EXHIBIT 10.1
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF JUNE 30, 2004
BY AND AMONG
ACCUPOLL HOLDING CORP.
AND
NTSD ACQUISITION, INC.
AND
NTS DATA SERVICES CORP.
AND
NTS DATA SERVICES, INC.
AND
XXXXXXX X. XXXXXX
AND
XXXX X. XXXXXXXX
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated
as of June 30, 2004, is by and among NTS Data Services Corp. ("Seller"), a
Delaware corporation with an address at c/o NTS Data Services, LLC, 0000
Xxxxxxxx Xxxx, Xxxxxxx Xxxxx, Xxx Xxxx 00000; NTS Data Services, Inc.
("NTS-Inc."), a New York corporation with an address at 0000 Xxxxxxxx Xxxx,
Xxxxxxx Xxxxx, Xxx Xxxx 00000; Xxxxxxx X. Xxxxxx ("Xxxxxx"), an individual with
an address at 000 Xxxxxxxxx Xx., Xxxxxxx, Xxx Xxxx 00000; Xxxx X. Xxxxxxxx
("Xxxxxxxx"), an individual with an address at 00 X. Xxxxx Xx. #000, Xxxxxxxx,
Xxxxxxx 00000 (NTS-Inc., Xxxxxx and Xxxxxxxx are each a "Shareholder" and
collectively, the "Shareholders"); AccuPoll Holding Corp. ("Buyer"), a Nevada
corporation having its principal executive office at 00000 Xxx Xxxx Xxxxxx,
Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000; and NTSD Acquisition, Inc. ("Merger Sub"),
a Delaware corporation and a direct wholly-owned subsidiary of the Buyer having
its offices at c/o AccuPoll Holding Corp., 00000 Xxx Xxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxxxx 00000.
R E C I T A L S
WHEREAS, the parties hereto desire that the Seller shall be
acquired by the Buyer through the merger ("Merger") of the Seller with and into
Merger Sub, with Merger Sub as the surviving corporation pursuant to an
Agreement and Plan of Merger substantially in the form attached hereto as
EXHIBIT A ("Plan of Merger") and the Delaware General Corporation Law ("DGCL");
and
WHEREAS, it is intended for federal income tax purposes that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended; and
WHEREAS, the Seller owns all of the membership interests (the
"Membership Interests") of NTS Data Services, LLC (the "Company"), a New York
limited liability company; and
WHEREAS, the Boards of Directors of the Buyer, the Merger Sub
and the Seller have approved the transactions contemplated by this Agreement
(the "Transactions") upon the terms and subject to the conditions set forth
herein; and
WHEREAS, the parties hereto desire to provide for certain
undertakings, conditions, representations, warranties and covenants in
connection with the Transactions;
NOW, THEREFORE, in consideration of the premises and of the
mutual representations, warranties and covenants herein contained and intending
to be legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
(a) "Affiliate" means with respect to any Person, a Person
directly or indirectly controlling or controlled by or under common control with
such Person.
(b) "Closing" means the consummation of the Transactions.
(c) "Closing Date" means the date of the Closing.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "GAAP" means generally accepted accounting principles of the
United States as set forth by the Financial Accounting Standards Board.
(g) "Governmental Authorizations" means the permits,
authorizations, consents or approvals of any Governmental Entity, which are a
condition to the lawful consummation of the Transactions.
(h) "Governmental Entity" means any court, or any federal, state,
municipal or other governmental authority, department, commission, board, agency
or other instrumentality (domestic or foreign).
(i) "Intellectual Property" means and shall include the following:
(1) all of the Company's rights, title and interest in
and to the copyrights, copyright registrations, proprietary processes,
trade secrets, license rights, specifications, technical manuals and
data, drawings, inventions, designs, patents, patent applications,
trade names, trademarks, service marks, domain names, URL's, product
information and data, know-how and development work-in-progress,
customer lists, software, business and marketing plans and other
intellectual or intangible property embodied in or pertaining to the
Company's business, whether pending, applied for or issued, whether
filed in the United States or in other countries listed on SCHEDULE
1.1(I);
(2) all things authored, discovered, developed, made,
perfected, improved, designed, engineered, acquired, produced,
conceived or first reduced to practice by the Company or any of its
employees or agents that are exclusively used by the Company in the
conduct of its business or developed by the Company exclusively for use
in its business, in any stage of development, including, without
limitation, modifications, enhancements, designs, concepts, techniques,
methods, ideas, flow charts, coding sheets, notes and all other
information relating to the Company's business; and
(3) any and all design and code documentation,
methodologies, processes, trade secrets, copyrights, design
information, product information, technology, formulae,
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routines, engineering specifications, technical manuals and data,
drawings, inventions, know-how, techniques, engineering work papers,
and notes, development work-in-process, and other proprietary
information and materials of any kind used in or derived from the
Company's assets.
(j) "Lien" means any mortgage, pledge, lien, security interest,
option, covenant, condition, restriction, encumbrance, charge or other
third-party claim of any kind.
(k) "Material Adverse Effect" with respect to a Person means any
event, change or effect that is materially adverse to the condition (financial
or otherwise), properties, assets, liabilities, business, operations, results of
operations, or prospects of such Person and its Affiliates, taken as a whole.
(l) "Net Cash" means, as of any date, the excess of the Company's
cash on hand over the sum of its accounts payable and accrued expenses.
(m) "Person" means an individual, corporation, partnership,
association, trust, government or political subdivision or agent or
instrumentality thereof, or other entity or organization.
(n) "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
(o) "Taxes" means all taxes, however denominated, including any
interest, penalties or other additions to tax that may become payable in respect
thereof, (i) imposed by any federal, territorial, state, local or foreign
government or any agency or political subdivision of any such government, for
which the Buyer could become liable as successor to or transferee of the
business or which could become a charge against or lien on any of the Seller's
assets or the Company's assets, which taxes shall include, without limiting the
generality of the foregoing, all sales and use taxes, ad valorem taxes, excise
taxes, business license taxes, occupation taxes, real and personal property
taxes, stamp taxes, environmental taxes, real property gains taxes, transfer
taxes, payroll and employee withholding taxes, unemployment insurance
contributions, social security taxes, and other governmental charges, and other
obligations of the same or of a similar nature to any of the foregoing, which
are required to be paid, withheld or collected, or (ii) any liability for
amounts referred to in (i) as a result of any obligations to indemnify another
Person.
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ARTICLE II
PURCHASE AND SALE BY MERGER
SECTION 2.1 MERGER.
Subject to the terms and conditions of this Agreement and of the Plan
of Merger, the Seller shall be merged with and into Merger Sub, with Merger Sub
as the surviving corporation, in accordance with the provisions of the Plan of
Merger and this Agreement. In connection with the Closing, Merger Sub shall
execute a Certificate of Merger and shall cause to be delivered, as soon as
practicable on the Closing Date, the Certificate of Merger to the Delaware
Secretary of State in accordance with the DGCL. The Merger will be effective on
the Closing Date. After the Merger, the Company shall continue as a wholly-owned
subsidiary of Merger Sub. Buyer agrees to maintain the separate existence of
Merger Sub for a period of not less than one year following the Closing Date.
SECTION 2.2 PURCHASE PRICE.
As full and complete consideration for the Merger, the Buyer shall
deliver to the Shareholders at the Closing the aggregate purchase price of
$6,651,234, adjusted as provided in Section 2.3 below, (the "Purchase Price") in
the following manner: (a) cash, by wire transfer of immediately available funds
or by certified or cashier's check, in the amount of Three Million Dollars
($3,000,000) (the "Cash Payment"), and (b) stock certificates in the names of
the Shareholders for an aggregate number of shares equal to $3,651,234 divided
by the Per Share Price (as defined below), and (c) the adjustments specified
pursuant to Section 2.3. All payments hereunder shall be distributed pro rata
among the Shareholders and shall be allocated as set forth on SCHEDULE 2.2. The
"Per Share Price" will be equal to eighty-five percent (85%) of the average
closing or last trade price of the Buyer's common stock for the twenty (20)
trading days immediately preceding the Closing Date.
SECTION 2.3 PURCHASE PRICE ADJUSTMENTS.
(a) RESERVED.
(b) The Company agrees that it shall have Net Cash as of the
Closing Date of at least Two Hundred Thousand Dollars ($200,000). To the extent
that, as of the Closing Date, the Company's Net Cash exceeds Two Hundred
Thousand Dollars ($200,000), the Purchase Price shall be increased by such
excess over Two Hundred Thousand Dollars, and the Buyer shall pay such excess to
the Shareholders in cash as additional Purchase Price within three (3) business
days following Closing. In addition, Buyer agrees (i) to use commercially
reasonable efforts to cause the Company to collect the accounts receivable of
the Company existing on the closing date as expeditiously as practicable
thereafter, (ii) that for this purpose all amounts collected from customers of
the Company on or after the Closing Date shall be applied to the oldest
receivables of such customers, and (iii) to pay to the Shareholders in cash each
week following Closing, as increased Purchase Price, the amount of such existing
accounts receivable collected during the previous week.
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(c) Except as set forth in subsection 2.3(b), under no
circumstances shall the Cash Payment component of the Purchase Price be reduced
below the sum of Three Million Dollars ($3,000,000.00). Except as set forth in
subsection 2.3(b), any adjustment made to the Purchase Price pursuant to this
Agreement shall be made to the Payment Shares component of the Purchase Price.
SECTION 2.4 REGISTRATION OF PAYMENT SHARES.
The Buyer agrees to register the Shareholders' resale of one-third of
the Payment Shares (the "Registered Shares"). If practicable (based on the time
of completion of the "Company Financial Statements", as defined in Section 3.5
below), and subject to the approval of any placement agent (the "Placement
Agent") leading the Equity Financing (as defined in Section 7.3(h)), the Buyer
shall include the Registered Shares in the registration statement on Form S-1
(the "S-1") to be filed by the Buyer with the Securities and Exchange Commission
(the "Commission") in connection with the Equity Financing. If the Placement
Agent advises the Buyer that the Registered Shares may not be included in such
registration statement, then, as soon as reasonably practicable following the
date that the Commission declares effective the registration statement filed on
S-1, but in no event greater than sixty (60) days thereafter, the Buyer shall
file with the Commission a second registration statement on Form S-1 (the
"Second S-1") covering the resale of the Registered Shares on a delayed basis
pursuant to Rule 415 under the Securities Act, and shall use its best efforts to
have the Second S-1 declared effective by the Commission as soon as practical
(each of the S-1 and the Second S-1 is sometimes referred to hereafter as a
"Registration Statement"). The Buyer agrees to maintain the effectiveness of the
Registration Statement which registers the resale of the Registered Shares
pursuant to Rule 415 at all times until the later of (i) the date that is six
months from the effective date of such Registration Statement and (ii) the date
that the Shareholder can dispose of all of the Registered Shares pursuant to
Rule 144 in a 90 day period (the "Registration Period"). The Buyer agrees to
furnish to each of the Shareholders, promptly after the same is filed with the
Commission, such number of copies of the Registration Statement and any
amendment thereto, each preliminary prospectus and each prospectus and any
amendment thereto, as such Shareholder shall reasonably request. The
Shareholders agree that remaining two-thirds of the Payment Shares shall be
legended as provided in Section 4.4.
SECTION 2.5 CLOSING.
The Closing shall take place within ten (10) days following the closing
of the Equity Financing at such time and place as the Buyer, the Shareholders
and the Seller shall agree, but in no event later than August 30, 2004, unless
the parties otherwise agree in writing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SELLER AND THE SHAREHOLDERS
Each representation and warranty set forth below is qualified by any
exception or disclosures set forth in the Seller's Disclosure Schedule attached
hereto, which exceptions specifically reference the Section(s) to be qualified.
In all other respects, each representation and warranty set out in this Article
3 is not qualified in any way whatsoever, will not merge on
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Closing or by reason of the execution and delivery of any agreement, document or
instrument at the Closing, will remain in force on and after the Closing Date
(although not deemed to be given as of any date after the Closing Date), is
given with the intention that liability is not confined to breaches discovered
before Closing, is separate and independent and is not limited by reference to
any other representation or warranty or any other provision of this Agreement,
and is made and given as of the date hereof with the intention of inducing the
Buyer to enter into this Agreement. The Seller and the Shareholders hereby
jointly and severally represent and warrant to the Buyer as of the Closing Date
as follows:
SECTION 3.1 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 New York
and has the requisite power and authority to own, lease and operate its assets
and properties and to carry on its business as it is now being conducted. The
Company is qualified to do business and is in good standing in each jurisdiction
in which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary. True, accurate and
complete copies of the Company's Articles of Organization and Operating
Agreement, including all amendments thereto, have heretofore been delivered to
the Buyer.
(b) The Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
requisite power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. The Seller
is qualified to do business and is in good standing in each jurisdiction in
which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary. True, accurate and
complete copies of the Seller's Certificate of Incorporation and By-Laws,
including all amendments thereto, have heretofore been delivered to the Buyer.
SECTION 3.2 CAPITALIZATION.
(a) As of the date hereof, there are 100,000 units of Membership
Interests of the Company issued and outstanding, all of which are owned by the
Seller. All of the issued and outstanding units of Membership Interests of the
Company are duly authorized, validly issued, fully paid, nonassessable, free of
preemptive rights and were issued in compliance with federal and applicable
state securities laws. The authorized capital stock of the Seller consists of
3,000 shares of common stock, par value $1.00 per share. As of the date hereof,
there are 100 shares of common stock of the Seller issued and outstanding, all
of which are owned by the Shareholders as set forth on SCHEDULE 3.2(A). All of
the issued and outstanding shares of common stock of the Seller are duly
authorized, validly issued, fully paid, nonassessable, free of preemptive rights
and were issued in compliance with federal and applicable state securities laws.
(b) As of the date hereof, there are no outstanding subscriptions,
options, calls, contracts, agreements, commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement, obligating the Company to issue, deliver, sell, purchase, redeem or
acquire, or cause to be issued, delivered, sold, purchased, redeemed or
acquired, units of
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membership interest of the Company or obligating the Company to grant, extend or
enter into any such agreement or commitment, except for this Agreement. There
are no outstanding or authorized membership interest appreciation, phantom,
participation, or other similar rights with respect to the Company. There are no
voting trusts, proxies, other agreements or understandings to which the Company
is a party or is bound with respect to the voting of any units of membership
interests of the Company. Notwithstanding the foregoing, Xxxxxx and Xxxxxxxx
have been granted options to purchase membership interests of the Company, which
options are contained in their respective Employment Agreements and which
options shall be surrendered and terminated effective upon the Closing.
(c) As of the date hereof, there are no outstanding subscriptions,
options, calls, contracts, agreements, commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement, obligating the Seller to issue, deliver, sell, purchase, redeem or
acquire, or cause to be issued, delivered, sold, purchased, redeemed or
acquired, shares of capital stock of the Seller or obligating the Seller to
grant, extend or enter into any such agreement or commitment, except for this
Agreement. There are no outstanding or authorized capital stock appreciation,
phantom, participation, or other similar rights with respect to the Seller.
There are no voting trusts, proxies, other agreements or understandings to which
the Seller is a party or is bound with respect to the voting of any shares of
capital stock of the Company.
SECTION 3.3 SUBSIDIARIES; OTHER INVESTMENTS.
Except as set forth on SCHEDULE 3.3, the Company does not own, directly
or indirectly, any capital stock of any corporation and has no subsidiaries.
Except as set forth on SCHEDULE 3.3, the Company does not own any securities
issued by any other business organization or governmental authority. The Company
is not a partner or participant in any joint venture or partnership of any kind.
SECTION 3.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Each of the Shareholders and the Seller has the power,
corporate or otherwise, and authority to execute, deliver and perform this
Agreement and the Plan of Merger and to consummate the Transactions. The
execution and delivery of this Agreement and the Plan of Merger, and the
consummation by each of the Shareholders and the Seller of the Transactions,
have been duly authorized and approved by the Shareholders and, as to NTS-Inc.
and the Seller, by their respective Boards of Directors, and no other corporate
proceedings are necessary to authorize the execution and delivery of this
Agreement and the consummation by each Shareholder or the Seller of the
Transactions. Each of this Agreement and the Plan of Merger has been duly and
validly executed and delivered by each Shareholder and the Seller and, assuming
the due authorization, execution and delivery hereof and thereof by the Buyer,
Merger Sub and each other party hereto, constitutes a valid and binding
agreement of such Shareholder and the Seller, enforceable against such
Shareholder and the Seller, in accordance with its terms, except that such
enforcement may be subject to (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (b) general equitable principles.
