EXHIBIT 2.1
AGREEMENT OF MERGER
OF
ENON MICROWAVE, INC.
WITH AND INTO
VECTRONICS MICROWAVE CORP.,
A WHOLLY OWNED SUBSIDIARY OF
MICRONETICS WIRELESS, INC. TO BE
RENAMED ENON MICROWAVE, INC.
UPON COMPLETION OF THE MERGER
DATED AS OF FEBRUARY 14, 2002
AGREEMENT OF MERGER dated as of February 14, 2002, among
MICRONETICS WIRELESS, INC., a Delaware corporation (?Parent?),
Vectronics Microwave Corp., a Delaware corporation and wholly-owned
subsidiary of Parent (the ?Acquisition Sub?), and ENON MICROWAVE,
INC., a Massachusetts corporation (the ?Company?), and the Company's
stockholders listed on the signature page to this Agreement (the
?Key Stockholders?).
The Boards of Directors of Parent, Acquisition Sub and the
Company have each duly approved and adopted this Agreement of
Merger (the ?Agreement?) in principle, and the proposed merger of
the Company with and into the Acquisition Sub in accordance with
the Agreement, the Delaware Business Corporation Law (?DBCL?) and
the General Laws of Massachusetts (the ?MGL?), whereby, among other
things, each issued and outstanding share of common stock, par
value $.15 per share, of the Company (the ?Company Common Stock?),
will be exchanged and converted into the right to receive cash and
shares of common stock, par value $.01 per share, of Parent (the
?Parent Common Stock?) in the manner set forth in Article II hereof,
upon the terms and subject to the conditions set forth in the
Agreement. As used herein, the term ?Transaction Documents? shall
mean collectively, the Agreement, the Voting Agreement between
Parent and certain stockholders of the Company dated January 4,
2002 (the ?Voting Agreement?) and the other documents, instruments
and agreements contemplated hereby and executed and delivered in
connection herewith.
NOW, THEREFORE, in consideration of the mutual benefits to be
derived from the Agreement and the representations, warranties,
covenants, agreements, conditions and promises contained herein and
therein, the parties hereby agree as follows:
ARTICLE I
GENERAL
1.1 The Merger. In accordance with the provisions of
the Agreement, the DBCL and the MGL, the Company shall be merged
with and into the Acquisition Sub (the ?Merger?), which at and after
the Effective Time (defined below) shall be, and is sometimes
herein referred to as, the ?Surviving Corporation.? Acquisition Sub
and the Company are sometimes referred to as the ?Constituent
Corporations.?
1.2 The Effective Time of the Merger. Subject to the
provisions of the Agreement, the Acquisition Sub, as the Surviving
Corporation of the Merger, shall file the Certificate of Merger
(substantially in the form set forth in Exhibit 1.2(a)) in
accordance with DBCL, and the Company and the Acquisition Sub shall
file Articles of Merger (substantially in the form set forth in
Exhibit 1.2(b)) with the Massachusetts Secretary of State in
accordance with the MGL (such filings collectively referred to
herein as the "Merger Filing") and the Merger shall be effective as
of the date and time set forth therein (the ?Effective Time?).
1.3 Effect of Merger. At the Effective Time, the
separate existence of the Company shall cease and the Company shall
be merged with and into the Acquisition Sub and the Constituent
Corporations shall thereupon become and constitute a single
corporation and the Acquisition Sub, which shall be renamed Enon
Microwave, Inc., shall continue as the Surviving Corporation.
Except as otherwise provided by law the Surviving Corporation shall
possess all of 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 each of the Constituent
Corporations and the Merger shall have such other effects as
provided by the DGBL.
1.4 Certificate of Incorporation and By-Laws of
Surviving Corporation. From and after the Effective Time: (a) the
Certificate of the Acquisition Sub shall be amended, and the
Certificate of the Acquisition Sub, as so amended, shall be the
Certificate of the Surviving Corporation, unless and until altered,
amended or repealed as provided in the DGBL; (b) the by-laws of the
Acquisition Sub shall be the by-laws of the Surviving Corporation;
(c) the directors of Acquisition Sub shall be the directors of the
Surviving Corporation, unless and until removed, or until their
respective terms of office shall have expired, in accordance with
the DGBL, the Certificate or the by-laws of the Surviving
Corporation, as applicable; and (d) the incumbent officers of the
Company shall resign (or be removed) and the incumbent officers of
the Acquisition Sub immediately prior to the Effective Time shall
be the officers of the Surviving Corporation, unless and until
removed, or until their terms of office shall have expired, in
accordance with the DGBL, the Certificate or the by-laws of the
Surviving Corporation, as applicable.
1.5 Taking of Necessary Action. Prior to the Effective
Time, the parties hereto shall do or cause to be done all such acts
and things as may be necessary or appropriate in order to
effectuate the Merger as expeditiously as reasonably practicable,
in accordance with the Agreement, the DGBL and the MGL. In case at
any time at and after the Effective Time, any further action is
necessary or desirable to carry out the purpose of the Agreement
and to vest in the Surviving Corporation, full title to all Assets
(defined below), privileges, rights, interest and entitlements (as
well as the obligations and duties) of either Constituent
Corporations, the officers and directors of such corporations shall
take all such lawful and necessary action.
1.6 Tax-Free Reorganization. For Federal income tax
purposes, the parties intend that the Merger be treated as a tax-
free reorganization within the meaning of Section 368(a)(1)(A) of
the Internal Revenue Code of 1986, as amended (the ?Code?), by
reason of 368(a)(2)(D) of the Code.
Notwithstanding the foregoing, in the event that the actual
value of the 182,500 shares of Parent Common Stock referenced in
Section 2.1(d)(i) (valued for the purposes of this paragraph on the
close of the day prior to the Closing Date) is less than 40% of the
value of the Merger Consideration (defined below) on the Closing
Date, then the number of shares of Parent Common Stock received as
Stock Consideration (defined in Section 2.1(d)(i)) shall be
increased and the Cash Consideration (defined in Section
2.1(d)(ii)) shall be decreased by a sufficient amount so that the
actual value of the Stock Consideration represents 40% of the value
of the Merger Consideration on the Closing Date. The number of
shares of additional Parent Common Stock, if any, shall as well be
valued for the purposes of this paragraph as of their value on the
close of the day prior to the Closing Date.
1.7 Closing. Unless the Agreement shall have been
terminated and the transactions contemplated by the Agreement
abandoned pursuant to the provisions of Article XIII, and subject
to the Agreement, the closing of the Merger (the ?Closing?) will
take place at 10:00 a.m. (New York City time) on March 20, 2002 or
a date (the ?Closing Date?) to be mutually agreed upon by the
parties, which date shall be not later than the third (3rd)
Business Day after all the conditions set forth in Articles VII,
VIII and IX shall have been satisfied (or waived to the extent the
same may be waived), unless another date is agreed to in writing by
the Parent and the Company. The Closing shall take place at the
offices of Tinti, Xxxxx, Xxxxxx & Xxxx, P.C. (?TQGF?), unless
another place is agreed to in writing by the parties. As used
herein, the term ?Business Day? shall mean any day other than a
Saturday, Sunday or day on which banks are permitted to close in
Massachusetts or New Hampshire.
ARTICLE II
EFFECT OF THE MERGER ON THE COMMON STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES; DISSENTER'S
RIGHTS OF APPRAISAL
2.1 Effect on Common Stock. At the Effective Time,
subject and pursuant to the terms and conditions of the Agreement,
by virtue of the Merger and without any action on the part of the
Constituent Corporations or the holders of the common stock of the
Constituent Corporations:
(a) Common Stock of Acquisition Sub. Each issued and
outstanding share of common stock, par value $.01 per share, of
Acquisition Sub shall immediately prior to the Effective Time be
deemed cancelled and converted into and shall represent the right
to receive one share of common stock, par value $.01 per share, of
the Surviving Corporation.
(b) Cancellation of Certain Shares of Company Common
Stock. Each share of Company Common Stock that is immediately prior
to the Effective Time: (i) owned by the Company as treasury stock;
(ii) owned by any Subsidiary of the Company; or (iii) owned by
Parent or any Subsidiary of Parent, shall be cancelled and no
Parent Common Stock or other consideration shall be delivered in
exchange therefor. As used in the Agreement, a ?Subsidiary? means
with respect to any Person (a) any corporation or other entity with
respect to which such Person, directly or indirectly, has the power
to vote or direct the voting of securities sufficient to elect a
majority of the directors or other managers thereof, or (b) any
corporation or other entity with respect to which such Person,
directly or indirectly, owns fifty percent (50%) or more of the
aggregate equity interests therein.
(c) Merger Consideration. Each share of Company
Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares cancelled pursuant to Section
2.1(b)) shall be deemed cancelled and converted into the right to
receive a pro rata share of the Merger Consideration (defined
below) in proportion to the total number of shares of Company
Common Stock issued and outstanding immediately prior to the
Effective Time as indicated in Section 4.4 hereof and not subject
to cancellation pursuant to Section 2.1(b) hereof. The
consideration for the Merger (the ?Merger Consideration?) shall be
the following:
(i) Ninety Percent (90%) of the net revenues
(sales) of the Company for calendar year 2001 as shown on the
audited statement of operations of the Company for its fiscal year
ended December 31, 2001 (the ?2001 Statement of Operations?), minus
(ii) Current and long-term liabilities (less
liabilities otherwise referenced in any of A-I below) of the
Company at December 31, 2001 as shown on the audited balance sheet
of the Company at December 31, 2001, as the same may be corrected
following consultation between the Parent and the Acquisition Sub
and the Company, (the ?2001 Balance Sheet?) and the following
expenses, liabilities and credits:
(A) The Company?s liabilities to Northeast
Entrepreneurs, Inc. for its services related to the Merger;
(B) credit for warranty claims of Fifteen
Thousand Dollars ($15,000);
(C) legal fees of the Company relating to the
Merger, whether paid or unpaid as of the Closing Date. It is
agreed that all legal fees incurred in relation to all documents
prepared and signed in connection with the Merger, including but
not limited to the Employment and Consulting Agreements attached
hereto, shall be deemed to be legal fees of the Company;
(D) accounting fees of the Company relating to
the Merger, whether paid or unpaid as of the Closing Date;
(E) credit for five percent (5%) of the
accounts receivable value as stated on the 2001 Balance Sheet;
(F) credit for fifteen percent (15%) of the
inventory value as stated on the 2001 Balance Sheet;
(G) accrued and unpaid at December 31, 2001
state and federal income taxes for the Company for 2001 as stated
on the 2001 Balance Sheet;
(H) $20,000 as a credit for any liability
associated with a license for accelerometers; and
(I) the estimated and unpaid cost of any
environmental cleanup or report of the Company.
Schedule 2.1(c) sets forth a preliminary calculation of the
total Merger Consideration, using estimates where necessary or
appropriate.
(d) Except as otherwise provided herein, the Merger
Consideration shall be payable:
(i) $750,000 by delivery of 182,500 shares of
Parent Common Stock (the ?Stock Consideration?); and
(ii) the balance in cash (the ?Cash
Consideration?).
(e) Adjustments for Capital Changes. If, prior to
the Effective Time, Parent or the Company recapitalizes through a
subdivision of its outstanding shares into a greater number of
shares, or a combination of its outstanding shares into a lesser
number of shares, or reorganizes, reclassifies or otherwise changes
its outstanding shares into the same or a different number of
shares or other classes, or declares a dividend on its outstanding
shares payable in shares of its common stock or securities
convertible into shares of its common stock, then the Share
Consideration shall be adjusted appropriately so as to maintain the
relative proportionate interests of the holders of shares of
Company Common Stock and the holders of shares of Parent Common
Stock.
2.2 Exchange of Certificates.
(a) Procedure for Exchange. As soon as practicable
after the Effective Time, counsel for Parent (the ?Exchange Agent?)
shall mail or deliver to each holder of record of a certificate or
certificates which immediately before the Effective Time
represented issued and outstanding shares of Company Common Stock
(collectively, the ?Old Certificates?): (i) a letter of transmittal
advising such holders of the terms of the exchange effected by the
Merger (and specifying how delivery shall be effected, and risk of
loss and title to the Old Certificates shall pass, only upon
delivery of the Old Certificates to the Exchange Agent and shall be
in such form and have such other provisions as Parent may
reasonably specify); and (ii) instructions for use in effecting the
surrender of Old Certificates in exchange for the Merger
Consideration. Upon surrender of an Old Certificate for
cancellation to the Exchange Agent, together with a duly executed
letter of transmittal and such other documents as may be reasonably
required by the Exchange Agent, the holder of such Old Certificate
shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Parent Common Stock
representing the Stock Consideration and a check payable to such
holder for the Cash Consideration which such holder has the right
to receive pursuant to the provisions of this Article II, and the
Old Certificate so surrendered shall forthwith be cancelled. In the
event of a transfer of ownership of shares of Company Common Stock
which are not registered on the transfer records of the Company, it
shall be a condition of the exchange thereof that the Old
Certificate representing such Company Common Stock is presented to
the Exchange Agent properly endorsed and otherwise in proper form
for transfer and accompanied by all documents required to evidence
and affect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by
this Section 2.2(a), each Old Certificate shall be deemed, on and
after the Effective Time, to represent only the right to receive
upon such surrender (x) the certificate representing full shares of
Parent Common Stock in respect of the Stock Compensation; (y) cash
in lieu of fractional shares of Parent Common Stock in respect of
the Stock Compensation (as hereinafter provided) and (z) the Cash
Consideration per share in the amount provided for in Section
2.1(d)(i) above.
(b) Distributions With Respect to Unsurrendered
Certificates. No dividends or other distributions declared or made
after the Effective Time with respect to Parent Common Stock with a
record date after the Effective Time shall be paid to the holder of
any unsurrendered Old Certificate with respect to the shares of
Parent Common Stock represented thereby until the holder of record
of such Old Certificate shall surrender such Old Certificate.
Subject to the effect of applicable laws, following surrender of
any such Old Certificate, there shall be paid to the record holder
of the certificates representing whole shares of Parent Common
Stock issued in exchange therefor, without interest: (i) the amount
of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares
of Parent Common Stock; and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares
of Parent Common Stock.
(c) No Further Ownership Rights in Company Common
Stock. The Merger Consideration paid upon the surrender for
exchange of shares of Company Common Stock in accordance with the
terms of this Article II (including any cash paid pursuant to
Section 2.2(b) or 2.2(d)) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of
Company Common Stock and there shall be no further registration or
transfers on the stock transfer books of the Surviving Corporation
of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective
Time, any Old Certificate is presented to the Surviving Corporation
for any reason, such Old Certificate shall be cancelled and
exchanged as provided in this Article II.
(d) No Issuance of Fractional Shares. No
certificates or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of Old
Certificates, and such fractional share interests shall not entitle
the owner thereof to vote or to any rights of a shareholder of
Parent such as rights to dividends, stock splits or interest in
lieu of issuing certificates for fractional shares. In lieu of any
such fractional shares, each holder of Company Common Stock who
would otherwise have been entitled to receive a fraction of a share
of Parent Common Stock upon surrender of certificates evidencing
Company Common Stock for exchange pursuant to this Section 2.2(d)
shall be entitled to receive from Parent a cash payment equal to
the product of such fraction and the closing price of a share of
Parent Common Stock on the Closing Date.
(e) Lost, Stolen or Destroyed Certificates. In the
event any Old Certificates shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the
Person claiming such Old Certificate to be lost, stolen or
destroyed, the Exchange Agent shall cause to be issued in exchange
for such loss, stolen or destroyed Old Certificate the Merger
Consideration provided for pursuant to in this Article II. The
Exchange Agent or the Surviving Corporation may, in its discretion
and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Old Certificate to give the
Surviving Corporation a bond in such reasonable sum as it may
direct as indemnity against any claim that may be made against the
Surviving Corporation with respect to the Old Certificate alleged
to have been lost, stolen or destroyed. As used in the Agreement,
the term ?Person? shall mean any individual, firm, corporation,
limited liability company, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company,
Governmental Authority or other entity of any kind, and shall
include any successor (by merger or otherwise) of such entity.
