2Capitalization. (a) The authorized capital stock of Company consists of 300,000 shares of voting common stock, par value $0.10 per share, and 3,000 shares of non-voting common stock, par value $0.10 per share (the “Company Non-Voting Common Stock”). As of the date of this Agreement, there are 128,277 shares of voting common stock of the Company issued and outstanding, and no shares of Company Non-Voting Common Stock are issued and outstanding. As of the date of this Agreement, there are (i) 11,689 shares of Company Common Stock held in treasury, (ii) 5,855 shares of Company Non-Voting Common Stock reserved for issuance upon the exercise of outstanding Company Stock Options, and (iv) other than as set forth above, no other shares of capital stock or other voting securities of Company issued, reserved for issuance or outstanding. All of the issued and outstanding shares of Company Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. There are no bonds, debentures, notes or other indebtedness that have the right to vote on any matters on which shareholders of Company may vote. No Company Benefit Plan that is intended to be qualified under Section 401(a) of the Code owns or holds Company Common Stock. Other than as set forth on Section 6.18 of the Company Disclosure Schedule, there are no trust preferred or subordinated debt securities of Company that are issued or outstanding. Other than Company Stock Options issued prior to the date of this Agreement, as of the date of this Agreement (i) there are no outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable or convertible securities or other commitments or agreements obligating Company to issue, transfer, sell, purchase, redeem or otherwise acquire, any such securities and (ii) except for the Executive Stock Appreciation Plan adopted by the Company effective as of January 1, 2016 and renewed by the Company from time to time, together with the corresponding agreements with respect to such plan (“Company ESAP”), there are no contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value of or price of, Company Common Stock or other equity interests of the Company. Section 3.2(a) of the Company Disclosure Schedule sets forth a true, correct and complete list of participants in the Company ESAP as of December 31, 2021. There are no voting trusts, shareholder agreements, proxies or other agreements in effect with respect to the voting or transfer of the Company Common Stock or other equity interests of Company, other than the Voting and Support Agreements. All grants of Company Stock Options were validly issued and properly approved by the Board of Directors of the Company (or a committee thereof) in accordance with the applicable Company Stock Plan and applicable law, in each case in all material respects. All Company Stock Options have been granted having a per share exercise price at least equal to the fair market value of the underlying Company Common Stock on the date such Company Stock Option was granted, and have not otherwise been modified within the meaning of Section 409A of the Code and associated Treasury Department guidance. Section 3.2(a) of the Company Disclosure Schedule sets forth a true, correct and complete list of all Company Stock Options outstanding as of the date hereof specifying, on a holder-by-holder basis, (A) the name of each holder, (B) the class and number of shares subject to each such Company Stock Option, (C) the grant date of each such Company Stock Option, (D) the Company Stock Plan under which such Company Stock Option was granted, (E) the exercise price for each Company Stock Option, and (F) the expiration date for each Company Stock Option. Other than the Company Stock Options and the Company ESAP, no equity-based awards (including any cash awards where the amount of payment is determined in whole or in part based on the price of any capital stock of Company or any of its Subsidiaries) are outstanding. (b) Except as set forth on Section 3.2(b) of the Company Disclosure Schedules, Company owns, directly or indirectly, all of the issued and outstanding shares of capital stock or other equity ownership interests of each of the Company Subsidiaries, free and clear of any liens, pledges, charges, encumbrances and security interests whatsoever (“Liens”), and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable (except, with respect to bank Subsidiaries, as provided under 12 U.S.C. §55 or any comparable provision of applicable state law) and free of preemptive rights, with no personal liability attaching to the ownership thereof. No Company Subsidiary is bound by any outstanding subscriptions, options, warrants, calls, rights, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary.