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(b) The execution and delivery of this Agreement by each
Shareholder and the Seller do not, and the consummation by each Shareholder and
the Seller of the Transactions will not, violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company under any of the terms, conditions or provisions of (i) as
to NTS-Inc. and the Seller, the respective charters, operating agreement or
by-laws of the Company, NTS-Inc. and the Seller, and as to all Shareholders and
the Seller, (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or governmental
authority applicable to the Company or any of its properties or assets, or (iii)
any note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which the Company is now a party or by which the Company or any of its
properties or assets may be bound or affected.
(c) Other than the filing with the Delaware Secretary of State of
the Certificate of Merger, as to each Shareholder and the Seller, no
declaration, filing or registration with, or notice to, or authorization,
consent, permit or approval of, any Governmental Entity is necessary for the
execution, delivery or performance of this Agreement and the Plan of Merger by
such Shareholder or the Seller or consummation by such Shareholder or the Seller
of the Transactions. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement or understanding to which any
Shareholder or the Seller is a party, or to which any of its or his properties
or assets are subject, is required for the execution, delivery or performance of
this Agreement and the Plan of Merger.
SECTION 3.5 FINANCIAL STATEMENTS.
Prior to the Closing, the Seller will cause to be prepared by an
accounting firm of the Seller's choice (the "Accountants") audited financial
statements of the Company for the fiscal years ending December 31, 2002 and 2003
(collectively, the "Company Financial Statements"). The Company Financial
Statements will be prepared in accordance with GAAP as applied on a consistent
basis, and the Company Financial Statements will fairly and accurately present
the financial position of the Company in all materials respects as of the dates
thereof and the results of operations and changes in financial position for the
periods then ended. The Seller has made available to the Buyer copies of the
Company's compiled financial statements for the fiscal years ending December 31,
2002 and 2003.
SECTION 3.6 ABSENCE OF UNDISCLOSED LIABILITIES.
Except as expressly disclosed and described in the Company Financial
Statements, the Company did not have at December 31, 2003, any liability,
indebtedness, expense, claim, deficiency, guarantee or obligation of any type
(whether absolute, accrued, contingent, matured, unmatured or otherwise) or of
any nature, except liabilities, obligations or contingencies which are accrued
or reserved against in the Company Financial Statements or reflected in the
notes thereto. Since December 31, 2003, the Company has not incurred liabilities
or obligations in the ordinary course of business which, in the aggregate,
exceed $10,000, except those liabilities or obligations listed on SCHEDULE 3.6.
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SECTION 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
From December 31, 2003 through the date hereof, there has not been any
Material Adverse Effect with respect to the Company.
SECTION 3.8 ASSETS GENERALLY.
(a) The Company owns good and marketable title to all properties
and assets reflected on the Company Financial Statements or acquired since the
date thereof, free and clear of all Liens, except for (i) liens for current
taxes not yet due and payable, (ii) assets disposed of since December 31, 2003,
in the ordinary course of business, and (iii) Liens described on SCHEDULE 3.8.
The foregoing shall apply only to those properties and assets of the Company
necessary for the conduct of the Company's business as it is presently being
conducted.
(b) (i) The Company does not own any real estate; (ii) the
properties subject to the real property leases described in SCHEDULE 3.8
constitute all of the real estate used or occupied by the Company (the "the
Company Real Estate"), and (iii) the Company Real Estate has access, sufficient
for the conduct of the Company's business, to public roads and to all utilities,
including electricity, sanitary and storm sewer, potable water, natural gas and
other utilities, used in the operations of the Company.
(c) The real property leases described in SCHEDULE 3.8 are in full
force and effect, and the Company has a valid and existing leasehold interest
under each such lease for the term set forth therein. The Seller has delivered
to the Buyer complete and accurate copies of each of the leases and none of such
leases has been modified in any respect, except to the extent that such
modifications are disclosed by the copies delivered to the Buyer. The Company is
not in default, and no circumstances exist which could result in such default,
under any of such leases, nor, to the knowledge of the Shareholders or the
Seller, is any other party to any of such leases in default.
(d) All of the buildings, machinery, equipment and other tangible
assets necessary for the conduct of the Company's business are in good condition
and repair, ordinary wear and tear excepted, and are usable in the ordinary
course of business. A complete list of all material items of machinery,
equipment and other tangible assets used in the business of the Company is
included in SCHEDULE 3.8. The Company owns or leases under valid leases, all
buildings, machinery, equipment and other tangible assets necessary for the
conduct of its business. The Seller has delivered to the Buyer complete and
accurate copies of all equipment leases and such leases are listed in SCHEDULE
3.8. None of such equipment leases has been modified in any respect. The Company
is not in default, and no circumstances exist which could result in such
default, under any of such equipment leases, nor, to the best knowledge of each
Shareholder or the Seller, is any other party to any of such equipment leases in
default.
(e) The Company is not in any material respect in violation of any
applicable zoning ordinance or other law, regulation or requirement relating to
the operation of any properties used in the operation of its business, and the
Company has not received any notice of any such violation, or of the existence
of any condemnation proceeding with respect to any properties owned or leased by
the Company.
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SECTION 3.9 INTELLECTUAL PROPERTY.
(a) The execution, delivery and performance of this Agreement and
the consummation of the Transactions (including without limitation the continued
conduct by Buyer after the Closing Date of the Company's business and the
incorporation of any Intellectual Property in any product of Buyer or an
Affiliate of Buyer) will not breach, violate or conflict with any instrument or
agreement governing any Intellectual Property and will not cause the forfeiture
or termination or give rise to a right of forfeiture or termination of any
Intellectual Property or in any material way impair the right of Buyer or any of
its Affiliates to use, sell, license or dispose of, or to bring any action for
the infringement of, any Intellectual Property or portion thereof
(b) Neither the development, manufacture, marketing, license, sale
or use of any product or intellectual property currently licensed, used or sold
by the Company in its business or currently under development in its business
violates or will violate any license or agreement to which the Company is a
party or infringes or will infringe any copyright, patent, trademark, service
xxxx, trade secret or other intellectual property or other proprietary right of
any other Person. All registered Intellectual Property (including without
limitation trademarks, domain names, service marks, patents and copyrights) are
valid and subsisting. There is no pending or threatened claim against the
Company or litigation contesting the validity, ownership or right to use, sell,
license or dispose of any of the its assets (including without limitation the
Intellectual Property) necessary or required for, or used in, the conduct of its
business nor is there any basis for any such claim, nor has the Company, any
Shareholder or the Seller received any notice asserting that any such asset
(including without limitation the Intellectual Property) or the proposed use,
sale, license or disposition thereof conflicts or will conflict with the rights
of any other Person, nor is there any basis for any such assertion. There is no
material unauthorized use, infringement or misappropriation on the part of any
third party of the Company's assets (including without limitation the
Intellectual Property).
(c) SCHEDULE 3.9(C) contains a complete and accurate list of all
applications, filings and other formal actions made or taken pursuant to
federal, state, local and foreign laws by the Company to perfect or protect its
interest in the Intellectual Property, including, without limitation, all
patents, patent applications, trademarks, trademark applications, service marks
and copyright or mask work registrations.
(d) The Company has taken reasonable steps, including, without
limitation, entering into confidentiality and non-disclosure with all officers
and employees of and consultants with access to or knowledge of the Company's
assets (including without limitation the Intellectual Property) to maintain the
secrecy and confidentiality of such assets (including without limitation the
Intellectual Property).
(e) All fees to maintain the Company's rights in the Intellectual
Property, including, without limitation, patent and trademark registration and
prosecution fees and all professional fees in connection therewith pertaining to
the Intellectual Property due and payable on or before the Closing Date, have
been paid by the Company.
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SECTION 3.10 CUSTOMER AGREEMENTS.
(a) SCHEDULE 3.10 contains a list (including names, addresses,
contact names and telephone numbers), which is complete in all material
respects, of all agreements or other arrangements pursuant to which the Company
is obligated to supply products, perform services or otherwise engage in the
conduct of its business (such agreements, as supplemented below, are referred to
collectively as the "Customer Agreements"). The Shareholders have made available
a true and complete copy of all Customer Agreements to Buyer. All such Customer
Agreements are in full force and effect and are valid and effective in
accordance with their respective terms against the Company, and against the
other party thereto. The Company holds all right, title and interest to the
benefits afforded it under the terms of each Customer Agreement free of all
Liens. The Company is not in default under any such Customer Agreements (or has
caused an event which with notice or lapse of time, or both, would constitute a
default), nor, is the other party thereto in default (or has caused an event
which with notice or lapse of time, or both, would constitute a default) under
any such Customer Agreements.
(b) The Company has not entered into any agreement under which it
is restricted from selling, licensing or otherwise distributing any products or
services of its business to any class of customers, in any geographic area,
during any period of time or in any segment of the market.
(c) After the Closing, Buyer will not be prevented by any act of
the Company from changing prices charged in any future agreement to existing or
future customers of any products or services.
(d) The Company has not granted any third party the right to
supply any products or services of its business to any other Person. No
agreement for supply of the products or services of the Company obligates the
Company, and no agreement would obligate Buyer after the Closing Date, to
provide any change in specification of such products or services or to provide
new products or services. No agreement pursuant to which the Company has
licensed to a third party the use of any products of the Company's business
obligates the Company to provide any change in specification in the performance
of such products or to provide new products or services.
SECTION 3.11 WARRANTIES AND INDEMNITIES.
SCHEDULE 3.11 sets forth a summary of all contractual warranties and
indemnities, express or implied, relating to products sold or services rendered
by the Company in connection with its business, and no contractual warranty or
indemnity in connection with its business has been given by the Company which is
not listed on the Seller's Disclosure Schedule or which differs therefrom in any
respect. The Company is in compliance, in all material respects, with all
warranties described in the Seller's Disclosure Schedule. The Seller's
Disclosure Schedule, in all material respects, also indicates all warranty and
indemnity claims currently pending, and to the best of knowledge of the Company,
Seller and Shareholders, threatened, against the Company in connection with its
business. The Company has expressly disclaimed in all agreements with third
parties all implied warranties of merchantability and fitness for a particular
purpose with respect to all products and services, except as expressly set forth
in SCHEDULE 3.11.
11
SECTION 3.12 ACCOUNTS RECEIVABLE.
All accounts receivable, notes receivable and other receivables
included in the Company Financial Statements as of December 31, 2003, are valid,
genuine and are expected to be fully collectible in the aggregate amount
thereof, subject to normal and customary trade discounts less any reserves for
doubtful accounts recorded therein. All accounts, notes receivable, and other
receivables actually invoiced and arising out of or relating to the Company's
business on December 31, 2003 have been included in the balance sheet to the
Company Financial Statements. Since December 31, 2003, there have been no write
offs or other adjustments to the accounts comprising the accounts receivable as
of December 31, 2003, which, either individually or in the aggregate, would have
a material adverse affect on the Company.
SECTION 3.13 LICENSES AND PERMITS.
To the best of the Shareholders' and the Seller's knowledge, the
Company holds all consents, approvals, registrations, certifications,
authorizations, permits and licenses of, and has made all filings with, or
notifications to, all Governmental Entities pursuant to applicable requirements
of all federal, state, local and foreign laws, ordinances, governmental rules or
regulations applicable to the Company, including, but not limited to, all such
laws, ordinances, governmental rules or regulations relating to registration of
the Company's products (at their current level of development and use). The
Company is in material compliance with all federal, state, local and foreign
laws, ordinances, governmental rules and regulations relating to the products
produced by the Company or otherwise related to the Company, and the Company,
the Shareholders and the Seller have no reason to believe that any consents,
approvals, authorizations, registrations, certifications, permits, filings or
notifications that the Company has received or made to operate its business are
invalid or have been or are being suspended, canceled, revoked or questioned.
There is no investigation or inquiry to which the Company is a party or, pending
or threatened, relating to its business and its compliance with applicable
foreign, state, local or foreign laws, ordinances, governmental rules or
regulations. Each such consent, approval, registration, certification,
authorization, permit or license is transferable and will not be terminated or
invalidated upon the consummation of the Transactions.
SECTION 3.14 LITIGATION.
There are no claims, suits, actions, proceedings or investigations
pending or, to the knowledge of the Shareholders or the Seller, threatened
against, relating to or affecting the Company, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator,
except as disclosed on SCHEDULE 3.14. The Company is not subject to any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
which prohibits or restricts the consummation of the Transactions or would have
any Material Adverse Effect on the business, operations, properties, assets,
condition (financial or other), results of operations or prospects of the
Company. For the purposes of this Agreement, "knowledge" shall be based upon a
reasonable level of inquiry by the party making the representation.
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SECTION 3.15 AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) Except for the Customer Agreements set forth on SCHEDULE 3.10
and other agreements set forth on SCHEDULE 3.15 (true and correct copies of
which have been made available to the Buyer), the Company is not a party to and
it is not bound by:
(i) any employment or consulting agreement, contract or
commitment with an employee or individual consultant or salesperson or
consulting or sales agreement, contract or commitment with a firm or
other organization;
(ii) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation rights plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the occurrence of any of the
Transactions or the value of any of the benefits of which will be
calculated on the basis of any of the Transactions;
(iii) any fidelity or surety bond or completion bond;
(iv) any lease of personal property with fixed annual rental
payments in excess of $10,000;
(v) any agreement, contract, commitment or grant containing
any covenant limiting the freedom of the Company or any of its
subsidiaries to engage in any line of business or to compete with any
person;
(vi) any agreement, contract or commitment relating to capital
expenditures and involving future payments in excess of $10,000 either
individually or in the aggregate;
(vii) any agreement, contract or commitment relating to the
disposition or acquisition of assets or any interest in any business
enterprise outside the ordinary course of the Company's business;
(viii) any mortgage, indenture, loan or credit agreement,
security agreement or other agreement or instrument relating to the
borrowing of money, the extension of credit or placing of Liens on any
assets of the Company;
(ix) any guaranty of any obligation for borrowed money or
otherwise;
(x) any purchase order or contract for the purchase of
materials involving in excess of $10,000 either individually or in the
aggregate;
(xi) any dealer, distribution, joint marketing or development
agreement;
(xii) any sales representative, original equipment
manufacturer, value added, remarketing or other agreement for
distribution of the Company's products or services;
(xiii) any collective bargaining agreement or contract with
any labor union;
13
(xiv) any medical insurance or similar plan; or
(xv) any other agreement, contract, commitment or grant
pursuant to which the obligations of any party thereto is in excess of
$10,000.
(b) To the best knowledge of each Shareholder and the Seller, the
Company is in compliance with and has not breached, violated or defaulted under,
or received notice that it has breached, violated or defaulted under, any of the
terms or conditions of any existing agreement (including Customer Agreements),
contract, grant, covenant, instrument, lease, license or commitment to which the
Company is a party or by which it is bound (collectively, a "Contract"), nor is
any Shareholder or the Seller aware of any event that would constitute such a
breach, violation or default with the lapse of time, giving of notice or both.
To the best knowledge of each Shareholder and the Seller, each Contract is in
full force and effect and is not subject to any default thereunder by any party
obligated to the Company pursuant thereto. The Company has obtained, or will
obtain prior to the Closing Date, all necessary consents, waivers and approvals
of parties to any Contract as are required thereunder for such Contracts to
remain in effect without modification or termination after the Closing.
Following the Closing Date, the Company will be permitted to exercise all of its
rights under the Contracts without the payment of any additional amounts or
consideration other than ongoing fees, royalties or payments which the Company
would otherwise be required to pay had the Transactions not occurred.
SECTION 3.16 TAX MATTERS.
(a) TAX RETURNS AND AUDITS.
(i) The Seller and the Company each has prepared and timely
filed (or has properly filed the extensions for) all required federal,
state, local and foreign returns, estimates, information statements and
reports ("Returns") relating to any and all Taxes concerning or
attributable to it, its subsidiaries or operations thereof, and such
Returns are true and correct and have been completed in accordance with
applicable law.