(f) No Liability. Neither the Exchange Agent,
Parent, Acquisition Sub nor the Company shall be liable to any
holder of shares of Company Common Stock for shares (or dividends
or distributions with respect thereto) of Parent Common Stock to be
issued in exchange for Company Common Stock pursuant to this
Section 2.2, if, on or after the expiration of eighteen (18) months
following the Effective Date, such shares of Parent Common Stock
are delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
2.3 Dissenter?s Right of Appraisal. Any other provision
of this Article II notwithstanding, any outstanding shares of
Company Common Stock the holder of which asserts and perfects the
right to receive payment for shares pursuant to MGL Chapter
156B:Section 85 (the ?Dissenting Shares?) shall not be subject to
the foregoing provisions of this Article, and the holder thereof
shall have only such rights as are granted to dissenting
stockholders under said MGL Chapter 156B:Section 85, provided,
however, that Dissenting Shares as to which the holder thereof
subsequently withdraws his demand for payment (or fails to perfect
his dissenter?s rights) before payment thereof shall thereupon be
subject to Section 2.2 in the same manner as provided herein for
other outstanding shares of Company Common Stock (except as to the
time of payment, which shall be as promptly as practicable after
withdrawal of such demand). The Company shall give to Parent
prompt notice of any demands received from holders of Dissenting
Shares for payment of the value of such shares, and Parent shall
have the exclusive right to conduct all negotiations and
proceedings with respect to any such demands. The Company shall
not, except with the prior written consent of Parent, voluntarily
make any payment with respect to, or compromise or settle, or offer
to compromise or settle, any such demand for payment. The
assertion of any demand for payment by a holder of Dissenting
Shares shall not prevent, interfere with or delay the consummation
of the Merger and the other transactions contemplated hereby,
except as provided by MGL or as a court of competent jurisdiction
may otherwise Order.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE KEY STOCKHOLDERS
Each Key Stockholder represents and warrants to Parent and
Acquisition Sub with respect to himself that:
3.1 Capacity; Authority; No Consents. Each Key
Stockholder has the requisite capacity and authority to execute,
deliver and perform the Transaction Documents to which he is a
party and the Agreement and the other Transaction Documents to
which he is a party have been, and will be, duly and validly
executed and delivered by him, and the Agreement and the other
Transaction Documents to which he is a party are, and will be, to
the best of his knowledge, the valid and binding obligations of
such Key Stockholder, enforceable against him in accordance with
their respective terms subject to bankruptcy, fraudulent
conveyance, insolvency, moratorium or similar laws affecting the
rights of creditors generally or general equitable principles.
3.2 Agreements, Etc. Schedule 3.2 sets forth opposite
such Key Stockholder?s name a true and complete list and accurate
description of the material terms of (i) all the employment and
consultancy arrangements between the Company and such Key
Stockholder and (ii) any other type of contract, commitment or
understanding between the Company and such Key Stockholder which
(except as otherwise generally provided by applicable law) is not
immediately terminable without cost or other liability at or at any
time after the Effective Time, in each case to which such Key
Stockholder is a party and not made in the Ordinary Course of
business, or made in the Ordinary Course of business which are
currently in effect.
3.3 Certain Agreements. Except as provided in the
Agreement or as otherwise set forth on Schedule 3.3 attached
hereto, neither the execution and delivery of the Agreement nor the
consummation of the transactions contemplated hereby will:
(a) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute,
bonus or otherwise) becoming due to such Key Stockholder, under any
Employee Plan, Benefit Arrangement or otherwise;
(b) increase any benefits otherwise payable under
any Employee Plan or Benefit Arrangement to such Key Stockholder;
or
(c) result in the acceleration of the time of
payment or vesting of any such benefits to such Key Stockholder.
3.4 Brokers. Such Key Stockholder has not employed any
broker or finder or incurred any liability for any brokerage fees,
commissions or finders? fees in connection with the transactions
contemplated by the Transaction Documents other than Acquisition
Services, Inc.
3.5 Related Transactions. Such Key Stockholder is not
now, and has not been during the last three (3) fiscal years:
(a) other than with regard to the lease between the
Company and Enon Nominee Trust, the beneficial interests of which
are held by Xxxxxx Xxxxxx and Xxxxxx Xxxxxxx, a party to any
transaction with the Company or any Subsidiary in which the amount
involved exceeded $10,000 (including, but not limited to, any
contract, agreement or other arrangement providing for the
furnishing of services by, or rental of real or personal property
from, or borrowing money from, or otherwise requiring payments to,
such Key Stockholder or any of his/its associates or affiliates);
(b) the direct or indirect owner, including any
ownership by a family member, of a ten percent or greater interest
in any non-natural Person, which is, or has been, a supplier,
customer, or, within the last 12 months, competitor, of the
Company; or
(c) a party to any transaction with the Company
whereby such Key Stockholder received compensation (other than
dividends paid by a publicly held corporation) from any other
Person, which is, or has been, a supplier, customer, or, within the
last 12 months, competitor of the Company.
3.6 The representations contained in Section 4.12 are
reasserted by the Key Stockholders and are true and accurate as of
the date hereof, and will be true as of the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Acquisition Sub that:
4.1 Organization; Good Standing; Qualification and
Power. The Company:
(a) is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts;
(b) has all requisite corporate power and authority
to own, lease and operate its properties and Assets and to carry on
its business in the Ordinary Course; and
(c) is duly qualified and in good standing to do
business in all jurisdictions in which the failure to be so
qualified and in good standing could be reasonably expected to have
a material adverse effect on such Person?s business, Assets,
operations, results of operations, liabilities, properties,
condition (financial or otherwise), affairs or an effect which
could materially impair the ability of a Person to perform any
obligation under the Agreement or materially impair the
consummation of the transaction contemplated hereby (?Material
Adverse Effect?). The Company has all requisite corporate power
and authority to enter into the Agreement and each of the other
Transaction Documents to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The Company has
delivered to Parent true and complete copies of the Charter and by-
laws of the Company as amended to the date hereof, and its minute
books. As used in the Agreement, ?Certificate? shall mean, with
respect to any corporation, those instruments that at the time
constitute its corporate charter as filed or recorded under the
general corporation law of the jurisdiction of its incorporation,
including the articles or certificate of incorporation or
organization, and any amendments thereto, as the same may have been
restated, and any amendments thereto (including any articles or
certificates of merger or consolidation or certificates of
designation or similar instruments which effect any such amendment)
which became effective after the most recent such restatement.
4.2 Equity Investments. The Company does not own any
common stock or other proprietary interest, directly or indirectly,
in any corporation, association, trust, partnership, limited
liability company, joint venture or other entity. Other than the
Subsidiaries identified on Schedule 4.2, the Company does not have
any Subsidiaries. There are no options, warrants, rights, calls,
commitments or agreements of any character to which the Company is
a party or by which the Company is bound calling for the issuance
of shares of common stock of the Company or any securities
convertible into or exercisable or exchangeable for, or
representing the right to purchase or otherwise receive, any such
common stock, or other arrangement to acquire, at any time or under
any circumstance, Company Common Stock or any such other securities
of the Company or the Company?s Subsidiaries.
4.3 Margin Stock. The Company owns no ?margin stock? as
such term is defined in Regulation U, as amended (12 C.F.R. Part
221) of the Federal Reserve Board.
4.4 Common Stock; Securities. The authorized common
stock of the Company consists of 2,000,000 shares of Company Common
Stock, par value $.15 per share, of which 1,067,817.5 shares are
outstanding as of the Closing Date. As of the Closing Date, the
Company has no outstanding warrants for shares of Company Common
Stock (with no shares of Company Common Stock reserved for such
purpose). The Company does not have outstanding any options to
purchase, or any preemptive rights or other rights to subscribe for
or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its common
stock or any such options, rights, convertible securities or
obligations. All outstanding shares of Company Common Stock are
validly issued and outstanding, fully paid and non-assessable and
not subject to preemptive rights. Except as set forth on Schedule
4.4 there are no voting trusts, voting agreements (except pursuant
to the Voting Agreement), first offer rights, co-sale rights,
transfer restrictions (other than restrictions imposed by federal
or state securities laws) or other agreements, instruments or
understandings (whether written or oral, formal or informal) with
respect to the voting, registration, transfer or disposition of
Company Securities to which the Company is a party or by which it
is bound, or to the knowledge of the Company, among or between any
Persons other than the Company.
4.5 Authority; No Consents. The execution, delivery and
performance by the Company of the Transaction Documents to which it
is a party and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of the Company; and the
Agreement and the other Transaction Documents to which the Company
is a party have been duly and validly executed and delivered by the
Company, and the Agreement and the other Transaction Documents to
which the Company is a party is, the valid and binding obligations
of the Company, enforceable against the Company in accordance with
their respective terms subject to bankruptcy, fraudulent
conveyance, insolvency, moratorium or similar laws affecting the
rights of creditors generally or general equitable principles.
Except as set forth on Schedule 4.5(i) neither the execution,
delivery and performance of the Transaction Documents to which the
Company is a party nor the consummation by the Company of the
transactions contemplated hereby or thereby nor compliance by the
Company with any provision hereof or thereof will: (a) conflict
with; (b) result in any violations of (c) cause a default under
(with or without due notice, lapse of time or both); (d) give rise
to any right of termination, amendment, cancellation or
acceleration of any obligation contained in or the loss of any
material benefit under; or (e) result in the creation of any
Encumbrance on or against any Assets, right or property of the
Company under any term, condition or provision of: (x) any
instrument or agreement to which the Company is a party, or, to the
knowledge of the Company, by which the Company, its properties,
Assets or rights may be bound (except as shall have been waived or
with respect to which consent shall have been obtained prior to the
Closing) except where the foregoing would not result in a Material
Adverse Effect on the Company; (y) any law, statute, rule,
regulation, order, writ, injunction, decree, permit, concession,
license or franchise of any Federal, state, municipal, foreign or
other governmental court, department, commission, board, bureau,
agency or instrumentality (?Governmental Authority?) applicable to
the Company or any of its properties, Assets or rights except where
the foregoing would not result in a Material Adverse Effect on the
Company; or (z) the Company?s Certificate or by-laws, as amended
through the date hereof. Except as contemplated by the Agreement,
no permit, authorization, consent or approval of or by, or any
notification of or filing with, any Governmental Authority is
required in connection with the execution, delivery and performance
by the Company and each Key Stockholder of the Agreement or the
Transaction Documents to which the Company is a party or the
consummation of the transactions contemplated hereby or thereby,
except for: (i) such filings as may be required by Nasdaq with
respect to Parent Common Stock to be issued in connection with the
Merger, if any; (ii) the filing of such documents with, and the
obtaining of such orders from, various state securities and blue-
sky authorities as are required in connection with the transactions
contemplated hereby, if any; (iii) the filing of appropriate
documents with the relevant authorities of other states in which
the Company is qualified to do business; (iv) the filings or
notices that may be required under Environmental Laws as set forth
on Schedule 4.5(ii); and (v) such other consents, waivers,
authorizations, filings, approvals and registrations which if not
obtained or made would not have a Material Adverse Effect on the
Company or materially impair the ability of the Company and the
Stockholders of the Company (the "Stockholders") to consummate the
transactions contemplated by the Agreement, including, without
limitation, the Merger.
4.6 Financial Statements. The financial statements of
the Company (the ?Company Financial Statements?):
(a) complied as to form in all material respects
with the then applicable accounting requirements, were prepared and
the 2001 Financial Statements of the Company will be prepared in
accordance with generally accepted accounting principals (?GAAP?),
consistently applied (except as may have been indicated in the
notes thereto);
(b) were in accordance and, as to the 2001 Financial
Statements, will be in accordance with the books and records of the
Company; and
(c) fairly present (subject, in the case of the
unaudited statements, to normal, nonrecurring audit adjustments)
the financial position of the Company as at the dates thereof and
the consolidated results of their operations and cash flows for the
periods then ended.
4.7 Absence of Undisclosed Liabilities. Other than with
regard to the matter referred to in Section 2.1(c)(ii)(H), at
December 31, 2001: (a) the Company had no material liability or
obligation of any nature (whether known or unknown, matured or
unmatured, fixed or contingent (?Liability?)), which was not
provided for or disclosed on the Company Financial Statements for
the fiscal year ended December 31, 2001; and (b) all liability
reserves established by the Company and set forth on the Company
Financial Statements were adequate, in the good faith judgment of
the Company, for all such Liabilities at the date thereof. There
were no material loss contingencies (as such term is used in
Statement of Financial Accounting Standards No. 5 issued by the
Financial Accounting Standards Board in March 1975 (?FAS No. 5"))
which were not adequately provided for on the Company Financial
Statements as required by FAS No. 5.
4.8 Absence of Changes; Conduct of Business. Since
December 31, 2001, the Company has been operated in the ordinary
course, consistent with the Company?s past practice (?Ordinary
Course?) and:
(a) the Company has notified Parent in writing of
any Material Adverse Effect on the Company;
(b) there has not been any damage, destruction or
loss, whether or not covered by insurance, having or which could
have a Material Adverse Effect on the Company;
(c) the Company has kept in a normal state of repair
and operating efficiency all tangible personal property used in the
operation of its business;
(d) except as set forth on Schedule 4.8(d), there
has not been any Liability created, assumed, guaranteed or
incurred, or any material transaction, contract or commitment
entered into, by the Company, other than the license, sale or
transfer of the Company?s products to customers in the Ordinary
Course except for liabilities incurred or to be incurred in
connection with negotiation and execution of the Agreement or
otherwise incurred in the Ordinary Course;
(e) there has not been any declaration, setting
aside or payment of any dividend or other distribution of any
Assets of any kind whatsoever with respect to any shares of the
common stock of the Company, or any direct or indirect redemption,
purchase or other acquisition of any such shares of the common
stock of the Company;
(f) other than in the Ordinary Course, there has not
been any payment, discharge or satisfaction of any material
Encumbrance or Liability or any cancellation by the Company of any
material debts or claims or any amendment, termination or waiver of
any right of material value to the Company;
(g) except as otherwise provided for in the
Agreement, the Company has paid or incurred only those fees and
expenses not in the Ordinary Course of its business approved in
writing or ratified in writing by Parent (other than statements of
fees for legal and accounting services, only on a time basis at not
higher than regular hourly rates). Except as set forth on Schedule
4.8(g), the Company has paid all of its current liabilities as and
when they became due;
(h) there has not been any stock split, reverse
stock split, combination, reclassification or recapitalization of
any Company Common Stock, or any issuance of any other security in
respect of or in exchange for, any shares of Company Common Stock;
(i) the Company has not redeemed, repurchased, or
otherwise acquired any of its common stock or securities
convertible into or exchangeable for its common stock or entered
into any agreement to do so;
(j) there has not been any issuance by the Company
of any shares of Company Common Stock or any debt security or
securities, rights, options or warrants convertible into or
exercisable or exchangeable for any shares of its common stock or
debt security;
(k) except as set forth on Schedule 4.8(k), there
has not been any termination of or indication of an intention to
terminate or not renew, any material contract, license, commitment
or other agreement between the Company and any other Person, or the
assignment by the Company of any interest in any contract to which
the Company is a party;
(l) the Company has used commercially reasonable
efforts to maintain the good will associated with its business, and
the existing business relationships with its agents, customers, key
employees and consultants, suppliers and other Persons having
relations with it;
(m) there has not been any material write-down or
write-up of the value of any Asset of the Company, or any material
write-off of any accounts receivable or notes receivable of the
Company or any portion thereof.
