AGREEMENT AND PLAN OF MERGER BY AND AMONG UNIVERCELL HOLDINGS, INC. AND UNIVERCELL DAYTONA BRANDS ACQUISITION CORPORATION AND DAYTONA BRANDS CORPORATION AND CONTROLLING UNIVERCELL SHAREHOLDER AND CONTROLLING DAYTONA BRANDS SHAREHOLDERS
BY
AND AMONG
UNIVERCELL
HOLDINGS, INC.
AND
UNIVERCELL
DAYTONA BRANDS ACQUISITION CORPORATION
AND
DAYTONA
BRANDS CORPORATION
AND
CONTROLLING
UNIVERCELL SHAREHOLDER
AND
CONTROLLING
DAYTONA BRANDS SHAREHOLDERS
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TABLE
OF CONTENTS
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BACKGROUND
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1
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1.
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Plan
of Merger.
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1
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2.
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Securities
Laws Compliance.
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5
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3.
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The
Closing.
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5
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4.
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Representations
and Warranties of the UniverCell Parties.
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6
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5.
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Representations
and Warranties of DAYTONA BRANDS and the Controlling DAYTONA
BRANDS
Shareholders.
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14
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6.
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Representations
and Warranties of the Controlling DAYTONA BRANDS Shareholders
and
Controlling UniverCell Shareholder.
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22
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7.
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Covenants
of The Parties.
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22
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8.
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Covenants
of UniverCell.
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23
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9.
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Covenants
of DAYTONA BRANDS.
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24
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10.
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Covenants
of the Controlling DAYTONA BRANDS Shareholders and Controlling
UniverCell
Xxxxxxxxxxx.
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00
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00.
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Conditions
Precedent to Obligations of DAYTONA BRANDS.
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27
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12.
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Conditions
Precedent to Obligations of the UniverCell Parties.
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27
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13.
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Indemnification.
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28
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14.
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Termination.
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33
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15.
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Definitions.
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33
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16.
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General
Matters.
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40
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THIS
AGREEMENT AND PLAN OF MERGER
is made
as of May 18, 2006 by and among UniverCell Holdings, Inc., a
Florida
corporation (“UniverCell”), Xxxx X. Xxxxx (the “Controlling UniverCell
Shareholder” and together with UniverCell, (the “UniverCell Parties”), DAYTONA
BRANDS Corporation, a Florida corporation (“DAYTONA BRANDS”), and the DAYTONA
BRANDS Shareholders executing this Agreement (the “Controlling DAYTONA BRANDS
Shareholders” and together with DAYTONA BRANDS, the “DAYTONA BRANDS Parties”).
UniverCell, DAYTONA BRANDS, , the Controlling UniverCell Shareholder and
each of
the Controlling DAYTONA BRANDS Shareholders are sometimes individually referred
to herein as a “Party” and sometimes collectively referred to herein as the
“Parties.” Certain other terms are used herein as defined below in Section
15
or
elsewhere in this Agreement.
BACKGROUND
UniverCell,
the Merger Subsidiary and DAYTONA BRANDS desire to effect the Merger of the
Merger Subsidiary with and into DAYTONA BRANDS in accordance with the FBCA
and,
to the extent applicable, the FBCA. This Agreement sets forth the terms and
conditions under which the Merger Subsidiary will merge with and into DAYTONA
BRANDS (the “Merger”). The Parties intend that upon completion of the Merger,
DAYTONA BRANDS will be a Wholly-Owned Subsidiary of UniverCell.
The
Merger Subsidiary is a Wholly-Owned Subsidiary of UniverCell, has been formed
solely to facilitate the Merger and has not conducted nor will it conduct
any
business or activity other than in connection with the Merger.
The
Board
of Directors of DAYTONA BRANDS has approved and adopted this Agreement, the
Merger and the other Transactions contemplated by this Agreement and has
recommended that the DAYTONA BRANDS Shareholders approve and adopt this
Agreement, the Merger and the other Transactions contemplated by this Agreement
in accordance with the FBCA.
The
respective Boards of Directors of UniverCell and the Merger Subsidiary have
approved and adopted this Agreement, the Merger and the other Transactions
contemplated by this Agreement in accordance with applicable Law and the
Board
of Directors of UniverCell has recommended that the UniverCell shareholders
approve and adopt this Agreement, the Merger and the other Transactions
contemplated by this Agreement in accordance with applicable Law.
NOW,
THEREFORE,
in
consideration of the mutual promises, covenants, representations and warranties
contained and made herein and of the mutual benefits to be derived herefrom,
and
intending to be legally bound hereby, the Parties agree as follows:
1. Plan
of Merger.
(a) The
Merger.
Upon the
terms and subject to the conditions hereof, and in accordance with the relevant
provisions of the FBCA, at the Effective Time, the Merger Subsidiary shall
be
merged with and into DAYTONA BRANDS. Following the Merger, DAYTONA BRANDS
shall
continue as the surviving corporation (the “Surviving Corporation”) and shall
continue its separate corporate existence under the Laws of the State of
Florida, and the separate corporate existence of Merger Subsidiary shall
cease.
(b) Effective
Time.
As soon
as practicable, but in any event within one (1) Business Day after the
satisfaction or waiver of all conditions to the Merger, the Parties shall
file
or cause to
be
filed with the Secretary of State of the State of Florida a
certificate
of merger (the “Certificate of Merger”) in such form as is required by the FBCA
and shall file with the Secretary of State of the State of Florida such
documents necessary to effect all of the Transactions contemplated in this
Agreement under the FBCA. The Effective Time of the Merger shall mean
the
later of the time the Certificate of Merger is filed with the Secretary of
State
of the State of Florida or the time and date specified in the Certificate
of
Merger filed with the Secretary of State of the State of Florida (the “Effective
Time”).
(c) Effect.
The
Merger shall have the effects set forth in Section 259(a) of the
FBCA.
(d) Charter
Documents of the Surviving Corporation.
The
Certificate of Incorporation of DAYTONA BRANDS as in effect immediately prior
to
the Effective Time of the Merger shall be the Certificate of Incorporation
of
the Surviving Corporation. At the Effective Time of the Merger, the Bylaws
of
DAYTONA BRANDS as in effect immediately prior to the Effective Time of the
Merger shall be the Bylaws of the Surviving Corporation.
(e) Officers
of the Surviving Corporation.
The
individuals identified on Schedule 1(e) shall, from and after the Effective
Time
of the Merger, be the officers of DAYTONA BRANDS and each such person shall
hold
the office specified in such Schedule 1(e) until his or her respective successor
shall have been duly appointed or elected and qualified or until his or her
earlier death, resignation or removal in accordance with the DAYTONA BRANDS’s
Certificate of Incorporation and Bylaws.
(f) Directors
of the Surviving Corporation.
The
individuals identified on Schedule 1(f) shall, from and after the Effective
Time
of the Merger, be the directors of DAYTONA BRANDS until their respective
successors shall have been duly appointed or elected and qualified or until
their earlier death, resignation or removal in accordance with DAYTONA BRANDS’s
Certificate of Incorporation and Bylaws.
(g) Charter
Documents of UniverCell.
At the
Effective Time of the Merger, UniverCell’s Certificate of Incorporation and
Bylaws shall be amended and restated to reflect, among other things, that
UniverCell is changing its name to DAYTONA BRANDS Corporation. The
form
of UniverCell’s
Amended and Restated Certificate of Incorporation is
attached to this Agreement
as
Exhibit
A
and
the
form
of
UniverCell’s Amended and Restated Bylaws is attached to this Agreement as
Exhibit B.
(h) Officers
of UniverCell.
The
individuals identified on Schedule 1(h) shall, from and after the Effective
Time
of the Merger, be the officers of UniverCell and each such person shall hold
the
office specified in such Schedule 1(h) until his or her respective successor
shall have been duly appointed or elected and qualified or until his or her
earlier death, resignation or removal in accordance with UniverCell’s Amended
and Restated Certificate of Incorporation and Amended and Restated Bylaws.
Each
of the current officers of UniverCell shall resign as of the Effective
Time.
2
(i) Directors
of UniverCell.
The
individuals identified on Schedule 1(i) shall, from and after the Effective
Time
of the Merger, be the directors of UniverCell until their respective successors
shall have been duly appointed or elected and qualified or until their earlier
death, resignation or removal in accordance with UniverCell’s Amended and
Restated Certificate of Incorporation
and Amended and Restated Bylaws. Each of the current directors of UniverCell
shall resign as of the Effective Time.
(j) Conversion
of Shares of UniverCell Common Stock; Conversion or Cancellation of DAYTONA
BRANDS Shares; Change of Name. At
the
Effective Time of the Merger:
(i) Each
share of UniverCell Common Stock issued and outstanding immediately before
the
Effective Time of the Merger (other than shares held by any Person who is
a
Dissenting Shareholder) shall, by virtue of the Merger, be converted into
and
represent one-twenty-fifth (1/25) of one (1) share of UniverCell Common Stock.
(ii) Each
Person who is a DAYTONA BRANDS Shareholder immediately before the Effective
Time
of the Merger (other than any Person who is a Dissenting Shareholder) shall,
by
virtue of the Merger be entitled to receive one hundred twenty five and
3,418/10,000 (125.3418) shares (the “Conversion Number”), of UniverCell Common
Stock (the “UniverCell Shares”) in exchange for each issued and outstanding
share of DAYTONA BRANDS Common Stock (collectively, the “DAYTONA BRANDS Shares”)
held by the DAYTONA BRANDS Shareholder immediately prior to the Effective
Time
of the Merger. Each of the DAYTONA BRANDS Shares that, immediately prior
to the
Effective Time of the Merger, is held by DAYTONA BRANDS as treasury stock
shall
by virtue of the Merger be canceled and retired without payment of any
consideration.
(iii) Each
share of common stock of the Merger Subsidiary issued and outstanding
immediately before the Effective Time of the Merger shall, by virtue of the
Merger, be converted into and represent one hundred twenty five and 3,418/10,000
(125.3418) shares of DAYTONA BRANDS Common Stock.
(iv) No
fractional UniverCell Shares shall be issued in the Merger.
(v) The
name
of UniverCell shall be changed to DAYTONA BRANDS Corporation.
(k) Exchange
of Certificates for UniverCell Shares.
(i) As
promptly as practicable after the Effective Time of the Merger, DAYTONA BRANDS
shall cause to be mailed to each DAYTONA BRANDS Shareholder a form of letter
of
transmittal (“Letter of Transmittal”). After the Effective Time of the Merger,
each DAYTONA BRANDS Shareholder, upon surrender to UniverCell of a DAYTONA
BRANDS stock certificate or certificates, together with the completed and
duly
executed Letter of Transmittal, and each UniverCell Shareholder, upon surrender
to UniverCell of a UniverCell a stock certificate of certificates, will be
entitled to receive a certificate or certificates evidencing the number of
shares of UniverCell Shares into which his, her or its shares of DAYTONA
BRANDS
Common Stock have been converted in connection with the Merger. Until so
surrendered, each DAYTONA BRANDS stock certificate shall, after the Effective
Time of the Merger, represent for all purposes, only the right to receive
UniverCell Shares as provided herein.
3
(ii) If
any
portion of UniverCell Shares are to be issued to a Person other than the
registered holder of shares of DAYTONA BRANDS Common Stock or UniverCell
Common
Stock formerly represented by the certificate or certificates surrendered,
it
shall be a condition to issuance of the new certificates that the certificate
or
certificates so surrendered shall be properly endorsed or otherwise be in
proper
form for transfer and that the Person requesting such new certificates shall
pay
to UniverCell any transfer or other Taxes required as a result of such issuance
to a Person other than the registered holder of such shares of DAYTONA BRANDS
Common Stock or UniverCell Common Stock or establish to the satisfaction
of
UniverCell that such Tax has been paid or is not payable.
(iii) No
dividends or other distributions with respect to the UniverCell Shares shall
be
paid to a DAYTONA BRANDS Shareholder until the certificate(s) representing
the
DAYTONA BRANDS Shareholder’s shares of DAYTONA BRANDS Common Stock are
surrendered as provided in this Section 1(k).
Upon
such surrender, there shall be paid, without interest, to the Person in whose
name the certificates representing the UniverCell Shares into which such
shares
of DAYTONA BRANDS Common Stock were converted are registered, all dividends
and
other distributions payable in respect of such securities on a date subsequent
to, and in respect of a record date after, the Effective Time, less the amount
of withholding Taxes which may be required thereon.
(iv) If
any
certificate shall have been lost, stolen or destroyed, then upon the making
of
an affidavit of that fact by the Person claiming such certificate to be lost,
stolen or destroyed and, if required by UniverCell, the posting by such Person
of a bond in such reasonable amount as UniverCell may direct as indemnity
against any claim that may be made against it with respect to such certificate,
UniverCell shall issue in exchange for such lost, stolen or destroyed
certificate the consideration provided for, and in accordance with the
procedures set forth, in this Section 1(k)
and, if
applicable, any unpaid dividends and distributions with respect to UniverCell
Shares deliverable in respect thereof pursuant to this Agreement.
(l) Adjustments.
If
at any
time during the period between the date of this Agreement and the Effective
Time, any change in the outstanding shares of capital stock of UniverCell
or
DAYTONA BRANDS shall occur by reason of any reclassification, recapitalization,
stock split or combination, exchange or readjustment of shares, or any stock
dividend thereon with a record date during such period or any similar event,
this Section 1
shall be
appropriately adjusted; provided, however, that DAYTONA BRANDS shall be
permitted up through the Effective Time to issue additional shares of DAYTONA
BRANDS Common Stock in connection with the private placement thereof; provided,
further, that in no event shall the shares of DAYTONA BRANDS Common Stock
outstanding at the Effective Time exceed 30,000,000 shares.
(m) No
Further Transfer of Shares.
At and
after the Effective Time, there shall be no transfers of shares of DAYTONA
BRANDS Common Stock that were outstanding immediately prior to the Effective
Time on the stock transfer books of DAYTONA BRANDS. If, after the Effective
Time, certificates are presented to DAYTONA BRANDS for transfer, such
certificates shall be canceled and exchanged for the UniverCell Shares as
provided in this Section 1.
4
(n) Appraisal
Rights.
In
connection with the Merger and the other Transactions contemplated herein,
the
holders of shares of DAYTONA BRANDS Common Stock entitled to vote on the
Merger
shall be afforded appraisal rights pursuant to Section 262 of the DGLG and
the
holders of shares of UniverCell Common Stock entitled to vote on the Merger
shall be afforded appraisal rights pursuant to Section 607.1302 of the
FBCA.
2. Securities
Laws Compliance.
(a) Purchaser
Representative.
Promptly
after execution and delivery of this Agreement, DAYTONA BRANDS shall, in
consultation with its counsel:
(i)
determine
which of its shareholders are not accredited investors,
(ii) use
its
best efforts to cause each such shareholder to appoint as his, her or its
purchaser representative a person meeting the requirements of Rule 501(h)
of the
SEC's Regulation D (“Regulation D”), and
(iii) notify
UniverCell of the identity of each such purchaser representative.