(ii) The Company (A) has paid all Taxes it is required to pay
as shown on the filed returns and has withheld with respect to its
employees all federal and state income taxes, Federal Insurance
Contribution Act ("FICA"), Federal Unemployment Tax Act ("FUTA") and
other Taxes required to be withheld, and (B) has accrued on the Company
Financial Statements all Taxes attributable to the periods covered by
the Company Financial Statements and has not incurred any liability for
Taxes for the period prior to the Closing Date other than in the
ordinary course of business. The Seller has paid all Taxes it is
required to pay as shown on the filed returns and has withheld with
respect to its employees all federal and state income taxes, FICA, FUTA
and other Taxes required to be withheld.
(iii) Neither the Seller nor the Company has been delinquent
in the payment of any Tax and there is no Tax deficiency outstanding,
assessed or proposed against it by the Internal Revenue Service (the
"IRS") or any other governmental taxing authority, and it has not
executed any waiver of any statute of limitations on or extending the
period for the assessment or collection of any Tax.
14
(iv) No audit or other examination of any Return of the Seller
or the Company is presently in progress, and neither the Seller nor the
Company has been notified of any request for such an audit or other
examination.
(v) No adjustment relating to any Returns filed by the Seller
or the Company has been proposed formally or informally by any Tax
authority to the Seller, the Company or any of their respective
representatives.
(vi) The Seller and the Company each has made available to the
Buyer or its legal counsel, copies of all federal and state income and
all state sales and use Returns for it filed for the past three (3)
years.
(vii) There are (and immediately following the Closing Date
there will be) no Liens on the assets of the Seller or the Company
relating to or attributable to Taxes other than Liens for Taxes not yet
due and payable.
(viii) No Shareholder has any knowledge of any basis for the
assertion of any claim relating or attributable to Taxes which, if
adversely determined, would result in any Lien on the assets of the
Seller or the Company.
(ix) None of the Seller's nor the Company's assets are treated
as "tax-exempt use property" within the meaning of Section 168(h) of
the Code.
(x) There is no contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement, covering
any employee or former employee of the Seller or the Company that,
individually or collectively, could give rise to the payment of any
amount that would not be deductible by the Seller or the Company, as
applicable, as an expense under applicable law.
(xi) Neither the Seller nor the Company has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section
341(f)(4) of the Code apply to any disposition of a subsection (f)
asset (as defined in Section 341(f)(4) of the Code) owned by it.
(xii) Neither the Seller nor the Company is a party to any tax
sharing, indemnification or allocation agreement and neither the Seller
nor the Company owes any amount under any such agreement.
SECTION 3.17 EMPLOYMENT.
(a) Except as set forth in SCHEDULE 3.17(A), at the date hereof,
the Company does not maintain, contribute to or have any liability under any
employee benefit plans, programs, arrangements or practices, including employee
benefit plans within the meaning set forth in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), any deferred
compensation or retirement plans or arrangements, or other similar material
arrangements for the provision of benefits (excluding any "Multiemployer Plan"
within the meaning of Section 3(37) of ERISA or a "Multiple Employer Plan"
within the meaning of Section 413(c) of the Code). The Company does not have any
obligation to create any such plan.
15
(b) With respect to each plan listed in SCHEDULE 3.17(A): (i) the
Company has performed in all material respects all obligations required to be
performed by it under each such plan and each such plan has been established and
maintained in all material respects in accordance with its terms and in
compliance with all applicable laws, statutes, rules and regulations, including
but not limited to the Code and ERISA; (ii) there are no actions, suits or
claims pending or, to the best knowledge of each Shareholder and the Seller,
threatened (other than routine claims for benefits) against any such plan; (iii)
each such plan can be amended or terminated after the Closing Date in accordance
with its terms, without liability to the Company; and (iv) there are no
inquiries or proceedings pending or, to the best knowledge of each Shareholder
and the Seller, threatened by the IRS or the Department of Labor with respect to
any such plan.
(c) SCHEDULE 3.17 (C) contains a complete and accurate list of the
employees for the Company, including job title, current compensation, vacation
accrued and service credited for purposes of vesting and eligibility to
participate under any pension, retirement, profit-sharing, thrift-savings,
deferred compensation, equity bonus, equity option, cash bonus, employee
membership interest ownership, severance pay, insurance, medical, welfare or
vacation plan. No employee of the Company is a party to, or is otherwise bound
by, any agreement or arrangement, including any confidentiality, noncompetition,
or proprietary rights agreement, between such employee and any other person or
entity that in any way adversely affects or will affect (i) the performance of
his or her duties as an employee of the Company, or (ii) the ability of the
Company to conduct its business. Neither the Company, any Shareholder nor the
Seller has received verbal or written notice that any of the employees listed in
SCHEDULE 3.17(C) will not continue their employment relationship with the
Company after the Closing Date. Except as noted on SCHEDULE 3.17(C), all
employees of the Company are terminable at will by the Company.
SECTION 3.18 LABOR CONTROVERSIES.
There are no significant controversies pending or, to the best
knowledge of any Shareholder or the Seller, threatened between the Company and
its employees. There are no material organizational efforts presently being made
involving any of the presently unorganized employees of the Company. The Company
has complied in all material respects with all laws relating to the employment
of labor, including, without limitation, any provisions thereof relating to
wages, hours, and the payment of social security and similar taxes, and no
person has asserted that the Company is liable in any material amount for any
arrears of wages or any taxes or penalties for failure to comply with any of the
foregoing.
SECTION 3.19 ENVIRONMENTAL MATTERS.
Except as set forth in SCHEDULE 3.19, to the best of the Shareholders'
and the Seller's knowledge, the Company (i) has obtained all applicable permits,
licenses and other authorizations which are required under federal, state or
local laws relating to pollution or protection of the environment
("Environmental Laws"), including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants or hazardous or
toxic materials or wastes into ambient air, surface water, ground water or land,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling
16
of pollutants, contaminants or hazardous or toxic materials or wastes by the
Company (or its agents); (ii) is in compliance in all material respects with all
terms and conditions of any required permits, licenses and authorizations, and
any other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in Environmental
Laws or in any regulation, code, plan, order, decree, judgment, notice or demand
letter issued, entered, promulgated or approved thereunder; (iii) is not aware
of nor has it received notice of any event, condition, circumstance, activity,
practice, incident, action or plan which is reasonably likely to interfere with
or prevent continued compliance with or which would give rise to any
Environmental Law or statutory liability, or otherwise form the basis of any
claim, action, suit or proceeding, based on or resulting from the Company's (or
any agent's) manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge or release into the
environment, of any pollutant, contaminant, or hazardous or toxic material or
waste; (iv) has taken all actions necessary under applicable requirements of
Environmental Laws, rules or regulations to register any products or materials
required to be registered by the Company (or its agents) thereunder; and (v) has
not transported, stored, used, manufactured, released, disposed of or handled
any hazardous substance or any product containing a hazardous substance in
violation of any Environmental Law.
SECTION 3.20 INTERESTED PARTY TRANSACTIONS.
Except as set forth on SCHEDULE 3.20, the Company is not a party to any
oral or written (a) consulting or similar agreement with any present or former
director, officer or employee or any entity controlled by any such person, (b)
agreement with any executive officer or other key employee of the Company the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving the Company of the nature
contemplated by this Agreement or (c) agreement with respect to any executive
officer or other key employee of the Company providing any term of employment or
compensation guarantee. The Company is not a party to any agreement, contract,
lease, license, arrangement, or other understanding with any Shareholder or any
employee of the Company (except employment agreements disclosed on SCHEDULE
3.17(C)), any relative or Affiliate of any Shareholder or any employee of the
Company, or any other partnership or enterprise in which any Shareholder or any
employee of the Company, or any such relative or Affiliate thereof, had or now
has a 5% or greater ownership interest, or other substantial interest, other
than contracts or agreements listed and so specified in SCHEDULE 3.20.
SECTION 3.21 INSURANCE.
SCHEDULE 3.21 lists all insurance policies and fidelity bonds covering
the assets, business, equipment, properties, operations, employees, officers and
directors of the Company. All insurance policies listed are in full force and
effect. There is no claim by the Company pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies and bonds have been paid and there is no retroactive premium
adjustment obligation of any kind, and the Company is otherwise in compliance
with the terms of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage). Neither the Company, any Shareholder
nor the Seller has any knowledge of any threatened termination of, or premium
increase with respect to, any of such policies.
17
SECTION 3.22 BOOKS AND RECORDS.
(a) The books of account, minute books, membership interest record
ledgers and other records of the Company, all of which have been made available
to the Buyer, are complete and correct. The minute books of the Company contain
accurate and complete records of all meetings held of, and limited liability
company action taken by, the members of the Company and no meeting of the
members of the Company has been held for which minutes have not been prepared
and are not contained in such minute books.
(b) The books of account, minute books, stock record ledgers and
other records of the Seller, all of which have been made available to the Buyer,
are complete and correct. The minute books of the Seller contain accurate and
complete records of all meetings held of, and corporate action taken by, the
Shareholders, the Board of Directors and committees thereof of the Seller, and
no meeting of the Shareholders, Board of Directors or committee of the Seller
has been held for which minutes have not been prepared and are not contained in
such minute books.
SECTION 3.23 PRODUCTS.
To the best of the Shareholders' and the Seller's knowledge, each of
the products and services produced, sold or provided by the Company in
connection with its business is, and at all times has been, in compliance in all
material respects with all applicable federal, state, local and foreign laws and
regulations and is, and at all relevant times has been, fit for the ordinary
purposes for which it is intended to be used and conforms in all material
respects to any promises or affirmations of fact made in connection with the
sale of such product or service. There are no known material design defects with
respect to any of such products, and each of such products contains adequate
warnings, presented in a reasonably prominent manner, in accordance with
applicable laws and current industry practice with respect to its contents and
use. Notwithstanding the foregoing, however, this representation does not
constitute a guarantee, indemnity or warranty to the Buyer that no defects will
be found or claims made after the Closing.
SECTION 3.24 PRODUCT LIABILITY.
There are no claims, actions, suits, inquiries, proceedings or
investigations pending by or against the Company, relating to any products of
the Company and containing allegations that such products are defective or were
improperly designed or manufactured or improperly labeled or otherwise
improperly described for use.
SECTION 3.25 REPRESENTATIONS COMPLETE.
None of the representations or warranties nor any statement made by the
Shareholders or the Seller in this Agreement, the Plan of Merger or any Schedule
or certificate furnished by the Shareholders or the Seller pursuant to this
Agreement or the Plan of Merger, contains any knowingly untrue statement of a
material fact, or knowingly omits to state any material fact necessary in order
to make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading.
18
SECTION 3.26 BROKERS AND FINDERS.
Except as set forth on SCHEDULE 3.26, neither any Shareholder, the
Seller nor the Company or any of their respective officers, directors or
employees has employed any broker or finder or incurred any liability for any
brokerage fee, commission or finder's fee in connection with the Transactions.
ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
CONCERNING THE PAYMENT SHARES.
Each Shareholder hereby represents and warrants to the Buyer as of the
Closing Date as follows
SECTION 4.1 PURCHASE ENTIRELY FOR OWN ACCOUNT.
This Agreement is made with each Shareholder in reliance upon such
Shareholder's representation to Buyer, which by such Shareholder's execution of
this Agreement such Shareholder hereby confirms, that the Payment Shares to be
acquired by such Shareholder will be acquired for investment for such
Shareholder's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, other than as a required part of the
fee arrangement with Paramax Corporation, broker for the Shareholders, and that
otherwise such Shareholder has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, each Shareholder further represents that such Shareholder does not
presently have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any
Person, with respect to any of the Payment Shares.
SECTION 4.2 DISCLOSURE OF INFORMATION.
Each Shareholder believes it or he has received all of the information
it or he considers necessary or appropriate for deciding whether to acquire the
Payment Shares. Each Shareholder further represents that it or he has had an
opportunity to ask questions and receive answers from the Buyer regarding the
Payment Shares. The foregoing, however, does not limit or modify the
representations and warranties of the Buyer contained in Article 5 or the right
of each Shareholder to rely thereon.
SECTION 4.3 RESTRICTED SECURITIES.
Each Shareholder understands that the Payment Shares have not been, and
as provided in Section 2.4 may not be as of the Closing Date, registered under
the Securities Act, by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of such Shareholder's
representations as expressed herein. Each Shareholder understands that such
unregistered the Payment Shares are "restricted securities" under applicable
U.S. federal and state securities laws and that, pursuant to these laws, such
Shareholder must hold the Payment Shares unless and until they are registered
with the Commission and qualified by state authorities, or an exemption from
such registration and qualification requirements is available.
19
Each Shareholder acknowledges that, except as provided under Section 2.4 hereof,
Buyer has no obligation to register or qualify any of the Payment Shares for
resale. Each Shareholder further acknowledges that if an exemption from
registration or qualification is available, such as that under Rule 144 under
the Securities Act, it may be conditioned on various requirements including ,
but not limited to, the time and manner of sale, the one (1) year holding period
for the Payment Shares, and on requirements relating to Buyer which are outside
of such Shareholder's control (such as the Buyer remaining current in its
filings with the Commission).
SECTION 4.4 LEGENDS.
(a) Prior to the effectiveness of the Registration Statement, each
Shareholder understands that the certificates representing the Payment Shares,
and any securities issued in respect of or exchange for the Payment Shares, may
bear one or all of the following legends:
(i) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM REASONABLY SATISFACTORY TO THE PURCHASER THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933";
(ii) Any legends required by the laws of the State of California,
including any legend required by the California Department of Corporations;
and/or
(iii) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the certificate so
legended, including New Jersey.
Upon the Registration Statement being declared effective by the
Commission, Buyer shall use its best efforts to have any and all of the above
legends removed from the Registered Shares, except that certificates
representing two-thirds of the Payment Shares may bear a legend restricting
transfer of such shares until the first anniversary of the Closing Date. On the
first anniversary of the Closing Date, Buyer shall use its best efforts to have
this legend removed from the Payment Shares.
SECTION 4.5 CORPORATE SECURITIES LAW.
THE SALE OF THE SECURITIES THAT IS THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA. THE ISSUANCE OF SUCH SECURITIES OR THE RECEIPT OF ANY PART OF THE
ASSETS FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE
SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR
25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS
20
AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED
UNLESS THE SALE IS SO EXEMPT.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND MERGER SUB
Each representation and warranty set forth below is qualified by any
exception or disclosures set forth in the Buyer's Disclosure Schedule attached
hereto, which exceptions specifically reference the Section(s) to be qualified.
In all other respects, each representation and warranty set out in this Article
5 is not qualified in any way whatsoever, will not merge on Closing or by reason
of the execution and delivery of any agreement, document or instrument at the
Closing, will remain in force on and after the Closing Date (although not deemed
to be given as of any date after the Closing Date), is given with the intention
that liability is not confined to breaches discovered before Closing, is
separate and independent and is not limited by reference to any other
representation or warranty or any other provision of this Agreement, and is made
and given as of the date hereof with the intention of inducing the Shareholders
and the Seller to enter into this Agreement. The Buyer and Merger Sub hereby
jointly and severally represent and warrant to the Shareholders and the Seller
as of the Closing Date as follows:
SECTION 5.1 ORGANIZATION AND QUALIFICATION.
(a) The Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada and has the requisite
power and authority to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted. The Buyer is qualified to do
business and is in good standing in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary. True, accurate and complete copies of the
Buyer's Articles of Incorporation and By-laws, in each case as in effect on the
date hereof, including all amendments thereto, have heretofore been delivered to
the Shareholders and the Seller.
(b) Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
requisite power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Merger Sub
is qualified to do business and is in good standing in each jurisdiction in
which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary. True, accurate and
complete copies of Merger Sub's Articles of Incorporation and By-laws, in each
case as in effect on the date hereof, including all amendments thereto, have
heretofore been delivered to the Shareholders and the Seller.
SECTION 5.2 CAPITALIZATION.
(a) The authorized capital stock of the Buyer consists of
600,000,000 shares of Common Stock, $0.001 par value per share ("Common Stock")
and 80,000 shares of convertible series A preferred stock, $0.01 par value per
share ("Preferred Stock"). As of the date hereof, there are [148,449,049] shares
of Common Stock issued and outstanding and 71,529 shares of Preferred Stock
outstanding. All of the issued and outstanding shares of the Common Stock and
Preferred Stock are duly authorized, validly issued, fully paid, nonassessable
and free of
21
preemptive rights and were issued in compliance with federal and applicable
state securities laws. The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, $0.0001 par value per share. As of the date
hereof, there are 1,000 shares of common stock of Merger Sub issued and
outstanding, all of which are owned by the Buyer. All of the issued and
outstanding shares of the common stock of Merger Sub are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights and were
issued in compliance with federal and applicable state securities laws.