(n) the Company has not sold, leased, licensed or
otherwise disposed of any Assets or created or permitted to exist
any Encumbrance on its Assets except in the Ordinary Course and
which would not have a Material Adverse Effect on the Company;
(o) there has not been any increase in or
modification or acceleration of compensation or benefits payable or
to become payable to any officer, employee, consultant or agent of
the Company, or the entering into of any employment contract or
consulting contract with any such Person;
(p) there has not been any making of any loan,
advance or capital contribution to or investment in any Person or
the engagement in any transaction with any employee, officer,
director, consultant or Stockholder;
(q) there has not been any Encumbrance created, or
agreement to do so, with respect to any Company Assets, tangible,
or intangible;
(r) there has not been any change in the accounting
methods or practices followed by the Company, or any change in
depreciation or amortization policies or rates theretofore adopted
by the Company;
(s) except as set forth on Schedule 4.8(s), there
has not been any termination of employment or consultancy of any
officer or key employee or key consultant of the Company or, any
expression of intention by any officer, key consultant or key
employee of the Company to terminate such office, employment or
consultancy with the Company;
(t) there has not been any amendments or changes in
the Company?s Certificate or by-laws;
(u) except as set forth on Schedule 4.8(u), there
has not been any commencement of any litigation or other action by
or against the Company and, to the Company?s knowledge, there has
been no occurrence which could give rise thereto;
(v) the Company has kept in all material respects
true, complete and correct books and records of account (?Books and
Records?) with respect to its business, in which entries have made
of all transactions up to the Effective Time in the Company?s
Ordinary Course; and
(w) there has not been any agreement, understanding,
authorization or proposal, whether in writing or otherwise, for the
Company to take any of the actions specified in items (a) through
(v) above.
4.9 Tax Matters. The Company and each other corporation
included in any consolidated or combined tax return in which the
Company has been included:
(a) have filed and will file, in a timely and proper
manner, consistent with applicable laws, all Federal, state and
local Tax returns and Tax reports required to be filed by them
through the Closing Date (the ?Company Returns?) with the
appropriate governmental agencies in all jurisdictions in which
Company Returns are required to be filed and have paid or will pay
all amounts shown thereon to be due; and (b) have paid and shall
timely pay all Taxes required to have been paid on or before the
Closing Date. All Taxes attributable to all taxable periods ending
on or before the Closing Date, to the extent not required to have
been previously paid have been adequately provided for on the
Company Financial Statements and the Company will not incur or
accrue a Tax liability from the date of the Company Financial
Statements up to and including the Closing Date, other than a Tax
liability incurred or accrued in the Ordinary Course of business.
The Company has not been notified by the Internal Revenue Service
or any state, local or foreign taxing authority that any issues
have been raised (and are currently pending) in connection with any
Company Return, and no waivers of statutes of limitations have been
given or requested with respect to the Company. Any deficiencies
asserted or assessments (including interest and penalties) made as
a result of any examination by the Internal Revenue Service or by
any other taxing authorities of any Company Return have been fully
paid or are adequately provided for on the Company Financial
Statements and no proposed additional Taxes have been asserted. The
Company has not made an election to be treated as a ?consenting
corporation? under Section 341(f) of the Code nor is it a ?personal
holding company? within the meaning of Section 542 of the Code. The
Company has not agreed to, nor is required to make any adjustment
under Section 481(a) of the Code by reason of a change in
accounting method or otherwise. The Company will not incur a Tax
liability resulting from the Company ceasing to be a member of a
consolidated or combined group that had previously filed
consolidated, combined or unitary Tax returns. As used in the
Agreement, ?Tax? means any of the Taxes and ?Taxes? means, with
respect to any entity: (x) all income taxes (including any tax on
or based upon net income, gross income, income as specially
defined, earnings, profits or selected items of income, earnings or
profits) and all gross receipts, sales, use, ad valorem, transfer,
franchise, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property or windfall profits
taxes, alternative or add-on minimum taxes, customs duties and
other taxes, fees, assessments or charges of any kind whatsoever,
together with all interest and penalties, additions to tax and
other additional amounts imposed by any taxing authority (domestic
or foreign) on such entity; and (y) any liability for the payment
of any amount of the type described in the immediately preceding
clause (x) as a result of: (i) being a ?transferee? (within the
meaning of Section 6901 of the Code or any other applicable law) of
another entity; (ii) being a member of an affiliated or combined
group; or (iii) any contractual obligations or otherwise.
(b) Prior to the Merger, the Stockholders did not
dispose of any Company Stock, or receive any distribution from the
Company, in a manner that would cause the Merger to violate the
continuity of stockholder interest requirement set forth in
Treasury Regulation Section 1.368-1(e).
(c) Schedule 4.9(c) hereto sets forth the following
information with respect to the Company as of the most recent
practicable date: (A) the Tax basis of the Company in its Assets;
(B) the amount of any net operating loss, net Capital loss, unused
investment or other credit, unused foreign Tax credit, research and
development credit, excess charitable contribution or other
carryover allocable to the Company, the years in which such Tax
attributes arose and the years (if any) in which such Tax
attributes are scheduled to expire; and (C) a list of any Tax
elections made by the Company and affecting the Company. The
Company has no net operating losses or other Tax attributes subject
to limitation under Code Section 382, 383 or 384, or the federal
consolidated return regulations, or under any similar provision of
state, local or foreign law. The amount of any net operating loss,
net Capital loss, unused investment or other credit, unused foreign
Tax credit, research and development credit, excess charitable
contribution or other carryover allocable to the Company is fully
utilizable by the Company.
4.10 Books and Records; Audits and Investigations. All
the books and records of the Company have been kept and were
prepared in accordance with GAAP. The Company has delivered to
Parent all responses to auditors? inquiry letters received in the
past four years and all letters to the Company from the auditors
during such period. Schedule 4.10 hereto identifies all
correspondence received from a Governmental Authority in the past
four years relating to tax and accounting, regulatory compliance
reviews, audits or investigations.
4.11 Title to Assets, Properties and Rights and Related
Matters.
(a) The Company has good and marketable title to, or
valid leasehold interests in, all its Assets, subject to no
security interests, mortgages, liens, pledges, guarantees, charges,
easements, reservations, restrictions, clouds, equities, rights of
way, options, rights of first refusal and all other encumbrances,
whether or not relating to the extension of credit or the borrowing
of money (?Encumbrances?) except: (i) liens for current Taxes not
yet due and payable, (ii) mechanics? and materialmen?s liens arising
or incurred in the Ordinary Course of its business, and (iii) as
reflected on Schedule 4.11(a).
(b) The properties, assets, rights, contracts,
leases, easements, permits, licenses and real and personal property
(the ?Assets?) evidenced on the Company Financial Statements are the
sole items of tangible and intangible personal property heretofore
utilized by the Company in the (and necessary for the Company to)
conduct of its operations. Except as set forth on Schedule
4.11(b), all the Assets are located at 000X Xxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000.
(c) The real and personal property owned or leased
by the Company, including, without limitation, all equipment and
machinery of the Company, are in reasonable working order and have
been maintained in accordance with standard maintenance procedures,
and meet all material standards, clearances and ratings in effect
on the date hereof in respect of those rules and regulations
promulgated by any Governmental Authority applicable thereto except
where the failure to meet the above would not have a Material
Adverse Effect.
(d) Except as set forth elsewhere in this Section
4.11, the Company makes no representations or warranties regarding
the real or personal property owned or leased by the Company,
specifically excluding any representations or warranties with
respect to merchantability or fitness for a particular purpose of
the Company?s products or services.
(e) Schedule 4.11(e) hereto identifies all real
property owned or leased by the Company and all improvements
located thereon, all unexpired options held by the Company or
contractual obligations on its part to purchase or sell any
interest in real property, and all mortgages held by the Company.
There exists no event constituting a default under any such
mortgage and no notice of deficiency has been issued with respect
thereto. The real property identified on such Schedule 4.11(e) as
owned or leased by the Company is the same as the real property
owned or leased by the Company on December 31, 2001, and the
condition thereof, including the improvements thereon, has not
deteriorated since such date, reasonable wear and tear excepted.
(f) Each lease or license of an Asset by the Company
is a valid and subsisting obligation enforceable against the lessor
or licensor, as the case may be, in accordance with its terms.
(g) To the knowledge of the Company, except as set
forth in Schedule 4.11(g), none of the Stockholders nor any third
party owns or has any rights in any Assets or property used to
carry on the business or operations of the Company.
(h) Such of the Assets as constitute inventory on
the date hereof is in good and merchantable condition and usable
for its intended purpose, and, as to finished goods inventory,
saleable at its normal gross profit margins experienced over the
last twelve (12) months;
(i) Schedule 4.11(i) hereto is a true and correct
list of all of the machinery and equipment owned or leased by the
Company as of the date hereof having an initial cost exceeding
$10,000 or requiring annual lease payments exceeding $10,000, and,
as to each item under lease or license, a brief description of the
material terms of such lease. The Company has good and marketable
title or, if reflected as a leasehold interest in the Company
Financial Statements, a valid and enforceable leasehold interest in
and to the machinery and equipment, merchandise, materials,
supplies and other property of every kind, tangible or intangible,
which are shown as or reflected in the Assets on the most recent
Company Financial Statements, or which, whether or not shown on the
Company Financial Statements, were acquired directly or indirectly
by the Company through the purchase of Assets or stock from or
through merger, consolidation or other transaction with, another
Person, except for machinery and equipment and other Assets which
have been consumed, sold or disposed of in the Ordinary Course
since the date of those Company Financial Statements or such
acquisition, free and clear, except as to the Encumbrances set
forth on Schedule 4.11(a), of all Encumbrances.
(j) The Company has complied with all obligations
under all material leases and licenses to which it is a party or to
which it has succeeded by merger or acquisition of stock or Assets
of any other Person and under which it is in occupancy or license,
as the case may be, and all such leases and licenses are in full
force and effect. The Company enjoys peaceful and undisturbed
possession under all real property leases.
4.12 Environmental Liability. Except as set forth on
Schedule 4.12, (a) the Company has obtained all permits, licenses
and other authorizations which are required with respect to its
operation under any and every (i) federal, state, local or foreign
law, ordinance, rule or regulation, or (ii) order, writ,
injunction, decree, judgment, award, determination, direction,
stipulation or demand of a Government Authority (?Order?), or (iii)
demand letter or request for information, or (iv) schedule or time
table set forth in any Federal, state, local or foreign law,
ordinance, rule, regulation, Order, demand letter or request for
information issued, promulgated, approved or entered thereunder
relating to pollution or protection of the environment or to
occupational health or safety, including, without limitation, laws
relating to emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals, petroleum, petroleum by-
products or industrial, toxic, flammable, radioactive or hazardous
substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, land, surface
or subsurface strata), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemicals,
petroleum, petroleum by-products or industrial, toxic, flammable,
radioactive or hazardous substances or wastes (?Environmental
Laws?); (b) the Company is in compliance with the terms and
conditions of the required permits, licenses and authorizations
required by the Environmental Laws; (c) there is no civil, criminal
or administrative action, suit, demand, claim, hearing, notice of
violation, proceeding, notice or demand letter pending relating to
the Company or threatened against it relating in any way to any
Environmental Laws or any regulation, code, plan or Order issued,
entered, promulgated or approved thereunder; (d) there are no
investigations or internal or non-public agency proceedings pending
regarding the Company relating in any way to any Environmental Laws
or any regulation, code, plan or Order issued, entered, promulgated
or approved thereunder; and (e) there has been no generation,
production, refining, processing, manufacturing, use, storage,
disposal, treatment, shipment, emission, receipt or release of a
substance or material regulated by any Environmental Law, and in
the regulations adopted and publications promulgated pursuant
thereto and include, without limitation, any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes, toxic
substances, asbestos or any material containing asbestos or
petroleum or petroleum by-product (?Hazardous Substance?) (i) by the
Company, its agents and employees, or (ii) on, in or under such of
the Assets of the Company constituting real property which would
subject the owner or operator of the real property or business, or
any past or future owner or operator of the real property to
liability for the removal, remediation or cleanup of any Hazardous
Substance. The Company has delivered to Parent true and complete
copies of all environmental studies made in the last ten years
relating to the Company?s real property or the business of the
Company. Except as set forth on Schedule 4.12, no Hazardous
Substance has ever been spilled, released, leaked, poured, leached,
dumped, discharged, placed or disposed of, or otherwise caused to
be located at any property which has at any time been owned, leased
or used by the Company in violation of any Environmental Law and
all Hazardous Substances have been handled in compliance with
Environmental Laws.
4.13 Intellectual Property. Schedule 4.13 sets forth a
list of all patents, copyrights, trademarks, trade names and
service marks and any licensed intellectual property rights (other
than commercial or ?shrink-wrap? licenses covering software
generally available to the public on a retail basis) (collectively,
?Intellectual Property Rights?) of the Company. The ownership or use
of such Intellectual Property Rights by the Company does not
infringe on the intellectual property rights of others and the
Company has not received notice alleging any such infringement,
and, to the knowledge of the Company, no third party is infringing
on the Intellectual Property Rights of the Company. The Company is
not obligated to pay any third party any royalty or fee for the use
of the Intellectual Property Rights used in its business. The
execution and delivery of the Agreement by the Company and the
consummation of the transactions contemplated hereby, will neither
cause the Company to be in violation or default under any such
license, sublicense or agreement, nor entitle any other party to
any such license, sublicense or agreement to terminate or modify
such license, sublicense or agreement. The Company is the sole and
exclusive owner or licensee of, with all right, title and interest
in and to (free and clear of any Encumbrances), the Company
Intellectual Property Rights, and, to the knowledge of the Company,
has sole and exclusive rights to the use thereof or the material
covered thereby in connection with the services or products in
respect of which the Company Intellectual Property Rights are being
used. To the knowledge of the Company, there is no unauthorized
use, infringement or misappropriation of any of the Company
Intellectual Property Rights by any third party, including, without
limitation, any employees, former employee, Stockholder or former
Stockholder.
4.14 Agreements, Etc. Schedule 4.14 sets forth a true and
complete list of all written or oral contracts, agreements and
other instruments to which the Company is a party and not made in
the Ordinary Course of business, or made in the Ordinary Course of
business which are currently in effect, and referred to in any of
clauses (a) through (k) of this Section 4.14
(a) any joint venture, partnership or other
agreement or arrangement for the sharing of profits;
(b) any collective bargaining contract or other
contract with or commitment to any labor union;
(c) the future purchase, sale or license of
products, material, supplies, equipment or services requiring
payments to or from the Company in an amount in excess of $10,000
per annum, which agreement, arrangement or understanding is not
terminable on thirty (30) days? notice without cost or other
liability at or at any time after the Effective Time, or in which
the Company has granted or received manufacturing rights, most
favored nations pricing provisions or exclusive marketing or other
rights relating to any product, group of products, services,
technology, Assets or territory;
(d) the employment or consultancy of any officer,
employee, consultant or agent or any other type of contract,
commitment or understanding with any officer, employee, consultant
or agent which (except as otherwise generally provided by
applicable law) is not immediately terminable without cost or other
liability at or at any time after the Effective Time;
(e) an indenture, mortgage, promissory note, loan
agreement, guarantee or other agreement or commitment for the
borrowing of money, for a line of credit or, if involving payments
in excess of $10,000 per annum, for a leasing transaction of a type
required to be Capitalized in accordance with Statement of
Financial Accounting Standards No. 13 of the Financial Accounting
Standards Board;
(f) a contract or commitment for Capital
expenditures individually in excess of $10,000;
(g) any agreement or contract with a ?disqualified
individual? (as defined in Section 280G(c) of the Code), which
could result in a disallowance of the deduction for any ?excess
parachute payment? (as defined in Section 280G(b)(i) of the Code)
under Section 280G of the Code;
(h) an agreement or arrangement for the sale of any
Assets, properties or rights having a value in excess of $10,000;
(i) an agreement which restricts the Company from
engaging in any aspect of its business or competing in any line of
business in any geographic area;
(j) the Company accounts for all of its software,
hardware, consulting, licensing, distribution and other similar
agreements and contracts under which the Company provides services
or sells or distributes goods or equipment in accordance with GAAP;
and
(k) a list of all agreements (?Government Contracts?)
with the Company?s vendors where the Company is an approved vendor
with the United States Department of Defense or other applicable
Governmental Authority. The Company has furnished to Parent true
and complete copies of all such agreements listed in Schedule 4.14
and Schedule 3.2 and each such agreement:
(i) is the legal, valid and binding obligation
of the Company and, to the best knowledge of the Company, the
legal, valid and binding obligation of each other party thereto, in
each case enforceable in accordance with its terms;
(ii) is in full force and effect; and
(iii) the other party or parties thereto is or
are not, to the knowledge of the Company, in material default
thereunder.
