Exhibit 2.1
AGREEMENT AND PLAN OF merger
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into on
January 15, 2001, among Eonnet Technologies, Inc., a Pennsylvania corporation
("ETI"), XxxxxxXxxx.xxx, Inc., a Florida corporation ("DoctorSurf"), and Eonnet
Acquisition, Inc., a Pennsylvania corporation ("Newco"). DoctorSurf, Newco, and
ETI are referred to collectively in this Agreement as the "Parties." Xxxxxxx
Xxxxxx and Xxxx Xxxxx (the "ETI Shareholders") are executing this Agreement for
the limited purpose of undertaking the indemnification obligations in Article
VIII.
WHEREAS, the respective Boards of Directors of DoctorSurf, Newco and ETI
and the respective shareholders of Newco and ETI have approved this Agreement
whereby Newco will merge with and into ETI with ETI as the surviving corporation
(the "Surviving Corporation"), in accordance with the terms and conditions set
forth in this Agreement (the "Merger");
WHEREAS, for Federal income tax purposes, it is intended that (a) the
Merger will qualify as a statutory merger under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code") and (b) this Agreement constitutes
a plan of reorganization;
WHEREAS, Newco is a wholly owned subsidiary of DoctorSurf that was formed
for the purpose of facilitating the Merger, and Newco will not exist following
the completion of the Merger;
WHEREAS, the ETI Shareholders hold approximately 85% of the outstanding
capital stock of ETI;
WHEREAS, following the consummation of the Merger, DoctorSurf will have
3,000,000 shares of its common stock outstanding, 2,000,000 of which were
outstanding following a reverse stock split completed before the Merger and
1,000,000 of which will be issued to the shareholders of ETI following the
Merger;
WHEREAS, following the Merger, DoctorSurf intends to file a registration
statement with the Securities and Exchange Commission for an underwritten public
offering of up to 2,000,0000 shares of common stock of DoctorSurf;
WHEREAS, DoctorSurf, ETI, and the ETI shareholders desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement; and
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
(a) The Merger
(1) The Merger; Filing; and Effective Time of the Merger. Upon the terms
and subject to the conditions of this Agreement and in accordance with the
Pennsylvania Business Corporation Law ("PBCL"), at the Effective Time (as
defined below), Newco shall be merged with and into ETI. As a result of the
Merger, the separate corporate existence of Newco shall cease and ETI shall be
the surviving corporation in the Merger. The parties hereto shall cause the
Merger to be consummated as soon as practicable on the Closing Date (as defined
below) by filing articles of merger (the "Articles of Merger") with the
Secretary of State of the State of Pennsylvania in such form as required by and
executed in accordance with the relevant provisions of the PBCL (the date and
time of the filing of the Articles of Merger with the Secretary of State of the
State of Pennsylvania (or such later time as is agreed to by the parties hereto
and set forth therein) being the "Effective Time").
(2) Closing. Unless this Agreement shall have been terminated pursuant to
Article VII and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the closing of the Merger (the "Closing") shall take place
at the offices of DoctorSurf, 0000 000xx Xxxxxx Xxxxx Xxxxx 000, Xxxxx, XX,
commencing at 9:00 a.m. local time on (i) January __, 2001, or (ii) if all of
the conditions to the obligations of the Parties to consummate the transactions
contemplated hereby have not been satisfied or waived by such date, as soon as
practicable (and in any event no later than one business day) after satisfaction
or waiver of the conditions (excluding the delivery of any documents to be
delivered at the Closing) set forth in Article VI (the "Closing Date"), unless
another date or place is agreed to in writing by the Parties.
(3) Effect of the Merger. The Merger shall have the effects set forth in
the PBCL.
(4) Articles of Incorporation and By-laws. The Articles of Incorporation
of ETI, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law. The By-laws of ETI as in
effect immediately prior to the Effective Time shall be the By-laws of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law.
(5) Directors. The directors of ETI immediately prior to the Effective
Time shall be the directors of the Surviving Corporation until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
(6) Officers. The officers of ETI immediately prior to the Effective Time
shall be the officers of the Surviving Corporation until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
(7) Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of any Party or the holder of any of
the shares described in this section:
(i) Each share of common stock of ETI, $.01 par value per share
("ETI Common Stock") issued and outstanding immediately prior to the
Effective Time (other than shares held in treasury) shall be converted
into and represent the right to receive a number of shares of common
stock, $.01 par value per share, of DoctorSurf ("DoctorSurf Common Stock")
equal to an amount determined by dividing (i) 1,000,000 by (ii) the number
of shares of ETI Common Stock outstanding as of the Effective Time. A
total of 1,000,000 shares of DoctorSurf Common Stock shall be issued in
connection with the Merger to holders of ETI Common Stock.
(ii) In the Merger, each issued and outstanding share of common
stock of Newco shall be converted into one issued and outstanding share of
common stock of the Surviving Corporation.
(8) Exchange of Shares. On the Closing Date, each shareholder of ETI shall
surrender to DoctorSurf his, her, or its certificates representing outstanding
shares of ETI Common Stock. After the Effective Time and as soon as practicable
after each ETI shareholder surrenders to DoctorSurf his, her, or its
certificates for the outstanding shares of ETI Common Stock, the shareholder
shall be issued certificates for his, her, or its pro rata portion of 1,000,000
shares of DoctorSurf Common Stock pursuant to Section 1.7. If any shareholder of
ETI is entitled in the Merger to a fractional share of DoctorSurf Common Stock
that is less than one-half, the shareholder shall not receive that fractional
share; if any ETI shareholder is entitled to a fractional share of DoctorSurf
Common Stock that is one-half or more, the shareholder shall receive one whole
share of DoctorSurf Common Stock in lieu of that fractional share.
(9) Actions at the Closing. At the Closing, (a) ETI shall deliver to
DoctorSurf the various certificates, instruments, and documents referred to in
(f)(2), (b) DoctorSurf shall deliver to ETI the various certificates,
instruments and documents referred to in (f)(3), and (c) ETI and Newco shall
file the Articles of Merger with the Secretary of State of the State of
Pennsylvania.
(10) Additional Action. The Surviving Corporation may, at any time after
the Effective Time, take any action, including executing and delivering any
document, in the name and on behalf of either ETI or Newco, in order to
consummate the transactions contemplated by this Agreement.
(b) Representations and Warranties of ETI
ETI makes the representations and warranties set forth below to DoctorSurf
and Newco, except as set forth in the disclosure schedule provided by ETI to
DoctorSurf on the date hereof (the "ETI Disclosure Schedule"), each of which is
true and correct on the date hereof and shall be true and correct on the Closing
Date. The Disclosure Schedule shall be arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Article II.
(1) Organization, Qualification and Corporate Power. ETI is a corporation
validly existing and in good standing under the laws of the State of
Pennsylvania. ETI is duly qualified to conduct business under the laws of each
jurisdiction in which the nature of its business requires such qualification,
except where the failure to be so qualified would not be reasonably expected to
have a material adverse effect. ETI has all requisite corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it.
(2) Capitalization. The authorized capital stock of ETI consists of
1,000,000 shares of ETI Common Stock, of which 1,000,000 shares are outstanding
as of the date hereof. (2) of the ETI Disclosure Schedule sets forth a list of
all stockholders of ETI as of the date of this Agreement, indicating the number
and class of shares held by each stockholder. All of the issued and outstanding
shares of capital stock of ETI are duly authorized, validly issued, fully paid,
and nonassessable. There are no outstanding or authorized options, warrants,
rights, convertible securities, agreements or commitments to which ETI is a
party or which are binding upon ETI providing for the issuance, disposition or
acquisition of any of its capital stock, other than as set forth in (2) of the
ETI Disclosure Schedule.
(3) Authorization of Transaction. ETI has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery by ETI of this Agreement and the
consummation by it of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate and stockholder action on the part
of ETI. This Agreement has been duly and validly executed and delivered by ETI,
and constitutes a valid and binding obligation of ETI, enforceable against it in
accordance with its terms, except as the validity, enforceability and binding
effect may be limited by bankruptcy, insolvency, reorganization, moratorium, or
other laws affecting creditors' rights generally and by general equitable
principles.
