset.................................................41
9.6
THRESHOLDS AND
LIMITATIONS......................................41
ARTICLE 10 - OTHER
AGREEMENTS.................................................42
10.1 TAX
MATTERS.....................................................42
10.2
Stockholders'
Representative....................................42
10.3
POST-CLOSING
OPERATIONS.........................................43
ARTICLE 11 -
GENERAL..........................................................43
11.1
EXPENSES........................................................43
11.2
Notices.........................................................43
11.3
SEVERABILITY....................................................45
11.4
Assignment......................................................45
11.5
PARTIES IN
INTEREST.............................................45
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11.6
Governing Law;
Venue............................................45
11.7
OTHER REMEDIES; SPECIFIC
PERFORMANCE............................45
11.8
Interpretation;
Schedules.......................................46
11.9
KNOWLEDGE.......................................................46
11.10 Entire
Agreement................................................46
11.11
COUNTERPARTS....................................................46
EXHIBITS
--------
2.3.1 - Form of
Certificate of Merger (Delaware)
2.3.2 - Form of Articles of Merger
(Washington)
2.5.1 - Form of 8% Note
due October 2007
2.5.2 - Letter of
Transmittal
5.3 -
Opinion of Counsel for TRMS and the Principal Stockholders
5.10.1 - Berris
Employment Agreement
5.10.2 - Clementson
Employment Agreement
5.10.3 - LION
Confidentiality and Inventions Agreement
5.11 - Investor
Questionnaire and Acknowledgement
6.3 -
Opinion of Counsel for LION and Merger LLC
6.6 - Put
Agreement
7.9.1 - REITCO Stock
Purchase Agreement
7.9.2 - REITCO Right of
First Refusal Agreement
SCHEDULES
---------
2.4 -
Directors and Officers of Surviving LLC
3
-
Disclosure Memorandum
5.10 - TRMS
Employees
7.9 -
REITCO Ownership
iv
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AGREEMENT OF MERGER
Agreement of Merger ("AGREEMENT") dated as of October 12, 2004, by
and
among LION, Inc., a Washington corporation
("LION"), LION Acq. LLC, a Washington
limited liability company wholly-owned by
LION ("MERGER LLC"), Tuttle Risk
Management Services Inc., a Delaware
corporation ( "TRMS"), Anthony Berris
("BERRIS") and Sern Clementson
("CLEMENTSON") (Berris and Clementson being
collectively referred to as the "PRINCIPAL
STOCKHOLDERS"), and Berris, as
Stockholders' Representative.
RECITALS
A. TRMS, the Principal Stockholders, LION and Merger LLC believe
it
advisable and in their respective best
interests to effect a merger of TRMS and
Merger LLC pursuant to this Agreement (the
"MERGER").
B. The board of directors and the stockholders of TRMS (the
"STOCKHOLDERS") have adopted and approved
this Agreement and the Merger as
required by applicable law.
C. The boards of directors of LION and Merger LLC and the sole
member
of Merger LLC have adopted and approved
this Agreement and the Merger as
required by applicable law.
D. It is
intended that the Merger will qualify as a reorganization
under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the
"CODE").
AGREEMENT
In consideration of the foregoing and the respective covenants,
agreements, representations, and warranties
set forth herein, the parties hereto
agree as follows:
ARTICLE 1 - DEFINITIONS
As used herein, the following terms shall have the meanings
herein
specified:
"ACCOUNTING REFEREE" means a firm of independent accountants of
nationally recognized standing reasonably
satisfactory to LION and the
Stockholders' Representative (which firm
shall not have any material
relationship with LION, TRMS or the
Principal Stockholders).
"ADVISERS ACT" means the Investment Advisers Act of 1940, as
amended,
and the rules and regulations of the SEC
thereunder.
"AFFILIATE" of any specified Person means any other Person directly
or
indirectly controlling or controlled by or
under direct or indirect common
control with such specified Person. For the
purposes of this definition,
"control," when used with respect to any
specified Person, means the power to
direct or cause the direction of the
management and policies of such Person,
directly or indirectly, whether through the
ownership of voting securities, by
contract or
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otherwise, and the terms "controlling" and
"controlled" have meanings
correlative to the foregoing.
"AGREEMENT" means this Agreement of Merger as described in the
Preamble.
"AVERAGE SHARE PRICE" shall be the lesser of (a) the closing price
of
LION common stock for the 20 Trading Days
ending on the Trading Day immediately
prior to the Closing Date and (b)
$0.65.
"BERRIS" is defined in the Preamble hereof.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or
other
day on which banks in the State of
California are authorized or required to
close.
"CERTIFICATES OF MERGER" is defined in Section 2.3.
"CLAIM" means any claim for indemnification under Article 9.
"CLAIM NOTICE" means a written notice of any claim for
indemnification
under Article 9.
"CLEMENTSON" is defined in the Preamble.
"CLOSING" is defined in Section 2.2.
"CLOSING DATE" is defined in Section 2.2.
"CLOSING WORKING CAPITAL" means the excess of current assets of
TRMS
over current liabilities of TRMS on the
Business Day immediately preceding the
Closing Date, such current liabilities to
include all legal, accounting and
other out-of-pocket expenses incurred (and
projected to be incurred) in
connection with the transactions provided
for in this Agreement and the other
Operative Documents.
"CLOSING WORKING CAPITAL STATEMENT" is defined in Section
2.6(b).
"COBRA" is defined in Section 3.13(f).
"CODE" is defined in Recital D.
"DELAWARE LAW" means the Delaware General Corporation Law.