(b) Information
Statement.
As soon
as reasonably practicable after the date hereof, the Parties shall jointly
prepare and file with the SEC a joint notice of meeting/information statement
relating to (i) the approval of the Merger and the other Transactions
contemplated by this Agreement by the Controlling UniverCell Shareholder
and the
Controlling DAYTONA BRANDS Shareholders, and (ii) ratification by the
controlling shareholder of UniverCell of the sale on March 9, 2006 of all
of
UniverCell's remaining assets to Xxxx X. Xxxxx for $20,000. The notice shall
be
in form and substance reasonably satisfactory to DAYTONA BRANDS and UniverCell
and shall include
(i)
a
statement of the rights, if any, of Dissenting Shareholders, and
(ii) additional
materials and information concerning the Merger and related Transactions,
including the recommendation of the Board of Directors of DAYTONA BRANDS
that
the DAYTONA BRANDS Shareholders approve the Merger, the recommendation of
the
Board of Directors of UniverCell that the Shareholders of UniverCell approve
the
Merger and such additional information as is required by Rule 502(b) of
Regulation D.
As
soon
as practicable after clearing SEC staff comments, if any, UniverCell and
DAYTONA
BRANDS shall distribute that joint notice of meeting/information statement
to
all holders of the securities of UniverCell and DAYTONA BRANDS entitled to
vote
on the Merger.
3. The
Closing.
(a) Location,
Date.
The
closing for the Merger and the other Transactions contemplated by this Agreement
(the “Closing”) shall be held, unless the Parties agree otherwise, at the
offices of Xxxxx Xxxxxx Xxxxxxxxxx Lesser & Xxxxx, LLP in New York, New York
at 4:00 p.m. (local New York City time) as promptly as practicable (and in
any
event within one Business Day) after satisfaction or waiver of the conditions
to
the Closing set forth in Sections 11
and
12
of this
Agreement (other than those conditions precedent which may only be satisfied
at
the Closing itself) but, without the prior written consent of all of the
Parties, not later than May 28, 2006. The date on which the Closing occurs
is
referred to herein as the “Closing Date.”
5
(b) Deliveries.
At
the
Closing:
(i)
the
Merger Subsidiary and DAYTONA BRANDS shall deliver or cause to be delivered
to
the Secretary of State of the State of Florida a duly executed Certificate
of
Merger as required under the FBCA and the Parties shall take all such other
and
further actions as may be required by the FBCA, FBCA and any other applicable
Law to make the Merger effective upon the terms and subject to the conditions
hereof;
(ii) UniverCell
shall enter into consulting agreements with the Persons identified in Schedule
3(b)(ii),
calling
for the issuance of the numbers of UniverCell Shares and warrants
to purchase UniverCell Shares (the “Warrants”) in
the
amounts set forth in that Schedule.
(iii) UniverCell
shall issue to Xxxx X. Xxxxx, in full satisfaction of its obligations under
his
existing employment agreement with UniverCell, a promissory note in the
principal amount of $250,000 substantially in the form attached hereto as
Exhibit C (the “Note”). The Note shall bear interest at the Mid-Term Annual
Applicable Federal Rate in effect on the date of issuance, and all accrued
interest and unpaid principal shall be due and payable on the date which
is two
(2) years from the date of issuance. If the Note is not paid in full on its
due
date, such Note shall convert into the number of shares of UniverCell Common
Stock equal to the quotient of the amount of the outstanding principal and
accrued interest on the due date divided by the Market Price of the UniverCell
Common Stock on the due date.
(iv) UniverCell
shall enter into a Registration Rights Agreement substantially in the form
attached hereto as Exhibit D with each of Xxxx X. Xxxxx, Xxxxxxx Xxxxx and
Xxxxx
Xxxxxxxx for all shares that are in their possession after the merger and
not
registered.
(v) UniverCell
shall deliver the opinion of counsel referred to in Section 11(e)
and the
certificate referred to in Section 11(f)
(vi) DAYTONA
BRANDS shall deliver the opinion of counsel referred to in Section 12(f)
and the
certificate referred to in Section 12(g).
4. Representations
and Warranties of the UniverCell Parties.
The
UniverCell Parties jointly and severally represent and warrant to DAYTONA
BRANDS
as follows, except as otherwise set forth in Schedules to this Agreement
(items
disclosed in one Section of such Schedules shall apply to all other Sections
unless specified otherwise):
(a) Corporate.
Each
of
UniverCell and the Merger Subsidiary is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction under which
it
was incorporated. Each of UniverCell and the Merger Subsidiary is qualified
to
do business as a foreign corporation in any jurisdiction where it is required
to
be so qualified, except where the failure to be so qualified would not have
a
Material Adverse Effect. The Charter Documents and Bylaws of each of UniverCell
and the Merger Subsidiary (all of which have been delivered or made available
to
DAYTONA BRANDS) have been duly adopted and are current, true, correct and
complete and are in full force and effect. Each of UniverCell and the Merger
Subsidiary has all necessary corporate power and authority to own, lease
and
operate its part of the UniverCell Assets and to carry on its part of the
UniverCell Business as it is now being conducted. UniverCell has no subsidiaries
other than the Merger Subsidiary.
6
(b) Authorization.
Each
of
UniverCell and the Merger Subsidiary has the requisite corporate power and
authority to execute and deliver this Agreement and the other Transaction
Documents to which either of them is a party and to perform the Transactions
to
be performed by each of them. Such execution, delivery and performance by
each
of UniverCell and the Merger Subsidiary has been duly authorized by all
necessary corporate action, other than the approval of this Agreement and
the
consummation of the Merger is subject to the approval of the holders of a
majority of the outstanding shares of UniverCell Common Stock. Each Transaction
Document executed and delivered by each of the UniverCell Parties as of the
date
hereof has been duly executed and delivered by such UniverCell Party and
constitutes a valid and binding obligation of such UniverCell Party enforceable
against such UniverCell Party in accordance with its terms, and any Transaction
Document executed and delivered by each UniverCell Party after the date hereof
will be duly executed and delivered by such UniverCell Party and will constitute
a valid and binding obligation of such UniverCell Party, enforceable against
such UniverCell Party in accordance with its terms, except as otherwise limited
by bankruptcy, insolvency, reorganization and other laws affecting creditors
rights generally, and except that the remedy of specific performance or other
equitable relief is available only at the discretion of the court before
which
enforcement is sought.
(c) Validity
of Contemplated Transactions.
Except
for (i) compliance with the Securities Act, the Exchange Act and applicable
state securities Laws and (ii) the filing of the Certificate of Merger, with
the
Secretary of State of the State of Florida,
and
such other documents as are necessary to effect the Transactions contemplated
herein with the Secretary of State of the State of Florida, neither
the execution and delivery by each UniverCell Party of the Transaction Documents
to which it or he is or will be a party, nor the performance of the Transactions
to be performed by it or him, will require any filing, consent or approval
under
or constitute a Default, or result in a loss of material benefit under, (A)
any
Law or Court Order applicable
to
any
UniverCell Party or
any of
their properties or assets,
(B) the
Charter Documents or Bylaws of UniverCell or the Merger Subsidiary, or (C)
any
Contracts to which any UniverCell Party is a party or by which any of their
properties or assets may be bound.
(d) Capitalization
and Stock Ownership.
The
total authorized capital stock of UniverCell consists of 200,000,000 shares
of
UniverCell Common Stock, of which 199,250,000 shares are issued and outstanding
on the date hereof. There will be 7,970,000 shares of UniverCell Common Stock
issued and outstanding immediately after the Effective Time of the Merger,
excluding the UniverCell Shares to be issued to the DAYTONA BRANDS Shareholders
as a result of the Merger and any other shares of UniverCell Common Stock
to be
issued as contemplated in this Agreement. Except as set forth on Schedule
4(d),
there
are no existing options, warrants, calls, commitments or other rights of
any
character (including conversion or preemptive rights) relating to the
acquisition of any issued or unissued capital stock or other securities of
UniverCell. All of the issued and outstanding shares of UniverCell Common
Stock
are validly issued, fully paid and non-assessable. Except as set forth on
Schedule 4(d),
no
options, warrants, calls, commitments or other rights of any character
(including conversion or preemptive rights) will entitle any Person to acquire
any securities of UniverCell or any Subsidiary thereof.
7
(e) UniverCell
Financial Statements. The
audited consolidated balance sheet at December 31, 2005 and the related audited
consolidated statements of income, cash flows, and stockholder's
equity for the period ending December 31, 2005 (the “UniverCell Financial
Statements”) have been delivered to DAYTONA BRANDS. The UniverCell Financial
Statements have been derived from the accounting books and records of UniverCell
and have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods presented in the UniverCell Financial Statements (except
for changes in accounting principles disclosed in the notes thereto). The
consolidated balance sheet included in the UniverCell Financial Statements
presents fairly the financial position of UniverCell and its
Subsidiaries as
at the
date thereof, and the consolidated statements of income, statements of
shareholder’s equity and statements of cash flows included in such UniverCell
Financial Statements present fairly the results of operations and cash flows
of
UniverCell and its Subsidiaries for
the
period indicated. There have not been any material adverse changes in the
financial position or condition of UniverCell or its Subsidiaries since December
31, 2005. For purposes of this Agreement, the consolidated balance sheet
of
UniverCell as of December 31, 2005 is referred to as the “UniverCell Balance
Sheet” and the date thereof is referred to as the “UniverCell Balance Sheet
Date.”
(f) Taxes.
(i)
UniverCell
(A) has filed (or, in the case of Tax Returns not yet due, will file) with
the
appropriate governmental agencies all material Tax Returns required to be
filed
on or before the Effective Time and all such Tax Returns filed were true,
correct and complete in all material respects, and (B) has paid (or, in the
case
of Taxes not yet due, will pay), all Taxes shown on such tax
returns.
(ii) UniverCell
has (A) duly paid or caused to be paid all material Taxes and all Taxes shown
on
Tax Returns that are or were due except to the extent that a sufficient reserve
for Taxes has been reflected on the UniverCell Balance Sheet, and (B) provided
a
sufficient reserve on the UniverCell Balance Sheet for the payment of all
Taxes
not yet due and payable.
(iii)
No
deficiency in respect of any Taxes which has been assessed against UniverCell
remains unpaid, except for Taxes being contested in good faith, UniverCell
has
no knowledge of any unassessed Tax deficiencies or of any audits or
investigations pending or threatened against UniverCell with respect to any
Taxes.
(iv) UniverCell
has not extended or waived the application of any applicable statute of
limitations of any jurisdiction regarding the assessment or collection of
any
Tax or any Tax Return.
(v) There
are
no liens for Taxes upon any assets of UniverCell except for liens for current
Taxes not yet due.
8
(vi) UniverCell
has to its knowledge (A) complied with all provisions of the Code relating
to
the withholding and payment of Taxes and (B) has made all deposits required
by
applicable Law to be made with respect to employees' withholding and other
payroll, employment or other withholding or related Taxes.
(vii)
UniverCell
is not a party to any contract, agreement, plan or arrangement that,
individually or in the aggregate, or when taken together with any payment
that
may be made under this Agreement or any agreements contemplated hereby, could
give rise to the payment of any “excess parachute payment” within the meaning of
Section 280G of the Code.
(viii)
UniverCell
is not a party to any agreement relating to the allocating or sharing of
the
payment of, or liability for, Taxes for any period (or portion thereof).
(ix) To
UniverCell's knowledge, except for the group of which UniverCell is presently
the ultimate parent, UniverCell has never been a member of an affiliated
group
of corporations (within the meaning of Section 1504 of the Code).
(g) Title
to Assets and Related Matters.
UniverCell has good and marketable title to the UniverCell Assets, free from
any
Encumbrances except (i) items described in any notes to the consolidated
financial statements of UniverCell contained in UniverCell's Financial
Statements, (ii) minor matters that would not have a Material Adverse Effect,
and (iii) constitutional and statutory liens arising from the obligation
to pay
for the provision of materials or services not yet in Default and Taxes not
yet
due..
(h) Real
Property.
UniverCell has never owned, and does not presently lease any real estate.
(i) Legal
Proceedings; Compliance with Law; Governmental Permits.
(i)
Except
as
set forth in Schedule 4(i), there is no Litigation that is pending or, to
UniverCell's knowledge, threatened against UniverCell. UniverCell is and
has
been in compliance with all applicable Laws, including Environmental Laws
and
applicable securities laws, except where the failure to be in compliance
would
not have a Material Adverse Effect. There has been no Default under any Laws
applicable to UniverCell, including Environmental Laws except for any Defaults
that have not had or would not have a Material Adverse Effect. There has
been no
Default with respect to any Court Order applicable to UniverCell. UniverCell
has
not received any written notice and no other communication has been received
to
the effect that it is not in compliance with any applicable Laws, and UniverCell
has no reason to believe that any presently existing circumstances are likely
to
result in violations of any applicable Laws.
(ii) To
UniverCell’s knowledge, there is no Environmental Condition at any property
formerly leased by UniverCell.
(iii) UniverCell
has all material consents, permits, franchises, licenses, concessions,
registrations, certificates of occupancy, approvals and other authorizations
of
Governmental Authorities (collectively, the “Governmental Permits”) required in
connection with the operation of its business as now being conducted, all
of
which are in full force and effect. UniverCell has complied, in all material
respects, with all of its Governmental Permits. The execution, delivery and
performance of this Agreement and the consummation of the Transactions
contemplated hereby will not (A) result in or give to any Person any right
of
termination, non-renewal, cancellation, acceleration or modification in or
with
respect to any such Governmental Permit, (B) result in or give to any Person
any
additional rights or entitlement to increased, additional, accelerated or
guaranteed payments under any such Governmental Permit, or (C) result in
any
Encumbrance upon UniverCell or any of its Assets under the terms of any
Governmental Permit.
9
(j) Patents,
Trademarks, etc.
To
UniverCell's knowledge, UniverCell has not infringed upon or unlawfully or
wrongfully used any Intellectual Property owned or claimed by another Person.
UniverCell has no Intellectual Property and has no business
operations.
(k) Absence
of Certain Changes.
