AMALGAMATED TECHNOLOGIES,
INC.
Dated as of December 23,
2005
CONTRIBUTION
AGREEMENT (this “ Agreement ”), made and entered
into as of December 23, 2005 by and between AMALGAMATED
TECHNOLOGIES, INC., a Delaware corporation (“ Parent
”) and PROLINK SOLUTIONS, LLC, a Delaware limited liability
company (the “ Company ”). Parent and the
Company are sometimes referred to herein each individually as a
“ Party ” and, collectively, as the “
Parties .”
WHEREAS, the Board
of Directors of Parent and the Board of Directors of the Company
have each declared it to be advisable and in the best interests of
each company and their respective stockholders and members that
Parent and the Company combine in order to advance their long-term
business interests;
WHEREAS, the Board
of Directors of Parent and the Board of Directors of the Company
have each approved this Agreement, in accordance with the General
Corporation Law of the State of Delaware (the “ DGCL
”), the Delaware Limited Liability Company Act (the “
DLLCA ”) and the terms and conditions set forth
herein, which will result in, among other things, the Company
becoming a wholly owned subsidiary of Parent and the members of the
Company becoming stockholders of Parent;
WHEREAS, the
members of the Company (by Super-Majority vote in accordance with
the terms and conditions of the Company’s Second Amended and
Restated Operating Agreement) have approved this Agreement and the
transactions contemplated hereby: and
WHEREAS, for
federal income tax purposes, it is intended that the transactions
contemplated hereby qualify as a tax-free reorganization within the
meaning of Section 351 of the Internal Revenue Code of 1986,
as amended (the “ Code ”) and the regulations
promulgated thereunder.
NOW, THEREFORE, in
consideration of the foregoing and the mutual representations,
warranties, covenants and agreements herein contained, and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties hereby agree as
follows:
1.1 The
Contributions . At the Closing (as defined below) and subject
to the terms and conditions contained in this Agreement, the
Company shall cause each of its members to contribute to Parent all
of the issued and outstanding membership interests of the Company
and upon such contribution the Company will become a wholly-owned
subsidiary of Parent.
1.2 Closing
. Unless this Agreement shall have been terminated and the
transactions contemplated by this Agreement abandoned pursuant to
the provisions of Article VIII, and subject to the
satisfaction or waiver, as the case may be, of the conditions set
forth in Article VI, the closing of the transactions
contemplated by this Agreement (the “ Closing ”)
shall take place at 10:00 a.m. (Eastern Standard Time) on a
date to be mutually agreed upon by the Parties (the “
Closing Date ”), which date shall be no later than the
second Business Day (as defined below) after all the conditions set
forth in Article VI (excluding conditions that, by their
nature, cannot
be satisfied
until the Closing) shall have been satisfied or waived in
accordance with Section 8.5, unless another time and/or date
is agreed to in writing by the Parties. The Closing shall take
place at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C. in New York, New York. For purposes of this Agreement,
“ Business Day ” shall mean any day on which
banks are permitted to be open in New York, New York.
1.3 Directors
and Officers . The initial directors of Parent and the Company
following the Closing shall be Jay Wolf, Robert Ellin, Barry
Regenstein, Lawrence D. Bain, William D. Fugazy, Jr. and Steven
Fisher to hold office from the Closing until their respective
successors are duly elected or appointed and qualified in the
manner provided in the Certificate of Incorporation or Bylaws of
the Parent and the organizational documents of the Company and the
Parent, as applicable or as otherwise provided by applicable law.
The officers of the Company immediately prior to the Closing shall
be the initial officers of Parent and the Company and shall hold
office from the Closing until their respective successors are duly
elected or appointed and qualified in the manner provided in the
Certificate of Formation or operating agreement of the Company or
as otherwise provided by applicable law. As soon as practicable
following the Closing, Parent shall file a proxy statement or other
appropriate form for a special meeting of stockholders to elect
directors, proposing a slate of seven directors which will consist
of two appointees of Trinad Capital Master Fund (one of which shall
be designated an independent director), Lawrence D. Bain, Steven
Fisher, William D. Fugazy, Jr. and two other individuals designated
by management of the Company (both of which to be designated as
independent directors) to hold office until their successors are
duly elected or appointed and qualified or until their earlier
death, resignation or removal.