"DISCLOSURE MEMORANDUM" means the disclosure memorandum attached
as
SCHEDULE 3 to this Agreement.
"DISTRIBUTION NOTES" means the promissory notes that TRMS will
issue to
the Stockholders prior to the Closing.
"EFFECTIVE DATE" is defined in Section 2.3.
"EFFECTIVE TIME" is defined in Section 2.3.
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"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" (as such
term
is defined in ERISA ss. 3(3)) and any other
material employee compensation or
benefit plan, program or arrangement of any
kind, including without limitation
deferred compensation, severance pay,
retirement, employment agreements, change
in control agreements, insurance, stock
purchase, stock option, and other
benefit plans, programs or arrangements)
that TRMS maintains or to which TRMS
contributes, has any obligation to
contribute or any material liability.
"ENCUMBRANCE" means any liens, mortgages, pledges, deeds of
trust,
security interests, charges, or other
encumbrances.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA AFFILIATE" is defined in Section 3.13.
"ERISA AFFILIATE PLAN" is defined in Section 3.13.
"ESTIMATED CLOSING WORKING CAPITAL" is defined in Section 2.6.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FINAL WORKING CAPITAL" is defined in Section 2.7.
"FULLY DILUTED COMMON STOCK NUMBER" means the total number of
shares of
TRMS Common Stock outstanding immediately
prior to the Effective Time.
"GAAP" means generally accepted accounting principles in the
United
States.
"GOVERNMENTAL AUTHORITY" means any government, any state or
other
political subdivision thereof, any entity
exercising executive, legislative,
judicial, regulatory or administrative
functions of or pertaining to government,
including the SEC or any other government
authority, agency, department, board,
commission or instrumentality of the United
States, any state of the United
States or any political subdivision
thereof, and any court, tribunal or
arbitrator of competent jurisdiction, and
any governmental or non-governmental
self-regulatory organization, agency or
authority, including the NASD.
"INDEMNIFICATION CAP" is defined in Section 9.6(c).
"INDEMNIFIED PARTIES" means the TRMS Indemnified Parties and the
LION
Indemnified Parties, as the case may
be.
"INTELLECTUAL PROPERTY" means all trade names, inventions,
processes,
designs, formulae, trade secrets, know-how,
and other proprietary rights.
"INVESTOR ACKNOWLEDGMENT" means the Investor Questionnaire and
Acknowledgment in the form set forth in
EXHIBIT 5.12.
"LETTER OF TRANSMITTAL" means a letter of transmittal substantially
in
the form set forth in EXHIBIT 2.5.2.
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"LION" is defined in the Preamble.
"LION COMMON STOCK" means the common stock, $0.001 par value per
share,
of LION.
"LION INDEMNIFIED PARTIES" is defined in Section 9.2.
"LOSS THRESHOLD" is defined in Section 9.6(a).
"LOSSES" shall mean any and all loss, obligation, deficiency,
damage,
claim liability, cost and expense
including, without limitation, the amount of
any settlement entered into pursuant to
this Agreement, and all reasonable legal
fees and other expenses.
"MATERIAL CONTRACTS" is defined in Section 3.10.
"MERGER" is defined in Recital A.
"MERGER CONSIDERATION" means the aggregate of (i) the
Distribution
Notes and (ii) the Notes and Merger Shares
issued to the Stockholders as a
result of the Merger, as described in
Section 2.5.1.
"MERGER LLC" is defined in the Preamble.
"MERGER SHARES" means the number of shares of LION Common Stock to
be
issued to the Stockholders in the Merger as
part of the Merger Consideration,
such that the Share Value is not less than
50% of the Merger Consideration.
"NASD" means the National Association of Securities Dealers,
Inc.
"NOTE" means the 8% promissory note due October 2007, the form of
which
is attached as EXHIBIT 2.5.1 hereto, to be
issued to the Stockholders in the
Merger as part of the Merger
Consideration.
"OPERATIVE DOCUMENTS"
means this Agreement and the other agreements and
certificates that are required to be
completed and executed pursuant to this
Agreement, including the Berris Employment
Agreement and the Clementson
Employment Agreement.
"OUTSTANDING SHARES" is defined in Section 3.3(b).
"PERMITS" means all currently required governmental approvals,
authorizations, consents, licenses, orders,
registrations and permits of all
agencies, whether federal, state, local or
foreign.
"PERMITTED
ENCUMBRANCES" means:
(a) Encumbrances for taxes, fees, assessments or other
government
charges or levies, either not delinquent or
being contested in good faith and
for which TRMS maintains adequate reserves
in accordance with GAAP;
(b) Licenses or sublicenses granted by TRMS in the ordinary
course
of business and any interest or title of a
licensor or under any such license or
sublicense;
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(c) Leases or subleases granted by TRMS in the ordinary course
of
business, including in connection with
TRMS's leased premises or leased
property;
(d) Liens in favor of financial institutions arising in
connection
with TRMS's deposit accounts or securities
accounts held at such institutions;
(e) Banker's liens, rights of setoff and similar liens incurred
on
deposits made in the ordinary course of
business;
(f) Materialmen's, mechanic's, repairmen's, employees' or other
like liens arising in the ordinary course
of business and which are not
delinquent;
(g) Encumbrances to secure payment of worker's compensation,
employment insurance, old age pensions or
other social security obligations of
TRMS in the ordinary course of business;
and
(h) Easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and
similar charges or encumbrances affecting
real property not constituting a TRMS
Material Adverse Effect.
"PERSON" means
any person, corporation, partnership, joint venture,
association, organization, other entity or
Governmental Authority.
"PERSONAL PROPERTY" is defined in Section 3.9.