Since
the UniverCell Balance Sheet Date, UniverCell has conducted the UniverCell
Business in the ordinary course and, except as disclosed in UniverCell’s SEC
filings, there has not been:
(i)
any
Material Adverse Effect on the UniverCell Business;
(ii)
any
distribution or payment declared or made in respect of UniverCell's capital
stock by way of dividends, purchase or redemption of shares or
otherwise;
(iii) any
increase in the compensation payable or to become payable to any current
director or officer of UniverCell, except for merit and seniority increases
for
employees made in the ordinary course of business consistent with past
practices, nor any material change in any existing employment, severance,
consulting arrangements or any UniverCell Benefit Plan;
(iv) any
sale,
assignment or transfer of any UniverCell Assets, or any additions to or
transactions involving any UniverCell Assets, other than those made in the
ordinary course of business;
(v) other
than in the ordinary course of business, any waiver or release of any material
claim or right or cancellation of any material debt held by
UniverCell;
(vi) any
change in practice with respect to Taxes, or any election, change of any
election, or revocation of any election with respect to Taxes, or any settlement
or compromise of any dispute involving a Tax liability;
(vii)
(A)
any
creation, or assumption of, any long-term debt or any short-term debt for
borrowed money other than under existing notes payable, lines of credit or
other
credit facility or in the ordinary course of business, (B) any assumption,
granting of guarantees, endorsements or otherwise becoming liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other
Person, or (C) any loans, advances or capital contributions to, or investments
in, any other Person;
(viii)
any
material agreement, commitment or contract except agreements, commitments
or
contracts for the purchase, sale or lease of goods or services in the ordinary
course of business;
(ix)
other
than in the ordinary course of business, any authorization, recommendation,
proposal or announcement of an intention to authorize, recommend or propose,
or
enter into any Contract with respect to, any (A) plan of liquidation or
dissolution, (B) acquisition of a material amount of assets or securities,
(C)
disposition or Encumbrance of a material amount of assets or securities,
(D)
merger or consolidation, or (E) material change in its capitalization;
or
10
(x) any
change in accounting procedure or practice.
(l) Corporate
Records.
The
minute books of UniverCell and the Merger Subsidiary contain accurate, complete
and current copies of all Charter Documents and Bylaws, including all amendments
thereto, and of all minutes of meetings, resolutions and other proceedings
of
their Board of Directors and shareholders.
(m) Finder's
Fees.
No
Person is or will be entitled to any commission, finder's fee or other payment
in connection with the Transactions based on arrangements made by or on behalf
of any of the UniverCell Parties.
(n) Insurance.
UniverCell has no insurance.
(o) Affiliate
Transactions.
(i) Schedule
4(o)
contains
a complete and correct list of (A) all agreements, contracts, arrangements,
understandings, transfers of assets or liabilities or other commitments or
transactions, whether or not entered into in the ordinary course of business,
to
or by which UniverCell, on the one hand, and any director or officer of
UniverCell or any Affiliate of a director or officer of UniverCell, on the
other
hand, are a party or are otherwise bound or affected, and that are currently
pending or in effect and (B) all agreements, contracts, arrangements,
understandings, transfers of assets or liabilities or other commitments or
transactions, whether or not entered into in the ordinary course of business,
to
or by UniverCell, on the one hand, and any employee or consultant of UniverCell
or any of its Affiliates or any Affiliate of any such employee or consultant,
on
the other hand, which, individually or in the aggregate, are material to
UniverCell’s business. Each item set forth on Schedule
4(o)
has been
entered into the normal and ordinary course of UniverCell’s business and
pursuant to the reasonable requirements thereof, and is based upon fair and
reasonable terms no less favorable to UniverCell than it could have obtained
in
a comparable arm’s-length transaction with an unaffiliated Person.
(ii) Except
as
disclosed in UniverCell’s SEC filings, no director, officer, employee or
consultant of UniverCell or any Affiliate of a director, officer, employee
or
consultant of UniverCell, (A) owns, directly or indirectly, and whether on
an
individual, joint or other basis, any material financial interest in (1)
any
property or asset, real or personal, tangible or intangible, used in or held
for
use in connection with or pertaining to the UniverCell Business, or (2) any
Person, that is a supplier, client or competitor of UniverCell, (B) serves
as an
officer, director, employee or consultant of any Person that is a supplier,
client or competitor of UniverCell, or (C) is a debtor or creditor of
UniverCell.
(p) Employees
and Labor Matters.
UniverCell has no employees other than its President. UniverCell has previously
furnished DAYTONA BRANDS a copy of its employment agreement with its President.
Such employment agreement will terminate at the Effective Time of the Merger.
UniverCell has complied in all material respects with all applicable Laws
pertaining to the employment or termination of employment of its employees,
including, without limitation, all such Laws relating to labor relations,
equal
employment opportunities, fair employment practices, prohibited discrimination
or distinction and other similar employment activities.
11
(i)
UniverCell
has no Benefit Plans.
(ii) Each
Benefit Plan previously maintained had been operated and administered in
all
material respects in accordance with its terms and applicable Law, including,
without limitation, ERISA and the Code. All contributions to and payments
from
the Benefit Plans were timely made. All returns, reports and disclosures
required to be made under ERISA, the Code or any other applicable Law with
respect to the Benefit Plans were timely filed or made,
and
all statements made on such returns, reports and disclosures were true and
complete in all material respects.
(iii) UniverCell
has not at any time in the past, sponsored, participated in or contributed
to,
and does not have any current or contingent obligations or liabilities
whatsoever with respect to any: (A) “defined benefit plan” within the meaning of
Section 3(35) of ERISA subject to Title IV of ERISA or the minimum funding
requirements of Code Section 412; (B) “multiemployer plan” within the meaning of
Section 401(a)(3) of ERISA; (C) “I” within the meaning of Code Section 419; or
(D) plan or arrangement that provides post retirement medical benefits (except
to the extent required by Code Section 4980B or Part 6 of Subtitle B of Title
I
of ERISA (“COBRA”) or similar state law), post retirement death benefits or post
retirement welfare benefits of any kind whatsoever.
(iv) All
contributions and payments of insurance premiums required to be made with
respect to the Benefit Plans have been fully paid in such a manner as not
to
cause any interest, penalties or other amounts that have not been satisfied
or
discharged to be assessed against UniverCell with respect thereto.
(v) UniverCell
has complied in all material respects with the continuation coverage
requirements under COBRA, and similar state law, applicable to any of the
Benefit Plans.
(vi) There
has
been no “prohibited transaction” or “reportable event” within the meaning of the
Code or ERISA within the last sixty (60) months, or breach of fiduciary duty
with respect to any of the Benefit Plans that could subject UniverCell, the
Surviving Corporation or any of the Affiliates of UniverCell or the Surviving
Corporation, or any of their respective ERISA Affiliates, to any tax, penalty
or
other liability under the Code or ERISA.
(vii)
There
is
no Litigation nor are there claims with respect to any of the Benefit Plans
pending or, to the knowledge of UniverCell, threatened, and to the knowledge
of
UniverCell, there are no facts, events, conditions or circumstances that
could
give rise to any such Litigation or claim (other than routine claims for
benefits from eligible participants or beneficiaries in the normal and ordinary
course). No Benefit Plan is the subject of any pending or, to UniverCell’s
knowledge, threatened investigation or audit by the IRS, the U.S. Department
of
Labor or the Pension Benefit Guaranty Corporation or any other Governmental
Authority.
(viii)
None
of
UniverCell or any of its employees, officers or directors, or any other Person
has made any statement or communication or provided any materials to any
employee or former employee of UniverCell that provides for or could be
construed as a contract, agreement or commitment by UniverCell or the Surviving
Corporation or any of their Affiliates to provide for any pension, welfare,
or
other employee benefit or fringe benefit plan or arrangement to any such
employee or former employee, whether before or after retirement or separation
or
otherwise.
12
(ix) To
UniverCell’s knowledge, no event or condition exists or is likely to arise by
virtue of the Merger or other Transactions contemplated by this Agreement
with
respect to any of the employees of UniverCell or any of the Benefit Plans
which
could reasonably be likely
to
result in any liability to UniverCell or the Surviving Corporation which
could
reasonably be expected to have a Material Adverse Effect.
(q) Business
Practices.
Neither
UniverCell nor, to the knowledge of UniverCell, any of its directors, officers,
agents, employees or representatives in their capacities as such has: (i)
used
any funds for unlawful contributions, unlawful gifts, unlawful entertainment
or
other unlawful expenses relating to political activity; (ii) directly or
indirectly paid or delivered any fee, commission or other sum of money or
item
of property, however characterized, to any finder, agent or other party acting
on behalf of or under the auspices of a governmental official or Governmental
Authority, in the United States or any other country, which is in any manner
related to UniverCell’s business that was illegal under any federal, state or
local laws of the United States or any other country having jurisdiction;
(iii)
made any payment to any customer or subcontractor of UniverCell’s business or to
any officer, director, partner, employee or agent of any such customer or
subcontractor, for the unlawful influence of any such customer or subcontractor
or any such officer, director, partner, employee or agent; (iv) engaged in
any
other unlawful reciprocal practice, or made any other unlawful payment or
given
any other unlawful consideration to any such customer or subcontractor any
such
officer, director, partner, employee or agent, in respect of UniverCell’s
business; or (v) violated any federal, state or local campaign finance, election
or similar laws.
(r) Accuracy
and Completeness of Information.
All
information furnished, to be furnished or caused to be furnished to DAYTONA
BRANDS by or on behalf of the UniverCell Parties for the purposes of or in
connection with this Agreement, or the Transactions contemplated by this
Agreement is or, if furnished after the date of this Agreement, shall be
true
and complete in all material respects and does not, and, if furnished after
the
date of this Agreement, shall not, contain any untrue statement of material
fact
or fail to state any material fact necessary to make such information not
misleading.
(s) Ownership
of Merger Subsidiary; No Prior Activities.
The
Merger Subsidiary is a Wholly-Owned Subsidiary of UniverCell created solely
for
the purpose of effecting the Merger. As of the date hereof and the Effective
Time of the Merger, except for Liabilities incurred in connection with its
incorporation or organization and the Transactions and except for this Agreement
and the other Transaction Documents, the Merger Subsidiary has not, nor will
not, through the Effective Time of the Merger, directly or indirectly, through
any Subsidiary or Affiliate of UniverCell, have any material Liabilities,
engage
in any material business activities of any type or kind whatsoever or enter
into
any agreements or arrangements with any Person.
13
5. Representations
and Warranties of DAYTONA BRANDS and the Controlling DAYTONA BRANDS
Shareholders.
DAYTONA
BRANDS and each of the Controlling DAYTONA BRANDS Shareholders jointly and
severally represent and warrant to UniverCell as follows, except as otherwise
set forth in Schedules to this Agreement (items disclosed in one Section
of such
Schedules shall apply to all other Sections unless specified
otherwise):
(a) Corporate.
DAYTONA
BRANDS is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Florida. DAYTONA BRANDS is qualified to do
business as a foreign corporation in any jurisdiction where it is required
to be
so qualified, except where the failure to be so qualified would not have
a
Material Adverse Effect. The Charter Documents and Bylaws of
DAYTONA BRANDS (all of which have been delivered or made available to
UniverCell) have been duly adopted and are current, true, correct and complete
and are in full force and effect. DAYTONA BRANDS has all necessary corporate
power and authority to own, lease and operate the DAYTONA BRANDS Assets and
to
carry on the DAYTONA BRANDS Business as it is now being conducted. DAYTONA
BRANDS’s only Subsidiary is EmailEmissary, Inc., an Oklahoma corporation.
(b) Authorization.
DAYTONA
BRANDS has the requisite corporate power and authority to execute and deliver
this Agreement and each of the other Transaction Documents to which it is
a
party and to perform the Transactions to be performed by it. Such execution,
delivery and performance by DAYTONA BRANDS have been duly authorized by all
necessary corporate action, other than the approval of this Agreement and
the
consummation of the Merger is subject to the approval of the holders of a
majority of the outstanding shares of DAYTONA BRANDS Common Stock. Each
Transaction Document executed and delivered by each of the DAYTONA BRANDS
Parties as of the date hereof has been duly executed and delivered by such
DAYTONA BRANDS Party and constitutes a valid and binding obligation of such
DAYTONA BRANDS Party enforceable against such DAYTONA BRANDS Party in accordance
with its terms, and any Transaction Document executed and delivered by each
DAYTONA BRANDS Party after the date hereof will be duly executed and delivered
by such DAYTONA BRANDS Party and will constitute a valid and binding obligation
of such DAYTONA BRANDS Party, enforceable against such DAYTONA BRANDS Party
in
accordance with its terms, except as otherwise limited by bankruptcy,
insolvency, reorganization and other laws affecting creditors rights generally,
and except that the remedy of specific performance or other equitable relief
is
available only at the discretion of the court before which enforcement is
sought.
(c) Validity
of Contemplated Transactions.
Except
for (i) compliance with the Securities Act, the Exchange Act and applicable
state securities Laws, and (ii) the filing of the Certificate of Merger with
the
Secretary of State of the State of Florida, and such other documents as are
necessary to effect the Transactions contemplated herein with the Secretary
of
State of the State of Florida, neither the execution and delivery by each
DAYTONA BRANDS Party of the Transaction Documents to which it, he or she
is or
will be a party, nor the performance of the Transactions to be performed
by it,
him or her, will require any filing, consent or approval under or constitute
a
Default, or result in a loss of material benefit under, (A) any Law or Court
Order applicable
to
any
DAYTONA BRANDS Party or
any of
their properties or assets,
(B) the
Charter Documents or Bylaws of DAYTONA BRANDS, or (C) any Contracts to which
any
DAYTONA BRANDS Party is a party or by which any of their properties or assets
may be bound.
14
(d) Capitalization
and Stock Ownership.
The
total authorized capital stock of DAYTONA BRANDS consists of 50,000,000 shares
of DAYTONA BRANDS Common Stock. Of such authorized capital stock, the only
issued and outstanding shares on the date hereof are 43,416,800 shares of
DAYTONA BRANDS Common Stock. Except for subscriptions for the purchase of
shares
of DAYTONA BRANDS Common Stock received by DAYTONA BRANDS in its ongoing
private
placement, there are no existing options, warrants, calls, commitments or
other
rights of any character (including conversion or preemptive rights) relating
to
the acquisition of any issued or unissued capital stock or other securities
of
DAYTONA BRANDS. All of the issued and outstanding shares of DAYTONA BRANDS
Common Stock are validly issued, fully paid and non-assessable.
(e) DAYTONA
BRANDS Financial Statements. The
audited balance sheet at December 31, 2005 and the related audited statements
of
income, cash flows, and stockholder's equity for the period ending
December 31, 2005 (the “DAYTONA BRANDS Financial Statements”) will be delivered
to UniverCell prior to the Effective Time. The DAYTONA BRANDS Financial
Statements will be derived from the accounting books and records of DAYTONA
BRANDS and will have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods presented in the DAYTONA BRANDS
Financial Statements (except for changes in accounting principles disclosed
in
the notes thereto). The balance sheet included in the DAYTONA BRANDS Financial
Statements will present fairly the financial position of DAYTONA BRANDS as
at
the date thereof, and the statements of income, statements of shareholder’s
equity and statements of cash flows to be included in such DAYTONA BRANDS
Financial Statements will present fairly the results of operations and cash
flows of DAYTONA BRANDS for the periods indicated. There have not been any
material adverse changes in the financial position or condition of DAYTONA
BRANDS since December 31, 2005. For purposes of this Agreement, the balance
sheet of DAYTONA BRANDS as of December 31, 2005 is referred to as the “DAYTONA
BRANDS Balance Sheet” and the date thereof is referred to as the “DAYTONA BRANDS
Balance Sheet Date.”
(f) Taxes.