(a) The
aggregate consideration (the “ Combination
Consideration ”) to be paid or reserved for issuance by
Parent to the members of the Company shall be 20,408,170 fully paid
and non-assessable shares of common stock of Parent, par value
$0.0001 per share (the “ Parent Common Stock ”).
At the Closing, all Company Membership Interests shall, by virtue
of this Agreement, be converted automatically into and become the
aggregate of 20,408,170 validly issued, fully-paid and
non-assesable shares of Parent Common Stock and shall be allocated
among the members of the Company as set forth on
Section 1.4(a) of the Company Disclosure
Schedule.
(b) From
and after the Closing, all existing membership interests of the
Company, (together, “ Company Membership Interests
”) shall be deemed canceled and shall cease to exist, and
each holder of a Company Membership Interest shall cease to have
any rights with respect thereto except as set forth herein or under
applicable law. As soon as practicable after the Closing, Parent
shall furnish one or more certificates representing the prescribed
number of shares of Parent Common Stock to the members of the
Company in accordance with the terms hereof.
1.5 No Further
Ownership Rights in Company Membership Interests . All shares
of Parent Common Stock issued upon the surrender for exchange of
Company Membership Interests in accordance with the terms of this
Article I shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Company Membership
Interests under this Article I.
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1.6 Company
Stock Options; Warrants . At the Closing:
(a) At
the Closing, each percentage point of the options to purchase
Company Management Interests granted to management of the Company
as disclosed in Section 1.6(a) of the Company Disclosure
Schedule (the “Management Options”) shall, by virtue of
this Agreement, and without any action on the part of the optionee,
be converted automatically into non-qualified stock options to
purchase 4,980,638 shares of Parent Common Stock as set forth on
Section 1.6(a) of the Company Disclosure Schedule and shall be
issued under the Company’s 2005 Employee, Director and
Consultant Stock Plan. All other options to purchase Company
Membership Interests (“Company Options”) shall be
terminated. As soon as practicable after the Closing, Parent shall
furnish one or more non-qualified stock agreements to purchase the
prescribed number of shares of Parent Common Stock to the optionees
in accordance with the terms hereof.
(b) Except
as disclosed on Section 1.6(b) of the Company
Disclosure Schedule, all outstanding warrants to purchase Company
Membership Interests shall be terminated. All warrants listed on
Section 1.6(b) of the Company Disclosure Schedule (the
“Company Warrants”) shall be converted into warrants to
acquire 1,336,468 shares of Parent Common Stock as set forth on
Section 1.6(b) of the Company Disclosure
Schedule.
1.7 Adjustments
to Contribution Consideration . Notwithstanding any other
provision of this Agreement, the Contribution Consideration shall
be adjusted, at any time and from time to time, to fully reflect
the effect of any stock split, reverse split, stock dividend
(including, without limitation, any dividend or distribution of
securities convertible into Parent Common Stock), reorganization,
recapitalization or other like change with respect to Parent Common
Stock, occurring during the Interim Period (as defined in
Section 4.1).
1.8 Letters of
Transmittal . As promptly as practicable before the Closing,
the Company shall deliver a letter of transmittal from each member
of the Company addressed to the Parent for use in enabling Parent
to issue one or more certificates representing the prescribed
number of shares of Parent Common Stock to which such member may be
entitled as determined in accordance with the provisions of this
Agreement.
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
Except as set
forth in the disclosure schedule provided by the Company to Parent
on the date hereof (the “ Company Disclosure Schedule
”), the Company represents and warrants to Parent that the
statements contained in this Article II are true, complete and
correct as of the date hereof and as of the Closing Date. The
Company Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in
this Article II. As used in this Agreement, a “
Company Material Adverse Effect ” means any change,
event or effect that is materially adverse to the business, assets
(including, without limitation, intangible assets), financial
condition, results of operations or reasonably foreseeable
prospects of the Company. Whenever a representation or warranty
made by the Company herein refers to the “ knowledge of
the Company ,” or words to such effect, such knowledge
shall be deemed to
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consist only of
the actual knowledge of the executive officers of the Company,
without independent investigation.
2.1
Organization and Qualification .