"PRE-CLOSING DISTRIBUTION" means the distribution to the
Stockholders
of cash and Distribution Notes prior to the
Closing Date which will result in
Closing Working Capital of not less than
$300,000.
"PRINCIPAL STOCKHOLDERS" is defined in the Preamble.
"PRO RATA SHARE" means the quotient derived by dividing the number
of
shares of Company Common Stock held by a
Stockholder by the Fully Diluted Common
Stock Number.
"PURCHASE PRICE" means $3,500,000 less the amount of the
Pre-Closing
Distribution.
"REAL PROPERTY" is defined in Section 3.9.
"REGISTERED INTELLECTUAL PROPERTY" means all registered patents,
patent
applications, registered trademarks,
trademark applications, registered
copyrights, copyright applications and
domain name registrations used by TRMS in
its business.
"REGULATORY DOCUMENTS" means, with respect to a Person, all
forms,
reports, registration statements, schedules
and other documents filed, or
required to be filed, by such Person with
any Governmental Authority.
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"REITCO" means the newly-formed corporation to which TRMS shall
have
transferred and assigned the assets and
liabilities of TRMS used in and
necessary for its REIT advisory business,
as described in Section 7.9.
"REITCO RIGHT OF
FIRST REFUSAL AGREEMENT" is defined in Section 7.9.
"SEC" means the Securities and Exchange Commission and any
successor
thereto.
"SEC DOCUMENTS" means true and complete copies of the following
reports
of LION filed or furnished to the SEC
pursuant to the Exchange Act: Annual
Report on Form 10-KSB, as amended, for the
fiscal year ended December 31, 2003;
Quarterly Report on Form 10-QSB, as
amended, for the quarterly period ending
March 31, and Quarterly Report on Form
10-QSB for the quarterly period ending
June 30, 2004; definitive proxy statement,
filed May 12, 2004, for LION's annual
meeting of stockholders; and Current
Reports on Form 8-K, as filed on February
2, 23, 26, April 28, June 8, July 30, and
August 20, 2004.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARE VALUE" means the product of the Merger Shares multiplied by
the
Average Share Price; PROVIDED, that the
Share Value shall not be less than 50%
of the value of the Merger
Consideration.
"STOCKHOLDERS' REPRESENTATIVE" is defined in the Preamble.
"STOCKHOLDERS" is defined in Recital B.
"SURVIVAL PERIOD" is defined in Section 9.1.
"SURVIVING LLC" means Merger LLC, as the surviving entity after
the
Effective Time.
"TAX" or "TAXES" means any or all foreign, federal, state, county
or
local taxes, charges, fees, levies,
imposts, duties and other assessments,
including, but not limited to, any income,
alternative minimum or add-on,
estimated, gross income, gross receipts,
sales, use, transfer, transactions,
intangibles, ad valorem, value-added,
franchise, registration, title, license,
capital, paid-up capital, profits,
withholding, payroll, employment, excise,
severance, stamp, occupation, premium, real
property, recording, personal
property, custom, duty or other tax,
governmental fee or other like assessment
or charge of any kind whatsoever, together
with any interest, penalties or
additions to tax.
"TAX RETURNS" shall mean any return, declaration, report, claim
or
refund, information return, statement or
other similar document relating to
Taxes, including any schedule or attachment
thereto, and including any amendment
thereof.
"THIRD PARTY CLAIM" is defined in Section 9.4.
"TRADING DAY" means a day on which trades may be made in the
over-the-counter market for the LION Common
Stock.
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"TRMS" is defined in the Preamble.
"TRMS BALANCE SHEET" mean the balance sheet of TRMS as of September
30,
2004.
"TRMS BUSINESS" means the business of providing interest rate
and
mortgage pipeline risk management services
as presently conducted by TRMS.
"TRMS COMMON STOCK" means the common stock, $0.001 par value per
share,
of TRMS.
"TRMS FINANCIAL STATEMENTS" means (a) unaudited balance sheets,
statements of income and expense,
statements of cash flow and statements of
stockholders' equity of TRMS as of and for
the nine months ended September 30,
2004 and the fiscal years ended December
31, 2003, 2002 and 2001 and (b) the
TRMS Balance Sheet
"TRMS INDEMNIFIED PARTIES" is defined in Section 9.3.
"TRMS MATERIAL ADVERSE EFFECT" means a material adverse effect
on
TRMS's business operations, assets,
liabilities (absolute, accrued, contingent
or otherwise) or condition (financial or
otherwise).
"WASHINGTON LAW" means the Washington Business Corporation Act,
RCW
23B, and the Washington Limited Liability
Company Act, RCW 25.15.
ARTICLE 2 - THE MERGER
2.1 THE
MERGER
Upon the terms and subject to the conditions hereof, (a) at the
Effective Time TRMS shall be merged with
and into Merger LLC in accordance with
Washington Law and Delaware Law, and (b) as
of and from the Effective Time,
Merger LLC shall continue as the surviving
corporation and the separate
corporate existence of TRMS shall
cease.
2.2 THE
CLOSING
Subject to the terms and conditions of this Agreement, the closing
of
the Merger (the "CLOSING") shall take place
on the earliest practicable Business
Day (the "CLOSING DATE") after the
satisfaction or waiver of the conditions set
forth in Articles 5 and 6 at 10 a.m. local
time at the offices of Stoel Rives
LLP, 600 University Street, Suite 3600,
Seattle, Washington, or such other date,
time or location as LION and TRMS shall
agree.