(i) DAYTONA
BRANDS (i) has filed (or, in the case of Tax Returns not yet due, will file)
with the appropriate governmental agencies all material Tax Returns required
to
be filed on or before the Effective Time and all such Tax Returns filed were
true, correct and complete in all material respects, and (ii) has paid (or,
in
the case of Taxes not yet due, will pay), all Taxes shown on such Tax
Returns.
(ii) DAYTONA
BRANDS has (i) duly paid or caused to be paid all material Taxes and all
Taxes
shown on Tax Returns that are or were due, except to the extent that a
sufficient reserve for Taxes has been reflected on the DAYTONA BRANDS Balance
Sheet and (ii) provided a sufficient reserve on the DAYTONA BRANDS Balance
Sheet
for the payment of all Taxes not yet due and payable.
(iii)
No
deficiency in respect of any Taxes which has been assessed against DAYTONA
BRANDS remains unpaid, except for Taxes being contested in good faith, and
DAYTONA BRANDS has no knowledge of any unassessed Tax deficiencies or of
any
audits or investigations pending or threatened against DAYTONA BRANDS with
respect to any Taxes.
15
(iv) DAYTONA
BRANDS has not extended or waived the application of any applicable statute
of
limitations of any jurisdiction regarding the assessment or collection of
any
Tax or any Tax Return.
(v) There
are
no liens for Taxes upon any assets of DAYTONA BRANDS except for liens for
current Taxes not yet due.
(vi) DAYTONA
BRANDS has to its knowledge (i) complied with all material provisions of
the
Code relating to the withholding and payment of Taxes and (ii) has made all
deposits required by applicable Law to be made with respect to employees'
withholding and other payroll, employment or other withholding or related
Taxes.
(vii)
DAYTONA
BRANDS is not a party to any contract, agreement, plan or arrangement that,
individually or in the aggregate, or when taken together with any payment
that
may be made under this Agreement or any agreements contemplated hereby, could
give rise to the payment of any “excess parachute payment” within the meaning of
Section 280G of the Code.
(viii)
DAYTONA
BRANDS is not a party to any agreement relating to the allocating or sharing
of
the payment of, or liability for, Taxes for any period (or portion thereof).
(ix) To
DAYTONA BRANDS's knowledge, DAYTONA BRANDS has never been a member of an
affiliated group of corporations (within the meaning of Section 1504 of the
Code).
(g) Title
to Assets and Related Matters. DAYTONA
BRANDS has good and marketable title to the DAYTONA BRANDS Assets, free from
any
Encumbrances except (a) items described in any notes to the consolidated
financial statements of DAYTONA BRANDS contained in DAYTONA BRANDS's Financial
Statements, (b) minor matters that would not have a Material Adverse Effect,
and
(c) constitutional and statutory liens arising from the obligation to pay
for
the provision of materials or services not yet in Default and Taxes not yet
due.
(h) Real
Property.
All
material real estate leased by DAYTONA BRANDS as of the date hereof and used
in
the operation of the DAYTONA BRANDS Business will be disclosed in the DAYTONA
BRANDS Financial Statements. Each such lease is referred to herein as a “Lease.”
The Leases constitute all of the leasehold interests in real property used
or
held for in connection with, necessary for the conduct of, or otherwise material
to, DAYTONA BRANDS’s Business. As of the date hereof, DAYTONA BRANDS does not
own any real property.
(i) DAYTONA
BRANDS has delivered to UniverCell correct and complete copies of the Leases.
Each Lease is legal, valid, binding, in full force and effect and enforceable
against each party thereto, except to the extent that any failure to be so
enforceable, individually and in the aggregate, has not had or resulted in
and
could not reasonably be expected to have or result in a Material Adverse
Effect.
DAYTONA BRANDS is not in default, violation or breach in any material respect
under any Lease, and to DAYTONA BRANDS’s knowledge, no event has occurred and is
continuing that constitutes or, with notice or the passage of time or both,
would constitute a default, violation or breach in any respect under any
Lease
that could reasonably be expected to have a Material Adverse Effect. Each
Lease
grants the tenant under the Lease the exclusive right to use and occupy the
premises and rights demised and intended to be demised thereunder. DAYTONA
BRANDS has good and valid title to the leasehold estate under the Leases
free
and clear of any Liens. DAYTONA BRANDS enjoys peaceful and undisturbed
possession under the Leases.
16
(ii) No
Proceedings.
There
are no proceedings in eminent domain or other similar proceedings pending
or, to
the knowledge of DAYTONA BRANDS, threatened, affecting any portion of the
property subject to the Leases. There exists no writ, injunction, decree,
order
or judgment outstanding, nor any Litigation, pending or, to the knowledge
of
DAYTONA BRANDS, threatened, relating to the ownership, lease, use, occupancy
or
operation by DAYTONA BRANDS of any real property subject to the
Leases.
(i) Legal
Proceedings; Compliance with Law; Governmental Permits.
(i) Except
as
set forth on Schedule 5(i), there is no Litigation that is pending or, to
DAYTONA BRANDS's knowledge, threatened against DAYTONA BRANDS. DAYTONA BRANDS
is
and has been in compliance with all applicable Laws, including Environmental
Laws and applicable securities Laws, except where the failure to be in
compliance would not have a Material Adverse Effect. There has been no Default
under any Laws applicable to DAYTONA BRANDS, including Environmental Laws,
except for any Defaults that have not had or would not have a Material Adverse
Effect. There has been no Default
with respect to any Court Order applicable to DAYTONA BRANDS. DAYTONA BRANDS
has
not received any written notice and no other communication has been received
to
the effect that it is not in compliance with any applicable Laws, and DAYTONA
BRANDS has no reason to believe that any presently existing circumstances
are
likely to result in violations of any applicable Laws.
(ii) To
DAYTONA BRANDS’s knowledge, there is no Environmental Condition at any property
presently or formerly owned or leased by DAYTONA BRANDS.
(iii) DAYTONA
BRANDS has all Governmental Permits required in connection with the operation
of
its business as now being conducted, all of which are in full force and effect.
DAYTONA BRANDS has complied, in all material respects, with all of its
Governmental Permits. The execution, delivery and performance of this Agreement
and the consummation of the Transactions contemplated hereby will not (A)
result
in or give to any Person any right of termination, non-renewal, cancellation,
acceleration or modification in or with respect to any such Governmental
Permit,
(B) result in or give to any Person any additional rights or entitlement
to
increased, additional, accelerated or guaranteed payments under any such
Governmental Permit, or (C) result in any Encumbrance upon DAYTONA BRANDS
or any
of its Assets under the terms of any Governmental Permit.
(j) Patents,
Trademarks, etc.
To
DAYTONA BRANDS’s knowledge, DAYTONA BRANDS has not infringed upon or unlawfully
or wrongfully used any Intellectual Property owned or claimed by another
Person
and no Person infringes on or wrongfully uses any Intellectual Property owned
or
claimed by DAYTONA BRANDS, except for those situations that would not have
a
Material Adverse Effect. To DAYTONA BRANDS's knowledge, DAYTONA BRANDS owns
or
has valid rights to use all Intellectual Property used in the conduct of
its
Business, or proposed to be used in its Business as proposed to be conducted,
except where the failure to have valid rights to use such Intellectual Property
will not have a Material Adverse Effect, free and clear of all Encumbrances,
other than Encumbrances which would not have a Material Adverse
Effect.
17
(k) Absence
of Certain Changes.
Since
the DAYTONA BRANDS Balance Sheet Date, DAYTONA BRANDS has conducted the DAYTONA
BRANDS Business in the ordinary course and there has not been:
(i) any
Material Adverse Effect on the DAYTONA BRANDS Business;
(ii) any
distribution or payment declared or made in respect of DAYTONA BRANDS's capital
stock by way of dividends, purchase or redemption of shares or
otherwise;
(iii) any
increase in the compensation payable or to become payable to any current
director or officer of DAYTONA BRANDS, except for merit and seniority increases
for employees made in the ordinary course of business consistent with past
practice, nor any material change in any existing employment, severance,
consulting arrangements or any DAYTONA BRANDS Benefit Plan;
(iv) any
sale,
assignment or transfer of any DAYTONA BRANDS Assets, or any additions to
or
transactions involving any DAYTONA BRANDS Assets, other than those made in
the
ordinary course of business;
(v) other
than in the ordinary course of business, any waiver or release of any material
claim or right or cancellation of any material debt held by DAYTONA
BRANDS;
(vi) any
change in practice with respect to Taxes, or any election, change of any
election, or revocation of any election with respect to Taxes, or any settlement
or compromise of any dispute involving a Tax liability;
(vii)
(A)
any
creation, or assumption of, any long-term debt or any short-term debt for
borrowed money other than under existing notes payable, lines of credit or
other
credit facility or in the ordinary course of business, (B) any assumption,
granting of guarantees, endorsements or otherwise becoming liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other
Person, or (C) any loans, advances or capital contributions to, or investments
in, any other Person except its Wholly-Owned Subsidiaries;
(viii)
any
material agreement, commitment or contract, except agreements, commitments
or
contracts for the purchase, sale or lease of goods or services in the ordinary
course of business;
(ix) other
than in the ordinary course of business, any authorization, recommendation,
proposal or announcement of an intention to authorize, recommend or propose,
or
enter into any Contract with respect to, any (A) plan of liquidation or
dissolution, (B) acquisition of a material amount of assets or securities,
(C)
disposition or Encumbrance of a material amount of assets or securities,
(D)
merger or consolidation, or (E) material change in its capitalization;
or
18
(x) any
change in accounting procedure or practice.
(l) Corporate
Records. The
minute books of DAYTONA BRANDS contain accurate, complete and current copies
of
all Charter Documents and Bylaws, including all amendments thereto, and of
all
minutes of meetings, resolutions and other proceedings of its Board of Directors
and shareholders.
(m) Finder's
Fees. No
Person
is or will be entitled to any commission, finder's fee or other payment in
connection with the Transactions based on arrangements made by or on behalf
of
DAYTONA BRANDS.
(n) Insurance.
DAYTONA
BRANDS currently only maintains health insurance coverage for its employees.
(o) Affiliate
Transactions.
(i) Schedule
5(o)
contains
a complete and correct list of (a) all agreements, contracts, arrangements,
understandings, transfers of assets or liabilities or other commitments or
transactions, whether or not entered into in the ordinary course of business,
to
or by which DAYTONA BRANDS, on the one hand, and any director or officer
of
DAYTONA BRANDS or any Affiliate of a director or officer of DAYTONA BRANDS,
on
the other hand, are a party or are otherwise bound or affected, and that
are
currently pending or in effect and (b) all agreements, contracts, arrangements,
understandings, transfers of assets or liabilities or other commitments or
transactions, whether or not entered into in the ordinary course of business,
to
or by DAYTONA BRANDS, on the one hand, and any employee or consultant of
DAYTONA
BRANDS or any of its Affiliates or any Affiliate of any such employee or
consultant, on the other hand, which, individually or in the aggregate, are
material to DAYTONA BRANDS’s business. Each item set forth on Schedule
5(o)
has been
entered into the normal and ordinary course of DAYTONA
BRANDS’s business and pursuant to the reasonable requirements thereof, and is
based upon fair and reasonable terms no less favorable to DAYTONA BRANDS
than it
could have obtained in a comparable arm’s-length transaction with an
unaffiliated Person.
(ii) Except
as
set forth in Schedule
5(o),
no
director, officer, employee or consultant of DAYTONA BRANDS or any Affiliate
of
a director, officer, employee or consultant of DAYTONA BRANDS, (A) owns,
directly or indirectly, and whether on an individual, joint or other basis,
any
material financial interest in (1) any property or Asset, real or personal,
tangible or intangible, used in or held for use in connection with or pertaining
to the DAYTONA BRANDS Business, or (2) any Person, that is a supplier, client
or
competitor of DAYTONA BRANDS, (B) serves as an officer, director, employee
or
consultant of any Person that is a supplier, client or competitor of DAYTONA
BRANDS, or (C) is a debtor or creditor of DAYTONA BRANDS.
(p) Employees
and Labor Matters.
(i) Schedule
5(p) sets
forth a complete and accurate list of all of DAYTONA BRANDS’s employees and
their current position.
(ii) Schedule
5(p) also
sets
forth those employees with whom DAYTONA BRANDS has entered into an employment
Contract or a Contract obligating DAYTONA BRANDS to make severance or
termination payments, income continuation payments and benefits,
change-in-control payments and benefits, healthcare continuation benefits,
supplemental life insurance benefits, consulting payments and other benefits
and
payments of any kind similar to any of the foregoing payments and benefits.
DAYTONA BRANDS has made available to UniverCell true and complete copies
of each
such Contract.
19
(iii) DAYTONA
BRANDS is not a party to or bound by any collective bargaining or other labor
agreement, and there are no labor unions or other organizations representing,
purporting to represent or attempting to represent any employees employed
by
DAYTONA BRANDS. To the knowledge of DAYTONA BRANDS, there has not been
threatened any strike, slowdown, picketing, work stoppage, concerted refusal
to
work overtime or other similar labor activity with respect to any employees
of
DAYTONA BRANDS. There are no labor disputes currently subject to any grievance
procedure, arbitration or litigation and there is no representation petition
pending or, to the knowledge of DAYTONA BRANDS, threatened with respect to
any
employee of DAYTONA BRANDS. DAYTONA BRANDS has complied in all material respects
with all applicable Laws pertaining to the employment or termination of
employment of its employees, including, without limitation, all such Laws
relating to labor relations, equal employment opportunities, fair employment
practices, prohibited discrimination or distinction and other similar employment
activities.
(q) Benefit
Plans.
Schedule
5(q) sets
forth a complete and accurate list of all Benefit Plans maintained by DAYTONA
BRANDS or any of its Subsidiaries or any of their respective ERISA
Affiliates.
(i) With
respect to each Benefit Plan, DAYTONA BRANDS has made available to UniverCell
true and complete copies of (A) the plan document, trust agreement and any
other
document governing such Benefit Plan, (B) the summary plan description, (C)
all
Form 5500 annual reports and attachments, and (D) the most recent IRS
determination letter, if any, for such Benefit Plan.
(ii) Each
Benefit Plan has been operated and administered in all material respects
in
accordance with its terms and applicable Law, including, without limitation,
ERISA and the Code. All contributions to and payments from the Benefit Plans
have been timely made. All returns, reports and disclosures required to be
made
under ERISA, the Code or any other applicable Law with respect to the Benefit
Plans have been timely filed or made, and all statements made on such returns,
reports and disclosures were true and complete in all material
respects.
(iii) DAYTONA
BRANDS does not at present and has not at any time in the past, sponsor,
participate in or contribute to, and does not have any current or contingent
obligations or liabilities whatsoever with respect to any: (i) “defined benefit
plan” within the meaning of Section 3(35) of ERISA subject to Title IV of ERISA
or the minimum funding requirements of Code Section 412; (ii) “multiemployer
plan” within the meaning of Section 401(a)(3) of ERISA; (iii) “welfare benefit
fund” within the meaning of Code Section 419; or (iv) plan or arrangement that
provides post retirement medical benefits (except to the extent required
by
COBRA or similar state law), post retirement death benefits or post retirement
welfare benefits of any kind whatsoever.