(a) The
Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of
Delaware. The Company is duly qualified or licensed as a foreign
limited liability company to conduct business, and is in good
standing in each jurisdiction as listed in
Section 2.1(a) of the Company Disclosure Schedule,
which is a complete list of all such jurisdictions where the
character of the properties and other assets owned, leased or
operated by it, or the nature of its activities, makes such
qualification or licensing necessary, except where the failure to
be so qualified, licensed or in good standing, individually or in
the aggregate, has not had and would not be expected to have a
Company Material Adverse Effect.
(b) The
Company has all requisite corporate power and authority to carry on
the businesses in which it is engaged and to own and use the
properties owned and used by it. The Company has delivered to
Parent true, complete and correct copies of its Certificate of
Formation and the second amended and restated operating agreement
of the Company (the “ Operating Agreement ”),
each as amended to date. The Company is not in default under or in
violation of any provision of its Certificate of Formation or
Operating Agreement.
(a) The
Company has no Subsidiaries other than Golf Leasing Network, LLC,
an Arizona limited liability company, which has no operations,
liabilities or obligations.
(b) For
purposes of this Agreement, the term “ Subsidiary
” means, with respect to any Person, any corporation or other
organization, whether incorporated or unincorporated, of which:
(i) such Person (or any other Subsidiary of such Person) is a
general partner (excluding partnerships, the general partnerships
of which held by such Person or Subsidiary of such Person do not
have a majority of the voting interest of such partnership); or
(ii) at least a majority of the securities or other equity
interests having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization,
is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries.
(a) All
of the Company Membership Interests held by the Members of the
Company are as reflected on Section 2.3 (a) of the
Company Disclosure Schedule.
(b) Except
as described on Section 2.3(a) of the Company
Disclosure Schedule, as of the date hereof, there are no shares of
voting or non-voting capital stock, equity interests, percentage
interests or other securities of the Company authorized, issued,
reserved for issuance or otherwise outstanding.
Section 2.3(a) of the Company Disclosure Schedule sets
forth a true, complete and correct list of all holders of Company
Membership Interests. The holders of
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Company
Membership Interests set forth on Section 2.3(a) of the
Company Disclosure Schedule own in the aggregate 100% of the issued
and outstanding Company Membership Interests.
(c)
Section 2.3(a) of the Company Disclosure Schedule also
sets forth a true, complete and correct list of the holders of all
Company Options and Company Warrants.
(d) All
outstanding Company Membership Interests are, and all membership
interests which may be issued pursuant to the Company Options and
Company Warrants, will be, when issued against payment therefore in
accordance with the terms thereof, duly authorized, validly issued,
fully paid and non-assessable, and not subject to, or issued in
violation of, any kind of preemptive, subscription or of similar
rights, and were or will be issued in compliance in all material
respects with all applicable federal and state securities
laws.
(e) Except
as disclosed in Section 2.3 (e) of the Company
Disclosure Schedule, there are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or
convertible into securities having the right to vote) on any
matters on which the Company’s members may vote. Except as
described in subsection (b) above, there are no outstanding
securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind (contingent or
otherwise) to which the Company is a party or bound obligating the
Company to issue, deliver or sell, or cause to be issued, delivered
or sold, membership interests, percentage interests or other voting
securities of the Company or obligating the Company to issue,
grant, extend or enter into any agreement to issue, grant or extend
any security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. The Company is not subject to any
obligation or requirement to provide funds for or to make any
investment (in the form of a loan or capital contribution) to or in
any Person.
(f) There
are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any shares of capital stock
(or options to acquire any such shares), membership interests,
percentage interests or other security or equity interests of the
Company or to cause the Company or its Subsidiaries to file a
registration statement under the Securities Act, or which otherwise
relate to the registration of any securities of the Company or its
Subsidiaries.
(g) Except
for the Operating Agreement, there are no voting trusts, proxies or
other agreements, arrangements, commitments or understandings of
any character to which the Company or its Subsidiaries or, to the
knowledge of the Company, any of the Company’s stockholders,
is a party or by which any of them is bound with respect to the
issuance, holding, acquisition, voting or disposition of any shares
of capital stock, membership interests, percentage interests or
other security or equity interests of the Company
2.4 Authority;
No Conflict; Required Filings .