4.15 Suppliers; Raw Materials. Schedule 4.15 sets forth
the names and addresses of the ten largest suppliers of the Company
based on the aggregate value of raw materials, supplies,
merchandise and other goods and services ordered by the Company
from such suppliers during the one year period ended December 31,
2001.
4.16 Customers; Sales Representatives.
(a) Schedule 4.16(a) sets forth for the years ended
December 31, 2001 and 2000 (i) a list of the top 10 customers
(inclusive of distributors) of the Company based on the aggregate
value of goods and services ordered from the Company by such
customers during each such period and (ii) the products purchased
by each such customer and the amount for which each such customer
was invoiced during such period. The Company has not received any
notice or has any reason to believe that any material customer (i)
has ceased, or will cease, to use the products, goods or services,
(ii) has materially reduced or will materially reduce, the use of
products, goods or services or (iii) has sought, or is seeking, to
materially reduce the price it will pay for products, goods or
services, which cessations and reductions, either individually or
in the aggregate, are reasonably likely to result in a Material
Adverse Effect on the Company.
(b) Schedule 4.16(b) sets forth a complete and
correct list of each sales representative of the Company (the
?Company Sales Representatives?), indicating with respect to each
such Company Sales Representative the aggregate value of goods and
services ordered from the Company by customers for whose accounts
such Company Sales Representative was responsible. Each of the
Company Sales Representatives is continuing to act as a sales
representative on behalf of the Company and the Company has no
reason to believe that any such representative has ceased or will
cease to act on behalf of the Company.
4.17 No Defaults, Etc. The Company has in all respects
performed all the material obligations required to be performed by
it to date and is not in material default or alleged to be in
material default under: (a) its Certificate or by-laws; or (b) any
material agreement, lease, mortgage, indenture, contract,
commitment, instrument or obligation to which the Company is a
party or by which any of its Assets or rights are or may be bound
or affected, and there exists no event, condition or occurrence
which, with or without due notice or lapse of time, or both, would
constitute such a default by it of any of the foregoing. No current
customer has notified, or to the knowledge of the Company expressed
an intention to notify, the Company or its employees, officers or
agents, that such customer will materially reduce the dollar amount
of business it will do with the Company or cease doing business
with the Company. Provided that the Company obtain the consents
which may be required to consummate the transaction which are set
forth on the Schedule 4.17, no such mortgage, indenture, lease,
contract, agreement, license, instrument or order limits in any
material way the freedom of any Person acquiring control of the
Company, whether directly or indirectly, or from performing the
Agreement in accordance with its terms. The Company has not
received any notice from any party to any such contract with
respect to such party?s unwillingness or inability to perform
thereunder.
4.18 Litigation, Observance of Statutes, Regulations and
Orders. There are no:
(a) actions, suits, claims, investigations or legal
or administrative or arbitration proceedings (collectively,
?Actions?) pending, or to the knowledge of the Company, threatened
against the Company, or to the knowledge of the Company facts which
could give rise to any of the foregoing, whether at law or in
equity, or before or by any Governmental Authority, other than as
set forth in Schedule 4.18(a);
(b) outstanding judgments, decrees, injunctions or
orders of any Governmental Authority or arbitrator against the
Company or disputes with customers or vendors;
(c) violations of or defaults with respect to any
Order of any arbitrator or Governmental Authority and, there is no
basis for there to be declared any such violation or Default;
(d) to the knowledge of the Company, Company
officers, directors, employees, agents, Stockholders or
representatives who have made, directly or indirectly, with respect
to the business of the Company, any illegal political
contributions, payments from corporate funds not recorded in the
Books and Records of the Company, payments from corporate funds
that were falsely recorded on the Books and Records of the Company,
payments from corporate funds to governmental officials in their
individual capacities for the purpose of affecting their action or
the action of the government they represent to obtain special
concessions or illegal payments from corporate funds to obtain or
retain business; or
(e) no holder of common stock of any Person which
was, at any time, directly or indirectly a subsidiary of the
Company, or which merged with or into the Company or any direct or
indirect subsidiary of the Company, or a Person from which the
Company, directly or indirectly, acquired substantially all of such
Person?s Assets or a stockholder of such Person, has asserted any
claim against the Company arising out of the acquisition of such
Assets or of such holder?s common stock and the Company knows of no
basis for any such claim.
4.19 Licenses, Permits, Etc. The Company possesses
adequate licenses, clearances, ratings, permits and franchises, and
all rights with respect thereto, to conduct its business as now
conducted, and without any conflict with the rights of others in
any such license, clearance, rating, permit or franchise. The
Company has no knowledge of, nor has received notice of
termination, revocation or limitation of, or of the pendency or
threatened commencement of any proceeding to terminate, revoke or
limit any such licenses, clearances, ratings, permits or other
approvals by the Governmental Authority or other Person issuing
same.
4.20 Compliance; Governmental Authorizations. The
Company has complied within the last five (5) years and is
presently in compliance in all material respects with all material
Federal, state, local or foreign laws, ordinances, regulations and
orders applicable to it or its business, including, without
limitation, all quality requirements applicable to its business,
the Environmental Authorities, all Federal and state securities or
?blue sky? laws, and all laws and regulations relating to
occupational safety and health and the environment. The Company
has all material authorizations, security clearances, consents,
approvals, licenses and permits necessary to be obtained from
Governmental Authorities in the conduct of its business as
presently conducted and as currently proposed by the Company to be
conducted, such authorizations, consents, approvals, licenses and
permits are in full force and effect, no violations are or have
been recorded in respect of any thereof and no proceeding is
pending or, to the best knowledge of the Company, threatened to
revoke or limit any thereof. All of the Company?s full-time and
temporary personnel who provide services in a manner or of the type
that require specific certifications or clearances have provided
such services at all times while having such certifications or
clearances in full force and effect. Neither the Company has nor,
to the knowledge of the Company, any of its full-time or part-time
personnel has, with respect to each of his or her activities,
actions, or services for or on behalf of the Company, been cited or
alleged by the Environmental Authorities, Defense Investigative
Service or other regulatory authority within the last five (5)
years as failing to comply with regulatory requirements or
guidelines.
4.21 Labor Relations; Employees. Schedule 4.21 sets forth
the name, date of hire, and rate of pay (including date of most
recent increase, if any) of all full-time and part-time employees
of the Company and the primary locations at which such employees
provide their services as of the Closing Date. In addition, except
as set forth on Schedule 4.21,
(a) the Company is not delinquent in payments to any
of its employees or consultants for any wages, salaries,
commissions, bonuses or other direct compensation for any services
performed by them to date or amounts required to be reimbursed to
such Persons;
(b) neither Acquisition Sub nor the Surviving
Corporation will by reason of anything done prior to the Closing be
liable to any of such employees or consultants for severance pay or
any other payments other than for ordinary wages and salaries
payable through Closing;
(c) the Company is in compliance in all material
respects with all material Federal, state, local and foreign laws
and regulations respecting labor, employment and employment
practices, terms and conditions of employment and wages and hours;
(d) there is neither pending nor, threatened labor
dispute, strike or work stoppage involving employees of the Company
(or otherwise) which affects or which may affect the Company?s
business or which may interfere with its continued operations;
(e) to the knowledge of the Company, there are no
union organization efforts relating to employees of the Company or
any representation question involving recognition as a collective
bargaining agent for any employees of the Company;
(f) there is not pending or, to the knowledge of the
Company, threatened any charge or complaint against the Company by
the National Labor Relations Board or any representative thereof;
(g) there have been no strikes, walkouts or work
stoppages involving employees of the Company in the last five (5)
years;
(h) there is no unfair labor practice, sexual
harassment or other employment-related complaint pending or, to the
knowledge of the Company, threatened against the Company or any
employee of the Company. No employee or consultant of the Company
is, to the knowledge of the Company, in material violation of any
term of any employment contract or consulting contract,
confidentiality agreement or any other contract or agreement
relating to the relationship of such employee or consulting
contract with the Company or any other party because of the nature
of the business conducted or proposed to be conducted by the
Company or the execution and delivery of such agreement or contract
by such employee or consultant.
4.22 Employee Benefit Plans and Contracts.
(a) Schedule 4.22(a) identifies each ?employee
benefit plan,? as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended (?ERISA?), and
all other material written or formal plans or agreements involving
direct or indirect compensation (including any employment
agreements entered into between the Company and any Employee of the
Company, but excluding workers? compensation, unemployment
compensation, other government-mandated programs and the Company?s
salary and wage arrangements) currently or previously maintained,
contributed to or entered into by the Company or any ERISA
Affiliate thereof for the benefit of any Employee or former
Employee under which the Company or any ERISA Affiliate thereof has
any present or future obligation or liability (the ?Employee
Plans?). The Company has provided to Parent true and complete
copies of all Employee Plans (and, if applicable, related trust
agreements) and all amendments thereto and written interpretations
thereof. For purposes of the preceding sentence, ?ERISA Affiliate?
shall mean any entity which is a member of (A) a ?controlled group
of corporations,? as defined in Section 414(b) of the Code, (B) a
group of entities under ?Capital control,? as defined in Section
414(c) of the Code or (C) an ?affiliated service group,? as defined
in Section 414(m) of the Code or treasury regulations promulgated
under Section 414(o) of the Code, any of which includes the
Company. Any Employee Plans which individually or collectively
would constitute an ?employee pension benefit plan,? as defined in
Section 3(2) of ERISA, but which are not Multiemployer Plans
(collectively, the ?Pension Plans?), are identified as such in
Schedule 4.22(a). For purposes of this Section 4.22, ?Employee?
means any employee, consultant or director of the Company.
(b) Each Employee Plan that is intended to be
qualified under Section 401(a) of the Code is so qualified and has
been so qualified during the period from its adoption to the date
hereof, and each trust forming a part thereof is exempt from tax
pursuant to Section 501(a) of the Code. The Company does not know
of any facts or circumstances that would materially adversely
affect such qualification prior to the Closing. The Company has
provided Parent with copies of the most recent Internal Revenue
Service determination letters with respect to any such Employee
Plans. Each Employee Plan has been maintained substantially in
compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations, including,
without limitation, ERISA and the Code, which are applicable to
such Employee Plans.
(c) No Employee Plan constitutes or since the
enactment of ERISA has constituted a ?multi employer plan,? as
defined in Section 3(37) of ERISA (a ?Multi employer Plan?).
(d) Schedule 4.22(d) lists each employment,
severance or other similar contract, arrangement or policy and each
plan or arrangement (written or oral) providing for insurance
coverage (including any self-insured arrangements), workers?
benefits, vacation benefits, retirement benefits, deferred
compensation, profit-sharing, bonuses, stock options, stock
appreciation or other forms of incentive compensation or post-
retirement insurance, compensation or benefits which:
(i) is not an Employee Plan;
(ii) is entered into, maintained or contributed
to, as the case may be, by the Company;
(iii) covers any Employee or former Employee;
and
(iv) under which the Company has any present or
future obligation or liability (excluding workers? compensation,
unemployment compensation or other government-mandated programs and
the Company?s salary and wage arrangements). Such contracts, plans
and arrangements as are described above are hereinafter referred to
collectively as the ?Benefit Arrangements.? Each Benefit Arrangement
has been maintained in substantial compliance with its terms and
with the requirements prescribed by any and all material laws,
statutes, rules, regulations, orders and judgments which are
applicable to such Benefit Arrangements. Except as indicated on
Schedule 4.22(d), no Benefit Arrangement or Employee Plan provides
benefits including, without limitation, death or medical benefits
(whether or not insured), with respect to any employee or former
employee of the Company beyond such employee?s retirement or other
termination of service (other than (i) coverage mandated by
applicable law, (ii) death benefits or retirement benefits under
any ?employee pension plan?, as that term is defined in Section 3(2)
of ERISA, or (iii) benefits the full cost of which is borne by the
current or former employee (or his or her beneficiary)).
(e) The Company has provided, or will have provided,
to individuals entitled thereto who are current or former Employees
of the Company all required notices within the applicable time
period and coverage pursuant to Section 4980B of the Code with
respect to any ?qualifying event? (as defined in Section 4980B(f)(3)
of the Code) occurring prior to and including the Closing Date, and
no tax payable on account of Section 4980B of the Code has been
incurred with respect to any current or former Employees of the
Company.
(f) None of the Employee Plans is subject to Title
IV of ERISA. There are no pending or, to the best knowledge of the
Company, threatened claims (other than routine claims for
benefits), actions, suits or proceedings by, or on behalf of or
against any of the Employee Plans or any trusts related thereto.
(g) With respect to each Employee Plan, neither the
Company nor any ERISA Affiliate has engaged in a ?prohibited
transaction? (as such term is defined in Section 4975 of the Code
or Section 406 of ERISA) that would subject the Company or the
Parent to any taxes, penalties or other liabilities resulting from
prohibited transactions under Section 4975 of the Code or Section
409 or 502(i) of ERISA.
(h) Neither the Company nor any ERISA Affiliate is a
party to or obligated under any agreement, plan, contract or other
arrangements that will result, separately or in the aggregate, in
the payment of any ?excess parachute payment? within the meaning of
Section 280G of the Code.
(i) Except to the extent set forth on Schedule
4.22(i) hereto, to the extent any Employee Plan is subject to
approval by any governmental agency (or such approval is available
under applicable law), such Employee Plan has received such
approval and such approval is current.
(j) The Company is not subject to, and no facts
exist which could subject the Company to, any liability whatsoever
which is directly or indirectly related to any Employee Plan,
including, but not limited to, liability for benefits payments or
related claims (other than the ordinary usual claims by
participants or beneficiaries which have been made for benefits
called for under the terms of such Employee Plans), any liability
for any Tax or related penalty under the Code, or liability for any
damages or penalties arising under Title I or Title IV of ERISA.
(k) no ERISA Welfare Plan provides benefits to
former employees of the Company other than continuation coverage
required by Section 4980B of the Code and Section 601 of ERISA.
(l) There are no pending or, to the knowledge of the
Company, threatened claims, suits or other proceedings with respect
to any Employee Plan other than the ordinary usual claims by
participants or beneficiaries which have been made for benefits
called for under the terms of such Employee Plans and which will be
paid under such Employee Plans in the Ordinary Course.
(m) There is no requirement that Parent, Surviving
Corporation or the Company make any further contributions to any
Employee Plan after the Closing Date, and each Employee Plan which
provides benefits to or on behalf of employees or former employees
of the Company may be terminated by Parent, Surviving Corporation
or the Company in its sole discretion on or after the Closing Date
without liability of any kind or description whatsoever to Parent,
the Company, Surviving Corporation, any of Parent?s ERISA
Affiliates, or any other person, entity or governmental agency;
provided, however, that Plan benefits upon such termination are
distributed to Participants in accordance with the Plan terms and
consistent with the requirements of ERISA and the Code.