2.3 EFFECTIVE
DATE AND TIME
On the Closing Date and upon the terms and subject to
conditions
hereof, certificates of merger (the
"CERTIFICATES OF MERGER"), substantially in
the forms attached hereto as EXHIBITS 2.3.1
and 2.3.2 complying with the
applicable provisions of Delaware Law and
Washington Law shall
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be delivered for filing with the Secretary
of State of the state of Delaware and
the Secretary of State of the state of
Washington. The Merger shall become
effective on the date (the "EFFECTIVE
DATE") and at the time (the "EFFECTIVE
TIME") of filing of the Certificates of
Merger or at such other time as may be
specified in the Certificates of Merger as
filed.
2.4 GOVERNANCE
OF THE SURVIVING LLC
At and after the Effective Time, Surviving LLC shall continue to
be
governed by its certificate of formation
and operating agreement as in effect at
the Effective Time, as amended to provide
for a change in name to Tuttle Risk
Management Services LLC. The directors and
officers of Surviving LLC shall be at
and after the Effective Time as set forth
SCHEDULE 2.4.
2.5 MERGER
CONSIDERATION
2.5.1
CONVERSION
As of the Effective Time, by virtue of the Merger and without
any
action on the part of the Stockholders,
each issued and outstanding share of
TRMS Common Stock shall be converted into
the right to receive:
(a) a Note in the principal amount calculated as follows:
A / B = C
where A = the dollar amount obtained by subtracting the Share
Value from the Purchase Price;
B = the Fully Diluted Common Stock Number; and
C = the principal amount of the Note; and
(b) the number of shares of LION common stock, determined by
dividing the Merger Shares by the Fully
Diluted Common Stock Number.
2.5.2 EXCHANGE
OF CERTIFICATES; ISSUANCE OF MERGER SHARES AND NOTES
As soon as practicable after the Effective Date, LION shall
make
available and each Stockholder shall be
entitled to receive, promptly after
surrender to LION of a Letter of
Transmittal, together with documents delivered
as required therein, for the shares of TRMS
Common Stock held by such
Stockholder:
(a) a certificate representing the number of shares of LION
Common
Stock that such Stockholder is entitled to
receive pursuant to Section 2.5.1
(unless the Final Working Capital has not
yet been determined in accordance with
Section 2.7 and any adjustments in the
Merger Shares required under Section 2.7
have not yet been made, in which case LION
shall deliver such certificate to the
Stockholders' Representative to hold until
such determinations are made); and
(b) a Note in the principal amount that such Stockholder is
entitled to receive pursuant to Section
2.5.1 (unless the Final Working Capital
has not yet been determined in
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accordance with Section 2.7 and any
adjustments in the Notes required under
Section 2.7 have not yet been made, in
which case LION shall deliver such Note
to the Stockholders' Representative to hold
until such determinations are made).
2.5.3 NO
FRACTIONAL SHARES
No certificates or scrip representing fractional shares of LION
Common
Stock shall be issued by virtue of the
Merger. The aggregate number of shares of
LION Common Stock a Stockholder shall be
entitled to receive pursuant to Section
2.5.1(b) shall be rounded to the nearest
whole number of shares, with one-half
of a share being rounded up to the next
greatest whole share.
2.6 CLOSING
WORKING CAPITAL
(a) No later than five Business Days prior to the Closing Date,
TRMS shall provide LION with a good faith
estimate of the Closing Working
Capital ("ESTIMATED CLOSING WORKING
CAPITAL"), which shall be based on the
latest available financial information and
shall be prepared in accordance with
GAAP, applied on a basis consistent with
the preparation of the TRMS Balance
Sheet, and giving full consideration to
TRMS's intention to distribute all 2004
taxable earnings to the Stockholders prior
to the Closing and giving pro-forma
effect to the Pre-Closing Distribution.
(b) As promptly as practicable, but no later than 75 days after
the Closing Date, LION will cause to be
prepared and delivered to the
Stockholders' Representative an unaudited
Closing Working Capital Statement (the
"CLOSING WORKING CAPITAL STATEMENT"),
setting forth LION's calculation of
Closing Working Capital. The Closing
Working Capital Statement shall (i) be
prepared in accordance with GAAP, applied
on a basis consistent with the
preparation of the TRMS Balance Sheet, (ii)
fairly present in all material
respects the current assets and current
liabilities of TRMS as at the close of
business on the Business Day immediately
preceding the Closing Date, and (iii)
be prepared in accordance with accounting
policies and practices consistent with
those used in the preparation of the TRMS
Balance Sheet.
(c) If the Stockholders' Representative disagrees with LION's
calculation of Closing Working Capital, the
Stockholders' Representative may,
within 10 days after delivery of the
Closing Working Capital Statement, deliver
a notice to LION disagreeing with such
calculation and setting forth his
calculation of such amount. Any such notice
of disagreement shall specify those
items or amounts as to which the
Stockholders' Representative disagrees. If the
Stockholders' Representative fails to
deliver such a written notice within such
10-day period, LION's calculation of
Closing Working Capital shall be binding
upon the parties.