(a) The
Company has all requisite corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement, the performance of its
obligations hereunder and the consummation of the transactions
contemplated hereby, have been duly authorized by all action on the
part of the Company and no other
5
proceedings are
necessary. The adoption of this Agreement has been approved by the
affirmative vote of holders of more than 66% of the Company
Membership Interests in accordance with the DLLCA and the Operating
Agreement (the “ Requisite Member Approval
”).
(b) This
Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company,
enforceable against it in accordance with its terms, subject only
to: (i) the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting the enforcement of creditors’ rights
generally; (ii) general equitable principles (whether
considered in a proceeding in equity or at law); (iii) an
implied covenant of good faith and fair dealing; and (iv) the
extent that any provision relating to indemnity and/or contribution
is contrary to law or public policy as interpreted or applied by
any court or governmental agency (collectively, the “
Equitable Exceptions ”).
(c) Except
as disclosed in Section 2.4 (c) of the Company
Disclosure Schedule, the execution and delivery of this Agreement
does not, and the performance by the Company of its obligations
hereunder and the consummation of the transactions contemplated
hereby will not, conflict with or result in any violation of, or
default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or
acceleration of any material obligation or to a loss of a material
benefit, or require the consent of any Person to, or result in the
creation of any liens, claims, security interests, pledges,
encumbrances of any kind or nature whatsoever (collectively,
“Liens”) in or upon any of the properties or other
assets of the Company under any provision of: (i) the
Certificate of Formation or Operating Agreement of the Company or;
(ii) subject to the governmental filings and other matters
referred to in paragraph (d) below, any (A) permit, license,
franchise, statute, law, ordinance or regulation or
(B) judgment, decree or order, in each case applicable to the
Company, or by which any of its properties or assets may be bound
or affected; or (iii) any loan or credit agreement, note,
bond, mortgage, indenture, contract, agreement, lease or other
instrument or obligation to which the Company is a party or by
which any of its properties or assets may be bound or affected,
except, in the case of clauses (ii) or (iii) above, for
any such conflicts, violations, defaults or other occurrences, if
any, that could not, individually or in the aggregate, reasonably
be expected to (x) result in a Company Material Adverse
Effect, (y) impair in any material respect the ability of the
Parties to consummate the transactions contemplated hereby on a
timely basis or (z) result in a liability or loss to the
Surviving Entity in excess of $100,000.
(d) To
the knowledge of the Company, no consent, approval, order or
authorization of, or registration, declaration or filing with, any
government, governmental, statutory, regulatory or administrative
authority, agency, body or commission or any court, tribunal or
judicial body, whether federal, state, local or foreign (each, a
“ Governmental Authority ”) is required by or
with respect to the Company in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby except for such consents, approvals, orders or
authorizations, or registrations, declarations or filings which if
not obtained or made, could not reasonably be expected to (A)
result in a Company Material Adverse Effect; (B) impair in any
material respect the ability of the Parties to consummate the
transactions contemplated hereby on a timely basis or
(C) result in a liability or loss to the Company in excess of
$100,000.
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2.5 Board
Approval; Required Vote .
(a) The
Board of Directors of the Company has: (i) approved and
declared advisable this Agreement; (ii) determined that the
transactions contemplated by this Agreement are advisable, fair to
and in the best interests of the Company and its members; and
(iii) has recommended to the Company’s Members
(A) the approval of the transactions contemplated hereby, and
(B) the approval and adoption of this Agreement.
(b) The
Requisite Member Approval is the only vote of the holders of any
class or series of the Company Membership Interests necessary to
approve and adopt this Agreement or the other transactions
contemplated hereby.
2.6 Financial
Statements and Information . The Company has previously
delivered to Parent true, complete and correct copies of its
(i) audited balance sheet as of and for the period of
inception through January 1, 2005 and the related audited
statements of income, changes in stockholders’ equity, and
cash flow for the fiscal year then ended; and (ii) audited
balance sheet as of the period ended October 1, 2005 (the
“ Most Recent Balance Sheet Date ”) (the “
Most Recent Balance Sheet ”), and the related
statements of income, changes in stockholders’ equity, and
cash flow as of the Most Recent Balance Sheet Date. Such financial
statements and notes fairly present the financial condition and the
results of operations, changes in stockholders’ equity and
cash flow of the Company as of the respective dates of and for the
periods referred to in such financial statements, all in accordance
with GAAP, subject, in the case of interim financial statements, to
normal recurring and non-material year-end adjustments. The
financial statements referred to in this Section 2.6 reflect
the consistent application of such accounting principles throughout
the periods involved, except as disclosed in the notes to such
financial statements.