4.23 Certain Agreements. Neither the execution and
delivery of the Agreement nor the consummation of the transactions
contemplated hereby will:
(a) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute,
bonus or otherwise) becoming due to any director, Stockholder, or
employee of the Company from the Company, under any Employee Plan,
Benefit Arrangement or otherwise;
(b) increase any benefits otherwise payable under
any Employee Plan or the Benefit Arrangement;
(c) result in the acceleration of the time of
payment or vesting of any such benefits; or
(d) violate any no shop, nonsolicitation,
noncompetition or nondisclosure agreement that the Company may be a
party to.
4.24 Insurance. The Company maintains policies of
insurance described on Schedule 4.24 sets forth and accurately
describes such policies, and a history of all claims within the
last three years in excess of $10,000 made by the Company
thereunder and the status thereof. All such policies of insurance
are in full force and effect and all premiums with respect thereto
are currently paid and, to the knowledge of the Company, no basis
exists for termination or non-renewal of any thereof on the part of
the insurer. The amounts of coverage under such policies conform
to the requirements set forth in the Company?s customer contracts.
The Company has not, during the last three fiscal years, been
denied or had revoked or rescinded any policy of insurance.
4.25 Brokers. The Company has not, nor have any of its
officers, directors, Stockholders or employees, employed any broker
or finder or incurred any liability for any brokerage fees,
commissions or finders? fees in connection with the transactions
contemplated by the Transaction Documents other than Northeast
Entrepreneurs, Inc.
4.26 Related Transactions. Except for compensation to
regular employees of the Company and as set forth on Schedule 4.26
hereto, no current or former director, officer or Stockholder that
is an affiliate of the Company or any associate (as defined in the
rules promulgated under the Exchange Act) thereof, is now, or has
been during the last three (3) fiscal years:
(a) a party to any transaction with the Company or
any Subsidiary in which the amount involved exceeded $10,000
(including, but not limited to, any contract, agreement or other
arrangement providing for the furnishing of services by, or rental
of real or personal property from, or borrowing money from, or
otherwise requiring payments to, any such director, officer or
Stockholder or associate thereof);
(b) the direct or indirect owner, including any
ownership by a family member, of a 10% or greater interest in any
non-natural Person, which is, or has been, a supplier, customer,
or, within the last 12 months, competitor, of the Company; or
(c) a party to any transaction with the Company
whereby such Person received compensation (other than dividends
paid by a publicly held corporation) from any other Person, which
is, or has been, a supplier, customer, or, within the last 12
months, competitor of the Company.
4.27 Board Approval. The Board of Directors of the
Company has:
(a) approved the Merger in principle to which the
Company is a party and the transactions contemplated hereby and
thereby;
(b) and by the Closing will have approved the
Transaction Documents and determined that the Merger is in the best
interests of the Stockholders and is on terms that are fair to such
Stockholders; and
(c) recommended that the Stockholders approve the
Merger in accordance with the MGL. No other Company approvals are
required other than that of the Board of Directors and
Stockholders.
4.28 Vote Required. The vote of two-thirds of the shares
of Company Common Stock outstanding and entitled to vote on
approving the Merger, the Agreement and the transactions
contemplated hereby and thereby are the only votes of the holders
of any class or series of the Company?s Common Stock necessary to
approve the Transaction Documents to which the Company is a party
and the transactions contemplated hereby and thereby.
4.29 Officers and Directors. The duly elected, qualified
and acting officers and directors of the Company are as set forth
in Schedule 4.29.
4.30 Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion in:
(a) the Stockholders? Materials (defined below)
will, at the dates mailed to the Stockholders and at the effective
date of the Stockholder Action (defined below), contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made,
not misleading. The Stockholders? Materials will comply as to form
with the provisions of all applicable laws, rules and regulations
of all Governmental Authorities.
4.31 Bank Accounts; Credit and Charge Cards. Schedule
4.31 hereto contains a true and complete list as of the date hereof
(i) of all banks, trust companies and savings and loan associations
in which the Company maintains an account (and the account number
thereof) or safe deposit vault and the names of all Persons
authorized to draw thereon and the balances on such accounts as of
December 31, 2001; and (ii) of all credit and charge cards issued
in the name of the Company or any of its employees or officers and
for which the Company has any liability and the outstanding
balances on each such card as of December 31, 2001.
4.32 No Right of Action. The execution and delivery of
the Agreement and the other agreements, documents and instruments
contemplated hereby and the completion of the transactions
contemplated hereby and thereby, shall not cause Parent, the
Surviving Corporation, or any of their respective affiliates to be
liable for damages to any other Person or give such Person any
equitable right against any of them or the Company or any of their
respective Assets.
4.33 Knowledge Definition. As used in the Agreement, ?to
the knowledge of the Company? and like phrases shall mean and
include:
(a) actual knowledge; and
(b) that knowledge which a prudent businessperson
(including the officers, directors and other key employees of the
Company) would have obtained in the management of his or her
business affairs after reviewing this Article IV in detail and
making due inquiry and exercising reasonable diligence with respect
thereto.
4.34 Full Disclosure. No financial statement, Exhibit,
Schedule or document required by the Agreement to be prepared or
furnished by or on behalf of the Company or any Key Stockholder to
the Parent and/or Acquisition Sub in connection with the Agreement
or any other Transaction Document hereby or delivered pursuant
hereto, contained or contains any material misstatement of fact or
omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. The representations and warranties set forth
in this Article IV do not contain any material misstatement of fact
or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
4.35 Acquiring Stock Consideration for Investment. The
Company and the Key Stockholders acknowledge that the Stockholders
are acquiring the Stock Consideration for investment and not with a
view to or for sale in connection with the distribution of such
stock nor with any present intention of selling or otherwise
disposing of all or any part of such stock; provided, however, the
Stockholders shall have the right to transfer the securities to
third parties pursuant to an exemption from registration under the
Securities Act of 1933 (the "Act"). In connection with any such
future transfer, the Parent will accept an acceptable opinion of
counsel to the Stockholders as to the existence of any exemption.
The Parent, the Acquisition Sub, the Company and the Key
Stockholders hereby acknowledge the understanding that the stock
representing the Stock Consideration is not being registered under
the Act or any state securities laws, on the ground that the
issuance of such stock in connection with the Agreement is, on
information and belief, exempt under the Act and relevant state
securities laws, as a small offering and not involving a public
offering, whether under SEC Rule 505 or otherwise. The Company
agrees to include with the Stockholders' Materials a notice to the
Stockholders that they may not sell such shares of stock unless
they are subsequently registered or an exemption from such
registration is available. The Parent and the Acquisition Sub
agree to provide the Company, for inclusion with the Stockholders'
Materials, with the documents and information required to be
disclosed to the Stockholders pursuant to SEC Rule 505, including
but not limited to the information and documents described in SEC
Rule 502(b)(2)(ii). The Company and the Key Stockholders
acknowledge their understanding that the Parent's reliance on such
exemptions are, in part, based upon the foregoing representations,
warranties, and agreements by the Company and the Key Stockholders
and that the statutory basis for such exemptions would not be
present, if notwithstanding such representations, warranties and
agreements, the Stockholders were acquiring such stock for resale
on the occurrence or non-occurrence of some predetermined event.
In order to induce the Parent to issue such stock, it is agreed
that the Parent will have no obligation to recognize the ownership,
beneficial or otherwise, of such stock by anyone but the
Stockholders, except as set forth herein.
The Company and the Key Stockholders have also been given the
opportunity, and the remaining Stockholders will, between the time
of the mailing of the Stockholders' Materials and the Stockholders'
Meeting (defined below), be given the opportunity, to ask questions
of, and receive answers from, management of the Parent regarding
the terms and conditions of this Agreement, and the transactions
contemplated thereby, as well as the affairs of the Parent and
related matters. The Company and the Stockholders may have access
to whatever additional information concerning the Parent, its
financial condition, business, prospects, management,
capitalization, and other similar matters, that the Company and the
Stockholders desire, provided that the Parent can acquire such
information without unreasonable effort or expense. The Company
and the Key Stockholders have had the opportunity to obtain
additional information necessary to verify the accuracy of the
information referred to in this Section 4.35.
4.36 Other Loans. The outstanding principal and accrued
interest therein as of December 31, 2001 of the Company?s loans with
Messrs. Xxxxxx, Xxxxxxx and Xxx Xxxx are set forth on Schedule 4.36
(the ?Other Loan?).
4.37 Backlog. The Company?s current backlog at December
31, 2001 is set forth on Schedule 4.37(a) and any items that are
currently at the Company for warranty repair are identified on
Schedule 4.37(b). Such schedules are true and correct as of such
date, and such backlog is for parts that have been designed or are
clearly within the design capabilities of the Company; and none of
the Key Stockholders has any reason to believe that any of such
backlog will not be shipped in accordance with the contractual
requirements for such shipment. The schedule of backlog will be
updated as of the Closing Date.
4.38 MRI Product Line. The assets making up the
magnetic resonance imaging (?MRI?) product line discontinued by the
Company in 2000 are included in the Assets. The Company has no and
does not anticipate any warranty claims for products in its MRI
product line.
4.39 Non-disclosure Agreements. The Company has
entered into non-disclosure agreements with the Persons identified
on Schedule 4.39. Other than as set forth on Schedule 4.39, the
Company has requested and received the return of its confidential
information from such Persons.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB
Parent and Acquisition Sub, jointly and severally, represent
and warrant to the Company and each of the Key Stockholders that:
5.1 Organization; Good Standing; Qualification and
Power. Each of Parent and Acquisition Sub:
(a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware; and
(b) has all requisite corporate power and authority
to enter into the Transaction Documents to which either is a party,
to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.
5.2 Continuity of Business Enterprise. It is the present
intention of Parent, and shall be the intention of the Parent as of
the Closing, to continue at least one significant historic business
line of the Company or to use at least a significant portion of the
Company?s historic business Assets in a business, in each case
within the meaning of Treasury Regulation Section 1.368-1(d).
5.3 Authority; No Consents. The execution, delivery and
performance by Parent and Acquisition Sub of the Transaction
Documents to which each is a party and the consummation of the
transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action on the part of
Parent and Acquisition Sub, and the Agreement and the other
Transaction Documents to which each is a party have been and will
be, duly and validly executed and delivered by Parent and
Acquisition Sub, and the Agreement and the other Transaction
Documents to which each is a party are the valid and binding
obligations of Parent and Acquisition Sub, enforceable against
Parent and Acquisition Sub in accordance with their respective
terms subject to bankruptcy, fraudulent conveyance, insolvency,
moratorium or similar laws affecting the rights of creditors
generally or general equitable principles. Neither the execution,
delivery and performance of the other Transaction Documents to
which each is a party nor the consummation by Parent and
Acquisition Sub of the transactions contemplated hereby or thereby
nor compliance by Parent and Acquisition Sub with any provision
hereof or thereof will: (a) conflict with; (b) result in any
violations of; (c) cause a default under (with or without due
notice, lapse of time or both); (d) give rise to any right of
termination, amendment, cancellation or acceleration of any
obligation contained in or the loss of any material benefit under;
or (e) result in the creation of any Encumbrance on or against any
assets of Parent or Acquisition Sub, right or property of Parent or
Acquisition Sub under any term, condition or provision of: (x) any
instrument or agreement to which Parent or Acquisition Sub is a
party, or, to the knowledge of Parent and Acquisition Sub, by which
Parent or Acquisition Sub, their respective properties, assets or
rights may be bound (except as shall have been waived or with
respect to which consent shall have been obtained prior to the
Closing) except where the foregoing would not result in a Material
Adverse Effect on Parent; (y) any law, statute, rule, regulation,
order, writ, injunction, decree, permit, concession, license or
franchise of any Governmental Authority applicable to Parent or
Acquisition Sub or any of their respective properties, assets or
rights except where the foregoing would not result in a Material
Adverse Effect on Parent; or (z) the Certificate or by-laws of
Parent or Acquisition Sub, respectively, as amended through the
date hereof. Except as contemplated by the Agreement, no permit,
authorization, consent or approval of or by, or any notification of
or filing with, any Governmental Authority is required in
connection with the execution, delivery and performance by Parent
and Acquisition Sub of the Agreement or the Transaction Documents
to which Parent and Acquisition Sub is a party or the consummation
of the transactions contemplated hereby or thereby, except for: (i)
such reports and information under the Exchange Act, and the rules
and regulations promulgated by the SEC thereunder, as may be
required in connection with the Agreement and the transactions
contemplated hereby and thereby; (ii) such filings as may be
required by Nasdaq with respect to notification and listing of
Parent Common Stock to be issued in connection with the Merger, if
any; (iii) the filing of such documents with, and the obtaining of
such orders from, various state securities and blue-sky authorities
as are required in connection with the transactions contemplated
hereby, if any; and (iv) such other consents, waivers,
authorizations, filings, approvals and registrations which if not
obtained or made would not have a Material Adverse Effect on the
Parent or materially impair the ability of Parent and Acquisition
Sub to consummate the transactions contemplated by the Agreement,
including, without limitation, the Merger.
5.4 SEC Documents. Parent has filed each report,
schedule, registration statement and definitive proxy statement
with the SEC on or after March 31, 2001 (the ?Parent SEC
Documents?), which are all the documents (other than preliminary
material) that Parent was required to file (or otherwise did file)
with the SEC on or after March 31, 2001. As of their respective
dates, none of the Parent SEC Documents (including all exhibits and
schedules thereto and documents incorporated by reference therein)
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading, and the Parent SEC
Documents complied when filed in all material respects with the
then applicable requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations promulgated
by the SEC thereunder.
5.5 Financial Statements. The financial statements of
the Parent included in the Parent SEC Documents (the ?Parent
Financial Statements?):
(a) complied as to form in all material respects
with the then applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were
prepared in accordance with GAAP, consistently applied (except as
may have been indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-QSB promulgated by
the SEC);
(b) were in accordance with the books and records of
the Parent; and
(c) fairly present (subject, in the case of the
unaudited statements, to normal, nonrecurring audit adjustments)
the financial position of the Parent as at the dates thereof and
the consolidated results of their operations and cash flows for the
periods then ended.
5.6 Absence of Undisclosed Liabilities. At March 31,
2001, (a) Parent had no Liability which was not provided for or
disclosed on the Parent SEC Documents for the fiscal year ended
March 31, 2001; and (b) all liability reserves established by
Parent and set forth on the Parent Financial Statements were
adequate, in the good faith judgment of Parent, for all such
Liabilities at the date thereof. There were no material loss
contingencies (as such term is used in FAS No. 5) which were not
adequately provided for on the Parent Financial Statements as
required by FAS No. 5.
5.7 Absence of Changes. Since the filing with the SEC of
the Parent?s most recent 10-KSB, the Parent has not experienced any
Material Adverse Effect.
5.8 Full Disclosure. No financial statement, Exhibit,
Schedule or document required by the Agreement to be prepared or
furnished by or on behalf of the Parent or Acquisition Sub to the
Company or and/or the Key Stockholders in connection with the
Agreement or any other Transaction Document hereby or delivered
pursuant hereto, contained or contains any material misstatement of
fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. The representations and warranties
set forth in this Article V do not contain any material
misstatements of fact or omit to state any material fact necessary
to make the statements therein in light of the circumstances under
which they were made, not misleading.