(4) Noncontravention. Subject to the filing of the Articles of Merger as
required by the PBCL, neither the execution and delivery by ETI of this
Agreement, nor the consummation by ETI of the transactions contemplated hereby,
will (a) conflict with or violate any provision of the
Articles of Incorporation or Bylaws of ETI, (b) require, on the part of ETI, any
filing with, or any permit, authorization, consent, waiver or approval of, any
court, tribunal, administrative agency, or commission or other governmental or
regulatory authority or agency (a "Governmental Entity"), (c) conflict with,
result in a breach of, constitute a default under, result in the acceleration of
obligations under, or create in any party the right to terminate any contract or
instrument to which ETI is bound or to which any of its assets are subject, or
(d) violate any statute, law, ordinance, rule or regulation or any order, writ,
injunction, decree, judgment or stipulation (an "Order).
(5) Subsidiaries.
(i) Except as set forth in (5) of the ETI Disclosure Schedule, ETI
does not own any capital stock or other equity interest in any entity.
(6) Financial Statements. Included in (6) of the ETI Disclosure Schedule
are (a) the audited consolidated balance sheets of ETI as of December 31, 1999
and statements of income, changes in stockholders' equity and cash flows of ETI
for the year then ended; and (b) the unaudited consolidated balance sheet (the
"Most Recent Balance Sheet") and statements of income, changes in stockholders'
equity and cash flows as of and for the three months ended as of September 30,
2000 (the "Most Recent Balance Sheet Date"). Such financial statements
(collectively, the "ETI Financial Statements") have been prepared in accordance
with GAAP (except, in the case of unaudited statements, for the absence of
footnote disclosure) applied on a consistent basis throughout the periods
covered thereby, fairly present in all material respects the consolidated
financial condition, results of operations and cash flows of ETI as of the dates
and for the years and periods indicated; provided, however, that the ETI
Financial Statements referred to in clause (b) above are subject to normal
recurring year-end adjustments.
(7) Absence of Undisclosed Liabilities. Except as and to the extent (i)
reflected in the ETI Financial Statements, (ii) incurred since the Most Recent
Balance Sheet Date in the ordinary course of business and consistent with past
practice, or (iii) set forth in (7) of the ETI Disclosure Schedule, ETI has no
liabilities or obligations of any kind or nature, whether known or unknown or
secured or unsecured, whether absolute, accrued, contingent or otherwise, and
whether due or to become due, which either individually or in the aggregate are
material.
(8) Accounts Receivable. The accounts receivable of ETI as set forth on
the Most Recent Balance Sheet or arising since the date thereof have arisen
solely out of bona fide sales and deliveries of goods, performance of services,
and other business transactions in the ordinary course of business; and are not
subject to valid defenses, set-offs or counterclaims.
(9) Absence of Certain Changes. Except as set forth in (9) of the ETI
Disclosure Schedule, since the Most Recent Balance Sheet Date, (a) there has not
occurred any material adverse change in the assets, liabilities, financial
condition, prospects, or results of operations of ETI, taken as a whole, and (b)
ETI has not taken any of the actions set forth in (d)(1).
(10) Taxes. Except as set forth on (10) of the ETI Disclosure Schedule:
(i) ETI has duly and timely filed or caused to be filed all federal,
state, local and foreign income, franchise, excise, payroll, sales and
use, property, withholding and other tax returns, reports, estimates and
information and other statements or returns (collectively, "Tax Returns")
required to be filed by or on behalf of ETI, and ETI and any affiliated,
consolidated, combined or unitary group of which it is or was a member (a
"Tax Group') have duly and timely filed or caused to be filed all Tax
Returns required to be filed by or on behalf of ETI, pursuant to any
applicable federal, state, local or foreign tax laws for all years and
periods for which such Tax Returns have become due, and (ii) all such Tax
Returns were correct in all material respects as filed.
(ii) For purposes of this Agreement, "Tax" and "Taxes" shall mean
(i) any net income, alternative or add-on minimum tax, gross income, gross
receipts, sales, use, ad
valorem, value added, transfer, gains, franchise, profits, license,
withholding on amounts paid or received, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit taxes, custom duties or other taxes, governmental fees or other
like assessments or charges of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by
any governmental authority responsible for the imposition of any such
taxes (domestic or foreign) and (ii) liability of ETI for the payment of
any amounts of the type described in (i) as a result of being a member of
a Tax Group for federal, state, local or foreign Tax purposes, or being a
party to any agreement or arrangement whereby liability of ETI for
payments of such amounts was determined or taken into account with
reference to the liability of any other person for any period prior to, or
up to and including, the Closing Date, and (iii) liability of ETI with
respect to the payment of any amounts described in (i) as a result of any
express or implied obligation to indemnify any other person.
(iii) ETI has paid all Taxes, or where payment is not yet due, has
established, consistent with past practice, an adequate reserve determined
in accordance with GAAP on its books and records for the payment of such
Taxes with respect to any taxable period (or portion thereof) ending on or
prior to the Closing Date.
(iv) (10) of the ETI Disclosure Schedule indicates those Tax Returns
of ETI or of any Tax Group that either have been audited or are currently
the subject of an audit. There is no dispute or claim (including any
anticipated claim) concerning any Taxes of ETI or any such Tax Group
either (i) claimed or raised by any authority in writing or (ii) as to
which ETI has knowledge.
(v) No deficiency or adjustment for any Taxes of ETI or any Tax
Group has been proposed, asserted or assessed in writing, and no federal,
state, local or foreign audits or other administrative proceedings or
court proceedings are pending with regard to any such Taxes of ETI or any
member of a Tax Group; no waiver or consent extending any statute of
limitations for the assessment or collection of any Taxes has been
executed by or on behalf of ETI, nor have any requests for such waivers or
consents been proposed in writing.
(vi) ETI has complied with all applicable laws relating to the
withholding of Taxes (including withholding of Taxes pursuant to Sections
1441 and 1442 of the Code) and has, within the time and within the manner
prescribed by law, withheld and paid over to the proper taxing authorities
all amounts required to be withheld and paid over under all applicable
laws in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party.
(11) Owned Real Property. ETI owns no real property.
(12) Real Property Leases. (12) of the ETI Disclosure Schedule lists all
real property leased or subleased to or by ETI. With respect to each lease and
sublease listed in (12) of the ETI Disclosure Schedule, the lease or sublease is
a valid agreement, without any material default of ETI or any party thereto.
(13) Title to Properties. ETI has good and valid title to all of its
properties and assets, including without limitation those reflected as owned on
the Most Recent Balance Sheet (other than properties and assets disposed of in
the ordinary course of business since the date of such ETI Financial
Statements), free and clear of any mortgages, pledges, security interests,
liens, charges and other encumbrances, except for (i) capital leases which are
reflected in the ETI Financial Statements, (ii) liens described in (13) to the
ETI Disclosure Schedule, (iii) liens for current taxes not yet due and payable,
(iv) liens imposed by law and incurred in the ordinary course of business for
obligations not past due to couriers, warehousemen, laborers, materialmen and
the like, (v) liens in respect of pledges or deposits under workers'
compensation laws or similar legislation, and (vi) minor imperfections of title,
none of which are material in nature or amount and which do not materially
detract from the value or impair the use of the property subject thereto or
impair the operations or proposed operations of ETI.
(14) Intellectual Property.
(i) ETI owns or has the valid and enforceable right to use all
Intellectual Property used in the operation of its business as presently
conducted, and the consummation of the transactions contemplated hereby
will not alter or impair any such rights to use such Intellectual
Property. No claims have been asserted against, or with respect to the use
by, ETI of its Intellectual Property or otherwise for patent, copyright or
trademark infringement. To ETI's knowledge, no other person or entity is
infringing, violating or misappropriating any of the Intellectual Property
of ETI. (14) of the ETI Disclosure Schedule lists each patent, patent
application, copyright registration, and trademark or service xxxx
registration or application therefor of ETI. To ETI's knowledge, none of
the activities or business presently conducted by ETI infringes or
violates, or constitutes a misappropriation of, any Intellectual Property
rights of any person or entity.