2.7 Absence of
Undisclosed Liabilities . To the knowledge of the Company, it
does not have any liabilities or obligations, whether fixed,
contingent, accrued or otherwise, liquidated or unliquidated and
whether due or to become due, other than: (i) liabilities
reflected or reserved against on the Most Recent Balance Sheet; and
(ii) liabilities or obligations incurred since the Most Recent
Balance Sheet Date in the ordinary course of business.
Section 2.7 of the Company Disclosure Schedule sets
forth the amounts of indebtedness of the Company to each of FOC
Financial Limited Partnership, National City Golf , Textron
Financial Corporation, True North Advisors Holdings, Paragon
Partners and E-Z-GO as of the Closing Date (the “
Scheduled Indebtedness ”).
2.8 Absence of
Certain Changes or Events . Except as set forth on
Section 2.8 of the Company Disclosure Schedule, since
the Most Recent Balance Sheet Date, the Company has conducted its
business only in the ordinary course of business consistent with
past practice, and there has not been: (i) any action, event
or occurrence which has had, or to the knowledge of the Company
could reasonably be expected to result in, a Company Material
Adverse Effect; (ii) any action, event or occurrence which has
had a loss or liability to the Company in excess of $25,000 or
(iii) any other action, event or occurrence that would have
required the consent of Parent pursuant to Section 4.1 had
such action, event or occurrence taken place after the execution
and delivery of this Agreement.
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2.9 Material
Agreements, Contracts and Commitments .
(a)
Section 2.9(a) of the Company Disclosure Schedule sets
forth each agreement (or series of related agreements), contract,
written commitment or, to the knowledge of the Company, any oral
agreement to which the Company is a party that (i) provides
for payments to third parties in excess of $100,000,
(ii) grants any third party rights to license, market or sell
any of the Company’s products or services; (iii) grants
any third party “most favored nation” pricing status;
(iv) establishes a partnership or joint venture;
(vi) creates, incurs, assumes or guarantees any obligation or
indebtedness; (v) creates a security interest in, or allows
for the transfer of, any assets of the Company, whether tangible or
intangible; (vii) provides for employment or consulting
services; (viii) involves any officer, director, stockholder
or Affiliate (as defined in Section 2.25(a)) of the Company;
(ix) imposes upon the Company any obligation of
confidentiality, non-competition or non-solicitation;
(x) requires the Company to indemnify any party thereto in an
amount that would result in a Company Material Adverse Effect;
(xi) could reasonably be expected to result in a Company
Material Adverse Effect in the event of default or termination of
such agreement, and (xii) any other agreement which was not
entered into in the ordinary course of business (collectively, the
“ Company Material Contracts ”).
(b) The
Company has not breached, or received in writing any claim or
threat that it has breached, any of the terms or conditions of any
Company Material Contract in such a manner as would permit any
other party thereto to cancel or terminate the same or to collect
damages from the Company in an amount that would result in a
Company Material Adverse Effect.
(c) Each
Company Material Contract that has not expired or otherwise been
terminated in accordance with its terms is valid, binding,
enforceable and in full force and effect and, to the knowledge of
the Company, no other party to such contract is in default in any
material respect.
(d) The
Company has made available to Parent a true, complete and correct
copy of each agreement listed in Section 2.9(a) of the
Company Disclosure Schedule.
2.10 Compliance
with Laws . To the knowledge of the Company it has at all times
complied with all material federal, state, local and foreign
statutes, laws and regulations, and is not in violation of, and has
not received any written claim or notice of violation of, any such
statutes, laws and regulations with respect to the conduct of its
business or the ownership and operation of its properties and other
assets, except for such instances of non-compliance or violation,
if any, which could not reasonably be expected to result in a
Company Material Adverse Effect.
(a)
Schedule 2.11(a) of the Company Disclosure Schedule
sets forth a true, complete and correct list of all material,
federal, state, local and foreign governmental licenses, permits,
franchises and authorizations issued to or held by the Company or
its Subsidiaries (collectively, the “ Material Permits
”).