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2Capitalization. (a) The authorized capital stock of the Company consists of 300,000 25,000,000 shares of voting common stockCommon Stock, 2,800,000 shares of Capital Stock and 10,000,000 shares of Preferred Stock, par value $0.10 per share, and 3,000 shares of non-voting common stock, par value $0.10 .01 per share (the “Company Non-Voting Common "Preferred Stock”"). As of the date of this Agreementhereof, there are 128,277 (i) 11,081,043 shares of voting common stock of the Company issued and outstanding, and no shares of Company Non-Voting Common Stock are issued and outstanding. As of the date of this Agreement, there are (i) 11,689 shares of Company Common Stock held in treasury, (ii) 5,855 427,186 shares of Company Non-Voting Common Stock are issued and held in the treasury of the Company, (iii) 450,000 shares of Capital Stock are issued and outstanding, (iv) no shares of Capital Stock are issued and held in the treasury of the Company, (v) no shares of Preferred Stock are issued, (vi) 950,000 shares of Common Stock are reserved for issuance upon conversion of Capital Stock issued or issuable upon exercise of Company Options, (vii) 3,094,767 shares of Common Stock are reserved for issuance upon exercise of outstanding Company Options, (viii) 0 shares of Common Stock are reserved for issuance upon the exercise of outstanding Company Stock Optionsoptions authorized but not granted under the Option Plan, and (ivix) other than as set forth above, no other 500,000 shares of capital stock or other voting securities of Company issued, Capital Stock are reserved for issuance or outstandingupon exercise of Company Options, (x) 63,321 shares of Common Stock are reserved for issuance upon exercise of warrants (the "Company Warrants") and (xi) 10,000 shares of Series A Junior Participating Preferred Stock are reserved for issuance upon exercise of the rights to purchase Preferred Stock (the "Company Rights") pursuant to the Rights Agreement between the Company (then known as National Patent Development Corporation) and H▇▇▇▇▇ Trust Company of New York, as Rights Agent, dated as of June 23, 1997 (the "Rights Agreement"). All of the issued and outstanding shares of Company Common Stock have been duly authorized the Company's capital stock are, and validly all shares which may be issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching pursuant to the ownership exercise of outstanding Company Options will be, when issued in accordance with the respective terms thereof, duly authorized, validly issued, fully paid and non-assessable. There are no bonds, debentures, notes or other indebtedness that have the right to vote on any matters on which shareholders of Company may vote. No Company Benefit Plan that is intended to be qualified under Section 401(ahaving general voting rights (or convertible into securities having such rights) ("Voting Debt") of the Code owns Company or holds Company Common Stockany of its Subsidiaries issued and outstanding. Other than Except as set forth above and except for the transactions contemplated by this agreement and the Stockholder Agreement, as of the date hereof, (i) there are no shares of capital stock of the Company authorized, issued or outstanding, (ii) there are no existing options (other than the Company Options outstanding on the date hereof), warrants (other than the Company Warrants outstanding on the date hereof), calls, pre-emptive rights, subscriptions or other rights (other than the Company Rights), agreements, arrangements or commitments of any character, relating to the issued or unissued capital stock of the Company or any of its Subsidiaries, obligating the Company or any of its Subsidiaries to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity interest in, the Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interests, or obligating the Company or any of its Subsidiaries to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment and (iii) except as set forth in Section 6.18 2.2(a) of the Company Disclosure Schedule, there are no trust preferred or subordinated debt securities of Company that are issued or outstanding. Other than Company Stock Options issued prior to the date of this Agreement, as outstanding contractual obligations of the date Company or any of this Agreement (i) there are no outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable or convertible securities or other commitments or agreements obligating Company its Subsidiaries to issue, transfer, sell, purchaserepurchase, redeem or otherwise acquireacquire any Shares, or the capital stock of the Company, or any such securities and Subsidiary or affiliate of the Company or to provide funds to make any investment (iiin the form of a loan, capital contribution or otherwise) except for in any Subsidiary or any other entity.
(b) All of the Executive Stock Appreciation Plan adopted outstanding shares of capital stock of each of the Subsidiaries are beneficially owned by the Company effective (except as set forth in Section 2.2 of January 1, 2016 and renewed by the Company from time to time, together with the corresponding agreements with respect to such plan (“Company ESAP”Disclosure Schedule), there are no contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on and all such shares have been validly issued and are fully paid and nonassessable and are owned by either the value Company or one of or price of, Company Common Stock or other equity interests of the Company. its Subsidiaries (except as set forth in Section 3.2(a) 2.2 of the Company Disclosure Schedule sets Schedule) free and clear of all liens, charges, claims or encumbrances ("Encumbrances").