5.9 Tax Matters. The Parent:
(a) has filed and will file, in a timely and proper
manner, consistent with applicable laws, all Federal, state and
local Tax returns and Tax reports required to be filed by Parent
through the Closing Date (the ?Parent Returns?) with the appropriate
governmental agencies in all jurisdictions in which Parent Returns
are required to be filed and have paid or will pay all amounts
shown thereon to be due; and (b) have paid and shall timely pay all
Taxes required to have been paid on or before the Closing Date.
5.10 No Defaults, Etc. The Parent and Acquisition Sub
have in all respects performed all the material obligations
required to be performed by it to date and is not in material
default or alleged to be in material default under: (a) its
Certificate or by-laws; or (b) any material agreement, lease,
mortgage, indenture, contract, commitment, instrument or obligation
to which the Parent and Acquisition Sub is a party or by which any
of its Assets or rights are or may be bound or affected.
5.11 Board Approval. The Board of Directors of the Parent
and Acquisition Sub have approved the Transaction Documents to
which the Parent and Acquisition Sub are a party and the
transactions contemplated hereby and thereby;
5.12 Parent Common Stock. The shares of Parent Common
Stock issued in the Merger pursuant to Article II of the Agreement
shall at the Effective Time be duly authorized, validly issued,
fully paid, and nonassessable and in compliance with the listing
rules and regulations of Nasdaq.
5.13 Parent?s Resources. The Parent has adequate
financial resources to fully fund the Cash Consideration, and
agrees to make such resources available to fund the Cash
Consideration.
ARTICLE VI
CONDUCT AND TRANSACTIONS PRIOR TO
EFFECTIVE TIME; ADDITIONAL AGREEMENTS
6.1 Access to Records and Properties of Each Party;
Confidentiality. From and after the date hereof until the Effective
Time or the earlier termination of the Agreement pursuant to
Section 13.1 hereof (the ?Executory Period?), the Company shall
afford: (i) representatives of the Parent or Acquisition Sub, free
and full access at all reasonable times upon reasonable notice to
all properties, books and records (including tax returns filed and
those in preparation) of the Company provided that such activities
shall not interfere with the Company?s normal operations, in order
that the Parent and Acquisition Sub may have full opportunity to
make such investigations as they shall reasonably desire to make of
the business and affairs of the Company. Additionally, the Company
will permit the Parent and Acquisition Sub to make such reasonable
inspections of the Company and its respective operations during
normal business hours, upon reasonable notice, as the Parent and
Acquisition Sub may reasonably require and the Company will cause
its officers to furnish to the Parent and Acquisition Sub, such
additional financial and operating data and other information as to
the business and properties of the Company as the Parent and
Acquisition Sub shall from time to time reasonably request (it
being understood that, subject to the terms of the Non Disclosure
Agreement dated September 20, 2000 by and between the Parent and
the Company, to which agreement the Acquisition Sub declares itself
bound, Parent and Acquisition Sub shall be entitled to make copies
of such information and take notes with respect thereto). No
investigation pursuant to this Section 6.1, or made prior to the
date hereof, shall affect or otherwise diminish or obviate in any
respect any of the representations and warranties made in the
Agreement.
6.2 Operation of Business of the Company. During the
Executory Period, the Company will operate its business as now
operated and only in the normal and Ordinary Course and, consistent
with such operation, will use its commercially reasonable efforts
to preserve intact its present business organization, to keep
available the services of its officers, consultants and employees
and to maintain satisfactory relationships with licensors,
franchisees, licensees, suppliers, contractors, distributors,
customers and other Persons having business dealings with it.
Without limiting the generality of the foregoing, during the
Executory Period, the Company shall not:
(a) take any action that would result in any of the
representations and warranties of the Company herein becoming
untrue or in any of the conditions to the Merger not being
satisfied.
(b) take or cause to occur any of the actions or
transactions described in Section 4.8 hereof.
6.3 Negotiation with Others.
(a) During the Executory Period, the Company and the
Key Stockholders shall not, and the Company shall not permit any
agent or other representative of the Company or any Key Stockholder
to, directly or indirectly:
(i) solicit, initiate or engage in discussions
or engage in negotiations with any Person (whether such
negotiations are initiated by the Company or Key Stockholder or
otherwise) or take any other action to facilitate the efforts of
any Person, relating to the possible acquisition of the Company
(whether by way of merger, purchase of Company Common Stock,
purchase or lease of Assets or otherwise) or any material portion
of its common stock or Assets (any such acquisition being referred
to as an ?Acquisition Transaction?);
(ii) provide information to any Person, other
than the Parent or Acquisition Sub, relating to a possible
Acquisition Transaction;
(iii) enter into an agreement with any Person,
other than the Parent or Acquisition Sub, relating to or providing
for a possible Acquisition Transaction;
(iv) consummate an Acquisition Transaction with
any Person other than the Parent or Acquisition Sub; or
(v) make or authorize any statement,
recommendation or solicitation in support of any possible
Acquisition Transaction, unless the Parent or Acquisition Sub are a
party to such Acquisition Transaction.
6.4 Advice of Changes. The Company and Parent shall
confer on a regular and frequent basis with the other, report on
operational matters and promptly advise the other orally and in
writing of any change, event or circumstance having, or which,
insofar as can reasonably be foreseen, could have, a Material
Adverse Effect on either such Person or which could impair
(negatively or positively) its financial projections or forecasts.
6.5 Letter of the Company?s Accountants. If requested by
Parent, at the Closing, the Company shall use its best commercial
efforts to cause to be delivered to Parent a bring-down comfort
letter of Xxxx Xxxxxx, the Company?s independent accountant, dated
the Closing Date and addressed to Parent, in form and substance
reasonably satisfactory to Parent and customary in scope and
substance for letters delivered by independent public accountants
with Mergers.
6.6 Stockholders? Approval. The Company shall:
(a) call a special meeting of the Stockholders (the
?Stockholders? Meeting?) within 30 days (or such other period as may
be required by applicable law) for the purpose of obtaining the
approval of the Merger, the Agreement and the transactions
contemplated hereby and thereby (the ?Stockholder Action?); and
(b) recommend that the Stockholders vote in favor of
the Merger and approve the Agreement and take or cause to be taken
all such other action as may be required by the DBCL, the DGBL and
any other applicable law in connection with the Merger and the
Agreement, in each case as promptly as possible. The Company shall
prepare and distribute any written notice and other materials
relating to the Stockholder Action, in accordance with the
Certificate and by-laws of the Company, the DGBL and any other
Federal and state laws relating to the Merger, such Stockholders?
Meeting or any other transaction relating to or contemplated by the
Agreement (collectively, the ?Stockholders? Materials?); provided,
however, that Parent and its counsel shall have the opportunity to
review all Stockholders? Materials prior to delivery to the
Stockholders, and all Stockholders? Materials shall be in form and
substance reasonably satisfactory to Parent and its counsel;
provided, further, however, that if any event occurs which should
be set forth in an amendment or supplement to any Stockholders?
Materials, the Company shall promptly inform Parent thereof (or, if
such event relates solely to Parent, Parent shall promptly inform
the Company thereof), and the Company shall promptly prepare an
amendment or supplement in form and substance satisfactory to
Parent in accordance with the Certificate and by-laws of the
Company, the DGBL and any other Federal or state laws.
6.7 Legal Conditions to Merger. Each Party shall take all
reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on such Party with respect to the
Merger and will take all reasonable action necessary to cooperate
with and furnish information to the other Party in connection with
any such requirements imposed upon such other Party in connection
with the Merger. Each Party shall take all reasonable actions
necessary:
(a) to obtain (and will take all reasonable actions
necessary to promptly cooperate with the other Party in obtaining)
any consent, authorization, order or approval of, or any exemption
by, any Governmental Authority, or other third party, required to
be obtained or made by such Party (or by the other Party) in
connection with the Merger or the taking of any action contemplated
by the Agreement or the Plan of Merger; and
(b) to defend, lift, rescind or mitigate the effect
of any lawsuit, order, injunction or other action adversely
affecting the ability of such Party to consummate the transactions
contemplated hereby; and (c) to fulfill all conditions precedent
applicable to such Party pursuant to the Agreement.
6.8 Consents. Each Party shall use its commercially
reasonable efforts, and the other Party shall cooperate with such
efforts, to obtain any consents and approvals of, or effect the
notification of or filing with, each Person or authority, whether
private or governmental, whose consent or approval is required in
order to permit the consummation of the Merger and the transactions
contemplated hereby and to enable the Surviving Corporation to
conduct and operate the business of the Company substantially as
presently conducted and as proposed to be conducted.
6.9 Efforts to Consummate. Subject to the terms and
conditions herein provided, each of the parties hereto shall, in
good faith, use reasonable effort to do or cause to be done all
such acts and things as may be necessary, proper or advisable,
consistent with all applicable laws and regulations, to consummate
and make effective the transactions contemplated hereby and to
satisfy or cause to be satisfied all conditions precedent that are
applicable to each such Party that are set forth in the Agreement
as soon as reasonably practicable.
6.10 Notice of Prospective Breach. Each Party hereto
shall immediately notify the other Party in writing upon the
occurrence of any act, event, circumstance or thing that is
reasonably likely to cause or result in a representation or
warranty hereunder to be untrue at the Closing, the failure of a
closing condition to be achieved at the Closing, or any other
breach or violation hereof or default hereunder.
6.11 Public Announcements. Each of the Company and the
Parent hereto agrees that it shall consult with the other parties
before issuing any press releases or otherwise making any public
statements with respect to the Merger; and shall not issue any such
press release or make any such public statement prior to such
consultation, except as may be required by law or by obligations
pursuant to any listing agreement with any national securities
exchange or as may be advised by counsel to be desirable or
appropriate, without the prior written consent of the other. Each
Party further agrees that no Party shall unreasonably withhold
their written consent to the issuance of a public disclosure
referred to in this Section 6.11.
6.12 Notice of Developments. Each party hereto will use
all commercially reasonable efforts to ensure that its respective
representations and warranties will be accurate and complete at the
time the Agreement is executed. However, notwithstanding the
foregoing, each party shall at any time from the date of the
Agreement throughout the Closing notify the other party if the
notifying party becomes aware of any fact or condition that causes
or constitutes a breach of any of its representations and
warranties as of the date of the Agreement or of any development
causing a breach of any of its representations and warranties.
6.13 Agreement Regarding Proceedings. In the event of any
threatened, pending or completed claim, action, suit, investigation
or any legal, administrative or other proceeding (a ?Proceeding?) by
any Governmental Authority or other Person which questions the
validity or legality of the transactions contemplated by the
Agreement or seeks to enjoin, restrain or prohibit such
transactions, or seeks damages in connection therewith, whether
before or after the Effective Time of the Merger, Parent,
Acquisition Sub, the Company, and the Surviving Corporation agree,
to the fullest extent permissible by law, to cooperate in the
defense thereof.
6.14 Key Stockholder Agreements. Notwithstanding anything
contained herein to the contrary, the execution of the Agreement by
each of the Key Stockholders shall terminate, effective as of the
date hereof, any and all oral or written agreement (other than the
Agreement and the Voting Agreement), understanding or similar
arrangement (to the extent not set forth on Schedule 3.2 or
specifically set forth in the Agreement) to which any such Key
Stockholder is a direct or indirect party or beneficiary and to
which the Company, its affiliates or agents, is a direct or
indirect party or beneficiary without any further liability or
obligations of the Company, its successors, assigns, affiliates or
agents. This Section 6.14 shall not apply to the lease by and
between the Company and Enon Nominee Trust currently in effect and
the shareholder to Company loans disclosed on Schedule 4.36 and
referred to in Section 7.8.
ARTICLE VII
CONDITIONS PRECEDENT TO EACH PARTY?S OBLIGATIONS
The obligations of each Party to perform the Agreement and to
consummate the transactions contemplated hereby and thereby will be
subject to the satisfaction of the following conditions unless
waived (to the extent such conditions can be waived) by each other
Party:
7.1 Stockholder Approval; Agreement of Merger. The
Agreement and the Merger shall have been approved and adopted by
two-thirds of the shares of Company Common Stock outstanding and
entitled to vote on approving the Agreement and the Merger.
7.2 Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with or expiration of
waiting periods imposed by any Governmental Authority necessary for
the consummation of the transactions contemplated hereby shall have
been obtained or made or shall have occurred.
7.3 Legal Action. No temporary restraining order,
preliminary injunction or permanent injunction or other order
preventing the consummation of the Merger shall have been issued by
any Federal or state court or other Governmental Authority and
remain in effect.
7.4 Agreements. The following agreements shall have been
executed and delivered by the respective parties thereto:
(a) a one year part-time consulting agreement
between Parent and Xxxxxx X. Xxxxxx (the "Xxxxxx Consulting
Agreement") (substantially in the form set forth in Exhibit B); and
(b) a two year employment agreement between Parent
and Xxx X. Xxxxxxx (the "Xxxxxxx Employment Agreement")
(substantially in the form set forth in Exhibit C).
7.5 Legislation. No Federal, state, local or foreign
statute, rule or regulation shall have been enacted which
prohibits, restricts or delays the consummation of the transactions
contemplated by the Agreement or any of the conditions to the
consummation of such transactions.
7.6 Company Cash. At least $50,000 in cash, in addition
to funds needed to fund any outstanding checks of the Company,
shall be on deposit in a bank account of the Company at the
Closing.
7.7 Lease. The Surviving Corporation shall have entered
into a two year lease to occupy the premises owned by the Enon
Nominee Trust on the same terms and conditions as in place as of
September 30, 2001 (?Enon?s Facility?).
7.8 Other Loans. The Surviving Corporation shall
repay the outstanding Other Loans of Messrs. Hill and Xxxxxxx at
the Closing. The Surviving Corporation and Xx. Xxxxxx shall enter
into a new three year promissory note with Xx. Xxxxxx with respect
to his Other Loan in the form of Exhibit A attached hereto to be
delivered to Xx. Xxxxxx in exchange for the note representing his
Other Loan.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF PARENT AND ACQUISITION SUB
The obligations of Parent to perform the Agreement and to
consummate the transactions contemplated hereby and of Acquisition
Sub to perform the Agreement and to consummate the transactions
contemplated hereby will be subject to the satisfaction of the
following conditions unless waived (to the extent such conditions
can be waived) by Parent and Acquisition Sub:
8.1 Representations and Warranties. The representations
and warranties of the Key Stockholders set forth in Article III and
the representations and warranties of the Company set forth in
Article IV hereof shall in each case be true and correct in all
respects as of the date of the Agreement, and as of the effective
date of the Stockholder Action and as of the Closing Date as though
made at and as of such dates, respectively.
8.2 Performance of Obligations of the Company. The
Company shall have performed in all material respects the
obligations required to be performed by it under the Agreement
prior to or as of the Closing Date.
8.3 Authorization of Merger.
(a) As of the Closing Date, all action necessary to
authorize the execution, delivery and performance of the
Transaction Documents by the Company and the consummation of the
transactions contemplated hereby and thereby shall have been duly
and validly taken by the Board of Directors and the Parent shall
have received copies of all resolutions evidencing same certified
by the Clerk of the Company. The Company shall have full power and
right to effect the Merger on the terms provided herein.
(b) As of the Closing Date, all action necessary to
authorize the execution, delivery and performance of the
Transaction Documents by each Key Stockholder, with respect to
himself, and the consummation of the transactions contemplated
hereby and thereby shall have been duly and validly taken by each
of the Key Stockholders, with respect to himself. The Key
Stockholders shall have full power and right to effect the Merger
on the terms provided herein.
(c) As of the Effective Time, all action necessary
to authorize the execution, delivery and performance of the
Transaction Documents by the Stockholders and the consummation of
the transactions contemplated hereby and thereby shall have been
duly and validly taken by the Stockholders, and the Parent shall
have received copies of all resolutions evidencing same certified
by the Clerk of the Company. The Stockholders shall have full
power and right to effect the Merger on the terms provided herein.