20
(iv) No
Benefit Plan is intended to be tax qualified under the Code.
(v) All
contributions and payments of insurance premiums required to be made with
respect to the Benefit Plans have been fully paid in such a manner as not
to
cause any interest, penalties or other amounts that have not been satisfied
or
discharged to be assessed against DAYTONA BRANDS with respect
thereto.
(vi) DAYTONA
BRANDS has complied in all material respects with the continuation coverage
requirements under COBRA, and similar state law, applicable to any of the
Benefit Plans.
(vii)
There
has
been no “prohibited transaction” or “reportable event” within the meaning of the
Code or ERISA within the last sixty (60) months, or breach of fiduciary duty
with respect to any of the Benefit Plans that could subject the Surviving
Corporation or any of its Affiliates or any of their respective ERISA Affiliates
to any tax, penalty or other liability under the Code or ERISA.
(viii) No
Benefit Plan has been terminated within the past sixty (60) months. There
is no
Litigation nor are there claims with respect to any of the Benefit Plans
(other
than routine claims for benefits from eligible participants or beneficiaries
in
the normal and ordinary course of business) pending or, to the knowledge
of
DAYTONA BRANDS threatened, and to the knowledge of DAYTONA BRANDS, there
are no
facts, events, conditions or circumstances that could give rise to any such
Litigation or claim (other than routine claims for benefits from eligible
participants or beneficiaries in the normal and ordinary course). No Benefit
Plan is the subject of any pending or, to DAYTONA BRANDS’s knowledge, threatened
investigation or audit by the IRS, the U.S. Department of Labor or the Pension
Benefit Guaranty Corporation or any other Governmental Authority.
(ix) Except
for the Benefit Plans to the extent currently provided to any employee or
former
employee in the ordinary course of business consistent with past practice,
none
of DAYTONA BRANDS or any of its employees, officers or directors, or any
other
Person has made any statement or communication or provided any materials
to any
employee or former employee of DAYTONA
BRANDS that provides for or could be construed as a contract, agreement or
commitment by the Surviving Corporation or any of its Affiliates to provide
for
any pension, welfare, or other employee benefit or fringe benefit plan or
arrangement to any such employee or former employee, whether before or after
retirement or separation or otherwise.
(x) To
DAYTONA BRANDS’s knowledge, no event or condition exists or is likely to arise
by virtue of the Merger or other Transactions contemplated by this Agreement
with respect to any of the employees of DAYTONA BRANDS or any of the Benefit
Plans which could reasonably be likely to result in any liability to the
Surviving Corporation which could reasonably be expected to have a Material
Adverse Effect.
(r) Current
Business Practices.
Neither
DAYTONA BRANDS nor, to the knowledge of DAYTONA BRANDS, any of its directors,
officers, agents, employees or representatives in their capacities as such
has:
(i) used any funds for unlawful contributions, unlawful gifts, unlawful
entertainment or other unlawful expenses relating to political activity;
(ii)
directly or indirectly paid or delivered any fee, commission or other sum
of
money or item of property, however characterized, to any finder, agent or
other
party acting on behalf of or under the auspices of a governmental official
or
Governmental Authority, in the United States or any other country, which
is in
any manner related to DAYTONA BRANDS’s business that was illegal under any
federal, state or local laws of the United States or any other country having
jurisdiction; (iii) made any payment to any customer or subcontractor of
DAYTONA
BRANDS’s Business or to any officer, director, partner, employee or agent of any
such customer or subcontractor, for the unlawful influence of any such customer
or subcontractor or any such officer, director, partner, employee or agent;
(iv)
engaged in any other unlawful reciprocal practice, or made any other unlawful
payment or given any other unlawful consideration to any such customer or
subcontractor any such officer, director, partner, employee or agent, in
respect
of DAYTONA BRANDS’s Business; or (v) violated any federal, state or local
campaign finance, election or similar laws.
21
(s) Accuracy
and Completeness of Information.
All
information furnished, to be furnished or caused to be furnished to UniverCell
by or on behalf of the DAYTONA BRANDS Parties for the purposes of or in
connection with this Agreement, or the Transactions contemplated by this
Agreement, is or, if furnished after the date of this Agreement, shall be
true
and complete in all material respects and does not, and, if furnished after
the
date of this Agreement, shall not, contain any untrue statement of material
fact
or fail to state any material fact necessary to make such information not
misleading.
6. Representations
and Warranties of the Controlling DAYTONA BRANDS Shareholders and Controlling
UniverCell Shareholder.
(a) Representations
and Warranties of the Controlling DAYTONA BRANDS
Shareholders.
Each of
the Controlling DAYTONA BRANDS Shareholders represents and warrants to
UniverCell that he or she is the owner of the number of shares of DAYTONA
BRANDS
Common Stock set forth on Schedule 6(a), free of all Encumbrances;
(b) Representations
and Warranties of the Controlling UniverCell Shareholder.
The
Controlling UniverCell Shareholder represents and warrants to DAYTONA BRANDS
that he is the owner of the number of shares of UniverCell Common Stock set
forth on Schedule 6(b), free of all Encumbrances.
7. Covenants
of The Parties.
(a) Notification
of Certain Matters. Each
of
UniverCell and DAYTONA BRANDS shall give prompt notice to each other of the
following:
(i) the
occurrence or nonoccurrence of any event whose occurrence or nonoccurrence
would
be likely to cause either (A) any representation or warranty contained in
this
Agreement to be untrue or inaccurate in any material respect at any time
from
the date hereof to the Effective Time, or (B) directly or indirectly, any
Material Adverse Effect;
(ii) any
material failure of such Party, or any officer, director, employee or agent
of
any thereof, to comply with or satisfy any covenant, condition or agreement
to
be complied with or satisfied by it hereunder; and
22
(iii) any
facts
relating to such Party which would make it necessary or advisable to amend
the
Schedules attached hereto in order to make the statements therein not misleading
or to comply with applicable Law; provided, however, that the delivery of
any
notice pursuant to this Section 7(a)(iii)
shall
not limit or otherwise affect the remedies available hereunder to the Party
receiving such notice.
(b) Access
to Information. From
the
date hereof to the Effective Time, UniverCell and DAYTONA BRANDS shall, and
shall cause its respective Subsidiaries, and its officers, directors, employees,
auditors, counsel and agents, to afford upon prior written notice the officers,
employees, auditors, counsel, financial advisors and agents of the other
Party
complete access at all reasonable times to such Party's and its Subsidiaries'
officers, employees, auditors, counsel, agents, properties, offices and other
facilities and to all of their respective books and records, and shall furnish
the other with all financial, operating and other data and information as
such
other Party may reasonably request.
(c) Public
Announcements. UniverCell
and DAYTONA BRANDS (i) shall use all reasonable efforts to develop a joint
communications plan and each Party shall use all reasonable efforts to ensure
that all press releases and other public statements with respect to the Merger
and the other Transactions shall be consistent with such joint communications
plan or, to the extent inconsistent therewith, shall have received the prior
written approval of the other and (ii) before issuing any press release or
otherwise making any public statements with respect to the Transactions,
will
consult with each other as to its form and substance and shall not issue
any
such press release or make any such public statement prior to such
consultation.
(d) Cooperation.
Upon
the
terms and subject to the conditions hereof, each of the Parties shall use
its,
his or her commercially reasonable efforts to take or cause to be taken all
actions and to do or cause to be done all things necessary, proper or advisable
to consummate as promptly as practicable the Merger and the other Transactions
and shall use its, his or her commercially reasonable efforts to obtain all
UniverCell Required Consents and DAYTONA BRANDS Required Consents, and to
effect
all necessary filings under the Securities Act and the Exchange Act. Without
limiting the generality of the foregoing, each Party shall use all commercially
reasonable efforts to take, or cause to be taken, all other actions and to
do,
or cause to be done, all other things necessary, proper or advisable to fulfill
the conditions herein to the extent that the fulfillment thereof is within a
Party's control.
(e) Reorganization.
From
and
after the date hereof and until the Effective Time, neither UniverCell nor
DAYTONA BRANDS, nor any of their respective Subsidiaries, shall knowingly
take
any action, or knowingly fail to take any action, that would jeopardize
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Code.
8. Covenants
of UniverCell.
(a) Operation
of the Business. Except
as
contemplated by this Agreement or as expressly agreed to in writing by DAYTONA
BRANDS, during the period from the date of this Agreement to the Effective
Time,
UniverCell and its Subsidiaries will conduct their operations only in the
ordinary course of business consistent with sound financial, operational
and
regulatory practice, and will take no action which would materially adversely
affect their ability to consummate the Merger and the other
Transactions.
23
(b) Maintenance
of the Assets. UniverCell
shall use its reasonable best efforts to continue to maintain and service
the
UniverCell Assets consistent with past practice.
(c) Employees
and Business Relations. UniverCell
shall use commercially reasonable efforts to keep available the services
of its
current employees and agents and to maintain its relations and goodwill with
its
suppliers, customers, distributors and any others having business relations
with
it.
(d) Expenses.
UniverCell
shall pay all of the legal, accounting and other expenses incurred by UniverCell
in connection with the Transactions.
(e) Certain
Tax Matters.
From the
date hereof until the Effective Time, (i) UniverCell will prepare and file,
in
the manner required by applicable Law, all Tax Returns (the “Post-Signing
Returns”) required to be filed under applicable Law; (ii) UniverCell will timely
pay all Taxes due and payable with respect to such Post-Signing Returns that
are
so filed; (iii) UniverCell will make provision for all Taxes payable by
UniverCell and/or any such Subsidiary under applicable Law for which no
Post-Signing Return is due prior to the Effective Time; and (iv) UniverCell
will
promptly notify DAYTONA BRANDS in writing of any action, suit, proceeding,
claim
or audit pending against or with respect to UniverCell in respect of any
Tax.
(f) State
Anti-Takeover Law.
If any
“business combination,” “moratorium,” “control share,” “fair price,” “interested
shareholder,” “affiliated transaction” or other anti-takeover statute or
regulation under the FBCA (i) prohibits or restricts UniverCell's ability
to
perform its obligations under this Agreement or any Party's ability to
consummate the Merger or the other Transactions contemplated hereby or thereby,
or (ii) would have the effect of invalidating or voiding this Agreement or
any
provision hereof, then UniverCell shall use its best efforts to obtain any
necessary consents or approvals so that the foregoing shall not
apply.
(g) SEC
Filings.
UniverCell shall timely file all periodic and other reports required to be
filed
with the SEC under the Securities Act or the Exchange Act.
(h) Accountant's
Reports.
UniverCell shall provide in a timely manner the written consent of UniverCell
independent accountant's reports on any of UniverCell’s financial statements, if
necessary under the Securities Act or Exchange Act.
(i) Shareholder
Meeting and Notice.
As
promptly as practicable following the date of this Agreement, UniverCell
shall
call and give notice of a meeting of the shareholders of UniverCell to consider
and vote upon the adoption of this Agreement and the terms and conditions
of the
Merger and ratification of the UniverCell Controlling Shareholder’s previous
purchase of substantially all of the assets of UniverCell.
9. Covenants
of DAYTONA BRANDS.
(a) Operation
of the Business.
Except
as contemplated by this Agreement or as expressly agreed to in writing by
UniverCell, during the period from the date of this Agreement to the Effective
Time, DAYTONA BRANDS will conduct its operations only in the ordinary course
of
business consistent with DAYTONA BRANDS’s usual business practices, and will not
willfully or intentionally take any action which would materially adversely
affect its ability to consummate the Transactions. Without limiting the
generality of the foregoing, except as otherwise expressly provided in this
Agreement or except as disclosed in the Schedules attached hereto, prior
to the
Effective Time, DAYTONA BRANDS will not, without the prior written consent
of
UniverCell:
24
(i) amend
its
Charter Documents or Bylaws (or similar organizational documents);
(ii) authorize
for issuance, issue, sell, deliver, grant any options for, or otherwise agree
or
commit to issue, sell or deliver any shares of its capital stock or any other
securities, other than the sale of shares of DAYTONA BRANDS Common Stock
in
private placements; provided, however, that the total number of shares of
DAYTONA BRANDS Common Stock that will be outstanding immediately prior to
the
Effective Date of the Merger shall not exceed 49,500,000 shares;
(iii) recapitalize,
split, combine or reclassify any shares of its capital stock; declare, set
aside
or pay any dividend or other distribution (whether in cash, stock or property
or
any combination thereof) in respect of its capital stock; or purchase, redeem
or
otherwise acquire any of its securities or modify any of the terms of any
such
securities;
(iv) (A)
create, incur, assume or permit to exist any long-term debt or any short-term
debt for borrowed money other than under existing notes payable, lines of
credit
or other credit facilities or in the ordinary course of business; (B) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person or as
otherwise may be contractually required and disclosed in a Schedule attached
hereto; or (C) make any loans, advances or capital contributions to, or
investments in, any other Person;
(v) (A)
amend
any DAYTONA BRANDS Benefit Plan or (B) except in the ordinary course of business
consistent with usual practice or established policy (1) increase in any
manner
the rate of compensation of any of its directors, officers or other employees
everywhere, except for increases in the ordinary course of business; (2)
pay or
agree to pay any bonus, pension, retirement allowance, severance or other
employee benefit except as required under currently existing DAYTONA BRANDS
Benefit Plans disclosed in a Schedule hereto or in the ordinary course of
business; or (3) amend, terminate or enter into any employment, consulting,
severance, change in control or similar agreements or arrangements with any
of
its directors, officers or other employees;
(vi) enter
into any material agreement, commitment or contract, except agreements,
commitments or contracts for the purchase, sale or lease of goods or services
in
the ordinary course of business;
(vii) other
than in the ordinary course of business or as provided herein, authorize,
recommend, propose or announce an intention to authorize, recommend or propose,
or enter into any Contract with respect to, any (A) plan of liquidation or
dissolution, (B) acquisition of a material amount of assets or securities,
(C)
disposition or Encumbrance of a material amount of assets or securities,
(D)
merger or consolidation or (E) material change in its capitalization;
(viii) change
any material accounting or Tax procedure or practice;
25
(ix) take
any
action the taking of which, or knowingly omit to take any action the omission
of
which, would cause any of the representations and warranties herein to fail
to
be true and correct in all material respects as of the date of such action
or
omission as though made at and as of the date of such action or
omission;
(x) compromise,
settle or otherwise modify any material claim or litigation; or
(xi) commit
or
agree to do any of the foregoing.
(b) Maintenance
of the Assets.
DAYTONA
BRANDS shall use its reasonable best efforts to continue to maintain and
service
the DAYTONA BRANDS Assets consistent with past practice. DAYTONA BRANDS shall
not, directly or indirectly, sell or encumber all or any part of the DAYTONA
BRANDS Assets, other than sales in the ordinary course of business or initiate
or participate in any discussions or negotiations or enter into any agreement
to
do any of the foregoing.