(ii) For purposes of this Agreement, "Intellectual Property" shall
mean patents, trademarks (registered or unregistered), service marks,
brand names, trade dress, trade names, copyrights, the goodwill associated
with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or
application; inventions, whether patented, patentable or not patentable in
any jurisdiction; mask works, trade secrets and confidential proprietary
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; writings and other works of commercial value,
whether copyrighted, copyrightable or not copyrightable in any
jurisdiction; registration or applications for registration of copyrights
in any jurisdiction, and any renewals or extensions thereof; any similar
intellectual property or proprietary rights; any computer programs or
software (including source code, object code and data), other than
commercially available computer programs and software; and licenses
relating to the foregoing.
(15) Contracts.
(i) Except as set forth on (15) of the ETI Disclosure Schedule, ETI
is not a party to or bound by, and none of its properties or assets are
bound by or subject to, any written or oral:
(1) Contract not made in the ordinary course of business;
(2) employment agreement that is not terminable at will by
both without any penalty and without any obligation of ETI to pay
severance or other amounts (including any bonus);
(3) any agreement under which it has created, incurred,
assumed, or guaranteed indebtedness (including capitalized lease
obligations) involving more than $10,000;
(4) any other agreement requiring the payment or receipt by
ETI of more than $10,000 annually;
(5) Contract pursuant to which ETI has agreed not to compete
with any person or to engage in any activity or business;
(6) Contract which is material in any respect containing any
provisions dealing with a "change of control" or similar event with
respect to ETI;
(ii) Each material contract of ETI is in full force and effect and
is a legal, valid and binding agreement of ETI and of each other party
thereto, enforceable against ETI, and against the other party or parties
thereto, in each case, in accordance with its terms. ETI has performed or
is performing all material obligations required to be performed by it
under each of its material contracts and is not (with or without notice or
lapse of time or both) in breach or default in any material respect
thereunder; and, to the knowledge of ETI, no other party to any of its
material contracts is (with or without notice or lapse of time or both) in
breach or default in any material respect thereunder. ETI does not know of
any circumstances existing on the date of this Agreement that are
reasonably likely to (x) materially adversely affect its ability to
perform its obligations under any material contract or (y) materially
adversely affect the ability of the other party to any material contract
to perform their obligations thereunder.
(16) Insurance. ETI has in effect insurance in such amounts and against
such risks as is customary for companies engaged in similar businesses to ETI to
protect the employees, properties, assets, businesses and operations of ETI.
(17) Litigation. Except as set forth in (17) of the ETI Disclosure
Schedule, there are no suits, actions, proceedings, or claims ("Litigation")
pending or, to ETI's knowledge, threatened, against ETI or its properties,
assets or business. There is no Order to which ETI is a party, or involving the
assets or business of ETI, which is unsatisfied or which requires continuing
compliance therewith by ETI.
(18) Affiliated Transactions. Except as set forth in (18) of the
Disclosure Schedule, no contracts or agreements are in effect as of the date
hereof between ETI, on the one hand, and its affiliates, officers, or directors
on the other hand.
(19) Labor Matters. ETI is not a party to or bound by any collective
bargaining agreement, nor has any of them experienced any strikes, grievances,
claims of unfair labor practices or other collective bargaining dispute.
(20) Employee Benefits.
(i) (20) of the Disclosure Schedule contains a list of all pension,
profit sharing, retirement, incentive bonus or other bonus, medical,
dental, life, accident insurance, benefit, employee welfare, disability,
group insurance, stock purchase, stock option, stock appreciation, stock
bonus, executive or deferred compensation, hospitalization and other
similar fringe or employee benefit plans, programs or arrangements or
other forms of incentive compensation or post-retirement compensation
maintained or contributed by ETI ("Employee Benefit Plans").
(ii) Each Employee Benefit Plan has been administered in all
material respects in accordance with its terms, and ETI has in all
material respects met its obligations with respect to such Employee
Benefit Plan and has made all required contributions thereto. The Company
and each Employee Benefit Plan are in compliance in all material respects
with the currently applicable provisions of ERISA and the Internal Revenue
Code and the regulations thereunder.
(21) Environmental Matters. To ETI's knowledge, ETI has complied and is in
compliance with all applicable environmental laws, and there is no pending or,
to ETI's knowledge, threatened, civil or criminal litigation, written notice of
violation, administrative proceeding, or investigation by any Governmental
Entity or person, relating to or otherwise arising under any environmental law
involving ETI.
(22) Legal Compliance. To ETI's knowledge, ETI is in compliance with all
applicable laws currently in effect of any federal, state or local government or
any Governmental Entity.
(23) Customers. No creditor, supplier, employee, client or other customer
or other person having a material business relationship with ETI has informed
any officer of ETI orally or in writing or has informed ETI in writing that such
person intends to materially change the relationship because of the transactions
contemplated by this Agreement.
(24) Brokers' Fees. ETI has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
(25) Employee Matters. To the knowledge of ETI, no director, officer or
other employee of ETI is a party to or bound by any contract, or subject to any
order of any governmental entity, that may interfere with the use of such
director's, officer's or other employee's best efforts to promote the interests
of ETI, conflict with the business of ETI (as now conducted or as proposed to be
conducted) or the transactions contemplated by this Agreement or will have a
material adverse effect on ETI. To the knowledge of ETI, no activity of any
employee of ETI as or while an employee of ETI has caused a violation of any
employment agreement, confidentiality agreement, patent disclosure agreement or
other Contract. To the knowledge of ETI, the execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation to or loss of a material benefit
under, any Contract under which any such employees are now obligated.
(26) Disclosure . No representation or warranty by ETI contained in this
Agreement and the ETI Disclosure Schedule contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary, in light of the circumstances under which it was or will be made, to
make the statements herein or therein not misleading.
(c) Representations and Warranties of DoctorSurf
DoctorSurf makes the representations and warranties set forth below to the
ETI Shareholders, except as set forth in the disclosure schedule provided by
DoctorSurf to ETI on the date hereof (the "DoctorSurf Disclosure Schedule"),
each of which is true and correct on the date hereof and shall be true and
correct on the Closing Date. The Disclosure Schedule shall be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this Article III.
(1) Organization, Qualification and Corporate Power. DoctorSurf is a
corporation validly existing and in good standing under the laws of the State of
Florida. DoctorSurf is duly qualified to conduct business under the laws of each
jurisdiction in which the nature of its business requires such qualification,
except where the failure to be so qualified would not be reasonably expected to
have a material adverse effect. DoctorSurf has all requisite corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it.
(2) Capitalization. The authorized capital stock of DoctorSurf consists of
95,000,000 shares of DoctorSurf Common Stock, of which 1,899,187 shares are
outstanding as of the date hereof, and 5,000,000 of Preferred Stock, none of
which are outstanding as of the date hereof. An additional 111,111 shares of
DoctorSurf Common Stock have been reserved for issuance pursuant to DoctorSurf's
registered free stock offering. All of the issued and outstanding shares of
capital stock of DoctorSurf are duly authorized, validly issued, fully paid, and
nonassessable. There are no outstanding or authorized options, warrants, rights,
convertible securities, agreements or commitments to which DoctorSurf is a party
or which are binding upon DoctorSurf providing for the issuance, disposition or
acquisition of any of its capital stock, other than as set forth in (2) of the
DoctorSurf Disclosure Schedule.
(3) Authorization of Transaction. DoctorSurf has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery by DoctorSurf of this Agreement and the
consummation by it of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate and stockholder action on the part
of DoctorSurf. This Agreement has been duly and validly executed and delivered
by DoctorSurf, and constitutes a valid and binding obligation of DoctorSurf,
enforceable against it in accordance with its terms, except as the validity,
enforceability and binding effect may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other laws affecting creditors' rights generally
and by general equitable principles.
(4) Noncontravention. Subject to the filing of the Articles of Merger as
required by the PBCL, neither the execution and delivery by DoctorSurf of this
Agreement, nor the consummation by DoctorSurf of the transactions contemplated
hereby, will (a) conflict with or violate any provision of the Articles of
Incorporation or Bylaws of DoctorSurf, (b) require, on the part of DoctorSurf or
any subsidiary, any filing with, or any permit, authorization, consent, waiver
or approval of, any Governmental Entity, (c) conflict with, result in a breach
of, constitute a default under, result in the acceleration of obligations under,
or create in any party the right to terminate any contract or instrument to
which DoctorSurf or any of its Subsidiaries are bound or to which any of their
assets are subject, or (d) violate any statute, law, ordinance, rule or
regulation or any Order.