(b) The Payment Shares issued to the Shareholders will be at the
Closing Date duly authorized, validly issued, fully paid and nonassessable and
free of preemptive rights and issued in compliance with federal and applicable
state securities laws.
SECTION 5.3 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Each of the Buyer and Merger Sub has full corporate power and
authority to enter into this Agreement and the Plan of Merger and to consummate
the Transactions. The execution and delivery of this Agreement and the Plan of
Merger, and the consummation by each of the Buyer and Merger Sub of the
Transactions, have been duly authorized by the Buyer's Board of Directors and by
Merger Sub's Board of Directors and sole shareholder, and no other corporate
proceedings on the part of the Buyer or Merger Sub are necessary to authorize
the execution and delivery of this Agreement and the Plan of Merger and the
consummation by the Buyer and Merger Sub of the Transactions. Each of this
Agreement and the Plan of Merger has been duly and validly executed and
delivered by the Buyer and Merger Sub and, assuming the due authorization,
execution and delivery hereof by the Shareholders and the Seller, constitutes a
valid and binding agreement of the Buyer and Merger Sub, enforceable against the
Buyer and Merger Sub in accordance with its terms, except that such enforcement
may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting or relating to enforcement of creditors' rights
generally and (b) general equitable principles.
(b) The execution and delivery of this Agreement and the Plan of
Merger by the Buyer and Merger Sub do not, and the consummation by the Buyer and
Merger Sub of the Transactions will not, violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of the Buyer or Merger Sub under any of the terms, conditions or
provisions of (i) the charter or by-laws of the Buyer or Merger Sub, (ii) any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to the
Buyer or Merger Sub or any of their respective properties or assets, or (iii)
any note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which the Buyer or Merger Sub is now a party or by which the Buyer or
Merger Sub or any of their respective properties or assets may be bound or
affected.
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(c) Other than the appropriate filing under Regulation D of the
Securities Act of 1933, as amended (the "Securities Act"), and the filing with
the Delaware Secretary of State of the Certificate of Merger, no declaration,
filing or registration with, or notice to, or authorization, consent or approval
of, any Governmental Entity is necessary for the execution, delivery and
performance of this Agreement and the Plan of Merger by the Buyer or Merger Sub
or the consummation by the Buyer or Merger Sub of the Transactions. No consent
of any party to any contract, agreement, instrument, lease, license, arrangement
or understanding to which the Buyer, Merger Sub or any of their respective
subsidiaries is a party, or to which any of them or any of their properties or
assets are subject, is required for the execution, delivery or performance of
this Agreement and the Plan of Merger.
SECTION 5.4 REPORTS AND FINANCIAL STATEMENTS.
The Buyer has previously delivered to the Shareholders copies of its
(a) Form 10-KSB for the fiscal year ending June 30, 2003, as amended, (b) Form
10-Q for the quarter ended December 31, 2003 and (c) all other reports or
registration statements filed by the Buyer with the Securities and Exchange
Commission (the "Commission") since December 31, 2003, including all such
amendments thereto (such reports and other filings, together with any amendments
or supplements thereto, are collectively referred to herein as the "Buyer
Reports"). Since March 31, 2003, and with the exception of its Form 10-Q for the
quarter ended March 31, 2004 (which was filed on June 8, 2004), the Buyer has
timely filed all forms, reports, schedules, statements and documents with the
Commission required to be filed by it pursuant to the federal securities laws
and Commission rules and regulations promulgated thereunder, and all such forms,
reports, schedules, statements and documents, as amended, filed with the
Commission have complied in all material respects with all applicable provisions
of the federal securities laws and the Commission rules and regulations
promulgated thereunder. As of their respective dates, the Buyer Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited financial statements and unaudited interim financial statements of the
Buyer included in the Buyer Reports (together, the "Buyer Financial Statements")
have been prepared in accordance with GAAP applied on a consistent basis (except
as may be indicated therein or in the notes thereto) and fairly and accurately
present the consolidated financial position of the Buyer and its subsidiaries as
of the dates thereof and the consolidated results of operations and changes in
financial position for the periods then ended.
SECTION 5.5 ABSENCE OF CERTAIN CHANGES OR EVENTS.
From December 31, 2003 through the date hereof, there has not been any
material adverse change in the business, operations, properties, assets,
liabilities, condition (financial or other), results of operations or prospects
of the Buyer, Merger Sub and each of their subsidiaries, taken as a whole.
23
SECTION 5.7 LITIGATION.
There are no claims, suits, actions, proceedings or investigations
pending or, to the knowledge of the Buyer or Merger Sub, threatened against,
relating to or affecting the Buyer or Merger Sub or any of their respective
subsidiaries, before any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator, except as disclosed on SCHEDULE
5.7. Neither the Buyer, Merger Sub nor any of their respective subsidiaries is
subject to any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or authority or any
arbitrator which prohibits or restricts the consummation of the Transactions or
would have any Material Adverse Effect on the business, operations, properties,
assets, condition (financial or other), results of operations or prospects of
the Buyer, Merger Sub and their respective subsidiaries.
SECTION 5.8 COMPLIANCE WITH LAWS.
Neither the Buyer, Merger Sub nor any of their respective subsidiaries
is in violation of, or has been given notice or been charged with any violation
of, any law, statute, order, rule, regulation, ordinance, or judgment
(including, without limitation, any applicable Environmental Law, ordinance or
regulation) of any governmental or regulatory body or authority, except for
violations which, in the aggregate, do not have a Material Adverse Effect on the
business, operations, properties, assets, condition (financial or other),
results of operations or prospects of the Buyer, Merger Sub and their respective
subsidiaries, taken as a whole. No investigation or review by any governmental
or regulatory body or authority is pending or, to the knowledge of the Buyer or
Merger Sub, threatened, nor has any governmental or regulatory body or authority
indicated an intention to conduct the same. Subject to the truth and accuracy of
the shareholders' representations contained in this Agreement, the issuance of
the Payment Shares to the Shareholders will comply with all applicable federal
and state securities laws and with the rules and regulations promulgated
thereunder, as well as with the rules and regulations promulgated by NASD.
SECTION 5.9 REPRESENTATIONS COMPLETE.
None of the representations or warranties nor any statement made by the
Buyer or Merger Sub in this Agreement, the Plan of Merger or any Schedule or
certificate furnished by the Buyer or Merger Sub pursuant to this Agreement or
the Plan of Merger, contains any untrue statement of a material fact, or omits
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading. None of the information to be supplied by the Buyer for inclusion or
incorporation by reference in the Registration Statement will, at the time it
becomes effective , contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading, except that no representation or warranty is made by the
Buyer with respect to statements made or incorporated by reference therein based
on written information supplied by any Shareholder specifically for inclusion or
incorporation by reference in the Registration Statement. The Registration
Statement will comply as to form in all material respects with all applicable
provisions of the Securities Act and the Exchange Act.
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SECTION 5.10 BROKERS AND FINDERS.
Except as set forth on SCHEDULE 5.10, neither the Buyer, Merger Sub nor
any of their respective officers, directors or employees has employed any broker
or finder or incurred any liability for any brokerage fee, commission or
finder's fee in connection with the Transactions.
ARTICLE VI
ADDITIONAL AGREEMENTS AND COVENANTS
SECTION 6.1 ACCESS TO INFORMATION.
Prior to the Closing, the Shareholders and the Seller will permit Buyer
to make a full and complete investigation of the Company and to receive from the
Company all information related to the conduct of its business. Without limiting
this right, the Shareholders and the Seller will cause the Company to make
available to Buyer and its accountants, legal counsel, and other representatives
full access, during normal business hours, at a mutually agreeable location
arranged in advance, to all of the books, records, files, documents, properties,
and contracts of the Company relating to related to the conduct of its business
and allow Buyer and any such representatives to make copies thereof, all of
which shall be made available in an organized fashion and so as to facilitate an
orderly review. This Section 6.1 shall not affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Transactions. The Shareholders and the Seller
shall maintain and make available the information and records specified in this
Section 6.1 in the ordinary course of the Company's business and document
retention policies, as if the Transactions had not occurred.
SECTION 6.2 THIRD PARTY CONSENTS.
Each party hereto shall use commercially reasonable efforts to obtain,
within the applicable time periods required, all required consents, waivers,
permits, consents and approvals and to effect all registrations, filings and
notices with or to third parties or Governmental Entities which are necessary to
consummate the Transactions so as to preserve all rights of, and benefits to,
the Buyer in the Company.
SECTION 6.3 CERTAIN NOTIFICATIONS.
At all times prior to the Closing, each party hereto shall promptly
notify the other party(ies) in writing of the occurrence of any event which will
result, or has a reasonable prospect of resulting, in the failure to satisfy any
of the conditions specified in this Agreement.
SECTION 6.4 BEST EFFORTS.
(a) The Shareholders and the Seller shall use their best efforts
(i) to cause to be fulfilled and satisfied all of the conditions to the Closing
set forth in Sections 7.1 and 7.3, and (ii) to cause to be performed all of the
matters required of them at the Closing.
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(b) The Buyer and Merger Sub shall use their best efforts (i) to
cause to be fulfilled and satisfied all of the conditions to the Closing set
forth in Sections 7.1 and 7.2, and (ii) to cause to be performed all of the
matters required of them at the Closing.
SECTION 6.5 COMPANY'S CONDUCT OF THE BUSINESS PRIOR TO CLOSING.
During the period from the date of this Agreement to the Closing Date,
the Shareholders and the Seller shall cause the Company to conduct its business
in the ordinary and usual course, consistent with past practice, and will use
all reasonable efforts to preserve intact all rights, privileges, franchises and
other authority of the Company, to retain its employees, and to maintain
favorable relationships with licensors, licensees, suppliers, contractors,
distributors, customers, and others having relationships with the Company. The
Shareholders and the Seller shall promptly notify the Buyer of any event or
occurrence or emergency not in the ordinary course of business, and any material
event involving the Company. Without limiting the generality of the foregoing,
and except as approved in writing by Buyer in advance, prior to the Closing, the
Shareholders and the Seller agree to ensure that the Company:
(a) will not create, incur or assume any obligation which would in
any material way affect the its business, operations, or the Buyer's ability to
conduct the business in substantially the same manner and condition as conducted
on the date of this Agreement;
(b) will not change in any manner the compensation of, or agree to
provide additional benefits to, or enter into any employment agreement with, any
employee;
(c) will maintain insurance coverage in amounts adequate to cover the
reasonably anticipated risks of the business;
(d) will not sell, dispose of or encumber any of the assets or
license any assets to any Person except in the normal course of business
consistent with past practice;
(e) will not enter into any agreements or commitments relating to
its business, except on commercially reasonable terms in the ordinary course of
business consistent with past practices;
(f) will comply in all material respects with all laws and regulations
applicable to the Company;
(g) will not enter into any agreement with any third party for the
distribution of any of the Company's products or assets, except on commercially
reasonable terms in the ordinary course of business consistent with past
practices;
(h) will not violate, amend or otherwise change in any way the
terms of any of the Contracts, or take any other action which would allow the
other party to any such Contract to terminate it;
(i) will not commence a lawsuit other than (a) for the routine
collection of bills; (b) for injunctive relief on the grounds that the Company
has suffered immediate and irreparable harm not compensable in money damages, or
(c) for a breach of this Agreement;
26
(j) will not assign, sell or otherwise convey to any third party,
without obtaining the Buyer's prior written consent, any of its accounts
receivable prior to the Closing Date;
(k) will use their reasonable best efforts to maintain in place all
Customer Agreements and revenue streams; and
(l) will not accelerate the recognition of revenue or otherwise
recognize revenue in any manner inconsistent with past practices.
SECTION 6.6 EXCLUSIVITY.
Until the earlier to occur of (a) the Closing or (b) the termination of
this Agreement pursuant to its terms, neither any Shareholder nor the Seller
shall, nor shall it or he cause the Company or authorize any of its or his
officers, directors, employees, agents, attorneys, accountants, advisors or
other representatives to, directly or indirectly, (i) initiate, solicit or
encourage (including by way of furnishing information regarding the Company or
its business) any inquiries, or make any statements to third parties which may
reasonably be expected to lead to any proposal concerning an equity or debt
investment in the Company or the sale of the Company or its assets (whether by
way of merger, purchase of membership interests, purchase of assets or
otherwise), or (ii) negotiate, engage in any substantive discussions, or enter
into any agreement, with any Person concerning an equity or debt investment in
the Company or the sale of the Company or its assets (whether by way of merger,
purchase membership interests, purchase of assets or otherwise). Each
Shareholder will promptly notify the Buyer in writing of any material inquiry,
proposal or offer relating to the foregoing that is received by such
Shareholder, the Seller, the Company or any of its officers or directors,
including the identity and terms of such inquiry, proposal or offer.
SECTION 6.7 TAX RETURNS.
The following provisions will govern the allocation of responsibility
and certain other matters as among the parties hereto with respect to certain
Tax matters following the Closing Date:
(a) SHORT FISCAL YEAR TAX PERIOD OF THE COMPANY. The Shareholders
shall prepare or cause to be prepared and timely file or cause to be timely
filed all Returns for the Company for the short fiscal year of the Company
ending on February 12, 2004.
(b) FINAL TAX PERIOD OF THE SELLER. The Buyer shall prepare or
cause to be prepared and timely file or cause to be timely filed all final
Returns of the Seller for the Tax period which ends upon the Closing Date,
subject to the Shareholders' prior review and reasonable approval of the
contents of such Returns, and the Buyer shall promptly pay or cause to be paid
all Taxes due in connection therewith. The Shareholders will reimburse the
Buyer, by a corresponding reduction in the Payment Shares portion of the
Purchase Price in the manner provided in Section 2.3, with respect to such
periods within l5 days after payment by the Buyer of such Taxes.
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(c) TAX PERIODS BEGINNING ON THE CLOSING DATE. The Buyer shall
prepare or cause to be prepared and timely file or cause to be timely filed all
Returns of the Company for the Tax period which begins on or after the Closing
Date, and the Buyer shall pay or cause to be paid all Taxes due in connection
therewith. Except as otherwise required by applicable law, such Returns will be
prepared in a manner not in conflict with Returns prepared and filed by the
Company prior to the Closing Date.
(d) COOPERATION ON TAX MATTERS. The parties shall cooperate fully,
as and to the extent reasonably requested by any other party, in connection with
the filing of Returns pursuant to this Section and any proceeding with respect
to Taxes. Such cooperation will include the retention and (upon another party's
request) the provision of records and information which are reasonably relevant
to any such proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder. The parties agree, upon request, to use their reasonable best efforts
to obtain any certificate or other document from any Governmental Entity as may
be necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including with respect to the Transactions).
(e) REPORTING; AUDITS. The parties agree that (i) all Returns of
the parties hereto shall treat the Transactions as a tax free reorganization
under Sections 368(a)(1)(A) and (a)(2)(D) of the Code, and (ii) in the event of
any audit or other proceeding by any Governmental Entity challenging such
tax-free status, the Shareholders shall have the exclusive right, at their
expense, to control the conduct and settlement of any such proceeding.
SECTION 6.8 EXPENSES.
Except as set forth in Sections 6.10, 9.1 and 9.2, all costs and
expenses incurred in connection with this Agreement, the Plan of Merger and the
Transactions shall be paid by the party incurring such expenses, whether or not
the Transactions are consummated. Any and all such costs and expenses incurred
by the Company prior to the Closing Date shall be borne by the Seller.
SECTION 6.9 PUBLIC STATEMENTS.
The parties shall consult with each other prior to issuing any press
release or any written public statement with respect to this Agreement, the Plan
of Merger or the Transactions and shall not issue any such press release or
written public statement prior to such consultation; provided, however, that the
foregoing shall in no way prevent the Buyer from issuing, or limit its ability
to issue, a press release in order to comply with the rules and regulations of
the Commission.
SECTION 6.10 COMPANY FINANCIAL STATEMENTS.
Seller shall pay for the costs incurred in connection with the
preparation of the Company Financial Statements.
28
SECTION 6.11 SECURITIES MATTERS.