(c) Employees
and Business Relations. DAYTONA
BRANDS shall use commercially reasonable efforts to keep available the services
of its current key employees and agents and to maintain its relations and
goodwill with its key suppliers, customers, distributors and any others having
material business relations with it.
(d) Certain
Tax Matters. From
the
date hereof until the Effective Time: (i) DAYTONA BRANDS will prepare and
file,
in the manner required by applicable Law, all Post-Signing Returns required
to
be filed under applicable Law; (ii) DAYTONA BRANDS will timely pay all Taxes
due
and payable such Post-Signing Returns that are so filed; (iii) DAYTONA BRANDS
will make reasonable provision for Taxes estimated by DAYTONA BRANDS under
applicable Law for which no Post-Signing Return is due prior to the Effective
Time; and (iv) DAYTONA BRANDS will promptly notify UniverCell in writing
of any
action, suit, proceeding, claim or audit pending against or with respect
to
DAYTONA BRANDS in respect of any Tax that is not disclosed with respect to
on
the Schedules attached hereto.
(e) State
Anti-Takeover Law. If
any
“business combination,” “moratorium,” “control share,” “fair price,” “interested
shareholder,” “affiliated transaction” or other anti-takeover statute or
regulation under the FBCA (i) prohibits or restricts DAYTONA BRANDS's ability
to
perform its obligations under this Agreement or any Party's ability to
consummate the Merger or the other Transactions contemplated hereby or thereby,
or (ii) would have the effect of invalidating or voiding this Agreement or
any
provision hereof or thereof, then DAYTONA BRANDS shall use its best efforts
to
obtain any necessary consents or approvals so that the foregoing shall not
apply.
(f) Accountant's
Reports.
DAYTONA
BRANDS shall provide in a timely manner the written consent of DAYTONA BRANDS's
independent accountant's reports on the DAYTONA BRANDS Financial Statements,
if
necessary under the Securities Act or Exchange Act.
(g) Shareholder
Meeting and Notice.
As
promptly as practicable following the date of this Agreement, DAYTONA BRANDS
shall call and give notice of a meeting of the DAYTONA BRANDS Shareholders
to
consider and vote upon the adoption of this Agreement and the terms and
conditions of the Merger.
26
10. Covenants
of the Controlling DAYTONA BRANDS Shareholders and Controlling UniverCell
Shareholder.
(a) Covenant
of the Controlling DAYTONA BRANDS Shareholder.
Each of
the Controlling DAYTONA BRANDS Shareholders agrees to vote his or her DAYTONA
BRANDS Shares in favor of the Merger and the other Transactions contemplated
herein.
(b) Covenant
of the Controlling UniverCell Shareholder.
The
Controlling UniverCell Shareholder agrees to vote his shares of UniverCell
Common Stock in favor of the Merger and the other Transactions contemplated
herein.
11. Conditions
Precedent to Obligations of DAYTONA BRANDS. The
obligations of DAYTONA BRANDS to consummate the Merger and the other
Transactions contemplated herein shall be subject to the satisfaction or
waiver,
on or before the Effective Time, of each of the following
conditions:
(a) Representations
and Warranties. The
representations and warranties of the UniverCell Parties contained in this
Agreement shall be true and correct on the date hereof and (except to the
extent
such representations and warranties speak as of an earlier date) shall also
be
true and correct on and as of the Closing Date, with the same force and effect
as if made on and as of the Closing Date.
(b) Agreements,
Conditions and Covenants. The
UniverCell Parties shall have performed or complied in all material respects
with all agreements, conditions and covenants required by this Agreement
to be
performed or complied with by them on or before the Effective Time.
(c) Required
Consents.
UniverCell shall have obtained all consents (“UniverCell Required Consents”)
from third parties.
(d) Material
Adverse Effect.
There
shall have been no Material Adverse Effect on UniverCell or the UniverCell
Parties taken as a whole.
(e) Opinion
of UniverCell’s Counsel.
UniverCell shall have furnished to DAYTONA BRANDS, at the Closing, with an
opinion of Xxxxx Xxxxxx Xxxxxxxxxx Lesser & Xxxxx, counsel to UniverCell,
dated as of the Closing Date, substantially in the form of Exhibit
11(e)
annexed
hereto.
(f) Delivery
of Certificate.
UniverCell shall have delivered to DAYTONA BRANDS an officers’ certificate,
dated the Closing Date, and signed by the principal executive officer, the
secretary and the chief financial officer of UniverCell, affirming that the
representations and warranties as set forth in Section 4
were and
are true, correct and complete.
12. Conditions
Precedent to Obligations of the UniverCell
Parties. The
obligations of the UniverCell Parties to consummate the Merger and the other
Transactions contemplated herein shall be subject to the satisfaction or
waiver,
on or before the Effective Time, of each of the following
conditions:
(a) Representations
and Warranties. The
representations and warranties of DAYTONA BRANDS contained in this Agreement
shall be true and correct on the date hereof and (except to the extent such
representations and warranties speak as of an earlier date) shall also be
true
and correct on and as of the Closing Date, with the same force and effect
as if
made on and as of the Closing Date.
27
(b) Agreements,
Conditions and Covenants.
DAYTONA
BRANDS shall have performed or complied in all material respects with all
agreements, conditions and covenants required by this Agreement to be performed
or complied with by it on or before the Effective Time.
(c) Required
Consents.
DAYTONA
BRANDS shall have obtained all consents (“DAYTONA BRANDS Required Consents”)
from third parties.
(d) Material
Adverse Effect.
There
shall have been no Material Adverse Effect on DAYTONA BRANDS.
(e) Patent
Application.
UniverCell shall not have reasonably determined that no patent will issue
on the
currently pending patent application by DAYTONA BRANDS covering software
for the
creation of erasable e-mail.
(f) Opinion
of DAYTONA BRANDS’s Counsel.
DAYTONA
BRANDS shall have furnished to UniverCell, at the Closing, with an opinion
of
Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.C., counsel to DAYTONA BRANDS, dated as of
the Closing Date, substantially in the form of Exhibit
12(f)
annexed
hereto.
(g) Delivery
of Certificate.
DAYTONA
BRANDS shall have delivered to UniverCell an officers’ certificate, dated the
Closing Date, and signed by the principal executive officer, the secretary
and
the chief financial officer of DAYTONA BRANDS, affirming that the
representations and warranties as set forth in Section 5
were and
are true, correct and complete.
(h) Securities
Law Compliance.
Not
later than 30 days after execution of this Agreement, DAYTONA BRANDS shall
have
delivered to UniverCell executed investor questionnaires from each of DAYTONA
BRANDS’s shareholders, and an executed offeree representative questionnaire from
the offeree representative of each DAYTONA BRANDS shareholder who is not
an
accredited investor, and, on the basis of such questionnaires, UniverCell
shall
have reasonably determined that, provided the joint information statement
referred to in Section 2(b) complies with the information requirements of
Rule
502(b)(2) of Regulation D, the issuance of the UniverCell Shares to the DAYTONA
BRANDS shareholders as contemplated by this Agreement does not require
registration under the Securities Act.
13. Indemnification.
(a) Survival
of Representations, Warranties and Covenants.
The
obligations of the Parties with respect to the representations, warranties,
agreements and covenants set forth in this Agreement will survive the Closing
and continue in full force and effect until the date twelve (12)
months following the Closing Date (the “Termination Date”), at which time the
representations, warranties, agreements and covenants of the Parties set
forth
in this Agreement or in any certificate, schedule or exhibit delivered pursuant
hereto will terminate; provided, that (i) notwithstanding the above, any
agreement or covenant set forth in this Agreement with a fixed term shall
survive and continue in full force and effect for the length of the entire
fixed
term, and (ii) the Parties will remain liable to the extent set forth in
this
Section 13
for
Damages; provided that a notice of such Damages has been delivered to an
Indemnifying Party on or before the Termination Date and until such time
as such
indemnity claim has been fully quantified and/or decided, settled or
adjudicated.
28
(b) Indemnification
of DAYTONA BRANDS Indemnified Parties. Subject
to the limitations set forth in this Section 13,
UniverCell and the Controlling UniverCell Shareholder will jointly and severally
indemnify and hold harmless each DAYTONA BRANDS Indemnified Party against
all
Damages, that arise directly or indirectly from, are based on, arise out
of, or
are attributable to (i) any breach of the representations and warranties
of the
UniverCell Parties given or made in this Agreement or in any schedules, exhibits
or certificates delivered in connection herewith; (ii) the nonfulfillment
of,
breach of or default in connection with any covenant or agreement on the
part of
the UniverCell Parties under this Agreement or any of the other Transaction
Documents, (iii) any liability under the Securities Act, the Exchange Act
or
other applicable Law which arises out of or is based on (A) any untrue statement
or alleged untrue statement of a material fact relating to the UniverCell
Parties, set forth in any filing made by UniverCell with the SEC or disclosure
to the general public or any untrue statement or alleged untrue statement
of a
material fact relating to UniverCell which is provided to DAYTONA BRANDS
or its
counsel in writing by UniverCell or any of its agents or representatives,
or (B)
any omission or alleged omission to state therein a material fact relating
to
UniverCell required to be stated in any filing, disclosure or statement to
make
the statements therein not misleading (each Damages claim described in Section
13(b)
being an
“DAYTONA BRANDS Indemnified Loss”), or (iii) any claim by a third party. Once
the occurrence of a breach of any representation, warranty, agreement or
covenant has been established, Damages shall be calculated without regard
to
whether such breach caused a Material Adverse Effect.
(c) Indemnification
of UniverCell. Subject
to the limitations set forth in this Section 13, DAYTONA
BRANDS and each of the Controlling DAYTONA BRANDS Shareholders shall jointly
and
severally indemnify and hold harmless UniverCell from and against, all Damages
that arise directly or indirectly from, are based on, arise out of or are
attributable to (i) any breach by DAYTONA BRANDS or such Controlling DAYTONA
BRANDS Shareholder of his or its representations and warranties set forth
herein
or in any schedules, exhibits and certificates delivered in connection herewith;
or (ii) the nonfulfillment of any covenant or agreement on the part of DAYTONA
BRANDS or such Controlling DAYTONA BRANDS Shareholder under this Agreement
or
any of the other Transaction documents. Once the occurrence of a breach of
any
representation, warranty, agreement or covenant has been established, Damages
shall be calculated without regard to whether such breach caused a Material
Adverse Effect.
(d) Maximum
Indemnification.
In no
event shall the aggregate liability of DAYTONA BRANDS and the Controlling
DAYTONA BRANDS Shareholder, or of UniverCell and the Controlling UniverCell
Shareholder, for indemnification or otherwise (including without limitation,
for
breach of covenants or otherwise at law or equity) exceed
$1,000,000.
(e) Basket.
The
indemnification obligations of an Indemnifying Party pursuant to Section
13
shall
apply only to the extent that the aggregate Damages incurred in connection
therewith exceed $50,000 and no claim for indemnification shall be paid unless
the aggregate damages incurred by the Indemnified Party exceeds $50,000,
and
then only of such excess amount.
29
(f) Insurance
and Third Party Recoveries.
Each
Indemnified Party shall use commercially reasonable efforts to access any
applicable insurance and seek recoveries from other responsible third parties
in
connection with any claim seeking indemnification pursuant to this Section
13.
Any
Damages for which indemnification is provided under this Section 13
shall be
net of any amounts actually recovered by an Indemnified Party (after the
Effective Time) from third parties (including amounts actually recovered
under
insurance policies) with respect to such Damages. If an Indemnified Party
recovers an amount from a third party in respect of Damages after the full
amount of such Damages has been paid or after a partial payment and the amount
received from a third party exceeds the remaining unpaid balance of such
Damages, then the Indemnified Party shall promptly remit to the Indemnifying
Party payment of the excess of (i) the sum of the amount heretofore paid
in
respect of such Damages, plus the amount received from the third party in
respect thereof, less (ii) the full amount of such Damages.
(g) Conditions
of Indemnification.
(i) The
provisions of Section 13
shall be
the sole manner by which the Indemnified Party shall assert any claim against
the Indemnifying Party, including, without limitation, any claim for breach
of
this Agreement.
(ii) A
party
claiming indemnification under this Agreement (an “Indemnified Party”) shall
promptly (A) notify the party from whom indemnification is sought (the
“Indemnifying Party”) of any third-party claim or claims asserted against the
Indemnified Party (“Third Party Claim”) that could give rise to a right of
indemnification under this Agreement and (B) transmit to the Indemnifying
Party
a written notice (“Claim Notice”) describing in reasonable detail the nature of
the Third Party Claim, a copy of all papers served with respect to that Third
Party Claim (if any), an estimate of the amount of damages attributable to
the
Third Party Claim to the extent feasible (which estimate shall not be conclusive
of the final amount of such Third Party Claim) and the basis for the Indemnified
Party's request for indemnification under this Agreement. Except as otherwise
set forth herein, the failure to promptly deliver a Claim Notice shall not
relieve the Indemnifying Party of its obligations to the Indemnified Party
with
respect to the related Third Party Claim except to the extent that the resulting
delay is materially prejudicial to the defense of that Third Party Claim.
Within
15 days after receipt of any Claim Notice (the “Election Period”), the
Indemnifying Party shall notify the Indemnified Party (1) whether the
Indemnifying Party disputes its, his or her potential liability to the
Indemnified Party under this Section 13
with
respect to that Third Party Claim and (2) if the Indemnifying Party does
not
dispute its, his or her potential liability to the Indemnified Party with
respect to that Third Party Claim, whether the Indemnifying Party desires,
at
the sole cost and expense of the Indemnifying Party, to defend the Indemnified
Party against that Third Party Claim.
30
(iii) If
the
Indemnifying Party does not dispute its, his or her potential liability to
the
Indemnified Party and notifies the Indemnified Party within the Election
Period
that the Indemnifying Party elects to assume the defense of the Third Party
Claim, then the Indemnifying Party shall have the right to defend, at its,
his
or her sole cost and expense, that Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of
the
Indemnifying Party in accordance with this Section and the Indemnified Party
will furnish the Indemnifying Party with all information in its, his or her
possession, subject to a confidentiality agreement, with respect to that
Third
Party Claim and otherwise cooperate with the Indemnifying Party in the defense
of that Third Party Claim; provided, however, that the Indemnifying Party
shall
not enter into any settlement with respect to any Third Party Claim that
(A)
purports to limit the activities of, or otherwise restrict in any way, any
Indemnified Party or any Affiliate of any Indemnified Party, (B) involves
a
guilty plea to any crime (C) involves a fine or penalty, whether or not paid
by
the Indemnifying Party, without the prior consent of that Indemnified Party
(which consent may be withheld in the sole discretion of that Indemnified
Party), or (D) does not include a full and complete release of the Indemnified
Party and its Affiliates in a form that is satisfactory to the Indemnified
Party. The Indemnified Party is authorized, at the sole cost and expense
of the
Indemnifying Party, to file, during the Election Period, any motion, answer
or
other pleadings that the Indemnified Party shall reasonably deem necessary
or
appropriate to protect its, his or her interests or those of the Indemnifying
Party. The Indemnified Party may participate in, but not control, any defense
or
settlement of any Third Party Claim controlled by the Indemnifying Party
pursuant to this Section and will bear its, his or her own costs and expenses
with respect to that participation; provided, however, that if the named
parties
to any such action (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party, and the Indemnified Party has
been
advised by counsel that there may be one or more legal defenses available
to it,
him or her which are different from or additional to those available to the
Indemnifying Party, then the Indemnified Party may employ separate counsel
at
the expense of the Indemnifying Party (provided that such expenses are
reasonable), and, on its, his or her written notification of that employment,
the Indemnifying Party shall not have the right to assume or continue the
defense of such action on behalf of the Indemnified Party.