(5) Subsidiaries.
(i) Except as set forth in (5) of the DoctorSurf Disclosure
Schedule, DoctorSurf does not own any capital stock or other equity
interest in any entity. (5) of the DoctorSurf Disclosure Schedule sets
forth: (i) the name of each of its subsidiaries; (ii) the number and type
of outstanding equity securities of each subsidiary and a list of the
holders thereof, and (iii) the jurisdiction of organization of each
subsidiary.
(ii) Each subsidiary of DoctorSurf is a corporation validly existing
and in corporate good standing under the laws of the jurisdiction of its
incorporation. Each subsidiary of DoctorSurf is duly qualified to conduct
business and is in corporate good standing under the laws of each
jurisdiction in which the nature of its businesses or the ownership or
leasing of its properties requires such qualification, except where the
failure to be so qualified or in good standing would not reasonably be
expected to have a material adverse effect. Each subsidiary of DoctorSurf
has all requisite corporate power and authority to carry on the businesses
in which it is engaged and to own and use the properties owned and used by
it,. There are no outstanding or authorized options, warrants, rights,
agreements, convertible securities or commitments to which DoctorSurf or
any subsidiary is a party or which are binding on any of them providing
for the issuance, disposition or acquisition of any capital stock or other
equity interests of any subsidiary of DoctorSurf.
(6) Financial Statements. Included in (6) of the DoctorSurf Disclosure
Schedule are (a) the audited consolidated balance sheets of DoctorSurf as of
December 31, 1999 and statements of income, changes in stockholders' equity and
cash flows of DoctorSurf for the year then ended; and (b) the Most Recent
Balance Sheet and statements of income, changes in stockholders' equity and cash
flows as of and for the Most Recent Balance Sheet Date. Such financial
statements (collectively, the "DS Financial Statements") have been prepared in
accordance with GAAP (except, in the case of unaudited statements, for the
absence of footnote disclosure) applied on a consistent basis throughout the
periods covered thereby, fairly present in all material respects the
consolidated financial condition, results of operations and cash flows of
DoctorSurf and the subsidiaries as of the dates and for the years and periods
indicated; provided, however, that the DS Financial Statements referred to in
clause (b) above are subject to normal recurring year-end adjustments.
(7) Absence of Undisclosed Liabilities. Except as and to the extent (i)
reflected in the DS Financial Statements, (ii) incurred since the Most Recent
Balance Sheet Date in the ordinary course of business and consistent with past
practice, or (iii) set forth in (7) of the DoctorSurf Disclosure Schedule,
DoctorSurf has no liabilities or obligations of any kind or nature, whether
known or unknown or secured or unsecured, whether absolute, accrued, contingent
or otherwise, and whether due or to become due, which either individually or in
the aggregate are material.
(8) Accounts Receivable. The accounts receivable of DoctorSurf as set
forth on the Most Recent Balance Sheet or arising since the date thereof have
arisen solely out of bona fide sales
and deliveries of goods, performance of services, and other business
transactions in the ordinary course of business; and are not subject to valid
defenses, set-offs or counterclaims.
(9) Absence of Certain Changes. Except as set forth in (9) of the
DoctorSurf Disclosure Schedule, since the Most Recent Balance Sheet Date, (a)
there has not occurred any material adverse change in the assets, liabilities,
financial condition, prospects, or results of operations of DoctorSurf and its
subsidiaries, taken as a whole, and (b) neither DoctorSurf nor any subsidiary
has taken any of the actions set forth in (d)(2).
(10) Taxes. Except as set forth on (10) of the DoctorSurf Disclosure
Schedule:
(i) DoctorSurf and each subsidiary has duly and timely filed or
caused to be filed all Tax Returns required to be filed by or on behalf of
DoctorSurf or any subsidiary, as the case may be, and DoctorSurf and each
subsidiary and any Tax Group have duly and timely filed or caused to be
filed all Tax Returns required to be filed by or on behalf of DoctorSurf
or any subsidiary as the case may be, pursuant to any applicable federal,
state, local or foreign tax laws for all years and periods for which such
Tax Returns have become due, and (ii) all such Tax Returns were correct in
all material respects as filed.
(ii) DoctorSurf and each subsidiary has paid all Taxes, or where
payment is not yet due, has established, consistent with past practice, an
adequate reserve determined in accordance with GAAP on its books and
records for the payment of such Taxes with respect to any taxable period
(or portion thereof) ending on or prior to the Closing Date.
(iii) (10) of the DoctorSurf Disclosure Schedule indicates those Tax
Returns of DoctorSurf, any subsidiary, or of any Tax Group that either
have been audited or are currently the subject of an audit. There is no
dispute or claim (including any anticipated claim) concerning any Taxes of
DoctorSurf, any such subsidiary, or any such Tax Group either (i) claimed
or raised by any authority in writing or (ii) as to which DoctorSurf has
knowledge.
(iv) No deficiency or adjustment for any Taxes of DoctorSurf, any
subsidiary, or any Tax Group has been proposed, asserted or assessed in
writing, and no federal, state, local or foreign audits or other
administrative proceedings or court proceedings are pending with regard to
any such Taxes of DoctorSurf, any subsidiary, or any member of a Tax
Group; no waiver or consent extending any statute of limitations for the
assessment or collection of any Taxes has been executed by or on behalf of
DoctorSurf or any subsidiary, nor have any requests for such waivers or
consents been proposed in writing.
(v) DoctorSurf and each subsidiary has complied with all applicable
laws relating to the withholding of Taxes (including withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code) and has, within the time
and within the manner prescribed by law, withheld and paid over to the
proper taxing authorities all amounts required to be withheld and paid
over under all applicable laws in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder or other third
party.
(11) Owned Real Property. Neither DoctorSurf nor any subsidiary owns any
real property.
(12) Real Property Leases. (12) of the DoctorSurf Disclosure Schedule
lists all real property leased or subleased to or by DoctorSurf or any
subsidiary. With respect to each lease and sublease listed in (12) of the
DoctorSurf Disclosure Schedule, the lease or sublease is a valid agreement,
without any material default of DoctorSurf or any party thereto.
(13) Title to Properties. DoctorSurf has good and valid title to all of
its properties and assets, including without limitation those reflected as owned
on the Most Recent Balance
Sheet (other than properties and assets disposed of in the ordinary course of
business since the date of such DS Financial Statements), free and clear of any
mortgages, pledges, security interests, liens, charges and other encumbrances,
except for (i) capital leases which are reflected in the DS Financial
Statements, (ii) liens described in (13) to the DoctorSurf Disclosure Schedule,
(iii) liens for current taxes not yet due and payable, (iv) liens imposed by law
and incurred in the ordinary course of business for obligations not past due to
couriers, warehousemen, laborers, materialmen and the like, (v) liens in respect
of pledges or deposits under workers' compensation laws or similar legislation,
and (vi) minor imperfections of title, none of which are material in nature or
amount and which do not materially detract from the value or impair the use of
the property subject thereto or impair the operations or proposed operations of
DoctorSurf.
(14) Intellectual Property.
(i) Each of DoctorSurf and each subsidiary owns or has the valid and
enforceable right to use all Intellectual Property used in the operation
of its business as presently conducted, and the consummation of the
transactions contemplated hereby will not alter or impair any such rights
to use such Intellectual Property. No claims have been asserted against,
or with respect to the use by, DoctorSurf of its Intellectual Property or
otherwise for patent, copyright or trademark infringement. To DoctorSurf's
knowledge, no other person or entity is infringing, violating or
misappropriating any of the Intellectual Property of DoctorSurf or any
subsidiary. (14) of the DoctorSurf Disclosure Schedule lists each patent,
patent application, copyright registration, and trademark or service xxxx
registration or application therefor of DoctorSurf or any subsidiary. To
DoctorSurf's knowledge, none of the activities or business presently
conducted by DoctorSurf or a subsidiary infringes or violates, or
constitutes a misappropriation of, any Intellectual Property rights of any
person or entity.