(a) The Buyer and the Shareholders shall cooperate in the
preparation of the Registration Statement, and the Buyer shall file with the
Commission the Registration Statement and cause the Registration Statement to
become effective as promptly as practicable thereafter, as provided in Section
2.4. The Buyer shall advise the Shareholders, promptly after it receives notice
thereof, of the time when the Registration Statement or any post-effective
amendment thereto has become effective or any supplement or amendment has been
filed, of the issuance of any stop order, or the suspension of qualification of
the Registered Shares for offering or sale in any jurisdictions or the
initiation of any threat of any proceeding for any such purpose, or of any
comments or request by the Commission for the amendment or supplement of the
Registration Statement or for additional information. If at any time following
the Closing any event occurs that should be set forth in an amendment of or a
supplement to the Registration Statement, the Buyer, Merger Sub and the
Shareholders shall cooperate with each other in the preparation of any amendment
or supplement thereto, and each shall notify the others of the receipt of any
comments of the Commission with respect to the Registration Statement and of any
requests by the Commissions for any amendment or supplement thereto or for
additional information, and shall provide to the others promptly copies of all
correspondence between the Buyer, Merger Sub or the Shareholders, as the case
may be, or any of their respective representatives with respect to the
Registration Statement. The Buyer shall give the Shareholders and their
respective counsel the opportunity to review over a period of five business days
the Registration Statement and all responses to requests for additional
information by and replies to comments of the Commission before their being
filed with, or sent to, the Commission, and the Buyer shall prepare and file
with the Commission such amendment or supplement as soon thereafter as is
reasonably practicable. Each of the Shareholders, the Buyer and Merger Sub
agrees to use its best efforts, after consultation with the other parties, to
respond promptly to all such comments of and requests by the Commission and to
cause the Registration Statement to be declared effective by the Commission at
the earliest practicable time and to be kept effective as long as is necessary
to consummate the Transactions. The Buyer shall take all actions necessary to
register or qualify the Registered Shares pursuant to all applicable state blue
sky or securities laws and shall maintain such registrations or qualifications
in effect for all purposes hereof. The Buyer shall cause the Payment Shares to
be quoted on the NASD electronic bulletin board over-the-counter market as of
the Closing and shall maintain such quotation in effect for all purposes hereof.
(b) From the Closing Date through the expiration of the
Registration Period, Buyer shall (whether or not it shall then be required to do
so) timely file such information, documents and reports as required or
prescribed under Section 13 or 15 (d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), whichever is applicable. Buyer shall promptly upon
the written request of any Shareholder, furnish such Shareholder with (i) a
written statement by Buyer that it has complied with such reporting
requirements, (ii) a copy of the most recent annual or quarterly report of
Buyer, and (iii) such other reports and documents as such Shareholder may
reasonably request in availing itself of an exemption for the resale of any or
all of the Payment Shares without registration under the Securities Act. In
addition, Buyer shall take such other measures and file such other information,
documents and reports, as shall hereafter be required by the Commission as a
condition to the availability of Rule 144 to the Shareholders for the resale of
any Payment Shares without registration under the Securities Act. Buyer agrees
to use its best efforts to facilitate and expedite transfers of Payment Shares
pursuant to Rule 144.
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ARTICLE VII
CONDITIONS
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
TRANSACTIONS.
The respective obligations of each party to effect the Transactions
shall be subject to the fulfillment at or prior to the Closing Date of the
following conditions:
(a) this Agreement, the Plan of Merger and the Transactions shall
have been approved and adopted by the Board of Directors of the Buyer, the Board
of Directors of Merger Sub, the sole shareholder of Merger Sub, the Board of
Directors of the Seller, the Shareholders and the Board of Directors of
NTS-Inc.;
(b) no preliminary or permanent injunction or other order or
decree by any federal or state court or other legal restraint or prohibition
which prevents the consummation of the Transactions shall have been issued and
remain in effect (each party agreeing to use its reasonable efforts to have any
such injunction, order or decree lifted);
(c) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States which would prevent the consummation of
the Transactions; and
(d) all Governmental Authorizations legally required for the
consummation of the Transactions shall have been obtained and be in effect at
the Closing Date, and all other third party consents, orders and approvals
legally required for the consummation of the Transactions shall have been
obtained or become final orders.
SECTION 7.2 CONDITIONS TO OBLIGATION OF THE SELLER AND THE SHAREHOLDERS TO
EFFECT THE TRANSACTIONS.
Unless waived by each Shareholder and the Seller in writing, the
obligation of the Shareholders and the Seller to effect the Transactions shall
be subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) the Shareholders and the Seller shall have received a
certificate from the Nevada and California Secretaries of State as to the good
standing of the Buyer, as of a date within five (5) days of the Closing Date;
(b) the Shareholders and the Seller shall have received certified
copies of the resolutions or consents of the Board of Directors of the Buyer,
the Board of Directors of Merger Sub and the sole shareholder of Merger Sub
approving the Transactions, this Agreement, the Plan of Merger, the issuance of
the Payment Shares subject hereto and the other documents and Transactions all
in form and substance reasonably satisfactory to the Shareholders, the Seller,
and their attorneys;
30
(c) the Shareholders and the Seller shall have received a
certificate of the corporate secretary of the Buyer and the Merger Sub
certifying the name, title and true signature of each officer of the Buyer and
of the Merger Sub executing this Agreement, the Plan of Merger and any of the
other documents and certificates to be delivered pursuant to or in connection
herewith and therewith;
(d) each of the Buyer and Merger Sub shall have performed in all
material respects its obligations, agreements and covenants contained in this
Agreement and the Plan of Merger required to be performed on or prior to the
Closing Date and the representations and warranties of the Buyer and Merger Sub
contained in this Agreement and the Plan of Merger shall be true and correct in
all material respects on and as of the Closing Date, and the Shareholders and
the Seller shall have received certificates of the Chief Executive Officer and
Secretary of each of the Buyer and Merger Sub, to that effect;
(e) each of the Buyer and Merger Sub shall have obtained all
consents and approvals from third parties as are required for it to consummate
the Transactions and execute this Agreement, the Plan of Merger and the
documents and certificates to be delivered pursuant to or in connection herewith
and therewith;
(f) the Shareholders and the Seller shall have received the
opinion of the Buyer's and Merger Sub's counsel, in the form of the attached
Schedule 7.2(f), addressed to the Shareholders and the Seller in customary form
reasonably satisfactory to the Shareholders, the Seller and their attorneys;
(g) the Shareholders and the Seller shall have satisfactorily
completed their due diligence review of the Buyer's financial condition and
business;
(h) the Shareholders and the Seller shall have satisfied
themselves in their sole discretion that the Seller and the Company shall suffer
no material adverse tax consequence as a result of the Transactions and in the
event such adverse tax consequence can be reasonably anticipated, the
Shareholders and the Seller may convert the form of the Seller and the Company
to a form that is less likely to suffer such material adverse tax consequences,
provided such form of the Seller and the Company is also acceptable to the
Buyer;
(i) Xxxx Xxxxxx and Xxxx Xxxxxxxx shall have entered into
Employment Agreements with the Company and Xx. Xxxxxxx XxXxxx shall have entered
into a Consulting Agreement with the Company or with the Buyer, such Agreements
to be acceptable in form and substance to each individual;
(j) the Buyer shall have obtained all consents and approvals from
third parties as are required and necessary to constitute full approval and
certification of its PASS voting equipment for its normal and anticipated uses.
31
SECTION 7.3 CONDITIONS TO OBLIGATION OF THE BUYER AND MERGER SUB TO EFFECT
THE TRANSACTIONS.
Unless waived by the Buyer and Merger Sub in writing, the obligation of
the Buyer and Merger Sub to effect the Transactions shall be subject to the
fulfillment at or prior to the Closing Date of the additional following
conditions:
(a) the Buyer and Merger Sub shall have received certificates from
the New York Department of State as to the good standing of the Company and
NTS-Inc. and from the Delaware Secretary of State as to the good standing of the
Seller, as of a date within five (5) days of the Closing Date;
(b) the Buyer and Merger Sub shall have received a certificate of
the corporate secretary of the Seller certifying the Certificate of
Incorporation and By-Laws of the Seller and a certificate of the sole member of
the Company certifying the Articles of Organization and Operating Agreement of
the Company;
(c) the Company, the Shareholders and the Seller each shall have
obtained all consents and approvals from third parties as are required for it to
consummate the Transactions and for each of them to execute this Agreement, the
Plan of Merger and the documents contemplated hereby and thereby;
(d) Xxxx Xxxxxx and Xxxx Xxxxxxxx shall have entered into
Employment Agreements with the Company and Xx. Xxxxxxx XxXxxx shall have entered
into a Consulting Agreement with the Company or with the Buyer, such Agreements
to be acceptable in form and substance to each individual;
(e) the Buyer shall have received the opinion of the Shareholders'
and the Seller's counsel in customary form reasonably satisfactory to the Buyer;
(f) the Shareholders, the Seller and the Company shall have
performed in all material respects their obligations, agreements and covenants
contained in this Agreement required to be performed on or prior to the Closing
Date, including the delivery of all required audited financial statements, and
the representations and warranties of the Shareholders and the Seller contained
in this Agreement shall be true and correct in all material respects on and as
of the Closing Date, and the Buyer shall have received a certificate from the
Shareholders and the Seller to that effect;
(g) the Buyer shall have satisfactorily completed its due diligence
review of the Company's financial condition and business; and
(h) the Buyer shall have consummated an equity financing for
minimum net proceeds of $7,500,000 (the "Equity Financing").
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ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION OF AGREEMENT.
This Agreement and the Plan of Merger may be terminated at any time
prior to the Closing:
(a) By mutual written consent of all of the parties hereto;
(b) By the Buyer or NTS-Inc. if the other party goes into liquidation,
has an application or order made for its winding up or dissolution, has a
resolution passed or steps taken to pass a resolution for its winding up or
dissolution, becomes unable to pay its debts as and when they fall due, or has a
receiver, receiver and manager, administrator, liquidator, provisional
liquidator, official manager or administrator appointed to it or any of its
assets;
(c) By the Buyer or by NTS-Inc. if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Transactions; or
(d) By the Buyer or NTS-Inc. if the Closing does not occur by August
30, 2004.
SECTION 8.2 PROCEDURE AND EFFECT OF TERMINATION.
In the event of termination of this Agreement by a party pursuant to
Section 8.1, written notice shall be given to the other party(ies) specifying
the provision of Section 8.1 pursuant to which such termination is made such
agreement and the obligations and rights thereunder shall be deemed terminated
and canceled and there shall be no liability on the part of a party (or its
officers, directors, partners or Affiliates), except as a result of any breach
of this Agreement by such party or to the extent such party is entitled to
indemnification under Section 9, or as a result of a violation of Section 10.7.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 SHAREHOLDERS' INDEMNIFICATION.
Following the Closing, each of the Shareholders, jointly and severally,
agrees to protect, defend, indemnify and hold the Buyer harmless with respect to
any and all claims, demands, suits, actions, administrative proceedings, losses,
damages, obligations, liabilities, costs and expenses, including without
limitation reasonable legal and other costs and expenses of investigating and
defending any actions or threatened actions, up to the aggregate amount of the
Purchase Price paid to the Shareholders at the Closing which arise as a result
of or which are related to (i) any active or passive act, omission, occurrence,
event or condition that occurred prior to the Closing Date in connection with
(a) the ownership of the Seller's capital stock or the Company's Membership
Interests; (b) the Company's compliance with federal, state or local laws,
regulations or orders; (c) any environmental or hazardous material claim,
personnel claim or product liability claim relating to the Company; (d) any
dispute or controversy between the
33
Company's customers and other parties which, in the aggregate, are valued at
more than $10,000, or (ii) any material misrepresentation or breach of any of
the representations, covenants or warranties of the Shareholders and the Seller
contained herein; or any material misstatements or failure to state a material
fact required to be stated with respect to the information provided by the
Company, the Shareholders or the Seller for inclusion in the Form 8-K to be
filed with the Commission in connection with the Transactions and the
Registration Statement, provided that the Buyer complies with the following
indemnification procedure:
(1) The Buyer shall, as soon as practicable (but in any event
within sixty (60) days) after it learns of a claim for indemnification under
this Section 9.1, give written notice to the Shareholders of its claim for
indemnification, which notice shall set forth the amount involved in the claim
for indemnification and contain a reasonably thorough description of the facts
constituting the basis of such claim;
(2) The Shareholders shall have a period of thirty (30) days from
the receipt of the notice referred to above to respond to the indemnity claim to
the satisfaction of the Buyer. During such 30-day period, the Buyer, on the one
hand, and the Shareholders, on the other hand, shall use their respective best
efforts to attempt in good faith to agree upon a mutually acceptable resolution
as to their respective rights with respect to any such claim for
indemnification, in which case the parties shall promptly prepare and sign a
memorandum setting forth such agreement;
(3) In the event that no agreement is reached during the 30-day
period specified in subsection 9.1(2), then the Shareholders shall be jointly
and severally obligated to pay such claim. The Buyer may elect to pay such claim
and the Shareholders shall be jointly and severally obligated to reimburse the
Buyer the amount thereof.
(4) The Buyer shall not settle or compromise any such claim
without the prior written consent of NTS-Inc. unless suit shall have been
instituted against the Buyer and each of the Shareholders shall have failed,
after reasonable notice of institution of the suit, to take control of such suit
on behalf of the Buyer. If any Shareholder admits, or all Shareholders admit, in
writing that it or he will be liable to the Buyer with respect to the full
amount and as to all material elements of a third party claim alleging damages
should the third party prevail in such suit, then the Shareholder(s) shall have
the right to assume full control of the defense of such claim, and the Buyer
shall be entitled to participate in the defense of such claim only with the
consent of such Shareholder(s).
(5) The Buyer shall be entitled to recover all reasonable costs,
fees (including attorneys' fees), expenses and other damages to enforce against
the Shareholders its indemnification rights under this Section 9.1.
Notwithstanding the foregoing, the indemnification of Xxxxxx and
Xxxxxxxx shall be limited to the sum of One Hundred Thousand Dollars ($100,000)
each, which sum is to be inclusive of all damages, costs, obligations,
liabilities, and legal expenses.
34
SECTION 9.2 BUYER AND MERGER SUB INDEMNIFICATION.
Following the Closing, the Buyer and Merger Sub jointly and severally
agree to protect, defend, indemnify and hold the Shareholders harmless with
respect to any and all damages, including without limitation reasonable legal
and other costs and expenses of investigating and defending any actions or
threatened actions, which arise as a result of or which are related to any
material misrepresentation or breach of any of the representations, covenants or
warranties of the Buyer or Merger Sub contained herein, provided that the
Shareholders comply with the following indemnification procedure:
(1) The Shareholders shall, as soon as practicable (but in any
event within sixty (60) days) after one of them learns of a claim for
indemnification under this Section 9.2, give written notice to the Buyer and
Merger Sub of its claim for indemnification, which notice shall set forth the
amount involved in the claim for indemnification and contain a reasonably
thorough description of the facts constituting the basis of such claim;
(2) The Buyer and Merger Sub shall have a period of thirty (30)
days from the receipt of the notice referred to above to respond to the
indemnity claim to the satisfaction of the Shareholders. During such 30-day
period, the Buyer and Merger Sub, on the one hand, and the Shareholders, on the
other hand, shall use their respective best efforts to attempt in good faith to
agree upon a mutually acceptable resolution as to their respective rights with
respect to any such claim for indemnification, in which case the parties shall
promptly prepare and sign a memorandum setting forth such agreement;
(3) In the event that no agreement is reached during the 30-day
period specified in subsection 9.2(2), then the Buyer and Merger Sub shall be
obligated to pay such claim. The Shareholders may elect to pay such claim and
the Buyer and Merger Sub shall be obligated to reimburse the Shareholders the
amount thereof.
(4) The Shareholders shall not settle or compromise any such claim
without the prior written consent of the Buyer and Merger Sub unless suit shall
have been instituted against the Shareholders and the Buyer and Merger Sub shall
have failed, after reasonable notice of institution of the suit, to take control
of such suit on behalf of the Shareholders. If the Buyer and Merger Sub admit in
writing that they will be liable to the Shareholders with respect to the full
amount and as to all material elements of a third party claim alleging damages
should the third party prevail in such suit, then the Buyer and Merger Sub shall
have the right to assume full control of the defense of such claim, and the
Shareholders shall be entitled to participate in the defense of such claim only
with the consent of the Buyer and Merger Sub.