(iv) If
the
Indemnifying Party (A) within the Election Period (1) disputes its potential
liability to the Indemnified Party under this Section 13,
(2)
elects not to defend the Indemnified Party pursuant to Section 13(g)(iii)
or (3)
fails to notify the Indemnified Party that the Indemnifying Party elects
to
defend the Indemnified Party pursuant to Section 13(g)(iii)
or (B)
elects to defend the Indemnified Party pursuant to Section 13(g)(iii)
but
fails diligently and promptly to prosecute or settle the Third Party Claim,
then
the Indemnified Party shall have the right to defend, at the sole cost and
expense of the Indemnifying Party (provided that such expenses are reasonable)
(if the Indemnified Party is entitled to indemnification hereunder), the
Third
Party Claim by all appropriate proceedings, which proceedings shall be promptly
and vigorously prosecuted by the Indemnified Party to a final conclusion
or
settled. The Indemnified Party shall have full control of such defense and
proceedings. Notwithstanding the foregoing, if the Indemnifying Party has
delivered a written notice to the Indemnified Party to the effect that the
Indemnifying Party disputes its, his or her potential liability to the
Indemnified Party under this Section 13
and if
such dispute is resolved in favor of the Indemnifying Party, the Indemnifying
Party shall not be required to bear the costs and expenses of the Indemnified
Party's defense pursuant to this Section or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and the Indemnified
Party shall reimburse the Indemnifying Party in full for all reasonable costs
and expenses of such litigation. The Indemnifying Party may participate in,
but
not control, any defense or settlement controlled by the Indemnified Party
pursuant to this Section, and the Indemnifying Party shall bear its, his
or her
own costs and expenses with respect to such participation.
31
(v) In
the
event any Indemnified Party should have a claim against any Indemnifying
Party
hereunder that does not involve a Third Party Claim, the Indemnified Party
shall
transmit to the Indemnifying Party a written notice (the “Indemnity Notice”)
describing in reasonable detail the nature of the claim, an estimate of the
amount of Damages attributable to that claim to the extent feasible (which
estimate shall not be conclusive of the final amount of such claim) and the
basis of the Indemnified Party's request for indemnification under this
Agreement. If the Indemnifying Party does not notify the Indemnified Party
within 15 days from its, his or her receipt of the Indemnity Notice that
the
Indemnifying Party disputes such claim, the claim specified by the Indemnified
Party in the Indemnity Notice shall be deemed a liability of the Indemnifying
Party hereunder. If the Indemnifying Party has timely disputed such claim,
as
provided above, such dispute shall be resolved by proceedings in an appropriate
court of competent jurisdiction if the parties do not reach a settlement
of such
dispute within 30 days after notice of a dispute is given.
(vi) Payments
of all amounts owing by an Indemnifying Party pursuant to this Section
13
relating
to a Third Party Claim shall be made within 30 days after the latest of (A)
the
settlement of that Third Party Claim, (B) the expiration of the period for
appeal of a final adjudication of that Third Party Claim or (C) the expiration
of the period for appeal of a final adjudication of the Indemnifying Party's
liability to the Indemnified Party under this Agreement. Payments of all
amounts
owing by an Indemnifying Party pursuant to Section 13(g)(v)
shall be
made within 30 days after the later of (1) the expiration of the 30-day
Indemnity Notice period or (2) the expiration of the period for appeal of
a
final adjudication of the Indemnifying Party's liability to the Indemnified
Party under this Agreement.
(h) Sole
Remedy.
From
and after the Effective Time, the remedies provided in this Section 13
shall be
the sole remedy of the Parties for any claim arising out of this Agreement
and
the Transactions contemplated herein or any Law or legal theory applicable
thereto, including the breach of any representation, warranty or covenant
contained in this Agreement or any Schedule to this Agreement.
(i) Continuation
of Indemnity.
(i) From
and
after the Effective Time, DAYTONA BRANDS shall maintain all rights of
indemnification (including rights to advancement of expenses and exculpation
from liability) existing in favor of the present and former directors, officers,
employees and agents of DAYTONA BRANDS on terms no less favorable than those
provided in the Certificate of Incorporation or by-Bylaws of DAYTONA BRANDS
as
in effect on the date of this Agreement, in each case with respect to matters
occurring prior to or after the Effective Time.
(ii) In
the
event that DAYTONA BRANDS or any of its successors or assigns (A) consolidates
with or merges into any other Person and shall not be the continuing or
surviving corporation or entity in such consolidation or merger or (B) transfers
all or substantially all of its properties or assets to any Person, then,
and in
each case, proper provision shall be made so that the successors and assigns
of
DAYTONA BRANDS honor the indemnification obligations set forth in this Section
13(i)(ii).
32
14. Termination.
(a) Grounds
for Termination. This
Agreement may be terminated at any time before the Effective Time as
follows:
(i) By
mutual
written consent of each of UniverCell and DAYTONA BRANDS at any
time;
(ii) By
UniverCell or DAYTONA BRANDS by written notice if the Transactions contemplated
hereby shall not have been consummated on or before September 30, 2006, unless
such date is extended by the mutual written consent of UniverCell and DAYTONA
BRANDS; or
(iii) By
either
UniverCell on the one hand or DAYTONA BRANDS on the other hand by written
notice
to the other if:
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(a)
|
the
representations and warranties of the other Party shall not be
true and
correct in all material respects at and as of the date when made
(except
to the extent such representations and warranties speak of an earlier
date), or shall not be true and correct in all material respects
as of the
Closing Date (except to the extent such representations and warranties
speak of an earlier date) as though made on and as of such
date,
|
|
(b)
|
the
other Party shall (and the terminating party shall not) have failed
to
perform and comply with, in all material respects, all agreements,
covenants and conditions hereby required to have been performed
or
complied with by such party prior to the time of such termination,
and
such failure shall not have been cured within five (5) days following
notice of such failure, or
|
|
(c)
|
any
event, fact or condition shall occur or exist that otherwise shall
have
made it impossible to satisfy a condition precedent to the terminating
party’s obligations to consummate the Transactions contemplated by this
Agreement, unless the occurrence or existence of such event, fact
or
condition shall be due to the failure of the terminating party
to perform
or comply with any of the agreements, covenants or conditions hereof
to be
performed or complied with by such party prior to the
Closing.
|
(b) Effect
of Termination. If
this
Agreement is terminated pursuant to Sections 14(a)(i)
or
14(a)(ii),
this
Agreement shall be terminated and there shall be no liability on the part
of any
of the Parties except as specified in Sections 8(d).
Notwithstanding the foregoing, nothing herein shall relieve any Party from
liability for the Party’s breach of this Agreement.
15. Definitions. For
convenience, certain terms used in more than one part of this Agreement are
defined or referred to below (such terms as well as any other terms defined
elsewhere in this Agreement shall be equally applicable to both the singular
and
plural forms of the terms defined).
33
(a) “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such Person. For
the
purposes of this definition, “control” when used with respect to any Person,
means the possession, direct or indirect, of the power to direct or cause
the
direction of the management and policies of such Person, whether through
the
ownership of voting securities, by contract or otherwise; and the terms of
“affiliated,” “controlling” and “controlled” have meanings correlative to the
foregoing.
(b) “Agreement”
means this Agreement and Plan of Merger.
(c) “Assets”
means, with respect to UniverCell, the Merger Subsidiary or DAYTONA BRANDS,
as
shown by the context in which used, all of the assets, properties, goodwill
and
rights of every kind and description, real and personal, tangible and
intangible, wherever situated and whether or not reflected in such Party's
most
recent financial statements, that are owned or possessed by such Party and
its
Subsidiaries, taken as a whole.
(d) “Benefit
Plan” means all employee benefit, health, welfare, supplemental unemployment
benefit, bonus, pension, profit sharing, deferred compensation, severance,
incentive, stock compensation, stock purchase, retirement, hospitalization
insurance, medical, dental, legal, disability, fringe benefit and similar
plans,
programs, arrangements or practices, including, without limitation, each
“employee benefit plan” as defined in Section 3(3) of ERISA.
(e) “Business”
means with respect to UniverCell the entire business and operations of
UniverCell and with respect to DAYTONA BRANDS the entire business and operations
of DAYTONA BRANDS and its Subsidiaries.
(f) “Business
Day” means any day except Saturday, Sunday and any day which shall be a legal
holiday or a day on which banking institutions in the State of New York
generally are authorized or required by law or other government actions to
close.
(g) “Certificate
of Merger” is defined in Section 1(b).
(h) “Charter
Documents” means an entity's certificate or articles of incorporation,
certificate defining the rights and preferences of securities, articles of
organization, general or limited partnership agreement, certificate of limited
partnership, joint venture agreement or similar document governing the
entity.
(i) “Closing”
is defined in Section 3(a).
(j) “Closing
Date” is defined in Section 3(a).
(k) “COBRA”
is defined in Section 4(p)(iii).
(l) “Code”
means the Internal Revenue Code of 1986, as amended. All citations to provisions
of the Code, or to the Treasury Regulations promulgated thereunder, shall
include any amendments thereto and any substitute or successor provisions
thereto.
34
(m) “Contract”
means any written or oral contract, agreement, letter of intent, agreement
in
principle, lease, instrument or other commitment that is binding on any Person
or its property under applicable Law.
(n) “Controlling
DAYTONA BRANDS Shareholders” is defined in the Preamble.
(o) “Conversion
Number” is defined in Section 1(j).
(p) “Copyrights”
means registered copyrights, copyright applications and unregistered
copyrights.
(q) “Court
Order” means any judgment, decree, injunction, order or ruling of any federal,
state, local or foreign court or governmental or regulatory body or authority,
or any arbitrator that is binding on any Person or its property under applicable
Law.
(r) “Damages”
shall have the same meaning as Losses.
(s) “Default”
means (i) a breach, default or violation, (ii) the occurrence of an event
that
with or without the passage of time or the giving of notice, or both, would
constitute a breach, default or violation or (iii) with respect to any Contract,
the occurrence of an event that with or without the passage of time or the
giving of notice, or both, would give rise to a right of termination,
renegotiation or acceleration or a right to receive damages or a payment
of
penalties.
(t) “FBCA”
means the Florida General Corporation Law, as amended.
(u) “Dissenting
Shareholder” means a UniverCell shareholder or DAYTONA BRANDS Shareholder who
properly exercised his, her or its right to dissent from the Merger and other
Transactions contemplated herein under applicable Law.
(v) “Effective
Time” is defined in Section 1(b).
(w) “Election
Period” is defined in Section 13(g)(ii).
(x) “Encumbrances”
means any lien, mortgage, security interest, pledge, restriction on
transferability, defect of title or other claim, charge or encumbrance of
any
nature whatsoever on any property or property interest.
(y) “Environmental
Condition” means any condition or circumstance, including the presence of
Hazardous Substances which does or would (i) require assessment, investigation,
abatement, correction, removal or remediation under any Environmental Law,
(ii)
give rise to any civil or criminal Liability under any Environmental Law,
(iii)
create or constitute a public or private nuisance or (iv) constitute a violation
of or non-compliance with any Environmental Law.
(z) “Environmental
Law” means all Laws, Court Orders, principles of common law, and permits,
licenses, registrations, approvals or other authorizations of any Governmental
Authority relating to Hazardous Substances, pollution, protection of the
environment or human health.
(aa) “ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
(bb) “Exchange
Act” means the Securities Exchange Act of 1934, as amended.
35
(cc) “FBCA”
means the Florida Business Corporation Act, as amended.
(dd) “GAAP”
means United States generally accepted accounting principles including those
set
forth: (i) in the opinions and pronouncements of the Accounting Principles
Board
of the American Institute of Certified Public Accountants, (ii) in the
statements and pronouncements of the Financial Accounting Standards Board,
(iii)
in such other statements by such other entity as approved by a significant
segment of the accounting profession, and (iv) the rules and regulations
of the
SEC governing the inclusion of financial statements (including pro forma
financial statements) in periodic reports required to be filed pursuant to
Section 13 of the Exchange Act, including opinions and pronouncements in
staff
accounting bulletins and similar written statements from the accounting staff
of
the SEC.
(ee) “Governmental
Authority” means any federal, state, local, municipal or foreign or other
government or governmental agency or body.
(ff) “Governmental
Permit” is defined in Section 4(i)(iii).
(gg) “Hazardous
Substances” means any material, waste or substance (including, without
limitation, any product) that may or could pose a hazard to the environment
or
human health or safety including, without limitation, (i) any “hazardous
substances” as defined by the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. §9601 et seq. and its implementing regulations,
(ii) any “extremely hazardous substance,” “hazardous chemical” or “toxic
chemical” as those terms are defined by the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. §11001 et seq. and its implementing regulations,
(iii) any “hazardous waste,” as defined under the Solid Waste Disposal Act, as
amended by the Resource Conservation and Xxxxxxxx Xxx, 00 X.X.X. §0000 et seq.
and its implementing regulations, (iv) any “pollutant,” as defined under the
Water Pollution Xxxxxxx Xxx, 00 X.X.X. §0000 et seq. and its implementing
regulations as any of such Laws in clauses (i) through (iv) may be amended
from
time to time, and (v) any material, substance or waste regulated under any
Laws
or Court Orders that currently exist or that may be enacted, promulgated
or
issued in the future by any Governmental Authority concerning protection
of the
environment, pollution, health or safety or the public welfare.
(hh) “Indemnified
Party” shall have the meaning set forth in Section 13(g)(ii).
(ii) “Indemnifying
Party” shall have the meaning set forth in Section 13(g)(ii).
(jj) “Indemnity
Notice” is defined in Section 13(g)(v).
(kk) “Intellectual
Property” means any Copyrights, Patents, Trademarks, technology, licenses, trade
secrets, computer software and other intellectual property.
(ll) “Law”
means any statute, law, ordinance, regulation, order, rule, common law
principles or consent agreements of any Governmental Authority, including,
without limitation, those covering environmental, energy, safety, health,
transportation, bribery, record keeping, zoning, antidiscrimination, antitrust,
wage and hour, and price and wage control matters.
(mm) “Lease”
is defined in Section 5(h).
(nn) “Letter
of Transmittal” is defined in Section 1(k).
36
(oo) “Liability”
means any direct or indirect liability, indebtedness, obligation, expense,
claim, loss, damage, deficiency, guaranty or endorsement of or by any Person,
whether known, unknown, accrued, contingent or otherwise.