8.4 Merger Filing. The Merger Filing shall be duly
executed by the Company.
8.5 Certificate. Parent and Acquisition Sub shall have
received a certificate dated the Closing Date, signed by the
President of the Company as to the satisfaction of the conditions
contained in Sections 8.1 through 8.3.
8.6 Good Standing Certificates. A certificate of the
appropriate officials, as of a recent date, of the due organization
and good standing to do business and tax standing of the Company in
Massachusetts and in each jurisdiction wherein the conduct of its
business or the ownership of operation of Assets requires the
Company to maintain qualification as a foreign corporation.
8.7 Opinion of The Company?s Counsel. Parent and
Acquisition Sub shall have received an opinion in the form set
forth on Exhibit 8.7, dated the Closing Date, of TQGF, counsel to
the Company.
8.8 Opinion of Environmental Counsel. Parent shall have
obtained an opinion of counsel experienced in environmental matters
as to the accuracy of the representations in the Agreement and the
Transaction Documents as to environmental matters relating to the
Company?s Assets and Enon's Facility.
8.9 Acceptance by Counsel to Parent and Acquisition Sub.
The form and substance of all legal matters contemplated hereby and
of all papers delivered hereunder shall be reasonably acceptable to
Xxxxx & Associates, P.C., counsel for Parent and Acquisition Sub.
8.10 Consents and Approvals. Parent and Acquisition Sub
shall have received duly executed copies of all consents set forth
on Schedule 4.5, and other consents and approvals contemplated by
the Agreement, in form and substance satisfactory to Parent and
Acquisition Sub.
8.11 Government Consents, Authorizations, Etc. All
consents, authorizations, orders or approvals of, and filings or
registrations with, any Governmental Authority which are required
for or in connection with the execution and delivery by the Company
of the Transaction Documents and the consummation by the Company of
the transactions contemplated hereby and thereby shall have been
obtained or made.
8.12 Transaction Documents. Each of the Transaction
Documents shall be in full force and effect as of the Effective
Time in accordance with the respective terms thereof, and each
Person or entity who or which is required or contemplated by the
parties hereto to be a party to any Transaction Documents who or
which did not theretofore enter into such Transaction Documents
shall execute and deliver such Transaction Documents.
8.13. Schedules. Parent and Acquisition Sub shall have
determined in its sole discretion, exercised in good faith, that
the respective observations of Parent and Acquisition Sub made
during their review of the schedules to the Agreement disclosed no
material information regarding the Company unsatisfactory to the
Parent or Acquisition Sub.
8.14 Services Agreements. (i) Xx. Xxxxxx shall have
executed and delivered to Parent a one year part-time consulting
agreement (substantially in the form set forth in Exhibit B); and
(ii) Xx. Xxxxxxx shall have executed and delivered to Parent a one
year employment agreement (substantially in the form set forth in
Exhibit C).
8.15 Backlog. The dollar amount of the Company's backlog
as of the Closing Date shall not be less than $1.25 Million.
8.16 As of the Effective Time, there are no liens on any
Assets. In this regard see Article 9.11.
8.17 Parent and Acquisition Sub shall have received
confirmation of the termination of the Company's Guarantee of
Eastern Bank's loan to the Enon Nominee Trust dated February 8,
2000 and such guarantee shall be of no further force and effect.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE COMPANY
AND THE KEY STOCKHOLDERS
The obligations of the Company and the Key Stockholders to
perform the Agreement, and to consummate the transactions
contemplated hereby will be subject to the satisfaction of the
following conditions unless waived (to the extent such conditions
can be waived) by the Company and the Key Stockholders:
9.1 Representations and Warranties. The representations
and warranties of Parent and Acquisition Sub set forth in Article V
hereof shall be true and correct in all material respects (except
for any representation or warranty that by its terms is qualified
by materiality, in which case it shall be true and correct in all
respects) as of the date of the Agreement, and as of the Closing
Date as though made at and as of such dates, respectively.
9.2 Performance of Obligations of Parent and Acquisition
Sub. Parent and Acquisition Sub shall have performed in all
material respects their respective obligations required to be
performed by them under the Agreement prior to or as of the Closing
Date.
9.3 Authorization of Merger. All action necessary to
authorize the execution, delivery and performance of the
Transaction Documents by Parent, the execution, delivery and
performance of the Agreement by Acquisition Sub, and the
consummation of the transactions contemplated hereby shall have
been duly and validly taken by the board of directors of Parent and
Acquisition Sub and by Parent as the sole Stockholder of
Acquisition Sub, and the Company shall have received copies of all
such resolutions certified by the respective Secretary of Parent
and Acquisition Sub.
9.4 Certificate. The Company shall have received a
certificate dated the Closing Date, signed by the President of each
of Parent and Acquisition Sub as to the satisfaction of the
conditions contained in Sections 9.1 through 9.3, except to the
extent waived by the Company.
9.5 Acceptance by Counsel to Company. The form and
substance of all legal matters contemplated hereby and of all
papers delivered hereunder shall be reasonably acceptable to TQGF.
9.6 Consents and Approvals. The Company shall have
received duly executed copies of all consents referenced in Section
5.4 and other consents and approvals contemplated by the Agreement
in form and substance reasonably satisfactory to the Company.
9.7 Government Consents, Authorizations, Etc. All
consents, authorizations, orders or approvals of, and filings or
registrations with, any Governmental Authority which are required
for or in connection with the execution and delivery by Parent and
Acquisition Sub of the Transaction Documents and the consummation
by the Parent and the Acquisition Sub of the transactions
contemplated hereby and thereby shall have been obtained or made.
9.8 Transaction Documents. Each of the Transaction
Documents shall be in full force and effect as of the Effective
Time in accordance with the respective terms thereof, and each
Person who or which is required or contemplated by the parties
hereto to be a party to any Transaction Documents who or which did
not theretofore enter into such Transaction Documents shall execute
and deliver such Transaction Documents.
9.9 Lease. The Surviving Corporation shall have
delivered to the trustees of Enon Nominee Trust an executed two
year lease to occupy Enon's Facility on the same terms and
conditions as in place as of September 30, 2001.
9.10 Opinion of Counsel for Parent and Acquisition Sub.
The Company shall have received an opinion in the form set forth on
Exhibit 9.10, dated the Closing Date, of Xxxxx & Associates, P.C.,
counsel to the Parent and Acquisition Sub.
9.11 Payment of Eastern Bank Loan. The Surviving
Corporation shall pay off the outstanding loan from Eastern Bank to
the Company in its entirety at the Closing. The parties understand
that the actual Eastern Bank UCC Termination Statement will be
filed post-Closing.
ARTICLE X
NON-COMPETE AND NO SOLICITATION
10.1 Non-Compete.
(a) Xxxxxx X. Xxxxxx covenants and agrees that for
a period of three years from the date of the Xxxxxx Consulting
Agreement, or two years following the termination of his
consultancy with the Surviving Corporation other than as a result
of a breach of the Xxxxxx Consulting Agreement by the Surviving
Corporation whichever is later, he shall not directly or indirectly
compete with the Surviving Corporation in the microwave control
components marketplace or in any other business in which the
Surviving Corporation may at such time be engaged, nor induce any
person associated with or employed by the Surviving Corporation or
any subsidiary of the Surviving Corporation, to leave the employ of
or terminate his association with the Surviving Corporation, or any
subsidiary of the Surviving Corporation, or solicit the consultant
of any such person on his own behalf or on behalf of any other
business enterprise.
(b) Xxx X. Xxxxxxx covenants and agrees that for a
period of two years following the termination of his employment
with the Surviving Corporation other than as a result of a breach
of the Xxxxxxx Employment Agreement by the Surviving Corporation,
he shall not directly or indirectly compete with the Surviving
Corporation in the microwave control components marketplace or in
any other business in which the Surviving Corporation may at such
time be engaged, nor induce any person associated with or employed
by the Surviving Corporation or any subsidiary of the Surviving
Corporation, to leave the employ of or terminate his association
with the Surviving Corporation, or any subsidiary of the Surviving
Corporation, or solicit the employment of any such person on his
own behalf or on behalf of any other business enterprise. In the
event of termination by virtue of a breach by the Surviving
Corporation, termination of the Xxxxxxx Employee Agreement without
cause or expiration of the Term (as defined in the Xxxxxxx Employee
Agreement), the aforesaid covenant will be applicable for a period
of one year from such event.
(c) The provisions of this Section 10.1 shall not
apply to investments by the Key Stockholders in shares of stock
traded on a national securities exchange or on the national over-
the-counter market which shall have an aggregate market value, at
the time of acquisition, of less than 5% of the outstanding shares
of such stock, or in shares of stock of the Surviving Corporation.
Each of the Key Stockholders acknowledge that the provisions
of this Section 10.1, and the period of time, geographic area and
scope and type of restrictions on its activities set forth herein,
are reasonable and necessary for the protection of the Parent and
the Acquisition Sub and are an essential inducement to the Parent
and the Acquisition Sub entering into the Transaction Documents to
which they are a party and consummating the transactions
contemplated thereby.
10.2 No Solicitation. No Key Stockholder shall from and
after the Closing Date, and for a period of two (2) years
thereafter, directly or indirectly, for himself or on behalf of any
other Person, employ, engage or retain any Person who, at any time
during the preceding 12-month period, shall have been an employee
of the Parent, Acquisition Sub, or the Company, or contact any
supplier, customer or employee of the Company for the purpose of
soliciting or diverting any such supplier, customer or employee of
the Parent, Acquisition Sub, or the Company.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by The Company. The Company agrees
to indemnify and hold harmless the Parent, Acquisition Sub and
(after the Merger) the Surviving Corporation from and against,
without duplication, all costs, fees, liabilities, Taxes, charges,
claims, expenses, losses and damages, including reasonable legal
expenses and costs of investigation (both of those incurred in
connection with the defense or prosecution of an indemnification
claim and those incurred in connection with the enforcement of this
provision) (collectively "Losses"), as and when actually incurred
or as and when actually paid by the Parent, Acquisition Sub and
Surviving Corporation or any of their respective subsidiaries,
successors, assigners, officers, employees, directors, agents or
affiliates, arising out of or in connection with any action or
proceeding as a result of or arising in connection with:
(a) the breach of any of the Company?s or where
applicable Key Stockholder?s representations, warranties or
agreements contained in the Transaction Documents;
(b) the commencement and/or prosecution of any
action brought against Parent or Surviving Corporation by a Key
Stockholder (or equity interest holder) or former Stockholder (or
equity interest holder) or any predecessor thereof or any Person
acquired thereby, arising out of or relating to the purchase of all
or a portion of such Person?s Company Common Stock or the
acquisition of all or substantially all of the Assets of the entity
the common stock of which was owned by such Person or, in each
case, any direct or indirect stockholder of any of the foregoing;
(c) the actual or threatened commencement of any
proceeding, suit or action based upon an action taken or not taken
or a product manufactured by the Company prior to the Closing Date
against Parent, Surviving Corporation or any direct or indirect
Subsidiary thereof, or any director, officer, agent or employee of
any of them, which, if determined adversely thereto (regardless of
the actual determination thereof) would result in a Loss (any such
pending or threatened suit or action being a ?Covered Action?); or
(d) any and all actions, suits or proceedings,
claims or demands incident to any of the foregoing or such
indemnities.
11.2 Indemnification by Key Stockholders. The Key
Stockholders agree to indemnify and hold harmless the Parent,
Acquisition Sub and Surviving Corporation from and against, without
duplication, all Losses, as and when actually incurred or as and
when actually paid by the Parent, Acquisition Sub and Surviving
Corporation or any of their respective subsidiaries, successors,
assignors, officers, employees, directors, agents or affiliates,
arising out of or in connection with the breach of any such Key
Stockholder?s representations, warranties, covenants or agreements
contained in those sections of the Agreement set forth above their
name on the signature page hereto. Prior to Closing, no Key
Stockholder shall have any indemnification obligations hereunder.
11.3 Indemnification by Parent and Acquisition Sub. The
Parent and Acquisition Sub agree to indemnify and hold harmless the
Company and each of the Key Stockholders from and against, without
duplication, all Losses arising out of or in connection with any
action or proceeding as a result of or arising in connection with
the breach of any of the Parent or Acquisition Sub?s
representations, warranties or agreements contained in the
Transaction Documents.
11.4 Loss Indemnity Procedure. Upon learning of the
commencement of a Covered Action or the actual receipt by the
parties claiming a right of indemnification (the ?Indemnified
Party?) of information relating to the purported existence of facts
or circumstances which could result in the commencement of a
Covered Action or other incurrence of Loss, the Indemnified Party
shall promptly, but no later than fifteen (15) days after learning
of such commencement or receipt, give notice (?Indemnification
Notice?) thereof, with reasonable specificity of the facts as then
known to the party having the indemnification obligation (the
?Indemnifying Party?); provided, however, failure to give timely
such notice shall not release the Indemnifying Party of its
obligations hereunder except, and only, to the extent the
Indemnifying Party suffers actual prejudice as a proximate result
of such failure.
(a) The Indemnifying Party shall have the right to
assume the defense of any such Covered Action by giving written
notice (the ?Assumption Notice?) to the Indemnified Party within 20
days after notice given pursuant to this Section 11.4 which
Assumption Notice shall state that (i) the Indemnifying Party
agrees that the claimant is entitled to indemnification hereunder
and that any resulting Loss for which it is or they are liable; and
(ii) it agrees or they agree to assume the defense thereof in the
name and on behalf of the Indemnified Party with counsel reasonably
satisfactory to the Indemnified Party, in either event at the sole
cost and expense of the Indemnifying Party; provided, however, (x)
all such costs and expenses of the foregoing counsel, if not paid
by the Indemnifying Party and instead paid by the Indemnified Party
shall be Losses for which the Indemnified Party is indemnified
under this Section 11.4, (y) the Indemnified Party, notwithstanding
the timely delivery of an Assumption Notice, may participate in
such Covered Action through counsel separately selected and paid
for by the Indemnified Party, and (z) if no Assumption Notice is
timely given, or despite the giving of the Assumption Notice the
defendants in any Covered Action include both the Indemnified Party
and the Indemnifying Party, and the Indemnified Party shall have
reasonably concluded that there may be legal defenses available to
it which are different from or additional to those available to the
Indemnifying Party, or if there is a conflict of interest which
would prevent counsel for the Indemnifying Party from also
representing the Indemnified Party, the Indemnified Party shall
have the right to select one separate counsel to conduct the
defense of such action on its behalf, and all such costs and
expenses shall be paid by the Indemnifying Party and, if paid by
the Indemnified Party, shall be Losses under this Section 11.4. The
Indemnified Party may take such action with respect to a Covered
Action as it may deem appropriate to protect against further damage
or default, including obtaining an extension of time to answer the
complaint or other pleading or filing an answer thereto.
(b) In no event shall an Indemnifying Party consent
to the entry of any judgment or enter into any settlement without
the written consent of the Indemnified Party, which shall not be
unreasonably withheld or delayed. No Indemnified Party shall
consent to the entry of any judgment or enter into any settlement
relating to a Loss without the written consent of the Indemnifying
Party, which shall not be unreasonably withheld or delayed.
11.5 Duration of Indemnification. Liability for
indemnification under this Article XI shall expire on the second
anniversary of the Closing Date (or, in the case of indemnification
arising out of the breach of a representation or warranty, the
survival period of such representation or warranty under Section
14.1 below).
11.6 No Claim against Surviving Corporation/Company. In
no event following Closing may any Key Stockholder seek or assert
any claim whatsoever, whether for contribution or otherwise,
against the Surviving Corporation arising out of any facts or any
action or failure to act by the Company or a Key Stockholder
existing or occurring prior to or as of the Closing, including,
without limitation, based upon any breach of any representation,
warranty, covenant or condition herein by the Company or a Key
Stockholder, whether by way of contribution based upon the gross
negligence or willful misconduct of the Company or a Key
Stockholder, or otherwise.