(5) The Shareholders shall be entitled to recover all reasonable
costs, fees (including attorneys' fees), expenses and other damages to enforce
against the Buyer and Merger Sub their indemnification rights under this Section
9.2.
35
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS.
The representations and warranties of the Shareholders and the Seller
shall terminate at the end of one year after the Closing Date with the exception
of those representations and warranties contained in Sections 3.2 and 3.16,
which will terminate at the end of three years after the Closing Date. The
representations and warranties of the Buyer and Merger Sub shall terminate at
the end of one year after the Closing Date with the exception of those
representations and warranties contained in Section 5.2, which will terminate at
the end of three years after the Closing Date. Any claim of any party based on
fraud shall survive the Closing for the applicable statute of limitations. The
covenants and agreements contained in this Agreement shall survive the Closing
and shall continue until all obligations with respect thereto shall have been
performed or satisfied or shall have terminated in accordance with their terms.
SECTION 10.2 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or certified
mail (return receipt requested) or sent via facsimile to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to the Buyer or Merger Sub to: AccuPoll Holding Corp
00000 Xxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
with a copy to: Xxxx X. Xxxxxxx
Xxxxx + Xxxxxx L.L.P.,
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
(b) If to the Seller or
the Shareholders: NTS Data Services, Corp.
c/o NTS Data Services, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxx Xxxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxxxx XxXxxx
NTS Data Services, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxx Xxxxx, Xxx Xxxx 00000
Xxxxxxx X. Xxxxxx
000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
36
Xxxx X. Xxxxxxxx
00 X. Xxxxx Xxxxxx #000
Xxxxxxxx, Xxxxxxx 00000
with a copy to: Xxxxxx Xxxxxx
Xxxxx + Xxxxx
800 Cathedral Park Tower
00 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
SECTION 10.3 INTERPRETATION.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
SECTION 10.4 MISCELLANEOUS.
This Agreement, together with the Plan of Merger, (including the
documents and instruments referred to herein and therein) (a) constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof; (b) shall not be assigned by operation of law or
otherwise; and (c) shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of California (without
giving effect to the provisions thereof relating to conflicts of law).
SECTION 10.5 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
SECTION 10.6 PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto. Nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
SECTION 10.7 CONFIDENTIALITY.
The parties agree that they will keep confidential and not disclose or
divulge any confidential, proprietary or secret information which they may
obtain from the Buyer, Merger Sub, the Company, the Shareholders or the Seller
in connection with the Transactions, or pursuant to inspection rights granted
hereunder, or reveal the financial or other terms and conditions of this
Agreement or the Letter of Intent unless such information is or hereafter
becomes public information through means other than a default hereof by such
party or is required to be disclosed by applicable law, including applicable
securities laws or stock exchange rules or regulations. The obligations of this
Section 10.7 shall survive any termination of this Agreement.
37
SECTION 10.8 TIME PERIOD.
The parties acknowledge that time is not of the essence with respect to
the fulfillment of the respective obligations of the parties hereto and the
Closing. The parties further acknowledge that either party may make time of the
essence by delivering a notice to that effect at any time on or prior to the
Closing Date.
SECTION 10.9 AMENDMENT.
This Agreement may be amended only by a written agreement executed by
all the parties.
SECTION 10.10 ADVICE OF LEGAL COUNSEL.
Each party acknowledges and represents that, in executing this
Agreement, it has had the opportunity to seek advice as to its legal rights from
legal counsel and that the person signing on its behalf has read and understood
all of the terms and provisions of this Agreement. This Agreement shall not be
construed against any party by reason of the drafting or preparation thereof.
SECTION 10.12 SEVERABILITY.
If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
[SIGNATURE PAGE FOLLOWS]
38
IN WITNESS WHEREOF, the Buyer, Merger Sub, the Seller and the
Shareholders have caused this Agreement and Plan of Reorganization to be signed
by their respective duly authorized representatives as of the date first written
above.
ACCUPOLL HOLDING CORP.
By: ________________________
Name: ________________________
Title: ________________________
NTSD ACQUISITION, INC.
By: ________________________
Name: ________________________
Title: ________________________
NTS DATA SERVICES CORP.
By: ________________________
Name: ________________________
Title: ________________________
NTS DATA SERVICES, INC.
By: ________________________
Name: ________________________
Title: ________________________
---------------------------------
Xxxxxxx X. Xxxxxx
---------------------------------
Xxxx X. Xxxxxxxx
39
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
OF
NTS DATA SERVICES CORP.
(A DELAWARE CORPORATION)
INTO
NTSD ACQUISITION, INC.
(A DELAWARE CORPORATION)
This Agreement and Plan of Merger (the "Agreement"), dated
_______, 2004, is entered into between NTS DATA SERVICES CORP. ("NTS"), a
Delaware corporation, and NTSD ACQUISITION, INC. ("NTSD Acquisition"), a
Delaware corporation, pursuant to Section 251 of the General Corporation Law of
the State of Delaware (the "DGCL"). NTS and NTSD Acquisition agree as follows:
1. NAMES.
-----
(a) The names of the constituent corporations
are NTS DATA SERVICES CORP. and NTSD
ACQUISITION, INC. (the "Constituent
Corporations").
(b) The name of the surviving corporation is
NTSD ACQUISITION, INC.
2. CONSUMMATING THE MERGER. The merger of NTS into NTSD
Acquisition (the "Merger") will be consummated upon
the Surviving Corporation's executing a Certificate
of Merger under Section 252 of the DGCL (the
"Certificate of Merger") and causing it to be filed
with the Secretary of State of the State of Delaware.
The effective date of the Merger shall be the date
upon which the Certificate of Merger is filed with
the Delaware Secretary of State (the "Effective
Date").
3. MERGER. Upon the terms and conditions of this
Agreement and in accordance with the DGCL, on the
Effective Date, NTS shall be merged with and into
NTSD Acquisition, which shall continue to be governed
by the laws of the State of Delaware, and the
separate corporate existence of NTS shall thereupon
cease. (NTSD Acquisition, as the surviving
corporation, is sometimes referred to as the
"Surviving Corporation"). The Merger shall be
pursuant to the provisions and with the effect
provided in the DGCL.
4. ISSUED AND OUTSTANDING STOCK.
(a) The designation and number of outstanding
shares of each class of NTS are 100 common
shares having a par value of $1.00 per
share, all of which are entitled to vote
(the "NTS Common Stock"). The number of
shares aforementioned is not subject to
change prior to the Effective Date.
(b) The designation and number of outstanding
shares of NTSD Acquisition are 1,000 common
shares having a par value of $0.0001 per
share, all of which are entitled to vote
(the "NTSD Acquisition Common Stock"). The
number of shares aforementioned is not
subject to change prior to the Effective
Date.
5. CANCELLATION OF STOCK. The manner of converting the
outstanding shares of the Constituent Corporations
into securities, cash or other property of the
Surviving Corporation shall be as follows:
(a) On the Effective Date, each issued and
outstanding share of NTS Common Stock shall
be cancelled and shall cease to exist
without any consideration being paid to the
stockholders in respect thereof, and the
separate corporate existence of NTS shall
cease.
(b) On the Effective Date, each issued and
outstanding share of NTSD Acquisition Common
Stock which is then issued and outstanding
will remain issued and outstanding.
6. CERTIFICATE OF INCORPORATION. On the Effective Date,
the Certificate of Incorporation of NTSD Acquisition
shall be amended to change the name of the
corporation to NTS Data Services Corp. On the
Effective Date, the Certificate of Incorporation of
the Surviving Corporation shall be the Certificate of
Incorporation of NTSD Acquisition, as amended by
changing the name of the Surviving Corporation to NTS
Data Services Corp.
7. BYLAWS. On the Effective Date, the bylaws of NTSD
Acquisition as in effect immediately prior to the
Effective Date shall be the bylaws of the Surviving
Corporation.
2
8. DIRECTORS AND OFFICERS. The officers and directors of
NTSD Acquisition as of the Effective Date will
continue to serve in their respective capacities as
officers and directors of the Surviving Corporation
until their successors have been elected and have
qualified or until their earlier death, removal or
resignation.
9. RIGHTS AND DUTIES OF THE SURVIVING CORPORATION. On
the Effective Date, for all purposes the separate
existence of NTS shall cease, and NTS shall be merged
with and into NTSD Acquisition, which, as the
Surviving Corporation, shall thereupon and thereafter
possess all the rights, privileges, powers and
franchises, as well of a public as of a private
nature, and be subject to all the restrictions,
disabilities and duties of NTS; and all and singular,
the rights, privileges, power and franchises of NTS,
and all property, real, personal and mixed, and all
debts due to NTS on whatever account, as well for
stock subscriptions as all other things in action or
belonging to NTS shall be vested in the Surviving
Corporation; and all property, rights, privileges,
powers and franchises (including, without limitation,
all patents, trademarks, copyrights, applications
therefor, and inventions), and all and every other
interest shall be thereafter as effectually the
property of the Surviving Corporation as they were of
NTS, and the title to any real estate vested by deed
or otherwise, under the laws of the State of Delaware
or any other state, in NTS, shall not revert or be in
any way impaired by reason of the DGCL or the laws of
any other state; provided that all rights of
creditors and all liens upon any property of NTS
shall be preserved unimpaired, and all debts,
liabilities and duties of NTS shall thenceforth
attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said
debts, liabilities and duties had been incurred or
contracted by it. If at any time the Surviving
Corporation shall consider or be advised that any
further assignment or assurances in law or any things
are necessary or desirable to vest in the Surviving
Corporation, according to the terms hereof, the title
of any property or rights of NTS, the last acting
officers and directors of NTS, as the case may be, or
the corresponding officers and directors of the
Surviving Corporation shall and will execute and make
all such proper assignments and assurances and do all
things necessary or proper to vest title in such
property or rights in the Surviving Corporation, and
otherwise to carry out the purposes of this
Agreement.
10. DIRECTOR AND SHAREHOLDER APPROVAL. This Agreement has
been adopted by the board of directors of each of the
Constituent Corporations and approved by the
stockholders of each of the Constituent Corporations
entitled to vote thereon pursuant to the requirements
of the DGCL.
3
11. TERMINATION. Anything in this Agreement or elsewhere
to the contrary notwithstanding, this Agreement may
be terminated and abandoned by either of the
Constituent Corporations by an appropriate resolution
of its board of directors at any time prior to the
Effective Date.
IN WITNESS WHEREOF, each of NTS Data Services Corp. and NTSD
Acquisition, Inc. has caused this Agreement to be executed as of the day and
year first above written, and each of them hereby affirms, under penalties of
perjury, that this Agreement is its act and deed.
NTS DATA SERVICES CORP.
By: _____________________________
Name:
Title:
NTSD Acquisition, Inc.
By: _____________________________
Name:
Title:
4
SELLER'S DISCLOSURE SCHEDULE - ARTICLE 3
Under Section 3.10, the representations and warranties are limited to
the extent of the Company's Agreements with Xxxxxxx Associates and Sparks + Co.,
Inc., dated respectively May 16, 2003, and May 21, 2003, referred to on Schedule
3.15 and previously disclosed during the due diligence phase as item F3.
SCHEDULE 1.1(I)
COUNTRIES OTHER THAN USA IN WHICH
THE COMPANY DOES BUSINESS
None presently.
2
SCHEDULE 2.2
ALLOCATION OF CASH AND PAYMENT SHARES
NAME SHARE OF CASH + SHARES
---- ----------------------
NTS Data Services, Inc. 90%
Xxxx X. Xxxxxxxx 5%
Xxxxxxx X. Xxxxxx. 5%
3
SCHEDULE 3.2(A)
OWNERSHIP OF THE SELLER'S COMMON STOCK
----------------------------------------
NAME NUMBER OF SHARES
----------------------------------------
NTS Data Services, Inc. 90
----------------------------------------
Xxxx X. Xxxxxxxx 5
----------------------------------------
Xxxxxxx X. Xxxxxx 5
----------------------------------------
4
SCHEDULE 3.3
SUBSIDIARIES AND OTHER SECURITIES OWNED
None.
5
SCHEDULE 3.6
OBLIGATIONS GREATER THAN
$10,000.00 IN THE AGGREGATE INCURRED
AFTER DECEMBER 31, 2003
None known.
6
SCHEDULE 3.8
LIENS, REAL AND TANGIBLE PROPERTY
LEASES + ASSETS
1. Section 3.8(b) -- Real Estate Lease:
Sublease dated as of June 7, 2004 by and between NTS Data Services, LLC
and NTS Data Services, Inc.
2. Section 3.8(d): -- Asset List:
See following pages.
7
---------------------------------------------------------------------------------------------------------------------------------
NTS DATA SERVICES, LLC - MATERIAL ASSET LIST
---------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT
LOCATION USER QUAN DESCRIPTION MONITOR OP. SYS.
---------------------------------------------------------------------------------------------------------------------------------
NTS L Xxxxxx 1 PC - Dual 400M 21" XP
NTS L Xxxxxx 1 PC - 1.7G Dell 17" 2000
NTS Xxxx M 1 PC - 2.8G Dell 19 Flat Panel XP
NTS Xxxxxxx 1 PC - 2.4G Dell 19" XP
NTS Xxx X 0 XX - 0.0X Xxxx 00" XX
NTS M Xxxxx 1 PC - 2.4G Dell 21" XP
NTS J Xxxxx 1 PC - 1 G Dell 19" 2000
NTS J Xxxxxxxx 0 XX - 0X XXX 00" XX
NTS J Xxxxxxxx 0 XX - 0.0X Xxxx X/X 00
NTS D Xxxxxxxxxxx 0 XX - 0X XXX 00" XX
NTS Xxxx 0 XX - 000X Xxxx 00" XX
NTS Xxxx 0 Xxxxxx - 0X Xxxx X/X 0000
NTS Dick K 1 Laptop N/A XP
NTS Xxxx J 1 Laptop - Dell N/A XP
NTS Xxxx Xxxxxxxxx 1 Desktop - Custom Build 15" XP
NTS Xxxxxxx 1 Desktop 17" 98
NTS Xxxx Xxxxxxx 1 Laptop - 1.6G Dell N/A XP
NTS Dev Area 5 PC - 466M Celeron N/A 98
NTS Xxx Xxxx 0 XX - 000X Xxxxxxx N/A 98
NTS Oracle Server 1 PC - Dual 1G N/A 2000
NTS Elixer 1 PC - 400M Compaq 15" 98
NTS Citrix Test 2 PC - Dual 2.0 XEON HP N/A 2003 Server
NTS Oracle Test 1 PC - 1G Dell N/A 2003 Server
NTS Xxxx X 0 XX - 0X Xxxx 00" XX
NTS Xxxx M 1 PC - 400M Celeron 15" 2000
NTS Term Server 1 PC - 550M Gateway N/A 2000 Server
NTS Modem Share 1 PC - 133M N/A NT4
NTS File Server 1 PC - 233M Compaq N/A Netware 4
NTS FTP Server 1 PC - 400M Compaq N/A 2000 Server
Niagara BOE Users 6 PC - 2.4G Dell 18" Flat Panel XP
Niagara BOE Users 2 PC - 2.6G Dell 18" Flat Panel XP
Niagara BOE Users 5 PC - 466M Ipaq 17" 98
Niagara BOE Users 2 PC - 466M Celeron 17" 98
Niagara Server 2 Server - ProLiant 1600 15" NT4
Niagara Jukebox 1 Juke - HP SureStore Optical 40 N/A
Xxxxxx XXX Users 6 PC - 2.4G Dell 18" Flat Panel XP
---------------------------------------------------------------------------------------------------------------------------------
8
---------------------------------------------------------------------------------------------------------------------------------
NTS DATA SERVICES, LLC - MATERIAL ASSET LIST
---------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT
LOCATION USER QUAN DESCRIPTION MONITOR OP. SYS.