(d) If the Stockholders' Representative delivers a notice of
disagreement pursuant to Section 2.6(c),
LION and the Stockholders'
Representative shall, during the 30 days
following such delivery, use their
commercially reasonable efforts to reach
agreement on the disputed items or
amounts in order to determine the amount of
Closing Working Capital, which
amount shall not be less than the amount
thereof shown in LION's calculations
delivered pursuant to Section 2.6(b) nor
more than the amount thereof shown in
the Stockholders' Representative's
calculation delivered pursuant to Section
2.6(c). If LION and the Stockholders'
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Representative are unable to reach such
agreement during the 30 days, they shall
promptly thereafter cause the Accounting
Referee promptly to review the disputed
items or amounts for the purpose of
calculating Closing Working Capital. In
making such calculation, the Accounting
Referee shall consider only those items
or amounts in the Closing Working Capital
Statement or LION's calculation of
Closing Working Capital as to which the
Stockholders' Representative has
disagreed. The Accounting Referee shall
deliver to LION and the Stockholders'
Representative, as promptly as practicable,
but not later than 120 days after
the Closing Date, a report setting forth
such calculation. Such report shall be
final and binding upon LION, TRMS and the
Stockholders' Representative. The
costs, fees and expenses of the Accounting
Referee shall be borne
proportionately by LION, on the one hand,
and the Stockholders, on the other,
based on the extent to which LION's and the
Stockholders' Representative's
respective determinations differ from the
Accounting Referee's determination.
2.7 ADJUSTMENT
TO MERGER CONSIDERATION
(a) If Final Working Capital is less than Estimated Closing
Working Capital, then the Merger
Consideration shall be adjusted by reducing the
principal amounts of the Notes issuable to
the Stockholders pursuant to Section
2.5.1(a) in an aggregate dollar amount
equal to the difference between Estimated
Closing Working Capital and Final Working
Capital.
(b) If Final Working Capital is greater than Estimated Closing
Working Capital, then the Merger
Consideration shall be adjusted by increasing
the principal amounts of the Notes issuable
to the Stockholders pursuant to
Section 2.5.1(a) in an aggregate dollar
amount equal to the difference between
Final Working Capital and Estimated Closing
Working Capital. The foregoing
notwithstanding, if increasing the
aggregate principal amount of the Notes
pursuant to the preceding sentence would
cause the Share Value to be less than
50% of the value of the Merger
Consideration, then to the extent necessary to
maintain the Share Value at not less than
50% of the Merger Consideration:
(i) LION shall issue additional shares of LION Common Stock,
which shall be considered part of the Merger Shares, such that
the
Share Value shall not be less than 50% of the value of the
Merger
Consideration; and
(ii) the amount of the increase in the principal amount of the
Notes that otherwise would have been made but for the limits
imposed by
this sentence shall be correspondingly reduced by the product of
(x)
the Average Share Price and (y) the additional shares of LION
Common
Stock issued pursuant to clause (i) of this sentence.
(c) Any adjustment in the Merger Consideration required by this
Section 2.7 shall be made based on each
Stockholder's Pro Rata Share.
(d) For purposes of this Section 2.7, "FINAL WORKING CAPITAL"
means Closing Working Capital as shown in
LION's calculation delivered pursuant
to Section 2.6(b), if no notice of
disagreement with respect thereto is duly
delivered pursuant to Section 2.6(c); or if
such a notice of disagreement is
delivered, as agreed by LION and the
Stockholders' Representative pursuant to
Section 2.6(d) or, in the absence of such
agreement, as shown in the Accounting
Referee's calculation delivered pursuant to
Section 2.6(d); PROVIDED that in no
event
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shall Final Working Capital be less than
LION's calculation of Closing Working
Capital delivered pursuant to Section
2.6(b) or more than the Stockholders'
Representative's calculation of Closing
Working Capital delivered pursuant to
Section 2.6(c).
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE PRINCIPAL STOCKHOLDERS
Except as otherwise is set forth in the Disclosure Memorandum, and
in
order to induce LION and Merger LLC to
enter into and perform this Agreement and
the other agreements and the other
Operative Documents, TRMS and the Principal
Stockholders severally represent and
warrant to LION and Merger LLC as of the
Closing Date as follows.
3.1
ORGANIZATION
TRMS is a corporation duly organized and validly existing under
the
laws of the state of Delaware. TRMS has all
requisite corporate power and
authority to execute, deliver and perform
its obligations each of the Operative
Documents, and to consummate the
transactions contemplated thereby. Each
Principal Stockholder has the power,
authority and capacity to execute, deliver
and perform his obligations under each of
the Operative Documents to which he is
a party and to consummate the transactions
contemplated thereby. TRMS is duly
qualified and licensed as a foreign
corporation to do business and is in good
standing in each jurisdiction in which the
character of TRMS's properties
occupied, owned or held under lease or the
nature of the business conducted by
TRMS makes such qualification or licensing
necessary, except that TRMS is not
qualified and licensed as a foreign
corporation to do business in the State of
Pennsylvania, and except where the failure
to be so qualified or licensed would
not have a TRMS Material Adverse
Effect.
3.2
AUTHORIZATION; ENFORCEABILITY
All corporate action on the part of TRMS necessary for the
authorization, execution, delivery and
performance of the Operative Documents,
the consummation of the Merger, and the
performance of all TRMS's obligations
under the Operative Documents has been
taken or will be taken as of or prior to
the Effective Time. The Stockholders have
unanimously approved this Agreement
and the Merger. Each of the Operative
Documents has been duly executed and
delivered by TRMS and each Principal
Stockholder, as applicable, and each of the
Operative Documents is a legal, valid and
binding obligation of TRMS and each
Principal Stockholder, as applicable,
enforceable against each of them in
accordance with its terms, except as
enforceability may be limited or affected
by applicable bankruptcy, insolvency,
fraudulent transfer, reorganization,
moratorium, or other laws of general
application relating to or affecting the
enforcement of creditors' rights, and
except as enforceability may be limited by
equitable principles, including those
limiting the availability of specific
performance, injunctive relief and other
equitable remedies providing for
defenses based on fairness and
reasonableness, regardless of whether considered
in a proceeding in equity or at law
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3.3
CAPITALIZATION
(a) The authorized capital stock of TRMS consists of 1,250,000
shares of TRMS Common Stock.