(15) Contracts.
(i) Except as set forth on (15) of the DoctorSurf Disclosure
Schedule, none of DoctorSurf or any of its subsidiaries is a party to or
bound by, and none of their properties or assets are bound by or subject
to, any written or oral:
(1) Contract not made in the ordinary course of business;
(2) employment agreement that is not terminable at will by
DoctorSurf or such subsidiary both without any penalty and without
any obligation of DoctorSurf or any of its subsidiaries to pay
severance or other amounts (including any bonus);
(3) any agreement under which it has created, incurred,
assumed, or guaranteed indebtedness (including capitalized lease
obligations) involving more than $10,000;
(4) any other agreement requiring the payment or receipt by
DoctorSurf or a subsidiary of more than $10,000 annually;
(5) Contract pursuant to which DoctorSurf or any of its
subsidiaries has agreed not to compete with any person or to engage
in any activity or business;
(6) Contract which is material in any respect containing any
provisions dealing with a "change of control" or similar event with
respect to DoctorSurf or any subsidiary;
(ii) Each material contract of DoctorSurf and each of its
subsidiaries is in full force and effect and is a legal, valid and binding
agreement of DoctorSurf or such
subsidiary and of each other party thereto, enforceable against DoctorSurf
or any of its subsidiaries, as the case may be, and against the other
party or parties thereto, in each case, in accordance with its terms.
DoctorSurf and each of its subsidiaries has performed or is performing all
material obligations required to be performed by it under each of its
material contracts and is not (with or without notice or lapse of time or
both) in breach or default in any material respect thereunder; and, to the
knowledge of DoctorSurf or such subsidiary, no other party to any of its
material contracts is (with or without notice or lapse of time or both) in
breach or default in any material respect thereunder. Neither DoctorSurf
nor any of its subsidiaries knows of any circumstances existing on the
date of this Agreement that is reasonably likely to (x) materially
adversely affect its ability to perform its obligations under any material
contract or (y) materially adversely affect the ability of the other party
to any material contract to perform their obligations thereunder.
(16) Insurance. DoctorSurf has in effect insurance in such amounts and
against such risks as is customary for companies engaged in similar businesses
to DoctorSurf to protect the employees, properties, assets, businesses and
operations of DoctorSurf.
(17) Litigation. Except as set forth in (17) to the DoctorSurf Disclosure
Schedule, there is no Litigation pending or, to DoctorSurf's knowledge,
threatened, against DoctorSurf or any of its subsidiaries or its or any of their
properties, assets or business. There is no Order to which DoctorSurf or any of
its subsidiaries is a party, or involving the assets or business of DoctorSurf
or any of its subsidiaries, which is unsatisfied or which requires continuing
compliance therewith by DoctorSurf or any of its subsidiaries.
(18) Affiliated Transactions. Except as set forth in (18) of the
Disclosure Schedule, no contracts or agreements are in effect as of the date
hereof between DoctorSurf or any subsidiary, on the one hand, and its
affiliates, officers, or directors on the other hand.
(19) Labor Matters. Neither DoctorSurf nor any subsidiary is a party to or
bound by any collective bargaining agreement, nor has any of them experienced
any strikes, grievances, claims of unfair labor practices or other collective
bargaining dispute.
(20) Employee Benefits. Neither DoctorSurf nor any of its subsidiaries
maintains any employee benefit plans
(21) Environmental Matters. To DoctorSurf's knowledge, DoctorSurf and each
subsidiary has complied and is in compliance with all applicable environmental
laws, and there is no pending or, to DoctorSurf's knowledge, threatened, civil
or criminal litigation, written notice of violation, administrative proceeding,
or investigation by any Governmental Entity or person, relating to or otherwise
arising under any environmental law involving DoctorSurf or any subsidiary.
(22) Legal Compliance. To DoctorSurf's knowledge, each of DoctorSurf and
each subsidiary is in compliance with all applicable laws currently in effect of
any federal, state or local government or any Governmental Entity.
(23) Customers. No creditor, supplier, employee, client or other customer
or other person having a material business relationship with DoctorSurf or any
of its subsidiaries has informed any officer of DoctorSurf or such subsidiary
orally or in writing or has informed DoctorSurf or such subsidiary in writing
that such person intends to materially change the relationship because of the
transactions contemplated by this Agreement.
(24) Brokers' Fees. None of DoctorSurf or any of the Subsidiaries has any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
(25) Employee Matters. To the knowledge of DoctorSurf, no director,
officer or other employee of DoctorSurf or any of its subsidiaries is a party to
or bound by any contract, or subject to any order of any governmental entity,
that may interfere with the use of such director's, officer's or other
employee's best efforts to promote the interests of DoctorSurf and its
subsidiaries, conflict with the business of DoctorSurf or any of its
subsidiaries (as now conducted or as proposed to be conducted) or the
transactions contemplated by this Agreement or will have a material adverse
effect on DoctorSurf. To the knowledge of DoctorSurf, no activity of any
employee of DoctorSurf or any of its subsidiaries as or while an employee of
DoctorSurf or any such subsidiary has caused a violation of any employment
agreement, confidentiality agreement, patent disclosure agreement or other
Contract. To the knowledge of DoctorSurf, the execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation to or loss of a material benefit
under, any Contract under which any such employees are now obligated.
(26) Disclosure . No representation or warranty by DoctorSurf contained in
this Agreement and the DoctorSurf Disclosure Schedule contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary, in light of the circumstances under which it was or
will be made, to make the statements herein or therein not misleading.
(d) Covenants
(1) Covenants of ETI.
(i) During the period from the date of this Agreement to the
Effective Time, except as consented to in writing by DoctorSurf or as
specifically contemplated by this Agreement, ETI shall carry on its
respective businesses in the ordinary course consistent with past practice
and use their commercially reasonable efforts to comply with all
applicable Laws and, to the extent consistent therewith, use their
commercially reasonable efforts to preserve their assets and technology
and preserve their relationships with material customers, suppliers,
licensors, licensees, distributors and others having business dealings
with them. Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time, except as
consented to in writing by DoctorSurf or as specifically contemplated by
this Agreement, ETI shall not:
(1) (x) declare, set aside or pay any dividends on, or make
other distributions in respect of, any of its capital stock, (y)
split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock or
(z) purchase, redeem or otherwise acquire any shares of capital
stock or any other securities of ETI, or any options, warrants,
calls or rights to acquire any such shares or other securities;
(2) issue, deliver, sell, pledge or otherwise encumber, or
authorize or propose the issuance, delivery, sale, pledge or other
encumbrance of, any shares of its capital stock, or any other
securities of any class or any securities convertible into, or any
options, warrants, calls or rights to acquire, any such shares or
convertible securities;
(3) amend or propose to amend its certificate of incorporation
or by-laws or similar organizational documents;
(4) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other
entity or division thereof or (y) any assets which, in the
aggregate, are in excess of $10,000;
(5) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets, except sales of obsolete equipment in the ordinary course of
business consistent with past practice;
(6) repurchase, prepay or incur any Indebtedness or Guarantee
any such Indebtedness of another person, issue or sell any options,
warrants, calls or other rights to acquire any Indebtedness of ETI,
enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, or
make any loans, advances or capital contributions to, or investments
in, any other person;
(7) make or agree to make any new capital expenditure or
expenditures which, in the aggregate, are in excess of $10,000;
(8) (A) pay, discharge, settle or satisfy any claims,
liabilities or obligations (whether absolute, accrued, asserted or
unasserted, contingent or otherwise), other than in the ordinary
course of business or in accordance with their terms as of the date
hereof, of claims, liabilities or obligations reflected or reserved
against on the balance sheet of ETI as of the Most Recent Balance
Sheet Date (for amounts not in excess of such reserves), or incurred
since the Most Recent Balance Sheet Date, in the ordinary course of
business consistent with past practice, (B) waive, release, grant or
transfer any right of material value outside the ordinary course of
business consistent with past practice or (C) waive any material
benefits of, or agree to modify in any adverse respect, or fail to
enforce, any confidentiality, standstill or similar agreement to
which ETI is a party;
(9) modify, amend or terminate any material contract to which
ETI is a party or waive, release or assign any material rights or
claims thereunder;
(10) enter into any material contracts;
(11) except as otherwise contemplated by this Agreement or as
required to comply with applicable law or agreements, plans or
arrangements existing on the date hereof, (A) terminate, adopt,
enter into or amend any collective bargaining agreement or Benefit
Plan, (B) increase in any manner the compensation or fringe benefits
of, or pay any bonus to, any director, officer, employee or
consultant, (C) increase in any manner the severance or termination
pay of any director, officer or employee, or (D) enter into (I) any
employment, severance, termination or indemnification agreement, or
consulting agreement (other than in the ordinary course of
business), with any current or former director, officer, employee or
consultant or (II) any agreements with any current or former
director, officer, employee or consultant the benefits of which are
contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving ETI of the nature contemplated
by this Agreement.