---------------------------------------------------------------------------------------------------------------------------------
Xxxxxx XXX Users 1 PC - 2.0G Compaq 17" XP
Xxxxxx XXX Users 14 PC - 400 IPAQ's 17" 98
Xxxxxx Server 2 Server- ProLiant 1600 15" in Rack NT4
Xxxxxx Server 2 Server- ProLiant ML370 2000 Server
Xxxxxx Jukebox 1 Juke - HP SureStore Optical 220MX
Sch Clerk Office Users 3 2.4G Dell 21 Inch Monitor XP
Sch Clerk Office Users 13 400 P2 Compaq 21 Inch Monitor
Sch Clerk Server 2 Proliant 1600 17 Inch Monitor NT
---------------------------------------------------------------------------------------------------------------------------------
PRINTERS
---------------------------------------------------------------------------------------------------------------------------------
NTS 2 HP Laserjet 4050
NTS 2 HP LaserJet 4100
NTS 1 HP 4Si
NTS 1 HP 1000
NTS 1 HP 4000
Xxxxxx 2 HP 5SI
Xxxxxx 1 Okidata Pin Feed
Niagara 3 HP 4300
Niagara 1 HP 8100
Niagara 3 Dymo Label Printers
Sch Clerk Printers 2 HP 4050
Sch Clerk Slip Printers 7 Axiohm A758 with Cutter
---------------------------------------------------------------------------------------------------------------------------------
MISC EQUIPMENT
---------------------------------------------------------------------------------------------------------------------------------
NTS 6 Personal Uninterrupted Power Supplies
NTS 2 Server Grade Uninterrupted Power Supplies
NTS 1 Ricoh 410 Scanner
NTS 1 HP 4050 Scanner
NTS 1 Intel Switch for Developers
NTS 1 Linksys DSL Router
NTS 1 Adobe Acrobat
NTS Tape Backup 1 HP DDS3
NTS 1 Microfilm Digitizer
Xxxxxx 1 Intel Switch
Xxxxxx Tape Backup 1 DDS4 Autoloader
Xxxxxx 2 Ricoh IS 420 Scanners
Niagara 2 Intel Switches
Niagara 1 Linksys DSL Router
---------------------------------------------------------------------------------------------------------------------------------
9
---------------------------------------------------------------------------------------------------------------------------------
NTS DATA SERVICES, LLC - MATERIAL ASSET LIST
---------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT
LOCATION USER QUAN DESCRIPTION MONITOR OP. SYS.
---------------------------------------------------------------------------------------------------------------------------------
Niagara Tape Backup 1 HP DDS3
Niagara 1 Ricoh IS420
Niagara 2 HP 4570 Scanners
Sch Clerk Tape Backup 1 HP DDS3 Autoloader
Sch Clerk Cash Drawers 7 POS Systems
Sch Clerk Xxxxxxxx 0 Xxxxxxx X0000
Xxx Clerk 2 Intel Switchs
---------------------------------------------------------------------------------------------------------------------------------
SW LICENSES
---------------------------------------------------------------------------------------------------------------------------------
NTS Development 5 Visual Foxpro 8
NTS Development 10 Visual Foxpro 7
NTS Office Suite 15 Microsoft Office Small Business Edition
NTS MISC 1 Adobe Acrobat
Xxxxxx Software 1 Legato AX
Xxxxxx Software 1 Legato DX
Xxxxxx Software 10 Microsoft SQL Server + 10 CALS
Niagara Office Suite 10 Microsoft Office Small Business Edition
Niagara Software 1 Legato DX
---------------------------------------------------------------------------------------------------------------------------------
OTHER
---------------------------------------------------------------------------------------------------------------------------------
NTS 6 Office Cubicles
NTS ~12 Office Chairs
NTS 50% Phone System (system split by NTS + CMI)
NTS 3 Fax Machines
Niagara 1 Fax Machine
Xxxxxx 1 Fax Machine
---------------------------------------------------------------------------------------------------------------------------------
10
SCHEDULE 3.9(C)
INTELLECTUAL PROPERTY
Annexed hereto is a listing of the intellectual property rights held by
the Company and previously disclosed during the due diligence phase as Item C7.
References in this Schedule 3.9(c) to "Exhibit C7-1" through "Exhibit C7-6"
refer to the Exhibits attached to the Due Diligence materials heretofore
provided by Seller to Purchaser.
NTS DATA SERVICES, LLC
The attached "Exhibit C7-1" is a representative software license
agreement that NTS executes with each customer using NTS developed
software including:
TEAM-2000 Voter Registration
Sign-It! Signature Digitization
EMS Election Management System
Image-It! Full Document Imaging
TERACS Total Election Reporting and Certification System
PIXTRAN
The attached "Exhibit C7-2" is the Software Distribution License
Agreement executed between Pixtran and NTS. NTS utilizes tool kits
provided by Pixtran in the Sign-It! And Image-It! Systems for the
purposes of image processing and display. In order to decrease costs,
NTS has prepaid for a number of licenses and reports on a quarterly
basis to Pixtran the number of licenses that have been used. The most
current (2003 Q4) royalty report is attached as "Exhibit C7-3"
OPTICAL STORAGE SOLUTIONS
On July 28, 1999, NTS entered into a "Joint Marketing Agreement" with
Optical Storage Solutions (OSS) in order to sell OSS' product LANDEX to
the Schenectady County, NY Clerk for the purposes of Land and Court
Records management.
On June 18, 2000, NTS and OSS executed a "Modification of Joint
Marketing Agreement" which added Texas to the territory where NTS could
sell LANDEX.
On July 11, 2000, NTS and OSS executed a "Software Escrow Agreement"
requiring OSS to place a copy of the source code with our attorney.
The three agreements between OSS and NTS are included as "Exhibit C7-4"
11
KIVA (FORMERLY NSS CORP)
Signaware Corp, (formerly St. Clair Software) was a subsidiary of NTS
until being folded into NTS Data Services, (**AHS - INC or LLC in what
year).
On May 7, 1990, Signaware and NSS Corp entered into a distribution
agreement (attached as "Exhibit C7-5") for the purpose of NSS selling
DOS based Sign-It! Software to banking clients. NSS (then Kiva) was
minimally successfully in penetrating the banking market with signature
digitization, selling Sign-It! To several banks in the U.S. along with
one bank in Saudi Arabia. NTS stopped maintenance on this product in
May, 2000 after providing migration support to the banking customers
and Kiva.
An email to this effect is attached as "Exhibit C7-6" showing Xxxx
Xxxxxxx, President of NSS, acceptance and understanding.
WANG LABORATORIES
During the late 1980's and early 1990's, Signaware had a marketing
relationship with Wang and Wang sold a Xxxx XX minicomputer version of
the Sign-It! Signature digitization system in several Central and South
American countries as well as the Caribbean. No support on these
products has been provided for approximately 10 years and NTS is
unaware of any customers still utilizing this product.
LEGATO, A DIVISION OF EMC, FORMERLY OTG (OPTICAL TECHNOLOGY GROUP)
NTS has used products from Legato including Disk Extender (DX), a
storage management product useful in managing optical jukeboxes and
Application Extender (AX), a product for content management including
robust full document imaging features. The NTS full document imaging
product included with Sign-It! Is now used in place of AX in most
instances. NTS still utilizes DX where images must be stored on optical
media rather than RAID.
12
SCHEDULE 3.10
CUSTOMER AGREEMENTS
Annexed hereto is a listing of the customer agreements held by the
Company and previously disclosed during the due diligence phase as item C6.
----------------------------------------------------------------------------------------------------------------------------------
COUNTY NAME NO. VOTER REG. FULL DOCUMENT SIGNATURE IMAGE TOTAL DATE OF
OF IMAGING DIGITIZATION CONVERSION ELECTION ORIGINAL
VOTERS REPORTING AND INSTALL
CERTIF.
----------------------------------------------------------------------------------------------------------------------------------
Albany County Board of Elections
County Court House Room 38
00 Xxxxx Xxxxxx
Xxxxxx XX 00000
Xxxxx Xxxxxxxx, Deputy Commissioner
Xxxxx Xxxx, Deputy Commissioner
(000) 000-0000 207,281 X X X X X 1994
----------------------------------------------------------------------------------------------------------------------------------
Allegany County Board of Elections
0 Xxxxxxxx Xxxxxx
Xxxxxxx XX 00000
Xxxxxx Xxxxxxx, Deputy Commissioner
Xxxxxxxxx Xxxxx, Deputy Commissioner
(000) 000-0000 27,456 X X X 1995
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx County Board of Elections
00 Xxxxxx Xxxxxx Government Plaza
XX Xxx 0000
Xxxxxxxxxx XX 00000
Xxxx Xxxxx, Deputy Commissioner
Xxxxxxx Xxxxxxxx, Deputy Commissioner
(000) 000-0000 125,859 X X X X 1993
----------------------------------------------------------------------------------------------------------------------------------
Cattaraugus County Board of Elections
000 Xxxxx Xxxxxx
Xxxxxx Xxxxxx XX 00000
Xxx Xxxxx, Commissioner
Xxxxxxx X. Xxxxxxxxx, Commissioner
(000) 000-0000 51,026 X X X X 1993
----------------------------------------------------------------------------------------------------------------------------------
Cayuga County Board of Elections
00 Xxxxx Xxxxxx
Xxxxxx XX 00000
Xxxxxxx X. Xxxxxxx, Commissioner
Xxxx Xxxxxxxxxx, Commissioner
(000) 000-0000 49,003 X X X 1995
----------------------------------------------------------------------------------------------------------------------------------
Chautauqua County Board of Elections
Xxxxxx Xxxxxx Xxxxxxxx
0 Xxxxx Xxxx Xxxxxx
Xxxxxxxx XX 00000
Xxxxx Xxxxxx, Commissioner
Xxxx Xxxxx, Commissioner
(000) 000-0000 89,758 X X X 1995
----------------------------------------------------------------------------------------------------------------------------------
Chenango County Board of Elections
Xxxxxx Xxxxxx Xxxxxxxx 0 Xxxxx Xxxxxx
Xxxxxxx XX 00000
Xxxxx X. Xxxxxxx, Commissioner
Xxxxx X. Xxxxxxxx, Commissioner
(000) 000-0000 28,622 X X 1995
----------------------------------------------------------------------------------------------------------------------------------
Columbia County Board of Elections
000 Xxxxx Xxxxxx
Xxxxxx XX 00000
Xxxxxx X. Xxxxxx, Commissioner
Xxxx Xxxxx, Commissioner
(000) 000-0000 36,551 X X X 1995
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
COUNTY NAME NO. VOTER REG. FULL DOCUMENT SIGNATURE IMAGE TOTAL DATE OF
OF IMAGING DIGITIZATION CONVERSION ELECTION ORIGINAL
VOTERS REPORTING AND INSTALL
CERTIF.
----------------------------------------------------------------------------------------------------------------------------------
Cortland County Board of Elections
County Court House
00 Xxxxxxxxx Xx. Xxxxx 000
Xxxxxxxx XX 00000-0000
Xxxxxx X. Xxxx, Commissioner
Xxxxxxxxx X. Xxxxx, Commissioner
(000) 000-0000 28,276 X X X 1995
------------------------------------------------------------------------------------------------------------------------------------
Dutchess County Board of Elections
00 Xxxxxx Xx.
Xxxxxxxxxxxx XX 00000-0000
Xxxx X. Xxxxxxx, Deputy Commissioner
Xxxx Xxxxx, Deputy Commissioner
(000) 000-0000 160,000 X X X X X 2001
------------------------------------------------------------------------------------------------------------------------------------
Franklin County Board of Elections
000 Xxxx Xxxx Xxxxxx
Xxxxxx XX 00000-0000
Xxxxxxx Xxxxx, Commissioner
Xxxxx Xxxxxx, Commissioner
(000) 000-0000 27,188 X X X 1994
------------------------------------------------------------------------------------------------------------------------------------
Xxxxxx County Board of Elections
0000 Xxxxx 00 Xxx0
Xxxxxxxxx XX 00000
Xxxxx Xxxxx, Deputy Commissioner
Xxxxx Xxxxxxx, Deputy Commissioner
(000) 000-0000 31,572 X 2001
------------------------------------------------------------------------------------------------------------------------------------
Genesee County Board of Elections
County Building One
00 Xxxx Xxxxxx XX Xxx 000
Xxxxxxx XX 00000
Xxxxxxx Xxxxxxx, Commissioner
Xxxx Xxxxxxx, Commissioner
(000) 000-0000 35,592 X X X 1996
------------------------------------------------------------------------------------------------------------------------------------
Xxxxxx County Board of Elections
000 Xxxx Xxxxxx 0xx Xxxxx
XX Xxx 000
Xxxxxxxx XX 00000
Xxxxx XxXxxxxxxxxx, Commissioner
Xxxxxx Xxxxx, Commissioner
(000) 000-0000 29,649 X X X X X 1994
------------------------------------------------------------------------------------------------------------------------------------
Xxxxxxxx County Board of Elections
Xxxxx 0 XX Xxx 000
Xxxx Xxxxxxxx XX 00000
Xxxxxx Xxxx, Commissioner
Xxxxxxxx Xxxxxx, Commissioner
(000) 000-0000 5,081 X X 1997
------------------------------------------------------------------------------------------------------------------------------------
Jefferson County Board of Elections
000 Xxxxxxx Xxxxxx
Xxxxxxxxx XX 00000
Xxxxx Xxxxx, Deputy Commissioner
Xxxxx Xxxxxxx, Deputy Commissioner
(000) 000-0000 57,545 X X X 1993
------------------------------------------------------------------------------------------------------------------------------------
Xxxxx County Board of Elections
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxx X. Xxxxx, Commissioner
Xxxxxx X. XxXxxx, Commissioner
(000) 000-0000 16,045 X X X 1994
------------------------------------------------------------------------------------------------------------------------------------
Xxxxxxxxxx County Board of Elections
0 Xxxxx Xxxxxx, Xx 000
Xxxxxxx, XX 00000
Xxxxx X. Xxxxxxxx, Commissioner
Xxxxxx X. Xxxxx, Commissioner
(000) 000-0000 37,000 X X 2001
------------------------------------------------------------------------------------------------------------------------------------
2
----------------------------------------------------------------------------------------------------------------------------------
COUNTY NAME NO. VOTER REG. FULL DOCUMENT SIGNATURE IMAGE TOTAL DATE OF
OF IMAGING DIGITIZATION CONVERSION ELECTION ORIGINAL
VOTERS REPORTING AND INSTALL
CERTIF.
----------------------------------------------------------------------------------------------------------------------------------
Madison County Board of Elections
Xxxxx Xxxxx Xxxxxx XX Xxx 000
Xxxxxxxxxx XX 00000
Xxxxx X. Xxxxx, Commissioner
Xxxxx X. Xxxxxxxx, Commissioner
(000) 000-0000 41,170 X X 1995
----------------------------------------------------------------------------------------------------------------------------------
Niagara County Board of Elections
000 Xxxx Xxxxxx
Xxxxxxxx XX 00000
Xxxxx Xxxxxxxxxx, Commissioner
Xxxxx X. Xxxxx, Commissioner
(000) 000-0000 136,769 X X X X X 1989
----------------------------------------------------------------------------------------------------------------------------------
Ontario County Board of Elections
00 Xxxxxxx Xxxxxx
Xxxxxxxxxxx XX 00000
Xxxxxxx Xxxxxxxx, Commissioner
Xxxx X. Xxxxxxx, Commissioner
(000) 000-0000 60,169 X X X 1992
----------------------------------------------------------------------------------------------------------------------------------
Orange County Board of Elections
00 Xxxxx Xxxx XX Xxx 00
Xxxxxx XX 00000
Xxxxx X. Xxxxx, Commissioner
Xxxxx Xxxxxx, Commissioner
(000) 000-0000 182,728 X X X X X 1993
----------------------------------------------------------------------------------------------------------------------------------
Oswego County Board of Elections
00 Xxxx Xxxxxx Xxxxxx
Xxxxxx XX 00000
Don Wart, Commissioner
Xxxxxxx X. Xxxxxxx, Commissioner
(000) 000-0000 77,959 X X X 1993
----------------------------------------------------------------------------------------------------------------------------------
Otsego County Board of Elections
Xxxxxx Xxxxxx Xxxx. 000 Xxxx Xxxxxx
Xxxxxxxxxxx XX 00000
Xxxxxx Xxxx, Deputy Commissioner
Xxxxx Xxxxxx, Deputy Commissioner
(000) 000-0000 35,311 X X X 1995
----------------------------------------------------------------------------------------------------------------------------------
Rockland County Board of Elections
00 Xxx Xxxxxxxxx Xxxx
Xxx Xxxx XX 00000
Xxxx Xxxxxxxxx, Commissioner
Xxx Xxxxx Xxxxx, Commissioner
(000) 000-0000 166,267 X X X X X 1993
----------------------------------------------------------------------------------------------------------------------------------
Saratoga County Board of Elections
00 Xxxx Xxxx Xxxxxx
Xxxxxxxx Xxx XX 00000
Xxxxx Xxxx, Xxxxxx, Commissioner
Xxxxxxx Xxxxx, Commissioner
(000) 000-0000 136,474 X X X 2002
----------------------------------------------------------------------------------------------------------------------------------
Schenectady County Board of Elections
000 Xxxxxxxx, Xxx X
Xxxxxxxxxxx XX 00000-0000
Xxxxxxx X. Xxxxxx, Commissioner
Xxxxxx Xxxxx, Commissioner
(000) 000-0000 96,131 X X X X 1992
----------------------------------------------------------------------------------------------------------------------------------
3
----------------------------------------------------------------------------------------------------------------------------------
COUNTY NAME NO. VOTER REG. FULL DOCUMENT SIGNATURE IMAGE TOTAL DATE OF
OF IMAGING DIGITIZATION CONVERSION ELECTION ORIGINAL
VOTERS REPORTING AND INSTALL
CERTIF.