(b) The issued and outstanding capital stock of TRMS consists
solely of 862,599 shares of TRMS Common
Stock (collectively, the "OUTSTANDING
SHARES"), which are held of record and
beneficially by the Stockholders in the
amounts described on SCHEDULE 3.3(B) to the
Disclosure Memorandum. The
Outstanding Shares are, and immediately
prior to the Closing will be, duly
authorized, validly issued, fully paid and
nonassessable, and issued in
compliance with all applicable federal and
state securities laws. To the
knowledge of TRMS and each Principal
Stockholder, and subject to applicable
community property laws, no Person other
than the Stockholders holds any
interest in any of the Outstanding Shares.
True and correct copies of the stock
records of TRMS showing all issuances and
transfers of shares of capital stock
of TRMS since inception have been delivered
to LION or its counsel.
(c) There are no outstanding options, rights of first refusal
or
offer, preemptive rights, stock purchase
rights or other agreements, either
directly or indirectly, for the purchase or
acquisition from TRMS or from any
Stockholder of any shares of capital stock
of TRMS or any securities convertible
into or exchangeable for shares of capital
stock of TRMS.
(d) TRMS is not a party or subject to any agreement or
understanding and, to the knowledge of TRMS
and each Principal Stockholder,
there is no agreement or understanding
between any Persons that affects or
relates to the voting or giving of written
consents with respect to any
securities of TRMS or the voting by any
director of TRMS. No Stockholder or any
Affiliate thereof is indebted to TRMS, and
TRMS is not indebted to any
Stockholder or any Affiliate thereof. TRMS
is not under any contractual or other
obligation to register any of its presently
outstanding securities or any of its
securities that may hereafter be
issued.
3.4
SUBSIDIARIES AND AFFILIATES
TRMS does not own, directly or indirectly, any ownership, equity,
or
voting interest in any corporation,
partnership, joint venture or other entity,
and has no agreement or commitment to
purchase any such interest.
3.5 NO
APPROVALS; NO CONFLICTS
The execution, delivery and performance of the Operative Documents
by
TRMS and each of the Principal
Stockholders, as applicable, and the consummation
by them of the transactions contemplated
thereby will not:
(a) constitute a violation (with or without the giving of
notice
or lapse of time, or both) of any provision
of law or any judgment, decree,
order, regulation or rule of any court or
other governmental authority
applicable to TRMS or the Principal
Stockholders;
(b) except as contemplated by the Operative Documents, require
any
consent, approval or authorization of, or
declaration, filing or registration
with, any Person, except for approval by
the Stockholders, which approval has
been heretofore unanimously given, and
the
12
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filing of all documents necessary to
consummate the Merger under Delaware Law
and Washington Law;
(c) result in a default under (with or without the giving of
notice or lapse of time, or both), or
acceleration or termination of, or the
creation in any party of the right to
accelerate, terminate, modify or cancel,
any agreement, lease, note or other
restriction, encumbrance, obligation or
liability to which TRMS or the Principal
Stockholders are parties or by which
they are bound or to which TRMS's assets
are subject;
(d) result in the creation of any Encumbrance upon any assets
of
TRMS or the Outstanding Shares;
(e) conflict with or violate any provision of TRMS's
certificate
of incorporation or bylaws; or
(f) invalidate or adversely affect any Permit used in or
necessary
for the conduct of the TRMS Business.
3.6 FINANCIAL
STATEMENTS
TRMS has delivered to LION the TRMS Financial Statements. The
TRMS
Financial Statements have been prepared in
conformity with GAAP on a basis
consistent with prior accounting periods
and fairly present the financial
position, results of operations and changes
in financial position of TRMS as of
the dates and for the periods indicated.
TRMS has no liabilities or obligations
of any nature (absolute, contingent or
otherwise) that are not fully reflected
or reserved against in the TRMS Balance
Sheet, except (i) liabilities or
obligations incurred since the date of the
TRMS Balance Sheet in the ordinary
course of business and consistent with past
practice, and (ii) liabilities or
obligations otherwise disclosed in this
Agreement or in the Disclosure
Memorandum. TRMS maintains standard systems
of accounting that are adequate for
its business.