11.7 Limitations on Indemnity.
(a) The parties acknowledge and agree that each Key
Stockholder shall only have liability hereunder for the Losses
incurred by the Parent or the Acquisition Sub arising directly out
of any breach of any representation, warranty, covenant or other
agreement made by such Key Stockholder hereunder; provided,
however, that (i) notwithstanding anything herein to the contrary,
in no event shall such Key Stockholder be liable for any such Loss
unless and until the aggregate amount of all Losses suffered by the
Parent and the Acquisition Sub caused by such Key Stockholder?s
breach exceeds the Threshold and then such Key Stockholder shall
only be liable for the excess thereof and (ii) in no event shall
such Key Stockholder be liable for any Losses suffered by the
Parent and the Acquisition Sub in excess of the Cap. As used in
this Section 11.7(a), with respect to any Key Stockholder, the
Threshold shall mean, ten percent of (i) the product of (A) the
number of shares of Parent Common Stock received by such Key
Stockholder in the Merger multiplied by (B) the closing price of a
share of Parent Common Stock as reported on Nasdaq on the Closing
Date or, if the Closing Date is not a trading day, the first date
prior to the Closing Date on which there is a closing price of the
Parent Common Stock reported on Nasdaq (the ?NASDAQ Closing Price?).
As used in this Section 11.7(a), with respect to any Key
Stockholder, the Cap shall mean, 60% of (i) the product of (A) the
number of shares of Parent Common Stock received by such Key
Stockholder in the Merger multiplied by (B) the NASDAQ Closing
Price.
(b) The parties acknowledge and agree that Parent
and Acquisition Sub shall only have liability hereunder for the
Losses incurred by the Company and Key Stockholders arising
directly out of any breach of any representation, warranty,
covenant or other agreement made by Parent and Acquisition Sub
hereunder; provided, however, that (i) notwithstanding anything
herein to the contrary, in no event shall the Parent and
Acquisition Sub be liable for any such Losses unless and until the
aggregate amount of all Losses suffered by the Company or the
aggregate amount of all Losses suffered by the applicable Key
Stockholder, as the case may be, caused by such Parent and/or
Acquisition Sub?s breach exceed the Parent Threshold and then the
Parent and Acquisition Sub shall only be liable for the excess
thereof and (ii) in no event shall the liability of the Parent and
the Acquisition Sub to the applicable Key Stockholder or to the
Company, as the case may be to provide indemnification for Losses
under this Article XI exceed the Parent Cap (regardless of whether
the applicable Key Stockholder or the Company, as the case may be
suffers aggregate Losses in excess of the Parent Cap). As used in
this Section 11.7(b), with respect to the Parent, Acquisition Sub
and if the party suffering loss is a Key Stockholder, the Parent
Threshold shall mean ten percent of (i) the product of (A) the
number of shares of Parent Common Stock received by such Key
Stockholder in the Merger multiplied by (B) the NASDAQ Closing
Price. As used in this Section 11.7(b), with respect to any Key
Stockholder, the Parent Cap shall mean, 60% of (i) the product of
(A) the number of shares of Parent Common Stock received by such
Key Stockholder in the Merger multiplied by (B) the NASDAQ Closing
Price. As used in this Section 11.7(b), with respect to the Parent
and the Acquisition Sub, and if the party suffering loss is the
Company, the Parent Threshold shall mean $50,000,00. As used in
this Section 11.7(b), with respect to the Company, the Parent Cap
shall mean $270,000.00.
11.8 Other Indemnification Provisions.
(a) Unless otherwise specifically provided herein,
the indemnification provisions of this Article XI shall, absent
fraud, be the sole and exclusive remedy of the parties for any
breach of any covenants, representations or warranties made by any
other Party in the Agreement and each Party hereby waives all
statutory and other claims with respect thereto, other than claims
for indemnification pursuant to this Article XI and claims based on
fraud.
(b) Indemnification hereunder shall include
liability for any special, incidental, punitive or consequential
damages to the extent the Indemnified Party is required to pay such
amount to a third party. Except as expressly provided in the
preceding sentence, there shall be no indemnification by any party
for any special, incidental, punitive or consequential damages.
(c) In calculating amounts payable to an Indemnified
Party, the amount of the indemnified Losses shall be computed net
of (i) payments that the Indemnified Party actually receives under
any insurance policy with respect to such Losses, (ii) the net
amount of any prior or subsequent recovery by the Indemnified Party
from any third party with respect to such Losses, and (iii) any Tax
benefit to the Indemnified Party with respect to such Losses.
ARTICLE XII
PAYMENT OF CERTAIN FEES AND EXPENSES
12.1 Payment of Certain Fees and Expenses.
(a) Except as set forth below in this Section 12.1,
Parent and the Company shall pay its own expenses that are
incidental to negotiation, preparation, execution, delivery of the
Transaction Documents and the Closing whether or not the Agreement
and the transactions contemplated hereby are actually consummated.
(b) If the Agreement is terminated by Parent
pursuant to Section 13.1 because (a) any Key Stockholder shall have
failed to vote his shares of the Company Common Stock in favor of
the Merger at the Stockholders? Meeting or (b) the Company enters
into a transaction as a result of which any entity other than
Parent or Acquisition Sub becomes the holder directly or indirectly
of securities of the Company having 30% or more of the ownership or
voting power of the Company, the Company shall pay to Parent a
termination fee in the amount of $750,000 (the "Alternate Proposal
Termination Fee?) within 15 days of such termination. In the event
Parent terminates this Agreement because of a material
misrepresentation by the Company, the Company shall pay Parent a
termination fee in the amount of $50,000 (the "Expense Termination
Fee") (the "Alternate Proposal Termination Fee" and the "Expense
Termination Fee" are referred to herein collectively as the
"Termination Fee").
(c) The Termination Fee shall constitute liquidated
damages to Parent in respect of all losses, liabilities, damages
and expenses suffered or incurred by Parent by reason of the
termination of the Agreement or the failure of the Company to close
the Merger under the circumstances referred to in Section 12.1(b)
and shall be in lieu of any other remedy or relief otherwise
available to Parent by reason thereof. The parties hereto
acknowledge that it would be impracticable to ascertain the amount
of all losses, liabilities, damages and expenses (including all
legal fees and expenses relating to the Merger) that would be
suffered or incurred by Parent under the circumstances described in
Section 12.1(b) and that the amount of the Termination Fee
represents a fair and reasonable estimate of such losses,
liabilities, damages and expenses and provides a reasonable and
certain amount to compensate Parent therefor.
(d) In the event that the Closing occurs, each Key
Stockholder shall indemnify and hold the Parent and the Surviving
Corporation harmless from all legal and professional fees incurred
by such Key Stockholder in connection with the negotiation,
preparation, execution and delivery of the Agreement and the other
Transaction Documents and the Closing.
ARTICLE XIII
TERMINATION; AMENDMENT, MODIFICATION AND WAIVER
13.1 Termination. The Agreement may be terminated, and
the Merger abandoned, notwithstanding the approval by Parent,
Acquisition Sub and the Company of the Agreement, at any time prior
to the Effective Time, by:
(a) the mutual consent of Parent, Acquisition Sub
and the Company.
(b) Parent, Acquisition Sub or the Company, if:
(i) the conditions set forth in Article VII
hereof shall not have been met and the Merger has not occurred by
April 30, 2002, which date may be extended at the discretion of the
Parent or Acquisition Sub, except if such conditions have not been
met solely as a result of the action or inaction of the party
seeking to terminate; or
(ii) the other party or parties have materially
breached at the time made a representation and warranty, covenant
or agreement set forth herein and such breach is not cured (if
curable) within 15 days following written notice thereof from the
non-breaching party;
(c) Parent and Acquisition Sub if the conditions set
forth in Article VII hereof shall not have been met (or waived by
the Person(s) entitled to satisfaction thereof), and the Company if
the conditions set forth in Article VIII hereof shall not have been
met (or waived by the Person(s) entitled to satisfaction thereof),
in either case by April 30, 2002, which date may be extended at the
discretion of Parent or Acquisition Sub, except if such conditions
have not been met solely as a result of the action or inaction of
the party seeking to terminate. Notwithstanding the provisions of
this Section 13.1(c), the Company shall have the right to terminate
the Agreement and abandon the Merger after April 30, 2002, except
if the Merger cannot be completed by such date as a result of the
action or inaction of the party seeking to terminate.
(d) Parent and Acquisition Sub on the one hand, or
the Company on the other hand, if such party or parties shall have
determined in its or their sole discretion, exercised in good
faith, that the Merger contemplated by the Agreement has become
impracticable by reason of the institution of any litigation,
proceeding or investigation to restrain or prohibit the
consummation of the Merger, so long as such litigation, proceeding
or investigation has not been instituted, initiated, commenced or
undertaken without the approval of the party or parties seeking to
terminate the Agreement (which in the Company?s case would include
any actions of the Key Stockholders).
(e) Parent or Acquisition Sub if during the sixty
(60) day period after the date of the Agreement or, if lesser, the
period of time between the date of this Agreement and the Closing,
Parent shall have determined in its sole discretion, exercised in
good faith, that the respective observations of Parent and
Acquisition Sub made during their due diligence process disclosed
information regarding the Company unsatisfactory to it.
Any termination pursuant to this Section 13.1 shall be
effected by written notice from the party or parties so terminating
to the other parties hereto.
13.2 Effect of Termination. In the event of the
termination of the Agreement as provided in Section 13.1, the
Agreement shall be of no further force or effect and no party
hereto, nor its stockholders, directors, officers or affiliates,
shall have any liability in connection herewith; provided, however,
this Section 13.2 shall survive the termination of the Agreement.
ARTICLE XIV
MISCELLANEOUS
14.1 Survival; Effect of Disclosure. Except as otherwise
specifically provided herein all statements, representations,
warranties and covenants shall survive the Closing for two (2)
years, regardless of any inspection or discovery whether by reason
of due diligence or otherwise, and shall remain in effect
continuously during such period; provided that the representations,
warranties and covenants set forth in (a) Sections 3.4, 4.4 and
4.26 shall survive indefinitely and remain in effect continuously
after the Closing and (b) Sections 3.6, 4.9, 4.12 and 4.23 shall
survive and remain in effect continuously after the Closing for the
lesser of (i) seven (7) years and the (i) statute of limitations
applicable to the subject representation, warranty or covenant.
None of the Company, Parent or Acquisition Sub shall be liable or
bound in any manner by representations, warranties, covenants or
agreements pertaining to the subject matter of the Agreement,
whether express or implied, or any other matter whatsoever, which
are made or furnished by any Person representing or purporting to
represent the Company, Parent or Acquisition Sub unless and only to
the extent that such representations, warranties, covenants, or
agreements are expressly and specifically set forth in the
Agreement or the Exhibits or Schedules hereto or in any certificate
or other agreement, document or instrument delivered pursuant to
the provisions of the Agreement.
14.2 Entire Agreement. The Agreement (including the
Schedules and the Exhibits attached hereto) and the other writings
referred to herein contain the entire agreement among the parties
hereto with respect to the transactions contemplated hereby and
supersede all prior agreements or understandings, written or oral,
among the parties with respect thereto.
14.3 Descriptive Headings. Descriptive headings are for
convenience only and shall not control or affect the meaning or
construction of any provision of the Agreement.
14.4 Notices. All notices or other communications which
are required or permitted hereunder shall be in writing and
sufficient if delivered personally or sent by nationally-recognized
overnight courier or by registered or certified mail, postage
prepaid, return receipt requested or by telecopier, with
confirmation as provided above addressed as follows:
if to Parent or
Acquisition Sub, to: President
Micronetics Wireless, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
with a copy to: Xxxxxxx X. Xxxxx, Esq.
Xxxxx & Associates, P.C.
0 Xxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
if to the Company, to: President
Enon Microwave, Inc.
000X Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
with a copy to: Xxxx Xxxx, Esq.
Tinti, Xxxxx, Xxxxxx & Xxxx, P.C.
000 Xxxxx Xxxxxx
Xxxxx, XX 00000
or to such other address as the party to whom notice is to be given
may have furnished to the other party in writing in accordance
herewith. All such notices or communications shall be deemed to be
received: (a) in the case of personal delivery or telecopy, on the
date of such delivery; (b) in the case of nationally-recognized
overnight courier, on the next business day after the date when
sent; and (c) in the case of mailing, on the third business day
following the date on which the piece of mail containing such
communication was posted.
14.5 Counterparts. The Agreement may be executed in any
number of counterparts by original or facsimile signature, each
such counterpart shall be an original instrument, and all such
counterparts together shall constitute one and the same agreement.
14.6 Governing Law. The Agreement shall be governed by
and construed in accordance with the DGBL and with the laws of the
State of Delaware applicable to contracts made and to be performed
wholly therein without regard to such state?s principles of
conflicts of law.
14.7 Benefits of Agreement. All the terms and provisions
of the Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns, and shall not confer any rights or benefits on any other
persons or entities. The Agreement shall not be assignable by any
party hereto without the consent of the other parties hereto;
provided, however, that anything contained herein to the contrary
notwithstanding, Acquisition Sub may assign and delegate any or all
of its rights and obligations hereunder to any other direct or
indirect wholly-owned subsidiary of Parent.
14.8 Pronouns. As used herein, all pronouns shall include
the masculine, feminine, neuter, singular and plural thereof
whenever the context and facts require such construction.
14.9 Waiver, Amendment and Modification.
(a) No failure or delay on the part of any of the
parties hereto in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power
or remedy. The remedies provided for herein are cumulative and are
not exclusive of any remedies that may be available to the parties
hereto at law, in equity or otherwise.
(b) No amendment, supplement or modification of or
to any provision in the Agreement, or any waiver of any such
provision or consent to any departure by any party from the terms
of any such provision may be made orally. Any (i) amendment,
supplement or modification hereto, (ii) consent hereunder or (iii)
waiver of any provision (collectively, ?Modification?) of the
Agreement or of any of the Notes shall be effective if given
pursuant to a written agreement signed by the parties to the
Agreement.
14.10 Specific Performance. The parties hereto agree that
if for any reason any party hereto shall have failed to perform its
obligations under the Agreement, then any other party hereto
seeking to enforce the Agreement against such non-performing party
shall be entitled to specific performance and injunctive and other
equitable relief, and the parties hereto further agree to waive any
requirement for the securing or posting of any bond in connection
with the obtaining of any such injunctive or other equitable
relief.
14.11 Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions
hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof. The parties hereto
further agree to replace such invalid, illegal or unenforceable
provision of the Agreement with a valid, legal and enforceable
provision that will achieve, to the extent possible, the economic,
business and other purposes of such invalid, illegal or
unenforceable provision.
IN WITNESS WHEREOF, each of the parties hereto has caused the
Agreement to be executed on its behalf as of the day and year first
above written.
MICRONETICS WIRELESS, INC.
By:______________________
Name: Xxxxxxx X. Xxxxx
Title: President & CEO
VECTRONICS MICROWAVE CORP.
By:______________________
Name: Xxxxxxx X. Xxxxx
Title: President
ENON MICROWAVE, INC.
By:______________________
Name: Xxxxxx X. Xxxxxx
Title: President
The undersigned shall have no liability under the aforesaid
Agreement except with respect to Article 3, Sections 6.3, 8.1 (as
to the Key Stockholders representations only), 8.3(b), 8.14,
Article 10, Article 11, Section 12.1(a), Section 12.1(d) and
Article 14.
KEY STOCKHOLDERS
_________________________
Xxxxxx X. Xxxxxx
_________________________
Xxx X. Xxxxxxx
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