8
(b) The
Company is in compliance in all material respects with the terms
and conditions of the Material Permits.
(c) Each
Material Permit is in full force and effect and the Company has
received no notification of any action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is
pending or, to the knowledge of the Company, threatened, which
seeks to revoke or limit any Material Permit.
(d) To
the knowledge of the Company, the rights and benefits of each
Material Permit will be available to the Company immediately after
the Closing on terms substantially identical to those enjoyed by
the Company immediately prior to the Closing.
2.12
Litigation . Except as disclosed on
Schedule 2.12 of the Company Disclosure Schedule, there
is no suit, action, arbitration, claim, governmental or other
proceeding before any Governmental Authority pending or, to the
knowledge of the Company, threatened, against the Company. Except
as disclosed on Schedule 2.12 of the Company Disclosure
Schedule, no such suit, action, arbitration, claim, governmental or
other proceeding would result in a Material Adverse Effect on the
Company.
2.13
Restrictions on Business Activities . Other than as
contemplated by this Agreement, there is no agreement, judgment,
injunction, order or decree binding upon or otherwise applicable to
the Company which has, or to the knowledge of the Company could
reasonably be expected to have, the effect of prohibiting or
materially impairing (i) any current or reasonably foreseeable
business practice of the Company; or (ii) any acquisition of
any Person or property by the Company.
(a)
Section 2.14(a) of the Company Disclosure Schedule sets
forth a true, complete and correct list of all employees of the
Company along with their position and actual annual rate of
compensation. All employees have entered into nondisclosure and
assignment of inventions agreements with the Company, true,
complete and correct copies of which have previously been made
available to Parent. No key employee or group of employees has
threatened to terminate employment with the Company or, to the
knowledge of the Company, has plans to terminate such
employment.
(b) The
Company is not a party to or bound by any union or collective
bargaining agreement, nor has any of them experienced any strikes,
grievances, claims of unfair labor practices or other collective
bargaining disputes.
(c) Except
as disclosed on Schedule 2.14(c) to the Company
Disclosure Schedule the Company is not a party to any written or
oral: (i) agreement with any current or former employee the
benefits of which are contingent upon, or the terms of which will
be materially altered by, the consummation of the transactions
contemplated by this Agreement; (ii) agreement with any
current or former employee of the Company providing any term of
employment or compensation guarantee extending for a period longer
than one year from the date hereof or for the payment of
compensation in excess of $75,000 per annum; or (iii)
9
agreement or
plan the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, upon the consummation of the
transactions contemplated by this Agreement.
(a) For
purposes of this Agreement, a “ Tax ” means any
and all federal, state, local and foreign taxes, assessments and
other governmental charges, duties, impositions and liabilities,
including, without limitation, taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, value
added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with all
interest, penalties and additions imposed with respect to such
amounts and any obligations under any agreements or arrangements
with any other Person with respect to such amounts and including
any liability for Taxes of a predecessor entity.
(b) The
Company has accurately prepared and timely filed all federal,
state, local and foreign returns, estimates, information statements
and reports required to be filed by it (collectively, “
Returns ”) relating to any and all Taxes concerning or
attributable to the Company or to its operations, and all such
Returns are true, complete and correct in all material respects.
Copies of all such returns have been delivered to
Parent.
(c) The
Company: (i) has paid all Taxes it is obligated to pay as
reflected on the Returns or otherwise; and (ii) has withheld
all federal, state, local and foreign Taxes required to be withheld
with respect to its employees or otherwise.
(d) There
is no Tax deficiency outstanding, proposed or assessed against the
Company that is not accurately reflected as a liability on the Most
Recent Balance Sheet, nor has the Company executed any waiver of
any statute of limitations on or extending the period for the
assessment or collection of any Tax.
(e) The
Company has no liability for unpaid Taxes that has not been
properly accrued for under GAAP and reserved for on the Most Recent
Balance Sheet, whether asserted or unasserted, contingent or
otherwise.
(f) The
Company is not a party to any agreement, plan, arrangement or other
contract covering any employee or independent contractor or former
employee or independent contractor that, individually or
collectively with any other such contracts, would reasonably be
expected to give rise directly or indirectly to the payment of any
amount that would not be deductible pursuant to Section 280G
or Section 162(m) the Code (or any comparable provision of state or
foreign tax laws).