3.7 ABSENCE OF
CERTAIN CHANGES OR EVENTS
Except for transactions specifically contemplated in this
Agreement,
since the date of the TRMS Balance Sheet,
neither TRMS, nor any of its officers,
directors or Stockholders in their
representative capacities on behalf of TRMS,
have:
(a) taken any action or entered into or agreed to enter into
any
transaction, agreement or commitment other
than in the ordinary course of
business;
(b) forgiven or canceled any indebtedness or waived any claims
or
rights of material value;
(c) granted any increase in the compensation of directors,
officers, employees or consultants;
(d) suffered any change having a TRMS Material Adverse Effect;
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<PAGE>
(e) borrowed or agreed to borrow any funds, incurred or become
subject to, whether directly or by way of
assumption or guarantee or otherwise,
any obligations or liabilities in excess of
$5,000 individually or $10,000 in
the aggregate, except liabilities and
obligations that are incurred in the
ordinary course of business and consistent
with past practice, or increased, or
experienced any change in any assumptions
underlying or methods of calculating,
any bad debt, contingency or other
reserves;
(f) paid, discharged or satisfied any material claims,
liabilities
or obligations other than the payment,
discharge or satisfaction in the ordinary
course of business and consistent with past
practice of claims, of liabilities
and obligations reflected or reserved
against in the TRMS Balance Sheet or
incurred in the ordinary course of business
and consistent with past practice
since the date of the TRMS Balance Sheet,
or prepaid any obligation having a
fixed maturity of more than 90 days from
the date such obligation was issued or
incurred;
(g) knowingly permitted or allowed any of its property or
assets
to be subjected to any Encumbrance, other
than Permitted Encumbrances;
(h) purchased or sold, transferred or otherwise disposed of any
of
its material properties or assets;
(i) disposed of, other than through licenses in the ordinary
course of business, or permitted to lapse,
any rights to the use of any
Intellectual Property, or disposed of or
disclosed to any Person without
obtaining an appropriate confidentiality
agreement from any such Person any
trade secret, formula, process or know-how
not theretofore a matter of public
knowledge;
(j) made any single capital expenditure or commitment in excess
of
$10,000 for additions to property, plant,
equipment or intangible capital assets
or otherwise or made aggregate capital
expenditures in excess of $10,000 for
additions to property, plant, equipment or
intangible capital assets or
otherwise;
(k) made any change in accounting methods or practices or
internal
control procedures; or
(l) paid, loaned or advanced any amount to, or sold,
transferred
or leased any properties or assets to any
of the Stockholders or any of TRMS's
officers, directors or employees, or any
Affiliate of any Stockholder or of
TRMS's officers, directors or employees,
except for (i) compensation paid to
officers and employees at rates not
exceeding the rates of compensation paid
during the fiscal year last ended, (ii)
advances for travel and other
business-related expenses, and (iii) the
Pre-Closing Distribution.
3.8 TAXES
(a) (i) All Tax Returns required to be filed by or on behalf of
TRMS have been timely filed and all such
Tax Returns were (at the time they were
filed) and are true, correct and complete
in all material respects; (ii) all
Taxes of TRMS have been fully and timely
paid, except for those for which
adequate reserves have been created in the
TRMS Financial Statements in
accordance with GAAP; (iii) no waivers of
statutes of limitation have been given
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or requested with respect to TRMS in
connection with any Tax Returns; (iv) no
taxing authority in a jurisdiction where
TRMS does not file Tax Returns has made
a claim, assertion or threat to TRMS that
TRMS is or may be subject to taxation
by such jurisdiction; (v) TRMS has duly and
timely withheld from employee
salaries, wages and other compensation and
paid over to the appropriate
Governmental Authority all amounts required
to be so withheld and paid over for
all periods under all applicable laws; (vi)
there are no Encumbrances with
respect to Taxes on any of TRMS's property
or assets other than Encumbrances for
current Taxes not yet payable; (vii) there
are no Tax rulings, requests for
rulings, or closing agreements relating to
TRMS that could affect the liability
for Taxes or the amount of taxable income
of TRMS for any period (or portion of
a period) after the Closing Date; and
(viii) any adjustment of Taxes of TRMS
made by the Internal Revenue Service in any
examination that is required to be
reported to the appropriate state, local or
foreign taxing authorities has been
reported, and any additional Taxes due with
respect thereto have been paid.
(b)
There is no outstanding dispute or claim concerning any Tax
liability of TRMS, nor to the knowledge of
TRMS or the Principal Stockholders is
any such claim or dispute pending. No Tax
Returns filed with respect to TRMS for
taxable periods ended on or after TRMS's
inception or the inception of any
predecessor have been audited or are
currently the subject of audit. TRMS has
delivered to LION correct and complete
copies of all Tax Returns, examination
reports and statements of deficiencies
assessed against or agreed to by TRMS
since TRMS's inception.
(c) TRMS has not made any payments, is not obligated to make
any
payments and is not a party to any
agreement that under certain circumstances
could obligate it to make any payments that
will not be deductible under Section
280G of the Code (or any similar provision
of state, local or foreign law).
(d) TRMS is not a party to any Tax allocation or sharing
agreement. TRMS (i) has not been a member
of a federal, state, local or foreign
consolidated, affiliated, combined, unitary
or other similar group of which TRMS
is now or was formerly a member filing a
consolidated income Tax Return under
Section 1501 of the Code (or any similar
provision of state, local or foreign
law) and (ii) does not have any liability
for Taxes of any Person under Treasury
Regulations Section 1.1502-6 (or any
similar provision of state, local or
foreign law) as a transferee or successor
by contract or otherwise.
(e) The unpaid Taxes of TRMS (i) did not, as the date of the
TRMS
Balance Sheet, exceed the reserve for Tax
liability set forth on the face
thereof and (ii) do not exceed that reserve
as adjusted for the passage of time
and operations in the ordinary course of
business through the Closing Date.
3.9
PROPERTY
(a) TRMS owns no real property other than the leasehold
interests
described on SCHEDULE 3.9(A) to the
Disclosure Memorandum (the "REAL PROPERTY").
TRMS has delivered to LION or its counsel
true and complete copies of all
written leases, subleases, rental
agreements, contracts of sale, tenancies or
licenses relating to the Real Property and
written
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summaries of the terms of any oral leases,
subleases, rental agreements,
contracts of sale, tenancies or licenses to
which the Real Property is subject.
(b) TRMS has delivered to LION a complete and accurate list of
each item of personal property that is
owned, leased, rented or used by TRMS
(the "PERSONAL PROPERTY"), and true and
complete copies of all leases,
subleases, rental agreements, contracts of
sale, tenancies or licenses to which
the Personal Property is subject.
(c) The Real Property and the Personal Property include all the
properties and assets other than the
Intellectual Property reflected in the TRMS
Balance Sheet. The Real Property and the
Personal Property include all material
property used in the TRMS Business, other
than the Intellectual Property.