(12) revalue any of its material assets or, except as required
by GAAP, make any change in accounting methods, principles or
practices;
(13) commence any Litigation (other than Litigation relative
to collections of accounts receivable Litigation or as a result of
Litigation commenced against ETI or any of its subsidiaries);
(14) hire any employees; and
(15) authorize any of, or commit, resolve or agree to take any
of, the actions prohibited by clauses (i) through (xiv) above.
(2) Covenants of DoctorSurf.
(i) During the period from the date of this Agreement to the
Effective Time, except as consented to in writing by ETI or as
specifically contemplated by this Agreement, DoctorSurf shall, and shall
cause its subsidiaries to, carry on their respective businesses in the
ordinary course consistent with past practice and use their commercially
reasonable efforts to comply with all applicable Laws and, to the extent
consistent therewith, use their commercially reasonable efforts to
preserve their assets and technology and preserve their relationships with
material customers, suppliers, licensors, licensees, distributors and
others having business dealings with them. Without limiting the generality
of the foregoing, during the period from the date of this Agreement to the
Effective Time, except as consented to in writing by ETI or as
specifically contemplated by this Agreement, DoctorSurf shall not, and
shall not permit any of its subsidiaries to:
(1) (x) declare, set aside or pay any dividends on, or make
other distributions in respect of, any of its capital stock, (y)
split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock or
(z) purchase, redeem or otherwise acquire any shares of capital
stock or any other securities of DoctorSurf or any of its
subsidiaries, or any options, warrants, calls or rights to acquire
any such shares or other securities;
(2) issue, deliver, sell, pledge or otherwise encumber, or
authorize or propose the issuance, delivery, sale, pledge or other
encumbrance of, any shares of its capital stock, or any other
securities of any class or any securities convertible into, or any
options, warrants, calls or rights to acquire, any such shares or
convertible securities;
(3) amend or propose to amend its certificate of incorporation
or by-laws or similar organizational documents;
(4) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other entity or division
thereof or (y) any assets which, in the aggregate, are in excess of
$10,000;
(5) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets, except sales of obsolete equipment in the ordinary course of
business consistent with past practice;
(6) repurchase, prepay or incur any Indebtedness or Guarantee
any such Indebtedness of another person, issue or sell any options,
warrants, calls or other rights to acquire any Indebtedness of
DoctorSurf or any of its subsidiaries, enter into any "keep well" or
other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the
economic effect of any of the foregoing, or make any loans, advances
or capital contributions to, or investments in, any other person;
(7) make or agree to make any new capital expenditure or
expenditures which, in the aggregate, are in excess of $10,000;
(8) (A) pay, discharge, settle or satisfy any claims,
liabilities or obligations (whether absolute, accrued, asserted or
unasserted, contingent or otherwise), other than in the ordinary
course of business or in accordance with their terms as of the date
hereof, of claims, liabilities or obligations reflected or reserved
against on the balance sheet of DoctorSurf as of the Most Recent
Balance Sheet Date (for amounts not in excess of such reserves), or
incurred since the Most Recent Balance Sheet Date, in the ordinary
course of business consistent with past practice, (B) waive,
release, grant or transfer any right of material value outside the
ordinary course of business consistent with past practice or (C)
waive any material benefits of, or agree to modify in any adverse
respect, or fail to enforce, any confidentiality, standstill or
similar agreement to which ETI is a party;
(9) modify, amend or terminate any material Contract to which
the ETI is a party or waive, release or assign any material rights
or claims thereunder;
(10) enter into any material contracts;
(11) except as otherwise contemplated by this Agreement or as
required to comply with applicable law or agreements, plans or
arrangements existing on the date hereof, (A) terminate, adopt,
enter into or amend any collective bargaining agreement or Benefit
Plan, (B) increase in any manner the compensation or fringe benefits
of, or pay any bonus to, any director, officer, employee or
consultant, (C) increase in any manner the severance or termination
pay of any director, officer or employee, or (D) enter into (I) any
employment, severance, termination or indemnification agreement, or
consulting agreement (other than in the ordinary course of
business), with any current or former director, officer, employee or
consultant or (II) any agreements with any current or former
director, officer, employee or consultant the benefits of which are
contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving DoctorSurf or any of its
subsidiaries of the nature contemplated by this Agreement.
(12) revalue any of its material assets or, except as required
by GAAP, make any change in accounting methods, principles or
practices;
(13) commence any Litigation (other than Litigation relative
to collections of accounts receivable Litigation or as a result of
Litigation commenced against ETI or any of its subsidiaries);
(14) hire any employees; and
(15) authorize any of, or commit, resolve or agree to take any
of, the actions prohibited by clauses (i) through (xiv) above.
(3) Access to Information. Upon reasonable notice, DoctorSurf and ETI
shall, and shall cause each of its subsidiaries, if any, to, afford to the
officers, employees, accountants, counsel and other representatives of each
other, reasonable access, during normal business hours during the period
prior to the Effective Time, to all its employees, properties, books, contracts,
commitments and records and, during such period, ETI and DoctorSurf shall, and
shall cause each of its subsidiaries, accountants, counsel and other advisors
to, furnish promptly to each other all information concerning its business,
properties and personnel as each may reasonably request. DoctorSurf and ETI will
treat any such information as confidential and in the event of termination of
this Agreement for any reason DoctorSurf and ETI shall promptly upon request
return or destroy all nonpublic documents obtained from the other, and any
copies made of such documents, to the other.
(4) Other Actions. DoctorSurf and ETI shall not, nor shall it permit any
of its subsidiaries, if any, to, take any action that would, or that could
reasonably be expected to, result in (i) any of their representations and
warranties set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) any of the conditions
set forth in Article VI not being satisfied.
(e) Additional Agreements
(1) Best Efforts. Except as expressly provided herein, ETI and DoctorSurf
will use reasonable efforts to take, and will cause each of its subsidiaries, if
any, to use reasonable efforts to take, all actions and to do, or cause to be
done, all things necessary, proper and advisable under applicable laws and
regulations promptly to consummate and make effective the transactions
contemplated by this Agreement (including cooperating fully with the other
parties hereto, furnishing all information to each other in connection with any
requirements imposed upon any party in connection with the Merger). ETI and
DoctorSurf will, and will cause each of its subsidiaries to, take all reasonable
actions necessary to obtain (and will cooperate with each other in obtaining)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party, required to be
obtained or made by DoctorSurf or ETI in connection with the Merger or the
taking of any action contemplated thereby or by this Agreement. Following the
Merger, the Parties will use reasonable efforts to (i) file a registration
statement for DoctorSurf with the Securities and Exchange Commission for an
underwritten public offering of up to 2,000,0000 shares of common stock of
DoctorSurf pursuant to a letter of intent received by DoctorSurf relating to
such an offering and (ii) complete such an offering.
(2) Fees and Expenses. Except as otherwise provided herein, all fees and
expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such fees or expenses, whether or not the Merger is consummated.
(3) Tax Treatment. DoctorSurf and ETI shall use reasonable efforts to
cause the Merger to qualify as a reorganization under the provisions of Section
368 of the Code.