(g) The
Company is not and has never been a party to or bound by any tax
indemnity agreement, tax sharing agreement, tax allocation
agreement or similar contract or agreement.
2.16 Employee
Benefit Plans .
(a)
Section 2.16(a) of the Company Disclosure Schedule sets
forth a true, complete and correct list of all employee benefit
plans (as defined in Section 3(3) of the
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Employee
Retirement Income Security Act of 1974, as amended (“
ERISA ”) and all bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement,
severance and other similar employee benefit plans, and all
unexpired severance agreements (pursuant to which any payments are
still due and payable by the Company), written or otherwise
(together, the “ Company Employee Plans ”), for
the benefit of, or relating to, any current or former employee of
the Company or any trade or business (whether or not incorporated)
which is a member or which is under common control with the Company
within the meaning of Section 414 of the Code (an “
ERISA Affiliate ”). The Company has delivered to
Parent a true, complete and correct copy of each Company Employee
Plan set forth on Section 2.16(a) of the Company
Disclosure Schedule.
(b) With
respect to each Company Employee Plan, the Company has delivered
Parent a true, complete and correct copy of: (i) the most
recent annual report (Form 5500) filed with the Internal
Revenue Service (“IRS”) with respect to any Company
Employee Plan subject to such filing requirement; (ii) each
trust agreement and group annuity contract, if any, relating to
such Company Employee Plan; and (iii) the most recent
actuarial report or valuation relating to a Company Employee Plan
subject to Title IV of ERISA.
(c) With
respect to the Company Employee Plans, individually and in the
aggregate, no event has occurred and, to the knowledge of the
Company, there exists no condition or set of circumstances in
connection with which the Company could be subject to any material
liability under ERISA, the Code or any other applicable
law.
(d) With
respect to the Company Employee Plans, individually and in the
aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are
no unfunded benefit obligations which have not been properly
accounted for by reserves or otherwise footnoted in accordance with
GAAP on the Most Recent Balance Sheet.
(a) The
Company owns or leases all tangible assets necessary for the
conduct of its businesses as currently conducted and as is
reasonably foreseeable to be conducted. Each such tangible asset is
in a good state of maintenance and repair, free from material
defects and in good operating condition (subject to normal wear and
tear) and is suitable for the purposes for which it presently is
used.
(b)
Section 2.17(b) of the Company Disclosure Schedule sets
forth (i) a true, complete and correct list of all items of
tangible personal property owned by the Company as of the date
hereof, or not owned by the Company but in the possession of or
used in the business of the Company with a book value in excess of
$25,000 (the “Personal Property”); and (ii) a
description of the owner of, and any agreement relating to the use
of, each item of Personal Property not owned by the Company or its
Subsidiaries and the circumstances under which such Personal
Property is used.
(c) Immediately
after the Closing, the tangible assets owned or leased by the
Surviving Entity, together with its intangible assets, when
utilized by a labor force substantially
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similar to that
employed by the Company on the date hereof, will be adequate to
conduct the business and operations of the Company as currently
conducted by the Company.
2.18 Owned Real
Property . The Company owns no real property.
2.19 Real
Property Leases . Section 2.19 of the Company
Disclosure Schedule sets forth all real property leases or
subleases to or by the Company, including the term of such lease,
any extension and expansion options and the rent payable under it.
The Company has delivered to Parent true, complete and correct
copies of the leases and subleases (as amended to date) listed in
Section 2.19 of the Company Disclosure Schedule. With
respect to each lease and sublease listed in
Section 2.19 of the Company Disclosure
Schedule:
(i) the
lease or sublease is legal, valid, binding, enforceable and in full
force and effect and will continue to be legal, valid, binding,
enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect
immediately prior to the Closing;
(ii) the
Company is not nor, to the knowledge of the Company, is any other
party, is in breach or violation of, or default under, any such
lease or sublease, and, to the knowledge of the Company, no event
has occurred, is pending or, to the knowledge of the Company, is
threatened, which, after the giving of notice, with lapse of time,
or otherwise, would constitute a breach or default by the Company
or its Subsidiaries or, to the knowledge of Company, any other
under such lease or sublease; and
(iii) The
Company has not assigned, transferred, conveyed, mortgaged, deeded
in trust or encumbered any interest in any lease or
sublease.