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxxx County Board of Elections 1997
County Office Bldg.
000 0xx Xxxxxx Xxxx 00
Xxxxxxx Xxxx XX 00000-0000
Xxxx Xxxx, Deputy Commissioner
Xxxxxxxx X. Xxxxxx, Deputy
Commissioner
(000) 000-0000 11,486 X X
-----------------------------------------------------------------------------------------------------------------------------------
Seneca County Board of Elections
Xxx XxXxxxxx Xxxxx
Xxxxxxxx XX 00000
Xxxxxx Xxxxxxxx, Commissioner
Xxxx X. Same, Commissioner
(000) 000-0000 20,652 X X X 1995
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxxx County Board of Elections
Government Center
000 Xxxxx Xx. XX Xxx 0000
Xxxxxxxxxx XX 00000-0000
Xxxx Xxxxxxxx, Commissioner
Xxxxxxx X. Xxxx, Commissioner
(000) 000-0000 47,578 X X X 1997
-----------------------------------------------------------------------------------------------------------------------------------
Tioga County Board of Elections
Xxxxxx Xxxxxx Xxxx. 00 Xxxx Xxxxxx
Xxxxx XX 00000
Xxxxxxx Xxxxxxxx, Commissioner
Xxxxxxx X. Xxxxxxx, Commissioner
(000) 000-0000 31,503 X X X 1992
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxxx County Board of Elections
Court House Annex 000 X. Xxxxxxx
Xxxxxx XX 00000
Xxxxxxxxx X. Xxxx, Commissioner
Xxxxxxx XxXxxx, Commissioner
(000) 000-0000 54,088 X X X 1992
-----------------------------------------------------------------------------------------------------------------------------------
Ulster County Board of Elections
000 Xxxx Xxxxxx
Xxxxxxxx XX 00000
Xxxxxx X. Xxxxx, Commissioner
Xxxxx X. Xxxxxxxxxxx, Commissioner
(000) 000-0000 102,001 X X X X 1995
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx County Board of Elections
County Municipal Center 0000 Xx. Xxx.
0
Xxxx Xxxxxx XX 00000
Xxxx Xxxx Xxxxx, Commissioner
Xxxx X. Xxxxxxxx, Commissioner
(000) 000-0000 55,000 X X X X 1999
-----------------------------------------------------------------------------------------------------------------------------------
Washington County Board of Elections 35,000 X X 2003
000 Xxxxxxxx
Xxxx Xxxxxx XX 00000
Xxxxx Xxxxxxx, Commissioner
Xxxxxxxx X. Xxxxx, Commissioner
(000) 000-0000
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxx County Board of Elections
000 Xxxxxxxxx Xxxxxx Xxx. XX Xxx 000
Xxxxx XX 00000
Xxxx Xxxxxx, Deputy Commissioner
Xxxxx Xxxxxxxx, Deputy Commissioner
(000) 000-0000 53,922 X X X 1994
-----------------------------------------------------------------------------------------------------------------------------------
4
----------------------------------------------------------------------------------------------------------------------------------
COUNTY NAME NO. VOTER REG. FULL DOCUMENT SIGNATURE IMAGE TOTAL DATE OF
OF IMAGING DIGITIZATION CONVERSION ELECTION ORIGINAL
VOTERS REPORTING AND INSTALL
CERTIF.
----------------------------------------------------------------------------------------------------------------------------------
Xxxxx County Board of Elections
000 Xxxxxxx Xx, Xxx 0000
Xxxx Xxx XX 00000
Xxxxxx X. Xxxxxx, Commissioner,
Commissioner
(000) 000-0000 14,200 X X X 1996
----------------------------------------------------------------------------------------------------------------------------------
Bergen County Superint. of Elections
Xxx Xxxxxx Xxxxxx Xxxxx, Xxxx 000
Xxxxxxxxxx, XX 00000
Xxxxxxxx XxXxxxxxxx, Superintendent
(000) 000-0000 505,000 X 2001
Fax: (000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx County Superintendent of
Elections
Administration and Records Xxxxxxxx
Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
XxxxXxxx Xxxxxxxxx, Superintendent 280,000 X X X 1997
(000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
Somerset County Board of Elections
00 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Xxxxxx Xxxxxxx, Administrator
(000) 000-0000 152,900 X 1996
(000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
Union County Board of Elections 268,884 X X 1996
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Xxxxxxx Xxxxxxxxxx, Deputy
Administrator
(000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
Berks County Board of Elections
000 Xxxxx Xx., 0xx Xxxxx
Xxxxxxx, XX 00000
V. Xxxx Xxxxxxx, Director of Elections
(000) 000-0000
Fax: (000) 000-0000 190,000 X X X 1998
----------------------------------------------------------------------------------------------------------------------------------
Dauphin County Board of Elections
0 Xxxxx 0xx Xx
Xxxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxxx, Director of
Elections
(000) 000-0000 150,000 X X 2001
Fax: (000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
Lancaster County Office of Voter Reg.
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Xxxx X. Xxxxxxx, Chief Registrar/Clerk
(000) 000-0000
Fax: (000) 000-0000 255,000 X 2001
----------------------------------------------------------------------------------------------------------------------------------
Lebanon County Board of Elections
000 Xxxxx 0xx Xx., Xxxx 000
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxx, Dir. of Elections +
Reg.
(000) 000-0000 50,000 X X 1995
Fax: (000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
Lehigh County Board of Elections
Gov't Center, 00 X. 0xx Xx.
Xxxxxxxxx, XX 00000-0000
Xxxxx Xxxxxxx, Chief Clerk + Director
(000) 000-0000
Fax: (000) 000-0000 136,000 X X 1997
----------------------------------------------------------------------------------------------------------------------------------
5
----------------------------------------------------------------------------------------------------------------------------------
COUNTY NAME NO. VOTER REG. FULL DOCUMENT SIGNATURE IMAGE TOTAL DATE OF
OF IMAGING DIGITIZATION CONVERSION ELECTION ORIGINAL
VOTERS REPORTING AND INSTALL
CERTIF.
----------------------------------------------------------------------------------------------------------------------------------
Monroe County Board of Elections
Xxx Xxxxxx Xxxxx, Xxxx 000
Xxxxxxxxxxx, XX 00000,
Dir. of Elec. + Voter
Reg.
(000) 000-0000 60,000 X X 1995
Fax: (000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxxxxx County Board of Elections
0 Xxxxxxxxxx Xxxxx, Xxxxx 000
Swede and Airy Streets
Norristown, PA 19404
Xxxxxx X. Xxxxxxxxxx, Dir. of Voter
Serv.
(000) 000-0000 450,000 X X X 1996
Fax: (000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
Northampton County Board of Elections
00 Xxxxx 0xx Xx.
Xxxxxx, XX 00000
Xxxxx Xxxxxx, Chief Registrar
(000) 000-0000
Fax: (000) 000-0000 132,000 X X X X X 1997
----------------------------------------------------------------------------------------------------------------------------------
Schuylkill County Board of Elections
000 Xxxxx Xxxxxx X Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxxxxxxx X. Xxxxx, Dir. of Elec. +
Vot. Reg
(000) 000-0000 80,000 X X 1998
Fax: (000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
Union County Office of Voter
Registration
000 Xxxxx 0xx Xx.
Xxxxxxxxx, XX 00000-0000
Xxxxx X. Xxxxxxxx, Chief Clerk
(000) 000-0000 17,627 X X 2001
Fax: (000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
York County Board of Elections
0 Xxxx Xxxxxxxxx (0xx Xxxxx)
Xxxx, XX 00000
Xxxx Xxxxx, Dir. of Elections + Voter
Reg.
(000) 000-0000 180,000 X X X 1998
Fax: (000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
Kosciusko County
000 X Xxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxxx Xxxxxxx
(000) 000-0000 43,000 X X 2002
----------------------------------------------------------------------------------------------------------------------------------
XxXxxxx County Board of Elections 74,000 X X 2003
813 Lincolnway
LaPorte, IN 46350-3490
Xxxx Xxxxxxx, Co-Director
Xxxxx Xxxxx, Co-Director
(000) 000-0000
Fax: 000-000-0000
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx County Board of Elections
Rm. W 131 City/County Bldg.
200E. Washington
Xxxxxxxxxxxx, XX 00000
Xxxxxx Xxxx, Republican Board Member
(000) 000-0000
Fax: (000) 000-0000 600,000 X X X X X 1989
----------------------------------------------------------------------------------------------------------------------------------
6
----------------------------------------------------------------------------------------------------------------------------------
COUNTY NAME NO. VOTER REG. FULL DOCUMENT SIGNATURE IMAGE TOTAL DATE OF
OF IMAGING DIGITIZATION CONVERSION ELECTION ORIGINAL
VOTERS REPORTING AND INSTALL
CERTIF.
----------------------------------------------------------------------------------------------------------------------------------
Xxxx County Board of Elections X
00 Xxxxxxx Xxxxxx, Xxxxxxxx X
Xxxxxxxx, XX 00000-0000
Xxxx Xxxx
(000) 000-0000
Fax: (000) 000-0000 330,000 X 1996
----------------------------------------------------------------------------------------------------------------------------------
DeKalb County Board of Elections
0000 Xxxxxxxx Xx, Xxx 000
Xxxxxxx, XX 00000
Xxxxxxx Xxxxxxx
(000) 000-0000
Fax: (000)000-0000 340,360 X X 1997
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx County Board of Elections
000 Xxxxx Xxxxxx, XX-Xxxxx 0000
Xxxxxxx, XX 00000
Xxxx Xxxxxxxx, Director of Voter
Registr.
(000) 000-0000 400,000 X 1990
Fax: (000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
Gwinnett County Board of Elections
00 Xxxxxxx Xxxxx
Xxxxxxxxxxxxx, XX 00000
Xxxx Xxxxxxx, Sup. of Voter Reg. +
Elec.
(000) 000-0000 200,000 X 1992
Fax: (000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
Peoria (City) County Board of
Elections
000 XX Xxxxx
Xxxxxx, XX 00000
Xxxxxxxx Xxxxxxxxxx
(000) 000-0000 70,000 X 1995
Fax: (000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
7
SCHEDULE 3.11
WARRANTIES + INDEMNITIES
The Warranties and Indemnities of the Company are contained in the
Customer Agreements referred to in Schedule 3.10 and previously disclosed during
the due diligence phase as item C6.
8
SCHEDULE 3.14
PENDING AND THREATENED LITIGATION
There is no current or pending litigation or known claims against the
Company.
9
SCHEDULE 3.15
OTHER AGREEMENTS
PARTY DATE OF AGREEMENTDUE DILIGENCE ITEM
----- -------------------- --------------
County of Steuben July 28, 1993 C13
Rensselaer County Board
Of Elections April 12, 1995 C13
Xxxxx Systems
Government Services Inc. December 8, 2003 C13
Xxxxxxx Associates May 16, 2003 F3
(terminated March 3, 2004) Supplemental
Sparks + Co., Inc. May 21, 2003 F3
(terminated March 3, 2004) Supplemental
Xxxxxx Xxxxxxxxxxx October 1, 2003 F3
Computing Devices August 8, 2000 F3
American Cadastre, LLC April 20, 2004 Supplemental
Xxxxxxx Data Corporation April 23, 2004 Supplemental
10
SCHEDULE 3.17(A)
EMPLOYEE BENEFIT PLANS
o Health Insurance Plan offered to employees provided in due diligence
item C11
o 401(k) plan offered to employees provided in due diligence item C11
o Accidental death and dismemberment plan provided in due diligence item
C9
o Benefits as outlined in employee handbook. Copy of employee handbook
provided in due diligence, item C11.
11
SCHEDULE 3.17(C)
EMPLOYEE LIST AND EXCEPTIONS
See attached list disclosed as item C8 during due diligence attached.
C8
--------------------------------------------------------------------------------------------------------------
CURRENT EMPLOYEES TITLE EXHIBITS
Xxxxxx Xxxx VP Software Development C8-2
Xxxxxxxx Xxx Software Engineer C8-17
Xxxxxxxxx Xxxx Customer Support Manager X0-00
XxXxxx Xxxxx Xxxxxxxxx X/X
Xxxxxx Xxxx Bookkeeper C8-19
Xxxxxxxx Xxxx VP Sales and Marketing C8-4
Xxxxx Xxx Technical Support Analyst C8-13
Xxxxxx Xxxx Customer Support Analyst C8-14
Xxxxx Xxxxxxx Software Engineer C8-15
Xxxxxxxxx Xxxx Technical Support Analyst C8-24
XxXxx Xxx Software Engineer C8-16
Xxxxx Xxxx Software Engineer C8-23
Xxxxxx Xxx Sr. Software Engineer C8-22
Xxxxxxxxxxx Xxxx Product Manager - Statewide Voter Xxxxxxxxxxxx X0-0, X0-0, X0-0
X'Xxxxxxx Xxxxxxx Customer Support Analyst C8-21
Xxxxxxx Xxxx Government Accounts Manager C8-8
--------------------------------------------------------------------------------------------------------------
CURRENT CONSULTANTS
Xxxxx Xxxxx Voter Integrity Team Specialist X0-0
Xxxxxxx Xxx X0-00
Xxxxxxxxxxx Xxxxxx Software Engineer ***MB
Xxxxxx Xxxxx C8-12
Xxxxxxx Skip Voter Integrity Team Specialist C8-10
FORMER CONSULTANTS
--------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx X0-0
Xxxxxx Xxxxxxxxxx X0-0
--------------------------------------------------------------------------------------------------------------
12
--------------------------------------------------------------------------------------------------------------
CURRENT EMPLOYEES TITLE EXHIBITS
FORMER EMPLOYEES SINCE 12/17/1999
Xxxx Xxxxx
Xxxxx Xxxxx
Xxxxxxxx Xxxx Xxxx Retired Secretary
Xxxxx Xxxx
Xxxxx Xxxx
Xxxxxxxx Xxxxxxx Retired Office Manager
Xxxxxxxxxxx Xxxxxx
Xxxxxxxx Xxx
Xxxxxxxx Xxxxxx
--------------------------------------------------------------------------------------------------------------
13
SCHEDULE 3.19
ENVIRONMENTAL EXCEPTIONS
None.
14
SCHEDULE 3.20
AGREEMENTS WITH
INTERESTED PARTIES
Sublease dated as of June 7, 2004 by and between NTS Data Services, LLC
and NTS Data Services, Inc.
See Schedule 3.15.
15
SCHEDULE 3.21
INSURANCE POLICIES AND FIDELITY BONDS
DESCRIPTION DUE DILIGENCE ITEM
----------- --- --------------
Employer Services Corp.
Health Insurance Plan C9
Commercial Application policy C9
Property insurance C9
General Liability Insurance C9
Crime Insurance C9
Valuable Papers C9
Electronic Data Processing C9
Business Auto C9
General Liability C9
Workers' Compensation
(States of GA, MD, RI, FL, NY) C9
Umbrella C9
Group Life and Accidental
Death and Dismemberment Coverage C9
16
SCHEDULE 3.26
BROKERS/FINDERS - SELLER
Paramax Corp.
000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxxxxxxxx, Xxx Xxxx 00000
by agreement dated April 11, 2003
17
BUYER'S DISCLOSURE SCHEDULE - ARTICLE 5
18
SCHEDULE 5.7
BUYER'S AND MERGER SUB'S PENDING AND THREATENED LITIGATION
19
SCHEDULE 5.10
BROKERS/FINDERS - BUYER AND MERGER SUB
Ascendiant Capital Group, LLC.
00000 Xxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
20