(c) Except as set forth a true, correct and complete list in Section 2.2 of participants in the Company ESAP as of December 31Disclosure Schedule, 2021. There there are no voting trusts, shareholder agreements, proxies trusts or other agreements in effect or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting or transfer of the Company Common Stock or other equity interests of Company, other than the Voting and Support Agreements. All grants of Company Stock Options were validly issued and properly approved by the Board of Directors of the Company (or a committee thereof) in accordance with the applicable Company Stock Plan and applicable law, in each case in all material respects. All Company Stock Options have been granted having a per share exercise price at least equal to the fair market value of the underlying Company Common Stock on the date such Company Stock Option was granted, and have not otherwise been modified within the meaning of Section 409A of the Code and associated Treasury Department guidance. Section 3.2(a) of the Company Disclosure Schedule sets forth a true, correct and complete list of all Company Stock Options outstanding as of the date hereof specifying, on a holder-by-holder basis, (A) the name of each holder, (B) the class and number of shares subject to each such Company Stock Option, (C) the grant date of each such Company Stock Option, (D) the Company Stock Plan under which such Company Stock Option was granted, (E) the exercise price for each Company Stock Option, and (F) the expiration date for each Company Stock Option. Other than the Company Stock Options and the Company ESAP, no equity-based awards (including any cash awards where the amount of payment is determined in whole or in part based on the price of any capital stock of the Company or any of its the Subsidiaries) are outstanding.
(b) Except as set forth on Section 3.2(b) of the Company Disclosure Schedules, Company owns, directly or indirectly, all of the issued and outstanding shares of capital stock or other equity ownership interests of each of the Company Subsidiaries, free and clear of any liens, pledges, charges, encumbrances and security interests whatsoever (“Liens”), and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable (except, with respect to bank Subsidiaries, as provided under 12 U.S.C. §55 or any comparable provision of applicable state law) and free of preemptive rights, with no personal liability attaching to the ownership thereof. No Company Subsidiary is bound by any outstanding subscriptions, options, warrants, calls, rights, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary.
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2Capitalization. (a) The authorized capital stock of the Company consists of 300,000 33,333,333 shares of voting common stockCompany Common Stock. The Company Common Stock is entitled to the rights and privileges set forth in the Company’s certificate of incorporation. As of the Capitalization Date, par value 13,256,570 shares of Company Common Stock were issued and outstanding (not including shares held in treasury), (ii) 0 shares of Company Common Stock were held in treasury, (iii) 877,503 shares of Company Common Stock were underlying outstanding Company Stock Options and the Company Stock Options had a weighted average exercise price of $0.10 per share1.86, (iv) 682,250 shares of Company Common Stock were underlying outstanding Company RSUs; (v) 77,779 shares of Company Common Stock were underlying the A▇▇▇▇▇▇ Warrant, which has an exercise price of $3.03; and (vi) 524,170 shares of Company Common Stock were underlying the H▇▇▇▇▇ Warrant, which has an exercise price of $2.38.
(b) The Company has made available to the Parent complete and accurate (i) copies of all Company Stock Plans and details regarding the number of shares of Company Common Stock reserved for future issuance under such Company Stock Plan, (ii) forms of stock option agreements evidencing Company Stock Options, (iii) forms of agreements evidencing Company RSUs, (iv) agreements evidencing the Warrants, and 3,000 (v) forms of agreements evidencing any other equity or equity-linked award or compensation arrangement. Section 2.2(b)(i) of the Company Disclosure Schedule sets forth, for each Company Stock Option, each Company RSU and each Warrant, (A) the name of the holder thereof, (B) the date of grant thereof, (C) the number of shares of non-voting common stockCompany Common Stock issuable upon exercise thereof, par value $0.10 per share and (D) the “exercise price of such Company Non-Voting Common Stock”). As Stock Option, Company RSU or Warrant.