(a)
Section 2.20(a) of the Company Disclosure Schedule sets
forth each insurance policy (including fire, theft, casualty,
general liability, workers compensation, business interruption,
environmental, product liability and automobile insurance policies
and bond and surety arrangements) to which the Company is a party
(the “ Insurance Policies ”). The Insurance
Policies are in full force and effect. All premiums due and payable
under the Insurance Policies have been paid and the Company is in
compliance in all material respects with all other terms thereof.
True, complete and correct copies of the Insurance Policies have
been made available to Parent.
(b) There
are no material claims pending as to which coverage has been
questioned, denied or disputed. All material claims thereunder have
been filed in a due and timely fashion and, the Company has not
been refused any insurance for which it has applied or had any
policy of insurance terminated (other than at its request), nor has
the Company received notice from any insurance carrier that:
(i) such insurance will be canceled or that coverage
thereunder will be reduced or eliminated; or (ii) premium
costs with respect to such insurance will be increased, other than
premium increases in the ordinary course of business applicable on
their terms to all holders of similar policies.
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2.21
Inventory . All inventory of the Company and its
Subsidiaries, whether or not reflected on the Most Recent Balance
Sheet, consists of a quality and quantity usable and saleable in
the ordinary course of business consistent with past practice,
except for obsolete items and items of below-standard quality, all
of which have been written-off or written-down to net realizable
value on the Most Recent Balance Sheet. All inventories not
written-off have been priced at the lower of cost or market on a
first-in, first-out basis.
2.22
Intellectual Property .
(a) Except
as disclosed in Section 2.22(a) of the Company
Disclosure Schedule, the Company owns, is licensed or otherwise
possesses legally enforceable rights, to all patents (including,
without limitation, any registrations, continuations, continuations
in part, renewals and applications therefor), copyrights,
trademarks, service marks, trade names, Uniform Resource Locators
and Internet URLs, designs, slogans and general intangibles of like
nature, computer programs and other computer software, databases,
technology, trade secrets and other confidential information,
know-how, proprietary technology, processes, formulae, algorithms,
models, user interfaces, customer lists, inventions, source codes
and object codes and methodologies, architecture, structure,
display screens, layouts, development tools, instructions,
templates, inventions, trade dress, logos and designs and all
documentation and media constituting, describing or relating to
each of the foregoing (collectively, the “ Company
Intellectual Property ”), together with all goodwill
related to any of the foregoing, used to conduct its business as
presently conducted. None of the Company Intellectual Property is
the subject of any pending or, to the knowledge of the Company,
threatened suit, action or proceeding. None of the Company
Intellectual Property is subject to any outstanding injunction,
judgment, order or settlement and the Company, or its Subsidiaries,
as the case may be, has fully complied with, paid and otherwise
satisfied all such obligations.
(b)
Section 2.22(b) of the Company Disclosure Schedule sets
forth a true, complete and correct list of each patent, patent
application, copyright registration or application therefor, mask
work registration or application therefor, and trademark, service
mark and domain name registration or application therefor of the
Company. All patents, registered trademarks, service marks and
copyrights which are held by the Company and which are material to
the business of the Company, taken as a whole, are valid,
enforceable and subsisting and the Company has received no notice
or allegation of invalidity or conflicting ownership, or
inventorship with respect to such material patents, in whole or in
part, has been received by the Company.
(c) The
Company is not nor will be a result of the consummation of the
transactions contemplated by this Agreement be, in breach in any
material respect of any license, sublicense or other agreement
relating to the Company Intellectual Property or any licenses,
sublicenses and other agreements as to which the Company is a party
and pursuant to which the Company uses any patents, copyrights
(including software), trademarks or other intellectual property
rights owned by third parties (the “ Third Party
Intellectual Property ”), the breach of which could be
considered reasonably likely to result in a Company Material
Adverse Effect or a liability or loss to the Surviving Entity in
excess of $100,000.
13
(d) Except
as disclosed in Section 2.22(d) of the Disclosure
Schedule, neither the Company has been named as a defendant in any
suit, action or proceeding which involves a claim of infringement
of any
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