(d) TRMS's leasehold interest in each parcel of the Real
Property
is free and clear of all Encumbrances,
other than Permitted Encumbrances. Each
lease of any portion of the Real Property
is valid, binding and enforceable in
accordance with its terms against the
parties thereto and against any other
Person with an interest in such Real
Property (except to the extent that such
other Person has an interest senior in
priority to the lease and such other
Person has not entered into a
nondisturbance agreement with respect to the
lease), TRMS has performed in all material
respects all obligations imposed on
it thereunder, and neither TRMS nor, to the
knowledge of TRMS and each Principal
Stockholder, any other party thereto is in
default thereunder, nor is there any
event that with notice or lapse of time, or
both, would constitute a default
thereunder by TRMS or, to the knowledge of
TRMS and each Principal Stockholder,
by any other party. TRMS has not granted
any lease, sublease, tenancy or license
of, or entered into any rental agreement or
contract of sale with respect to,
any portion of the Real Property.
(e) TRMS owns all Personal Property free and clear of all
Encumbrances, other than Permitted
Encumbrances. Each lease, license, rental
agreement, contract of sale or other
agreement to which the Personal Property is
subject is valid, binding and enforceable
in accordance with its terms against
the parties thereto, TRMS has performed in
all material respects all obligations
imposed on it thereunder, and neither TRMS
nor, to the knowledge of TRMS or the
Principal Stockholders, any other party
thereto is in default thereunder, nor is
there any event that with notice or lapse
of time, or both, would constitute a
default by TRMS or, to the knowledge of
TRMS or the Principal Stockholders, any
other party thereunder except for such
defaults as would not give rise to a TRMS
Material Adverse Effect. TRMS has not
granted any lease, sublease, tenancy or
license of any portion of the Personal
Property, except in the ordinary course
of business.
3.10 CONTRACTS
3.10.1 MATERIAL
CONTRACTS
SCHEDULE 3.10.1 to the Disclosure Memorandum contains a complete
and
accurate list of all contracts, agreements
and understandings, oral or written,
to which TRMS is currently a party or by
which TRMS is currently bound providing
for potential payments by or to TRMS in
excess of $10,000 (collectively, the
"MATERIAL Contracts"), including customer
service agreements, distribution and
marketing agreements, security agreements,
license agreements, software
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development agreements, joint venture
agreements, credit agreements and
instruments relating to the borrowing of
money. All Material Contracts are
valid, binding and enforceable in
accordance with their terms against each party
thereto, TRMS has performed in all material
respects all obligations imposed on
it thereunder, and neither TRMS nor, to the
knowledge of TRMS or the Principal
Stockholders, any other party thereto is in
default thereunder, nor to the
knowledge of TRMS or the Principal
Stockholders is there any event that with
notice or lapse of time, or both, would
constitute a default by TRMS or, to the
knowledge of TRMS or the Principal
Stockholders, any other party thereunder.
True and complete copies of each such
written contract (or written summaries of
the terms of any such oral contract) have
been delivered to LION by TRMS. Other
than as described on SCHEDULE 3.10.1 to the
Disclosure Schedule, TRMS has no:
(a) contracts with directors, officers, Stockholders,
employees,
agents, consultants, advisors, salespeople,
sales representatives, distributors
or dealers that cannot be canceled by TRMS
within 30 days' notice without
liability, penalty or premium, any
agreement or arrangement providing for the
payment of any bonus or commission based on
sales or earnings, or any
compensation agreement or arrangement
affecting or relating to former employees
of TRMS;
(b) employment agreement, whether express or implied, or any
other
agreement for services that contains
severance or termination pay liabilities or
obligations;
(c) non-competition agreement or other arrangement that would
prevent TRMS from carrying on the TRMS
Business anywhere in the world;
(d) written notice or, to the knowledge of TRMS or the
Principal
Stockholders, any other form of notice that
any party to any Material Contract
intends to cancel, terminate or refuse to
renew such contract (if such contract
is renewable);
(e) material dispute with any of its suppliers, customers,
distributors, licensors or licensees;
(f) joint venture contract or arrangement or any other
agreement
that involves a sharing of profits with
other Persons;
(g) instrument evidencing indebtedness for borrowed money by
way
of a direct loan, sale of debt securities,
purchase money obligation,
conditional sale or guarantee, or
otherwise, except for trade indebtedness
incurred in the ordinary course of
business, and except as disclosed in the TRMS
Financial Statements; and
(h) agreements or commitments to provide indemnification.
3.10.2 REQUIRED
CONSENTS
The execution and delivery of this Agreement and the performance of
the
obligations of TRMS and the Principal
Stockholders hereunder will not constitute
a default under any Material Contract,
except for those consents and/or waivers
listed on SCHEDULE 3.10.2 to the Disclosure
Memorandum, all of which will be
obtained on or prior to the Closing.
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3.11 CLAIMS AND LEGAL
PROCEEDINGS
There are no claims, actions, suits, arbitrations, investigations
or
proceedings pending or involving or, to the
knowledge of TRMS or the Principal
Stockholders, threatened against TRMS
before or by any Person. To the knowledge
of TRMS and the Principal Stockholders,
there is no valid basis for any claim,
action, suit, arbitration, proceeding or
investigation before or by any Person
that could reasonably be expected to have a
TRMS Material Adverse Effect. There
are no outstanding or unsatisfied
judgments, orders, decrees or stipulations to
which TRMS is a party. SCHEDULE 3.11 to the
Disclosure Memorandum sets forth a
description of any material disput