(4) Name Change. Following the Merger, DoctorSurf will take all reasonable
actions necessary to change its corporate name to a name mutually acceptable to
the ETI Shareholders and the Board of Directors of DoctorSurf.
(5) DoctorSurf Board of Directors. Following the Merger, DoctorSurf will
take all reasonable actions necessary to expand its Board of Directors to seven
members and to appoint Xxxxxxx Xxxxxx and a nominee of Xxxxxxx Xxxxxx to the
Board of Directors.
(f) Conditions
(1) Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party hereto to effect the Merger shall be subject
to the satisfaction on or prior to the Closing Date of the following conditions:
(i) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other Order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect.
(ii) No Litigation. There shall not be pending or threatened any
suit, action or proceeding brought by any Governmental Entity, or any
suit, action or proceeding brought by any other third party, seeking to
restrain or prohibit the consummation of the Merger.
(2) Conditions of Obligations of DoctorSurf. The obligations of DoctorSurf
to effect the Merger shall be subject to the satisfaction on or prior to the
Closing Date of the following conditions unless waived by DoctorSurf:
(i) Representations and Warranties. The representations and
warranties of ETI contained in this Agreement shall be true and correct as
of the date of this Agreement and as of the Closing Date with the same
effect as though made as of the Closing Date (except that the accuracy of
representations and warranties that by their terms speak as of a specified
date will be determined as of such date), except where the failure of such
representations and warranties to be so true and correct (without giving
effect to any limitation as to "materiality" or "material adverse effect"
set forth herein) does not have, and will not have, individually or in the
aggregate, a material adverse effect on ETI.
(ii) Performance of Obligations of ETI. ETI shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date.
(iii) Shareholders Consent. All holders of shares of ETI Common
Stock shall have consented to the Merger and the execution and performance
of this Agreement.
(iv) Legal Opinion. DoctorSurf shall have received from counsel to
ETI a mutually agreeable legal opinion, addressed to DoctorSurf and dated
as of the Closing Date; and
(v) No Changes. No materially adverse change or effect to the
assets, business, liabilities, financial condition, prospects, or results
of operations of ETI shall have occurred since the Most Recent Balance
Sheet Date.
(vi) Consents. ETI shall have obtained all of the waivers, permits,
consents, approvals or other required authorization to complete the
transactions contemplated by this Agreement.
(vii) Employment Agreement. Xxxxxxx Xxxxxx shall have executed an
employment agreement with DoctorSurf pursuant to which Xx. Xxxxxx will
serve as DoctorSurf's Chief Executive Officer for a term of three years,
with annual compensation equal to $120,000 per year ($36,000 of which will
be accrued until the completion of an underwritten public offering by
DoctorSurf), and with other customary terms and conditions (the "Xxxxxxx
Employment Agreement").
(3) Conditions of Obligations of ETI. The obligation of ETI to effect the
Merger shall be subject to the satisfaction on or prior to the Closing Date of
the following conditions unless waived by ETI:
(i) Representations and Warranties. The representations and
warranties of DoctorSurf contained in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date with
the same effect as though made as of the Closing Date (except that the
accuracy of representations and warranties that by their terms speak as of
a specified date will be determined as of such date), except where the
failure of such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or "material
adverse effect" set forth
therein) does not have, and is not reasonably more likely than not to
have, individually or in the aggregate, a material adverse effect on
DoctorSurf.
(ii) Performance of Obligations of DoctorSurf. DoctorSurf shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior the Closing Date.
(iii) Legal Opinion. ETI shall have received from counsel to
DoctorSurf a mutually agreeable legal opinion, addressed to ETI and dated
as of the Closing Date; and
(iv) No Changes. No materially adverse change or effect to the
assets, business, liabilities, financial condition, prospects, or results
of operations of DoctorSurf and its subsidiaries, taken as a whole, shall
have occurred since the Most Recent Balance Sheet Date.
(v) Consents. DoctorSurf and its subsidiaries shall have obtained
all of the waivers, permits, consents, approvals or other required
authorization to complete the transactions contemplated by this Agreement.
(vi) Employment Agreement. DoctorSurf shall have executed the
Xxxxxxx Employment Agreement.
(4) Frustration of Closing Conditions. Neither ETI nor DoctorSurf may rely
on the failure of any condition set forth in Section 6.1, 6.2, or 6.3 as the
case may be, to be satisfied if such failure was caused by such party's failure
to use reasonable efforts to consummate the Merger and the other transactions
contemplated by this Agreement.
(g) Termination and Amendment
(1) Termination. This Agreement may be terminated at any time prior to the
Effective Time:
(i) by mutual consent of DoctorSurf and ETI;
(ii) by either DoctorSurf or ETI if the other party shall have
breached any of its representations, warranties, covenants or agreements
set forth in this Agreement, which breach (i) would give rise to the
failure of a condition to the obligation of such party set forth in
Article VI of this Agreement and (ii) has not been, or is incapable of
being, cured by such other party within 10 calendar days after such other
party receives written notice of such breach from DoctorSurf or ETI, as
the case may be;
(iii) by either DoctorSurf or ETI if the Merger shall not have been
consummated on or before June 30, 2001; provided, however, that the right
to terminate this Agreement pursuant to this (1) shall not be available to
any party whose failure to perform any of its obligations under this
Agreement results in the failure of the Merger to be consummated by such
time.
(2) Effect of Termination. In the event of a termination of this Agreement
by either ETI or DoctorSurf as provided in Section 7.1, this Agreement shall
become void and there shall be no liability or obligation on the part of
DoctorSurf or ETI or their respective officers or directors, except with respect
to any willful breach of any representation, warranty, covenant or agreement
contained in this Agreement prior to such termination; and except that this (2),
Article VIII, and Article IX shall continue in effect.
(3) Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors prior to the
Effective Time, but no amendment shall be made which by law requires further
approval by the stockholders of ETI without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
(4) Extension; Waiver. At any time prior to the Effective Time, each of
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance of the other party with any of the agreements or conditions to
its obligations contained herein. Any agreement on the part of the party hereto
to any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
(h) Indemnification
(1) Indemnification and Related Matters.
(i) Indemnification by DoctorSurf for Breach. DoctorSurf shall
indemnify and hold harmless the ETI Shareholders from and against any and
all Damages suffered or incurred by any of them resulting from, arising
out of, or based on:
(1) any breach of any representation or warranty made by
DoctorSurf in this Agreement; or
(2) the breach of any covenant of DoctorSurf contained in this
Agreement.
(ii) Limitation on Liability of DoctorSurf. After the Effective
Time, the ETI Shareholders sole remedy for indemnification and Damages
under (1)(i) shall be the right to be issued additional shares of
DoctorSurf Common Stock, which additional issued shares shall be
proportional in value to the amount of Damages incurred under Section
8.1(a). The ETI Shareholders shall have no claim for any cash or any other
remedy to compensate them for Damages under (1)(i).
(iii) Survival of Representations and Warranties of DoctorSurf.
(1) The representations and warranties of DoctorSurf in this
Agreement shall survive the Closing until the second anniversary of
the Closing; provided, however, that the representations and
warranties contained in (c)(10) shall survive until the expiration
of the applicable statute of limitations.
(2) Any claim for breach of representations and warranties
brought prior to the expiration of the periods set forth in
subparagraph (1)(iii)(1) shall be deemed timely made whether or not
such claim is resolved prior to the expiration of the applicable
period.
(iv) Indemnification by the ETI Shareholders for Breach. The ETI
Shareholders, jointly and severally, shall indemnify and hold harmless
DoctorSurf and its officers, directors, employees, stockholders, agents,
and representatives (collectively, the "Indemnified Parties") from and
against any and all Damages suffered or incurred by any of them resulting
from, arising out of, or based on:
(1) any breach of any representation or warranty made by ETI
in this Agreement; or
(2) the breach of any covenant of ETI contained in this
Agreement.
(v) Limitation on Liability of the ETI Shareholders. After the
Effective Time, the Indemnified Parties sole remedy for indemnification
and Damages under (1)(iv) shall be the right to be cancel the number of
shares of DoctorSurf Common Stock issued to the ETI Shareholders hereunder
which are proportional in value to the amount of Damages incurred under
Section 8.1(d). The DoctorSurf Indemnified Parties shall have no claim for
any cash or any other remedy to compensate them for Damages under (1)(iv).