(c) Except (i) as set forth in Section 0(a) and for changes since the Capitalization Date resulting from the exercise or settlement of Company Stock Options, Company RSUs or Warrants outstanding on such date in accordance with their respective terms and (ii) as reserved for future grants under Company Stock Plans as of the date of this AgreementAgreement permitted under Section 4.1(i), (A) there are 128,277 shares no equity securities of voting common stock any class of the Company issued and outstandingCompany, and no shares of Company Non-Voting Common Stock are issued and outstanding. As of the date of this Agreementor any security exchangeable into or exercisable for such equity securities, there are (i) 11,689 shares of Company Common Stock held in treasuryissued, (ii) 5,855 shares of Company Non-Voting Common Stock reserved for issuance upon the exercise of or outstanding Company Stock Options, and (ivB) other than as set forth abovethere are no options, no other warrants, equity securities, calls, rights, commitments or agreements to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound obligating the Company or any of its Subsidiaries to issue, exchange, transfer, deliver or sell, or cause to be issued, exchanged, transferred, delivered or sold, additional shares of capital stock or other voting securities of Company issued, reserved for issuance or outstanding. All equity interests of the issued and Company or any security or rights convertible into or exchangeable or exercisable for any such shares or other equity interests, or obligating the Company or any of its Subsidiaries to grant, extend, accelerate the vesting of, otherwise modify or amend or enter into any such option, warrant, equity security, call, right, commitment or agreement. The Company does not have any outstanding stock appreciation rights, phantom stock, performance based rights or similar rights or obligations. None of the Company, any of its Subsidiaries or any of its Affiliates is a party to or is bound by any agreement with respect to the voting (including proxies) or sale or transfer of any shares of Company Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free capital stock or other equity interests of preemptive rights, with no personal liability attaching the Company. Except to the ownership thereof. There are no bondsextent arising pursuant to applicable state takeover or similar laws, debentures, notes or other indebtedness that have the right to vote on any matters on which shareholders of Company may vote. No Company Benefit Plan that is intended to be qualified under Section 401(a) of the Code owns or holds Company Common Stock. Other than and except as set forth on in Section 6.18 2.2(c) of the Company Disclosure Schedule, there are no trust preferred registration rights, and there is no rights agreement, “poison pill” anti-takeover plan or subordinated debt securities other similar agreement to which the Company or any of its Subsidiaries is a party or by which it or they are bound with respect to any equity security of any class of the Company.
(d) All outstanding shares of Company that Common Stock are, and all shares of Company Common Stock subject to issuance as specified in Section 2.2(b) above, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or outstanding. Other than Company Stock Options issued prior to the date of this Agreement, as any similar right under any provision of the date DGCL, the Company’s certificate of this Agreement incorporation or bylaws or any agreement to which the Company is a party or is otherwise bound.
(ie) there There are no outstanding subscriptionsobligations, optionscontingent or otherwise, warrants, puts, calls, rights, exchangeable of the Company or convertible securities or other commitments or agreements obligating Company any of its Subsidiaries to issue, transfer, sell, purchaserepurchase, redeem or otherwise acquire, or to register, any such securities and (ii) except for the Executive Stock Appreciation Plan adopted by the Company effective as shares of January 1, 2016 and renewed by the Company from time to time, together with the corresponding agreements with respect to such plan (“Company ESAP”), there are no contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value of or price of, Company Common Stock or other equity interests of the Company. Section 3.2(a) of the Company Disclosure Schedule sets forth a true, correct and complete list of participants in the Company ESAP as of December 31, 2021. There are no voting trusts, shareholder agreements, proxies or other agreements in effect with respect to the voting or transfer of the Company Common Stock or other equity interests of Company, other than the Voting and Support Agreements. All grants of Company Stock Options were validly issued and properly approved by the Board of Directors of the Company (or a committee thereof) in accordance with the applicable Company Stock Plan and applicable law, in each case in all material respects. All Company Stock Options have been granted having a per share exercise price at least equal to the fair market value of the underlying Company Common Stock on the date such Company Stock Option was granted, and have not otherwise been modified within the meaning of Section 409A of the Code and associated Treasury Department guidance. Section 3.2(a) of the Company Disclosure Schedule sets forth a true, correct and complete list of all Company Stock Options outstanding as of the date hereof specifying, on a holder-by-holder basis, (A) the name of each holder, (B) the class and number of shares subject to each such Company Stock Option, (C) the grant date of each such Company Stock Option, (D) the Company Stock Plan under which such Company Stock Option was granted, (E) the exercise price for each Company Stock Option, and (F) the expiration date for each Company Stock Option. Other than the Company Stock Options and the Company ESAP, no equity-based awards (including any cash awards where the amount of payment is determined in whole or in part based on the price of any capital stock of the Company or any of its Subsidiaries) are outstanding.
(b) Except as set forth on Section 3.2(b) of the Company Disclosure Schedules, Company owns, directly or indirectly, all of the issued and outstanding shares of capital stock or other equity ownership interests of each of the Company Subsidiaries, free and clear of any liens, pledges, charges, encumbrances and security interests whatsoever (“Liens”), and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable (except, with respect to bank Subsidiaries, as provided under 12 U.S.C. §55 or any comparable provision of applicable state law) and free of preemptive rights, with no personal liability attaching to the ownership thereof. No Company Subsidiary is bound by any outstanding subscriptions, options, warrants, calls, rights, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary.
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Sources: Merger Agreement (Cynergistek, Inc)