(pp) “Litigation”
means any lawsuit, action, arbitration, administrative or other proceeding,
criminal prosecution or governmental investigation or inquiry.
(qq) “Losses”
means all Liabilities, obligations, changes of any kind, judgments, liens,
injunctions, charges, orders, decrees, rulings, demands, claims, losses,
dues,
assessments, Taxes, fines, penalties, expenses, fees, costs and amounts paid
in
settlement (including reasonable attorneys’ and expert witness fees and
disbursements in connection with investigations, defending or settling any
action or threatened action).
(rr) “Market
Price” means, as to the UniverCell Common Stock, the average of the closing
prices of such security’s sales on all domestic securities markets on which such
security may at the time be listed, or, if there have been no sales on any
such
exchange on any day, the average of the highest bid and lowest asked prices
on
all such markets at the end of such day, or, if on any day such security
is not
so listed, the average of the representative bid and asked prices quoted
on the
OTC Bulletin Board as of 4:00 P.M., New York time, on such day, or, if on
any
day such security is not quoted on the OTC Bulletin Board, the average of
the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization; in each such case averaged over a period
of
twenty (20) trading days immediately preceding the day as of which “Market
Price” is being determined. If at any time such security is not listed on any
domestic securities exchange or quoted on the OTC Bulletin Board or other
domestic over-the-counter market, the “Market Price” shall be the fair value
thereof as determined in good faith by a majority of the UniverCell’s Board of
Directors (determined without giving effect to any discount for minority
interest, any restrictions on transferability or any lack of liquidity of
the
UniverCell Common Stock or to the fact that the UniverCell has no class of
equity registered under the Securities Act, as amended), such fair value
to be
determined by reference to the price that would be paid between a fully informed
buyer and seller under no compulsion to buy or sell.
(ss) “Material
Adverse Effect,” as to UniverCell, means a fact or event which has had or is
reasonably likely to have a material adverse effect on the Assets, Business,
financial condition or results of operations of UniverCell, either as a
corporate entity or with its Subsidiaries taken as a whole, as indicated
by the
context in which used, and when used with respect to representations,
warranties, conditions, covenants or other provisions hereof means the
individual effect of the situation to which it relates and also the aggregate
effect of all similar situations unless the context indicates otherwise.
“Material Adverse Effect,”, as to DAYTONA BRANDS, means a fact or event which
has had or is reasonably likely to have a material adverse effect on the
Assets,
Business, financial condition or results of operations of DAYTONA BRANDS,
and
when used with respect to representations, warranties, conditions, covenants
or
other provisions hereof means the individual effect of the situation to which
it
relates and also the aggregate effect of all similar situations unless the
context indicates otherwise.
(tt) “Merger”
is defined in the Preamble.
(uu) “Merger
Subsidiary” is defined in the Preamble.
37
(vv) “Parties”
is defined in the Preamble.
(ww) “Patents”
means patents, patent applications, reissue patents, patents of addition,
divisions, renewals, continuations, continuations-in-part, substitutions,
additions and extensions of any of the foregoing.
(xx) “Person”
means an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof)
or
other entity of any kind.
(yy) “Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
(zz) “DAYTONA
BRANDS” is defined in the Preamble.
(aaa) “DAYTONA
BRANDS Assets” means the Assets of DAYTONA BRANDS.
(bbb) “DAYTONA
BRANDS Benefit Plan” means the Benefit Plans of DAYTONA BRANDS.
(ccc) “DAYTONA
BRANDS Business” means the Business of DAYTONA BRANDS.
(ddd) “DAYTONA
BRANDS Common Stock” means the common stock, par value $0.0001 per share, of
DAYTONA BRANDS.
(eee) “DAYTONA
BRANDS Indemnified Loss” is defined in Section 13(b).
(fff) “DAYTONA
BRANDS Indemnified Party” means DAYTONA BRANDS and its Affiliates and each of
their respective officers, directors, employees, agents and counsel; provided,
however, that no Person who indemnifies DAYTONA BRANDS Indemnified Parties
in
this Agreement in his capacity as a stockholder will be a DAYTONA BRANDS
Indemnified Party for purposes of this Agreement, notwithstanding that the
Person is a DAYTONA BRANDS Indemnified Party for purposes of one or more
of the
other Agreements.
(ggg) “DAYTONA
BRANDS's knowledge” or “knowledge of DAYTONA BRANDS” with reference to any item
means that which an executive officer of DAYTONA BRANDS actually
knows.
(hhh) “DAYTONA
BRANDS Parties” is defined in the Preamble
(iii) “DAYTONA
BRANDS Required Consents” is defined in Section 12(c).
(jjj) “DAYTONA
BRANDS Shareholder” means a recordholder, as of the Effective Time, of an
outstanding certificate or certificates that immediately prior to the Effective
Time represented DAYTONA BRANDS Shares.
(kkk) “DAYTONA
BRANDS Shares” is defined in Section 1(j).
(lll) “Regulation
D” is defined in Section 2(a)(ii).
(mmm) “SEC”
means the Securities and Exchange Commission.
38
(nnn) “Securities
Act” means the Securities Act of 1933, as amended.
(ooo) “Subsidiary”
means any corporation or other legal entity of which UniverCell or DAYTONA
BRANDS, as the case may be (either above or through or together with any
other
Subsidiary) owns, directly or indirectly, more than 50% of the stock or other
equity interests the holders of which
are
generally entitled to vote for the election of directors or other governing
body
of such corporation or other entity.
(ppp) “Surviving
Corporation” is defined in Section 1(a).
(qqq) “Taxes”
means any and all federal, state, local and foreign taxes, assessments and
other
governmental charges, duties, impositions, levies and liabilities, including,
without limitation, taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
gains, franchise, withholding, payroll, recapture, employment, excise,
unemployment, insurance, social security, business license, occupation, business
organization, stamp, environmental and property taxes, together with all
interest, penalties and additions imposed with respect to such amounts. For
purposes of this Agreement, “Taxes” also includes any obligations under any
agreements or arrangements with any Person with respect to the liability
for, or
sharing of, Taxes (including pursuant to Treas. Reg. Section 1.1502-6 or
comparable provisions of state, local or foreign Tax Law) and including any
liability for Taxes as a transferee or successor, by Contract or
otherwise.
(rrr) “Tax
Return” means any report, return, election, notice, estimate, declaration,
information statement and other forms and documents (including all schedules,
exhibits and other attachments thereto) relating to and filed or required
to be
filed with a taxing authority in connection with any Taxes (including, without
limitation, estimated Taxes).
(sss) “Termination
Date” is defined in Section 13(a).
(ttt) “Third
Party Claim” is defined in Section 13(g)(ii).
(uuu) “Trademarks”
means registered trademarks, registered service marks, trademark and service
xxxx applications and unregistered trademarks and service marks.
(vvv) “Transactions”
means the Merger, the exchange of the DAYTONA BRANDS Shares for the UniverCell
Shares and the other transactions contemplated by this Agreement and the
related
transaction agreements.
(www) “UniverCell”
is defined in the Preamble.
(xxx) “UniverCell
Assets” has the meaning set forth in Section 4(g).
(yyy) “UniverCell
Business” means the Business of UniverCell.
(zzz) “UniverCell
Common Stock” means the common stock, par value $0.0001 per share, of
UniverCell.
(aaaa) “UniverCell's
knowledge” or “knowledge of UniverCell” with reference to any item means that
which any officer and director of UniverCell actually knows.
(bbbb) “UniverCell
Required Consents” is defined in Section 11(c).
39
(cccc) “UniverCell
SEC Filings” means the reports and registration statements filed by UniverCell
with the SEC under the Securities Act or the Exchange Act for the years ended
December 31, 2003 and 2005 and the year ending December 31, 2006.
(dddd) “UniverCell
Shares” is defined in Section 1(j)(ii).
(eeee) “Warrants”
is defined in Section 3(b)(ii).
(ffff) “Wholly-Owned
Subsidiary” of any Person means any Subsidiary in which all of the stock or
other equity interests is owned, directly or indirectly, by such
Person.
16. General
Matters.
(a) Contents
of Agreement. This
Agreement, together with the other Transaction documents, set forth the entire
understanding of the Parties with respect to the Transactions contemplated
herein and therein and supersede all prior agreements or understandings among
the Parties regarding those matters.
(b) Amendment,
Parties In Interest, Assignment, Etc. This
Agreement may be amended, modified or supplemented only by a written instrument
duly executed by each of the Parties. No supplement, modification or amendment
of this Agreement will be binding unless made in a written instrument that
is
signed by all of the Parties and that specifically refers to this Agreement.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, legal representatives, successors and
permitted assigns of the Parties. No Party shall assign this Agreement or
any
right, benefit or obligation hereunder without the prior written consent
of the
other Parties hereto. Any term or provision of this Agreement may be waived
at
any time by the Party entitled to the benefit thereof by a written instrument
duly executed by such Party. The Parties shall execute and deliver any and
all
documents and take any and all other actions that may be deemed reasonably
necessary by their respective counsel to complete the Transactions. Nothing
in
this Agreement is intended or will be construed to confer on any Person other
than the Parties any rights or benefits hereunder.
(c) Interpretation.
Unless
the context of this Agreement clearly requires otherwise, (i) references
to the
plural include the singular, the singular the plural, the part the whole,
(ii)
references to any gender include all genders, (iii) “or” has the inclusive
meaning frequently identified with the phrase “and/or,” (iv) “including,”
“includes” or similar words has the inclusive meaning frequently identified with
the phrase “but not limited to” and (v) references to “hereunder” or “herein”
relate to this Agreement. The Section and other headings contained in this
Agreement are for reference purposes only and shall not control or affect
the
construction of this Agreement or the interpretation thereof in any respect.
Section, subsection, Schedule and Exhibit references are to this Agreement
unless otherwise specified. The Exhibits and Schedules referred to in this
Agreement will be deemed to be a part of this Agreement. Each accounting
term
used herein that is not specifically defined herein shall have the meaning
given
to it under GAAP.
(d) Notices.
All
notices, requests, demands, waivers and other communications that are required
or permitted hereunder shall be in writing and shall be sufficient and shall
be
deemed to have been duly given if sent to the addresses set forth below,
(i)
personally delivered, (ii) mailed, certified or registered mail with postage
prepaid, or (iii) sent by next day mail or delivery or by overnight delivery
by
a nationally recognized overnight courier all such notices requests, demands,
waivers and other communications shall be deemed to have been given; (iv)
if by
personal delivery, on the day after such delivery, (v) if by certified or
registered mail, on the third Business Day after the mailing thereof, or
(vi) if
by next day or overnight mail or delivery, on the day delivered.
40
| If to UniverCell Holdings, Inc.: | 0000 Xxxxxxx Xxxxxx #000 |
| Xxxxx Xxxxx, XX 00000 | |
| Attn.: Xxxx X. Xxxxx, CEO and President | |
| With a required copy to: | Xxxxx Xxxxxx Xxxxxxxxxx Lesser & Xxxxx, LLP |
| 000 Xxxxxxx Xxx. | |
| Xxx Xxxx, Xxx Xxxx 00000 | |
|
Attn:
Xxxxx Xxxxxx, Esq.
|
|
|
If
to the Controlling UniverCell Shareholders:
|
|
| Xxxx X. Xxxxx | |
| If to DAYTONA BRANDS: | |
|
Daytona
Brands, Inc.
|
|
| X/X Xxxxx Xxxxxxxx, Xxxxxxxxx | |
|
Xxxxxx,
XX 00000
|
|
| 000 Xxxxxx Xxxxxx Xxxxx Xxxxx 000 | |
| If to the Controlling DAYTONA BRANDS Shareholders: | |
|
Daytona
Brands, Inc.
|
|
| X/X Xxxxx Xxxxxxxx, Xxxxxxxxx | |
| Xxxxxx, XX 00000 | |
| 0000 Xxxxxx Xxxxxx Xxxxx Xxxxx 000 | |
|
With
a required copy to:
|
Xxx X. Xxxxxxx, Esq. |
|
XXXXXXX
& LANCASTER, LP
|
|
| 00000 Xxx Xxxxxx Xxxxxx | |
|
Xxx
Xxxxxx Xxxxx 000
|
|
|
Xxxxxx,
XX 00000
|
(e) Governing
Law and Venue. This
Agreement shall be construed and interpreted in accordance with the Laws
of the
State of Florida without regard to its provisions concerning conflict of
laws.
Any dispute or controversy concerning or relating to this Agreement shall
be
exclusively resolved in the courts of the State of Florida located in Monmouth
County, Florida, and
in
the federal courts of the United
States of America located
in the State
of
Florida.
Each of
the Parties
hereby
irrevocably submits to the exclusive jurisdiction of the courts of the
State
of
Florida located
in Monmouth
County, Florida and
the
federal courts of the United
States of America located
in the State
of
Florida.
(f) Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
binding as of the date first written above, and all of which shall constitute
one and the same instrument. Each such copy shall be deemed an original,
and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
(g) Waivers.
Compliance
with the provisions of this Agreement may be waived only by a written instrument
specifically referring to this Agreement and signed by the Party waiving
compliance. No course of dealing, nor any failure or delay in exercising
any
right, will be construed as a waiver, and no single or partial exercise of
a
right will preclude any other or further exercise of that or any other
right.
(h) Enforcement
of Agreement. The
Parties agree that irreparable damage would occur in the event that any of
the
provisions of this Agreement was not performed in accordance with its specific
terms or was otherwise breached. It is accordingly agreed that the parties
shall
be entitled to an injunction to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of competent
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or equity.
(i) WAIVER
OF JURY TRIAL. EACH PARTY ACKNOWLEDGES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES,
AND
THEREFORE EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(I)
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES
THIS
WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS
SECTION .
(j) Severability.
If
any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any Law or public policy, all other conditions and provisions
of this Agreement shall nevertheless remain in full force and effect. Upon
such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable Law in an acceptable
manner to the end that the Transactions are fulfilled to the extent
possible.
41
IN
WITNESS WHEREOF, this Agreement has been executed by the Parties as of the
day
and year first written above.
|
UniverCell
Holdings, Inc.
|
||
| |
|
|
| By: | /s/ | |
|
Name: Xxxx X. Xxxxx |
||
| Title: Chief Executive Officer | ||
|
DAYTONA
BRANDS Corporation
|
||
| |
|
|
| By: | /s/ | |
|
Name: Xxxxx Xxxxxxxx |
||
|
Title
: President and Chief Executive
Officer
|
||
| UniverCell DAYTONA BRANDS Acquisition Corporation | ||
| |
|
|
| By: | /s/ | |
|
Name: Xxxx X. Xxxxx |
||
|
Title:
Chief Executive Officer
|
||
|
The
Controlling DAYTONA BRANDS
Shareholders
|
||
| |
|
|
|
Xxxxx Xxxxxxxx |
||
|
Xxx Xxxxxx |
||
|
|
||
|
|
||
42
| The Controlling UniverCell Shareholder | ||
| |
|
|
|
Xxxx X. Xxxxx |
||
43
EXHIBITS
[Omitted
from filing]