(vi) Survival of Representations and Warranties of ETI.
(1) The representations and warranties of ETI in this
Agreement shall survive the Closing until the second anniversary of
the Closing; provided, however, that the representations and
warranties contained in (b)(10) shall survive until the expiration
of the applicable statute of limitations. (2) Any claim for breach
of representations and warranties brought prior to the expiration of
the periods set forth in subparagraph (1)(vi)(1) and shall be deemed
timely made whether or not such claim is resolved prior to the
expiration of the applicable period.
(3) Without the consent of DoctorSurf, the ETI Shareholders
shall not transfer the shares of DoctorSurf Common Stock issued to
them in the Merger before the later of (i) the expiration of the
two-year survival period for the representations and warranties or
(ii) the resolution of any claims brought for breaches thereof.
(i) Miscellaneous
(1) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties to this Agreement at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) if to DoctorSurf, to:
XxxxxxXxxx.xxx, Inc.
0000 000xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
With a copy to:
Xxxxx & Xxxxxxx
000 X. Xxxxx Xx., Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxx
(ii) if to ETI, to:
Eonnet Technologies, Inc.
000 Xxxxxxxxx Xxx.
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
With a copy to:
Xxxxxx X. Xxxxxxxx, Esquire
Xxxxxxx Xxxxxx Xxxxxxx & Groudine, PC
Third Floor - Grant Building
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
(2) Definitions. For purposes of this Agreement, each of the following
defined terms is defined in the Section of this Agreement indicated below.
Defined Term Section
Agreement Introduction
Articles of Merger (a)(1)
Closing (a)(2)
Closing Date (a)(2)
Code Recitals
DS Financial Statements (c)(6)
DoctorSurf Introduction
DoctorSurf Common Stock (a)(7)(i)
DoctorSurf Disclosure Schedule (c)
ETI Introduction
ETI Common Stock (a)(7)(i)
ETI Disclosure Schedule (b)
ETI Financial Statements (b)(6)
ETI Shareholders Introduction
Effective Time (a)(1)
Employee Benefit Plans (b)(20)(i)
Governmental Entity (b)(4)
Indemnified Parties (h)(1)(iv)
Intellectual Property (b)(14)(ii)
Litigation (b)(17)
Material Adverse Effect (f)(3)(i)
Materiality (f)(3)(i)
Merger Recitals
Most Recent Balance Sheet (b)(6)
Most Recent Balance Sheet Date (b)(6)
Newco Introduction
Order (b)(4)
PBCL (a)(1)
Parties Introduction
Surviving Corporation Recitals
Tax (b)(10)(ii)
Tax Group (b)(10)(i)
Tax Returns (b)(10)(i)
Taxes (b)(10)(ii)
Xxxxxxx Employment Agreement (f)(2)(vii)
(3) Certain Supplemental Defined Terms.
"Code" means the Internal Revenue Code of 1986, as amended.
"Damages" means, with respect to any right to indemnity, (i) all debts,
liabilities and obligations; (ii) all losses, damages, judgments, awards,
settlements, costs and expenses (including, without limitation, interest
(including prejudgment interest in any litigated matter), penalties, court costs
and reasonable attorneys and accountants fees and expenses); and (iii) all
demands, claims, suits, actions, costs
of investigation, causes of action, proceedings and assessments, whether or not
ultimately determined to be valid.
"Employee Benefit Plan" means any "employee pension benefit plan" (as
defined in Section 3(2) of ERISA), any "employee welfare benefit plan" (as
defined in Section 3(l) of ERISA), and any other written or oral plan, agreement
or arrangement involving direct or indirect compensation, including without
limitation insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation maintained or contributed by the Company or any Subsidiary for its
current or former employees or directors and any of their beneficiaries or
dependents.
"Intellectual Property" means all (i) patents and patent applications,
(ii) copyrights and
(i) "Damages" means, with respect to any right to indemnity, (i) all
debts, liabilities and obligations; (ii) all losses, damages, judgments, awards,
settlements, costs and expenses (including, without limitation, interest
(including prejudgment interest in any litigated matter), penalties, court costs
and reasonable attorneys and accountants fees and expenses); and (iii) all
demands, claims, suits, actions, costs of investigation, causes of action,
proceedings and assessments, whether or not ultimately determined to be valid.
(ii) "material adverse effect" means, when used in connection with ETI or
DoctorSurf, any state of facts, change, effect, condition, development, event or
occurrence that has been, is or is reasonably more likely than not to be
materially adverse to the prospects, business, assets, financial condition or
results of operations of such party and its subsidiaries, taken as a whole,
(4) Entire Agreement; No Third Party Beneficiaries; Rights of Ownership .
This Agreement and the Confidentiality Agreement (including the documents and
the instruments referred to herein) (a) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and (b) except as
expressly set forth in Section 6.05 of this Agreement, are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
(5) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA, REGARDLESS OF THE LAWS THAT
MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
(6) Publicity. Except as otherwise required by law, for so long as this
Agreement is in effect, neither ETI nor DoctorSurf shall issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld.
(7) Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
(8) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be a single agreement.
(9) Exhibits and Schedules; Interpretation. The headings contained in this
Agreement or in any Exhibit or Schedule hereto and in the table of contents to
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. All Exhibits and Schedules
annexed to this Agreement or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein. Any capitalized
terms used in any Schedule or Exhibit to this Agreement but not otherwise
defined herein, shall have the meaning as defined in this Agreement. When a
reference is made in this Agreement to a Section, Article, Exhibit or Schedule,
this reference shall be to a Section or Article of, or an Exhibit or Schedule
to, this Agreement unless otherwise indicated. For all purposes hereto: (a) the
words "include", "includes" and "including" shall be deemed followed by the
words "without limitation" and (b) the words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
(10) Legal Matters. The validity, construction, enforcement, and
interpretation of this Agreement are governed by the laws of the State of
Florida and the federal laws of the United States of America, excluding the laws
of those jurisdictions pertaining to resolution of conflicts with laws of other
jurisdictions. For any action instituted by Doctorsurf relating to this
Agreement or the Merger, ETI (a) consents to the personal jurisdiction of the
state and federal courts having jurisdiction in Hillsborough County, Florida,
(b) stipulates that the proper, exclusive, and convenient venue for any legal
proceeding arising out of this Agreement is Hillsborough County, Florida, for
state court proceedings, and the Middle District of Florida, Tampa Division, for
federal district court proceedings, and (c) waives any defense, whether asserted
by a motion or pleading, that Hillsborough County, Florida, or the Middle
District of Florida, Tampa Division, is an improper or inconvenient venue. For
any action instituted by ETI relating to this Agreement or the Merger,
DoctorSurf (a) consents to the personal jurisdiction of the state and federal
courts having jurisdiction in Allegheny County, Pennsylvania, (b) stipulates
that the proper, exclusive, and convenient venue for any legal proceeding
arising out of this Agreement is Allegheny County, Pennsylvania, for state court
proceedings, and the Western District of Pennsylvania, Civil Division, for
federal district court proceedings, and (c) waives any defense, whether asserted
by a motion or pleading, that Allegheny County, Pennsylvania, or the Western
District of Pennsylvania, Civil Division, is an improper or inconvenient venue.
EACH PARTY TO THIS AGREEMENT KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES
THE RIGHT TO A JURY TRIAL IN ANY LAWSUIT BETWEEN THE PARTY AND ANY OTHER PARTY
WITH RESPECT TO THIS AGREEMENT.
IN WITNESS WHEREOF, DoctorSurf, Newco, ETI, and the ETI Shareholders have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
EONNET TECHNOLOGIES, INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
EONNET ACQUISITION, INC.
By:
--------------------------------
Name:
-----------------------------------
Title:
--------------------------------
XXXXXXXXXX.XXX, INC.
By:
--------------------------------
Name:
-----------------------------------
Title:
--------------------------------
ETI SHAREHOLDERS:
-----------------------------------------
Xxxxxxx Xxxxxx
-----------------------------------------
Xxxx Xxxxx
